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The internet is rife with offers of businesses for sale. A little research often reveals that some of the most attractive of these offers are shelf corporations.

 

A shelf corporation is a company that was established and then was “left on the shelf”- meaning that it has been inactive for several years. After a period of time, it could be sold to an entrepreneur looking for an established business with longevity.

The longevity factor is appealing for two reasons: 1. there is a greater chance of receiving bank loans, and 2. the business is more familiar and attractive to customers. In other words, banks and customers trust existing businesses more than new ones. An entrepreneur starting a new business could also avoid the work of incorporating and receiving an IRS number by buying an existing shelf corporation.

Recently, shelf corporations have become a favorite among scammers and swindlers. In one scenario, they set up several businesses in a certain area, and then charge and pay expenses among the businesses. In the eyes of the credit rating agencies, these businesses are upstanding. They demonstrate income, and they pay their bills on time. In reality, though, these “businesses” have not bought or sold anything.

For many would-be small business owners purchasing a shelf corporation is a very tempting proposition- especially where bad credit is an issue. Suddenly having a solvent business to present to the lending bank would seem like a godsend. Replacing a failing business with a robust shelf corporation seems like a simple method of securing capital from the bank.

But those who are considering purchasing a shelf corporation out of desperation may want to think again. Misrepresenting one’s business is always risky, and it exposes the business owner to a Pandora’s box of legal issues.

As many more small business owners struggle to secure bank loans, they have been turning to popular financing alternatives, such as accounts receivables financing, equipment leasing, and business cash advances. Though a shelf corporation may sound like a lucrative idea, business owners are better off finding some other means of infusing cash into their business.

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Sources:

en.wikipedia.org/wiki/Shelf_corporation

http://www.businessweek.com/smallbiz/content/jul2009/sb20090714_626511.htm

Chase has apparently decided to do its part to jumpstart the still sluggish American economy by promoting an interesting offer: The bank promises to reduce the interest rate for each new employee that a small business hires.

 

Last week Chase announced that the new program is being offered to business owners willing to undertake a new Chase business credit line of up to $250,000, and to existing customers who seek to increase their line of credit by at least $10,000. The bank promises to reduce a half of a percentage point off the interest rate for each new individual hired (with 3 being the limit). The bank stated that the discount will be valid for the duration of the loan.

Businesses that are Chase checking customers will be eligible for an additional 0.5% point credit-line discount, in addition to the hiring discount. Theoretically, this would mean that small business could reduce their credit-line interest rates by 2 percentage points. Chase calculated that the step would save $4,000 over three years on an outstanding balance of $65,000.

But here’s the rub – only enterprises that qualify for a credit line will be eligible for Chase’s offer, so many companies won’t be able to apply. During the recession many of the leading banks slashed small business lending and Chase was no exception. Nevertheless, Chase claims that during the first quarter of 2010 it loaned $2.1 billion to small businesses, representing a 31% increase in comparison to the corresponding quarter last year.

Despite some signs of recovery, payroll processing firm ADP announced that last month companies employing less than 50 workers laid off an additional 1,000 positions collectively. So it would appear that U.S. businesses are being very cautious – they are choosing not to hire additional personnel despite tax and other incentives.

Is Chase just chasing after some good PR and a little bit of the limelight in these troubled times? It’s a definite possibility.

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In the previous two posts, I offered a definition of cloud computing and discussed some general ways in which cloud computing can benefit a small business. But even with all of its benefits, computing from the cloud is not for every business. Before you move your business operations and data online, there are several vital factors to consider:

 

• Security Issues. The security of the data stored online is one of the main considerations commercial users have when it comes to cloud computing. The security level of your cloud computing provider is a critical question especially when dealing with sensitive information. Make sure that the provider employs a specialist in cloud security and has a solid online security system. Look into how passwords are assigned, protected and changed. Cloud service providers also often work with third parties. Be sure to attain information about those companies which could potentially access data.

