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Headlines
Money Matters
"Credit Cards Replace Small Business
Loans"
"Positioning Your Company for Debt
Financing"
"Location Incentives: Valuable
Tax Breaks for Businesses"
"Collecting
Debts Can Save Your Business"
Bright Ideas
"The Basics of a Small Business Marketing
Plan"
"Win With Customer Ideas"
"How to Create a Successful Web Site for Nothing (or
Almost Nothing)"
"How to Assemble an
Employee Handbook"
Grow
"Use Collaboration as a Tool to Grow Your Small
Business"
"Steps to Achieve
Growth"
Off Hours
"Travel Slump Has an Upside: Deals on
Hotels"
"All the Right Moves: GPS Devices
Let You Go Anywhere"
Money Matters
Credit Cards Replace Small Business
Loans
Business Week (08/20/08) Tozzi, John
Small businesses (SMBs) are increasingly turning to credit
cards as an alternative to business loans for financing
expansion plans and other needs. Particularly as banks tighten their
credit standards, experts say that credit card debt can offer a much
needed source of funding. The National Small Business Association
(NSBA) says the percentage of companies that use credit cards has
climbed from 16 percent in 1993 to 44 percent today. Meanwhile, the
percentage of small businesses using bank loans fell from 45 percent
to 28 percent over that same time. Federal Reserve Bank surveys also
show that SMBs are relying on credit cards as an alternative to
small business lending. The Fed says 48 percent of companies used
business credit cards in 2003, up from 34 percent in 1998.
Meanwhile, various surveys show that between 20 percent and 30
percent of all SMBs carry a balance on their credit cards instead of
paying off their balances in full each month. Not surprisingly,
credit card companies are increasingly targeting SMBs, according to
the Mercator Advisory Group, which reports that 12 percent of the 6
billion credit card offers mailed last year were sent to SMBs. "As
issuers have discovered the small business segment, they have become
fairly aggressive about getting small business cards into the hands
of some very early-stage businesses," says Mercator analyst Ken
Paterson. Visa calculates that total small business spending in the
United States reached $4.7 trillion last year, while Mercator
estimates that the volume charged on small business payment cards,
including debit, is only $283 billion. Although credit card debt
interest rates can be high, for many SMBs it can provide crucial
funding.
Return to Headlines
Positioning Your Company for Debt
Financing
Smart Business Ideas (07/08) Vol. 4, No. 7, P.
26; Honig, Gary
Once, going to the bank and applying for
a loan was the only way of obtaining outside capital for a small
business, but today many of the guidelines for running a company
have been rewritten. Building your company incrementally is still
key, and following a pre-prepared business plan, watching expenses,
and increasing sales will help your company grow. In certain
situations, however, borrowing is still the best solution for
increasing growth or starting a company, and knowing what commercial finance companies
look for will make your business a more attractive prospect for
financing. First, finance companies look for incoming revenue to be
spread evenly over a number of customers, so avoid making one or two
large sales and then forgetting to find more customers. Second, be
sure that your customers and business partners are as creditworthy
as you want your company to be. Finance companies respect business
owners that have a thorough credit-checking process and a variety of
stable, creditworthy customers. Having a qualified bookkeeper on
staff also can help as being able to produce an instant fiscal
picture of your company will highlight the professionalism and
sophistication of your business and show finance companies that you
keep a close eye on your books. Pay all your taxes and be upfront
about any past bankruptcies, either professional or personal, as it
will enhance the finance companies' ability to overlook past
difficulties. Finally, be professional by answering calls and
messages quickly, be prepared with information, and show up for
meetings on time.
Return to Headlines
Location Incentives: Valuable Tax
Breaks for Businesses
Tax Hotline (08/08) Vol. 28, No. 8,
P. 5; Plostock, Mark A.
The federal government offers
tax breaks for companies to establish operations in economically
distressed areas, and state and local governments also provide
incentives to draw businesses to their communities. Governments
offer a variety of tax breaks, collectively called location tax
incentives, which can include abatements, credits deduction, and
exemptions. Abatements are the reduction of real estate tax for a
limited time. Credits are dollar-for-dollar savings off federal
and/or state and local taxes for rehabilitating real estate and
creating jobs. Deductions are subtractions from income subject to
tax for investments in equipment within designated areas. Exemptions
are income items that are not subject to tax. Federal tax breaks
include employment credits of 20 percent of wages up to $15,000,
enhanced Section 179 deductions for equipment purchases and an
additional $35,000 limit on annual purchases, and special capital
gains rules for sales of assets located within qualified areas.
