Tag: business

The Best Business Structures to Consider for Tax and Legal Purposes
Which business structure is best? There are several types of legal structures to choose from, each with its unique benefits and challenges. It’s a good idea to familiarize yourself with all the options when you’re setting up a new company so you can select the right structure for your needs and make sure it will suit you in the long run too. We’ll give you a quick overview of the options and some tips to help you choose the best one below.

Choosing a Business Structure That’s Right for You

First and foremost, your business structure impacts how much you’ll pay in taxes and how your taxes are paid, plus determines your personal liability for business-related issues. It also affects how you can raise money and the types of paperwork you file. With that in mind, there’s no singular “best” business structure. Instead, you’ll want to choose the one that aligns with your business needs.

Can My Business Structure be Changed?

Before we begin, it’s important to note that the ability to change a business structure depends on the structure you’re presently using. It works in a linear fashion. For example, if you start with a structure designed for one owner, you can change it later to include multiple business owners or to a more advanced level. However, if you’re running a corporation, you cannot change the structure later. You’d have to dissolve the corporation and create a new business. For that reason, it’s always a good idea to speak with an attorney and/or accountant specializing in business matters.

Different Types of Business Structures

Sole Proprietorship

Sole proprietors have total control and ownership of their companies. With more than 23 million sole proprietors across the United States, this is the most popular option for small businesses per Small Biz Trends. All assets and liabilities are exclusively yours and indistinguishable from your personal assets and liabilities. You’ll even pay taxes, under ordinary income tax rates, on your business earnings when you file your personal tax returns rather than paying taxes separately as a business. This is known as pass-through taxation or flow-through taxation.

It’s easy to file sole proprietorship paperwork. Your business will automatically be designated as one if you’re doing business alone as well. You can operate under a trade name or “doing business as” (DBA) name for professionalism or privacy too. However, raising money as a sole proprietor can be more difficult as banks and investors are a bit more hesitant to lend, and you can’t sell stock.

Partnership

Partnerships are the simplest business structure for two or more people. Though there are several types that vary in form and function, taxes are managed through personal returns in all of them, but sometimes there are additional IRS requirements.
- The general partner has unlimited liability and must pay self-employment taxes, but also typically has more control over the company than the limited partners do.
- Only certain types of professional service businesses qualify for this designation. The list varies by state but typically includes professionals like doctors, attorneys, accountants, and so forth.
- Limited Liability Limited Partnership (LLLP): There’s a gap between LPs (Limited Partnerships) and LLPs (Limited Liability Partnerships) that leaves general partners unprotected from business issues. In the past, some businesses would create an LLC to serve as the general partner to avoid the risk. Nowadays, some states allow the creation of an LLLP to serve the same purpose.
Filing partnership documents for any of these arrangements is comparatively easy. However, it’s always a good idea to have an attorney examine the partnership agreement to ensure there are no questions or misunderstandings about the rights, privileges, and profits any partner will receive.

Corporation

A corporation is a distinct legal entity from its owners and has its own rights. There are several types of corporations.

C Corporations: A C corp can own and sell property and sue or be sued. It’s also responsible for paying income tax. This is done when the profit is made and when dividends are paid to shareholders too. Corporations can raise money through the sale of stocks and usually have an easier time getting funding from banks and other sources. However, it’s more expensive to form corporations compared to other options. A C Corporation is not only subject to corporate income tax, but its owners must still pay personal income tax on profits (known as double taxation). Plus, there’s less flexibility for management as corporations are required to have a board of directors, and additional recordkeeping is involved.

S Corporations: S corps are the most common business structure for small businesses with employees. The biggest benefit to running an S corp over a C corp is that double taxation of profits is not an issue. Only shareholders pay taxes on profits received. However, there are additional requirements to file as an S corp, such as all shareholders need to be U.S. residents. There are limits set on how stocks are handled too. For example, there can only be a maximum of 100 shareholders, and owners can only get common stock.

