Tag Archive: small_business_owners

Navigating the SBA Loan Process: Q&A with Charles Green

Navigating the SBA Loan Process: Q&A with Charles Green

Posted by SBOC Team in Financing Tipson Nov 2, 2012 8:04:36 AM

QAcharlesgreen_Body.jpgby Jen Hickey.

Business writer Jennifer Hickey recently spoke with Charles H. Green, who spent 30 years in the commercial banking industry and is now the executive director of the Small Business Finance Institute, an Atlanta, Georgia-based nonprofit that helps business owners improve financial management and access to funding through annual conferences, monthly workshops, and a weekly webinar series on various topics. He is also the author of the SBA Loan Book, now in its third edition.


JH: What role does a bank or lending institution play in administering SBA loans?

CG: The Small Business Administration (SBA) does not make the loan directly but serves as a guarantor for the loan up to a certain percentage depending on the program. The intention of the program is for lenders to make loans under their existing lending criteria or policy. If a loan can be approved without the guaranty, it should be. If it cannot be approved due to being outside loan policy and is a prudent loan likely to be repaid, the lender can proceed with the guaranty. The guaranty is intended to shore up a loan for borrowers who would not otherwise be able to get a small business loan, as their collateral levels, requested leverage, credit score, or repayment terms, etc. fall outside that criteria.

QAcharlesgreen_PQ.jpgJH: How is an SBA-backed loan different from a traditional bank loan?

CG: Traditionally, bank regulators have discouraged financing beyond the horizon of which would be a safe risk. SBA-backed loans allow for longer term financing that banks would be discouraged from giving based on existing lending criteria. For example, an SBA loan allows a company that wants to purchase a building for manufacturing or retail purposes to finance the loan for up to 25 years. Bank regulation sees that as a long time to take a risk and commit money without knowing what the cost of funds will be, how well the business will do over time, etc. Yet, it’s impractical to think an asset that will be useful over 20 years can be repaid in three years. The SBA guarantee encourages the bank to make loans that would otherwise not be possible due to the regulatory environment.


JH: What types of provisions must be met for the most common types of SBA loan programs?

CG: The most commonly used is the 7(a) program, which provides a 75 percent guarantee for loans up to $5 million and up to 85 percent for loans under $175,000 until the loan has been paid in full. A loan backed by the 7(a) loan program can be used for any business purpose and the maturity is based on the use of proceeds. The loan can have a maximum term of up to 25 years if used for property and up to 10 years for equipment financing and seven years for working capital.


The second most used program is the Certified Development Company (CDC)/504 loan program, which provides subordinate financing directly to the small business and is administered locally through SBA-licensed nonprofit CDCs. A 504 loan can only be used for capital improvements, like the acquisition or construction of capital assets such as property or major equipment. It is not a guarantee like the 7(a) program but a funding augmentation. The SBA actually participates in the funding of this program by selling debentures, which serve as a subordinate piece of the total financing (up to 40 percent), while the CDC funds a minimum of 50 percent of the transaction.


The SBA Express program allows for the funding of much smaller initiatives, up to $350,000 ($500,000 for qualified veterans) and carries a smaller guarantee by the SBA, generally 50 percent (75 to 80 percent for veterans). While the program target is working capital, it can be used for any business purpose. Express loans are fast-tracked; there are fewer forms required from lenders to the SBA, and lender is allowed to use their own loan documents to close the deal.


JH: What’s the difference between a preferred, standard, and certified SBA lender?

CG: This refers to the status or recognition of the lender by the SBA. A “standard” lender is one that is qualified to make an SBA loan, having entered into an agreement with the agency that allows it to submit transactions for review and receive a guarantee on the credit if approved by the SBA. Once the lender gets some experience and demonstrates its ability to follow the rules and generate decent volume, it can become “certified,” which puts its deals in the front of the line. With “preferred” status, the SBA actually allows the lender to make the decision whether to use the guarantee or not, and in many cases, the loan can be approved the same day. With standard and certified lenders, the SBA checks for eligibility and also reviews the lender’s application to ensure the loan is underwritten with a high degree of certainty that it meets SBA credit standards. With a preferred lender provider (PLP), the SBA only checks the lender’s justification of eligibility for the borrower, not their underwriting.


