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The Importance and Benefits of Small Business Certifications

The Importance and Benefits of Small Business Certifications

There are many important benefits and advantages available to businesses owned by women and/or minorities, but in order to qualify for them a business must become certified as a minority- or woman-owned enterprise. Connections, marketing assistance, and technical training are just some of the benefits that come with certification, says Susan Rittscher, president and CEO of the Center for Women & Enterprise, the New England affiliate of the Women’s Business Enterprise National Council, a leading certifier of women-owned businesses. (Others include the National Women Business Owners Corporation and the National Association of Women Business Owners.)

“First and foremost, if the diverse-owned business is interested in pursuing bids or contracts with a large corporation with a supplier diversity program, a state agency, or a federal agency, they must be certified in order to count toward supplier diversity goals,” Rittscher says. Another benefit of certification is connections to other certified businesses, which can be a powerful network of potential partners, clients, and advisors and mentors. “Certification is a strong marketing and selling tool for business owners when leveraged effectively,” she adds. Certified businesses may also have access to exclusive programs and services such as professional development workshops and networking and matchmaking events.

Tom Greco, vice president of ThomasNet.com, a free platform with a database of more than 610,000 companies, notes that there are many different ownership/diversity certifications that provide a competitive advantage to qualifying companies, and many businesses and government agencies are anxious to do business with them. “Indeed, 72 percent of buyers recently surveyed by CAPS, a research arm of the Institute for Supply Management, said they would be increasing their spending with diverse suppliers. Diverse businesses include Women-Owned Businesses and Minority-Owned Businesses as well as Veteran-Owned Businesses, Small Disadvantaged Businesses, HUBZone Businesses, and Service-Disabled Veteran Businesses,” he says.

While the process for obtaining various kinds of certification varies, Greco suggests that a business seeking any of the certifications mentioned above start by self-registering with the federal government’s System for Awards Management (SAM), since that is a requirement for most types of certification. Next, seek out one of the major certification organizations for your diversity group—such as WBENC for a women-owned business or the National Minority Supplier Development Council for a minority-owned firm. In most cases, minority-owned business certification falls under the purview of the individual states. Check out this useful list of certifying agencies by state to learn more.

It is important to note that in order to qualify for minority- or women-owned certification, the business must not only be owned by minorities or women but also controlled by them, says Dean dt ogilvie [ed. note: lack of capitalization is intentional and should be retained], the dean and a professor of business strategy at the Rochester Institute of Technology’s Saunders College of Business. “They have to be the ones making the decisions about strategy, business, and structure. They can’t just be figureheads to get the certification,” she warns. Owners must provide required documentation to prove ownership and control; they must have contributed capital and/or expertise to the business; they must be U.S. citizens (or, for some programs, resident aliens); and they must be independent in decision-making, Rittscher says.

Lisa Firestone is president and owner of Managed Care Advisors (MCA), a woman-owned employee benefits and disability management consulting and workers’ compensation case management firm based in Bethesda, Maryland, and she believes certifications and the set-asides to which they provide access play an important role in leveling the playing field for companies like hers. MCA is a certified minority business enterprise in Maryland and several other states and a WBENC-certified woman-owned business. In 2012 it also became certified as an Economically Disadvantaged Woman-Owned Small Business. “Honestly, before my business entered into government contracting, certifications and set-asides were unfamiliar concepts, and ones that made me a bit uncomfortable,” she says. “But what I have learned is that there really is no ‘special consideration,’ but just an opportunity to level the playing field and compete effectively. Certifications can get your business noticed, but they are not a direct conduit to a contract. You still have to get out there, compete for that business, and win it.”

May 15, 2014 Today's Business, , , , , , , , , , 0 Read more >

Using Your Benefits of Certification To Advance Your Business

Using Your Benefits of Certification To Advance Your Business

There are many important benefits and advantages available to businesses owned by women and/or minorities, but in order to qualify for them a business must become certified as a minority- or woman-owned enterprise. Connections, marketing assistance, and technical training are just some of the benefits that come with certification, says Susan Rittscher, president and CEO of the Center for Women & Enterprise, the New England affiliate of the Women’s Business Enterprise National Council, a leading certifier of women-owned businesses. (Others include the National Women Business Owners Corporation and the National Association of Women Business Owners.)

“First and foremost, if the diverse-owned business is interested in pursuing bids or contracts with a large corporation with a supplier diversity program, a state agency, or a federal agency, they must be certified in order to count toward supplier diversity goals,” Rittscher says. Another benefit of certification is connections to other certified businesses, which can be a powerful network of potential partners, clients, and advisors and mentors. “Certification is a strong marketing and selling tool for business owners when leveraged effectively,” she adds. Certified businesses may also have access to exclusive programs and services such as professional development workshops and networking and matchmaking events.

