Five Ways to Make an Impact and Grow Your Business March 5, 2014Posted by SBDC in Small Business General.
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Do you have a hard time remembering the name of someone you just met? Don’t worry, you’re not alone. People forget who you are too. And when you’re trying to grow your business, being forgotten can be bad news. So, what can you do to be more memorable and make a big impact on others? Sure, you could dress unusually or give yourself a funny nick name – that might work, at least initially. But, for long-term success, you’ll be much more memorable if you simply make positive impressions on others and add value to their lives.
Here are five techniques you can use to make an impact on your customers, acquaintances and business partners:
Mail Them a Handwritten Note
We seldom receive handwritten mailings anymore – this is what makes them so special. The next time you mail something to someone you know, send it in a hand addressed envelope with a handwritten note. Your envelope will be the first one they open and the most memorable piece of mail they receive all week (or month).
Send Them Some Useful News and Information
Next time you read a magazine or newspaper, think about who you know. Chances are, someone on your contact list would be interested in reading that article too. Clip it and send it – along with a handwritten message. You can also email web articles, send suggestions on a great book you’ve just read, or give them a heads up about an upcoming networking event. You’re not selling a thing – just offering value.
Talk About What Interests Them
A big part of being memorable is being likable. It’s hard to like someone who only talks about themselves or their services. It’s like listening to an infomercial – boring! Figure out what your customers like to do when they’re not at work. Do they like to cook, love the Washington Redskins, fly fish, or have 17 grandchildren? These things are important to them. If you encourage them to talk about their interests, you will be VERY memorable.
Buy them a Cup of Coffee
It can be hard to build connections during short phone calls or emails. If you want to get to know someone better – invite them out for a cup of coffee. You’ll have some extra time to get to know them, and they won’t feel like they’re giving up hours of their time. Think about some subjects you can talk about prior to your meeting. Keep the conversation light, but make the most of your time. Don’t just sit there, sipping away those precious minutes together.
Introduce Them to Someone you Know
I’ll bet that many of the people you know could benefit from meeting each other. Maybe a friend of yours writes a blog or is President of an organization that could help one of your contacts. Or, maybe they’re both looking for an early morning running partner. Think about your network of friends and associates and find creative ways to help them to connect. You’ll help build their network and yours as well.
Making a big impact isn’t easy and it doesn’t happen overnight. It takes time and persistence. But, if it was easy, everyone would be doing it, right? So, starting today, think about what you can do to be more memorable. If you do it right, I guarantee you won’t be forgotten.
What is An Employee Identification Number and Why Do I Need One? February 18, 2014Posted by SBDC in Small Business General.
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More than likely, as a start-up business, you have set up your business as a sole proprietor. You remember being told that as a sole proprietor you will be reporting your business income on your personal tax return. Therefore, you can use your social security number, right?
The EIN is your employer identification number for your business. Theft of taxpayer’s identities has become a growing, widespread problem. Identity thieves steal taxpayer’s Social Security numbers and use them to file fraudulent tax returns and obtain tax refunds. For this reason, it’s wise to keep your personal Social Security number as private as possible. Also, if you perform personal services as an independent contractor, you must provide an EIN or Social Security number to your clients, or the client will be required to withhold 28% of your payments. Obtaining an EIN allows you to avoid having to provide your Social Security number to clients and other members of the public.
A free service offered by the Internal Revenue Service, tax payers can apply for an EIN online at www.irs.gov and search for form SS-4, Application for Employer Identification Number. You can also apply for an EIN by fax, mail or telephone.
SBA Implements Stricter Requirements for Size Certifications February 3, 2014Posted by SBDC in Small Business General.
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A final rule published in Monday’s Federal Register changes the Federal Acquisition Regulations to address the requirements detailed in the Small Business Jobs Act of 2010. Congress passed and President Barack Obama signed the bill into law in September 2010.
The new rule, effective Aug. 27, will ensure vendors that claim to be small businesses, are, in fact,small.
The final rule stated small businesses that fail to update their size or status annually no longer will be identified as “small” until they update their listing in the System for Award Management (SAM).
In addition to requiring small business to update their size or status online, the new rule requires an authorized official to assert the company’s size or status certification by signing the certification page for a contract or grant as well as documentation in SAM.
The final rule would apply to the roughly 348,000 companies that are listed as small businesses in the Dynamic Small Business Search (DSBS) database.
