Business Information for Entrepreneurs by an Entrepreneur

Businesses across all industries are being forced to tighten their belts as a result of the ongoing economic recession. Cost cutting is a primary way that businesses are combating the effects of the recession; however, all cuts are not created equal. There are certain cost cutting measures that can actually have a detrimental effect on business operations in the long run.

1. Slashing the marketing budget. Marketing is a costly endeavor, regardless of the mediums are used. Many business owners see making cuts to the marketing budget as the best way to save money. However, the only way to generate a solid revenue stream is if customers know who you are, where you are and what you have to offer. This is accomplished through marketing, and therefore marketing is something that your business should not cut. Some businesses have actually increased their marketing budget to try and counter the effects of the recession. One good way to refine your marketing techniques is to use feedback mechanisms to see what works and what doesn’t. This can be as simple as a quick online survey of customers or asking walk-in buyers where they learned about your business. This will allow you to focus your marketing monies on strategies that actually translate into results.

2. Refusing to accept credit cards. There was a time when cold hard cash or personal checks were the standard in business. Those days are long gone, and people are now using credit and debit cards as staples in their lives. Some business owners believe that refusing to accept credit cards is a quick way to save on costs. Processing fees for credit cards may take a percentage out of your operating budget; however, your sales will most certainly drop if you stop accepting them. You may lose sales all together or find that each sale’s value has been reduced. The loss is not worth the savings in processing fees in the long run.

3. Cutting prices. The prices you charge for products or services are essentially the life blood of your business. When times are tough, business owners may be attempted to slash prices in order to attract more customers. This is a move that can have a negative impact in the long run. Instead of cutting prices across the boards, look for ways to give customers additional value, such as package deals, weekly specials, coupons and incentive programs.

In these tough economic times, it’s important to exercise caution when trying to tighten the belt. Avoid these three cost cutting mistakes and look for other creative ways to save on overhead.

Time is running out for small businesses to save on incredible tax perks. The year 2009 is more than half over, and some impressive tax incentives expire on December 31st. Before 2010 arrives, small business owners can take a proactive approach to capitalize on these special tax perks. Here are some of the most lucrative tax benefits that are available to small business owners, as well as supporting details about what needs to be done to take advantage of them in 2009.

Bonus Depreciation Break

The government has made provisions for something called a bonus depreciation break this year. A bonus depreciation break applies to just about all types of new business equipment, as well as some types of software. It is possible for small businesses to claim tax deduction that is equal to 50% of the remaining balance due for the equipment. In certain cases, businesses will be able to create some net operating losses or increase the existing net operating loss numbers. The net operating loss is, of course, another source of tax break for small businesses. This bonus depreciation break must be taken advantage of before December 31st, 2009.

Section 179 Deduction

Section 179 is a special deduction that relates to the depreciation of certain equipment that a business has procured. For example, any new equipment or software that has been purchased is eligible for a deduction as soon as it is put into use at the business. This deduction applies for equipment and/or software purchases up to $250,000. These terms are not applicable to equipment that has been leased. In 2010, the Section 179 deduction will be reduced to cover purchases up to $135,000. This is a significant reduction, and therefore taking advantage of Section 179 in the year 2009 is important.

There is a possibility that the government will to extend the deadline for bonus depreciation breaks and Section 179 deduction beyond December 31st, 2009. However, there is no concrete guarantee for small business owners beyond this target deadline. It is more prudent to strike now while the iron is hot, rather than waiting it out and becoming ineligible for perks beyond 2009.

If there is one complicated aspect of entrepreneurship that small business owners struggle to understand, it’s intellectual property. As if time and money don’t present enough troubles and constraints for small business owners, intellectual property simply serves to muddy the waters even further.

The facets of intellectual property are largely misunderstood in the small business world. There are in fact some key points that can help small business owners protect their rights, assets and interests using the power of intellectual property law. Here are some commonly held myths regarding intellectual property and practical applications of truths for small business owners.

Myth #1 – Intellectual Property Rights Are a Waste of Time and Money for Small Business Owners. Intellectual property isn’t just about patents; it’s about protecting the unique brand and image that your small business has developed. Many small business owners often forget that intellectual property also pertains to trademarks, the look and feel of a certain product, and even the website addresses that the company uses. These are relatively simple assets to protect without the hefty price tag like a patent carries. Small business owners can easily secure intellectual property rights for items like trademarks and web addresses.

