26 INEXPENSIVE CUSTOMER APPRECIATION DAY IDEAS

by Helpful Articles & Tips
by SARA SUGAR

We have a few inexpensive customer appreciation tricks up our sleeve that can assist you in making your loyal (and soon-to-be loyal) customers feel like the valued patrons they are. After all, happy customers make for even happier cash drawers. So for those ready to start the New Year off with an appreciative bang, here are 26 budget-friendly customer appreciation day ideas you can leverage all year round.

1. Choose A Customer Of The Day

Who doesn’t like surprises, especially when they save you money? Choose a customer of the day and take this opportunity to drive in-store traffic by announcing the promotion via your social channels. Then, post a picture of the lucky winner to encourage future visits. Since it’s so easy to keep track of sales with your POS system, why not reward the customer of your 50th transaction with a discount? Even if it’s as little as 10% off a cup of coffee, it’s really the thought that counts. Ultimately, you want your customers to know that they’re just as appreciated during a busy holiday season as they are during the slushy days of March.

2. Give Special Attention to Loyal Customers

This next approach requires a little more legwork, but will definitely keep your most loyal customers returning to your store (while keeping your costs down). You’re probably already keeping track of what your customers are buying, so this might seem like a big ‘ol obvious, but it’s all about what you are doing with this information. Your POS system does a great job of tracking your inventory and monitoring sales, but did you ever think of taking that data and using it to improve customer loyalty and appreciation? It’s time to for you to use this info for all it’s worth! Every three to six months, take a look at what your most loyal customers are purchasing and mark that information in their profile in your POS. The next time these customers are checking out, reference what they most frequently buy and ask them if they’d like to make a purchase at a discount. For example: If loyal customer Janet regularly purchases the same bottle of wine, offer her a discount on a bottle of her favorite. Even if it wasn’t on her shopping list, she might jump at the offer. If she doesn’t, she’ll definitely still appreciate the gesture.

3. Give Special Attention to your Not-So-Loyal Customers

There are always going to be customers who stop by your store a few times and then seem to drop off the face of the earth. Most likely, it’s nothing you’ve done, but you still want their business, right? So how do you get those customers back into your store? Try sending customers a “We Miss You” card with a discount code. If they plan on returning, they’ll come running! Just make sure your code has an expiration date to help create a sense of urgency.

4. A Simple Gesture Goes a Long Way

Sometimes it’s the smallest gestures that make the biggest difference. The most inexpensive way to show customers appreciation — and keep your brand popular — is to always practice excellent customer service. Make sure you don’t overlook the little day-to-day gestures. Actions such as greeting customers when they walk in, and walk out (even if empty-handed), create an inviting atmosphere that customers will notice. Also, don’t forget the art of conversation! You probably became a merchant partially due to your love of people. So don’t forget to take time out of your busy day, slow down, and make small talk with you patrons. You might be surprised by what you learn about your customers and the expectations they have. This kind of information can be invaluable to your business and will provide you with ideas on how to best manage your store going forward. In retail, it’s the little things that are going to set you apart.

Bonus Tip:

Use your POS system to take notes of customer information that will help you provide them with a personalized experience every time they walk through your door. For example, you can surprise your customers the next time they check out by asking how they enjoyed their last purchase of a certain bottle of wine or if they’ve worn that special blue dress they picked up at your store last month.

Use your POS system to take notes of customer information that will help you provide them with a personalized experience every time they walk through your door.

5. Speaking of Personalizing…

Even if you aren’t one of those people that celebrates their birthday all month long, most people appreciate the acknowledgment of their special day. So reward your customers for getting older! This can come in the form of discounts, cool swag that helps further brand your business, or (based on sales information from your POS) your customers’ favorite products. If you want to get a little creative, you can offer your rewards in the form of experiences. If you’re a coffee shop owner, reward loyal customers with a coffee tasting. If you’re a boutique owner, provide your customer with a personalized wardrobe consultation. As mentioned before, make sure to add an expiration date to create a sense of urgency — within one or two months of their birthday is typical. By far the best part about rewarding customers with an experience is that it will get them back into your store. Who knows, they might even spend a little more money thanks to that free sample or consultation you just provided!

6. All Customers Deserve a Little TLC

Everyone needs a little TLC once in awhile, and customers are no exception. To let your customers know that you appreciate all that they do for your business, slip pre-written thank you cards into their shopping bags. Not only will your customers appreciate the warm gesture, you can use this as an opportunity to include your business’ contact information, social accounts, and an invitation for them to visit you again. This is one of those times you should let your personality shine through. So, if it’s relevant to your business, make the card funny or sweet. It’s really up to you!

Everyone needs a little TLC once in awhile, and customers are no exception.

7. Give Them A Rain Check

Though this concept might sound a little outdated, but here’s how to give it new life! Traditionally a rain check is a ticket given for later use when a sports or outdoor event is interrupted or postponed due to rain. But it can also be a great way to convince customers — who walked out empty handed because you were out of their desired item — to give your stores a second try. There’s a few ways you can go about this. If a customer didn’t find what they were looking for, request their email (if you don’t already have it) and offer to email them when the product is back in your store, or even ship it to them directly. The important thing is to not let an issue with your inventory prevent you from making a sale. If the customer is not interested in either of these options, this is where a coupon comes in handy. The coupon will provide them with a discount for that specific item or a similar item of their choice. It’s a way of saying “we’re sorry you were disappointed”. The coupon incentivizes them to come back and purchase their favorite item from you. That is, instead of visiting a competitor.

8. A Picture Is Worth a Thousand Words

Everyone, including your uncle (and maybe even your grandmother), is on social media these days. So why not indulge a few customers in their fantasies of being famous! Encourage customers to post about your business or products on their social channels for a chance to be featured on yours. You can regram, retweet, and repost your favorite customer posts to show them your appreciation. Because doesn’t everyone — in one way or another — want to be Instagram famous?

