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30 Do’s And 20 Don’ts In Starting A Small Business

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Saturday, March 29, 2014

Simple Steps Help You Avoid Cash Flow Fraud (Video)

Nothing’s worse than finding out you’ve been taken advantage of. That’s what happens to thousands of small businesses around the world every year.

They bring a trusted friend or dedicated employee on board to “handle the books.” And then they never check up on them.

Until there is no cash left in the business bank account.

Think this can’t happen to you? It sure could. People can fake all sorts of records. And desperate people will do it in a heartbeat.

The thing that bothers me the most about it is that it’s so easy to prevent.

Take a quick two minutes to watch this video and learn six easy controls you can implement in your business, so you aren’t a cash flow fraud victim.

Wednesday, March 26, 2014

Obama's Trillion Dollar Small Business Fraud

Abby Martin speaks with president and founder of the Small Business League, Lloyd Chapman, about trillions of dollars in federal contracts that went to fortune 500 companies instead of the small businesses they were mandated for.

Saturday, March 22, 2014

Resource Guide....Preventing Payment Fraud

Payment fraud is the crime that never goes away. While advances in technology are creating new ways to combat it, those same advances are also creating new ways to commit it. And since it’s constantly evolving, small business owners need to be more vigilant than ever. Click here to download a resource guide on preventing payment fraud.

Payment Fraud is part two of a series of informational resource guides designed to help small businesses understand more about fraud and how to stop it before it starts.

For more information on preventing other types of business fraud:

•Download part one: Preventing Data Breach Fraud.

•Download part three: Business Identity Theft.

Also, find out more by viewing the Small Business Fraud is Big Business Infographic(Link).

Wednesday, March 19, 2014

Resource Guide...Business Identity Theft

For small businesses, identity theft is on the rise. It happens when criminals gain access to proprietary information concerning credit lines and customers. And it’s thriving online, with results ranging from misrepresentation that drives customers away to destroying a business’ credit standing and reputation. Click here to download a resource guide on business identity theft.

Business Identity Theft is part three of a series of informational resource guides designed to help small businesses understand more about fraud and how to stop it before it starts.

For more information on preventing other types of business fraud:

•Download part one: Preventing Data Breach Fraud.

•Download part two: Preventing Payment Fraud.

Also, find out more by viewing the Small Business Fraud is Big Business Infographic (Link).

Saturday, March 15, 2014

Four Common Small Business Accounting Mistakes (And How To Avoid Them)

For most entrepreneurs, the first few years of a newly minted business are a mixture of excitement and fear. You’re on your own, doing what you love. But you’re also running an enterprise that requires a fair degree of financial know-how and bookkeeping discipline in order to stay afloat and grow.

Establishing—and following through with—good accounting and financial controls from the beginning is essential to creating a solid foundation for any small business, say the experts. We spoke with a few of them to identify some of the most common accounting mistakes—and how to avoid them.

1. Setting up the books incorrectly

Installing accounting software, such as QuickBooks, is a common first step for many small business owners when it comes time to set up their finances. But when it’s done incorrectly, the problems just multiply.

“I think QuickBooks is great and it has many of the features that a small business owner needs,” says Brian Germer, a CPA and partner with Parsons & Germer, an accounting firm based in Portland, Oregon. “But when numbers are entered incorrectly or a payment date is not right, you can wind up showing a negative balance and that throws everything off.”

If you’re not comfortable with setting up your accounting software in the beginning, hire someone to do it for you. “It’s money well spent,” says Christopher Gamble, a CPA and partner with Kroner Gamble & Co. based in Rochester, New York. “I’ve seen clients who have mixed income and expenses into one category and it’s a nightmare. If the categories and the data aren’t correct, there are going to be endless and costly mistakes.”

2. Not reconciling accounts each month

Whether you get your bank statements electronically or on paper, they can’t be ignored, or put off until you have more time.

“One of the biggest mistakes I see is when a business owner waits several months, or even until the end of the year to reconcile their bank statements with what they’ve put into their own systems,” says Gamble. If you’ve made an error in entering a bill or payment, or the bank has recorded a check amount incorrectly, the inconsistency can wreck havoc on your books if left unattended, he says.

Pamela Etzin, owner of An Eye for Detail, a wardrobe styling and consulting firm based in northern New Jersey, says she knew early on that bookkeeping was not her strong suit. “When it comes to my clients, their needs, and responding to them, I am prompt and conscientious,” she says. “But I just didn’t keep up with my bookkeeping and I knew that was going to be a problem as the business started to grow.”

