Posts Tagged ‘small business’
There is a lot of advice out there about whether or not you should register a small business with governmental agencies and trade organizations. Whether or not you choose to join organizations is mostly a personal decision that heavily depends on your current circumstances and preferences. Let’s look at some of the pros and cons.
The Small Business Administration (SBA) is the federal agency that serves as the primary governmental advocate for small business. From the SBA.gov web site, a small business owner can find links to registration requirements. If you are doing business as a sole proprietorship, you will be working in your own name and subject to personal liability related to your business. As a sole proprietor, you will still need to obtain local business licenses, too. If being personally liable for your business activities doesn’t sound appealing, register your business with a state as a corporation or LLC and obtain a federal tax ID. Don’t forget to find out if there are any business licenses required for your business at the county and city level, too.
Agencies and banks for small businesses might offer loans, perks, or training to small businesses. For example, the SBA is currently partnering with the W20 group, which is a group of digital communications companies, to offer a social media webinar series to help small businesses develop their web presence. The SBA also offers special loan programs to veterans, minorities, and women. The loans are actually backed by the SBA and issued by participating banks, so don’t think the SBA directly offers loans, though.
State business organizations provide venues for members to network and share resources. Members can help each other by referring customers, or providing mutually beneficial services. Being registered as a small business increases your chances of being invited to events you might otherwise not know about.
Business organizations also can be an effective political group. As with anything, the louder the voice, the more likely you are to be heard. Therefore, joining a small business organization can be a good way to promote policies that would benefit small business owners. These groups are not necessarily partisan, but rather they can work together to support common business interests.
Although there may be fees associated with joining some business organizations, the dues are usually tax deductible.
Many small business organizations offer group discounts for professional and personal services, which can be a very nice perk.
While the SBA is set up as the main advocate for small businesses in the US, the definition of “small business” is rather broad. For example, some of the business categories allow businesses with over 1,000 employees to be considered a small business. As you can see, the definition of “small business” is wide and often, a truly small business of less than 20 employees may find some SBA benefits are not useful.
SBA-backed bank loans sound good in concept, but the loan requirements make the loans out of reach for many early stage companies and very small companies. If you don’t have at least two years of operating history and a year’s worth of revenues, then you are unlikely to qualify for any SBA-backed bank loans.
Like everything in business, professional and trade associations cost money. Just about every small business organization has some kind of annual fee and many charge a fee for joining in the first place. Such fees can add up over time, especially for a new business. Additionally, participation in the events requires additional expenditures.
Being an active member of a business organization can be a big time-consumer, especially if you’re involved in more than one or at higher levels of an organization. Most organizations have a monthly meeting, but for members of several organizations, a few monthly meetings can turn into what is essentially a meeting every week. As a business owner, your time is extremely valuable so spending significant amounts of time on professional organizations can turn into a huge distraction.
If you don’t thrive on working with others or mixing business and social events, business organizations may not be for you. These organizations often combine social activities with things like networking or seminars, which is great for a lot of people, but there are many people who do not like to combine those aspects of their lives.
If you decide that registering your business is right for you, check out the US Small Business Administration for information about how to register a name for the business and find state agencies.
This has been a guest post by Angie Picardo, a writer for NerdWallet, a financial literacy website dedicated to helping consumers leverage their own business and set better personal financial goals.
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.
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?
It’s nice to hear an inspiring story from an experienced entrepreneur. Ash Kumra has compiled 35 such stories from a diverse array of entrepreneurs in his book, “Confessions from an Entrepreneur (Volume 1)“.
When you want something more substantive than an inspirational quote but don’t have time to read an entire book or long chapter about entrepreneurship, then a bite-sized chapter from “Confessions from an Entrepreneur” is the ideal option.
Currently available on Kindle ($4.99 at the time of this writing) and soon available in paperback, this is an affordable book that every entrepreneur should have and share with fellow entrepreneurs.
Health care reform has been one of the hot topics of the 2012 Presidential election, at times more fiercely debated than issues surrounding the economy and job market. Health care costs far exceed taxes for many people, and can mount quickly without insurance coverage. Furthermore, coverage may not provide sufficient financial relief if you do not have the right type of policy for your budget and medical needs.
Fortunately, companies that sell private health insurance through partnerships with multiple carriers can provide you with a broad range of coverage options. The result? You truly can customize your plan so that it is both affordable and comprehensive. Here are three strategies to evaluate.
Bridge the Gap with Short-term Coverage
Short-term coverage offers a solution to several different scenarios including finding yourself in between jobs and waiting for employer sponsored coverage to kick in after starting a new job. These policies offer coverage anywhere from 6 to 12 months. The point of short-term plans is to offer protection against unforeseen accidents or illnesses. As a result, services like immunizations, preventive care and screenings are not covered by most short-term insurance policies. It is important to note that this type of plan does not typically cover pre-existing medical conditions.
High Deductible = Low Premium
Provided you do not need ongoing medical care, a health insurance plan that carries a high deductible could be an attractive option because these policies offer low monthly premiums. In exchange for the advantage of extremely low premiums, you must pay all of your medical expenses until you meet the high deductible, which can mean thousands of dollars out of your pocket – except for preventive care, which insurers must cover 100 percent under health care reform. Therefore, high deductible plans are a good route to take for those who are healthy and do not have any pre-existing conditions.
Talk to Mom and Dad
Health care reform provides an especially nice advantage to young adults, who can now remain covered by their parents’ health insurance plan until they turn 26. So if you are fresh out of school and still looking for a job, or your entry level salary is not as robust as you anticipated, just give mom and dad a call.
Keep it Simple but Make Sure You Do Your Homework
Online resources like our partner, GoHealthInsurance, offer you the chance to access information on a variety of plans, and better yet, review quotes based on the criteria you enter. Today’s resources are designed to be time efficient and simple to digest, so there really is no reason to select coverage that is not right for your particular situation.
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.
On November 7, the House, Senate and White House remain controlled by the same political parties. For all of the cries for change and dissatisfaction with business as usual, the electorate has chosen “More of the Same”.
So what should an entrepreneur do to achieve success now?
The same things they were doing prior to November 6:
Prepare, plan and execute.
Entrepreneurs and small businesses will always be underdogs in the business world. We are blades of grass under a sidewalk. Some of us don’t quit until we pierce the concrete. Most, however, die before seeing daylight.
The election is over. Imperfect and unnecessary regulations are still in our way. Of course, some may be helping. Competitors are still trying to crush us. We continue to return the favor. Customers are still demanding more value for lower prices. Banks and capital providers are still stingy with their checkbooks. We fight on and exercise our right to vote with competence when given the opportunity.
Again, the election is over.
- If you are gloating, stop. It’s distracting you from your goals and annoying others.
- If you are sulking, stop. It’s distracting you from your goals and annoying others.
- If you have already put the election behind you and are back to work, you’ve just put some distance between you and your sulking or gloating competitors – congratulations.
ActSeed serves partisans and non-partisans alike, but our greatest value to you is when you avoid being distracted by things you cannot control, and when you are focused on executing the next step and planning ten more steps.
Abraham Lincoln said (paraphrased), “America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.” This is true for our country, our businesses and our personal lives. Let’s apply our economic freedom and build something, not sit back and wait for a handout. We are entrepreneurs – part of the solution, not part of the problem.
Now, let’s get to work.
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.