9. Expert Tips and Advice are Priceless

Knowledge is power and some of the best pearls of wisdom are free. So reward your customers with emails that provide them with expert advice that they can really use. Are you a shoe store? Share tips on how to best take care of your shoes. A clothing store? Give tips on how to remove stains from delicate fabrics. Or maybe you’re a coffee shop owner? Offer advice on how to store coffee beans to keep them fresh longer. The key is to personalize your tips and tricks so your customers feel engaged and more invested in your store.

10. Call Me, Maybe

Nothing says we appreciate you like a good old-fashioned phone call. But don’t just call to say “hi”. Like all of our other suggestions, you need to be able to add value. Combined with some of the customer appreciation ideas above, this can be a great tactic for birthdays and anniversaries if a customer has been with you for a while. Call them up to congratulate them and let them know you have a little reward waiting for them at the store, in the mail, or sitting in their inbox.

Nothing says we appreciate you like a good old-fashioned phone call. But don’t just call to say “hi”. Like all of our other suggestions, you need to be able to add value.

11. Create a Thank You Video

Now don’t get intimidated too quickly. This video doesn’t have to be high-tech or scary to make. A simple smartphone video will do the trick. If you have the tech know-how and can edit in your store’s graphic, even better! But if you don’t, that’s ok too. Email your thank you video to new customers after they shop at your business, thanking them for their purchase. Yes, this might sound a little corny. But guess what? It will set you apart from the competition.

12. Share Local Goods

This next customer appreciation tip is good for customers, your wallet, and neighboring businesses. It’s a “you scratch my back and I’ll scratch yours” opportunity. Maybe you’re a doggie daycare that doesn’t offer dog grooming, but you know that The Posh Poodle down the street does. Reach out to them and see if they would be interested in sharing a special code or certificate with you. Next time customers pick up their pooches, let them know you are partnering with Posh to bring them the best service possible. Either hand them the code directly or attach it to their next receipt when they pay. It’s a win-win situation for everyone. Just make sure you aren’t promoting any of your competitors!

13. Share Local Wisdom

Similar to #9, you’re giving your customers the gift of knowledge. But rather than sharing tips and advice that highlight your specific trade, here you are providing your customers with insider advice about the neighborhood. Chances are if you own your own business, you know all the hot spots and who’s who in the area. If you’re the owner of a women’s boutique that targets young female millennials, create an email or a physical insert to slip into their shopping bag that tells them the best places to grab a drink, get their nails polished, or the best blowout bars in the area. Using free online tools such as Canva and PicMonkey make it easy for you to create physical flyers or inserts. Just make sure you vet the businesses you recommend and that they are relevant to the demographic you serve.

14. Bad Weather Appreciation

For some businesses more than others, bad weather means bad sales. If your business is likely to take a hit because of a rainy day, show customers that brave the foul weather how much you appreciate their business by providing a reward or incentive for them to visit you during less-than-ideal conditions. For example, an ice cream shop in our neighborhood offers customers 10% off all cones when it’s either raining or snowing. This can be applied to any business, because no one likes going out in the rain! >Show customers that brave bad weather how much you appreciate their business by providing them with a reward or incentive.

15. A Little Something Sweet

As we mentioned earlier, customer appreciation doesn’t always have to come in the form of discounts and promos. Sometimes, sweetening the day of a cranky child with a piece of candy is all you need to do (or an adult with a sweet tooth for that matter). Providing lollipops at your counter can help put a smile on the faces of small children, as well as their parents. We recommend that you go with allergy-free candy, because a healthy child is a happy child! We recommend checking out the candy aisle at your local health food store.

16. It’s All About The Package

We admit, the tab for packaging (depending on how customized your orders get) can hit your wallet pretty hard. This is the time, however, to snag a page out of the big box playbook. There is a reason that stores such as Victoria’s Secret and Sephora make it a point to package your purchases as beautifully as they do; it makes it feel more like a gift than just an everyday lipstick or bra. Creating your own custom packaging will not only delight your customers’ senses, but will also build your brand

17. Throw An Appreciation Party

Nothing says thank you like a celebratory bash dedicated to your customers. Invite both new and loyal customers. Throwing a party for your patrons is a great way to show your appreciation to customers who have been with you the longest and also a perfect tactic for acquiring new ones. If the price tag of throwing a party scares you, don’t worry. It doesn’t have to be fancy. Here are some ideas o help you get started on a small budget.

18. Start a Loyalty Program

Allowing your customers to use a loyalty rewards program such as AppCard allows patrons to earn rewards points by shopping at your store and other participating retailers. Customers can then redeem these points for future purchases. What we love about AppCard is that it integrates with your POS data to allow you to collect valuable information on your customers. You’ll know exactly what your most loyal customers purchase, precisely how much they spend, and how often they return.

19. Reward Social Behavior

Like it or not, It is very likely that your customers are already talking about you on social media. So why not reward that behavior (both good and bad)? Yes, it seems obvious to reward positive feedback you receive on social. You can Tweet at a customer that gives you a positive review and tell them to stop in for a discounted coffee or a free wine tasting. We admit though that rewarding negative social feedback can seem counter-intuitive. Take a step back however and try and approach any negative behavior as a learning experience. If someone is complaining about your business, take it as an opportunity to learn from what went wrong in his or her experience and invite the individual back for the opportunity to make it up to them, maybe with a bonus offer. You’ll not only show others on social media that you take feedback seriously and look to keep your customers happy, but will also prevent yourself from losing business.

20. Donate To Charity On Your Customer’s Behalf

Make shoppers feel good about spending money in your store by donating a percentage of your sales on their behalf. This is a great idea around the holidays or the national holiday or month dedicated to your cause (e.g. October if you are donating to a breast cancer awareness charity). Ultimately, this tactic makes shoppers feel good about frequenting your store and might urge them to spend slightly more at their next checkout. Just make sure to advertise in your store or business that you are planning on donating, also how much or what percentage of your sales. If this sounds expensive, don’t fear! Remember, it’s a tax write-off. Just stay away from any charities that might be controversial. For example, we wouldn’t go donating to a presidential candidate.

