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The Small Business Advisor Newsletter for October, 1997

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NOTES/TIPS/etc

POST-IT. Just about everyone uses the little post-it notes. "Jot-It" is a software package that allows you to place notes on your screen and in any application. Pretty handy. $30 from Jot-It Software, 800 667 4340
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For those with MERCHANT CARD ACCOUNTS, don't forget that Visa and Mastercard regulations do NOT permit you to charge a premium for credit card payments. You may, however, give a discount for cash.
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Don't forget to periodically review your BUSINESS INSURANCE. Many companies are over-insured, have duplicate coverage, of have deductibles that are too high or too low. Check your policies and if you have been with the same insurer for a few years, get some new bids.
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Do you have a RETIREMENT PROGRAM in place? If you are self-employed, it's up to you. Take advantage of the SIMPLE retirement plan. If you put a plan in place before the end of the year you can make your contribution up to the due date of your taxes in 1998 and still take the deduction for 1997. Talk to your CPA
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SEARCHING FOR INFO ON THE INTERNET? If you think the big search engines are all that's available, take a look at http://www.internets.com for links to hundreds of major databases. This is a fantastic resource.
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POWERFUL WORDS to use when writing sales literature, news releases, and other advertising pieces: FREE, YOU, YOUR, NOW, MONEY, NEW, EASY.
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Here is a neat TIME-SAVING TIP from Jonathan Ment, Tannersville, NY:Tear articles of interest out of your favorite magazines and drop them in a "read while
waiting" folder. Recycle the rest of the magazine. Keep the folder in your briefcase or bag, and read the pertinent articles while waiting at banks, checkout lines, post offices, etc.
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VIRUS! This word is bound to get your attention! However be advised that most virus warnings are not warranted and in spite of the hundreds of reported viruses, very few of us ever "get" one. When you read about a virus warning, check to see if the virus is real by visiting http://ciac.llnl.gov/ciac/CIACHoaxes.html which provides a detailed listing of all virus hoaxes and an explanation of each.

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PROTECT YOURSELF FROM Y2K LITIGATION
by Dr. R. Sullivan

Avoid possible Y2K litigation by ensuring, to the extent possible, that you are Y2K compliant (that is, your computer hardware and software will support dates beyond 12/31/1999). Consider the following:

1. Start keeping careful records of everything you do that relates to Y2K.

2. Ensure that your suppliers will be Y2K compliant. Formally query them by letter and request that they confirm their compliance.

3. Ensure that your computer hardware and all software is compliant.

4. Check to ensure that your business liability insurance policy will cover any losses due to Y2K-related problems.

5. Call your payroll processing service to ensure they are Y2K compliant.

A little planning now could save you a LOT of grief later.

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BONDS AND BONDING
By Dr. Robert Sullivan

From time to time a small business, especially those performing contracting services will be asked to bond his work in advance. In some states certain types of contractors are required to be bonded. What is a bond, how do you get one, and what does it do?

Simply put a bond (sometimes referred to as a surety bond) is a third party obligation promising to pay if a vendor does not fulfill its valid obligations under a contract. There are various types of bonds such as LICENSE, PERFORMANCE, BID, INDEMNITY & PAYMENT. A bond is a financial guarantee that you will honor a business contract. Frequently a customer will require that your company be bonded.

A PERFORMANCE bond is a guarantee that you will perform work in accordance with the terms of a contract.
A BID bond is a guarantee you will perform work if the bid is won by you.
A INDEMNITY bond promises to reimburse loss incurred if you fail to perform or if you fail to pay other vendors in the performance of the contact.
A LICENSE bond is required by some states for certain businesses. In some cases you pay the state directly rather than obtaining a bond.
A PAYMENT bond promises you will pay all subcontractors and material providers utilized in the performance of a contract.

A bond is NOT an insurance policy. This is important to remember. A bond provides assurance that the contracted work will be satisfactorily completed only. For example your bond will not pay for property damage or personal injury resulting from your work. For this you need conventional insurance coverage.

Your local yellow pages will list companies that provide bonding services under "surety bonds." Also, check with Bond-By-Fax, Commercial Surety Department at 1 (800) 395 CBIC. Generally speaking, bonding companies will only provide bond coverage in an amount that you can cover with existing liquid assets.

