Tuesday, December 21, 2010

Do I need insurance if I run my business from home?

Insurance is Essential for Home-Based Businesses

Operating a small business from home can free entrepreneurs from the costs of leasing space and commuting. But too many of them may short-change themselves when it comes to buying insurance.

A recent survey commissioned by the Independent Insurance Agents & Brokers of America (IIABA) found that nearly 60 percent of the nation’s 11 million home-based businesses do not have insurance coverage. Of those entrepreneurs, nearly 40 percent thought they are already protected by some other type of coverage, while almost 30 percent said their businesses are too small to insure.

Madelyn Flannagan, IIABA’s vice president of education and research, explains that home-based business owners are at risk for significant financial losses associated with theft, accidental damage, natural disasters, vehicle accidents, and liability if an employee suffers an injury while on the job or a business guest is hurt while visiting the home-based business.

“Homeowners’ insurance normally does not provide protection in these situations,” she says. “Investing in protection can provide security and peace of mind as a business grows and produces more income.”

To protect home-based businesses, IIABA offers the following tips:

Check your homeowners’ policy. Homeowners’ insurance was never meant to cover business exposures. Coverage for certain business items is limited, and homeowners’ coverage provides no liability insurance for home-based businesses. Additionally, a homeowner’s policy affords no business interruption coverage in the event that a loss causes a home-based business to cease operations. However, a home-based business owner may be able to obtain an endorsement to add these coverages to an existing homeowners’ policy.

Check business insurance policy options. There are several options for home-based businesses including incidental business endorsement, a business owner’s package policy, or an in-home business owner’s policy. Flannagan says that while levels of coverage and premiums depend on the risk associated with each business, “a comprehensive commercial policy can cost a home-based business as little as $250 a year.”

Protect yourself. If a home-based business is a full-time occupation, business owners must consider protections such as life, health, and disability insurance, and workers’ compensation.

“An independent insurance agent can help identify risk areas and provide guidance for finding the appropriate coverage to protect you, your family, and your business,” Flannagan says. More information on insurance for home-based businesses is available at www.independentagent.com or www.TrustedChoice.com.

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties in NJ

Tuesday, December 14, 2010

How can I build up my small business skills?

Opportunities Abound for Sharpening Your Small Business Skills

Very few people begin the process of building a small business with a full knowledge of all the skills required for success. Even those who have extensive experience or education in business management still need to bring themselves up to speed on the added responsibilities of entrepreneurship—tax issues, employee management, business development, accounting, etc.

Fortunately, the range of small business-oriented learning opportunities and training programs has never been broader for veteran and novice entrepreneurs alike. Seeking help is simply smart. No business owner can be adept at every aspect of operating successfully. Plus, conditions change, so keeping yourself informed is vital to long-term success.

The single most popular program in America is probably the SBA Small Business Training Network/E-Business Institute, which registers nearly a million users at its Web site each year. The Small Business Training Network is a Web-based conglomerate that can link you to online courses, workshops, publications, learning tools, information resources and access to electronic counseling and other types of technical help. For details on the Small Business Training Network, go to www.sba.gov and click “On-line Training” under the site’s Services section.

Free online courses are offered on about 75 topics in areas such as business startup, growing your business, home-based business and re-engineering your skills. Sample titles include: Starting a Business; Business Planning; Business Management; and, Government Contracting, to name a few.

The Tools section of www.sba.gov gives you access to an extensive library of articles, podcasts, and Web chats on various small business issues.

Local SBA-sponsored training events are offered nationwide. These range from breakfast talks on local economic conditions, to brown-bag networking lunches, loan seminars, startup workshops and free business assessments. Simply go the Local Resources section of www.sba.gov and click your state on the Web site map for a calendar listing dates and event details in your area. You can also sign up for free newsletters issued by your state SBA office.

Contact your local SCORE chapter for its calendar of free business seminars and its new, fee based, Quick Start workshop series. Mycentraljersey.com is another wonderful resource for listings of upcoming seminars, workshops, and articles that will help your business succeed.

In addition, dozens of top colleges and universities offer business training courses you can take online or in more traditional classroom environments. Most require a fee, and some may have educational prerequisites. Advisors at the individual schools will help you identify one or more courses that are best suited to your needs.

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties in NJ

Tuesday, December 7, 2010

Do I need an outside accountant for my business?

Outside Financial Experts Are a Sound Investment

Computer software packages have made it easier for small business owners to monitor cash flow, prepare tax returns, and handle other financial reporting tasks. Still, keeping up with these chores as your business grows also consumes an increasingly large chunk of precious time, and risks potentially costly mistakes. That’s why many entrepreneurs look to outside financial specialists for help.