Tom Greco, vice president of ThomasNet.com, a free platform with a database of more than 610,000 companies, notes that there are many different ownership/diversity certifications that provide a competitive advantage to qualifying companies, and many businesses and government agencies are anxious to do business with them. “Indeed, 72 percent of buyers recently surveyed by CAPS, a research arm of the Institute for Supply Management, said they would be increasing their spending with diverse suppliers. Diverse businesses include Women-Owned Businesses and Minority-Owned Businesses as well as Veteran-Owned Businesses, Small Disadvantaged Businesses, HUBZone Businesses, and Service-Disabled Veteran Businesses,” he says.

While the process for obtaining various kinds of certification varies, Greco suggests that a business seeking any of the certifications mentioned above start by self-registering with the federal government’s System for Awards Management (SAM), since that is a requirement for most types of certification. Next, seek out one of the major certification organizations for your diversity group—such as WBENC for a women-owned business or the National Minority Supplier Development Council for a minority-owned firm. In most cases, minority-owned business certification falls under the purview of the individual states. Check out this useful list of certifying agencies by state to learn more.

It is important to note that in order to qualify for minority- or women-owned certification, the business must not only be owned by minorities or women but also controlled by them, says Dean dt ogilvie [ed. note: lack of capitalization is intentional and should be retained], the dean and a professor of business strategy at the Rochester Institute of Technology’s Saunders College of Business. “They have to be the ones making the decisions about strategy, business, and structure. They can’t just be figureheads to get the certification,” she warns. Owners must provide required documentation to prove ownership and control; they must have contributed capital and/or expertise to the business; they must be U.S. citizens (or, for some programs, resident aliens); and they must be independent in decision-making, Rittscher says.

Lisa Firestone is president and owner of Managed Care Advisors (MCA), a woman-owned employee benefits and disability management consulting and workers’ compensation case management firm based in Bethesda, Maryland, and she believes certifications and the set-asides to which they provide access play an important role in leveling the playing field for companies like hers. MCA is a certified minority business enterprise in Maryland and several other states and a WBENC-certified woman-owned business. In 2012 it also became certified as an Economically Disadvantaged Woman-Owned Small Business. “Honestly, before my business entered into government contracting, certifications and set-asides were unfamiliar concepts, and ones that made me a bit uncomfortable,” she says. “But what I have learned is that there really is no ‘special consideration,’ but just an opportunity to level the playing field and compete effectively. Certifications can get your business noticed, but they are not a direct conduit to a contract. You still have to get out there, compete for that business, and win it.”

 

April 30, 2014 Today's Business, , , , , , , , , , 0 Read more >

Short-term Financing

Short-term Financing. Short-term Financing.

Short-term Financing. When businesses need a short-term cash infusion, the first option to come to mind is often a traditional bank loan with repayment terms ranging several years or more. However, short-term financing, with repayment terms of less than a year—often as little as 90 or 120 days—can be a smart tool to help build your business and fill cash flow gaps without committing to several years of repayment. Short-term Financing.

Short-term financing has a wide range of applications, says business consultant Dave Lavinsky, co-founder of Growthink in Los Angeles, California. Seasonal businesses may need short-term funds to sustain them during slow periods. Other companies might need to purchase inventory or materials for sales or orders that won’t be paid for months. In some cases, the business investment necessary to sustain growth may leave a business temporarily cash-strapped, says Lavinsky. Short-term financing can also provide the immediate funds necessary for an acquisition or expansion that will lead to additional sales, revenue, or access to capital to meet the repayment terms.Short-term Financing.

There are several types of short-term financing options. Businesses may use credit cards to finance smaller expenses over a short period of time, says Lavinsky. That can be effective, but it’s important to track the cost of interest on this type of financing, which can be high. Small business credit cards in particular are not subject to the regulations passed in the Credit Card Accountability, Responsibility and Disclosure Act of 2009, which restricted arbitrary interest rate increases and standardized payment dates and also provided other protections. However, some issuers have opted to extend these policies on their small business cards regardless of the requirement, so it’s important to read the fine print. These cards are also often issued based on the business owner’s personal credit, so late payments or high balances could damage the individual’s credit profile. Short-term Financing.

Traditional bank loans with shorter repayment terms and lines of credit are usually the most attractive option for many businesses seeking short-term financing. They may have slightly higher interest rates than longer-term loans, but cost less in the long run because the interest isn’t being paid over a longer period of time. In addition, they’re much less expensive than options like factoring, where businesses are paid a portion of their accounts receivable and hand over collection activities to the factoring firm at rates that are often “just short of loan sharks,” says Lavinsky. However, they do offer a way to get revenue in-house quickly, he says. Short-term Financing.