JH: Explain some of the different eligibility requirements for obtaining an SBA loan?

CG: A small business has to be “active,” meaning that it is directly involved in economic activity. Businesses involved in passive investments, third-party financing, or speculative business activity would not be eligible. And the loan must be used for legal business purposes, of which there are restrictions; it cannot be used be used for gambling-related activities, lending, multilevel marketing, real estate investment, charities, among others.


A borrower has to fall under the SBA’s definition of a small business, as described under the North American Industry Classification System (NAICS), which places a limit on specific industries based on number of employees and revenue levels. In general, businesses with fewer than 500 employees, or less than $7.5 million of annual revenue, are considered small businesses, though there are hundreds of differences within those generalizations, depending on the industry. Some have more or fewer employees, while others have a lower or higher revenue ceiling. For example, a car dealership can have up to $33 million in revenue and still be eligible for an SBA loan. It depends on the relative numbers in that particular industry.


The borrower must be a legal U.S. resident (i.e. a citizen or approved status) and has to be current on his/her income taxes and/or child support. In the SBA Business Loan Application, applicants must acknowledge and confirm they are in compliance with several statutes ranging from the Lead Based Paint Poisoning Prevention Act to the Right to Financial Privacy Act. The “other resources” rule states that if a borrower has a certain level of resources available to them, they would not be eligible for SBA financing. So, if a business has more than $2 million in cash, it would not be eligible for an SBA loan since it would qualify for financing elsewhere.


JH: Is there any additional documentation or collateral required for an SBA loan vs. a traditional business loan?

CG: The “paperwork” reputation of the SBA is overblown and concerns lenders not borrowers. The credit decision to make the loan is ultimately made by the bank, although the SBA can decline guarantee for a standard program lender if the borrower really wasn’t eligible or didn’t demonstrate the ability to repay the loan adequately. A loan may be rejected if, in the view of the agency, the projected financial results can’t be justified by either past performance of the business or with the accompanying business plan that sets forth how the financial objectives will be achieved.


The SBA loan program stipulates that if borrower collateral is available, it must be put toward the loan. For example, if the borrower is using loan proceeds to buy a building for its business, then that building would be put up as collateral for the loan. But there’s no firm rule on how much collateral is adequate. The SBA expects the bank to apply the same requirements as they would for any other type of business loan; however, there’s more flexibility with an SBA loan when it comes to collateral, credit scores, etc., if the financial projections are sound and based on real numbers.



Saying Goodbye to Summer: Best practices for closing down a seasonal business

Saying Goodbye to Summer: Best practices for closing down a seasonal business
Despite the lingering heat, many owners with small businesses tied to vacation and recreation are winding down operations before closing for the season. But that doesn’t mean they can put up their collective feet until next spring. Even if your doors are closed, your business is still “open” as far as the state in which you operate and creditors are concerned. So, it’s important to manage cash flow in those peak months to be able to cover expenses in the off-season. And you want to stay connected to those far-flung employees and customers, so they are more likely to come back when you re-open. “If you have a physical location that lies empty, the liabilities don’t stop during that five to six-month period,” cautions Tripp Watson, whose Birmingham, Alabama-based Watson Firm advises entrepreneurs on legal and contractual matters as well as on business strategy. “You have a legal duty to inspect and maintain the property. If someone is injured, even if they’re trespassing, you’re still legally liable.” Watson recommends investing in a monitored security system to help protect your business from litigation. “It always helps if there’s video of someone getting hurt or breaking in,” notes Watson. “Just factor it in as the cost of doing business.”

Beware the off-season budget busting expenses

Cash flow management is especially critical for seasonal businesses, as they may only have three to six months to generate enough revenue to cover expenses throughout the year. “Your costs don’t go down to zero when your doors are closed,” Watson points out. “You should map out expenses throughout the peak and off peak months as well as the off-season.” If it’s your first season, Watson advises doubling those costs. “Things you didn’t think about will crop up and can cut into your margins if you’re not prepared.”

