When Customers Can’t Pay on Time Flexibility is Key

Small business owners tend to wear many hats; they can be managers, marketers, IT technicians,accountants, and office assistants. But in today’s economy as valued customers struggle to pay their financial obligations, many small business owners are finding that yet another hat has been added: debt collector.

When customers withhold payment, the cash flow of the business is essentially compromised by an interest-free loan. One way to ensure that customers fulfill their obligations is to offer payment plans. Here are a few commonly used payment plans for outstanding accounts:

  • Create an installment agreement: Divide the money owed into equal payments, to be paid regularly over the next several months. To demonstrate goodwill, be flexible about the length of the payment period and the size of the payments.
  • Require a down payment: When you discuss a payment plan with a customer who hasn’t paid, it’s a good idea to require a lump sum partial payment at the start. You want your customer to know you are serious about collecting your outstanding bill.
  • Charge interest or a late payment fee: You might want to consider charging a low interest rate or a small late payment fee, since you are in essence lending your customer money.
  • Create a rule about ongoing business with your customer: Decide whether you will allow your customer to charge more goods or services. Do you want the bill completely paid off before the customer purchases more? Or would you prefer an active customer who slowly pays bills over a period of time?

Regardless of which options you choose, it is good business practice to have a written, debt collection agreement with your customers. Include consequences if payments are missed, and define what constitutes default. With a little flexibility and some carefully crafted payment plans, not only can you preserve your business’ cash flow, you can hold on to your valuable customers. It’s a win-win situation.

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Small Businesses Reject SBA Loans

How well did the economy do in February? According to a recent Time Magazine article, retail sales rose strongly, signaling that recession-weary shoppers may finally be opening their wallets. The revival of the US consumer in recent months has been cheered by economists as a sign that the recovery is on a more solid footing.

But for small business owners, economic confidence in February was flat. According to the Discover Small Business Watch, owners expect economic conditions to largely stay the same in the coming months.

The economic stimulus package enacted a year ago has helped stabilize the economy, according to the Washington Post, but has not made a noticeable dent in the nation’s vast unemployment. That is part of the reason why President Obama expects Congress to pass additional measures that will help small-business owners create new jobs and give them more of an incentive to hire.

Federal Stimulus Efforts are already doing as much as possible, like offering Small Business Administration loans. However, Small Business owners remain uninterested; 91 percent of owners say that they have never applied for an SBA loan, up 1 percentage point from October 2009.Of those who have never applied for an SBA loan, 54% say they did not need one; 13% would rather use personal assets, 13% received a loan from another source, 11% are unfamiliar with the programs and 6% say it takes too much time. At the same time, 61% of small business owners are “not very likely” or “not at all likely” to apply for a SBA loan if they become easier to get.

In addition to not taking advantage of the Federal Stimulus programs, 70% of owners say that the stimulus efforts have had no impact on their businesses. More than that: 17% say it has actually hurt their businesses!

Sources:

http://www.discovercard.com/business/watch/2010/february.html

http://www.time.com/time/business/article/0,8599,1971653,00.html

http://www.washingtonpost.com/wp-dyn/content/article/2010/02/17/AR2010021701958.html

Revamp Your Home Business with Energy Star and Save Money

While the US economy is struggling to attain its equilibrium, home business owners are being offered a boon to help them upgrade or expand their home based offices through the Energy Star Rebate Program.

 

The Cash for Appliances Rebate Program, also referred to as the Energy Star Rebate Program, is a $300 million US government stimulus plan aimed at encouraging Americans to increase energy efficiency in their homes. The program offers rebates to US consumers who acquire certain Energy Star appliances for their homes and submit the required paperwork.

Since government appliance rebates are independent of federal and state Energy Star tax credit incentives on the same purchase, home business owners can take full advantage of the program by making any necessary qualifying equipment purchases.

Home based business owners should also keep in mind that energy companies sometimes offer incentives for these purchases as well.

In terms of the Energy Star rebates, they typically vary from appliance to appliance and from one part of the country to the next, but most are within the $50-$200 range. The largest rebates are given for heat and air systems and can come to as much as $1,300 in some states, which is particularly good news for the home business owner.

