Posts Tagged ‘planning’
As an entrepreneur, do not make the mistake of thinking that your company is too small to need workers’ compensation insurance, also referred to as “workers’ comp”. First of all, unless you have less than five employees, you are probably required by law to obtain this coverage for your workers. Secondly, just one accident at your workplace could potentially bankrupt your business.
Maybe you think that there is nothing dangerous at your workplace, so there is not much cause for concern? Think again. The Bureau of Labor Statistics reports that 3.1 million workers report non-fatal injuries and/or illnesses every year across the country. The chances of one of these millions of injuries happening at your workplace is not at low as you may have initially thought. This coverage is also not that expensive, considering the safety net it provides.
What Does It Cover?
Workers’ comp covers damages caused by any injury, illness, loss of limb or loss of life that may occur at the workplace. This plan covers your entire staff, and also provides you with liability insurance in case your employee chooses to sue you for damages. If an employee is injured at the workplace, the insurance plan will cover the costs of your employee’s medical treatment, rehabilitation services, transportation expenses to appointments, and lost wages, as well as a flat sum for the a loss of limb or death. Obtaining this coverage prevents your business from being personally liable for all of these expenses.
How Are the Rates Determined?
Workers’ compensation rates are based on the job position or positions at your workplace. The Council for Compensation Insurance, Inc. has a list of over 100 different job categories. Your insurance adjuster will place each of your job positions into one of these categories and the rate will be based on that classification. Typically, the more hazardous the job duties are, the higher the workers’ compensation rates. This rate will then be calculated for every one hundred dollars of your payroll. It is possible to lower your rates by having fewer accidents and putting specific safety measures in place at the job site.
Tips for Finding the Right Carrier
There are many different companies on the market that offer workers’ compensation to both large and small businesses. The first thing you want to do is shop around and see who is willing to give you the best rates. Ask for a quote from several different companies before making your final decision. You also want to be clear about exactly what workers’ compensation expenses they are responsible for paying. Ultimately, you should not have to pay any out-of-pocket expenses when a worker is injured if you have compensation insurance.
While cost may be a determining factor as to whether you purchase workers’ compensation or not, you really should try to calculate if you can afford not to have this insurance. Just one accident can lead to hundreds-if not thousands-of dollars in medical expenses, not to mention lost wages.
Do yourself a favor and obtain this coverage of soon as possible. It will work to protect you and your employers, and prevent a huge out-of-pocket settlement to be paid by you.
NOTE: ActSeed thanks Nik Donovic for guest-authoring this useful post. Thanks, Nik!
You have the best business idea in the world, with a product or service everyone is simply going to eat right up. Better yet, this great product or service can be provided from a home-based business, so you don’t have to figure out where to set up shop or deal with the associated overhead. There are 38 million home-based businesses in the United States, according to Business for Home, so you’re in good company as you start yours up. Just make sure to put the necessary legal and security practices in place to ensure you’re off to a great start.
Zoning laws are specific to your particular city or county, so talk to the local chamber of commerce or the zoning board to determine whether you’re able to have a home business at all. Some reasons your local zoning laws may prohibit home businesses is due to increased street and foot traffic, retail sales and employees within your home.
Once zoning is cleared, Startup Nation says to choose your business structure. Many home-based businesses use a sole proprietor structure for simplicity, as you do not need to do any additional registration. However, business structures such as LLCs and the various types of corporations offer a separation of your personal and business assets, which is useful in the event your business gets sued or goes bankrupt. Check into any appropriate state or federal licensing you need to operate your business, as well as any permits the zoning board requires you to have.
Chances are good you’re not going to have your own IT department on hand, so get familiar with the best practices to keep your network secure against cyber-attacks. Establish good security practices before cyber-attacks become a problem. Head off issues like phishing and trojans by being careful about the activities you do on your computer. Ensure the emails you open are safe by carefully checking outgoing links and email headers before downloading or logging into anything.
