Alternative Financing Vs. Venture Capital: Which Option Is Best for Boosting Working Capital?

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.Different Types of FinancingOne problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.Alternative Financing SolutionsBut what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well: It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.A Precious CommodityRemember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

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Low Tech in a High Tech World

It seems that the more gadgets we have that were all touted as being able to de-stress us by keeping us up to date, the more stressed out we have become. People walk out of their houses on their phones, they drive while checking their emails, and walk down the street while texting someone.You know, there is something to be said for not knowing everything right now. Wouldn’t it be nice to walk down the street to your local store and actually watch where you’re going? Take time to see the trees, the insects, and the birds as you go by? Being able to drive in your car and enjoy the view, what a simple pleasure we take for granted. Sometimes we’re trying to talk to one person while texting someone else. Gone are the times when you had someone’s undivided attention, and enter the times when our lives have become one multitasking session after another.Being detached from the grid from time to time can be very de-stressing, unless you start stressing about not knowing. There are two things we need to do in order to live low tech in this high tech world.1. Don’t get caught up in the hype. You don’t need to upgrade every time. Believe it or not, the tech we have can last years and years, and most of the time, our needs don’t change that drastically to warrant getting the latest tech anyway.2. Understand that there is, and will always be, something better than what you have, so just be satisfied with what you do have, and don’t focus on what you don’t have.We get up in the morning and check our smart phones and or tablets before we talk to our significant other. We can send a quick email, check the weather and the news all before we say “hey” to our partners. There used to be time for talk before we leave the house, but now the only talk we hear is “I’m late, gotta go.”This high tech driven society definitely has it’s advantages, and there are some technologies that really make life a joy to live, however, all this tech has come at a price. Instead of connecting one on one, we end up connecting one on three, or one on five, as we try to connect to everything and everyone at once.We cannot escape this high tech society in which we live, and neither should we try to, but what we should try to do is know which tech we need and which we don’t. Lets stay connected with our family and friends, but lets not loose the joy of enjoying life. Let’s control our tech, instead of our tech controlling us. Let’s enjoy the sun, the rain, the breeze, as we also enjoy our loved ones, and the gadgets that keep us connected. Lets try to understand which tech gadgets will give us the balance that will truly allow us to be low tech in a high tech world.

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How To Start Trading Your New Business

So you’ve decided to start a small business and you’re ready to get started but how do you start trading your new business?Here are some things that you will need to consider to get your new business idea off the ground.Sole Trader or Limited Company?The first thing to consider is whether you are going to trade as a sole trader or a limited company. The type of small business that you are going to start will largely determine which option that you choose.A sole trader is a business that is owned by one person (with no staff) who is solely liable for the company’s debts and fulfilment of contracts. This type of business tends to be favoured by traditional skilled tradesmen like gardeners, plumbers, decorators, plasterers etc.The advantages of being a sole trader are:Having full control over the business.It is easy to set up as there are fewer regulations to comply with. You will just need to ensure that you contact the Inland Revenue to advise them that you are self employed within 3 months of starting the business.You won’t have to complete a lot of forms unlike limited companies, but you will nevertheless, need to have accounts prepared ready for your annual self assessment tax return to declare annual profits and tax liabilities.As there are no staff you will keep all of the profits yourself, which can remain private as you will not have to declare them to Companies house.You will not have to register the company and therefore can be known as anything hence why so many sole traders refer to themselves as “trading as…”You can build up a more personal rapport with the customer.It will be cheaper for you as accountants will charge you less as they will only need to complete a profit and loss account for you.The main disadvantages to this type of company are:You will be solely liable for any failures or liabilities such as your business failing or property being damaged.It can be harder to compete with larger companies who have more staff and can therefore complete work quicker.If you become sick you will have no income. Even though you can take out critical illness insurance, some will not pay out until after 1 month.If your business fails you could be forced to sell your personal assets, such as your house, to fulfil your liabilities.However, as your business becomes more successful you can minimise the risks by forming a corporation or limited liability company instead.Limited CompanyUnlike being a sole trader, when you form a private limited company your are registered in such a way as to ensure that you have limited liability, with your company and personal finances being kept separate. A limited company is owned by shareholders and operated by directors. By registering your company as a limited company you will need to consider the following:You will be subject to corporation tax.If you anticipate turning over £77k or more per annum you must register for VAT.As a director you will have more legal, financial and administrative responsibilities.You will have less control over the overall running of your business as you will be answerable to the shareholders.You will need to register with Companies House and will be required to submit an annual return along with annual accounts to them each year.N.B.The difference between a private limited company and a public limited company is that in a private limited company all of the company shares are in private hands whereas in a public limited company the shares are owned by the public.The main advantage of registering a business as a limited company is that directors and shareholders only have “limited liability” and therefore their personal assets cannot be touched, unlike being a sole trader.StaffingWhen you start a small business you are in effect becoming self employed and will therefore need to inform the Inland Revenue that your income may change. Even if you keep an existing job you must still inform the Inland Revenue.The same applies if you are going to employ staff. You have an obligation to collect and pay their PAYE contributions to the Inland Revenue. The Inland Revenue will them provide your new business with a PAYE number and an account office reference number.You can either do this yourself or you can appoint an accountant to all of this for you and to pay the wages and salaries on your behalf, which is what I do with one of my larger businesses.Choosing a small business nameCreating a good name for your business is important. When choosing a name for a business, it is important to make sure that the name is not already in use, otherwise you could be sued.You can either check with Companies House whether the name you have chosen is available or if you are considering an online business or having a website for your business you can go online using sites such as Go daddy to check whether the domain name that you want is available.I personally used to think that when naming a company you should make sure that the name reflects what your business is about, but many people argue that the name should be something that is easy to remember or one that is unusual and leaves a lasting impression like “confused.com” or “funkypigeon.com”. After all who would have imagined that these types on names would turn into multi million pound enterprises?If you plan to start a limited company, then you will need to register a company name with Companies House. They in turn will issue you with a company registration number that will be unique to your new company.Companies House will then keep details of your new business including account and address details, for third parties to be able to view.Small Business insuranceRegardless of what small business you start, you will need to take out a small business insurance to protect your business and your customers. There are many specialist insurance brokers who can put a package together to suit your company’s requirements.Make sure that you have your insurance cover already set up before you start your small business venture to ensure that your equipment and your premises are insured whilst you are setting up your business.Once you have implemented the above points, you will be ready to start trading your new business.

