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Small Business Success Index 5

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Archive for March, 2010


Three Big Lessons I Have Learned About Small Biz Financing

March 31st, 2010 ::

Over the last 10 years I have gone through many ups and downs when it comes to business cycles, hiring, clients, business models and about 30 other things. The one thing constant that needed to be there in order for my business to continue was that I need to keep the money coming in and that at some points I needed small business financing. I have learned three big lessons in small business financing that might not seem like your typical financing advice but they are lessons hard learned.

Lesson #1 – Debt is a Vampire that will suck the lifeblood from your company

There will always be good times and there will inevitably be not so good times. The old adage “people will give you money when you don’t need it” is so true I can not even tell you. I have made the mistake of using personal credit cards to fund my business and getting myself in massive debt. Yeah, fun.

Since cash is the lifeblood of any business, I make the parallel that debt is a vampire. You think most of the time it is helping support your business but with interest payments and monthly bills that might be tough to pay once and a while, it can suck the life out of your company and stunt potential growth.

Lesson #2 – You don’t need to have debt to be a “normal” company

I remember early on in the life of my business I had brought on a person to be managing partner of one of our services groups. He was really good with finance and it was something I needed help with because I was busy doing client work and business development. One of the things he remarked that we didn’t have any debt and that in order to grow we should take some on because that is what “normal” companies do.

A part of me had my doubts but we did take on debt in the form of lines of credit or leases but after a while what realized is that since he had no obligation to these debts it was easy to add it on. The “other people’s money” or OPM style of finance might have worked for some people but not when you are a small business with limited cash flow.

The reality is that you don’t have to take on debt to be a growing company. You can watch and trim your budget and save money to create your own line of credit. This leads me right to lesson #3….

Lesson #3 – Have six months of cash for whatever you are planning

This is an interesting on and one that I learned the hard way once unforeseen circumstances (Internet bubble bursting) and tragedy on 9/11 caused me to lay off everyone because we only had two months of cash left. When we were hiring we had lots of contracts and used our lines of credit to float the payroll and leases. We even looked into using retirement accounts to fund the business (I would not recommend this) and eventually we calculated that all the interest payments would have actually paid for another person which would have been more valuable to increase or productivity but also our billings.

So we went on a debt diet and over the course of three years we paid off all the debts and leases, early if we could and added staff only when we had six months of cash for their salary package. We used contractors for a while because it was easier to utilize people for specific tasks and not have the overhead.

We recently have adopted the policy to use cash flow and create our own virtual lines of credit. This rule of having six months of cash built up to do something allows us to take on new things but deal with the payment cycles of clients and how fast new employees get up to speed. It is working and I would recommend every business look into experimenting with this approach.

What Lessons Have You Learned?

So these lessons are some big ones I have learned and about 100 other tiny ones. What have you learned running your small business that would be important to share? Leave a comment.

Think Before You Leap, Or How to Set Up a Successful Partnership

March 31st, 2010 ::

Relationships can be so easy to leap into, especially in your personal/social life.  You tend to seek out people with the same interests, opinions, values, and outlooks on life as you.  Like attracts like, and so forth.  Your chemistry just clicks, you fall in “like”, and you hang out and have a great time together.  Marriage and long-term romantic relationships are similar, but with the addition of a deep attraction, love and…well, all that other stuff I’d get in trouble for writing about.  But you know where I’m going, so we’ll leave it at that.

Jumping

elliott23/Flickr

Business relationships are not to be jumped into blindly.  They can be hard to get just right, because we have to fight against our natural desire to spend time with people who are just like us (and therefore totally awesome).   It’s important that you and a potential partner have the same values and goals and that you get along and genuinely like each other.  But what else do you need to look for in a potential business partner to ensure your partnership is successful?  And just how do you go about setting up a partnership when you are so used to working by yourself?

As I recounted in my last post, I recently met a super cool CPA and small business consultant named Jason Howell.  He and I totally clicked: He’s funny, friendly, energetic, and chock full of advice for small business owners.  We sat down to talk about small business finance and money matters; this post is the second in a series of three based on that conversation.

