Five “Ancient” Marketing Ploys That Still Work in the Internet Age October 28, 2011
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With the advent of Internet marketing people have been quick to abandon the wide range of advertising avenues made available to them prior to the web.
While forward thinking is certainly is not a bad idea, failure to incorporate surefire, time-tested strategies into modern marketing is a failure to utilize state-of-art technology to its fullest effect.
The following are five marketing techniques that sound like they belong in the old school, but are certain to find their audience in the Internet Age:
Kitsch/Camp
Old-time salesman who huffed and puffed their sales pitch from town to town had to think of ways to catch peoples attention. This often led to eccentric character development, obnoxious paint jobs, and memorable monologues. Today this marketing ploy continues to exist in the form of viral kitsch; stuff that’s so bad it’s good. Examples include the efforts of Vat19.com, a site dedicated to showcasing the most awkward of products via even more awkward YouTube videos, and the marketing success of the Snuggie.
Promotional Products
T-shirts with a company’s name printed on them and custom coffee mugs remain hot items for marketing your brand. You just have to get a little creative with them. Instead of brandishing an uninteresting corporate logo, brandish a fat QR code on the side of a mug or the back of a T-shirt. That way you invoke a reaction, which can result in an action, which would obviously be people scanning these items and being taken to your website via their mobile device.
Author: Chris Birk
Developing a Business Idea June 14, 2010
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Conventional wisdom says that your big idea for a small business will gradually develop into the exact replica of what you imagined when you came up with the idea. The reality for many business owners is that the first idea only serves as the kernel for the one that will eventually fly.
Chances are by the time you actually launch the business, your idea will be molded by market research, customer input, cost of development, and other information you learn in the research process. For this reason, it is important in the set-up stage not to become discouraged if you have to abandon part of your business idea, or even your entire idea. You will need flexibility and perseverance to keep your business afloat once you start, so applying it during the startup phase is good practice.
Unfortunately, some potential business owners abandon their ideas too easily believing that if an idea has flaws, the concept is unsalvageable. To help you avoid this trap, use the five instances of idea-roadblock listed here to determine how you can keep going if your idea isn’t perfect.
You’re hardly the first
Problem: Lots of people are already running businesses doing what you planned on doing.
Solution: Examine the field and see if there is still room for you. Often, lots of businesses cater to the same customer, but leave some small niche underserved. For example, if you planned on starting a dance studio and you find that there are already too many in town, there may be a market for someone who goes to private parties and teaches large groups of people who don’t have time to go to a dance studio. To find an underserved niche, look at the current offerings of your future competitors and think about what narrow markets you may be able to serve that they are overlooking.
Too late?
Problem: You are too late to market
Solution: Just because other companies beat you to market doesn’t mean you won’t be successful. In fact, the first company to market has to spend a lot of money educating buyers about why this new product or service is worth purchasing. You can also learn from the mistakes of your predecessors. For example, look at how Microsoft came into the spreadsheet market and took over with Excel after Lotus had been dominant with its 1-2-3 product.
Flat industry
Problem: Your research tells you the industry is flat.
Solution: See if you can look at the business a totally new way. For example, a recent article in the Harvard Business Review talked about a movie theater owner in Europe who recently entered a market that was saturated and suffering from a lack of customers. However, by starting a movie theater with huge comfortable seats, lots of parking, and other amenities that transformed the movie-going experience, he was able to pack his theater night after night.
Prohibitive costs
Problem: Set-up costs are too high.
Solution: Start out as a contractor to a business that you want to create. For example, if you really want to own a bakery, but you cannot afford rent, start out by baking a few goods and supplying them to existing bakeries. Over time you can save enough money to have your own store.
Lack of information
Problem: You can’t find information about the industry to determine if your idea is viable.
Solution: The best way to learn about an industry is to talk to small business owners who are in it. Many entrepreneurs will be willing to share a few hours with you to explain how they got started, how the business works, and industry pros and cons. As long as you are not potentially direct competitors, you will find many entrepreneurs helpful. You may need to call 50 people to find five who will help.