Put a security system in place to protect your home and business. The FBI reports 23.8 percent of property crimes in 2010 were burglary-related. Your computers and other business equipment have sensitive data and may be worth a great deal of money. Don’t protect your systems from cyber-attack and then leave them wide open to burglary.
Check your homeowners’ insurance to see if you have any coverage for home-based businesses. Bankrate cautions against hoping your homeowners insurance will cover any claims on its own. All it takes is one employee or customer getting hurt at your home-based business for you to have a major issue. Talk with your insurance company to add home-business insurance. Most homeowner policies are not going to give you enough coverage right off the bat to cover business loss and equipment.
After countless lattes and café-centric business meetings, are you the biggest customer of Starbucks, or might they be your biggest customer?
Being a small business shouldn’t keep you from thinking big. You never want to rely on one customer to keep you in business, but even a small contract with a major corporation can be a catalyst for major growth. There are plenty of excuses for sticking with the status quo: things are too busy, your staff can’t take on another project, you can’t serve a big client with your current infrastructure. But that’s all they are: excuses. Savvy small business owners know that they have to leap at every available opportunity and then make some more opportunities for themselves.
One of the big keys to small business success is cash management know-how. Small businesses, especially in a troubled economy, can’t always qualify for the grants, loans or other funding opportunities that could help them expand, strengthen and improve their business. Landing a corporate contract, however, can make a huge difference in qualifying for financing or landing investors.
Do you manufacture ceramics? If so, have you ever been to a Starbucks and imagined your products on the shelf? If so, why haven’t you pitched them? Starbucks, as part of their “Indivisible” line of retail merchandise, sells American-made items and gives a portion of the proceeds to an initiative called Create Jobs for USA. Starbucks is a great example for this because they are a high-profile, major corporation with retail stores all over the globe. And they want to sell ethically produced and sourced materials. They want to buy from American manufacturers. Their partnership with American Mug and Stein, a company based in Ohio, has basically saved the company from going out of business.
American Mug and Stein Revitalized
Once dubbed the Pottery Capitol of the World, East Liverpool, Ohio is now merely a shadow of what it once was. Nearly the entire town’s workforce worked in the ceramics industry. When the demand for quality, American-made ceramics waned, all of the pottery manufacturers but two closed down. With a high rate of unemployment and a higher rate of skilled workers biding time in unskilled professions, all signs pointed to desolation for the workers, the factories and the town as a whole.
Then, Starbucks came calling – by way of Ulrich Honighause, the owner of tableware company, Hausenware. American Mug and Stein owner, Clyde M. McClellan couldn’t believe his luck. He told the New York Times that he thought the call was a “crank.” It wasn’t. With an initial order of 20,000 mugs, McClellan was able to secure financing to increase production and hire more workers. The first run of mugs sold out and their partnership has continued.
Find Your Formula
This kind of story doesn’t happen for all small businesses, however worthy they might be. McClellan’s call from Honighause was like the mythical golden Wonka ticket — a fantastic tale, but not a good formula for finding success. But your business can take a cue from this tale. Identify who your market could be, what the benefits of a partnership would be and start making contacts. If you don’t try, you’ll never succeed.
In other words, it’s definitely “NO” until you ask.
Whether you need to lease commercial office space or retail space, it’s important to take the decision seriously. If you’re like most start-ups, your rental space will be a significant investment – both in up-front deposit costs and in monthly commitments. So before you rent that space, consider these six factors:
1. Location, location, location
Obviously, location is particularly important for retail businesses. The closer you are to your customers, the more business you’re likely to get. But location is important even if you’re renting office space and will rarely see customers in your own office.
Think about your employees or potential employees, for example. A luxurious office in a less-than-desirable part of downtown might turn off otherwise excellent employment candidates. And, of course, your own commute to your office is important to consider, if possible.
2. How much space you really need
Too many small business owners with big dreams end up in an overly-large office or retail space. Take some time to carefully consider how much space your business actually needs, and don’t get any more than that.
Also, think about what you may be able to do to cut down on the space you need. Can you store some files at home or in a small off-site storage unit? Can you use all your vertical space to avoid needing extra storage room?
