Tag Archives: money

10 Ways Small Businesses Can Start Saving Money Right Now

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Whether you are an entrepreneur who’s just starting out or a seasoned small business owner, you probably have one thing in common. Chances are you want to cut the costs of doing business. In addition to increasing profits, this allows you to reinvest in your own success. There are a number of creative ways that entrepreneurs can cut their costs. Here are ten strategies that will help you slash expenses quickly and efficiently.

Turning off computers
Energy costs can be a major line item each month. A simple way to save on electricity is to turn off computers or laptops when you’re going to be away from your desk for an extended period of time. If you know you’re in meetings for several hours or leaving the office for the day, why not turn off your computer? You can also consider an automatic device that turns of items at given times of the day, such as overnight. Doing so will save money and prolong the life of your computers and laptops. It’s a win-win for cost conscious companies.

Switching out light bulbs
Most of us have made the switch from traditional incandescent light bulbs at home to help save on energy costs, but what about at work? CFLs may have a higher upfront cost than incandescent bulbs, but the cost savings in the long-term is worth it. They last up to ten times as long and use 2/3 less energy than traditional light bulbs.

Automatic hand dryers
Do you find that your business goes through paper towels like they’re going out of style? Why not make the switch to automatic hand dryers? They also have a higher upfront cost, but they significantly cut down on the cost of paper goods. Newer automatic hand dryers are also energy efficient, using less electricity than older models.

Equipment restoration
If your business uses certain electronic or manufacturing equipment to develop products, you should consider equipment restoration to help save money. Perhaps some of your machines have stopped working entirely due to electrical failure or certain functions no longer work? Look into companies that can help get your machines up and running again. The cost will most likely be significantly lower than replacing the machines with new equipment.

Download free software
If you’re in the market for a new software program, there are numerous free resources available to budget-conscious business owners. If your software costs are getting out of control, consider looking at free or open source software. Many companies offer free trials of their programs, or entirely free options for the life of the software. So do your research, and look into alternatives to costly programs. For example, Open Office is a good possibility if you’re considering purchasing Microsoft office.

Multiple bids
If you are hiring a vendor for a particular project or working with a consulting service, it’s a good idea to get multiple bids. Don’t just hire the first company you come across because chances are you may be able to get a better deal by shopping around. A good rule of thumb is to obtain at least three bids for projects before you make a final decision. You don’t necessarily have to go with the lowest bidder, but always get quotes from vendors to compare!

Outsourcing
If you’re on a shoestring budget, look into outsourcing some of your business. Sites like Elance and Guru are good places to find freelance web designers, writers, and programmers. Often, working with an independent consultant is less expensive than hiring a full-time employee or working with a firm.

Go virtual or share space
A smart way that small businesses are cutting costs is by taking their operations virtual. If you can work out a situation where employees telecommute, then you don’t need to worry about the high cost of renting office space. If full-time telecommuting is not an option for your business, look into shared space office space. A communal office space can be much less costly than individual offices.

Google Voice
Google offers a number of free or low-cost tools for businesses. Google Voice allows you to quickly and easily set up a business phone line and voice mail without the high cost of working with a telecommunications company to get started. If saving money on communication costs is a priority for your business, try out Google Voice.

Reuse and recycle
This one probably goes without saying, but it is worth mentioning. Always make sure you reuse your scrap paper, print on both sides of the page whenever possible, and avoid printing out every email message you receive. It’s also a good idea to recycle paper and toner cartridges. Some large office supply companies offer special discounts on certain products for businesses that take advantage of their recycling programs.

There are a number of strategies for cutting costs for your business. While some strategies such as switching out old light bulbs carry a higher upfront cost, they are great money savers over the long-term. Whether you’re just starting out or you’re a seasoned entrepreneur, saving money for your small business should be a top priority.

About the author: Carl Petoskey’s vast knowledge in the business industry stems from his 15 years writing and working for various small businesses. When he’s not writing, you can find him covering LWG Consulting or other companies focused on bettering small business owners.

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How Much Capital Do You Need to Start Your Company?