Factoring – A Short-Term Business-Financing Alternative November 11, 2008
Posted by SBDC in Biz Financial Tips, Small Business General.3 comments
Occasionally a small business owner is caught between the proverbial rock and a hard place in regards to cash flow. Employees, vendors, suppliers and utilities must be paid, yet your customer’s have decided to delay paying your invoice until 30 – 60 – 90 days from now. Adding insult to injury, the bank cancels your line of credit and asks for repayment. As a small business owner, you may not have an accounts receivable department dedicated to collections. Usually, you or your bookkeeper review the A/R aging report and make calls when time permits. Do you have any options other than a cash infusion from your personal funds, another loan, contacting family and friends or even calling Lonnie, ‘The Nose’, to ask the local mob for a loan, perhaps at 10% a week?
Factoring your outstanding receivables might be a solution. A ‘factor’ will accept your receivables and advance you a percentage within two to five days. In essence, they become your accounts receivable department. They contact your customer requesting that payments be sent to their office. They may ‘qualify’ your clients, rejecting invoices from a client who is in poor financial condition. You get the funds to operate, your bills are paid and you can concentrate on generating sales and growing the business. Sounds great, doesn’t it.
Finding a factor is relatively easy, do a Google® search and several thousand hits will pop up. Selection is the challenge. Some things to consider: Do they know your industry? Can you get local references? How long have they been in business? What are the set-up and transaction fees? Do they have an on-line system that allows you to monitor the process? How will your customers react? Will your customer contracts allow you to factor invoices? What type of contract is required? Can you utilize their services on an as needed basis without multiple set-up fees? In other words, be wise and discuss this option with both your attorney and your accountant.
Finally, what is the cost for factoring? That depends, but here is an example. On Monday, you submit $20,000 worth of invoices from last week. The customers are dependable, with minimal possibility of not paying. On Wednesday, your bank receives a wire transfer deposit of $14,150, or 75% of the face value, less 3% for the factoring fee and a $250 set-up fee. At the end of 30 days, you receive another $2,000. At the end of 60 days, you receive another $2,000 and the return of a $1,000 invoice a customer has not paid.
For a young business, factoring invoices may be an option. More expensive than a working capital loan, but you receive operating funds now, without jumping through too many hoops. You can concentrate on growing your business, but with additional overhead. Can your pricing structure and competitive environment support this cost? You make the call.
Making a Deal. Can you ignore your overhead? April 25, 2008
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In a production environment, when the manager, the accountant and the top salesperson meet to discuss a special order, sparks sometimes fly, tempers explode, and both the customer and the company can suffer. You might think the writer is out to lunch when the suggestion of ignoring your overhead costs is considered possible, but please continue reading. Everyone knows that all costs must be recovered if a company is to succeed. However, if a customer requests special pricing for a particularly large order, the normal costing – pricing strategy would result in a substantially different price than what to customer is requesting. Let’s look at an example.
Widgets-Is-Us is well known in the industry, has a strong customer base, and production totals around 100,000 units per month. Per unit costs break down as follows:
Direct Material: $4.00
Inbound Freight: $0.75Total Direct Costs: $4.75
Indirect Costs:
Warehousing: $0.37
Insurance & Taxes: $0.28
Spoilage: $0.08
Utilities: $0.02
Billing: $0.01
Other Overhead Charges: $1.47Total Indirect Charges: $2.23
Corporate Overhead Charges: $2.28
Total Unit Cost: $9.26
Mega mart, a prime customer has approached the company with an offer to purchase 90,000 units, with delivery over the next six months, for their brand new Extraordinary Mega mart, opening in Houston. List price on this item is $37.00, with the lowest price for a 10,000 piece order set at $17.95, with the salesperson earning a 10% commission. Mega mart’s offer is $12.95 each with payment terms of 2%, net 10 days from verified pick up date. Mega Mart will use their own trucks to pick up each shipment as they are deadheading back to the distribution center. Now, would you accept the order?
