How can freelancers maintain a steady stream of work?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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