Qualifying for bank loans requires a track record in business of at least a couple of years, as well as demonstrated ability to repay, says Lavinsky. Be prepared to provide financial documents like profit and loss statements for the past two or more years, cash flow analyses, and others, as well as documentation of assets, inventory, cash on hand, or other assets the business owns that might be used as collateral. If you have contracts with or orders from large clients that show an ongoing relationship, that might be useful, as well. Depending on the amount of the loan and your business track record, you might be asked for a personal guarantee, where you pledge your personal assets as collateral to satisfy the loan. Short-term Financing.

To avoid needless delays in the decision-making process, discuss your loan package with your bank representative to ensure it’s complete before submitting it. And while credit markets have been tighter in recent years, the 2012 Federal Reserve Bank of New York Small Business Borrowers Poll found that 63 percent of loan applicants in 2011 were able to get at least part of the credit they sought, although only 13 percent were approved for the full amount of the loan or line of credit they sought. Short-term Financing.

“I’ve always been of the mindset that a company that commits itself to raising capital will raise the capital,” Lavinsky says. “Don’t give up.” Short-term Financing.

April 1, 2013 Today's Business, , , , , , 0 Read more >

Discounting’s Downside: The long-term costs of constant price cuts and ‘always-on sale’ mentality by Cindy Waxer

Discounting’s Downside: The long-term costs of constant price cuts and ‘always-on sale’ mentality by Cindy Waxer.

Customers love a good bargain. But for a small business, deciding on a price that will lure shoppers while still generating a profit is a difficult endeavor. After all, if you price a product too low, a deep discount can significantly eat into a company’s profits. At the same time, by failing to offer an appropriate price cut, you might push consumers into the arms of competitors.

While there’s no secret formula for setting a price, successful small businesses watch out for the dangers of deep discounting. Read what today’s experts have to say about seven important risks of constant price cuts.

Price sensitivity. Selling your products and services at a fraction of the cost can drive consumer price sensitivity, affecting shoppers’ buying preferences and encouraging them to pinch pennies rather than part with their hard-earned dollars. “You’re attracting a discount coupon shopper and that’s not how you make money,” warns Bob Phibbs, a retail consultant and author of Groupon – Why Deep Discounts are Bad for Business. “With constant discounts, the only way you’re going to keep customers coming back is by giving them equally as big a discount every time.”

In fact, according to a recent Retail Systems Research report, Retail Pricing In a Post-Channel World, 67 percent of survey respondents report consumer price sensitivity as a top-three business challenge, up from 46 percent in 2010.

Discounts_PQ.jpgEroded profit margins. While price chopping pleases shoppers, it can drastically eat into a small business’ profits. “Companies don’t run on revenue; they run on profit,” warns Brad Sugars, founder of business coaching firm ActionCOACH. “The moment you start discounting, you lose a lot of your profits.”

Phibbs agrees. “When we give these deep discounts, we kid ourselves and say that it’s because the economy is bad or we need the money. But what we’re essentially doing is giving up on being able to charge full price.”

Lost customers. Consider the loyal, long-time shopper who purchased a blouse in-store for $80 and then discovered that her neighbor purchased the same item on the company’s website for $60. Chances are, you’ve not only angered that loyal customer, but you’ve lost her to the competition. By failing to consistently cut prices across multiple channels, Phibbs says, “Your loyal customers are going to wind up very upset with you. That’s because someone who hasn’t made you successful is now getting a better deal than them.” Instead, Phibbs recommends that small businesses “understand that it’s about getting people who already love you to come back more often.”

The wrong customer. Face it, says Sugars: “The simple reality is there are always going to be people who go towards the best price.” But do you really want those folks to be your key customers? According to Sugars, small businesses that heavily discount their products and services will “start attracting a type of customer who isn’t there for the service, the loyalty, or the value you add; they’re there for the price. The moment you start targeting these price shoppers, your quality customers will be long gone.”

What’s more, this discount pricing strategy may devalue your brand’s ultimate appeal. American automakers learned this hard lesson during the early part of the last decade, when their heavy reliance on incentives to sell their cars temporarily boosted sales but sent the wrong, long-term message to consumers. As Claes Fornell, director of the National Quality Research Center, explained in a Ward’s Auto article from that period, consumers began to perceive non-discounted vehicles from imported brands as having more value than the price-chopped domestic brands. “And once you start discounting it’s hard to get out of the habit, and consumers come to expect it,” Fornell noted. “Discounts are a two-edge sword and have a negative effect. Low price contributes to a low opinion.”