Jason started out with the basics of forming a partnership, which will most likely come as no surprise.  To set up a partnership, you need to:

1. Find the right person.

2. Put an agreement in place.  

Like many things in life, easier said than done. 

Find the Right Person

Put together a list of potential partners.  Include clients, colleagues, former colleagues, people you’ve informally partnered with on projects, and friends.  Now cross off your friends, or at least most of them.  Unless you can be totally objective, it is very easy to overlook personality quirks and skills, or lack thereof, when you like and know someone very well. 

Finding the right person, aka, the ideal partner, is hard.  You not only have to get along with that person, but he or she must have skills that complement yours.  If you’re a software engineer, partner with a sales person.  If you’re a landscape architect, partner with a design/build company.  Leverage the talents of other people to ensure your partnership, and thus each of your careers, grow and flourish.  If you hire someone with similar skill sets, your weaknesses will be amplified and you will most likely torpedo your company’s growth.

Jason used to work in the music industry, so he gave me a great example of a successful partnership.  A lot of musicians have personal managers, but very few have business managers.  Those with business managers are serious about making it in the music industry.  They recognize that they lack the skills to successfully negotiate record deals, concert series, tours, etc.  Jason said the musicians with great business managers are most likely to hit it big.

Put Together an Agreement

There are two kinds of partnerships: a general partnership and a limited liability corporation (LLC).  A general partnership is much like a sole proprietorship, while an LLC recognizes the company as an entity separate from the partners; it is probably the best way to go, since it offers the partners legal protection.  With an LLC, you’ll put together an operating agreement that will lay out responsibilities, obligations, and how losses, expenses, and profits will be divvied up.  It’s not super complicated, but it must be done right.

The Tug of Truth

March 31st, 2010 ::
by Thomas Madrecki
cartoon of people jumping off a cliff like lemmings

http://www.flickr.com/photos/hikingartist/ / CC BY 2.0

When I talk to friends and family members about future job prospects, there is a now nigh standardized list of ideas and opinions that seems to inevitably meet the air: “You should go to law school.”

Yes, as a trained journalist and devout academic scholar, I seem to have a knack for all things research-based and detail-oriented. And ever since I began to see America’s legal system in action, there has been a part of me that readily identifies with the profession and feels I could easily become one of the thousands of well-paid lawyers across the country.

At the same time, though, I must say there is some aspect of law school that strikes me as undeniably mundane and typical. To employ a clichéd description, I don’t know if anything screams “selling out” quite like attending law school. Of course, that’s my personal opinion – but to me, it is the sum of all things “safe,” “expected,” and “what your girlfriend’s parents might like their future son-in-law to do if he isn’t a doctor or a celebrity.”

If not law school, though, what course of action might best suit my talents and interests?

With a background in editorial decision-making and writing, not to mention a decent amount of print and web design experience, I’ve naturally focused on job opportunities within those sectors. But communications agencies are tough to break into and many require that potential full-time entry-level employees fulfill an internship post-graduation. Those internships are frequently unpaid and there is an upfront emphasis on the fact that interns may not – and, in this economy especially, chances are, will not – be hired after the summer months. The idea, of course, is that work-place competition and increased selectivity in turn engenders more successful paid hires in a tightly budgeted and relatively small industry. All of that is well and good, but even for the most confident of applicants, the idea of heading to a new city with no guarantee of long-term growth or a permanent job is a potentially worrisome hurdle to overcome.

Elsewhere in the communications world, truly viable job prospects seem few and far between. There are plenty of interviews to be had, even in this tough economy, but what is missing is an easily accessible pool of entry-level positions tasked with the type of far-ranging creative work in which I have an interest. I might be able to find work as a marketing associate or as a corporate communications assistant, but the degree of responsibility – how multi-faceted an opportunity is – entrusted to me would most likely be lacking if the average job description holds any truth.

