More survey results showed that small business owners don't seem to focus on social media at all. 86% said they do not use social media sites for information or business advice.

But what if they're not doing it right?

Compare these results to the results of the Small Business Success Index conducted by Grow Smart Business. This poll showed that although 75% of small businesses had a web page on a social networking site like Facebook or Twitter, only about one in five actively used social media in their business promotion.

Only 20%? It's no wonder that so many small business owners find Twitter or Facebook not at all helpful. The ones who do find it helpful are the ones actively building a network of followers and potential customers. Although the success results from 2009 are low, 45% of small business owners do expect social media to be profitable in the next 12 months.

So who are the businesses that make social media work? It's small firms like The Grilled Cheese Truck in Los Angeles, for instance. You wouldn't think that a simple grilled cheese is anything to follow on Twitter, but the buzz about the LA sandwiches has exploded and demand is extreme. But what's the problem? The truck stops at a different location every day. Only the followers on Twitter know where the truck will be. The Grilled Cheese Truck as reached "legendary" status in all of LA, and residents from all parts of the city clamor to get to the truck when it arrives.

That is the bread social media promotions were made of, no pun intended. If you have a social media page for your business, the key is to not let it sit stagnant, hoping customers will find you. You must be creative and use social media as a way to generate buzz and acquire a following. Will your small business be profitable through social media in 2010?

Traditional vs. Virtual Phone Answering Services

Answering systems used by big businesses can save a lot of time and make call routing more efficient. But a standard phone system requires expensive hardware, software, and maintenance costs. These high costs have made the standard internal answering system out of reach for most small business owners.

However, now companies have begun offering virtual phone answering services that do not require all the expensive setup, yet offers all the benefits of the phone systems used by the major corporations. A virtual answering service allows your customers to dial by name, extension, and leave voicemail to specific individuals. Small businesses can use a toll-free number or a local number.

Benefits of a Virtual Answering Service

The advantages of a virtual answering service are many. First, the cost advantage is considerable. Without having to spend a big outlay of capital on a regular answering system, a small business can get all or most of the features found in high-priced answering systems.

In addition, a virtual answering service gives the appearance and the perception that the business operates not as a small business, but just as big and organized as any large corporation. Although there is no reason to deceive your customers or clients that you are bigger than you are, it does, however, avoid the stigma that many small businesses get who use a simple answering machine. Why not appear as professional as possible if it helps business?

The new business of virtual answering service is a growing one - with more than $2.5 billion in revenue. As more and more small businesses find the benefits of virtual answering services, it will likely continue to grow to fit the needs of small business owners like you.

How Many Businesses Finance with Credit Cards?

The National Small Business Association (NSBA) in its 2009 Small Business Credit Card Survey showed that most small businesses are, in fact, using credit cards to help with business financing. While only 5% of small businesses used an SBA loan and 19% used no financing during the previous 12 months, 59% of small business respondents said they have utilized credit cards for their capital needs.

And the number of business credit cards may be surprising as well. While only 23% of small business owners who used credit cards used only one card, 77% used more than one, and even 23% used four or more credit cards.

The State of Business Credit

As far as overall debt, 34% of poll respondents said that 25% or more of their debt financing is from credit card debt. With that many business owners having credit card debt, it doesn't help when credit card companies change the rules. In fact, 79% said that their credit card terms have grown worse over the last 5 years.

When asked what changes have occurred to their credit card terms just from 2008 to 2009, 41% said their credit was reduced, 63% said the interest rate increased, and 23% said their interest switched from a fixed to a variable rate.

Unfortunately, small business owners seem to be trapped. Without the available capital from credit cards, 62% said they would be unable to expand or grow business operations, and 56% even said they would have to reduce the number of their employees.

Clearly, business credit cards might be an important element of your consistent business financing. Be sure you research the right cards and get the best terms, like the Discover business card which offers no annual fee, 5% cash back on all office supply purchases, and a smaller cash back for other purchases.

With good credit, you may be able to obtain very reasonable credit terms from almost any credit card company. If you find that credit cards are almost essential for your business financing needs, be sure you research the best card, and use them according to terms to avoid negative financial whiplash.

According to a recent New York Times article, many cities and states are stepping up to the plate and offering to help small businesses succeed. What are they doing to help?

San Francisco

To help reduce the unemployment rate, the city of San Francisco is offering a 100% hiring subsidy for small businesses who hire certain new employees. That means the city will pay the wages of new employees, as long as the small business owner pays the regular Social Security and unemployment insurance. The stipulation is that the new employee must have been unemployed for at least 30 days prior to hire. Through the program, San Francisco has helped hire over 1,800 employees.

Cleveland

Cleveland is attempting to encourage consumers to spend money locally. They have set up a website where local small businesses offer special offers and discounts for northeast Ohioans. So far over 300 small businesses have signed up, and about two dozen more sign up each month. The result? Over the last six months, they have recognized a 40% increase in purchasing activity through the website deals.

Connecticut

The state of Connecticut is helping manufacturing businesses through grants. Small manufacturing firms can obtain grants ranging from $5,000 to $25,000 through the Connecticut Small Business Innovation and Research Office. Companies must be a locally registered manufacturing plant (and plan to keep it in the state) and provide at least three years of financial data.

