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Securing a contract to supply goods or services to a big corporation could be godsend for a small business at a time when consumer confidence (and spending) has plummeted. Small business owners, especially minorities and women, should be aware that several big businesses have programs in place to actively reach out to and cultivate their network of small suppliers.

Not only do many of these corporations provide the potential for lucrative contracts, but some of them also offer mentoring programs. At IBM, for example, the corporation individually assigns executives to offer guidance to promising small suppliers for up to a year and a half.

To be considered by a corporation that seeks out minority suppliers, you must first certify your business as a minority business enterprise (MBE) or women business enterprise (WBE). The requirements for certification generally include:

• You must be from a specified ethnicity or a woman.
• You should have ownership of at least 51 percent of your business.
• You should have have solid business management practices in place and financial viability.

• You must be a U.S. citizen.

Be sure to check out the the Billion Dollar Round Table. Each member corporation spends at least $1 billion annually with minority- or women-owned suppliers.

Any potential small business supplier to big businesses- whether minority owned or not- should also take a look at the National Business Matchmaking Online Network. This organization helps bring corporate and government buyers together with small companies through a series of regional events and networking tools.

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There is a lot of difficult news out there these days. With all the talk about pension cuts, pay freezes, layoffs, bankruptcies, and government bailouts, the fact that some industries are not only surviving the recession, but thriving in it, may seem hard to believe. But the truth is that in the midst of all the economic turmoil, there are industries that are prospering. Some of these businesses are typical recession-busters, others are particular to the current recession.

1. Sweet Treats

When the going gets tough, the sweet tooth gets going. Inexpensive candies, snacks, and treats become the comfort of many as people try to deal with hard times. In addition to a number of candy manufacturers and distributors around the country reporting a significant increase in sales, Nestle and Cadbury have both reported profits. Ice cream sales are also up among independent parlors as well as name brands, such as Häagen-Dazs and Ben and Jerry’s.

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2. Entertainment

Hollywood is profiting from the recession enjoying one of its biggest years ever in box office sales to the tune of $10 billion. The video gaming industry is also are experiencing a surge in demand. Most notably, in the first week of sales Grand Theft Auto IV, produced by Rockstar Entertainment raked in some $500 million.

 3. Technology

This one seems a bit counter-intuitive at first. As the recession drags on, one would expect the sales of consumer electronics to drop across the board. While there has been a slowdown in some areas, several companies are reporting a surge in sales. Sales of Apple’s iPhone 3GS out-performed analyst expectations by as much as 50%. Sales of netbooks have also been brisk.

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In general the IT sector is going strong specifically in areas of data storage, processing, and management as well as software design and development, networking and systems administration.

4. Life’s Little Pleasures

A little indulgence can go a long way. While high-end consumer products are having a hard time moving in the recession, a range of cheap, feel-good items are experiencing brisk sales. Low-cost cosmetic lines for products such as lipstick and lip balm, anti-aging creams, and self-tanning creams are predictably on the rise. Wholesale beer sales are also doing well. Most notably, Anheuser-Busch, the biggest brewer in the United States, has been reporting a profit despite concerns that rising costs for raw materials like glass, barley, wheat, and fuel would undermine any gains. Finally, tobacco sales across the nation going strong.

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5. Profiting from the Damage

As people across the nation try to get a grip on their mounting debt, it is no surprise that repossession firms, auctioneers of foreclosed homes, debt consolidation companies, debt consultants, collection agencies, and bankruptcy lawyers all have plenty of work these days to keep themselves busy. There have also been a surge in the creation of companies that handle the clean-up and refurbishing of foreclosed homes and their surrounding property. Though these industries may be looked upon as scavengers profiting from the downtrodden, who is going to argue with the fact that someone has to do it.

6. Payday Loan Industry

Call them loan sharks or predatory lenders… but they are still legal. And right now business is booming for the payday loan industry as consumers try to cover their cash shortfall with these high interest, short-term loans.

