Ask SCORE

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

2010-12-21T15:42:00.000-05:00

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?

2010-12-14T15:40:00.000-05:00

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?

2010-12-07T16:08:00.001-05:00

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?

2010-11-23T18:09:00.002-05:00

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?

2010-11-16T12:07:00.002-05:00

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?

2010-11-09T12:04:00.000-05:00

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?

2010-11-03T14:43:00.000-04:00

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?

2010-10-05T15:27:00.003-04:00

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?

2010-08-31T21:00:00.000-04:00

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?

2010-08-24T14:00:00.002-04:00

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?

2010-08-17T16:08:00.001-04:00

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?

2010-08-10T16:10:00.003-04:00

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?

2010-07-28T15:00:00.001-04:00

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?

2010-07-20T11:54:00.002-04:00

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?

2010-07-13T16:19:00.002-04:00

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?

2010-06-22T10:26:00.002-04:00

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?

2010-06-15T16:11:00.003-04:00

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?

2010-06-10T15:48:00.002-04:00

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?

2010-05-25T19:58:00.002-04:00

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?

2010-05-18T11:23:00.001-04:00

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?

2010-05-11T16:05:00.001-04:00

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?

2010-05-04T11:20:00.003-04:00

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?

2010-04-27T19:38:00.004-04:00

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?

2010-04-27T13:13:00.002-04:00

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"?

2010-04-13T11:54:00.001-04:00

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?

2010-04-06T11:51:00.000-04:00

“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?

2010-03-23T12:24:00.002-04:00

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?

2010-03-16T15:13:00.000-04:00

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?

2010-03-09T20:31:00.000-05:00

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?

2010-03-02T20:30:00.000-05:00

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?

2010-02-23T20:28:00.001-05:00

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?

2010-02-09T11:51:00.001-05:00

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?

2010-02-02T09:26:00.003-05:00

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?

2010-01-26T12:34:00.000-05:00

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?

2010-01-12T12:50:00.002-05:00

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?

2010-01-05T20:01:00.001-05:00

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

How can freelancers maintain a steady stream of work?

2009-12-29T13:11:00.002-05:00

When you’re a freelancer or solo independent contractor, you are your own Marketing Department. It’s up to you to make the contacts and generate the work that will enable you to grow your business.

Freelance newcomers and veterans alike need to continually broaden and update their work-finding and marketing skills not only to sustain their current workloads, but also stay ahead of the competition. Two keys to being successful at this are consistency and dedication. The search for work is constant part of your independent enterprise, so you’ll enjoy it more if you develop a passion for finding the next big project.

Obviously, the best sources of new business are current customers. Doing good work for them will keep them coming back, which is why you also need to be a stickler for client satisfaction. Always stand behind your work and try to gauge client expectations at every step, and then exceed them.

It’s also important to stay in touch with your clients, even if you already have a substantial backlog of work. Check in periodically to ask how things are going, what projects or initiatives may be in the works, and remind them that you’re ready to help out if the need arises. They’ll appreciate your proactive interest, and planting that seed may pay off immediately, or in several months when things start to slow down on your end.

Also recognize that building your personal brand is important. As a sole operator, your brand is you, so focus on leveraging your special knowledge, style or expertise. But don’t lock yourself in to tightly. The most successful independent contractors try to build new skills and leverage existing ones to higher price levels.

A substantial number of Web sites specialize in matching freelancers with potential clients. Their approaches are as varied as the range of industries they cover. Some work on a bid system where employers post projects and freelancers bid on the work. These sites will likely take a cut of your proceeds. Then there are job boards, where projects are posted and you respond with a pitch letter and resumé directly to the employer. You may need to pay a fee to access these resources, so it’s a good idea to find out whether the amount of work or contacts generated is worth the investment.

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

How can I use Customer Service for competitive advantage?

2009-12-22T12:53:00.001-05:00

Size isn’t everything, especially for providing value to customers.

This important fact can help distinguish small “mom and pop” businesses from big box chain stores. It gives them a powerful competitive advantage in an age when more consumers crave and expect a high level of service and responsiveness.

Your position at the “front lines” of your business gives you direct access to your customers’ needs, attitudes, and opinions. You know the kinds of products or services they want, when they want them, and how best to deliver them.

To gain these valuable insights, you need to proactively assess what you do and should be doing to keep customers coming back, rather than tempting them to try the “big store” down the street.

Start by putting yourself in your customers’ place. How would you like to be treated if you were a first-time customer or a “regular?” Also consider conveniences. What can you do to make it easier to find items and check out, rather than having to navigate a big-box store’s aisles and cashier lines?

Also visit other stores and service centers, including those unrelated to your business. See what they do that you find appealing, and adapt those practices to enhance your business’s customer experience. Similarly, watch for aspects you don’t like, but be sure to understand the reasons behind problems or poor service, such as understaffing and limited inventory. This will help prevent similar problems from arising in your business.

How you connect with customers by phone or email will also help differentiate your small business from the sometimes bureaucratic nature of big-box chains. Answer calls promptly and with a friendly greeting. Avoid putting callers on hold for longer than a minute; take a message and respond as soon as possible. If you use an automated answering system, your customer service line should be one of the first options.

Although it may be impractical to handle email inquiries as they arrive, don’t let them sit for too long. Some email systems automatically generate a response to acknowledge the message. Make sure the text is upbeat and friendly—again, the kind of message you’d want to receive. A promise to respond within 24 hours may not be enough. Designate certain times during the day to handle email queries, or assign the responsibility to an employee.

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

What should my accounting records tell me?

2009-12-15T11:29:00.002-05:00

SCORE counselor J. Mitchell Sincoff, C.P.A., QuickBooks Certified ProAdvisor, shares with us his thoughts on the basics of reporting your income properly.

The first basic of keeping an accurate set of books and records is that you know whether you can stay in business. Maintaining accuracy is important to determine your cost of goods sold, and thus what the true gross profit of your business is. This will enable you to pay your overhead and most important your salary. Determining your costs and profits can also be programmed per item or service performed. It is important to see if you are priced right in the marketplace.

Can you afford loss leaders and do they bring business in to your establishment? Is your service or labor charges priced correctly to take into consideration all the additional costs of employees? Without accurate records, you can easily guess wrong and go out of business.

Based on this information, major decisions can be made on how your company is really performing: what changes need to be made, where to raise prices, where you can lower prices, which items are selling, and which are not. Plus what costs are too high, where to trim, or cut back on coverage, is it time to expand, and what else needs to be done now or in the immediate future.

Other advantages of keeping accurate books and records that indicate you are properly operating a business are: increased line credit of from financial institutions to help finance additional inventory, renovations, and additional locations. A local banker in Jamesburg recently commented that most of the people who are looking for loans have no idea as to the profitability of their business and are not really clear as to how the loan will be used. When tax and business records are not reconcilable, how can the lending institute grant a loan?

Keeping accurate books and records is also a definite advantage if you are subject to audits by the I.R. S., the State Sales Tax or Income Tax or Unemployment Tax divisions.

In the event you are currently losing money, do you realize you could take those losses off your taxes in the future, or get it back from past taxes you have already paid? A good Certified Public Accountant, or a Public Accountant, using Congressional guidelines can reduce any increase in taxes you may owe and help get you the relief necessary to save your business. He or she will save you, many times, more than their fee is.

So, there are many positives to keeping an accurate set of books and records.

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

How can I improve my networking skills?

2009-12-09T09:53:00.001-05:00

SCORE® counselor Alan Yarnoff shares his thoughts on “Networking for Success” in an attempt to help you improve your networking skills.

In this difficult economic period we are going through, it may be time for you to re-examine your current networking process and begin to think more “out of the box.” Now is not the time to rely on traditional networking practices: handing out business cards, attending meetings, and joining local chambers because these tactics will only go so far. You need to become more proactive, since the same old traditional tactics may have reached the point of diminishing returns.

One of the real problems is that most people believe that networking consists of communicating with as many people as possible about yourself and your business rather than the real objective which is to find out as much as you can about the prospects’ potential for you and your business. It is important that the initial conversation focus on understanding your prospects problems, needs and 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 in an actionable way. People have short memories so 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 immediately or 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 you’re 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 that will help the audience improve their business; thereby, positioning yourself as an expert. This will 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 can I make my business environmentally friendly?

2009-12-02T11:20:00.001-05:00

With climate change and diminishing resources dominating the news these days, small business owners are looking for ways to make their operations more environmentally friendly. Simple steps such as recycling soda cans and turning off lights are a good place to start, but there are many other ways you can make a big difference without a lot of effort and expense. What’s more, these measures will benefit both the environment and your bottom line.

Take energy use, for example. According to the U.S. Environmental Protection Agency’s Energy Star program (www.energystar.gov), cutting energy waste can typically save small businesses as much money and prevent as much pollution, per square foot, as large organizations—including those in leased space. Performed properly, business-specific energy efficiency upgrades can provide a positive cash flow right from the beginning.

Some “sure energy savers” include replacing incandescent light bulbs with Energy Star-qualified compact fluorescent lamps (CFLs), which cost about 75 percent less to operate, and last about 10 times longer. Regularly changing heating and air conditioning filters and investing in regular “tune-ups” will also keep the system operating as efficiently as possible.

Making greater use of email and electronic file transfers are sure to cut down on the amount of paper your business uses. If your business relies on incoming or outgoing faxes, a computer fax modem will enable you to exchange these documents without the need for making printed copies.

There are likely more recyclable items around your office than you realize. Your municipal solid waste department can provide information on materials and recycling procedures. Another good source is the Electronic Industries Alliance’s e-Cycling Central Web site at www.eiae.org, which provides information on finding local agencies and organizations that will recycle computers and printers. And, many charities accept unwanted office furniture for repair and reuse by other businesses, organizations, schools, and charities.

Purchasing products and equipment made from recycled or sustainable materials is also a good way for small businesses to do right by Mother Earth. According to GreenBiz.com, recycled-content products typically perform as well or better than virgin products and often are competitively priced. And when it’s time to upgrade computers or appliances, purchasing Energy Star-qualified products will ensure that you’re getting the most from every kilowatt of power.

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

Should my business idea be patented or protected in some way?

2009-11-24T16:57:00.000-05:00

Protecting Your Intellectual Properties is a Smart Move.

“TM,” “SM,” “PAT PEND,” “©,” “®.” These small symbols and abbreviations carry a lot of legal weight when it comes to safeguarding a company’s proprietary names, designs, products, and services. As an entrepreneur, you should consider making sure the valuable intellectual properties of your small business are protected as well. But which one(s) do you need?

Trademarks are not the same as patents and copyrights, even though the differences are not widely understood. While there are similarities, they serve different purposes.

According to the U.S. Patent and Trademark Office (USPTO), a trademark is a word, name, symbol or device used in business to indicate a source of the goods, i.e. your business, and to distinguish those goods from those sold by another business. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product.

A patent for an invention grants a specific legal property right to the inventor—“the right to exclude others from making, using, offering for sale or selling” the same invention.

A copyright is harder to define. It is mainly a protection for authors of original works, including literary, dramatic, musical, artistic, and other intellectual works, both published and unpublished.

The Internet has transformed the once mysterious process of applying for a trademark into something accessible to anyone willing to spend some time to understand the intricacies and get it right. But while no business skills or special legal knowledge are required to apply, the field is filled with potential pitfalls and wrong turns that could sabotage your trademark filing if you don’t know the intricacies of creating trademarks that can stand up to legal challenges later on.

For example, the application requires that you identify goods or services under specific categories. But misunderstanding these categories and filing too broadly or too narrowly can ruin your trademark and cause problems later on. A qualified trademark attorney can help you avoid such problems.

The U.S. Patent and Trademark Office’s Web site at www.uspto.gov provides a wealth of information and resources about protecting your small business’ intellectual properties. You’ll find basic information about trademarks, patents, and copyrights; links to easy-to-follow “How To” guides; and search engines for researching existing trademarks and patents.