For proof, just ask Tom Lawless and Tina Oddleifson. When this husband-and-wife team took over the Pilgrim’s Inn and Whale’s Rib Tavern on Deer Isle in Maine’s East Penobscot Bay in October 2005, they had to put in a new septic system right off the bat. “We were slapped with a big unexpected expense without having any revenue,” recalls Oddleifson. Thankfully, the pair had purchased the business when some late-season revenue was still coming in; coupling that with the working capital they started with, they were able to cover the cost of the repair and then replenish their coffers when they opened the next spring.

Typical off-season expenses for the inn and restaurant, though, are things like utilities and insurance payments. “Deposits, which start coming in January, help with cash flow during the months we’re closed,” she explains. And she also taps this early infusion of cash to fund renovations and repairs, which usually don’t happen until the spring.

Know your costs; watch every penny

When Duane Greenawalt, who runs his own CPA practice in Bennigton, Vermont, bought Hathaway’s Drive-in Theatre in North Hoosick, New York in 2009, he saw it as a vehicle to teach some life lessons to his children, all four of whom work there along with his wife. And while running this seasonal side business has been fun, it hasn’t been easy, he admits.

“Not only is it like running two distinct businesses, but we can only do business at night and when the weather is nice,” explains Greenawalt. “Cost control and knowing your margins are critical.” As they only bank a fraction of every ticket they sell after the film companies and state take their cut, Greenawalt instructed his eldest son on how to run a cost analysis to identify waste at the snack bar, which serves both hot and cold food. “Not unlike McDonald’s, which knows the cost of each French fry, everyone’s now more aware of the need to control portions.” Greenawalt points out. “Not that we’re giving our customers less, but we’re giving them what they pay for.”

Recruit staff for the long haul, and then stay in touch

Aside from the limited window to generate revenue, staffing is a major challenge for seasonal businesses. “A bad hiring decision can be costly,” cautions Watson. “Even if there are costs involved to maintain an employee from season to season, typically those costs are worth it when you factor in the costs of finding a replacement and training.”

“We have about an 80 to 90-percent return rate for the kitchen and 70 percent for the inn,” notes Oddleifson. “But it remains a challenge with our student staff, since our season overlaps with the academic year. My husband and I are putting in a lot of hours and juggling many roles during those months.” Oddleifson keeps in touch with employees during the off-season with periodic emails. “If people don’t know what’s happening with your business, rumors can start, especially in smaller communities,” cautions Oddleifson.

For Greenawalt, staffing is mostly a friends-and-family affair. His drive-in’s eight other employees are his children’s friends and siblings of the previous owner’s former employees. “While we lose some of the older kids when they go off to college, training usually takes no more than a week for most jobs in the snack bar, though there’s more of a learning curve for running the projector.”

Think strategically as the season’s end nears

Oddleifson has been able to structure the business’s mortgage and most ordering to pay during peak season. “We pay our biggest expenses when we’re making money,” Oddleifson points out. “By law, we have to pay for alcohol on delivery and we order food as we need it.” Then, as the season winds down, so does ordering for the restaurant. “We start paring down our wine list in the fall and don’t offer as extensive a list as our high season,” she explains. “We shorten our menu for the last two weeks we’re open and run lots of specials until the food is gone.” Any fresh goods left over are distributed among their employees and canned goods are stored. “We have become better at ending with very little inventory each season.”

As the drive-in officially closes after Labor Day weekend, Greenawalt begins winding down some purchases by mid-summer. “We have a lot of food inventory—you never know when you’re going to get hit with a big night,” says Greenawalt. “But you reach a certain point where the risk of running out is lower than the risk of getting stuck with inventory at the end of the season.” Greenawalt has typically stopped purchases for candy, popcorn, and ice cream by late July or early August, as the vendors require minimum purchase orders and he would have to buy a lot to get the reduced rate. “While we’re not going to run out of popcorn, we may run out of a few popular brands of ice cream and candy, though we offer a wide variety of both.”
For more info; http://smallbusinessonlinecommunity.bankofamerica.com/community/running-your-business/generalbusiness/blog/2012/09/05/saying-goodbye-to-summer-best-practices-for-closing-down-a-seasonal-business

Healthy Body, Healthy Business Q & A: Why Small Business Owners Can’t Afford to Sacrifice their Health for their Business

Healthy Body, Healthy Business Q & A: Why Small Business Owners Can’t Afford to Sacrifice their Health for their Business
by Iris Dorbian.