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7. Health Care

Though the health care industry as a whole is experiencing cutbacks, as the baby boomer generation gets older there has been an increased demand for home health care services and specialized medical procedures generally performed in small outpatient clinics and doctor’s offices. This has increased the need for qualified nurses and specialized doctors.

8. Discount and Second-Hand Retailers

As household budgets get tighter, consumers are flocking to discount retailers, such as Wal-Mart and Dollar General. Thrift stores and Goodwill stores across the country are also drumming up traffic even as sales among other retailers have plummeted .

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9. Re-education

The demand for online degrees, professional certification, and continuing educational programs have all increased. As more and more American workers are laid off (or fear being laid off), many are are seeking re-education opportunities. The trend is also likely due to the increasing cost of higher education that has out-paced inflation for several years in a row. Although quality online degrees still require a significant investment of money, when you factor in the savings from room and board as well as scheduling flexibility, in the end an online degree comes out much cheaper.

This is the final post in a four-part series on employee theft.

If you suspect that theft or fraud has occurred in your business, then you should promptly follow up with a thorough investigation. When done properly, an investigation can help you limit your loses and quickly resolve the situation.

First you need to determine what is missing or which reports or systems seem inaccurate This will help you to get a handle on the extent of the loss. Take stock of your inventory and check your financial accounting system for any unusual entries or changes in cash flow.

Second, you should try to figure out approximately when the theft(s) occurred and by whom. Make a list of all employees who could have had access to the missing items or information. In some cases, if you have surveillance cameras, it may help to review the tape to get an idea of who was around when the theft occurred

Finally, your investigation should end with either an employee interview or survey. Basically, you are looking to gather information from two distinct groups of people: those who you suspect may have been involved in the theft or fraud and innocent co-workers who may have some knowledge or suspicions as to who committed the act.

The interview and/or survey should be confidential. Employees should be informed that no co-workers will know what was said about them and that there will be no repercussions for sharing information.

Some questions to consider asking:

1. Do you know any employee(s) has stolen something from the business? What was stolen? When?

2. How do you think the theft might have occurred?

3. Has any employee acted differently before or since this theft that makes you think he or she might be involved? Who? How did they act?

4. Are any employees reluctant to participate in this investigation or encouraging anyone else not to participate? Who?

5. Which employees do you think might have committed this theft? Why?

6. Which employees do you trust? Why?

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This is the third post in a four-part series on employee theft.

The Association of Certified Fraud Examiners (ACFE) in its Report to the Nation on Occupational Fraud & Abuse recently estimated that the typical business will lose an average of six percent of revenues from employee theft, and according to the U.S. Chamber of Commerce employee theft is major factor behind one-third of business bankruptcies.

The bottom line is that employee theft is serious business, and making a conscientious effort to prevent it deserves the attention of any small business owner who hires employees.

The following are a few tips to help you prevent employee theft in your small business:

Create an anti-theft policy.

Your business’ anti-theft policy should include several key elements. First, you should establish clear guidelines and procedures for handling inventory, supplies, equipment, cash, receipts, and any sensitive information. Describe what happens when employees are caught stealing from the company, including the process of warnings, firing, and pressing charges.

Keep in mind that your policy should address the most common forms of employee theft including stealing cash, inventory, equipment, or supplies, conducting shipping and billing scams, forging receipts, faking an injury and claiming compensation, and putting fictitious employees on the payroll.

You should also mention any internal controls your business has in place (such as installing cameras or conducting random audits) to prevent theft.

Make sure your employees understand the rules.

The most well thought out and comprehensive anti-theft policy will be limited in its effect if employees are unaware of the consequences of stealing from the company. All employees should receive the business’ anti-theft policy in writing, and every employee should be required to sign a form to verifying receipt of this information.

Screen your employees.

Running background checks on potential new hires may seem like a time consuming or costly process, but it will save you a lot of time and money in the long run should you hire someone who later proves to be problematic. Though you can never be completely sure that the people you are hiring will be trust worthy, by screening any new hires you can effectively reduce the number of dishonest employees that you bring into the business.