B Corporations: Sometimes referred to as a benefit corporation, a B corp is guided by a societal mission. It aims to generate profit and provide some kind of public benefit. Taxation is the same as with a C corp. However, B corps can qualify for additional certifications that can shape public perception and sometimes qualify for special programs or discounts.

Limited Liability Company

A limited liability company (LLC) is similar to a hybrid between a partnership and a corporation, though you can also form one alone. Your personal assets are largely protected under an LLC, and double taxation is not an issue. Taxes on profits are paid by the individuals on their personal returns rather than at the corporate level. However, all members of an LLC must pay self-employment taxes and contribute to Medicare and Social Security.

Guidelines vary quite a bit at the state level, so it’s a good idea to check your local laws to see how they’ll impact your business before settling on an LLC.

Cooperative

Cooperatives are unique in that they’re owned and operated by a group of members for their own benefit. These members, known as user-owners, usually vote in a board of directors who make decisions for the cooperative. Any profits are split, and taxes are paid as a pass-through.

Best Type of Business Entity for Tax and Legal Purposes

There’s no single best type of business entity. But, again, each one comes with unique advantages and disadvantages, so you’ll have to familiarize yourself with them all and see what fits best with your business needs. The highlights are covered below.

Considerations Before Choosing a Business Structure

As you’re deciding which business structure to choose, consider the following questions:
- Am I ok with being held personally liable for my business debts or lawsuits?
- Do I want to retain total control of my company, or am I ok with a board making decisions?
- Does the option I’m considering minimize my tax liabilities?
- Will I be able to get the funding my business needs with this business structure?
Get the Funding You Need at Any Stage

Small businesses often have a difficult time getting the funding they need to grow based on the type of legal structure they choose. At the same time, it’s not always best for the business to move to a more advanced business structure, as moving can drain resources and reduce the amount of control you have over your business. If your company is struggling with funding issues, consider invoice factoring. It’s like getting an advance on your unpaid B2B invoices, except your clients pay the factoring company rather than you after you’re funded, so you don’t accrue debt and are free to move forward. To learn more, request a complimentary rate quote from Charter Capital.

DISCLAIMER: This article is not intended to provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
October 13, 2021
Are You Prepared for Your Peak Season? How to Ensure Your Business is Ready

“Give me six hours to chop down a tree and I will spend the first four sharpening the ax,” Abraham Lincoln reportedly said. While the source of the quote is debatable, the wisdom is not. As a small-business owner, your peak season is an opportunity to shine. You can reach a wider audience, attract new customers, and build lasting relationships that will carry you through the slower months of the year. However, there’s little margin for error, and you’re likely contending with an array of unique challenges, including inventory shortages and an influx of temporary employees. Whether you run a warehouse or are in e-commerce, transportation, personal services, or something else entirely, the sooner you start “sharpening your ax,” the smoother your busy season will go and the stronger your business will become. Use this guide to prepare and make the most of the time you’ll have.

Make Alterations to Your Operational Strategies

Preparation is key to success during busy periods. Start by examining your metrics from the previous year and prior peak periods to identify trends and any shortcomings you faced. You can also gather stakeholders for a discovery session to see if they see potential issues. Staffing is a big one that must be carefully weighed with labor expenses. Raw materials, inventory management, and equipment are also common concerns. Can you ramp up for a busy day or accept a large order with ease? If not, adjust your strategy or create contingency plans that will give you the boost you need.

Ensure Temporary Staff Are Properly Trained

Last year, UPS alone had to hire 100,000 temporary workers for the holiday season, according to Transport Topics. As the largest transport company in the U.S. by revenue and third-largest employer of seasonal employees, it certainly knows a thing or two about gearing up temporary help. The company’s gone so far as to install an artificial ice patch in its training facility to give delivery drivers practice walking on slippery surfaces. All drivers undergo extensive training before hitting the road. Those taking on 18-wheelers have three weeks.