 

• Budgetary Concerns. Small businesses seeking to reduce computing costs have discovered that Internet-based software and services can save a lot of money. Through the use of cloud-based services, you can reduce software and other computing costs and eliminate most of the need for an internal IT person. Nevertheless, research the budgetary issue carefully to ensure that you are indeed streamlining operations and cutting expenses.

 

• Data Backup. Some commercial cloud computing users assume that they do not have to conduct data backups because the provider is doing so. The truth is, however, that cloud outages and downtime, can a do occur. Thus, working in the cloud does not mean you can discontinue your system for data backup.

 

• How Reliable is It? IT experts who have control over and responsibility for all of the enterprise’s servers may be concerned about putting parts of their business on “black box” rented cloud services. In addition, what happens when your host experiences power outages? Will your business grind to a halt?

 

Despite the legitimate concerns regarding cloud computing, many cloud computing experts and IT developers hold that the benefits of Internet-based computing greatly outweigh its drawbacks. In any case, before you decide to start operating in the clouds, research the issue carefully and find out which services will best serve your company.

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In a previous post, I offered an updated definition of cloud computing. In short, cloud computing refers to the use of Internet-based services to support various business processes in real time. In practical terms, cloud computing allows small businesses to remotely manage and store information, and access customized software or services from any device featuring Internet access.

 

Though the concept of cloud computing started generating a buzz in 2009, the majority of small businesses have been reluctant to make the switch from desktop and in-house equipment and services. But that may soon change. According to Ray Boggs, vice president of SMB research for IDC, companies with 100 or fewer employees are expected to spend $2.4 billion on Cloud Computing services this year. This constitutes a considerable increase over last year’s $1.7 billion.

There is a lot to be said for commercial- based cloud computing. Cloud-based services can help small businesses significantly reduce their software and hardware computing costs. This includes a reduction in power bills and the costs for maintaining and upgrading hardware. Cloud computing also allows for easier collaboration with workers and clients from remote locations. Finally, the software and services accessed via the cloud are typically upgraded with the latest improvements in functionality.

Small business can utilize cloud computing in several vital areas: Small business SaaS applications often involve customer relationship management, human resource management, finance and accounting programs, and document collaboration. Cloud computing is ideal for these purposes. Through the use of online storage services, small businesses can also boost their storage capacity and create online backup and archiving accounts. And perhaps the most ubiquitous of commercial usage is the online office suite with collaboration tools which allows for remote access information sharing, editing, and storage.

For those small business owners who are just now looking into cloud computing services for their business, there are several popular options to choose from. For starters:

Google Apps. Google Apps provides a custom email address, tools for word processing, spreadsheets and presentations, a shared calendaring system and access to a flexible intranet system. This software package is especially beneficial for small businesses involved in business travel, remote collaboration, or any form of project management.

Microsoft Web Apps. Microsoft has entered the cloud computing fray with its suite of enterprise-grade e-mail communications, Web videoconferencing, CRM and collaboration solutions

Zoho.com. Zoho is another richly featured, web-based office suite

Infusion CRM. A comprehensive CRM solution that supports online shopping carts and sales transactions, auto-responders, product information, customer details, order history, payment plans, lead tracking and progression, and Skype CRM integration.

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Over the past few years, the term “cloud computing” has become a catch-all phrase referring to the use of real time, Internet-based services to support business processes. More specifically, cloud computing can refer to software as a service, such as Salesforce.com for Customer Relationship Management (CRM); to file storage, synchronization, backup services, such as Dropbox.com; and to infrastructure as a service, as in Amazon Web Services, GoGrid, and Flexiscale.

 

Commercial cloud computing services usually take one of the following three forms:

• Platform as a Service (or PaaS): PaaS delivers a development platform, hosted by the vendor, enabling the development and deployment of websites and services through the Internet.

 

• Software as a Service (or SaaS): SaaS, which is also known as “software on demand,” constitutes today’s most widespread commercial use of cloud computing. SaaS enables customers to access software via the Internet rather than locally downloading and running it.

