Posts Tagged ‘Small Business’


5 Strategies to Bootstrapping Your Business

1-28 Funding Options SmallAs you prepare to become your own boss, you need to get your finances in order. You’ll need enough money to cover 6-12 months of business and personal finances before you even launch your business. That being said, you have a few options to consider in terms of where that money comes from.

1. Savings

If you’re lucky enough to have a well-padded savings account, kudos to you. This should be your first option for funding your business. Note: don’t jeopardize your own future by taking the money out. If you have a savings account to cover “rainy day” home repairs, the last thing you want to do is take that money out, and then find you need a new roof!

Consider leaving your money in your savings or money market account, and just taking what you need. That way, your money continues to earn interest.

Benefits: Using your savings account keeps you from having to take out a business loan, which many entrepreneurs are reticent to do. If you have less than stellar credit, you can purchase a Certificate of Deposit and use it as collateral for a loan while earning interest.

2. Bank Loan

The Small Business Association (SBA) is set up to help businesses get the money they need to start a business. There are banks that cater to small businesses just like yours that can help you find a great rate. Start with your own bank, or look for one that does small business lending.  Look for alternative lenders as well, such as Women’s Business Loans. Note: banks don’t lend to startups, so you’ll need to be in business two years prior to applying for a traditional bank loan.

Benefits: The SBA provides a guarantee for business loans, which means applicants with challenged credit score still have an opportunity to get funding.

3. Your Retirement Fund

You can borrow against your 401(k) to start a business. With this option, you essentially use your own money to fund your company, then pay yourself back. Just make sure you pay it back! Sometimes there can be penalties for borrowing funds, so you want to make sure you are aware of them before you take this option.

Benefits: 401(k) financing actually has lower risk than an SBA loan. If things go badly, you still have to pay for the loss, but the 401(k) provides before-tax money, reducing the effective cost. Plus, there are no credit implications and your house is not on the line as collateral.

4. Home Equity Line of Credit

If you own your home, borrow no more than 80% of your home’s value through a home equity line of credit to avoid having to purchase private mortgage insurance.  You’ll increase your chances of getting approved for one if you have great credit and good payment history. Make sure to pay attention to what current interest rates are before deciding on this strategy. And remember: you’re putting your house on the line, so if your business fails, you risk losing it if you can’t pay the loan.

Benefits: Funds are easy to access once you’ve been approved. The interest is tax-deductible, since it’s mortgage interest.

5. Friends and Family

Having a friend or family member who’s willing to invest in your business idea is a real boon. Some may want to be involved in the business in exchange for the investment, while others may hand you a check and say “pay me whenever.” Either way, make sure you’re clear on payment terms (and offer interest) and how willing you are to have someone involved in helping you make the business decisions.

Benefits: If you have a family member who can afford to loose the money they invest in your business, this means they could be more patient with letting you build your business.


Is Your Passion Enough to Start a Business?

1-21 passion into business smallPassion is an overused term in business. You keep hearing “do what you love,” but you need to be thinking about whether your passion is truly sufficient enough to start a successful business. To create a business you must provide a product or service people are willing to pay for. Maybe you love knitting baby booties, and want to make millions doing so. I’m sad to tell you: unless you employ about 10,000 other baby-bootie knitters, you will likely never reach that financial goal.

It’s important that you assess whether your passion has a profit center before you start that business. By making sure you can actually make money you’ll ensure that your business will be able to weather an economic crisis and other bumps in the road. You also need to be able to scale that profit center beyond what your own two hands can create.

Assess Your Passions

Start by looking at what you’re passionate about. Your list will likely include things you can quickly mark off your “possible business” list, like “watching WWE fights or The Food Network.” You simply aren’t going to be able to build a business around that!

Maybe you’re an avid bike rider who’s passionate about taking kids on long cross-country bike treks. Or you love animals and have a knack for training them. Maybe you are good at helping friend pull together a killer look or update their wardrobe. These are passions you can build a business around.

But go beyond those obvious passions, like what you enjoy doing in your spare time, and look at the abstract. You might enjoy working with small teams, or planning events. You might love closing a sale, or have an eye for home design. Some of these passions may be worth considering starting a business around, while others may simply be useful as you develop your business.

Consider Your Goals

Going back to that baby bootie example. If you’re content knitting 25 hours a week and making enough cash to take a vacation, leaving you ample time to spend with your kids, this could be a sustainable business model. You have to look at your resources (at this point, that’s just you, the knitter) and determine whether you can accomplish what you want with them.

Maybe you’ve got money squirreled away, and could hire your knitting club to triple your production of booties. Now you’re talking! You could create a virtual network of knitters (say that 5 times fast) and grow your business from there.