Before you purchase a bond from any bonding company, have the bond documentation reviewed by your attorney and ensure that you understand exactly what the bond can and cannot protect against - for you and your customer.
 

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FACTORING
by Chad M. Melton

The buying and selling of invoices or accounts receivable is known as factoring.  Businesses utilize factoring as a means of financing not available from traditional lending institutions. Unlike the traditional funding institutions, the factor is not concerned with the credit of the business and business owner. Instead the factor is only concerned with the credit of the business's customers. This allows businesses the ability to access funding with less than perfect credit. Also, unlike the lending institutions there is no debt to repay.

Factoring invoices or accounts receivable is an excellent way to increase credit to qualify for more traditional financing. Paying on accounts payable early can often result in discount. This will increase credit worthiness toward vendors as well as help cover the costs of factoring.

Factoring provides a source of capital that can be used to increase revenues and expand.  Funding a much needed marketing campaign is one aspect of increasing business. Expanding services or increasing available products are costly approaches to increasing business and financing is not always available on the promise of increased sales.

The cost of factoring is determined by the amount of the accounts receivable, the credit of the customers, and the time frame in which the invoices are paid. Usually, a percentage of the total value of the invoices or accounts receivable is paid up front and a reserve is held until the invoices or accounts receivable are paid by the customer. The quicker a customer pays the lower the fee.

Factoring is a form of financing that is controlled by the business owner. The amount that is factored and how often the invoices or accounts receivable are factored is determined by the business owner. No other form of financing can offer this many advantages.

(Contact Mr. Melton at DCFS Melton Enterprises cmelton@ix.netcom.com (918) 342-3068 Toll Free:(800) 320-3979, Fax: (918) 342-4276)

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10 THINGS TO DO TODAY
by John J.O'Callaghan

1. TODAY I WILL BE HAPPY. I will put on a happy face. I will strive to be happy. I will act as if I am happy knowing that those who act as if they are happy, actually become happy. I will bury the past. I will move on. I will have no regrets about yesterday. I will stop being resentful. I will stop feeling guilty. I will forgive my enemies and anyone who may have ever harmed me. I will forgive myself for what I have did and for anything I failed to do.

2. TODAY I WILL BECOME MORE ORGANIZED. I will begin the day by making a list of all the things I have to do. Next I will number all the things on my list in critical order of importance. Then I will make a new list in numerical order. I will start on the number one task and finish it before moving on to the next. The things that don't get done by the end of today, I will carry over and add to tomorrow's list.

3. TODAY I WILL REVIEW GOALS. I will think about where I am now and where I want to be in the next five, ten and fifteen years. I will rewrite my goals as positive statements such as, "In five years from now I will have...or be..."

3. TODAY I WILL MAKE BETTER USE OF TIME. I will concentrate on doing only those things which will help me reach my goals, or adversely affect the realization of my goals if left undone. If possible, I will delegate all the minor tasks that can safely be delegated, and concentrate only on the main issues and on doing the things that only I can do.

4. TODAY I WILL BE A POSSIBILITY THINKER. I will visualize the future exactly as I would have it. I will not contemplate failure. I will expect success. I will imagine exactly how it will be. I will refuse to think, "It's impossible" and "I can't. " Instead I will think, "I can and I will," realizing that nothing is impossible unless I choose to think it is.

5. TODAY I WILL SEEK OUT NEW OPPORTUNITIES. I will not say at home waiting for circumstances to change, for the tide to turn and for opportunity to knock. Instead I will go out looking for opportunities, and when I don't find them, I will immediately try to create the kind of circumstances that are favorable to me and conducive to success.

 6. TODAY I WILL AIM TO BE OF SERVICE. I will seek to serve others first, knowing that my success will be totally dependent on my ability to satisfy others needs. I will say to those who can help me , "How may I help you? I am an expert in my profession. Tell me about your needs and wants," rather than burden and bore them with my needs and wants.