3. How much you can afford to pay in rent
Obviously this is going to be one of your number one questions, and it’s one that you should really consider extra carefully. If you can’t afford to pay your lease for a month, your business could take a huge financial hit. So look at your current or expected earnings, and lowball the estimate. Don’t forget to factor in the related costs, such as insurance, utilities, and even hidden costs in the lease, such as the landlord’s ability to pass on increases in taxes or other operational costs.
Often, your ability to rent a place can be limited by your creditworthiness. If you’re just beginning, you may want to get some leverage by building credit with a business credit card. In addition, having a credit card or line of credit on hand as an emergency fund can help if account receivables don’t come in on time to pay your rent, as you’ll have some sort of short-term backup plan in place.
4. The nitty-gritty of the lease terms
Unless you’re a lawyer, it’s probably a good idea to hire one to review the lease terms with you. Again, this is one of the most important decisions you’ll make as a small business owner, so it’s worth putting the time and money into having an expert check over your lease.
According to the Small Business Administration, some things you should check for on your lease include:
- Expenses you might incur beyond rent
- Maintenance and repair terms
- The ability to sublease
- Flexible lease terms
- The ability to lock in the rental cost for a long period of time
5. Potential extra costs
As noted above, one thing you should look for in your lease terms is potential extra costs. For instance, unlike an apartment building where the landlord is usually responsible for maintenance, you may be responsible for a good portion of the maintenance of your commercial space.
You’ll also want to look into how much you can expect to pay for utilities. If possible, negotiate to have utilities included in your rent payment, which can at least make them a predictable extra cost.
6. Other options besides renting
Finally, before you sign a contract, look into other options that you might have besides renting. It’s a huge commitment, and can be a very expensive mistake if you don’t do it right. Most small business owners are better off working at home, meeting clients at coffee shops, or even selling products through distributors rather than renting their own space.
Another increasingly popular option right now is co-working. A co-working space allows you to rent a small desk space or even an office where you can meet with clients. This gives you the opportunity to work with other entrepreneurs, to get out of the house, and to rent at a minimal cost.
As with every business decision you make, you’ll want to walk into this one with both eyes wide open. Plan for the worst, but expect the best, and your first business space rental will be great.
Can you run a business out of something that can fit in your back pocket? PC World says yes. Running a small business from your smartphone — virtually — is possible with the many apps available, on iTunes and Google Play, like videoconferencing programs and PowerPoint assistants.
You can sell products, keep track of mileage, calculate the amount of time spent on a project, build spreadsheets and complete other tasks, too, with a variety of apps.
What apps would best serve a small business owner who wants to rely more on a smartphone? Forbes has several suggestions for making a business productive this year.
If you’re a traveling sales representative, you could use EchoSign to manage, send and sign documents from your smartphone. EchoSign alleviates the need to carry large paper contracts because users access documents from the mobile device instead. If you’re a small company of 1 to 5 users, the app is free, otherwise you’re looking at spending $299 to $399 for a global or enterprise license.
The Right Hosting Service
Email is definitely a business necessity. You should get reliable VPS hosting, which allows business partners, employers and customers a fast and secure way to share files and data. VPS hosting at MyHosting.com provides email benefits such as push email, which decreases a user’s reliance on SMS Messaging, a dated technology. Customers’ emails, contacts, tasks and other information also are saved on the server. This data can be automatically synched on a new device.
Forbes’ David K. Williams recommends Evernote for Business because it’s a multi-platform app that specializes in note-taking. Improved support, simplified billing and business notebook features all for the small price of $10 per month (premium version), per user. It’s great for capturing and organizing everything from photos to emails to web sites. It’s the ultimate brainstorm tool and you can download for PC, Mac, Android and iOS platforms.
PayPal and Money Center Smartphone Apps
Most major banks and PayPal have advanced smartphone apps. Even some of the smaller regional banks have good apps. As an entrepreneur on the go, make sure you have your bank’s app and understand the features. Many will even give you a free dongle that will allow you to swipe a credit card using your phone.