Like many small business owners, Ceres “C.C.” Opanowski has had an unusual career trajectory. After spending a decade as a paralegal, she jettisoned the corporate lifestyle to become a certified Pilates instructor. Recently, the 35-year-old Opanowski opened her own studio, Rivertown Pilates in Tarrytown, New York where she now works 50 hours a week giving classes and running her own business. Recently, writer Iris Dorbian spoke to Opanowski about her new venture and why a healthy body can contribute to a healthy business.

ID: What prompted you to go into business for yourself?

CO: I had been working with Pilates since 2007 and really fell in love with it. It’s a form of art rather than exercise. As I began to get deeper into it, I thought I would like to teach this. I didn’t really love what I was doing; I just felt myself shifting from being involved with law and wanting to be involved with something that was about my health, my wellness, and my body. When the time was right and I managed to get enough students who were interested in my teaching and the way I taught Pilates, I decided to go out on my own and work for myself.

PQ_HealthyImage.jpgID: Do you agree with the sentiment that a healthy body makes for a healthy business? You think there’s a link?

CO: Absolutely. I think when you’re taking care of your body and yourself, that tends to fall all across the board. You’re going to feel better. You’re going to be more likely to have the endurance to build and to grow and to keep the outlook the same as you would for yourself. Being in business, you have to nurture it in order to grow. And you have to do the same thing for your body. It generally follows that if someone is not taking care of him or herself, they’re not taking care of their business and vice versa.

ID: Do you have clients who are small business owners? Do they come to you with health issues they want to work out?

CO: I do. If they have sedentary types of jobs and they’re not moving around, they tend to have lower back issues like sciatica or neck and shoulder tension. Then if you have clients who do move around—such as those in construction or different kinds of hands-on jobs—they come in with a whole set of other issues. I really see a wide spectrum of people come in. But, listen, every industry is going to have something negative—we have body patterns. Our bodies move in a repetitive manner [based on the] regular things we do every day—the way we sit, the way we eat, the way we sit in a car, the way we work. All of these things create imbalances in the body. So yes, people come to me and they have issues: Some of it is caused by work.

ID: Many small business owners tend to be workaholics. How can they prevent burnout and still do what they do effectively without destroying their health?

CO: I think the first thing is [to realize] you didn’t go into business because you wanted to work 100 hours a week and you didn’t want to take a day off or not take care of yourself. Most likely, you said, ‘Hey I want to go into business for myself because I want to golf more.’ That may sound silly, but that’s someone’s passion, just like I said, “Hey I think I’m going to go into Pilates because I like Pilates so much I want to do it all the time.’ In fact, I not only want to do it, but I want to teach others so they can do it too. You got into [your business] for a reason, so keep why you opened your business in your mind. That was your goal and it should be at the forefront. When you’re trying to work too hard or you’re overstressed, you really do have to take care of your body. You can’t expect that your body is going to take care of you if you’re not giving it the right exercise or the right nutrition or the right health benefits.

ID: How has Pilates helped you manage your own small business better?

CO: Pilates helps me keep my head in order when managing the business. The advantage to owning your own space is the ability to work out and get into your “zone” when things get stressful and overwhelming.

9 Ways to Give Back

9 Ways to Give Back. Small business people are among the most passionate, idealistic people out there. After all, how could you be anything but if you are willing to quit a more traditional job, forgo your benefits, follow your passion, take out a loan, open up shop, find and serve your new customers, and believe you will be profitable and happy? I would consider that fairly idealistic – in the best sense of the word.

So it may be no surprise that small business owners are among the most active people in terms of giving back to their communities. After all, it is the community that supports these businesses, the community that makes up their employees and customers, and it is the community that keeps them in business.

How do they give back, and how can you? Here are nine great ways:

1. Become a mentor: One of the real problems with all of the educational cutbacks is that young people have fewer opportunities to mingle with mentors. Teachers and coaches are spread thin, and after-school activities are disappearing. Kids need mentors.

One place you, or your business, can make a great difference is by getting involved with schools. Mentoring students, not only about business and entrepreneurship, but also about life, would be invaluable.

And while we are at it, let’s not stop there. Mentoring older people as well, especially those just starting in business, is equally beneficial. You can do this through your local chamber of commerce, trade organization or SCORE (www.score.org)

Click here to read more articles from small business expert Steve Strauss.

