Financially Speaking / Archive RSS Feed
Archive for the ‘Business Tips’ Category
Learn to Embrace Sales
Salespeople often get a bad rep, and thinking of yourself as a salesperson can make you feel uncomfortable. But why? As an entrepreneur, you’re selling all the time…your primary job is to be a salesperson for not only your business, but yourself.
As a result, you’re likely to develop strategies for how you sell based on feedback you receive. Should you go into financials right away, should there be a dramatic pause after the fifth slide? Of course, this is not *considered* sales, but at the heart of the matter it essentially is.
Why not apply this same manner of thinking to your business? Learning about how potential customers think, how to phrase your pitch to make them think a certain way, and how to close the deal are all pertinent to your success. So as much as you don’t want to think about sales pitches and scripts…you really should. If you aren’t, it’s a detriment to your business.
In today’s lending atmosphere, many entrepreneurs and small business owners must resort to family and friends as a source of loans to get them started or keep them going. Here are some things to keep in mind if you’re contemplating this route:
Money impacts all relationships. Make sure the one who lends you the money won’t be put in a financial hardship because as a result. Always think “what if I can’t pay him back?” Not that anyone is willing to lose money, but if you can’t pay back and put your friend in financial hardship – they will not be your friend for long.
This is a business relationship and you should treat it as such. “Don’t have an attitude that implies, ‘These are my friends and family. They will understand if I miss or delay a monthly payment, or fail to provide timely financial information or fail to communicate financial issues,” writes Jeffrey Yount, a partner at B2B CFO, in an article on AOL Small Business. At the same time, he says, don’t let them interfere with the day to day operations. They provided finances, they are not co-owners.
When the loan amount is great, you might have to enlist an accountant. If the loan is over $10,000, the lender is required by law to charge interest. The IRS issues monthly minimum interest rates that must be charged. Uncle Sam want s to know what is going on, so you better hire a professional to make sure everything is done by the book.
Put everything in writing. That is where it all starts. Put down in writing all the terms of the loan, the involvement of the investor in the business, and the collateral you are putting against the loan, if any. Even if the loan amount is not great, it will make your ‘investors’ feel protected.
Don’t make false promises that you know you won’t be able to keep. The suggestion is to under-promise and over-deliver. Make realistic calculations and pad them a bit to cover unexpected delays in delivery or payment.
Image thanks to http://www.flickr.com/photos/10944535@N08/2230236391/
When you run a small business, it is beneficial sometimes to hear what the other side – the employees – have to say about the way the business is run, the relationships you develop and the atmosphere in your business.
A friend of mine started a new job a few months ago and has been complaining about the boss and the working conditions he imposes. Here are some things we can all learn about how to run a small business successfully without creating a hostile work environment:
• Set your priorities correctly. You can’t have it cheap, fast and good. These three hardly ever go together. You can choose two of the three. If you want it cheap and good – it won’t be quick. If you want it quick and good – it won’t be cheap, etc.
• Leave room for change. Things hardly ever work out exactly how you planned them. Allow room for change and don’t get upset when things don’t happen exactly how you envision them to.
• Take responsibility. Blaming your employees for everything that goes wrong, even if it is out of their hands, is counter-productive and will poison the atmosphere.
• Don’t gossip about your workers to other people in your organization. If you do that, all of your workers will stop trusting you. It is sometime fun to hear the boss complain about the other workers, but what does he say about you behind your back?
• You are running a business, not a kindergarten. Remarks like: “These are excuses and I don’t want to hear stories” are fine when you raise a child, not when you run a business. Expect the unexpected.
• Pay attention to what your employees are telling you. Don’t dismiss them with “it’ll work out” or “it’ll be OK” and then get mad at them when what they warned you against, did happen.
• If you want to make a change, make it. Don’t go around complaining and do nothing about it. This is definitely counterproductive. Make a change if you don’t get what you think you should be getting. Don’t drag. If you want to fire someone, do it with respect by talking to the person face to face. Don’t suddenly ignore your employee and have rumors swirling around about replacement.
This is some simple advice on how to make your business more productive and the atmosphere conducive to making your business grow. Your employees spend sometimes more quality time with you than with their families, and going to work willingly and happily will benefit you and your business in the long run.
Image thanks to http://www.flickr.com/photos/32022858@N00/2510982244/
Common Startup Mistakes
The Wall Street Journal reported on the 10 most common startup mistakes recently. I noticed there was a pattern within the ten: being extreme on both ends of the spectrum. For example, one mistake was not having a business plan, while another stated that overthinking the business plan was a major mistake. Or, not getting enough funding, and getting too much funding were also common mistakes. How can you avoid falling into these extreme categories? Here are some ideas:
1) Evaluate your personality- Sometimes, it’s easy to become nearsighted and lose track of what is important in your business. Knowing how you operate as an entrepreneur will help you identify when you may be drawn toward an extreme before it’s too late to stop it.
