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

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

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

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

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

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

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

Can Angel Investing Work for Me?

Financing Your Business via Angel Investors

David Plucinsky, SCORE counselor and international financial expert, provides some focus on Angel investment. Many SCORE clients ask about this, hopeful of locating a person who is interested in funding their venture. This article provides background material; the next will cover the process and what Angel investors seek when examining an opportunity.

Angel investors are typically successful business people who have made money in life and look to deploy a certain amount of their wealth backing start-up and early stage businesses. They are accredited under SEC Regulation D, Rule 501, meaning that they pass a wealth test. This is important to entrepreneurs as it means you can engage with them without having to provide the substantial documentation required by the Securities and Exchange Commission if the investor does not meet the requirements of Regulation D. Anytime you speak to potential investors in your business, you must determine if they are accredited. Angel investors generally invest in industries they know well, for example software, oftentimes where they made their money. Many like to bring not only money to the table but also their experience, a valuable resource when utilized properly.

Professor Jeffrey Sohl of The Center for Venture Research, University of New Hampshire provides the following information. In 2009 57,225 entrepreneurs received $17.6 billion from 259,480 active Angel investors. From this we can infer that the average investment was $307,000 and the average amount invested by an Angel was $67,800, meaning that the entrepreneur was funded by 4 to 5 angels. Software ventures received 19% of this investment, healthcare 17% and Industrial/Energy 17%. Of the amount invested, 35% went to start-up companies, 62% to early stage and expanding companies, those already in business with a product or service. The yield rate was 14.5% meaning that for every seven business plans that made it to full review, 1 received funding. Women accounted for 21.3% of all requests for funding, 9.4% of these were successful. Minorities represented 6.2% of entrepreneurs requesting money, 14.5% being successful. With respect to minority applications, it is interesting to note that the yield rate was the same as the overall average, this means that minorities applied much less for funding, however when they did, they had the same success rate, one out of seven. This is not the case for women whose 9.4% yield rate was some 5% behind the average.

In today’s market, Angel investors band together in what is called a network. A network has a leader who manages the process of finding companies seeking funding, creates the review disciplines, locates investors interested in funding companies and brings them together.

An upcoming article will examine the process of obtaining Angel investment.



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

How can I keep my business growing?

After a fast start, your small business seems to have lost momentum. What happened? And more importantly, what can you do about it?

Given the interconnected nature of today’s economy, even small, largely local businesses are influenced by trends and events in other industries, and even other continents.

But your internal approach to generating and managing growth could well be the source of your sales slowdown, even in the face of what seem to be bright opportunities. The detailed business plan you’ve followed since the outset may no longer be applicable in a marketplace where changes—both expected and unforeseen—happen on a daily basis.

A growth plan that acts like an internal compass can be a helpful tool for getting things back on track.

Start with your day-to-day actions. If you want your business to grow, that should be the focal point of everything you do. Gather the financial details about what’s happening internally. Then put your plan in writing. It does not need to be lengthy and ultra-detailed. Just the basic points will do. For example, how has your business done in fulfilling your original mission? Did you start with a bang only to see things flatten out? Perhaps you aren’t delivering what you first promised to your customers. Fix any problems or shortfalls quickly.

Keeping up with changes in your marketplace is crucial, so you might have to conduct some new research to stay up to date. This doesn’t have to be formal research. You might start with a simple customer survey, for example, or check for available research online. Make adjustments as needed in your approach.

Communicate your growth vision to others involved with your business, including outside vendors and contractors as well as partners, investors and employees. Don’t just dream—delegate specific actions to reach those goals.

Find out what objections customers are raising to your sales effort—why they have purchased or declined your product or service. Adjust your sales process to place greater emphasis on closing.

You can find some valuable guidance for growth planning in two books: Strategic Planning for Small Business Made Easy, the latest in the “Made Easy” series from Entrepreneur Press, and The 7 Irrefutable Rules of Small Business Growth by small business growth expert Steven S. Little. Both are available in bookstores and online.



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

Should I consider outsourcing order fulfillment?

Handling the fulfillment responsibilities yourself may seem like a good, cost-saving idea when you’re just starting out. But as demand for your products grows, so too will your fulfillment backlog. Unless you stay on top of it, your sales will suffer along with your company’s reputation for quality and responsiveness.

This may be a good time to consider using an outside order shipping and fulfillment service to take the burden off of your shoulders. Outsourcing fulfillment can save you time. Your products, labels and other unique packaging can be stored in the fulfillment company’s facilities. When orders are placed, the fulfillment firm packs and ships the items and perhaps handles customer service and returns as well. Orders can come through you via your usual methods, or can go direct to the service.

Plus, a good shipping and fulfillment service will have the latest tools and technology for efficiently packing, shipping, and tracking orders. By letting them handle this responsibility, you can devote more time to managing and growing your business.

There are many different ways to approach shipping and fulfillment solutions based on the type, weight, size and destination of the items you ship, along with your customers’ needs and expectations. Outside fulfillment involves a cost, but you should also consider the costs you are avoiding such as storage space, payroll and your own time. If you charge customers for shipping and handling, you may be able to recover all or a portion of it.

When selecting an order fulfillment firm, be sure to align your needs with the services they offer. Ask about minimum and maximum order quantities, error rates and restrictions on the types of products they will ship. Some, for example, only ship via UPS and the Postal Service and don’t handle oversize items. If you have special packaging, ask if they will use it.

A great source of information is the Mailing and Fulfillment Service Association, a national trade association for the mailing and fulfillment services industry. Their website (www.mfsanet.org) offers tips for evaluating, selecting, and working with a fulfillment service, postal and legislative information, and a search feature for locating a locating a company that’s right for you.


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

I can finance my business myself. What are the implications?

Self-Financing Has Its Rewards…and Risks.

Loans are a great, affordable way to get a small business off the ground. But they’re not for everybody. Personal sources of financing can work just as well, and may be the entrepreneur’s “Plan B” if attempts to secure a commercial loan are unsuccessful.

Although self-financing options may give you more control and flexibility over your start-up capital, special care is essential to make sure they are used wisely. A misstep puts more than your small business at risk. It can also endanger the long-term security of you and your family.

Before you dip into your savings or tap the equity in your house, make sure you have a realistic plan to meet your existing obligations, such as mortgage, utility bills, vehicle payments, insurance, and daily living expenses. Be sure to consider “worst-case” scenarios, such as a spouse losing his or her job, major car repairs, or serious health issue. The likelihood of such events may be remote, but the consequences on your financial security will be very real if they do occur.

