A Few Words From Greg:
Change is inevitable but it never ceases to amaze. Every generation goes through times when it believes something can be better, faster, cheaper, safer or healthier than it is. The folks ahead of that generation seem to ignore the newer generation by quietly going about using things “the old fashioned way” and pleased to enjoy it. Of course, little thought is needed to realize that older generation that went through the same invention and improvement of things of their predecessors as the new generation is doing now. It must be human nature to seek new and better ways to do things. We will always strive to be better than we are. The April 2016 issue is taking on an updated look with features intended to make viewing a more comfortable experience and a better read on your mobile device. Scrolling is much improved; we believe the articles and the representation in photos as well as text is an important improvement. This issue covers a variety of articles that will appeal to every reader. Please take a quick glance down the list on the Table of Contents to see how diverse the articles are while also being important to everyone. A special “Thank you” is always extended to our contributors of the excellent articles they provide. And appreciation is always extended to our advertisers without whom the Southern Oregon Business Journal would not be possible.
To you, the best of everything, Greg Henderson, Publisher greg@southernoregonbusiness.com
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Southern Oregon Business Journal, 703 Divot Loop, Sutherlin, Oregon 97479 www.southernoregonbusiness.com
Contents
April 1st, 2016
featured story 6 Debt, The Double Edged Sword!
features 3 A Snapshot of the Emerging Entrepreneur 9 Digital Economy Agenda 11 Douglas County's Unemployment Rate Drops to 7 .1 Percent 13 Survey: Dependability is Top Soft Skill for 3rd Year 14 Housing Wealth Reaches a New Record High 16 Making Clearcuts Less Ugly 17 Marijuana Economy 19 Millennials and Small Town America 21 What is Meant by "Company Culture" and How is it Important to my Business
Barry Robinson General Manager •••••
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22 Oregon Coast Economic Indicators 23 Spotlight on Rogue Valley Manufacturing 24 Tax & Business Alert
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2 Ameri-Title 5 Cardinal Services, Inc. 15 Gary Leif 2
A Snapshot of the Emerging Entrepreneur By Amisha Miller & Colin Tomkins Bergh - 11/12/15
The Kauffman Foundation interviewed thirty-five EY Entrepreneur Of The Year 2015 winners in the emerging category from across the country. We would like to thank these high-growth entrepreneurs for helping us understand how they achieved their success in such a short time. From the information gathered in these interviews, over the next year, the Foundation will create several more briefings and stories on the characteristics of emerging entrepreneurs, which will help entrepreneurs and those who support them around the country.
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10 Attributes That Surfaced From These 35 Interviews With EY Emerging Entrepreneurs -
companies that are five years or younger with demonstrated rapid growth, who represent a diverse set of sectors. These attributes provide some initial insight into what makes these successful founders tick. 1. EY emerging companies make a big difference to local employment. New businesses account for nearly all net new job creation and almost 20 percent of gross job creation in the United States. The EY emerging companies interviewed hire local, young talent: 37 percent recruit from local universities and 37 percent recruit from their same region; 40 percent recruit recent grads and 20 percent recruit people with little experience. “We have so many great universities here [locally], and so few dominant technology companies, that we have an abundance of graduates from these programs, which are top-notch programs,” said one entrepreneur. 2. EY emerging entrepreneurs are motivated by a love of entrepreneurship. These entrepreneurs are motivated to start their companies for a wide range of reasons, but the most common is that they love being an entrepreneur (69 percent). Some love being their own boss, starting a project from scratch, and working on small teams. Other common motivations include solving a problem that they faced or they saw potential customers facing (49 percent). Others were driven by promising economic gain (49 percent) or were “pushed” into starting a business: they lost or disliked their job or thought they could provide a product or service better on their own. 3. Experience is important. Prior research suggests that founders with previous startup and managerial experience tend to be more successful than those without. This holds true for EY emerging entrepreneurs. A majority of these successful companies were founded by entrepreneurs with experience—both with running a business (69 percent) and working in their respective industries (74 percent). 4. Cofounders are important for all entrepreneurs, especially first timers. A majority of EY emerging entrepreneurs (63 percent) founded the company with one or more cofounders. Of those who founded the company by themselves, 85 percent were serial entrepreneurs. This suggests that first-time entrepreneurs likely start companies with cofounders to increase their knowledge of their industry or how to start their company. Cofounders of those surveyed often were people the entrepreneurs knew well—previous colleagues (43 percent) or personal contacts, such as friends and family (38 percent), though we know from other research that these choices have consequences.
