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We hope you find this arcthve useful. A subscription to The Small Business Advisor Newsletter is free. Subscribe now - it's easy! The Small Business Advisor Newsletter for March, 2000 CONTENTS Notes, tips, etc NOTES/TIPS/etc CUSTOMER SERVICE. Is your "little" business growing to the point where you need assistance with customer service? Visit Net Effect Systems at http://www.neteffect.com. They provide an online customer response service using "live" agents. The service is scaleable and can be tailored to your specific requirements. Also visit http://www.liveperson.com and for a very inexpensive solution, http://www.sessio.com. FAVORITE SITE for travel: http://www.biztravel.com. CAUTION! Read the privacy information on any website that asks you to register. If you don't you might end up with a LOT of unsolicited e-mail, fax, etc. For example, read the privacy page on http://www.cnbc.com and you might reconsider "registering" for their personalized stock ticker. QUICK TAX TIPS: (1) Hire your children. You can pay them up to $4250, take a deduction and they pay no taxes. (2) If you're self -employed you can write off 60% of your health insurance for you and your family. As always, check with your tax advisor for details. FREE resource: The Small Business Resource Guide - CD 2000 (developed by the IRS and SBA) provides critical tax information to small businesses including forms, instructions, and publications. The CD also provides valuable business information from a variety of government agencies, non-profit organizations, and educational institutions. Also included is essential startup information needed by new small businesses in order to be successful. Order by calling (800) 829-3676 orvisiting http://www.irs.gov/bus_info/sm_bus/smbus-cd.html. TRAVEL WEBSITES:
WEB STATISTICS: 37% of all small businesses now have a web presence; European internet sales is estimated to be $2Trillion by 2002 and $8Billion in Latin America by 2003. SMALL BUSINESS TAX EDUCATION PROGRAM is a cooperative effort between the IRS and local organizations to provide business tax education to the small and home-based business owner. Visit http://www.isquare.com/ and click on TAX ADVICE for details (look for the "NEW" graphic). TAX TIDBIT. If you pay an independent contractor more than $600 you must issue a 1099 by Jan 31 to the recipient and by Feb 28 to the IRS. 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. WHY I CAN'T START
A BUSINESS (or … There MUST be some reason!) It is amazing how many people I talk with that want to start a small or home based business for any number of reasons - extra income, new challenge, about to be "downsized," retired and looking for something to do, got a great idea! Considering how many new businesses startup each day I'm equally amazed a how many of these folks come up with a reason(s) not to start their business! Considering how exciting, satisfying and profitable a small business can be I want to address some of these "excuses" in the hopes that a few more of you will take the plunge into the fantastic world of small business! I DON'T HAVE THE
TIME I DON'T HAVE THE
MONEY However, in many instances outside funding will be required depending on the nature of the business. For example, expensive equipment or initial stock may be required. When determining your financing needs, remember that nearly everyone underestimates what is required so be careful and do your planning accordingly. And of course, don't forget to factor in contingency ...sickness, bad weather, equipment breakdown, etc. Anything that increases the time line to profits! Best you figure on a year before you see a profit. There are two major forms of business financing. * DEBT FINANCING. This simply means you get a loan from someone or somewhere and go into debt! You are obligated to repay the money. * EQUITY FINANCING. This involves "selling" a portion of your company to an outside investor. You have no obligation to repay the funds. In general, venture capital firms provide this type of funding. The fact is, 99.99% of all small businesses will utilize debt fi nancing since most "equity lenders" (venture capital companies) are interested in lending large amounts of money, generally a million dollars or more. We will only consider sources for obtaining debt financing for your venture. For those of you interested in equity financing (venture capital), here are some suggestions for locating possible sources: Check the yellow pages under "venture capital companies." Check out http://www.vcworld.com, Venture Capital World Online. They provide a direct database link between investors searching for opportunities and entrepreneurs in need of venture capital. Check with the National Venture Capital Association in Arlington, VA at 703 528 4370. SOURCES FOR DEBT FINANCING 1. YOURSELF! (Savings) You are your own best "lender" if you have the savings. This approach can be quick and easy. CAUTION: ensure you have adequate savings for both the business and other life contingencies. 2. FRIENDS and RELATIVES. If they believe in you and your idea, friends and relatives are sometime willing to fund you. Choose this route with care and ensure you execute a formal loan document stating loan terms (interest, terms of repayment). CAUTION: Many friends have been lost and many relatives alienated because of a small business failure. 3. BANKS and CREDIT UNIONS. Many banks and credit unions (check with your own first and with you local chamber of commerce for alternate possibilities) will loan money for starting a small business. This approach will require that you present a formal plan to the bank showing justification for the amount you are borrowing. 4. THE SMALL BUSINESS ADMINISTRATION (SBA). Check out their website (http://www.sba.gov). Contrary to what many believe the SBA does NOT generally loan money directly but rather guarantees a loan (normally up to 90%). This can make it a lot easier to obtain a bank loan since the banks risk is lowered considerably. The exception is that the SBA does provide direct loans to certain groups including Vietnam-era and disabled veterans and handicapped individuals. In general, the SBA will not offer any assistance until you have been turned down for a loan by a commercial bank. Most loans guaranteed through the SBA are between $25,000 and $750,000. However, there is a "microloan" program for amounts from a few hundred dollars up to $25,000. 5. VENDOR FINANCING. If your business is one that relies heavily on certain vendors, it may be possible to obtain financing through the vendor. After all, they want you to use their product and therefore have an interest in helping you be successful. 6. STATE. Some states have small business financing authorities that issue tax-exempt development bonds that be used to finance land, buildings and equipment for manufacturing businesses. Check with your local government office for details. 