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How to Get Paid What You Are Worth

By on May 17, 2012 in Cash Flow & Finance, SmallBizChat, Starting A Small Business

Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with Alfred Edmond @AlfredEdmondJr is SVP/Editor-at-large of Black Enterprise. He is a content leader, brand representative and expert resource for all media platforms under the Black Enterprise brand, including the magazine, television shows, web site, social media and live networking events. From 2008 through 2010, Edmond was SVP/Editor-in-chief of BlackEnterprise.com, helping to lead the transition of Black Enterprise from single-magazine publisher to digital-first multimedia company. From 1995 through 2008, Edmond was chief editor of Black Enterprise magazine. He also hosts The Urban Business Roundtable on WVON-AM in Chicago and Money Matters, a syndicated radio feature of American Urban Radio Networks.

SmallBizLady: How can a small business get paid what it is worth?

Alfred Edmond Jr: To get paid what it is worth the first thing a small business must do is understand that profits don’t happen by accident, or just by being a good, nice person or passionate about your business. To turn a consistent profit requires research and planning, so you can establish what your goods and services are worth, and then have the entrepreneurial conviction to price and sell to earn a profit on purpose and without apology.

SmallBizLady: You once wrote a blog called “Why I hate the hook-up” can you explain your idea behind this?

Alfred Edmond Jr: The “hook up” is when entrepreneurs give away their valuable goods and services to family, friends and others in their community free of charge, as a show of community support, cultural solidarity or friendship. This is very common among African American entrepreneurs, who are often pressured or guilted into hooking people up. The problem is, entrepreneurs devalue the quality of their goods and services when they routinely sell them at a loss, or give them away, which is why many of those businesses struggle and fail. The purpose of a business is to sell goods and services for a profit. If you don’t do that, you’re not in business. That’s why I hate the hook up–it weakens and kills businesses.

SmallBizLady: How should a start-up go about setting pricing?

Alfred Edmond Jr: There is a cost per unit of goods or service. There is a maximum price you can charge for that unit and still be competitive in the market place. The difference is your profit. You should know all three of these numbers at all times, and market accordingly. To figure this out, you need to break down the costs per unit to the penny, taking into account raw materials, labor, time and expertise, etc. You also need to know what customers are currently paying to others for the goods or services you provide. Price too much lower, and you won’t make a profit. Too much higher, and you’ll lose out to lower priced competition.

SmallBizLady: How often should pricing strategy be evaluated?

Alfred Edmond Jr: Pricing should be evaluated more frequently for many types of businesses. You should always be aware of what your competitors are charging, and why, especially if it is higher or lower than the prices you are considering. And remember, the competition is not just those who sell what you’re selling. They also include those selling substitutes and alternatives to what you sell.

SmallBizLady: Can you explain value-based pricing?

Alfred Edmond Jr: Value-based pricing is a business strategy. It’s when you price your product based on the value it creates for the customer. This is usually the most profitable form of pricing, if you can achieve it. Trading your skills for an hourly rate can often have you on the loosing end of the deal.

SmallBizLady: How and when should you give a discount?

Alfred Edmond Jr: Discounts must be strategic and should never be given unless they can deliver a measurable result in at least one of three ways: increase sales volume and net profit, reduce costs or some combination of these. Remember, your profit comes from having income or sales greater than your costs of doing business. Discounts that spur revenue generating behavior include those to reward loyalty (i.e. 10 visits to the dry cleaners entitles customer to 11th visit at a discount), referrals (a 5 percent discount for every new paying customer referred by a customer in a given month), or to spur purchases of higher priced items (discounting cost of fries because they will spur higher sales of sodas, which have higher margins that will offset the discount).

SmallBizLady: What is a reasonable profit margin for a professional service business?

Alfred Edmond Jr: There’s no single profit margin that can be deemed universally redeemable for a service business. It can vary widely by type of business and market area and other variables. The answer to that question can’t just be Googled or look-up; it must be researched and constantly monitored, with margin goals being adjusted by the entrepreneur.

SmallBizLady: Why are so many small business owners afraid to talk about pricing?

Alfred Edmond Jr: Many small business owners are afraid to talk about pricing for the same reason some people don’t like to take tests. They haven’t done their homework, so they can’t price with confidence. The key to pricing is doing enough research to know it, not just guess at it. Entrepreneurs who are experts in their industry, not just their business, know prices and can talk about them with confidence. The others? Those are the ones who drop their prices at the first sign of competition, or as a substitute for actually selling the customer on the value of their wares.

SmallBizLady: Why do so many business owners avoid numbers?

Alfred Edmond Jr: Many small business owners have a hard time with numbers because once you know the numbers, you have to do something about it. Numbers aren’t impressed with your title, your business cards, your passion for your business. Either you’re turning a profit or you’re not. It’s amazing how many entrepreneurs do all they can to avoid that reality check. Great entrepreneurs love numbers, because they know that business is a competition and profit is how you keep score.

SmallBizLady: How can you market yourself in a way to prove you are worth what you want to charge?

Alfred Edmond Jr: The best way to market that you are worth what you want to charge is to get your satisfied customers to do the talking for you. Go out of your way to wow your customers and then get the most influential among them to sing your praises, both via word of mouth and social media. If you are as good as you say you are, they won’t hesitate. And if they do hesitate, you need to find out why, so you can make the changes necessary to inspire them to do so.

SmallBizLady: What are your top 3 tips for raising price without losing customers?

Alfred Edmond Jr:. Tips to raise prices without losing customers:

  • A. Don’t let a price hike be a surprise to your best or most loyal customers. Tell them up front that it’s coming, be honest about why, and communicate how it will improve the quality of your products or services for them. Also tell them when it’s coming, to give them time to adjust.
  • B. If possible, delay the price increase for your best (highest spending), regular customers.
  • C. Show evidence that your increased price is still lower than your competitors, or that you are adding improvements and features others are not offering with their price hikes.

SmallBizLady: What is your opinion of MLM or multilevel marketing businesses as a real way to generate profit margin?

Alfred Edmond Jr: My opinion of the MLM business is the same for any business: focus on the numbers. No matter the compensation system, you will occur measurable costs to participate, and that includes the cost of the product you buy for yourself, even though you’ll get credit for those purchases. (Forget the argument that those purchases aren’t real costs because you would have bought those beauty products from someone anyway. As an entrepreneur, not just a customer, EVERY cost counts.) Also add in the value of your time–because no matter what you’re told, selling takes time and nothing sells itself. Know what your costs are and how much product you have to sell before you recoup what you’ve spent. If you can turn a consistent profit with an MLM business great.

If you found this interview helpful, join us on Wednesdays 8-9pm ET follow @SmallBizChat on Twitter.  Here’s how to participate in #Smallbizchathttp://bit.ly/S797e 

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. 

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Should You Have Good Pricing or Great Pricing?

By on May 14, 2012 in Cash Flow & Finance, Grow Your Business

Should you have good pricing or great pricing? Our first instinct is to have great prices that will permit us to crush the competition, gain market share and fuel fast growth. The usual problem is that great prices typically provide slim profit margins. Good pricing, however, over the long term, should create enough profitability to make your enterprise a business rather than a glorified hobby. The challenge is developing a pricing strategy that is simple in concept and execution. How you create your best pricing will depend on your type of business, your sales objectives, competition, marketing strategy and/or cost structure.

Let’s look at several different types of businesses and their different approaches to pricing:  Brick and mortar retail/wholesale enterprises which depend on inventory to sell, typically price the goods on arrival and the pricing can be manufacturer’s suggested retail (with or without discounts), or a standard markup of 50 to 100% depending on the item. Commonly competitive items, like a gallon of milk for example, should be shopped to be sure your price is close to that in stores like yours. It is important to feature the occasional “loss leader”, an item you sell at minimal markup, to stimulate traffic. The overall objective, however, is to have an inventory mix that will give you solid profit margins at the sharpest price points possible (considering your competitors pricing), especially on high-turnover items). 