5. Even rapidly growing companies are funded by their founders. Research on Inc. 500 companies found that 59 percent of the companies were financed by the entrepreneurs’ own funds. Findings are similar for EY emerging entrepreneurs: 52 percent mentioned using a substantial amount of their own money or money from their previous business to start their company, and 31 percent completely financed the company themselves (with zero investors). 6. All entrepreneurs face difficulties raising funds. Even some of these highly successful entrepreneurs were turned down for funding, and 80 percent of the entrepreneurs who were turned down were serial entrepreneurs, meaning that even experienced entrepreneurs find it challenging to raise funding. However, the evidence suggests that when most entrepreneurs are able to demonstrate the progress of their company, they attract funding later. Of the entrepreneurs turned down for funding, more than three-quarters eventually were able to access external funding. 7. Entrepreneurs tend to give up equity to grow their business. Most EY emerging entrepreneurs use equity to gain funding and attract employees, executives, and cofounders. Aside from their cofounders, entrepreneurs give equity to investors (43 percent) and employees (32 percent). A small number of these emerging entrepreneurs owned 100 percent of their company. 8. EY emerging entrepreneurs learn from customers and markets. Though experienced, these entrepreneurs don’t assume they know everything, and they rely on customers or market intelligence to improve products and services. Fifty-seven percent of companies have added a new product or service line, and 66 percent changed their product or service due to customer demands. As one entrepreneur stated, “We take a lot of that customer feedback to decide where we’re going to invest.” 9. They also learn from mentors. Mentorship often is considered a key to entrepreneurial success. Among this group of seasoned entrepreneurs, only 11 percent said they do not have a mentor. The EY emerging entrepreneurs largely sought knowledge about their market from professionals with deep sector experience (40 percent), or mentoring on leadership and management (37 percent). 10. EY emerging entrepreneurs give back too. Half of the entrepreneurs (54 percent) gave back to other entrepreneurs by mentoring, giving presentation advice, or encouraging entrepreneurs to start a business. Interestingly, of those entrepreneurs who said they didn’t have a mentor, 75 percent of them did not give back in any of the ways mentioned above; those who receive the value of mentoring are more likely to give back. EY emerging entrepreneurs have worked with groups such as Youth Entrepreneur Council, MIT Entrepreneurial Masters and more. “So I mentor a lot of people—not just in manufacturing but also the startup community” - stated one entrepreneur.
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Continue to check www.kauffman.org/emerging for more findings from these interviews over the next year. Haltiwanger, J., Jarmin, R., Miranda, J., “Who Creates Jobs? Small Versus Large Versus Young” (The Review of Economics and Statistics, 2013), 360. Gompers, P., Kovner, A., Lerner, J., and Scharfstein, D. “Skill vs. Luck in Entrepreneurship and Venture Capital: Evidence from Serial Entrepreneurs.” (National Bureau of Economic Research, 2006), 7. Wasserman, Noam. “The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.” (Princeton University Press, 2013). Bhide, Amar. “The Origin and Evolution of New Businesses” (The Oxford University Press, 1999.) Eesley, C., Wang, Y., “The Effects of Mentoring in Entrepreneurial Career Choice” (Berkley Fung Institute, 2015), 24. Related Content
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Debt, The Double Edged Sword! January 2016 Data Update 6: “In corporate finance, the decision on whether to borrow money, and if so, how much has divided both practitioners and theorists for as long as the question has been debat-
On the other side of the ledger, debt does come with costs. The first and most obvious one is that it increases the chance of default, as failure to make debt payments can lead to financial distress and bankruptcy. The other is that borrowing money does create the potential for conflict between stockholders (who seek upside) and lenders (who want to avoid downside), which leads to the latter trying to protect themselves by writing in covenants and/ or charging higher interest rates.
ed. Corporate finance, as a discipline, had its beginnings
Positives of Debt 1. Tax Benefit: Interest in Merton Miller and Franco Modigliani’s classic paper on the irrelevance of capital structure. Since then, theorists have expenses on debt are tax deductible but cash flows finessed the model, added real life concerns and come to the to equity are generally unsurprising conclusion that there is no one optimal solu- not. The implication is tion that holds across companies. At the same time, practi- that the higher the marginal tax rate, the greater tioners have also diverged, with the more conservative ones the benefits of debt. (managers and investors) arguing that debt brings more pain
Negatives of Debt 1. Expected Bankruptcy Cost: The expected cost of going bankrupt is a product of the probability of going bankrupt and the cost of going bankrupt. The latter includes both direct and indirect costs. The probability of going bankrupt will be higher in than gain and that you should therefore borrow as little as businesses with more possible, and the most aggressive players positing that you volatile earnings and the cannot borrow too much. cost of bankruptcy will also vary across businesses. The Trade off on Debt: 2. Added Discipline: Bor- 2. Agency Costs: Actions The benefits of debt, for better or worse, are embedded in rowing money may force that benefit equity the tax code, which in much of the world favors borrowers. managers to think about investors may hurt the consequences of the lenders. The greater the Specifically, a company that borrows money is allowed to deinvestment decisions a potential for this conflict duct interest expenses before paying taxes, whereas one that little more carefully and of interest, the greater the cost borne by the is equity funded has to pay dividends out of after-tax earn- reduce bad investments. The greater the separation borrower (as higher ings. This, of course, makes it hypocritical of politicians to between managers and interest rates or more stockholders, the greater covenants). Businesses lecture any one on too much debt, but then again, hypocrisy the benefits of using debt. where lenders can is par for the course in politics. A secondary benefit of debt is monitor/control how that it can make managers in mature, cash-rich companies a their money is being used can borrow more than little more disciplined in their project choices, since taking businesses where this is bad projects, when you have debt, creates more pain (for the difficult to do. managers) than taking that same projects, when you are an all equity funded company.