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The process of starting a business is usually associated with that of accumulating large sums for start-up capital and marketing campaigns. Businesses have now moved away from that sort of thinking and have found easier and more innovative ways to get their companies up and running without having to find an outrageous sum of money. This calls for a total change in the mindset of the budding entrepreneur and a level of commitment to the process.

Starting a Business with Zero Capital

This will be a challenging task with many hurdles to jump, but once you are dedicated to the process you will make it. Here are a few tips.

1. Seek a Partner

Partnerships offer a great means of starting a business. Once you find someone who shares your passion and enthusiasm to become your own boss, then you have covered the first base. If you are really serious about finding someone who shares your vision and is willing to put his/her shoulder to the wheel and help build the business, you must be prepared to treat them like a partner and not a hired hand. If you pay someone for an hour, they will give you your money’s worth, but a partner takes the job more seriously.

2. Start Your Business from Home – Eliminate Expenses

You do not want to start your business with expenses hanging over your head, so eliminate those expenses. Start your business from home to avoid the cost of rent. If you’ve found someone to work with as a partner, then you should both start off doing all the work instead of hiring workers. Work it that way until you reach some point of profitability or some transitional point in the business (expansion) that would require added hands.

3. Get a Business Website Going

Depending on the nature of the business, you could start off with a business website. If the business idea does not require a brick and mortar building, then your first option should be a business website. If you do have a brick and mortar, then you can still have a website up and running in a short time. A good domain name is essential to your online presence, so you would want to spend some quality time selecting one. You can still get a good domain name without spending hefty sums. A free site from WordPress or Tumblr will also be a good starting point. You can start advertising your business through blogs or use the social media platforms, and they are all free.

4. Free Legal Advice and Incorporating Your Company

There are lawyers who offer free services, so you can get legal advice and documents that you can modify to suit your business needs. Incorporating your company may have to wait until you start earning, but until then you can register your company as a LLC, which may be the best business structure for now. You can also go through with the IRS procedure as well.

Jack Harding is a business consultant. He enjoys consulting upstarts and blogging about his insights on various business blogs. Visit Wish.co.uk to see how this upstart utilizes fun marketing to maximize its customer reach.

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Should You Use a Personal Credit Card for Business Expenses?

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As a small business owner, many responsibilities fall on your shoulders. And, as time is money, you probably multi-task to increase your efficiency whenever possible – such as when running errands and making purchases.

There’s nothing wrong with a little bit of multi-tasking to increase efficiency. But there’s one practice you’ll want to avoid – using your personal credit card for business expenses. Many professionals have done this at one time or another, so it probably seems like there’s nothing wrong with this practice but there are four clear advantages to keeping your personal and professional purchases separate.

1. Accounting Purposes

It can be a major pain to document professional versus personal expenses. You have to save all your receipts, combing through each item line by line. And how do you treat items like coffee or toilet paper, which you may share between your house and office? By diligently keeping these purchases separate, you’ll save yourself (and your accountant!) a lot of time and headache medicine.

If you set up an online account with your business credit card, you’ll also get a more complete snapshot of your spending throughout the month. Many credit card companies now offer their business clients tools for navigating through their online banking suites including detailed statements that categorize purchases into various spending classifications. This will help you fine-tune your monthly and quarterly budgets and make it easier to identify any seasonal purchasing trends.

2. Protect Your Personal Credit

The last thing you want to do is inadvertently harm your personal credit with your business purchases. With credit scores being a major factor in future loan interest rates and limits, it’s important that you do all that you can to keep your personal credit in tip-top shape.

Personal credit score algorithms take into account your credit card utilization and payment history when they calculate your score. This means if you end up maxing out your personal card due to business purchases, your score may drop. The same is true if you end up being late on your payment one month because your business income was lighter than expected.

3. Boost Your Business Credit

Speaking of credit, as a small business owner, you’ll want to do all that you can to boost your business credit score. After all, as your company begins to expand, you may need to borrow funds to move into a larger facility or invest in new equipment. Even if those goals are extremely far off, you’ll want to lay the ground work now to ensure you qualify for a business loan in the future.

One way to do this is by establishing your business credit with a business credit card. Through responsible usage like paying the bill on time each month, you’ll be building your credit score so it’s ready to help your business get a loan when you’re ready to take the next step.