Myth #2 – I Already Have a Trademark, Therefore, My Brand is Totally Safe. A trademark is an excellent way to protect your small business and your brilliant ideas. However, a trademark doesn’t automatically grant you rights to everything under the sun. For example, if you have a trademark registered with the U.S. Patent and Trademark Office, it doesn’t stop someone else from registering a URL with the same name as your trademark product. You might not be able to get the exact URL you desire, even if you have a solid trademark in hand.

Myth #3 – My U.S. Patent or Trademark is Good All Over the World. International business has transformed the world of intellectual property. When doing business in other countries, you might discover that it is not possible or very costly to secure intellectual property rights, such as a trademark or URL.

Small business owners need to exercise awareness and prudence when it comes to intellectual property rights. For more specific information regarding intellectual property, especially patents and trademarks, consult the Small Business Association or the US Patent and Trademark Office.

As a small business owner, you may rely heavily on your staff members to help your company reach its full potential. However, are your hiring costs hurting your bottom line? Here are three of the most costly hiring mistakes that small business owners make and tips to avoid making them.

• Don’t wait until a vacancy opens to recruit talent. One problem that small business owners face is that they cannot always compete with larger companies when it comes to salary and benefits packages. This can make it difficult to attract the attention of high-performing employees. Further, if you only recruit when you have a vacancy, you limit your candidate pool tenfold. Instate a rolling application process that allows interested parties to submit employment applications and/or resumes on an ongoing basis. You might just come across a talented candidate with a fabulous skill set that can revolutionize your small business.

• Don’t forget to check references and perform background checks on candidates. The majority of resumes are not a clear reflection of who the real person is seated across the table in an interview. Some people interview exceptionally well, but have poor track records with previous employers or legal problems. You can save your small business grief by screening out these types of candidates early on in the process. The only way to do it is to verify references and conduct a thorough background check. If you can avoid hiring a slacker who will likely quit after six months, it will save you a great deal of energy and money.

• Don’t settle for anything less than the best. Small business owners often feel isolated because of their size and lack of competitiveness. This doesn’t mean that it’s necessary to choose the “best of the worst” to fill a job vacancy. Don’t be afraid to leave the vacancy open, develop a more targeted recruiting campaign, or go back to the drawing board if your candidate pool is less than stellar.

These basic tips can increase the likelihood of finding a high-performing employee that will stay with your small business and help grow the bottom line – instead of costing it.

Small businesses are always looking for ways to cut down on operating costs. A growing trend in small business is the use of virtual assistants. These flexible assistants are savvy at conducting business remotely. They can lend a helping hand when times get tough or busy for small business owners. Virtual assistants aren’t just a way to get a job done; they are also a means for small business to cut down on operating costs.

• Eliminate the need for regular full or part-time employees. Virtual assistants can be used to cover overflow work during peak seasons and unexpected rushes. Because it’s not necessary to hire a virtual assistant for a long-term employment relationship, small business owners can use their services as needed. This means that when business is slow, you are not faced with unnecessary labor expenses.

• Find a specialist in a specific field. Some virtual assistants are specialists or gurus in a certain field. You can get things accomplished more effectively and more efficiently by employing a virtual assistant with a special concentration in a certain area. Popular specialties include website design, real estate, law, event management and marketing.

• Direct communication eliminates errors. Virtual assistants will communicate with you via phone or email. Messages don’t get mixed or confused because they will deal directly with the business owner through one-on-one communication.

• Virtual assistants typically have lower hourly rates. Because of the flexibility of their job and their enjoyable work environment from home, virtual assistants typically charge less when paid by the hour than a traditional employee working onsite would expect.

• Fixed rates make budgeting easier. Many virtual assistants will negotiate a fixed rate per project rather than charging by the hour. This helps small business owners develop a more viable budget well in advance.

• There is no need for perks, incentives or benefits for virtual assistants. Employees often expect more out of their working experience than a virtual assistant. They require encouragement through perks, incentives and benefits that aren’t necessary when it comes to virtual assistants. Virtual assistants are typically very self-motivated and they don’t require any “extras” to get the job done right.

Virtual assistants are an affordable and flexible option for busy small business owners. They can also make finding a balance between life and work just a little easier.