2. Sponsor: Sponsor a little league team. Sponsor a concert. Co-sponsor a big event. Sponsor public television. The value of sponsoring is two-fold:

First, due to lean budgetary times, being a sponsor is often the difference between an event happening or never getting off the ground. You will be a local hero.
Sponsoring is an excellent way to soft sell your business. People will see your sponsorship signs and associate you with the good feelings they have about the event. It is branding, selling and impressing all rolled into one.

3. Hire a vet: Veterans from Iraq and Afghanistan are coming home now, and they need work. In fact, unemployment among veterans, especially young veterans, is extraordinarily high. Frighteningly high.

And the ironic thing is that these folks make great employees. They have learned how to take direction, think independently, work hard, be a team and focus on the big picture and accomplish goals. What else could you want from an employee?

4. Hire an intern: Students need to learn skills and get recommendation letters. You need to get work done and don’t want to spend a lot of money. It sounds like a match made in heaven, right?

5. Offer discounts to the elderly: We don’t need to make a profit on every sale to make a profit. By offering a senior citizen discount, you help seniors, and they will become loyal customers and recommend your business.

April 17- 9 Ways to Give Back.png

And not only that, it feels good.

6. Offer in-kind contributions: If you sell widgets, consider offering your widgets to different non-profits in the area. They would welcome the help and it would probably cost you little.

7. Giving a percentage of your sales to charity: You would be surprised at how many small businesses make this a part of their regular business practice. Some set aside around 5% of profits for charitable giving. Yes, you can deduct this, but better, it builds goodwill and good karma.

8. Offer health and wellness programs for employees: Like so many things on this list, there are both selfish and selfless benefits that come from doing the right thing. Helping your employees become healthier is good, and it may also cut down on your health care costs.

9. Go green: Greening your business is easier than ever. It saves the planet, can cut your costs, and definitely impresses a certain segment of the population. For example, did you know that there is a green alternative to the Automobile Club? It offers roadside auto and bicycle assistance, among many other eco-benefits. If you look, there are lots of similar programs.

The Power of the Crowd: Is crowdsourcing right for your small business?

asian business woman the power of the crowdsourcing right for your small business?You may think you know the definition of crowdsourcing for your small business , but there are a lot of interpretations to its meaning.

In the words of Northwestern University professor Jeff Howe, who coined the term, crowdsourcing is “the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”

Regardless of how you define it, there is an argument to be made that crowdsourcing is a particularly good match for small businesses. Here’s why:

Venture capital firms are generally supportive of the concept as it allows the companies they fund to lower operating expenses.

It provides access to a pool of experienced and creative talent that might otherwise be inaccessible to a small business.

The concept of user feedback on product design and branding is already an accepted dynamic in the social media-driven world currently embraced by many small businesses and their customers.
Small businesses may have smaller tasks that need to be solved and they will get a broader spectrum of crowd-sourced solutions.

Pull Quote.pngIf you’ve never considered crowdsourcing, there are a multiple of websites dedicated to it and particularly useful to small businesses. Innocentive is a forum where “solvers” compete to devise a solution to a small business’s problem, usually a technical one. Ideaken is a software platform that facilitates collaboration between enterprises and individuals. Whinot is a consulting firm dedicated to providing crowd-sourced technical solutions to small businesses. crowdSPRING is a crowd-sourced marketplace for graphic design and writing services. There are many more crowdsourcing websites including: GeniusRocket, 99 designs, LogoTournament, Minted and Poptent, just to name a few.

If you are considering venturing into crowdsourcing, there are few rules of engagement to consider:

Don’t skimp on information. Describe the project and target audience in detail.
If you have specific pet peeves or favorite colors, spell them out in your project description.
If you’re crowdsourcing creative work, such as a logo design, take steps to ensure the design is original before contracting to use it.
If you’re running a contest, think carefully about the dollar amount of the reward. You’re already saving significantly so let the reward fit the effort.
Don’t forget that, in addition to the financial incentive, many participants in crowdsourcing are motivated by constructive feedback and publicity.