Safety isn’t the company’s only concern, though. Customer service remains a priority. “The demands we have this time of year create a spike and, in order for us to do that in a customer-satisfying manner, we have to make sure they know how to do the job,” Stefon Harris, then acting Vice President of Human Resources for U.S. Operations, told Business Insider.

While your team may not need to practice walking on ice, equipping them with the knowledge to perform their jobs well and maintain customer satisfaction is paramount. Not only will it help you win over the new customers you’re seeing and turn them into lifelong fans, but it also gives you a glimpse into who might be an ideal candidate to hold onto once the season concludes.

Most seasonal employees are in place a month before seasonal sales ramp up, with some companies onboarding staff two months or more in advance. That means if your peak season is November and December, your team should be largely in place in October. It takes an average of 23.8 days to fill a position per Glassdoor research. Certain industries take longer. So, working backward, you’ll want to start planning your recruitment and training strategy during the summer and have job postings up by August or September to ensure a smooth process for this type of scenario.

Continue Marketing Your Company to Maximize Exposure

Many small-business owners stop marketing when business ramps up for the season, thinking there’s no benefit because they’re so busy. Nothing could be further from the truth. First, if you don’t attract the people looking for your product or service while they’re looking for it, your competitors will. And, they will keep them. To build your business during the rest of the year, you must maximize who you can reach during the peak period.

Secondly, consumers in many industries require longer nurturing periods. If you suddenly stop marketing to them because you’re busy, you give the relationship you’ve already built time to cool off.

Lastly, certain marketing techniques grow more effective with time, especially when you’re running digital marketing campaigns. Each share on social media, visit to your site, and even minute spent on your site can build your reputation in the eyes of Google, so it sends you more traffic going forward. Use it to your benefit when people are actively engaging in online shopping and searching for what you do.

While you may want to adjust a marketing campaign here and there to meet your current needs or capitalize on shifts in consumer behavior, you’ll lose ground if you stop altogether.

Don’t Lose Touch with Your Current Customer Base

Consider this:

50 percent of “loyal” customers have left a company for a competitor they felt was more relevant and could better satisfy their needs.33 percent of customers say they’ll consider switching companies after a single instance of poor service.A 5 percent increase in customer retention correlates with at least a 25 percent boost in profit.

These statistics from HubSpot hit home an important point. Your existing customers are valuable, and your relationship with them needs to be maintained. Whether that means offering special perks for your long-time customers, giving them a deal, or simply just checking in to ensure their needs are being met, your gesture will go a long way.

It’s also wise to take stock of what and who has been bringing your business success. Sometimes companies get caught up in trying to capture new markets that they forget who made their business. The McDonald’s Arch Deluxe is a prime example of this. If you don’t remember it, this was McDonald’s attempt to be “sophisticated.” The company reportedly spent $150 million advertising it per Mashed, releasing a series of commercials that included Ronald McDonald with golf clubs and highlighting how it wasn’t intended for kids. It missed two big points. First, people going to the restaurant aren’t visiting for sophistication. Secondly, it alienated its audience by being less kid-friendly. It failed as a high-price menu item and failed when the company tried to revive it at a lower price point. While this clearly didn’t do the company in as a whole, it certainly could have if it was smaller.

Ask for Referrals

Referrals are one of the best ways to bring in new customers. They tend to be easier to sell to because someone has already warmed them up to the idea of doing business with you. Plus, they have a 37 percent greater retention rate, and you can expect at least 16 percent more in profits from them per Extole. Use the busy season when you’re seeing more of your customers and people are looking for your services to ramp up referrals. This can be as simple as asking for referrals, but you may generate more interest with a formal incentivized program.

Stock Up on Inventory and Supplies

Early ordering gives you several advantages. First, you’ll probably have more cash on hand, so you may be able to negotiate volume discounts or other deals with your vendors. Secondly, it can save you from having to pay premium prices when everyone else wants the same thing or, worse, not being able to get shipments you need because your supplier is out or something happened to the supply chain.

