Business Information for Entrepreneurs by an Entrepreneur

Besides your reputation, the one thing in life that deserves fierce protection is your credit score. The same holds true when it comes to the name and reputation of your small business and its credit score. Traditionally, small business debt is not a part of your individual credit score. However, changes in the economy, business and banking practices are beginning to influence this longstanding tradition. Small business owners are finding that financial institutions are sometimes reporting bad business debts to the credit bureau. Unfortunately, the creditors aren’t doing so under the name of the business, but the business owner.

The Blame

Small businesses typically have to rely on some type of loan or line of credit to cover the cost of overhead at some point in time. Such credit was not previously considered as part of an individual’s credit history, unless, of course, delinquency became a problem. Unfortunately, delinquency is a growing problem, especially given the current economic circumstances. It is likely that delinquency is to blame for the practice of reporting business activities on a personal credit report.

The Ups and Downs

How will a credit score be impacted if a bank reports on small business debt? The credit scoring process is complex and certain standards also fluctuate right along with the economy. It is difficult to pin an exact number on the impact of small business debts on an individual’s credit score, but a safe estimate is likely 25-75 points. For struggling small business owners, this fluctuation in credit score could make the task of personal finance management even more daunting.

The Likelihood

Despite the changes in business and credit reporting practices, the likelihood of business credit impacting one’s personal credit score is small. Most financial institutions do not make it a habit, and the average small business owner’s personal credit is safe. The best way to protect a personal line of credit is by monitoring your personal credit report on a regular basis, minimally 1-2 times per year. In addition, if maintaining the integrity of your business credit becomes a problem, consult with a financial professional to stop a small spark from becoming a wildfire.

What you say during a call or meeting with a potential customer ultimately determines your chances of closing the deal.  It’s not always natural for most of us to sell.  But if you run a company or work in sales or marketing, you need to have many phrases at the ready to combat the objections and resistance you may encounter.  You can read some tips on overcoming price resistance in this blog.

This week, one of our MailerMailer clients, Give More Media, just released a wonderful little free ebook that will help you find just the right words to use in different sales situations.

This fast-reading guide includes a checklist to help you prepare yourself prior to the call or meeting. Plus, it provides 30 sample open-ended questions that are designed to get your prospect talking – something you definitely want to do because you close more sales if they talk, not you.

Here are two excerpts of sample dialogs from this ebook that I really love:

WHEN THE PROSPECT PERCEIVES IT IS SAFER TO DO NOTHING:
“The exciting part of this [solution/ program] is not only the additional immediate revenue you’ll likely generate, but also the added referrals that become possible as a result— in addition to the competitive barriers you’ll create by getting the primary customer relationship going now.”

TO CREATE A SENSE OF URGENCY:
“It seems like a great fit to what you’re trying to accomplish, and I’m fairly confident we’ll have the inventory available, but we can only guarantee it [today/ this week/ this month]. What concerns do you have about moving forward now?”

If you are new to sales or need a little inspiration to help close a deal, Be Sales Ready is pure gold.

Download Be Sales Ready for free here.

Every penny counts in a small business, from the money spent on inventory to office supplies and especially the funds set aside for payroll. Now is the time to start looking for ways to reduce overhead while still preserving the integrity of your small business. New government initiatives aimed at helping small business survive have come up with a creative incentive program. Now you can enjoy financial rewards for hiring young employees to work for your small business!

Young adults aged 14-19 have a great deal of energy and enthusiasm to offer in the workplace. There are several different programs that reimburse employers as much as $2.00 of a young employee’s hourly wage. These programs feature some great opportunities for small business owners to enjoy the following benefits:

Overhead Reduction

The extra funds from government-sponsored employment programs can help you reduce overhead at your small business. While these programs are often restricted by time limits, they might provide that extra savings that you need to get ahead.