There are some factors, however, that can allow you to build generous margins with minimal competitive penalties. For example, my local convenience store has a 15 to 20% premium on much of what they sell compared to similar items in the local supermarket. The candy, soda, dairy products, and other grocery items are limited in variety and customers typically pay without complaint especially when the purchase must be made when the supermarket is closed or farther away. You can also charge more if your service is unique, for example you repair certain luxury cars, or you are in industrial air conditioning repair, or a doctor with a specialty practice, or a lawyer who deals only with tax litigation. Typically, the more specialized and unique the service the more you can usually charge.

So what should you be thinking about when you are considering your pricing strategy?

  1. Whatever you charge, make sure you cover your costs. A good price should do it; too many great prices might put you out of business.
  2. If competitive conditions are good for you, that is you have few competitors and solid demand, don’t be afraid to squeeze out a few additional profit dollars in your pricing. You can always lower them later if competition heats up.
  3. Focus on cost controls. Work diligently to drive your costs down because it will let you make more money without raising your prices.

Finally, don’t be emotional about creating your pricing program. Let your numbers, e.g. overhead, material costs, sales costs, and whatever else goes into you getting your product sold drive your pricing. It is the only way you are going to be successful. Good luck!  

Do you have any good pricing advice?

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is America’s #1 small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestselling author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works.

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5 Things You Could Do Today to Generate a Sale

By on May 1, 2012 in Business Inspiration, Cash Flow & Finance, Grow Your Business, Melinda Emerson @SmallBizLady

Sales GrowthIt’s May.  That means it’s National Small Business Month and it’s time for you to get serious about your business.

Answer these questions about your business: Have you updated your business plan?  Are you using your business plan to run your small business?  Do you have monthly/weekly sales goals?  Do you know by the 15th of the month how well or poorly your business did last month? Are you doing 5 things before 11am each day to jump-start sales and revenue in your business? If your answer is no or not really try these:

Here are 5 things you could do today to generate a sale:

1)    Send an email to a recent customer (within the last two weeks) and ask for a LinkedIn or Yelp recommendation. Be sure to send the link in the email to make it easy for them.

2)    Call a contact that you met at a recent networking event to schedule coffee or a lunch appointment.

3)    Send a personal note to an old customer to check in on them.  Include an article of interest to them, too.

4)    Write a 300-500 word blog post for your business blog.

5)    Evaluate your accounts receivable to see if anyone is 30 days behind in paying you, and give them a call to find out payment status. While you’re on the phone with them, inquire about another order.

May is the busiest time of the year for me, and I have some great free resources for you from some of my corporate customers that will help you as you run your small business.

May 1:  Take a business course for free: I’m the lead instructor for Black Enterprise’s Small Business University: Register for the Small Business University NOW and learn how to build and grow your business! Plus enter for a chance to win more than $50,000 in prizes. It’s not too late to sign up today http://www.blackenterprise.com/sbu/

May 2: 7th annual New York XPO for Business at The Javits Center in NYC. I will be delivering a keynote speech: “Using Social Media to Engage Customers & Drive B2B Success!” My speech is from 4:00 – 5:00 PM. I will teach small business owners how to create a winning online marketing strategy. Register today before it’s sold out.  Here’s a BONUS! FREE 1-DAY XPO PASS REGISTER NOW = http://bit.ly/ubMH61 Promo Code = SPEAKER15

May 8: Live Tweetchat on Twitter Learn How to Build a Social Media Brand to Grow Your Small Business. Stay tuned for details.

May is going to be a great month for being in business. Check back at this blog daily for tools and resources to succeed as your own boss.

Melinda F. Emerson, known to many as SmallBizLady www.twitter.com/smallbizlady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing.  Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. http://succeedasyourownboss.com/products/purchase-the-book/

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Budgeting Tips for Small Business Owners

By on April 10, 2012 in Branding & Marketing, Cash Flow & Finance, Guest Articles

Photo credit: BUSINESS OBJECTS © Anatoliy Babiychuk

If your fiscal year parallels your wall calendar, then you made it through Q-1 or as you may formally call it, the first quarter. Perhaps you’re feeling optimistic about the goals you’ll accomplish this year, or are concerned about your revenue goals for the second quarter. It’s best to look at where you’ve been to figure out a great strategy for where you are going next. Here are four things you can immediately do to make the most of the remaining three quarters of this year in your small business.

1. Stick to your budget:

Not only do you need to stick to your budget, but you need to track your budget against what you actually spend each quarter. It is so important to prevent cost overruns before they occur. In fact, you should ask yourself Why three times, before making a purchase that is not in your budget. Keeping the numbers in your head is easy when you have one project, but not when you have many. Invoicing and accounts payable can easily become overwhelming. If you’re seeing success then add a stretch goal to your budget. A good stretch goal to consider is five percent of your figures.

2. Track Your Business Development Time

If you’re like most movers and shakers in small business, then you’ve spent a great deal of time this fiscal year building relationships, following up on leads, and hopefully closing contracts and sales. Remember to add up the time you’re spending on business development and use that number as a projection in your budget. Keep a daily timesheet to help you record how you’re spending your time on this critical marketing activity. Over the next three quarters, think about how much work you can actually complete in addition to your business development activities.

3. Track in Black, Red…. And Gray

Not only must you review your budget for revenue and expenses, but also, you must track the actual numbers.  If you’re using a basic spreadsheet, include an actuals column next to your budget column so that you can record what you’re really spending versus what you budgeted as the year progresses. Be sure not to overlook the obvious growing pains associated with any business such as rework, rush fees from your vendors, process hiccups, emergency breakdowns of equipment, etc. In the area of marketing, remember that you have to spend to create opportunities to sell.  This means that there should be monthly spending activity for marketing.

Your labor will often be a direct cost expense. Track your expenses closely and to think about what it takes to create and deliver specific products and services to your clients. You will also need to track your indirect costs, which support the entire business as a whole including admin, marketing and your professional services like accounting and legal support.  Likewise, be sure you understand the difference between fixed and variable costs so that as you grow, you know how to budget expenses that will increase and decrease with scale.

3. Do Your Homework

If you’re new to budgeting, or are jumping back into business, the first place to start is within your own network.  Begin creating trusting relationships with other professionals in your industry.  This will allow you to talk with them about how they budget without revealing what you might consider trade secrets. You need the right answers, and ones that are based on data to manage your business.  You need to know the following:

  • How much your products or services cost in the competitive marketplace?
  • How much companies like yours pay in expenses on average to operate weekly, monthly and annually?
  • What is the standard timeline for delivering similar products and services?
  • How much each supply chain component costs in similar companies in time and money?
  • What is the standard profit margin?

4. Unless You’re A Magician, Leave the Rabbit Tricks Alone

Moving into the second quarter of your fiscal year can be a bit scary if you didn’t start off with a budget. The opportunity is now for getting your arms around your company’s financial performance. You’ll need to plan for revenues and expenses to better understand what opportunities to pursue this year. You’ll want to know how to price them, and most importantly you’ll get clear about how many opportunities you must win to turn a profit.  When setting objectives, there is no magic wand to earn greater profits. Through consistent efforts you’ll do three things; increase revenue, fulfill your company’s mission and  move closer to turning a profit.

Do you have any tips for establishing a budget once the business year has started? Please share you thoughts.

