Business Information for Entrepreneurs by an Entrepreneur

How to Choose a Vendor for Your Small Business

If you’re a small business owner, you have probably had to choose at least one vendor. Some make the mistake of selecting the first vendor that they talk to while others always go for the lowest price.

There are other factors to consider, however, and choosing the best vendors can prove to be vital to the overall health and growth of your business.

Here are some things to consider.

Ease of Contact

If you can’t get the vendor to call you back even before the sale is closed, forget reaching them once you’ve signed on the dotted line.

Instead, find a vendor that has time for you and that clearly is going to value your business.

Remember, a good price means nothing if you can’t get in touch with someone when you need them.

Price

While price shouldn’t necessarily be the most important consideration, it certainly is a factor in your decision. If the price seems too good to be true, it probably is.

A vendor who is bidding way above or way below the average should raise a red flag.

That doesn’t mean there may not be a good reason for the difference in pricing, but you should definitely get an explanation.

Experience

Working with a new company can be a great way to save some money. Sometimes, however, you need to work with someone who has experience.

For example, a start up printer may work out fine, but you’ll probably want someone with experience when it comes to marketing and advertising.

References

Check the Better Business Bureau, professional organizations and personal references before deciding on a vendor.

If the vendor has had problems in the past, you’ll be able to save yourself a lot of trouble by learning from other’s mistakes.

Choosing a vendor is as important as any other decisions you’ll make – so choose wisely.

Easy Ways to Trim Your Small Business Budget

There are many challenges involved in running a small business. One of those is finding ways to meet the financial needs of your business before the revenue stream has been fully established.

While some expenses are absolutely necessary, there are areas in which you can trim your budget without hurting the growth of your small business.

Here are a few tips for painless budget cuts.

Office Supplies

This is one area in which many small businesses overspend.

Obviously, some supplies are needed to run the office, but do you really need the most expensive pens and the name brand supplies?

Depending on the size of your office, you can save hundreds of dollars a month by choosing the store brand or the less expensive pens.

Also, stress to your employees the importance of only using the company office supplies for company business. Pilfering office supplies is a common – and costly – problem.

Business Meals

If you are barely able to make ends meet, then this is one expense that you should stop immediately.

Unless it is to entertain clients, put business lunches and dinners on hold until the revenue picks up.

Employees would much rather lose the occasional expensed lunch than be laid off from their jobs.

Office Furnishings

This is a biggie. You can save thousands of dollars by choosing used office furniture rather than buying new.

Check online sites, such as Craigslist, or your local yellow pages for used office furniture suppliers.

Printing

If you can do some of your printing in-house without sacrificing quality, then you should.

For projects that you can’t do yourself, such as those requiring offset printing, be sure to shop around. Printing prices vary widely between vendors, so be sure to get quotes from at least four vendors before making a decision.

Those are just a few ways you can trim your business budget. As your business grows, you can make different decisions. For now, however, be smart with your money so your business can flourish.

Customer Retention Tips

One of the first principles learned in business school is that it is much less expensive to keep an existing customer than it is to win a new one.

Still, many businesses are sorely lacking when it comes to customer service, and this shows as customer loyalty seems to be at an all-time low.

Call many businesses and you’ll be greeted by a recorded message. If you press the button for new sales, you’re likely to be speaking to a live person almost instantly.

Handle With Care

If, however, you press the button for customer service you’re likely to be on hold for several minutes. This is a mistake many businesses make, and it’s a costly one.

Your existing customers should be treated with even more care than those who are not yet your clients.

Of course it’s important to win new customers, but it’s equally important to keep the existing ones happy.

Keep Mistakes in Check

While some customers are going to make unreasonable requests, most just want to be treated fairly. If a customer has a complaint, it’s important to address it and work to correct it as soon as possible.

Even in situations where a mistake cannot be fixed, just acknowledging the error and showing how sorry you are can go a long way in keeping a customer.

It’s important to instill the value of exceptional customer service to every employee. You must demand nothing less than the best treatment of every customer by every employee.

It’s a good idea to make sure that your email address and/or phone number is available to customers. Let them know that they can contact you directly if their issues are not resolved to their satisfaction.

Sometimes there is a cost involved in keeping a customer happy – but that cost is worth it if it keeps your customers loyal.

Here’s a quick tip on negotiating price that you will find invaluable when someone asks you for a breakdown of your costs:

• Make sure that the total cost, when you add up each item, is MORE than what you are bidding.

Why? The sum of the parts is more than the whole.

Have you ever taken your car in to replace an automatic window?  It can cost over $400 and it is just a small part of your car. If you bought a car part by part, a $20,000 Toyota could cost you $50,000. But by buying it as a whole, your cost is significantly less.

