Business Information for Entrepreneurs by an Entrepreneur

There is no shortage of criminals looking to take advantage of anyone. Small businesses are especially vulnerable to fraudulent acts and scams that are designed carefully. With advances in technology, criminals are also become more advanced and more creative. Telephone, email and other computer applications are now at the center of scams involving small businesses.

Telephone Scams. Criminals like to use the telephone to collect pertinent information about small businesses. One such scam involves a representative (criminal) who calls and asks a small business to “update” their information for an online directory, such as the yellow pages. The representative will use careful language that is actually designed to rope the small business into an agreement for an online listing service. The business will then be charged a fee for the “service.” To not fall victim to this scam, avoid giving out business information or dealing with suspicious individuals over the phone. If you are unsure of the “company” or the “representative,” chances are that it is a telephone scam.

Email Scams. Since email has become the preferred method of communication, it has also become the preferred method of working for con artists and criminals. There are a variety of different ways that scammers will try to collect personal and business information via email. An email scam that has a goal of obtaining personal information is known as phishing, and there are many creative ways to accomplish this scam. For example, you might receive an email from what looks like your business credit card company, informing you of some changes to your account. If the scam is well-developed, it might even look like the email was sent from a major financial institution like Bank of America or Chase. The email will ask you to provide pertinent information, such as addresses, account numbers or passwords. This is a total scam, as your financial institution would never ask for such information via email. If you have any doubts, call your bank or financial institution directly.

IRS Scams. Tax season is especially stressful for small business owners. Criminals take advantage of the added stress and pressure by developing scams that are specifically related to the IRS and taxes. This is typically done through phone or email contact by individuals claiming to be the IRS. Sometimes the scams come complete with documents bearing the official IRS logo. IRS scams are typically designed to steal identities. Stay updated by visiting the real IRS’ website that provides information on the most recent scams.

Criminals will continue to get smarter and more creative; therefore, it’s important to exercise caution and awareness at all times. Protect your personal and business information. If you are suspicious, don’t be afraid to do some investigating on your own. Chances are that a few questions will lead you to the right answer and reveal fraudulent activity.

Vistage, the world’s largest CEO group (mostly small and mid-size business CEOs), takes quarterly surveys of its members to get a sense of what they feel about the economic climate.  Since small and mid-size businesses employ 75% of the country’s work force, this is a good indicator of how the nation’s employers see things.

Good news!  Confidence is on the rise for the second quarter in a row.  It is now almost back to 2008 Q2 levels.

While this does not mean that the economy is out of hot water, it does suggest that businesses feel things are improving.  Some more data points:

Download the complete CEO Confidence Index (2 page PDF file)

Small business is at the crux of the American economy. That is why the White House is looking for creative ways to help small business owners make it through these difficult financial times. President Obama and his administration have developed several different methods to try and provide assistance to small businesses that are struggling. While government officials don’t necessarily agree with all of these plans, the suggestions are evidence that someone has heard the outcry from small businesses that are struggling to stay afloat:

Government-Backed Loans. One of the most popular suggestions by the Obama administration is that the government should underwrite loans that could be used to fund small businesses. This would make more cash readily available to small business owners who need to cover the costs of overhead or make investments in their companies. This is a risky idea for both the government and taxpayers who would face repercussions if small business owners find themselves unable to repay the loans.

Extend Lines of Credit. Another suggestion is to allot part of the money that has been provided to the financial sector to extend lines of credit to small business owners. The government provided just over $700 billion to bail banks and other members of the financial sector out of an economic crisis. Because banks are the primary source of funding for small businesses that open lines of credit, there is a belief that some of these funds should be targeted right back into small business.

Stimulus Funding. Some stimulus dollars have already been invested in the area of small business. In conjunction with the Small Business Association, about $730 million has been committed to lending guarantees. This stimulus money is packaged into loans that small business owners can apply for at competitive interest rates, and deferred payments are also available. The funding is already being provided by the Small Business Administration, but it is a small dent in a much larger problem.