Before you answer the question, you need a few more facts. First, the plant’s capacity is 100,000 units per month, but is operated at 80,000 units to avoid excessive wear and tear. Second, all pricing is based producing 80,000 units. Third, the salesperson, recognizing the potential coup for his or her career, is willing to accept a 6% commission on this order. Finally, sales over the previous 18 months have floated between 77,500 units to 82,500. Now, what is your decision?
If answered no, you are probably in the majority. However, you just lost a rather profitable order. First, since overhead charges are calculated based on normal monthly production runs, each additional unit produced costs you only $4.86, plus the sales commission of $0.777, plus the cash payment discount of $0.259 for a grand total of $5.896. Your net profit is $7.054 each, $105,810 per month or a grand total of $634,860. The key here is to identify those costs directly affected by the order. Direct materials will not change. Utilities, spoilage and billing will not change. All other costs are immaterial as they are covered by the standard production run. You may incur some additional repair and maintenance costs, but you could negotiate lower raw materials pricing. If a customer asks for a special order, with special pricing and terms, look at the whole picture, not just the numbers on the accountant’s ledger.
Seven SBA Loan Myths March 26, 2008
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Most small business owners have considered financing at some point in the life of their business. You may have considered expansion, buying new equipment, more inventories, purchasing real estate, or just looking for a new capital infusion. But the confusion surrounding SBA loans may perplex or frustrate even the most astute entrepreneur. Conflicting information from your trusted advisors or the internet may not help to bring you closer to separating fact from fiction.
There are many myths surrounding SBA loans. Some of these myths are substantial and strong enough to discourage a small business owner from expanding, getting out from under onerous debt, or even staying in business. Understanding how an SBA loan works and how to successfully get one for your business is a matter of separating the facts from the myths. You may recognize yourself in some of the following misconceptions of SBA loans. You will finish this article more informed and in possession of the facts. The facts regarding SBA loans can help you to be a better, more successful small business owner.
The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. The SBA recognizes that small business is critical to America’s economic recovery and strength, to building America’s future, and to helping the United States compete in today’s global marketplace. Although SBA has grown and evolved in the years since it was established in 1953, the bottom line mission remains the same. The SBA helps Americans start, build and grow businesses. Through an extensive network of field offices and partnerships with public and private organizations, SBA delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam.
THE 7 MYTHS
Myth #1- All banks evaluate the risks of a SBA loan request with the same viewpoint.
Financial Fact- Although all banks are subject to the same SBA Guidelines, the rules are subject to different interpretations with respect to analyzing a particular loan request. Some banks may be willing to take greater risks. Some banks will take a more optimistic evaluation of the facts and your business’ future success. Therefore, choosing the best bank for your SBA loan needs can make the difference between loan approval and denial.
Myth #2- All banks offer the exact same types of financing for SBA loans.
Financial Fact- Loan pricing and structure can vary substantially at different banks. Interest rates on SBA loans are based on the prime rate plus a margin. Some banks are more competitive in price to be leaders in SBA lending. Some banks will carve-out a provision for accounts receivable and inventory financing from their loan agreement to permit additional third party commercial financing in addition to the SBA loan. For the same loan, some banks will require additional collateral guarantees, such as a lien on your house. Evaluating the adequacy of such additional collateral guarantees is also subject to interpretation.
Myth #3- It takes too long to get through the red tape of SBA loans.
Financial Fact- This may be true if the bank has to deal through the SBA bureaucracy. Many lenders have “delegated authority” to directly approve a SBA loan. They can provide a full written loan proposal within 48 hours, and some provide a loan commitment within a week of receiving a full loan package. Closing the loan depends on the specific requirements of each transaction, but takes no longer than closing a conventional commercial loan. If the loan requires an appraisal, this may add several weeks to the process.
Myth # 4- SBA loans are only for start-ups or small companies, and not for “big” companies.