Passion is a great place to start in becoming your own boss, but it’s not the only factor to consider. You also need to be able to make enough money to hit your goal, while maintaining the type of lifestyle you desire. Profit is how we keep score in business, so just make sure you are honest with yourself about whether or not your business concept can actual make money.


Breaking Bad Business Habits

1-9 breaking bad habits smallSmall business owners are among the hardest-working people in the country. They get in early and stay late, handle every business detail and bend over backwards to meet and exceed the needs of their clients and customers. On the surface, these traits are admirable. But they can also stifle the future of your company. Here are five habits to kill so that you can work smarter, instead of harder, and maximize your success.

Working Non-stop

When you turn your computer off at the end of each day, it re-starts completely fresh in the morning.  When you don’t, it starts to work sluggishly and sometimes, it even crashes.  Don’t you think that your mind needs the same break? A little R&R (and a good night’s sleep) gives your brain a chance to process the previous day’s events. And, since it’s not uncommon to go to sleep with an unsolved problem and wake up with the solution, you can sleep guilt-free, knowing that you may continue to work after you hit the sack.  Even just taking some time to exercise, watch television or engage in a hobby allows you to be your best self and in turn, that makes you better in your business.

Short-term Thinking

With cash-flow a common issue for small business owners, it’s tempting to chase every dollar. Granted, you’ll get a quick hundred bucks now if you take on a two-day special project for a client. But, those two days might be better spent going on sales calls to acquire new business or starting a large project that will realize major income, even if you won’t see it until next month.  Or perhaps you have a temporary solution to a business issue that doesn’t take into account future issues that the new solution might cause to your customers.  Don’t just think about today; be focused on your ultimate goals.

Doing Everything Yourself

Most entrepreneurs wear all hats in the early days of their businesses, but during times of growth, they have to learn to let go of the daily minutiae. At some point, you need to outsource or delegate, even if you don’t think others can handle every task as brilliantly as you do it. You definitely should continue to monitor the progress of all business operations, but let your employees, contractors and/or service providers do things in the ways that they are comfortable while you focus on the aspects of your business where you can add the most value and be best utilized.

Addressing the “Urgent” Rather than the “Important”

The squeaky wheel may get the grease, but a wheel might make no noise before falling off of the car. So, even though Customer A is yelling the loudest — or yelled most recently — Customer B (or even a new customer that you are courting) may have more important issues.

Your job is to correctly prioritize every task and stick to your decisions. If newer issues are more important than others on your to-do list, place them higher on the list. This simple method allows the most trivial issues to naturally fall to the bottom of the list (which, by the way, might help identify great tasks to delegate).

Being a “Yes Man” (or Woman)

Every business owner needs to learn how to say “no.” You can only take on so many projects at once. You can lose your reputation and clients if you have to cut so many corners that you turn out less-than-stellar products or services. Before taking on new work, remind yourself of your end goals as a business and use those goals as your litmus test. If you’re already short on time and responding to a request does not further those goals, you need to turn it down.

Let your business habits match your business cycle. The habits that served you in the early days of your business do not necessarily make sense as your company becomes more mature. Don’t be constrained by the “I’ve always done it this way” attitude. Take a little time to determine the best ways to use your time and resources to take care of your business and yourself. 


10 Trends for Small Business In 2015

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This New Year will be an important one for every small business as powerful trends shape the direction of the economy. Here are the shifts that companies can expect in 2015:

