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Time Management Tips for Small Business Owners

Time Management Tips for Small Business Owners

Few would argue that being a small business owner can be enormously demanding. Whether it’s dealing with vendors, managing staff, or serving customers, finding the right balance for these tasks can be a formidable challenge. While some try to handle the time management dilemma by working overtime every day, this kind of solution can often lead to burnout. How then can business owners successfully manage their time without sacrificing their health and personal lives?

Following are time management tips from several small business owners who have faced this challenge:

1. Don’t be afraid of shutting down technology to complete a project.

Because technology allows us to instantaneously access information via an unending assortment of mobile or wireless devices, it can be tempting to constantly check for e-mails or alerts—and then just as quickly respond to them. Try to avoid this trap. Unless you are waiting for a time-sensitive response from a client, your time is probably better spent attending to other aspects of your business.

Diana Ennen, president of Virtual Word Publishing, an online PR/marketing firm that handles book authors, wholeheartedly agrees.

“You absolutely need to focus and turn off all notifications when working on projects,” she urges. “That means turn off your cell phone, social media, Skype, or e-mail notifications. Log out of Outlook so that way you won’t see new e-mails coming in. If it helps, set a timer and work for several hours.”

To prove her point, Ennen, who works with four subcontractors regularly, says she often does this when writing press releases and articles for clients. As a result, she can complete the job easily. “It’s so much better because I’ve committed to it and am fully focused,” she says.

2. Carve out a block of time to complete jobs.

If you want to use your time productively, schedule in your calendar a block of time to work on a key job or project. This way you will be able to concentrate on what needs to be done without scattering your energies or letting your attention wander to a host of other things.

Time_Management_PQ.jpg

Dana Manciagli, a Bellevue, Washington-based career consultant with her own business, says this is an imperative.

“Schedule your important work as an appointment to yourself,” advises Manciagli, who previously worked at Microsoft as a worldwide sales manager. “If you need to write proposals that you are not getting to, open your calendar and make an appointment with yourself for it. If you need to remind yourself which ones to work on, put more details in the body of the invitation.”

3. Master the art of saying no.

Cultivating potential customers and associates at meetings or networking events is good for business. But if your attendance prevents you from planning your monthly budget or training new personnel, you might have to decline the invitation to focus on the task on hand. Be strategic when weighing the pros and cons of invitations as well as favors that others may ask of you.

“Learn how to say no,” insists Manciagli. “I made a lot of mistakes in my first year [as a small business professional] and this is one of them. Ask yourself: Which line item of my P&L will benefit immediately if I attend this event? Cost-Savings? And within revenue, be more specific with yourself. Will new clients be there? Will I get leads? If not, say ‘no, thank you.’”

4. Get up early.

It might be a platitude but the old saying, “Early to bed and early to rise makes a man, healthy, wealthy and wise,” might have some validity for business owners seeking to better manage their time. Drew Stevens, owner of Stevens Consulting Group, which helps small struggling healthcare professionals improve their revenue, endorses this takeaway as a great way to get things done.

With the extra time, Stevens says small business owners can review a perplexing client issue or look over notes or PowerPoint slides for an upcoming board meeting. “I remember getting up at 5 a.m. to get my master’s work done before I commuted to work,” he says. “And if you do commute, do some work on the train rather than read a book or sleep.”

5. Create a to-do list.

Sometimes scheduling time to complete a project is not enough. You might need to actually write out a to-do list on a regular basis. Then once you’re finished with each task, just cross it off until you get to the next job. It might sound like an obvious time management solution for small business owners, but not too many do it, says Essen. However, if you don’t adhere to this simple best practice, you might be subjecting yourself to a lot of all-nighters.

“To feel more in control, make this a habit—even on your busiest days,” she advises. “It takes away the feeling of being overwhelmed and the fear of forgetting something. For me, it has been instrumental as well in completing larger projects, such as redoing my website. It’s amazing how freeing it is to take large projects a chunk at a time. And if they don t get done, put it on the list for tomorrow.”

6. Learn to delegate.

As a small business owner, it is not incumbent upon you to do everything yourself. Lighten your load by learning to assign some duties to your staff or others who can help you.

Says Stevens: “There is no reason to be involved in everything. For example, I operate a very busy coaching business and recognize I cannot do it all. To that end, I hire freelancers for my graphics, my invoicing, my collections and even printing. This allows me to focus on my most vital aspect—clients.”

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

Five Steps to Business Credit

Operating without loans can have significant impacts on your cash flow and working capital and does nothing extra to build your business credit. Five Steps to Business Credit

Maintaining good business credit is essential, as a bad credit rating may severely hinder your business growth and expansion. Without good business credit, banks can be less likely to accept your loan applications. Operating without loans can have significant impacts on your cash flow and working capital and does nothing extra to build your business credit.