Price wars. Pricing your products competitively is key to running a successful business, but not if it means engaging in an all-out war where business owners lose perspective. “There’s always somebody out there willing to give a lower price than you—I don’t care what it is,” says Phibbs. “But it’s a bad rabbit hole to go down.”

Ignoring the obvious. A trap that many small business owners fall into is focusing more on competitors’ prices than on their customers’ needs. “Learn how to sell,” advises Sugars, whether that entails offering customers special services such as home delivery, or refining your sales pitch. “At the end of the day, the best stores are going to curate the best customer experience,” says Phibbs. “And by giving people the experience they want, customers are going to drive past a competitor to get that experience again. He cites customer-conscious companies such as Lululemon Athletica and Victoria’s Secret as businesses that are “hitting on so many levels that are right because the customer experience isn’t just okay, it’s great.”

http://smallbusinessonlinecommunity.bankofamerica.com/community/managing-your-finances/accountingandbudgeting/blog/2012/09/12/discounting-s-downside-the-long-term-costs-of-constant-price-cuts-and-always-on-sale-mentality

September 12, 2012 Today's Business, , , 5 Read more >

Cash Flow Best Practices: Four Ways to Improve Day-to-Day Money Management

Cash Flow Best Practices: Four Ways to Improve Day-to-Day Money Management
by Sherron Lumley.

When a business has more money coming in than going out, that’s positive cash flow. Ideally, this is the zone in which a small business could operate forever, like a perpetual motion machine. Even though understanding cash flow seems simple, the day-to-day reality of it can cause mayhem. What to do when a customer payment is in the pipeline for next month, but employees must be paid on Friday, raw materials purchased next week, and the electricity bill taken care of by 5:00 p.m. today? These are the do-or-die questions of cash flow.

According to business information giant Dun and Bradstreet, 90 percent of small business failures are caused by poor cash flow. That’s why creating a cash flow budget, maintaining a cash reserve, getting paid on time, and managing expenses are critical policies to keep your small business successful.

Cash flow management would appear simple except for one major complication, and that’s credit. Accounts receivable and accounts payable are by-products of credit arrangements and the length of time between money paid and money received is called the cash conversion cycle. In a nutshell, cash flow management is about minimizing this cash conversion cycle. The ins and outs of cash flow fill some hefty tomes of financial literature, but here are four simple best practices to improve day-to-day money management for small businesses.

PQ_CashFlow.jpgFirst, make a plan

“The first requirement is an effective budget. If you don’t know what your cash flow is, it will be difficult to manage. Both your budget and your projections should be reviewed and adjusted on a timely basis,” says Andrew Schrage, former hedge fund analyst and founder of Money Crashers, a financial advice website.

The plan, otherwise known as a cash flow budget, is a way to project your business’s cash inflows and outflows over a defined period of time, say six months. The U.S. Chamber of Commerce provides a free download of a cash flow budget worksheet with relevant categories and explanations of what you need to do to prepare a cash flow budget. You start with the current cash, add the projected cash inflows, and then subtract the cash outflows to get your cash flow bottom line.

Have a contingency plan (or two)

In order to anticipate cash inflow, a sales forecast is needed, which can be based on recent revenues, seasonal sales, or market research. It’s important to have several projections, including best-case and worst-case sales scenarios, with a contingency plan of how to respond to these different situations. In the event sales are lower than expected or an unforeseen crisis happens, be prepared by maintaining a cash reserve, advises Dun and Bradstreet. Have alternate sources of cash for when unexpected needs arise, and get to know your bankers before you need a loan from them.

“If you’re in a business with inventory, or if you have employees, you should have a six-month cash reserve,” advises SCORE.org, a non-profit entrepreneurial mentor organization that works in conjunction with the U.S. Small Business Administration.

Managing inventory—mind the gap

The cash conversion cycle breaks down into three categories: accounts payable, accounts receivable, and inventory. Too much or obsolete inventory leads to negative cash flow. Although some cash is going to have to be spent to have inventory on hand, clearly, the less inventory sitting around and becoming obsolete, the better. A closer look: The Inventory Conversion Period (ICP) refers to the length of time between the purchase of raw material and the sale of the finished product. Since the business must wait for the sale, then wait some more for the accounts receivable to be converted to cash; any money tied up in maintaining inventory becomes a drag on cash flow. Conversely, a business can temporarily boost its coffers by waiting until the end of the reporting period to pay its own bills.

If possible, wait 30 or 60 days to pay suppliers and ask for a discount for early payment. “1

You know that you can improve cash flow by slowing down your payment of accounts payable,” says Sam Thacker, writing for Dun & Bradstreet. Thacker is a partner in the Austin, Texas based financial consulting firm, Business Finance Solutions, which assists small businesses with financing challenges.

