New York Times says: Stay Small

What are your goals for your small business?  Do you have any?  I know that when I think about starting my own business I have visions of sitting in a giant leather chair at the head of a long table full of men in suits waiting to do what I tell them too.  Of course the office would be somewhere in New York on the highest floor possible.  Granted, this may not be the most realistic vision, but it is a goal of sorts.

Lots of small business owners have opened their doors with the idea of becoming a national chain or a huge corporation.  It’s the American dream right?  It’s not selling out really, just becoming successful in the world of business.  However, with the economy in the state that it’s in, it’s time for small business owners to take a good hard look at what they want their business to turn into in the future and focus on staying in the black until we consumer spending come back up a little.

I read an article today on the New York Times website by Paul Brown that talked about the idea that small businesses that stay small, will ultimately be the businesses that thrive (you can read the whole article here).  It might seem a little counter intuitive to you, but if you stop and think about it, it does make a lot of sense.  Here are a few of thre reasons Paul listed as benefits of keeping your operation on the small side:

• Less bureaucracy
• Greater involvement for each employee.  With a smaller number of people involved, they can all have a piece of the action.
• It’s easier to understand what is going on within the company.
• The employees feel more like it’s their company.

Not to mention that when you have a smaller company with fewer employees, it’s easier to keep your costs low which means that you will be able to keep your doors open and your employees employed even during tough times.  A smaller company also means that you can stay on top of things without losing your mind.  And if you don’t have your heath (mental or otherwise), how can you be expected to run a business?

I was quite impressed with the article and I highly recommend that you read it for yourself.  Then, let me know what you think.  Would you keep your business small?

New York Adds New Taxes

While this article I found at CNN.com about new taxes that the Governor wants to impose on the state doesn’t talk about small businesses directly, it does have some information in it  that will affect small businesses.  Like the fact that clothes under $110 will lose their sales tax exemption.  I would not be surprised to see lots of small souvenir shops go under as a result of a drop off in sales.

And what about all the people who are barely surviving in a city where an apartment costs as much to rent as it does to make a mortgage payment on a house in the Midwest?  With taxes on things like cab rides and cable, I would also think that there will be a large number of people who simply will not be able to afford to continue living in the city.  While I understand that the local government is hurting from the huge drop off in Wall Street, I can’t help but wonder about the effects that these taxes (that are still proposed, as far as I know) would have on the population of the city.

And if these taxes do force out a large number of city residents, what will happen to the city?  Where will they go to find the money they need for their budget if there is no one living in the city to pay the taxes?  I understand that there has to be a way for the local government to earn the money they need to continue functioning.  But instead of overtaxing their population to the point that they have to relocate, maybe this would be a good time to see some budget cuts.  I can’t help but feel confident that if the Governor were to sit down and take a long, hard look at how they were spending all their money, he might be able to come up with a few projects that could be cut.  Or at least some things that they could be spending less on.

What do you think?  Do you think that there is a chance of a mass exodus out of New York if these taxes are imposed?

I apologize …

Oh dear readers, I am quite sorry for my long absence.  Life sometimes happens in a way that  does not accommodate regular, or even semi-regular, blog posting.  I promise that I have a few articles in the works.  For the time being, however, I think you might want to stroll over to the Huffington Post and check out the article about how 37% of Americans Can’t Find America on a Map of America.  It made me laugh, and unless you fall into the category of “can’t find America on a Map of America” I’m sure you will find it amusing as well.

Stay tuned readers.  Like I said, I have a lot of stuff brewing away on the back burners.

Business Funding Alternatives

In today’s economic climate you may have found, if you are a small business owner, that it is increasingly more difficult to get the money you need from the bank.  So what are you to do when you need a little extra to repair the roof or make your rent for the month?  More and more, small business owners are turning to other ways to get the funds they need.

Factoring is one way that you might be able to get the money you need.  You can factor credit card sales or invoices.  With invoice factoring, you sell your unpaid invoices, at a discount of course, to a factoring company who then will take on the job of collections.  This can be good for small businesses who are struggling with waiting for clients to make payments or spend way too much time dealing with collections.

If you factor your credit card sales, you can get a cash advance of a certain amount based on the volume of your credit card sales.  The cash advance provider then takes a certain percentage of your credit card sales until the principal of your loan is repaid.

Either option of factoring is a way for small business owners to go around the hoops that the bank makes loan applicants jump through.  Not to mention the fact that the loan application process is much easier.  You don’t have to supply a business plan or a personal guarantee.  That means that you can use the money for whatever you need, and you don’t have to spend as much time worrying before you get the funds you need.

Are You Cut Out to be a Small Business Owner?

I think that would be a lot of answers to this question.  I think the most common one you would  come across would be, “I would love to work for myself but I have no idea what I would do.”  Or possibly, “I don’t know that I would have the dedication it takes to own my own business.”  Well, if you are wondering what questions you need to ask yourself before you start out on the journey of entrepreneurship, I already did the legwork for you.  Thanks to the Small Business Administration for putting together a great list of questions (which is where I got all my information).