If a small business falsely portrays itself as a small business in order to claim a small business contract, the rule mandates the contractor pays the government the value of the contract as punishment.
In fiscal 2010, SBA found 200 firms ineligible for small business contracts. Not all of these concerns, however, intentionally misrepresented their size or status, according to the SBA.
5 Way To Increase the Value Of Your Company—Before You Sell It January 23, 2014Posted by SBDC in Small Business General.
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“Most business owners wait to sell their company until they’re mentally frustrated or worn out,” says Greg Caruso, principal at Harvest Associates LLC, a transaction advisory firm in Baltimore.
To get the highest selling price for your business, start planning early. And do these five things:
1. Strive to increase profits and cash flow.
The person or company buying your business will probably need a loan for the purchase—and they’ll be using the business’ profits to make their monthly payments. That’s why maximum profitability, as well as healthy cash flow, is so important to the value of your business.
Think you’re doing the best you can? Think again, says Caruso. He suggests hiring a part-time CFO or CPA—someone from the outside—to scour your books and operations for inefficiencies. “A lot of business owners don’t understand how to assess where they are, and it can make a huge difference in profitability,” he says.
2. Grow sales. Period.
Why would you want to spend long hours boosting the revenue of a company you’re about to sell? Because you’ll get more money in the sale. Caruso says if a business’ revenue is consistently growing for two to three years, the buyer is willing to pay a higher price because sales are an indication that they’ll be making more money down the road.
Also, buyers are more enthusiastic about purchasing a growing business. “When things are expanding and improving, people get emotionally excited. And ultimately, emotions drive a purchase,” he says.
3. Get systems in place to put your business on autopilot.
From a buyer’s point of view, a business is a series of processes and systems that develops a service or product, which is then sold in exchange for money to generate a profit. It is not a hobby or a way of life, as you might see it. It must be a well-oiled machine that can operate on its own.
The price of your business will go up if you can prove you’ve mastered these processes. What have you done over time to increase their efficiency? Do employees follow the processes? Buyers place higher value on companies that can run themselves.
4. Remove yourself from the business.
By the time you put your business on the market, you should be as hands-off as possible. This demonstrates that your top managers and employees can handle running—and continue growing—the business without you. Because eventually, they will have to. “If every decision stops with you, what is a buyer going to buy?” Caruso says.
5. Get the details, like debts and leases, in order.
Your business will sell at a higher price if the details of your business are in order. If you own a convenience store, for example, and its success hinges upon its prime location, you better have a long-term lease sewn down. But if you own an engineering firm that is outgrowing its small office space, a short-term lease is better. “Contracts like these should be in a prime spot to increase the value of your business,” says Caruso.
Debts and other obligations should also have nailed-down arrangements. Uncertainty is not friendly to the valuation of a business, says Caruso.
SAM (System for Award Management) January 14, 2014Posted by SBDC in Small Business General.
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Business both established and new to Federal contracting must register in the Government’s electronic database known as System for Award Management (SAM). Registration at the official SAM site http://www.sam.gov/ is free.
SAM replaced the Central Contractor Registration (CCR). SAM is an attempt by the federal government to consolidate other stand-alone databases into one comprehensive system. Because SAM replaced CCR all vendors must validate and update their records to be ‘migrated’ into SAM. New vendors joining the Government sector must also establish a profile in SAM for the first time.
There is good news! SAM is a free site and an experienced vendor can master the process alone, but if help is needed, it is readily available and free of charge!
Here are some important tips:
1. Don’t be fooled by look-alike websites. There is only one SAM database, and it’s a secure website operated by the federal government at https://www.sam.gov/ . The registration process itself is free! If there is any cost associated with SAM you are most likely at the wrong site or have been contacted by a third-party.
2. There are plenty of helpful videos now available on the SAM web-site with FAQ’s to assist.
3. If you need advice on what records to gather, or just desire help with the registration process itself, expert assistance is available, just contact your Procurement Technical Assistance Center (PTAC).
Remember, SAM registration is necessary if you want to do business with the federal government. Your SAM account is ‘active’ for 365 days and must be verified/updated every year to retain that status. There is never a charge to register at https://www.sam.gov/, and assistance with SAM registration is available for no charge from PTAC, just call 361-698-1021 and one of our staff counselors will be happy to help.