Forecast the Season

As your peak season approaches, forecasting and planning ahead are critical to ensure your small business operates efficiently during the busiest time of year. Many small business owners rely heavily on historical data and customer feedback to predict peak demand and streamline their operations. This can help your business pivot quickly and avoid costly mistakes like stockouts or supply chain delays.

Proactive Tips to Help Small Businesses Forecast and Streamline for Peak Season Success

Start by reviewing sales data and customer behavior from your last peak season. Are there clear trends in order volume, product shortages, or customer preferences? Use this insight to optimize stock levels and improve your reorder schedule. If you’re a retailer or in e-commerce, real-time tracking and an integrated inventory management system can help reduce friction in order fulfillment.

Customer data can also shape your dynamic pricing strategy or influence how you schedule to accommodate peak times. For example, adjusting pricing based on demand or promoting slower-moving items earlier can help spread out traffic and increase sales.

Finally, consider how your business runs during downtime. Investing in systems now, like automation tools or generative AI for marketing, can reduce stress when the season begins and improve your ability to deliver excellent customer service when demand surges. For some businesses, these systems also help highlight when external funding support, like invoice factoring, may be needed to handle surges in demand.

Allocate Your Resources Wisely

Periods of growth and surges are always difficult to cope with because you’re trying to meet today’s demands with yesterday’s smaller profits. Work out your budget ahead of time and determine where your cash will be going. Whenever possible, set a little aside for the unexpected too.

Address Cash Flow Issues Required to Get Through the Busy Season

If you’ve balanced your budget and see points where cash will be tight, put an ace in your pocket and set up some kind of cash flow solution ahead of time. Common solutions are bank loans and lines of credit, but if your small business doesn’t qualify for these options because you don’t have strong credit, you already have debt, or you don’t want debt, you can also get set up to factor your invoices. With invoice factoring, you sell your unpaid B2B invoices to a factor at a slight discount. They advance you the cash right away so you can cover payroll, buy supplies, or take care of whatever you need. Although approval and funding are generally quick, you can become established with one now to save time should you want to factor later when you’re busy. To get started, request a rate quote from Charter Capital.

June 8, 2021
Put Some Wind in Your Sails During the Slow Season

Mariners once dreaded sailing the seas around the Earth’s equator. Not for the heat or the sharks or the waves. Rather for the lack of wind. Sailing ships would often become stuck for days or weeks, unable to move due to the shortage of any breeze. The nautical term for this area is the doldrums, meaning windless waters.

Nowadays, the doldrums carry other meanings, as well. One of the most used is to denote a period of stagnation or inactivity. Like an ancient sailing ship leaving the trade winds, businesses also go through doldrums. Often these doldrums occur during a specific season and can be forecasted in advance.

For example, new home construction slows during the winter months as bad weather makes work difficult. Furnace repair contractors don’t get many service calls during the summer. The hospitality business grinds to a halt after Labor Day and the end of vacation season. Companies need to plan and budget accordingly to make it through these slower times until their next peak season rolls around.

Your business probably also has its own doldrums or slow season. For you it may be in the spring. Or perhaps in the summer, when customers and employees alike take off for some needed escape from work. No matter when your doldrums occur, you need to have a plan of action to properly deal with them and to make sure your sails are in tip-top shape when the trade winds return, and business takes off. Here are some quick tips to get you going:

Work on your business instead of for it – When sales are popping, you’re often too busy to take care of some basic house… well, make that business-keeping chores. Now that times have slowed, it’s the perfect opportunity to take care of many tasks you just had to put off. Such as…

Update your marketing plan – A good marketing plan never stands still. It’s always moving, dynamic and flexible. Look back over the past 12 months. What didn’t quite go as planned with your marketing plan and could use some tweaking or revamping? What went right and should be done again? And, what went totally wrong and needs to be sent to Davy Jones’ locker at the bottom of the sea?