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In the Miller-Modigliani world, which is one without taxes, bankruptcies or agency problems (managers do what’s best for stockholders and equity investors are honest with lenders), debt has no costs and benefits, and is thus irrelevant. In the world that I live in, and I think you do too, where taxes not only exist but often drive big decisions, default is a clear and ever-present danger and conflicts of interests (between managers and stockholders, stockholders and lenders) abound, some companies borrow too much and some borrow too little.”
Debt’s Two Sides: Riches and Misery
“To a startling degree, the two sides of debt — its destructive and its beneficial powers — have been responsible for the shifting fortunes of vast numbers of Americans since the turn of the century. Data collected by the Federal Reserve and analyzed in a recent paper by Edward N. Wolff, an economics professor at New York University, makes it clear that many American households of moderate means got much richer, on paper, anyway, from 2001 to 2007, largely because of rising home prices combined with mortgage debt. The data also shows that when the housing market soured, that debt intensified an extraordinarily sharp decline in the household wealth of most Americans from 2007 to 2010. The effects of that shocking decline on the wealth of American households since then — and the proper role of debt in the future — are much less Aswath Damodaran obvious. But important and sometimes counterintuitive lessons about the use I am a Professor of Finance at the Stern School of and abuse of debt are already Business at NYU. I teach classes in corporate finance emerging from the data.” and valuation, primarily to MBAs, but generally to anyone who will listen.
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NY Times “Business Day” Strategies By JEFF SOMMER FEB. 21, 2015
#BuzzWords Make social media work for you.
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Digital
Economy
Agenda Penny Pritzker Secretary of Commerce at U.S. Department of Commerce U.S. unveils Digital Economy Agenda that supports new tech, worker participation Mar 11, 2016 Our Digital Economy Agenda: preserving economic growth, opportunity and security for America’s businesses and workers. Our country and the entire world are living through one of the most remarkable economic and societal transformations in history and it is being driven by technology. In this changing world, economic growth and competitiveness are increasingly tied to the digital economy. This technology revolution has been dramatic. Ten years ago less than 18 percent of the world’s population had access to the Internet. Last year roughly 3 billion people—approximately 43 percent of global population—were online. This is phenomenal growth, and the pace of change is continuing. The digital economy has a staggering impact on U.S. growth and economic opportunity. Consider this fact: In 2014 the United States exported roughly $400 billion in digitally-deliverable services, accounting for more than half of U.S. services exports and about one-sixth of all U.S. goods and services exports. One study recently reported that the Internet economy already represents over 5 percent of U.S. GDP. Additionally, in G-20 developed markets the Internet economy is expected to grow at an annual rate of 8 percent over the next five years, far outpacing just about every traditional economic sector. For many people, the digital economy will be the best place to find their next job or business opportunity. In 2013, 60 percent of unemployed American Internet users ages 15 and older used the Internet to search for a job.
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The Commerce Department is committed to ensuring the digital economy continues to thrive and grow, for everyone. America’s economic growth and competitiveness depend on our capacity to embrace digitization in the economy. Specifically, we have rolled out an agency-wide Digital Economy Agenda that supports the transformative impact of the Internet and reflects its role as a global platform for communication, commerce, individual expression, and innovation. This initiative builds on the work of the Department’s 12 bureaus and nearly 47,000 employees and is focused on four key pillars. 1. A free and open Internet A free and open global Internet, with minimal barriers to the flow of data and services across borders, is the linchpin of the digital economy’s success. It ena bles workers and businesses to market their wares, connect with customers, and increase their skills. That open Internet is now threatened by new barriers to cross-border information flows, erected by governments and other interests through data localization rules, platform regulation, and security policies. 2. Trust and security online The digital economy cannot succeed if businesses and consumers do not trust their security and privacy online. American business needs a framework at home that will promote global trust, and international rules that do not unfairly burden American firms.