21. Throw in a Free Gift

Move excess inventory and delight customers by repurposing unsold items as free gifts. You know that edible puppy shampoo that never sold in your Paw Shop? We know you don’t like to mention inventory orders that might not have gone as planned, but the fact is that you ordered it and you need to move it! So why not move excess inventory and boost sales all while delighting customers? Include these bottles of shampoo in the shopping bag of customers who spend over a certain amount. Even if it’s something they might not have purchased themselves, they’ll appreciate the gesture and might discover a new product they actually love!

22. Show Them You Listen

Have a sizable amount of customers been complaining about the lighting in your dressing room? The packaging of your donuts? Or the syrup in your coffee? Rather than let this irritate you, take it as an opportunity to use their feedback to show customers how much you appreciate them and really truly listen. Send your customers an email highlighting the changes you’ve made based on their comments and thank them for helping you improve your business. This will position you as a store owner that truly cares and listens to customers, which is liquid gold when it comes to marketing. If you want to learn more about email marketing, check out our blog post here.

23. Have a Customer Appreciation Day Sale

Flash sales are a great way to increase revenue during your slow season, so why not make it a customer appreciation day sale? Invite your entire customer base to a sale in their honor. You can sweeten the pot by incentivizing them with an additional bonus if they bring a friend to the event. Send customers an email thanking them for their loyalty and inviting them to the sale. Make sure the email (or snail mail postcard) lists when the sale is, what the discount will be, and how much of an additional percentage they will receive when they bring a guest.

24. Start Your Own Secret Society

Well, maybe not exactly secret, but everyone loves feeling like they’re special or privy to a secret. Start by putting loyal customers on an “exclusive” mailing list that will give them first dibs on special events, discounts, and promotions. This doesn’t necessarily mean that you are creating additional discounts or holding additional promotions for loyal customers, it might just mean that your loyal customers are alerted first to when your sales will be. Want to go a step further? For larger sales, open your doors an hour early for these customers. Provide a treat like donuts and coffee and your patrons will come flocking!

25. Celebrate Their Accomplishments With Them

Remember how we mentioned earlier the importance of getting to know your customers? We can’t emphasize its importance enough. If you do this successfully, the customers you build solid relationships with will become like family and start sharing their special news with you. Is Sally having a baby? Or maybe Lisa just graduated from college? Take this opportunity to send either an email or note in the mail congratulating them on their special milestone. Include a discount code to show your appreciation and an expiration date to create a sense of urgency. Because you don’t want them redeeming their discount on Little Johnny’s third birthday! >Get to know your customers and help them celebrate their milestones with a special discount or gift.

26 SMS Messaging (Texting)

We’ve talked a lot about email marketing in this post, but Americans are texting more than ever these days. On average we are sending/receiving 32 texts per day! That is a lot of time on our phones. So take advantage of the current texting frenzy and get your customers’ attention by sending them a little text reminder that your business is still here and misses them. With Valentine’s Day around the corner, SMS messaging is a great low-cost way to revive “dead” relationships with customers. Remember, this works best when you give them a reason to return, such as a promo code or an invite to a special event.

Need more customer appreciation day ideas to help build customer loyalty? Check out our post on how to create the customer loyalty your business needs.

Original Post: http://www.shopkeep.com/blog/inexpensive-customer-appreciation-ideas#step-1

This is Why Every Entrepreneur Needs to Go on an Annual Retreat

by Helpful Articles & Tips
A Small Biz Viewpoints Article

When you run a successful company, it may seem counter-intuitive to think about leaving for a few days. However, taking a break, whether it’s for a vacation or for a work retreat where you’ll learn new tactics, is integral to keeping up with your success. With the demands of entrepreneurship it is easy to get exhausted and burned out. Taking few days off allows you to get rejuvenated to keep the engine going. Still need more convincing? Read on to see why you need to take that time away or sign up for that retreat you’ve been considering.

  1. It is important to disconnect from time to time. It can get easy to work for endless hours, never even realizing that you haven’t taken a break all day long. This is especially true in the early days of launching a business or project. Tunnel vision isn’t conducive to productivity and creativity, though. Without taking some time away to clear your head, you could end up spending too much time on the wrong things without even realizing it. Breaks here and there will help restore your energy and prepare you to get back to work, refreshed and ready to do big things.
  2. It’s a good thing for your employees. When you leave the office and stay out of contact, your team has to rise to the occasion and handle things for you. There aren’t a lot of issues that the owner of a business can only solve on their own. Putting your team in charge communicates to them that you trust that they can handle anything that comes up. Plus, when you see that you can leave for a few days and return to an intact business, you’ll feel more comfortable going away in the future.
  3. You need to be patient and focused in order to succeed. Being able to focus on something, even if it’s that yoga pose you’re trying to master, is important for any type of success. When you force yourself to get out of work mode for a number of days, you practice patience. Businesses don’t turn into successes overnight. When you head back to work, you’ll need to take with you that patience and focus. For more career and success inspiration, check out Robert Bratt online.
  4. You’ll learn that small steps lead to big changes. For example, if you go on vacation and are going to try surfing for the first time, you’ll have to start from the beginning, despite the fact that you’re watching professionals master the waves. This is a great business lesson to be reminded of. Every businessperson, no matter how successful they become, had to start from the beginning. Even when you have professionals to guide you, your journey has to start somewhere.

Getting away from the day-to-day challenges of running a business gives you necessary time to clear your head. Once your time away has come to an end, you’ll discover that you have brand new, fresh ideas to bring back to the business.