Move over laptop computers, PDAs and cell phones! There is a new tool in the business world that is making it easier take care of day-to-day business functions. The iPhone isn’t just a tool for video game junkies and music fanatics. It’s a powerful resource that makes doing business easier. Here are some of the ways that the iPhone is benefitting small business owners:

Mobile Business

When a business trip becomes necessary, the iPhone is there to simplify your life. You can store pertinent information about your business, including expense reports, sales data and projections right on the phone. It’s easy to load business data on the phone and carry it off to a meeting hundreds of miles away. The iPhone is more than just a way to share numbers and figures. You can also format your stats in an attractive way to present to business partners, potential investors and other stakeholders.

Mobile Tracking

With the iPhone, it’s easy to track data like stock prices, sales on eBay, and even sales reports efficiently. Users can view these types of files and more with the iPhone. Keeping track of what’s going on in your business has never been easier. The iPhone allows you the freedom travel freely and stay updated at all times.

Mobile Money

The iPhone offers an invoicing application that makes it possible to generate invoices for customers in the palm of your hand. There is even a way to accept credit card payments with the iPhone. Another mobile money feature on the iPhone is a comprehensive bidding system that allows you to generate easy-to-read bids on contracts for your potential customers. Applications like invoicing and bidding make the iPhone a popular tool for making money on the go.

The iPhone saves time and space, two resources that small business owners often find in short supply. Apple continually looks for ways to update and improve the iPhone as needs arise. This means that small business owners can expect their product to evolve and change right along with popular business trends. As a business tool, the iPhone leads the technology industry.

Protecting your company from identity theft might not be at the forefront of your mind as a small business owner. However, the Federal Trade Commission (FTC) has instated a new “Red Flags Rule” that may change how you conduct business in the near future. The “Red Flags Rule” is designed to protect American consumers and business owners from identity theft, a crime that is growing steadily in popularity. Identity theft is a huge problem that can tarnish one’s reputation, both personally and professionally, for many years.

The FTC’s “Red Flags Rule” targets specific types of institutions to better safeguard personal information. These institutions include banks, any company that issues credit cards, or companies that offer loans and/or deferred payment options to customers. The “Red Flags Rule” insists that businesses who lend money must take measures to verify the identity of those who are borrowing money or establishing lines of credit. This rule might impact business operations in the following ways.

• Industries. The “Red Flags Rule” may impact small business like small banks, private medical and legal practices. These types of businesses grant loans or offer extended payment plan options and often times have pertinent information about their customers on file. This makes them vulnerable to identity theft attacks.

• Complying. There are several different ways that small business will need to comply with the “Red Flags Rule.” Address verification is a critical factor. Before lending money or extending a line of credit, business owners must ensure that the address on record matches the address that appears on a basic credit report. Another measure for compliance includes verification of information. For example, if a customer calls to change their address or add another name to the account, the business must attempt to verify the caller’s identity through strategies such as calling the customer back at the phone number on record.

• Costs. The costs of complying with the “Red Flags Rule” are minimal. It might be as easy as instating policies that require employees to ask certain questions. Overall, these measures should reduce incidences of fraud and save the business money in the long run.

For more information on the new “Red Flags Rule,” consult the FTC’s official website on the law at http://ftc.gov/redflagsrule.

Our MoreBusiness.com site has opened the doors to the State Business Licensing Center, which is a free online resource that helps entrepreneurs in all 50 states quickly and comprehensively access information about their state’s specific business licensing requirements.

Here is our full news release:

To help entrepreneurs effectively navigate their states’ business licensing requirements, MoreBusiness.com has released its comprehensive State Business Licensing Center. This free online resource has compiled traditionally piecemeal regulations regarding state licensing into one convenient and comprehensive center. Entrepreneurs in all 50 states can now quickly and easily access all the information they need to start a business in their specific state.

When you start a business, there are so many facets to consider. Entrepreneurs should not be spending hours researching piecemeal information on licensing requirements – but instead should be focusing on the core of their startup

The State Business Licensing Center was created to compile important licensing information and resource in one convenient place for entrepreneurs to easily access.

When starting a business, it is important to be aware of the license and permit requirements outlined by the state in which the business will be operated. Each state government requires varying licensing requirements depending upon your business type. This new resource is designed to be a one-stop center to help entrepreneurs in all states find the important business licensing information that they need.