When a prospect asks for a price breakdown, they want to see how you came up with your final number so they can negotiate your price down.  They’ll say things like “Well, we don’t really need this piece so how about trimming that out of your proposal” or “I didn’t realize this component costs so much… let’s take that out.”  If you are bidding time and materials, they might say “Whoa!  It’s going to take HOW long for this subtask?!?  You either have to do it faster or reduce your rate.”

If you add up each line item price and it equals the cost of your bid, it’s very easy for them to tell you what to trim off.  That could include profit that you tried to bury in some of your high margin line items.

So, if you make each line item a little bit more expensive so that your total works out to be 20% higher (or more) than the actual fixed price that you are bidding, you can include a line item labeled “Discount” to subtract the difference from the sum of the parts and your actual bid.

This gives you leverage to reduce your discount if they cut out a line item.  You can then say “Well, we can take that out, but that will reduce the discount we are able to give you since that is based on the project as a whole based on our initial proposal.”

Have a negotiation tip?  Comments are welcome.

Should Your Employees Telecommute?

More and more employees are taking advantage of telecommuting. This allows the employee to work at home – and it can work well in many situations.

If you have not considered offering this option to your employees, now may be the perfect time due to the high cost of gas.

Not everyone is a good candidate for telecommuting. Some administrative personnel, such as receptionists who greet visiting clients, are needed in the office. Still others, such as account payable and receivable clerks, can work just as easily from a home office.

You will need to evaluate each position individually to decide whether or not it is suited to telecommuting. You will need to do the same with each employee.

Just as every position is not a good match for telecommuting, neither is every employee.
Self-motivation is an important quality that must be present. Also, only reliable and trustworthy employees are good candidates for telecommuting.

Here are some tips to ensure a positive telecommuting experience for both your small business and your employees.

• Employees Should Be Available By Phone During Working Hours

Other than lunch and scheduled breaks, they should answer when you call.

• Telecommuters Should Be In The Office At Least Once A Week

This helps ensure they maintain a relationship with other employees and gives an opportunity for any necessary face to face meetings.

• You Should Own The Equipment Telecommuters Use At Home

Rather than putting sensitive information about your business on the employee’s family computer, it is best to purchase a computer that is only for the use of the employee for business purposes.

You should also pay for the employee to install a dedicated telephone line.

Telecommuting can work well for both employee and employer as long as both the position and the employee are well suited for it.

Is it Time to Fire an Employee?

The decision to let go of one of your employees is never going to be easy. There comes a time, however, when such a decision is necessary.

When this time comes, it’s best to handle the matter as soon as possible rather than allowing a negative situation to continue.

There will be some situations in which immediately terminating an employee is the only correct thing to do. Some examples include illegal activity, sexual harassment of another employee and misrepresenting the business to vendors or clients.

Knowing When to Act

But how do you know that it is time to fire an employee rather than continue to work with them when the offenses are less serious?

Naturally, every situation is going to be unique, but here are a few questions to ask when trying to make that decision:

• Have you counseled the employee about the behavior/performance in the past?
• Is the employee disruptive to the workings in the office or to other employees?
• Are the actions of the employee hindering the growth of the business or the performance and/or morale of other employees?
• Do you think that counseling or additional training will help this employee?

Based on the answers to the above questions, you should be able to decide whether it is time to let them go. If so, be aware that they may file for unemployment benefits.

Keep Meticulous Records

That is why it is so important for you to keep detailed records of every meeting, counseling session and training that is related to the behavior for which he is being fired.

For example, if the employee is chronically late, you should keep documents of that in his file. Dates and times of lateness should be included as well as proof of any counseling sessions – signed by the employee – related to the lateness.

Such documentation will be necessary should you choose to oppose the payments of unemployment benefits.

Once you have made your decision, it’s important to stick with it. You have to do what is best for your other employees – and your small business.

Perks vs. Higher Pay – Which Will You Choose?

You want to hire the best people for your small business, but at this time you just can’t pay the same high salaries as some bigger companies. That doesn’t necessarily put you out of the running for some of the best talent.

If you can’t match the salaries of some of your competition, then beat them by offering perks that potential employees will find hard to resist.

Now more than ever, employees know the importance of balancing work with family and their other interests. Fewer and fewer people are willing to put in 80 hour weeks at the cost of never seeing their children.

For this reason, the following perks may be able to lure someone away from a higher paying position.

Telecommuting

The opportunity to work at home is appealing to people for many reasons. They can be at the bus stop to meet their older children after school. Pets won’t need to be left alone all day.

In addition, it effectively cuts the time off of their work day, because there is no commute. Also, they save the cost of gas and expensive work wardrobes. This won’t work for every position, but for some it’s perfect.

Even if the employee can telecommute part-time (i.e. 2 days in the office and 3 days telecommuting) it’s a big benefit.