Original Post: http://www.smallbizviewpoints.com/2015/05/30/this-is-why-every-entrepreneur-needs-to-go-on-an-annual-retreat/

What Entrepreneurs Can Learn From Kim Kardashian

by Helpful Articles & Tips

By Gene Marks

Recently I was asked if I could name one entrepreneur that I looked up to the most. It was an easy question. To me, that entrepreneur is Kim Kardashian. Yes, Kim Kardashian.

The Kardashians have been making news once again. Just last week it was reported that the “Kendall & Kylie” mobile game has earned $3.5 million. Kendall is 20 and Kylie is 18. Their older step-sister is Kim Kardashian. Earlier this month Kim publicly boasted that she’s earned $80 million from her own mobile app “Kim Kardashian: Hollywood.” Forbes has estimated Kim’s 2015 earnings to be about $50 million. Some estimates put the net worth of the entire Kardashian clan at over $300 million. Who’s to know how much of this is true. All I know is that the family seems to be living pretty large on their reality show “Keeping Up With the Kardashians” — and yes I’m a fan, OK?

Kim’s detractors call her a talentless phony. They accuse her of being a self-centered publicity hound. They say she’s only famous because of a sex tape and a larger than life derriere, of which she seems to have zero problem showing to the universe. They put her at the center of what’s wrong with America.

But as I see it, she’s actually the opposite. Kardashian is what’s right with America. She is smart. She is savvy. She is hardworking. And she is very, very entrepreneurial. So instead of hating her, why not learn? This is a business woman who has the same characteristics that make up every successful entrepreneur I know.

Contrary to those that think that running a small business is all about “passion” and “changing the world,” the most successful entrepreneurs I know simply have a passion for making money. This is not something that’s taught. Kardashian caught the bug early. As a teenager, she worked at a clothing store for four years. She then designed accessories and started her own eBay store at the age of 16, selling shoes and other fashions. She used this experience to start another business that cleaned out and redesigned closets and took the clothes from her customers and sold them on eBay, too. Sure, her father, a successful and famous attorney, loaned her money for her various entrepreneurial ventures. But he always required that she sign contracts (he once bought her a car in return for her washing it every week – she ultimately paid it off with the profits from her other businesses).

Kardashian catapulted to fame because of that famous sex tape she made back in 2003. But instead of withdrawing from the world she, like any entrepreneur, capitalized on the moment and set about leveraging it to make more money. She persuaded a very skeptical E! network to temporarily run her reality show and, 11 seasons later, KUWTK is clearly making  her and the network a ton of money – it’s the network’s most watched show and earned the Kardashians a 2015 renewal deal for $100 million.

But that’s only the beginning. Kardashian has a chain of clothing stores. She has a string of endorsement deals (some successful, some not…welcome to entrepreneurship) for products ranging from diet pills to nail polish to debit cards. She charges hefty fees for speaking appearances. And of course there’s the mobile app. Is she exploiting her famous name? Darned right she is. And why not. This is what entrepreneurs do. They profit from opportunities. Her fame, her brand, her style, her attitude…that’s her product. This is why she has 42 million Twitter followers, and counting. There is a huge audience of people who she entertains. This is not because of a sex tape. It’s because she’s a driven entrepreneur who’s providing a service to her customers.

She’s also smart enough to realize that she wouldn’t be so successful without others helping her. Every product endorsement and every deal – from her DASH stores to the mobile app – involves a commercial partner. She’s smart enough to know what she doesn’t know. She’s not a retailing guru or a mobile app developer. She licenses her name to companies and lets them do what they do best. Yet, she stays deeply involved in her projects because she’s also smart enough to know that any failure from these ventures will reflect poorly on her, and her brand.

But her best partners are family. And the Kardashians are a true family business, complete with rivalries, bickering, love and arguments. The no. 1 reason why KUWTK is so successful is because — it’s NOT all about Kim. Her sisters and mother and Caitlyn all contribute to the storylines. And they’ve all benefited. Khloe has her own talk show and book. Kourtney blogs about food and style and sells accessories. Caitlyn’s used the show as a launching pad for her transgender agenda. Kendall and Kylie (30 million Twitter followers between the two) are raking in the bucks from their mobile app. And Kris, the manager-mom, takes a percentage of it all. The best entrepreneurs I know delegate, partner and share the wealth. They enjoy making others successful. Kim does this well.

So stop judging. And learn. Why did Kendall and Kylie’s mobile app earn $3.5 million so far? They deserve credit.  But the real credit goes to their older step-sister. It’s Kim that drives it all. A successful entrepreneur doesn’t have to make excuses for what she does. The Kim Kardashian brand provides a release, enjoyment, entertainment and fun for millions. And, like the founders of Facebook and the makers of Star Wars, she profits.  Good for her.

Original Post: https://genemarksblog.wordpress.com/2016/03/22/what-entrepreneurs-can-learn-from-kim-kardashian/

The Home-Based Business: Basics to Consider

by Helpful Articles & Tips
A Doty Group CPA Article

More than 52 percent of businesses today are home-based. Every day, people are striking out and achieving economic and creative independence by turning their skills into dollars. Garages, basements, and attics are being transformed into the corporate headquarters of the newest entrepreneurs–home-based business people.

And, with technological advances in smartphones, tablets, and iPads as well as rising demand for “service-oriented” businesses, the opportunities seem to be endless.

Is a Home-Based Business Right for You?

Choosing a home business is like choosing a spouse or partner: Think carefully before starting the business. Instead of plunging right in, take the time to learn as much about the market for any product or service as you can. Before you invest any time, effort, or money take a few moments to answer the following questions:

  • Can you describe in detail the business you plan on establishing?
  • What will be your product or service?
  • Is there a demand for your product or service?
  • Can you identify the target market for your product or service?
  • Do you have the talent and expertise needed to compete successfully?