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

How much should I charge for my product or service?

2009-11-17T12:46:00.002-05:00

How much to charge is one of the first questions most small business owners ask. And, it's not an easy one to answer. Setting a pricing strategy depends on many factors - the type of product or service you're offering, your own costs to provide it, your expected profit, your customers' location, the "going rate" for your industry, and many others.

Finding just the right balance between all of the factors involved is more art than science. Pricing too low can cut into your profits, while overpricing also can hurt your business.

A common misstep - especially in the early stages of a business - is pricing too low in order to attract customers. While special deals can work in some cases to start the ball rolling, going low is not always the best path. Low prices can draw customers interested only in price. They are the ones most likely to abandon you the moment they find something priced even lower elsewhere.

Selecting excessively low pricing levels to attract clients is even more dangerous for service businesses. You only have so many hours to sell. Your business can't make it up in volume like a retailer who still profits from lower prices if volume is high enough.

Pricing is partly psychological. You will want to set your levels according to the perception of your product or service "brand." If you want to be in the premium neighborhood, your pricing can be higher to match an upscale image. Pay attention to price points; they differ widely by product and industry.

Pricing is an ongoing process, so test your pricing periodically. You may need to adapt to changing conditions. Competitor prices, your own costs, customer perceptions, and your profit expectations can all change. Or, you may want to simply test different pricing levels to see what works best for your business.

Research the norms for your industry, including price ranges across the country if you sell nationwide. You may want to charge more or less, depending on your brand positioning.

Make sure ou use timely and accurate information to calculate your costs for labor, supplies, and direct and indirect overhead for every product or service you offer. "Guesstimates" are not good enough, and may cost you far more than the hour or two of research. Also take into account seasonal fluctiations that might cause short-term increases.

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

What kind of life insurance do I need as a small business owner?

2009-11-11T16:15:00.001-05:00

If you're a small business owner, chances are that you've caught yourself more than once dreaming about the future. You may picture yourself hobnobbing with industry leaders, cornering the market with an innovative product or service, or directing the work of hundreds of employees.

There's nothing wrong with this kind of musing - as long as you are willing to invest the time and energy to achieve these dreams. However, entreprenuers often fail to consider a less cheerful scenario: what happens to the business if you die suddenly? Would your business close? Would it be clear who controls the assets? Would your family's interests be protected?

The best way to avoid this troubling uncertainty is to have life insurance for your business - and it may not be optional. Before making a business loan, many banks require the business owner to have a life insurance policy. Typically, it's in the form of term life insurance that covers the cost of the loan in the event the borrower dies. The bank then is the beneficiary of the insurance policy.

Life insurance can provide for the successful liquidation of your financial interest in the business, thereby protecting your heirs. If your employees are scheduled to assume ownership following your death, the insurance policy can be designed to provide funds for the purchase of the business. In addition, the life insurance policy can be used to pay the federal estate taxes on your estate. It can also fund a buy-sell agreement between partners.

If the business is to be sold outright after your death, an insurance policy can provide working capital for the transition period. The availability of a ready source of cash will make the business much easire to sell. Assets are usually discounted during such a sale, so the availability of insurance funds will help your heirs.

A related type of insurance is "key person" (or "key man") insurance, which compensates your company for the loss of an employee who is vital to the business operation. The business would have funds to tide it over in case of any slowdown resulting from the loss, and provide funds to apply to the search for and compensation of the key person's successor. For businesses with multiple owners, each partner should have a life insurance policy to facilitate an automatic buyout of the deceased partner's interests.

You should consult with your family, your attorney, and your insurance agent when putting together a sound life insurance program. If you belong to a professional association, chances are that the association has an affinity program that offers affordable insurance.

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

Does outsourcing make sense for my business?

2009-11-03T13:13:00.003-05:00

In a small business, unfortunately, you can't do everything for yourself and still expect to grow. If you're not in a position to hire employees to share the workload, chances are that you'll consider outsourcing.

Companies of all sizes can benefit from sending certain job functions outside rather than dealing with them in-house. Some of those tasks may be infrequent or require special equipment; others may fall into the category ofongoing maintenance, such as accounts payable and receivable, or janitorial services.

Regardless of the type of company you have - service, retail, or manufacturing - not every activity involved in operating your business requires your expertise. In fact, it makes sense to outsource any activity that another individual or company on the outside can do better than you. As the company owner, you then free up your own time and talent for the more profitable aspects of running your business.

Bookkeeping is an example of a job function for which a small business may not require a full-time employee. Unless you yourself have an accounting background, this is an activity that you may not enjoy and consequently put off. Even if you work on your own tax forms, you may not want to keep up with payroll requirements the way an outside payroll management firm does. Computer maintenance is another area where it may make sense to oursource, by buying a small amount of expertise and service that would take you or other employees a long time to master yourselves.

There are also good reasons not to outsource. One is the possibility that the IRS will not view your outsourcing partner as an independent contractor, but as an employee of your business. If that happens, you may find yourself paying that individual's Social Security taes and possibly other penalties....so make sure that you know and follow all the rules in this area.

In addition, the time may come when outsourcing a particular activity is no longer cost effective - because of increased business volume, for example, or a shift in the focus of the business that causes the outsourced functin to warrant full-time attention on site. Or, outsourcing might be the right idea, but you discover that your first choice of contractor is not the right choice. That's a situation that will cost you time (and perhaps other resources) to rectivy before it saves you time.

Time and money are your two most important resources. Outsourcing certain functions may save you both. If you have a clear focus and a handle on your day-to-day management, you'll know whether and when it makes sense for your company.

Richard Strug

Greater Princeton Area SCORE (Chapter 631)

Serving Mercer and Middlesex Counties

Does my business need a line of credit?

2009-10-27T17:41:00.000-04:00

A line of credit, sometimes called revolving debt, enables a company to draw against a pool of money as it needs to. That line of credit is invaluable for protecting your business from emergencies and stalled cash flow, because it extends the cash available in the business checking account to the upper limit of the loan contract. Essentially, the line of credit is assurance by a bank that as long as your company is financially healthy, it can borrow money whenever it needs to.

This form of short-term borrowing is an excellent way to establish a relationship with a bank and demonstrate the creditworthiness of your business—especially if you have but don’t use the line of credit. Moreover, by virtue of having this relationship, your banker can become a sort of silent partner, giving you business operation advice as well as money.

You’ll find many variables in a line of credit, such as the period of time (short or intermediate), whether it is renewable or nonrenewable, and whether it has a fixed or fluctuating rate of interest.

A short-term line of credit typically is 60 to 120 days, whereas an intermediate-term line may be as short as one year or as long as three. You’re most likely to want the line of credit to purchase inventory and to pay operating costs—not to purchase equipment or real estate. The Small Business Administration offers qualified small businesses CAP Lines loans to meet their short-term and cyclical working-capital needs. The five programs are called Seasonal Line, Contract Line, Builders Line, Standard Asset-Based Line, and Small Asset-Based Line. For more information, visit www.sba.gov/financing/fr7aloan.html.

To negotiate a credit line with your bank, prepare to hand over your current financial statements, latest tax returns, and a statement of projected cash flow.

What collateral will you use to secure your loan? You’ll need more than the assets you may be purchasing with it, such as the company’s accounts receivable, equipment, and real estate. The loan agreement and related documents will be designed to ensure that your loan payments are on time and have priority over non-critical expenses, dividends and employee bonuses.

This is a key point for avoiding confusion and resentment over what your bank is willing to do for you. Some small business owners may think that the loan officer does not understand their business requirements. At the same time, the loan officer may not think that the borrower is making realistic projections for anticipated cash flow, profitability, and the like.

As loans go, banks tend to view line-of-credit loans as low risk, so they carry the lowest interest rate. The bank may reserve the right to cancel the loan if it thinks your business is in jeopardy. You’ll make interest payments monthly, regardless of when you expect to pay off the principal. For an annual fee, most banks will allow one-year lines of credit to renew almost automatically. However, they may require the credit line to be fully paid off for between seven and 30 days each contract year.

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

What is Working Capital, and what does it tell me about my business?

2009-10-20T14:27:00.000-04:00

As the owner of a small business, you may think it has little in common with a large corporation. While it is true that you will likely rely more on trade credit, bank financing, lease financing and personal equity, your long-term investment decisions require the same kind of analysis used by large firms. The key is understanding those factors that affect financial decisions, how they apply to your business’s short- and long-term goals and strategies, and any other influences that may be unique to your situation.

Working capital is the difference between current assets and current liabilities. Lack of close control on working capital is one cause of business failure. The small business owner must be constantly alert to changes in working capital, the reasons for them, and any resulting business implications.

It is helpful for the owner to think of working capital in terms of its six components:

1) Cash and equivalents. This most liquid form of working capital requires constant supervision. A good cash budgeting system addresses many important considerations: whether the cash level is adequate to meet current expenses as they come due; timing of cash inflow, cash outflow and peak cash needs; amount to borrow to meet cash shortfalls; and the timing of repayment of loans.
2) Accounts receivable. Almost all businesses extend credit to their customers. Make sure the amount of accounts receivable is reasonable in relation to sales and that receivables are being collected promptly. Identify slow-paying customers and have a strategy for dealing with them.
3) Inventory. Inventory often constitutes as much as 50 percent of a firm’s current assets. Is the inventory level reasonable compared with sales and the nature of the business? Know the rate of inventory turnover compared with other companies in your type of business.
4) Accounts payable. Financing by trade is common in small business and is one of the major sources of funds for entrepreneurs. Understand whether your business’s payment policy is helping or hurting your credit rating. Know the timing pattern between payment of accounts payable and collections of accounts receivable.
5) Notes payable. Notes to banks or other financial sources represent a popular alternative financing source. Note whether the amount of borrowing is reasonable compared to the equity financing of the firm. Look at when payments are due and whether the money will be there to make these payments on schedule.
6) Accrued expenses and taxes payable. These are obligations of the firm at any given time and represent expenses already obligated, even if payment is not yet issued.

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

Is Internet advertising right for my business?

2009-10-13T10:01:00.000-04:00

Internet search advertising is one of the fastest-growing outlets for businesses of all sizes. And no wonder. Thanks to the convergence of search engine technology and high-speed Internet connections, customers in search of information about a particular product or service can have literally hundreds of answers in seconds.

Businesses who want added visibility often invest in small, text-only ads that appear atop or alongside the search engine results. Such ads are ideal for small businesses, as they offer tremendous flexibility to control costs and can be tailored to specific search keywords such as geographic area or a specific product/service.

Internet ads also allow small business owners to test various marketing approaches almost instantly. For example, florists can quickly change from prom to wedding season or an air conditioning service can exploit an early heat wave. What’s more, results from these types of ads can be tracked, and return on investment measured in tremendous detail never available with traditional print types of advertising.

If your business uses a Web site to sell or market products and services, online marketing will be critical to your success. Targeted ads attached to keyword search results are the clear winner among Web-based marketing methods. Their simplicity, low cost and popularity among small businesses have pushed flashy banners aside as the main method for connecting buyers and merchants online.

Best of all, Internet advertising is relatively simple to implement. In the two most popular search ad outlets—Google AdWords at www.google.com/ads and Yahoo! Search Marketing at http://searchmarketing.yahoo.com, you bid on the keywords or phrases for your campaigns. The higher the bid, the higher your ad will be listed in the paid results. You pay only when someone clicks your ad and visits your site. A prospect that reads your brief ad but doesn’t click it costs you nothing.

Both Google and Yahoo have built-in tools to help you monitor track the effectiveness of your Internet ad campaign. One important statistic is the “click-through rate”—how often the ad is clicked in proportion to how often it appears. Ads with high rates are obviously good; low-rated ads should probably be modified or deleted to maximize cost-effectiveness. In addition, Google also offers free “Google Analytics” that can help analyze your Web site statistics

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

What's the best way to build customer loyalty?

