Tuesday, November 16, 2010

Top 10 Small-Business Software Applications

In a previous blog post, I shared some insight on how to find small business software. Today, I want to expand on that and share with you the top 10 must-have small-business software applications. Depending on your business and industry, you may not need all of these software applications; however, I think each is important to consider. 

Accounting Software – One of the first software packages any small business will purchase is the accounting software. The #1 rated accounting software for small businesses is Intuit’s QuickBooks. There are various different types of QuickBooks depending on your needs and budget. QuickBooks is one small-business software application that can grow with your business. If you are looking for your first real accounting software, I recommend QuickBooks Pro 2011, you can purchase it directly from Intuit on their website or from one of their many resellers. QuickBooks Online is also available for those of you wanting to avoid hosting your own data and wanting the ability to access everything in the cloud.

Customer Relationship Management Software – A CRM, as they are known in the business world, helps you keep track of your prospects, leads, customers, vendors and other relationships. A CRM is a great tool for helping your employees track their interactions with customers for support, sales, marketing or management. Many small businesses elect to build their own CRM and while this can work, I would advise against it unless you really have a unique business. You should stay focused on your core competency and let other businesses do theirs. If you want the best CRM in the industry, is your answer; however, you will pay for it. If you are looking for a cheaper solution, you may want to go with SugarCRM, which is an open source software application. However, you may need to pay to get it set up and to train your employees on how to use it.

Point of Sale Software – If you have a retail element in your small business, you will need a Point of Sale small-business software application. If you are already using QuickBooks for your accounting, I suggest looking into QuickBooks Point of Sale. This will allow you to scan items at the point of sale and make direct updates to QuickBooks. But remember, you will need a merchant service provider to accept credit cards. Also, you may get a Point of Sale Software application included with your ERP or inventory management software.

Web Analytics Software- You may not think of web analytics as being a small-business software application, but it is something you should consider. If you are running a website, a web analytics software application is a must. Most small businesses should stick with Google Analytics as it’s free and has more features than most users will ever need. However, if your business grows to the point that Google Analytics is no longer enough, Omniture, recently acquired by Adobe, is the leader in large-business web analytics software.

Content Management System – A CMS is used to host a website in order to make it very simple for anyone to quickly update content. This can be useful if you continually need to update your website but don’t want to involve your development or IT department. Drupal is an open source application that is widely used and recommended.

Word Processing Software – We all know that we need basic word processing software when it comes to running our business.  Things like Word, Excel and PowerPoint seem commonplace now a day.  So, when you are considering your small-business software applications, don’t forget the Microsoft Office Suite.

Enterprise Resource Planning and Inventory Management Software – In big business, many companies turn to Microsoft Dynamics for their ERP solutions. However, this can be expensive and oftentimes overkill for many small and mid-sized companies. If your business carries inventory, manufactures items or needs to create and fulfill orders, I suggest looking into an inventory management software application. If you are using QuickBooks for accounting, I suggest using Fishbowl Inventory for your inventory management software. It integrates with QuickBooks and lets you track inventory across multiple locations.

Remote Access and Web Conferencing Software – If you need a small-business software application to remotely view customer or prospect computer screens, consider a remote access or web conferencing application. You can use industry-known software such as Go To Meeting or Log Me In Rescue to remotely help customers solve issues or show prospective clients how your business can help them.

Email Software – If you want to stay in contact with your customers, a great way to do that is via email blasts and promotions.  Constant Contact is a small-business software application that lets you easily create professional email campaigns without the technical knowhow. Also, if you have employees that travel, you may want to consider SMTP Server software.  SMTP2Go is an SMTP Mail service that lets your employees send emails from anywhere worldwide. This is valuable for traveling salespeople and other employees as ISPs often prevent emails from sending if you are not connect to the Internet via their connection.

Graphic Design Software – If you have a need to create and edit graphics, whether for your website or other marketing purposes, you should consider some graphic design software. While these software applications can seem overbearing at first, with a little time watching instructional videos on YouTube and a little practice, you can get what you need done. The most widely known graphic design software application is Adobe Photoshop. But, depending on your needs, you may want to consider Adobe InDesign as well. Also, if you are looking for the low-budget option, Gimp is a free small-business software application that will satisfy most of your graphic design needs.

I hope this list of small-business software applications is helpful to you. If it is, please leave a comment and let me know. Also, if you think I missed a good application or have additional ideas, let me know that too! And as always, please forward this along to your friends using one of the social media or email links below.

(Image: Some rights reserved,  David Morris.)   