  1. Less employees, more freelancers. The nature of work has profoundly changed. Small businesses now are easily able to match new revenue to needs in increased resources. This means less permanent employees and more part time resources. This is a beneficial trend that enables the small business owner to make their workforce a variable expense as their sales goes up and down.
  2. Less office employees, more remote resources. While it can be comforting for small business owners to look out from their office and see their team, this version of the company is a thing of the past. Instead, all managers need to get comfortable with leading and building a team culture with remote resources that they do not see every day.
  3. Less email, more in person meetings (or at least video chat). People have opted for email instead of phone calls. But the trend this year will be to have more in person meetings with employees, vendors and customers as everyone wants to make true connections that build lasting relationships.
  4. Less apps, more dashboards. Apple and Android apps have become ubiquitous. According to a recent Intermedia study, 14.3 is the average number of apps per small business and it’s hurting employee productivity. Companies will begin to use more dashboards to integrate these apps to track the key metrics of their business. These include tools like iDashboard.
  5. Less “Bring Your Own Device” (BYOD), more company issued phones. In recent years, small businesses have saved money by having employees conveniently use their own smart phone device for business. This has resulted in many security issues. The trend is for companies to spend the extra money to issue business only devices. They are then able to load only approved applications and keep tight security on those smartphones.
  6. Less data, more analysis. Small business owners are flooded with disparate data that they don’t understand. The trend is away from just data to more analysis of what it all means. Key tools include Power BI from Microsoft, Qlik and Tableau. These applications can integrate much of the company information into something that can be used by management.
  7. Less features, more relationships. With the spread of information almost instantaneously worldwide, there are less differences in product features. The customer can always choose the lowest price. The focus in 2015 will be to continue to service the customer to build value in a personal long term relationship that ensures loyalty. This includes less mass marketing and more one on one personalization through technology.
  8. Less secrecy, more transparency. With social media instantly communicating anything and with every phone having a camera, nothing in business is a secret any longer. This will force every small business to be much more transparent in dealings with customers, employees and product developments. This will also boost more social responsibility for these companies.
  9. Less organic social posts, more boosted advertising. With the sheer glut of millions of posts every day clogging feeds, small business owners in 2015 will be forced to boost their message through social media paid advertising on all the major platforms in order to be seen by their customers.
  10. Less bank loans, more peer to peer lending. Even though bank loans will continue to grow from the depths of the Great Recession, small businesses will now get more of their capital from sites like Fundera that will help choose the best alternate source.

What trends do you see in your business for 2015?


Nextiva Tuesday Tip: Why the Holidays are a Great Time to Call Your Customers

12-2 making a phone call smallWhen you think about the holiday season, you probably think about family, fun and feasting. But did you ever stop to think that the holidays are also a great time to reach out and call your small business customers?

There are several reasons why now is an ideal time to contact customers by phone.

  • The holiday season is a time for celebrating relationships, and talking in person can help reinforce and cement your business relationships.
  • With many businesses short-staffed during the holidays, decision-makers who normally don’t answer the phone may be a lot easier to reach.
  • While rank-and-file workers typically take time off, C-level execs are more likely to be working, frequently coming in early or staying late to take advantage of the quiet office and uninterrupted time to focus.
  • At many companies, budgets need to be spent before the year ends, so there might be money available for projects you might normally have trouble selling.
  • Other companies are planning their budgets for next year, making now a good time to get on their radar.

So how can you make your “reach out and touch” customer calls successful? Try these four tips:

  1. Make a list. Use your CRM system or other customer data to identify potentially most lucrative customers. For example, you might check who purchased from you this time last year or whose fiscal year is about to end.
  2. Set a goal. Calling is a numbers game, so it’s important not to get discouraged. Set a goal to call a certain number of customers per day, and just power through.
  3. Be prepared. Know what you’re going to say in advance so you don’t waste the customer’s time. Yes, small talk greases the wheels, especially this time of year, but people are also busy.
  4. It’s not all about the sale. These calls aren’t focused on making an immediate sale (though that would be nice), but on enhancing your relationship with the customer and finding new ways to serve him or her. Explore their needs for the coming year, what they’d like to do differently and how you can help them achieve their 2015 goals. Ending up with a firm commitment to talk in 2015 is a good start.

News You Can Use for Small Business

Young man sitting on a sofa reading a newspaperIf you own a small business, there are a number of things that likely fall to the bottom of your “to-do” list.  However, keeping up with “the news” shouldn’t be one of them.  It may seem like a grind, but keeping abreast of certain types of news and trends is essential to business success.  Here are the best ways for you to use the news to enhance your own business.

Find Competitor and Industry Opportunities

While you don’t have to turn into a bona fide spy, you can glean insights and opportunities from your competitors and the industry. Stories about customer reactions to anything from competitors’ products and services to their websites teach you what to do — and what not to do- in your own business.

Also, competitor and industry news can lead you to explore great collaboration opportunities as well. If you make chocolate-covered pretzels and you learn that another company is introducing chocolate-covered beer, you can contact them to consider cross-selling beer and pretzel packages.

Read the News, then Make Some News

Many stories you read are bound to generate your own thoughts. What did the XYZ Company do wrong to cause a sudden reduction in sales? How does your company avoid a particular problem? Don’t let those thoughts go to waste — consider writing an article that offers valuable advice — and gives your company great PR.

The recent news about the horrendous Comcast customer service phone call went viral, and the savvy CEO of Nextiva, Tomas Gorny, capitalized on the newsworthiness of the story. He used it as the jumping-off point for a great article in Entrepreneur containing helpful customer service lessons. That article has undoubtedly helped many entrepreneurs while gaining free PR for Nextiva.