A good preventive measure is to designate certain funds as “off-limits” for use in your business. Certain retirement accounts may also be “untouchable” due to the tax consequences and heavy penalties associated with early withdrawals.

Friends and family members can be good sources for start-up capital. However, history is full of ruined businesses and personal relationships because money was not repaid as expected, or the investor demanded a say in how the business was run.

Even if your benefactors place no conditions on the money, make sure everyone clearly understands how the funds are to be used; the repayment terms and amount of interest, if applicable; and what role, if any, contributors will play in the business. Then, put everything in writing and have all parties agree to the terms.

Credit cards can also be a source of quick cash for your business, but low limits and high interest rates usually make them useful only as a last resort, or as a short-term cash flow bridge. It’s best to use them only if absolutely necessary, and you have the ability to pay them down quickly. Otherwise, that debt can quickly spiral out of control. Also carefully scrutinize equipment financing offers from retailers and manufacturers. Their terms may be more restrictive and expensive than credit cards.

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

How can I make sure my business data is secure?

Locks, alarms, and cameras can help safeguard your facilities and equipment. But what about your computer databases—the places where valuable, sensitive, and potentially irreplaceable assets of your small business are stored?

It may be easy to assume that Internet firewalls and PC passwords are enough to prevent unauthorized access. But according to Fredric Paul, publisher and editor-in-chief of bMighty.com, an online resource that specializes in the IT needs of small and medium-sized businesses, database breaches from both external and internal sources are increasing at an alarming rate.

“Small businesses face a higher risk because they usually lack the IT security infrastructure and expertise of larger, but no less vulnerable, corporations,” Paul explains. “Because small businesses also lack the resources and expertise to detect and respond quickly to a breach, the consequences of unauthorized access are greater as well.”

Here are some steps for keeping your small business database as safe as possible:

Enable security capabilities. Many off-the-shelf databases have only limited default security controls. Make sure that all authentication controls are enabled, and avoid using common passwords for user and administrator accounts.

Give the database a security check-up. Before entering any data, make no unwanted or unnecessary sharing features are activated by default. Check the software developer’s website every few months to ensure that your version is up-to-date with all the latest security patches.

Restrict database access. Even if you have a small, trusted staff, access to the database should be limited to a need-to-know basis. This will prevent passwords and other important information from being misused or unintentionally shared. It also provides an extra measure of safety in the event today’s colleague becomes tomorrow’s competitor.

Make regular backups. Depending on the size and extent of your small business databases, back-ups should be made on a monthly, weekly, or even daily basis. The data should be stored in encrypted format to further minimize its value to a data thief. Back-ups should also be kept at a secure, off-site location in the event your normal place of business become inaccessible due to weather, fire, or natural disaster.

Keep track of trends. Even if you don’t consider yourself a computer whiz, safeguarding IT resources is easier when you take a proactive approach. Resources such as bMighty.com can provide valuable information and tips for ensuring your system stays in step with your small business’s needs.

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

Does my business need a disaster recovery plan?

SCORE counselor Bala Subramanian reminds us that based on current events businesses large and small should have a Disaster Recovery plan in place.

“Small business owners need to plan for many contingencies including unexpected disasters. The gulf oil spill illustrates this fact vividly. While the media and society considers this as BP’s (a large business by any measure) failure and accuses their unpreparedness for that eventuality, all small businesses such as: fisherman, oysterman, tourist industry dependents, i.e., restaurants, hotels, etc., affected by that event are equally unprepared. If those small businesses had considered the impact of such unexpected catastrophic events, they could have been better prepared to state their claims and not only seek compensation but also have alternate solutions for their survival, insuring their continued existence.

Business plans rarely include disaster recovery. Disaster recovery caused by an internal or an external failure is essential for large as well as small businesses.

In the case of a small business, owners should plan for such eventuality and have a contingency action plan that would enable them to relocate re-source-suppliers and continue their services to their customers. Even in cases when there are only walk-ins and the customers are transients, a disaster recovery plan can provide valuable information to those end-users, clients and the dependants of those businesses services; an alternative way to have those services available to them in an uninterrupted manner.

The DR (disaster recovery) or BC (business continuity) plan begins with risk analysis and ends with a plan that needs constant updating. There are several steps in between which answers questions such as: What are the threats? What are the probabilities associated with each of those threats occurring? Prioritizing and ranking the threats using an estimate, perhaps based on the cost associated with the loss of value to your business if that threat occurred.

Each business is unique in its needs and with thoughtful consideration you can create a Disaster Recovery Tool Kit for your business that may include:
 A contingency check list or a questionnaire.
 An audit questionnaire.
 A dependency analysis document (with questions, guidelines and a time frame).
 A business impact analysis.
Based on these findings each small business needs to have an action list to recover from any disaster contingency.

Here is a link to more resources: http://www.businesscontinuityworld.com/tool.htm, an organization that specializes in providing technical services.

If you as a small business owner feel this to be of importance and want to learn more, contact SCORE at the number below to arrange a free counseling session.”

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

Am I ready to be my own boss?

SCORE® counselor and noted advertising executive, Alan Yarnoff asks the question, “Do you want to be your own boss?”

How many times have you gotten up in the morning and headed to work wondering if I would be better off being my own boss and answer to no one but myself? Being your own boss is not an easy task, as evidenced by the fact that 85% of all small business fail after five years. Even so, being the boss can be appealing and many have had great success. Before you give up a steady job here are some points you need to consider:
- Are you a good decision maker who can make decisions quickly under pressure and in an independent manor?
- Do you have the stamina to put in seventy to eighty hour work weeks over a long and protracted period?
- Do you have good business skills from marketing to accounting and beyond? Remember small business is just that and you need to be prepared to do it all.
- Are you a self starter? It will be up to you to take the lead to develop the business, manage the process, and follow through on all the projects.
- Do you work well independently, since once you are on your own you really are alone? No accounting department to call on for forecasts, no marketing group to turn to for sales and promotion ideas, and no dedicated sales organization to bring in the business.
- Are you ready to handle the uncertain financial risks? Remember you won’t be getting a pay check weekly, and there will be times when your cash flow dips well below your operational costs leaving you short of covering your fixed personal expenses.