To avoid that hazard, Etzin hired a part-time bookkeeper to stay on top of bills, taxes, and invoices for clients. “I am a big believer in seeking out the experts in any field and the money I’m spending is well worth it,” she adds.

3. A mismatch between payables and receivables

You didn’t get into your own business to become a bank for your customers. But that’s exactly what you’re doing if there’s a significant gap between the payment terms your vendors give you and the terms you offer your customers, says CPA Sarah Krom with accounting firm SKC & Co.

“I’ve seem small business owners want to pay off every bill as soon as it comes in because they don’t want to owe money,” says Krom. “If you do that, but your own customers have 30 or 45 days to pay you, you’re essentially financing your customers.”

A better strategy is to compare the terms you have with your vendors and the payment terms you give clients in order to see if they match. If they don’t—and you can’t or don’t want to renegotiate either side—consider speaking to your bank about opening a working line of credit, suggests Krom.

“This allows you to bridge that gap between the time you have to pay bills and when you’re getting paid and helps further establish your credit worthiness as you pay it back each month,” she says. Of course, the best time to apply for a line of credit is when you don’t need it, Krom adds, so don’t wait until you’re in a financial bind before having the conversation with your banker.

4. Financial controls given to one person

The financial cycle for any small business begins with the person who opens the mail and records the bills and checks coming in. That same person shouldn’t be the one to authorize or sign checks or make deposits, cautions Gamble.

“There needs to be a proper separation of duties for financial control so that you don’t wind up in situation where someone could potentially steal from you,” he explains. Hiring a bookkeeper or even a part-time CFO as the company grows, does not mean that an owner shouldn’t have a hand on the financial controls as well.

“Ideally, the owner should be the one signing the checks or at the very least, authorizing someone else to sign them but only after understanding what the money is for,” Gamble says.

Running and growing a business is a marathon, not a sprint. Don’t let simple accounting mistakes become the stumbling blocks along that journey.

Disclaimer: Since the details of your situation are unique, you should always seek the services of a qualified CPA or other financial professional.

by Susan Caminiti

Wednesday, March 12, 2014

Creating A “Living” Business Plan

To strengthen your focus and prospects for growth, commit your strategy to paper—and let it live off the page.

1. Introduction: Plan Because You Need To

Staff members at the Shenandoah Valley Small Business Development Center (SBDC) receive frequent calls for help in creating a business plan. The trouble is, the entrepreneurs who seek this assistance often aren’t launching new companies. They’ve been running existing companies without a business plan and sit down to write one only when forced to by banks or other lenders who need that document to process a financing application.

That approach deprives the company of a resource that can play an important role in driving and guiding growth. “The plan is really a management tool for the business owner,” says Joyce Krech, the SBDC’s director. “It’s a great piece of the lending package, as well, but we would prefer that they be doing it for their own purposes and not because they’re being asked to do it.”

2. Stay On Course and On Target

Capturing your business planning process in writing gives you a solid analysis of the company’s mission, income, financial obligations, and paths to growth. Companies that operate without a written plan run the risk of getting distracted and thrown off course by opportunities that may seem interesting but aren’t really germane to their core business and function.

“They lose their focus, which just deters them from growth,” says Gwen Moran, founder of Biziversity, an online information resource for small businesses, and co-author of The Complete Idiot’s Guide to Business Plans (second edition, Alpha). “A business plan acts as your touchstone to keep you on track, to make sure that your business is performing in the way that you expected it to perform. Without a business plan, it’s very difficult to gauge those metrics and to know exactly what your business needs are at any given time.”

Once the plan is written, how do you keep it in play and optimize its value to your business? Experts recommend that you revisit your plan each time you review the company’s performance—whether that means at annual or quarterly meetings or in regularly scheduled conferences with your financial advisor. That helps business owners to hold themselves accountable to their plans and look objectively at whether the company is on course in terms of liquidity, credit, human resources, pay scales, production capabilities, distribution and logistics systems, risk management, and marketing.

“A good accountant will be able to help you fine-tune your plan and see opportunities and pitfalls that you might not even see because you’re so in the day-to-day of your business,” Moran says. Other options include SBDCs, the Service Corps of Retired Executives (SCORE), or non-competing business owners who are interested in providing mutual support. “You’ll get insights from different industries and new ways of thinking about doing things.” Whichever option you choose, make sure you select advisors who are willing to stand up to you and make sure you engage in all the critical thinking necessary to maximize the company’s potential for success.