About the author:

Akia T. Garnett, MBA is a speaker, columnist for Minority Business Entrepreneur Magazine and CEO of Brandbuilder. She is an adjunct professor of business, marketing and consumer behavior at Trinity University of Washington, DC, and Co-Author of Seen and Sustained: Best Practices in Communication that Increase the Visibility of Small and Diverse Businesses. Akia helps small business owners create, cast and complete vision and mission mapping exercises for their professional and personal brands.  Learn more at http://www.BestPracticesforSmallBusinesses.com

 

 

 

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How to be a Finance Rock Star in Your Business with Nicole A. Fende

By on March 29, 2012 in Cash Flow & Finance, Q & A Interviews, SmallBizChat

Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with @NicoleAFende. Nicole is The Numbers Whisperer™ and President of Small Business Finance Forum.  As a credentialed actuary with experience as a Chief Financial Officer, Investment Banker, and successful entrepreneur, Fende helps her clients reach their profit goals and learn how to effectively run the financial side of their business. In her book, How to be a Finance Rock Star: The Small Business Owner’s Ticket to Multi-Platinum Profits, Nicole shares how to reach multi-platinum profits.  For more info: http://financerockstar.com/

SmallBizLady: Why did you think is the biggest financial challenge holding back small business owners?

Nicole A.Fende: Not understanding the drivers behind profit.  You can sell a lot, but if your product or service is not priced correctly you may lose a lot of money rather than make a lot of money. 

A close second is thinking the numbers can come later.  That’s like saying I’ll worry about where to build my house after it’s built.  If you build on sand the house won’t last.  If your business is built on poor financial planning it is unlikely to last.

SmallBizLady: What does it mean to be a Finance Rock Star?

Nicole A.Fende A Finance Rock Star understands the basics of running a profitable business. They don’t need or want to know every last detail, but they do have a firm grasp on the fundamentals. Then they apply those fundamentals consistently in their business.  When appropriate they bring in an expert to handle the nitty gritty. 

Otherwise it’s like expecting a vocalist who can’t sing to be successful.

SmallBizLady: Why do so many business owners avoid numbers?

Nicole A.Fende: Fear.  For some it’s the fear of math.  The fear of not understanding how to analyze their business is common, so they just shove it away. However I also have clients who excelled at math in school.  For them it’s the fear of what the numbers will say about their business.  They’re afraid that the numbers will say their business can’t succeed. 

SmallBizLady: How can small business owners overcome their fear of finance?

Nicole A.Fende Would you drive down the autobahn in a sports car doing 80 MPH with your eyes are closed?  If you do that for more than few minutes you will end up crashing, maybe dying.  Running your business without understanding the numbers is no different.  You can’t see where you’re going, and sooner or later you will crash.

Face your fears.  If it’s the actual math that scares you get help from a coach, accountant or bookkeeper.  Think of it as Drivers Ed.

If it’s the fear of the answer, consider this.  Would you rather find out you’re heading over a cliff after you’re airborne or before?  If you know before you can change course and have a good chance of avoiding the crash.  You can’t avoid a problem you can’t see.

SmallBizLady: Financing a start-up is hard, especially if your credit is less than stellar.  What are some non-traditional ways entrepreneurs can get capital?

Nicole A.Fende: Crowd Funding has become quite popular online.  I call it the busking of Web 2.0.  You post a specific project or need online and then raise money for it.  Friends, colleagues, even strangers can support your initiative.  It is not a loan, nor is it charity.  The person or business raising money offers some type of incentive or experience to those who pledge money.

Another option, often overlooked, is eBay.  You can sell off any number of collectibles and dust collectors on eBay.  I’ve discovered the saying “One man’s trash is another man’s treasure.” is absolutely true.

Some other options I cover in my book include; Sponsorships, Customer Funding, Peer to Peer Loans, and Joint Ventures.

SmallBizLady: Why is expense tracking so important?  Do I really need to keep track of every $5 expense?

Nicole A.Fende: Every dollar of expense you don’t track is costing you $1.35!

So if you ignore a $5 expense it’s costing you $6.75 (5 * 1.35).  If you ignore $5 expense every week of the year it will cost you $351 (52 weeks * $6.75).   Would you throw away a check for $351 if I handed it to you right now?

Everyone hates tracking expenses (I do too!).  My personal favorite is Shoeboxed.com to automate that task.  Others include Keebo.com and Expensify.com.  You might consider hiring a bookkeeper if the online solutions are not a fit.  They are a cost conscious alternative to CPA’s.

SmallBizLady: One of your key mantras is “Time is money”.  What do you mean by that?

Nicole A.Fende: Time is your most precious, irreplaceable asset.  You can’t save time.  You can’t buy more of it.  When it’s gone it’s gone. 

Let’s say you work a 40 hour week.  Imagine that goes onto your financial statements just like your revenue.  How are you spending it?  Would you be embarrassed if you had to determine the return you are getting on your time?

If an hour of your time is worth $100, and you spend 2 hours a month on the free version of a service that costs $20 a month, are you spending your time wisely?  Treat your time like a bank account that gets filled up each week.  Spend it as carefully as you spend the cash your clients pay you.

SmallBizLady: What are some common pricing mistakes people make?

Nicole A.Fende:

  • Accounting for inflation.  Whether your business is a service business or produces an actual product you have expenses.  Those expenses will go up by at least the rate of inflation each year.  If you don’t include that in your price you will earn less next year than you did this year.
  • Assuming that if you sell enough you will make a profit.   This is false.  In fact the more you sell of an underpriced product or service, the more money you will lose!
  • Simply setting their price by looking at what their competitors charge.  First, do you even know if they make a profit?  Second, do you know what their expenses are?  Finally, would you let your competitor run your business?  Then why are they setting your price?

SmallBizLady: You’ve said that offering promotions is like giving customers money from your personal bank account.  Why?

Nicole A.Fende: When you set your price you assume a certain level of profit.  Let’s say it’s $100,000 a year.  You decide to run a sale.  It’s a big success, however the revenues you received were $10,000 less than at your regular price.  In other words, your business brought in $10,000 less in total money, but your expenses stayed the same.  That means your profit, the amount you can pay yourself, is only $90,000 this year.

SmallBizLady: So how can you offer a promotion and keep your profits?

Nicole A.Fende: The easiest way is to bump up all your prices to give a cushion for discounts and sales.  Another option is treat the revenue lost due to a promotion as a marketing expense.  The key is accounting for it somewhere.  If you don’t the only place left to get the money is from your pocket.

SmallBizLady: What are Key Metrics?

Nicole A.Fende: When musicians get on stage they don’t worry about every little detail.  If someone misses a chord, or steps in the wrong spot once, it’s no big deal.  The audience probably won’t even know and certainly will not remember.

However there are some problems which will kill a show.  All the stage lights go out.  The speaker system dies or gets stuck in one of those head exploding feedback loops. You may not be able to prevent a problem, but like the best live rock bands, you must be ready to fix it.

Key Metrics are the show stoppers for your business.  This should not be a long list, simple and short is your goal.  Examples include revenue, expenses, clients gained and clients lost.

SmallBizLady: Once I have my Key Metrics, what do I do with them?

Nicole A.Fende: Compare your key metrics to your experience at the end of every month.  This will tell you very quickly if you are on track or need to make a course correction.  Going back to our original example of the speeding sports car, Key Metrics let you know to keep going straight or if you need to turn to avoid going off a cliff.
If you found this interview helpful, join us on Wednesdays 8-9pm ET follow @SmallBizChat on Twitter.  Here’s how to participate in #Smallbizchat http://bit.ly/S797e 

 

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works.

 

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How to Stop Burning Money in Your Small Business!

By on February 28, 2012 in Cash Flow & Finance, Guest Articles

stop burning money in small businessYour unrecorded expenses are a profit fire hazard.  Do any of these statements sound familiar?

  • “It’s only $5.   It’s not worth my time.”
  • “I’ll do my expenses when I’m not busy.”
  • “There’s no easy way to track my expenses.”
  • “I have money in the bank, so I don’t need to worry about expenses.”

If so, your unrecorded expenses are in danger of becoming a profit fire hazard.  Why carelessly burn up all your hard work? 

In a few hundred words I’ll debunk the myths above and show you easy, practical ways to get your business expense proofed.  Why is this such a crucial issue?  Consider the following:

Every dollar of expense you fail to track is costing you at least $1.35!  In today’s economy, heck in any economy, if you someone offered you an instant, no-risk return of 35% would you say no?   Of course not!  So keep reading and find out how you can earn it starting today.

