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How Is Your Small Business Celebrating This Year?

November 29th, 2012 ::

By Karen Axelton

Does your small business have plans to celebrate the holidays? As the economy shows signs of improvement, the recently released 2012 American Express OPEN Small Business Holiday Monitor finds small business owners are feeling more festive than they did in 2011. Here’s how other entrepreneurs will be celebrating this year.

More entrepreneurs are giving their employees bonuses (35 percent, compared to 29 percent in 2011). Of those, 25 percent report plans to give out larger bonuses this year than they did last year, with the average bonus being 9 percent. Employers say the number-one reason for giving out bonuses is to acknowledge good work.

Employers will also be celebrating in style, with 40 percent of small business owners reporting that they plan to host a holiday party (up from 35 percent last year). Entrepreneurs say they will spend an average of $959 on their celebration, down a little from $1,029 last year.

But employees aren’t the only ones who will be benefiting from small business owners’ generosity this year. Over half of small business owners (57 percent) say they plan to give a contribution to charity this holiday season. About one-third will give money, one-quarter will make an in-kind donation, and about one-quarter will donate their time.

Giving thank-you gifts is also an important part of the holidays. More than half (51 percent) of small business owners plan to give gifts to clients and customers this year, up from 43 percent last year. On average, entrepreneurs say they plan to spend $958, a steady increase from $827 last year and $740 in 2010.

Maybe one reason for the festive plans is that a good number small businesses overall are feeling fairly optimistic, despite the tentative economy. Some 36 percent of small business owners overall, and 41 percent of small retailers, report that they expect “strong” holiday sales this season, while 19 percent of small business owners and 13 percent of small retailers expect their sales to hold steady compared to last year.

How will you celebrate the holidays with your clients, customers and employees this year?

Image by Flickr user caitlinator (Creative Commons)

 

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Posted in Customer Service, Small Business, small business, Workforce | No Comments »

Small Businesses’ Credit Profiles Are Improving. Is Yours?

November 20th, 2012 ::

By Karen Axelton

Ask any small business owner who’s been trying to borrow expansion capital, obtain working capital or simply get a line of credit from a lender, and they’ll tell you it’s become far more difficult since the recession hit. However, a new study by Direct Capital Corporation suggests that the tough times may have actually had a beneficial effect on small business owners in one way: Since the recession hit in 2008 and during the past few years of recovery, small business owners’ average credit profile actually improved in 45 out of 50 U.S. states.

Direct Capital Corporation, a nationwide lender to small businesses, reviewed credit data for over 23,000 small businesses nationwide during the past 12 years. Where do small business owners have the strongest average credit profile? Nebraska topped the list, followed by Alaska, South Dakota, Indiana and Oklahoma.

The states where small businesses’ average credit profiles have declined in the past four years are Washington, DC (which had the lowest average credit profile), followed by Rhode Island, New Mexico, Montana and Texas.

Direct Capital Vice President of Marketing Stephen Lankler says one reason for the surprising change is that business owners have a heightened awareness of how important it is to keep their credit score high. “Business owners today are much more aware of how important it is to maintain a strong credit profile,” he said. “That was not the case five to seven years ago when it was much easier for a business to access credit.”

Lankler says growth in the number of products that give businesses on-demand access to their credit profiles has also contributed to the higher credit scores. “As a result of the financial crisis, major lenders – including banks – have become much more restrictive in extending credit to business owners,” Lankler said. “In response, business owners have become more vigilant in maintaining strong credit profiles and a flood of products have been introduced to help them do so.”

What are some ways you can keep your business’s credit score high?

  • Pay your bills on time and if you cannot, talk to the vendor to work out a payment plan.
  • Monitor your business’s credit report to note any errors and take steps to correct them.
  • Don’t mix personal and business funds. Use business, not personal, accounts for business purchases.
  • Use business credit cards carefully, being sure not to overutilize credit. Ideally, pay off your balance in full each month, but if you can’t, keep your balance under 30 percent of your available credit.
  • Even if you never plan to use it, make sure you keep enough available credit (through business credit cards and other options) to get you through an emergency if need be.