3. Access and skills American businesses need broadband infrastructure and a skilled workforce to compete. Yet broadband deployment remains uneven and more than 25 percent of U.S. households still do not use the Internet from home. American workers will need new skills and tools if they are to share in the prosperity offered by the modern digital economy. 4. Innovation and emerging technologies The pace of technological change is only increasing, bringing both opportunity and disruption. Commerce aims to increase its capacity to engage in new technologies, such as autonomous cars and unmanned aircraft, early in the development life cycle to break-down barriers and address long-term policy concerns. While the digital economy offers great opportunity, we face challenges too. Governments around the world are increasingly pursuing policies that could restrict the free flow of information on the Internet. These policies, such as data localization requirements, present significant risks to the competitiveness of both U.S. and foreign firms globally. The recently announced EU-U.S. Privacy Shield Framework is just the latest example of the importance of digital economy issues. For companies across all sectors of the economy – not just digital economy and Internet companies – effectively addressing these potential regulatory and trade barriers is the kind of export assistance they need the most. To respond to these needs, as the U.S. Government’s primary advocate for business, the Commerce Department has made promoting U.S. digital commercial interests a top priority. So I am pleased to announce today that we are launching a pilot program of ‘Digital Attaches’ in order to ensure that U.S. companies can participate in the global digital economy and reach markets worldwide. The primary goals of the Digital Attachés, members of our Foreign Commercial Service of commercial diplomats, will be to provide support and assistance to help U.S. businesses successfully navigate digital policy and regulatory issues in foreign markets and expand exports through global E-commerce channels. This initiative will be led by the Department of Commerce’s International Trade Administration, working with bureaus across the Department of Commerce, in collaboration with the Department of State and our industry stakeholders. This initiative will enhance efforts to advance commercial diplomacy, drive policy advocacy on technology issues, ensure linkages between trade policy and trade promotion efforts, and provide front-line assistance for U.S. small and medium enterprises to take advantage of the robust e-commerce channels. The Commerce Department’s commercial service mission is to support American businesses, promote trade, and ensure that all companies have access to a fair and competitive marketplace. The Department looks forward to using the new attaché program to partner with the private sector in advancing this mission for the evolving digital economy.
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NEWS Douglas County’s Unemployment Rate Drops to 7.1 Percent Douglas County’s seasonally adjusted unemployment rate dropped to 7.1 percent in December from a revised 7.5 percent in November. The rate is 1.4 percentage points below the 8.5 percent recorded in December 2014. This is the lowest seasonally adjusted unemployment rate since February 2000. Oregon’s seasonally adjusted unemployment rate was 5.4 percent and the national rate was 5.0 percent in December.
The Oregon Employment Department plans to release the January county and metropolitan area unemployment rates and employment survey data on Tuesday, March 8 and the statewide unemployment rate and employment survey data for January on Tuesday, March 1.
Seasonally adjusted total nonfarm employment rose by 170 in December. Employment has increased in eight out of the last 12 months, producing a generally upward trend. Douglas County added 610 jobs over the year ending in December, for a 1.7 percent annual growth rate. The statewide over-the-year growth rate was 3.1 percent in December. Not seasonally adjusted total nonfarm employment decreased by 40 in December. There was a seasonal gain in retail trade (+10) from holiday hiring. There were seasonal losses in construction (-60) and leisure and hospitality (-40). Elsewhere, there were relatively large gains in manufacturing (+70) and education and health services (+50). There were losses in mining and logging (-10) and financial activities (-10). Government dropped 110 due to losses in local education (-130) and federal government (-30) that were countered by a gain of 50 in noneducation local government. Over-the-year employment growth occurred in most private-sector industries. The industries contributing the most were manufacturing (+180), professional and business services (+120), and retail trade (+110). The only over-the-year losses in the private sector were in financial activities (-40) and other services (-10). Government has gained 50 jobs since December 2014 due to gains in federal government (+80), state government (+10), and local education (+130) that were countered by losses in local government tribal (-90) and local government excluding education and tribal (-80). 11
For more info visit www.qualityinfo.org
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Survey: Dependability Is Top Soft Skill For Third Year PR Web - March 9, 2016
Express Employment Professionals recently released new survey results revealing the most important hard and soft skills a job applicant should have. Respondents were asked, "What are the five most important soft skills an applicant should have?" At the top of the list, for the third year in a row, was "dependability/reliability" at 72%, followed by "motivation" (48%), "verbal communication" (44%), "teamwork" (39%) and "commitment" (39%). Respondents were also asked, "What are the three most important hard skills an applicant should have?" "Experience" topped the list with 95%, followed by "technical ability" (67%) and "training" (60%). "While we've seen some fluctuation year to year in the skills ranking, it's clear that the best job applicant is one who can show experience and demonstrate dependability," said Bob Funk, CEO of Express, and a former chairman of the Federal Reserve Bank of Kansas City. "After all, if an employer can't depend on you, then nothing else matters."Â Â willis.cook@expresspros.com
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Housing Wealth Hits a New Record High
By Rick NewmanMarch 10, 2016
The Housing Bust is Officially Over. Nine years ago, the total value of housing in the United States hit $25 trillion. Then home values started to plunge, foreclosures began to mount and a nasty recession pushed the homeownership rate to the lowest level in 30 years. The housing bust wiped out about $7 trillion worth of ordinary Americans’ net worth—but the damage has finally been repaired. The Federal Reserve says the total value of Americans’ homes hit $25.3 trillion in the fourth quarter of 2015. That’s about $450 billion more than in the prior quarter, and a new high. Nine years after home values starting falling in 2006, the sector has finally regained its losses, as this chart shows:
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Source: Jared Blikre/Yahoo Finance; Federal Reserve It took a remarkably long time for housing wealth to get back to break-even. Financial markets recovered much faster, with total financial assets peaking at $54.3 trillion in 2007, bottoming out at $45.8 trillion in 2009, and hitting a new high of $55.1 trillion in 2011. Investors recovered all their lost financial wealth in just over four years. Today, total financial assets stand at $66.9 trillion, 23% above the prior peak. That partly reflects the Fed’s aggressive monetary stimulus policies, which pushed up stock values a lot faster than home values.