7. TODAY I WILL NETWORK. I will widen my circle of influence. I will ask every customer or potential customer I contact to give me the names of three people whom they think might benefit from my advice. I will practice the "Three Foot Rule." I will tell everyone who comes within three feet of me that I am open for business and anxious to serve.

8. TODAY I WILL I WILL BE THE BEST I CAN BE. I will aim to be the best at doing what I do. I will strive for perfection. I will be a people pleaser. I will treat everyone the same way I would have them treat me. I will assume the customer is right, even when he is not, knowing that I need him as a customer more than he needs me.

9. TODAY I WILL BUILD GOODWILL. I will seek to establish a good reputation for myself and for my business. I will be willing to give free advice to all those who for ask it but cannot afford to pay, knowing that it is truly impossible to help another without being richly rewarded and compensated in some way. I will be a kind friend to all those who need a friend.

10. TODAY I WILL ACT AS IF WERE IMPOSSIBLE TO FAIL. I will think and behave as if I already am a success. I will dress like successful people dress. I will concern myself with the things that concern them. In so far as I am able, I will be like them, go where they go and do what they do. I will believe success is inevitable and I will persist until I do succeed.

(Contact Mr. O'Callaghan at Entrepreneur's Network, Inc., 426 Fieldstone Drive, Venice, Florida 34292-4600. JohnOC29@aol.com)

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OUTSOURCING -- THE WAVE OF THE FUTURE FOR BUSINESS
by Mary Tibbens, Tibbens Business Services
 
The practice of subcontracting work to other companies-- better known as outsourcing -- is becoming increasingly common. Outsourcing firms could provide various services such as typing, transcription of dictation tapes, bookkeeping, payroll, billing, taxes, office cleaning, copying and mailings -- all at their office.
 
Every business should be open-minded regarding the multitude of advantages obtained from outsourcing. To illustrate a point, let's use the most common form of outsourcing (secretarial) as our example.
 
You, as the company owner, are faced with the dilemma of accepting a substantially large contract from a client with a short deadline. Since you maintain a lean staff (or no staff), in order for you to accept this project, you would have to choose from any of the following alternatives: Hire additional personnel; call a temporary services agency; or call a business specializing in outsourcing.
 
Hiring new staff entails spending money for classified ads; productive time being wasted on interviews, testing, and other screenings; training and supervising new hires; overhead such as office space, a desk, chair, computer, printer, copier, fax machine and office supplies; bookkeeping; payroll accounting; utilities, and the most expensive of all -- monetary expenses, which include salary, worker's compensation insurance, unemployment taxes, Medicare, etc.  Additional employee benefits such as vacation, sick days, personal days, medical, vision and life insurance, maternity leave, pension, etc., also need to be calculated into the total cost.
 
Upon completion of this job, you gained another employee -- the "secretary."
You could terminate him or her and pay unemployment compensation. Or you could absorb him or her into the payroll, paying for idle time between contracts.
 
The second alternative would be to contact a temporary services agency.  Consider that their rates are usually high as their hourly rate includes that which they pay their employee (temp). Another disadvantage would be that you never know which temp you'll get -- perhaps a different person each time.  Although you save on employee expenses, which are paid by the agency, your overhead costs remain.  You still need to supervise and train the temp to your method of doing business.  One advantage you have is that if you aren't pleased with the temp, a simple telephone call to the agency should (hopefully) have the temp replaced the next day -- without any involvement on your part between yourself and the temp.  Now you need to retrain that temp.
 
The third alternative would be to utilize the services of an outsourcing firm. Not only would you save money on employee expenses and overhead, but the same staff will handle your work each time, with work completed at their office. This would allow you to work without disruption in your business. With a fax machine, your documents could be immediately sent to the outsourcing company who would then type the work and fax it back in time for your meetings, deadlines, etc.  Without a fax machine, your work could be completed and faxed immediately to your client for maximal time efficiency. After all, in today's fast-paced business world, doesn't everyone need everything "yesterday?"
 
By having your work done by a reputable firm, your savings can be enormous, resulting in immediate savings in time and money. A good outsourcing agency will possess a professional and friendly staff who will treat you special, as if you are their only client whether your project is small, large, or a one-time project, and will maintain open lines of communication, making themselves available for your telephone calls and faxes -- even in the evenings and on weekends.  You only pay for the time involved in the completion of your work.
 