Give your website a fresh face – Have you looked at your website lately? Your customers do. Is it a proper and energetic reflection of your company that engages customers and encourages them to do business with you? Or is it a reflection that you really don’t know much about modern marketing? Even worse, is it a reflection that the last time you updated your website it was in the age of dial-up modems? A static, never-changing website can give your customers the impression that nothing’s going on with your company. A new, dynamic design, on the other hand, tells your prospects you’re a company on the move, ever striving to improve your products, services and your ability to help them. There’s no better time than your doldrum period to ask yourself these questions and act to ensure your site best showcases your firm’s knowledge, expertise and solutions-oriented approach.

Reconnect with old clients – There’s so little time to talk and interact in this fast-paced world of the early 21st century. The doldrums are a great time to reconnect with those with whom you’ve lost touch. No, not Aunt Mabel. In this case, your old clients. Give them a call, or better, stop by their office to catch up. If they still do business with you, let them know how important they are and update them on any new offerings that could help them. If they’re no longer clients, call anyway. Let them know you appreciated their business in the past and that you were thinking of them. Update them on your company’s progress and see if there’s any chance to rekindle a business relationship. Don’t forget, it’s much cheaper to get old clients to either do more business with you or come back to the fold than it is to prospect for new business.

Get organized – Remember last tax season when it took you two days to find that important documentation? And remember how you swore it would never happen again… you were going to get organized next time around. Well, guess what? Now’s your chance to do that. Organize your office, files, marketing materials, supply cabinet, and whatever cluttered, disorganized, and frustrating thing that has driven you to distraction.

Efficiency is the mother of success – Closely related to the above tip, the doldrums allow you to not only make your operation more organized but efficient as well. Every operation, no matter how perfect at its start, has inefficiencies creep in over time. Your boat’s engine may purr as you glide out of the marina, but overlook the occasional necessary tune-up, and you have an engine guaranteed to leave you stranded somewhere. Examine your operation; Look at each step from the moment you meet a prospect to the making of a product or until you deliver the service. Examine your billing process and your follow-up. No matter how many steps you have in your company’s process, there’s a good chance you need at least a little tweaking at best, or at worst, a complete overhaul. Make productive use of your slow season to get back on course!

Help your bottom line – Your finances may need a boost during the doldrums as business drops. This can cause cash flow problems for small businesses. If revenues drop more than expected or you haven’t set aside sufficient funds to tide you over, your business could be in jeopardy. In slow seasons, many small business owners may turn to small business loans, cash advances, or line of credit in an attempt to get working capital needed to keep their business afloat. If your cash-inflow is not where it should be, you may not have the money you need to pay suppliers, cover payroll, perform any maintenance, or buy equipment.

There is an option that could put some wind in your sails during these doldrums. This convenient alternative to a traditional business loan is called invoice factoring. Invoice factoring allows you to “sell” your accounts receivable invoices to a third party lender (factoring company) for a discount fee known as a factoring fee. This third party pays you upfront for outstanding invoices, giving you the working capital you need today to run your business, and eliminating the worry and hassle of slow pay collections.

In comparison to invoice discounting or invoice financing services, where you will still need to do the debt collection, invoice factoring offers you a more convenient cash-flow solution. After you go through a quick and easy application process on an online platform, the factoring agency will perform credit checks on your clients (not on you, so your personal credit history is not a problem) to determine any risk involved. Once the service has been approved, the invoice finance provider will pay you a percentage of the invoice amount, and collect on the invoices for you. Giving you more time to perform your business operations. You’re left free to run your business.

Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans. Factoring gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – the money for your unpaid invoices is usually paid into your bank account within as little as one business day.

You may ask yourself, “Who can use invoice factoring?” Invoice factoring services are best suited to B2B or service-based businesses and SMEs, which is why it is often used by those in industries like manufacturing, real estate, consulting, and healthcare.

If you would like to learn more about how invoice factoring works, simply call toll-free 1-877-960-1818 or email [email protected].