There are three types of federal qualified zones—empowerment zones,
enterprise communities, and renewal communities. Qualified zones can
be in both urban and rural locations, and descriptions are available
from the U.S. Department of Housing and Urban Development. However,
not every tax break is available for each designated area. For
example, the enhanced Section 179 deduction for equipment purchases
applies to empowerment zones and renewal communities but not to
enterprise communities, and a full exclusion for capital gains from
the sale of certain assets held more than five years applies only to
renewal communities.
Return to Headlines
Collecting Debts Can Save Your
Business
U.S. News & World Report (07/28/08) Vol. 145,
No. 2, P. 113; Bandyk, Matthew
Many small businesses may
feel obligated, or even willing to extend credit to their customers,
but during difficult economic times collecting on these debts can be
extremely difficult just when your business needs the money the
most. Failing to collect on money owed can be a life-or-death issue
for small businesses, and learning to collect on accounts receivable
quickly and efficiently can be the difference between success and
failure, experts say. At first, Brian Kendrick of KTM Auto in
Plymouth, N.H., was more than willing to give people leniency on
paying for repairs made to their cars. "It was very much done on a
handshake and a promise," Kendrick says. However, once delinquent
payments became a problem, Kendrick decided to formalize the
process. "Now, we get all the information from the customer, and we
agree to terms," he says. Many small business owners do not do the
basic homework on their customers, says Michelle Dunn, author of the
"Ultimate Credit and Collections Handbook." Dunn recommends making
all customers fill out a credit application, that is updated yearly,
to track financial situations. Small business owners also have
problems in failing to follow up on invoices. If a payment is
needed, give the customer a call and use a friendly but firm tone to
collect. A phone call often gets faster results than an email or
letter because it is harder to ignore. "It's harder to deal with
owing money when the person is standing right there," Dunn says.
However, it is important to be willing to negotiate and work with
someone to get your payments. Ask for less up front, and ask
questions about their jobs and what they are paid to find a way for
customers to pay you.
Return to Headlines
Bright Ideas
The Basics of a Small Business Marketing
Plan
SmartBiz.com (07/11/08) Smith, Charen
A
strong small business marketing plan contains a core message, a
good, recognizable logo and brand, a Web site, business signatures
such as business cards and fliers, and public exposure. First,
determine a core message that will influence all aspects of your
marketing campaign. The message can be about a new product or
service, a redesign of the business or older products, or better
customer service. Part of knowing your core message is knowing your
audience. Who they are, where they live, how much they make, and how
willing they are to buy your product are factors that must be
considered. Explain to them why they need your product and structure
your message so that it serves their needs. Next, create a strong,
memorable logo and brand. The logo represents your business and its
personality in a glance so when people see it they know what your
are and will remember your business. The brand represents your
business as a whole, including your logo, advertising campaign, and
product. All businesses need a Web site, if only to provide Internet
users with some basic information about the business, its location,
operating hours, and a few product details. Explain who you are as a
business, what your business does, and how your business can help
your customers. Add more functionality to your Web site as your
business grows. Print out business cards that include your Web site
address to increase Web traffic and give your business a level of
respectability. Hand out business cards to everyone you know and to
potential business partners or clients. Finally, gain some exposure.
Contact local media, as many newspapers and local magazines like to
run stories about new businesses. Advertise in local media and post
flyers in the community.
Return to Headlines
Win With Customer
Ideas
Investor's Business Daily (07/14/08) P. A3
Good customer service combines several key factors, says
Joseph Michelli, author of "The New Gold Standard." First and
foremost is to ask questions of yourself. Michelli says to ask
yourself whether you listen to customers in a way that allows you to
innovate and increase customers' perceived value, and to note what
changes exist between the customer you served five years ago and the
customer you serve now. He recommends finding a balance that
combines current trends with past success. Consider everyone a
customer, including your staff. By filling the needs of your staff
and keeping them happy you ensure that they will work harder to keep
customers happy. Give customer service teams the authority to solve
problems instead of forcing them to simply serve as a relay between
customers and another branch. Empowering employees expedites problem
solving, making both the customer and the company feel better about
the experience. The best customer service teams understand the
underlying feelings and unspoken concerns in addition to listening
to the initial complaint. Customer service professionals must also
be knowledgeable on all aspects of the business and constantly be
teaching themselves about new trends to create an experience that
will bring customers back.