2009-10-06T12:02:00.003-04:00

The competitive nature of today’s business world may be intimidating to the small business owner. If a competitor cuts prices or offers other incentives, you may feel tempted to do the same in order to hold on to your customers, even if it puts the stability of your business at risk.

Though cost is important to customers today, it is but one component of a larger, more important attribute ….. value. If your business provides value through service, responsiveness, and going the “extra mile,” your customers will respond with loyalty, regardless of what your competition does.

Building loyalty through value is something small business owners have been good at for centuries, because they are better able to cultivate relationships with their customers. They focus not just on selling to them, but also keeping them. That kind of stability is more efficient and predictable for everyone involved.

So how to create loyalty? Building loyalty is not a marketing matter, so don’t look there for help. To foster customer loyalty, a small business needs a strategy that keeps patrons coming back. It starts with basics that are sometimes overlooked. Thanking customers for their business, for example, goes a long way; but try going beyond a few spoken words. Write some thank you notes and letters. Make them personal and sincere. Just let them know you appreciate their business.

Creating value will help boost loyalty. Ask customers if there is anything else you could be doing for them. Then, after they tell you, do it. When you lose a customer, you should consider it unacceptable. Find out why it happened and then work to prevent it from happening again.

Remember, too, that your customers’ needs are always changing, and that they may find attributes or “extras” in other business that put your service elements at a disadvantage. Take ease of access, for example. Make sure all your touch points— your phones, website, store layout, etc.—operate with your customer’s needs in mind. Visiting competitors’ locations and sites may alert you to areas where you may be behind, and spark ideas for making a good service or process even better. If your customers like what they find at your business, they’ll keep coming back for more.

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

Am I too old to start a business?

2009-09-29T12:06:00.001-04:00

As America’s 77 million baby boomers begin contemplating retirement, many are finding that slowing down is the last thing they want to do. Indeed, they’re seeking outlets for their experience, energy, and drive that will be personally and financially rewarding, while also providing the flexibility and direction they might not have enjoyed during their previous careers.

Sound a lot like owning a small business? It should.

Statistics show that of the nation’s 10.9 million self-employed workers, the largest category, 25 percent, is boomers aged 45 to 54. In 2006, the number of self-employed persons aged 65 and older totaled 781,000—a 19-percent increase in just six years.

As with entrepreneurship at any other age, a boomer’s entrepreneurial direction has many influences, such as interests, knowledge, location, financial resources, and personality. Some may relish the challenge of building a new business, even to the point of working as many hours as they did before retiring. Others may prefer pursuing an enterprise with more limited hours, allowing them to make the most of that long-awaited leisure time.

Fortunately, there’s a growing range of resources designed to help boomers pursue second careers as entrepreneurs. For example, the self-employed section of AARP’s Web site, www.aarp.org, helps those approaching retirement weigh second career opportunities as consulting and franchise ownership. Mature Resources at www.matureresources.org, an online magazine that covers a wide range of issues related to aging, contains a business section with articles related to over-50 entrepreneurs, as well as a business directory.

Marketing consultant Andrea J. Stenberg has created the baby boomer entrepreneur blog at thebabyboomerentrepreneur.com, which provides small business marketing strategies and motivation aimed at aspiring 40-plus entrepreneurs build new businesses.

Another multifaceted information resource is All Business at www.allbusiness.com, an online service that helps address real-world business questions and presents practical solutions. All Business provides articles and directories for aspiring small business owners, as well as a section dedicated to analyzing boomer marketing and demographic trends. Similarly, the Learning Center page of My New Venture at www.mynewventure.com/learning_center has a section specifically for retirement-bound boomers.

For women eyeing a post-retirement career in small business, the TIP$, or Turning Ideas into Profits, Mid-Life Women’s Business Community offers free information, tools, support and networking opportunities. Their website is www.tipscommunity.com.

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

Do I need a Disaster Recovery Plan?

2009-09-22T14:43:00.002-04:00

Stop for a moment and think about all the time and resources you’ve invested in your small business. Now, imagine that it’s all gone—facilities, equipment, everything. What do you do?

Every year, this hypothetical question becomes very real to thousands of small business owners who suffer losses due to fires, natural disasters, and other events.

Although many potential disasters are unpredictable, a thoughtful, proactive disaster management plan can mitigate their effects on your business, and help speed your return to normal operations. True, disaster planning may not be pleasant to think about, but the consequences of not doing it are far worse.

Here are some tips for developing a disaster management strategy for your small business:

- Identify potential hazards. Consider both natural events (e.g., hurricanes, floods, earthquakes, and ice storms) as well as man-made disasters such as fires, toxic material spills, civil unrest, and terrorism. While your business may not be directly affected, such events could disrupt your utilities, logistics, and supply chains.
- Develop operational contingency plans. Assess the feasibility of operating out of rented office space, a nearby storefront, or even your home, and what equipment/resources will be needed (e.g., computers, data files, inventory). Important documents, back-up copies of computer records and software, and other vital information should be stored in a fireproof container, or at a secure off-site location.
- Ensure the safety of employees and customers. Develop an evacuation plan that includes access to shelters, hospitals, and other emergency services. Keep emergency telephone numbers clearly posted, and maintain up-to-date emergency contact and essential medical information for all employees.
- Perform a safety inventory. Regularly clean and test smoke detectors, and change the batteries at least once a year. Make sure you have well-stocked first-aid kits, fully charged fire extinguishers, and a fresh supply of all types of batteries used in your business. If you have portable generators for emergency power, make sure that the fuel is fresh and safely stored.
- Review your business insurance coverage. At a minimum, your coverage should be enough to get your business back in operation, and cover the replacement cost of essential facilities. Note that most general casualty policies do not cover flood damage, nor may they apply to special tools or equipment. Also consider purchasing business interruption insurance, which can assist with ongoing expenses during a forced shutdown.

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

Should I use contractors, or hire employees?

2009-09-15T11:55:00.000-04:00

Independent contractors are an attractive option for small businesses that don’t have the resources or need for full-time employees. In fact, your small business may be built entirely on serving as an independent contractor to other enterprises.

But before you hire one or more independents, make sure that relationship fits entirely within the IRS’s definition of contract labor, and that both you and your contractors understand the rights and responsibilities of everyone involved.

Deciding who can legitimately work as an independent contractor and who must be given employee status has become a difficult matter for small business owners. You can’t simply choose what’s best for you. The IRS and equivalent state agencies are strict on worker classification issues.

Remember that independent contractors work for themselves. They operate their own business. You are their client, not their employer. You don’t dictate their hours or control how they perform their work. In the eyes of most government agencies, a worker is an employee unless you can prove otherwise.

Contractors control when and where they work. Avoid setting a pattern of daily or weekly work hours dictated by your business. Also, independent contractors do not usually have a permanent or continuing relationship with the business and have time to pursue other clients. Plan to compensate contractors on a per-job basis, not weekly or monthly.

And since contractors are paid to complete a set task, they may bring in others to help, at their discretion and on their payroll. They also should use their own tools and technology and be responsible for their incremental expenses.

Contractors can’t be fired as long as they produce results that meet their contract specifications. Do not include them under any insurance or benefits coverage you have for employees. Independent contractors are subject to making a profit—or suffering a loss—based on their own skills and expertise. Always require an invoice before making payment.

Understanding the requirements of using independent contractors will help you better determine whether such relationships are right for your current business needs, or if you need to hire them as employees. Also make sure your contractors understand the rights and responsibilities involved as well. This will help prevent misunderstandings and potentially costly disputes over benefits and compensation.

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

Is it time to buy a new computer?

2009-09-09T11:53:00.000-04:00

Computer technology changes so quickly, it almost seems like today’s state-of-the-art today might well be obsolete. Though few small business owners can afford to be on the “bleeding edge” of PC technology, they also don’t want to compromise their employees’ productivity with seemingly outmoded machines. As a result, they find themselves making periodic purchases of new hardware while the old machines pile up in a closet or corner.

Don’t consign those old PCs to the scrap heap just yet. There may be several some ways you to coax more productivity out of what you already own, saving your business some money and easing the burden on the local landfill.

PCs you own may have plenty of life left in them. But to get them in top shape can require a little attention. The longer a computer is used, the messier its hard drive can get. Viruses, outdated software, fragmented storage space and general clutter can turn a good piece of equipment into a real slowpoke.

To get your slightly worn PCs and laptops back in action, follow these tune-up tips.

Remove old programs, temporary files and the Web browser’s cache, cookies and history. Empty the trash folder, and while you’re at it, clean the keyboard. Use your disk utilities to scan the hard drive for errors, fix any corrupt sectors and remove invalid registry entries or broken shortcuts.

Also defragment the hard drive. A hard drive is composed of many sections, known as sectors. As files are saved, they are often divided into parts that are scattered across the drive. This slows down the system because the file must be retrieved from different locations. Defragmenting brings the pieces back together again.

Scan the computer for viruses and update virus definitions. There are several excellent companies that offer a full range of antivirus, anti-spam and problem solving PC solutions.

Even with your best efforts, long-used computers may still suffer breakdowns—often when you need them the most. That’s why it’s also important to routinely back-up data on to a separate storage medium (e.g., CD, Zip drives, etc.) and keep it in a secure area. That will prevent your business from being crippled from a crashed PC.

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

Is there a market for my new business idea?

2009-09-01T11:52:00.000-04:00

If you’re thinking about starting a business, most likely you have dreamed of one that revolves around your interests. But what does the market need or want? Are you noticing trends in what people are buying, or how and where they are buying those goods?

Determining the marketability of your start-up business is typically done in the context of creating a business plan and performing an analysis of your competition. It is a multifaceted exercise, requiring research you may not have done so far. Here are some areas of inquiry to help you explore marketability.

Consider whether the business offers a new solution to an old problem or complements an emerging trend. The untapped markets that are profitable to tap into are few and far between. They’re also riskier.

Have a clear picture of your target market. These are the people and other companies that are likely to want or need what your business has to offer. “All restaurants” is a broader market than “fast food joints.” “All restaurant patrons” is a broader market than “senior citizens who eat out.”

Understand the benefits that your product or service offers. Can you quantify them? (In other words, how much money might a customer save by buying from your company instead of someone else?) Knowing these benefits will help you generate ideas for future promotions.

Examine industry data that can confirm whether there is a sustained, preferably growing demand for your product or service. (Keep in mind this data is sales driven, not marketing driven.) Have you tapped all likely sources of industry data, such as trade associations and government agencies?

Identify the percentage of market share that it is realistic for you to capture. The more competition you have, the lower the margins will be.

Consider how realistic your pricing is. How can you present your product or service to potential customers so that it appears to be a good value, while still affording you a healthy profit?

You may find that you don’t like the answers you’re getting to your market research. But if you’re committed to creating a viable business that can provide you with a good income, the sooner you know the answers to these questions the faster you can make a course correction to succeed.

Richard Strug
Greater Princeton Area SCORE
Serving Mercer and Middlesex Counties

Why is branding important?

2009-08-25T12:03:00.002-04:00

In a world of short attention spans, a great product or first-class service is rarely enough to sustain a lasting impression among your customers. A sound branding strategy will help ensure that customers remember your business as the “go-to” source for their needs, especially in today’s competitive marketplace.

A branding strategy includes your company’s name, logo, symbols, Web site, and other tools that define your small business in the minds of consumers and, perhaps more importantly, differentiates it from others providing the same products or services in your target market. According to marketing experts, branding and marketing go hand-in-hand.

Almost anything can be branded, including you. But branding is complex and involves the customer’s total experience with you, your product or your service. The most effective branding combines both online and off-line elements. The Web offers tremendous opportunities for promoting your brand, through low-cost search engine ads or interactive features on your Web site.