4. Take Advantage of Rewards

Rewards often are the very reason why business owners skip the small business card and stick to their personal credit card. If you have a personal credit card loaded with rewards, it can be very tempting to use it every chance you get; but using your business purchases to help offset the costs for your sweet summer vacation makes accounting a bit tricky. Plus, there’s an entire collection of small business credit cards that offer fantastic business rewards. Ranging from cash back to travel to merchandise rewards, these cards are focused on perks that businesses can truly enjoy.

If you’re unsure on where to start when searching for the right rewards card, you can start at a credit card comparison site like CreditDonkey.com. CreditDonkey has an entire section dedicated to business credit cards, so you’re sure to find one that fits your needs.

As you can see, there are some huge benefits to utilizing your business credit card. On your next shopping trip, take a couple of extra minutes to separate your personal and professional purchases. You’ll get to take full advantage of your business credit card and your business (and personal!) bank accounts will thank you.

Daniela Baker is a social media advocate and blogger at CreditDonkey.com, a small business credit comparison website. Daniela focuses on how entrepreneurs can use credit to build and grow their business.

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9 Ways to Work with a Bookkeeper for Your Business

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You love being the CEO of your business, but what happens when you have to be the CFO?

Dealing with your business finances can be overwhelming.   If you want to take your company to the next level, you are going to need to have some major clarity around your business finances.  You need to lift up the hood of your business money and see what is going on in there.  That way, you can make better financial decisions, have more control over your business, and focus on your life without being worried about your company finances.  How cool would it be if your stress level went down?!

Here’s the key – you don’t have to be a numbers person to do this.  You just need a system for dealing with your business finances. The first place to start is to hire a bookkeeper.  Your bookkeeper will enter financial data into software, create financial reports for you, and help you manage your cash flow.  Your bookkeeper will explain your numbers to you in a way that you can understand them and you’ll feel really empowered to take control of the money for your business.

Here are my 9 to dos that you should consider when working with a bookkeeper.

1. You need your bookkeeper to communicate with you.  For the first few months, it’s best to meet face to face.  Afterward, tell them that you would like a call or an email from once every two weeks.  One of the calls can be a check-in to see if you need anything.  The other call needs to be a review of two reports: a profit/loss statement and a balance sheet.  Your bookkeeper must teach you how to read these two reports.  Once you understand how to read a basic profit/loss and balance sheet statement, ask your bookkeeper to teach you how to read a statement of cash flows so you understand how to work with key lines in each report.

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Can Small Loans Help Advance your Career?

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In today’s economy, it can be a challenge to find a job or a career right out of college. Chances are you currently don’t have enough money or aren’t making enough money at that part-time job to afford the things you need to advance your career or find that dream job with. Maybe you just graduated with an art degree and want to build an amazing online portfolio, but you need a new iPad to do it on. Maybe you have a degree in business, but can’t afford the professionally tailored suit you need for your first major job interview.

The problem of not making enough money to help get you to the career you want is fairly common for recent grads. However, with small loans and cash advances, you can find the tools you need to have the career you want. But that doesn’t mean you have a limitless source of free money. Borrowing can advance your career, but it must be done responsibly. Before you begin taking out loans and racking up debt, there are a few questions you need to consider.

Can I really afford this?

Taking out loans doesn’t have to be scary. If done in a smart way, loans can really help you out. When you’re stretched for cash but need to buy a new suit for an interview, a small loan or cash advance can make all the difference. However, when you go to apply for a loan, ask yourself if you can afford the loan in the long run. One of the biggest mistakes young people make when getting a loan is that the loan is simply too large. For example, if you take out a $1,000 loan (and you only need $500), you may end up paying twice as much due to fees and interest rates. Instead of taking out a large loan that will take you years to pay off, consider how much money you actually need. How much will you be able to pay off quickly? It isn’t just about that one crucial thing you need to land the job; it’s about what you will have to pay back in the long run.

Is this tool really worth it?

If you’re waiting for your dream computer to go on sale, you may be waiting a long time. Sometimes the breaks we’re waiting for just don’t come. The suit we think will help get us the job never appears on the clearance rack. The software suite we need goes down in price, only to be upgraded and replaced a week later. This is the part of the loan process that is really crucial. Before you go to get your loan, make sure the tool or product you’re after is important to your career. Can you survive or get the job done without this one item? If you ask these questions and come to the conclusion you must have this one tool, a short-term loan is probably for you.

