Tag Archives | money

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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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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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.

Continue Reading →

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How to Set Your Price to Achieve Your Profit Goals #SmallBizChat QA with Nicole Fende

By on July 14, 2011 in Q & A Interviews, SmallBizChat

small biz chat with melinda emersonEvery 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 Nicole Fende @BizFinanceForum Nicole is President and Chief Numbers Whisperer of Small Business Finance Forum. Nicole is a credentialed actuary with experience as a Chief Financial Officer, Investment Banker, and successful entrepreneur. Her forthcoming book, How to be a Finance Rock Star, is an easy, practical guide to mastering small business finance.

SmallBizLady: What is the first step in pricing any product or service?

Nicole Fende: You need to set your profit goals. In other words, you need to determine how much money you want to earn in a given period. Think of profit and pricing like a road trip. First you need to know where you are going, then you can get directions. I recommend starting with your annual profit goal. Think of it as the salary you are paying yourself.

SmallBizLady: What is the difference between revenue and profit?

Nicole Fende: This distinction is crucial. Revenue is the total funds you bring in the door. Whether you are paid in person or online, by cash, check, credit or even barter, this is the total amount of money the business has received in a given period for providing goods or services. Profit is the money that is left after all your expenses are paid. It is the money you are able to take out of the business and deposit into your personal bank account. Think of it as the salary your business pays you. Would you rather have a business that generates a million dollars in revenue and $50,000 in profit, or a business that generates a half million dollars in revenue and $100,000 in profit?

SmallBizLady: Establishing a profit strategy sounds like a lot of work. Can you create one quickly and easily?

Nicole Fende: Actually creating a profit strategy is really easy! You only need to answer four questions:

1) How many hours a week do you want to work?

2) How many weeks in a year do you want to work?

3) What is your target income (i.e. your salary) for the year?

4) What percentage of your time is spent on revenue generating activities? Continue Reading →

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Finding Alternative Funding Sources for Your Small Business – Q&A with Tom Gazaway

By on June 2, 2011 in Cash Flow & Finance, Featured Post, Q & A Interview, Q & A Interviews, SmallBizChat

small biz chat with melinda emersonTom Gazaway is the President of Hawkeye Management. Tom is a certified Business Finance Consultant. He was personally trained by the #1 credit expert in the United States, John Ulzheimer. Tom is an advocate for entrepreneurs and small business owners. His company, Hawkeye Management, provides loans & lines of credit to help business owners start, build, and grow their businesses more effectively through having access to loans and lines of credit.

Smallbizlady: What would you say are the biggest challenges small businesses face today with credit & financing?

Tom Gazaway:

1 – Knowing their options

2 – Credit Challenges

3 – Borrowing the RIGHT way

4 – Choosing the correct lender(s)

Smallbizlady:  Please explain the 2 ways you can raise capital for a business?

Tom Gazaway: Yes.  You can only raise capital through debt or equity.  Explain each briefly.

Smallbizlady: Credit is still really tight. What are the lending solutions for small business owners in today’s economy?

Tom Gazaway: At this point, there’s nothing new about credit being tight.  Loan options for small business owners are primarily a function of credit, collateral, and the revenue and profit of the business.  Of course, it does eliminate a lot of people if you need lots of revenue, good profit, valuable collateral, and great credit so this is a big reason why banks deny approx. 90% (or more) of the applications they receive from small business owners.

If you’re part of the 90% that won’t get approved by the bank then you’ll want to find someone who works with small business owners on non-bank financing solutions.

Smallbizlady: In my book, BYOB stands for Be Your Own Bank, but give me your opinion, Can a start-up get a loan?

Tom Gazaway: We do financing for start-ups all the time but that doesn’t mean it’s easy.  HELOC’s used to be the most popular form of start-up financing and now we’ve seen that dramatically shift to credit cards.  According to the Meredith Whitney Advisory Group 82% of small business owners use credit cards.  The problem is that most people end up using those credit cards the wrong way and they miss out on several benefits.  Keep in mind that 30% of our FICO scores are determined by the balances on our personal credit cards so if you use your credit cards the wrong way like most people do then you’ll hurt your credit scores, miss out on tax benefits, increase your risk of losing your credit lines, and pay too much in interest.

