Positioning in Small Business Marketing

Five Tips to Obtain Credit for Small Businesses

by: Monique Hawkins

As many small business owners know, financing is crucial to the financial health of their enterprise. While some small business owners have the resources to launch their business, most look to the credit market for financial help. Indeed, the banking industry is an important source to gain necessary capital. However, many entrepreneurs may not realize that that applying for commercial credit requires a great deal of preparation. Here are five tips to assist entrepreneurs in improving their chances of getting credit approval.

Tip #1: Decide on the type of commercial loan that is needed. Loan options include short-term loans, intermediate loans, long-term loans, and lines of credit.

Short-term loans are usually for less than a year. They typically provide interim working capital for a business temporarily in need of cash.

Intermediate loans are often used for business set-up, the purchase of new equipment, expansion, or an increase in working capital. This loan can be anywhere from 1-3 years.

Long-term loans are for major capital improvements, acquiring fixed assists, and business start-ups. The loan term is usually from 3-5 years and repayment installments are on a monthly or quarterly basis.

A line of credit gives a small business the ability to borrow money repeatedly, up to the credit limit. The lender will usually perform a review once a year, at which time the borrower is asked to update financial statements.

Tip #2: Make sure all paper work is in order. Applying for commercial loans can be very tedious and requires much more documentation than applying for consumer credit. So, the key is to be prepared. In addition, entrepreneurs who have carefully put together the needed paperwork to include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal will be viewed more favorably by many lenders.

Tip #3: Develop a well thought out proposal. The proposal should include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal. Points to include are the business description that tells the nature of the business, product and service, a personal profile, and a business plan that outlines the corporate strategy for the next three to five years. Additional points to add are supporting documentation that supports the information outlined in the proposal, and collateral that will be used to secure the loan. Financial statements, both personal and for the business, are important as well.

Tip #4: Seek advice! It is important for entrepreneurs to talk with someone who has gone through the process of obtaining commercial credit before a lender is approached. This is especially important for the first time buyer. Entrepreneurs can approach mentors, qualified business counselors, business support groups, and the U.S. Small Business Administration. This step will increase the chances of getting a favorable credit decision.

Tip #5: Be prepared to pursue various options. Sometimes, financial institutions will say no. Once again, obtaining credit can be difficult, especially for entrepreneurs who are first-time borrowers. However, since financial institutions have different standards, an inability to meet the standard of one lender does not mean one fails the standards of all. It is highly possible that credit approvals can be gained with another lender. So, it is important to keep seeking until a lender is found.

Obtaining credit is necessary for many small businesses. Knowing what steps to take in this process can greatly increase an approval from a financial institution. Now, put these five tips into practice and be on your way to getting the credit you need for your business venture.

About the author:
Monique Hawkins is the owner of the online music box store; “Monique’s Music Box” located at http://www.my-music-box.com. She enjoys sharing information with business owners that will help them attain success. For additional assistance from one of the most respected markets around today, Jay Abraham, visit: http://www.abrahampublishing.net/app/?af=274476

7 Things to Consider Before Buying Small Business Accounting Software

by: William Siebler
The world of small business accounting software can be a minefield for any business owner. However choosing the right package is one of the most critical business decisions you will make.

Here are the seven things you must consider before making a purchase that will help you achieve your businesses goals.

1. Scalability

Businesses change over time so it’s critical that the small business accounting software you choose can change too. Some things that often change are the number of products and services offered and the number of employees. When you choose your package try and imaging the business in 5 years or 10 years time and how different it will be. Use this information to guide your purchase decision. It may well be better to pay a little more now for the software knowing that it can be easily
upgraded when needed with minimum disruption and cost to your business.

2. Support

It is important that any software has great support for when something goes wrong (and it always does). Most major companies offer support but you also need to think about support in your local area. It’s often much easier to have someone locally come in and do things you need done with your software than have someone trying to help you over the phone. Make some
enquiries with other businesses about the package they use and who helps them.

3. Accountant Interface

It’s most unlikely you will handle every aspect of your businesses accounting. Your accountant is an important factor in making the right decision. What software are they used to working with and what do they prefer? Can you easily supply them data and reports from your package without the need for any extra work (which you’ll have to pay for). Don’t be afraid to ask their opinion as they live and breathe this stuff.