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Posted in Capital Access, Raising Capital, Small Business, small business | 3 Comments »

Start Your Own Small Business Support Group

November 13th, 2012 ::

By Karen Axelton

Do you think of other entrepreneurs as your competition? Well, some of them are, but that doesn’t mean you can’t learn from them. In today’s economy, with big companies creating an ever-tougher environment for small business success, small businesses have to stick together—and sometimes, that might mean joining forces with people you typically consider your competition.

You probably already belong to one or more trade groups for your industry. But what if you created your own (smaller) small business support group? A smaller organization can meet more frequently, and gives you room for every member to be heard. Here are some ideas for starting your own group.

  • Figure out how big you want it to be. You want it big enough that even when everyone can’t come to a meeting, it will be worthwhile, but small enough that everyone gets to interact. Two dozen is a good general guideline.
  • Determine other parameters for membership. For instance, if your restaurant is in a popular downtown area, you might want to start a group only for downtown business owners. Or you might want to limit it only to restaurants.
  • Consider competition. Yes, it’s OK to have people within the same industry (two retail store owners) but if they are directly competitive (two children’s clothing store owners), they’re not going to feel comfortable sharing ideas and information with each other.
  • Set a schedule. You’ll want to have regular meetings or your group will quickly peter out. If monthly meetings are too much, make them at least quarterly.
  • Choose a location or rotate among different members’ locations.
  • Keep in touch online. Start a LinkedIn or Facebook group just for members so you can keep in touch between meetings. (Just don’t let online interaction substitute for in-person meetings; getting together face-to-face is crucial for give-and-take.)

What do you discuss in your group? Time is valuable, so it’s a good idea to set a basic agenda that you follow at every meeting. You can rotate so that one month you share marketing ideas, another you talk about employee management, and another you talk about cash flow issues. Be sure that when appropriate, you also talk about timely issues, such as new parking restrictions that are making it harder for customers to visit your shop and how your group should work with the city to change them. Share your challenges, concerns and insights, and you’ll all learn how to do things better!

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Posted in Entrepreneurs, Small Business, small business | 1 Comment »

Is Angel Funding Taking Wing Again?

November 6th, 2012 ::

By Karen Axelton

Small business owners seeking financing from private investors can take heart from the latest data from the Center for Venture Research at the University of New Hampshire. The quarterly study of angel investors found that, as of the second half of 2012, the angel investor market seems to be on the rebound. The total dollar amount invested, total number of investments, and total number of investors all grew compared to the same period in 2011.

For the first two quarters of 2012, total dollars invested reached $9.2 billion, up by 3.1 percent compared to the same period in 2011. Investments were made in a total of 27,280 entrepreneurial businesses–a 3.7 percent increase from the same period in 2011. And the number of active investors hit 131,145 individuals, up 5 percent from the same period in 2011. In the first half of 2012, the average deal size hit $336,390, holding fairly steady with 2011’s average deal of $338,400.

Jeffrey Sohl, director of the UNH Center for Venture Research at the Whittemore School of Business and Economics, says that while many of the figures are holding steady, the survey shows a “steady recovery” of the angel market since 2008.

While the percentage of investments focused on seed and start-up stage investing held steady at 40 percent (compared to 39 percent last year), there’s good news for existing business owners: Expansion stage financing grew to 22 percent of investments in the first half of 2012, up from 13 percent in the same period of 2011.

What industries are most likely to find angel funding? Healthcare services/medical devices and equipment accounted for 24 percent of investments, followed by software (14 percent), biotech (12 percent), retail (10 percent), IT services (7 percent) and media (6 percent). Interest in the industrial/energy sector, which had been one of the top six sectors since 2009 due to an interest in clean tech, dropped in the first half of 2012. Meanwhile, retail and media have “solidified” their place in the top six sectors, driven primarily by investments in social networking-related businesses.

One interesting trend: The percentage of women angel investors nearly doubled in 2012 from the same period last year (from 11.7 percent of angels to 21.8 percent). Meanwhile, 18.4 percent of companies seeking angel investment were women-owned.

Minority angels are less represented, accounting for just 4 percent of the angel population. Similarly, minority-owned firms accounted for only 7.1 percent of the companies that sought angel capital.  Although minority-owned businesses got angel financing at a similar rate to all businesses, the study says the fact that so few are seeking angel capital is cause for concern.