The end result is a feeling on my part that accepting a job for the sake of having a job would be, much like law school, settling for something I don’t whole-heartedly want to do. I’m a passionate person, a devoted person, and a hard-working person – but I have to believe in what I’m doing, and I have to feel like whatever I’m working on takes full advantage of all my talents and mental abilities. Perhaps from a pejorative stance that makes me highly selective and/or slightly inflexible. On the other hand, I consider this potential weakness one of my greatest strengths: Whether in good or bad times, I won’t settle for anything less than the best.

That notion of “refusing to settle,” though, brings to mind perhaps my biggest fear about the “real world” and the job market. I’m a firm believer in the pursuit of happiness – in a quest for existential meaning and philosophical understanding. Some might even say that the questions of truth – What makes living worthwhile? How can man better his condition? How does one become a hero if becoming a hero is possible? – tend to dominate my thinking on a wide range of subjects.

And so, now on the verge of entering a consumerist, very non-philosophical world (in which the bottom line reigns supreme and one’s only goal is to fulfill the demands of his job), I am somewhat concerned that any job opportunity will require me to make a personal sacrifice – to X-out or subdue the Nietzsche-loving student, to replace the self-directed author and literary critic with a mechanical businessman removed from higher, more human devotions.

Which is better? Which is more immature – to obsess over truth or to obsess over completing menial tasks?

The answers to those questions are profoundly personal, and everyone has a different opinion to share. That much has been made clear to me while I’ve searched high and low for the elusive perfect opportunity.

As for how I’ll respond to such musings, I have yet to determine what I’ll do next. I’ve come to a cliff – it’s time to jump or run…

Thomas Madrecki headshotThomas Madrecki is a fourth-year Echols Scholar at the University of Virginia and the former managing editor of The Cavalier Daily newspaper. A true media chameleon, he hopes his extensive writing background and knowledge of various print/web design options makes him the perfect candidate for a career in brand management, communications, journalism, and/or public affairs. On the side, he’s also a former Dexter USBC High School All-American bowler (averaging about 225) and a budding, Nietzsche-adoring philosopher with a keen interest in existentialism and the pursuit of happiness. Make sure you check out his online portfolio!

Tech, Business and Magic – Small Business Technology Summit 2010 Recap

March 30th, 2010 ::

This month Shashi and I were asked to speak at the Small Business Tech Summit in New York City. There were many great speakers as you can see from the agenda. I have had a small business for 10 years and I learned a few new things which is why I like Ramon’s event so much. They keep it relevant, have good content and with Ramon’s trademark delivery never let it get dull. The summit had over 500 folks registered and you can see the details of the conference at http://www.smallbiztechsummit.com. You can follow the conversation on Twitter by searching the conference hashtag #smallbizsummit

Highlight: Seth Godin Keynote

Seth Godin

Image via Wikipedia

This year they had Seth Godin keynote in the afternoon and I have to tell you that for never having seen him speak I can see why people pay lots of money to have him at their event and why he sells tons of books. He is that good. Granted, all of his books I haven’t liked or they just didn’t speak to me personally but I have to admit his one hour delivery that centered around his new book Linchpin (which we just reviewed yesterday) it was really informative and entertaining.

He took the audience through an informative set of info graphics and distilled being a linchpin when he described Marissa Mayer at Google. From his book “If you could write Marissa’s duties into a manual, you wouldn’t need her. But the minute you wrote it down, it wouldn’t be accurate anyway. That’s the key. She solves problems that people haven’t predicate, see things people haven’t seen and connects people who need to be connected. She is a linchpin.”

For more on his book, check out our book review of Seth’s Godin’s Lichpin.

Highlight: Small Business Tech Hot Demos

This year they had something new to fill the space between speakers and that was the Small Business Tech Hot Demos. These were new or existing companies that had a really hot technology that would benefit any small business owner. The winners were:

Broadlook Mobile Profiler
http://www.broadlook.com/products/profilerx/

Automatically acquire accurate and more information about your contacts from the Internet, in particular social networks.