Choosing the right type of tax, accounting, bookkeeping or other financial help is an important decision. An outside accountant can be one of your most trusted business advisors and a key to your success. Although some business owners work with large national firms, most prefer to work with small independent firms or solo accounting professionals.

Accounting services differ from bookkeeping services, however. An accounting firm prepares financial statements and tax returns based on the numbers that you give them via your own in-house books. Bookkeeping services, if offered, will be extra. If you plan to hire your own bookkeeper, make sure the person you choose is qualified. One way is to use the “Bookkeepers Hiring Test” available free from the American Institute of Professional Bookkeepers at their Web site, www.aipb.org.

Before selecting a certified public accountant (CPA) or other financial pro, list the services you think you need, such as tax preparation, financial reports, balance sheets, invoicing, payroll services, general bookkeeping or someone to set up your books. Some firms may handle it all, or you may need to split the tasks. CPA Directory is a huge online listing of CPAs nationwide and can help you find an accountant in your area as well as your local newspaper’s classified section and Web site.

And don’t forget about Enrolled Agents (EAs), who are licensed by the Federal government to prepare tax returns. They have either worked for the IRS or have passed a rigorous IRS exam. EAs are savvy tax experts, but generally don’t have the degrees of CPAs and tend to charge less. Visit the National Association of Enrolled Agents Web site at www.naea.org.

Accountants’ fees vary depending on location and the types of services you require. Some firms will offer to handle a specific range of services for a flat rate, and charge less for bookkeeping and other tasks that don’t require CPA-level training. If you feel your business requires the assistance of a larger accounting firm, find out which staff members you will be working with to make sure their experience and personalities match your needs.

Richard Strug
Greater Princeton Area SCORE
Serving Mercer and Middlesex Counties in NJ

Tuesday, November 23, 2010

Where can I learn more about tax laws?

Tips for Tackling Taxes

Mention “taxes” to an entrepreneur and the likely response will be a rolling of the eyes, a litany of complaints about the complexities of the rules governing small businesses, and a few well-chosen verbal jabs at the U.S. Internal Revenue Service (IRS).

Though IRS may be the agency everyone loves to hate, they only manage the tax laws and policies that Congress passes. And rather than being a bane to small business, the agency has taken several initiatives to be a benefit to owners and the self-employed by providing much-needed guidance to tax procedures and requirements without those confusing “Gov-speak” terms.

One of the chief improvements is a special Web site, www.irs.gov/smallbiz. This is a great place to give yourself a tax smarts tune-up. And what could be more authoritative than information coming from the chief tax honchos themselves?

A section called “Starting, Operating or Closing a Business,” for example, covers a tremendous amount of tax territory and includes much of the site’s most useful information. This is where you’ll find IRS rules on hiring your own kids or other family members, recordkeeping, employer ID numbers and selecting a business structure.

There’s also help answering a key tax-related question: Is what you are doing a true business or merely a hobby? If the IRS decides your “business” is really just a hobby, your expenses may not be deductible. Look for their nine-point checklist to see how you stack up. Also visit the “Industries/Professions” section for specific information about tax regulations that may apply to your type of business.

The advice and information under “Operating a Business” is helpful for just about any type of small business. If you have employees, you’ll find resources on hiring, employment taxes and wage reporting requirements. And the all-important “Business Expenses” section defines the types of costs you can and cannot deduct from your taxes.

For the self-employed and independent contractors, there’s a full section that covers filing requirements, when a tax identification number is necessary, a listing of special publications and forms, responsibilities associated with operating and closing a business, and other valuable information.

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties

Tuesday, November 16, 2010

What makes for a good Press Release?

Tap the Power of Press Releases

Behold the humble press release. Even in the age of blogs and RSS feeds, the press release remains the simplest, yet most effective tool for generating publicity about your small business. Even better, the resulting coverage costs nothing compared to the costs of paid advertising.

While you don’t have to be a PR expert or writing whiz to create an effective release, a potentially newsworthy item may be overlooked if the release is poorly organized or doesn’t seem newsworthy.

First, you need to have news that’s worth sharing. Things that may seem important to you may not be relevant to your intended audience. Imagine you’re a reader with little or no familiarity with your business, and think about what might appeal to you. Some things are easy, such as adding a new product or service, opening a new location, or reaching a milestone anniversary.

Also consider offering readers helpful hints related to your product or service. If you’re an accountant, for example, a list of tips for getting organized at Income Tax time may be perfect for time-crunched taxpayers. Gift shop owners can prepare a list of innovative ideas for specific holidays, or acceptable items to send service personnel overseas.

