Business Basics: Return on Investment (ROI)

Welcome back to business basics! In case you’ve forgotten, every week we take a look at a basic business concept in order to try to help new business owners better understand it. This week, we are covering Return on Investment, or ROI – a fairly straightforward, but often misunderstood, part of running a business! Though you may think you know all about ROI, you could be using it incorrectly. But first… ROI

What is ROI?

Return on Investment, or ROI, is pretty easy to grasp – heck, the definition is right in the name. It’s whatever return you get after your invest in some part of your business. So if you hire 2 new salespeople, a basic measurement of ROI will be the money they bring in, minus their wages. Continue reading

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ABCs of Small Business Industry: B is for Banking

As we enter week four of our series, we decided to look at a slightly different industry – banking. Now, focusing on banking may seem a bit odd. After all, most people don’t consider banking as something an entrepreneur can even get into. And while there are loads a regulatory loopholes to jump through, plenty of entrepreneurs do start their own bank! And running a bank can be quite lucrative. So if you have experience in the financial industry, and are looking for a change, this could be just the post for you! banking

How do you start a bank?

Like any business, you need to identify a need. Most communities are served by big-name banks like Chase or Bank of America, and people gravitate towards names they recognize. But even if it feels like your community is over saturated with corporate banks, there could be a place for a small, community bank, like if you decide to focus on serving a particular section or area of the community. Some people also like being able to meet face-to-face with a high-level executive to talk about loans or their account – something they’d never be able to do at a corporate bank.

If the market looks good, you then need to work on getting everything organized. Most states require banks to have multiple directors, who then put in an initial offering to get the bank started, usually around 25% of the bank’s starting capital. Since banks need a lot of capital to run, this is usually a substantial amount of money. Most banks sell off shares to raise the rest of their capital.

When your ducks are in a row, you file for a state or federal charter. Filing this form typically costs thousands of dollars, and requires a substantial amount of preparation. You’ll need to include information like feasibility studies, applications for the directors, projected costs, projected salaries – the state or federal government effectively needs to decide whether or not you’ll be successful before granting a charter. After this, you apply for deposit insurance from the FDIC, which requires banks to prove they have enough capital to cover any risk and losses. It will take a few months before the charter application is processed and, once it is approved, you normally have about a year to start the bank officially.

What business structures are best suited for banking?

Because banks are required to have directors, executives, and shareholders, a bank has to be some sort of corporation. However, in some states, a bank is an entity in itself. Though it is run in the same way a standard corporation is.

How stable is the banking industry?

Very. Because banks have to apply for a charter, an outside organization effectively reviews their business plan and target market, and determines whether or not the idea is viable. Banking costs a lot of money, but if you get a charter, you can usually bet that you’ll be successful. The rate at which banks fail has also slowed substantially as the economy has recovered.

Interested in community banking? Have any questions about the banking industry? Leave a comment below, or give us a call at 1-877-692-6772!

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How to Build a Solid Sales Team

It can feel odd hiring a sales team after you start your business. You were probably the only salesperson for the first few years of your company’s life, and giving up such an important responsibility can be jarring. However, if you want your business to succeed, you have to learn how to delegate and grow. Sales Team Actually having a sales team is very different than doing sales yourself. You need to trust them, and their skills, implicitly, even if how they sell is different from how you sold. With that in mind, when you first begin to hire and train your sales staff, remember to…

Look for personability

Friendliness and personability are two of the most important qualities of a successful salesperson. It doesn’t matter if someone has three decades of sales experience – if they’re pushy or irritating while selling, they’re going to lose clients. Sales has changed a lot over the last few years. Cold calling is a wash, and the best way to bring in customers is actually through inbound marketing. Your sales staff has to be able to connect with your customers and talk them through the sale, rather than throw pitch after pitch at them.