With each of these different suggestions and strategies by the Obama administration, the key is finding an effective solution that is also efficient and affordable. Taxpayers cannot be expected to assume responsibility for the financial problems of all small businesses across the nation. It will take a combination of strategies like these, as well as tactful financial planning, in order to promote recovery in the small business sector. There is not a magic solution to the complex problems created by the ongoing economic recession. The key is implementing a variety of creative strategies to combat the problem as a whole.

The majority of identity theft schemes focus on the collection of personal identification. Criminals specifically take advantage of individuals who have extensive credit lines and large reserves of cash on hand. This makes small business owners especially vulnerable. Small business owners often times have access to lines of credit in a variety of different capacities, as well as cold hard cash onsite or in reserve.

Entrepreneurs need to exercise extreme caution when it comes to protecting information about personal identity, financial matters and the overall integrity of the business. Here are some practical tips to help protect your small business from identity theft:

Watch What Goes in the Trash. As the saying goes, one man’s garbage is another man’s gold. Identity thieves are especially adept at collecting pertinent information out of dumpsters. Nothing should be put in the trash that contains information like bank account numbers, social security numbers, or any other important financial information that should be protected. Invest in a good shredder and instate company policies requiring employees to use them as necessary. This is one of the easiest ways to protect your business.

Monitor Credit Reports. Another simple way to protect small businesses from identity theft is to perform biannual checks of credit reports. Often times, a small business will be associated with social security number of a business proprietor. In that case, it is important to get a credit report and look for personal or business-related discrepancies.

Use an EIN. An employer identification number (EIN) is a unique tax ID number that business owners can use in lieu of a social security number. The IRS issues them for free, and it is much safer than using a sole proprietor’s social security number.

Protect Electronic Data. Some identity thieves are also skill computer hackers. This means that your electronic files are subject to breaches of security. Take steps to ensure that the virus protection and firewall software on your company computers is kept up to date and in working order. Set up your protective software to perform scans daily. Password protection is another simple measure that can enhance security of electronic data. Information is less likely to fall into the wrong hands if all company computers require a username and password for access.

Protecting a small business from identity theft isn’t rocket science, but it does involve careful planning and taking targeted steps to avoid falling victim. Always protect information about your business just like you would protect your own personal information, and you’ll be well on your way to thwarting any attempt at small business identity theft.

The business world grows more and more competitive by the minute. Standing out and getting recognition is a challenge that many small business owners struggle with each day. Corporate competitors make it increasingly difficult to offer all the products and services that consumers demand at affordable prices.

How can small businesses differentiate themselves from brand name corporate competitors? Just like the recent “going green” trend in business, “going local” can transform the way that small business operate and set them apart from big chain stores. Here are a few ways that “going local” can benefit small businesses:

Treat Customers Right. Small businesses offer more personalized service to customers. There is something to be said when you can walk into a grocery store and the cashier knows your name. Hiring local employees to serve customers is a good way to start building meaningful, customer-centered relationships. It is also important to go above and beyond the call of duty to meet customer needs. This is relatively simple to initiate, yet will fuel word of mouth at the grassroots level in the small business community.

Build Relationships. Stocking your shelves and resupplying your office with goods from local vendors is a great way to build relationships in the community. For example, a restaurant owner who buys produce from a local farmer creates a unique bond that has the potential to last a lifetime. In addition, the restaurant owner is contributing to the sustainability of the farm, therefore enabling further growth and development in the community. The model of local, sustainable relationships is what has propelled many restaurants, such as the famous Chez Panisse, into international limelight.

Save on Time & Money. While other vendors and suppliers may feature lower prices on goods, the cost of traveling across town and/or paying shipping expenses add up quickly. If you weigh the price against the cost of procuring the items, it is likely that you will find some extra savings when you buy local. Time is money, and a great deal of time can be saved by buying products locally.