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Automotive Marketing on the Web

We are in the generation where the Internet plays a big role in our daily lives. Its contribution is a big help in terms of reaching out to the world from our own homes or wherever else. Aside from personal use, it also influences the businessmen in the world to publish their business online. In particular, automotive sellers have been considering using the Internet advantage in boosting their sales through automotive direct mail marketing.Why use automotive direct mail? This is because direct mail is flexible. A businessman can reach a great number of people in a very convenient way. And, on top of that, this method is also practically costless because everything one needs is an Internet connection and a list of leads.Many car dealers prefer using the automotive direct marketing because they believe that a one-on-one contact between the buyer and the seller is a good start to build a good relationship and strong trust for each other. But what does marketing really mean? Dictionary.com defines it simply as, “to offer for sale or to sell.” Having an effective marketing system is a great start to sell your products or services. You should know all the parts, for an example, of the car you are selling. You should know not even just the parts but all the information about the car or any automotive equipment that you are offering to your buyer or client. It may sound awkward, but you have to give them all the positive side of your product and service in order for you to convince your clients. Of course, all the information should be true and reliable. You cannot just create a story about the car or equipment.In automotive marketing, you should think of a better headline for your ads, in order for the automotive buyers to at least find your ads interesting. You should also consider your price. It should really be competitive with the others. And last, you should have your proof about the equipment you are about to sell. With all these Internet-based business techniques, you could just be clicks away from a future empire.

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Commercial Loans – What Do They Involve?

You may want to start a business or develop a project but you do not have adequate funding. Do not give up as there are alternatives that can help you gain access to the funding you need. Commercial loans are one of these options and they help individuals to buy business premises or commercial buildings for both new and existing businesses. They are also used to purchase a business asset or even when you want to finance the expansion of an established business.There are different commercial loan lenders in the market and it is advisable that you do your homework before you settle for a particular one. There are various requirements that lenders look at to assess if you are qualified for this type of loan. One factor that the lenders look at is your credit history. There are also various kinds of policies and processes that need to be followed before they can approve the loan.It is important for you to produce all your business documents since the lender has to be aware of your business and what you intend to do with the money. It is also a good idea to have a solid business plan showing your income. Most times, commercial loans are secured loans since they deal with large amounts of money. If you have the collateral, you will pay lower interest rates and if you have a good credit history plus solid repayment capacity then you can even get an even more reduced rate.The amount to be borrowed is normally determined by personal circumstances. The lender will assess the amount that you are capable of repaying on an installment basis. The repayment period for commercial property is flexible and you have five to thirty years duration.