Keep in mind that the best brands tend to tap emotions and appeal to a person’s natural need for involvement. Be original in identifying your brand identity—the thing that truly sets your small business apart. Everybody touts quality and service, for example, so look for something that’s really different. If you are having trouble pinpointing a branding message, try asking your customers what they need from you the most. Then base your brand on that.

Your brand should also last a long time, so avoid elements or catch phrases linked to trends likely to disappear or become outdated. Simplicity is also a virtue in your branding message. Buyers are overwhelmed by excess information. Too much information confuses your brand message.

A number of resources can help you understand and craft a sound branding strategy, including The 22 Immutable Laws of Branding. Written by market guru Al Ries and daughter Laura, this smart and accessible book includes 11 Immutable Laws of Internet Branding. Peter Montoya’s The Brand Called You offers ideas and advice on how entrepreneurs can promote themselves, personally, as a brand. Australian branding expert Martin Lindstrom also offers an extensive library of branding articles on his Web site, http://www.martinlindstrom.com/

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

What's the importance of a startup timeline?

2009-08-25T11:50:00.000-04:00

Al MacIlroy, SCORE Counselor, believes that the time factor in starting a company is ignored by many clients. Here are several suggestions to consider:

The vast majority of people come to SCORE with an idea that excites them and that they want to turn it into a business. Typical client questions are about writing a business plan, forming an LLC or other entity, and financing. What they fail to consider is how much time all this going to take. Am I a parent with small children? If I have a full-time job, am I ready to give up nights, weekends and vacations to do the required work? Am I driven to make my dream come to true?

Let’s take the business plan outline as an example: Executive Summary, Company Description, Products and Services, Marketing and Operational Plan, Management and Organization. The list goes on. As important as it is to focus on these areas, it is equally important to create a timeline to start and complete each section to determine the total time needed.

There are two parts of the timeline. The first is how much “actual time” it will take to write the plan section or the task at hand, e.g. filling out the paperwork to form a business entity. The second is a “running timeline,” or the overall timeframe, for these tasks and the rest of life’s demands for time.

The timeline gives a view of reality. If completion dates are constantly missed, there should be a review of why. Am I being too optimistic? Do I have other higher priorities in my life?

With an electronic organizer: Palm, iPhone, Blackberry, etc., all aspects of what needs to be accomplished is easily tracked on a calendar. For those not into technology, a simple calendar can be used. The challenge to the entrepreneur is to be disciplined in creating the timeline and being realistic about analyzing what is happening with time and the meeting, beating, or slipping from the planned timeline. It is a must, especially in the early days.

The same holds true for the monetary cost of starting a business along with the
“time cost.” The financial timeline and cash reality will show up in the Sources & Uses part of the business plan.

The challenge to all is to create and manage time and learn from what is happening based on the timeline. It will be a reality check for all new and ongoing businesses. The sooner one is adopted by the business owner the better.

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

How can my business weather these tough economic times?

2009-08-25T11:48:00.000-04:00

Broad economic slowdowns can often trickle down to small businesses, including those in relatively stable industries or geographic locations. Individuals tend to cut back on discretionary spending while corporations curb routine activities, delay major purchases, and shelve new initiatives.

For many small businesses with limited resources, these and other factors often combine to pressure bottom lines past the breaking point, creating a domino effect of other dilemmas such as a credit crunch or layoffs.

A downturn doesn’t have to spell disaster for your small business, however. Good financial management practices will help you weather even the worst of economic times, and be ready to capitalize on new opportunities will inevitably come with good times return.

Begin with the basics. Even when times are terrific, no small business can survive without good recordkeeping, budgeting, cash flow monitoring, and credit management.

Consult your bank. Lenders can tap their vast experience in economic cycles to advise you on issues specific to your business and industry. Depending on your projected long-term expenses, consider arranging a line of credit in case a cash flow gap occurs.

Be on good terms with your creditors. Falling behind on payments is never the answer, even if it’s “just this once.” Creditors will be more amenable to renegotiating terms to small businesses they consider to be conscientious and reliable.

Watch your receivables. By the same token, you need to stay on top of any outstanding debts to your company, particularly problem accounts. Be firm, but also willing to negotiate where appropriate.

Scrutinize your spending. Rather than arbitrarily slashing your budget, strive to spend only on those things that have a justifiable positive effect on your business. That will make it easier to redirect money to areas that enhance business performance.

Step up your review of financials. Assessing your reports weekly or biweekly rather than monthly will put you in a better position to make informed decisions. Similarly, a monthly or quarterly review your business plan enables you to adjust your strategy and direction to changing market conditions.

Keep marketing in the mix. Look for cost-effective ways to keep your company visible to current customers and potential new markets. They may be ready to restart their spending long before the headlines proclaim an end to the economic crisis.

Richard Strug

Greater Princeton Area SCORE (Chapter 631)

Serving Mercer and Middlesex Counties

Should I buy a franchise?

2009-08-18T11:46:00.000-04:00

Franchising is a popular way for entrepreneurs to fast-forward their small business ownership ambitions. Franchisors provide a tested and proven base structure of the business, freeing their franchisees from having to invent the operational wheel. Franchisors also provide ongoing guidance, innovations, and tested marketing materials. And new opportunities emerge on an almost daily basis.

But even with its many attractive advantages, franchising has many risks and challenges that need to be considered. The biggest mistake is believing that franchises never fail. Although the failure rate is much lower than that of independent businesses, the franchisee still must have the necessary commitment and drive to make the franchise successful. Seek legal counsel with expertise in dealing with franchisors to review all documents before making your final decision.

Purchasing a franchise also requires a substantial financial commitment, one that may require applying for a small business loan. Franchise owners also have no special legal protection after they purchase the business. The Uniform Franchise Operating Circular (UFOC) protects the buyer before the sale, but when it’s signed, you are legally required to abide by its rules and requirements.

That’s why it’s important for prospective franchise owners to thoroughly research their franchising opportunity. Don’t rely solely on the Internet. Literally “walk the street” and ask people if this kind of business is needed in the neighborhood. Study the competition, what are they doing, and how can you do it better.
In researching franchisors you plan to work with, make arrangements to visit other locations and examine their processes. Ask the owners if they would buy the franchise again, if the franchisor is providing enough support, if the experience is living up to their expectations, and if they are meeting their business goals. These relationships will also be helpful should you decide to move forward with the franchise purchase. You can develop a network of friends that have the same base knowledge and abilities, and can serve as a source of help when you have questions or good ideas to share.

And as with any other type of small business, you’ll need a thorough, well-crafted business plan to map your franchise’s growth strategy. Preparing a business plan will help you determine where you want to go, and the best way to get there. You’ll also be better able to set experience and performance milestones for steps such as purchasing additional franchises.

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

How do I turn my small business dream into reality?

2009-08-05T12:06:00.001-04:00

If you are one of thousands of U.S. workers who have been affected by the wide economic swings of the past few years, this may be a good time to consider starting that small business you have always dreamed of.

The first steps for creating a successful business are planning, research and more planning. Ask yourself, “Can I be my own boss?” and try to objectively assess the pros and cons. Operating a business is different from working for one even if you are an experienced manager. Every responsibility is yours: generating new work, paying taxes, locating office space, buying paper clips, etc., etc., etc. falls on your shoulders. That is in addition to actually doing the work itself.

As part of your research and planning, take the following actions:

There’s no substitute for experience, so talk to other small business owners who are in the same line of business as you aspire to enter. Find out how they got started, what mistakes they made, and what they would do differently. These discussions may also reveal opportunities to team with existing businesses for special projects, workload overflows or complementary services.

Put yourself in the position of your potential customers. What impresses you about the businesses you patronize? Those little things, such as home delivery or online shopping, consume resources. Consider the time, cost and energy required to support value-added services.

Tell friends and colleagues of your plans. Even if they are not prospective customers, they may volunteer other contacts who may be interested in using your services and offer other useful perspectives.

Make planning an ongoing effort. Update your business plan as you collect useful intelligence. In today’s fast-paced business climate, your entrepreneurial plans may have to take a back seat to other developments in your current work life, such as a major new project or a change in your job responsibilities.

Put your family’s financial security first. Depending on your current situation, remember the adage “a bird in the hand is worth two in the bush.” If a good job opportunity arises, it may be best to take it and put your entrepreneurship dreams aside for a while. But don’t abandon them completely. Many successful small businesses have started as part-time ventures, enabling their owners to eventually shed the worries of working for someone else and truly be their own bosses.

There is no substitute for experience when it comes to planning and opening a small business. A great place to find this valuable resource is your local chapter of SCORE “Counselors to America’s Small Business.” There you’ll meet knowledgeable counselors ready to help you with every aspect of realizing your dream. SCORE’s small business counseling is free, and all discussions are confidential.

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

How should trends impact my business?

2009-07-28T11:32:00.001-04:00

Predicting the future is one of humankind’s oldest endeavors. Nearly everything from tea leaves to caterpillars has served as a bellwether of fate. Twenty-first Century small business owners can draw on a host of technology and information resources to chart the course of their enterprises. But given the increasing pace and unpredictability of change, one can’t help but wonder if those caterpillars might really know something.

Anticipating trends can be extremely valuable in keeping you current on everything from sales strategies and customer desires to technology tools and the general economy. As your business grows, change will be inevitable and small business owners should constantly look ahead and seek out ways to shake things up. The more you test the winds of change, the better your chances of success down the road.

But how can you tell the difference between a fleeting fad and a true trend? Louis Patler, a market research guru for companies such as American Express and Dell, has spent decades tracking emerging trends and studying their impact on business. He says the key to successfully piloting a business in the years ahead will be embracing new ways of thinking.

For example, Patler says that truisms like “stick to what your business does best” are outmoded. If you want your business to grow, consider that past business traditions and processes might only hold you back. Trying new approaches is vital.

Not all customers are created equal. Some are more valuable and loyal than others, and those are the ones you should lavish the most attention on with special savings and service offers. And don’t expect loyalty from employees. As American society becomes ever more mobile and labor shortages worsen, workers won’t stay on a job for more than three years.

Information is the key to success in the 21st Century, and the ability to effectively capture and analyze data on customer needs and behaviors is essential for small business owners to stay on top of and, even more important, anticipate trends related to their products of services. After all, what’s important to your current and potential customers will likely be important to you as well.

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

What are the special considerations for family businesses?

2009-07-21T22:01:00.001-04:00

The family business is an American small business tradition, one that gives parents, spouses, children, and others an opportunity to contribute to and share in a dream that can grow and prosper over many generations.

But without proper planning and management, family businesses can also be the source of contention, acrimony, and even irreparable harm to once-loving relationships. That’s why it’s important for aspiring entrepreneurs to fully understand the pros and cons of going into business with relatives and in-laws. The needs of the business may not always be compatible with family harmony, resulting in a situation that handled improperly, can jeopardize the survival of both.

When bringing family members into a business for the first time, especially as investors or in a startup situation, you should consider putting the business relationship in writing. Family members sometimes buy into the excitement of a business startup without a clear idea of their role once the business is underway.

In an ongoing family business, it’s important to treat family members fairly. While some experts advise against hiring family members, that sacrifices one of the great benefits of a family business. Countless small companies would never have survived without dedicated family members. But avoid favoritism. Pay scales, promotions, work schedules, criticism and praise should be evenhanded between family and non-family employees.

Don’t become the employer of last resort for every distant relation who calls. Base employment on the skills or knowledge they can bring to the business. If your kids will be joining the business, make them get at least three to five years business experience elsewhere first to help them gain perspective of how the business world works outside of a family setting.

Problems and differences of opinion are common in a family business, so it’s important to keep lines of communication clear. Weekly meetings to assess progress, air differences and resolve disputes work well for many family firms.