When conducting a background check be sure to look for any criminal records and involvement in lawsuits You should also verify their stated level of education and degrees at accredited institutions as well as an employment verification of positions, length of employment, and reasons for leaving.

Keep in mind that there are several companies that can run background checks for you. But you should still check the candidate’s references and talk to previous employers.

Monitor operations.

Keeping a watchful eye on your business’ operations will help you both prevent theft and spot any suspicious activity. You should also being setting up a system of internal controls with a focus on financial reporting and your business’ precious assets. Here are some common ideas:

• Set up surveillance cameras, do a random walk-through in your business, and conduct unannounced audits and spot inspections.

• Access to physical and financial assets as well as sensitive information and accounting systems, should be restricted to the employees you trust.

• Establish an anonymous or confidential reporting system for employees, vendors, and customers to report any violations of policies and procedures without fear of repercussion.

Create a positive work environment.

Incidents of theft often go hand-in-hand with financial or emotional stress. As stress levels increase, so does crime. Make sure your employees feel valued and that the lines of communication are open- even if you have had to make reductions in employee bonuses and benefits. When employees trust their employers they are more likely to act in the best interests of the business.

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This is the second post in a four-part series on employee theft.

As the economic recession churns on and countless Americans struggle to get some control over their mounting debt, incidents of employee theft and fraud are becoming more and more common. The FBI even calls employee theft “the fastest growing crime in America,” and this trend is having a devastating effect on small businesses.

Although employee theft may immediately be associated with pilfering inventory or stealing cash, there are actually several ways that employees can steal from their employers. The Boston Globe and Denver Post recently reported that U.S. companies lose nearly $400 Billion per year in lost productivity due to loafing (“time theft”). Some of the more sophisticated examples of employee theft include: conducting shipping and billing scams, forging receipts, faking an injury and claiming compensation, and putting fictitious employees on the payroll.

The Association of Certified Fraud Examiners (ACFE) in its Report to the Nation on Occupational Fraud & Abuse recently estimated that the typical business will lose an average of six percent of revenues from employee theft. The report also indicates that small businesses are especially vulnerable to occupational fraud since they generally have the limited resources to devote towards crime detection. The average loss suffered by businesses with fewer than 100 employees was $200,000, which was significantly higher than the average loss in any other category, including the largest businesses.

Moreover, a U.S. Chamber of Commerce survey recently reported that a staggering one-third of business bankruptcies are attributed to employee theft.

Employee theft often goes beyond loses in time, money, and resources, it can also tarnish a business’ reputation as a provider of quality products and service. At a time when every dollar, and every customer counts, the way a business responds to incidents of employee crime may make the difference between staying afloat and sinking.

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The 2009 tax season may have come to an end. But now that all the dust has settled and those tax returns have been spent, its time to begin thinking about 2010…

To get you started, take a look at these strange, but true attempts individuals have made to reduce their tax burdens. And yes, many of these people actually got away with it!

Animals being used as tax deductions

• One man claimed his dog as a dependent. Another tried to write off dog food for his “home security system,” while a third individual tried to claim his pet as a “landscaping subcontractor.” 

• A South Carolina couple who owned a junkyard was allowed to write off $300 for the cost of the cat food they set out to attract wild cats. It turns out these cats were providing a valuable business service: they got rid of the snakes and rats on the property, making the place safer for customers. 

• An ostrich farmer in St. Tammany Parish wanted to know how he would go about depreciating an ostrich. It may sound bizarre but by law one can depreciate an ostrich or any other livestock if it is used for breeding.