Ez Texting
http://www.eztexting.com

Send SMS (text) messages to customers (clients). Send to 10 clients or 500 clients. Send to all or a segmented groups.

Lexmark Pinnacle Pro901
http://www.lexmark.com

One of the first printers with customizable applications

SugarSync for Business
http://www.sugarsync.com

Synchronize files or folders, instantly, across computers or mobile devices

ReTargeter
http://www.retargeter.com

Display online advertising in front of customers when they visit other popular web sites, after they’ve left your web site.

Pixability Business Video
http://pixability.com

Take video footage of your business. Send it to Pixability for creation of a professional video about your business.

Highlight: Meeting Awesome People

This year there were about 500 people and it was bigger than last year with great small business owners and those who work with small business

We met some great folks at the event  and here is a list of some of them:

Highlight: The Swami Presents his Great Social Media Presentation

Here is the presentation Shashi Bellamkonda gave at the Small Business Tech Summit New York March 16th 2010.

I had the opportunity to present my 2010 edition of the 10 Rules for Killer Business Cards. Here it is, from Slideshare, below for your viewing and amusement. Would love to hear your feedback and thoughts on the do’s and don’ts of business cards.

10 Rules for Killer Business Cards 2010 EditionView more presentations from Steven Fisher.

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Managing Finances With A Mobile Company

March 30th, 2010 ::

Not every business owner finds it necessary to have a central office these days. A surprising amount of work can be handled exclusively over the web, leaving a business with the ability to avoid the expenses of maintaining an office. It does take some careful planning, however, and perhaps a few more online resources than you might rely on otherwise.

Managing a Business Online

Untemplater is just such a business. Essentially an online publication geared towards helping readers live a less-templated life, the team behind Untemplater lives and works across multiple time zones, handling every aspect of the business online. The number of tools now available for handling business finances online has made the process relatively simple. Jun Loayza, the CEO of Untemplater, describes the company’s set up: “We currently use PB Works and Google Groups to manage communication between the team and use a good ol’ excel sheet to track all our finances. Any expenses are sent to the COO who tracks them, along with our income and what we owe to our paid writers.”

If you’re considering making the switch, you can find a variety of tools through the Small Business Web, a group of software companies focused on building online applications specifically for small businesses.

Deciding on a Base

Even if your goal is to take your business on a round-the-world trip, you’ll still need a home base for it — a legal base, preferably in the same country where you are a citizen. The IRS and other government agencies require an address in order for you to operate a business. That address can be a post office box or another location where you receive mail. However, it’s worthwhile to consider all of your options before making a final decision.

Convenience is one aspect, and a key factor in Untemplater’s approach: Loayza says, “The business entity is based in Indiana, solely because one of our co-founders in charge of operations is based in Indiana.” But factors like state taxes may also lead you to make a different decision. The type of business structure you want to use can also be a factor. The Untemplater team chose to create a standard LLC, but individual states have different rules governing business structures.

The Benefits of Mobile Finances

For Untemplater, mobile finances make sense — everything about the business is mobile. “We cut expenses dramatically because we don’t need to pay rent, LAN line, internet, and all the other expenses involved with a physical office. Most of the tools we use are free online services or we utilize the existing resources of one of the members of the team,” says Loayza. There are some downsides, however, if you move beyond the purely financial: “One of the big things we are missing though is facetime—the founding team doesn’t get to bond as well and build trust by working side-by-side. It can be difficult to schedule conference calls over Skype, with team members in 4 or 5 different timezones, but we do try to have regular calls when there’s decisions to be made or progress to discuss.”

The decision to go mobile can depend entirely on your business and how you best operate, but at least the financial aspects are very manageable.

Image courtesy Untemplater.com.