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Qualifications of a Commercial Loan Workout Officer

A large number of foreclosure notices are filed every day and there seems to be no immediate end to this. When the real estate market was in jeopardy a few years back, many properties were foreclosed and many more are still facing foreclosure. Handling these cases for lending firms and banks is a commercial loan workout officer who sifts through pages of documents reviewing a client’s mortgage payment history and the application for a loan modification.In the United States, the average salary of such an officer is a little bit over $40,000. Some firms, though, offer as much as $60,000 to $80,000 which could include bonuses for meeting set targets like getting a high collection efficiency rate. The basic task of the officer has a lot to do with the real property accounts of the firm. The officer reviews the sale of foreclosed properties and negotiate with the borrower the terms and conditions of loan applications. A person with a college degree in business administration, finance, and other related fields can apply for the job. Usually, firms that are looking for these people are also looking into the years of experience of the individual especially in real estate properties. The more experience you have, the higher the compensation package that you can demand.The officer should also possess good interpersonal skills because he talks with the clients. He needs to reach out to the borrower and must know how to negotiate a deal. He has to understand the real situation behind the application so that he can come up with a reasonable loan modification plan that can benefit the his firm and the borrower. Whether or not the commercial property should be foreclosed, it is up to the officer to come up with suggestions on how to dispose of the property or how to efficiently collect from delinquent accounts.

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Increasing Student Success Through Instruction in Self-Determination

An enormous amount of research shows the importance of self-determination (i.e., autonomy) for students in elementary school through college for enhancing learning and improving important post-school outcomes.
Findings

Research by psychologists Richard Ryan, PhD, and Edward Deci, PhD, on Self-Determination Theory indicates that intrinsic motivation (doing something because it is inherently interesting or enjoyable), and thus higher quality learning, flourishes in contexts that satisfy human needs for competence, autonomy, and relatedness. Students experience competence when challenged and given prompt feedback. Students experience autonomy when they feel supported to explore, take initiative and develop and implement solutions for their problems. Students experience relatedness when they perceive others listening and responding to them. When these three needs are met, students are more intrinsically motivated and actively engaged in their learning.

Numerous studies have found that students who are more involved in setting educational goals are more likely to reach their goals. When students perceive that the primary focus of learning is to obtain external rewards, such as a grade on an exam, they often perform more poorly, think of themselves as less competent, and report greater anxiety than when they believe that exams are simply a way for them to monitor their own learning. Some studies have found that the use of external rewards actually decreased motivation for a task for which the student initially was motivated. In a 1999 examination of 128 studies that investigated the effects of external rewards on intrinsic motivations, Drs. Deci and Ryan, along with psychologist Richard Koestner, PhD, concluded that such rewards tend to have a substantially negative effect on intrinsic motivation by undermining people’s taking responsibility for motivating or regulating themselves.

Self-determination research has also identified flaws in high stakes, test focused school reforms, which despite good intentions, has led teachers and administrators to engage in precisely the types of interventions that result in poor quality learning. Dr. Ryan and colleagues found that high stakes tests tend to constrain teachers’ choices about curriculum coverage and curtail teachers’ ability to respond to students’ interests (Ryan & La Guardia, 1999). Also, psychologists Tim Urdan, PhD, and Scott Paris, PhD, found that such tests can decrease teacher enthusiasm for teaching, which has an adverse effect on students’ motivation (Urdan & Paris, 1994).

The processes described in self-determination theory may be particularly important for children with special educational needs. Researcher Michael Wehmeyer found that students with disabilities who are more self-determined are more likely to be employed and living independently in the community after completing high school than students who are less self-determined.

Research also shows that the educational benefits of self-determination principles don’t stop with high school graduation. Studies show how the orientation taken by college and medical school instructors (whether it is toward controlling students’ behavior or supporting the students’ autonomy) affects the students’ motivation and learning.
Significance

Self-determination theory has identified ways to better motivate students to learn at all educational levels, including those with disabilities.
Practical Application

Schools throughout the country are using self-determination instruction as a way to better motivate students and meet the growing need to teach children and youth ways to more fully accept responsibility for their lives by helping them to identify their needs and develop strategies to meet those needs.