2) Have someone call you out- This goes along with a couple of the other mistakes in the article: not having a partner or advisory board. Having someone who can call you out on your mistakes will make it much easier to stop before your business tanks. Often, this involves a deep level of trust and respect from both parties so neither will get offended or be afraid to get their opinion out there. Also, an advisory board with tons of experience will more readily be able to see when you’re making a mistake or about to…they’ve been there before.
3) Be humble- Know when it’s time to back off or admit you’re wrong. You’d be surprised how often entrepreneurs develop a big ego and turn renegade. The most successful entrepreneurs know that it’s important to stay grounded, hear others out, and take action on smart advice. Important also is to be thankful and never take any advice or extra help from others for granted.
Image thanks to http://www.flickr.com/photos/49503102897@N01/54389823/
Why You Need to Outsource
Besides freeing up your time to focus on important things, outsourcing is usually a cheaper option than hiring on a full time person. If you can hire them on as a 1099 then you don’t have to worry about, “health and life insurance, as well as make contributions to retirement plans,” according to Wise Geek.
The OutsourceBlog goes on to say, “the United States Bureau of Labor determined the “true cost” for an experienced in-house administrative employee is currently $45.54 per hour. On average, the Virtual Assistant industry estimates the starting rate for a Virtual Assistant is $40.00 per hour. Five hours of in-house administrative labor will cost a company $212.70 versus $175.00 for retaining an Independent Virtual Assistant for the same time period.” Figuring out ways to keep your business growing without losing revenue is a must for start-ups. Outsourcing is a great option that more small business owners are taking advantage of. Being able to think ahead and realize you can’t do everything is a great step in the right direction.
Shannon Suetos is an expert writer on phone systems based in San Diego, California. She writes extensively for an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs such as VoIP service at Resource Nation
Image thanks to http://www.flickr.com/photos/24662369@N07/4386822005/
Summer vacation is almost over. The summer that was supposed to be “The Summer of Recovery” didn’t prove itself to be one. In today’s economic climate, business owners are apprehensive about hiring help. The cycles of hope and despair that have been plaguing us for at least a year have left people disillusioned and less adventurous.
If you need help in your small business, and don’t want to hire people because you are afraid you’ll have to let them go a few months later, maybe an internship program is the way to go.
Internship is defined by the Department of Labor by certain criteria: It has to be in the same academic or vocational field, the intern should not replace any paid worker and the internship should primarily benefit the intern, not the employer. The employer, on the other hand, “derives no immediate advantage” from the internship.
Read on, not all internships are born alike.
If you establish contact with a higher education institute that has courses in your field, you have a way into the talent pool of the future. The young generation is most likely up to date with new technology which can make your life easier, or move your business forward.
Those students want to learn. They think of your business as their profession of choice and they are willing not to get paid to learn how it works in the real world.
What a wonderful way to screen your future employees, and keep the ones you like by turning them into student employees. If you want to get young talent into your business, you might have just hired the new whiz-kid.
An article in ReadWrite Start has 5 tips on creating an internship program. How to create a work plan, how to assign a good supervisor (it can be you…), how to give and take feedback and provide compensation when the work that’s done doesn’t fall into the categories mentioned above.
New rules which will go into effect in January 2012 require all businesses and nonprofit organizations to issue a 1099 form for all goods and services which were paid over $600 a year. The buzz that this new regulation causes can be heard from those who will impacted the most – small business owners.
How this legislation happened is another story. It was slipped into the Health Care bill which was passed in March as an attempt at closing a gap of income tax revenue reporting. The additional paperwork puts business owners at a disadvantage because of minimal or non-existent support staff.
Pennsylvania’s SMC business networking organization surveyed its members and found that they currently average 10 filings a year. The new rules might push that average to over 200 fillings per year for typical small business.
What will be the effect of this regulation?
It will undoubtedly cause small businesses to consolidate their purchases, going from many vendors they do business with, to only a few to ease on the reporting. That might hurt small businesses in general.
It will also cause a larger paper trail. ”Small businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition.” Says SMC Business Councils Tom Henschke.
Because of product returns and other complications, the payment documented by the 1099 won’t match up cleanly against the revenue business report, putting small business owners to have increased communication with the IRS.
How to avoid the new reporting?
The buzz this new requirement created was heard all the way to the IRS. In May, in a speech before two payroll trade groups, IRS Commissioner, Douglas Shulman, announced a major exemption to the new rule. The IRS plans to exempt transactions made through credit cards and debit cards. “Whenever a business uses a credit or debit card, there will be no new burden under the new law,” Shulman said.
The main beneficiaries of that exemption are likely to be credit card companies, which will get an added hook to get small businesses to pay their fees.
Image thanks to http://www.flickr.com/photos/joshuacraig/2415343592/lightbox/
Getting an SBA loan is not an easy task, we all know. It is a little like winning the biggest stuffed animal at the carnival. Odds are against you, but sometimes it does happen, writes Geoff Williams in his article in AOL small business. He spoke with Christine Reilly, the president of Small Business Lending for CIT, who said about a year ago the federal government tinkered with the formula for getting an SBA loan and for a brief moment the loans were semi easy to get. The SBA guaranteed 90 cents on the dollar instead of 75 cents and waived the borrower’s fees (about 3% of the loan). SBA lending jumped until the 90 cents guarantee ended in May. In June lending has dropped a whopping 74%.