Lastly, remember this new venture will completely change your life. You will need to balance family demands with your new responsibilities. You may have financial difficulties before the company becomes profitable creating a need to reduce your living standards and forego family activities that had been common place prior to your new business adventure.

Well, if you answered the above with a definite "yes", you may be a candidate to be the boss. Remember, before you leap into the market place do your homework and make sure you get it right.

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

What should I consider in outsourcing functions of my business?

Outsourcing is a common practice in today’s business world, but it’s not the domain of large companies. Small business owners use outsourcing for a variety of reasons—to handle work overflows, receive specific expertise in a new or unfamiliar area such as marketing or IT, or take on more routine administrative tasks that are taking up too much of their time and attention.

The decision to outsource certain functions requires a professional approach, particularly since the small business owner may be understandably leery about relinquishing control over a task that he or she has handled from the outset. Developing a successful long-term relationship with an outsourcing partner requires effort on both sides. It’s important to treat it like a partnership, because that’s what it really is. A vendor who supplies a vital service for your business is like part of your staff, so you should go through a similar interviewing and reference checking process before you “hire” them.

Using outside service providers who have experience working with your particular type of business is important. You’ll also want someone with the technology and expertise to deliver cutting edge services.

Be sure to ask detailed questions about the service you will receive and your access to someone who can answer questions and solve problems as they arise. For most small business owners, this kind of accessibility and service are top priorities. If the firm you are considering won’t be available when something goes wrong, look elsewhere.

Also ask your candidate firms for current and past clients who received services of a scope similar to what you’re looking for. If possible, ask for clients similar to yours to properly gauge how well the company understands your needs. And, always meet with the service provider’s leadership as well as the people who will be working directly with you. You don’t want to have any doubts about their ability to handle what may be critical tasks for your business.

The “go-to” resource for help is the Outsourcing Institute, the world's largest professional community dedicated solely to outsourcing. The Institute’s Web site (www.outsourcing.com), provides a wealth of information about outsourcing trends, articles on securing IT and business processing services, and tips for ensuring your outsourcing partner delivers the level of performance you want.



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

How do I retain my best employees?

Make Employee Retention a Top Priority

The expression, “good help is hard to find,” has never been more accurate. Competition for talented workers is intense in most locations and specialties, and the “best of the best” know it. If they’re unsatisfied with their current job, they have no qualms about looking for something else.

Retailing motivated, productive employees is a critical concern for small business owners, as they often play a key role in the growth and success of the enterprise. A survey by Robert Half International, conducted by an independent research firm, examined the reasons that “top” employees, those considered good performers by their bosses, left the business. Here’s what they found:

• Limited advancement opportunity: 39 percent
• Unhappy with management: 23 percent
• Lack of recognition: 17 percent
• Inadequate salary/benefits: 11 percent
• Bored: 6 percent
• Lifestyle change, such as moving: 2 percent
• Other/don’t know: 2 percent

The message for business owners is clear, says Max Messmer, CEO of Robert Half. “Helping top performers reach their goals is essential to keeping them. The best employees are ambitious and may not stay in a job long if it lacks growth potential.”

Retaining good employees can be a challenge to small business, particularly when compensation or advancement is involved, but it’s not an insurmountable one. If promotions aren’t an option at your business, you can still find ways to reward extra effort. It doesn’t have to be money. If budgets are tight, consider a more flexible schedule or larger workspace. Praise should be frequent and personalized, but it does not have to be costly or time consuming. A simple thank you note can be an effective motivator.

Take the pulse of employee perceptions in your business. Are they happy doing what they do? Ask their opinions on the work environment and changes that might enhance their loyalty.

Also remember that like any other important business asset, employees require their own form of care and maintenance. Bringing in temporary help during crunch times is one way to ease the workload and prevent burnout. Engage your employees in finding ways to add some fun to the workplace, especially for jobs that involve a lot of repetition. The resulting increase in morale and camaraderie will boost not only loyalty to your company, but also its productivity.


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

What funding sources are available for small businesses?

Financial expert and SCORE counselor David Plucinsky shares his expertise in this first of a series of articles on how to fund your business.

“One of the most frequent questions asked of SCORE counselors concerns ways to fund a business. The topic is very broad; today’s article addresses general concepts.

Money: You want it, someone has it and you are looking, oftentimes to a stranger to part with it; invest in your idea, lend to your business or provide a grant. No one gives money away, no matter how good your idea or your current business is, unless there is “demonstrable evidence” to support funding. Funding sources want to know that they are not throwing money into a “Black Hole”. Demonstrable evidence is your high quality business plan which addresses:
---- For equity investors (e.g. Angels or venture capital firms), a return on investment
---- For debt lenders, proof there is sufficient collateral and cash flow
---- For grantors, proof the concept is viable plus documenting that a social good will occur

Where to look for funding depends on who you are. Are you an entrepreneur with a great idea? Perhaps an entrepreneur with a proven idea; you have a proto-type or beta site to back it up? You may already be in business and struggling, possibly in business and succeeding, looking to expand.

While there are no hard and fast rules as to where to source funding, certain realities do apply. Banks will not fund a start-up. Organizations like the Small Business Administration (SBA) or the NJ Economic Development Authority do not fund businesses; they provide guarantees to banks once the bank determines that the borrower is credit worthy. Banks require collateral to support the amount of money needed, be it assets in the business (heavy duty machinery, receivables from customers or property), equity in your home or other assets that can reasonably be converted to cash.

Professional investors such as venture capital firms do not fund start-up businesses. Occasionally what is known as “Angel” investors may, however recent statistics prove this to be less likely. Looking for money from those close to you and indeed, yourself, generally known as “friends and family” is your best option if you are starting a new business. Grants are available; these however generally apply to” special circumstances”, the disadvantaged, minorities and those providing a social good, such as creating new jobs. Many SCORE clients believe grant money is “easy” money, this is most certainly not the case, obtaining a grant is very hard work.

As noted at the outset, funding is a very broad topic. Future articles will look in depth at the various forms of funding.”

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

Does it make sense to plow profits back into my business?

As your business matures, the time will come when you will see excess cash and steady profits. Then the question arises of how to further increase the profits of your company. The stock market in recent years has been particularly unkind to the large companies that invested heavily in it. So plowing your profits back into your company may be the shrewdest move you can make in good times.