Bringing Children to Work

This is not feasible for every small business, but if you have a situation where an employee can bring her children to work – even some of the time – that will be a huge benefit.

The cost of daycare continues to rise, and many parents fret about the lack of trustworthy child care providers. Sometimes all it takes is a private office with a crib or playpen.

Or, if you have several employees, it could be worth it to set aside a day care room and hire a couple of child care providers on site.

Flex Schedules

Offering flexible scheduling in which the employee can choose her hours is a perk many will find irresistible.

Many small businesses can accommodate varying schedules without much of a problem. This is a way to give your employees a great benefit at no extra cost to you.

Be creative, and offer perks that will bring the best talent to your door – even if your salaries are a bit less than the competition.

Hiring Interns: a Win-Win!

Bringing a college intern into the office is a great decision for many small businesses. If you choose the interns wisely, it can benefit to both the college student and your small business.

Most colleges require that soon-to-be grads complete some type of internship as a requirement for graduation. Some internships are paid, and some are not.

It is completely up to you to decide whether or not to offer monetary compensation for the internship. Some small business owners offer an hourly rate, while others offer a lump sum amount to go toward the intern’s college expenses.

Why Internships?

For the college students, it’s a chance to work in the field for which they have spent the last few years studying. They get some real world experience as well as the college credits required to graduate.

But they aren’t the only winners in the arrangement.

For small business owners, taking part in an internship program allows you access to some fresh talent. Many students find their first jobs through their internships. It’s a good way for you to meet some of the people who will be looking for jobs upon graduation.

Lowering Your Expenses

It’s also a way to supplement your workforce without having to hire additional employees.

For example, if your busy graphic designer is always begging for an assistant designer, bringing in an intern or two could be a perfect low-cost solution.

Some companies take advantage of the program and use the interns only for running errands and making copies. If this is your plan, you need to make that clear to the potential intern before they start.

The point of the program is for the intern to get an idea about what working in their chosen field will be like – not to serve as coffee runners.

That isn’t to say you should put them in charge of a project, and it’s fine to have them do some administrative work. But, they should also be given the chance to work in their fields.

This will give them the experience they need, and it will give you a chance to observe their performance.

3 Good Reasons You Should Hire an Accountant

Many small business owners keep their own accounting books. Some are meticulous and well-suited to the task.

Others shove receipts in the drawer and scribble notes on scraps of paper about where the money is going. That can make things pretty tricky come tax time.

Some business owners put off hiring an accountant because of the expense, but since most are paid by the hour, hiring one doesn’t have to be prohibitively expensive.

There are many good reasons to hire an accountant. Here are three.

1. Payroll

There are so many payroll regulations that it can be tough to learn them all. Plus, they are always changing.

Deviating from federal regulations can result in hefty fines. By having an account handle payroll, you won’t have to worry about keeping current.

2. Tax Time

This is one of the best reasons to hire an accountant. Business tax regulations change each year and are difficult for many “lay people” to understand.

You need someone to guide you throughout the year about what will be best for your business come tax time. If you wait to hire someone just to do your taxes it will be too late to take advantage of some money saving tax strategies.

Instead, you need someone who knows your business and can guide you – starting on January 1 – about how to save money when tax time comes around.

3. Free Time

Hiring an accountant to handle your books will take one big burden off of your shoulders and will free up your time to run and grow your business.

Keep in mind that you should never hand your books over 100% to an accountant. You need to know every detail about what is going on at all times.

This will remove the possibility of someone skimming off the top or your small business being involved in any unsavory practices.

Hire a good accountant, but always know what is in those books. It is, after all, your business.

The Importance of Cultivating a Web Presence

Some business owners don’t feel that a web presence is necessary in their particular field.

While this once was true, today’s consumers expect businesses to have a website where they can find information about products and services 24 hours a day.

Many small businesses lose out on revenue because a potential customer bypassed them in favor of a company with a simple website.

It doesn’t matter what type of business you have: many consumers are going to want to check out your website before giving you their business.

Build a Quality Site

Of course your website is a reflection of your business, so you don’t want it to look shabby and be full of grammatical mistakes. On the other hand, it needn’t be fancy.

As long as it provides some basic information, and includes an email address where potential customers can contact the business, it will do the job.

As you grow your business, you can also grow your presence on the web. Some businesses use their website as a marketing tool and a way to set themselves up as experts in their field.

Continually Add Good Content

One plumber, for example, hired a freelance writer to post new articles to his website each week. Over time, his website included a library of articles covering pretty much any plumbing related topic the average consumer may need.

By updating his website frequently, and including a lot of relevant information, he began to get more visitors to his site. This translated into more business.

Don’t make the mistake of underestimating the importance of a website. Doing so could really cost you!