You can start with a non-strategic project, such as how to configure your phone system. Or, you can get input from the “crowd” on something as significant as your company name. Whether you’ve thought about crowdsourcing for a while or are considering it now for the first time, there are very few barriers to jumping into the mix

The Discipline Story: How to handle difficult employees

It is normal for workplace issues to arise amongst colleagues – after all most Americans spend more time at work than any place else. When employees are having difficulty getting along with each other, or when they are having performance problems, small business owners may question how to handle the issues at hand.

Companies of all sizes must manage employees that turn out to have difficult personality traits, are a poor fit for their current role or have trouble working with others. Unless the employee has broken the law, behaved unethically or is grossly incompetent, the goal in most cases should be to help them stay with the company. Terminating employees can often be a long process and often a painful one.

Driven to Distraction

If you have an employee who has suddenly changed from being a valued, trusted worker to disengaged or disgruntled, there may be something going on in the employee’s personal life. When you sit down to talk with the employee, remember that the goal is not to get him or her to confess personal problems. You want to make the employee aware that you have noticed the change in his or her behavior and that you’d like to help the employee get back on track.

Prior to this conversation, you want to garner as much information as you can that showcases the contrast between the employee’s historical job performance and their current one. For example, you may want to speak to his or her direct supervisor, review quality and error rates, look at attendance records and gather recent e-mail correspondence that may speak to a change in attitude. Hopefully, with your help and support, the employee can work on shifting their behavior and mindset in a more positive direction.

The Attitude Problem

Some employees just don’t realize how they come across to others when they are condescending, blunt, offensive or self-aggrandizing. Working with this type of personality can cause a decline in team morale, derail a project or make everyone else’s job more difficult.

Pull Quote.pngIf you are faced with disciplining an employee for a negative attitude, there are several steps you can take. One option is to present the problem to the employee using the SBI model – this is a way that sheds light on the situation at hand – what the situation is, how different behaviors factor into the outcome and its impact on fellow employees. Be sure to criticize the behavior, not the person. Make it clear that the offending behavior is a problem because of its impact on company productivity. If the employee wasn’t aware of the impact of his or her behavior on workmates, he or she just might make a change.

The Bad Fit

Sometimes you will find that you’ve hired a bright, hard-working employee who just isn’t in the right job. Remember that a performance deficiency is not the same thing as insubordination or misconduct. Therefore, the right solution might be coaching. Keep in mind, this approach will likely require patience by the small business owner, and other employees.

If you’re unsure about whether the employee can gain competence in his or her role, you may have to make the tougher decision to terminate employment. However, before you do that, conduct a formal performance review and analyze the employee’s strengths and weaknesses to determine if there might be a better fit elsewhere in the company.

If an employee has been valuable to your small business, don’t ignore the difficult behavior or immediately write them off. Look for a way to resolve the issues. At the end of the day, it’s usually better to find a way to work with an employee – even a difficult one – than to go through the time- and cost-intensive process of recruiting and training a new one.

7 Types of Workplace Culture – What’s Yours?

Workplace culture can be broadly defined as how employees describe their working environment. While some cultures will be defined naturally based on a small business owner’s leadership styleor industry type, a lot of it will also be determined by the employees you hire and the office tone that management sets. How you implement your unique small business culture in day-to-day operations can help to attract and retain talent while ultimately contributing to your business’ success.  Here are some characteristics of seven types of company culture.


  • Appreciative Culture: While employees value bonuses and promotions in recognition of a job well done, there is more to creating a culture of appreciation. Studies have shown that employees prefer an in-person “thank you” or a positive report delivered to senior management. While it may feel awkward at first, research indicates this kind of approach motivates employees to repeat good performance and correct workplace issues when they arise.
  • Customer Service Culture: Companies that embrace a culture dedicated to top-notch customer service recognize that meeting customers’ needs is a responsibility that extends beyond the customer service department. All employees should be aware that they are expected to put the customers first always and that office policies are designed to be customer friendly. Employees should also recognize that senior management is measuring service quality and customer feedback on a regular basis.
  • Family Business Culture: Family businesses are often multi-generational and, therefore, have long-established norms, processes and rituals. On the plus side, they are known for mentoring and cultivating employees’ career growth over the long haul.  On the downside, due to a family-like environment, employers may be more hesitant to let underperforming employees go.  Keeping these types of employees around could have a negative impact on work output and office morale.
  • Innovative Culture: Innovative companies tend to be fast moving and often encourage employees at all levels of the organization to take risks. Such companies seem to be guided by research, such as a Harvard University study, that says there is a direct correlation between an employee’s autonomy and their creative output. Senior managers in this type of culture need to be wary of burnout, making it even more important to communicate regularly with staff.
  • Merging Cultures: When two companies merge, it is crucial to pay attention to combining two distinct cultures. In fact, ignoring the issue can not only have a negative impact on employee morale, but can ultimately undo the partnership.  While in some cases the dominant culture prevails, it is best for merging companies to build a new culture based on shared values, processes and philosophies.
  • Trust-Based Culture: While trust is arguably important in any business setting, there are companies that actively seek to foster this type of environment. These companies are built on solid relationships between and among management and employees, as well as with customers. Additionally, they are committed to an open-door policy and transparency in their transactions and agendas.workplace woman