Expense Tracking Myth #1: Its only $5.  It’s not worth my time.  How about an extra $351?  Is that worth your time?

If you fail to record a $5 expense every week for a year, that is $260 ($5 *52 Weeks).  Since you actually lose $1.35 for every dollar, the real cost is $351 ($260 * 1.35).

Spend a few minutes and think about how many receipts, or “small expenses” you’ve lost, forgotten or just threw out in the past few weeks.  I bet it’s more than $5 a week!  That money is coming right out of your pocket.

Expense Tracking Myth #2: I’ll do my expenses when I’m not busy.  Show me an entrepreneur that isn’t busy, and I’ll show you an entrepreneur that isn’t successful.  Cut out even 15 minutes of Social Media a week and you can get this done.

Expense Myth #3: There’s no easy way to track my expenses.  I’ll let you in on a little secret.  I positively hate doing expenses.  Yes The Numbers Whisperer™ and lover of all things finance hates tracking expenses.  Good news, there are easy, low cost solutions.

My personal favorite is Shoeboxed.com, which lets you submit your receipt by forwarding emails (so easy), uploading scanned receipts, using their smartphone app or even mailing in hardcopies and they fill in all the details.  It’s expense tracking heaven!  Prices start at free (yes, I said free).

Other options include Keebo.com (UK version of Shoeboxed.com) and Expensify.com.  If you are truly buried under an avalanche of receipts consider a bookkeeper to get you caught up, their fees are very budget conscious compared with a CPA.

Expense Myth #4: I have money in the bank, so I don’t need to worry about expenses. 

Why you lose at least $1.35 for each dollar of expense you fail to track

When you perform work for a client, or produce a product for a customer you incur certain expenses.  Let’s say you have to buy a Super Widget, and it costs $10.  Aren’t you going to include that cost in the price you charge your client?

If you don’t (and why wouldn’t you?), you are spending money that should go into your personal bank account for a client’s expense. If you don’t record the expense you can’t ensure you bill the client for it.

Consider this. When you worked for someone else, and had to buy something for your employer with your own money or credit, did you get reimbursed?  Of course you did!  So why aren’t doing the same thing with your business?  If you don’t treat your business as a business you will forever be held back from reaching your profit goals.

Where does the other $0.35 come from?  Quite simply, the tax man.

From the government’s point of view, since you didn’t record that dollar of expense, it must be a dollar of income.  That means it is taxable!  A US business owner is considered self-employed, therefore he or she must pay 12.4% FICA and 2.8% Medicare on their income.  Right there you’ve got 15.3 cents you’re out.

What about the other 20 cents? The average working American easily pays more than a 20% tax rate on their earned income between state and federal taxes.  In many other countries the rates are even higher.   At a minimum you are out $1.35 total, it could be much higher depending on your tax bracket.

Give yourself a 35% return today.  Track all of your expenses.

Nicole Fende is The Numbers Whisperer™ and President of Small Business Finance Forum.  As a credentialed actuary with experience as a Chief Financial Officer, Investment Banker, and successful entrepreneur, Fende helps her clients reach their profit goals and learn how to effectively and enjoyably run the financial side of their business. In her book, How to be a Finance Rock Star, Nicole shares the same strategies she uses for her profit coaching clients to help them reach multi-platinum profits.  You can order her book on Amazon.com.

 

Comments { 1 }

How to Be More Tax Savvy in Your Small Business with Eva Rosenberg @TaxMama

By on February 24, 2012 in Cash Flow & Finance, Melinda Emerson @SmallBizLady, Q & A Interview, SmallBizChat

Each week as Smallbizlady, I conduct interviews with small business experts on my weekly Twitter talk show #SmallBizChat. This is excerpted from my #SmallBizChat interviewwith Eva Rosenberg, the TaxMama® @TaxMama is passionate about helping your business pay the least taxes legally possible. She’s the author
the award-winning book Small Business Taxes Made Easy, as an practicing enrolled
agent, and a nationally syndicated writer, she helps business owners stay abreast
of the latest changes in tax news. Check her website at http://www.taxmama.com

SmallBizlady: What is one of the most important things small business
owners overlook in their businesses?

TaxMama®: They don’t take
the time to find out what licenses their business needs on all three levels – Federal,
state and locally. Often, this catches up with you later, when you suddenly find
yourself hit with penalties you should never have incurred.

For instance, in Los Angeles, if you register your business with the city, there is no
license fee, as long as your business grosses less than $100, 000. But if your business
qualifies, but doesn’t register, you will pay penalties and interest of over $100.

Or people do work in different, nearby areas without getting licensed. For instance,
in the Los Angeles area (let’s use L.A. as a base, since I am here – the same rules
and logic will apply in your area.) a personal trainer will work with private clients
at their homes in Beverly Hills, Westwood, West Hollywood and Santa Monica.
Although she may only be working in a 5-8 mile radius, she is working in 4 distinct
cities. She will need licenses in each city, because she is performing work INSIDE
those cities.

SmallBizlady: What else do small business owners overlook in their
businesses?

TaxMama®: They don’t set up an advisory board. I talk about the concept in Chapter 1 of Small Business Taxes Made

Easy. But, perhaps I don’t explain it well. The Board doesn’t need to be a formal
board. You don’t necessarily need to pay Board members. And you don’t need to
have formal meetings. Though it would be good to have everyone meet, in person, at
least once a year.

This can be an informal group of solid contacts – your tax pro, your attorney,
your insurance agent, your banker and a few other key people. These people
can help open the door to both clients and vendors. They can help you find the
best resources, at insider prices – because they have contacts. When you get
referrals from respected members of the community, it’s easier to close a sale to a
prospective client. It’s easier to get a line of credit from a supplier. It’s easier to get
good prices from a vendor. You might even learn about special deals or services
others don’t know about.

Heck, they might even find you investors – or offer to do so themselves, if they are
impressed with your business.

Best of all, they can bring your business to profitable status more quickly. If you
haven’t done this yet, it’s never too late to set up your own informal advisory board.

SmallBizlady: You mention tax professionals. And you are an Enrolled
Agent. Could you explain what that is?

TaxMama®: Enrolled Agents,
or EAs, are the best-kept secret in the tax industry. We have been around since the
Civil War, when the U.S. Treasury Department created this designation to prevent
people from filing phony claims for reimbursements after the war. These days,
Enrolled Agents are authorized to represent taxpayers before the Internal Revenue
Service in all tax matters.

  • You can become an EA two ways – the easy way is to work for IRS for 5
    or more years in certain positions. The hard way is to pass a set of very rigorous IRS
    examinations. I teach the course to help tax pros do that at www.irsexams.com (incidentally, this is a TERRIFIC
    profession for women – I’ll tell you more about this in a minute.)
  • When it comes to tax matters, EAs can do everything that CPAs can do –
    and, believe it or not, often we can do it better.
  • Why? Because all of an Enrolled Agent’s continuing education must be
    tax related. We must absolutely be up-to-date on all tax issues. We have special
    training in tax issues. CPAs must also take continuing education courses. But there is
    no requirement that any of their education must be on taxation or tax matters.

SmallBizlady: What is so special about Enrolled Agents?

TaxMama®: Enrolled Agents
are specifically license to represent taxpayers who have tax problems, like audits,

tax debts, IRS errors, spousal disputes, and other night terrors. Many CPAs don’t
even know how to do tax representation. Their strengths lie in helping you with
complex accounting matters – or with complex tax planning issues.

I was shocked when I looked at someone’s IRS audit recently. He’s working with his
CPA, who missed a crucial response deadline – and just cost my friend his right to go
to Tax Court. The CPA didn’t even know he had done that.

SmallBizlady: Getting back to business, what’s another thing small
businesses tend not to do?

TaxMama®: People start a
business with an idea. Or someone asks them to do something and starts to pay
them. Things start rolling on their own…and there’s no planning. Often, you’re
making some money, or a lot of money, before you even realize it.