Employee Gifts: How to Give Tax-Free December 9, 2013Posted by SBDC in Small Business General.
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As you decide on an appropriate holiday gift for your employees, it’s important to consider not only what they’ll enjoy but also how taxes will come into play. Because a “gift” is often considered by the IRS to be compensation, it’s important to note the rules so that your employees are not responsible for paying taxes on their gifts. “Get creative so the reward isn’t an individual burden to the employee, but a company expense,” says Brent Shelton, spokesperson for FatWallet, Inc., an online shopping resource website based in Rockton, Ill. “That way it stays as a reward.” Here are some options that will ensure your employees won’t face a tax on their holiday gifts.
Give a gift under $25.
Gifts under $25 are tax-exempt, explains Howard Rosen, CPA, president and principal of Tax Services for Connor Ash in St. Louis, Mo. If this is the amount you typically spend on each employee, then you have nothing to worry about.
Tie a gift to an employee award.
You don’t have to worry about taxes if the holiday gift is a reward for service (i.e. highest sales) or longevity (i.e. the employee has been with the company for 10 years). Rosen says you can even create more personalized awards, such as “Most Helpful” or “Best Attitude,” as long as the awards have some kind of consistent format and you give them on an annual basis.
Make a charitable donation.
If your gift to your employees is a charitable contribution in their name, then you don’t have to worry about taxes, no matter the amount, says Rosen.
Give company products or a job performance aid.
If you run the type of business where the employees would enjoy your products (i.e. a clothing store or bakery), then you can give your company products or services as gifts without having to pay taxes on them. And while an employee might not get too excited over office supplies, Shelton says this is a good opportunity to get creative. “Perhaps there could be branded office supplies like an idea journal,” he says.
Give the gift of an outing.
You can take only a group of employees, such as the management team, to an event, and the cost will be tax-free. But, Rosen warns, you cannot take only family members involved with your business and consider it a tax-free company expense.
Facing the Tax
If you opt to go ahead with a gift not listed above that costs more than $25, Rosen recommends “grossing up.” This means you have to be willing to pay the gift amount and also the amount it’s taxed for so that the remaining amount can be given to the employee without he or she worrying about taxes. For example, if you want to give a $100 gift to your employee, you’re likely to end up spending around $135.
Related resources: 3 Ways to Maintain Productivity During the Holidays, and 6 Ways to Motivate Employees by Using Little to No Money, plus more tax tips
3 Reasons Why An LLC Beats A Corporation December 2, 2013Posted by SBDC in Small Business General.
One of the first things a new business owner needs to figure out is what sort of entity they want to file their new business as. This question can be answered based on the specifics of your new business as well as what you need as the business owner. Do you need more protection for your personal assets? Are you more focused on less tax fees or less paperwork?
Unless your business fits in the nonprofit bracket, the two most popular entity types for new entrepreneurs to choose from are corporations and LLCs. They both come with their fair share of positives and negatives, but ultimately an entrepreneur’s choice should depend upon what specificities are best for their business (which can only be determined after doing a good amount of research).
However, looking at the two entities side by side without any particular industry or business in mind, I’ll always think of an LLC as the better of the two to maintain for the following three reasons:
1. You’ll avoid double taxation
LLCs have something called a pass-through taxation structure. This means that an LLC is a legal entity in which income “passes through” to investors and owners, or the income of the business is actually the income of the investors and owners. An LLC also has the ability to change the way it’s taxed if the business owner isn’t a fan, for whatever reason, of that structure.
Corporations, on the other hand, experience almost the opposite tax effect in most states. They experience “double taxation,” which is a corporate tax rate that is levied against a corporation’s profits. Shareholders then additionally have to pay personal taxes on whatever income they make from the business.
2. You’ll effectively protect your business as well as your personal assets
When you first start a business, your personal assets are attached to your new business. That means if your business fails and you have some major debt to pay, your home, car, and other personal items are at risk of being seized from your possession. A corporation does do the job of turning the business into its own legal entity, separating it from the business owner. This means that the business can now hold its own debts, can be paid separately, and is taxed separately from the owner. This gives the business owner some protection in separating himself from his business. With the LLC, a business owner is rewarded the same legal and fiscal protection as a corporation, but in a less complicated manner than with a corporation.