Lowering your overhead is a logical place to start, particularly if your rental payments keep going up. That may suggest to you that it’s time to buy your current building or look for one to purchase, so that you acquire a manageable mortgage that costs you less per month than renting. And once the space is yours, you can design the layout that will best maximize productivity. Longer term, you benefit from having the value of the building on your balance sheet and may be able to protect some of your profits from taxes due to the depreciation allowance.

Another approach to building value for your company is taking advantage of down markets to buy additional inventory—taking advantage of volume discounts and discounts at the end of a supplier’s selling season—or acquire better equipment. The latter approach might include computerized and electronic systems that can improve internal processes—again enhancing productivity.

However, another use for excess cash is to invest in financial instruments. You may decide, for example, that excess funds are best kept in treasury bills or certificates of deposit (if you can keep them there at least 90 days). Most likely, with available funds in excess of $100,000, you can make transfers between your checking account and your interest bearing investment account, despite the limit on the number of checks you can draw on the interest bearing account.

Lastly, you may want to consider acquiring a smaller company as a way of growing your business and expanding market share. If you go this route, prepare to learn more about business valuation at the same time you’re scrutinizing such assets as property, equipment and inventory, to be sure you really need them.





Richard Strug
Greater Princeton Area SCORE
Serving Mercer and Middlesex Counties

Is Newspaper Advertising Still Relevant for My Business?

As a small business owner, you must give great consideration to the best ways to promote your business and newspaper advertising needs to be a key element in your media mix.

Newspapers are one of the oldest forms of mass media and they continue to be one of the largest sources of communication between the advertiser and the consumer. Over 50% of adults read a daily paper with readership in the Sunday paper nearly 65%. Importantly, they spend valuable time reading and processing the content, illustrating the importance the reader gives to the material.

Yes, newspapers play an important role in our daily lives but how does this translate to building your business and making your advertising budget work harder?

 Newspapers allow you to easily reach a large number of your target audience within a specified geographic area thereby reducing media waste and increasing your advertising plans efficiency.

 Newspapers offer immediacy. You can judge results quickly, and since you are working with short deadlines, you can adjust the advertising quickly depending on market conditions.

 Consumers can take their time examining your advertising unlike other media where they are limited by the length of the commercial.

 Newspaper advertising is relatively inexpensive to produce compared to other media. They are also easy to switch if you need to promote a new service, special offer, or a seasonal event.

 Newspapers give you the opportunity to better pinpoint your ad depending on your target audience or business profile. If you’re promoting an accounting firm, you would use the business section or, if your target is only men, you might place your ad in the sports section.

The bottom line is that you have many advertising options to choose from and limited funds to work with. To reach and persuade your target market, newspaper advertising remains one of oldest, affordable, and reliable ways to advertise your product.


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

How do I deal with unexpected rapid growth?

Rapid Growth Can Be Exciting…And Overwhelming

Strong demand for your product or service is a sure sign of success. But it’s also possible to be too successful—that is, having more orders and requests than you’re able to fulfill.

At first, that might sound like a good problem to have. But if you don’t act quickly, this dream-come-true can quickly deteriorate into a nightmare of frayed nerves, broken promises, lost clients, and irreparable damage to your reputation.

Here are some tips for dealing with over-demand:

Get a status check. You can’t make good decisions unless you have an accurate picture of where everything stands. If you manufacture a product, see what might be needed to incorporate the new orders into your processes. Can your existing suppliers provide the needed materials? Are alternate sources available? If you’re a service business, can you rearrange your schedule and still meet your existing commitments? Plan wisely, as measures to meet short-term demand can also disrupt your long-term plans and operations.

Assess the costs. Whether it’s a temporary up-tick or sustained upward trend, responding to high demand may require an immediate investment of capital. Weigh your options against your cash flow and other resources. Hiring temporary workers may or may not be as affordable as overtime for your current staff. You may also have to pay a premium for rush orders of materials, or by using other suppliers.

Be honest with your customers. Explain that you’re short on time or inventory, and specify how long they may have to wait before you can fill the order or take on the assignment. Remember that you can’t please everyone. Some people will be willing to wait, others will look elsewhere.

Be honest with yourself. While it may be tempting to take on new orders and assignments in the name of growing your business, it’s still up to you to manage everything. Don’t overtax yourself or your resources. And certainly, don’t let increased demand compromise your health or personal responsibilities.

Refer customers to others. Nobody likes turning away business, but it’s better than the consequences of missing deadlines or producing poor quality work. Refer opportunities you can’t handle to other vendors or contractors who you trust will do a good job. Customers will appreciate your candor, and remember you as a problem-solver and information resource. That increases the likelihood that they’ll come back.

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

What are my chances of success in a small business?

Fear of failure is an understandable concern that can give even the ablest of prospective entrepreneurs cold feet about starting a new venture. Those doubts are amplified with every news story heralding the number of failed or closed small businesses

But a look behind the numbers reveals that small business entrepreneurs have a better chance at success than they may realize. In fact, a review of business closings by the Wall Street Journal’s Small Business editors shows that the number of outright failures is highly exaggerated.

Nearly a third of business closures that government statistics assume to be failures are not really failures at all. These businesses were considered a success by their owners who simply sold off the pieces or closed them to retire or pursue other activities.

Data from the U.S. Census Bureau’s Business Tracking Series show that about 65 percent of new businesses are still operating after four years. That means new ventures actually succeed more often than not.

But the more resources a new business has to start with, the better its chances. That includes money, of course, but other assets such as market savvy and the right people. Here are four factors that improve the odds of new business survival:

1) People. If you can afford to hire employees, do it. Well-staffed businesses have better survival rates than solo operations.
2) Startup capital of at least $50,000. Not easy, perhaps, but businesses that start with less have higher failure rates.
3) A college degree for the owner. Better yet, enroll in a college-based entrepreneurship program.
4) Home beginnings. To keep costs low, start initial stages of your business from a home office.

So why do small businesses fail in the first few years? The most common reasons include failure to have a comprehensive business plan, competition, mismanagement, high rent and insurance costs, high debt, inability to get financing, loss of clients and difficulty with collections. Most of these factors can be addressed early on through good research and planning, having a thorough business plan, and getting advice from trusted, objective sources. Unforeseen and uncontrollable factors that lead to business failure may still arise, but doing your homework will definitely put the odds of success in your favor.


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

As a retailer, how can I make the most our of my promotion spending?

Alan Yarnoff, SCORE counselor and former advertising executive, provides us with his expertise on cost effective ways to promote your business.