Smallbizlady: How can a small business obtain an unsecured loan?

Tom Gazaway: Your best bet for unsecured money is either through credit cards or a peer to peer loan.  Some banks offer unsecured personal loans but the one’s that are approved (less than 10%) are usually for less than $10,000 so they are pretty small.

Smallbizlady: What credentials should a small business owner have in place to qualify for loan?

Tom Gazaway: It does depend on the kind of loan they are looking for but it does go back to understanding your lending options and it’s normally pretty important to either have good credit or to work on making it better.  Credit is such a foundational component of most small business lending solutions that I can’t emphasize its importance enough.

Smallbizlady: What is a conventional business loan vs. a line of credit and how should they be used?

Tom Gazaway: A loan is a fixed installment loan that you can only use once and a line of credit is something you can use over and over again.  Loans are generally for long-term purposes of 2-5 years and lines of credit are traditionally best for short terms purposes (30 days to 12-18 months).

Smallbizlady: Your niche is getting loans and lines of credit for businesses without collateral and – many times – without financials? How is this done?

Tom Gazaway: For us we’ve worked with hundreds of small business owners and we’ve done thousands of applications with all the top banks across the country so when you do this you learn what’s best, what works and what doesn’t, and you learn to match people with the lenders that are best for them.  We have found some good ways to get people between $25k – 100k with good terms and without needing collateral or financials.

Smallbizlady: There’s lots of scams out there so how can small business owners find a trustworthy vendor to help get them secure financing?

Tom Gazaway: First of all, you should check out any companies thoroughly before dealing with them.  Check out their record with the Better Business Bureau and also, be careful if they charge up-front fees.

Smallbizlady: I’ve heard of programs where you can buy a shelf corporation or build your business credit separate from your personal credit and you can obtain loans and lines of credit without any personal guarantees…is that real?

Tom Gazaway: No.  We have never sold a Shelf Corp and we’re intimately familiar with the strategies involved in building business credit.  Although I would love to be proven wrong, it’s just not a reality to think that you can have or get a “cash line of credit” as a small business owner without a personal credit check and without personally guaranteeing the loan.  The exception to this are the vendor tradelines…explain.

Smallbizlady: What are the biggest challenges you face in dealing with people who are looking for financing?

Tom Gazaway: It’s kind of tough to answer because we get so many applications from so many good people all around the country.  There’s the obvious answer of some people not having good credit but for the 75% of our Pre-Quals that we can work with I would say that the answer has to do with what I call the “trickle-down effect”.  Let me explain.  We all know that we’re in a tough time with the economy.  We also know that the credit and lending markets are right at the heart of the challenges we’re facing.  Lending has not shut down but it has seriously slowed down compared to a few years ago.  We are offering a pretty nichey solution where people can get between $25-100k in loans or lines of credit and we can do it without collateral and without financials.  There are sometimes 2 extremes that we face with this.  One, is that some people who realize how tough the credit markets are simply don’t believe we can even do it.  We simply tell them that we can, we do it all the time, and remind them that we don’t charge any up-front fees so if they only have to pay our fees after they get their approvals then what is there to lose?  Then the other extreme are people who sort of long for the “good-ole days” and they think that it should be easy to get the money since they have such good credit.  I remind these people that the pendulum has swung from one side to the other side and that until we get the pendulum somewhere in the middle that we can only pursue the options that we have as of today.  Let’s not be-labor the point and do what we can in todays economy, move forward, and position ourselves even stronger for the future when we hope the lending markets will open back up a bit.

