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August 27th, 2009In an effort to help small business owners correctly determine the risk associated with starting a business, an Odds of Success Calculator has been unveiled by business advice and networking website StartUpNation.com.
Eight factors are used to determine the chance of success for an entrepreneur: amount of capital investment, difficulty in obtaining funds, quality of financial management, degree of business planning, annual industry growth rate, management experience, industry experience and timeframe.
After completing a questionnaire, the utility calculates the probability of success by comparing the company with data points of up to thousands of other companies.
The idea for the calculator was in response to site visitors wanting a tool that could tell them if they're on the right track or not. It's also a bit entertaining - giving quick and definitive results.
Learn more and see how Twitter fared on the calculator by reading this Daily Dose post from Entrepreneur.com.
June 24th, 2009In a report released by the nonpartisan Small Business Majority and featured in the Daily Dose blog, healthcare reform could save America's small businesses $855 million in the first 10 years.
Healthcare reform is a hot topic in the halls of Congress right now. Increasing costs have forced entrepreneurs and small businesses to make tough choices about whether to provide coverage or not.
The Economic Impact of Healthcare Reform on Small Businesses report noted that successful reform will require shared responsibility among the healthcare industry, businesses, government and individuals.
In an interview with Entrepreneur.com, Small Business Majority CEO John Arensmeyer commented "Not enacting healthcare reform is going to be an unmitigated disaster, but implementing a system based on the framework Congress is working on right now--even with the [controversial] mandates for employee coverage--will be a tremendous benefit to small business. Even the most conservative versions of reform will produce better results."
Up to 178,000 jobs could be lost by 2018 and small business employees will see $12 billion in lost wages this year alone if healthcare reform fails.
While debate is ongoing, Arensmeyer is optimistic a reform package will be completed this year.
June 2nd, 2009When getting a small business off the ground, you want to have all the knowledge you can to make the right decision...but finding the right ones that will actually be useful can be very time consuming.
An article in Entrepreneur Magazine's April, 2009 issue - Best Resources for Startups - lists 4 resources every aspiring small business owner, and even those who are well established, should be familiar with.
1. SCORE - A nonprofit organization with over 400 chapters and 12,000 working and retired entrepreneurs and business people that provides mentoring online and in-person for free.
2. Small Business Development Centers - Located across the country and usually connected to a university, these organizations provide consulting for just about anything facing a small business.
3. Small Business Administration - Federal government agency that provides an array tools to help new and aspiring entrepreneurs succeed. It's recommended you start with their Start-up Assessment Tool to help find the right resources.
4. U.S. Chamber of Commerce Small Business Center - An arm of the U.S. Chamber of Commerce that provides comprehensive assistance for startups through web-based tools and resources.
These are just a few of the many resources out there...but, they're most likely the most reliable for accuracy and impartiality.
April 22nd, 2009Recently perusing the Online Incorporation MaxBlog, I discovered there is a government program from the U.S. government that provides loans to small business trying to get started.
Called the Basic 7(a) loan program, the Small Business Administration makes capital available to ventures trying to get a foothold in their respective markets - loans are provided by private lenders that participate in the program. They are made on a guaranty basis, which means the institution structures the loan according to SBA guidelines while the agency guarantees a portion of it in the event of default.
Any business looking for a 7(a) loan must meet SBA's requirements in order for a financial institution to loan them money under the guaranty basis. These criteria include: meet SBA size standards, be for-profit, not already have the resources themselves to provide the capital and be able to demonstrate repayment.
Not all private banking institutions participate, but many do...check with your local bank to see about obtaining a loan for your small business.
Learn more about SBA's Basic 7(a) Loan program here.
April 7th, 2009It's that time of year when we're all thinking about filing our individual tax returns - however, there are also taxes for small businesses that need to be addressed to avoid the dreaded IRS audit, which can put the brakes on whatever you may be trying to accomplish.
The IRS site provides some explanation of the taxes a small business can be responsible for paying - these include: income taxes, self-employment taxes, employment taxes and excise taxes.
All businesses except partnerships are required to file an annual income tax return...partnerships file an informational return.
Self-employment taxes are for individuals who work for themselves, covering Social Security and Medicare. If you have employees, employment tax(es) cover this along with income withholding and unemployment insurance taxes.
Depending on what you do, you may have to pay excise taxes as well. These apply to companies that manufacture or sell certain products, operate certain kinds of businesses, use various types of equipment and receive payment for certain services.
Of course, it's important to consult with an accountant to find out exactly what taxes you must pay...but short of that, take a look at the IRS' Business Tax article to learn more.
February 3rd, 2009Last Thursday, President Barack Obama signed his first bill into law, the Lilly Ledbetter Fair Pay Act. This new law loosens the restrictions under which pay discrimination lawsuits can be filed.
The Ledbetter Act is named after an Alabama woman that sued Goodyear - claiming she was paid substantially less than men in similar positions over the course of her 19 year career at the company. A jury ruled in her favor but in 2007, a 5-4 Supreme Court decision tossed out her claim. The justices ruled that Ledbetter should have filed her lawsuit within 180 days of the first time the company paid her less than her peers.
The new law effectively restarts that 180-day clock after each paycheck a worker receives. Plus, workers will be able to sue for up to two years of back pay. "That's a pretty nice window they get," said Philadelphia-based employment law attorney Christine Bonavita.