Financial Fact- The SBA defines a qualifying small business as “one that is independently owned and operated and which is not dominant in its’ field of operation.” The SBA does not discriminate between start-ups or established businesses, and company size requirements are not the same across the board. The actual standard used in determining qualification is calculated by number of employees or average annual receipts and varies by industry. For example, in the manufacturing and mining industries, a business can have no more than 500 employees to qualify. Average receipts in most retail and service industries can total no more than $5.5 million. The SBA size regulations are located at sba.gov. Most lenders can tell you immediately if your business qualifies regarding income and number of employees.
Myth #5- SBA loans require a lot of collateral
Financial Fact- SBA lenders do consider collateral when reviewing a loan application, but they also look at several other factors. Your character, your creditworthiness with respect to you history of paying your debts, your management capabilities, and your equity contribution are just as important as having collateral. SBA lenders look at your business as a whole, and although they will not deny you loan solely due to lack of collateral, it can be a contributing factor if there are other weak spots in you application. Ultimately, your ability to repay the loan from your business’s cash flow is the most important consideration.
Myth #6- SBA loans are loans from the Federal Government.
Financial Fact – SBA loans come from commercial lenders who participate with the SBA in SBA lending. The Small Business Administration is an agency of the executive branch of the Federal Government. It establishes guidelines that lenders must follow when giving SBA loans and the SBA backs each loan with a guarantee that eliminates some of the risk to the lender. The actual funds for each loan will come directly from the financial institution. The SBA loans are backed, up to the amount of the guarantee, by the SBA.
Myth # 7- SBA loans are a loan of last resort.
Financial Fact- Lenders that offer SBA financing should be one of the first places a start-up or small business owner goes when seeking a business loan (unless you have a friend or relative willing to invest in your business). The express purpose of the SBA is to help Americans start, build, and grow businesses in order to promote a healthy economy. SBA loans are structured with longer terms, lower down payments, and can have lower rates than conventional commercial loans so small business owners have increased cash flow. Going to a lender for a SBA loan is especially valuable for business owners seeking loans who may not have collateral required with typical commercial loans. There is a reason the SBA is the largest single financial backer of U.S. businesses in the nation.
You need to assess your business’s current health and growth potential. Would it benefit your company if you refinanced old debt? Could you increase business with more equipment? Would a facelift bring in more customers? Would a combination of SBA financing with commercial financing for accounts receivable and inventory help you succeed?
It is critical to your business that you know not only when to seek financing, but how much you will need, and what is available. Many businesses suffer of even fail because their owners do not take out loans when they need to; or they fail because their owners do not borrow enough. Understanding your options will help you determine these things, which can in turn help your business flourish.
Conclusion: the Del Mar College Small Business Development Center can help you separate the myths from the financial facts. They can find the best SBA loans. They can evaluate the best overall financing structure for your particular situation with lower interest rates, longer payback times and lower upfront costs. They can help you understand the big picture and create new opportunities for your consideration.
10 Critical Cash Flow Rules February 27, 2008
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Cash flow problems can kill businesses that might otherwise survive. According to a U.S. Bank study, 82 percent of business failures are due to poor cash management. To prevent this from happening to your business, here are my 10 cash flow rules to remember.
1. Profits aren’t cash; they’re accounting. And accounting is a lot more creative than you think. You can’t pay bills with profits. Actually profits can lull you to sleep. If you pay your bills and your customers don’t, it’s suddenly business hell. You can make profits without making any money.
2. Cash flow isn’t intuitive. Don’t try to do it in your head. Making the sales doesn’t necessarily mean you have the money. Incurring the expense doesn’t necessarily mean you paid for it already. Inventory is usually bought and paid for and then stored until it becomes cost of sales.
3. Growth sucks up cash. It’s paradoxical. The best of times can be hiding the worst of times. One of the toughest years my company had was when we doubled sales and almost went broke. We were building things two months in advance and getting the money from sales six months late. Add growth to that and it can be like a Trojan horse, hiding a problem inside a solution. Yes, of course you want to grow; we all want to grow our businesses. But be careful because growth costs cash. It’s a matter of working capital. The faster you grow, the more financing you need.