Aside from the news item itself, the most important parts of a press release are the headline and first paragraph. Because editors sift through dozens of press releases a day, they rarely read anything that doesn’t immediately grab their attention. Get to the point by organizing the first paragraph around what your news is, who it’s about, and why it’s important. Then, use brief supporting paragraphs to add detail.

Remember that like a resume, a press release is designed to pique interest, not tell the entire story. As such, limit your release to no more than two double-spaced pages.

Your company’s logo and contact information should be at the top of your press release. It’s also helpful to include a name, address, and phone number or email in the text.

Once your release is ready, contact the publications or media outlets to identify the right editor, and whether they prefer to receive releases by regular mail or electronically. Make sure you spell the editor’s name and title correctly. Releases with errors or addressed to long-departed predecessors often go into the trash unread.

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties

Tuesday, November 9, 2010

What are the considerations for going into franchising?

Franchising has been characterized as a way to be in business for you without being by yourself. Rather than having to “reinvent the wheel”” a franchise owner can take advantage of tested concepts and proven operational and marketing strategies, as well as the franchisor’s institutional knowledge and guidance.

But franchise ownership isn’t an easy shortcut to success. As with any other kind of small business, it’s up to you to commit the finances, time, and effort to meet both the franchisor’s goals and your own. That’s why it pays to weigh the pros and cons of franchising to make sure it’s right for you.

According to the International Finance Association (IFA), franchised businesses are growing at a rapid pace. Some 400,000 franchised businesses now employ nearly 10 million people with a payroll of $230 billion. There’s always a hot new franchise on the scene.

As you research franchises, ask about the required experience, if any, as well as the expected hours and personal commitment necessary to run the business. You also should learn about the franchisor’s background. For example, what is the company’s track record and how are other franchisees in the system doing? The upfront cost of buying the franchise is crucial, of course, but also how much you’ll pay for the continuing right to operate the business and what products or services you will be required to buy from the franchisor.

The “Franchising Basics” section of IFA’s Web site, www.franchise.org, offers extensive information on how franchising works, online discussion forums that cater to prospective owners, and a searchable database of more than 1,100 plus franchise opportunities.

And, don’t forget about your financing. If you’re considering applying for a loan backed by the U.S. Small Business Administration, visit the SBA’s Franchise Registry at www.franchiseregistry.com. This service lists names of franchise companies whose franchisees enjoy the benefits of a streamlined review process for SBA loan applications. A faster review means better, faster service, allowing you to get your franchise off the ground sooner. Even if the franchisor is not a Franchise Registry participant, your loan application will still be reviewed individually by the SBA or its lenders.

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties

Wednesday, November 3, 2010

How can networking improve my business?

Use Networking to Build Business Visibility

Word-of-mouth is the most effective form of marketing. But people can’t spread the word about you and your small business if they don’t know you.

That’s where networking comes in. Whether it’s through a professional association for your industry, a local business group, or a conference, networking offers a valuable forum for prospective customers and colleagues to learn about you and the services or products you provide.

Successful networking is more than simply exchanging introductions and business cards, then waiting for someone to call. In fact, professional marketing coach Charlie Cook at www.charliecook.net says that most people waste the few precious moments they have with new and existing contacts by focusing on themselves.

“It’s better to spend most of that time asking questions and collecting information,” he says. “Then you can make quick assessments as to whether they would have any interest in the solutions you provide.”

Cook recommends that every entrepreneur should have a succinct “elevator speech”—a 30-second description of the problems his or her business solves. After that, the focus of the networking conversations should be entirely on other people: their primary business concerns, problems they want solved, and unmet business needs. As the conversations unfold, you may find areas that overlap with the solutions you provide.

“If not, you can still make an impression by referring them to other people in your network who can help,” Cook says. “They’ll see you as a problem solver, and be more likely provide you with referrals in return.”

Networking also doesn’t end with the conversation. Cook recommends maintaining a data file of networking information (several software programs are available to track networking contacts), and updating it as soon as possible after every contact.

“Make note of their interests, what you’ve shared with them, and when to contact them next,” he says, adding that regular follow-ups are essential. “People have short memories and may forget that you exist and more importantly, that you’re the best person to help them with their business needs and problems.

Finally, while valuable business contacts can happen anytime and anywhere; don’t leave your strategy to chance. “Identify the people you want to make contact with, whether prospects or potential marketing alliance partners, and make carefully researched efforts to build relationships,” Cook says. “This approach takes more time on your part, but it gets results.”

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties