Business Information for Entrepreneurs by an Entrepreneur

Don’t let the recession dampen your company’s holiday spirits. Show your employees your appreciation for them by throwing them a festive holiday party – even on a budget!

Although many companies are paring down their ordinarily over-the-top parties in favor of simpler ones, it is still possible to throw a great party that will be enjoyed and remembered by your employees for years to come. It is important to remember that most employees will appreciate the gesture more than the affair. Paring down the expenses will often go unnoticed, but your kind deeds will not!

• Instead of hosting your event at a restaurant, consider catering a lunch at the office. An office is often a more informal get-together, as it allows employees to interact in a more comfortable atmosphere. In fact, many employees will enjoy an informal luncheon or dinner much more than a stuffy restaurant.

• If a catered affair isn’t in the budget, consider a potluck dinner. Potluck dinners are making a comeback as more and more people find themselves in tight financial situations. Many employees will relish in bringing in and sharing their favorite dish, and there is sure to be plenty of delicious entrees to go around!

• Consider hosting a party at your house. It will give you a chance to mingle with your employees on a more personal, unassuming level. It will also show your employees your commitment to them and your gratitude for their service.

• Instead of a professional band or DJ at your company party, consider using an iPod and dancing to your favorite tunes. Ahead of time, you can ask your employees for a list of their favorite songs to make the event personalized for everyone.

• To save on restaurant or catering costs, consider having your holiday party on a weeknight or during the day instead of the evening. Often times, catering halls and restaurants will offer reduced prices if you have your function during an off-peak time and day.

• Shorten the duration of your holiday party, and you’ll find that your bar tab will be considerably less.

• Make it a family affair and keep the menu simple and the kids entertained with fun music and games. A simplified menu of cold cuts and chicken fingers will save your budget, and your employees and their families will be grateful for hosting a family-friendly affair!

Do you think your employees are desperately seeking healthcare benefits from your small business? It’s completely natural for a business owner to assume that employees are interested in benefits. Whether it’s a retirement savings plan, incentive program, or health insurance, these are perks that people definitely want.

However, it’s unclear as to which benefits employees desire the most. An employer may automatically assume that healthcare benefits are at the top of employees’ wish lists. A recent survey revealed otherwise.

Is Healthcare a Concern for Your Employees?

George S. May International, a management consulting firm, recently conducted a survey of 1,046 small business owners. The study asked if the business owners had ever questioned employees directly about healthcare coverage. The survey revealed that 55% of small business owners had never even asked if their employees wanted healthcare benefits. The same survey indicated that chief complaints from employees of small businesses included salary size, pay equity within the organization, and poor benefits programs. Healthcare coverage was not specifically addressed by the majority of respondents.

What does it all mean? Employers need to start taking a different approach to addressing the needs of employees. Based on the survey, employees are indicating an interest in taking ownership over their own money and investing it as they see fit. For example, if an employee was given the choice between an increase in salary or health insurance, odds are that they would opt for the salary increase. This money could be invested in a retirement fund, placed in a high yield savings account, or used to participate in a healthcare savings plan.

Save Money by Asking Your Employees about Their Benefits

Modern employees want flexibility and input when it comes to the dollars they earn. Small business owners can actually save money in the long run by taking employee needs into account and responding accordingly. Healthcare coverage is extremely costly for small business owners, and it might be possible to save big in the long run by beefing up on salaries rather than investing in an expensive group policy.

The U.S. Census Bureau identifies 47 million Americans as uninsured. However, it is interesting to note that many employees, 43% of those 46 million, are categorized as “voluntarily uninsured.” This means that they have access to healthcare coverage from employers; however, they opt not to take it. This is evidence that employees want to exercise control and stewardship over their money. In summary, it is important to take the needs of employees into account when developing benefits programs. They are the backbone of your small business, and keeping them satisfied will provide magnificent long-term results for your organization.

Small business owners are often faced with the question of whether to hire people as employees or independent contractors. The answer isn’t always cut and dry, as several factors come into play when making a wise decision in this arena. The fact is that hiring someone as an independent contractor when they should be classified as an employee can be quite costly for an organization. This guide should be a helpful tool for you to avoid mistakes when answering this question for yourself.

• If controlling the way in which a job is done is as important as the end result, hire an employee. When the position can directly reflect positively or negatively on your business, it is probably best to hire an employee. Any one that has direct contact with your customers should absolutely be an employee of your company. When a person is your employee, you have the right to train and assess how they are doing the job you have given them. The use of discipline is also permitted to create whatever behavior you desire. In contrast, when you hire an independent contractor, you will only have control over the end result – and not how they get there.