Before you dive head first into a home-based business, it’s essential that you know why you are doing it and how you will do it. To succeed, your business must be based on something greater than a desire to be your own boss, and involves an honest assessment of your own personality, an understanding of what’s involved, and a lot of hard work. You have to be willing to plan ahead and make improvements and adjustments along the way.

While there are no “best” or “right” reasons for starting a home-based business, it is vital to have a very clear idea of what you are getting into and why. Ask yourself these questions:

  • Are you a self-starter?
  • Can you stick to business if you’re working at home?
  • Do you have the necessary self-discipline to maintain schedules?
  • Can you deal with the isolation of working from home?

Working under the same roof that your family lives under may not prove to be as easy as it seems. It is important that you work in a professional environment. If at all possible, you should set up a separate office in your home. You must consider whether your home has space for a business and whether you can successfully run the business from your home. If so, you may qualify for a tax break called the home office deduction. For more information see the article, Do You Qualify for the Home Office Deduction? below.

Compliance with Laws and Regulations

A home-based business is subject to many of the same laws and regulations affecting other businesses, and you will be responsible for complying with them. There are some general areas to watch out for, but be sure to consult an attorney and your state department of labor to find out which laws and regulations will affect your business.

Zoning

Be aware of your city’s zoning regulations. If your business operates in violation of them, you could be fined or closed down.

Restrictions on Certain Goods

Certain products may not be produced in the home. Most states outlaw home production of fireworks, drugs, poisons, sanitary or medical products, and toys. Some states also prohibit home-based businesses from making food, drink, or clothing.

Registration and Accounting Requirements

You may need the following:

  • Work certificate or a license from the state (your business’s name may also need to be registered with the state)
  • Sales tax number
  • Separate business telephone
  • Separate business bank account

If your business has employees, you are responsible for withholding income, social security, and Medicare taxes, as well as complying with minimum wage and employee health and safety laws.

Planning Techniques

Money fuels all businesses. With a little planning, you’ll find that you can avoid most financial difficulties. When drawing up a financial plan, don’t worry about using estimates. The process of thinking through these questions helps develop your business skills and leads to solid financial planning.

Estimating Start-Up Costs

To estimate your start-up costs include all initial expenses such as fees, licenses, permits, telephone deposit, tools, office equipment and promotional expenses.

In addition, business experts say you should not expect a profit for the first eight to ten months, so be sure to give yourself enough of a cushion if you need it.

Projecting Operating Expenses

Include salaries, utilities, office supplies, loan payments, taxes, legal services and insurance premiums, and don’t forget to include your normal living expenses. Your business must not only meet its own needs but make sure it meets yours as well.

Projecting Income

It is essential that you know how to estimate your sales on a daily and monthly basis. From the sales estimates, you can develop projected income statements, break-even points, and cash-flow statements. Use your marketing research to estimate initial sales volume.

Determining Cash Flow

Working capital–not profits–pays your bills. Even though your assets may look great on the balance sheet, if your cash is tied up in receivables or equipment, your business is technically insolvent. In other words, you’re broke.

Make a list of all anticipated expenses and projected income for each week and month. If you see a cash-flow crisis developing, cut back on everything but the necessities.

If a home-based business is in your future, then a tax professional can help. Don’t hesitate to call if you need assistance setting up your business or making sure you have the proper documentation in place to satisfy the IRS.

Original Post: http://www.dotygroupcpas.com/newsletter.php?date=082016#3

7 Questions to Ask Your Advisor Before Getting a Small-Business Loan

by Helpful Articles & Tips

A Nerd Wallet Article

Small Business Development Center advisors can offer you experienced advice, unbiased opinions and the invaluable market knowledge that you need to prepare your small-business loanapplication — all for free.

The U.S. Small Business Administration sponsors hundreds of these centers around the country, each with advisors who provide one-on-one business counseling. When you meet with an advisor, he or she will have plenty of questions for you. (Why do you need a small-business loan? What’s your credit score? How will your business be profitable?) Here are seven things you should ask them.

1. Do I have a feasible business idea for my market?

Business advisors can help you do market research to ensure that your business idea will thrive in your particular area. They have access to databases that provide insights including the average revenue of local businesses in your industry and market saturation statistics.

For example, data might show that consumers in your area spend $30,000 a year on coffee. If there’s only $6,000 worth of java being sold by local businesses, your coffee shop has a higher likelihood of success, says Tim Holtkamp, a business advisor at the McLennan Small Business Development Center in Waco, Texas.

2. How much capital do I really need?

In trying to keep their costs down, small-business owners typically underestimate the amount of money they need to borrow, Gary Smith, director of the Small Business Development Center at the University of Wisconsin-Platteville, says via email. Business advisors can help business owners realistically estimate how much capital they’ll actually need, taking into account the unexpected costs that are bound to pop up, Smith says.

3. Am I prepared to approach a lender?

A business plan alone isn’t enough when you approach a lender to ask for a loan. You’ll need to put together a loan package, and advisors can help you do that, Suzanne Darden, a finance consultant at the Greater Birmingham Small Business Development Center in Birmingham, Alabama, says via email. Once you’ve assembled your loan package, you can shop it around to several lenders, Darden says. A loan package should include the following:

  • A business plan
  • Business financials and projections (balance sheets, income statements and cash flow statements)
  • Personal financial statements
  • Personal and business tax returns
  • Personal and business credit reports
  • Legal documents (i.e. articles of incorporation, partnership agreement, licenses, leases, franchise agreements)
  • A description of why you need the loan and specifically how you’ll use the funds

4. What type of loan is best for my business?

Business advisors can help make sure you take out the right type of loan based on the needs of your business. For example, if you need to purchase inventory or cover a gap in your accounts receivable, you should take out a short-term loan that’s one year or less, Bruce Morse, regional director of the Wyoming Entrepreneur Small Business Development Center, says via email.