Speaktoit is the top-rated virtual assistant for Android or iOS/Windows, according to Forbes. However, the app will target productivity for businesses this year. More features are being added, including calendar/meeting scheduling. Users can schedule meetings via voice through their Assistant. The app will remind users of their daily agendas, also via voice. Reminders can be given so users will know to book an airplane flight or a room in a hotel. Speaktoit also will partner with financial news services to give automatic updates on financial news and stock quotes.
So far, we’ve highlighted apps to help you run your business. Now, we share a company that can create a custom smartphone app for your business. Having your own app enables you to connect with your customers wherever they are. Custom app creator company Vandrio does this well, and the costs are incredibly affordable for a small business to have a custom app.
Long gone are the days when business people were tied to their desks with their traditional land-line phones, large personal computers, paper calendar and a cumbersome file cabinet filled with space-hogging documents. Although office time probably is a necessity for most business people, mobile apps and smartphones make it easier to take on many tasks, while growing their business on the open road.
One of the best ways for small businesses to stay competitive is through pricing strategies. As part of your overall marketing and business plan, your pricing strategy is quite important. But, it can also be one of the most difficult parts of your plan to put together.
Here are six tips that will help you take advantage of your pricing strategy to stay competitive in an increasingly competitive marketplace:
1. Figure out what you can actually afford to charge
First, you need to understand what you can actually afford to charge. If you’re making absolutely no money keeping your business afloat, you’re not going to be selling products for long.
Understanding what you can afford to charge means carefully looking at the costs of your products or services, including the overhead costs that are often more difficult to spot. Then, you figure out how much money you need to keep your business afloat (preferably while keeping your personal budget going, as well).
A good rule of thumb for managing overhead costs is plan on spending 80 cents of every forecasted dollar. This gives you a 20% buffer and if you hit your forecast, you have a nice profit margin.
2. Focus on introducing new and better products
According to an interesting Entrepreneur article on this topic, the best businesses don’t simply focus on competitive pricing. Eventually, the free market will find the price that consumers will pay for a particular product or service, and you’ll just have to stick close to that to remain in business.
But if you don’t want to be completely controlled by these market forces, innovate. Focus on introducing new and better products. Yes, you’ll need to have a pricing strategy for all these new things, too. But if you can get a leg up on the competition with better or more innovative products, you won’t have to be constrained as much by the going price.
3. Keep careful track of costs
Obviously, as you’re creating your pricing strategy, you need to keep track of your costs. Putting your business expenses on a business credit card (compare here) instead of a personal credit card can help you keep track of your spending. All business owners prefer to have a larger profit margin, but getting your profit margin to grow is all about understanding your costs. Cutting costs while keeping your products and services similarly priced will raise your business’s profits.
If you’re not already familiar with basic bookkeeping for your business, it’s time to get there now. And if you need to run more complicated cost and profit margin calculations, it may be best to hire an accountant.
4. Consider lower introductory prices
When you’re just starting out, you can often break into the market by setting your prices lower than those of your competitors. This works if you just want to get your products into the hands of many people, or if you’re breaking into a new local market.
While your prices are set lower, though, you may not bring home much profit. In this situation, it may be wise to look into credit cards or a business line of credit that can help keep your business afloat until you have the customer loyalty you need to raise your prices. Once your prices are higher and your profit margin is better, you can use some of your extra revenue to pay down those credit card balances.
5. Understand how price affects image
Psychology is probably the most difficult piece of setting a pricing strategy, since the way consumers think has much to do with what they’ll pay for a product. Most of the time, consumers will shop for the best value – the lowest price among very similar products.
However, be careful to not set your prices too low if you want to position yourself as a luxury brand. Too low a price for certain products or services could lead customers to believe that your brand’s offerings are shabby, sub-par, or simply not as luxurious as you’d like them to be.
6. Talk to distributors, if necessary
You can’t actually tell your distributors what they have to price your items at, but you definitely can have conversations with them. Explain to distributors why your pricing strategy is important, and how it will benefit both you and them to follow this strategy. Selling to distributors means lower revenue per unit for you, but it usually means higher volume and greater access into the market, and faster.