You should start your small business by asking yourself these questions:

1. Am I a self starter? – This is important for the obvious reason that when you own your own business, there is no one above you to tell you what to do.  While this may be one of the main reasons people are drawn to the idea of owning their own business (it’s my main reason to be honest), it can also be your ultimate downfall.  If you aren’t a task oriented person or are the sort of person who has to have someone tell you what you need to do next, then owning your own business may not be the right choice for you.
2. How well do I get along with other people with different personalities? - You will have to deal with people that you don’t like as the owner of your business.  You will have clients who are rude and crass and just all around annoying.  However, as an entrepreneur, you will have to treat them graciously.  Remember – the customer is always right (even if they are rude).  If you think this might be something that you would have a hard time with, consider hiring someone who is patient and does will in customer service to do it for you.  Otherwise, I would recommend taking the time to learn some anger management techniques to help you cope when dealing with this clients.
3. Am I good at making decisions? - As the head of the company you will be the ultimate decision maker, there is no passing the buck.  If you are the kind of person who gets into hour long conversations about where to go to dinner that consist of you and the other person asking each other where to go – then you might want to rethink setting out on your own.  Or, before you leave your day job, get yourself into a position where you will be able to take part in making key decisions.  This can help build your decision making confidence for the future.  And just for the record, flipping a coin is not a recommended way to make decisions that may determine the fate of your business.
4. Can I handle the mental and emotional stress of owning a small business? - Owning your own business may allow you to buy that house in the Bahamas you’ve always wanted and maybe someday, years down the road, you might be able to move there full time and run your business from the comfort of your deck chair.  But until then, you will have to live and breathe your business.  No one is going to make it happen for you – your business will go as far in the world as you make it go.  It’s a lot of stress, and if you are the sort who can’t even handle doing two things at once, then it might be time to start honing your multitasking skills (or refilling your prescription for anti-anxiety medication).
5. How well can I plan and organize? – In order to get a loan, you will have to have a very detailed business plan and a very detailed and clear picture of where you want your business to go in the future.  Planning and organizational skills are something that a small business owner absolutely must have.  You will have to manage your income to be able to purchase new inventory while also having enough to purchase basic office supplies and still be able to pay the rent each month.  If you can’t organize yourself adequately, you are doomed for many sleepless nights spent worrying.
6. Do I have the attitude and drive to maintain my motivation? – Trust me, this is another thing that you will absolutely need to have in order to make it in the world of small business.  If you can’t maintain your motivation, you are really going to hate yourself when you close up shop four months into your endeavor because you just don’t want to deal with it anymore and you think back on all the money you invested in yourself.
7. How will this business affect my family and my social life? – Owning a business is a huge commitment of time.  Especially when you are first getting your operation up and running.  When you first open your doors, odds are you will be your only employee which means that you can expect to be working all the shifts Monday through Friday, plus overtime for the weekend shift.  Plus the time you spend at home working on the finances.  Plus the time to meet with clients outside of office hours.  The list goes on and on and on.  You need to consider whether the costs are worth a pay off that you may not see for several years.

Now, don’t think that I am discouraging you from going forth and taking on the business world on your own.  But it is important to think about why you want to get out there on your own, how you are going to do it, and if you have the will to commit to yourself the time and energy that your business will take away from other parts of your life.

What about you?  What do you think are the most important questions to ask yourself before opening up shop?

Big Three Bail-Out

Apparently last Tuesday the big three auto makers in Detroit (Ford, General Motors, and Chrysler) went to congress to beg for a $25 billion tax-payer funded “bridge loan” to avoid having to lay off massive amounts of people and close factories.  While this may not have any direct link to small businesses, I feel like it’s something that needs to be talked about because it is such a big, huge thing.  Plus, we are the ones funding the whole thing – whether you own your own business or not.

Personally, I think that they should have to go it alone.  I don’t think that it’s fair for them to run their businesses into the ground and then expect to get help when their failed businesses plans blow up in their faces.  I like what Mitt Romney had to say about the whole thing:

“If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.”

And I think he is totally right.  I think it’s time that we start making these CEOs and their board of directors take some personal accountability for how they have been doing business.  And I don’t think there is any better time than now to make them step up.

To hear the auto makers talk about it though, you would think that without the bail-out the whole world will come crashing to an end:

“This is all about a lot more than just Detroit. It’s about saving the U.S. economy from a catastrophic collapse,” Rick Wagoner [General Motors CEO] said.

And I suppose that, in part, he is right.  If the American auto makers were to go under and disappear, there would be millions of jobs lost (estimated to be around 3 million).  And those jobs lost would include the factory workers as well as the people who own dealerships, and all the people who work on the sales floor and the maintenance people.  It is truly mind boggling to think about how many people in America could be adversely affected if the big three do go under.  However, with so many jobs at stake, I would like to think that they would take the high road and do the restructuring that they need to do to make sure that they don’t end up in a similar situation in another ten years or so.

