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.)  

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.) 

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.)

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.)

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.) 

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:

Bootstrapping

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, Prosper.com, 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. Prosper.com 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.)

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.)