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The Small Business Advisor Newsletter for July, 2000

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CONTENTS

Notes, tips, etc
Don't Make these Five Mistakes
A good lesson to remember
Retirement Plans for Small Businesses

WEBSITE TRAFFIC. Requesting reciprocal links from other websites is an excellent way to increase traffic to your website but when requesting these links do it right. Take care to compose an e-mail requesting the link - be polite, brief and to the point. Indicate the value of including your link; note that you will be including their link within your website; and make it easy by including a one-sentence description of your site along with the complete URL and the name of the site.

SELLING TO THE GOVERNMENT. Get listed in Fedmarket's new directory - its free: http://www.fedmarket.com/procurement_library/buyer/index.html. You will need a DUNS number, also free and issued by D&B. http://www.dnb.com/dunsno/dunsno.htm

WOMEN IN BUSINESS. WomenCONNECT.com is leading provider of information and resources for women in business. Visit them at http://www.womenconnect.com/

MARKETING OPPORTUNITY. There are 113 U.S. Navy exchanges (NEX) worldwide with sales volume ranging from $156,000 to $131 million annually. NEX revenues worldwide are nearly $2 billion. These exchanges purchase a wide variety of products. For details on selling to the NEX's visit http://www.navy-nex.com/pcv-0.htm.

The Internet Marketing Center, http://www.marketingtips.com/t.cgi/7115 Marketing tips, strategies, and secrets for internet marketing, online advertising and website promotion that will skyrocket your small, medium or home based business profits through the roof.

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DON'T MAKE THESE FIVE MISTAKES
by Robert Sullivan

Starting a small business is a challenge so it's to your advantage to learn from the mistakes of others. Over the years we have seen five mistakes cause more business problems than any others. Here they are - don't YOU make these mistakes.

1) Not planning. It's hard to run a business when you don't know where you're going! Take the time to prepare a short strategic plan for your business. Include major risks and strategies for dealing with them. Visit http://www.isquare.com for more details on writing your strategic plan. (Click on THE ADVISOR and navigate to Starting a Business, then Planning for Success).

2) Not getting professional advice. You can't know everything. Get expert advice for tax, insurance and legal matters. Don't get yourself in trouble because you over looked a detail in an area for which you have no expertise.

3) Not understanding cash flow. Budget carefully and plan for contingencies. Cash flow is the life line of your business - don't get caught short. If you need help understanding cash flow contact your CPA and prepare a cash flow analysis for your business.

4) Lack of Information about your own product or service. You might have a passion for a business idea but that doesn't mean you necessarily understand the business consequences of selling your product or service. Educate yourself about your service or product - become "the" expert. Determine who your customers will be and where they are located. And while you're at it take the time to gain an understanding of the practical aspects of starting and operating a small business. Use the Internet (http://www.isquare.com), SCORE (http://www.score.org) , and the SBA (http://www.sba.gov).

5) Not marketing continuously. Many small businesses start on the basis of one initial customer or contract. But remember, at some point you're going to need a second and a third customer! Regardless of how busy you are it's imperative you take some time EACH DAY to market yourself or your products. It's sounds obvious but many, many small businesses fail because of their lack of attention to future sales.

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A LESSON TO REMEMBER

One day, an expert in time management was speaking to a group of business students and, to drive home a point, used an illustration those students will never forget. As he stood in front of the group of high-powered overachievers he said, "Okay, time for a quiz" and he pulled out a one-gallon, mason jar and set it on the table in front of him. He also produced about a dozen fist-sized rocks and carefully placed them, one at a time, into the jar. When the jar was filled to the top and no more rocks would fit inside, he asked, "Is this jar full?"

Everyone in the class yelled, "Yes."

The time management expert replied, "Really?"

He reached under the table and pulled out a bucket of gravel. He dumped some gravel in and shook the jar causing pieces of gravel to work themselves down into the spaces between the big rocks. He then asked the group once more, "Is the jar full?" By this time the class was on to him.

"Probably not," one of them answered.

"Good!" he replied. He reached under the table and brought out a bucket of sand. He started dumping the sand in the jar and it went into all of the spaces left between the rocks and the gravel. Once more he asked the question, "Is this jar full?"

"No!" the class shouted.

Once again he said, "Good." Then he grabbed a pitcher of water and began to pour it in until the jar was filled to the brim.

Then he looked at the class and asked, "What is the point of this illustration?"

One eager beaver raised his hand and said, "The point is, no matter how full your schedule is, if you try really hard you can always fit some more things in it!"

"No," the speaker replied, "that's not the point. The truth this illustration teaches us is: If you don't put the big rocks in first, you'll never get them in at all.

What are the 'big rocks' in your life -- time with your loved ones, your faith, your education, your dreams, a worthy cause, teaching or mentoring others?

Remember to put these BIG ROCKS in first or you'll never get them in at all."

So, tonight, or in the morning, when you are reflecting on this short story, ask yourself this question: What are the 'big rocks' in my life?

Then, put those in your jar first.

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RETIREMENT PLANS FOR SMALL BUSINESSES
From the TaxTalk Newsletter (http://www.isquare.com/tax3.htm)

Profit Sharing Keogh

The most flexible plan. It lets you decide each year how much to contribute. You can even forgo contributions if you decide to skip a year. The maximum annual deductible contribution per participant is for: (a) Employees: $25,500 or 15% of compensation, whichever is less. (b) Self-employed: $25,500 or 13.0435% of net income, which ever is less.

Employees can generally participate if they are (1) at least 21 years old; and (2) have completed one year of service.

Vesting is accomplished over a period of years and the plan must be set up before the end of the employer's tax year but contributions don't have to be made until the tax return due date, including extensions.

Money Purchase Keogh

This type of plan give you the potential of larger deduction than a profit sharing Keogh. The price that you must pay to get the potential of a larger deduction is that you are required to make the contribution each year. For example, 10% of compensation or earned income without regard to profits. The maximum annual deductible contribution per participant is for: (a) Employees: $30,000 or 25% of compensation, whichever is less. (b) Self-employed: $30,00 or 20% of net income, which ever is less.

Employees can generally participate if they are (1) at least 21 years old; and (2) have completed one year of service.

Vesting is accomplished over a period of years and the plan must be set up before the end of the employer's tax year but contributions don't have to be made until the tax return due date, including extensions.

SEP (Simplified Employee Pension Plan)

These plans are hybrids between Keogh Plans and IRA's. Although originally designed as an easy to administer retirement plan for small businesses, you can also open a SEP if you have self-employment income. The maximum annual deductible contribution per participant is for: (a) Employees: $25,500 or 15% of compensation, whichever is less. (b) Self-employed: $25,500 or 13.0435% of net income, which ever is less.

Contributions must be made for all employees who: (12) are at least 21 years old; (2) have performed services for the employer during three of the immediately preceding five years and (3) are paid at least a minimum amount of annual compensation (approximately $400).

The SEP can be set up and funded any time before the employer's tax return due date, including extensions.

SIMPLE (Savings Incentive Match PLan for Employees)

SIMPLE retirement plans first introduced in 1997 can be used by employers with no more than 100 employees and self-employed individuals. The maximum annual deductible contribution for a SIMPLE is $6,000 and in addition, employers contribute 3% of compensation, up to $6,000.

Contributions must be made for all employees who have earned more than $5,000 in any two prior years and who will earn at least $5,000 in the current year.

The plan must be opened by October 1st of the year for which the contribution is made. Contribution can be made at any time before the employer's tax return due date, including extensions.

This material is being reprinted, with permission, from the TaxTalk Newsletter.

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