 

In addition, if you skirt your financial responsibilities, it’s unlikely that suppliers will extend your business a trade or credit account. That means that you may lose the ability to leverage the 30-, 60-, and 90-day terms of invoices as short-term loans. In addition, many businesses enjoy discounts provided by suppliers to encourage prompt payment; cash customers usually do not get such discounts.

 

If your business does not have good credit, you can take steps to repair it. The first step to building your business credit is to contact your creditors to set up payment schedules. Such schedules should be reasonable and fair to both your business and the creditor. If you have some history of paying bills promptly, you may find that creditors are willing to set up alternative payment schedules. In addition, successful completion of a payment schedule often leads to a continuing relationship between businesses and creditors.

 

Late payments or unpaid invoices can often be traced back to housekeeping or paperwork issues rather than cash flow problems. Even these types of mistakes can affect your business credit.

To determine the root cause of the problems ask yourself:

  • Are your creditors sending invoices to the correct address and person?
  • Are your payment checks being sent to and received by the correct department and person?
  • Are all parties clear on when payments must be made?

 

Additionally, listed below are steps you can take to improve your business’s creditworthiness:

  • Always pay on time. The ability to repay loans promptly has a great impact on business credit scores. You should endeavor to always pay within the terms you have with your suppliers. On-time payments are the most direct way to improve a business credit rating.
  • Pay your biggest bills first. Some business credit scores are dollar weighted, such as the PAYDEX ® Score. Therefore, if you are consistently paying all of your smaller bills but neglecting your largest, your Paydex score can suffer.
  • If timely payments to suppliers and lenders are not included in your business credit profile, your business may not get the credit it deserves for paying your bills on time. You should monitor your business credit profile at least twice per year to ensure that vendor payment relationships are included.
  • Stay on top of your business credit profile. You must ensure that your business credit profile information is complete and accurate. Address any inaccuracies immediately. Certain business credit companies offer customer services and online tools that can help you update and manage such details.
  • Contribute to your company’s credit profile. You can communicate to the credit bureaus as well. The more information you give to credit bureaus like D&B, the more robust your business credit profile will be. In addition, try to choose suppliers and vendors that report their experiences to credit bureaus, which can also boost your profile.

Many businesses are feeling the pressure of tightened credit requirements. However, by carefully planning and executing your plan, you can help fix and improve your business credit.

February 8, 2014 Today's Business, , , , , , , , , , , , , , , , , , 0 Read more >

Small Business Owners Management Tips

Small Business Owners Management Tips

Small Business Owners Management Tips

Small Business Owners Management Tips

By Iris Dorbian.

Few would argue that being a small business owner can be enormously demanding. Whether it’s dealing with vendors, managing staff, or serving customers, finding the right balance for these tasks can be a formidable challenge. While some try to handle the time management dilemma by working overtime every day, this kind of solution can often lead to burnout. How then can business owners successfully manage their time without sacrificing their health and personal lives?

Following are time management tips from several small business owners who have faced this challenge:

1. Don’t be afraid of shutting down technology to complete a project.

Because technology allows us to instantaneously access information via an unending assortment of mobile or wireless devices, it can be tempting to constantly check for e-mails or alerts—and then just as quickly respond to them. Try to avoid this trap. Unless you are waiting for a time-sensitive response from a client, your time is probably better spent attending to other aspects of your business.

Diana Ennen, president of Virtual Word Publishing, an online PR/marketing firm that handles book authors, wholeheartedly agrees.

“You absolutely need to focus and turn off all notifications when working on projects,” she urges. “That means turn off your cell phone, social media, Skype, or e-mail notifications. Log out of Outlook so that way you won’t see new e-mails coming in. If it helps, set a timer and work for several hours.”

To prove her point, Ennen, who works with four subcontractors regularly, says she often does this when writing press releases and articles for clients. As a result, she can complete the job easily. “It’s so much better because I’ve committed to it and am fully focused,” she says.

2. Carve out a block of time to complete jobs.

If you want to use your time productively, schedule in your calendar a block of time to work on a key job or project. This way you will be able to concentrate on what needs to be done without scattering your energies or letting your attention wander to a host of other things.

Dana Manciagli, a Bellevue, Washington-based career consultant with her own business, says this is an imperative.

“Schedule your important work as an appointment to yourself,” advises Manciagli, who previously worked at Microsoft as a worldwide sales manager. “If you need to write proposals that you are not getting to, open your calendar and make an appointment with yourself for it. If you need to remind yourself which ones to work on, put more details in the body of the invitation.”

3. Master the art of saying no.

Cultivating potential customers and associates at meetings or networking events is good for business. But if your attendance prevents you from planning your monthly budget or training new personnel, you might have to decline the invitation to focus on the task on hand. Be strategic when weighing the pros and cons of invitations as well as favors that others may ask of you.

“Learn how to say no,” insists Manciagli. “I made a lot of mistakes in my first year [as a small business professional] and this is one of them. Ask yourself: Which line item of my P&L will benefit immediately if I attend this event? Cost-Savings? And within revenue, be more specific with yourself. Will new clients be there? Will I get leads? If not, say ‘no, thank you.’”