If you are operating a home business, there are several ways that you can profit from the Energy Star program. Making your home more energy efficient with Energy Star can help to reduce high energy bills and earn you tax credits as well. The tax credit for energy efficiency in your home is 30% of costs up to $1500.

Some of the home products/systems that qualify for tax credits are biomass stoves, heating and ventilating, air conditioning, certain hot water boilers and a range of appliances such as refrigerators, washing machines and more. When it comes to the Cash for Appliances Rebate, please note that you may need to trade in an old appliance to be eligible.

With the Energy Star rebate program as well as the tax incentives offered on qualifying Energy Star equipment, home business owners have a chance to contribute to a better environment and save some money at the same time.

What to Consider Before Taking the Franchising Plunge

Getting started with a franchise may seem like an attractive, more secure option for would-be entrepreneurs looking to run their own business- especially among those who have experienced layoffs, work reductions, or the inability to find work in the first place. But becoming a franchisee generally involves a considerable investment of time and money, and one needs to know how to pick the good franchising opportunities from the bad ones.

To that end, I have compiled a quick checklist of what to consider before entering a contract with a franchisor:

1. Is the Franchise Disclosure Document (FDD) clear, thorough, and accurate? The FDD is one of the most important documents a prospective franchisee will have. The franchisor is legally required to provide specific information about its operations to help the would-be franchisee decide whether or not to work with the company. Since first time franchisees may not know what to look for, it is advisable to hire a franchise attorney.

2. Does the prospective franchisor have a good background and reputation? Has the franchise operated successfully within several different locations for at least 3-5 years? Are there any complaints or litgations against it? Is there a solid business model that is both doable and potentially profitable? Both the Federal Trade Commission and the Better Business Bureau have information on various franchises for prospective fanchisees needing to conduct backgound research.

3. How much support and communication exists between the franchisor and the franchisee? Does the franchisor provide any training to new franchisees? Will it provide any further assistance and support?

4. What does the management look like? Does the management team behind the franchise have the experience and know how to run a successful franchise operation?

5. What is the industry like? Is there growth potential within the industry being considered? What are the current economic trends, and, where applicable, what is the profile of the local market?

6. Are you interested and/or experienced with the particular industry? Do you have the necessary skills and background to be successful in this kind of business?

7. What are the start-up and operational costs associated with this franchise? What kind of area, if any, will need to be leased to operate the business? What about equipment, employees, and supplies?Do you have the financial means to buy into the franchise, expand, or renovate?

8. What is the expected investment of time per week, and what is the projected level of income? This is an extremely important factor to consider when looking into a franchise. Even a franchise operation that offers a well-known brand name and a comprehensive support system, will still require a lot of effort on the owner’s part to open and operate, and a considerable amount of time may pass before the owner breaks even on the investment. This holds even more true for a lesser known brand, with weaker support.

In short, the bottom line for any prospective franchisee is to exercise full due diligence so that precious time, energy, and money are invested in something that will provide an adequate return.

How to Generate Cheap Publicity for Your Small Business

Generating publicity is a major part of any small business marketing campaign. But when tight budgets meet up with lack of know how, many excellent opportunities can go to waste. Small business owners looking to expand their marketing tactics on a shoe string may want to consider these options: 