Are You Indispensable? A Review of "Linchpin" by Seth Godin

March 29th, 2010 ::

In his book — Linchpin: Are You Indispensable? — Seth Godin poses a challenge: Take your gift, whatever it is, and use it to change the world. Linchpin by Seth Godin starts with the basic premise that everyone should work to be a linchpin in their organization. This means being indispensable but it also means defining yourself as a third team in the business world. The original two are management and labor but that won’t suffice anymore. “Linchpins are people who own their own means of production, who can make a difference, lead us and connect us”.

He talks throughout the book that the way school has been designed is to encourage mediocrity and just to fit in. He says that school should teach two things – solve interesting problems and lead. He also talks about the lizard brain, fear that is instilled in us at school and poses a question that many of us could quickly answer – is it possible to do hard work in a cubicle? (you will have to read the book to find out the answer)

The Seven Abilities of Linchpins

Seth goes into great detail to show why certain people are linchpins. He says that there are seven abilities of a Linchpin:

  1. Providing a unique interface between members of an organization
  2. Delivering unique creativity
  3. Managing a situation or organization of great complexity
  4. Leading customers
  5. Inspiring staff
  6. Providing a deep domain knowledge
  7. Possessing a unique talent

He points to an excellent example of a Linchpin, Marissa Mayer. He describes Marissa Mayer at Google. From his book “If you could write Marissa’s duties into a manual, you wouldn’t need her. But the minute you wrote it down, it wouldn’t be accurate anyway. That’s the key. She solves problems that people haven’t predicate, see things people haven’t seen and connects people who need to be connected. She is a linchpin.”

Are You a Linchpin?

I put this to you, my readers, are you a linchpin? I believe I am in some cases and in other places I could do better and become one. I recommend that you go out and buy this book or at the very least read some other great reviews below and tell us – are you a linchpin?

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The Rules of Recruiters… and Why Commitment Matters to Them as Much as it Does the Guy You're Dating

March 29th, 2010 ::

by Allison Kapner

So rather than go in a boring step-by-step order and continuing with Step 2, I’m going to share a bit about working with recruiters… which, in the dating world, translates into dating guys that are just out for one thing.

For those of you who don’t understand the face of recruiting, times have changed. Employers used to hire recruiters for all levels and all functions. During the recession, companies began realizing how much they were spending on agency fees and started creating strategies around working with recruiters.

Internal HR staff are now trained to make cold calls and use social media to reach out for certain positions. So, for example, analyst roles most likely will not go through recruiters because of the number of applicants who apply on their own. Ask yourself, why would a company pay a VERY hefty fee for me when I can apply directly and not go through a third party?

So while recruiters who are experts in their field can be extremely helpful and add value, if you’re young and inexperienced, I wouldn’t count on a recruiter landing you your first job.

http://www.flickr.com/photos/randysonofrobert/ / CC BY 2.0

Recruiters – of the internal and external sort – can be your best friend or worst enemy. They can act as the gatekeepers to your dream employer, or can be the reason you don’t get your dream job. The genuine ones (such as me in my past life) care about you and put your needs first even if it means missing a deal. They do this because they know and respect good karma. The ruthless recruiters are only focused on you as a dollar sign. Recruiters, by nature, stay on top of their star candidates, the people who can actually interview successfully for the roles they are looking to fill. They woo you, keep you on their good side and walk you through the interview process. The second you mess up or the client decides to “pass,” you are back to the starting line until another job comes along that you’re the PERFECT person for.

The funny thing is, the worst thing you can do to a recruiter is work with other recruiters. They’ll say whatever it takes to keep you from others because they don’t make money if someone else places you…which leads me to a dating story and point that recruiters and men (sorry guys!) can in fact consciously or subconsciously share the same mentality.