Gary Leif
Housing has been so slow to recover for a number of reasons. The value of homes, like the value of everything, is determined by supply and demand. And demand collapsed during and after the recession, as lending standards tightened and widespread unemployment cut into income and savings. As a debt binge unwound, many consumers found themselves owing far too much to afford a home or qualify for a mortgage. And the foreclosure epidemic left many people with wrecked credit and low odds of owning again any time soon. Housing isn’t completely back to normal. The Case-Shiller national home-price index is still slightly below its 2006 peak, so while the total net worth of homes is at a new high, the average price of a home is still about 5% below the all-time high, according to the index. That indicates more homes with a higher total value, but a slightly lower average price. The sales pace of both new and existing homes is still below historical averages, with young buyers waiting far longer to purchase a first home. Part of the problem is a shortage of starter homes, a result of fewer people upgrading from their first home to a larger second one. And median household income, adjusted for inflation, is still slightly below where it was in 2000, showing that ordinary families remain under financial stress. But rising home values and improving net worth are an important part of the solution. As home values increase, owners who might have been under water a few years ago -- owing more than their home was worth -- will rise above the water line and be able to sell without losing money. That will boost the inventory of homes for sale and make room for more first-time buyers. A more stable housing market, in turn, makes the overall economy stronger, banks more willing to lend, and consumers a bit cheerier. It’s about time. Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman .
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I SUPPORT:
• Term Limits • The Right to Bear Arms • Slashing Red Tape • Mental Health Solutions • Increasing O&C Support • Local Control of Our Lands
Making Clearcuts Less Ugly Over the past several years, OFRI has surveyed Oregonians on how they view forest management. One consistent finding is that people don’t like clearcuts. Discussions during focus groups and informal visits indicate the main reason for these feelings is aesthetics: Most people consider clearcuts just plain ugly. Learning about the natural forest cycle, and how clearcuts mimic natural disturbances such as fire, can help people understand clearcuts. But it still doesn’t help them like them. A better way to combat the negative perception of clearcuts is through visual management – a collection of concepts that help foresters plan timber harvests so they are more aesthetically appealing. The concepts include: - Leaving residual patches of trees to visually break up the clearcut. - Avoiding straight cutting boundaries. Straight lines rarely occur in nature, and the human eye views them as intrusions. - Limiting the size of clearcuts, so viewers can see where they end. If a clearcut goes to the top of a ridge, the natural visual assumption is that it continues over the ridge top. If people see the boundary, they know where it ends. Designing clearcuts that fit naturally into the landscape and the residual forest. - Cleaning up slash piles, trash and other debris.
