Tag Archives: small business
By Charles H. Green
Technology advancements over the past 20 years have had a significant impact on busines and industry, which has led to major changes in output, costs, productivity, employment, marketing and connectivity among other business metrics. Small companies have often been on the leading edge of these changes because they are more nimble and will often realize faster improvements (and profits) by adapting sooner.
The National Small Business Association (NSBA) recently conducted their second survey of technology adoption and dependency among their members and posted some interesting results. Among their key findings was a marked increase in usage of laptops also, from 67 percent in 2010 to 84 percent in 2013.
An interesting tangential finding was the drop in the number of small-business owners who pay an outside firm to handle their information technology (IT), which they asserted was likely driven by two factors: the economic challenges small businesses have faced in the past few years; and improved IT platforms and the growing reliance on–and therefore need to understand—these technology tools and platforms.
Other results from the small companies surveyed:
41% use tablet devices (which were not available during the 2010 survey);
60% allow some employees to telecommute (an increase of over one-third);
50% don’t have broadband or fast-speed internet because it’s still not available;
27% still don’t use social media to promote themselves.
Why is technology a ‘finance issue’ that should concern business lenders? Because it represents a harbinger of the future horizon for the success of that business.
1. Adaptation of new technology signals better productivity is ahead at a cheaper price;
2. Smaller firms can compete more effectively when visable through the web and recognized in social media. Without breaking into these frontiers, that business will be lost to anyone trying to find it.
3. Mobility will be the most heavily-travelled portal through which future consumers conduct business.
Read more at NSBA.
By Charles H. Green
A review by the U.S. Government Accountability Office (GAO) found that U.S. Small Business Administration’s (SBA) Patriot Express loans, valued at $703 million, have a higher default rate than other loans under SBA’s other loan guarantee programs. The GAO report also said that losses for Patriot Express have exceeded its income.
“The Patriot Express program’s overall default rate was significantly higher for smaller loans, especially for loans below $25,000 (20 percent),” according to GAO. And it was revealed that one lender accounted for more than 64 percent of these smaller loans and experienced higher default rates than the remaining lenders.
From 2007 through 2012, losses in the Patriot Express program exceeded income by $31.1 million (not accounting for future fee revenues or funds recovered from loans in default). Patriot Express has continually operated in the red.
In 2010, SBA extended the Patriot Express pilot through 2013 to allow time to evaluate the effect of the program. To date, SBA has not evaluated the program or established a plan of what it intends to do to evaluate it. SBA officials reported to GAO that they “focused their resources on evaluating 7(a) loans because there are many more of them and, therefore, they pose a greater risk to SBA than Patriot Express loans.”
GAO also asserted that SBA’s internal controls over lenders may not provide reasonable assurance that Patriot Express loans are only made to eligible members of the military community and that only these members benefit from loan proceeds. This finding may lead to more direct consequences to participating lenders as this evaluation continues.
Read more at GAO
by Sara Miller
Many of us have that sure-fire business idea mulling in the back of our minds. That doesn’t make us entrepreneurs, however. Entrepreneurship demands action—one step after another, until your business is launched and thriving. Whether you’re just setting out on the journey toward entrepreneurship or well down the path, take the next step to make your dream a reality.
Stage 1 – You Have an Idea
Every good business starts with an idea. Maybe you want to launch a vegetarian taco truck or start a virtual personal assistant firm. Your next step is to develop a business plan that outlines your first three to five years of business. SBA.gov suggests the following outline for business plans:
• Executive summary – A quick snapshot of your business
• Company description – Who you are, who you serve and what you do
• Market analysis – Who your competitors are and what separates you from them
• Organization and management – What organizational structure best suits you
• Service or product – What you sell and what your product lifestyle is
• Marketing and sales – How will you market your business
• Funding request – Who will fund your business and how will you ask for money
• Projected finances – What do you hope to make per year
• Appendix – Additional information relevant to your business, such as licenses and permits
Stage 2 – You’ve Completed Your Business Plan, Now What?
Your next step is to work toward the achievable goals outlined in your business plan. Many young businesses need capital to invest in equipment and infrastructure. A business credit card can help you make these initial purchases at a time when your cash flow may be limited. According to the Better Business Bureau, a new business credit card can actually help you establish good credit and may even have a reward or loyalty component.
Stage 3 – You’re Hiring Your First Employee
That credit card and business plan helped fuel initial growth, and now you need to hire an employee to work toward launch. As DailyMuse.com notes, having an employee dedicated to reaching your goal can help you get there that much faster. The site suggests hiring as soon as you can afford to do so and investing in the potential of a passionate employee rather than choosing someone with demonstrated experience who may not be passionate about your business. If you have multiple stakeholders, have everyone on the team interview that person to ensure a strong cultural fit before hiring.
Stage 4 – You’re Ready to Launch
All your initial goals have been accomplished, and you’re ready to launch your business. Your next step is getting the word out about your products and services.