If you need to buy equipment, supplies or a large amount of inventory, you should take out a loan with a term of up to three years, Morse says. If you’re purchasing large equipment or real estate, you should finance it over a longer period of time: seven to 25 years, Morse says.

5. What funding options are available to me?

When it comes to small-business funding options, advisors know the lay of the land; they’re familiar with all of the federal, state and municipal loan programs, and have relationships with local microlenders and community bankers. Lenders are more likely to consider lending to businesses that have worked with a Small Business Development Center advisor, says Richard Sifuentes, assistant director of the University of Texas-San Antonio Small Business Development Center.

“They give [the loan package] a whole lot more credence,” he says. “We won’t send a client to the bank if we don’t think they’re ready.”

Although online lenders such as Lending Club and OnDeck have become more common in recent years, Small Business Development Center advisors typically don’t recommend them to small-business owners.

“I don’t refer clients to programs that I’ve not physically spoken to a loan officer,” Debra Hamilton Farley, associate executive director of the Hampton Roads Small Business Development Center in Hampton, Virginia, says via email.

6. Are the loan terms a lender has offered me good?

Before you sign a loan agreement, business advisors can help you read the fine print and understand the terms and conditions, says Mark Rentschler, a finance and technology specialist at the Kutztown University Small Business Development Center in Reading, Pennsylvania. For example, if you apply for a bank loan and a bank is interested, it will issue a commitment letter offering you the loan under certain terms. Bring that commitment lender in to your local Small Business Development Center and have an advisor review it before you close on the loan, Rentschler says.

7. What resources do you have that I can use in the future?

Just as it’s smart to go to the doctor for checkups even when you’re healthy, it’s important to meet with your business advisor even when your business is running smoothly. Business owners should make monthly or quarterly appointments to check in with their advisor, says Pamela Lankford, director of the Ohio Small Business Development Center in Marietta, Ohio. Whether it’s helping you market your business or helping you better understand your business’s cash flow cycle, business advisors can continue to work with you to improve.

Original Post: https://www.nerdwallet.com/blog/small-business/small-business-loan-advisor-questions/

7 Small-Business Loan Application Terms That You Need to Understand

by Helpful Articles & Tips
A Nerd Wallet Article

If you’ve applied for a small–business loan, you might have thought that the fine print on your contract sounded like another language. Yet, it’s crucial for you to understand your loan’s terms and conditions.

“[Small-business owners] should know what they’re signing off on,” says Eyal Lifshitz, founder and CEO of BlueVine, an invoice financing company. “The smarter they are, the better decisions they can make.”

The following are seven terms you should know before agreeing to a loan:

1. Origination fee: Financial institutions often charge an origination or application fee to “help defer some expenses that go into evaluating credit requests,” says Jim Salmon, vice president of business services at Navy Federal Credit Union. “Anyone that’s going through the business credit application process will see the information required … can be substantial.”

The cost may be expressed either as a dollar amount (for example, $500) or a percentage of the loan (such as 0.50% of $100,000). You may be able to negotiate the fee with a lender, and you likely won’t have to pay the fee until the deal is approved, according to Salmon.

Origination fees vary among online lenders. Kabbage doesn’t charge the fee. OnDeck short-term loans carry an origination fee of 2.5% on the first loan and 1.25% on the second, with fees waived on subsequent loans. Funding Circle charges a 3% origination fee, while Dealstruck charges 4%.

However, the lender with the lowest origination fee isn’t always giving you the best deal. To get the true cost of a loan, borrowers should ask lenders for the annual percentage rate (APR), which factors in all fees.

2. Fixed rate: A fixed interest rate means just that: The interest rate you pay on a loan doesn’t change during the repayment period. For example, if you have a 30-year, fixed-rate mortgage, you’ll pay the same interest rate and have the same monthly payments for the life of the loan.

When interest rates are historically low — as they are now — it’s often better to take out a fixed-rate loan than one with a variable rate, since you can lock in the low rate over a long period of time. LendingClub, Prosper and Dealstruck all offer fixed-rate small-business loans. SBA 7(a) loans, offered through banks and credit unions, also have a fixed rate.

3. Variable rate: A variable-rate loan is the opposite of a fixed-rate loan. The interest charged on the loan  — and your monthly payments — can rise and fall with market fluctuations.

“You have to be comfortable with the fact that your business will … deal with an additional cost if rates go up,” Salmon says.

Business term loans are generally fixed-rate loans, since they’re tied to a specific repayment period. Business credit cards and lines of credit tend to carry a variable rate, since there’s no time frame to repay the entire balance, according to Salmon.

4. Default interest rate: This term refers to the higher interest rate lenders can charge if you fail to make timely payments on your loan. It’s a common feature of credit cards: If you miss payments or go above your available credit limit, you can trigger a higher penalty rate, typically 29.99%.

“In my experience, it’s an interest rate the lender reserves the right to charge, but … usually doesn’t because they want to keep the relationship,” says Craig Coleman, CEO of ForwardLine, a small-business lender and payment processing provider. “But they reserve the right to do it if they really feel like someone isn’t making any effort to pay.”

5. Contract duration: Small-business owners should be aware whether a loan comes with a contract duration, Lifshitz says. This is common with invoice factoring, a financing option in which you sell your accounts receivable at a discount in exchange for cash.

Most lenders that use this technique require you to factor invoices for a specific period of time, typically six to 12 months, according to Lifshitz.

“If you leave them before … the contract ends, they can have a pretty high penalty. It could be 10%,” Lifshitz says.

6. Prepayment penalty: You might expect that repaying your remaining balance early will save you money in interest. But some lenders will slap you with a prepayment penalty for doing so.

You don’t want to get a loan with a prepayment penalty if you want the option to refinance it later on with a lower-cost loan, Coleman says. “Having no prepayment penalty gives you maximum optionality,” he says.

“It all boils down to costs,” Lifshitz says. “When you think about it, you want to get two things: Make sure you’re not paying more than you should, and that you have flexibility.”