4. Business-to-business sales suck up your cash. The simple view is that sales mean money, but when you’re a business selling to another business, it’s rarely that simple. You deliver the goods or services along with an invoice, and they pay the invoice later. Usually that’s months later. And businesses are good customers, so you can’t just throw them into collections because then they’ll never buy from you again. So you wait. When you sell something to a distributor that sells it to a retailer, you typically get the money four or five months later if you’re lucky.
5. Inventory sucks up cash. You have to buy your product or build it before you can sell it. Even if you put the product on your shelves and wait to sell it, your suppliers expect to get paid. Here’s a simple rule of thumb: Every dollar you have in inventory is a dollar you don’t have in cash.
6. Working capital is your best survival skill. Technically, working capital is an accounting term for what’s left over when you subtract current liabilities from current assets. Practically, it’s money in the bank that you use to pay your running costs and expenses and buy inventory while waiting to get paid by your business customers.
7. “Receivables” is a four-letter word. (See rule 4.) The money your customers owe you is called “accounts receivable.” Here’s a shortcut to cash planning: Every dollar in accounts receivable is a dollar less cash.
8. Bankers hate surprises. Plan ahead. You get no extra points for spontaneity when dealing with banks. If you see a growth spurt coming, a new product opportunity or a problem with customers paying, the sooner you get to the bank armed with charts and a realistic plan, the better off you’ll be.
9. Watch these three vital metrics: “Collection days” is a measure of how long you wait to get paid. “Inventory turnover” is a measure of how long your inventory sits on your working capital and clogs your cash flow. “Payment days” is how long you wait to pay your vendors. Always monitor these three vital signs of cash flow. Project them 12 months ahead and compare your plan to what actually happens.
10. If you’re the exception rather than the rule, hooray for you. If all your customers pay you immediately when they buy from you, and you don’t buy things before you sell them, then relax. But if you sell to businesses, keep in mind that they usually don’t pay immediately.
To read more from articles like this visit Entrepreneur.Com
What are Employment Taxes? February 8, 2008
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Small business owners often have great responsibilities while operating and managing a business. Before you become an employer and hire employees, you need a Federal Employer Identification Number (EIN).If you have employees, you are responsible for several federal, state, and local taxes. As an employer, you must withhold certain taxes from your employees pay checks. Employment taxes include the following.
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Federal income tax withholding
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Social Security and Medicare taxes
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Federal unemployment tax act (FUTA).
Federal Income Taxes/Social Security and Medicare Taxes
You generally must withhold federal income tax from your employees wages. To figure how much to withhold from each wage payment, use the employee’s Form W-4 and the methods described in Publication 15, Employers Tax Guide and Publication 15-A, Employers Supplemental Tax Guide.
Social security and Medicare taxes pay for benefits that workers and families receive under the Federal Insurance Contributions Act (FICA). Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Medicare tax pays for benefits under the hospital insurance part of FICA. You withhold part of these taxes from your employee’s wages and you pay a matching amount yourself.
Which form do I file to report federal Income Taxes, Social Security, and Medicare taxes?
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Form 941, Employer’s Quarterly Federal Tax Return
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Form 943, Employer’s Annual Federal Tax Return for Agriculture Employees (For use by farm employers)
Federal Unemployment (FUTA) Tax
The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. You pay FUTA tax only from your own funds. Employees do not pay this tax or have it withheld from their pay. Report FUTA taxes on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.
Depositing Taxes
In general, you must deposit income tax withheld and both the employer and employee social security and Medicare taxes (minus any advance EIC payments) by mailing or delivering a check, money order, or cash to a financial institution that is an authorized depositary for Federal taxes. However, some taxpayers are required to deposit using the Electronic Federal Tax Deposit System (EFTPS). For additional information, refer to our Employment Taxes for Small Businesses page.
Certain Taxpayers May Now File Their Employment Taxes Annually
To reduce burden for certain small business taxpayers, employers who have an Employment Tax liability of $1,000 or less for the year will now file Form 944, Employer’s Annual Federal Tax Return, instead of Form 941, Employer’s Quarterly Federal Tax Return. Eligible taxpayers will be notified by mail.