You suddenly look up and, uh oh! I’m in business! I haven’t made any plans. I haven’t
thought anything through. And I haven’t set aside any money to pay the taxes on my
business. A couple of years ago, I set up some special training for the top Internet
Marketers – you know, the guys making a million dollars or so online. Several of
them had this problem. When they first started to succeed, they made their first
couple of hundred thousand dollars – and spent it all – leaving NOTHING with which
to pay the taxes.

You never want to have that problem.

So…learn the rules about making estimated tax payments – and make them on time.

SmallBizlady: What are the rules for Estimated Tax Payments – and how
can we simplify this?

TaxMama®: These days, IRS
wants us to make the payments electronically. So open up a free account at www.EFTPS.gov . It will link to your bank
account and take a couple of days to set up.

BTW, ladies you DO have a separate bank account right for the business, right? If
you’re in business, you must. If you haven’t done it, do it first.

Let’s set aside the complications in the rules. OK. Bottom line?

1) If you’re going to owe $1,000 or more by April – make estimated payments.
Period. Pay $250 per quarter. The first payment is due on April 15th.
(OK, this year, it’s the 17th because the 15th is on a
weekend.)

2) Set aside about 1/3 of all your profits in a savings account, so you can pay your
taxes each quarter. If you end up not needing that much for taxes, at least you’ll have
money saved to put into your retirement account.

SmallBizlady: You told me that you have a pet peeve about small business
owners. Come on, what is it?

TaxMama®: Shall I tell you what almost makes me cry?

People who come to me with their questions AFTER they’ve already done whatever
it is they’re asking about. By the time they get to me, they’ve already done
something so wrong, it’s really expensive to fix.

Oh, they can mean well. For instance, this sweet fellow, Joe, brought his best friend
to consult with me about his new business. Joe was so proud of himself. To help his
friend, he had gone and arranged to buy him an LLC because he heard on the radio
that LLCs are good things to have.

Well, as it happens, in California, there is an annual $800 fee for LLCs. And California
also charges a Gross Receipts tax based on the business’ sales – even if the business
runs at a loss. In California, LLCs are often a bad idea. It’s much cheaper to simply
buy a business liability insurance policy, if you’re concerned about protecting your
assets. And if you don’t have any assets – you don’t need an LLC or insurance.

Not only did he waste about $400 of his own money, it was going to cost even more
to undo the LLC his friend didn’t need.

SmallBizlady: Speaking of LLCs, what is the best legal structure for a new
business?

TaxMama®: I wish I could give you a pat sound-bite. But there is NO one best choice.

Your business structure will depend on what you want to get out of the business. Do
you need benefits? Like health insurance, child care, retirement, etc. Do you already
have all that at a job or a spouse’s job?

Do you plan to take the business public in a few years? Do you want to build dynasty
and pass the business to your children and grandchildren?

Do you need investors to help grow the business? Or will you be using your own
money or loans? Each need is served by a different structure.

If you haven’t done any planning, don’t set up any structures. Just start out as a sole

proprietorship and see how the business does. It’s cheaper, easier to untangle later
– and it has fewer strict recordkeeping and minute-keeping demands.

SmallBizlady: What is the best thing about being in business, instead of
having a job?

TaxMama®: It’s your time. It’s your decisions. Just the other day, someone told me he had some students (children)
who were generally rude and whiny. He really, really didn’t enjoy teaching these
undisciplined children. Even though their presence provided $1,000 per month,
since it was HIS business, he was free to send them on their way.

I love having the freedom to have clients I really enjoy being with. I love being hire
to people to work with me or for me, who are like sunshine to have around. I don’t
have to put up with negative, stressful, or inconsiderate co-workers or customers.

That’s one of the big advantages of working for yourself.

SmallBizlady: How can you go about surrounding yourself with great
clients?

TaxMama®: This is one of the
advantages of doing a business plan. (Chapter 2 in Small Business Taxes Made Easy)
Sit and visualize how you would like to spend your business days. Who do you want
to spend your days with? What kind of customers; what kind of staff?

Once you know who you want to surround yourself with, you can find a way to
target exactly those kinds of people. And you can do this in any profession. Let’s say
you love being around horses and people who love horses.

Join organizations, turf clubs, etc. that cater to horse people. Get to know them.
Volunteer for projects, events, committees. These are the people who will become
your friends and contacts. If you’re a dentist – they need dentists. If you’re a tax
professional, they need tax pros who are experts at dealing with breeding, racing
and ranching audits. Whatever it is you do, you can provide a service or product to
the horsey set.

SmallBizlady: Your clients seem to do well, even in recessions. Why is that?

TaxMama®: I try to help my
clients keep an eye on the market and changing conditions.

Two of my clients, brothers, were in the garment industry, selling custom designed
fabrics. Several years ago, I told them both – you need to find a new business, or go
to China. The Chinese will be undercutting your prices. And many of their customers

would be going out of business.

They heeded my advice. Let’s call them Bill and Ben. Bill looked at other business
options, like real estate. Ben went to China and researched the market and vendors
there. Ben came back and said he would start getting his fabrics manufactured in
China. I gave him some warnings about what to watch out for in the workmanship
and the production. So, he did exactly that. His business grew faster than it ever had.

Incidentally, Ben told me that some of his customers DID start going under. But he
had such a good relationship with their accounts payable departments, that the
ladies there made sure he was paid before they went out of business or filed for
bankruptcy.

Let’s look at another case. I had become good online friends with Jacqueline
Freeman. Her husband was apparently well-known for his therapeutic work
with show horses or racehorses. He loved what he was doing. Jacqueline told me
the work is so physical, that as he got older, it gets to be harder on his body. So I
suggested that he turn his skills into a school – and it worked! http://equinenaturalmovement.com/

See, you not only get to do what you love, but you need to adapt as times and
markets, and skills change.

SmallBizlady: How about giving a few tax cutting tips?

TaxMama®: How exciting.
Cutting taxes!

If you’ve been following the Republican campaigns, you’ve seen a lot of nastiness.
And sometimes, a little stupidity. There was a critical story in the news about Newt Gingrich because his S Corp
paid him a salary of about $420,000, on profits of about $2.4 million. The article
talks about him evading self-employment (Medicare) taxes of about $60,000. What
Gingrich did was not only legal, his salary was certainly high enough not to attract
an IRS audit.

The whole point of having an S Corp is to avoid paying payroll taxes on ALL
your earnings. You use the S Corp to have a modest, but reasonable wage – and
to pass the rest of the income through to you without the extra 15.3% worth of
Social Security and Medicare taxes (or just save the 2.9% of Medicare, if your
wages are above the FICA limits). (You can see what one attorney had to say about
this.)

I do a little comparison of Romney’s and
Gingrich’s tax returns for the tax pro community at www.iShade.com . But one thing I didn’t touch
on is – some of Romney’s income is surely from his Bain investments. That
company is designed to invest in businesses. There’s a special provision
in the tax code that allows you to exclude all or part of the gain when
you sell the stocks of Qualified Small Businesses (QSBS). In fact, there’s another provision that lets you roll over the profits if your business is a Specialized Small Business Investment Company (SSBIC). I didn’t
dig into Romney’s 200-page tax return deeply enough to track down the untaxed
income from such rollovers or exclusions. But, it’s quite possible, due to the nature
of his investments, in his blind trusts, you will find such untaxed income.

Well, isn’t that the whole point of tax planning? To use the tax laws to your
advantage.

With the right planning, you can set up your own corporation to qualify for this
QSBS treatment. Then, if you do well and sell your stock, you can avoid paying taxes
on some or all the gains. And if you fail – there’s a special treatment for the losses,
too!

Just imagine, the first people who bought or received FaceBook stock – their
original stock probably qualifies for the QSBS exclusions. And how much is their IPO price?

That could be your company 6 years from now!