Just as solo entrepreneurs and non-related partners need to separate their business and personal lives, owners of family businesses need to prevent work-related issues from dominating family activities. While it may be difficult to totally confine shop-talk to the workplace, make it a standing rule not to discuss work and business issues at social gatherings or at designated “family times” where the focus should be on other things.

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

How do I stretch my promotion dollars?

2009-07-14T21:54:00.000-04:00

SCORE counselor Alan Yarnoff advises small business owners on how to stretch their promotion dollars.

Small business owners face a tough decision on how to best invest their promotion and advertising dollars in today’s economy. They operate with smaller marketing budgets against larger companies with greater funds and resources. However, all is not lost because there are many ways to draw attention to your business without overspending your budget.Some of the best strategies offer a very high ROI [Return on Investment] with very little capital outlay. For a relatively small financial investment and some of your time, you can get leading ads and promotions that will draw customers to your business and ring the cash registers.

Let's take a look at some of these options: Companies like McDonald’s advertise to create name recognition and future sales. A small business cannot afford to operate this way; they need to create advertising to produce immediate sales. To accomplish this, you must include a special offer in your advertising and an easy way for your customer to act on the offer. Think out of the box: always look for some unconventional marketing ideas your competitors are missing. This can lead to the discovery of some highly profitable ways to generate sales and avoid the competition. Reduce the size of your ads so you can increase the frequency without increasing your spending. On many occasions, if the message is on the target, the size of the ad will not determine its success or failure.Set up joint promotions with other non-competitive businesses. Offer to promote their products or services to your customers if they promote your products or services to their customers. This can generate incremental sales with very little investment by your company. Be the expert by offering seminars to help establish your business as the local source for the products or services you offer. Seminars can help cement relations with current customers, attract prospects, and increase your company’s identity in the community.One last point, make sure your selling materials are professionally created. Every brochure, flyer, email blast, ad, and mailer should be competently produced. Do not cut corners; this may be the final element in a successful sale or lost customer.

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

How do I determine the price for my products/services?

2009-07-07T22:03:00.000-04:00

Many entrepreneurs frequently struggle with setting a fee schedule for their work. While it’s tempting to set a low price and cut profit in order to lure customers, this strategy will almost always backfire. Some customers may resist your attempts to increase prices later on, while others will be suspicious of what they are receiving for such a great price.

Trade journals and professional organizations often publish baseline rates and fees on a national, regional or local basis. Networking with other entrepreneurs can be instructive, although some may be justifiably reluctant to discuss their fees with potential competitors. You also want to learn the rationale behind various price structures to arrive at appropriate rates for your customers.

A good starting point is to set an hourly rate. As you gain experience, you’ll be able to set flat fees based on the amount of work, supplies and other resources that a job will require. Often rates can reflect what a company would pay someone with your skills to do the same kind of work in house.

Say a comparable full-time position for your service pays $30,000 a year. Dividing that figure by 2,000 (approximately 40 hours a week for 50 weeks) results in $15 per hour of straight pay. Next, add a percentage to cover the cost of fringe benefits that employers normally pay (such as Social Security and unemployment and health insurance). Generally, fringe benefits equal one-third of an employee’s pay. Then figure a percentage for your overhead costs: office space, equipment, supplies, vehicles and time devoted to business development and research. Fifteen percent is a common premium.

Next, consider your profit margin, such as 15 percent, for funding capital investments or future growth, and surcharges for time-sensitive assignments that may require extra effort or rescheduling on your part. Other variables that influence your prices may not become apparent until after you have been in business for some time.

Regardless of how you set a price schedule, make sure that you and your customer agree on the fee up front, especially if expenses and surcharges are involved. If the customer wants to negotiate, weigh the pros and cons of a lower fee. Is this a one-time project or the beginning of a steady stream of work? Does the client have a reputation for reliability? Will you still be able to cover your costs of doing business?

By the same token, you may develop a strong enough relationship with your regular customers to confidently offer a discount in return for a larger volume of work. Just be sure that this discount does not cut into your profit margin, and that the advantage of staying busy does not limit your ability to attract other, potentially more lucrative assignments.

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

What are the best time management technques?

2009-06-30T21:58:00.000-04:00

Time is the one resource that most small business owners wish they had more of. But until someone figures out how to make days last longer than 24 hours, entrepreneurs must be content with learning how to sharpen their time management skills.

Fortunately, one of the most effective time management tools is also the simplest—the basic “To-Do” list. Each day, jot down all of the things that need to get done, all on one sheet of paper.

You can also number or check the ones that are highest priority “must-do” items. As tasks are completed, cross them off. This can help you focus on getting them done one at a time, and also gives you a sense of accomplishment. To add a technology flavor to tracking your tasks, TimeTiger.com provides a web-based to-do list that helps you monitor your project and non-project activities.

Delegating more work can also help ease your time crunch. Many business owners accustomed to “doing it all” find this exceedingly difficult. But even if you are a sole operator, you can pass off tasks to others, via outsourcing, for example, to free up time for yourself.

Periodically analyze how time is spent at your business—and not just your time, but everyone’s. Divide the day into small time blocks and record what you, or others, were doing in each block. Now compare this real use of time to your goals, expectations and mission priorities. If they do not align, you’ll need to take action. And remember that growing, successful businesses don’t put things off. Even a simple “no” response to something on your to-do list can extinguish that item and let you move on.

A variety of technology solutions are also helping small businesses track and manage time. For example, Workarea.com is an Internet-based time tracking system that can provide billing information up to the second. The system includes a time clock, time sheet, expense tracking, address book and the ability to access it all via cell phone or PDA.

For businesses with employees, the TimeClock Plus Small Business Edition at www.timeclockplus.com lets you turn any PC into a time clock. Employees can sign in or out with the keyboard or mouse, and easily allocate hours and costs to specific jobs.

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

Is venture capital financing right for my business?

2009-06-23T22:07:00.001-04:00

In assessing options for financing a new small business, many entrepreneurs look to venture capital. This approach can benefit a relatively unproven enterprise that appears to have a promising future. Securing this type of funding is not easy, however. Venture capital firms expect a business to return their investment with interest plus a large profit. And after the disappointments with many tech-sector companies in recent years, venture capital providers are particularly wary about where they invest.

Many venture capital firms are affiliated with banks, insurance companies, other financial institutions and large corporations. Some are owned by individuals or private groups of investors; others are publicly held. The minimum investment is generally from $50,000 to $500,000, but investment ceilings are almost unlimited.

The interest of a venture capital firm in a small business usually depends on the stage of the new firm’s development. An investor may be interested only after the new firm has established itself and has a working organizational structure, a viable business plan and start-up arrangement. However, some firms prefer to come in at a later stage—perhaps when the new company is in its second or third round growth stage and needs more capital either to carry out expansion plans or to tide it over until a merger or public offering takes place.

A company’s business plan serves as the primary analytical tool for the interested venture capital investor. In analyzing the plan, investors have three specific concerns:
1) The product or service. Investors seek product or service innovations that give the company a strong competitive advantage. A new idea, backed by market surveys (measuring the appeal of the product or service and its potential market), may be appealing to investors.
2) Management capability. No matter how good the product or how innovative the service, the quality and experience of the management are key factors in the success of the business. The astute investor looks for solid evidence of such management skill.
3) The industry’s growth potential. Investors also want to be sure that the product or service is in a growth field. A significant or revolutionary product improvement may nevertheless lack luster in a declining product or service category.

Most venture capital investors purchase common or convertible stock rather than burden the fledgling enterprise with interest payments on debt or debentures. They may want more than 50 percent ownership. Additionally, while investors may insist on a position on the board of directors or expect to give management and technical advice, they are rarely interested in day-to-day management issues unless the survival of the business and their investment are at stake.

Before taking the next step for obtaining venture capital, get outside advice. Talk with your accountant and tax advisor.

Richard Strug

How can I make my business more efficient?

2009-06-16T14:25:00.000-04:00

Gerald Bose, SCORE counselor and past vice president, shares his expertise in the area of Process Improvement.

Many organizations are seeking ways to reduce waste and become more efficient. The automotive and financial industries in the U.S., in particular, have realized significant process improvements throughout the 1990s. However, they grew complacent in the 21st Century and curtailed their improvement efforts. Today, companies like GM, Chrysler and Citibank face acquisition by competitors or bankruptcy.

Now, a variety of small businesses are successfully improving their processes and becoming more productive, agile and competitive.

A process is simply a series of steps and decisions performed in a way to accomplish a work product. Virtually everything we do in life involves processes. Examples of processes that can be found anywhere are: producing invoices, taking an order, preparing a lunch order or confirming customer appointments.

Process improvement is a series of actions taken to identify, analyze and improve existing processes within an organization to meet goals and objectives. This means setting aside past practices of assigning blame or being reticent to change because “we’ve always done it this way”. Sometimes the biggest change is to stop fighting fires or managing crises and learn to find ways to do your work better.

We need to find the root causes of problems in order to fix what is broken. Occasionally, Murphy’s Law will rear its ugly head and our process improvement efforts may actually make things worse. Don’t despair because Rome wasn’t built in a day. Sometimes, we have to take a step back before we can take two steps forward.

The basic process improvement model follows the proven Plan-Do-Check-Act (PDCA) Cycle. First, identify the root causes of problems with the selected process. Plan how and what to do to improve the process. Often diagramming the steps and decisions involved can help visualize the problem better and pose viable solutions. Next, implement or Do the changes you planned in a pilot or on a smaller scale. Check to see that fixes are working and effective. Act to make the fixes standard and part of the revised work policy or repeat the previous steps to discover alternate solutions.

So, whether your business is in the start-up phase or has been an on-going entity for years, it can benefit from process improvement. Apply the key process improvement steps to a business function you believe needs tweaking to see what you learn. By continually improving your internal business processes your company will not only survive but it will thrive.

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

How can I revitalize my business?

2009-06-09T14:23:00.001-04:00

Have those good ideas stopping coming? Do your employees appear to be doing little more than going through the motions? Are your competitors making splashes in the media that you can’t answer?

If so, a makeover could be just the thing to re-energize your business. It need not be a major overhaul; some minor tweaks may be enough. What’s important is that you recognize the need for action, and learn all you can to make informed decisions.

In order to identify where changes are most needed, you’ll have to dig for details about various aspects of your business. Remember to focus not just on the individual elements, but also how they all fit together.

For example, has your customer base changed since you first started? Is it broader or narrower? Older or younger? More upscale or less? You may need a new image, revved-up branding or perhaps just a rewrite of your marketing materials to address the needs of this changing customer base.

Take a hard look at whether your products or services are performing to customer expectations. Remember that your goal should be to exceed expectations, not simply meet them. Perhaps competitors are doing a better job, or maybe they’ve created add-on products and services that you haven’t. Your own customers can help with your makeover if you ask them for feedback.

If your marketing message has never changed, perhaps it’s time to reevaluate and devise a new one. Try revisiting your original business plan. You might be able to recapture some of the insight and enthusiasm you originally had from that document. Think back to your most successful promotions, presentations or sales efforts. Rather than reinventing the wheel, you might be able to update and expand an approach that has already worked for your business.

Don’t be afraid to seek out other perspectives. After all, you may be “too close” to the issues to understand the sources and solutions. Meet and brainstorm with your trusted advisors, mentors, friends, partners, employees, and outside consultants. Ask customers to give you a frank assessment of what you’re doing, how you’re doing it, and what you can do to better serve their needs. The more ideas you receive, the more options you’ll have for getting your business back on the fast-track.

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

Where can I find training for small business startups?

2009-06-02T14:12:00.000-04:00

On Thursday, May 14, I had the privilege of attending the 1st Annual Awards & Entrepreneur Showcase Event of The Intersect Fund, an organization founded by Rutger’s seniors Rohan Mathews and Joe Shure. The Organization provides an opportunity for local communities new and existing small businesses to better educate themselves before entering the business world.