Foresters can implement these visual management concepts using modern photo and visualization software that shows how the clearcut will appear from various angles and distances. This is especially useful to see how clearcuts will look from key travel corridors. To help foresters learn these visual management tools, OFRI is co-sponsoring a pair of workshops with the Oregon Forest Industries Council, Washington Forest Protection Association and the Western Forestry and Conservation Association. The workshops will be held April 13 in Springfield and April 19 in Grand Mound, Wash. The workshop will include teaching and reviewing visual management concepts and tools developed by Dr. Gordon Bradley, an emeritus professor at the University of Washington. Loren Kellogg, an emeritus professor at Oregon State University, will highlight some operational and safety considerations, and OSU professor Doug Maguire will discuss silvicultural considerations. We will also examine a local case study, and I’ll present the OFRI clearcutting survey findings. Registration for the sessions in open; you can find detailed workshop information at the WFCA website. Please join us and learn what you can do to make our harvest units more socially acceptable. For the forest, Mike Cloughesy Director of Forestry 503-329-1014 cloughesy@ofri.org Oregon Forest Resources Institute 16
Marijuana economy may hit $44 billion by 2020 By Daniel Roberts March 14, 2016 In its annual report on the U.S. cannabis industry,Marijuana Business Daily predicts up to $44 billion in economic impact by 2020. To put that into some corporate context: it's roughly equivalent to the current market cap of Netflix (NFLX) or Caterpillar (CAT). Last year's report predicted $14 billion to $17 billion in impact for 2016. The publication has been producing the report since 2012. The impact figure is separate from sales of marijuana; it represents sales plus all the money pumped into the economy as a direct result of sales. It encompasses everything from wholesale growers to grow-light manufacturers to marijuana accoutrements and everything below it touched by the trickle-down effect of marijuana money. It even extends to home purchases in places like Colorado, which has attracted new residents since legalizing recreational use. The marijuana mag assigned the marijuana economy an economic multiplier of 4—that means every dollar spent on marijuana leads to another $3 working its way into the economy. "We've been expecting rapid growth in the marijuana industry for a while now, and that's exactly what's playing out," says MBD managing editor Chris Walsh. "The main drivers of the growth in recreational sales are Colorado, Washington and Oregon. And also, interestingly, even the mature medical marijuana markets are growing very quickly, like Arizona, New Mexico, and states that have had medical programs for years now. And then you have new medical marijuana states like Illinois, Nevada and Massachusetts." In other words, there's marijuana momentum almost everywhere. As for actual sales of marijuana, that figure is estimated at $3.5 billion to $4.3 billion for this year in just states that have legalized medical and recreational use. That's up from $3 billion to $3.4 billion last year, and in 2014 it was $2 billion to $2.4 billion. The overall sales market for marijuana each year in all states (not just where legalized), in case you wondered: "Between $30 and $45 billion in the U.S., and that includes the black market," Walsh says. For just legal sales, MBD projects $6 billion to $11 billion by 2020.
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Of course, the cannabis revolution could be heavily affected by a change in political regime—and federal law still prohibits marijuana, which has made it extremely difficult for marijuana businesses to get bank accounts. But Walsh bets that there's too much momentum now for any one politician to slow it down. "You might get an anti-cannabis president in January, but even then, it's hard to see this going in the opposite direction," he says. "The genie's out of the bottle, half the country has legalized medical marijuana and an increasing number of states are legalizing recreational. Anyone who tries to stand in its way is going to have a hard time."
Marijuana Business Daily 1005 Main Street, #2130 Pawtucket, RI 02860 (401) 354-7555 x1
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Millennials
& Small Town America Last night while I was perusing Facebook I came across a post featuring this article, Why Millennials Are Avoiding SmallTown America. It discusses the demographic shift in rural communities. Data showsthat while the number of Millennials (20-34 years olds) is increasing slightly in small towns and rural areas, it cannot compare to their growth in big-city suburbs and lower-density cities. After surveying the population estimates and examining the trends influencing these shifts, William H. Frey, Senior Fellow at the Brookings Institution writes, “At this point, the prognosis does not look good for much of small town America.” Writer Brittany Shoot examines the choice many Millennials make to leave their small towns in her piece for The Atlantic Citylab, Should Millennials Feel Guilty for Leaving Their Small Towns Behind? She writes: “From my teenage point of view, there seemed to be two choices for young people growing up in Anderson. You could plant yourself, either intentionally or by letting inertia control your fate. (No one else leaves; why would you?) Or you could flee. Early on, I bought into the myth and the language of getting out. Leaving meant making it—it being the pursuit of some nebulous American Dream-type upward mobility.” She is not alone in her thoughts, if you ask many Millennials why they left their small towns and did not return it is because they felt “trapped” as teenagers in these places and they saw leaving as a component of being seen as successful.
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Small towns need Millennials to stay there and/or move to in order to survive. They need to work to make their communities a desirable place for them to live and work. In a poll conducted by theAmerican Planning Association, 74% of Millennials surveyed said that attracting new businesses by investing in schools, transportation options and walkable areas is better than the recruitment of companies.
“As the world continues to become more urbanized, it’s important that small towns keep up with these changes." Planners have highlighted increasing density as a strategy to attract Millennials to small towns. Andrew A. Pack a Community Development Specialist for the Federal Reserve Bank of St. Louis writes, “As the world continues to become more urbanized, it’s important that small towns keep up with these changes. Increasing a small town’s density to reflect some of the positives of a more urbanized lifestyle may be important to its future success.” As a Millennial living in a small rural community I see why many who grow up here leave for the “big city.” I at times have struggled with living here due to the lack of opportunities and options that are readily available in areas with a larger population. I see attracting people my age to small towns is more than just having jobs for them and being an affordable place to live it is also providing the lifestyle and quality of life that they want. If these communities want to continue into the future they must get beyond the industrial recruitment economic development strategy. They must carefully examine the needs and wants of the Millennial generation and take progressive steps in planning their towns to meet these.