How will I pay off the loan?

Always be sure to find a loan that is right for you. Instead of taking the first one that comes your way, do some shopping. Find a loan or cash advance that meets your needs. Does it provide you with the correct amount of cash? Is the interest rate reasonable? Will you be able to pay the loan off in a timely manner? Since there’s a good chance you have some recent student loan debt, you may not get the interest rate you want, so be sure you’ll be able to pay the loan off when those monthly statements start rolling in.

It’s important when borrowing money to remember you have to pay it back. The feeling of finally having some cash in your wallet or bank account is great, but don’t let it burn a hole in your pocket. Instead, consider carefully what you are spending this money on. How will it help you advance in your career? Are you going to be able to pay the money back in a reasonable amount of time? Borrowing money isn’t a bad thing, unless you borrow too much and get too far in debt. Just remember to keep your loans reasonable and you’ll be on the road to financial freedom in no time.

Felicia Baratz is a freelance writer, graphic designer and social media addict living in Indianapolis, IN. As a contributor to ProfessionalIntern.com, Felicia discusses new, innovative technology and it’s relation to the business world and social media marketing.

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Guest Post: Where Do You Get Stuck With Money?

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As a Certified Financial Planner™ practitioner, new clients come to me because they want advice on specific issues like:

What can I do to get better control of the cash flow in my business?
How can I develop a budget that allows me to spend and save?
Can I afford to get office space?
Am I on track to retire?
How should I invest my portfolio?
How can I get ahead in my financial life?

I bring up the definition of insanity – doing the same thing over and over and expecting a different result. As I begin to answer these questions, my clients realize that most financial decisions they must consider somehow relate to making a change. They become more aware of what’s getting in their way and begin to reflect on the notion that something has to change.

Our human brain is wired to resist change because we like the status quo. But sometimes making a change is the right thing to do.
Financial planning forces us to prepare and anticipate for change – which usually can improve our financial lives. Financial planning also gets us closer to reaching our goals – buying that vacation house, feeling financially secure in retirement, starting a new business, or even starting a new hobby.

James Prochaska, a Ph.D., writes about the 6 stages of change in his book Changing for Good (James Prochaska, John Norcross and Carlo DiClemente. New York, NY: William Morrow and Co. 1994). Take a peek below and think about some issues that you are stuck on – and which stage of change you think you may be in.

1. Precontemplation – We have no intent to change. We are in denial. People are putting pressure on us to change. We think its too late to change. For example, we need to quit smoking, save more, take less risk, spend more time talking about our finances with our financial planners, or spouses.
2. Contemplation – We are getting around to acknowledging that we have a problem and are willing to think about what we should do to solve it. This could still take us months or years to make a decision. We may even know what we need to do but we aren’t ready to do it yet. For example, we know that we need to renew our gym membership and get back in an exercise routine.
3. Preparation – We are almost there. We will be making this change in a few weeks. We are developing an action plan and may even rehearse it. For example: We are going to ask for a raise by the end of the year. We are going to do our financial planning by the end of this month.
4. Action – We are taking action based on some type of gameplan we developed. We are making our move and doing something about it. An example would be meeting with our estate planning attorney to create a family living trust, or rebalancing our portfolio based on our financial goals.
5. Maintenance – This stage is where we need to stay in the zone, keep the same new routine, and maintain our desired level of change. It’s where we need to meet with our financial planner every quarter to make sure we are on track and moving towards reaching our goals.
6. Termination – This is where this new change is so deeply rooted in our lives that we don’t go back to our old ways of doing what we changed. It’s a new routine behavior like balancing our checkbook every week, or stretching before and after we exercise.

Life is a journey and change is a constant in your life. The next time you are trying to make some type of transition, especially a financial one, consider reviewing these 6 steps. You’ll be more aware of where you are with regard to change in any direction, and you will understand what it will take for you to get to the next level.

Justin Krane is a Certified Financial Planner with Krane Financial Solutions. Follow Justin on Twitter @justinkrane.