4. Get up early.

It might be a platitude but the old saying, “Early to bed and early to rise makes a man, healthy, wealthy and wise,” might have some validity for business owners seeking to better manage their time. Drew Stevens, owner of Stevens Consulting Group, which helps small struggling healthcare professionals improve their revenue, endorses this takeaway as a great way to get things done.

With the extra time, Stevens says small business owners can review a perplexing client issue or look over notes or PowerPoint slides for an upcoming board meeting. “I remember getting up at 5 a.m. to get my master’s work done before I commuted to work,” he says. “And if you do commute, do some work on the train rather than read a book or sleep.”

5. Create a to-do list.

Sometimes scheduling time to complete a project is not enough. You might need to actually write out a to-do list on a regular basis. Then once you’re finished with each task, just cross it off until you get to the next job. It might sound like an obvious time management solution for small business owners, but not too many do it, says Essen. However, if you don’t adhere to this simple best practice, you might be subjecting yourself to a lot of all-nighters.

“To feel more in control, make this a habit—even on your busiest days,” she advises. “It takes away the feeling of being overwhelmed and the fear of forgetting something. For me, it has been instrumental as well in completing larger projects, such as redoing my website. It’s amazing how freeing it is to take large projects a chunk at a time. And if they don t get done, put it on the list for tomorrow.”

6. Learn to delegate.

As a small business owner, it is not incumbent upon you to do everything yourself. Lighten your load by learning to assign some duties to your staff or others who can help you.

Says Stevens: “There is no reason to be involved in everything. For example, I operate a very busy coaching business and recognize I cannot do it all. To that end, I hire freelancers for my graphics, my invoicing, my collections and even printing. This allows me to focus on my most vital aspect—clients.”

February 8, 2014 Today's Business, , , , , , , , , , , , , 0 Read more >

Think Before You Leap: Seven questions to ask before making a big decision

Think Before You Leap: Seven questions to ask before making a big decision
by Heather Chaet.

When deciding to use a beautiful photo of Mount Fuji or that funny cat picture as your screensaver or to have the Cobb salad or a turkey sandwich for lunch, a simple coin flip will do. But, for big decisions that affect the direction and success of your company, navigating which way to head when you reach that fork in the proverbial road means you need something more than the quarter in your pocket.

LookBeforeLeap_PQ.jpgWhat is your decision-making GPS system? Small business owners are confronted perhaps daily with large dilemmas or issues to resolve—having a method to make a smart choice streamlines and focuses those often daunting determinations you need to make. Here’s a checklist of seven questions to ask before making that big decision.

1. What is best in the long term?

When making a big decision, thinking beyond the “right here, right now” is a vital first step toward avoiding a big stumble. “It’s easy to make decisions based on what’s [simple] at the moment or what makes my ego feel good. But those are rarely the right decisions,” says Ian Ippolito, founder and CEO of vWorker.com, which connects employers and entrepreneurs with virtual workers. Sometimes it helps to add a specific time frame on that question, as Paige Arnof-Fenn, 
founder and CEO
 of Mavens & Moguls, a global marketing strategy consulting firm, suggests. “[One of] the main things I think about is
 will it matter six months down the road,” says Arnof-Fenn. Thinking in terms of a finite time horizon often provides better insight to the right solution.

2. What is the return on investment?

For any small business owner, evaluating how this choice will impact your bottom line is essential. Christy Cook, president and founder of Teach My, the maker of award-winning learning kits for children, agrees. “I am not a ‘numbers’ girl, but over the years, I have trained myself to ask 
the same question every time: What is the return on investment? If small business owners don’t measure
the ROI, decisions will be made that could put the business into serious
 financial jeopardy.” Fred Deblasi, cofounder and CEO of HooplaDoopla.com, the online money saving site, says ROI goes beyond just finances, “I think this is a very common question for business at any stage, as it can cost money and time to not get a return on something—[whether it is] a marketing decision or even hiring a new employee.”

3. Are there any other decisions that need to be made before this one?

All too often when running a small business, many issues must be dealt with at the same time. Prioritizing which one needs your immediate attention is as tough and as important as figuring out the right answers to those decisions. “For the last year, we’ve been implementing a raft of changes, and we
 always need to weigh the pros (and any cons) of the change and see if
 anything else is needed more urgently,” says Sandip Singh, CEO and founder of the fundraising website GoGetFunding.com.

4. What’s the worst thing that can
happen if I make a mistake (and can I live with it)?

Just as fundamental as exploring the benefits to any change, looking at the worst-case scenario can provide a prime perspective. “We use the same advice in running our [own] business as we give to the business
owners we work with,”
offers 
Jim Stewart, founder and CEO of ProfitPATH, a strategy consulting firm, “For them and us the main question is ‘What’s the worst thing that can 
happen if this goes wrong?’”
 Being able to evaluate how your company will handle a situation if projections are incorrect or unexpected additional funds are needed to complete an expansion is crucial.