I once met a guy – we’ll call him Aaron – who has an intense personality and acts as someone who is driven and motivated. For the first few weeks of knowing each other, he contacted me. I didn’t think much of it and didn’t respond much. In fact, he was upset that I wouldn’t friend him on Facebook. I was impartial. (Similar to how most candidates are in a good market when approached by a recruiter.) He persisted and we went out to a three-hour first date dinner. It was great. He wanted to know all about me (1st interview or “screening” per a recruiter) and I “passed” round one. He suggested going to get ice cream a few days later, and after going to four places and striking out four times trying to get ice cream, Aaron finally figured out a way to find us ice cream. I was impressed, he was creative and innovative. (Similar to a recruiter getting you a first round interview, if you’re a strong candidate, they’ll do whatever it takes.) This continued and things were going well. A few weeks into it, I decided it was time for me to finally give in and be nice and after him asking many times for a housewarming gift (weird, yes), I brought over cookie dough as a housewarming gift.

Stop the presses!! From then on, every time I received a text or spoke to him, the question was “how many guys do you bring cookies to?” Well, he obviously couldn’t handle the idea of me dating other people and he freaked himself out (later apologizing, then falling off the face of the earth). In his apology, he admitted he freaked himself out because he wasn’t ready for someone who would expect something out of him but he was too insecure to have me date others.

Moral of the story: If you can’t make a recruiter a quick buck or be a quickie to a shady guy, you’ll get dropped – and fast – which is probably for the better.

Second moral: Keep your options open until a recruiter asks you to only work with them (or until a guy asks you for a commitment). Don’t give either the satisfaction of being your one and only unless they prove themselves worthy.


Allison Kapner headshotAllison Kapner is a Relationship Manager in Career Services at the Johns Hopkins University Carey Business School where she is responsible for building partnerships with employers to ultimately create job and internship opportunities for students and alumni. She also advises and coaches students on job search techniques and brings a unique corporate expertise to assist candidates, as her past experience was as an Executive Recruiter in financial services in New York City.

Ready To Grow Your Business? Know Thyself Before Hiring

March 29th, 2010 ::
Handshake

From Aidan Jones on Flickr

I recently met a super cool CPA.  I do realize that statement is (usually) an oxymoron, but this guy is pretty much the opposite of what I expect a numbers-loving, detail-oriented accountant to look and act like.  Jason Howell is one of the nicest, funniest, most friendly people I’ve ever met.  He is full of energy, quick to laugh, and very engaging.  In other words, he’s my kind of people.  After talking to him a couple of times, I realized that not only is he really smart, he is also overflowing with advice for small businesses.  We sat down one recent warm, sunny afternoon to talk about small business finance and money matters.  This post is the first in a series of three based on the wisdom that Jason so generously shared with me.

The idea of hiring my first employee, full-time, part-time, or temporary, is exciting and scary at the same time.  I’m getting busy enough that I don’t really have time for networking anymore.  In the next few months, I should also be on the verge of turning away prospective clients.  In this economy, that’s pretty cool.  On the other hand, hiring an employee strikes fear into my heart.  Just thinking about the additional paperwork (we all know how much I love accounting/finance/tax stuff) and time needed to manage others stops me cold.

Jason said that before you or I think about hiring, we need to think about our business and what we most enjoy doing.   Simple enough!  He said all small business owners have varying levels of expertise in following three areas: 

  1. Technical skills.  We are technically proficient at whatever it is we do.   We might not love everything it is we do, but we are good at doing it.
  2. Management skills.  Some of us are very good at delegating responsibility and leading and managing others.  You can hand over the aspects of your business you don’t enjoy to focus on what you do enjoy.
  3. Sales skills.  Some small business owners think very strategically and are totally sales-focused.  They have a long-term vision of how they can grow their company, and they are good at selling their company’s products and/or services.  These people live for networking and closing the sale.

When you’re ready to hire people, simply figure out which skill it is you enjoy the most.  Is it doing the work, managing others who will do the work for you, or networking and selling your products and/or services?

If you enjoy the technical aspect of your work…Hire a salesperson to network and drive sales.  Train the heck out of that person so they know your business inside and out.  They need to have several elevator speeches ready for different audiences and have the charm and persuasive skills to set up meetings and close deals.  They will be out and about constantly, leaving you time to focus on doing what it is you do.

