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Amid cautious consumer spending and an overall economic and legislative uncertainty, having a reliable source of credit and short-term financing is a necessity for small business owners. One of the more popular credit options among small businesses has been a bank sponsored business line of credit. But these days, many current small business account holders are seeing their credit lines being slashed or closed down, often with little reason or notice.

So how can a small business owner hope to secure a new business line of credit at the bank? Here are three tips that you may not of thought of:

 

Tip 1: If your credit score is low, consider the option of transferring 100% of the business to your business partner if he or she has a strong personal credit profile. The ownership transfer can be easily arranged and filed in the company’s records. Ownership can be transferred back once you complete the application for a corporate credit line.

Tip 2: Apply for a credit line below $50,000. Loans up to the $50,000 mark are approved much more easily than $100,000 ones, mainly due to the documentation and amount of financials required for the latter. If the credit line you seek exceeds the $50,000 mark, you will have to provide two years of personal tax returns, two years of business tax returns, profit and loss statements and financial statements. So think twice before going for the larger amount.

Tip 3: One of the lessons of the recent credit crunch is not to put all your eggs in one basket. Diversify your business credit and develop relationships with more than one bank. That way, if one bank reduces or cancels your line of credit, you will still have other options.

However, be sure not to open more than three business bank accounts within a 90-day period because the loans might end up stuck in the ratings systems (known as chex systems) which are applied by banks when opening up a business bank account.

Aside from being a logistical headache, bounced customer checks levy a significant expense to small businesses in terms of both time and money, and these costs often go way beyond the actual face value of the check.

 

 

As economic recovery continues at a snail’s pace, and consumer dollars are stretched ever further, the occurrence of bounced checks will likely rise. So what can you do if you suddenly find yourself holding a handful of bounced checks? Actually, quite a lot.

 

Bounced Checks, A Ripple Effect

 

Bounced checks are expensive. Bankrate.com recently reported that the average bank charges a hefty $27.04 for dealing with a bounced check. Then there is the time factor. A bounced check requires staff members to spend time tracking down the customer in order to illicit payment. Finally, bounced customer checks can also wreak havoc on a small business’ cash flow, creating an uncomfortable situation where anticipated money is so close, yet so far.

 

Reducing the Costs of a Bounced Check:

 

Bounced checks are inconvenient to deal with but fortunately there are several things small business owners can do to help minimize the impact and occurrence of bounced checks as well as increase the debt collection rate:

 

• Use a collection agency. You can sell the debt to a collection agency that will take on the responsibility of collecting the amount owed from the customer.

• Use a check verification system. At point of sale, it is possible to compare the signature of the check you are receiving against a national database of people who have written checks, and have not made good on them, and if the name comes up you can insist on another method of payment.

• Get bank notification the first time a check doesn’t clear. Normally a bank will try to clear a check twice before alerting you. Instead, you can opt to have your bank to tell you after the first attempt so you can communicate with the customers bank to see if they have funds available to pay you. If they do you can redeposit the check.

• Electronic Check re-presentment. After a check has failed to clear twice, you can check with the customers bank to see if funds are present, if they are then you can electronically debit the check and receive the funds

 

 

Now that the U.S. House of Representatives has decided not to extend long-term unemployment benefits past November, job creation is more urgent than ever. But recent statistics suggest that most new businesses are sole proprietorships or very small companies. Thus, new job creation remains elusive.

 

According to research by economists John Haltiwanger, Ron Jarmin, and Javier Miranda, new businesses are the key source of jobs in America. New businesses steer innovation and increase productivity, raising U.S. living standards in the long run.

While the recession has prompted many people to go into business for themselves, most of those newly created businesses are not the job generating kind. As of late, a large percentage of new businesses have been consultancies to other companies, or E-bay stores which are run by sole proprietors.

Traditionally, easy sources of start-up cash encouraged entrepreneurs to open businesses that quickly expanded by hiring employees. Trends have changed as the credit crisis causes banks to severely reduce credit card and home equity loans. Angel investors and venture-capital firms, previously strong sources of startup funding, have little cash to lend as they attempt to divest themselves of existing companies.

Other factors also inhibit new business creation. The wrangling in the federal government over healthcare leaves business owners unsure about employer responsibilities. They can’t project employee healthcare costs over the next few years. Additionally, tax laws, constantly in flux, leave potential employers wondering whether they will be able to afford to operate a business.

According to Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire, a few fields stand out even in these troubled times. Biotechnology and healthcare draw money from both angel investors and pharmaceutical companies. He also points out that all businesses need less cash investment than they used to, due to rapidly dropping prices of software and hi-tech equipment.

Nonetheless, new businesses, and the new jobs they bring, are rising at a far slower rate than the economy demands.