The whole thing is just down right scary.  I feel like it’s a giant train wreck, I don’t want to watch but I can’t look away.  I mean, how many times do you get to watch your economy crumble right in front of your eyes?

Cut Costs, Not Corners (Part II)

Sorry for taking so long to post this stuff – you know how life can get crazy.  This blog fell to the wayside these past few weeks while I worked on things in the real world that need my attention.  But now I’m back, and hopefully I will begin to post regularly.  As my peace offering, please accept a few more ideas for small business owners to cut their costs without cutting corners.

Cut down on your travel expenses by not traveling to places that will not generate revenue for your business.  Now, don’t take this to mean that you should never travel; there are times that you will need to travel in order to make that big sale or cement your relationship with a client.  These are times when you will want to shell out the money for a plane ticket because you will eventually reap the rewards through more sales or possible referrals from a loyal customer.

With the real estate market slowly circulating the drain, the time has never been better to try and get your rent lowered.  You can do this in a number or ways.  You can go out and try to find new office space with lower rent or you might want to try and negotiate with your current landlord.  Landlords would much rather have their office space rented than have it sit empty, even if it means renting at a lower price.  If you have found a new office at a better price, mentioning it to your landlord during negotiations may be the key to getting the rent you want and not having to deal with moving across town.

One way to save a bundle on business costs is to purchase secondhand office furniture.  I know, it seems so simple but I am willing to bet that this idea doesn’t ever cross the mind of the average business owner.  Websites like myofficefurniture.net can help you find essential office furniture.  You might also try craigslist.org or check out local garage sales for gently used pieces that would look right in an office setting (the pink desk with the Hannah Montana stickers on it is probably not the right choice, even if it is only $2.50).  Remember, the services that you offer your customers and your commitment to quality as a small business owner are what will set you apart from your competition.  Expensive office furniture may make you feel extra-professional, but it is not essential to running a thriving business.

Saving Money as a Small Business

With the economy in its current state, it’s not surprising that everyone is looking for ways to cut corners.  However, if you own your own business, cutting corners may mean closing your doors due to lack of working capital.  So what can you do to save your small business money?  There are a number of ways that you can do just that without changing much about the way you do business.

Save on energy costs by turning down the heat.  Yes, your dad had the right idea when he told you to go put on a sweater.  Turning the heat down even just 2 degrees can save your business a bundle on your heating and cooling bills.  If you rent office space in an older building, you might want to talk to your landlord about having some better insulation put in.  If your office has lots of windows, make sure that they are keeping the inside air in and the outside air out with the appropriate weather stripping.  Using fluorescent lights as well as CFL lights in desk lamps will help to push back your energy savings as well as save money on purchasing new blubs.  Some CFL’s are advertised to last for a few years at a time.
If you can, you might consider telecommuting to work a few days a week.  Not only will it save you money on gas wasted idling on the highway, but it will give you back the time you would have wasted sitting in traffic going nowhere.  Depending on how far your office is from home, this could add an extra two hours to your day.  Not to mention the reduction in your stress levels – have you ever heard of anyone who liked sitting in rush hour traffic?

Talk to the businesses that your purchase goods or services from.  You might be able to get a discount on your invoice total by paying them early.  This will vary company by company however, so be sure to double check before you make any assumptions.  You also may be able to barter goods or services with businesses that you provide services or goods to, which will save you money overall.  Taking the time to call and set up deals like bartering for goods or getting a discount on your invoice will do another positive thing for your business – you’ll be making contacts throughout the industry that may be able to bring you more business in the future.  Never underestimate the power of personal contact in business ventures.

Three More Ways To Cut Business Costs

This is the last installment in this seemingly endless triplet of posts that started several months ago.  Here are a few more ways that you can cut the costs of your small business with having to lay anyone off.

Join a community and start bartering with businesses in your area.  Not only will keep some your money in your till, you will make many new business acquaintances that could just end up driving more business your way in the future.  I have a post that goes into more detail on how/what bartering is that should be up on Wednesday.

When you reorder stock, don’t overdue it.  Keeping only the supplies you need in stock will reduce your overhead and some of the strain on your checkbook.  If your business is a retail one, order only what you think you will be able to move in two weeks.  That way you won’t have to worry about massive amounts of stock sitting around costing you money.

Claim every tax deduction that you can for your small business.  Check out this page on the IRS’ website that lists a bunch of them.  If you have an accountant, have them go over the books and see if there is anything that you can claim but aren’t currently.  New equipment purchases and hybrid cars are examples of deductions you might not be using to your advantage yet.

When was the last time you gave your company a self audit?  Auditing your fixed assets could reveal payments you are still making on things that you no longer have/use.  You could end up saving yourself a tidy sum, not only will you save yourself making payments that don’t directly benefit your business, you will also save yoruself from paying taxes on them too.