The flip side of the ICP is the Receivable Conversion Period (RCP), which is the time lag between selling on credit and receipt of cash for the accounts receivable. When customers or business partners show stable or positive trends in payment and avoid delinquency, expand their credit line to encourage revenue growth.

“Having a good handle on your accounts receivable is very critical to improving your cash flow, especially during tough economic times when everyone else is slowing down their payables,” Thacker points out.

Cut costs and expand with caution

“The more money you can save, the less you will need to rely on outside investors,” advises Schrage at Money Crashers. For example, “Start by saving money on start-up costs. Investigate your options to acquire used computer equipment, office furniture, and other supplies,” he says.

“You can also consider delaying hiring as one of a number of strategies to trim expenses,” adds Schrage. Running a business solo can save you a great deal of money, as long as you’re willing to put in the work.”

Cutting costs can significantly free up your small business’s cash flow. Simple initiatives such as keeping an eye on overhead expenses such as rent and travel, and shopping for competitive prices among suppliers can make a big difference.

Lastly, expand with caution. “In addition to your budget and income and expense projections, you should have a plan in place as to how and when you plan to expand,” explains Schrage. “The expand-at-all-costs business model is not very effective. Once you’ve got larger cash reserves and more experience in your industry, then you can be a little more aggressive in terms of growth.” Expanding through your business’s own cash flow is often an attractive alternative to outside debt or equity financing.

Cash flow resources available online:

The U.S. Chamber of Commerce has information on preparing a sales forecast and an online cash flow budget worksheet.
Microsoft Office has a free template online for creating a cash flow statement.
Score.org provides a free template for a 12-month cash flow projection.
The U.S. Small Business Administration provides guidelines for 7(a) loans (the most basic and most used within the SBA program), for starting, acquiring and expanding a small business.
Dun & Bradstreet provides information on establishing, building and monitoring business credit.

April 26, 2012 Today's Business, , , , , , , , , , , 6 Read more >

Cash Flow Best Practices: Four Ways to Improve Day-to-Day Money Management

Cash Flow Best Practices: Four Ways to Improve Day-to-Day Money Management
By Sherron Lumley.

When a business has more money coming in than going out, that’s positive cash flow. Ideally, this is the zone in which a small business could operate forever, like a perpetual motion machine. Even though understanding cash flow seems simple, the day-to-day reality of it can cause mayhem. What to do when a customer payment is in the pipeline for next month, but employees must be paid on Friday, raw materials purchased next week, and the electricity bill taken care of by 5:00 p.m. today? These are the do-or-die questions of cash flow.

According to business information giant Dun and Bradstreet, 90 percent of small business failures are caused by poor cash flow. That’s why creating a cash flow budget, maintaining a cash reserve, getting paid on time, and managing expenses are critical policies to keep your small business successful.

Cash flow management would appear simple except for one major complication, and that’s credit. Accounts receivable and accounts payable are by-products of credit arrangements and the length of time between money paid and money received is called the cash conversion cycle. In a nutshell, cash flow management is about minimizing this cash conversion cycle. The ins and outs of cash flow fill some hefty tomes of financial literature, but here are four simple best practices to improve day-to-day money management for small businesses.

PQ_CashFlow.jpgFirst, make a plan

“The first requirement is an effective budget. If you don’t know what your cash flow is, it will be difficult to manage. Both your budget and your projections should be reviewed and adjusted on a timely basis,” says Andrew Schrage, former hedge fund analyst and founder of Money Crashers, a financial advice website.

The plan, otherwise known as a cash flow budget, is a way to project your business’s cash inflows and outflows over a defined period of time, say six months. The U.S. Chamber of Commerce provides a free download of a cash flow budget worksheet with relevant categories and explanations of what you need to do to prepare a cash flow budget. You start with the current cash, add the projected cash inflows, and then subtract the cash outflows to get your cash flow bottom line.

Have a contingency plan (or two)

In order to anticipate cash inflow, a sales forecast is needed, which can be based on recent revenues, seasonal sales, or market research. It’s important to have several projections, including best-case and worst-case sales scenarios, with a contingency plan of how to respond to these different situations. In the event sales are lower than expected or an unforeseen crisis happens, be prepared by maintaining a cash reserve, advises Dun and Bradstreet. Have alternate sources of cash for when unexpected needs arise, and get to know your bankers before you need a loan from them.

“If you’re in a business with inventory, or if you have employees, you should have a six-month cash reserve,” advises SCORE.org, a non-profit entrepreneurial mentor organization that works in conjunction with the U.S. Small Business Administration.