New businesses with little or no office space or staff, or companies experiencing corporate downsizing are prime candidates for outsourcing. Even fully staffed businesses occasionally incur large, undesirable, seasonal or periodic projects, or highly confidential documents (board minutes, bids, specifications, contracts), which could be outsourced.
 
It is easy to see why so many of today's businesses are embracing outsourcing as a cost-effective method of doing everyday business, increasing productivity, stretching tight dollars and reaping the rewards (profits). Can you, as a business owner, afford NOT to?

(Visit Mary Tibbins' website at http://www.tibbensbusinessservices.com)

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(NETWORKING is very important to the small business owner and entrepreneur. Mr. Hawkins' article provides some specifics on effective techniques that you can put to use.  ed)

HOW TO COLLECT CONTACTS
by Arthur A. Hawkins II

Your Network: relatives, friends, associates, acquaintances, friends-of-friends, employees, bosses, experts, professionals, consumers, prospects, clients, suppliers, distributors, anyone you- know, meet, run-into, see anywhere. . . Meet as many people as you can, but work closely with only the few that add value. Network: the starting point for info & income.  How you make, maintain and use Contacts to build your own personal Info Network:

1) get to know people: their likes, dislikes, hopes, fears. . ., even their birthdays (show a genuine interest in them; and interact with them) 2) ASK questions and for opinions and Business (you never know what will turn up)
3) SAVE names, numbers, titles and pertinent info
4) CALL, fax, e-mail, telex, wireless, computer/modem and page them
5) VISIT them, take field trips
6) DINE with them, take them out to eat, do "power" lunch
7) WRITE, fax and e-mail them; use the power of the post
8) RETURN the favor, also JOIN their network
9) Ask for REFERRALS and other sources
10) THANK, Reward & Impress them; always keep them happy and satisfied
Networks involve everyone, friends, relatives, strangers. . . It doesn't make a difference. Most people gladly help someone seeking their "expert" views. Start by contacting everyone you know. They bend over backwards to help you, overjoyed at the thought of helping or showing their "expertise." Supply them with the right methods. Maximize their helpful efforts. Use contacts to make Contacts. Get what you need. Network!

The next step is recruiting new people: real experts, organizations, "strangers". . .You never know who can help. It's in your interest to have as many people as you can working with you. Use all people, methods and sources available to find FREEBIES. When you need info fast, can you afford to miss free money, info or advice? Make the process as simple as you can with your Contacts.
 Why reinvent the wheel? Networks help you find, buy or sell it!

"Ask and ye shall receive!" Grow your own grapevine. Create your own opportunities. Nearly everyone can be useful, no one is too BIG or too small. You know the saying "out of the mouths of babes." It's true, many people have an uncanny way of simplifying difficult things. But if you don't ask you'll never know. Also find those who have experienced what you hope to. Ask for their advice and invaluable insights. Talking to them has a way of getting your creative juices going. This allows you to create your own solutions, free. Build your Info Network and use it!

Talk isn't cheap - - it's free!

Everyone offers an opinion, if asked, even pros like attorneys and accountants. Have an idea of what you need, before you start. Speed it up: Make a list of what's to be covered. Subtly steer the conversation where you want to go. Be conversational but direct. Ask for referrals. But do NOT be a pest or pump them for "free" advice. Also consider using surveys, questionnaires, focus groups. . . Chances are you will find more or different information than anticipated and much of it may not be applicable. But always remember it's free! Just ask.

It's WHO you know, WHAT you know and HOW you use it!

Build your personal Info Network to increase your speed and proficiency in getting what you need without spending hard dollars. You will make friends, build important alliances and set up a distribution system. One way to receive tons of info is by having powerful influential organizations assist you. But also realize no one is too small to help. Use everyone. Use one network to build Networks, "the more the merrier." Learn what people want then show a genuine interest in them. Communicate. Go get 'em!

(Excerpted from Arthur A. Hawkins II's book, "THE Self-Employment Resource Guide" ($25) ©Copyright 1996. For more info: A_Hawkins@nwu.edu)

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