For references, related topics and more information visit the IRS website.
Have Tax Questions? January 28, 2008
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With tax season upon us many small business owners need assistance getting organized and prepared for April. The IRS has compiled a Tax Center to answer some of these questions.
On the IRS website you can find common forms and publications or use the Electronic Federal Tax Payments (EFTPS) to pay your taxes online. If you prefer meeting with someone in person you can locate your local tax office or the Taxpayer Advocate Service that can help taxpayers resolve problems with the IRS and recommend changes that will prevent problems.
The IRS also offers answers to deduction questions, business expenses, Employer Identification Numbers (EINs), and information regarding self-employeed individuals. Also educate yourself on tax scams, how to spot them and avoid them. To get more information on these questions and other common issues visit the IRS Tax Center by clicking here.
Find and Finance Sales to Foreign Buyers May 18, 2007
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We are pleased as punch to be offering this fantastic opportunity for your business. If you are a small business owner interested in exporting, we strongly advise that you attend this event. The Export-Import Bank of America will be discussing the financial assistance they can provide, so that you can do business with foreign buyers.
TRADE SYMPOSIUM
DATE: May 24, 2007
TIME: 8:30 – 12:30
LOCATION: 3209 S. Staples RM 167
REGISTRATION: Call (361) 698-1021 to register. Cost: $39
Sign up online now!
Discover how to find international buyers and use trade finance tools to win international sales and grow your business.
Let trade and export finance professionals guide you through the maze of export challenges and demonstrate how to obtain valuable trade or research information, enter new markets, minimize risks, improve cash flow, and effectively ship your products to market.
Designed especially for U.S. exporters, this half-day interactive symposium will review the many products and services available from the Department of Commerce (U.S. Commercial Service), the Small Business Administration (SBA), the Export-Import Bank of the United States (Ex-Im Bank).
During this event you will learn how to:
· Identify New Buyers and Markets
· Locate and screen buyers, distributors, and partners to meet your business needs
· Tap into foreign market information from experts in 84 countries
· Use e-commerce tools and on-line export declaration filing
· Secure Export Financing Support
· Obtain working capitial loans to fulfill your sales orders
· Offer competitive credit terms to your foreign customers
· Obtain Financing Support for You and Your Buyers
· Protection against nonpayment
· Get Your Products to Market
· Look at the macro view of global logistics
“Reserve your seat now before this Symposium sells out!”
Claiming your seat at our "U.S. Trade Symposium" on May 24th in Corpus Christi is easy…
Need Cash to Prosper? August 12, 2006
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If your small business needs a bit of money, there are plenty of options available. You could visit your personal bank, tap into a credit card, or visit Prosper.com. I was recently made aware of this site, and I thought I’d shed a little light on this site, because it might be of use to local small businesses. Basically, Prosper connects lenders with people who are in need of a quick loan in an eBay style environment.
- no collateral needed
- no prepayment penalty
- a fixed rate over three years
Prosper.com is definitely an attractive alternative if you are looking to raise small amounts of money, and the terms are also pretty reasonable:
So, how does Prosper work? Well, people who need money request it, and other people bid for the privilege of lending it to them. Prosper makes sure everything is safe, fair and easy. According to Inc Magazine, “Borrowers sign up for a free membership in Prosper, which performs a basic credit check and assigns each member a credit rating. Next, borrowers post loan requests, listing the desired loan amount (up to $25,000), the maximum interest rate they are willing to pay, how they intend to use the loan, and the duration of the auction (between three and seven days), along with a credit score and debt-to-income ratio provided by Prosper. Borrowers then sit back and wait for lenders to offer loans at interest rates either at or below the preset cap. If a loan is fully funded, Prosper combines the bids with the lowest rates into a single loan and deposits the cash in the borrower’s bank account within a few days. Prosper handles all the back-office work, including payment collections. In return, borrowers pay 1 percent of the loan amount up front and lenders pay an annual fee of half a percent.”Please note that landing a loan on Prosper won’t always be easy. Here’s how one business owner navigated the process.