  • Send out a press release. Expanding your business, launching new products or services, gaining new clients, or sponsoring an event are all examples of newsworthy events that can be the focus of a press release. You can send out press releases to local newspapers, magazines, or radio stations, who attract the attention of people in your target market. Alternatively, for a small fee you could use the services of an online news release agency such as PR Web or PRLeap.com. Not only will this help to get your name out there, but it will also temporarily help your website’s Google ranking.
  • Sponsor and/or host an event. Associating your company with a special event, such as a workshop, a lecture series, or some form of entertainment may generate positive interest in your business and drum up sales. You should try, however, to be involved with events that are both relevant to your business and directed to your target audience. 
  • Book yourself for public speaking engagements. If you are comfortable speaking in front of others, offering to be a speaker on a topic within your area of expertise can generate a lot of good publicity for your business- even if you are doing it pro bono. If you are having trouble finding places to speak, there are even public speaker brokers who can help hook you up with groups in need of a speaker. 
  • Get involved in community service project. Your company’s involvement with local charity or community service organization, such as a shelter or a soup kitchen, can generate a tremendous amount of good will and build up a positive reputation for your company, not to mention help those in need.
  • Conduct promotional events. Promoting events, such as giveaways, theme nights, special “value” deals, can generate a buzz among your customers, increase brand awareness, and encourage people to use your products or services. Keep in mind that creativity and planning are central elements to running a successful promotion.
  • Hold a contest. Holding a contest is another easy and fun way to promote your business. Here are a few examples: Have customers send in videos using your products; hold a contest for the best customer-generated t-shirt or logo design. Conduct a lottery for all those who patron your business on a particular day.
  • Create a viral marketing campaign. With a little creativity and know how, a well executed viral promotion can greatly increase brand awareness and generate an increase in sales. Viral promotions typically involve short videos, interactive Flash games, ebooks, software, images, and sometimes email or text messages that are quickly spread among the users of various social networks. To see some examples of the most successful viral marketing campaigns over the last decade, check out this post at Ignite Social Media.
  • Build an engaging online presence. In 2010, developing a business’ online presence can mean more than just maintaining a website and getting listed in local online business directories. It may also involve producing an engaging blog and using social networking sites, such as Twitter and Facebook as well as social bookmarking sites, such as Digg , Delicious, and StumbleUpon. Learning how to effectively integrate these sites into your marketing campaign can generate a tremendous amount of interest in your company and make your business known to people you would be unable to contact otherwise.
  • Build a useful and informative online presence. Aside from being engaging, if you consistently offer useful and valuable information, products, and/or services to those who reach you online, you can also generate a great deal of publicity. Writing articles to e-zines, offering a free e-book or white paper, and posting to or moderating forums are all ways to spread your message and generate leads to your site.

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How Your Small Business Can Make the Most of Google Docs

Last week, Google released an upgraded version of Google Docs its online suite of productivity tools and software. The upgrade is widely recognized as a competitive move on Google’s behalf, preempting the release of Microsoft Office 2010 which is expected to ship out in June.

For budget-wise small businesses involved in business travel, remote collaboration, or any form of project management, the improved online software package may be especially appealing. Some of the more prominent changes to Google Docs include: a faster, and more versatile user interface, upgraded document importing/exporting, and a bunch of neat collaboration features, such as real-time collaboration and editing for up to 50 users, character-by-character editing, and enhanced management of groups and user discussions.

Best of all, the business version of Google Docs costs a mere $50 per year, per user. (The standard version is free). There are many ways that Google Docs can be integrated into a small business’ operations. Here are a few examples:

Integrated business communications. Need to discuss a quick point with a co-worker or client? With Google Docs you can have an instant video conference or audio chat right from your Gmail window. This is in addition to being able to send email, sms, and conduct instant messaging.

Off-site data back-up and storage.Though many have concerns regarding the security of data stored on Google’s servers as well as Google’s own history of exploiting the information it gleans from its users, Google Docs is still a versatile data back up and remote access solution. But business owners should definitely be cautious about uploading their sensitive data. Where data security is top priority, then it is worthwhile selecting a more dedicated and proven service like, Dropbox.

Time tracking and integrated scheduling. The Google Calender application is a great tool for both project and time management. The web-based calender is integrated into Gmail allowing users to send “invitations” to others for events and meetings. When someone responds, the person’s email is then added to the calender. With Google Calender, users can also overlay multiple calendars to see when people are available and set up a range of sharing permission controls to so that the can calender either be viewed by the company as a whole or only shared with specified employees.

Real-time collaboration on documents. Google Docs allows up to 50 users to make real-time, character-by-character changes to a document and to simultaneously hold interactive discussions.

Create and manage groups and share info. Users can access and search present and archived discussions sent to their lists. Moreover, users can control who has access to content by managing group membership.

Custom domain registration. For $10 a year, small business owners can purchase a custom domain name. The site is automatically set up to work with Google Apps, such as Google Sites, the Google website builder.

Integrated business tools. Easily access other Google products and tools such as, Google page translation, Google maps, and Google search.

Will the Obama Jobs Bill Affect Small Business Hiring?

In March, President Obama signed into law a watered down version of his much-touted Jobs Bill. The $17.6 billion initiative offers small business owners two tax breaks for qualifying new workers hired in 2010.