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How to Reduce Your Small Business’s Tax Bite

November 1st, 2012 ::

By Karen Axelton

Now that the presidential election is less than a week away, one of the big questions that’s been hanging over small business owners’ heads for the past year or so is about to be resolved: Will taxes rise or fall?

Three-fourths (77 percent) of small business owners surveyed in the new Hartford 2012 Small Business Success Study believe their taxes are likely to rise. If so, small business owners report they will offset the higher taxes by passing costs on to customers (66 percent), delaying expansion plans (58 percent), reducing personal investments in their business (55 percent) and putting on a hiring freeze (54 percent). However, only 28 percent say they would lay off existing staff.

Small business owners are already making many of these same moves in response to the uncertain economy. The most common steps entrepreneurs report taking to deal with slow economic growth are cutting costs (80 percent), strengthening existing client relationships (76 percent), prospecting for new clients (69 percent) and refining their business strategy (65 percent).

Asked for more specifics about what they’re doing to cut costs, 68 percent say they’re taking less money out of the business, 57 percent are investing less in expansion, 52 percent are reducing owner/partner compensation and half are hiring fewer employees.

The Hartford study found that taxes were the second-biggest issue concerning small business owners (slow economic growth was the biggest concern, cited by 67 percent of respondents). Despite this passion about taxes, the study also found that one-third of business owners surveyed aren’t taking advantage of tax incentives or deductions that are available to their businesses. That’s mostly because they don’t know what these incentives or deductions are (37 percent) or do not qualify (35 percent).

What can you do to pay the fewest taxes, no matter what the outcome of the election?

  • Keep accurate records and up-to-date financial statements so you can document any deductions you take in case of an audit.
  • Make sure you’re working with your accountant and tax advisor to take all the deductions and exemptions you and your small business are entitled to.  Trying to prepare your taxes on your own can cost you more than you save.
  • Keep up with industry newsletters, blogs and publications to stay on top of tax changes that apply to your type of business. Unless your accountant specializes in your industry, even he or she may sometimes miss new changes that could save you a lot on your tax return.

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A Nation of Independents

October 23rd, 2012 ::

By Karen Axelton

The face of the American workforce is changing, and whether they’re solopreneurs, independent contractors, consultants, freelancers or temporary workers, the number of independent workers is growing, reports MBO Partners’ second annual State of Independence in America study.

Since 2011, MBO Partners found, the independent workforce has grown from 16 million to more than 16.9 million. Within the next five years, it’s expected to grow to 23 million.

What’s behind the growth of independent work? Although some of the independents surveyed were “nudged” into independence by the recession and difficulty finding a job, nearly three-fourths (71 percent) say they’re highly satisfied with the independent lifestyle, up from 60 percent last year.

Independents are also feeling more confident about being independent than they were last year. Overall, they expressed less worry about marketing their businesses and maintaining their independent status in the future. In fact, 39 percent said they feel more secure being independent than they did as employees, up 6 percent from 2011.

The study also looked at generational differences in independents and here’s what they found:

Gen Y (ages 21 to 32) faces difficult challenges entering the workforce and is most likely to be “torn” over being independent. While most of them are satisfied with being independent, they’re less likely than other generations to have willingly chosen it. About 40 percent of Gen Y chose independence, compared to 68 percent of Gen X and 58 percent of Boomers. While one-third of Gen Y say they love independent work and don’t plan on going back to a traditional job, one-third want traditional employment and one-third are undecided.

Gen X (age 33 to 49) professionals make up the bulk of independent workers, and overall, love being independent. Three-quarters are highly satisfied and 76 percent plan to continue as independents (64 percent) or build a bigger business (12 percent). Only 6 percent plan on seeking traditional employment. About two-thirds cited “do work that I love” as a reason for becoming independent.

Boomers (aged 50 to 66) Three-fourths of boomers, the most of any generation, chose independent work in order to control their schedules; 70 percent said greater flexibility was a reason for being independent. However, 54 percent said “office politics” was a reason for going independent and one-fourth had faced job loss before they went independent. A whopping 82 percent of Boomers plan on staying independent (71 percent) or building a bigger business (11 percent); just 8 percent plan on seeking traditional employment.

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How Your Small Business Can Market to Affluent Consumers

October 16th, 2012 ::

By Karen Axelton                 

Are you trying to market to affluent consumers? Then you’ll want to know what the results of the latest Ipsos MediaCT 2012 Mendelsohn Affluent Survey say about their media consumption habits.