8 Different Types of Small Business Management Styles – What’s Yours?

There are numerous perspectives on the different types of “small business management styles.” To help you identify your type, or learn more about, we’ve outlined eight different small business styles below.

Active leadership: Active leaders tend to lead by example and set a high standard Business handshakefor themselves and their employees. They wouldn’t ask an employee to take on a task they’d be unwilling to do themselves. They are highly involved in the day-to-day work and fully aware of what’s taking place in the office.

Democratic leadership: This style seeks to take all stakeholders’ opinions into account and achieve consensus before reaching a final decision. While this style can be frustratingly slow, having all parties involved in a decision can make for an easier and more seamless implementation process. This style promotes more trust, harmony, productivity and job satisfaction in the overall organization.

Directive leadership: Although less authoritative than autocratic managers, directive leaders do not typically solicit employee input. They often cite a short time-frame, an unpredictable client or an emergency situation as the reason for acting unilaterally. Often this may be true. Other times, they may just have a bit more difficulty letting go of control.

Paternalistic leadership: This style is also similar to autocratic, except more sensitive to employees perspectives. Managers who embrace this style are concerned with employees’ feelings and well-being. However, they will not place individuals ahead of the organization’s success.

Participatory leadership: Based on a coaching philosophy, this style focuses on empowering employees to seek their own knowledge and make their own decisions when appropriate. It can be very effective in fluid work environments with shifting priorities. A more advanced version of this style is the flat management style, where different managers take the lead on projects, depending on their expertise.

Servant leadership: Based on a “people-come-first” philosophy, this style has been made famous by writer Robert Greenleaf. The style is based on finding the most talented people to run your organization and then empowering them to do what they do best. The leader sees him or herself as a “servant” to the customer and encourages employees to adopt the same attitude.

Task-oriented leadership: Leaders who use this business style may have once been project managers. They are experts in planning projects, allocating resources, assigning roles, setting benchmarks and keeping to strict deadlines.

You may recognize yourself in some of these small business or business management styles and may be turned off by others. You could even aspire to start using a style that’s unfamiliar to you. Or, you may realize you need to play up one or more of the styles to keep your staff happy. No matter what you decide about your own style, you should give it some careful thought, because it is always better to manage with self-awareness than blindly. Which style(s) would you identify yourself as having? What do you think works? Does not work?

Thinking of a small business loans, check out Apple Capital Group, Inc. Give us a call! This article is a courtesy of Apple Capital Group, Inc., if you like the articles, please share it to friends and PLEASE click the google+1 so we can measure how it is helping this small business community! Thank you!

Eight Ways to Navigate Workplace Conflict

Leaving workplace conflict unaddressed can have significant costs. For example, in 2008 U.S. employees spent 2.8 hours a week managing conflict, according to CPP Inc, the publishers of the well-known Myers-Briggs Assessment on decision making styles. In addition, 25 percent of employees said that they missed work due to a work-related conflict, 10 percent said it contributed to project failure, and 33 percent said it led to someone leaving the company, according to the CPP Study. All of this came at a price tag of $359 billion in work hours.

Some experts believe that conflict isn’t inherently negative, but can be turned into something positive given some proactive steps. Negative tension occurs when the parties at odds with each other don’t communicate and assume that the feelings will eventually go away. In contrast, positive tension is energy that can be put toward creative and innovative business solutions. As a small business owner, you would be wise to embrace positive tension because it creates a work atmosphere where ideas can be debated openly and dynamically.