5. What will happen if I don’t do this?

Stewart often asks this after tackling the doomsday situation. Envisioning the alternative—doing nothing—can lead to a more definite outlook on the issue, perhaps even providing alternative choices not considered before or a totally new path your company could take to achieve a similar result.

http://smallbusinessonlinecommunity.bankofamerica.com/community/running-your-business/generalbusiness/blog/2012/10/04/think-before-you-leap-seven-questions-to-ask-before-making-a-big-decision

January 2, 2014 Today's Business, , , , , , , , 0 Read more >

Small Business Thinking Out of Crisis-Mode

Small Business Thinking Out of Crisis-ModSmall Business Thinking Out of Crisis-Mode

by Erin McDermott.

 

Small Business Thinking Out of Crisis-Mode. Your business has weathered a tough and challenging cycle. Now it’s time to start breaking out of crisis mode. How do you do it?  As with any kind of upheaval, it’s difficult to get past fears born out of a bad experience. A brush with the demise of a business falls into its own traumatic category, with your professional, financial, legal, and personal life seemingly on the line. But how you deal with the aftermath of that tough situation is important, too. Afraid of committing to an expansion or new segment of customers? Lingering resentments over what went wrong and who’s to blame? Unable to lead staffers in a clear direction?

 

Troy Hazard compares it to what he’s learned from racing cars. The serial entrepreneur, business consultant, and author has been taking classes at tracks for years. But one instructor’s advice resonated with both of his passions. The lesson: Don’t obsess over the first turn, or getting into an accident. Think about what you intend to do to attack the curve that’s two turns ahead, because that’s what will help you win the race. Small Business Thinking Out of Crisis-Mode

 

“The biggest challenge most businesses have now is the hit they took back in 2008,” he says. “There’s such a fear about ‘What if it happens again?’ And the answer is: It’s going to happen again. It’s happened every seven to 10 years for the last 70 years. The problem is we’re so reactive to things that are drama today instead of focusing on a strategy for tomorrow.”

 

His advice to clients: Take time every day—“walking the dog, even that 15 minutes in the shower”—to think about where you want to be in five years or 10 years, and what changes you might make now to reach that goal. Small Business Thinking Out of Crisis-Mode

 

Jeffrey Kadlic works with companies in the wake of a crisis. His small business private equity fund, Evolution Capital Partners, based in Cleveland, uses a system of five “pillars” to take a company out of what he calls “no man’s land.” Small Business Thinking Out of Crisis-Mode

 

Kadlic’s five steps to getting back to business:

1. Get timely and accurate financials

“You can’t have any sense of what you’re doing or where you’re going until you measure where you’re at and what your performance has been,” Kadlic says. Some important questions: Where do you stand compared to your peer group? How profitable are you really?

 

2. Create a plan

Most companies start with a short-term plan, going out at least a few pay periods to evaluate their cash cycles. Kadlic suggests a 100-day plan, which should be enough time to see tangible results from the changes you’re implementing.

 

3. Put the right people in the right seats

Kadlic equates it to football: How can you create a roster if you don’t yet have a playbook? Once you know the market you’re about to attack, then it’s time to put the right specialists in your lineup to get it done.

 

4. Be transparent

This part can be difficult for a small business owner who’s used to making most of the decisions. But to have your key staff understand where they fit in this new plan is essential, Kadlic explains. “Show them the big picture and how they’re contributing to the results as a whole,” he says. He recommends monthly meetings to show where everyone stands in proximity to their goal. “It gives people a sense of ownership in what’s going on,” he adds.

 

5. Be accountable

Give employees a realistic goal against which they can be measured, he says. It sets expectations for old and new staffers. Plus, if someone isn’t working out as you’re trying to get back on track, those benchmarks make a dismissal less of a surprise to the employee and an easier way to define what a successor will need to do, Kadlic says.

At all of the businesses he’s bought over the years—most of which he’s entered during crisis mode, “because that’s where the opportunity is”—Hazard says he’s implemented not only a routine of not-to-miss Monday morning meetings, but also a “daily huddle” that keeps the focus on what’s down the road. In that 10-minute meet-up, teams from finance to operations come together to answer the question: What are the things you see that are strategic roadblocks for you right now? “It brings up the things that are going to affect the business long-term,” he says, “but it also gives everyone a chance to help overcome these obstacles and collaborate on a solution.” Small Business Thinking Out of Crisis-Mode

 

Hazard likens it to what he’s learned on the racetrack. “It takes the day-to-day issues and turns them into longer-term strategies,” he says. “That’s what changes the culture.” Small Business Thinking Out of Crisis-Mode

November 19, 2013 Today's Business, , , , , , , 0 Read more >

Understanding its advantages and disadvantages of Venture Capital Funding

Understanding its advantages and disadvantages of Venture Capital FundingUnderstanding its advantages and disadvantages of Venture Capital Funding

Understanding its advantages and disadvantages of Venture Capital Funding. Before taking on venture capital, entrepreneurs must ask themselves a fundamental question – “Do you want to be rich or be king?” As Harvard Business School Professor Noam Wasserman explains, it’s difficult for founders to maintain control over their businesses once they take on outside investors. However, without them, such businesses like Twitter and Facebook would likely have never have taken off. For those entrepreneurs who have developed a product with a large untapped market and a potential for rapid, high growth, venture capital (VC) funding makes sense if you’re willing to give up some control and most likely sell your business at the end of the investment period, or fund life-cycle (i.e. when the fund becomes due). However, if you would like to build a generational business, an angel investor may offer more favorable terms that will allow you to receive some equity while maintaining a degree of control.