“An effective and well planned out promotion approach is an essential survival tool for any retail business in today’s harsh business environment. You need to be creative in finding ways to promote your business and stay at least one step ahead of the competition, while staying within your preset budget perimeters.

Every retailer has at one time used the “tried and true” promotional approaches of flyers, mailers, value packs and newspaper and radio ads all of which are expensive and over time they lose their market value. But, there are other ways to reach your target audience without incurring the high costs of traditional media. Here are some ideas that may be helpful in promoting your business with virtually no costs.

You can write how to articles for newspapers and news letters published by groups in your area focused on your business expertise. If you own a jewelry store you can do stories about buying and selling gold; if you have a gallery, write about buying art as an investment. Just make sure you end the story with your store name and location.

You can contact the promotion manager at the local radio station and offer to donate prizes for their various promotions in return for promoting your store name every time they the event is mentioned.

Try partnering with a local charity by designating a special day to donate a percentage of the profits to the charity. They would promote the event and you would get added traffic to the store and build excellent goodwill in the community.

Get involved in the local community by sponsoring a town event, or parade, or the cleanup of the school playground. You could have a window decorating contest with the neighborhood schools, and, if you get the mayor to be the judge, it will certainly make the local paper.

Remember the key here is to always look for events or promotions that will get your business in front of the public in a positive manner. Be aggressive in what you are doing and once you commit to something make sure it maintains the same high standards you used to build your business.

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

I want to go freelance. What are the considerations?

SCORE counselor, Abraham Cohen, offers his perspective for those considering a start up consulting or freelance business

With unemployment rates close to 10%, more Americans are looking into consulting or freelancing, having given up on the salaried 9 to 5 world. Here are a few tips for those considering going that direction:

• Commit for the long term: You may see this as a temporary situation; odds are you are wrong; you may be in for the long haul. See it as a job, an investment requiring time and thought. Print business cards, set up a basic website, establish a new cell phone number for your business and make a list of your contacts.

• Use and update your skills: Your expertise and skills, too expensive or infrequently used for companies to keep in house, are your assets. Implementing new software or temporary graphic designs demand greater salaries; firms find it more efficient to hire your talent short term. Keeping your skills fresh is vital, an upper hand on competition. Attend workshops and training courses to maintain your cutting edge expertise. Teaching at regional schools, colleges or workshops will look good on your résumé. It will provide some income and a great way to network and get leads to new clients. Teaching also forces you to keep up with the latest advancements in your professional field.

• Networking: Join a network or community of consultants, giving you an important source of new clients. You can share work with fellow consultants for bigger projects that require more hands. Forming a team that works as a firm is a possibility. And, keeping referrals within the group will create a flow of work.

• Your own space: Find a work space away from home. Clients want a level of professionalism when dealing with you. Sharing an office with a group provides quiet space and a desk to call your own. A receptionist service will answer your calls and keep schedules.

• You need to have a business plan: This is the most important ingredient for success. A business plan and mission statement will help decide what jobs to take. Get known for what you do best; taking anything that comes along will brand you “non-specialist.” Organize the business, use software to track billing and expenses and, most important, keep your personal and business finances separate. Steer your business toward your goals.

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

What role does my business plan play after I'm up and running?

Starting a small business requires extensive planning and research. But just because things are up and running doesn’t mean your days as a strategist are done. In fact, they are just beginning.

Planning is an ongoing necessity because the environment in which your small business operates continually changes. New opportunities and challenges will arise that are different than those assessed during the start-up stage. Your initial financial projections may be literally and figuratively on the money—or trending in a different and unexpected direction.

Here are some planning tips to help keep your small business on track for long-term growth:

Revisit your business plan. Your business plan shouldn’t become a “trophy” of your start-up success. Refer to it every quarter or six months to match estimates with current realities. Update your plan as needed with new or modified contingencies, and adjusted time frames for key milestones such as expansions or new product/service lines.

Watch those numbers. Financial statements provide a window into the health of your business. Project cash flow several months into the future based on reasonable expectations for sales and income, customer demand, regular payments (e.g. loans and rent), and other factors. By comparing actual cash flow to projections, you can spot opportunities to improve performance.

Watch your industry. In today’s interconnected global economy, any change anywhere can have a ripple effect on any small business. The influences may be as far-reaching as a shift in demand for a certain commodity, or as local as a new stoplight near your store. Stay current with world and community events; study your sales records; and communicate with customers, suppliers, and colleagues. You’ll be less susceptible to surprises, and better prepared to anticipate and capitalize on these changes.

Develop relationships. Although growth usually implies investing in additional resources, there may be more cost-effective options better suited to your immediate and long-term needs. Building partnerships with other businesses in your field and specialty consultants can help stretch your capabilities. They may also call on you when they need help—perhaps during a period when you have time or capacity to spare.

Invest in your staff. Because a growing business will demand more of your time, identify employees who can take on routine and management responsibilities. They’ll relish the opportunity to grow personally and professionally, and you’ll be free to focus on more important issues.

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

How effective are marketing "tag lines"?

Alan Yarnoff, SCORE counselor and former advertising executive, looks at the importance of an effective tag line for your service or product.

“With all the effort small business owners and managers put into creating websites, online advertising, and newspaper and radio ads, they sometimes overlook the most important ad they need to create: the company’s or product’s tag line. A tag line is best defined as a short phrase that tells your audience what you offer in a memorable fashion and should never be taken as an after thought.

An effective tag line is the true first step and an integral part of brand building. No matter what your company does, your tag line creates a first and lasting impression to your projected target audience and should not be ignored.

Effective tag lines are terse, “Just do it;” they make a promise, “Bayer works wonders;” or they can suggest the risk of not using the product, “It’s gotta be clean, it’s gotta be Tide.”

To get you started, here are some tips on how you can create a winning tag line for your business. Start by defining the key factors of your product or service. What features are truly different and how do they translate into a real benefit for the customer. Once this is done, you need to translate the findings into an evocative and inspiring call to action.

First, keep it short - more than one line becomes tedious. Second, be descriptive - this can be difficult to do in a few words but it is very important. The tag line that describes the core benefit of the product and what truly sets it apart will be successful. Third, stay within the brand - the tag line must fit in and compliment your brand, not stand apart from it. Lastly, be relentless - the challenge of creating an effective tag line is not an easy task and will not come quickly. Use all your resources, give it time, and eventually you will find it.