If you like managing others…Replicate yourself.  Hire people who have the same and/or complimentary skills and pass work over to them.  You’ll still get to do some technical aspects of your business if you choose—the ones you like doing best.  Say you’re a bakery owner.  You specialize in artisanal breads—it’s what you love doing and what you’re known for—but you also make pastries, which you don’t enjoy as much.  Employee A can help you with the bread baking, while Employee B can make the pastries.

If you’re a born salesperson…Find technicians to do whatever it is your company does.  This will allow you to be out networking, selling, and closing deals.

Proper Use Of Collateral

March 26th, 2010 ::

Business owners who are operating revenue driven companies often turn to outside sources of capital when looking to grow faster. Either a company can sell shares (and shared ownership) to raise capital or they can borrow against collateral. Collateral usually means some sort of tangible asset such as equipment or receivables.

When using collateral for borrowing, it can be costly to not recognize the ramifications of pledging certain assets. This means, once collateral has been borrowed against in the form of a loan, the loan must be paid off in order for the same collateral to be used again. All lenders can quickly ascertain whether a loan exists and what collateral has been assigned. Asset based lending companies require a first security position on the collateral they are financing. Pre-existing loans or credit activities that have been issued a secured position on collateral make additional funding impossible.

Generally the problem stems from a line of credit, which was used up over an extended period of time. Ideally, a line of credit from a bank should be properly managed and treated like a revolving loan. Money should be taken from the line, but regularly paid back to pay down the line. Having the discipline to borrow and pay back on a line of credit will keep the financial condition of the company sound. This means certain expenditures must wait until profit or other investment is available.

What finally happens with the mis-management of a line of credit is – the line has reached the maximum credit limit. In today’s lending environment, the bank will be unwilling to extend further credit and probably will change the structure of the outstanding amount into a “term loan.” This means the total amount is due on a monthly installment payment plan, leaving the company with their collateral spoken for and no ability to raise additional capital through alternative sources.

So the critical lessons here are, knowing when the company assets are being used as collateral and don’t get caught in a dead end where there is no access to badly needed working capital.

Smart Ways to Manage Your Business Finances

March 25th, 2010 ::

Ever wanted to know what tips and resources you need when running your own smart business in order to manage your finances? David Cotriss wrote eight great tips on how to help your small business handle its finances. You can read the original article here:

Find the best local credit union. Given their frequent willingness to provide loans, finding a credit union that understands the needs of your business can go a long way.

Find a trusted mentor. Access to free help is just a click away, with sites that help connect entrepreneurs with mentors fitting their needs. Having a mentor assist with setting up finances can be invaluable if the person is trustworthy.

Choose the correct accounting software. While software is a mainstay of small business finance, sorting through dozens of choices isn’t easy, since there may be better options for your specific needs than the popular QuickBooks program and related packages.

Consider hiring a bookkeeper. A good, trusted bookkeeper can handle all of the mundane tasks that go along with keeping finances on track.

Accelerate cash flow with mobile payment systems. Mobile payment systems can allow faster and easier acceptance of payments for products and services.

Look into factoring receivables. Accounts receivable financing allows immediate payment for invoices rather than waiting 30 days or longer and tying up working capital as a result. Factoring services advance the amount of the invoice minus a “discount”, or fee (advances of 80 to 90 percent are common), and provide a “rebate” when invoices are paid – the amount depends on how long it takes the customer to pay.

Understand and measure capital versus operational costs. The goal often is to drive down the totals on the capital costs side of the spreadsheet and move more over to the operational side of the equation. Operating costs don’t require complex depreciation calculations and are more easily adjusted from year to year.

Measure bottom line impact by looking at the service budget year over year. Are the costs for delivering a service going up, staying the same or dropping? Figure out how much it costs to deliver specific services to the business such as recruitment, payroll or benefits management. Understanding cost-to-serve offers the business great insight into projects and tasks, how long it actually takes to do them, and as a result how much they cost.

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