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Business Basics – Cross-Blogging

Content marketing is amazing. Studies have found that inbound and content marketing cost 62% less than traditional marketing, and yet brings in three-times as many leads. If you don’t blog, you’re missing out on a huge marketing opportunity, and a great chance to network. Over the last year or so, we’ve really amped up our cross-blogging, and we’ve seen some amazing results. New markets have opened up, our web presence has never been bigger, and we’ve made some great new partners. cross-blogging

But, in finding new partners to blog with, we’ve noticed that some businesses don’t know the first thing about cross-blogging. So to help those of you experimenting with inbound marketing out, here are a few tips on how to make your cross-blogging experience positive and rewarding.

Make suggestions and share ideas

Some of the best articles we’ve ever written have come from ideas brainstormed with our cross-blogging partners. However, entrepreneurs can be a little skittish when it comes to sharing ideas. Now when a business is built on an idea, guarding it makes a lot of sense, but if that idea is nothing more than a possible topic for an 800-word article, you don’t have to treat it like a trade secret. So feel free to pitch ideas with your partners, and build off of each other’s suggestions. A major part of cross-blogging is networking. You want to forge a strong, working relationship with the people you partner with, and brainstorming is a great way to do just that.

Keep the relationship light

New bloggers sometimes get a bit overly zealous when contributing or accepting a post. Before anything is written, they want a thirty-page contract filled out in triplicate and faxed to their attorney’s office. Remember, you aren’t sharing revenue or starting a business together. You’re cross-blogging. A few simple requests like ‘don’t plagiarize’ and ‘don’t publish this somewhere else’ are really all that you need.

Don’t ask your partner to do all the work

We feel like this should go without saying, but we’ve had way, waytoo many potential partners ask us to just write the post for them. There’s no quicker way to ruin this networking and marketing opportunity than by shirking all of your responsibility and expecting someone else to pick up the slack. Treat others the way you want to be treated. Would you want a crummy, hastily written article, riddled with spelling and grammar errors on your blog? We doubt it. Any articles you send to your partner should be insightful, unique, and engaging, and you should expect the same of them. That way no one feels slighted, and your new partnership starts off right. 

Interested in contributing a guest post? We’d love to talk to you! Click here to read our author guidelines, pitch an idea, and get in contact with our social media team.

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Business Advice I’d Give to My 22 Year-Old Self

I’ll be the first to admit that, at 22, I was in no position to run a business. I was fresh out of college and thinking about signing up for law school. I had no idea that, in a few more years, I’d be thinking about mortgaging my house to buy a company and make the leap from IP lawyer to executive. business advice That transition wasn’t easy, and there is plenty of business advice I’d give myself if I could go back in time and let 22-year-old me know what was on the horizon.

Pay attention to long-term return on investment.

When I was a lawyer, a return on investment was assumed. We normally took cases that made the firm money – that was straightforward enough. But when you run a business, maintaining a positive ROI is a lot more complicated. It isn’t about money-in, money-out. A good ROI could be defined as more exposure, a bigger web presence, or a better reputation. All of these factors play into how much money the business brings in, but you don’t see hard results right way. One of the best pieces of business advice I’ve ever received is to always look at the long-term. Long-term thinking staves off stagnation, and keeps a business’s doors open. You can cut corners to make more money in the short-term, but that may damage your reputation and cost you in the long run.

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50 States of Incorporation: Wyoming

It’s the last week of our 50 states of incorporation series and we’re focusing on the Cowboy State – Wyoming. Smack dab in the middle of the Rockies, Wyoming is America’s least populous state, but is easily one of the most beautiful. The vast majority of the land in Wyoming is owned and protected by the Federal Government, and Wyoming is home to the world’s first national park, Yellowstone. Incorporate in Wyoming Wyoming’s natural beauty has ensured the state’s tourism industry would flourish, and today it generates two billion dollars in state revenue. Along with tourism, Wyoming’s historic agricultural and mining industries continue to drive the state’s economy – Wyoming is the number one producer of coal in the country. Though largely rural, Wyoming is a great state for a small business, thanks largely to the low cost of doing business. So what does it take to get started there? And how do you incorporate in Wyoming?