 

• Infrastructure as a Service (or IaaS): IaaS provides the client with infrastructure equipment as an on-demand service. Infrastructure can include servers and storage, all of which is hosted by the vendor’s premisis. This form of cloud computing is both more complex and more flexible than the previous two options because it allows clients to build their own platform and services according to their specific needs.

 

Cloud computing offers commercial users several significant advantages, one of which being the ability to quickly update web resources while at the same time utilizing automated back-up capabilities. It also enables speed and agility, which are primary business needs. But there are drawbacks too, such as the real risk of security breaches and possible downtime.

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The use of a virtual assistant (or VA) can be a cost-effective and efficient alternative to hiring on-site employees. But, just like most things in life, one needs to know how and when to use them in order to maximize the benefits.

 

But before we can discuss the ways to maximize the use of a Virtual Assistant, business owners should be clear about what a VA really is. A virtual assistant is a broad term that describes anyone who contributes to a business from a remote location. Usually, VA’s are hired to perform administrative tasks, such as fielding phone calls, answering emails, writing memos or reports, etc or research-oriented tasks, such as conducting market research.

Outsourcing is a vital tool in nearly every business these days. After all, what is the logic of hiring employees and having to pay salaries and benefits, not to mention renting office space to accommodate them, if you can simply hire sub-contractors to do the job? This question is particularly relevant to a small business which cannot afford extra expenses.

So how can small business owners maximize the use of a Virtual Assistant? Here are a few tips:

• Use the Virtual Assistant to take care of repetitive tasks that take up a lot of your own time so that you will be free to do the larger, more important things. The Virtual Assistant can deal with responses to routine emails, market research, compiling business quotes, updating contact lists and other mundane tasks.

 

• Virtual assistants can also help with more creative activities such as lead generation via blogging and social networks, and submitting articles to directories. You can also use them for event planning and preparing Power Point presentations about your business.

 

• Take the time to establish work flow processes. Decide on how you will share information (verbally? By email?) Establish how you will issue instructions – (verbally or in writing?) Set clear procedures to prevent double handling.

 

• In order to ensure maximum efficiency, make a list of the tasks you want your Virtual Assistant to accomplish and establish a reasonable timeline. Prepare an outline of the specific task step-by-step so that the Virtual Assistant will be able to tackle the job efficiently.

 

• Establish a method of evaluating the VA’s performance and return on investment. At the beginning there may be some tweaking involved in working with a remote employee until the right balance is achieved. Sometimes appropiate tasks are being assigned, but the person filling the VA position may not be a good fit. Other times it may be the exact opposite.

 

The good thing about outsourcing is that you can use it if and when you need it and customize it to fit your resources and demands. It’s up to you to find the right balance. Once you have, a Virtual Assistant can be virtually invaluable.

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Sources:

http://zenhabits.net/tips-for-working-with-a-virtual-assistant-and-why-you-might-want-one/

http://webworkerdaily.com/2009/08/17/how-to-use-a-virtual-assistant-in-your-business/

http://www.flyingsolo.com.au/working-smarter/outsourcing/five-tips-for-working-with-a-virtual-assistant

Many small business owners may be apathetic when it comes to business insurance- seeing it as an expense to avoid or to minimize where possible. But savvy business owners realize that business insurance is in essence an investment on the future. The various business insurance products available protect not only the owner(s) of the business, but also secure all of the business’ working relationships including customers, creditors, and investors. With proper coverage, business owners avoid having to pay for all sorts of liabilities, from flood damage to litigious customers.

 

There are several different types of insurance available to business owners- each one serving its own purpose. Here is a brief rundown of the major options:

• Property Insurance. Purchasing business property insurance is the first step toward security. Even if you rent office space instead of owning your building, property insurance is crucial. It will protect your assets from loss in case of a natural disaster, fire, or electrical surge. You can cover every item in your office, including equipment, carpeting and lighting fixtures. While not typically included, you can adjust your policy to cover theft and embezzlement. Business property insurance also pays for loss of income while the business recovers from damage.