Under the new legislation, businesses will be exempt from paying their share of Social Security payroll taxes (generally 6.2% of an employee’s wages) for any new employee who has not worked within the previous 60 days. Moreover, if any of those new employees are retained for a full year, the business would receive an additional $1,000 tax break in 2011, or 6.2% of the wages paid to the employee in 2010, whichever is less. These credits are available to businesses of any size and can be applied to an unlimited number of employees.

But the big question is if this will really make a palpable difference for the average small business owner. Will these credits really tip the scales in favor of hiring for those small business owners who are “on the fence” about bringing in new workers?

I have my reservations. Bringing in another worker is a major investment, costing the employer much more than hourly wages or a salary. The true cost of a new employee includes a cocktail of fixed expenses, such as federal and state taxes, employee benefits (health insurance, life insurance, retirement savings accounts) and workman’s compensation, in addition to any added equipment and supplies, or resources. There are also numerous hidden or “soft” costs involved, such as the time and resources needed to train a new worker. This “loaded” rate of pay averages around 30% but in some instances can reach up to 40% of a worker’s base pay.

At a time when the economy is still far from a recovery, the incentives that Washington has introduced may not be enough to keep the majority of small business owners from ending up on the “wrong” side of the hiring fence.

Are there any small business owners out there who plan hiring now that the jobs bill has passed?

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40 Celebrity Tax Evaders

As the 2010 tax draws to a close, chances are that many this year will struggle to pay their taxes. In a previous post I explained some options small business owners have to make their tax obligations more manageable.

Even so, it may be tempting for some to try to get out of their obligations dishonestly.

To those who may want to evade their taxes, be warned: with strained budgets, many states in addition to the IRS are cracking down on those who try to side step their tax obligations. Moreover, California and New York have even taken to publicly posting a yearly roster of their biggest tax evaders.

Surprisingly, several celebrities have made these lists. But this is nothing new. Many rich and famous have tried to outsmart the IRS. Here is a list of some famous recent tax evaders:

Richard Hatch- The first winner of the reality TV show Survivor, Hatch failed to report his $1 million grand prize and instead had to survive time in prison.

Annie Lebovitz- According to the New York Post, the state of New York is demanding $135,916 in back taxes from this famous pop culture photographer.

Marc Anthony- Marc Anthony, the husband of Jennifer Lopez, was ordered to pay $2.5 million in back taxes for failing to file tax returns from 2000 to 2004.

Wesley Snipes- Actor Wesley Snipes was recently acquitted of federal tax fraud and conspiracy, but was found guilty on three misdemeanor counts of failing to file a tax return.

Willie Nelson- In 1990, Nelson was slapped with a $16.7 million bill by the IRS for back taxes. To cover the cost he wrote several albums and even sold his assets.

Damon Dash- In 2007, Dash, who is considered one of hip hop’s biggest mogels, was handed a bill for more than $2 million by the state of New York according to The New York Post.

Dwight Yoakam– The famed country music singer, Dwight Yoakam presently owes the IRS almost $458,000 in delinquent federal taxes, according to a new lien filed with the Los Angeles County Recorder of Deeds.

El DeBarge- This 80’s era R&B singer, best known for his solo hits Where’s Jonny and Love Always, has a $354,000 tax lien filed against him by the IRS.

Allen Stanford- Currently being held in custody for running a $8 billion ponzi scheme, the IRS has four federal tax liens from 2007 and 2008 against Stanford totaling more than $212 million.

Sinbad- Comedian Sinbad was the celebrity owing the most on California’s 250 “top tax scofflaws” released by the Franchise Tax Board in California in 2009. He is listed as owing over $2.5 million in personal back taxes.

Burt Reynolds- Another notable name on California’s 250 “top tax scofflaws” released in April of 2009 and updated earlier this year. He came in at No. 247 owing $225,000 dating back to 1996.

Daryl Strawberry– The former Major League Baseball player was convicted of tax evasion in the 90’s and returned to court in 2008 when he failed to pay the bill. He owes over $430,000 in back taxes, interest, and penalties.

O.J. Simpson- The former pro football player and actor can add tax evasion to his impressive list of legal problems. Simpson owes more than $1.4 million to the state of California.

Ruben Studdard- The winner of ‘American Idol’ owes close to $200,000 in federal and state taxes.