Thursday, November 11, 2010

Small Business Failure Rate – What you should know

“90% of all new small businesses fail within the first few years!” You may have heard that statistic before. Well, it seems that there isn’t much in available data to support it. Maybe it’s a scare tactic or maybe it’s just people exaggerating. Either way, just because a lot of businesses fail, it doesn’t mean that yours has to be one of them. 

But, since we’re on the topic, let’s examine the small business failure rate a little bit closer. According to data available on the US Small Business Administration’s website, about 34% of new employer firms are still in business 10 years after opening. That often won’t even include businesses that may change entity types or reincorporate. So, I think it’s safe to say that about 1/3 of new businesses survive their first 10 years. Now, if we were talking human survival rate, that’s pretty bad but for a small business survival rate that isn’t too bad.

Data from the SBA website states that 7/10 new firms survive at least 2 years, ½ at least 5 years, 1/3 at least 10 years, and ¼ at least 15 years or more. They also stated that small business failure rates were similar across states and major industries. 

So, after looking at that data on the US small business failure rate and going to see what other people out on the net thought of this rate, I found a post from 2008 on Small Business Trends that also shares more data. According to their figures, about 29% of the small businesses they were tracking were still in business 10 years later; a little lower that the SBA numbers. Also, their data showed that about 25% of the small business that fail, do so within the first year. So, if you are past your first year in business, your chances of survival just got a lot better!

I hope this small business resource was helpful to you. Please leave a comment and let me know your thoughts on the small business failure rate. Also, be sure to pass this article along to your friends using one of the social media or email links below!

(Image: Some rights reserved,  TheGiantVermin.)  

Tuesday, November 9, 2010

Small Business Saturday - November 27, 2010

In an effort to help small businesses during these tough economic times, more and more businesses and people are joining the efforts of Small Business Saturday. Small Business Saturday, an idea that recently got traction in New York City, seems to be catching national attention. New York Mayor Michael Bloomberg announced the idea along with Kenneth Chenault, CEO of American Express, yesterday (November 8th) in New York.

Large retail stores have long had Black Friday and in recent years online retailers staked out Cyber Monday. Now, it seems, small businesses will claim their large shopping day as Small Business Saturday. Small Business Saturday will immediately follow Black Friday, on November 27, 2010, the weekend following Thanksgiving. Supporters are hoping the efforts will spur sales for those small businesses involved. 

The first 10,000 small businesses to sign up for the event will get $100 worth of Facebook advertising and American Express will give a $25 credit 100,000 of its customers who pledge to use their cards at small businesses on November 27, 2010 for Small Business Saturday.

Organizers are hoping to make the event an annual one and hope that it will help stabilize and increase the small business sector of the economy which is still lagging in economic recovery. You can read more about Small Business Saturday on their website

Please share your thoughts on Small Business Saturday in our comments section below. If you found this small business news article useful, please pass it along using one of our social media links below!

(Image: Some rights reserved,  Rubenstein.)  

Thursday, November 4, 2010

5 Small Business Sales Tips

Let’s face it. If you’re in small business sales, you can’t offer all of the same benefits and perks that your larger competitors can. You need to differentiate yourself and provide what the big boys can’t. How do you do that you might ask? Well, I’ve prepared 5 small business sales tips below that I think will help you do just that!

1. Sell a relationship – If you are friendly, dependable and honest, your customers will appreciate you for it. We all know that working with large companies can be annoying because we never know who we will interact with and what kind of a person they are. As a small business, your employees are your face to the customer, so put on a good one. If you can build good relationships with customers, they will stick by you even if you don’t have all of the whistles and bells.

2. Be Flexible – As a small business sales department, your employees should have the power to deliver what the customer needs. Big businesses are like ocean liners and small businesses are motorboats. Although you can’t provide all the comfort and benefits, you can maneuver through tough waters and change course easier. If you see a need that your prospects have that no one is satisfying, you can jump on that opportunity much quicker than a large business with lots of red tape.

3. Work with partners – As a small business, you should understand that many times customers will want a lot more than you provide.  If there is something you don’t have the time or resources to develop yourself but your customers want it, consider finding a small business partner who can provide it. For example, if your company makes accounting software, you may want to partner with a company that makes CRM software. Add value to your products by bundling them as a solution with other small businesses products.

4. Don’t sell yourself short – Just because you’re a one-man shop, doesn’t mean everyone has to know it. Or if you have 20 employees, your customers don’t have to know that either. I’m not saying you should be dishonest, but make sure you and your employees go out of your way to avoid telling people. Never tell customers “We can’t fix that because we only have four full-time employees.” Don’t let it be an excuse, because the real reason will always be that it’s not the highest priority right now or you are working on it. You should act big, but not too big. Don’t have your employees convincing people that you are a big company only to have them find out on their own that you are not. 