Stay on Top of Your Key Vendors

No business is an island; you count on any number of vendors or service providers to get your product or service to the public. News that your main parts vendor is moving to a lower (or even higher) grade of plastic can instantly affect your pricing decisions and many other aspects of your day-to-day operations. The sooner you know the news, the more time you have to formulate a backup plan.

Go Local

Even chiropractors and real estate companies take booths at local food fairs, so why shouldn’t your company be represented? Any event that draws the public can be a low-cost marketing tool. Whether you set up your own booth at a festival, or even if you just hand out leaflets or promotional items at a parade, you have a golden opportunity to get your company name out to the public. So, watch for news of upcoming local events and find out how you can participate.

Keep Abreast of Technology Changes, including Social Media

The social media outlets that you use to promote your business are not stagnant. They add features and change the rules in ways that can positively – or negatively – impact your business. You don’t have to learn every new feature or tool, but you do need to stay apprised of changes that will directly affect your business.

Let’s say you sell women’s lingerie. If you advertise on Facebook, their current policy says you cannot show too much skin in your images. If you learn that they have further tightened their policy, your models may have to button up. Not knowing this information up front could cost you dearly in both wasted photo shoot dollars and lack of exposure (pun entirely intended).

Find Efficient Ways to Stay Informed

You can really use the news to better your business, so find technology solutions to help you minimize the time-sink. TweetDeck or similar apps can alert you to the tweets with information on your key competitors. Similarly, Google Alerts notifies you of news stories of interest, such as industry-related stories. And, the old standby, RSS Feeds, lets you create a custom news page that you can scan quickly each day. These tools set up quickly, while generating a big return on the time investment for your small business.


How to Get Paid 7 Days Sooner in Your Small Business

One of the biggest pet peeves of small business owners is late-paying clients. We’re not running corporations, so cash flow can make or break our businesses! And when a client doesn’t pay on time, we can’t pay our own vendors. It’s a sticky situation, but with a little strategy to light a fire under your clients, you can get paid not only on time but even seven (or more) days early.

Look at Why They’re Paying Late

If you have a client who typically pays on time, one late payment may be nothing to worry about. But analyze your accounts receivables to see if you have other clients who habitually pay their invoices after your due date.

Next, look at your payment policy. Is it clear on each invoice when the payment is due? Do you let your client know at the beginning of your business relationship when payments are due? If it’s not clear to a client when you expect a payment, you can’t blame them for the problem.

If this is the case, send an email letting your clients know your payment policy. Consider sending this to all clients so those late-payers don’t feel you’re picking on them. Make it objective and simply a notification of your company policies. And make sure that due date is clear on each invoice.

You can also send a reminder a few days before the invoice is due. It’s completely understandable that your email invoice might have gotten lost in the stack of emails in your clients’ inbox.

Offer Incentive to Pay

There’s two ways to go about this: in the first, you can charge a penalty for late payments. Not everyone wants to take such a negative approach, but if you think that’s the right motivation to get your clients moving (after all, who wants to pay more if they can simply pay on time?), then try it out.

The other is to offer a discount for early payment. You’ll have to decide how much money you’re willing to part with in order to get paid on time. Many businesses offer something like a 2% discount if the invoice is paid 7 days early, or even 5% off if they pay 14 days early. Make the amount enough to motivate them to pay early.

Whichever incentive you decide to offer, mention it in the email you send about your payment policy. It’s imperative that you clearly communicate any changes to your clients, as well as give them a heads up of a few weeks or even a month before this new policy kicks in. The last thing you want to do is upset your customers.

If They’re Still Not Paying on Time…

Consider each on a case-by-case basis. Perhaps one client is having his own financial woes. In that case, set up a payment plan that works for both of you. If it’s not a financial problem that’s keeping a client from paying on time, consider whether you truly want to continue working with a problematic client like this.

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Life Lessons on Training Great Employees

Dog Photo SmallAll of life’s experiences can provide insight into running a small business. A good friend just drove this point home after adopting a new dog. She’s full of stories about her training challenges and as she told me her tales (or should I say, “tails?”), it was clear that the principles applied to employee training as well. You may have never trained a pet, but your own childhood memories or even your favorite TV show provide lessons that can make you a more effective employee trainer.

Keep it Positive

When my dog-training friend talks about her own childhood music training, it is easy to see the difference that positive reinforcement makes in a person’s ability and willingness to learn. She dutifully practiced piano (for a while), but her mother kept running into the room, yelling, “WRONG NOTE!” She quickly lost interest in playing piano. On the other hand, her mother’s outspoken pride in her dance abilities created a prodigy. At 13 years old, she was the youngest student in the advanced class that was generally reserved for teachers.