Heidi Fleiss- The infamous “Hollywood Madam” was convicted in 1997 for pandering, tax evasion and money laundering and sentenced to three years in prison.

Dennis Kozlowski- Former Tyco CEO, Kozlowski, bought $13 million worth of paintings for his Manhattan residence in 2002. To avert the sales taxes, he claimed that they had been shipped from out of state. It’s been downhill from there. Kozlowski is presently serving a 25-year sentence surrounding the Tyco bankruptcy.

Nicolas Cage– In 2009, the Academy Award winning actor reportedly owed about $6.5 million to the IRS. Cage claimed that the financial oversight was the fault of his former business manager. Whatever the case, he was forced to foreclose on his multi-million dollar Las Vegas home in November 2009.

Duane “Dog” Chapman- The star of the reality show, ‘Dog the Bounty Hunter’ had $2 million in tax liens in January 2009.

Pamela Anderson- In 2009, the former Baywatch beauty and Playboy model received a $1,700,173 lien from the IRS. The state of California also recently filed a $252,360 tax lien against her in Los Angeles.

Julio Cesar Chavez- Considered the best pound-for-pound boxer in the world, Chavez faces two tax liens with a combined value of just under $12.8 million.

Randy Quaid- The IRS has filed tax liens against the Golden Globe winner totaling more than $1.16 million.

Patti LaBelle- Grammy Award-winning R&B singer, Patti LaBelle owes more than $337,000 in federal taxes.

Robert Patrick- Famous for his tough-guy roles in Cop Land and Terminator 2, Patrick owes more than $176,000 to the IRS and state of California.

Teri Polo- Actress Teri Polo who starred in Meet the Parents and Meet the Frockers owes $433,736 in delinquent state and federal taxes.

Val Kilmer- Actor Val Kilmer currently owes $538,858 in federal taxes.

Chris Tucker- The Rush Hour star received a $3.6 million tax lien in June from the state of California.

Forest Whitaker- Award winning actor Forest Whitaker currently owes $1.27 million in state and federal taxes.

Robin Givens- In May 2009, the U.S. government sought to sue Givens for $292,000 for allegedly failing to pay federal taxes, including interest and penalties.

Sherilyn Fenn- An actress best known for her role as Audrey Horne on “Twin Peaks,” Fenn owes $176,593 in state and federal taxes since 2006.

Brian McKnight- R&B singer, songwriter, and musician, Brian McKnight, currently owes more than $257,000 in federal taxes.

MC Hammer- The State of California and IRS have filed liens against rapper MC Hammer this year totaling more than $671,000.

Aaron Carter– The recently eliminated “Dancing with the Stars” contestant and former teen idol owes over $1 million in back taxes to the government.

Leona Helmsley– The New York hotel tycoon was known to have quipped, “We don’t pay taxes. Only the little people pay taxes.” She was sentenced to almost two years in prison along with a $7 million fee in 1990 for with holding millions of dollars in taxes.

Floyd Mayweather Jr.- In 2007, the famous boxer owed over $6 million to the IRS, most of which has since been paid off.

Stephen Baldwin- In July of 2009, the youngest of the Baldwin clan filed for bankruptcy along with his wife. He owes the IRS $1,084,000.

Jim Thorpe- The champion golfer faces up to two years in jail and $4.1 million in fines after he pleaded guilty for failing to pay over $2 million in income taxes

Snoop Dogg- The IRS has filed a tax lien for nearly $600,000 against rapper and actor Snoop Dogg. This is on top of the $284,053 that he owes the state of California.

Nas– Nas, an actor and rapper and considered to be one of the Greatest MC’s of All Time according to MTV has been slapped with a $2,500,000 lien by the IRS.

Anthony Mason- Former power forward with the NBA, Anthony Mason earned over $40 million during his career. Now he owes approximately $1.8 million in taxes on those earnings.

sources:

Using the Internet to Conduct Market Research for A Small Business

The prolific growth of the Internet and Web2.0 has been a boon for market researchers in that it has simplified the process of collecting and generating quality market data.

To run a successful small business these days, conducting effective market research is a must. Market research is a dynamic process focused on understanding the relationship between consumers and a particular product or company. It involves the systematic collection and analysis of consumer and economic data including economic reports and industry trends as well as consumer attitudes and behaviors.