Business travel

• In 1981, a Virginia company, sponsored a “Super Bowl Sales Seminar” where it flew 120 people including customers and employees along with their families to New Orleans. They paid for airfare, hotel rooms, game tickets and even included an outing to the French Quarter. The company claimed a $103,000 deduction as an advertising cost for a tax savings of $45,000. The IRS ultimately determined that the expenses were not legitimate and rejected the deduction (Hmmm… I wonder why)

• O. Carlyle Brock, president of the Sanitary Farms Dairy in Erie, Pa., tried to write off the cost of a six-month hunting trip in Africa with his wife. Brock claimed that the trip was a legitimate business expense. After he and his wife returned, the dairy ran an advertising campaign around the theme of wild animals. Customers were served game dinners, they shared films of the hunt and displayed heads and skins from hunts in their own museum for the public. They even donated a tiger from the Africa trip to the Erie zoo and held a “name-the-tiger” contest. The IRS ruled the trip was a legitimate expense.

• Rather than drive five to seven hours to check on their rental condo or be limited to commercial flights, a couple decided to purchases their own plane. The Tax Court allowed them to deduct their condo-related trips on the aircraft, including the cost of fuel and depreciation for the portion of time used for business-related purposes.

 Business as usual?

• The owner of several rental properties hired his live-in girlfriend to manage them. Her duties included locating furniture, overseeing repairs, and running his home. The IRS let him deduct $2,500 of the $9,000 he paid her. The rest was not allowed since it was deemed for nondeductible personal services.

• As a promotion, a gas station owner gave his customers free beer instead of trading stamps. The IRS allowed the write-off as a legitimate business expense.

• An Arizona man sought a home office deduction for the toilet paper he bought for his house.

• A professional bodybuilder tried to deduct high-protein buffalo meat, protein shakes and various kinds of body oils from 1999 to 2001 as business expenses. The tax court ruled that his food consumption was “inherently personal” and therefore not a legitimate deduction. But the oils he used to help him look better during competitions were considered a legitimate use for his business and thus deductible.

 How to you file this one?

• A Pittsburgh furniture-store owner hired an arsonist to burn his failing business down after years of trying unsuccessfully to sell it. The store-owner’s plan was not only to collect the $500,000 in insurance money, but also to deduct the $10,000 “consulting fee” he had paid the arsonist! An IRS audit two years later brought them both to jail.

Here are some strange, but legitimate tax deductions that you may not know about:

• If you are changing jobs and meet the requirements, you can deduct the cost of moving your dog, cat or other pet from your old residence to your new one.

• Business conventions held in Bermuda are deductible without having to show that there was a special reason for the meeting to be held there. Other countries in the Caribbean region qualify, also, including Barbados, Costa Rica, Dominica, the Dominican Republic, Grenada, Guyana, Honduras, Jamaica, Saint Lucia, and Trinidad and Tobago. Meetings held in Canada, Mexico and all U.S. possessions also receive this favorable tax treatment.

• If you attend a professional seminar while on “vacation,” then travel becomes a potential deduction.

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Yes, there are small businesses out there that are considering growth opportunities even as our current recession keeps a tight hold on our economy. But for those small businesses that are in this situation, any steps that they take to expand operations should be carefully implemented.

Here are a few tips on how to responsibly grow a small business in a recession:

Now is the time to re-examine, re-define, and streamline company objectives.

A recession often changes consumer demand, spending habits, and attitudes. It is thus extremely important that small business owners take the time to ensure that their businesses are operating in line with this a shifting environment.

Keep up the trust of your employees.

Even if you cannot offer a big benefits package, make sure there are methods in place for employee recognition and that the lines of communication are open.

Focus on customer service.

Catering to your customers is after all the focus of your business, and having good customer service does not have to get expensive. Like your employees, you want to build the trust, loyalty, and regard of your customers.

Develop creative, low-cost ways to advertise your business.

Getting your name out there effectively does not have to break the bank.

One of the biggest obstacles to small business growth is lack of funding or inadequate cash flow.

Make sure that you are doing all you can to maximize cash flow, such as implementing effective debt collection strategies, good price management, inventory management, and the coordination of equipment purchases. You should also be aware of all your financing options.

Stay on top of current trends in technology.

There are many software programs, services and devices on the market that will greatly improve efficiency and give your business a competitive advantage even over your bigger competitors. Many of these essential business tools are also relatively inexpensive.