• When only the end result is important, hire an independent contractor. If the job you are trying to fill only reflects upon your business by whether it is completed or not, you should probably hire an independent contractor. An independent contractor requires less liability and commitment from you as an employer and ultimately costs less. As long as you are certain that you will not need to control how this person behaves or accomplishes the tasks you assign, this is the way to go.

• Be sure to classify your hires correctly. Improperly declaring those who work for your business is a fast way to get in trouble with the IRS. Extensive fines and penalties can and will be levied against organizations that are found in violation. If you are unsure of how a hire should be categorized, you can file form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

There are benefits for hiring employees and independent contractors alike. Be sure to assess each job carefully before making a decision. If you are unsure, do not hesitate to get help from the IRS so they can’t harm you later.

If you are a small business order, then you can’t afford to miss out on an important deadline that is on the horizon. As part of the American Recovery and Reinvestment Act of 2009, the government is extending a special tax refund to small businesses that experienced a significant financial loss in the year 2008.

Expiring Tax Benefits for Small Businesses

Here are some highlights regarding the terms, conditions and deadlines associated with the special tax refund:

• Small businesses that recorded losses in the year 2008 are eligible to apply for the special tax break. The tax break allows businesses who lost money to claim expenses back as far as 2003 (traditionally, one could claim expenses only back to 2006). This five-year window means that a larger refund may be issued.
• Eligible businesses that are owned by individuals must apply for the tax refund by October 15th, 2009. Eligible businesses that are set up as calendar-year corporations must apply by September 15th, 2009.
• Filling out certain forms can help business owners accelerate the refund process. Form 1045 is an application for tentative refund that will speed up the process for individual filers. Form 1139 is the corporate equivalent.
• Refunds for this special tax break will typically be issued within 45 business days.

Time is of the Essence

Time is running out for small business owners to take advantage of this special tax break. This is an excellent way for small business owners to get much-needed cash into their hands with no interest and no strings attached. There is still adequate time remaining to submit the necessary paperwork to qualify for this tax break. Small business owners will need to act quickly in order to process the necessary documents.

Additional details and more specific guidelines regarding the American Recovery and Reinvestment Act of 2009 and the special refund claim deadline is available at these websites:

• http://www.gpo.gov/fdsys/pkg/PLAW-111publ5/content-detail.html
• http://www.recovery.gov/
• http://www.irs.gov

Small business owners should pay special attention to the approaching deadlines of September 15th, 2009 and October 15th, 2009 in order to make the most out of the special tax refund.

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.

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.

Small business owners are plagued with the task of wearing many hats simultaneously. They are leaders, managers, HR specialists, accountants and customer service providers. With the many different responsibilities that are associated with these roles, it’s easy for small business owners to get caught in a sea of multitasking. While it may seem counterintuitive, multitasking can hurt a small business in the following ways:

• In general, doing more than one task at a time at full effectiveness is virtually impossible. Multitasking means switching back and forth between two or more projects. Continual starting and stopping threatens productivity.

• Multitasking also takes away from the quality of work accomplished. When one’s mind is divided between two or more tasks, errors and sloppy results are far more likely.

• Taking a project from start to finish is personally and professionally rewarding. With constant interruptions and switching back and forth, multitasking makes for a less fulfilling experience in the workplace.

How can small business owners eliminate the risks and dangers associated with multitasking? The answer lies in a variety of strategies that can be applied in everyday workplace functions like these:

• Make a to-do list and stick to it. A to-do list is a great way to outline the work to be done for the day. This list should be prioritized accordingly as well. Chances are that small business owners will deviate from the list from time to time when a pressing situation emerges. However, the list will serve as a focal point to return to once pertinent matters have been addressed.

• Delegate tasks accordingly. Sometimes small business owners just need to relinquish some control and allow employees to assist with getting projects done. It’s better to delegate a critical task to one person who can put a sincere effort into it, rather than try and multitask yourself and generate mediocre results. Recruiting and hiring talented individuals who can take on a great deal of responsibility will alleviate the feeling that small business owners need to be involved in every single facet of business operations.

• Use business process outsourcing. Small business owners can outsource critical tasks – such as payroll and invoicing – to save time and money, and avoid multitasking on a regular basis.

It’s not realistic to completely eliminate multitasking from the workday, but these tips can alleviate the pressure and negative effects of it. When applied in day-to-day functions, these steps can minimize multitasking and maximize efficiency.

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)

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.