5. Use a salesperson – Even for small business sales, a salesperson is important. If you don’t have a salesperson or can’t afford one, turn yourself into one by studying. There are plenty of books that can teach you how to become a better small business salesperson and what you should do to improve. Don’t just hope that you will get it right and then pat yourself on the back when you get a few sales. No matter how good you are now, a little education and a lot of practice will make you better!
I hope these small business sales tips have been useful. Please leave a comment below and let me know what you think. Also, be sure to pass this small business article along using one of the social media or email links below!

(Image: Some rights reserved,  Aaron Tang.) 

Tuesday, November 2, 2010

What Drives the Small Business Economy?

Today I wanted to share a little on politics, the economy, and small business. After all, it is Election Day. America is great because it is the land of opportunity. People have the freedom to try something new and succeed. However, along with that comes the opportunity to fail. In the last few years it seems that many have tried to eliminate the opportunity to fail in the hopes that all will succeed all of the time. This cannot work. To understand why, we must understand the economics behind the US economy and what drives the small business economy.

While not always this simplistic, basic economics can be explained as people freely exchanging goods and services with one another. With time, individuals in the economy begin to specialize in producing a particular good or rendering a certain service. These small businesses are able to produce their products more efficiently because that’s all they think about. When they need some other service, they trade with other small businesses specializing in the service they need. Of course, when trading for various items becomes cumbersome, money comes into the picture to act as a store of the value of the items on either side of the trade.

These businesses only succeed if they are able to make a product as good or better than the individual on the other side of the trade could make. If they don’t, they will not succeed unless they change. This change may be producing a different type of product or service or learning how to do work better. Because individuals tend to produce things they are interested in and they spend a lot of time doing it, they tend to get better at it. The small business economy and our entire economy in general, only improve and function properly if individuals are good at what they do. And where there is demand in the market for their products or services indicates whether they are properly producing something that other individuals need.

Coming back to the topic of our current small business economy, I wanted to share the following video which recaps many small business managers’ feelings toward big government. What do you think?

I hope you enjoyed this small business article on the small business economy. Please share it using one of the social media or email links below!

(Image: Some rights reserved,  William Warby.)

Thursday, October 28, 2010

Small Business Management Anxiously Awaits Election

While many small business managers are reading mixed signals from the current economy, it seems they are anxiously awaiting the November 2nd election. According to a recent survey, 49 percent of small business owners would vote Republican if the election were held today. 38 percent said they would vote Democrat. Why the difference, it seems that many small business managers don’t feel the current administration is doing what’s necessary to help small business stay competitive and higher more employees. 

Although congress did recently pass H.R. 5297, the Small Business Jobs and Credit Act of 2010, small business managers still feel Washington is out of touch. Many small business managers may not be aware of the recently passed bill and what it may be able to do for them. Although the bill is labeled for small businesses, it contains tax cuts and credit opportunities for much larger businesses as well. 

Another recent survey, by business management software company Sage Group, said 77 percent of small businesses surveyed are either unsure when the economy will improve or don’t expect improvement in the next year. That’s yet another reason why small business management may turn up in the election booths to vote for change in Washington. 

Hopefully once the election is over and we all have a better idea of who will be creating economic policies and the types of policies they will be making, small business management will be more willing to invest in their companies. Many managers feel the future is too uncertain to invest and therefore would rather play it safe and wait a few more weeks to see how things play out.

You can read more about these two survey’s here:

Hopefully you enjoy these surveys and this small business news article. If it was useful to you, please send it along to your colleagues using one of the social media or email links below. Also, post a comment if you have any questions or thoughts. Thanks!

(Image: Some rights reserved,  John Lee.)

Tuesday, October 26, 2010

Calculating Return on Investment for Small Business

Do you know what ROI is? If you’re managing a small business, then you definitely should! ROI stands for Return on Investment, or the benefit (or loss) that your investment has returned to you. Usually this is calculated in dollars and it’s figured over a certain amount of time. As I talk to more and more students and young entrepreneurs, I am often surprised and how many of them don’t know what a return on investment is or how to calculate it. ROI is business 101!

Let’s look at an example, say I started a business with a loan from the bank of $15,000. For now, don’t worry about the interest on the loan or when it has to be paid back, let’s focus on the ROI you’re getting from your investments in the business. Let’s say you use $1,000 to build a website and another $2,000 in the first month to advertise online and bring traffic to your small business via the website. What’s your ROI for that investment?