I am a University of Nebraska – Lincoln Extension Educator located in Johnson County (Tecumseh, NE) with an emphasis in community vitality. My work primarily concentrates on building rural communities that are economically, environmental, and socially sustainable. I particularly have a passion for sustainable agriculture and local food systems; and an interest in exploring the social aspects of agriculture production and natural resource management in rural communities. My formal educational background reflects my interests in agriculture, natural resources, and public policy.  I received a Bachelor of Science degree from the University of Wyoming where I focused on studying animal agriculture, food science, and agricultural economics. I also hold a Master of Science degree from Colorado State University in Rangeland Ecosystem Science and a Master of Public Administration degree from the University of Nebraska at Omaha.
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What is Meant by “Company Culture”
& how is it important to my business?
By Arlene M. Soto CMA, Southwestern SBDC Director Company culture is defined as the shared values, beliefs and Once the assessment is completed, the next step is to determine what you want the company culture to look like practices of company employees including management. in the future. Review corporate mission, vision, values and This is not the written policies, procedures or strategic goals to make sure the company culture you are inventing plan; it’s the actions and attitudes of each individual who is supportive of them. Develop an action plan considering is a part of the organization. Knowing the culture in any business is important to ensure the long term health of the what is working well and what needs to be improved. Brainstorm changes in formal policies and business practices that business. Company culture changes as the employees in enhance the desired improvements. Make sure to include the business change, as management makes strategic deci- employees at all levels of the organization in all levels of sions and as the business environment fluctuates. Growing planning and making changes. Develop models anticipatbusinesses often experience culture shifts. ing changes and communicate with all employees about the The most successful businesses have an adaptive culture. A study co-sponsored by Crawford International and HR.com in Palo Alto, California in 2006 found that “companies that create adaptive corporate cultures outperform companies with non-adaptive cultures by a factor of 900 to 1 as measured by long term net income and stock price growth.” An adaptive culture is defined as one that is aligned with the business mission, strategic goals and where employees feel valued. How can a business owner assess their company culture? Look for common employee behaviors. How do employees act with customers and with each other? Listen with an open mind to employees, suppliers, customers, the media and members of the community. What is being said about the company in public, on social media and in the hallways of the business? What employee actions are rewarded or punished? Are sales growing or shrinking? Is the company environment toxic or healthy? 21
expected outcomes. Monitor the results of any changes that are initiated to see if they are impacting the company culture in a positive way. Company culture cannot be dictated by management, it can only be modeled. Reward behaviors that align with strategic goals. Celebrate accomplishments and communicate regularly with all employees about the progress towards reaching the strategic goals of the company and how the employees have contributed to company success. The bottom line; to change the culture of a business the leaders must start acting differently and enlist enough support within the organization that others act differently as well. The SBDC is a partnership of the U.S. Small Business Administration, the Oregon Small Business Development Center Network, the Oregon Business Development Department and Southwestern Oregon Community College. Arlene M. Soto has been the Director of the Southwestern Small Business Development Center since July 2007. To ask a question call 541-756-6445, e-mail asoto@socc.edu, or write 2455 Maple Leaf, North Bend, OR 97459. Additional help is available at the OSBDCN Web page www.bizcenter.org.
Oregon Coast Economic Indicators
By Annette Shelton-Tiderman, Southwestern Oregon Workforce Analyst Oregon Employment Department – Research Division
When reviewing the distribution of employment by industry sector, our rural area and the individual counties show a greater percentage of workers counted as being under the “government umbrella” than in more urban areas. For example, only 15.4 percent of Multnomah County’s covered employment is considered to be government; Lane County is a bit more (17.0%); Curry County’s government employment makes up 19.4 percent of the total employment; Douglas County’s is one in five (21.8%); and Coos County’s is one in four (25.8%). Typically, many people do not give much thought as to what services are actually included as being under the umbrella of government. For example, rural areas tend to not have very many private education entities – hence, workers associated with rural schools are counted as local government employees. Additionally, tribal business activities are also considered to be local government. Twenty-three percent of SW Oregon’s employment is covered by federal, state, and local government. The pie chart shows the area’s government employment distribution by sector. For more information contact: Annette Shelton-Tiderman, Southwestern Oregon Workforce Analyst Oregon Employment Department – Research Division | Phone: 541.530.0605 | E-mail: Annette.I.SHELTON-TIDERMAN@oregon.gov Shawna Sykes, Workforce Analyst/Economist - Oregon Employment Department Research Division | Phone: 503.397.4995 ext. 232 | Cell Phone: 503.396.7355 | E-mail: Shawna.L.Sykes@oregon.gov 22
Spotlight on Rogue Valley
Manufacturing: Recovery from Great Recession by Guy Tauer Another reason that manufacturers garner special treatment is wages can pay higher than average. In Jackson County, the average manufacturing wage per job was $45,320 in 2014, compared with $37,263 for the non-manufacturing average wage. In Josephine County, the average wage per job in manufacturing was $38,338 in 2014 while the non-manufacturing wage per job was $32,137.