 

Looking for that big return

“A VC firm does not invest in a business,” explains investment banker Jeff Koons of San Francisco-based Vista Point Advisors. Instead, it invests in a company that will sell for a lot more than it’s worth at the time of the initial investment. And such firms are looking for a big return (up to 20 times the initial investment) in a relatively short amount of time (3 to 10 years, depending on the fund life-cycle). “If your business is growing just 20 to 30 percent per year, VC funding is not for you,” notes Koons. Focusing primarily on the tech sector, Vista Point acts as a broker to bootstrapped entrepreneurs entering the VC world for the first time. “We help them think through the process from valuation to exit,” notes Koons.

 

Defending your interests 

Vista Point vets various VC firms for the best valuation and possible outcome for the entrepreneur. Unlike others in their field, Vista Point only works on the “sell side,” meaning their sole clients are entrepreneurs. They do not work with VC firms on other deals. “VC firms sometimes look for a break in the negotiations on these smaller deals for the promise of future work for the investment bank on more lucrative deals down the road,” cautions Koons. So a good rule of thumb is to ask any investment brokers if they work on the “buy side,” with VC firms, as well.

 

Having sound advice makes all the difference when entering the complex world of equity financing. Joshua Mag, CEO of SquareHook, a content management system provider, consulted a former professor who is an operating partner at a large VC firm before taking on equity from an angel investor in June 2012. “Potential investors want to know what market you’re targeting and its size,” notes Mag. “They’re not going to invest in something that doesn’t produce a large return, so there needs to be a big potential market for your product.” The angel investment allowed Mag to quit his full-time job to focus exclusively on building his business, which included hiring a few employees and seeking development assistance. “My decision to take on capital was a choice of acceleration,” explains Mag. “Had I not taken on the capital, this would have been a slower task.”

 

Equity comes at a price

Mag gave up 20 percent of equity of his company in exchange for the angel investment; however, a VC investor typically wants at least 20 percent ownership in addition to a board seat and the ultimate sale or IPO of your company upon exit. Nevertheless, how much ownership an entrepreneur gives up, whether to a VC or angel investor, is largely determined by the amount of equity the entrepreneur needs, the valuation of the business, and whether it’s the first, second, or third round of investment.

 

Aaron Skonnard, CEO of Layton, Utah-based Pluralsight, grew his company’s online training platform for software developers organically for about a decade before taking $27.5 million in Series A funding in 2012. “We saw periodic interest over the years from investors,” notes Skonnard. “But we thought it was too risky to give up too much control in case we needed to change direction.” It was only when Skonnard and his partners felt they had a solid business model and were set to enter a high-growth mode that they decided to take on VC funding

Shop around

“It wasn’t so much about the money as forging those strategic relationships,” Skonnard points out. “Once we decided, then it became a financial exercise –– how much do we take, how much do we want to sell, and who’s the right partner to go with.” Skonnard and his partners met with five or six VC firms several times before they decided on one they believed would add the most value to their business. “It was our comfort level with the people and personalities that drove our decision more than the financial metrics,” explains Skonnard. “Make sure you’re happy with the people that will be on your board of directors.”

 

Investors provide more than just cash

While the cash infusion helps grow your company, partnering with a VC firms also gives you access to new players in your industry, which in turn helps attract the top talent and increase your market presence. Pluralsight’s traditional model had been to work directly with content producers to build its online training library. But with the funding, it was able to finance the purchase of two online training companies, which doubled its content library in a matter of months. “The Series A really unlocked our ability to make those acquisitions,” Skonnard points out. “We would have never been able to consider that without such funding.”

 

Beyond their connections in financial and sector-specific industries, some VC investors have an entrepreneurial background as well. Brendan Anderson bought his first business in 1995 and has helped manage and invest in many more since then. In 2006, he co-founded Cleveland, Ohio-based Evolution Capital, which invests in $5- to $6-million companies that have at least $500,000 in free cash flow. “We are point-in-time investors looking for entrepreneurs/founders with a vision creating something compelling in the market,” explains Anderson. He and his partners then work with these entrepreneurs to implement the steps needed for growth.

 

These include getting the entepreneurs’ financials in order to develop a plan for growth, which in turn enables these businesses to attract the best people. Next is transparency, making sure the entrepreneur communicates his vision and shares day-to-day operational data with employees. Finally, holding the entrepreneur and employees accountable for tasks that will move their company forward. “Once these best practices are implemented, they’re happy with the results,” Anderson points out. “But the process of doing it is usually painful.”