To figure it out, we first need to know how to calculate a Return on Investment. Well, it’s quite simple actually. Take the profit generated by the investment and divide it by the cost of the investment. (The profit generated by the investment is not the revenue. You must subtract the cost from the revenue to get the profit.) For additional help in the calculation, a really good definition can be found on Investopedia’s ROI page.

Now that we know how to calculate it, let’s break it down and find the ROI in our example. In order to find the ROI, we need to know how much business the website actually generated. So, let’s say you had a system in place that tracked where your leads came from and showed that $4,000 in sales closed because of the website. Now we can find the website’s ROI.

To calculate this month’s ROI, simply take the revenue generated from the website in the month ($4,000), subtract the cost of the website in the month ($2,000) and divide the result of that by the cost of the website in the month ($2,000). So you get something like this:

($4,000- $2,000)/$2,000 = 1 ROI

Now, what does 1 ROI mean? Well, notice how the dollar symbols are on both the top and bottom of the equation, so they cancel each other out leaving only a percent as a unit. This means that 1 ROI is a Return on Investment of 100%. That makes sense because you spend $2,000 and you got your money back plus another $2,000.

You may be wondering now why we didn’t include the original cost of $1,000 to build the website when we subtracted website costs. Well, the reason we didn’t is because of the way we figured our timeline and how we did our accounting. I don’t want to spend a lot of time in this small business article talking about accounting. But, I will say that I decided not to include it because that $1,000 was a cost that will continue to provide benefit well beyond the first month I run the website. Some people may want to include it but I find it more relevant to focus on the current costs that generated the current revenue. Because come next month, I won’t have to pay that $1,000 to build the website again.

I hope this small business article has been useful and if you have any questions about calculating return on investment, please leave a comment below. Please send this small business article to your friends and colleagues using one of the social media or email link buttons below!

(Image: Some rights reserved,  Keith Ramsey.)  

Thursday, October 21, 2010

Government Updates Definition of Small Business

Times are a changing and so it seems is the definition of small business! Come November 5, 2010, recent changes in the Small Business Administration’s definition of what a small business is will take effect. The redefinition will expand the title to encompasses approximately 18,000 additional businesses in 70 industries. About one-third of the new small businesses are car dealerships.

Currently, the definition of small business is different based on industry and has different qualifiers including number of employees or annual revenue. While the definition of small business will still vary by industry, the previous cap of around $7 million in annual sales will jump to over $120 million. I don’t know about you, but that doesn’t sound like such a small business! 

Personally, I think this is bad for more traditional small businesses as they will now have to compete for small business loans and other assistance against much larger, more established companies. I was under the impression that the Small Business Administration was established to help small business but that at some point those businesses would be big enough to support themselves. However, it seems that between the new definition of small business and the big business bail-outs, corporations are now going to be receiving the same ever-increasing, always-under-funded, cradle-to-grave, broken welfare system that the American public is being forced to swallow. 

Some speculate that this new small business definition will help the government meet its quota of 23% small business contracts, which is the amount of small businesses they try to award government-contract assignments to. Well, if you change the definition, goals are a lot easier to meet, aren’t they!

As a small business manager or owner, what are your thoughts on the new definition of small business? I hope you find this small business news article useful and I will follow it up with additional news as it becomes available. Please send this small business news along to your friends and colleagues using one of the social media or email link buttons below!

(Image: Some rights reserved,  David Paul Ohmer.)  

Tuesday, October 19, 2010

Getting Local Businesses Online

Today I wanted to share a bit about small business online advertising and how to target local businesses. First of all, if you want to get business online, you need a website. If you don’t have a website, you may want to contact a local web-design company, or look into using a service such as Intuit Websites by Homestead. I will write future small business articles on building a website for your business, but that’s not what I want to focus on now.

Once you have a website, you need to figure out how you are going to attract visitors to it. Two of the most used methods for generating traffic are SEO (Search Engine Optimization) and SEM (Search Engine Marketing). Both of these can be used in getting local businesses online. 

If you use SEO, you want to make sure to build content on your website relevant to your local area. For example, if you are a plumber in Lancaster, Pennsylvania, make sure to mention Lancaster and other cities and specific neighborhoods that you service on your website. You could create a specific page on your website dedicated to each of the towns that you service e.g. Lancaster, Manheim, York, Marietta, Harrisburg, etc. These pages will help get local visitors and businesses coming to your website.