Manufacturing jobs are important to most economies. Many manufacturing businesses are considered "traded-sector," meaning that they sell their products outside the local area and thereby create new wealth for the communities where they are based. Not all local manufactured goods are sold or consumed outside the local area. I have personally consumed a few pints – not at one time – of locally manufactured microbrews from local manufacturers such as Caldera or Southern Oregon Brewing. But in general, manufacturers rely on exporting and selling their products beyond the local areas where they reside. Advanced manufacturing is one of the Rogue Workforce Partnership's – the local workforce investment board – targeted industry sectors. Southern Oregon Regional Economic Development also focuses on retaining and recruiting manufacturing companies as part of their mission to assist traded-sector businesses in the Rogue Valley.
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Manufacturing jobs have been recovering steadily from the Great Recession in the Rogue Valley. In Jackson County, manufacturing pre-recession peak employment occurred in summer of 2007, at 7,910 jobs. During the recession, the county lost 1,970 jobs to reach 5,940 in January 2010. Since that time, manufacturing employment rose steadily to reach 7,800 jobs by November 2015. Manufacturing employment in Jackson County has recovered 95 percent of the jobs lost during the most recent recession. Jackson County has a mix of higher- and lower-paying manufacturing industries. The most jobs are in fairly high-paying wood products manufacturing, while the second highest number of jobs are in food manufacturing with an average annual wage of $32,624. Jackson County has many jobs in higher-paying chemical, transportation, machinery, and computer/electronic products manufacturing industries. The Great Recession also took a toll on Josephine County manufacturing jobs, and the recovery has not been as robust. Manufacturing's payroll employment pre-recession peak occurred in May 2006, when it stood at 3,600. By February 2010, the county lost 1,400 of those jobs as employment dipped to 2,200 in this "goods-producing" industry. Since that time, Josephine County added 780 jobs back in manufacturing. The county has regained 55 percent of the manufacturing jobs lost during the recession. Josephine County's mix of manufacturing jobs explains some of its struggles to regain all of those lost jobs. More of Josephine County's manufacturing jobs are tied to the housing and construction industries, which are still not back to their pre-recession levels. Josephine County has substantial employment in wood products and furniture manufacturing. These two industries account for more than 40 percent of Josephine's manufacturing employment. While these two housing-dependent sectors have yet to fully get back to their pre-recession levels employment, this has impacted the overall manufacturing recovery in the county. Computer and electronic product manufacturing is Josephine's highest-paying manufacturing industry, with average wage of $64,328 and more than 200 jobs in second quarter 2015. The overall economy continues to expand and the housing market is tightening in many areas. This should lead to more construction activity and growing demand for Josephine County's manufactured goods, creating more opportunities and jobs going forward.
Tax & Business Alert! WHAT YOU SHOULD KNOW ABOUT CAPITAL GAINS AND LOSSES. When you sell a capital asset, the sale results in a capital gain or loss. A capital asset includes most property you own for personal use (such as your home or car) or own as an investment (such as stocks and bonds). Here are some facts that you should know about capital gains and losses: Gains and Losses. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset. Net Investment Income Tax (NIIT). You must include all capital gains in your income, and you may be subject to the NIIT. The NIIT applies to certain net investment income of individuals who have income above statutory threshold amounts—$200,000 if you are unmarried, $250,000 if you are a married joint-filer, or $125,000 if you use married filing separate status. The rate of this tax is 3.8%.
Deductible Losses: You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sal e of property that you hold for personal use. Long- and Short-term: Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is longterm. If you held it one year or less, the gain or loss is shortterm. Net Capital Gain: If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a net capital gain. Tax Rate: The capital gains tax rate, which applies to long-term capital gains, usually depends on your taxable income. For 2015, the capital gains rate is zero to the extent your taxable income (including long-term capital gains) does not exceed $74,900 for married joint-filing couples ($37,450 for singles). The maximum capital gains rate of 20% applies if your taxable income (including long-term capital gains) is $464,850 or more for married joint-filing couples ($413,200 for singles); otherwise a 15% rate applies. However, a 25% or 28% tax rate can also apply to certain types of long-term capital gains. Short-term capital gains are taxed at ordinary income tax rates. Limit on Losses. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return. Carryover Losses: If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened in that next year.
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