Managing inventory—mind the gap

The cash conversion cycle breaks down into three categories: accounts payable, accounts receivable, and inventory. Too much or obsolete inventory leads to negative cash flow. Although some cash is going to have to be spent to have inventory on hand, clearly, the less inventory sitting around and becoming obsolete, the better. A closer look: The Inventory Conversion Period (ICP) refers to the length of time between the purchase of raw material and the sale of the finished product. Since the business must wait for the sale, then wait some more for the accounts receivable to be converted to cash; any money tied up in maintaining inventory becomes a drag on cash flow. Conversely, a business can temporarily boost its coffers by waiting until the end of the reporting period to pay its own bills.

If possible, wait 30 or 60 days to pay suppliers and ask for a discount for early payment. “1

You know that you can improve cash flow by slowing down your payment of accounts payable,” says Sam Thacker, writing for Dun & Bradstreet. Thacker is a partner in the Austin, Texas based financial consulting firm, Business Finance Solutions, which assists small businesses with financing challenges.

The flip side of the ICP is the Receivable Conversion Period (RCP), which is the time lag between selling on credit and receipt of cash for the accounts receivable. When customers or business partners show stable or positive trends in payment and avoid delinquency, expand their credit line to encourage revenue growth.

“Having a good handle on your accounts receivable is very critical to improving your cash flow, especially during tough economic times when everyone else is slowing down their payables,” Thacker points out.

Cut costs and expand with caution

“The more money you can save, the less you will need to rely on outside investors,” advises Schrage at Money Crashers. For example, “Start by saving money on start-up costs. Investigate your options to acquire used computer equipment, office furniture, and other supplies,” he says.

“You can also consider delaying hiring as one of a number of strategies to trim expenses,” adds Schrage. Running a business solo can save you a great deal of money, as long as you’re willing to put in the work.”

Cutting costs can significantly free up your small business’s cash flow. Simple initiatives such as keeping an eye on overhead expenses such as rent and travel, and shopping for competitive prices among suppliers can make a big difference.

Lastly, expand with caution. “In addition to your budget and income and expense projections, you should have a plan in place as to how and when you plan to expand,” explains Schrage. “The expand-at-all-costs business model is not very effective. Once you’ve got larger cash reserves and more experience in your industry, then you can be a little more aggressive in terms of growth.” Expanding through your business’s own cash flow is often an attractive alternative to outside debt or equity financing.

Cash flow resources available online:

The U.S. Chamber of Commerce has information on preparing a sales forecast and an online cash flow budget worksheet.
Microsoft Office has a free template online for creating a cash flow statement.
Score.org provides a free template for a 12-month cash flow projection.
The U.S. Small Business Administration provides guidelines for 7(a) loans (the most basic and most used within the SBA program), for starting, acquiring and expanding a small business.
Dun & Bradstreet provides information on establishing, building and monitoring business credit.

April 23, 2012 Today's Business, , , , , , , , , , , 41 Read more >

Incentives Expert Q & A: How to Motivate Employees When Money is Tight

Incentives Expert Q & A: How to Motivate Employees When Money is Tight
by Jen Hickey.

To get some ideas on how small business owners can motivate workers when cash is in short supply, business writer Jen Hickey spoke with Cindy Ventrice, the author of Make Their Day: Employee Recognition that Works and president of Potential Unlimited, which offers consulting, speaking and training to help companies create a positive work environment.

JH: How do “recognition” and “reward” function in the workplace?

CV: Recognition is an act between two people. It’s a one-on-one interaction between manager and employee that demonstrates “we value you.” It has an emotional component with lasting value. A reward is a tangible gift for something an employee accomplishes. Rewards are great if they’re tied to recognition. Giving a reward meant to act as recognition is much more short lived.

JH: What are some examples of recognition?

CV: From research I’ve done asking employees about memorable recognition experience, I’ve found it breaks down into four elements:

Praise: Giving employees positive feedback for the work they’re doing.
Appreciation: Thanking an employee for his/her efforts. This is not as performance-based as praise.
Respect: This element must always be present for recognition to take place. Without respect, praise and appreciation won’t work.
Opportunity: Find something that employee wants to learn and give them the opportunity to do that (e.g., special project, challenging assignment).

I’ve experienced a lot of push back from managers who think their employees are too busy and will not see an opportunity for a new project or special assignment as a form of recognition. Employees want their manager to know what’s important to them and to provide them with the opportunities to grow. It shows how well they’re valued.
JH: Why is it important to incorporate recognition into incentives?