June 12, 2019
Texas’ Strong Economy, Pro-Business Attitude Make It a Top State for Truckers

Keep on truckin’. That’s the message the Lone Star State sends over-the-road owner-operators looking to make it big in the transportation and logistics business.

In 2016, more than 3,000 trucking industry professionals throughout the U.S. were surveyed to determine the best and worst states to own and drive a truck. The survey revealed Tennessee as the nation’s best for truckers, with California “raking the leaves” at the back end of the convoy.

The survey factored several items to determine its rankings. These included cost of overnight parking, fees/regulations, if location in the U.S. mattered, and how friendly states were to drivers. Texas finished a solid fourth in the best state’s derby. Were there to be another survey, it’s likely the state could finish higher thanks to the state’s “put the hammer down” pro-business attitude and economy.

Texas benefits from a strong economic base that often booms when times are good and weathers slow times better than the rest of the nation. This creates and sustains demand for consumer and industrial goods and products, goods and products that must be transported over the road. Small trucking companies have plenty of opportunities to compete for these loads, even outfits new to the market. In addition, Texas is home to three of the nation’s largest cities and one of America’s biggest ports. It’s no surprise that Texas cities ranked among the Top 10 in several freight transportation categories in a 2018 trucking survey by DAT Solutions.

The Lone Star State also has a business-friendly agenda. This means fewer laws and regulations that add to costs, sap cash reserves and make doing business harder. These include complex labor and environmental laws that can be burdensome for trucking companies of all sizes, but smaller ones in particular.

In 2018, Texas won CNBC’s annual Top State for Business in America award. It was the fourth time Texas has won top prize in the award’s 12-year existence. Texas Gov. Greg Abbott explains:

“When given the freedom to aspire, Texans risk their own capital and invest in themselves and others by opening businesses large and small. And success is contagious. New business formation in Texas is at a five-year high. Start-ups are growing here right alongside Fortune 500 companies and more than 2.6 million small businesses. It’s no surprise that Texas is ranked by CEOs as the best state for doing business, now for the 14th year in a row. As one Texas entrepreneur puts it: ‘If you like big ideas … build your business in Texas.’”

Meanwhile, Texas placed third in a similar Forbes magazine survey of best states for business.

Texas’ low business taxes and lack of an income tax make it an attractive place to open a business of any size. It’s a top state in terms of access to the capital a business like a trucking outfit needs to expand and grow.

Texas is a big place with tens of thousands of miles of highways. The state has invested heavily in infrastructure and roads in both rural and urban areas. Better and less congested roads make a trucker’s job easier.

Whether you’re eastbound and down, westbound or any other direction, Texas should rank high on your list of places to locate a trucking firm.

Once you’ve set up shop in the Lone Star State, you may find you need to add employees, buy new equipment or improve your cash flow. If so, consider invoice factoring. Invoice factoring allows you to “sell” your accounts receivable invoices to a factoring company. The factoring company pays you upfront for outstanding invoices, giving you the cash you need today to run your business, and eliminating the worry and hassle of slow pay collections, leaving you free to run your business. Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans and risky crowdfunding. Each of these sources require a long-term contract. Factoring, however, gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. If you would like to learn more about how invoice factoring works and how it can put your cash flow into the fast lane, simply call toll-free 1-877-960-1818 or email [email protected].

May 6, 2019
Trying to Build a Successful Small Business? Look Past Niches and Fill Gaps Instead

Trying to Build a Successful Small Business?

Like the countless number of stars in the night sky or grains of sand on a beach, there is an infinite number of ways to build a small business. The challenge for you, the business owner, is to identify the strategy, compile a business plan that best fits your personality and company, and follow it through to a successful conclusion.

One of the most popular and well-known strategies for start-ups, of course, is to find an unfilled niche in the marketplace and make it your specialty. Many successful entrepreneurs have followed this path to profits and success. But it’s not the only strategy out there. Today, we’re going to look at another strategy you may want to pursue.