3. Know How to Answer, “What If?”

These reviews will help you to assess not only how well your company is performing, but how thorough the plan is in anticipating what could go wrong and how you’ll handle those scenarios. “It could be a resource issue. It could be a competitive issue. The law could change,” says management consultant and business planning specialist Jenifer Grant. “There should always be a risk section in the business plan. And then you can assess, what happens if a key person goes away? What happens if the costs of our main ingredients go up? What if I need to hire people, and I can’t find them? You need to assess all the different risks that could have an impact on your business.”

And those if-then analyses aren’t limited to worst-case scenarios. You should also consider what you’ll do if, for example, your product takes off so much faster than anticipated that you suddenly need to ramp up production and contend with cash flow issues and staffing shortages. “Fast growth can be as much of a stressor as slow growth, or even more so,” Moran says. “You have demands placed on your business, and if you can’t meet the demands of your customers, you’re ultimately going to disappoint them, and they’re going to turn elsewhere.”

Comparing what’s written in the plan with what’s happening day to day can even produce insights about entry into new markets or expansion of your customer base. “Then you start thinking, as one of my clients did, ‘I never thought about this particular type of customer for my product before, because I had one vision in mind, one road on my roadmap. I didn’t see this other parallel customer base that I can tap into at very little cost,’” Krech says. In that scenario, too, a business plan is an invaluable resource in helping the company to modify its course and take advantage of those additional opportunities.

4. Bring the Whole Team on Board

But the business plan is not just a resource for entrepreneurs and executives. It’s a big challenge, but to get the biggest return on your investment in the plan, you’ve got to look for ways to make it live throughout the organization and ensure that it is supported by every employee. “On a day- to-day basis, you come in, you do your job, whatever it is,” Grant says. “It has to resonate with what you do—you, the individual employee.”

As a business owner, part of your job is to communicate the plan’s importance through your actions and behavior. “As you begin to fulfill your plan, it’s your job to talk to your employees, to talk to your team members, to get them as excited about your business as you are,” Moran says. She advises business owners to make sure their employees understand the solution that the company offers in its market and also the strategy you’re pursuing to achieve your market share. In addition, all employees should know their roles in the business and how they are important to the overall corporate vision. “That’s how you get buy-in. You need to be excited about your plan. If you’re not, then you need to go back to the drawing board until you find what makes you excited about your business, something that you can communicate to the people in your organization to get them excited about the difference that they’ll make in this process.”

Moran offers the example of the CEO of a mid-sized manufacturing company who each month invites a small group of employees to his office for coffee, donuts, and conversation about the business. Giving employees that kind of access to a business owner who knows their names and asks after their families is a morale booster. It also gives staff members a chance to see how committed the boss is to the company. “When you see someone who’s truly excited or truly passionate about something, it’s hard not to care about that,” she says. “You get that great one-on-one face time. You get that opportunity to convey excitement, to convey enthusiasm, to let people know that they’re part of a winning team. And everybody wants to be part of a winning team.”

5. A Plan for Top Performance

Once you’ve integrated the plan into your company’s day-to-day operations, how often do you need to revisit and re-evaluate it? That depends on your business and its rate of growth. During periods of rapid growth or cash flow crisis, some entrepreneurs and venture capitalists find it necessary to review the business plan weekly to make sure the numbers are on track. And any time you pass a major milestone or hit a certain revenue target, it’s good practice to re-evaluate the plan and make sure that it’s still serving you well. At a minimum, experts say, you must review the plan annually, and a quarterly review is preferable.

“When you keep a microscope on those numbers, they’re going to tell the story of your business. And too many business owners don’t,” Moran says. “They let a few financial statement periods go by before they actually look at the numbers. Then they realize that their expenses are far too high and their incoming revenue is far too low, and they start getting into trouble. But when you start following the numbers monthly and then doing a very serious dive into what’s happening in your business according to the metrics on a quarterly basis, that’s when your business plan starts to become a living, breathing document.”

Ultimately, that shouldn’t come at the expense of a huge investment of your time. You can achieve these goals without creating a massive document; a few pages can suffice. The objective is to be equipped to compare current operations and numbers with a written projection or benchmark that points out any divide—positive or negative—between the company’s projected and actual performance. And over the long run, a resource that accomplishes that should save you time, keep your company on track, and help ensure that the business delivers on its potential for sustained profitability and growth.

Article created by Inc. © Inc.

Saturday, March 8, 2014

Exit Strategies...Positioning Your Company for Sale (and Cashing Out the Right Way)

It’s never too early for business owners to develop their exit strategies, and it’s essential to lay the groundwork at least three to five years in advance of succession or sale. By thinking ahead, owners can maximize the company’s value and make the most of their business legacy. In this attached whitepaper, you will learn how to position your company for sale and how to cash out the right way.