Here are some things you need to know before you apply for a loan:
- Learn about the loans – There are a few SBA loans, applying for the correct one will give you a better chance of getting the loan.
The 7(a) loans are the most popular. Within it there are four types of loans:
The Express loan – Aimed at getting your loan as fast as possible
Export Loan Program – for businesses that export their products.
Rural Lender Advantage Program – designed for businesses in small communities, away from big city areas.
Special Purpose Loan Programs – designed for businesses that were affected by NAFTA.
There are also loans called 8(a) which are aimed at ‘Socially Disadvantaged Individuals’.
SBA 504 loans are another type of loans for real estate or infrastructure such as buying land or expending your building.
- Prepare The Documents – It’s not enough to ask for a loan and bring some papers to back up a request. John Martinka, Vice-President of Partners, a Kirkland, Washington company, suggests his clients prepare a “book” about the company and the individuals involved. It can be a 10 tab divider with business and personal financial statements, tax returns, accounts receivable, accounts payable, a business plan, reference letters and whatever else is related to the business or the loan. Bankers see many applications, the well-organized ones gives them an idea of how you run your business and how in tune you are to details. Tell a good story about you and your business.
- Collateral – SBA requires that the lender put up all available collateral, including home equity, against the loan. Your business might have some assets that can guarantee the loan.
- Risk factors – Even if you think you have the uncanny ability to turn tin into gold, don’t brag about it to the bank. Traditional lenders hate risk and it’s not the best environment to go way outside your core business.
Image thanks to http://www.flickr.com/photos/42179515@N06/3908285404/
Small Business Travel Tips
Business.gov had a great guest post the other day with tips on travel for small business. I was surprised to learn that for every $1 spent on business travel, incremental revenue is $12.50. Wow! That’s a great return…however, travel can also be sticky, tricky, and somewhat undesirable in the modern age of Skype. Here are some ground rules to help guide your travel planning:
1) Do you really, really need to travel?- Are there alternatives to spending the money to fly to meet your potential client/partner. Could you both meet halfway in a desirable location where there is more opportunity for both parties? Can the meeting be conducted via Skype for now, and then plan a trip at a better time?
2) Make travel rules crystal clear- Though you may think employees know your sentiments on 5 star dining while on business trips, it’s better to clearly voice your expectations and set ground rules before you get a receipt from the Four Seasons.
3) Set agendas and expectations- Make sure travel time is optimized by seeing whether there are other opportunities other than the mandatory meeting to attend. There may be networking events, conferences, or other contacts in the area where you are traveling. Really maximize each dollar you spend by not wasting time on the road. A way to monitor this is to have a spelled out agenda which shows exactly what you or whoever is traveling will spend their time doing. Having an agenda makes it easier to set expectations for the outcomes to expect from travel meetings.
4) Make expense reporting easy- Expense reporting can be complicated and a waste of time. Luckily there are an abundance of tools and strategies to make it easier. Having a procedure that everyone is aware of will minimize questions about requirements. Or, you can opt to use what we use, Expensify, which makes expense reporting easy by having photos of receipts mailed in a pdf to automatically create an expense report.
Image thanks to http://www.flickr.com/photos/12734746@N00/427400947/
These days social media experts demand, nay, expect everyone under the sun to be actively Tweeting. However, small businesses are somewhat weary to jump on the bandwagon due to a lack of results.
Here are some stories from business owners who Tweet, and the results they achieved:
A company called Avaya, a global communication provider out of Baskin Ridge, N.J. follows about 2,500 tweets a week. They use third party applications to track mentions of their name and questions posted that are related to their business. “We see those, we’re on them in 15 or 20 minutes.” says Paul Dunay the managing director of services and social marketing. “That provides killer support and customer delight.” Mr. Dunay tells a story about a post he read from a company looking for a new phone system. “Within 13 days, we were able to convert that one tweet into a $250,000 sale.”
Humphry Slocombe is a 14 seat ice cream shop in San Francisco. They have gathered 300,000 Twitter followers. “We started using Twitter just because we have zero money for any kind of advertising or promotions” says Sean Vahey the co-owner. Their flavors change daily and they wanted to have a way to keep their clients up to date. “As soon as we put it on Twitter, it moves” He says, “It’s an insane response”.
Whole Foods uses Twitter as a live version of a FAQ. They have 1.7 million followers. The theory is that if one person has a question others will as well. Answering it in no time shows the customers the company cares about them.
Kiss my Bundt is a small bakery in Los Angeles. Chrysta Wilson, the owner, likes to experiment with new products and Twitter is like a focus group for her to see which of her new products gets the best tweets. “It’s great for getting input – they become your sounding board” she says. “It’s a way to break out of the business owner’s bubble and get an outsider’s perspective.”
Read more here.