 

• Liability Insurance. Liability insurance will protect you if someone sues your business for negligence. It should cover personal injury and medical expenses caused by your business. This includes injuries that happened on your premises, and injuries caused by your products.

 

• Worker’s Compensation Insurance. Most states require businesses to purchase worker’s compensation insurance, which covers employees who are hurt on the job. Business owners benefit, because this insurance guarantees that workers cannot sue their employers for on-the-job injuries. Instead, they will receive regular monthly payments from the insurer.

 

• Commercial Auto Insurance. If your business uses vehicles, you need commercial auto insurance. Personal auto insurance will not cover company cars. This insurance covers damage to the cars, and damage that the cars might cause to others.

 

• Health Insurance. Business owners looking to retain loyal workers can offer a health insurance benefits package to their employees.

 

• Life and Disability Insurance. Life and disability insurance protects the business in the case of the death or disability of vital employee. When properly executed, the proceeds and stipulations of the policy can create a smooth transfer of ownership or company interests among the surviving business partners and relatives.

 

It goes without saying that business owners should seek a good insurance agent who will listen to their individual needs and explain the policy clearly. The monthly insurance premiums will be money well spent.

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Sources

http://www.myownbusiness.org/s5/#1

http://businessinsure.about.com/od/insuringyourbusiness/tp/listtypesins.htm

The reasons why a business would fail to post a profit are many. According to the Small Business Administration (SBA), the majority small businesses take at least a year to show a profit due to the fact that it takes some time to generate enough revenue to cover the company’s start-up expenses. There are other factors though, such as challenging economic conditions, poor resource management, and changes in industry trends.

Identifying the cause behind of a business’ lack of profitability and taking appropiate corrective action can dramatically (and often quickly) turn a business around. Here are some areas of consideration:

• Are you utilizing metrics, forecasts, and other reports? There are countless financial and performance reports that a business owner can use to both measure and predict business performance and thus spot a potential problem. Budgets, income statements, cash flow statements, and salesforcasts all fit into this category. Prepare a budget on an Excel spreadsheet and refer back to it often. Make sure to link work activities to your income. If you are in sales, make individual sales projections. If you deal in flat-rate services, track contracts closed and the dollar value of each contract. If your services are sold by the hour, track contracts closed and billable hours.

 

• Are you being fiscally responsible? In order to make money, you have to keep a close eye on your spending. Are you about to spend money on something for your business? Ask yourself if you really need it and whether it is within your budget.

 

• How is your inventory management? At times a business may not be profitable because too much capital is being tied up in unused or slow moving inventory. Look for ways to free up over stocked inventory supplies, and make those bulk purchases wisely.

 

• Are you paying too much for your overhead costs? Overhead (or operational) costs generally consist of some of the biggest expenses facing a small business. These are expenses such as payroll, rent/mortgage payments, and utilities. Look for ways to reduce your overhead by, for example, sharing office space or opening your office at home. The latter will provide you with double savings, both on rent and commuting expenses.

 

• Are you pricing your products/ services properly? The profitability of a business also depends on the rates you charge for your product or service. In order to lure in customers, many new business owners tend to undercharge for their service or products. You need to ensure that your rates are enabling you to turn a profit.

 

• Is your location working for you? Evaluate your current location. Is it too far from your potential customer base? Is it too far from delivery routes. What about the commute for you and your workers? What image or message does your location give to your potential clients?

 

• How are your employees performing? Your employees play a vital role when it comes to profitability. Whether you deal in sales or any other area, every team member contributes to delivering value to customers. Examine each employee’s success factors: For example, does your marketing assistant increase business through his/her efforts? Has your sales team met its quota? If you define critical activities you will effectively motivate your employees. Take heart – if you treat your staff as partners to your success and establish reasonable goals for the future, your small business is likely to flourish.