We all know how difficult the current market situation is and we must do everything possible to build and maintain our customer base. No part of your promotional program can be over looked, especially something as important as an effective and meaningful tag line. So get to work today and devise the words that will define your business and create a memorable and lasting impression for your customers.

The Ask SCORE column needs a tag line. The winner’s name will appear in the first article that uses it. Send your ideas to my attention at info@scoreprinceton.org.

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

Where should a company owner focus his/her time?

“Just wait ‘til I’m the boss…”

That sentiment has helped sustain many aspiring entrepreneurs through the process of getting their small businesses up and running. Among the many benefits of small business ownership is the opportunity to do things “the right way” when it comes to employees and customers.

Once in charge, however, many small business owners find that leading, managing, and motivating others involved with the business aren’t as easy as they sound. One reason is widespread confusion about the difference between “managing” and “leading.” Leadership experts say they are two very different roles, even though most small business owners consider them the same.

“Managing” implies structure, control, rules, deadlines and efficiency, says Ken Blanchard, best-selling author of The One Minute Manager. But according to Blanchard, “leadership” is nearly the opposite of “management.” Leading requires actions that are more experimental, unstructured, visionary, flexible and passionate. Managers and leaders think and behave differently.

Blanchard and his partner Drea Zigarmi spent seven years studying how business leaders exert influence and how their values, beliefs and personalities contribute to their success—or failure. Through it all, one finding was clear: A one-size-fits-all style of leadership does not exist.

Owning a business automatically puts you in a position of leadership. Your goal is to engage employees, partners, vendors, investors, independent contractors or other participants in your venture in a course of action that helps achieve a mutually shared vision. But being in a leadership position does not necessarily make you a leader.

Many entrepreneurs turn to management techniques to enlist the minds and muscles of the people they lead, but fail to capture an equally important component—their hearts. If you merely work to focus activities of followers and fail to engage them in a purpose, you won’t likely be seen as a good leader.

“The first step to becoming a better leader is to study yourself and get honest, unfiltered feedback about how you are doing from the people you lead,” says Blanchard. “You cannot effectively lead if you do not know your own values.”

Learning when and how to provide direction (defining roles, setting goals and priorities, scheduling, and evaluating results), and support (seeking input, listening, offering praise and encouragement, sharing information, explaining decisions, and helping others solve problems) is an ongoing process for even veteran small business owners. Employees, vendors, and customers all change; you need to make your leadership skills flexible as well.

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

How can I maximize my advertising dollar?

Even on a limited budget, every retail business must advertise to keep new customers coming in the door. Co-promotions and cooperative advertising are two approaches to maximizing the value of your advertising dollars by sharing the costs. The supplier (typically a manufacturer or distributor) benefits because its product gains greater exposure at the same time its sales are increasing.

Co-promotion may be an option if you can split your ad costs with another local business serving your same target audience. Those costs could include sponsorships, ads, newsletters, fliers and bill stuffers. You may identify one or more vendors who are willing to share the cost of a trade show booth as well as the printed materials and staffing required for the booth.

With cooperative advertising (also known as co-op advertising), two or more parties are sharing certain ad costs. This arrangement may take the form of an incentive program, with manufacturers contributing dollars to the ad campaigns of distributors or retailers to encourage the promotion of certain products.

Suppliers who participate in co-op advertising programs usually give the retailer credits for purchasing their products or services. Those advertising credits can amount to 3 percent to 5 percent of the total purchase. The credits can be redeemed when the business owner buys advertising that the supplier approves. Often Yellow Pages advertising qualifies for co-op money.

The supplier sets the guidelines. Usually the ads eligible for co-op dollars feature the supplier’s brand exclusively. In addition the supplier may have to sign off on the ad and the chosen medium being used if not also the frequency. Sometimes suppliers have ad copy or scripts that must be used to qualify for a reimbursement. If not, the supplier probably will want to approve of the ad before it runs. Remember, however, that the ad should feature your business prominently in addition to playing up the product.

How do you get reimbursed for co-op advertising? There are two approaches. You may have to pay for the ad up front and then give the supplier a copy of the ad. For radio or TV ads, you’ll probably need to show the script and proof of the dates and times the ads were aired. Some suppliers, however, may issue credits that equate to their agreed-upon share of the advertising. Then the business owner can make future purchases from the supplier at a discount.



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

How can networking help my business?

SCORE counselor, Alan Yarnoff, shares his fifth article with us, this time, on the subject of networking.

“In this difficult economic period, it may be time to look at your current networking process and begin to think more “out of the box.” Now is not the time to rely on the common networking practices like handing out business cards, attending meetings, and joining local chambers of commerce because these tactics will only go so far. You need to become more proactive since the same old tactics may have reached the point of diminishing returns.

One of the real problems is that most people believe that networking consists of telling as many people as possible about yourself or your business, rather than the real objective: which is to find out as much as you can about the potential prospect you are networking with. It is important that the initial conversation focus on understanding your prospects problems, needs, concerns, and getting solid contact information. With this in hand, you can determine whether they would have an interest in the product or services you provide.

If the answer is yes, it’s time to get to work and follow up the initial contact within an actionable way. People have short memories; it is incumbent upon you to remind them that you are the one that can solve their unmet business needs. Send a letter or email with suggestions they could use right away, send samples of your products, or articles you have written that would be useful in building their business. Most important keep the pressure on until either you get the new client or are asked to stop.

Another way to expand your network is to speak to local groups, organizations, and associations about your field of expertise. The object is to transform your experience into an informative concise and entertaining presentation to help the audience improve their business. Position yourself as an expert and validate your credibility in the local business community.

Lastly you may consider creating a blog for your business. The blog offers you a valuable tool to stimulate a personal dialogue with potential customers and a great way to let your current clients know what’s new with your business.”
Good luck and good networking.



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

How do I manage cash flow?

Just as watching your blood pressure is important to your personal health, monitoring cash flow is vital to the well-being of your business. Minor “hiccups” may be expected, but they can also be an early warning of bigger, potentially chronic problems ahead, especially if other indicators such as sales seem positive.

Though critically important, monitoring and predicting cash flow is actually a matter of consistently following some simple, common-sense financial management practices.

The object is to make certain that more cash enters your business than exits your bank account. First you need to translate sales into real money as quickly as possible. Once you’ve collected the cash, your business needs to guard it. Surprises, such as slow or non-paying customers and unexpected expenses, are your worst cash flow enemies.