The following are some do’s and don’ts for turning conflict into fodder for greater productivity:


Know the difference between a task-related conflict and an emotional conflict. The first can be turned into a brainstorming session. The second, which often occurs when employees feel undervalued or demeaned, can cause company-wide dysfunction.
If necessary, criticize an employee’s behavior, but be careful about using terms that sound like you’re criticizing them as a person.
Learn how to listen. An effective technique is to allow a person to explain their thoughts on a matter and then attempt to repeat back to them your understanding of what they said. While this may feel awkward at first, it is a proven method of enhancing communication between individuals.
Conclude with a list of concrete actions that employees can take to resolve a specific conflict.


Attempt to address a conflict in the heat of the moment. Instead, set time aside when all parties are calm and have had time to process the situation and emotions involved.
Neglect to hear both sides of the story. When you bring employees in for separate discussions, consider having them cite one or two positive qualities that they see in the other party.
Appear to favor one side over the other, but work toward compromise. If you are dealing with two valued employees, chances are both opinions have some merit.
Forget that a conflict-free meeting might not be necessary for a productive meeting. If everyone agrees with each other, you may stifle creative thoughts.

Pull Quote.png

You may think that, as a small company, you have smaller conflicts. The reality is that the cost of conflict for a small business can be quite high. Leaving conflicts to fester in an intimate work environment can affect an entire company culture. The cost of replacing employees who resign can be much more of a burden. Also, lost productivity can result in significantly lower sales. Dealing with conflict can be uncomfortable. Consider doing it anyway. Your business may depend on it.

6 New Year’s Small Business Resolutions

 6 new year's business resolutions

2012 New Year Small Business Resolution

While we are all familiar with the making of personal New Year’s resolutions (maybe too familiar!) a recent and emerging trend is to make New Year’s small business resolutions. The challenge of course is that, like personal resolutions, we want our small business resolutions to stick.

So how do we do that? Experts say that people who are able to make and keep resolutions know not to bite off more than they can chew. Here are a few simple, easy-to-implement, small business resolutions that can make a big difference this year:

1. Create a board of advisors: Small business entrepreneurs generally like to help each other. By creating your own small business board of advisors you can give the people in your life a way to help you. Your lawyer, small business colleagues, or even your friends can all be part of an informal board. Even if it is as simple as hosting a dinner twice a year, you can create an invaluable way to receive important feedback, spark some new ideas and have discussions that could help your small business. For example, I have a friend who hosts a pizza party whenever he has a new idea; he uses the opportunity to share his thoughts and gauge the reaction of his panel.

2. Find a mentor: While, like a board, mentors can also offer valuable feedback, they can do so much more. Mentors make introductions, open doors and teach valuable lessons. If you don’t have a mentor, finding one should not be difficult; it is just a matter of asking. Last week, an associate asked me to mentor him and I was flattered. Whomever you ask will likely feel the same way.

3. Get bigger and better clients: With budgets continuing to be tight, consider looking for clients with bigger budgets – such as government contractors or corporate clients. You may think that this wouldn’t work for your business. Consider this: even mini-marts whose customers are almost exclusively individual consumers could try and land some commercial accounts.

Why not you too? Target some businesses that need what you sell. Make a presentation and pitch them. Try some more. Think differently. Get out there.

4. Give yourself a raise: With the economy being what it has been, many small businesses have kept a lid on fees and prices for years. Well, maybe this is the year to raise prices a bit, nothing dramatic, but enough so that you can increase your bottom line.

5. Create a referral rewards program: It is simple, yet so effective. Your best business often comes from referrals. Check out the option of creating a consistent system for staying in touch with current customers, and then rewarding them when they send new business your way.

6. Bust a move: Many small businesses have been retrenching, waiting and holding back the past few years. While it might be a smart strategy right now, it is against our nature as entrepreneurs. There just may be pent up demand for something new, different and better this year. Find those new customers and attack new angles.

If you like these small business articles, we ask that you google 1+ this article to say you like it so we can continue offering them. Apple Capital Group has a small business daily show on blog talk radio. Check it out at http://www.blogtalkradio.com/applecapitalgroup.