Throughout the recession, the majority of US companies were laying off employees rather than hiring them. They certainly weren’t worried about employees jumping ship. But as the economy begins to stabilize this situation is changing.

 

Online job search engine, LinkUp.com, reports that there are plenty of job openings out there and that the trend seems to be gaining momentum. The tide seems to be finally turning on the employer’s market. Now employee retention is key.

So how can you keep your employees from leaving. Though you might think that salary is the number one reason why employees quit their jobs, the truth is that most employees are more interested in “sentimental issues” like respect, culture and environment.

Consider the following factors that can affect job satisfaction and job retention:

• Pay attention to the working conditions. The physical layout of your workspace and the quality of the work-related equipment available to use play a key role in keeping employees happy. Make sure that the office is pleasently decorated and maintained. Even small things, such as applying a fresh coat of paint, can make a difference. Moreover, you can’t expect your employees to take pride in their work if you don’t supply them with the proper tools and equipment to get the job done.

 

• Create a pleasant corporate culture and working atmosphere. It is important for any business that involves employees to maintain certain values and standards.Establish a clear, written definition of your company’s missions and values, and make sure that your employees are aware of it. A company’s culture encourages employees to take pride in their work.

 

• Make employee recognition a priority. It is human nature for people to want recognition for their input and hard work. Be sure to acknowledge the achievements of your staff members. By publishing praise in company newsletters or making such announcements at meetings, you are not only encouraging the object of your praise but his peers as well. Many companies hold contests to recognize the best employees in certain areas. Give prizes to the winners. Even something small like a gift certificate for a meal at a restaurant or a movie rental is enough to give your employee an appreciative glow.

 

• Have an open dialogue with your employees. Your employees need to feel that you value their opinions. Try to have one-on-one meetings with as many of them as you can (depending on the size of your company). If you make an effort to implement some of their suggestions, they will surely feel more connected and loyal to their jobs.

 

• Offer adequate employee compensation. In order to attract quality employees, keep your base pay competitive within the industry. You can encourage your employees through the use of a performance-based compensation plan. Compensation should be fair to all of your employees. Staff contribution deserves to be justly rewarded.

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Smack in the middle of all the social networking hype that has been generated over the past few years there is Facebook- a site that lets users add people as “friends”, designate themselves as”fans”of other users, send messages, and update their personal profiles. With more than 400 million active users, many, including this blog, saw Facebook as fertile ground for businesses to interact with their customers, establish their brand, pinpoint their target market, and in short generate a profitable buzz.

 

But today, numerous business owners who sought to heed the clarion call to all things social networking are now left wondering whether it was all worth it. It turns out that Facebook, though it may be a popular way to connect with other people, may nonetheless be the wrong platform for many seeking to increase brand awareness and drum up business.

Here is a breakdown of the three major problems and drawbacks small business owners may experience as they work on building their Facebook following:

1. No distinction between personal and professional use. One problem is that Facebook causes business owners to cross boundaries and identities. This is due to the fact that Facebook does not allow one user to have two profiles. This means that users must merge their personal and professional networking. Sharing ones personal interests and photos with business contacts may not enhance one’s professional standing.

2. More fans do not equal more business. Facebook users are focused on socializing. The site additionally provides many interesting distractions, which make users less likely to pay any meaningful attention to business offerings- even when they have labeled themselves as friends or fans. Bottom line: increased exposure within Facebook among users in no way guarantees increased revenue.

3. Advertising a business on Facebook exposes it to fraud. Hacking and spam are prevalent on Facebook. Business owners certainly do not want someone sending strange messages to all their Facebook fans. In addition, because the Facebook audience is so vast and non-targeted, anyone can easily contact a business. Business owners can easily waste time responding to people who never intended to become customers.

In sum, while Facebook may offer unprecedented exposure, it is not truly a business tool. Business owners still interested in social media should consider other mediums, such as LinkedIn or Twitter in order to generate business growth and get a decent return on investment.