4. Best Value For Money

Once you have selected the right package for your business you may as well get the best value. Shop around as the price can vary greatly and the product is exactly the same. Online merchants such as Amazon may offer better pricing because of the sheer volume of products they sell. However price is only one part of the equation so if their is great merchant locally with support or installation assistance this may be far more valuable.

5. Major Brands

There are two major players in the small business accounting software market. They are QuickBooks and Peachtree. Microsoft is expected to enter the market soon. I recommend choosing a major brand so that you can get regular updates and you know the company will be around as long as your business needs them.

6. Ease of Use

Ease of use is a personal thing but it is worth trying the software before you buy it if you can. Remember to get the person who will be the main user to test the software as well. Also consider how well the package can interact with other software you use. This is an advantage the Microsoft package may have when it’s available.

7. Features Needed

I touched on this earlier when talking about thinking ahead as to where you business will be in 5 or 10 years time. Most accounting software packages come in several different versions. If you don’t need certain features now and can’t see a need for them in the future then don’t buy them. The major differences are usually - number of users allowed, inventory management capability and number of reports available.

To sum up think ahead when planning your purchase of small business accounting software. You will make a much smarter business decision that will save you plenty of trouble and money in the future.

About the author:
Please visit us for more information and a feature by feature comparison of:
Small Business Accounting Software

Small Business Collection Agencies Get You Paid

by: Joel Walsh

If you’re like many small business owners, the mountain of debt you accumulated during startup might have been enough to make you worry about collection agencies every time you answered the phone. But your feelings toward collection agencies are eventually going to change, if they haven’t already.

Small Business Collection Agency Services: More Benefits than Costs

Small business collection agency services will certainly cost more than just writing letters demanding your money back. But the amount of money you’ll collect, not to mention the time you’ll save, will more than pay it back. In fact, when you consider the hourly rate of your employees, or you yourself, collection agencies’ fees really can be quite a bargain.

Let’s say you have an assistant your business pays $10/hour, effectively costing your business $15/hour once you count in employment taxes, benefits, and the overhead of your office. You would be lucky if that assistant spent just five hours total on each debt, and managed to collect half of them.

But you would have sunk $150 into each successful collection. Plus, there’s the opportunity cost: $150 worth of time you haven’t spent in growing your business. So the net loss is $300, and probably more if you’re a profitable business that gets a good return on your people’s time.

But if you refer your delinquent debts to a collection agency for $75 each, and they collect three-quarters of them, you’ve invested only $100 per debt collected. Once you factor in all the money from all the debts the agency collected for you that you couldn’t have collected on your own, the return on investment is huge. That’s not even counting the saved opportunity cost, or all the stress you’ll save yourself and your associates.

In the end, your small business has to focus on doing what brings in the money: your core business. Leave your taxes to your accountant, your office repairs to your building manager, and your collections to your small business collection agency.

About the author:
Joel Walsh writes for Collection Agency Information:http://www.collection-agency-information.com? collection agency [Web publication requirement: create live link for the URL/web address with “collection agency” as visible link text/anchor text; if offering for re-publication (article bank, aggregator, or clearinghouse), no link text required.]

Small business investments

by: Larry Westfall

State laws have been relaxed to make it easier for small business to raise start-up and growth financing from the public. Many investors view this as an opportunity to “get in on the ground floor” of an emerging business and to “hit it big” as the small businesses grow into large ones.

Statistically, most small businesses fail within the first few years. Small business investments are among the most risky that investors can make. This guide suggests factors to consider for determining whether you should make a small business investment.

Risks and investment strategy
A basic principle of investing in a small business is: Never make small business investments that you cannot afford to lose! Never use funds that may be needed for other purposes, such as college education, retirement, loan repayment, or medical expenses.
Instead, use funds that would otherwise be used for a consumer purchase, such as a vacation or a down payment on a boat or a new car.

Above all, never let a commissioned securities salesperson or office or directors of a company convince you that the investment is not risky. Small business investments are generally hard to convert to cash (illiquid), even though the securities may technically be freely transferable. Thus, you will usually be unable to sell your securities if the company takes a turn for the worse.