 

“The founder/entrepreneur still owns a major piece of the business even after we invest,” Anderson points out. However, Evolution Capital typically controls the majority interest (more than 50%) and maintains the right to change management and control their exit (with a typical investment ranging from 3-7 years). “We want to build businesses that continue to grow long after our ownership,” he says.

 

Understanding terms, conditions, and valuation

If you’re considering taking on equity, it’s critical to understand the terms and conditions of any investment agreement. Whether the entrepreneur maintains some control is largely determined by how the deal is structured. Mag decided to go with an angel investor, who was looking for a longer investment with annual dividends rather than a large payout at the end of a VC fund life-cycle. “Taking on VC means you need to have an exit strategy: IPO, sell, or dividends,” notes Mag. “Most VCs want a full exit to collect on their return within a period that is reasonable.”

And that’s largely determined by when a business becomes part of the fund. “You want to be invested as soon as possible in the life of the fund,” explains Koons. “If there’s only two years left before the VC firm needs to return capital to their limited partners (i.e. investment occurs in year five of a seven year fund), a company could be sold for a loss or spun out even if it’s achieving its growth projections.” Understanding its advantages and disadvantages of Venture Capital Funding

 

Typically, investors are looking for preferred terms that will position them better than other parties (e.g. paid first upon exit, right of first refusal, put option, liquidation preference). Pluralsight has a minority interest deal with their VC investment firm, which has allowed Skonnard and his partners to only give up two seats on their seven-seat board. “The founders still control the board and the ultimate direction of our strategy,” notes Skonnard. “While we have a very healthy relationship with our new board members, we didn’t want to give up too much control.” Understanding its advantages and disadvantages of Venture Capital Funding

 

It’s also important to understand valuation, as you need to know what your company is worth in order to negotiate the best terms. “One way to valuate your business is to look at your competitors to see what they sold for upon exit,” explains Mag. There are a number of public sources and tools that list industry comparables. This will also help figure out how much equity you’ll need to put into your business to achieve your growth plans. “That investment defines what your business will be valued at,” explains Mag. “By taking on more than you need, your business is likely losing equity unnecessarily.” Understanding its advantages and disadvantages of Venture Capital Funding

 

November 19, 2013 Today's Business, , , , , , , , , , , , , , , , 0 Read more >

How Much To Ask When Applying For A Small Business Loan

How Much To Ask When Applying For A Small Business LoanHow Much To Ask When Applying For A Small Business Loan

It’s a question that besets many small business owners when applying for business loans: how much should I ask for? More so than deciding on which lender to approach, not having a sound estimate of how much capital you need to borrow could lead to cash flow problems—which could lead to your business shutting down. How Much To Ask When Applying For A Small Business Loan

How then can small business owners determine how much financing they need when approaching lenders? What factors should they take into account when calculating the ideal sum of their business loan?

Be clear on the reason for the loan

Are you launching a startup? Or do you need the loan as additional working capital to make improvements in your business? Answering yes to either question is critical when deciding on how much you need.

Denise Beeson, a small business-funding consultant who previously lent her services to a local SBA-administered Small Business Development Center, a provider of mostly free resources and training to small business entrepreneurs, in Santa Rosa, California, always asks her small business clients the previous questions whenever they come to her about wanting to apply for loans. For those with startups, she does issue a caveat: “If this is a start-up, I remind them that an SBA preferred lender does not fund startups,” says Beeson “We then discuss where they may find funding, such as peer-to-peer lending options, tapping into their personal resources, or asking family and friends.”

If the small business owner is seeking to buy a business from another, Beeson notes that the seller may fund the loan. How Much To Ask When Applying For A Small Business Loan

 

Also, if the small business owner is seeking working capital for myriad reasons, which might include increasing the marketing budget, making renovations, or paying off debt, Beeson says she will ask clients if they can produce documentation verifying that the debt was accrued as a result of the business.

 

Without providing the necessary paper trail needed to accompany a loan application, small business owners could hurt their chances of getting financing from a lender, insists Beeson. To prove her point, she offers the following anecdote:

 

“Recently a restaurant client was interested in an SBA loan to consolidate debt based on improvements to the premises,” she recalls. “They had almost $100,000 in debt including credit card debt that was claimed as accumulated to the business during the recession. However, when we looked at the statements, the entries were not clear when and what had been done. In addition they could not produce any paid invoices from contractors or suppliers linked to the credit card statements. Unfortunately, we could not move forward because the borrower could not provide the needed documentation to the preferred SBA lender.” How Much To Ask When Applying For A Small Business Loan

Consult trusted financial professionals

If you are unsure or confused about how much you should ask for when applying for a business loan, it might behoove you to visit a financial expert such as a reliable bookkeeper or a CPA that regularly deals with small business clients. By reviewing your financials, he or she can then approximate how much financing you will need, taking into account existing debt obligations and operating revenue. And a word of caution: don’t be lax or lazy when it comes to understanding your financials. Sloppy bookkeeping or a lack of knowledge about your books or tax returns will prevent you from acquiring a loan.