If you found this interview helpful, join us on Wednesdays 8-9pm ET
follow @SmallBizChat on Twitter. Here’s how
to participate in #SmallBizChat: http://bit.ly/S797e

For more tips on how start or grow your small business
subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts.
As a seasoned entrepreneur, professional speaker, and small business coach, she
develops audio, video and written content to fulfill her mission to end small
business failure. As CEO of MFE Consulting LLC, Melinda
educates entrepreneurs and Fortune 500 companies on subjects including small
business start-up, business development and social media marketing. Forbes
Magazine recently named her one of the Top 20 women for entrepreneurs to follow
on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging
entrepreneurs. She also publishes a resource blog www.succeedasyourownboss.com Melinda is also the author
of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business
That Works. (Adams Media 2010)

Comments { 1 }

5 Things Wrong With Your Business Plan

By on November 7, 2011 in Branding & Marketing, Cash Flow & Finance, Starting A Small Business

If you’ve taken the time to develop a business plan for your start-up business, you are on the right track. You have a roadmap that will help you with decision-making in your new enterprise. Take the time to be sure your business plan doesn’t contain any of the following shortcomings that will prevent your business from being effective. If you need help, check put my three part series on how to write a business plan for even more advice.

You haven’t researched your market. Many business owners don’t have enough information about who is buying their products and why. You need to find out who your ideal customers are, what their income is, what their buying habits are, and how they make purchasing decisions, for a start. You can do this by conducting surveys or polls online, interviewing people you consider potential customers, and searching for existing data on your demographic. Organizing the results will give you a clear picture of your customers’ perspective. This is an advantage when you develop messaging and begin to “talk” to them. All public relations and customer communications should center around customer pain points.

You haven’t researched your competitors. Know who your competitors are and stay up to date on their activities not only helps you make strategy decisions, it is a learning experience as well. You should know who has the best quality product or service at what price and who has the least, what customers are saying about the company, any financials made publicly available, and what kind of marketing or advertising they do. As you follow your competitors’ movements, you will be able to observe the rewards and consequences of their decisions on many levels, and adjust your own strategy to expand, advance, or target your market in new ways.

You haven’t planned for growth. A business plan is an action plan. It’s hard to motivate yourself, your employees, and your investors with research and projections. Be sure your plan outlines an actual plan for at least one future scenario. I say at least one because you should make plans for factors beyond your control that may derail your first plan.

You don’t know your numbers. Running a business is all numbers. Sales projections, production yields, profit estimates and more can swallow the heart of a business plan: the viability of your business model. Don’t get so focused on month-to-month numbers that you lose sight of whether your business idea, operations, and strategic decisions will allow those numbers to be actualized.

Your business plan is not up-to-date.  If your plan is outdated, you will not be able to use it to run your business. Most business plans are created before launch. When your new business meets the real world, however, you often need to make adjustments that aren’t incorporated or reflected in your written plans. If you haven’t looked at your business plan in a while, ask yourself why. Is it because you’ve made so many changes to daily operations, or your numbers don’t correlate with what’s on paper at all? Take the time to sit down and go over your business plan once again and decide whether you need to make changes or make a new one that will better reflect your business’s current direction.

Do you have any other common business plans mistakes for small business owner?

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts.Melinda Emerson "SmallBizLady" As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. 

Comments { 7 }

How to Generate Revenue for Your Small Business

By on November 1, 2011 in Branding & Marketing, Cash Flow & Finance, Grow Your Business

Most people know they shouldn’t attempt to take on a mortgage without having some way to pay for it.  Yet small business owners do something quite similar every day.  How do they do this? Some small business owners focus on running the business before focusing on generating the leads that fund the business.  Sure, every business needs money to stay open, but without building a strategy to funnel the revenue into the business, the foundation is shaky at best.

Just like some new homeowners take on more mortgage than they can afford, eventually it catches up to them.  They are then forced to find more money or a smaller home.  After a few years, the initial rush of the business wears off leaving a gaping hole where lead generation would have been.  Small business owners may have quick sales in the beginning but without a long-term lead generation plan, they will go bankrupt.  The cash flow a business needs requires a sales funnel.  So how do you create that funnel?  Below are a few tips to make lead generation a priority in your business without taking away from your other activities.

  1. Create a list: Encourage people to opt in to your newsletter/free report or to a webinar/telesemiar.  Developing a list of people who have opted in to your communications is quite possibly one of the best lead generation tactics you can implement.  No, you shouldn’t buy lists or dump your contacts into your email newsletter program.  People need to sign up by themselves.  So incite them to do so.  Host a free webinar or offer a free special report.  Just offer them something.  Taking action is better than perfecting the freebie.
  2. Devote a set amount of time each week to lead generation.  Customer needs change.  Industries change.  Consumer expectations change.  Client budgets for your products and services may dwindle.  So you need an ongoing plan for lead generation. Set aside time each week purely for lead generation activities.  This could be list building activities social media marketing, warm calling, in-person networking, and many other activities. It’s easy to get caught up in your current client work, setting time aside for lead generation helps you bridge the gap between hunting for new business while producing the work you already have.
  3. Build leads offline.  Network, network, network. Have I mentioned networking? It’s a great way to build leads. Attend luncheons and business breakfasts to meet new people and expand your circle. Since your network of contacts will be in a constant state of flux, it’s important to keep adding to it. Some people will filter out, so replenishing is critical. Remember to tie your offline activities to your online activities, meaning connect to them on LinkedIn. Mention your e-report or other freebie on your business card.  Direct people to a squeeze page on your website where they can sign up for your webinar.
  4. Accepts “nos.” Getting a “no” is better than being stuck with a “maybe.” With a “no” you can move on to the next lead. Getting stuck with false hope maybes will, “bankrupt your business.”  Building in registration deadlines for webinars and teleseminars encourages action. Promoting your reports and newsletters with some mystery encourages people to sign up to find out the punch-line. Demonstrating scarcity, a limited number of copies of a book to hand out, for example, encourages people to take action now. These tactics also weed out anyone who simply isn’t interested.
  5. Make lead generation a priority.  It’s easy to stop spending time each week on sales activities.  But remember, quick cash creates a false sense of security.  Quick cash burns out fast too (if you don’t first!). Build your business the right way even if it means saying no to work that doesn’t fit your business model.  There are no shortcuts to success.

Lead generation is one of the most important things you can do to build and sustain your business.  Focusing on working in your business instead of on your business will keep you from achieving the profit and longevity you seek. Focusing create quality content that will attract your target customer. Building quality leads into your sales funnel is what will make your business stand out and help you avoid sleepless nights. 

Do you have any more ideas to share about lead generation and building a sales funnel?

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

By day Morgan Leu Parkhurst helps individuals put the pieces of their marketing puzzles together.  By night she teaches
marketing communications to aspiring entrepreneurs. Reach her atwww.sharpmindmarketing.com or on Twitter at @Morgan_LP.

Comments { 2 }

5 Things Every Entrepreneur Must Do Each Day

By on October 17, 2011 in Business Inspiration, Cash Flow & Finance, Featured Post, Grow Your Business, My Recommendations

Meditate— The worst thing you can do for your business is start each day in a race. I am strong believer in thinking about your day before you jump into it. I start each day in prayer before I leave my bed. I find that I am able to keep a positive disposition throughout my day regardless of what happens as a result. Years ago, Oprah Winfrey featured a book on her show called Simple Abundance; A Daybook of Comfort and Joy by Sarah Ban Breathnach. In it, she provides daily lessons about the concept of peace, joy and gratitude. This is a great book that I have used over 10 years to stay centered. If you start your day thinking about what you are grateful for it’s much easier to keep perspective when things go wrong. Running a small business involves 10 or more jobs at one time. Do yourself a favor, slow down and mediate on something before each day starts.