As a small business, you probably don’t have a marketing maven on hand. Take advantage of social media to connect with other local businesses in your field of expertise, find potential clients or customers and expand brand awareness. Marketing Land suggests that you pick a metric you’re interested in measuring—for example, customer service or brand awareness—and find ways to measure your marketing and social media outreach to see if you’re increasing your target metric. Track how quickly you gain Twitter followers or Facebook fans to see what tactics help expand your reach.
Stage 5 – Steps Toward Stability
After the initial buzz of a grand opening dies down, your business’ success will depend on regular patronage and stability. If you can’t imagine your business failing, taste this grain of salt: half of small business will fail within the first year, according to Smallbiztrends.com, and a staggering 95 percent will close shop within five years.
Ups and downs are inevitable. The businesses that survive struggles usual have a stable base of clients, customers and partners who help keep the lights on. As you embark on small business ownership, build relationships that result in continual business.
A tip: The little things make a difference. Remember your customers’ names, ask about their families and do the other things larger competitors can’t.
From first grade through graduate school, “B” was never in Sara’s vocabulary. In addition to being a perfectionist, she has always been fascinated by the anatomy of successful start ups.
A clean, accessible accounting system that accounts for every transaction is a requirement for every small business, especially when the company begins to realize increased daily sales.
Trying to keep track of every transaction manually with a paper system can be a nightmare, often leading to missed items and a backlog in processing the postings. Since you also need to know current cash flow and prepare for critical tax reporting and payments, how do you handle all of this efficiently and comprehensively? One way to simplify and make things easier could be going plastic as soon as your doors open.
With electronic payment so widespread, accepting “plastic” payment allows a company to process both credit and debit cards on most of the major networks. Doing so creates easy-to-manage records and paperwork for accounting purposes. Accepting credit/debit card payment also allows a business to be paid immediately rather than waiting for a large personal check to clear.
For small businesses, cash flow is critical. Receiving sales funds as quickly as possible helps a business owner manage his or her company finances on a more predictable basis, paying off vendors in a timely manner. With credit card payments, bounced checks and cash flow hiccups are eliminated. The business knows exactly when and what payment has arrived and can use those funds immediately.
Going plastic also allows a small business to integrate better with e-commerce. Most customers buying goods or services online use a credit card. Small businesses that accept such payments access wider markets, regardless of distance or even country, because the credit card processing companies manage the risk and movement of payments electronically. The customer enjoys risk-free purchasing and the small business enjoys a wider portfolio of customers not possible with cash or check payments.
For tax reporting purposes, most card processing services provide easy-to-download activity records that break out incoming and outgoing funds, the payer and payee, amounts, dates, and what the transaction covered. These activity logs are actual transaction records that are very useful as supporting documentation for tax reporting. So instead of chasing various receipts all over the place, a small business has all it needs on one clean report that can’t be easily disputed in an audit. This reporting format works well for both reporting sales tax as well as business income taxes. Further, the reporting is easily imported into major financial off-the-shelf software programs, producing even easier financial management benefits.
Finally, customers tend to spend more via a credit/debit card payment versus cash. Because the money isn’t due right away, customers find it easier to purchase higher cost items. That in turn means larger sales per transaction for small businesses, which is a good thing when every revenue dollar counts. Up-selling becomes easier too because customers are not concerned about cash in hand.
Using credit cards for your business is a valuable transaction tool and produces greater revenue as well as easier on-the-go financing and important tax records. Smart businesses take advantage of all opportunities, including available payment tools. Go plastic today!
About the author
Kristen Gramigna is Chief Marketing Officer for BluePay, a merchant services provider and also serves on its Board of Directors. She has more than 15 years experience in the bankcard industry in direct sales, sales management and marketing.
According to a survey conducted by American Airlines in 2011, nearly half of the small and medium-sized businesses (SMBs) that responded indicated that 10 to 24 percent of their annual budget is allocated for travel expenses — and nearly all indicated that they are actively controlling airline costs. If your small business falls into those categories, we have some cost-saving travel tips for you (courtesy of the U.S. Small Business Administration)!
Use technology wisely to save on airfare. This includes online tools like Skype, Webex and Face Time that can connect you with partners, customers and satellite offices at little to no cost. Consider equipping your field reps or employees working remotely with tablets, smartphones or laptops to make it easy to interact with them. As an added plus, you can use a camera-equipped device to inspect property, equipment or products at a supplier’s or customer’s location. For more on how tech tools can make virtual meetings a part of your business, read this.
Reap the benefits of the sharing economy. If you’re looking to save $$$ on expenses like car rentals and hotel rooms — and don’t mind trying some non-traditional options — check out group sharing websites like ZipCar and ZimRide for the former and Airbnb and CouchSharing for the latter.
Use loyalty programs and business credit cards to save money. According to the same American Airlines survey cited earlier, SMBs say that enrolling their company in a B2B loyalty program is one of the top three methods of maximizing the value of their travel. If business travel often takes you to the same locations and hotels, consider establishing a corporate account that offers discounted rates with a hotel chain. Additionally, the SBA offers some tips for finding the right business credit cards that offer rewards and points programs here.