Researchers have developed and evaluated instructional interventions and supports to encourage self-determination for all students, with many of these programs designed for use by students with disabilities. Many parents, researchers and policy makers have voiced concern about high rates of unemployment, under-employment and poverty experienced by students with disabilities after they complete their educational programs. Providing support for student self-determination in school settings is one way to enhance student learning and improve important post-school outcomes for students with disabilities. Schools have particularly emphasized the use of self-determination curricula with students with disabilities to meet federal mandates to actively involve students with disabilities in the Individualized Education Planning process.

Programs to promote self-determination help students acquire knowledge, skills and beliefs that meet their needs for competence, autonomy and relatedness (for example, see Steps to Self-determination by educational researchers Sharon Field and Alan Hoffman). Such programs also provide instruction aimed specifically at helping students play a more active role in educational planning (for example, see The Self-directed Individualized Education Plan by Jim Martin, Laura Huber Marshall, Laurie Maxson, & Patty Jerman).

Drs. Field and Hoffman developed a model designed to guide the development of self-determination instructional interventions. According to the model, instructional activities in areas such as increasing self-awareness; improving decision-making, goal-setting and goal-attainment skills; enhancing communication and relationship skills; and developing the ability to celebrate success and learn from reflecting on experiences lead to increased student self-determination. Self-determination instructional programs help students learn how to participate more actively in educational decision-making by helping them become familiar with the educational planning process, assisting them to identify information they would like to share at educational planning meetings, and supporting students to develop skills to effectively communicate their needs and wants. Examples of activities used in self-determination instructional programs include reflecting on daydreams to help students decide what is important to them; teaching students how to set goals that are important to them and then, with the support of peers, family members and teachers, taking steps to achieve those goals. Providing contextual supports and opportunities for students, such as coaching for problem-solving and offering opportunities for choice, are also critical elements that lead to meeting needs for competence, autonomy and relatedness and thus, increasing student self-determination.

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How to Build a Better Educational System: Jigsaw Classrooms

The jigsaw classroom technique can transform competitive classrooms in which many students are struggling into cooperative classrooms in which once-struggling students show dramatic academic and social improvements.
Findings

In the early 1970s, in the wake of the civil rights movement, educators were faced with a social dilemma that had no obvious solution. All over the country, well-intentioned efforts to desegregate America’s public schools were leading to serious problems. Ethnic minority children, most of whom had previously attended severely under-funded schools, found themselves in classrooms composed predominantly of more privileged White children. This created a situation in which students from affluent backgrounds often shone brilliantly while students from impoverished backgrounds often struggled. Of course, this difficult situation seemed to confirm age-old stereotypes: that Blacks and Latinos are stupid or lazy and that Whites are pushy and overly competitive. The end result was strained relations between children from different ethnic groups and widening gaps in the academic achievement of Whites and minorities.

Drawing on classic psychological research on how to reduce tensions between competing groups (e.g., see Allport, 1954; Sherif, 1958; see also Pettigrew, 1998), Elliot Aronson and colleagues realized that one of the major reasons for this problem was the competitive nature of the typical classroom. In a typical classroom, students work on assignments individually, and teachers often call on students to see who can publicly demonstrate his or her knowledge. Anyone who has ever been called to the board to solve a long division problem – only to get confused about dividends and divisors – knows that public failure can be devastating. The snide remarks that children often make when their peers fail do little to remedy this situation. But what if students could be taught to work together in the classroom – as cooperating members of a cohesive team? Could a cooperative learning environment turn things around for struggling students? When this is done properly, the answer appears to be a resounding yes.

In response to real educational dilemmas, Aronson and colleagues developed and implemented the jigsaw classroom technique in Austin, Texas, in 1971. The jigsaw technique is so named because each child in a jigsaw classroom has to become an expert on a single topic that is a crucial part of a larger academic puzzle. For example, if the children in a jigsaw classroom were working on a project about World War II, a classroom of 30 children might be broken down into five diverse groups of six children each. Within each group, a different child would be given the responsibility of researching and learning about a different specific topic: Khanh might learn about Hitler’s rise to power, Tracy might learn about the U.S. entry into the war, Mauricio might learn about the development of the atomic bomb, etc. To be sure that each group member learned his or her material well, the students from different groups who had the same assignment would be instructed to compare notes and share information. Then students would be brought together in their primary groups, and each student would present his or her “piece of the puzzle” to the other group members. Of course, teachers play the important role of keeping the students involved and derailing any tensions that may emerge. For example, suppose Mauricio struggled as he tried to present his information about the atomic bomb. If Tracy were to make fun of him, the teacher would quickly remind Tracy that while it may make her feel good to make fun of her teammate, she is hurting herself and her group – because everyone will be expected to know all about the atomic bomb on the upcoming quiz.
Significance
When properly carried out, the jigsaw classroom technique can transform competitive classrooms in which many students are struggling into cooperative classrooms in which once-struggling students show dramatic academic and social improvements (and in which students who were already doing well continue to shine). Students in jigsaw classrooms also come to like each other more, as students begin to form cross-ethnic friendships and discard ethnic and cultural stereotypes. Finally, jigsaw classrooms decrease absenteeism, and they even seem to increase children’s level of empathy (i.e., children’s ability to put themselves in other people’s shoes). The jigsaw technique thus has the potential to improve education dramatically in a multi-cultural world by revolutionizing the way children learn.
Practical Application