One way to shift cash your way is to ask for all or a portion of payment up front. Asking for at least a deposit in advance is a great way to jump-start your cash flow. And if you establish the policy fairly and properly, it shouldn’t alienate good customers.

Accepting credit card payments also can help, so you may want to sign up for a merchant account that allows you to do this. Or, if you already have one, encourage customers to use this option more often. You do pay a fee for this. But credit cards are a great way to speed cash into your account, and the cost is generally small.

You may need to manage “receivables” more closely. This is the money that customers owe to you for products or services you’ve delivered. Create a detailed “aging” schedule of what you are owed, by whom and for how long. Place phone calls to overdue accounts, focusing first on the largest amounts due. Offering a discount can bring some quick cash in the door, but play this card only after you’ve called the customer to ask for full payment.

Finally, don’t overlook the power of an operating budget. Note specific due dates for payables as well as receivables, and regularly use it to get a “snapshot” of your cash flow status. With that information, you’ll be better able to make short- and long-term plans, spot potential problems, and avoid potentially crippling cash crises.


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

What are the pitfalls of borrowing from family or friends?

Friends and family are an invaluable source of support for the aspiring small business owner. And often, they’re an invaluable source of financial assistance as well.

In fact, more small businesses rely on loans from friends and family than any other funding source. Familiarity with the person and his/her business goals, the investment opportunity, and the ability to monitor the venture’s progress are among the major reasons why friends and family members willingly contribute to a start-up or expansion.

However, ready source of cash is not without its potential pitfalls. Business loans from family and friends also can be a disaster is they are not done right. Unstructured or loosely structured financing and payback terms can haunt both sides later on. Research shows that 14 percent of business loans from family and friends go into default, compared to about one percent for bank loans.

To increase the odds of success, approach family and friends with a detailed loan proposal, including financials from your business, just as you would a bank or venture capitalist. Be frank about the risks. If things go badly, they could lose all or some of their money. Consider the consequences of a soured business deal to your relationships.

Pick a financing structure that works best for your business and make certain everyone understands it. Specifically, be clear on whether the deal involves an ownership stake in your business, or whether it is a simple debt you plan to repay. And be clear about repayment terms.

To legally seal the deal, use a document such as a “Promissory Note.” Putting the terms of your borrowing agreement into proper legal form is crucial. You can find the downloadable legal documents you need, including many different Promissory Note variations, at www.findforms.com. Self-help legal publisher Nolo also offers loan forms and related information at www.nolo.com.

Another helpful resource is Virgin Money at www.virginlendingus.com, previously known as CircleLending.com before it was acquired by well-known entrepreneur Richard Branson. Virgin Money helps small business owners avoid the problems that can arise with loans from friends and family by providing loan administration, recordkeeping, payment processing and structural support. The service emphasizes flexibility to meet the needs and concerns of both borrowers and lenders, from terms and interest rates to repayment strategies.


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

Should I buy or lease equipment for my business?

Ready to invest in some new equipment for your small business, but concerned about the added burden of a loan? Consider leasing.

Not only does leasing help you conserve your cash, it also ensures that you don’t wind up paying for equipment that quickly becomes obsolete or unsuited for your needs. And if you need the equipment only for a short time or special project, leasing saves you the hassle of having to be both buyer and seller.

There’s no limit to the type of equipment available for leasing, or the size of the company that can access it. Even one-person operations can lease equipment. Unlike loans, leases generally do not require a down payment. You’re required to finance only the value of the equipment expected to be used during the lease term. Depending on the type of equipment and lease arrangement, you may also be responsible for routine maintenance and other costs as well. When the lease expires, the equipment goes back to the leasing company, completing your obligation.

Leases are not loans, so their costs are calculated differently. Payments on an operating lease are considered an overhead expense that you can deduct from your business income. Generally, however, the cost of leasing is similar to the cost of other financing options when you consider the entire transaction.

Flexibility is another leasing hallmark. You can tailor a lease to fit your month-to-month, seasonal or annual cash flow needs. And if customers or the competition demand that you always have the latest technology, a short-term lease can help you get what you need and keep your cash. Most leasing companies offer lease-to-own plans if you determine that purchasing the equipment is in your best interests of your business.

The Equipment Leasing and Financing Association (ELFA), a trade group of leasing companies and financial services companies, has a special section that explains the basics of leasing at its Web site, www.elfaonline.org. You’ll also find guidance on leasing options and benefits, loan/lease differences, leasing terminology, and a searchable directory to help find a leasing company to meet your needs.

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

How do I keep my employees motivated?

One of the first and most important lessons an entrepreneur learns is that employees really are a small business’s most important resource. In fact, the business literally cannot succeed with out them. Their talent, skills, and effort truly add value to your products or services, allowing you to focus on the planning and creative issues that will move your business forward.

Unlike your equipment, computers, and other resources, however, you can’t simply turn employees on and off for business hours. All employees need a clear understanding of their role in your business and how it can grow, plus the motivation to achieve and, even better, exceed those expectations. That’s why you, as the business owner, also hold the title of “Chief Communicator and Motivator.”

It’s important to have direct contact to make your message clear. Some owners try to save time and manage by email. That works only to a point. But direct contact builds trust and rapport.

Establish your business “mantra” and keep repeating it. Don’t assume that everyone involved in the business understands and buys into the mission as you do. After all, you’re the one who created it, not them. They haven’t lived and breathed every detail as you have.

Here’s one simple step to make certain you communicate clearly. Instead of asking if an employee understood your instructions, ask what specific steps the person will take to complete the task. That way you can be absolutely certain they not only understood, but also plan to complete the assignment in an appropriate way.

Avoid constantly criticizing employees. That hurts morale and can make people less motivated. If you highlight the positive and correct mistakes without getting personal, employees are more likely to deliver what you want.

While a good manager is also visible, it’s important to not make it appear that you are micromanaging. A quick chat about work and non-work issues during a stroll through your business is all the positive reinforcement is all most employees need. They’ll feel more comfortable about coming to you with questions, concerns, or suggestions. Augment the informality with individual and group meetings to share information and updates, brainstorm ideas, and simply get to know each other. Such interaction will not only help re-energize your staff, but the boss as well!

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

What are the best sales habits to practice to keep my customers?

The longer you’re in business, the more you realize that the only constant is change. You may be enjoying strong sales across a broad customer base, but those conditions could be far different in just a matter of months. A competitor’s offer may tempt your customers to try something different. Organizational and operational changes may require you to build relationships with new people from scratch.