Although tablet and smartphone usage among affluents is growing, one surprising finding was how important print publications continue to remain to affluent (household income of $100K-$249K) and ultra affluents (household income of $250K+). The survey asked consumers about their readership of 150 print publications including 143 magazines and 7 national newspapers. Eighty-two percent of affluents read at least one of the publications in print form; overall, they regularly read an average of 8.2 titles.

Affluent women and ultra affluents are particularly heavy print readers; ultra affluents consume approximately 25 percent more print media than average affluents, reading an average of 10 titles.

Print isn’t the only media source affluent consumers turn to. Magazines were second to television in advertising reach and receptivity. And 60 percent of Affluents listen to radio in an average week, with the average time spent listening increasing by 4 percent, to 10.6 hours weekly, compared to last year.

Of course, affluent interest in mobile devices and digital media is growing, with 26 percent of affluents owning a tablet personally and nearly half (47 percent) having one in the household. More than half (55 percent) own a smartphone, up from 45 percent in 2011.

What are affluent consumers using their mobile devices for? While games, weather and music top the list of downloaded apps, of more relevance to small business owners are social networking apps (used by 45 percent) and magazine apps. Some 4.7 million affluents downloaded a magazine app in 2012, more than double the 2.0 million who did so in 2011, and 5.9 million downloaded a newspaper app, up from 3.6 million last year.

Affluents’ use of the Internet is up 14 percent from last year, to an average of 37.4 hours weekly. The biggest growth areas for Internet use were sites related to social media, entertainment and shopping.

What do these figures mean to you? If you’re seeking to grab affluent consumers’ attention, your marketing message needs to be integrated across many channels. While affluents’ use of the mobile Web is growing, don’t assume that the Internet is now the only place to reach them. Depending on your particular niche of the affluent market, you may want to put just as much or more of your marketing budget into print, radio or cable TV advertising as you do into your online efforts.

Whatever your marketing strategy, make sure all your marketing materials point back to a updated, mobile-friendly website with a clear call to action.

Image by Flickr user ToGa Wanderings (Creative Commons)

 

 

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Posted in Branding, Business Development, Marketing, sales process, Small Business, small business | No Comments »

What’s Stopping Your Small Business From Getting Paid?

October 9th, 2012 ::

By Karen Axelton

The nation’s small business owners are feeling increasingly optimistic, but are still struggling with cash flow concerns, according to the most recent Western Union Small Business Barometer. More than three-fourths (79 percent) of small business owners in the nationwide poll were optimistic that their annual revenue would either stay stable or increase in the next 12 months.

That’s good news, but concerns about cash flow and sustaining revenues top the list of worries that plague small businesses. Here’s some of what the survey found:

The smallest businesses are much more worried about their financial stability. Twenty-four percent of those with sales of $100K-$250K and 21 percent of those with sales under $100K cite “getting paid to ensure cash flow” as a top concern.

When it comes to money, small business owners are exhibiting a cautious rather than growth-oriented mind-set. Asked what they would do with extra cash reserves, 57 percent say they would pay outstanding bills and 47 percent would save the money. Just 22 percent would invest in sales and marketing, and only 16 percent would invest in IT, facilities or systems.

Asked what is the best part of owning a small business, the number-one answer was “control over income.” Yet small business owners in the survey are failing to take control of their income by performing some key steps that could help them get paid faster and more reliably, including:

Electronic invoicing. Over three-fourths of small businesses in the survey still use non-electronic invoicing. More than half print from a software program and hand-deliver or mail their invoices, but 25 percent still handwrite invoices.

Electronic invoicing is simple to do today, and many clients (particularly in business-to-business industries) prefer it. If you’re worried that electronic invoicing is too costly, consider this: The smallest businesses—those with sales under $100K—were most likely to use electronic invoicing. This could be because they’re younger (and have younger owners), or because they’re on tighter budgets and realize how cost-effective electronic invoicing can be.

Following up on late payments. Small business owners’ approach to late payers is less than effective. When faced with past-due payments, the vast majority (80 percent) send another invoice. About one-third send a past-due notice or an email. Just 38 percent make a phone call.