Wednesday, March 5, 2014

Getting A Handle On The Financial Help You Need

Financial professionals offer small business owners assistance that extends beyond performing bookkeeping and accounting transactions. By choosing the right resources for each stage of the company’s growth, owners can ensure that they’re supported by the financial expertise necessary to attain their goals.

Click here to read the Inc guide titled Getting a Handle on the Financial Help You Need.

Saturday, March 1, 2014

Business Incubators...Are They Right For Your Small Business?

According to the National Business Incubation Association (NBIA), 87 percent of entrepreneurs who entered some type of incubation program were still in business after three years. Incubators come in a variety of forms, each catering to particular industry categories. For example, special purpose incubators could specialize in biotechnical or software start-ups. A mixed-use incubator may provide both industrial and office space. And some incubators focus on white-collar professional services. Doing your due diligence when investigating incubators can often pay off handsomely in the growth of your business. (To find a business incubator near you, use this NBIA guide.)

Do your research

"Incubators are broad in scope, depending on the community where they are located and the type of space available," says Jasper Welch, CEO of the NBIA.

Welch offers a five-point process to help entrepreneurs find the right incubator that satisfies their business needs. First, an incubator that is a member of NBIA assures that they adhere to professional standards and conduct. Second, talk to graduates or current incubator occupants to find out about their experience. Third, be ready to take your business to the next level by having some kind of business plan or outline for your future growth. Fourth, make sure that the incubator supports your type of product or service. The fifth point is what Welch calls the magic factor.

"If you take all those things—your business, your dreams, the incubator and what they offer—will they work [together]?" Welch says. "If you're in a large metropolitan area and there are choices, you can look around. In other cases, your choices might be limited and you'll need to make some adjustment to fit within that incubator."

Fees range across the board—some incubators charge as low as $100 a month—but again, you need to be clear on what you get for your money, such as space, phone and Internet services, marketing or branding advice, and so on.

Some start-ups may be lucky to find angel investors willing to invest in their company, but typically not at the beginning. "Many businesses that come into an incubator are either debt-financed or use personal funds," Welch says. "Incubators will connect you with financial resources, but they don't necessarily have money [to hand out]."

Getting past the obstacles

Incubators are often associated with the development of high-tech products, but even more conventional product categories—such as food start-ups—can find a suitable place to experiment and innovate.

"If you have an idea or concept for a food product, the regulatory and production hurdles and the ability to understand how to get your products into larger markets is just enormous," says Chris Reedy, executive director of Blue Ridge Food Ventures, a North Carolina not-for-profit food incubator. "We offer folks an on-ramp that allows them to approach these kinds of issues as it pertains to making a food-based product."

Blue Ridge has three production kitchens, as well as a team of experts that provide help on a range of issues, such as product development, food safety training, cost analysis, and sales projections. Fees run about $30/hour for kitchen time, with additional fees for storage. For the time being, Blue Ridge does not charge for their support services.

Since opening its doors in July 2005, Blue Ridge has had about 230 entrepreneurs pass through, 31 of which have moved on to expand their business elsewhere. Others have dropped out because they realized that food production was not for them, or have simply moved on to other opportunities in the food service industry, such as operating food trucks.

But even the clients who don’t graduate out of the incubator can meet with success. "We had a client who started at the facility less than six months after we opened and she is still here," Reedy says. "She had a chocolate product that addresses a specific niche in the raw foods market. She's probably the largest business at the facility now, and employs about 10 people twice a week. She's got a great business."

Network, then move on

When Outreach Promotional Services outgrew its home space, they relocated to the Dublin Entrepreneurial Center, an Ohio-based incubator that offered them a new facility with high-tech features—and more.

"Because the rent is subsidized by the city, we probably pay 60 percent of what we would normally pay for this kind of office space," says Nevin Bansil, Outreach’s CEO. "Then there's the networking. There are more than 100 businesses in the center. We've actually had the chance to work on some projects with a company here in partnership. A lot of times you can't meet those kinds of people when it's your home space."

Bansil plans to move out in under two years. After an initial six-month contract, he pays on a month-to-month basis. The center brings in outside speakers who can pitch their products and services to the occupants, and Dublin's own clients are allowed to make presentations as well.

"Take advantage of the things that are going to help you grow your business in an incubator," Bansil says. "Network—you never know what's going to come out of that. If you keep your head down all the time, you're not taking full advantage of the incubator space. Be cognizant that it's going to be a temporary address. Have a plan to move out in two to three years and make sure you're working toward that."

by Robert Lerose