While there are several approaches to these challenges, all share the same fundamental elements—good selling habits. For example, it’s important for your business to approach selling with a positive, service-minded attitude that focuses on your customer’s needs, desires and expectations. How do you get these valuable insights? Ask them. Most people love to talk about themselves, and what you learn will help you adjust your sales and service tactics accordingly.

Keeping the attention on them, rather than you, will also help you tune in to why they buy, or why they don’t. Plus, if you take time to listen and ask questions, customers will start to think of you and your business as a valued resource, rather than just a selling machine. You can easily show that you are willing to help the customer by anticipating what they need and having answers to potential objections.

Train yourself and your employees to smile. It’s easy to get grumpy or cynical if sales go south. But that’s when a good attitude becomes most important. Don’t be afraid to take a risk or try out a new approach from time to time. It could be a new marketing pitch or advertising channel. When operating a business in today’s competitive world, the greater risk is in thinking that the status quo will suffice.

Remember too that today’s customers have higher expectations than ever before. You can’t accommodate everybody’s needs, but automatically declining an unusual request will get you nowhere. By adopting a positive, can-do attitude, your mind will instinctively be alert to ways for doing things that once might have seemed unreasonable. That will ensure your customers keep coming back and, just as important, keep recommending you to others.

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

Where should I direct my spending in these tough economic times?

SCORE counselor Alan Yarnoff once again offers his insights on the necessity of promoting your business in a slow and changing marketplace.

“Over the last eighteen months, the small business owner has faced a wide range of problems: liquidity has become difficult, sales have softened, and costs continue to grow. To the detriment of their future, companies have cut back or eliminated promotional spending as a means of staying afloat.

This, I am sorry to say, is probably the least effective method of looking positively at your long term growth. You must look at the strategies that helped build your business at a time when it’s most needed. Look back and recall how you grew your customer base, what promotions worked best, and then concentrate the limited promotional funds you now have to make those successful tactics work again.

If the best way to turn the tide is by keeping your current customer base, then place your promotional endeavor against this target. Open up a new line of communications with them by e-marketing, social networking: Twitter, Facebook, You Tube, or blogging. With a series of meaningful e-mail bursts, enticing offers, and actionable options for them to act upon, your business will start to improve.

If the road to survival needs a new base of customers, then apply your best efforts to sourcing new business. Review what worked in the past when you had the funds to use multiple methods of promotion and spend your dollars there. If print is the right way to go, advertise there. If special offers or couponing had positive results, then spend your limited dollars there.

Lastly, review your website and make sure it is working as hard as possible in building your business. You must allocate a portion of your promotional budget to making your site always look fresh and exciting. For new customers, it’s their first opportunity to meet you and shop your store. For returning customers, it’s their way of finding out what’s new, what special offers are available, and new trends in the marketplace.

Remember, the goal is to keep you business viable until the economy improves and the worst thing you can do is to stop being aggressive, because being aggressive is what built your business in the first place."

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

What can I do to improve customer loyalty?

Much has been written about the erosion of customer loyalty, and how cost-conscious buyers are putting a higher priority on price.

Fortunately, the repeat customer is far from becoming an endangered species. But in today’s highly competitive environment, you need to do everything possible to ensure that relationships with your customers don’t end at the point-of-sale.

“You need to give your customers something of extra value if you want them to return,” says international hospitality consultant Linda Novey-White. “Look at your business like a customer would. What could you be doing better, and what is your competition doing better?”

Start by anticipating your customer’s needs. Think ahead to what the market will be demanding in the coming months and determine what you can do better. Also keep abreast of trends that may influence your customers’ purchasing decisions. They may alert you to the need to modify your offerings to respond to new regulatory requirements, or changes in preferred styles and formats.

You can also gain insights into customer needs simply by asking and, more importantly, listening. Too many businesses take it upon themselves to advertise the next big thing without considering whether their customers want it or not. And while everybody wants a good price, they want a good value even more. Listening to and acting on your customers’ needs and concerns will make a lasting impression on even the most meticulous comparison shopper.

Adding a personal touch will also forge a stronger bond between you and your customers. Casual conversations will yield important information such as birthdays, professional accomplishments, and family events that you can recognize with a card or other low-cost token of appreciation. Everyone appreciates a helpful reminder in this busy world, and a message about an upcoming event such as change in postage rates or a new industry requirement will cement your reputation as a go-to source for more than just your product or service.

It’s also helpful to regularly share news about your products or services, and the issues that affect their use. You can do this on your Web site, or via a customer e-newsletter. Just make sure your customers specifically request to be on your mailing list.

Finally, make sure you deliver what you promise. “Too many people offer hype and then don’t follow through,” Novey-White says. “Delivering a product or service that disappoints is the fastest way to lose your customers.”

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

How can I maximize word-of-mouth referrals?

Even in an age of high-tech communication, the most powerful and effective means of generating new business is also the oldest: word-of mouth. People naturally turn to trusted friends or colleagues for recommendations regarding product or service providers. You’ve probably used it yourself when searching for a mechanic, making major purchases, or weighing an outlet to promote your small business.

And because word-of-mouth referrals are free, you can’t be the return on investment that a positive referral can generate.

While a successful word-of-mouth marketing chain can sometimes start on its own, don’t assume that the phone will start ringing off the hook. Any successful marketing tool—word-of-mouth included—requires a proactive, patient approach to ensure that the right message gets to the right people.

A good way to get started is to create a simple marketing message that is easy for people to pass along. If it’s not simple, it won’t pass the test. But make it specific to a real benefit or need, not something vague or general. If you can, include success stories or testimonials from real customers. These can have a tremendous pass-along impact.

To stimulate word of mouth, you might also consider asking customers for referrals and recommendations. And put your networking efforts into high gear. If you network and get to know people in your community or industry, they will think of you when they need your product or service. Join networking groups and local business organizations, and attend conferences. Donating your products or services to local charities can generate goodwill and get your name around.

Consider introductory discounts or free samples. People are more willing to try a new product or service if they can do so economically. Many small companies have jump-started sales through carefully controlled giveaways.

Above all, perhaps recognize that people will happily spread the word about your business if you treat them well. Tales of negative experiences or poor performance can be difficult to correct once they are passed on. That’s another important reason why it’s important to continually provide superior service, address problems quickly, and anticipate your customers’ needs. Those are the things they’ll remember—and talk about.


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