CV: An incentive is neither recognition nor reward, but you can add recognition to the delivery of an incentive. An incentive is meant to encourage a certain kind behavior (e.g. getaway trip for top sales), whereas a reward is something given after the fact in appreciation for certain behavior a manager wants to reinforce but did not necessarily promise ahead of time (e.g., a 10-year anniversary gift). Both incentives and rewards have more value when given with recognition. It’s important to find out what an employee has contributed to the organization before giving a tangible reward/incentive.
PQ_QAcindyventrice.jpgJH: What type of nonmonetary reward/recognition can a small business owner offer employees?

CV: Low-cost recognition and rewards have proven to be very effective. Through employee surveys, I’ve found that 57 percent of meaningful recognition had no cost. Hand-written notes can be very powerful. People tend to hold onto them for many years and look back to them for encouragement. Other examples include keeping a white board in the break room for employees to write messages of encouragement or celebrate successes, remembering details about an employee’s project, and symbolic awards. Offering flextime or telecommuting could be an incentive or reward. This requires a certain amount of responsibility on an employee’s part, and a manager may want to set some parameters before offering such incentives.

A good manager knows what’s important to the individual and has tailored rewards to match. Flex-time/telecommuting is a great incentive for those in the back office, but may not work for an employee who needs to meet face to face frequently with customers. A manager must know his/her employees to tailor rewards to an individual’s needs/preferences.
JH: What are some concrete steps a business can take to foster inherent recognition in the workplace?

CV: Showing support and acknowledging employee efforts build inherent recognition in the workplace. Employees see recognition from their manager even when it’s not the original intent if a respectful work environment exists. The same goes at the organizational level.

A good starting point for a company is to look at its policies/procedures for anything that may create a disrespectful work environment. Conduct an anonymous survey among employees to identify patterns of perceived distrust.

Often times, a manager or organization is unaware of negative messages they’re sending. Saying “we value your opinion” and then not acting on or even acknowledging suggestions made or doing anything that says “we don’t trust you” can have a detrimental effect on recognition.

For example, I worked with a company that installed a key card system for security but employees thought it was to track their coming and going. Good communication was needed to clear this up. It’s important to have these conversations to determine what can be done to foster an environment of trust in the workplace.

Recognition can also come from a business’ standing in the community. A business known for its charitable efforts can foster inherent recognition in the workplace. Ask employees to pick a charity and give them company time off to participate. Positive public relations can provide recognition to employees, and a positive reputation tends to bring in higher caliber employees.

Offering training or classes can be an inexpensive way to show employees they’re valued. For example, I worked with a company that offered English classes to employees who were mostly Spanish-speaking.
JH: Explain the difference between tangible and intangible incentives, and which tend to be better motivators?

CV: A tangible incentive is something that can be held in your hand or put into a bank account. Time off is considered semi-tangible, as it can’t be held but can be measured. Praise, appreciation and respect are intangible incentives.

Refusing to let someone telecommute when work can easily be done from home or falling below industry standard for pay and benefits can be de-motivators. If your business can’t afford to offer paid time off, you must work extremely hard to find incentives to offset this.

For example, a company with a lot of students could offer unpaid time off for studying for exams. Or one with a lot of employees with school-age children could offer flextime or to work from home when a child’s sick.
JH: Why is it important to help employees identify their purpose in the workplace?

CV: Every employee should understand how he or she contributes to the company’s success. In a small business, it is much easier to connect employees to what they do and how they contribute to a company’s success. It’s one of the greatest strengths of small businesses, and why so many people love to work for them. Employees can see how they make a difference and have far more opportunities to build skills.

Think of each employee as cast members in a play. Production suffers if not every member—from the main characters to the stagehands—is performing his/her role well. This puts people with different responsibilities on equal footing.

It’s important to create a narrative for your business and tie that back to what each employee does. Encourage pride among employees for each part they play in bringing your products or services to customers.

April 14, 2012 Today's Business, , , , , , , , , 19 Read more >

Incentives Expert Q & A: How to Motivate Employees When Money is Tight

Incentives Expert Q & A: How to Motivate Employees When Money is Tight by Jen Hickey.

To get some ideas on how small business owners can motivate workers when cash is in short supply, business writer Jen Hickey spoke with Cindy Ventrice, the author of Make Their Day: Employee Recognition that Works and president of Potential Unlimited, which offers consulting, speaking and training to help companies create a positive work environment.


JH: How do “recognition” and “reward” function in the workplace?

CV: Recognition is an act between two people. It’s a one-on-one interaction between manager and employee that demonstrates “we value you.”  It has an emotional component with lasting value. A reward is a tangible gift for something an employee accomplishes. Rewards are great if they’re tied to recognition. Giving a reward meant to act as recognition is much more short lived.

JH: What are some examples of recognition?