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Guest Post: Can Your Small Biz Use Crowdsourcing With the JOBS Act?

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Recently, the Jumpstart Our Business Startups Act (JOBS Act) passed amid much hoopla about how this legislation would be the stimulus that jumpstarts the economy and enables people like you and me to invest in all of these startups without becoming accredited investors, as was previously required by the Securities and Exchange Commission.

Now if you’re a small business owner, the floodgates will open, and you’ll be able to raise tons of money to accelerate your business, right? Probably not. While the SEC is still in its evaluation stage and the actual regulations have not been written, some things are already clear from the text of the JOBS Act bill itself. First, you will only be able to raise a total of $1 million in the course of 12 months, and individual investors will only be able to contribute the greater of $2,000 or 5% of net income if they make less than $100,000 per year or have a net worth of less than $100,000, and they will only be able to contribute the greater of 10% of the net income or net worth of the investor if the investor makes or is worth more than $100,000 and not to exceed $100,000 (see Section 302(a) of the text of the bill for details). So, raising $1,000,000 will require either at least 10 high income/net worth investors or at least 500 lower net worth investors, and probably many more than that.

Furthermore, the SEC will only allow you to raise money if you raise it through an approved platform. Given that sites like Kiva.org, Lendingclub.com, and Kickstarter.com are already available on the market for fundraising purposes, I would expect a similar platform to be created for the small business crowdfunding market.

Before you decide to raise money through crowdfunding, consider the following things first:

1) It’s better if you can give rewards rather than equity. While equity is cheap, if you achieve the success you envision through the raising of capital, then it will be expensive in the future. Let’s say that you give away 10% of your company in exchange for graphic design services or getting a website up and running. These exchanges won’t cost you any cash out of your pocket, but if you sell your company for $2 million later, that’s $200,000 which is not in your hands. You’ll lose out on the upside from the equity you gave away. It’s better to give credit and make these clients VIP customers or do something special which rewards their contribution but allows you to keep ownership.

2) Do you have a compelling story? I expect the requestors of funds to outnumber the sources of funds, at least in the beginning. For every 5 people with a dream, there will only be one person who can fund the dream. Therefore, your story has to REALLY stand out to get funding. One good way to create participation desire is to have original and interactive rewards. Take a look at these projects and see what sort of nifty rewards the founders offered their backers.

3) Don’t use this source of funds to pay off bills or to cash out. The money you’re raising has to go to something which is going to dramatically improve both top line and bottom line results in your business.

4) Do you have a track record of success? Are you making a profit yet and have clients and sales established? If you said yes, and you can make for the case that crowdfunding will only accelerate the process that you would have taken anyway, you probably have a chance of receiving funding.

5) Is there a perception of overnight success in what you’re offering? A lot of people will throw $10 or $20 at projects that they think will be the next Facebook which often causes them to disregard the fundamentals in the process. There has to be just as much sizzle as steak for your small business, as many of the investors will be, by and large, uninformed and uneducated ones who are hoping to be able to tell their friends that they invested in the next Google or Facebook despite their lack of knowledge about how to properly judge a business plan.

Overall, the criteria for successful fundraising through crowdfunding will be the same as what is used to raise money through venture capital and private equity markets now – do you have a sustainable model which projects a high level of growth without an unrealistic hockey stick profit projection? If so, then crowdfunding might be a very viable alternative because of the paucity of VCs and the high cost of going to them if you are successful later.

If you want a great guide for how to launch a successful crowdfunding project, check out Natalie Sisson’s great study on it. These projects succeeded because, as I mentioned above, they told compelling stories, were moving and impactful projects as a whole, and had founders that were able to reach and connect with a large audience.

About the Author: Jason Hull is a candidate for CFP Board’s certification and passed the CFP(R) exam in March 2012. He is a Series 65 securities license holder. He is the owner of Hull Financial Planning.

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5 Questions Small Businesses Should Ask Before Spending

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One of the keys to startup success is the ability to efficiently manage scarce resources. Among the scarcest resource for any small business is money. Startups have to adhere to a budget and know what and where the money they are spending is going to.