With SEM, you want to create campaigns that target your specific metro or small business regions. If you are familiar with Google Adwords or Microsoft adCenter, you may be aware that they allow you to target local web traffic through Geotargeting. This is perfect for getting local businesses online. For example, if you have a pizzeria in Chicago, you can create a campaign and restrict your ads to that specific metro area. This allows you get better ad placement by focusing your efforts and it helps increase your ROI.

To edit your campaign settings in Adwords, simply open the relevant campaign, click on the Settings tab, under Locations and Languages select Edit Locations, select the locations where you want your ads to appear, and then click Save. Getting local businesses online is that easy!

To edit your campaign settings in adCenter, open the relevant campaign, click on Change Settings, under Campaign targeting select Edit under Target customers by location, edit your settings to match the location you want to target, and then click Apply. Before you know it you will be targeting local businesses on the web!

If you have any additional questions about getting local businesses online, please let me know and I will try my best to answer them soon. I hope you find this article useful and enjoy our our small business resource center. Please send this small business article along to your friends and colleagues using one of the social media or email link buttons below!

(Image: Some rights reserved,  Brett Stark.) 

Monday, October 18, 2010

How to Find Small-Business Software

If you are starting a small business, finding the right software can be a daunting task. There is so much small-business software on the market and yet often times none of it seems to do exactly what you want! Finding the right software will help in your small-business management. Today I wanted to dive into a few things you should consider when looking for software for your small business.

First of all, consider how many employees you have today and how many you think you will have in a year or two. Having software that can grow with your business is extremely important since you don’t want to waste all of your time learning how to use new software or migrating your data when you can be focusing on your core competency. Also, if your business is only you or less than 5 people, your small-business software needs are going to be entirely different than if your company has 50 to 100+ employees.

Now, consider which of your business processes could be improved by using software. If you’re like most small-business managers, accounting software will be the first thing you need once you get past basic word processing needs. Many small businesses use QuickBooks for their accounting needs, primarily because of its low cost and easy-to-use interface. What some people don’t understand is that Intuit, the makers of QuickBooks, actually offer multiple versions of QuickBooks, e.g. QuickBooks Pro, QuickBooks Premier, QuickBooks Enterprise, and QuickBooks Online. Again, depending on the size and projected size of your small business, you may want to consider one of these packages. QuickBooks Pro goes for about $100 and you can buy used copies for even less. (FYI, QuickBooks 2011 was just released in September.) If you watch carefully, you may be able to get QuickBooks Pro for free, like I did. I bought QuickBooks Pro 2009 when Office Max offered it free with a mail in rebate. QuickBooks is a great small-business software solution for many small businesses’ accounting needs.

Another small-business software program that you should consider is a CRM (Customer Relationship Management). A CRM is basically software that lets you store your customer data such as billing history, customer support history, addresses, vendors, etc. If you manage a really small business, you may be able to track this data in an excel spreadsheet or small SQL database, although having a properly maintained CRM will probably serve you better if you can afford it. (FYI, I have yet to see a CRM database without errors. If you have one, I would love to see it.)

Other small-business software you may consider for your business depends on your industry and customers. For example, if you run a warehouse or ship products, you may need an inventory or order management program. Also, if you sell products online, you may need email software that lets you send newsletters or mass emails. I will write additional small-business articles about software when I have more time. If you found this small-business resource helpful, please send it along to your friends and colleagues using one of the social media or email buttons below!

See a follow-up blog post on the Top 10 Small-Business Software Applications.

(Image: Some rights reserved,  Michael Surran.)

Thursday, October 14, 2010

5 Things to Do Before Starting a Business

Ever wonder why they say 9 out of 10 new small businesses fail? Well, it’s because there are many potential traps every new business can run into. How do you avoid these traps? One of the best ways is to have a plan and not to get overwhelmed. If you ever seemed overcome in running your small business, just know that you are not alone. Just remember to occasionally take a step back and prioritize your tasks so that you are always taking care of the most important things first. So, in order to help you keep focused before you ever start your small business, today I wanted to share 5 things to do before you even open your doors. 

Know your customer – Ask yourself, who is really going to buy what your selling? If you start a pizzeria in your town, who is going to come? Is it going to be a teen hangout or a place for families at dinner? Are you going to be on Main Street or in the new shopping district on the edge of town? Your location, menu, lighting and everything should be centered around your customer. That’s why it is vitally important to find out who your customer is going to be and make sure to be in a place they want to be. It's essential for survival in small business!

Estimate your burn rate – Your burn rate is how much money you need to spend on the business over any amount of time. Going back to the pizzeria example, you need to know how many employees you need, how much you are going to pay each employee per month, how much rent and utilities will be, and how much depreciation will be on the assets of your small business. 