In the current economic downturn, many Americans who thought their jobs were secure now find themselves looking for work. The comfort of depending on one’s employer to provide stability and long-term financial success may be a thing of the past. Thousands are finding opportunity in the midst of crisis by striking out on their own to start small businesses in their communities.

The Intersect Fund, a non-profit organization based in New Brunswick, can help. The group offers seed capital, consulting services, and comprehensive training, all at affordable prices.
Entrepreneurs who wish to participate are invited to take a course that meets once a week for six weeks and covers the fundamentals of business that one should know before embarking on a new business venture. Topics include budgeting, managing cash flow, marketing, registering one’s business, and a host of other useful skills. When entrepreneurs complete the course, they have the tools necessary to create a viable business plan, a must for every new and existing business to succeed. They also become eligible to apply for a loan that helps them buy working capital or cover the cost of expansion. Courses are available in Spanish.

In addition to receiving quality business services at a reasonable price, The Intersect Fund entrepreneurs’ have available to them a myriad of networking opportunities and continued support from an attentive, competent staff. The Fund also provides low-cost logo creation and graphic design services, and can also help set up a web site.

Starting or expanding a business can seem like a daunting task. And, let’s face it: it is. With the right support system and training, the steps to business success become far easier to handle.

To learn more about The Intersect Fund, and to find out how to take advantage of the services the Group offers, send an e-mail to info@intersectfund.org.

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

Would QuickBooks help me manage my business?

2009-05-27T14:10:00.000-04:00

SCORE counselor, Oria Gonzales, has practiced accounting for more than 40 years as Controller and Senior Accountant for numerous businesses, and in private practice as co-owner of an accounting and tax service. As a Certified QuickBooks ProAdvisor, she shares with you her thoughts on QuickBooks.

QuickBooks is accounting software that helps small business owners record what is bought, sold, owed, owned, what money comes in, what goes out, and what is left, all in one place. It's so easy to use, almost 70% of users report saving 3 hours or more a week. This allows you to spend more time growing your business and generating revenue not recording it.

Whether you’re just starting out or your business is growing, there is a QuickBooks that fits your needs:
· Simple Start – instantly create invoices, track payments and manage expenses, start using it in minutes. Free download.
· QuickBooks Online – access your finances from anywhere, anytime, keep your data backed-up and secure - automatically.
· QuickBooks Pro – track inventory, set reorder points, create purchase orders, import data from Excel, Quicken, Microsoft Office Accounting and prior QuickBooks versions, track international sales and expenses in multiple currencies, download bank and credit card transactions.
· QuickBooks for Mac – it’s built for Mac users by Mac users, with the same basic features found in QuickBooks Pro.
· QuickBooks Premier – chart of accounts and reports tailored to your specific industry (Contractor, Nonprofit, Manufacturing & Wholesale, Professional Services, and Retail), easily generate sales forecasts and business plans, create sales orders and track back orders.
· QuickBooks Enterprise – for mid-market, track inventory in multiple warehouses, do serial/lot tracking and bar coding. Up to 30 simultaneous users.

Common features in all QuickBooks editions:
· Easily print checks, pay bills & track expenses
· Track sales, sales taxes & customer payments
· Create & email invoices
· Create & email estimates
· One-click business reports

Intuit, the maker of QuickBooks, invites you to visit its website at www.smallbusiness.inuit.com for free products and marketing tools, to help your small business survive and thrive.

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

What business information is most crucial for my sales staff?

2009-05-19T14:06:00.000-04:00

High overhead costs are nothing new to large department stores and retail chains. But the results of a sluggish economy typically are new cost-cutting measures, including deep cuts in customer service personnel. The result is largely a self-service shopping environment that customers may tolerate or even prefer for certain types of purchases, but a nightmare for the customer who has questions or needs help locating an item.

Small retailers must keep tabs on overhead costs too. But they are in a better position to provide the level of service that today’s demanding consumers expect. Knowledge of your customers’ interests and preferences will enable you to provide a better shopping experience that will be repaid with sales, repeat business and that all-important positive word-of-mouth advertising.

Your sales force should be knowledgeable about the products, trained in the art of customer relations and motivated to do their best through appropriate compensation ─ particularly if personalized service and specialized products are part of your marketing and sales strategy. A wise investment in hiring, training and incentives will likely result in a top-notch sales staff that will go out of their way to keep customers happy and your business growing.

These goals are easy to achieve and do not require a formal, structured training program. Routine sales meetings and informal training sessions can enhance employee performance of day-to-day activities. Encourage discussions to keep up with product innovations, adapting ideas of other retailers (including those outside your market and service area), and changes that can help anticipate customer needs. Role-playing is also a good way to help your staff handle problems on the floor, including those hard-to-please customers and the question of where to draw the line between being helpful and being pushy.

Remember, all customers want to feel valued even if they say they are “just looking.” You should be ready to offer the best solution to meet their needs, even if that means a referral to a competitor. By being attentive, knowledgeable and sincerely interested in your customers, you and your staff will go a long way in building their loyalty and a successful business.

What insurance do I need for my business?

2009-05-12T14:02:00.000-04:00

Like home insurance, business insurance protects the contents of your business against fire, theft and other loses. It is prudent for any business to purchase a number of basic types of insurance. Some types of coverage are required by law, other simply make good business sense. The types of insurance listed below are among the most commonly used and are merely a starting point for evaluating the needs of your business.

Liability Insurance – Businesses may incur various forms of liability in conducting their normal activities. One of the most common types is product liability, which may be incurred when a customer suffers harm from using the business product. There are many other types of liability, which are frequently related to specific industries. Liability law is constantly changing. An analysis of your liability insurance needs by a competent professional is vital in determining an adequate and appropriate level of protection for your business.

Property – There are many different types of property insurance and levels of coverage available. It is important to determine the property you need to insure for the continuation of your business and the level of insurance you need to replace or rebuild. You must also understand the terms of the insurance, including any limitations or waivers of coverage.

Business Interruption – While property insurance may pay enough to replace damaged or destroyed equipment or buildings, how will pay costs such as taxes, utilities, and other continuing expenses during the period between when the damage occurs and when the property is replaced? Business Interruption (or “business income”) insurance can provide sufficient funds to pay your fixed expenses during a period of time when your business is not operational.

“Key Person” – If you (and/or any other individual) are so critical to the operation of your business that it cannot continue in the event of your illness or death, you should consider “key person” insurance. This type of policy is frequently required by banks or government loan programs. It also can be used to provide continuity in operations during a period of ownership transition caused by the death or incapacitation of an owner or other “key” employee.

Automobile – It is obvious that a vehicle owned by your business should be insured for both liability and replacement purposes. What is less obvious is that you may need special insurance (called “non-owned automobile coverage”) if you use your personal vehicle on company business. This policy covers the business’ liability for any damage which may result from such usage.

Officer and Director – Under most state laws, officers and directors of a corporation may become personally liable for their actions on behalf of the company. This type of policy covers this liability.

Home Office – If you are establishing an office in your home, it is a good idea to contact your homeowners’ insurance company to update your policy to include coverage for office equipment. This coverage is not automatically included in a standard homeowner’s policy.

Contact your insurance agent or broker to make sure you have the proper coverage for your business.

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

How do I make my website work for me?

2009-05-05T14:20:00.001-04:00

Our chapter’s resident expert on advertising and marketing, Alan Yarnoff, shares his thoughts on today’s fastest growing business segment.

The first thing you must do is to look at your site with critical eyes by addressing the key elements that lead to a successful and profitable presentation.

Have you set business goals, do you have a realistic target market and do you have quantifiable objectives and budgets?

Did you take the lead in the direction your site will take, or did the developer make the vital decisions? Remember, you know your business and what it takes to be successful; they know how to create the look.

Is your site search engine friendly? There is nothing worse than getting a potential client come to the site and then leave empty handed.

Have you been up-dating your site? It’s extremely important to keep the site fresh and newsworthy. Web consumers are always looking for new information and are prone to move off the site quickly if they feel are getting the same story over and over.

Does the site have a call to action? The site is your dialogue with your customer so you need to communicate clearly what you want them to do, such as, “buy now” - “save” - “free” or “don’t wait, act now. “

Does your site include testimonials from satisfied customers? This adds a point of trust to what you are selling and a real human element to the presentation. And if you don’t have a “tell a friend” link, don’t hesitate to add one. Like testimonials, word of mouth is an important marketing tool and the “tell a friend” link is a good way to accomplish this goal.

And lastly, you must know what the site is delivering. It’s absolutely imperative that you keep a close eye on the sites performance and to act accordingly if the goals you set are not met.

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

Do I really need a written LLC Agreement?

2009-04-28T14:00:00.000-04:00

For a variety of valid reasons, many SCORE clients make the decision to form a Limited Liability Company (LLC) for their new business. This company form offers the limited personal liability protection of a standard C or S corporation with the tax advantages of an S corporation without the excess costs and reporting burdens imposed by a C or S corporation. Mainly, these LLCs are sole owner companies.

Often, however, clients want to form an LLC with one or more associate(s). In many cases, the associate is a friend or a close relative such as a spouse. In all cases when clients want to form a multiple member LLC, SCORE counselors urge them strongly to enter in advance into a written Membership Agreement reviewed by an attorney competent in such matters. It should be noted that a Membership Agreement is a different document than an LLC Operating Agreement which is a required legal document by both the State of the LLC’s formation and the IRS. Although, the terms of a Membership Agreement could be incorporated into the Operating Agreement, it is preferable that it be a standalone agreement.

The purpose of the Membership Agreement is to be explicit as to the purpose of the business, the capital contribution and ownership percentage of each member and the allocation of management responsibilities: contracting, hiring and firing, purchasing, signing checks, entering into agreements, and other matters of mutual interest. The agreement can designate one or more of the members for each function and can also designate that, for some transactions more than one member’s agreement is required. Also, the Agreement details the dissolution of the business and the exit strategy from the LLC for the members in the event, for whatever reason one of them or their heirs/assigns wants to opt out. Clients are sometimes reluctant to enter into a Membership Agreement with a close friend or relative under the mistaken theory that it might be an insult, is culturally taboo or the members are very close and such an agreement is unnecessary. These are not valid reasons and there should always be a Membership Agreement irrespective of the personal or familial relationship between/among the members.

Contributors to this Ask SCORE column were Larry Pollack and Bill Litchman

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

How do I start a home-based Internet business?

2009-04-21T13:57:00.000-04:00

Home-Based Internet Businesses Still Require “Old-Fashioned” Business Fundamentals. Our chapter’s resident expert on home-based Internet businesses, Sasha Mason, shares her thoughts and suggestions with you concerning this subject.

The fundamentals of home-based internet business are no different from any other business. It requires due diligence, planning, and endless hours. You are wasting your time and money if you are hoping to create a website and then sit back while the customers click away.

As with any other business model, the starting point for you home-based Internet business must be a good business idea followed by due diligence to ensure its viability. Are there other websites doing what you want to do? If so, is there room for another one? How big is your market? Assuming you pass these hurdles, you should register a domain name. This is inexpensive, easy to do, and will ensure that no one else takes your chosen domain name.

Next, draft a business plan. Even a relatively simple business that requires no financing will benefit from a well thought-out plan. Try to use reasonable projections -- one common mistake with internet businesses is underestimating your costs as well as the volume of sales needed to turn a profit. Also think carefully about your marketing plan – do not expect to rely solely on internet search engines. How will you advertise and drive traffic to your site?

Finally, hire a web designer, but remember you get what you pay for. There are many “web designers” for whom this is a side job. It is worth paying more to hire a professional with whom you can have an ongoing relationship. You will also need to look for a webhosting plan. There are plenty of inexpensive hosting sites. It is important, however, to ensure that your host can increase your bandwith as your site grows.

Good luck and remember that you can contact SCORE for help along the way.