In addition, just because the state has registered the offering does not mean that the particular investment will be successful. The state does not evaluate or endorse any investments. If anyone suggests otherwise, they are breaking the law.

If you plan to invest a large amount of money in a small business, you should consider investing smaller amounts in several small businesses. A few highly successful investments can offset the unsuccessful ones. However, even when using this strategy, only invest money you can afford to lose.

Analyzing the investment
Although there is no magic formula for making successful investment decisions, certain factors are considered important by professional venture investors. Some questions to consider are:

– How long has the company been in business? If it is a start-up or has only a brief operating history, are you being asked to pay more than the shares are worth?
– Consider whether management is dealing unfairly with investors by taking salaries or other benefits that are too large in view of the company’s stage of development, or by retaining an inordinate amount of equity stock of the company compared with the amount investors will receive. For example, is the public putting up 80 percent of the money but only receiving 10 percent of the company shares?
– How much experience does management have in the industry and in a small business? How successful were the managers in previous businesses?
– Do you know enough about the industry to be able to evaluate the company and to make a wise investment?
– Does the company have a realistic marketing plan and do they have the resources to market the product or service successfully?
– How or when will you get a return on your investment?

Making money on your investment
The two classic methods of making money on an investment in a small business are resale of stock in the public securities markets following a public offering, and receiving cash or marketable securities in a merger or other acquisition of the company.

If the company is not likely to go public or be sold out within a reasonable time (i.e., a family-owned or closely held corporation), it may not be a good investment for you – despite its prospects for success – because of the lack of opportunity to cash in on the investment. Management of a successful private company may receive a good return indefinitely through salaries and bonuses, but it is unlikely that there will be profits sufficient to pay dividends in proportion with the risk of the investment.

Other suggestions
Investors must be provided with a disclosure document – a prospectus – before making a final decision to invest. You need to read this material before investing.

Even the best small business venture offerings are highly risky. If you have a nagging sense of doubt, there is probably a good reason for it. Good investments are based on sound business criteria and not emotions. If you are not entirely comfortable, the best approach is usually not to invest. There will be many other opportunities. Do not let a securities salesperson pressure you into making a decision.

It is generally a good idea to see management of the company face-to-face to size them up. Focus on experience and record of accomplishment rather than a smooth sales presentation. If possible, take a sophisticated businessperson with you to help in your analysis. Beware of any information that differs from, or is not included in the disclosure document. All significant information is required by law to be in the disclosure document. Immediately report any problems to your state Office of the Commissioner of Securities.

Conclusion
Greater numbers of public investors are “getting on the ground floor” by investing in small businesses. When successful, these enterprises enhance the economy and provide jobs. They can also provide new investment opportunities, but the advantages must be balanced against the risky nature of small business investments.

About the author:

Larry Westfall is the owner of DIY Investing - http://www.pennystockebook.com

Picking A Small Business Accounting Program

 by:StephenL. Nelson, CPA

A small business accounting program should accomplish
three tasks: track income and expenses, generate business forms, and
keep detailed records for other assets and liabilities.

Tracking Income and Expenses

The task of tracking a business’s income and
expense is really the most important job of an accounting system. If
you own or manage a small business, obviously, you need some tool for
measuring your income and your cash flow.

Although checkbook programs like Quicken and Microsoft
Money does little more than keep a checkbook, you can actually keep
financial records for a business right out of a checkbook. To do this,
you simply categorize deposits as falling into some income category.
And when you write a check or make some other withdrawal, you
categorize expenses as falling into some expense category.

One problem with using a checkbook program, however, is
that by using a checkbook program, you are implicitly using cash-basis
accounting to track your income and expenses. Cash-basis accounting
counts income when you receive a deposit and counts expense when you
write a check.

Cash-basis accounting is easy to understand, and that
means you are less likely to make errors in implementing it. However,
cash-basis accounting is generally too imprecise for more complicated
businesses. If you use inventory in your business, for example,
cash-basis accounting isn’t very accurate—and the
Internal Revenue Service does not allow it.