Online lenders such as BlueVine, Prosper, Funding Circle, Lending Club, Kabbage and OnDeck don’t charge prepayment penalties.

This fee is prohibited by federal credit unions, as stated in the Federal Credit Union Act.

7. Covenants: There may be covenants, or legal provisions, in a loan agreement that require you to fulfill certain conditions, according to Salmon.

“For example, a loan with a bank may require you to maintain all of your business accounts with that bank,” he says. “You have to decide whether that’s right for you or not.”

Another possible covenant might require you to provide financial information whenever the bank asks for it, or require you to maintain a certain level of cash in a bank account, Salmon says.

 

Original Post: https://www.nerdwallet.com/blog/small-business/7-small-business-loan-application-terms-to-understand/

How to Decide if Entrepreneurship is Right for You

by Helpful Articles & Tips
by Colleen DeBaise (Three Rivers Press, Dec. 29, 2009).

Starting a business is a lot like becoming a parent. Not only do you have to prepare for your start-up emotionally and financially, but you have to be committed to its constant needs until it’s mature enough to hum along on its own. And even then (much like a child) it will always need you in some capacity, no matter how old it gets.

Here are five questions to ask before you start your own business:

1. Am I passionate about my product or service? Let’s face it: the start-up phase is stressful. You will find yourself questioning whether you’ve made the right decision, especially when the hours are long and the initial profits (if any) are lean. As the business owner, you’re also chief salesperson for your company. Your enthusiasm for your product or service— whether it’s hand-knit sweaters or top-notch tax preparation— is often the difference that hooks customers, lands deals and attracts investors. It’s unwise to start down the path of entrepreneurship unless you’ve got a zeal that will get you through rough patches and keep you interested long after the initial enthusiasm has faded.

2. What is my tolerance for risk? Whether it’s quitting your day job or signing a lease on a new space, nothing about starting a business is for the faint of heart. Just ask Ina Garten, who bought a specialty-foods store called The Barefoot Contessa in East Hampton, New York, in 1978 and has since branched out into cookbooks, television and a line of products. Garten tells aspiring entrepreneurs that you have to “be willing to jump off the cliff and figure out how to fly on the way down.” Even with enough passion to launch a thousand ventures, you could find any number of circumstances hastening your failure: a location that turns out to be less than ideal, a problem with city or state zoning boards or a kink in the supply chain that can’t easily be ironed out. There’s no guarantee of success, or even a steady paycheck. If you’re risk-averse, entrepreneurship probably isn’t the right path for you.

3. Am I good at making decisions? No one else is going to make them for you when you own your own business. Consider how you might handle these early decisions: Do I work from home or do I lease office space? Do I hire employees? Do I pursue high-end clients or sell to the masses? Do I incorporate? Do I advertise? Do I borrow money from friends or family? Do I use my entire savings? Keep in mind that the decision-making process only gets more complicated as time goes on, once you have employees or clients depending on you. The choices you make can lead to success or downfall, so you must feel confident in your ability to make the right call.

4. Am I willing to take on numerous responsibilities? While a corporate employee focuses on a special skill or role within the larger corporation, a business owner must contribute everything to the business. Solo entrepreneurs in particular must be versatile and play a number of roles, from chief salesperson and bookkeeper to head marketer and bill collector. If juggling many roles doesn’t suit you, entrepreneurship probably won’t, either. The recent economic downturn has made it more important than ever for business owners to have a good working knowledge of their companies’ finances. While you will undoubtedly learn much on this topic from getting your hands dirty, the more knowledge you have in advance, the better prepared you’ll be.

5. Will I be able to avoid burnout? Working seven days a week, losing touch with friends, abandoning old hobbies and interests and not making time for loved ones can quickly lead to burnout in the midst of starting up— and ultimately to business failure. That’s what happened to James Zimbardi, an entrepreneur in Orlando, Florida, who says he didn’t know any better when he started his first company in 1997 and worked as hard as possible, for as long as possible, until his creativity, enthusiasm and energy were sapped. By 2002, he was a broken man— the business took a downturn, and so did his personal life. Now Zimbardi is at work on his second company, Allgen Financial Services, and sticking to better habits to maintain work/life balance, such as not working on Sundays, making time for hobbies such as sailing and salsa dancing, and building close ties with other business owners through a faith-based support network.

Take some time to mull over these questions, do some soul-searching, and then if you think you have what it takes, go for it.

Original Post: http://guides.wsj.com/small-business/starting-a-business/how-to-decide-if-entrepreneurship-is-right-for-you/

The Difference between Business Loans and Consumer Loans by Paul Long

by Self Published Articles

By Paul Long   August 2016

When I talk with business owners there are always questions and assumptions that get brought up when talking about loans. Most Americans understand basic consumer loans, there are your traditional term loans, lines of credit and mortgage loans. Now even though businesses have those same types of loans they can look very different. Here are some of those differences.

Application process

Many consumer loans these days are done on a scoring system.  Banks, car dealerships and vendors all use programs where they submit your social security number and get your credit score, analyze your income and the computer spits out a yes or no within minutes.

For businesses though the most common thing I hear is “Geeze there is a lot of paperwork” and yes depending on the bank and product, there can be. Businesses are complicated and it is the banks job to make sure that we are making a good loan. We have to understand how your business lives and breathes so therefor we will ask for more documentation….sorry.

Loan Terms- Mortgages vs Commercial Mortgages

Let’s take a look at a mortgage loan. On the consumer side you want a loan to purchase a house. You can get a great fixed rate for 30 years. This is because most loans are sold to Fanny Mae and Freddie Mac. These are government sponsored programs that allow homeowners to get low long term rates. Without those organizations there would be no 30 year fixed rate. When banks lend money on a fixed term they are taking the interest rate risk. For example if you get a 4% fixed rate and then rates jump up to 9% you are getting a deal and the bank is losing money.