North Carolina

And if you live in the state of North Carolina, you could get free financial advice for your small business. Since the fall of 2009, the program, called BizBoost, has helped over 158 small businesses with cash flow advice, money management strategies, and even lining up financing. Typical businesses who receive help have about 10 employees or less.

Check with your local government, both city and state, and find out how you can receive help for your small business. All it may take is a phone call or simply filling out an application.

The usual paradigm of an entrepreneur is one who wants to work for himself or herself and create a business from scratch. In contrast, the reluctant entrepreneur was once happy working for someone else, as long as he or she received a regular paycheck and health benefits. However, this new class of entrepreneur is forming home-based businesses as a survival response,

They never intended to start a business and are finding the challenges more demanding than they ever imagined. Though they enjoy continuing to do what they love, be it accounting, architecture, or computer programming, they also must manage a business, including all the marketing, cash flow, invoice collecting, etc. These extra duties, though necessary, are what made these entrepreneurs 'reluctant' in the first place.

If you fit into this class of entrepreneur, you are not alone. Here is some advice to help give you encouragement as you grow your new business:

• Grow your network - An entrepreneur's success can be measured by the number of contacts he or she has. You must generate your own business, and simply hanging a shingle is not sufficient. Call your old boss. Call your friends. Call everyone you know to start drumming up business. And get involved with networking events to extend your contact base.

• Be persistent - Did you encounter a potential client who said no? Keep trying. A successful entrepreneur is persistent and doesn't let a single decline stop him from trying again.

• Create a plan - And change it often. Business plans are a great way to keep you on track of what you want to accomplish. However, remember that change is the only constant, so review your plan regularly and update it as needed.

Just because you formed a business out of necessity doesn't mean you will fail or have a tough time succeeding. Remember, you are doing what you love. With that in mind, you will find the way to make your business succeed.

Social networking has seen steep increase in usage over the last few years. In fact, about 67% of all online users have an account with at least one popular social network, such as Facebook, Twitter, or LinkedIn. With such astronomical numbers, marketers are having a field day using available data to offer credit products to consumers.

The Company You Keep Could Impact Your Credit

Although your social activity has no impact directly on your credit score, your visible activity can clue credit card companies about your likes and dislikes and the type of people you have as friends and acquaintances. Your visible activity, including all your updates, groups, and comments, can be compared to a social graph, which is comprised of large amounts of social networking data. Your position can inform credit card companies whether you are connected to a community of good credit customers or poor risks. Their presumption is that your responsibility with credit is predictable to the company you keep.

The Social Networking Debate

However, is it fair for credit card companies to assume risk based on your social activity? Consumer advocacy groups say no. Linda Sherry, a spokesperson from the consumer group, Consumer Action, states, "they may be gaining information from people who are naive and not understanding how their profiles are set. It verges on privacy violation."

The bottom line is that marketers will use the data that is available to them. With so much social networking data collected, it is possible to spot consumer trends, which makes it a potentially great marketing tool for credit card companies.

Protecting Your Profile - and Credit

Thankfully, there is a way you can avoid being profiled based on your online social activity. Marketers can only pick up data that is public. You can assure that your social activity is not used for consumer profiling by changing your privacy settings on each account.

For instance, Facebook allows you to adjust privacy settings to allow only your acknowledged friends see your activity. Twitter has similar privacy settings.

If you fear that your social activity could be used against you, don't let creditors have a look at it.

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.

Ed, the answer depends on the kinds of professional photographs you will be taking, your connections into your proposed distribution channels, and what your earning requirements are. Sites like istockphoto.com, which provide licenses for millions of stock images at extremely low prices, have put a big dent in traditional stock photography license fees. This prompted Getty Images, the largest of the lot, to buy istockphoto a few years ago as a bet against declining sales for their expensive stock images. The quality of images in these less expensive sites is fairly good so if your hope is to make money through stock images, you might find a tough market that generates very nominal income for you.

However, if your photographs will be from assigned projects, you stand a much better chance at earning decent income. Such projects are usually assigned by organizations based on your relationship with them. Contact magazines, ad agencies, and others who routinely outsource projects to local photographers to take pictures of people or events nearby. Create a web site and post your portfolio (you can use software to watermark your images if you are concerned about unauthorized use). You might consider starting it off as a side business so you can gauge the marketplace and your growth rate, then make it a full-time effort once you have established connections and can project your cash flow more accurately.

To help, we are putting together an "Ask the Expert" section where small business owners and budding entrepreneurs can submit specific questions and get usable answers without the expert pitching his or her consulting services.

Each week, or every few days depending upon how many questions we get, we will pick one or two to showcase on this blog.  Suggestion: the more specific the question, the better the chance of it being profiled (i.e., it is unlikely we will respond to "How do I start a business?" - answer: read our Start-Up section).

Do you have a business issue that is keeping you up at night?  Fill out our morebusiness.com contact form and we'll try to help with expert business advice!

I want to buy an existing company. How do I determine what it is worth?

Ollie

Dear Ollie,

Publicly traded companies make it pretty easy: just see what other people are paying for it! Take their share price and multiply it by the number of shares and you know exactly what (collectively) someone is willing to pay to own the company. Of course it's not a perfect calculation because the market is not always perfect but it's a good start. The best calculation is appropriately called “Enterprise Value” and it works well for any company.

market value — (cash and investments) / (divided by) net earnings

Best regards,
Buzz