When users click on the state in which they plan to conduct business, they will find valuable information that will guide them through their state’s specific requirements. This includes important state-specific points to remember, steps to securing a business license in the state, local sales tax information and other pertinent resource links.

“When you start a business, there are so many facets to consider. Entrepreneurs should not be spending hours researching piecemeal information on licensing requirements – but instead should be focusing on the core of their startup,” explains CEO Raj Khera. “The State Business Licensing Center was created to compile important licensing information and resource in one convenient place for entrepreneurs to easily access.”

The licensing center also includes links to apply for licenses and permits online, register your business trade name, and obtain your Employee ID Number from the IRS. With MoreBusiness.com’s new resource, there is no need to search around the internet to piece together all the information pertaining your state’s business license requirements. The State Business Licensing Center outlines in one condensed resource what every entrepreneur needs to license their business.

This new resource center can be found at: http://www.morebusiness.com/state-licensing-center

As the internet continues to grow as the most popular tool for gathering and sharing information, search engine optimization (SEO) is also growing in importance. This is a simple technique used by web designers and business professionals to maximize the likelihood of a website appearing in a list of search engine results.

Studies show that the closer to the top of the list that a website appears in a collection of search results, the more likely a user is to click on it. In fact, Google users prefer to click on “natural” listings 70% more than pay-per-click (PPC) advertisements.

Thankfully, SEO is easy to implement and at no extra cost to a business owner. Therefore, using SEO is one of the best “free” advertising sources for your business. How can you maximize SEO to get the best results? Use these tips to help you transform your website into a higher performing tool:

1. Use Keywords. The best place to find out words and phrases that are commonly searched for on the internet is by performing an internet search yourself. Websites like Keyword Discovery, Word Tracker, and Google AdWords provide comprehensive feedback on the most commonly used words and phrases. Keywords change regularly so check these sites every few months for what your customers are using to search for your type of product or service.

2. Optimize Your Page Titles. Use keywords and phrases in page titles. Search engines scour through page titles before tackling the actual text included on websites.

3. Optimize Your URLs. Use keywords and phrases in URLs and file names on your website. Search engines use these as part of the search criteria. The more keywords and phrases you use, the more likely your page is to show up in a list of search results.

4. Publish Content. Online, “content is king,” and the more content you publish on your website, the more likely that the search engines will rank you appropriately for your particular keywords. Consider starting a corporate blog or publishing resource articles on your website.

5. Revise & Revisit. SEO is not something that you do one time. It is a process that must be revised and revisited frequently. Dedicate yourself to a schedule and look for opportunities to enhance SEO features on your website at least once every three months, more if possible.

Generally speaking, you can use SEO techniques on your own at no cost, or for a minimal fee with the help of a professional. SEO can enhance traffic to your website by tenfold. It is worth the investment of time to generate such a return.

Washington writes:

What is the best way to handle contract disputes with clients?  My company has a business agreement for clients to sign.  Is there ever a time when a company should sign a clients’ independent contractor agreement?

Washington:

Whenever possible, get clients to sign your contract.  If the attorney who drafted your contract did their job well, your contract should more favorable to your company.  It would specify that arbitration or disputes being handled in your state, not the client’s (if they are out of state), plus include other stipulations that are fair to your client but also advantageous to you.

There are exceptions.  If you are using software or an online service, you typically review terms online and agree to them by clicking a checkbox before you proceed to use the tool.  But for consulting engagements or high ticket items that require a written signed contract, try to use your own contract.

That said, some clients will absolutely insist that you sign their agreement.  Make sure that there is nothing in their contract that is detrimental to you.

I once had a big brand name client agree to signing our agreement.  However, their lawyers wanted to modify parts of it, which wasn’t surprising since that’s what lawyers at big firms do.  The document they returned looked like it went through an episode of Extreme Makeovers – Lawyers Edition.  It contained so many negative and heavy handed attributes that I was very uncomfortable signing it. The client was frustrated because she really wanted to use our company and did not feel our initial terms were out of line, but she was only authorized to sign what her lawyers agreed to.  In the end, the deal broke down.

Be prepared to walk away from a deal if the contract terms could put you in a bind.