Return to Headlines
How to Create a Successful Web
Site for Nothing (or Almost Nothing)
Wall Street Journal
(08/11/08) P. R1; Vara, Vauhini
A 2007 Jupiter Research
LLC survey indicates that only just over a third of companies with
fewer than 100 employees have Web sites, but experts note that even
small business owners with a little time and money easily can obtain
a Web presence. They need only begin by purchasing a domain name
from Go Daddy Group Inc., Tucows Inc., or Register.com Inc. for as
little as $10. While many small businesses spend $1,000 or more per
year on Web hosting, firms can have their sites hosted for free
through Microsoft Corp.'s Office Live Small Business, Weebly Inc.,
or SynthaSite Inc., among others. After completing these tasks,
small business owners can start building their sites, taking
advantage of the tools offered by free hosting services. The number
and type of Web pages will depend on the nature of the business; but
all companies should have a home page to welcome visitors, an
"About" page to spell out the firm's mission, a "Contact" page to
ensure that prospective clients can reach them, and a "Store" page
if they sell merchandise. If they deal with sales, firm owners
should open eBay or PayPal accounts to facilitate transactions; and
they should consider Google's AdSense service that places ads on the
site and ensures they receive a small payment whenever an ad is
clicked; however, they should keep in mind that some visitors are
turned off by ads. Finally, they should use keywords that describe
the business throughout the site and in page titles to boost the
site's placement in search engine results and take advantage of such
programs as Google Webmaster Tools to track site traffic.
Return to Headlines
How to Assemble an Employee
Handbook
Inc. Guidebook (08/08) Vol. 1, No. 5, P. 1
Many entrepreneurs find themselves too busy running their
company to think about how to run it, only creating company policies
when situations arise. However, creating policies in advance
provides a measure of legal protection in the event that an employee
sues for wrongful termination, harassment, or illegal
discrimination. While not lawsuit-proof, a handbook establishes
policies for the court and proves when the policy was put in place.
Furthermore, establishing employment policies with a progressive,
employee-friendly attitude can be a powerful tool for recruiting and
sustaining morale. To create an employee handbook, first look at the
big picture. Employee handbooks pit consistency against flexibility.
Emphasizing at the beginning of the handbook that the handbook
merely establishes general guidelines provides flexibility while
establishing best practices. Be sure to address the legal issues.
Harassment and discrimination guidelines must affirm that the
company is an equal opportunity employer, that the company will not
tolerate harassment or illegal discrimination, and outline the steps
an employee should take to report violations. Identify as generally
as possible the days and hours of the workweek, as well as rules for
breaks and meals, as well as guidelines for determining which
employees are salaried and which are hourly. Companies that work in
potentially dangerous environments should detail a safety policy
that meets state and federal regulations. Explain employee benefits.
Companies must allow for jury duty and workers' comp leave, and may
states demand other leave options, such as for military service.
Also outline any voluntary benefits, including insurance and
retirement benefits, and family and bereavement leave. Require
employees to acknowledge with a signed document that they have
received and read the handbook, and that they will seek
clarification on any unclear issue.
Return to
Headlines
Grow
Use
Collaboration as a Tool to Grow Your Small
Business
Michigan Live (08/21/08) Deaumud, Jennifer
The sharing of business information and ideas among
partners, suppliers, and customers is a reasonable and intelligent
approach toward building a successful small business (SMB), but few
SMBs use collaborative business strategies to create opportunities,
drive sales, and decrease expenses, writes Michigan Small Business
& Technology Development Center's Jennifer Deaumud.
Collaborating can be beneficial to SMBs in marketing, advertising,
distribution, personnel, cost sharing, accounting, and many other
areas. Some business owners try to form collaborative-business
strategies but are unsuccessful, while others believe that they do
not have time to engage in a collaborative effort. To make a
collaborative effort successful, small business owners must be able
to articulate the mission, vision, and objective of their company.