And there are other circumstances, too, in which
cash-basis accounting produces serious and usually unacceptable errors
in precision. For example, if you often receive money before you have
actually earned it or if you often incur expenses long before you
actually have to pay for them, you need to use a more sophisticated
accounting program than a checkbook program.

Generating Business Forms

The second task that a small business accounting program
should help you with is the generation of business forms. The most
common business form is simply a check. Any checkbook program help you
do this. Other business forms that small businesses commonly need to
produce include invoices, credit memos, monthly statements, purchase
orders, and so forth.

If you have a small business with very simple form
requirements—perhaps you need only checks—then a
checkbook program may work very well for you.

However, if you have extensive or complicated business
form generation requirements, a more full-featured small business
accounting package, such as Intuit’s QuickBooks,
Peachtree’s Complete Accounting, or Microsoft Small Business
Accounting will do a better job for you.

If you produce more complicated forms, but you produce
these other forms with a word processing program, then a checkbook
program may still work for you.

Detailed Record Keeping for Other Assets and Liabilities

The third task that a small business accounting program
should help you with is detailed record keeping of your most important
assets and liabilities. A checkbook program lets you keep good detailed
records of cash, and for some businesses that is the principal asset.
But many small businesses have other significant assets and liabilities
they need to track, for example, accounts receivables, inventory, and
vendor payables.

Whether or not a particular software program’s
accounting tools provide adequate asset and liability record keeping
depends on the situation. However, no small business accounting program
does everything you need it to do. Any accounting program that provides
an extensive list of features, by its very nature, becomes a challenge
to use. For example, moving to the accrual basis of accounting adds an
entire layer of complexity to financial record keeping, and keeping
detailed records of inventory adds another layer.

For these reasons, even when a particular program
doesn’t do everything you need it to do, your best choice
still may be to use the program—and then simply live with its
shortcomings.

Small Business Merchant Accounts

A small business merchant account may be just what your company needs to edge out the competition. If your customer base is growing or they are asking increasingly for credit payment options as well as for information about your products and services, a merchant account can answer their questions and help to grow your business while leaving your competitors in the dust.

It is easy to apply for a small business merchant account. Just find a merchant account provider, which you can do by searching the Internet using relevant key terms. Browse the many sites offering this special type of commercial status before choosing one. Terms and fees vary a great deal, so you want to become knowledgeable about your choices before signing the contract. You may become tempted to take on more than a business the size of yours really needs at this point. Don’t be misled by all the bells and whistles that are available. Stick with the basics when you start out, and add other options only when they are truly needed and when you can afford them.

Companies offering a small business merchant account are usually banks and other financial institutions. Typically they look for a company’s good credit history, the ability to make payments on the merchant account, and avoidance of questionable commercial activities like spam or telemarketing. They are willing to extend credit to small business owners who demonstrate good business ethics, who have made good use of resources to date, and who have developed a sensible growth plan for long-term goals. Often, the application can be filled out online and submitted electronically, and you may receive an answer within a matter of hours. Then you can immediately purchase or lease credit processing equipment like a credit card processor, electronic or wireless, as well as check and debit processors, pagers, and other types of technical equipment that will upgrade your business into a higher professional realm by dint of efficiency and speed capabilities.

Your small business merchant account will help you set up an Internet Website to promote your business internationally. Customers from around the world can browse the site any time of the day or night and shop without the hassle of finding the store closed or associates unavailable. With your convenience credit processing option, they can order a product or service and pay by credit card, facilitated by the underwriting bank or financial institution that authorizes MasterCard or Visa coordination and then pays you via an account transfer. All you really have to do after setting up the site and keeping it upgraded via service personnel is to make occasional equipment checks and then withdraw income from your merchant account.

A merchant account gives a small business owner the freedom to conduct business like a professional, using the same equipment and services to attract and serve busy customers. Others in your field who don’t have a merchant account may lose clients to your company when you upgrade to the use of time-saving technology. Check out the advantages along with the responsibilities of opening a small business merchant account.

About the author:
Shane Penrod is the founder of Merchant-Acount-Quotes.com Specializing in allowing merchants the ability to shop and compare multiple quotes from national merchant account providers. For free quotes on merchant account rates and fees, please go to http://www.merchant-account-quotes.com

Does my small business need a budget?