Armed with this information, businesses can adjust their policies and strategies so that they are in line with current market realities. Here are a few ways, small business owners can use the Internet to conduct market research:

Researching “Secondary” Data
Secondary data refers to any information about the market or the economy that has already been collected. It is called secondary because you are not directly interacting with your current or potential base market. Examples of places to go to get secondary data include: government sites (check out my previous post on free government resources), trade journals, and surveys conducted by other businesses.

Keyword Research

Keyword research goes beyond a simple Google or Yahoo search. See how different keywords are performing and get an idea of what your customers are looking for. Use Google’s free keyword analytics tools, such as the Google Adwords Keyword Tool, to measure keyword usage.

Keyword research also includes monitoring social networking sites, such as Twitter and blogs for any mentions of your company.

Keeping Tabs on the Competition
The Internet makes it easier for business owners to find out what their competitors are doing. A simple Google search of a company’s name, for example, will provide a snapshot of who is linking to their site  and what people are saying. Check out your competitor’s website to get a feel for the customer’s experience and get information on the kinds of products and/or services they are offering.

Webtraffic Analytics
Small business owners with a strong web presence can measure and qualify how current and potential customers are using their site. As mentioned above, Google provides a fully featured web analytics package, Google Anaytics, which is free.

Conducting Online Surveys/Focus Groups
The best way to know what your customers are feeling or doing is to ask them directly, and by far the cheapest way to do this is online. Enter online customer surveys and focus groups.

For those who want to conduct an online survey, there are several sites that offer software to help you create an effective customer questionnaire- some of them for free. Those interested in a survey creator should check out Survey Monkey and Question Form to start out with.

With online focus groups, a company can invite several individuals to participate in a structured discussion with a moderator for about an hour. Conducting focus groups online generally requires at  least some conferencing software. There are also several programs available specifically created for online focus group moderation with some nifty features, such as video, drawing tools, and remote website navigation.

Top Financial Scams Targeting Small Business Owners

Small and home-based business owners in desperate need of financing are increasingly being targeted by a flood of scam artists hoping to capitalize on wide spread confusion and economic hardship. The Better Business Bureau recently released its list of the top 10 scams and rip-offs for 2009. Here are a few examples from that list directed at small business owners:

Stimulus/Government Grant Scams – Even before President Obama announced the stimulus plan in February, scammers had already set up schemes for misleading consumers and small business owners into thinking they could get a piece of the pie. Offers for worthless assistance and advice on how to get government grants bombarded consumers online, over the phone and via mail and e-mail.

Google Work from Home Scam – Countless Web sites cropped up in 2009 that claimed you could learn how to make money from home using Google or Twitter and offered a free trial of learning materials. The Web sites often included the Google or Twitter moniker and logo. As a result, many people who complained to BBB thought they were getting a job with Google or Twitter when in, fact, they were being lured into another misleading free-trial offer and were billed every month for the materials and other mystery charges that added up to hundreds of dollars.

Over-Payment Scams – Over-payment scams typically target small business owners, landlords or individuals with rooms to rent and sellers on classifieds or sites like Craigslist. Typically the scammer pretends to be a customer, possible renter or interested buyer, respectively. The victim receives a check for more than the amount requested. The scammers then ask the victim to deposit the check and wire the extra amount elsewhere, such as to a shipping company. Ultimately though, the check is fake and the victim is really wiring money back to the scammers.

Other common fraudulent financial schemes include:

The Advance Payment/Fee Scam- A person claiming to be a loan broker asks for an upfront processing fee that can go as high as a few thousand dollars. Upon payment of the fee the “loan broker” disappears and the loan never materializes.

The Identity Thief- In this case sensitive information, not money, is the target. Fraudulent brokers lure unsuspecting business owners in to applying for a loan by either promising easy approval or low interest rates. After filling out the application, the broker absconds typically with the applicant’s social security number, bank account information, and even credit card numbers.

Fake Equipment Loans/Lease Programs- Business owners receive a letter or a phone call stating that they have been pre-approved for either an equipment loan or equipment lease. They are encouraged to send in their first payments, yet they never receive the equipment.

In an upcoming post, I’ll outline some tips on how to protect yourself and your business from these fraudulent financiers.

Source:

http://smallbusiness.dnb.com/business-finance/business-loans/3535-1.html

(Image Credit)