They also must create a business plan to break down the tasks of
running the business into goals to help identify challenges, which
will make it easier to identify areas for potential collaboration.
After identifying specific areas, focus on communications by
attending networking events to seek matches and collaborative
opportunities and participate in brainstorming sessions to identify
potential collaborators and establish objectives. After finding a
potential collaborator, negotiate a potential relationship and
define roles and expectations, establish metrics, and implement the
new relationship. Collaboration does come with some challenges,
including time and money, but new technologies have made
collaboration more efficient and easily accessible to small business
owners. Many SMBs collaborate through Webinars, wikis, and
Internet-based counseling to support their work partners.
Return to Headlines
Steps to Achieve Growth
Investor's
Business Daily (08/13/08) P. A3
Growth within a small
business creates new opportunities and excites and motivates
workers, but knowing where growth comes from and when is the right
time to expand a small business can be difficult. McKinsey analyzed
400 firms and found that boosting market share rarely drives growth,
and that the key is actually which market segments you choose to
compete in, even during slow periods. "Downturns present great
opportunities," says McKinsey's Patrick Viguerie. "Everyone knows
that, but no one acts on it." Viguerie and University of
Pennsylvania Wharton School professor David Wessels provide some
advice on growing your business. First, compare yourself to your
rivals. Viguerie says most managers know why their company is
profitable, but few understand those reasons relative to their
peers. Examine two-year changes in revenue, profits, and cash flow.
Be realistic about growth expectations. For example, when entering a
mature market segment, do not expect rapid growth. Sometimes growth
comes at a slower, but steady pace. Update the business and keep a
balanced portfolio that maintains the core of the business while
exploring growth opportunities. Use mergers and acquisitions to fill
business positions and to acquire new technologies, but be sure to
match purchases with judicious and timely divestments. Allocate
resources responsibly by giving them to strong leaders and managers,
instead of just pumping money into a division. Identify areas with
growth potential and allocate capital and attention to those areas.
Invest in how those areas are expect to perform in the future
instead of how they are performing today.
Return
to Headlines
Off Hours
Travel Slump Has an Upside: Deals on
Hotels
Wall Street Journal (08/28/08) P. D1; Jackson,
Candace
Although U.S. hotel room rates are predicted to
rise by approximately 2 percent this year, resort properties are
actually offering lower rates than 2007. This is attributed to the
rising cost of fuel and airline cutbacks, which have reduced demand
for once-popular resort destinations, including Florida and Hawaii.
Many cities and resort towns have also recently built new hotels,
offering additional supply at a time when demand has fallen
drastically. In order to attract visitors, many hotels are cutting
rates and offering incentives, such as a free night or free meals,
while others have chosen to not implement their annual rate
increases. Caribbean resort chain Sandals is even offering travelers
an airline credit of up to $550 per person for choosing to stay at
one of its hotels. Online travel agency Travelocity will soon launch
as "Race to Savings" promotion that will offer substantial discounts
on rates at popular resorts in Florida and Mexico through January
2009. Though resorts are typically the first to react to reduced
demand, many business hotels are also feeling the impact of high
travel costs. About 30 percent of corporations reported that they
have attempted to renegotiate their corporate rates, which are
historically set a year in advance.
Return to
Headlines
All the Right Moves:
GPS Devices Let You Go Anywhere
Open Air (08/08) P. 13
GPS navigational units were the most popular electronics
item last holiday season. Americans purchased over $100 million in
GPS devices during the three days after last Thanksgiving. One
reason for their rise in popularity is a significant reduction in
price that made the units more affordable. People are also becoming
more aware of how useful the technology can be. For this article
four GPS devices were tested for functionality and capabilities. The
Lowrance XOG did not perform as well as higher-priced units, but at
almost $200 less, it is a solid investment for a first-time buyer.
More expensive units have more advanced interfaces and offer more
options, including the ability to record your own voice for giving
directions and the ability to see nearby points of interest on the
route. At $499, the Magellan Maestro was the most expensive GPS
device tested, and although it offered good navigation, its user
interface was poor. The Garmin Nuvi 260W was the highest-rated GPS
device tested. Reviewers liked its easy set up and graphical
three-dimensional interface.
Return to
Headlines
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