“I only have a small business, I don’t need a budget.”

“I don’t have enough money to budget.”

For many small business owners, the word “budget” is something for the bigger company - maybe they’ll have one when their business “grows up.”

What is a Budget?

The simple explanation is a budget is a plan for how you will manage all financial resources and all expenses for your business. The basic equation that you want to demonstrate in a budget is as follows:

(estimated )Sales minus (estimated) Expenses = Profit (or loss)

How to create a Budget

If this is your first time to work on a budget for your small business, you might work from the perspective of having to list cost of goods or services plus all of your operating expenses to start the process.

How much does it take to operate your phone line? What is the cost of other utilities? How about the cost of a company vehicle, or what is the cost of transportation if you’re using your personal vehicle to also serve as a company vehicle. Do you need any supplies or inventory to operate your business? How about any employee payroll, payroll taxes or independent product or service providers? Remember to include everything you spend money on to operate your business even if you allocate some of the expenses to “petty cash” expenses, such as parking or bridge tolls while traveling to see clients.

I recommend that you create annual budget, as opposed to a monthly budget, so you can identify any expenses that you may have that come up only once or twice a year such as insurance and include them in your list of expenses. This allows you to amortize or spread the cost of this out over several months so that you can plan ahead for the expense.

As you work on your list of expenses keep in mind that these are the expenses that are necessary to operate your business. These should not be your “wish list” unless you want to budget in some expansion or growth. You may want to create a budget with just the necessities and another version of your budget with expansion expenses listed so that you can see the cost of both separately.

With a dollar figure to work with of your total expenses you are able to set the standard for or evaluate your sales figures. If you are new to your business you may need to use the dollar amount of your expenses to help you determine what your sales need to be in order to cover all costs and show a profit. If you have been in business for a while you can evaluate whether or not you are producing a profit by looking at historical sales figures.

As you conduct business during your budget year you should compare your actual income and spending with what you estimated. This will allow you to manage your spending so that you don’t over spend and cut into or eliminate your profits. You will also be able to see if sales have met expectations in order to cover expenses and still remain profitable.

Who should Budget?

Every small business owner should budget, no matter the size of business. I have heard some small business owners say their business is too small to budget, but that is not true. If you don’t have a written plan for what your financial obligations are and how your revenue will cover those obligations and leave some money unspent, then your business will never grow. In fact, you may out-spend your revenue and put yourself out of business.

Why Budget?

Budgeting for your small business gives you control over your finances. By looking ahead to what you know or can reasonably estimate what your expenses will be, you can then make financial decisions that will keep you from over-spending, or give you the freedom to invest in the growth of your business.

When Budget?

Every small business owner should have a budget to start their business and then review it annually. I recommend that small business owners review their budget several months before the end of their fiscal year.When I say review the budget I’m talking about comparing projected budget with actual. In the comparison you can see if your estimates were realistic. You and your CPA can also plan for last minute tax strategies, or plan to implement strategies in the up coming year’s budget.

The Goal in Budgeting

Remember, the goal of having a budget is to stay in control of your finances in advance. Setting the standard for your spending and revenue and having a tool to compare with actual will give you the control that you need to stay profitable. At the very least it will give you an indication of whether or not your business is actually profitable and not just busy.

Resource

Throw away all your receipts! Yes, you can throw them all away after you’ve scanned them into NeatReceipts. This handy tool is operated by scanning all of your receipts using a portable scanner into your computer or laptop. The software can produce expense reports or you can import the information from the receipts into your accounting software such as Quicken or QuickBooks. Once the receipt has been scanned into your computer you have a digital copy so you can through the receipt away. No more shoe boxes full of receipts!
http://www.thesmallbusinessguru.com/products/item10.cfm

About the author:
Melody Campbell is The Small Business Guru. You can view more Small Business Owner Resources at The Small Business Guru website. Educate yourself for Success in the Core Competencies to becoming a Master Small Business Owner. New monthly membership trial for only $1 for the first 30 days! http://www.thesmallbusinessguru.com