3. It keeps things simple
All things considered, running an LLC can be pretty easy compared to running a corporation. Different states regulate certain entities differently, but for the most part, an LLC can get by with just an organized record of major business decisions and your business’s finances. Some LLCs can even get away with opening with just one member. They also don’t need to worry about annual shareholder/member meetings like corporations do.
LLCs do, however, need to send in an annual report with updated information on the names and addresses of those involved with the business and to pay a fee as well. Though those additional areas are included, maintaining an LLC is still much easier than maintaining a corporation.
The Importance of Cash Management November 25, 2013Posted by SBDC in Small Business General.
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Business analysts report that poor management is the main reason for business failure. Poor cash management is probably the most frequent stumbling block for entrepreneurs. Understanding the basic concepts of cash flow will help you plan for the unforeseen eventualities that nearly every business faces.
Cash vs. Cash Flow
Cash is ready money in the bank or in the business. It is not inventory, it is not accounts receivable (what you are owed), and it is not property. These can potentially be converted to cash, but can’t be used to pay suppliers, rent, or employees.
Profit growth does not necessarily mean more cash on hand. Profit is the amount of money you expect to make over a given period of time, while cash is what you must have on hand to keep your business running. Over time, a company’s profits are of little value if they are not accompanied by positive net cash flow. You can’t spend profit; you can only spend cash.
Cash flow refers to the movement of cash into and out of a business. Watching the cash inflows and outflows is one of the most pressing management tasks for any business. The outflow of cash includes those checks you write each month to pay salaries, suppliers, and creditors. The inflow includes the cash you receive from customers, lenders, and investors.
Positive Cash Flow
If its cash inflow exceeds the outflow, a company has a positive cash flow. A positive cash flow is a good sign of financial health, but is by no means the only one.
Negative Cash Flow
If its cash outflow exceeds the inflow, a company has a negative cash flow. Reasons for negative cash flow include too much or obsolete inventory and poor collections on accounts receivable (what your customers owe you). If the company can’t borrow additional cash at this point, it may be in serious trouble.
What Are the Components of Cash Flow?
A “Cash Flow Statement” shows the sources and uses of cash and is typically divided into three components:
Operating Cash Flow Operating cash flow, often referred to as working capital, is the cash flow generated from internal operations. It comes from sales of the product or service of your business, and because it is generated internally, it is under your control.
Investing Cash Flow Investing cash flow is generated internally from non-operating activities. This includes investments in plant and equipment or other fixed assets, nonrecurring gains or losses, or other sources and uses of cash outside of normal operations.
Financing Cash Flow Financing cash flow is the cash to and from external sources, such as lenders, investors and shareholders. A new loan, the repayment of a loan, the issuance of stock, and the payment of dividend are some of the activities that would be included in this section of the cash flow statement.
How Do I Practice Good Cash Flow Management?
Good cash management is simple. It involves:
1. Knowing when, where, and how your cash needs will occur
2. Knowing the best sources for meeting additional cash needs
3. Being prepared to meet these needs when they occur, by keeping good relationships with bankers and other creditors
The starting point for good cash flow management is developing a cash flow projection. Smart business owners know how to develop both short-term (weekly, monthly) cash flow projections to help them manage daily cash, and long-term (annual, 3-5 year) cash flow projections to help them develop the necessary capital strategy to meet their business needs. They also prepare and use historical cash flow statements to understand how they used money in the past.
Source: U.S. Small Business Administration
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For small business owners, determining how to best protect your business and your family with proper insurance and legal needs can be overwhelming. But it’s important to realize that the stability of your business and family are often dependent on each other. Sudden events in your personal life can mean you’re unavailable to manage your business. Likewise, business demands might mean you’re not able to spend time with family the way you’d like to. Failing to navigate your protection needs appropriately can be catastrophic if something unfortunate happens and your business is unprotected. It can be especially tricky when you begin to consider the security and protection of yourself, your family, your possessions and your business.
Therefore, it’s crucial to that you ensure the proper protection and legal agreements are in place before the unexpected happens. There are always special circumstances to think about, but the following four points serve as a great place to start as you consider protecting your future:
Know what should be insured - Make a list of all the products, people and services vital to your business and determine what insurance coverage and agreements are needed to ensure business continuity if an unexpected event occurs. Though it may not be pleasant, try to think outside of the box when considering your exposure to risks. Considering multiple scenarios – everything from stock market downturns to employee injuries to natural disasters – will help you recognize the vulnerable areas of your business. Purchase insurance to protect you from catastrophic events if it’s available, and establish contingency plans for things that can’t be covered by a policy.