If you’re having trouble coming up with your business’s pricing strategy, you may want to call in a professional. Those who are more familiar with marketing could help you find the best prices for your products and services. Otherwise, you may just need to do some market research into your competitors, and try out different prices with consumers to see what sells best.
What are some other tips you can share in addition to these six?
Why do so many New Year’s Resolutions fail after the first six weeks? People fail to achieve their goals for lots of reasons, but we’re not focusing on excuses here. We’re focusing on solutions.
The typical day of an entrepreneur or small business owner is crammed with surprises and distractions, and the long list of longer term, strategic, goal-oriented activities often gets pushed to the following day, then again, until so many days slip by that those big goals become completely ignored. This is akin to treading water instead of swimming and wondering why the shoreline fades in the distance.
One useful tactic to help you get back on track with your goals is to create a List of One.
Each day, amid the minutiae and distractions, focus on completing one goal or one milestone toward a larger goal. You can have a larger list, but each day, just pick one key milestone and make material progress. If you complete your List of One, then create another List of One and apply the same focus and tenacity to completing that task. One step at a time.
Yes, the process is as simple as it sounds, and you’ll find that more gets done when you chew one bite at a time of the metaphorical elephant we call building a small business.
What’s on your List of One today?
When we find ways to level the playing field for small businesses and entrepreneurs, we share them.
The slowest of the herd get eaten.
The view for the middle of the pack never changes.
But those at the front eat first and best.
There is no perfect crystal ball, but information does exist that can give us a competitive advantage. We don’t need perfect foresight, just better information sooner than our competitors. Relying on trends and patterns identified exclusively for a slice of society, such as stock markets or fashion, may provide minor insight into what we should do now and what we should plan to do in the future, but isolating a piece of society to forecast the future may be severely limited in value.
The challenge is to identify patterns so we don’t fight trends we can’t control. We must find ways to harness the natural energy within markets so that our businesses benefit from motions we cannot control but can be leveraged to our advantage.
Waves oscillate. Capital markets oscillate. People, populations and political winds oscillate. Oscillation is a given within both nature and man. When we tune our businesses to the right oscillations, we compete and serve our customers more effectively.
If you could identify a pattern that has held up for thousands of years, that oscillates with regularity and integrates broad cultural trends to show how humankind collectively swings like a pendulum back and forth between a “We” mindset and a “Me” mindset, would you have an advantage over your competition?
If you had information that enabled you to target belief systems, worldviews and attitudes instead of simply age groups or other narrow demographics, would you have an advantage over your competition?
When we find ways to level the playing field for small businesses and entrepreneurs, we share them.
Pendulum is a program you should seriously consider.
Entrepreneurs need a better way to figure out what people need now and will need in the future, not what they needed yesterday.
Entrepreneurs need to know what marketing angle will be most effective in reaching people.
Entrepreneurs must avoid investing in marketing that may have been previously successful but will likely flop now and in the future.
Patterns have emerged through the oscillation of our culture over time. Pendulum has uncovered a tantalizingly interesting pattern that can benefit us and our customers, which is why we have decided to share this with you while exploring it ourselves.
History, if you will listen to her voice, may stutter sometimes, but she is a brilliant teacher.
From the “Ask ActSeed” files…
What is your advice on starting a restaurant?
How would you approach it?
1. Check out the resource documents on the site: “The Restaurant Wizard“, where you can find introductory information about food and labor cost control, reporting, setting up a chart of accounts, and more.
The site’s owner, Scott Armstrong, is a consultant to restaurant owners and based in southern California. If you like his articles, he may be a good consultant for you to consider engaging. These articles have a lot of helpful business tips unique to operating a restaurant.
2. For the general business-starting issues, join ActSeed’s Entrepreneur Group. Here, you have a blueprint for starting any business – restaurants included. Even if you are just in the idea stage, this will help you. ActSeed generates scores for the preparedness of an early stage business in 7 core areas, so you can quickly determine where you need some additional preparatory work before launch and during the first few years of operation.