Calculate your break-even point – Your break-even point is the point in time at which your small business no longer has a negative net worth. In essence, that means your company is actually worth more than the sum of all its’ tangible assets. Knowing your estimated break-even point will help you determine how much capital investment you will need up front and if you will need additional rounds of funding later. (I'll write another small business article on this in the future.)

Get a great team – Any small business needs an experienced, eager team supporting it. If you were born with natural entrepreneurship skills, then you know that you should surround yourself with those you aspire to be like. All of your team may not be employees; you could have investors who help plan things from a high-level view or even mentors who know your industry. 

Have a plan – Having a plan is one of the most important things you could do for your small business. Something magical happens when we take something from our minds and put it down on paper-it becomes real. Even though your plan will change, write it down so that you can remember and update it as needed. Include things like goals and strategies for reaching your goals. A plan is your first step to proper small business management.

All of these points are simple guidelines to help you visualize how your small business will grow. It’s not as important that all of the estimates that you make be right as it is that you have them and you update them so that you can continue to progress.

I hope you have enjoyed this and will check back frequently for more small business articles. Please check out our additional links and articles in this small business resource center!

(Image: Some rights reserved,  dave_mcmt.)

Wednesday, October 13, 2010

New Legislation for Small Business

Stay up to date with our small business news alerts-With the current federal administration passing various new laws and changes existing ones, as a small business owner, it is very important to keep up with what’s happening in Washington. Just recently President Obama signed into law the Small Business Jobs Act of 2010 after it passed a majority vote in the House of Representatives. How might this new law affect you? Well, in many ways but I will try to highlight some of the most important here below.

First off, concerning health insurance coverage; the bill allows self-employed individuals to use the deduction cost of insurance of themselves, their spouse, dependents and children under 27 in calculating net earnings. This applies to post-2009 tax years. The bill also increases the maximum amount a taxpayer may expense for Section 179 expensing and bonus depreciation. Cell phones can no longer be defined as listed property. Penalties are also increased if you fail to file a correct information return. 

I hope to share more about recent and upcoming news that affects small business. If you are curious about something or have input, let me know. I will keep you up to date with any additional small business news as it becomes available. If you found this small business resource helpful, please send it along to your friends and colleagues using one of the social media or email buttons below!

(Image: Some rights reserved,  Kevin Dooley.) 

Tuesday, October 12, 2010

5 Ways to Get Small Business Financing

Today I want to share a few thoughts on small business financing. If you are new to entrepreneurship, you may not be too familiar with terms like Venture Capital (VC) or Angel Investors. In this small business article, I want to briefly explain these terms and share with you a few creative ways to get the money you need to get your small business started or to take it to the next level.

As part of your business plan, you should consider how much money your business will need, when it will need that money, and how you are going to get it. This will help you stay focused and not be wasteful. Depending on the amount of money you need and when you need it, you may want to use various types of small business financing for your venture. The methods I list below certainly aren’t your only options for financing, but just a few of the main ones. Consider the following types of financing and their pros and cons:


This is when you start a business with only a minimal amount of capital (maybe a few thousand or even just a few hundred dollars) and continually reinvest the company’s earnings to provide additional capital investments. Bootstrapping is probably my favorite type of small business financing. This is because it lets the business grow naturally and keeps you, the business founder, in charge of the direction of the company. Bootstrapping means that the company grows and expands on its own without an outside infusion of capital. If you need something for the business, you have to wait until you generate enough money to buy it!

Friends and Family

Another way some small businesses get the capital they need to get start or expand quickly is through the entrepreneur’s network of friends and family. Although this may seem like an easy and safe route to take for small business financing, I issue an extremely harsh word of caution before you consider such a thing. Your friends and family are the most important relationships you have in your life and if by some means you are not able to repay the money, this can cause large problems in every area of your life. While there have been many example of friends going into business together where both friends succeeded, there are countless untold stories of business partners ruining their relationships because of failed businesses and unpaid debts. 

VC (Venture Capital)

If you study business in school, say by getting your MBA (Masters in Business Administration) or even an undergraduate degree in Business Management, like me, you will learn about Venture Capitalists. My advice would be that if you have big plans for your little business and don’t want to be bossed around, you should seriously consider against going to a venture capitalist. That being said, VCs can still provide a good source of capital and great business skills and resources to help your business grow. However, they can be very demanding and very picky on which of all of the many businesses that are presented to them they will actually invest in. I’ll write a blog post later to expand on the world of VCs as this small paragraph certainly cannot do it justice. 