Keep your eyes open for opportunities.

A recession may provide many opportunities to expand business operations. Real estate, for example, is much cheaper now and so is many raw materials. Consumers also have different needs, and your business may be able to capitalize on them.

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Over the past few weeks the Obama Administration has placed the topic of health care reform front and center on the national agenda. The move has sparked fresh debate, concern, and anxiety among politicians, consumers, business owners big and small, as well as health industry experts and representatives.

Most agree that something must be done to change a system where approximately 45 million people across the US are uninsured and that oversight should be extended to regulate a health insurance industry accused of using deliberate and questionable tactics to maximize profits, such as raising premiums, co-pays and deductibles, refusing coverage or charging exorbitant rates to people with pre-existing conditions, and even retroactively denying coverage to people with established policies.

But exactly what will be done in the end is still very much up in the air, and this has been a subject of much concern among small business owners in particular.

It is estimated that about half of those who are uninsured are people who are either self-employed or who work for small businesses. While most big companies still provide health benefits, an astronomical rise in insurance premiums over the last decade has help to create a situation where many small businesses can no longer afford to cover their employees.

There are really three key issues in health care reform of particular concern to small businesses, namely: employer mandates, the creation of a government-run, public insurance plan, and changes to the tax code.

With employer mandates the government would require businesses to either provide health insurance to their employees or pay a fee to the federal government. This may be too much of a financial burden for very small businesses- especially in the present economy. The establishment of a public health plan could provide much needed competition to private insurers and reduce the cost of health insurance. But some fear that this will drive private insurers out of business. Finally, various changes to the tax code have been proposed, of mention are several tax increases, such as taxing some employer-provided coverage, and small business tax credits to help offset the costs of providing insurance.

Whatever the actual outcome of the health care reform bill, the relationship and involvement of small businesses to health benefits is likely to change… for better or for worse.

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The recent announcement that GM has filed for bankruptcy is only the latest in a list of big corporations that have taken the financial plunge- a list that includes such “household names” as Circuit City, KB Toys, CompUSA, Linens n’Things, and most recently, Chrysler). This unavoidable trend also includes many smaller businesses and consumers.

Since this trend is likely to continue for the next year or two ( I’m on the pessimistic side), I wanted to dedicate a post to the subject.

I have found that although most people (especially business owners) may recognize that bankruptcy is something to avoid, they often do not know what actually happens when a business “goes bankrupt.”

The first thing to know is that when it comes to businesses, there are two types of bankruptcy that apply, Chapter 7 and Chapter 11. Each one has very different terms, procedures, and consequences.

Under Chapter 7, also known as “liquidation bankruptcy” once the filing is underway, an administrator or trustee is appointed to sell off the business’ non-exempt assets so that the outstanding debts can be repaid to the fullest extent possible. The portion of the debt that cannot be repaid through the asset liquidation is then discharged. Businesses generally try to avoid Chapter 7, because the process makes it impossible to continue operating.

With a Chapter 11 bankruptcy filing, the business continues its regular operations, maintains control and ownership of all assets, and tries to draw up a plan to pay off creditors. A business will choose to file Chapter 11 if its future revenues will be higher than the liquidation value of its assets. Many of the creditors will also benefit since they can get more money back if they allow the business to reorganize and work out some kind of payment plan. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the business has 120 days to come up with its reorganization and payment plan.

The major drawback for filing Chapter 11 is that it can be a costly and time-consuming process. Even smaller businesses will need to hire professionals to help them sort out their debt, and sometimes a plan’s approval can take several months

All business owners who are considering bankruptcy should keep in mind that the bankruptcy will appear on the business’ credit report which will make it harder for the business to get business loans, credit, and leasing contracts for several years. Bankruptcy also stunts business growth. Under Chapter 11, the business can only conduct regular operations. This means no growth-oriented transactions, such as buying a new property or expanding an existing space.

In short, though bankruptcy may help some businesses stay afloat, this “life jacket” has a lot of lead inside of it.

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