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, SmallBizLady, is one of America’s leading small business experts. She is an author, speaker and small business coach whose areas of expertise include small business start-up, business development and social media marketing. As CEO of MFE Consulting LLC, Melinda develops audio, video and written content to fulfill her mission to End Small Business Failure.  She publishes a resource blog, www.succeedasyourownboss.com and hosts a weekly talk show on Twitter called #Smallbizchat for emerging entrepreneurs.  Forbes Magazine named Melinda Emerson one of the Top 20 Women for Entrepreneurs to follow on Twitter. Melinda has been featured in the New York Times, Wall Street Journal, The Washington Post, Fortune and Black Enterprise. She’s the author of the bestselling book “Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works.” She writes a column for www.secondact.com, and is an instructor for the Black Enterprise Small Business University.

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Getting a Financial Game Plan For Your Small Business

By on March 31, 2011 in Q & A Interview, Q & A Interviews, SmallBizChat

small biz chat with melinda emersonEach week as Smallbizlady, I conduct interviews with small business experts on my weekly Twitter talk show #SmallBizChat. This is excerpted from my #SmallBizChat interview with @DorethiaConner Dorethia Conner, MBA, is president of Conner Coaching. Dorethia provides results-oriented personal finance and business coaching services to small business owners . Known for her no nonsense approach and charismatic personality, Dorethia is passionate about helping entrepreneurs successfully manage their money and increase their bottom line. For more information on her coaching services  www.connercoaching.com.

Smallbizlady: Why is it important for small business owners to develop a financial game plan?

Dorethia Conner: Without a plan you won’t know the potential for your business. It’s important that you reach your growth goals and know where you stand financially.  Every business should have a revenue goal to reach each year that is more than the previous year, along with a strategic plan outlining how they will reach that number.

Smallbizlady: What is the first step to creating a financial game plan?

Dorethia Conner: The first step is to evaluate the previous year’s finances and initiatives. You want to look at your marketing, operating processes and expenses. For example, what marketing campaigns worked? How much did they cost and what % of sales can be attributed to each campaign? Does your business flow smoothly? Is there a more efficient way to run it by adding technology or processes? Did you have to hire new staff or contractors and how did that help your bottom line? Is it working? Did you invest in machinery, buildings or other expenses, did this increase or decrease your bottom line? What is the expected return on investment for the next year, 3 years, etc.?  Essentially, you want to fairly evaluate where you are spending your money and eliminate what isn’t generating income in a reasonable amount of time.

Smallbizlady: What would a strategy for the current year consist of?

Dorethia Conner: It will involve:  1. Setting your sales/revenue goals 2. Developing and implementing a marketing strategy to meet those goals  3. Having a plan in place for allocating the revenues that come in.  After you’ve paid your monthly business expenses – including your salary, it’s necessary to have a specific place for additional revenues

Smallbizlady: Is there an effective way to manage business banking?

Dorethia Conner: Number one is to keep personal and business banking separate. I know we’ve all heard this, but it never fails that a client comes in who is mixing the two.  I also can’t stress enough the importance of good accounting software that links with your bank accounts.  Online banking saves the day in that it allows you to pay your expenses, transfer money, etc. without leaving the office. Also, all transactions can be downloaded into the accounting software. This makes reconciling and record keeping must easier.

Smallbizlady: What is the best way to set up business bank accounts?

Dorethia Conner: Business Checking – General Monthly Expenses

Business Savings 1 – Allocate quarterly, annual, etc. business expenses  ie. taxes, licenses, insurance, etc. Business Savings 2 –– Lean times – an emergency fund for your business

Business Savings 3 – Growth, new development, etc.

Smallbizlady: What are some strategies small business owners can use to scale back expenses?

Dorethia Conner: Re-evaluate  office space, is it too big or too expensive, what alternatives do you have? Can you operate effectively in a cheaper space or allow employees to work from home? Do you need to warehouse your products or will using a fulfillment center help slash your overhead and other costs?  Consider equipment as well, do you have gas guzzling trucks where more economical vans will serve the same purpose? This will not only save you money on gas, but maintenance as well. Are you paying for expensive monthly advertising that isn’t yielding any results?

Smallbizlady: What role does business debt play?