Angel Investors

Many people new to entrepreneurship aren’t familiar with exactly what angel investors are. Many times Angel Investors work in small groups or networks and they invest their own money, as compared to Venture Capitalists who invest their investors’ money. Angel Investors typically invest less money than Venture Capitalists and don’t take on as much control but act more as advisers. Angel investing seems to be on the rise in recent years and is definitely a good source of small business financing.

Online Investing

OK, so this last area of financing is going to be one you may not hear about too often, but depending on your needs as a small business owner, could be extremely valuable. One website,, has set up a peer-to-peer marketplace where investors and borrowers meet. While the website isn’t restricted to purely business uses, many small business investments are made all the time. is a great alternative to getting money from friends and family and could be the answer you’re looking for.
I hope this helps answer some of your questions about how to obtain financing for your small business. As I have more time, I will expand further on these topics and provide more small business resources to connect you with small business financing. Let me know if you have any questions as I would be happy to answer them in upcoming articles!

(Image: Some rights reserved,  Alan Cleaver.)

Thursday, October 7, 2010

September 2010 Job Growth in Small Business

While small businesses across the United States did increase the number of jobs they created in September, it was a smaller increase than in August. According to the Intuit Inc. Small Business Employment Index, 27,000 new small business jobs were added nationwide in September, compared to 39,000 added in August. You can read the full September 2010 report.

This means that small businesses still have a chance to survive and thrive in this tough economy. Many small businesses are reluctant to hire at this point because of uncertainties in government regulations in regards to the new health-care reform and financial regulatory reform bills. And, still other small business owners are worried that we might enter into a double-dip recession. While I can’t say that I blame businesses for this, sometimes the best tactic is to get out there and do what you need to do for your business. When the dust settles and we finally know how these new laws will affect everyone and how long the economy will take to steadily grow again, then you can start to make cuts or adjustments as needed. Unfortunately, we can’t predict the future but we can be prepared for additional hard times while simultaneously taking advantage of an opportunity to come out ahead of the competition!

One other note, maybe your business or the business you are considering starting, is one of the businesses that thrive in a recession. Some businesses, like lower-end fast-food joints and discount retailers, actually increase business in down economic times. As you investigate your business, maybe there is an area that you could ramp up operation in order to minimize your overall corporate risk. Hedge your investment!

(Image: Some rights reserved,  kevinhengli.)

Wednesday, October 6, 2010

Government Grants Available

Do you need cash to help jump start your small business? Well, you are in luck, because help is on the way! Bank of America Corp. just issued 40 grants worth more than $3.7 million (part of a $10-million plan they announced in July) to organizations that lend to small businesses. The bank said that their plan, over the next year, should release about $100 million in low-cost, long-term capital for small business micro loans over the next year.

Through Fractional-Reserve Banking, the nonprofit lenders are able to release an average of 10 times the amount they receive. The money is expected to make 2,000 loans to small businesses and start-ups through December 2011. With an average size of $13,000, the loans are expected to help roughly 8,000 small and rural businesses.

Find out more about the SBA loans and grants by visiting Also, for specific information on microloans and to see if your business qualifies, visit their micro loans page.

(Image: Some rights reserved,  Andrew Magill.)

Tuesday, October 5, 2010

5 Ways to Find the Best Small Business Ideas

I know this is a question a lot of people ask themselves when considering entrepreneurship. You may have thought of a few good business ideas in your lifetime only to discover that someone was already doing them! Or, maybe your business ideas were so far removed from your knowledge set that they seemed impossible for you to accomplish, nevertheless, you knew they were great ideas! 

Well, even when you have a great idea, just remember that there is a lot more that goes into starting a business than the idea. In the real world, ideas are a dime a dozen and your success as an entrepreneur really depends on the plan and execution. 

Today we live in an age with an overabundance of information. We must learn to weed through the bad information and find the useful information. I heard recently that the average American comes across something like 2 different million-dollar business ideas per week. The real trick is deciding which idea to run with! That’s why I’ve outlined 5 ways to help you find the best business idea for you by filter through all the excess information. So, here we go:

1. Ask yourself when you were a dissatisfied customer or simply unhappy with something. Maybe you received bad service at a local fast-food joint, or your oven light broke. Any time and any place that there is a need or pain, a business can thrive. Make a list of these pain points and consider how you might solve them with a business idea.

2. Focus on a business idea doing something you love. Chances are that whatever business you decide to go into; you will have a competitor that loves the industry and everything about the business. For example, say you wanted to sell designer toothbrushes online. Great, if you love toothbrushes! But, if you don’t and you just see it as an easy way to make money, it might not be the best idea for you. Because someone who eats, sleeps, and drinks toothbrushes could put you out of business quickly.