Thirty-one percent admitted the reason they send emails is to avoid a confrontation.  No one likes to confront a client, but if you’re concerned about getting paid, you need to bite the bullet and pick up the phone. Emails can easily go unanswered—phone calls less so. And often, a simple conversation is all it takes to clear the air, work out a payment plan and ease your worries about whether you’ll ever get the money you’re owed.

How do you handle these issues?

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Posted in Accounting and Taxes, Compliance, Small Business, small business | 2 Comments »

Is Your Small Business Struggling With Cash Crunches?

October 2nd, 2012 ::

By Karen Axelton

Despite their best efforts to manage their companies’ cash flow, half of small business owners have suffered a sudden cash crunch in the past 12 months, according to a new survey from Citibank.

The Citibank Small Business Pulse found that weak sales were causing cash flow concerns for the majority entrepreneurs. Even though 73 percent say they personally manage their cash flow daily—not trusting the job to anyone else—30 percent say they are still struggling with challenges such as slow or delinquent receivables and customer bankruptcies, and 24 percent say late or non-payments have caused their companies an unexpected cash crunch.

Despite their awareness of the importance of cash flow management, small business owners in the survey admit that they struggle to crack down on customers. Some 78 percent say they’ve extended customers’ payment terms in the last 12 months, and nearly one-fourth say that “making a collection call” is the most uncomfortable aspect of managing their business finances.

The cash-flow issues these businesses faced weren’t all due to slow-paying customers. Forty-one percent of entrepreneurs blamed “lackluster consumer spending” for their cash crunch, while 28 percent said it was due to expected sales failing to materialize.  Overall, the need to maintain sales was the number-one concern small business owners expressed, cited by 78 percent.

Still, small business owners in the survey feel hopeful about their own business finances, even if they don’t feel as rosy about the economy as a whole. While 85 percent think the nation might still have a double-dip recession, 43 percent think their business’s 2012 sales will top last year’s, and 56 percent expect their businesses will either meet or exceed their 2012 revenue goals.

Small business owners have reason to feel confident. To achieve those sales goals, more than half of companies surveyed say they have “reinvented” their businesses in the past year, either adding new products or services, overhauling their technology, or both, in order to become more competitive in a tough marketplace.

What can you do to keep your cash flowing? Small business owners in the survey are doing all the right things—except for one. It’s tough, but following up on late-paying customers and doing all you can to ensure you get paid is essential if you want to keep your business in the black.

How is your business’s cash flowing?

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Health Insurance Costs Rise More Slowly—Is That a Good Thing?

September 25th, 2012 ::

By Karen Axelton

When I opened my company’s health insurance premium renewal packet recently, I got a pleasant surprise: Although our small business’s premiums increased, it was at a far lower rate than in years past. Turns out we’re not alone: The Kaiser Family Foundation reports that the cost of employer-provided health insurance increased by about 4 percent compared to last year. By comparison, family coverage costs rose by 9 percent between 2010 and 2011.

The average cost to cover a family of four through employer-provided insurance is now about $16,000, according to the 2012 Employer Health Benefits Survey. The cost of individual insurance coverage through an employer increased by a mere 3 percent, to an average cost of $5,615 per policy.

Despite widespread concerns about the Patient Protection and Affordable Care Act’s effect on employer-provided insurance, the survey found that 61 percent of companies offer health benefits to their workers – the same as last year.

Ironically, workers who earned lower wages had higher deductibles and paid more for their insurance than higher-paid employees. Kaiser found that in where at least 35 percent of workers earn $24,000 or less annually, workers paid an average of $1,000 more in premiums (nearly $5,000 out of the employees’ pockets). By comparison, workplaces where at least 35 percent of workers earn $55,000 annually, workers paid an average of $4,000 for their share of premium costs.

The slower rise in costs is good news for your small business’s budget, but will it last? Experts caution it’s not necessarily a result of the PPACA, but could stem from several factors:

  • The general slowdown in the economy has curtailed spending all over.
  • Many employees are limiting or avoiding doctor visits or non-urgent surgeries because they can’t afford the out-of-pocket costs.
  • Employers are better educating employees about the costs of coverage, whether by shifting more of the premium costs to them, increasing copay and prescription drug costs, or providing more information about options for choosing insurance and providers. Given this information, more consumers have been willing to do things like choosing generic over brand-name drugs.

How are you keeping health insurance costs down at your small business?

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