Shop bargain travel sites (with care). It’s possible to find deals on travel discount sites, especially if you’re combining a hotel, car and air ticket. Shop around, then cross check prices against the hotel or airline’s website or by phone to ensure that you’re getting the best deal available. Providers may match any online specials offered by discount sites, and their cancellation policies may be friendlier.
Manage your costs on the road. There’s an app for that! One to try is Wi-Fi Finder, a free app that lets you search over 500,000 Wi-Fi hot spots (free or paid) around the world to save you hotel Wi-Fi charges and keep you connected. For tracking and organizing your travel budget, the Travel Pocket app (available for a small fee) gives you parameters for time, location and category and lets you convert your reports into a spreadsheet.
Be smart about business expense tax deductions. You probably already know that you can deduct the cost of mileage, airfares and lodging on your tax return, but did you know you can also deduct 50 percent of meal costs, tips, and even dry cleaning or laundry you need doing on the road? The SBA offers more information on deducting your small business travel expenses on its http://www.sba.gov/community/blogs/community-blogs/small-business-cents/going-road-how-deduct-your-small-business-trave.
Bon voyage and happy savings!
About the Author:
Beth Longware Duff is a professional editor and award-winning writer whose work on a wide variety of topics has been published in print and electronic media. She currently writes on a wide range of topics dealing with electronic payment processing and small business merchant services for Merchant Express.
In the US many people use personal credit cards to finance their business transactions. Business people are eager to use credit card accounts because their higher credit limits enable the business to access more cash toward business objectives.
An owner can avoid investing their own money while setting up a business by opting to use a credit card to tap into extra funds. But they should be cautious and exercise discipline to pay back the full monthly charge amounts otherwise face an insurmountable level of debt for the young enterprise.
Here are a few other risks involved with using credit cards that you should be aware of:
Accumulated debt: When using credit cards for business transaction, the owner risks spending money they may otherwise avoid if relying solely on cash. Therefore it’s advisable to track all your expenses and be aware of which ones were spent from credit accounts. Limit them to what you believe you will be able to repay in the next 30 days. If you will dedicate subsequent income receipts to be applied toward paying off your credit charges, then you avoid accumulating long term debt.
Fraud and Theft: Identity theft and credit card fraud are two serious risks associated with credit card usage, so be careful as to who you provide your account information to. Also be aware of the charges you make and confirm that your monthly statements do not contain others Charles that you did not make. Don’t pay for charges you did not make, which you are not legally responsible, but rather report them immediately to the lender.
Never disclose your credit card PIN number to anyone – it’s designed only to be used either at an ATM, through the telephone keypad or online.
Avoid prepaid credit cards (if you qualify): Apply for a regular credit card to avoid the risk of loss from misplacing or theft of a prepaid card. You can cancel a regular account card with a maximum $50 loss, but the prepaid account balance will be irretrievably lost.
Credit History: Avoid the adverse consequences to your credit history by paying all bills, especially credit card accounts on time or even ahead of schedule. Be aware that some low-interest accounts have a zero tolerance for your payments being received even being one day past the due date. Schedule it and all bills to arrive safely ahead of time to build and protect a good credit rating.
High interest rate: Late payments, poor credit histories and using the accounts for “cash advances” rather than purchases raise the interest rate charged by lenders. Payoff these sums as quickly as possible to lower borrowing cost and work toward performing better on your credit accounts to improve your score.
Christina Jones is a contributing writer to many financial publications and has written several articles on debt relief programs and Chapter 7 and 13c bankruptcy. Her expertise is in debt finance.
Charles H. Green is Executive Director of Small Business Finance Institute that educates business owners about finance. He is the author of The SBA Loan Book, 3rd Edition (Adams Media).
Businesses seeking borrowed funds need to be cognizant of the cost of leveraged money. Understanding how lenders determine and assess borrowing costs, or interest, gives the owner a tool with which to further evaluate the feasibility of borrowing money. Read More
Businesses seeking debt financing need to be cognizant of the cost of leveraging money. Understanding how lenders determine and assess borrowing costs, or interest, gives the owner a tool with which to further evaluate the feasibility of borrowing money.
Knowing how interest rates are determined is also useful for developing strategies to lower interest costs where possible and for knowing when the best rate has been negotiated for your situation. Read More
In the today’s globalized world, ease of movement has never been greater, and it is sometimes difficult for persons of different origins to communicate effectively. America has always had a multicultural social fabric, with the historic swelling ranks of immigrants growing our population since the very founding of the 13 colonies.
Today our cultural mix continues to be a blur of a faces with many different features. Distinguishing Burmese from Vietnamese, Austrian from German, or Nigerian from Ghanaian can be challenging for the average American without practiced interaction. Read More
Lenders have many criteria to consider when deciding whether to provide financing for your business operations, and all start with the traditional examination of capacity, capital, credit, collateral, and character. But, make no mistake. Regardless of the other relative strengths you may possess, it all comes down to character.
Lenders have to be assured that prospective borrowers have the ability to perform well enough to generate profits to repay their financing. They will ensure that the borrower has a vested interest in the operation with their own money, and that there is always a secondary source of repayment from which they can ultimately get out of a deal. Read More