7. HOME EQUITY LOAN. Interest rates for this kind of loan are generally quite low and the interest is fully deductible for the first $100,000 borrowed. CAUTION: You are placing your home on the line! 8. LIFE INSURANCE. Some type of life insurance policies (whole life and universal) have cash value which can be borrowed at very low interest rates. You are not obligated to pay this money back but if you don't, your policy payout is reduced by the amount borrowed. 9. RETIREMENT PLANS. Some retirement plans (401K for example) allow you to borrow against vested benefits. Generally, up to 50% may be borrowed as long as this is less than $50,000. CAUTION: If you quit you employment, the loan must be repaid immediately. If you don't the amount borrowed is treated as an early distribution and is taxable. 10. GRANTS. Many foundations provide funding in the form of grants. Check "The Foundation Directory" at your local library or visit their website at http://fdncenter.org to find out what foundations may have an interest in your specific business idea. The Foundation Center may be reached at 212 620 4230. 11. CREDIT CARDS. These should be used with care because of the excessively high rates of interest usually charged. I DON'T HAVE THE
REQUIRED EXPERTISE I DON'T HAVE A
GOOD IDEA I DON'T UNDERSTAND
"BUSINESS" I DON'T KNOW WHERE
TO START BOOK REVIEW by Robert Sullivan Beep! Beep! Competing in the Age of the Road Runner by Chip R. Bell and Oren Harari (ISBN: 0446523534). Available at most on line book stores. Retail: $23.95. We get a lot of books to review and seldom do I read a book from cover to cover. "Beep! Beep! is an exception - I LOVE this book. Highly entertaining and good advice on nearly every page! If you're like most business managers, you grew up watching a scruffy coyote futilely chasing a colorful bird. Now you're competing against companies started by twenty-two-year-olds who sleep under their desks. Be honest: In today's business world, who is chasing whom? In business today you are either a Wile E. Coyote or a Road Runner. If you're using old solutions to new problems and are pathologically in love with "Acme Products," you are a Wile E. Coyote. This book is designed to help you and the people who work with you become Road Runners-road warriors in a new era of supercharged, super changing business competition. Consider this:
So which are you?? The $1,000,000
Idea Every week new start-ups are making millions because of their simple ideas that take the world by storm. Success definitely involves effort, but sparking your creativity and coming up with profit-producing ideas may be easier than you think. Of course, creativity can result in a profitable start-up business idea. But have you considered how important it is to other aspects of you business as well? Creativity is an effective way of improving your company's quality of service, reducing production costs or generating a new product line. Brainstorming By focusing on a problem and deliberately coming up with as many off-the-wall ideas as possible, you'll be surprised at what innovative solutions you'll find. Stretch your imagination by thinking like a child where the sky is the limit. Sparking Creativity 1. First, realize that everyone can be creative. You may not believe that you are a creative person, but the difference between a creative person and the rest of us is that the creative person commits to their creativity to overcome limitations imposed by others. They take chances. 2. Second, forget for the moment that you live in the real world. Avoid judgment of any kind until after you've finished brainstorming. Judgments can constrain and often squash creativity altogether. 3. Third, be aware of your own defenses. If you are brainstorming by yourself as opposed to within a group, finding a place or activity that you enjoy can sometimes spark your creative thinking. While you are brainstorming, you want to be as relaxed as you possibly can and let go of your defenses. 4. Lastly, nothing is "bad". Well, that is until you come out of your brainstorming session, judge your idea and squash it. Breaking it Down Into Steps There are certain steps to follow when brainstorming. Whether you want to come up with a business plan for a start-up or develop a time-saving strategy within your existing company, it all boils down to solving a problem. When you brainstorm, remember to break down preconceptions about any limits. The objective is to open your mind and list as many ideas as possible without stifling creativity. You can even merge two average ideas into one very unique one. Understand also that any new ideas we develop can only come from the ideas we already know. Brainstorming encourages our minds to combine ideas and produce innovative solutions. 1. Define your problem or what you want to accomplish. Be concise. 2. Give yourself a time limit. Start with about 20 to 30 minutes. As you become more experienced, you will be able to judge the amount of time that works best for you. 3. Start your brainstorming session, thinking of as many ideas as possible. Make sure to write them all down. Don't criticize, evaluate or worry about how you'll even make your ideas work at this point. 4. Once your time is up, select the 5-10 ideas that you liked best 5. Decide on 5-6 different criteria for judging your ideas. Start the criteria with 'should'. (it should be more profitable, it should gain more attention, it should be more cost effective, etc...) 6. Score your ideas on a scale of 1 to 10 using your criteria. The idea with the highest score will most likely be the best solution to your problem Ask Questions The quickest and most direct way to stimulate creativity is to ask questions. By provoking answers, questions automatically lead to resolution. The more questions you ask, the more ideas you'll be able to come up with. When problem-solving, try and see things from a different perspective, like the average Joe walking down the street. He has never heard of your company and may not even know about your product either. Ask yourself questions that encourage making a change to an existing idea. 1. Modify: (i.e.
How can you modify the product?) Get in the habit of brainstorming on a regular basis, and you'll benefit even more. Without a whole lot of effort, you can train yourself to automatically investigate, question and analyze every business situation, which can result in finding and resolving a conflict before it turns into a major crisis. This proactive approach can save you a good deal of time and money. As you become more aware of your business operations and the endless possibilities are available, your flexibility will enable you to adapt to outside influences and quickly make changes when needed. Creative brainstorming can help you create more options for your business, but also can help to eliminate stress and fear because you have increased your awareness and have better control of business outcomes. You'll find that your business can run much more smoothly while you stay one step ahead of competition. Return to top of page - Back to Home Page - Back to Archive Index |