Establish partnership agreements - Each state has its own laws governing partnerships, but you are not confined to these. To avoid conflicts, document important agreements including how profits will be shared, the decision-making authority of each party and the protocol for the withdrawal or addition of partners. Being able to refer to a written document may help defuse a disagreement before it escalates into a legal matter.
Budget and consult with other professionals -Treat protection costs like any business expense and budget for them in advance. If you find yourself stressed over the cost, decide what you can’t afford to replace with savings should something be destroyed or your income compromised by an unforeseen disability. Consult with professionals like a financial advisor, attorney, accountant and small business consultant to ensure that you’re adequately protected.
Don’t forget to cover yourself - Your business and your family depend on you – so it’s absolutely essential that you have the proper personal protection in place. Consider your options for life, disability and long-term care insurance, and make sure that the income you provide your family would be replaced if you are injured or pass away unexpectedly. Also be sure you have legal documents in place that reflect your wishes to help eliminate unnecessary complications for you and your family following a traumatic event. No matter what the cost may be today, you will likely never regret the price of protecting what is most important to you in the aftermath of a tragedy.
Financial Considerations When Starting Your Own Business November 4, 2013Posted by SBDC in Small Business General.
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If you’re thinking about starting a small business, it’s important to look carefully before you leap. Owning a small business can be very rewarding, but it can also require a lot of time, energy and funds long-term. Taking the right steps upfront can help you increase your chance of success and maximize your start-up dollars. Begin by:
• Using the resources that are available to you — There are several free online resources that can help guide you through the steps of starting your own business. One of the most comprehensive is the U.S. Small Business Administration site at http://www.sba.gov. It offers detailed information on how to plan, implement or sell a small business and more. You may also consider meeting with other small business owners and professional consultants.
• Determining equipment needs and costs — Make a list of all the items you’ll need to purchase or lease to get a true sense of your start-up and operating costs. Will you need big ticket items such as business or office space, manufacturing and computer equipment? What about smaller purchases like office supplies and software? It’s beneficial to have a detailed list of your needs when making a plan and figuring out your costs.
• Adding up the other costs you may incur — If you plan on hiring any personnel, factor in the costs of any employee benefits, such as healthcare or dental insurance, that you may be required to provide your employees. Also consider any wages that you’ll pay and the fees for any legal, financial or tax advice or special licenses or permits if they apply to your business needs.
• Determining how much financing is needed — After you identify your start-up and operating costs, you can assess whether you need outside financing. Keep in mind that these sources may require a contribution from you as the owner of roughly 20 percent or more, depending on the type of business.
• Establishing an advisory team — Before you make major financial commitments or sign complicated agreements, seriously consider consulting with a financial professional, an accountant and an attorney. Treat your business financial plan and personal plan with the importance they deserve by putting them in writing. Not only will this hold you accountable, it will also give you something to refer to when difficult and inevitable choices arise.
• Setting up your financial accounts — After you have established the type of business entity you need, talk with your advisors about what kind of banking and credit services you may need. Shop around to see who offers the services and pricing that best meet your needs.
• Implementing a business insurance policy — Depending on your business, you may have special or additional insurance requirements and considerations. A business insurance policy helps you protect your investment by minimizing the financial risks associated with unexpected events, like the death of a partner, an injured employee, a lawsuit or natural disaster. Your state government determines the insurance requirements for businesses. Your financial lender or investors may also require you to maintain certain types of insurance to protect their investment. After implementing the coverage you need, annually meet with your financial professional to discuss changes in your business and whether or not they alter your coverage needs.
• Assessing your household budget — It’s easy for this “To Do” to get lost in the excitement of starting a new venture, but it’s critical to closely and regularly review your household balance sheet. Because of the income uncertainty that can occur when you branch out on your own, it’s even more important if you are leaving a stable paid position. Staying on top of how your new business venture impacts your personal finances can help you remain realistic about what you can and cannot afford for both your personal and business needs and wants.
Taking the time to carefully consider the viability of a small business venture and to create a business and financial strategy can help you feel more confident about your endeavor. It can also provide you with the information you need to make sound decisions that will more likely lead to greater success in your business and personal lives.