Asking the right questions can lead small businesses down the right path. When it comes to money, here are five questions that small business owners should be asking in order to get the most bang for their business’ buck.

1. How will this expense help repay itself?

One thing I learned in the early days of running a business is that expenses must bring a return back. It might seem obvious, but we’re conditioned to think we need certain things that, in reality, we do not. Eyeing each purchase you make with an eye towards return brings much needed focus back to the company.

Some expenses might not have clear returns. For example, while office supplies won’t make you money they are still necessary to buy for an office to function properly with. Others expenses might be a bit more clear.  Seminars and training that boost skills within various departments can lead to measurable results back to the business.

2. Do we have a plan for follow through?

A few years ago my small online publishing company was having issues with our web host. We knew we needed to switch to a new provider, and wanted to get it done ASAP. With a little research I found a highly rated host with reasonably priced dedicated hosting. All good things, right?

As we found out, we had not considered many aspects of the follow through. Most notably, we didn’t know how we’d go about migrating our data to the new servers. That turned out to be a prohibitively expensive endeavor. Because we couldn’t afford the move, we had to eat the money spent on the servers. That pushed back our move considerably. Always be sure to research the follow through details as thoroughly as possible before making any sudden decisions – it’s time well spent.

3. Is this the best price possible?

Many, if not most, of business-to-business transactions involve a flexible price. It might not seem that way initially, but there is often room for negotiation. Savvy small business owners should never buy products or services without feeling out the flexibility.

In the book, Never Lose Again, authors Steven Babitsky and James Mangraviti pose 50 questions that can help anyone get a better deal on almost anything. Small businesses can use the tactics from this book in order to negotiate better prices in exchange for concessions that they can more easily afford.

4. Are we getting the most for our money?

If a small business wants to stretch its dollar, it can look to variable expenses. For instance, a small business can reduce its electricity bill by reducing consumption. According to power giant ABB, many companies can save by using less energy, since buildings account for such a disproportionate amount of energy usage.

Finding inefficiencies in recurring expenses can lead to recurring savings. If a small business can take some of these energy saving tips and turn them into $20 monthly savings, that’s $240 per year. Find three or four such areas for your business in order to maximize the savings made.

5. What will happen if we don’t spend this money?

One of my publishing partners asks this question every time we’re about to write a check. While we still write the check most of the time, we’ve saved a great sum by carefully considering the consequences of not taking this action. In so many instances they just weren’t significant.

By avoiding what amount to unnecessary expenses, we’re able to better focus our limited funds. That has allowed us to save money for items that are much more critical for our mission.

Joe Pawlikowski has owned and worked for small businesses for more than five years. His companies primarily produce content, using new media tools and agility to stay ahead of the mainstream pack. He chronicles his experiences at his blog, A New Level.

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Guest Post: How to Deal With an Angry Teenage Customer

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Summer is here, and with this wonderful, warm season teens descend upon all kinds of businesses, flush with extra cash and time to kill. Teenagers make great customers for businesses, but when they can’t always get what they want, trouble can easily start. So how do you deal with angry teenage customers without losing your cool? Our guest poster Andrew Schrage, co-owner of Money Crashers Personal Finance, stepped in today to give us tips on how to keep calm and carry on with your youthful summertime customer base.

When dealing with an irritated teen customer, you have to first remain calm. This can be difficult, but it’s important to keep your cool to prevent the situation from escalating.

Next, identify the problem. This can also be a challenge, especially if the teenager is more intent on causing a scene than actually having a problem resolved. However, you must do your best to calm the person down. Explain that you’re there to help, and that no one is trying to rip them off. Far too many consumers think the odds are stacked against them when registering a complaint with a business. Any savvy business owner knows that excellent customer service is a cornerstone to the success of their business, and dealing with unhappy consumers can definitely put your resolve to the test.

Once you understand the problem, work toward finding a quick and satisfactory solution that satisfies both sides. Teenagers just want to be heard, and aren’t necessarily looking for any monetary compensation. If they are, and their complaint is at least somewhat legitimate, consider offering them a refund or store credit. By taking an initial loss, you may earn yourself a repeat customer.

Follow Money Crashers on Twitter @MoneyCrashers and find out more at moneycrashers.com.

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