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

Do I need a license for my business?

2009-04-07T13:55:00.001-04:00

There are many types of licenses, both state and local as well as professional. Depending on what you do and where you plan to operate, your business may be required to have various state and/or municipal licenses, certificates or permits.

Regardless of the legal structure of your business, you should contact the Clerks of both the municipality and county in which the business is located to determine if there are any permits required for your business and to determine if there are any local regulations that apply to your business.

Occupations and business activities often require some form of registration, license, or certification by the State of New Jersey. The New Jersey License and Certification Guide, prepared by the Department of Business Advocate& Information in the New Jersey Commerce, Economic Growth and Tourism Commission, contains a listing of these requirements with the appropriate agency contact. A copy of the guide can be found on line at: http://www.state.nj.us/njbusiness/licenses. The Hotline number is (609) 777-2642 or toll free 800-533-0186.

If you are a new or existing business owner and need assistance with the regulatory and permitting process, or need additional information or assistance with licensing, registration, certification requirements, or compliance issues, you should contact the NJ Commerce Call Center at 1-86NJFIRST9. Businesses will be connected to professional call center agents who will quickly direct callers to the appropriate Commerce office or other state agency. Call center agents provide businesses with information concerning any business or tourism related issue.

Building Codes, Permits and Zoning – It is important to consider zoning regulations when choosing a site for your business. You may not be permitted to conduct business out of your home or engage in industrial activity in a retail district. Contact the business license office in the city or town in which the business is located.

Your SCORE counselor is ready to assist you, as well. Please call 609-393-0505 for our free counseling service.

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

Should I consider email marketing?

2009-04-04T13:53:00.000-04:00

SCORE counselor and resident advertising and marketing guru, Alan Yarnoff shares his thoughts on email marketing and the impact it can have on your business.

In today’s difficult environment it is essential to maximize you’re your marketing effort in the most efficient manor possible. One excellent tactic to achieve this goal is the use of a strong email marketing program.

Email marketing in its broadest sense covers every email you send to acquire new customers or persuade existing customers to buy again. In addition, it will serve to encourage customer loyalty and enhance the customer relationship. It gives you the opportunity to continue a positive dialog with your customer base, and to reinforce your relationship with your clients.

Notably, email marketing is a relatively low cost way to reach your target audience compared to traditional approaches like direct mail, newspapers, and radio and television. It allows you to target your message to your specific market segment while delivering valuable content material to the recipient. And, most importantly, it usually delelivers a high ROI (Return on Investment).

It’s a fact email marketing works. Why, because the national use of emails is growing. Statistics confirm that 91% of Internet users read and send emails every day. Secondly, the important senior market of baby boomers with its expendable income is joining in at a very high rate. In total, over 147million people use email every day.

Once you make the decision to use email marketing you need a plan. First you must decide what type to send, to whom, and when. You need to build an email list of permission based recipients; you most craft your message so it will be read, and you must plan on reviewing results and adjust when necessary. Do not make the same mistake twice.

One last but very major point is that you most receive permission before sending commercial emails. Email marketing only works if they are sent to permission based participants, other wise they will end up in the spam file.

Consider the following reasons why email marketing can help your business:
§ The low cost per order vs. any other promotional tactic.
§ Best way to drive people to your web site.
§ Email offers and promotions generate action.
§ Greater sales.
§ More downloads.
§ Significant number of inquiries and registrations.
§ High ROI (Return on Investment.

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

What are some of the key considerations in managing inventory?

2009-03-25T16:06:00.001-04:00

Abraham Cohen, SCORE counselor, shares with us his thoughts on managing your inventory. There is a saying “inventory can make you or break you.” If it is too high, it ties up working capital and cash flow; too low, it may cost you sales. The right balance is easier said than done. Forecasting sales, market conditions, and deliveries may require a crystal ball. Inventory control is not a perfect science. However, the following principles, when applied, will get you close to optimum levels.
- Frequent Inventory Analysis: Use a computer program that matches your needs. Create your own program, buy a ready-made one, or hire the services of a programmer. If you are using QuickBooks for your accounting needs, they offer an inventory control add-on.
- Purchasing - Basic Factors: Months on hand; sales/lost sales; frequency (quarterly, bi-monthly, monthly, weekly or daily); vendors’ lead (delivery) time; safety stock to cover the unforeseen.
- Inventory Turns: Reorders per year. Example: monthly sales for item X is 20 (annual 240) – ordering 40 (2 months worth) every 2 months gives 6 turns; (240/40=6) – average monthly stock would be 20 (240/12). More turns, the leaner the inventory. Order timing is of the essence as well as adjustments for seasonal products.
- Vendor Lead Time: Order date to delivery. A 30 day delivery works fine for the above example, annual 240 and 6 turns. Order 40 units 6 times a year when your inventory is down to 20. Depending on the location of your vendor, domestic deliveries usually arrive in 30 days or less. Imported items can take up to three months or longer depending on the country of origin, trade agreements, location of the port, and inspections at both the shipping and receiving ports. Arranging for ‘Just in time’ delivery would be nice but many times difficult to forecast.
- Safety Stock: This factor is important especially when deliveries are unreliable. A 10 to 20% extra inventory cushion comes in handy, more so when sales are higher than forecasted. Lost sales and backorders hurt business and drive customers to your competitor. Incorporate the 10 to 20% into the purchasing formula.
- Computer Program Data: Above are basics to formulate a purchasing program. They are not universal. Different businesses require different data for their computer systems. The system will work only as well as the data entered: “Garbage in – Garbage Out.”

No computer program can claim perfection. Checking the numbers before placing the order will prevent nasty surprises. An experienced purchasing agent must know the items and have a working knowledge of your business. And remember, inventory = $$$$$$ already spent.

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

How do I keep my service customers?

2009-03-17T21:50:00.000-04:00

Customer confidence is important to every successful small business, but particularly to those that offer services. Here, the customer’s satisfaction determines whether you cultivate loyalty or an unfavorable reputation through word-of-mouth.

The foundation of this confidence is quality. The typical customer knows little about the technical side of your business and therefore judges your business solely on results. For others, it’s the courtesy and integrity of you and your staff. Never assume things are satisfactory. Continually monitor your operations and competition to be sure you are staying on top of your customers’ needs.

For example, evaluate the price range for services offered by competitors, determine how and why they arrived at that price schedule, and make sure your prices are reasonable and reliable. Provide each customer with a comprehensive bill that breaks out specific charges.

Train your employees to be patient with all customer questions. Be sure there are clear policies in place to address service errors, complaints and discounts. Train your employees to handle such situations and to know at what point complaints should be directed to you. Not even a loyal customer appreciates getting the runaround.

In all customer dealings, honesty is the best policy. No one likes to hear that a service problem has not been solved or that the resolution will take longer than expected. Be as specific as possible, but leave room for unforeseen problems such as receiving the wrong part or an employee’s personal emergency. And if a delay is unavoidable, notify the customer right away.

If you would like to discuss this topic or business planning, business growth strategies or a specific business issue, contact us at 609-393-0505 or email us at info@scoreprinceton.org.

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

What's the value of a business mentor?

2009-03-03T15:59:00.003-05:00

Often the smartest people are the ones who know they don’t know it all. Like it or not, a business of your own exposes you to duties, situations, problems and opportunities you may never before have faced. Is it time for you to get a mentor?

A mentor is an experienced business adviser who is willing to share information and insights on a regular basis. If you worked in a corporate environment before going out on your own, you’re probably familiar with the concept of a senior manager in the organization mentoring a younger one. Some companies have even formalized their mentoring program. In your own business, however, of necessity your mentor will come from outside.

If you are seeking a mentor, it makes sense to start by looking for experienced business professionals in the same business or industry as your own company. Ideally the one you want will already know something about your work and management style. Over your entrepreneurial career, you may even have a succession of mentors.

What does a mentor contribute to your growth as a business owner? First of all, he or she helps speed up your learning in vital areas of your business. This individual is not afraid to share personal experiences with you as well as expertise. But there are other advantages. A mentor
helps you avoid isolation, by becoming a “trusted other” in which to confide your uncertainties as well as your breakthroughs. A good mentor lends perspective, reminding you to “keep your eye on the doughnut and not the hole”; supplies the candid, honest feedback you may not be getting from your employees; and provides moral support for the tough decisions you have to make in your business.

Not so very far down the road, you will be ready to mentor individuals who are where you were only a year or two ago. You may be pleasantly surprised to see how this accelerates your own learning and growth as an entrepreneur. You then become a contributor to the business community in the same way your mentor was to you.

In short, mentoring is a relationship that will pay dividends for both you and the individual who mentors you. Finding the right mentor could be one of the most important ways you help your business to succeed.

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

How do federal laws on employment verification affect me?

2009-02-24T15:55:00.002-05:00

Our chapter’s resident expert on employment issues, Yan Bennett, shares her thoughts on federal regulations on employer requirements in verifying the work eligibility of employees. Yan Bennett is an attorney and counsels small business owners on various state and federal requirements.

Recently, the federal government proposed changes to regulations governing verification of employee work authorization, or what Human Resources personnel know as Form I-9 Employment Eligibility Verification. These changes include amending the acceptable identity and employment authorization documents employees may present to their employers, disallowing employers to accept expired documents to verify employment authorization on the Form I-9, and proposing changes to the Form I-9 itself.

However, during the public comment period, which was to conclude on February 2, the federal government received comments from employers requesting an extension of the effective date of the rule to address procedural and substantive concerns the new rule raises. Commentators noted that without proper guidance, the new rule, as proposed, would present exceptional burdens and costs to employers in using the new form and instructions. The interim final rule and an informational copy of the revised Form I-9 are available for public comment at http://www.regulations.gov/ until April 3, 2009.

The imposition of this new interim rule may result in a cost of an aggregate $100 million to businesses in the first year that the new form is used. The government considers this initial cost to be a non-reoccurring in that most of the costs are associated with familiarizing Human Resources and personnel with the new requirements, and transitioning to the new forms. However, failure to comply with the employment eligibility verification requirements may result in the imposition of civil penalties of several hundred to several thousand dollars per employee. Thus, the total cost of the new rule and form may well be unknown. Thus, employers are highly encouraged to familiarize themselves with the new regulation before it becomes effective for a smooth transition.

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

Do I have what it takes to be an entrepreneur?

2009-02-19T16:12:00.001-05:00

While almost never asked explicitly in SCORE counseling sessions, Bill Litchman, SCORE counselor, explains in his following article an underlying concern of each of our clients, “Do I have what it takes to be a successful entrepreneur or small business owner?” First, we need to understand the differences between the two. While there are many similarities, there are a few notable divergences.

True entrepreneurship entails substantial innovation providing the venture with a unique competitive edge leading, if successful, to significant wealth creation over a relatively short period of time and, therefore necessitating significant financial risk to both the entrepreneur and other investors. The entrepreneur is a leader with an enthusiastic vision and the ability to drive the enterprise intellectually and convince outside investors and potential employees of the value and uniqueness of the idea. The entrepreneur does not need to be “chief cook and bottle washer” of the enterprise but needs to recognize her/his weaknesses and compensate with outside talent.

The Small Business Owner also needs perseverance and drive; and every start-up necessitates financial risk and anticipates financial rewards. However, the small business owner is chief cook and bottle washer and needs to understand, with some degree of detail every aspect of her/his business including leadership, sales & marketing, how to read financial statements, potential legal ramifications and, as appropriate purchasing, inventory control, web site development and on and on. Usually, the small business owner is seeking to realize her/his dream with contained financial risks while earning a steady and growing income. The entrepreneur bets the farm, the small business start-up does not; but both need that all important business plan.

For both the entrepreneur and small business owner, the words of Frank Lloyd Wright apply: “I know the price of success: dedication, hard work and an unremitting devotion to the things you want to see happen.” And, both need to understand fully the concept behind the words of Arie de Geus: “Your ability to learn faster than your competition is your only competitive advantage.”