Take into account your other non-related business expenses

To determine how much you’ll be able to repay and the length of the loan’s duration, small business owners need to do a cash flow analysis of all their expenses, including mortgage payments or auto loan payments. By doing so, a business owner will be able to develop a more viable estimate of how much they’ll need to borrow from a lender.

 

Rohit Arora, CEO of the six-year-old Biz2Credit.com, feels this is an imperative step for all small business owners to take when deciding on how much of a loan they should apply for.

 

“A lot of business owners don’t take [their miscellaneous non-business expenses into account when deciding how much money they should borrow,” he says. “Everything boils down to your repayment capacity. So if you feel that you can borrow some money and there’s some good opportunity that will help you make money off it, that’s good. But that calculation is not a certainty.” How Much To Ask When Applying For A Small Business Loan

Carefully consider payment terms

After you analyze your financial situation, both on a personal and business level, you will also need to decide on how long you want to pay off your loan. By following this best practice, you will be able to produce a rational figure as opposed to an amount that you will never be able to discharge in light of your finances and debts.

Arora agrees, offering a hypothetical scenario: “Let’s say a business owner is borrowing $100,000 and they have to pay back everything in one year,” he explains. “Then the amount of repayment they have to make in terms of speed is pretty steep. Typically for small businesses, the cash flow is their bloodline.”

Similarly, Arora says small business owners need to exercise extreme caution, particularly if they’re planning on borrowing from alternative lenders. “A lot of times they want their money back pretty quickly,” he warns.

Know the lender

When figuring out how much money you need to borrow, it’s vital that you research your lending options. Which banks or lenders are amenable to small business owners in your sector? Just conjuring up a random number for a loan will not help you if the lender is not open to your industry, says Beeson, who advises business owners to also explore nontraditional lending options.

If you need to figure out how much of a business loan you should ask for, you will need to know offhand all of your business and non-business expenses. Not only is this information essential for maintaining good credit—a prerequisite for getting a loan—but it will help you come up with a realistic number that will allow you to comfortably fulfill repayment terms and not disrupt your cash flow. How Much To Ask When Applying For A Small Business Loan

November 19, 2013 Today's Business, , , , , , , , , , , , , , , , , , , 0 Read more >

Turning Down a Customer: When Is It Smart!

Turning Down a Customer When Is It Smart!Turning Down a Customer: When Is It Smart!

by Erin McDermott.

 

Yoga is supposed to be an escape to mindfulness and physical rejuvenation.

 

But running a yoga studio is like any business, and Patrice Simon has had to refuse some customers. Once, she even had to summon police to her busy Costa Mesa, California, spot, Bikram Yoga Studio, when a student became alarmingly verbally abusive.

 

“It’s been a lesson in psychology for me. There are individuals who intentionally raise their voice at the desk or become insulting—and they do it so an audience can hear them,” explains Simon “I don’t let it get that far. I say, ‘You need to leave, and now.’ I get a vibe from dealing with people at this point. This individual went far over the line.” Turning Down a Customer: When Is It Smart!

 

It may seem counter-intuitive, but sometimes it’s best to turn down a customer. Many business owners say it’s rarely as straightforward as encountering an unruly person at the other side of the counter. It could be that the limits of your own enterprise are overstretched, or their deadline is impossible to meet. Mostly, it’s just one of those things that only your gut can tell you. Turning Down a Customer: When Is It Smart!

 

Everyone’s in business to make money, but when are those dollars just not worth it? Here are four situations that small business owners say they’ve encountered on the road to saying “no thanks” to new customers. Turning Down a Customer: When Is It Smart!

 

1)  It’s never going to be profitable

 

Some projects require an investment to keep relationships with big potential growing. And there are times when you have to hold your nose and say yes in order to keep your doors open. But those numbers need to add up somewhere on the horizon.

 

Michael Bremmer is founder and CEO of TelecomQuotes.com, a Marino Valley, California telecommunications-solutions provider for small and midsize businesses. He says 20 years of trial and error have led him to ask three questions of himself for any new customer: 1) What’s his gut feeling about the individual or business? (“Every time I’ve ignored my gut, I’ve paid the price,” he says.) 2) How reasonable are their requests? and 3) Is the amount of profit worth the time and effort?  “Even if you’re struggling to start your business, you have to choose so wisely because your time is your most valuable asset,” Bremmer says. Turning Down a Customer: When Is It Smart!

 

For example, Bremmer has had to send some customers to competitors or outright “fire” others. He says he recently had to cut off a longtime family friend who became unreasonable about pricing. He struggled with the decision because he could see how stress had made her irrational, but “the client who keeps you awake at 3 a.m.—that’s the one you’ve got to fire.” Turning Down a Customer: When Is It Smart!