Dorethia Conner: Business debt can hinder your financial game plan, especially if you are overextended. Make sure you have a handle on what you owe and are current on payments. Develop a debt payoff plan.  Here are a few action steps you can take:

  1. List all your business debts so you can know how much money you will need to pay it all off. Include the money you borrowed from your rich uncle. I tell my personal and business clients to attack their debt paying off the smallest amount to the largest. This gives them a sense of accomplishment.
  2. Develop an attack plan – what will you have to bring in financially to cover expenses and have extra to pay down your debt. Is there a contract or big deal you can go after?
  3. Determine what you are willing to do to make it happen, stick to your goals.  What sacrifices are you willing to make in your personal and business life, to get out of debt? Continue Reading →

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Finding The Money To Start Your Small Business

By on September 14, 2009 in Become Your Own Boss Tips, Cash Flow & Finance, Starting A Small Business

The following is an excerpt from my forthcoming book: Become Your Own Boss in 12 months or Less! A Month-by-Month Guide to Start a Business that Works! Scheduled to be released by Adams Media in February 2010.

If you are ready to take the leap into entrepreneurship, you must get really focused on your finances. It will be a real test to get back to only the bare necessities. Are you willing to reduce your lifestyle down to just basic living expenses? Most of the time, the initial capital to start your small business will come from you. Here are 8 tips you may not have considered to find money to start your small business.

Pay your mortgage twice a month to reduce payments. It is the accelerated payment program. Your mortgage company or a third party vendor offers this service for a low or no fee. The money will be automatically debited from your bank account. An extra mortgage payment is made each year; you can reduce a 30 year mortgage to a 22 year mortgage.

Go cash only. If you don’t have the cash, you don’t buy it. If you stop using your check card or credit cards to pay for everything, it’s much easier to stick to a weekly budget for yourself.

Avoid 90 days, 6 months or 1 year – same as cash deals. If you do not have the money the day you are making the purchase, chances are you will not have it in 90-days, six-months or a year from when it’s due. Keep in mind if you can’t pay, the interest rate is hefty and is compounded back to your original purchase date.

Cook at home and bring your leftovers to work for lunch. You’ll save money, get a healthier meal, and spend more quality time with your family. Look for free recipes online and start cooking!

Keep driving your car. Drive your car until it stops running. As a new business owner, you can no longer afford to upgrade your vehicle every two to three years. Buy a reliable car and take care of it, so you can ride without a car payment as long as you can. (I still do this! My car is five years old.) Try to plan your days so that you can do lots of major errands on the same day to minimize gas and parking expenses.

Grab a sweater. Turning down your thermostat five degrees and keeping a throw blanket nearby to save money on heating costs. The American Council for an Energy-Efficient Economy (ACEEE) says that for every degree you lower your thermostat, you’ll save about 3% of your heating bill. Putting your thermostat on a timer during the workday or while you are asleep will have an even greater effect on your heating bills.

Turn down the hot water heater. Heating water is the third-largest portion of the typical family’s energy bill. Heat water to 115-120 degrees to reduce power consumption.

Cut back on trips to Starbucks, Dunkin’ Donuts, Dairy Queen and Blockbuster. The money you spend each week on unnecessary extras can really add up. Treat yourself only once in a while. You’ll be shocked how the money you save will add up.

When you get started in business, you need three pools of money – an emergency savings account for your household, 12 months of budget to run your household, and 12 months of operating expenses to start your business. If you employ these simple money management tools, you will have the money you need in no time.

Comment on this blog if you have any other money saving tips to share.

WANT TO USE THIS ARTICLE IN YOUR EZINE, E-NEWSLETTER OR WEB SITE? You may, as long as you include this complete blurb with it:

Melinda Emerson “SmallBizLady”is a Veteran Entrepreneur, Small Business Expert and Social Media Coach who hosts #smallbizchat on Twitter. #Smallbizchat is the trusted resource Twitter to discuss everything entrepreneurs need to know about launching and running a profitable small business. Melinda’s first book, Become Your Own Boss in 12 months or Less! A Month-by-Month Guide to Start a Business that Works! is scheduled to be released by Adams Media in early 2010.

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

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