CV: From research I’ve done asking employees about memorable recognition experience, I’ve found it breaks down into four elements:

  • Praise: Giving employees positive feedback for the work they’re doing.
  • Appreciation: Thanking an employee for his/her efforts. This is not as performance-based as praise.
  • Respect: This element must always be present for recognition to take place.  Without respect, praise and appreciation won’t work.
  • Opportunity: Find something that employee wants to learn and give them the opportunity to do that (e.g., special project, challenging assignment).

I’ve experienced a lot of push back from managers who think their employees are too busy and will not see an opportunity for a new project or special assignment as a form of recognition. Employees want their manager to know what’s important to them and to provide them with the opportunities to grow. It shows how well they’re valued.

JH: Why is it important to incorporate recognition into incentives?

CV: An incentive is neither recognition nor reward, but you can add recognition to the delivery of an incentive. An incentive is meant to encourage a certain kind behavior (e.g. getaway trip for top sales), whereas a reward is something given after the fact in appreciation for certain behavior a manager wants to reinforce but did not necessarily promise ahead of time (e.g., a 10-year anniversary gift). Both incentives and rewards have more value when given with recognition. It’s important to find out what an employee has contributed to the organization before giving a tangible reward/incentive.

PQ_QAcindyventrice.jpgJH: What type of nonmonetary reward/recognition can a small business owner offer employees?

CV: Low-cost recognition and rewards have proven to be very effective. Through employee surveys, I’ve found that 57 percent of meaningful recognition had no cost. Hand-written notes can be very powerful. People tend to hold onto them for many years and look back to them for encouragement. Other examples include keeping a white board in the break room for employees to write messages of encouragement or celebrate successes, remembering details about an employee’s project, and symbolic awards. Offering flextime or telecommuting could be an incentive or reward. This requires a certain amount of responsibility on an employee’s part, and a manager may want to set some parameters before offering such incentives.

A good manager knows what’s important to the individual and has tailored rewards to match. Flex-time/telecommuting is a great incentive for those in the back office, but may not work for an employee who needs to meet face to face frequently with customers. A manager must know his/her employees to tailor rewards to an individual’s needs/preferences.

JH: What are some concrete steps a business can take to foster inherent recognition in the workplace?

CV: Showing support and acknowledging employee efforts build inherent recognition in the workplace. Employees see recognition from their manager even when it’s not the original intent if a respectful work environment exists. The same goes at the organizational level.

A good starting point for a company is to look at its policies/procedures for anything that may create a disrespectful work environment. Conduct an anonymous survey among employees to identify patterns of perceived distrust.

Often times, a manager or organization is unaware of negative messages they’re sending. Saying “we value your opinion” and then not acting on or even acknowledging suggestions made or doing anything that says “we don’t trust you” can have a detrimental effect on recognition.

For example, I worked with a company that installed a key card system for security but employees thought it was to track their coming and going. Good communication was needed to clear this up. It’s important to have these conversations to determine what can be done to foster an environment of trust in the workplace.

Recognition can also come from a business’ standing in the community. A business known for its charitable efforts can foster inherent recognition in the workplace. Ask employees to pick a charity and give them company time off to participate. Positive public relations can provide recognition to employees, and a positive reputation tends to bring in higher caliber employees.

Offering training or classes can be an inexpensive way to show employees they’re valued. For example, I worked with a company that offered English classes to employees who were mostly Spanish-speaking.

JH: Explain the difference between tangible and intangible incentives, and which tend to be better motivators?

CV: A tangible incentive is something that can be held in your hand or put into a bank account. Time off is considered semi-tangible, as it can’t be held but can be measured. Praise, appreciation and respect are intangible incentives.

Refusing to let someone telecommute when work can easily be done from home or falling below industry standard for pay and benefits can be de-motivators. If your business can’t afford to offer paid time off, you must work extremely hard to find incentives to offset this.

For example, a company with a lot of students could offer unpaid time off for studying for exams. Or one with a lot of employees with school-age children could offer flextime or to work from home when a child’s sick.

JH: Why is it important to help employees identify their purpose in the workplace?

CV: Every employee should understand how he or she contributes to the company’s success. In a small business, it is much easier to connect employees to what they do and how they contribute to a company’s success.  It’s one of the greatest strengths of small businesses, and why so many people love to work for them. Employees can see how they make a difference and have far more opportunities to build skills.

Think of each employee as cast members in a play. Production suffers if not every member—from the main characters to the stagehands—is performing his/her role well. This puts people with different responsibilities on equal footing.

It’s important to create a narrative for your business and tie that back to what each employee does. Encourage pride among employees for each part they play in bringing your products or services to customers.

March 24, 2012 Today's Business, , , , , , , , , 0 Read more >