Employment lawyers like Bonavita say now is a good time to re-examine compensation practices. "Being in compliance with the law may take some work and extra resources," comments Cleveland employment attorney Keith Ashmus.
Both Bonavita and Ashmus recommend small businesses take the following steps to avert or better handle a discrimination lawsuit.
* Evaluate compensation figures, ranging from salaries, bonuses, merit raises, cost of living increases and benefits. Individuals with similar jobs and qualifications need to be paid at the same rate.
* Be able to clearly demonstrate any business reasons for differences in compensation.
* Train supervisors on what the law requires.
* Update company policies and handbooks to clearly state discriminatory pay practices are not
allowed.
* Review insurance policies and make changes if necessary to ensure claims from ex-employees regarding events in the past are covered.
* Retain all payroll records, periodic performance reviews and any other documentation indefinitely.
Above all, documentation is the most important according to Bonavita, including correspondence between the employee and HR manager and owner. This can be invaluable in defending against a lawsuit.
Ashmus also suggests it may be safer to offer bonuses rather than merit raises since the 180-day rule does not apply to them.
And if it makes sense, an employee should be immediately notified of decisions to change their compensation and why. "Once they know, once they have the information, it's a little harder for them to justify waiting 30 more years to file a lawsuit," Ashmus says.
And, of course, that conversation should be documented.
January 14th, 2009The share of small business profits and personal income you are required to give the state in the form of taxes is a big consideration.
See where your state ranks and which provide the best business tax climate in the 2009 State Business Tax Climate Index. Recently released by the nonprofit Washington research firm The Tax Foundation, this report examines unemployment insurance, income, property, business profits and sales tax rates.
Of course, other factors contribute to a state's overall business climate - labor force, the market for products and services, proximity to suppliers and quality of life are just a few.
For 2009, the following are the 10 best states in the rankings:
1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. Montana
7. Texas
8. New Hampshire
9. Oregon
10. Delaware
The 10 worst states in 2009 in regard to their tax climate are:
41. Minnesota
42. Nebraska
43. Vermont
44. Iowa
45. Maryland
46. Rhode Island
47. Ohio
48. California
49. New York
50. New Jersey
December 11th, 2008Financing equipment for your business is a crucial decision. Is it better to lease or take out a loan and buy it outright?
Financing requires at least a down payment that is 10-20% of the value of the equipment, which takes cash away from other vital things and reduces your available line of credit. On the other hand, leasing requires an initial outlay of 1%. Also, payments for leasing can be smaller and spread over a larger period of time.
Leasing also means you do not necessarily have to keep the equipment, as opposed to a loan. It's much easier to replace equipment once it is obsolete under a leasing arrangement than if you own it.
There are also tax advantages. The IRS treats an operating lease as a tax deductible overhead expense rather than a purchase, thus 100% of lease payments are tax deductible. Also, since a lease is not considered a long-term debt, it does not appear on the company's balance sheet as such, improving financial health.
Leasing gives your business valuable flexibility as you position yourself in the marketplace.
Find great information on financing solutions here.
October 29th, 2008The idea of starting your business during these uncertain economic times may be a non starter for most. You shouldn't let bad economic times deter you from making that leap, especially if you have a stellar idea. Now may be the best time to incorporate or form an LLC online according to Heleigh Bostwick for the following reasons.
First is the idea, which can be difficult during a recession. One way to consider this is do you have an idea that answers needs for people during an economic downturn? Everyone is looking for ways to get the most of their hard-earned dollars, especially these days. A business that can help folks in that effort would be very valuable.
The next criterion is credit, which is tightening due to the ongoing financial crisis in the U.S. Nevertheless, having low or no balances on your credit cards and an excellent credit rating can be a tremendous plus, allowing you to negotiate good terms for loans and business credit cards.
Continuing on the credit theme, possessing good negotiating skills is a must have in this environment, and even more critical if your credit is less than perfect. Being a good negotiator and providing the bank with a strong marketing plan can be a big help in obtaining favorable loan terms.
Beyond the idea for your small business and financing, managing money is very important. Getting by on a shoestring budget is good practice anyway but a big plus when incorporating a business. And being disciplined and avoiding impulsive decisions is especially important in this current environment.
In the final analysis, if you're ready to incorporate your business, don't let the recession stop you. Many of today's successful companies such as Hewlett-Packard (1934) and Adobe Systems (1982) got their start during major economic hardship in the U.S.
September 22nd, 2008The ongoing financial crisis in the United States has led to tightening of lending standards, including those for small businesses. Many small businesses are being affected, but it doesn’t need to mean disaster for you.
One of the most important steps to weather the storm is to develop and maintain good relations with your business banker, according to Sovereign Bank marketing manager John Merrill. Much like a bank gaining confidence in a small business, confidence can be built in an experienced banker who has experienced various economic cycles.
A continuation of this theme is in the form of transparency. The more informed your banker is about your business and its plans, the better they can help. Bankers and small business people have the same objectives in mind, seeing your business succeed.
In addition to financing, a banker can help a business with something that is often overlooked, especially in good times. And that is retaining an adequate amount of net worth to weather tougher times. While credit is important, the banker can also offer advice on alternatives and tips on improving cash flow and financial condition.
However, before any plan is developed, a business and their banker must evaluate favorable and unfavorable conditions to provide sound solutions. Identifying hurdles to stability and profitability are vital to setting your small business on that course.
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