 

2)  Haggling over price

 

John Olson calls them “the price hunters” and he’s learned to turn them away over his 20 years in business. They’re the people who call or email GrayStone Industries, his pond and fountain-supply company in Cleveland, Georgia,, with eyes only on the price tag. He says his staff gets calls from people who say they’ve contacted them and their competitors, and will buy from whoever has the lowest price.

 

In those cases, Olson says “we will not even provide a quote, which would force some other poor seller into beating it by sacrificing their own profit. That’s not the way we want to do business.”  His products and these projects, he says, require a “modicum of intelligence” from customers, and his staff is constantly trained to assist anyone with questions before or after a sale. So forget about a retail race to the bottom, he explains. “Anyone who cares more about the price than the company selling these type of products is setting themselves up for failure—it will come back to haunt any company who caters to this type of customer.”

 

3) Negative or abusive comments

 

The customer is always right? Let’s hope not, judging by the unprecedented abuse that business owners say they’re experiencing via the Internet. Melinda West, founder and CEO of SwagsGalore.com, a curtain and window-treatment ecommerce site based in Lakeville, Pennsylvania., says she has a greatest-hits collection of the crude, angry, or wacky messages she’s seen from the site’s order-comments box since she opened in 1999.

 

“People seem to have no problem leaving messages, but in person they likely wouldn’t be that crass,” West says. “The comments are so rude or bizarre that you don’t know whether to take them seriously.” So she’s had to block some users’ IP numbers from the site, canceled orders with a brief note, or told the pushiest ones that their goods were out of stock—just to make them go away. Though West says the overwhelming majority of the company’s orders are pleasant or at least uneventful, cutting off negative new customers no longer keeps her up at night. “Sometimes people are nasty and they don’t even order anything—how can they be so irate over curtains?” Turning Down a Customer: When Is It Smart!

 

4) A bad fit

 

Maybe the work is too outside your specialty, the budget is a tough stretch, or ethical or personal lines are crossed. Don’t ignore the red flags. Frank Ebysen, a founder of Santa Monica, California-based OnClick Marketing, an SEO and social media services company, says he’s adopted a “serious person” test, a concept his business partner learned from co-workers at a company overseas. For example, there are clients who have good ideas, but the lack of a sound game plan makes them problematic, he says. Now when they discuss whether to take on a client or turn them away, it comes down to whether the person is genuine and worth their expertise, or if they come off as “not a serious person.”

 

Or you could turn the tables. One PR agency executive says her small agency has started asking potential clients for a list of their references before they agree to do business. “They’ll get the feeling that you are selective and not just looking to make a buck. You’ll appear to be the leader in the situation—but mostly it helps to ward off the ones who will be a headache,” she says.

Perhaps turning away someone’s business could possibly help make that customer look within, to see that they were —gasp!—wrong. Simon says that yoga client who sparked the police call came back to her studio a year later, seeking forgiveness and promising to behave. He’s been a regular on the mats there for years now.

 

She says it’s added to the meaning of her business. “You never know what’s going on in someone’s life. There are students I see that are in such despair and in a heightened state of anxiety. They are coming to me to take care of that,” Simon says. “When you can understand that, then you’re doing your job.”

November 17, 2013 Today's Business, , , , , , , , , 0 Read more >

Veteran Entrepreneurs Small Business Resources

Veteran Entrepreneurs Small Business Resources.

Veteran Entrepreneurs Small Business Resources.Veteran Entrepreneurs Small Business Resources.

With Veterans Day around the corner, I am reminded of one of the questions I got the most during the past decade writing my USA TODAY column: why aren’t more small business owners hiring veterans?

It was a very legitimate question. The fact is, since 9/11, American veterans have come home to a very icy employment picture. For much of that time, veteran unemployment figures typically were several percentage points higher than the national average. For instance, in 2011, the number of veterans out of work stood at 12.1%. In 2012, it fell to 9.9%, but even that was several points higher than the national average. Happily, veteran unemployment continues to fall. Today it hovers around 7%.

Veteran Entrepreneurs Small Business Resources.

 

So yes, the good news is that employers seem to be warming up to the idea of hiring vets. The only real question is why did it take so long? Veterans generally make very good employees, especially because of their training and background.

 

And, if you think about it, that same training also means that veterans tend to be excellent entrepreneurs and small business owners:

 

  • Veterans understand how to create a plan, implement and execute it
  • Many are trained to be leaders
  • They understand systems
  • Hard work and commitment are in their bonesYet veterans face the same challenges that all small business owners face, as well as some unique to the veteran experience. Like all small businesses, finding the training and assistance needed to succeed can be tough. Beyond that, veteran entrepreneurs who are disabled or have other trauma-related issues have their own, unique set of issues to deal with.

     

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    So for all of the men and women who were brave enough to both serve our country, as well as who want to start a business (or have), here is a list of resources to make your entrepreneurial life easier:

     

November 11, 2013 Today's Business, , , , , , , , , 0 Read more >