The economic recession has made things increasingly difficult for small business owners. Now more than ever, going local can help restore normalcy. The local trend is growing just as fast as the going green trend did. It’s time to reach out and help build sustainability in local communities – and watch your bottom line grow.

Disaster can strike at any moment, and small businesses are at a significant risk during times of turmoil. The best way to prepare for any disaster is to expect the unexpected. An important part of planning to manage a disaster is developing a plan of action, long before any sort of disaster occurs. There are three important components that should be included in a small business disaster plan:

• Protecting Human Resources. Human resources are the most precious entities that your small business has. The safety of employees should be considered first and foremost in a disaster plan. This portion of the planning includes evacuation procedures, notifying family members, and keeping accurate contact information on file for every employee.

• Protecting Physical Resources. The second most critical element of your small business is the physical property that allows you to do business every day. From computers to office furniture and building structures, physical resources are costly to replace. This portion of disaster planning should include a dependable backup computer system, archiving of data and information, and proper insurance coverage for the building and its contents.

• Planning for the Business Community. If disaster strikes, it will have a greater overall impact on the business community. Your suppliers may fail to deliver key items in the event of a disaster; therefore, you need a backup plan for resupplying and for making sure that you can produce deliverables for your own customers.

Small business owners are not alone. There are many organizations, such as the Red Cross and National Guard, which provide training, support and planning advice right in your local area. Another valuable resource is the Small Business Association, who features step-by-step instructions and tips for disaster preparedness. The U.S. government also features a host of interactive online tools that are available at Ready.gov to help families and businesses prepare for any disaster.

Online resources regarding disaster preparedness are available to all types of business owners free of charge. There is no excuse for failing to access these free resources to protect your small business and employees. From natural disasters to pandemic outbreaks and hostage situations, every business needs to develop a plan of action.

In an attempt to stimulate the economy and create new opportunities for business owners, the Small Business Association (SBA) has recently loosened some of its requirements for 504 loans. This move by the SBA is designed to help generate some much-needed revenue in the small business community. 504 loans are among the least expensive options available to small business owners. But is a 504 for loan for everyone?

The Terms

The down payment for 504 loans is also very affordable at 10%. There are 10 and 20-year repayment options. However, a 504 loan has some very specific stipulations. The loan must be used to expand a business, meaning that it must create or sustain a certain number of jobs. Small business owners must use the funds by purchasing fixed assets, such as a building or new equipment.

The Changes

Recent changes in policies have made it more affordable for small businesses to obtain a 504 loan. A number of fees have temporarily been eliminated, lowering the overall cost of the loan and making it possible for small businesses to thrive. Other changes include the allotment of a limited amount of debt refinancing with a 504 loan.

The Catch

The SBA 504 loans feature a tricky set of terms given the current economic conditions. Very few small businesses are looking at expansion during these times of financial uncertainty. As the market continues to shift, small business owners are becoming more and more conservative with spending, development and expansion projects. The recent changes to the loans make it easier and more affordable for small business owners to take out a 504 loan; however, these loans are basically restricted to expansion-based projects. The money absolutely can’t be used to cover existing debt or the cost of overhead.

The Bottom Line

While the financing options and repayment terms are enticing, the restrictions on what the money can be used for make it a risky solution for small business owners. For the right business with a well-laid plan and signs of sustainability, a 504 loan might be a wise solution. The bottom line is that a 504 loan might not be the solution every small business owner is looking for, but it may meet the needs of certain types of business in key industries.

Managing the day-to-day operations of a small business can be tiresome. From serving customers to placing orders and fulfilling payroll, there just aren’t enough hours in a day to get everything done. If you are a small business owner who struggles to get it all done, outsourcing may provide a unique solution. Here are some questions you can ask yourself to determine whether or not outsourcing is right for your small business:

What kind of financial position is my business in?

Outsourcing has the potential to save a lot of money for various reasons. You can call upon a virtual assistant or virtual worker when you need them, which eliminates the need for full or part-time employees. In addition, there is no need to outfit a virtual assistant with office space, supplies or a computer. If you are looking for a cost effective way to complete the little tasks that take up so much time, then outsourcing work to a virtual employee or firm might be the right solution.