Here’s a link to a 5-page overview about ActSeed’s business blueprint process and how it will help you get your company off the ground.
Beyond the Best MBA Program: Understanding and Navigating Real-World Business Policies for Small BusinessesFriday, October 26th, 2012
In recent months, ActSeed has covered a range of topics entrepreneurs may need help understanding, including health care laws and new insurance mandates. Tax loopholes and small business incentives are also increasingly presenting challenges, as Juliana Davies explains below.
Ms. Davies is a business education writer who focuses on such things as what a top online MBA is worth. Her expertise in US tax policy and enterprise law have helped many new business school graduates get off on the right foot.
In the corporate world, large companies are often touted as “job creators.” However, experts have recently been calling this assertion into question, since small startups and emerging firms are often far more instrumental in filling new positions with qualified employees, particularly during hard times. Due to lopsided corporate policies that tend to favor large businesses, smaller companies must adopt various strategies for succeeding within the current market.
An April 2012 article by The Nation reported that many current business policies do not take company size and generated wealth into account – and as a result, wealthy corporations can often receive the same tax benefits as smaller businesses. One example is the research and experimentation tax credit first implemented by Congress in 1981, which initially targeted the economic recession at that time. However, the credit’s structure allowed large companies to be compensated for R&D projects that were well within their budget. Boeing, for instance, received a credit of $137 million last year – despite only paying federal income taxes once in the last nine years. Another company that has exploited US tax policies is Bechtel, one of the world’s largest telecommunications companies. Despite annual revenue of roughly $33 billion and a workforce of more than 50,000 employees, the company has remained family-run and retained less than 100 shareholders. This qualifies Bechtel as an “S Corporation,” a title that relieves the firm of paying federal income taxes.
Some other unfair policies concern interest generated overseas. While tax law states that interest-generated income earned anywhere in the world is taxable in the United States, companies like GE have circumvented this statute by using an “active financing exception.” This rule states that businesses with captive finance companies in other countries can exclude from their tax reports interest generated by these subsidiaries. Other companies, such as Pfizer, have exploited legal loopholes by building facilities and registering patents in overseas “tax havens” such as Luxembourg and Ireland. At the same time, Pfizer incurs most of its research and development, manufacturing and advertising expenses on American soil. This has allowed the company (the world’s largest pharmaceutical manufacturer) to declare a loss for the last four years – and receive a substantial amount of monetary compensation from the US government.
Though these policies put smaller firms at a strong disadvantage, experts say they can employ certain strategies to navigate the inherently unfair corporate structure. Forbes contributor John Greathouse encourages startups to think unconventionally when it comes to business strategy. “[Implement] a bold and unpredictable go-to-market strategy and [modify] it as soon as your competitors believe they have you figured out,” he wrote. “You can also keep your competitors off-balance by introducing new products into new and unexpected markets, distributing existing products via new channels and serving novel customer segments.” These efforts, he says, will prevent competitors from deciphering – and eventually, emulating – the startup’s strategies.
Fast Company contributor Aaron Shapiro urges small companies to “borrow from big businesses” using various strategies that have historically proven successful. First, he urges startups to focus their energy on “being the best at one very particular thing”; this mindset allows for organic growth through customer loyalty and word-of-mouth. He also notes that, while user experience is key to building a successful brand, companies should also establish a firm strategy for generating revenue in the early stages of development. And while some smaller firms are hesitant to institute bureaucracy at the workplace, he explains that “the b-word” is often seen as a benchmark of success for large companies – and such a system provides structure and reinforces company expectations for all employees.
While various policies of the corporate world may benefit large companies moreso than small ones, experts agree that fledgling businesses can overcome the disparities through streamlined structure and innovative thinking. These are the companies that will most positively impact job creation in the United States – but until more balanced policies are adopted, burgeoning firms must implement alternative strategies for success.
Julianna Davies is a writer and researcher for MBAOnline.com.