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

What are the most common pitfalls in a recession?

2009-02-09T13:49:00.000-05:00

Entrepreneurs face challenges on many fronts, including lower consumer spending, rising unemployment and tightening credit. Inflation pressures have hit both businesses and customers. By acting quickly and decisively to protect their business today, local business owners can make it through the recession with a profitable business.

SCORE CEO Ken Yancey says, "Small businesses feel the credit crunch first. We have seen difficulty accessing capital and collecting payments from customers." Yancey adds, "Don't wait. Now is the time to meet with a SCORE mentor to make plans to tighten credit policies, cut expenses and look at holding cash in your accounts. Experienced SCORE mentors are here to help you plan actions to survive the recession and grow when the economy turns around."

SCORE offers tips for small business owners on Five Recession Pitfalls to Avoid:
1. Cutting expenses too slowly. Don't cut expenses a little bit at a time. Now is the time to look at expenses and decide whether your company needs to cut expenses five, 10 or up to 20 percent. Do what it takes early in the year and bring costs down.
2. Maintaining the same product and service mix. Your needs are changing. You can bet your clients needs have changed too. Call your existing clients and ask them what they need. Then, design your product service mix around those needs.
3. Reducing marketing instead of focusing on marketing. The company that stands tall, strong and visible in the marketplace has stature and status. Differentiate with strong marketing to drive leads and sales.
4. Lacking systems to free up your time. Streamline your business and become more efficient. Use a handheld organizer to keep track of phone numbers, dates, appointments and meetings. Set a time each week to handle routine tasks, bills and paperwork.
5. Keeping everything to yourself. Your team knows the economy is tough and wants to understand what the company is facing and how, together, you can make it through. Lead toward a brighter future by focusing your efforts on today.

Richard Strug

Wjhat structure is best for my business?

2009-02-02T13:43:00.000-05:00

You may operate your business under one of many organizational structures generally chosen for liability and tax reasons. The most common organizational structures for “for profit” businesses are sole proprietorships, general and limited partnerships, “C” and “S” corporations, and limited liability companies.

Each structure offers unique tax and liability benefits appropriate for different personnel situations. If you’re uncertain where to start, contact SCORE for free counseling and your attorney and accountant for assistance. Here's an overview get you started:
Sole Proprietorship – One person operating a business as an individual is a sole proprietorship. It is the most common form of business organization. Profits are taxed as income to the owner personally. The personal tax rate is usually lower than the corporate tax rates. The owner has complete control of the business, but faces unlimited liability for its debts. There is very little government regulation or reporting.
General Partnership – A partnership exists when two or more persons join together in the operation and management of a business. Partnerships are subject to relatively little regulation and are fairly easy to establish. A formal partnership is recommended to address potential conflicts such as who will be responsible for performing each task; what, if any, consultation is needed between partners before major decisions, what happens when a partner dies, and so on. Under a general partnership each partner is liable for all debts of the business. Profits are taxed as income to the partners based on their ownership percentage.
Limited Partnership – Like a general partnership, this is established by an agreement between two or more individuals. However, there are two types of partners.
· A general partner has greater control in some aspects of the partnership. For example, only a general partner can decide to dissolve the partnership. General partners have no limits on the dividends they can receive from profit so they incur unlimited liability.
· Limited partners can only receive a share of profits based on the proportional amount on their investment, and the liability is similarly limited in proportion to their investment.
“C” Corporation – A “C” corporation is a legal entity made up of persons who have a charter legally recognizing the corporation as a separate entity having its own rights, privileges, and liabilities, apart from those of the individuals forming the corporation. It’s the most complex form of business organization and is comprised of shareholders, directors, and officers. The corporation can own assets, borrow money, and perform business functions without directly involving the owners. Corporations are subject to more government regulation and have the advantage of limited liability, but not total protection from lawsuits.
Subchapter “S” Corporation – This is a special section of the Internal Revenue Code and permits a corporation to be taxed as a partnership or sole proprietorship, with profits taxed at the individual, rather than the corporate rate. A business must meet certain requirements for Subchapter “S” status. Contact SCORE for free counseling, the IRS, and your accountant for additional information.
LLCs and LLPs – The limited liability company is a popular business form. It combines selected corporate and partnership characteristics while still maintaining status as a legal entity distinct from its owners. As a separate entity it can acquire assets, incur liabilities and conduct business. It limits liability for the owners. LLC owners risk only their investment, not personal assets. The limited liability partnership is similar to the LLC, but it is aimed at professional organizations.

Contact SCORE for information concerning organizational structures for non-profit organizations.

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

Can I run my business from home?

2009-01-21T13:38:00.000-05:00

Going to work used to mean traveling from home to a plant, store or office. Today many people do some or all of their work at home. Garages, basements and attics are being transformed into corporate headquarters of the newest entrepreneurs – the home-based business person.

Before diving headfirst into a home-based business, you must know why you are doing it. To succeed, your business must be based on something greater than your desire to be your own boss. You must plan and make adjustments along the road.

Ask yourself these questions and remember, there are no best or right reasons for starting a home-based business. But it is important to understand what the venture involves. Working under the same roof where your family lives may not prove to be as easy as it seems. It’s important to work in a professional environment. One suggestion is to set up a separate office in your home to create this professional environment. So, before rushing in to it, ask yourself:
· Can I switch from home responsibilities to business work?
· Do I have the self-discipline to maintain schedules?
· Can I deal with the isolation of working from home?
· Am I a self-starter?
· Does my home have space for a business?
· Can I identify and describe the business I want to establish?
· Can I identify my business product or service?
· Is there a demand for that product or service?
· Can I successfully run the business from home?

A home-based business is subject to many of the same laws and regulations affecting other businesses. Some general areas include:
· Zoning regulations. If your business operates in violation of them, you could be fined or shut down.
· Product restrictions. Certain products cannot be produced in the home. Most states outlaw home production of fireworks, drugs, poisons, explosives, sanitary or medical products, and toys. Some states also prohibit home-based businesses from making food, drink, or clothing.

Be sure to consult an attorney and your state’s department of labor to find out which laws and regulations will affect your business. Additionally, check on registration and accounting requirements needed to open your home-based business. You may need a work certificate or license from your state and your business name may need to be registered. For home-based businesses, a separate business telephone and bank account are normally required.

Also remember, if you have employees you are responsible for withholding income and social-security taxes, and for complying with minimum wage and employee health and safety laws.

If you are convinced that working from home is for you, it’s time to create your business plan. SCORE and its cadre of counselors are ready to help you. Call today for free counseling.

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

Wjy worry about competition?

2009-01-06T13:36:00.000-05:00

Not too many years ago, if your products or services were unique and there was no competition within a 15 or 20 mile radius, you were able to maintain a very profitable business. As shopping center after shopping center opened, cyber retailing exploded, and franchising expanded, it became more difficult to maintain your exclusivity within a geographical area. However, if I trust in the merits of my product or services to be successful, why should I care about the competition?

Very few businesses operate in isolation without market competition. Direct and non-direct competitors are trying to convince customers to buy their products or services rather than yours. There may also be indirect factors impacting customer choice. It is in your best interest to attempt to learn more about the companies that are trying to reduce your take-home pay. Knowing the competition enables you to get a competitive advantage.

List the strengths and weaknesses of each of your competitors. Talk to friends, visit your competition, call for information about their products or services, and analyze how they advertise.

Next, take a sheet of paper and list each of the major competitors and give each a rating of 1-10, for product or service quality, process, advertising, and customer satisfaction. You can add other ratings that you feel are important.

You can now use the competitive analysis to make decisions relevant to your strategic marketing plan (an integral part of your business plan). Your marketing plan will guide you toward the right decisions in the areas of pricing and advertising. It will also help you to increase your company’s customer satisfaction rate (which usually shows up as a weakness in many firms). Finally, it can help you make the right decision in customer and product segmentation.

In summary, it is impossible to produce a realistic marketing and business plan without knowing your competition.

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

Am I ready to start my own business?

2008-12-30T13:34:00.000-05:00

The thought of owning your own business and being the master of your own domain is exciting, challenging and somewhat scary. Many times people enter businesses without asking themselves key questions that could dissuade them from making the decision to go out on their own.

Ten Questions to Ask Yourself Before Going into Business

1. Is my product or service different from others already in my market area?
2. Do I have the right kind of business experience to support this business?
3. Can I prepare a detailed, credible business Plan for the first three years?
4. Am I able to take responsibility?
5. Am I a good organizer? For myself and others?
6. Am I ready to put in the long hours that probably are necessary for the first few years?
7. Am I ready to stick to it even in rough times?
8. Do I have the full support of my family?
9. Do I have adequate resources and credit? And maybe a bit more?
10. Is my health up to the hard tasks ahead?

Richard Strug

What is a business plan and why do I need one?

2008-12-23T13:31:00.000-05:00

When you take a trip, the smart traveler plans their route in advance, making sure there are sufficient rest stops, gasoline stations, hotels that accept pets [when required], and alternate routes in the event of a detour that could delay arrival at the designated destination. A business plan is a road map for the entrepreneur.

A business plan precisely defines the business, identifies goals and serves as the company’s resume. It illustrates the operational and financial aspects of a business. It assists in resource allocation, minimizing unpredicted complications, allowing owners to make good decisions. Because it provides specific and organized information about the company and how borrowed money will be repaid, a good business plan is a crucial part of any loan package. Additionally, it tells personnel, suppliers and others about company operations and goals. Business plan formats are fairly standard; the same format may be used by someone who wants to start an electronics firm as a person seeking to start a daycare center.

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

How do I obtain a loan from the SBA?

2008-12-16T13:27:00.002-05:00

When you apply for a loan to start your new business or to expand your current business and are unable to secure that loan from a bank, assistance could be available from the Small Business Administration (SBA).

The SBA does not provide funding for direct loans nor does it provide grants/low interest rate loans for business start-up or expansion. The SBA does, however, enable its lending partners to provide financing to small businesses when funding is otherwise unavailable on reasonable terms by guaranteeing major portions of loans made to small businesses. The eligibility requirements and credit criteria of the program are very broad in order to accommodate a wide range of financing needs.

Here's how it works: When a small business applies to a lending partner for a loan, the lender reviews the application and decides if it merits a loan on its own or if it requires the additional support of an SBA guaranty. SBA backing on the loan is then requested by the lender. In guaranteeing the loan, the SBA assures the lender that in the event the borrower does not repay the loan, the government will reimburse the lending partner for a portion of its loss. By providing this guaranty, the SBA is able to help tens of thousands of small businesses every year get financing they would not otherwise obtain. To qualify for an SBA guaranty, a small business must meet the SBA’s criteria and the lender must certify that funding could not be offered on reasonable terms without the SBA guaranty. For additional information, visit the SBA’s Web site (www.sba.gov/financing).

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

Am I capable of starting a business?

2008-12-09T14:11:00.002-05:00

We are facing uncertain economic times. Before investing in a business it is of utmost importance to ask yourself, “Am I ready?” To help you in that thought process, here is a question you should ask yourself:

How do I determine whether I am capable of starting a business?

Compare your skills and expertise with those who are successful in similar business pursuits. Analyze what particular attributes and operational capabilities made other businesses profitable and viable in the marketplace. Can you duplicate and surpass the capabilities that other successful businesses possess? What unique skills or edge do you possess to obtain a sufficient share of total market in the area you plan to serve? What level of capitalization, technical acumen, energy, passion, organizational strategy, other resources or equipment can you incorporate into the business to command the essential market share for viability?

Review business journals and other comparative studies that identify the requirements necessary to operate such a business. Based on your findings, develop a strategy for what should be incorporated into business operations. If possible, do a small scale sample survey and market penetration to test the waters in terms of business vulnerability.

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