Positive reinforcement has real power over employees’ current and future success, so be sure to catch trainees doing something right and commend them for it. Each success breeds employee confidence, making it easier to master future tasks successfully. In fact, a well-placed compliment can feed their drive for success throughout their careers.

Also, give employees credit for contributions in front of clients, vendors and other employees.  The more that the employee knows that they are valued, the more incentivized they will be to do their best work.

Set New Employees Up for Success

Of course, it’s hard to provide positive reinforcement when the tasks are too complicated to learn, so break down new tasks into smaller components to give employees a real chance at success. Think back to the classic I Love Lucy Episode when Lucy and Ethel take jobs in a candy factory. They had about a minute of training before taking their places at a slow-moving conveyor belt to wrap chocolates. When the belt speed increased, the girls start stuffing candies into their mouths, their blouses and even their hats. They were set up to fail.

Not all jobs can be learned in five minutes —or even a week. And even relatively simple jobs cannot be performed at top speed on the first day. Break down procedures into manageable tasks so employee successes drive accuracy. Consider constructing checklists that the employee signs off on as they finish each task component. If you set them up for success, your employees will gain confidence and speed.

Use Errors as Training Opportunities

You have the power to turn trainee mistakes into lessons, rather than sources of embarrassment. My dog-training friend was happily surprised when a gentle “uh-uh,” combined with an acceptable chew toy, stopped her pup from biting an electric cord — and he avoided all cords from that point on because he learned what was wrong and what was right. Of course, saying, “uh-uh” to an employee would be patronizing, however, pointing out an error and gently correcting it makes a lot of sense.

No matter how carefully you conduct training, employees do not always know what “right” looks like until you point it out. If they pick lug bolts when filling a customer order that requests lug nuts, you have the opportunity to go beyond correcting that single error. This is the time to point out that many fasteners have similar names, so a careful review of each bin label is essential while picking each item in an order.

Be Flexible

People have differing backgrounds and a variety of learning styles; they do not all need to learn the same things in the same way. You need to be flexible enough to make training interesting and informative on an individual basis.

I know a seasoned sales rep who nearly walked out on his first day when he was herded into a room with sales newbies to watch a week’s worth of generic sales training videos. Sure, he needed to learn the company’s product line and its sales culture, but he did not need to learn what a “cold call” is. Rather than lose the company’s most valuable new hire, the sales manager personally took on his training.

Let the Student Become the Teacher

New employees have a fresh outlook and ideas that are untainted by a “we’ve always done it this way” attitude. From their first day on the job, they can ask questions or spot process incongruities that can make things unnecessarily difficult. When my friend’s dog insisted on getting his leash attached while sitting on a chair, he made the process easier — no stooping required. So, whether trainees have certain personal preferences, or if they see ways to make a process simpler or more precise, you should listen and learn.

Even seasoned business owners have new things to learn. Just as you accept suggestions from your longer-term employees, never discount the possibility that the new kid on the block has something to contribute. Everyone benefits when the student becomes the teacher.


Business Leadership Lessons from Pope Francis

From the beginning, the 266th Pope showed the world that he would somehow be different.  Pope Francis declined fancy shoes, a palace apartment, and the protected “Pope Mobile”. He said, he opted instead for more modest loafers, the Vatican guesthouse, and a bus ride.

Pope Francis’s model of leadership is one of authenticity, commitment, and understanding. He leads from a place of humility in order to serve the greater good and is an example for all leaders to follow.

Here’s what small business leaders in particular can learn from Pope Francis about leading:

  1. Master self-leadership first. Each person must be able to lead themselves before they can lead others. This self-leadership ability comes from a deep understanding of who they really are. This includes examining both their good and bad attributes. They then need to identify other people that can fill these gaps. The second step is to have courage to always be oneself. It is key to become a direct and authentic person that employees respect, admire, and want to follow.
  2. Commit to development. Never stop learning how to be a better leader. Just like every company should never become comfortable with profits or market position, a business leader should never settle on “good enough” leadership. All leaders need to look to who they can learn from inside and outside the organization. This includes not only other managers, but other individual employees.
  3. Work directly with the team. Small business leaders spend a lot of time with their customers, so they know what their problems are. In the same way, small business leaders need to work closely with their employees in order to understand their particular issues and goals to be able to match those to the company’s objectives.
  4. Lead selflessly. Effective small business leaders put their own self-interests aside in order to serve the greater mission their business has. When their interests diverge from the company’s, this is where that business begins to fail.

Pope Francis’s leadership is a reminder of what a great leader looks like. With authentic and humble leadership, every team will work harder, be more loyal and make it easier to grow a profitably company.

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What non-business leaders have you learned from?




 
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