Community Development

An investment in a young person is like an investment in your community. You can help aspiring young professionals learn workplace skills, leadership skills, and provide an opportunity for them to demonstrate responsibility and initiative. All of these skills and attributes are critical for young people who want to continue onto higher education. You also might find promising new talent when hiring young people. They could potentially stay with your small business for many years to come.

Building Relationships

By participating in government-sponsored programs geared toward helping small businesses and young people, you can build meaningful relationships with other organization in your community. This might include other small businesses who are participating in the program or local and state officials who are documenting progress of these government-sponsored initiatives. Building relationships with diverse populations of people in the community is one way you can enhance your presence, influence and consumer base in your community.

Hiring a young person features many benefits for employees, employers and entire communities. Be on the lookout for government sponsored programs in your area that capitalize on the resources of young people to take your business to the next level.

The number of individuals filing claims for unemployment is steadily climbing as the economy continues to spiral out of control. Small business owners are especially vulnerable to failure during these times of uncertainty. If your small business fails, are you eligible for unemployment benefits?

Protection for Employees

Small business owners must consider the rights and interests of employees as part of the unemployment issue. As long as you are paying state and federal taxes on workers’ wages properly, they are completely eligible for full unemployment compensation. If you have to let employees go from your small business as a result of economic crises, they will not have any difficulty securing coverage from the local unemployment office.

Protection for Yourself

Contrary to popular opinion, simply paying state and federal taxes on workers’ wages does not make you as the employer eligible for unemployment protection if your business fails. Eligibility is determined by the structure of your business. Generally speaking, sole proprietors are not eligible for unemployment benefits. This is because a business owner is not considered an employee. They do not pay the unemployment tax, and are therefore, considered ineligible for coverage.

Under certain circumstances, however, the owner(s) of a limited liability corporation or incorporation may be eligible for benefits, so long as there is enough evidence to show that the business failed as a direct result of economic circumstances. In this case, the corporation rather than the individual is considered the employer. As long as the proper taxes have been paid by the corporation, a business owner should be able to collect unemployment benefits.

Risky Business

In general, self-employment is a significant risk because of the looming threat of small business failure. Small business owners generally aren’t aware that they could lose not only their business, but the government won’t be able to help them get back on their feet in the aftermath like employees who are laid off or lose their jobs for other economic reasons. As a small business owner, it’s important to have a backup plan in the event that failure knocks on your door.

Nearly everyone is using some form of social networking today. From Facebook to MySpace and LinkedIn to Twitter, there are many online resources that provide personal information about its members.

From a business perspective, some of these sites contain information that can positively or negatively impact your decisions about a potential employee. In essence, you can use social networks to conduct employee background checks. There are several different factors that you should consider before turning to social networks as a source of information on candidates for your job vacancies.

A Low-Cost Alternative

Using social networks to conduct employee background checks is a cheap and easy way to find information about prospective hires. If your small business doesn’t have the time, money or resources to invest in professional background checks, then social networks might be an appropriate solution for you.

Work-Life Balance

Your employees are entitled to a sense of balance between their personal and professional lives. What they do outside the workplace is their choice to make, and you may discover things about potential candidates’ personal lives that would never arise in a job interview with social networking websites. Keep in mind that it’s important for everyone to have a healthy work-life balance. Social networks are a part of that balance for the people you are interviewing, and they are entitled to a certain degree of liberty and freedom.

Ethics and Social Networks

Social networks may contain personal information about potential employees. There are certain facts that should not influence your hiring practices. For example, information on social networks regarding marital status, sexual orientation, race, class or gender cannot be used when making a hiring decision. Having access to such information may have a negative impact on your ability to make objective decisions about who you want to hire and why. If you turn to social networks as a source of background information on employees, be sure to keep ethical and legal issues in mind.

Social networks should never be used as a sole source of information. You should always contact personal and professional references in addition to any background check. Remember that the ideal candidate may not have a picture perfect record. Regardless of what you might find on social networks, weigh skills, attributes, accomplishments and education carefully before making any hiring decisions.