Even the best and brightest small business owners seldom achieve success all on their own. Somewhere along the line, they had some kind of help or a business partnership that enabled them to overcome a difficult challenge or allowed them to make a breakthrough that enabled them to be the successful business owners they are today. For instance, many growing businesses struggle with slow-paying customers, and that leaves a cash flow gap which makes it difficult to cover daily needs and scale. At Charter Capital, we help businesses fill that gap by accelerating cash flow through invoice factoring with tailored services for specific industries. Our oilfield factoring services, for instance, help oil and gas service companies. Of course, funding is not the only challenge businesses face. Every company, no matter the size, has a gap they need assistance with. One way to guide your small business to ultimate success is to make it your mission to identify that gap and develop new ideas to fill it for your target market.

Bill Gates, the co-founder of Microsoft, is certainly one of the most successful small business entrepreneurs of all time. His company has products found on virtually every computer and electronic device in the world and his innovation is world-renowned. But as big as the company is today, it started quite small. What started it on the road to its current level of dominance is the strategy it used to get going. Gates didn’t start out with Windows 10 or MS Office. No, he started by filling larger organizations’ gaps. Gates built relationships with these larger computing companies, learned they had areas where they needed help, gained their trust and provided a valued service and expertise. In Gates’ particular case, it was providing software for computing giant IBM that was an important factor for building his personal success.

At the time, IBM was THE world’s computing giant. There was IBM, and then there was everyone else. To think that IBM had any kind of computing or programming need that they couldn’t fill on their own seemed laughable. Yet Gates, who was essentially a nobody at the time, took the chance, asked the questions and built the crucial trust-based relationships that enabled him and his fledgling Microsoft to be the company that would fill the gaps in IBM’s personal computer business. Without taking advantage of that opportunity and those relationships, the world of computing might look far different today.

To achieve success and build a profitable business, then, is to constantly be thinking of partnerships. Think of partnerships not that can just benefit you, but of partnerships where both sides can aid one another and learn valuable lessons from each other. Yes, Gates received valuable work, contacts, assets and references he later turned into a multi-billion-dollar corporation. But Gates also learned things from IBM and, in turn, IBM learned some things from him. Their partnership was a two-way street. When you have a relationship and a partnership like that, no gap is too large to overcome for you and your team member to run a successful business.

March 26, 2019
Tired of Striking Out with Banks, Small Businesses Find Alternative Lenders’ Pitch More to Their Liking

In baseball, a player who bats below .200 is said to be hitting below the Mendoza Line, so named for a light-hitting shortstop for the 1970s Pittsburgh Pirates. That means the batter makes an out more than eight out of every 10 at bats. Sounds pretty futile, doesn’t it?

Small businesses often face a Mendoza Line of their own each time they apply for a loan. Nationally, banks reject small business loan applications 80 percent of the time, on average. So, each time an entrepreneur walks into a bank seeking capital to start or expand his or her business, they might as well be poor Mendoza batting against fireballing Nolan Ryan. The results are going to be about the same – another frustrating effort often ending in failure.

Mendoza was just plain out of luck and out of baseball after a few lackluster seasons. There’s just not much of a market for players that can barely hit their weight. Small business owners, however, have found other options for their lending woes. Thanks in part to the power of the Internet, these entrepreneurs have discovered new funding sources ready to go to bat for them instead of tossing curveball after curveball their way.

Online lending has proven to be a home run for capital-hungry small businesses. In fact, it’s been such a hit that 2018 was the biggest year yet for online lenders. Unlike standard brick-and-mortar banks, online lenders have proven much more willing to lend needed money to startups or young businesses looking to grow. While banks may okay only 20 percent of small business loans, online lenders are approving three times that amount, earning many appreciative fans in the small business community. Another advantage in their favor over traditional banks is a more simplified application process and a faster review/approval.

Peer-to-peer lending offers entrepreneurs another funding alternative. Investopedia defines peer-to-peer lending as “a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary.” You may have heard peer-to-peer lending also called social lending or crowdfunding.