3. Consider if your idea is scalable. You need a business idea that you can expand beyond just a part time gig. For example, if you decided you wanted to sell tacos in the local downtown district, while your idea may be good for one person or a few, remember that the barrier to entry is very low. Not many people are going to want to work for you for an hourly rate if they can start their own business making more for themselves.

4. Ask yourself why someone isn’t already doing it or if they are how they are doing. The last thing you want to do is jump into a business too fast and waste a lot of time and money. Analyze the market and competition before considering starting your own small business.
5. Talk to people who could use your business idea. Once you have narrowed your list of business ideas to a few that you are really excited about, share them with people who you know that could use them. Be sure you get feedback from the target market and not just anyone because they happen to be the most convenient. In statistics, that’s called a convenience survey, and it’s not very useful. Also, don’t be shy in sharing your ideas, remember, that the real value in a business comes from the execution!

(Image: Some rights reserved,  Chuck Coker.)

Saturday, October 2, 2010

The Social Network Movie Review

Last night I saw the new movie “The Social Network”, which is about Mark Zuckerberg, Eduardo Saverin and how Facebook got started. WARNING: If you haven’t seen the movie yet, this may spoil a few points! However, I will try not to spoil it too bad. I still highly recommend watching the movie! Apparently, with a 97% Tomatometer rating on Rotten Tomatoes, it might be kind of hard to spoil!

What’s it like starting a small business and having it grow to over a billion-dollar valuation with over 500 million users within a few years? Well, apparently it’s pretty dramatic! I personally wasn’t aware of the major two lawsuits involved around Facebook. When I heard the movie was going to involve a lawsuit, I thought maybe it would be about personal privacy issues… not even close! Well, ok, maybe close, but in a completely different way. Is it just me or did both of these law suits not get very much press coverage? Or, maybe they happened before I joined Facebook, which was in 2006. To be fair to myself, I was living outside of the U.S. during 04 and 05, so maybe that’s when the lawsuits got press coverage. Maybe I will have to look it up on Wikipedia.

Facebook started out just like any other small business these days; with a few kids playing around on their computers. I like to think that Mark Zuckerberg wasn’t as socially awkward as “The Social Network” portrays him. I think this is just Hollywood getting away with itself again. I thought Jesse Eisenberg played a pretty good Mark. Great casting job! But, if you are used to Jesse’s normal roles, this one is different and he doesn’t show much personality.

I had heard a while back that Sean Parker (founder of Napster) was involved somewhat in Facebook (or TheFacebook, as it was before Sean came along), but I had no idea he was THAT involved. However, it can’t be true that after already meeting up in Massachusetts, Mark Zuckerberg and Sean Parker just happened to be in houses right across the street from each other in Palo Alto. Don’t you think they would’ve stayed in contact and known about each other’s plans a little more?

Until the movie came out, I hadn’t really heard the Eduardo Saverin or Erica Albright stories. Although, it is cool to see that even Mark Zuckerberg uses Facebook to stalk just like everyone else! It seems like Eduardo was trying to help out with the business but naturally got carved out. I won’t say more than that but I though Andrew Garfield did an outstanding job! In fact, all around the acting in “The Social Network” was great!
I thought the movie would portray more of the history of Facebook and the actually business once it really became a business. But in the movie, once the business started growing, the movie came to a pretty abrupt stop. :( I wanted it to talk about the good old days of Facebook! Back before there were any applications or Farmville games. Back when poking people was the funniest thing to do and when everyone was related to each other by multiple, obscure ways! Do you remember that? When you added a new friend on Facebook and it would say “How do you know this person?” Then you would choose from about a hundred different options or make up one of your own? So you would look through people’s friends’ lists just to see the hilarious commentary people put there. Like, “We met on a road trip in 1999 and we also met in college and we have a child together and we are cousins!”

One other thing about old Facebook that is portrayed in the movie that I remember is that you had to be a part of a specific group to join and you could only see the other people in your group. It started out that you had to have a email address and then as Facebook expanded to other colleges, you had to have that college’s .edu email address to join that network. Somewhere along the way that was all lost. But, I think it was a smart move for a small business-start with a small “love group” and once you meet their expectation, grow out and expand. Also, the movie talked briefly how Facebook used the little-big horn tactic to capture Baylor University.

Anyway, I won’t spoil the “The Social Network” movie any more than I already have. I totally recommend seeing it and if you use Facebook-And I know you do because there are more people on Facebook than live in the United States-then it’s a must!!

(Image: Some rights reserved,  Franco Bouly.)