Source: The Wall Street Journal

The current recession is leading more people toward entrepreneurship, according to a new study. Robert Fairlie of the University of California Santa Cruz found that in every month in 2009, 340 out of every 100,000 American adults founded a business. In comparison, on average, 290 adults a year started new businesses in the ten years prior to the recession.

 

Dr. Fairlie saw a clear correlation between unemployment and business creation. He focused on cities with poor labor markets. For the past few years, as the labor market conditions in an area deteriorated, entrepreneurship increased in tandem.

His findings indicated that unemployed people are more likely than salaried workers to start businesses. After losing their jobs, people might decide they have nothing left to lose, so starting a business bears little risk. For the unemployed, there is no “opportunity cost” of giving up a steady salary to enter a business venture.

Entrepreneurship has not increased as rapidly as the unemployment rate has. From 2006 to 2009, unemployment increased by a whopping 100%, while business creation increased by only 16%.

New business growth impacts positively on the general U.S. economy. Even though many businesses are struggling in today’s recession, many will become wildly successful. In fact, 57% of current Fortune 500 companies were started during recessions or bear markets.

Of course, some businesses will never create new job opportunities. John Robertson, senior economist at the Federal Reserve Bank of Atlanta, stated that many new businesses are simply independent contractors offering services to other companies. Additionally, E-bay businesses, which tend to have sole proprietors and no employees, are popular entrants to the new business field.

The seemingly endless recession is yielding at least one positive byproduct: the creation of new businesses that contribute to the innovation and wealth of the U.S. economy.

To be human is to feel. The whole gamut of human emotions gives us a sense of meaning, identity, and place, and without them we would go through life being little more than organic robots. But what happens when your inner emotional world collides with your work environment?

 

Your emotions are often most tested at work. After all, you likely spend more time with your peers at work than you do with your family. Work is a place where expectations must be met and deadlines kept, where communication must happen among differnet personalities and cultures.

It goes without saying that emotions such as anger, jealousy and anxiety can have a negative effect on your performance at work and those around you. So how can you regulate your emotions so they can play a positive role at your workplace? Here are a few tips to keep in mind:

Keep the lines of communication open. One of the best ways to avoid conflict is to keep the lines of communication open. If you feel that there is a problem with one of your peers, don’t allow anger to take control. Sit down with him or her in private and discuss the problem openly and calmly. If this fails, ask your superior or another intermediary to interject or to arrange a three-way meeting in order to discuss the problem and find ways to resolve it.

Make sure you have other outlets. Sometimes the tension of work can build up to the point of explosion- especially in high stress jobs, or when having to work with difficult people. Aside from making sure there is healthy communication, you should also ensure that you have other places- i.e. people and activities- in your life that allow you to express your frustrations and let off steam. There is much more to life then one’s job, and sometimes all that is needed to reduce negative or distressful feelings is a little work-life balance.

Try to stay positive. Though you may try, you cannot control your peer’s emotions. You can, however, control your own. Broadcast control and calm and you may be surprised to see how it will “rub off” on those around you.

Above all, the key to properly managing your emotions is to make healthy choices. Don’t react in the heat of the moment. Before saying something that may fundamentally change your situation at work, count to ten. Think the situation through. Is it worth letting off steam? What damage will it cause? Think of a better way to resolve the problem. Chances are, there is one.

The National Federation of Independent Businesses (NFIB) Index of Small Business Optimism indicates that the recession is still going strong. According to September’s report, small business owners have been pessimistic since January 2008, when the index dropped below 93.

The report examined various factors, including employment, capital spending, sales, earnings, and credit. In most areas, statistics showed minimal upward change. Business owners are clearly suffering because of consumers’ low spending power.

Small business’ employment statistics reflect the current high rate of unemployment. Average employment growth was negative. In addition, 16% of respondents reported plans to reduce their work forces.

In the capital spending arena, the picture is not much rosier. In fact, the frequency of spending on improvements like new equipment and facility expansion is only one point above the 35-year record low. Apparently, business owners don’t feel their businesses are successful enough to justify major investments.

Sales have not fared well either. 34% of small business owners reported reduced sales in the past three months. Many described liquidating inventory, while lacking reason to order new stock.

Inflation has been affecting small businesses, according to the report. There is cost-cutting across the board, creating reduced profits. Profits, vital to expansion, have not been strong. 33% of owners reported that they have increased profits. That number represents a 3 point decrease in business owners reporting profit.

One bright spot in all the gloom is credit. 91% of small business owners are satisfied with the level of credit they receive. While interest rates are low, borrowing is down, because without expansion and capital spending, businesses do not need large influxes of cash.