Since its demonstration in the 1970s, the jigsaw classroom has been used in hundreds of classrooms settings across the nation, ranging from the elementary schools where it was first developed to high school and college classrooms (e.g., see Aronson, Blaney, Stephan, Rosenfield, & Sikes, 1977; Perkins & Saris, 2001; Slavin, 1980). Researchers know that the technique is effective, incidentally, because it has been carefully studied using solid research techniques. For example, in many cases, students in different classrooms who are covering the same material are randomly assigned to receive either traditional instruction (no intervention) or instruction by means of the jigsaw technique. Studies in real classrooms have consistently revealed enhanced academic performance, reductions in stereotypes and prejudice, and improved social relations.

Aronson is not the only researcher to explore the merits of cooperative learning techniques. Shortly after Aronson and colleagues began to document the power of the jigsaw classroom, Robert Slavin, Elizabeth Cohen and others began to document the power of other kinds of cooperative learning programs (see Cohen & Lotan, 1995; Slavin, 1980; Slavin, Hurley, & Chamberlain, 2003). As of this writing, some kind of systematic cooperative learning technique had been applied in about 1500 schools across the country, and the technique appears to be picking up steam. Perhaps the only big question that remains about cooperative learning techniques such as the jigsaw classroom is why these techniques have not been implemented even more broadly than they already have.

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Have Your Children Had Their Anti-Smoking Shots?

Findings

In the early 1960s, social psychologist William McGuire published some classic papers showing that it is surprisingly easy to change people’s attitudes about things that we all wholeheartedly accept as true. For example, for speakers armed with a little knowledge of persuasion, it is remarkably easy to convince almost anyone that brushing one’s teeth is not such a great idea. McGuire’s insight into this curious phenomenon was that it is easy to change people’s minds about things that they have always taken for granted precisely because most people have little if any practice resisting attacks on attitudes that no one ever questions.

Taking this logic a little further, McGuire asked if it might be possible to train people to resist attacks on their beliefs by giving them practice at resisting arguments that they could easily refute. Specifically, McGuire drew an analogy between biological resistance to disease and psychological resistance to persuasion. Biological inoculation works by exposing people to a weakened version of an attacking agent such as a virus. People’s bodies produce antibodies that make them immune to the attacking agent, and when a full-blown version of the agent hits later in life, people win the biological battle against the full-blown disease. Would giving people a little practice fending off a weak attack on their attitudes make it easier for people to resist stronger attacks on their attitudes that come along later? The answer turns out to be yes. McGuire coined the phrase attitude inoculation to refer to the process of resisting strong persuasive arguments by getting practice fighting off weaker versions of the same arguments.
Significance

Once attitude inoculation had been demonstrated consistently in the laboratory, researchers decided to see if attitude inoculation could be used to help parents, teachers, and social service agents deal with a pressing social problem that kills about 440,000 people in the U.S. every year: cigarette smoking. Smoking seemed like an ideal problem to study because children below the age of 10 or 12 almost always report negative attitudes about smoking. However, in the face of peer pressure to be cool, many of these same children become smokers during middle to late adolescence.
Practical Application

Adolescents change their attitudes about smoking (and become smokers) because of the power of peer pressure. Researchers quickly realized that if they could inoculate children against pro-smoking arguments (by teaching them to resist pressure from their peers who believed that smoking is “cool”), they might be able to reduce the chances that children would become smokers. A series of field studies of attitude inoculation, conducted in junior high schools and high schools throughout the country, demonstrated that brief interventions using attitude inoculation dramatically reduced rates of teenage smoking. For instance, in an early study by Cheryl Perry and colleagues (1980), high school students inoculated junior high schools students against smoking by having the younger kids role-play the kind of situations they might actually face with a peer who pressured them to try a cigarette. For example, when a role-playing peer called a student “chicken” for not being willing to try an imaginary cigarette, the student practiced answers such as “I’d be a real chicken if I smoked just to impress you.” The kids who were inoculated in this way were about half as likely to become smokers as were kids in a very similar school who did not receive this special intervention.