Know your cash flow situation– Cash is King! You have to know what your cash flow is, every single day, or you could lose your business. You should run your business based on a 30-day cash flow projection. You need to know how much money is coming in and what money needs to go out daily. You also need to stay on top of what invoices need to go out, and what the payment procedure is for each of your clients. Start collections procedures the first day after your money is past due. Never hesitate to call your client or the bank to get clarity about your cash flow situation. No matter what accounting software you use or what bookkeeper you hire, as the owner of the business you must know your cash flow situation every day.

Set aside 1 hour a day for business development– Work on getting in front of someone who may buy your product or service every day. Sales is the life’s blood of your business. Each day you must conduct business development activities in order to stay ahead of the competition. You can make calls, write emails, send thank you notes, Connect with new connections on LinkedIn, search for conferences and trade shows to attend, develop signature content, use social media to build relationships as lead generating activities. You need to make it a priority each day to spend at least one hour generating new business.

Follow-up with 3 three existing connections– People do business with people they like, know and trust, but you must nurture those relationships. Reach out to existing customers you haven’t spoken too in a while. Give three recommendations on LinkedIn. Send a lengthy personal note on Facebook.  Make three calls or send follow-up notes with an article your read in the New York Times or Washington Post over the weekend. You will spend a longer time on these contacts, but they are further down your sales funnel, so they are worth it.  

Get your plan together for the next day– One of my other favorite books is the 7 Minute Difference by Allyson Lewis. In this book, she says you need to do 5 things before 11am each day and anything else is a bonus. I love this and I do this every day. I make my list of the five things at the end of each day so I have a game plan for my day each morning. This, by the way, is also how I sleep well at night.

Do you have any suggestions for the daily priorities of a small business owner?

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestselling author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. 

 

 

 

Comments { 42 }

Managing Your Personal Credit and Your Business Credit – #SmallBizChat QA

By on October 13, 2011 in Cash Flow & Finance, Q & A Interviews, SmallBizChat

Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wed on Twitter from 8-9pm ET. This is excerpted from my recent interview with Iris Carter @idCarter. Her company, Corporate Fast Track, helps small business owners separate their personal credit from their business credit. Iris Carter is an accountant and IT professional with an in-depth understanding of debt negotiation, business credit, loan packaging and managing your banking relationship. She specializes in providing sound financial strategies to small business owners that will maximum funding opportunities for their businesses. http://www.corporatefasttrack.com


Smallbizlady: What does it mean to separate personal credit from business credit?

Iris Carter: Separating your personal credit from your business credit means that you formally establish business credit. Any credit cards, loans, and/or lines of credit that pertain to your personally are listed with the 3 major credit bureaus Experian, Trans Union and Equifax. Establishing business credit means any credit cards, loans, and/or lines of credit that you are using for your business would be listed in the business bureaus such as Dun & Bradstreet, Experian Business and Equifax Business. When you run a personal credit report, you will see no evidence of any of the creditors you use on a business basis.

 

Smallbizlady: Why is it important to separate my personal credit from my business credit?

Iris Carter: You need to separate your personal credit from your business credit for several reasons. The first has to do with comingling funds. For accounting purposes you need to keep business credit separate to be sure to take advantage of all tax benefits afforded you. The second most important reason is that your personal credit has a credit score. This score can help you acquire things you want in life or it can hinder you depending on how low or how high the score is. If for example, you have too much debt /credit on your personal credit report, this can hurt your scores. You don’t want add business debt on your personal credit, especially if the debt/credit belongs to your business. This will increase your debt ratio and lower your personal credit score. Other creditors can also lower your available balances, and even your insurance rates may increase. Your business is suppose to be a separate entity from you, standing on its own.

 

Smallbizlady: How to do you establish business credit?

Iris Carter: The only way to establish business credit is to start by separating your personal credit from your business by incorporating your business and getting a federal ID number for your business. Then you want to apply for credit in the name of your business.

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10 Tips To Recession Proof Your Small Business

By on October 10, 2011 in Branding & Marketing, Cash Flow & Finance, Customer Service

Sponsored Post

If you are tired of hearing about the recession or the potential of a double dip recession due to foreign markets crashing now, Listen up. It does not matter. Recession or not you need to run your business well. You need to be an agent of convenience for your best target customer, manage cash flow with military precision and pay attention to the trends in your industry. This is a perfect time for an aggressive small business. No matter what your business does, if you build a better mousetrap, the world will beat a path to your door.  In order to beat the recession, you must get smart about your marketing and business operations.

Here are 10 tips on strategic marketing and cash management to recession proof your small business.

Keep marketing. Do not be tempted to cut or eliminate marketing activities. This is no time to cut back on marketing. If you can’t afford a full-blown marketing campaign, pursue low-cost options such as social media marketing, webinars, news releases, e-mail blasts, blogging, and online newsletters. Be sure to keep your marketing activities going at least six months so that you can track your rate of return.

Develop 30-day sales goals. Do not focus on sales activities beyond 30 days. You should break down how many sales you need to close each month to meet your revenue goals.  Determine how many meetings, calls, emails and blog posts you need to have, make, send or write to generate your target sales.  You must keep the sales engine rolling in your business. You should be doing at least 60 minutes of sales cultivation activities per day.

Cut expenses and track cash carefully.  It is extremely important for you to understand your monthly burn rate and your cash position.  Determine where you can cut costs, and make sure on a weekly basis that you understand what money is coming in. As you cut costs use this formula, for every $2 dollars you cut in business expenses, invest $1 into your marketing efforts.

Start collections at 30 days past due. The days of waiting 45-90 days for payments are over. You need your money now. Once a client gets to 30 days past due, get on the phone and track down the accounts payable manager for an update. Be sure you are set up to take credit cards, you may get paid a lot faster.

Improve communications with your customers.  Have quarterly face-to-face meetings or lunches with your top customers. Understand their biggest business challenges and look for ways you can help even if that doesn’t involve more direct business for you.  Consider keeping your fees the same for long-term customers if they are really having financial difficulty.

Add value, not price.  Continuously adding value to your and services is the way to get repeat customers and new business through referrals.  Adding price without value is a lose/lose proposition.  You may get the reorder, but your client will start looking for a replacement vendor.

Under Promise and Over Deliver.  Excellent customer service is the number one way to beat the recession. If you do a great job and your customers love working with you, your customers will become an unpaid sales force for your business.  If do great work, are highly responsive if there’s a concern, make follow-up calls, send thank you cards, throw in little extras all that shows you care.  It’s also the best way to encourage your customers to refer you more business.  Be known for delivering great products and services. Do not treat your customers like you are doing then a favor.

Network, network, network online and offline.  People do business with people they like, know and trust. You need to make sure people know who you are, what you do and how to do business with you. You want to be top of mind when an opportunity presents itself.  One of the best ways to so this is using social media. You can network online without being considered spam. Use Twitter and Facebook Fan Pages to give out helpful advice.  Consider updating your LinkedIn profile regularly with updates on your business and/or any signature content such as blog posts.  When you meet a new contact, online or in person think solutions for them first.  Successful networking is all about give to get.

Consider adding staff.  One good thing about a recession is there are lots good people are on the market looking for a job.  You could pick up some quality talent right now that you could not otherwise afford.  Consider hiring a salesperson and pay them commission only.  Make them kill what they eat. Also be sure you think about exact what target market they will focus on and how success will be measured. If you have never hired an employee here’s a recent blog post that will give you some tips on the interview process.

Call the bank before things great critical.  Good relationships are made in hard times. Regardless of your business situation, you need to communicate with your bank sooner rather than later.  The bank does not benefit if you go out of business, so stop the denial and negotiate better terms with your bank.

Last week, I spoke with FedEx Office® during a live Tweet Chat #FedExSmallBiz about ways to recession proof a small business.  Check out the transcript from part one of their Boost Your Small Business Tweet Chat series.

Do you have any more ideas on how to recession proof a small business? Your idea could be worth $50 bucks.