When the news of a public relations problem breaks, it doesn’t take long for information to spread. PR issues involving corporate scandals, employee-customer relations, and bad business practices are not as rare as one would like to think. If you own an internet-based business, fighting PR fires is even more difficult. The problem with owning and operating an online business is that each and every one of your customers can quickly become a critic. Whether it is blog posts, customer reviews, or a quick email to friends and family, online customers share their experiences like wildfire.

Here are some important factors you should consider when a PR issue arises that is related to your internet-based business:

• Know what is being said about your business and who is saying it. You might need to enlist the help of other employees to comb internet pages looking for tidbits attacking your business. Make sure to access a variety of online resources, from social networking sites like Facebook to online discussion forums like Craigslist and Yelp, as well as private blogs. Create a file that includes what is being said about your business and who is saying it. These are people you will need to include on your contact list once you issue a formal statement.

• Tell your customers what the facts are. Issue a formal statement that contains as much hard evidence and fact-based argument as possible. Be matter-of-fact about the details and be genuinely sincere if an apology is necessary. Contact the customer(s) who have been directly impacted by the crisis prior to releasing the statement and deal with their concerns one-on-one.

• Revise policies and rebuild your reputation. Throughout a crisis, you will be able to identify breakdowns in certain areas. This might mean you need to adjust certain policies regarding customer service, best practices, or things like refund or exchange policies. Revise your policies in a directed fashion to try and eliminate the same mistake from happening again. Look for ways to repair broken relationships and reconnect with your consumer base.

The most important thing to do when fighting a PR fire online is to act quickly and amicably. Do not take allegations that are made about your internet-based business lightly. With millions of readers all over the world, anyone looking at negative PR materials is a potentially lost customer.

Like any small business owner, you want to get the best value for every dollar spent – and this includes your communication services. Many businesses are exploring the options of switching from a landline service to a voice-over-internet-protocol (VoIP) phone system. The trusty landline has been meeting business needs for years, but the VoIP comes with a luxurious list of features. Let’s examine the pros and cons of the VoIP.

VoIPs are much cheaper than most landline telephone services and they offer more features. Most VoIP line systems include the following:

• Voicemail

• Call waiting

• Call forwarding

• Caller ID

• Unlimited local calling

• Unlimited long-distance calling (domestic)

Along with all of these great features, VoIP users can keep their existing phone number or choose a new one with an area code from the provider’s list. It would seem that with all these great features, VoIP is a very logical solution for small business owners. However, there are several challenges associated with using VoIP for telephone services:

• Internet problems – VoIP requires a high-speed internet connection. If you don’t have a solid, lightening quick connection, then there is a great possibility that you will experience outages and frequent disconnections.

• Limited 911 capabilities - In an emergency situation, a dispatcher may not be able to determine your physical address. This can be especially dangerous if you are incapable of talking or if you get cut off from the call.

• Jack troubles – VoIP is not always compatible with every phone jack on your property. Sometimes it will only work well with one or two jacks. Extension jacks throughout your building may need to be replaced to make it work well.

When you balance the features of a VoIP against the challenges, it becomes clear that a VoIP isn’t necessarily the best solution for all small business owners. The costs associated with beefing up your high-speed internet connection may outweigh that of keeping your traditional landline.

Ultimately, you use phones to meet customer needs and those needs are your number one priority as a small business owner. Before making the decision to move from landline to VoIP, conduct research to see exactly how much money you might be able to save and whether or not a VoIP will allow you to meet customer needs effectively.

A new legislative bill has slapped a host of constraints on the credit card industry. Within the next nine months, credit card companies will be forced to change their ways. Some key stipulations of the new bill include:

• Credit card companies must give 45 days notice before increasing interest rates.

• Late fees will be prohibited until a payment is at least 30 days overdue.

• Over-the-limit charges will be significantly reduced across the board.

So what do all of these nuances mean for small business owners?