Does the volume and nature of your business change from time to time?

Small businesses often experience fluctuations in volume of work. There may be peak seasons when extra help is necessary, as well as down time when too many hands are on deck. If you operate a business that experiences volume changes like this, then outsourcing is a good way to manage overflow work during the busy times, while not paying extra for labor costs during the slow season.

Is there a degree of flexibility when it comes to the work I am outsourcing?

Certain tasks that need to be completed are more flexible than others. For example, data entry must be done, but it is not necessarily a high-priority item on a to-do list. Placing phone calls is sometimes necessary too, but the hours and deadlines for completion are usually somewhat flexible. If the tasks you need assistance with completing are somewhat flexible, then outsourcing work to a virtual employee or firm is a logical choice.

Outsourcing provides unique financial solutions and flexibility for small business owners. The decision to hire a regular full or part-time employee should only be made when there is ongoing work available that is essential to the operation of the business. Look to outsourcing for “non-essential” tasks that are not ongoing to meet small business needs.

Cash in hand is important in any small business endeavor. It takes not only a savvy entrepreneur, but one with the financing and management skills to put the money to good use. The rumor mill is constantly running regarding grant money and small businesses. Is there really cash available for aspiring entrepreneurs?

The truth is that the government isn’t giving away free funds to any type of small business owner. If you are an average business owner with a coffee shop, clothing boutique or auto detailing business in mind, then chances are slim that you may secure a government grant. On the other hand, there are some special circumstances that might qualify your small business for a government grant:

Community Development. The government often awards grants to nonprofit organizations that are striving to start businesses or complete projects that will benefit communities as a whole. For example, a general contractor might be able to get a grant for a downtown redevelopment project. Special interest groups are often times the recipients of grants that enhance communities in other ways, such as offering community healthcare education programs or substance abuse treatment programs.

Cutting-Edge Research. Another leading area that the government channels grant money into is research. The government only supports specialized small businesses that are dedicated to a unique cause, usually in fields related to science and medicine. Typically, grants given for research are applied to develop new and exciting technologies.

Veteran & Disabled Preference. For veterans of the armed forces and persons with certain types of disabilities, the government sets aside a certain amount of money to be issued in the form of grants. Monies obtained through this method can be used by veterans or disabled persons to purchase equipment that is necessary to start a business, or perhaps attend college or vocational classes to learn a new skill.

Economic Stimulus. If you happen to live in a part of the country that is under distress for some reason, your business may qualify for a grant. This might include a region that is struggling as a result of a natural disaster, such as a hurricane or flood.

This is the bottom line on government sponsored grants: There is no such thing as “free money” and the government only supports specific initiatives that are aimed at specific outcomes. However, if you fall within the ranks of endeavors the government sponsors, you can access helpful funds that are essentially “free.”

If you work with a group of people, you have to hold meetings. There is really no way around it. You can minimize the number of meetings you have. You can hold meetings online or by phone. But you still have to hold meetings at some point to discuss the tasks at hand.

So, how much do these meetings really cost? You might be surprised at how expensive they can be. Take our weekly management meeting as an example. We gather in our conference room to go over the key projects we are managing.

Let’s take a look at what goes into calculating the cost for a 1 hour meeting:

• Staff time (i.e., estimated hourly rate of combined staff)
• Proportionate share of employee benefits – vacation time, medical, 401k, training, travel, other perks
• Proportionate share of office space rent, computers, lunches and other direct or indirect costs

We’re a pretty lean company and only those who really need to be in the meeting are there. Yet in our case, this 1 hour meeting costs about $800. Which means that if we run over by just 15 minutes, it costs $1000.

This does not include the productivity costs, which is the time that could be spent doing something else. Of course, you would hope that the meeting is productive enough that it helps guide the team in case we needed to tweak the tasks.

So, what do you think? Is your next meeting worth the cost?