@SmallBizlady will offer two $50 gift cards for two more great ideas to recession proof your small business.  To be considered, post your comment on this blog post until 10pm ET Wed Oct. 12, 2011. Winners will be announced on Twitter on Friday,  Oct. 14, 2011. FedEx Office has no involvement in the selection of winners.   This is sponsored by @SmallBizlady.

Disclosure:  FedEx Office compensated me to write this post and participate as a small business expert during the FedEx Office Boost Your Small Business Tweet Chat program.  FedEx Office also provided the $50 gift cards. The ideas in this blog post are mine and not ideas or advice from FedEx Office.

About FedEx Office

FedEx Office (formerly FedEx Kinko’s) has the world’s largest retail printing network, providing access to printing and shipping expertise with reliable service.  The company’s network of more than 1,900 locations includes 1,800 in the U.S. and features FedEx Office Print & Ship Centers, FedEx Office Ship Centers, FedEx Office Signs & Graphics Centers, and centralized production centers.  Services include copying and digital printing, professional finishing, document creation, direct mail, signs and graphics, computer rental, free Wi-Fi access, FedEx Express and FedEx Ground shipping, and more.  In addition, the company offers the award-winning FedEx Office® Print Online solution, an online printing application for business and personal printing, at home, at the office or on the go.  Products, services and hours vary by location.  For more information, please visit www.fedex.com/office.

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading smallMelinda Emerson "SmallBizLady" business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure.  As CEO of MFE Consulting LLC, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine recently named her one of the Top 20 women for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog    www.succeedasyourownboss.com Melinda is also the author of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. (Adams Media 2010)

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Affiliate Marketing the Right Way

By on October 4, 2011 in Cash Flow & Finance, Grow Your Business, Guest Articles

Have you been the recipient of communications from affiliate marketers or web-based entrepreneurs? Many of you have created or signed up to participate in affiliate programs.  The government considers your affiliate activities to be a business activity and has a few things to say about what you can and cannot do.  If you’re new to the game of affiliate marketing, it’s best to set up your program right the first time around.  Here are action steps for ensuring you’re marketing your affiliate program the legal way.

What is An Affiliate Marketer?

You act as a referral source for another business for compensation. Or you get a percentage of each click-through from your site to another site.

For example, if I sell baby clothes and seek out a really popular mommy blogger to put a link on her site, and she does so for a percentage of each click-through (or purchase) to my baby product site, then I am a merchant and the mommy blogger is an affiliate marketer.

How are Affiliate Marketers Successful?

  1. You must have a ton of traffic to your website from your target customer.
  1. Associate only with good affiliate marketing programs that offer helpful information or quality products/services to your target audience.
  1. Look for affiliate programs with a reputation for paying high commissions on time and providing excellent customer service to the end buyers, not just their affiliates.
  1. Only promote products or services that you would actually buy. Linking to an affiliate marketing scam will eventually damage your online brand.
  2. Do you homework to make sure you are providing legitimate value to your loyal web visitors.

Keeping Your Affiliate Program Legally Compliant.

In 2007, several government entities published rules to regulate the activities of affiliate marketers.  The Affiliate Marketing Regulations, issued by the Federal Trade Commission (FTC) and the Federal banking agencies, generally require a company to provide a notice to consumers and an opportunity to opt out before an affiliated company can use certain information for marketing purposes. The affiliate marketing notice is in addition to the privacy notices already mandated, and would be a second required notice and opt out opportunity.

What Must I Do to Comply?

Get permission from the customer in advance.

Ask the customer if you can share their information with your affiliates BEFORE you share any information.

Use an opt-out feature. 

Most email marketing programs offer an opt-out feature.  You have to give your customers the opportunity to decide they don’t want their information shared with your partners.

What Should My Opt-Out Include?

It’s best to keep it simple.  Try something like–

“Click here to opt out” or “Enter ‘Stop Emails’ in the Subject Line and hit ‘Send’”

Avoid these not so simple options–

“Print out this notice, fill it out and send by mail within 14 days” or “Enter your username, password and click here, there and everywhere to get to the opt-out page.”

There’s truly nothing more frustrating for a customer (and potentially illegal for you) than a complex opt-out process.  Make it simple, and your customers will appreciate it and may even return later.

What Content Should Include an Opt-Out?

Remember, opt-out policies are not just for e-newsletters.  Coupon offers, daily deals, infrequent updates, and anything else communicated to the consumer via an affiliate (or the merchant, of course), should include an opportunity for the consumer to opt-out in advance.

The government is not interested in completely raining on your affiliate marketing parade.  There are a few things you can do without using an opt-out.

No Opt-Out Necessary When…

You had a pre-existing relationship with the customer

The customer initiated the communication or the Customer requested the solicitation

Include a Renewal

Give the customer an opportunity to renew their opt-out preferences at least every five years.

Do the consumers need to know that I’m an affiliate marketer? 

Absolutely!  Anytime you receive compensation (money, products or other freebies) of any type for providing access to a product via links on your site, product reviews or any other method of product promotion, then you need to tell your site visitors that you are being compensated for doing so.

Of course, you can also remind them that your reviews and opinions are based on your personal experience with the product (if that’s the case, and it should be…), but nevertheless, you must let them know so they can decide whether to go forward.

Three Steps to Legalize Your Affiliate Program

Strive for transparency.  I imagine that’s a good rule in business, but definitely when it comes to sharing your customer’s information.  Disclose all relationships and let you customers know and make the decision for themselves.

Err on the side of being overly generous with your opt-out policies.  Don’t force yourself on your potential customers.  Instead, give them a measure of choice in the relationship.

Keep it simple.  Any opt-out procedure should not require a great deal of time or energy on the part of your customers.  Make it easy to no longer hear from you. Keep it clear and to the point.

If you have a great product or service, then your customer base will grow over time, and you don’t have to engage in any sketchy tactics to get their business or email address.

Disclaimer:  Any and all information contained in this post is shared for information purposes only.  There is no attorney client relationship created between the author, reader, and any third party by the creation and sharing of this content.   For more information on the federal regulations on affiliate marketers contact The FTC Bureau of Consumer Protection, Division of Privacy and Identity Protection, can be reached at (202) 326‐2252.

Shannon Harmon is a writer and communications consultant with Jones Harmon Communications, Inc.  She helps companies around the globe create effective written content for business growth.  As a licensed attorney she also publishes valuable legal information for web-based entrepreneurs via ibusinesslegal.com.  If you have questions about your writing strategy or communications needs, she always welcomes emails at shannon (at) jonesharmonwriting (dot) com and will provide a thoughtful response to your inquiry.

 

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How to Get Corporate Sponsorship for Your Small Business

By on September 22, 2011 in Cash Flow & Finance, Q & A Interviews, SmallBizChat, Telesummit

Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with @anisharkeeys.  Anisha Robinson Keeys is the Principal Officer of Best Practice Fundraising. With 14 years of nonprofit fundraising and marketing experience,she has raised over $52 million dollars in the areas of youth and women’s empowerment, disaster relief, arts, and health care. Learn more about Anisha at bestpracticefundraising.org.


Small Biz Lady:  What does it mean for an organization, brand or person to get sponsored?

Anisha Robinson Keeys: Sponsorship is a mutual business proposition that offers something in exchange for a financial commitment from a corporation. Corporations get a return on their financial “investment,” enhance their profile, associate their brand with a cause or attract customers who support that cause. Sponsorship typically involves a contractual relationship between the non profit and the corporate sponsor

 

Small Biz Lady: How do you even get started pursuing sponsorship?

Anisha Robinson Keeys: Getting funding from corporations may be a great opportunity for your organization to increase your budget but– you should never haphazardly create a corporate sponsorship program for the sake of filling a budget deficit Before pursuing support from corporations, you first need to know your organizations goals,  and then ask and answer these questions:

  • What is your organization trying to achieve?
  • Can you effectively tell your organizations story?
  • What value could your organization provide to a prospective corporate sponsor?
  • What impact could a corporation make by partnering with your organization?

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