Welcome Relief

Small business owners are often forced to rely on credit cards to manage a variety of responsibilities, ranging from paying utility bills to stocking their shelves with inventory. Continual increases in interest rates and late fees often impact small business owners negatively. With these new stipulations, small business owners will experience a significant loosening of the credit card belt.

A Leveler Playing Field

Small business owners do not have the luxury of relying on corporate structure to back their credit. Because small business owners often put their personal credit on the line to keep their companies alive, the new credit card regulations will make it easier for them to get ahead.

Shorter Credit Lines

One negative factor that small business owners might want to weigh is that with the regulation of credit card companies, it will become more difficult to secure a line of credit. Credit card issuers will be less likely to extend generous lines of credit to small business owners. Small business owners should be prepared to see shrinking credit lines and less frequent increases as time progresses.

This new legislation is just one manner in which the government is trying to combat the effects of the economic recession. It is obvious that the new credit card bill will change the way that big credit card companies do business, as well as the way that small business owners use their lines of credit. Overall, the new legislation should have a positive impact on small business owners. Keeping up with monthly credit card bills should become more realistic in the near future.

Have you ever wondered just how much money your business is worth? This might be a question you ponder out of plain curiosity or because you have an interest in selling your business. Whatever the case, there is no simple formula for determining the value of your business, but you can use the following questions to guide you in determining the value of your business.

What does the business own?

Take a look at the assets, inventory and equipment that are part of the business. These are important entities that contribute significant value to your business. At bare minimum, the amount invested in office supplies, special equipment, property, and inventory makes up a core percentage of the value of your business. Make sure to factor in depreciation for items like computers and company vehicles that need to be updated or replaced regularly. Also consider practical items like shelving units and displays, which are integral to business functions, but not necessarily high dollar items. In total, all of the little pieces of equipment and inventory that your business has may add up to much more than you could imagine.

What are the yearly revenue stream and profits?

In addition to the physical property of the business, the yearly revenue stream is the next factor in determining its value. While revenue is only a crude approximation of how much a business is worth, it is an important indicator of the viability of the business. The other critical number is how much profit the business generates yearly. Comparing the revenue stream against the profits often generates a more realistic projection of what your business is worth in terms of dollars and cents. Generally speaking, an average business is “worth” three to six times its annual cash flow.

What is the outlook for the future?

The final factor to consider when determining how much your business is worth is the outlook for the future. In the event that declining revenues and profits have left your business flailing, your business clearly will not have the same kind of value as one that is thriving and growing. By examining records for the past five years, as well as economic predictions for the future, you can develop a better understanding of how much your business is worth.

Media and technology are exploding, and thanks to websites like YouTube and Metacafe, videos are quickly gaining popularity. In a matter of seconds, computer users can download short clips, news stories, and even full length feature films. Video is an excellent way to share information with consumers, as well as increase interest and traffic on your website. Here are some of the reasons why online video is effective and why your business website can benefit from videos:

• Credibility – The modern consumer enjoys seeing proof about products and services offered online. With a video, there is a heightened sense of credibility for your business if the images can help answer questions and concerns.

• Entertainment – Videos are entertaining and give customers just one more added reason to spend more time browsing at your website.

• Competition – You can set yourself apart from other competitors by using high-quality videos that are fun and entertaining for customers. Video will give you an extra edge when it comes to competing with other small and large businesses.

Along with all of these great benefits are several problems with video when it comes to your business website. Some of the problems and concerns commonly associated with video include the following:

• Cost – You will want a well-made video for your website, which means you might have to make a significant investment.

• Time – Making good videos is time consuming. From conception to shooting and editing, it will take a significant investment of your time to create a great one for your business website.

• Technology – Not all computers are created equal, and video may slow down the speed of your website. This might cause frustration for customers and you could lose potential sales.

Video can certainly spice up a marketing campaign, as long as you have the time, creativity and energy to do the job right. Take your consumer market into consideration, explore the websites of your competitors, and survey your customers before you draft your first video script. Weigh the strengths and weaknesses of video as you decide whether or not to include it on your business website.