Public service advertising campaigns have also made use of attitude inoculation theory by encouraging parents to help their children devise strategies for saying no when peers encourage them to smoke. Programs that have made whole or partial use of attitude inoculation programs have repeatedly documented the effectiveness of attitude inoculation to prevent teenage smoking, to curb illicit drug use, and to reduce teenage pregnancies and sexually transmitted diseases. In comparison with old-fashioned interventions such as simple education about the risks of smoking or teenage pregnancy, attitude inoculation frequently reduces risky behaviors by 30-70% (see Botvin et al., 1995; Ellickson & Bell, 1990; Perry et al., 1980). As psychologist David Myers put it in his popular social psychology textbook, “Today any school district or teacher wishing to use the social psychological approach to smoking prevention can do so easily, inexpensively, and with the hope of significant reductions in future smoking rates and health costs.” So the next time you think about inoculating kids to keep them healthy, make sure you remember that one of the most important kinds of inoculation any kid can get is a psychological inoculation against tobacco.

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Early Intervention Can Improve Low-Income Children’s Cognitive Skills and Academic Achievement

National Head Start program conceptualized while psychologists were beginning to study preventive intervention for young children living in poverty.
Findings
As a group, children who live in poverty tend to perform worse in school than do children from more privileged backgrounds. For the first half of the 20th century, researchers attributed this difference to inherent cognitive deficits. At the time, the prevailing belief was that the course of child development was dictated by biology and maturation. By the early 1960s, this position gave way to the notion popularized by psychologists such as J. McVicker Hunt and Benjamin Bloom that intelligence could rather easily be shaped by the environment. There was very little research at the time to support these speculations but a few psychologists had begun to study whether environmental manipulation could prevent poor cognitive outcomes. Results of studies by psychologists Susan Gray and Rupert Klaus (1965), Martin Deutsch (1965) and Bettye Caldwell and former U.S. Surgeon General Julius Richmond (1968) supported the notion that early attention to physical and psychological development could improve cognitive ability.
Significance

These preliminary results caught the attention of Sargent Shriver, President Lyndon Johnson’s chief strategist in implementing an arsenal of antipoverty programs as part of the War on Poverty. His idea for a school readiness program for children of the poor focused on breaking the cycle of poverty. Shriver reasoned that if poor children could begin school on an equal footing with wealthier classmates, they would have a better of chance of succeeding in school and avoiding poverty in adulthood. He appointed a planning committee of 13 professionals in physical and mental health, early education, social work, and developmental psychology. Their work helped shape what is now known as the federal Head Start program.

The three developmental psychologists in the group were Urie Bronfenbrenner, Mamie Clark, and Edward Zigler. Bronfenbrenner convinced the other members that intervention would be most effective if it involved not just the child but the family and community that comprise the child-rearing environment. Parent involvement in school operations and administration were unheard of at the time, but it became a cornerstone of Head Start and proved to be a major contributor to its success. Zigler had been trained as a scientist and was distressed that the new program was not going to be field-tested before its nationwide launch. Arguing that it was not wise to base such a massive, innovative program on good ideas and concepts but little empirical evidence, he insisted that research and evaluation be part of Head Start. When he later became the federal official responsible for administering the program, Zigler (often referred to as the “father of Head Start”) worked to cast Head Start as a national laboratory for the design of effective early childhood services.

Although it is difficult to summarize the hundreds of empirical studies of Head Start outcomes, Head Start does seem to produce a variety of benefits for most children who participate. Although some studies have suggested that the intellectual advantages gained from participation in Head Start gradually disappear as children progress through elementary school, some of these same studies have shown more lasting benefits in the areas of school achievement and adjustment.
Practical Application

Head Start began as a great experiment that over the years has yielded prolific results. Some 20 million children and families have participated in Head Start since the summer of 1965; current enrollment approaches one million annually, including those in the new Early Head Start that serves families with children from birth to age 3. Psychological research on early intervention has proliferated, creating an expansive literature and sound knowledge base. Many research ideas designed and tested in the Head Start laboratory have been adapted in a variety of service delivery programs. These include family support services, home visiting, a credentialing process for early childhood workers, and education for parenthood. Head Start’s efforts in preschool education spotlighted the value of school readiness and helped spur today’s movement toward universal preschool.

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