On the business side when dealing with Commercial Mortgages the terms are different. You will never find a 30 year fixed rate and term on a commercial mortgage. Why? Because there is no government sponsored program like Fanny Mae and Freddie Mac that can guarantee those rates, therefor banks have to determine their own interest rate risk. This is why most commercial loans have a 5 year fixed rate with a 10 year maturity, but the payments are based on 25 or 30 years.

Also when comparing terms on mortgages consumer mortgages have no balloons (usually) and no renewal periods (thank Fanny and Freddy for this too.) On commercial mortgages a bank is going to want to see how the property is doing after 10 years. Can you still afford the payment? Is the building still worth at least what the mortgage balance is? These terms make the bank feel better about the loan but can also cause some issues with the borrower if your situation had changed since you took out the original loan.

If you look into the consumer mortgage market in Canada they run there mortgage loans like we run commercial mortgages here in the USA.

Lines of Credit

Getting a line of credit for you personally is usually done by a scoring model as described above. There are no conditions on how you use the funds or when you pay them back. In most cases if a borrower wanted to have a line of credit and borrow $10,000 and make minimum payments for 5 years, then that is no problem. There are no renewal periods so you don’t have to worry about the bank calling the note. However, if you have a large downturn in your credit score chances are a bank will “term out” your line of credit. Term out means the bank will turn off any available credit and turn what you owe on the line into a loan where you make fixed payments until the balance is paid.

On the business side lines of credit are pretty risky to a bank. Most banks want to see a borrower “rest” their line of credit for a certain amount of time each year. A “rest” means that the balance on the line must be at $0.00 for a minimum of at least 15 days or the line will not be renewed. There are also terms on a line of credit where the bank will re-underwrite the line each year or 2 to make sure that the source of repayment is still solid.

Overall make sure to ask your banker questions when applying for a loan. You are signing on the dotted line so make sure you know what you are signing. It is also our job as a lender to make sure that you are informed and making the best decision possible too.

Happy Lending!

 

 

How to Get Funding from Angel Investors

by Helpful Articles & Tips
Small businesses looking for financial help from an “angel” often turn to individuals willing to invest in promising, start-up opportunities. Angel investors can be a good funding source to consider after you’ve tapped your friends and relatives. But angels usually don’t write blank checks. They’ll want to see progress and a way to exit the deal down the line with meaningful profits. So expect angel investors to do a lot of research and careful investigation into your business plan.

Be thoughtful in approaching potential investors. Biotech investors, for example, don’t want to hear about a clothing manufacturer. A scattershot approach is likely to turn them off. Industry associations, local trade groups or, in some states, business-incubator centers can help point to potential angels.

Angel investors often invest through groups or networks. These provide due diligence, extra research, access to potential deals and shared expertise that one person operating alone generally doesn’t have. For instance, one member of an angel group might have background in a particular industry or the know-how to set up deal terms, sharing that knowledge with the other investors.

Angel investors are usually thorough, so don’t expect to get your money quickly. It could take several months to meet with different individuals or groups and answer all of their questions. (There are exceptions, including the case of Google, which got funding from an angel before its cofounders finished their presentation to him.)

Because they’ll own a part of your company, they’ll likely want a say in major decisions, and they’ll watch to see whether you listen to them. Don’t expect them to write a check and walk away. Many angel investors are former business owners who want to help people like themselves. They may be able to provide good advice based on their previous experiences.

Getting funding from angel investors isn’t easy, but it can be done if you take the right approach and are a good match with their interests. And the benefits can beyond the money for your business, but their expertise in both in business operations and your industry niche.

 

Original Post:http://guides.wsj.com/small-business/funding/how-to-get-funding-from-angel-investors/

How to Borrow from Family and Friends

by Helpful Articles & Tips
Budding entrepreneurs often turn to a lender that overlooks weak points, provides flexible terms, and offers a dream-come-true interest rate: the Bank of Mom or Dad. Without an established track record, start-ups often have trouble getting a traditional bank loan or funding from venture or angel investors. So after tapping their savings, founders often turn to informal investors, which usually means family members and friends.

Such arrangements combine best wishes, a pay-me-when-you-can attitude, and few expectations of a meaningful return. That might be the most realistic view of family and friends financing. So in many cases, it might be wise to not formalize the loan since doing so can raise expectations that it will be repaid in full.

Many people will opt for a loosely structured deal in which, for example, repayment may start only when a company has reasonable cash flow and can afford to make payments — a position many businesses don’t reach until three to five years down the road, if at all. Such an arrangement doesn’t raise expectations of prompt repayment. But such vagueness can lead to problems and confusion later on, prompting some experts to urge putting into writing whether funds are a loan, a gift or an investment. Still, terms of the agreement need close attention. Failure to collect interest or a repayment might prompt the Internal Revenue Service to decide the “loan” was actually a gift and impose gift tax and other penalties.

Online services, such as Prosper Inc. and Virgin Money, a unit of Virgin Group PLC, offer to structure arrangements between borrowers and individual lenders, who are often relatives or friends. For smaller loans, Virgin Money, for example, provides documentation and a payment schedule. For larger business loans, it will service the loans, send payment reminders and provide year-end reports. A more formal plan for larger loans services the loan — including setting up electronic fund transfers, sending email reminders and providing online account access. It also sends out year-end reports to the borrower and lender. The loans are flexible, usually offering lengthy grace periods and interest rates and payment schedules favorable to the business owner.

Some planners note that family members can provide money as an annual gift, helping reduce the size of an estate subject to taxes. Gifts also ease worries of conventional lenders who might be concerned that family loans could impair their ability to collect. One other thought: Some family members who provide loans or gifts think the funds come attached with the right to have a say or participate in the business. Documentation can spell out such issues.

Original Post: http://guides.wsj.com/small-business/funding/how-to-borrow-from-family-and-friends/