How do you start a business in Wyoming?
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Business Basics: Business Entity

If there is one thing we’ve learned from over a decade and a half of helping small business owners, it’s that every business is different. For new small business owners, it’s important that you choose the business entity that will suit your unique needs. There are four basic entities that you can choose from, each with its own advantages and disadvantages. While there is no “right” choice, depending on what you sell, where you plan to take your company, and how ownership of the company is divided, there will be certain entities that will fit your business model better than others. Business Entity Choice

Sole Proprietorships and Partnerships

Sole proprietorships and partnerships are the simplest type of business entity. They are also the default option. It doesn’t take much to start a sole proprietorship or a partnership either. Just file for a ‘Doing Business As’ name, apply for the right licenses and permits, and open your doors. If the business is run by two or more people, you will also need an Employer Identification Number (EIN) and you’ll have to file another form come tax time. But this simplicity comes at a price. Everything the business owes and owns is tied to your personal assets. In other words, you, and your partner if you have one, will be held liable for the business’s debts if it fails. Also, if you do have a partner, you may not be protected if they decide to walk away from the business. So, while running a sole proprietorship or partnership is a lot simpler, it does put an undue amount of risk on the owner(s). To limit your liability, consider forming a corporation or limited liability company.

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‘Doing Business As’ Names vs. Trademarks

Entrepreneurs are always going to be protective of their business’s name. After all, this is the name under which all of the goodwill and branding they’ve worked so hard to accrue will go. But there is still some confusion about the best way to protect that name. On the one hand, registering a ‘Doing Business As’ name does keep other businesses in your area from using the same name, and for some businesses that’s enough. 'Doing Business As' Names vs. TrademarksWhile a trademark on your business’s name offers a lot more protection, filing a trademark does take more time and money. So we decided to take a look at both DBA names and trademarks, and help explain what the pros and cons of each are.

Doing Business As Names
A DBA name, which is also referred to as a trade name, is just that – a name. It’s a quick and easy way to identify a business or entity, and filing for a DBA name is pretty straightforward. Continue reading

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What Goes into an Operating Agreement?

Operating agreements are one of the most vital, and overlooked, tools in running a limited liability company. We’ve actually covered operating agreements as part of our ‘ABCs of MyCorp’ series, but we never delved into what an operating agreement should actually say. operating agreement As a quick refresher, an operating agreement is essentially a document that defines how the LLC will be run, and the SBA recommends that every LLC draft one. The trouble is that only a couple of states, like Missouri and New York, legally require new LLCs to have an operating agreement. But without the rules, structure, and regulations an operating agreement provides, your LLC could be in serious trouble if partners disagree, a member wants to leave, or if the state starts questioning the validity of your LLC. Operating agreements are also pretty easy to draft and only need to cover a few key areas.

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What is a Foreign Corporation?

The term ‘Foreign Corporation‘ sometimes confuses people. Though it can also refer to a corporation from a different country, when business advisers refer to a Foreign Corporation or LLC, they are usually talking about a domestic company with permission to operate in a state other than the one the company was formed in. This permission is often called a ‘foreign qualification,’ Foreign Corporation and it effectively registers your company with the new state so the state can collect taxes. With it, you can open up another branch of your company, or move your base of operations, without changing states. But why would a business want to do that?

Why would you want a foreign qualification?
There are a few reasons why a business chooses to qualify as a foreign entity in other states. One of the main ones being that the company simply wants to expand its operations – sales could be strong in their home state, and they figure they’ll take a crack at opening another store or office in a neighboring state. Since you need permission to do business in another state, they pursue a foreign qualification. However, some business owners also believe that they may save money on taxes by forming a business in a state like Nevada or Delaware, and then qualifying in the state they actually do business in. There are pros and cons to incorporating in another state, so be sure to weigh your options carefully.

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