This method of funding works a little like on online dating service. Only in this case, it’s a business and investor that hook up, rather than two lonely hearts. A small business looking for money puts a profile of itself on a peer-to-peer online platform. Interested investors can view these profiles and assess whether they want to lend money. The investor can lend all or only part of what a business needs. If the small company only gets a portion of what it’s seeking, it can keep its profile active online for other potential investors. The small business and the investor(s) must agree on repayment plans and interest rates. And, of course, the online platform that brought the two (or more) parties together also gets a slice for providing the service. As you can imagine, however, it’s certainly much easier and quicker to obtain funding this way.

Since Mendoza seldom got on base, he wasn’t much of a base-stealing or scoring risk to opposing teams. But online lending and peer-to-peer lending do have risks which you should be aware of before trying them.

With online loans, fees and interest rates generally tend to be much higher than for traditional loans from a bank. Plus, there are often more fees attached to the online loan than loans from other sources.

Many online loans have set repayment provisions, and these provisions could wind up making the loan more of a hindrance down the road than a help. If you are expecting a traditional once-a-month payment plan, for example, you may be surprised to learn the online lender you’ve taken a loan from actually requires payment every week, or in the worst cases, even daily.

Finally, there is the security issue. News reports come out almost daily about online scams of all kinds. Just because someone has put up a website advertising online loans does not automatically mean it’s a legitimate firm. There’s the possibility it’s a fly-by-night outfit looking to steal your information and good name for their own nefarious uses or a lead gatherer who will then sell it to online lenders.

As for peer-to-peer lending, interest rates may prove problematic. These rates can often reach more than 30 percent, especially for companies the investors view as risky. After all, a peer-to-peer loan is an unsecured loan for the investor, which means no collateral for repayment should the borrower default. Investors want some assurance they won’t lose everything in case of default, and that’s accomplished partially through high interest rates.

When looking for capital via online or alternative funding sources such as peer-to-peer lending, it’s best not to immediately swing for the fences. Do plenty of research beforehand. A good hitter studies that night’s starting pitcher looking for clues as to each pitch’s speed, movement and location before stepping up to the plate. Make sure you have a solid grasp of your true needs and of the risks and benefits of these non-traditional funding sources before pursuing a loan. You may find these choices a great resource for your business… or you may discover you’re better off taking your chances with a traditional bank. The one thing you don’t want to do is desperately flail away and make a costly out or error that will end your season and perhaps even your business.

A better play might be to consider another form of raising needed money for expanding a business, adding employees, buying new equipment and improving cash flow. This option is called invoice factoring. Invoice factoring allows you to “sell” your accounts receivable invoices to a factoring company. The factoring company pays you upfront for outstanding invoices, giving you the cash you need today to run your business, and eliminating the worry and hassle of slow pay collections. That’s now the invoice factoring company’s concern, leaving you free to run your business.

Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans and risky crowdfunding. Each of these sources require a long-term contract. Factoring, however, gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. If you would like to learn more about how invoice factoring works and how it can step up to the plate for your business, simply call toll-free 1-877-960-1818 or email [email protected]. You may find it a great addition to your lineup.

March 8, 2019
Is Brick-and-Mortar Dead? Hold Up on That Obituary

Is Brick-and-Mortar Dead? Hold Up on That Obituary

When asked about wild rumors of his passing in 1895, Mark Twain reportedly replied, “Reports of my death have been greatly exaggerated.”

Fast forward nearly 125 years and there’s another rumor of death floating around. Only this time it’s not about a person, but about a way of doing business. According to analysts and experts, we’ve entered the e-commerce age. All purchases will be transacted online, and orders will be shipped overnight to waiting customers. Amazon and companies like it will rule the marketplace. As a result, “brick-and-mortar” (those that rely on a physical location) businesses are dead.

But is that, in fact, true? Has ecommerce replaced traditional brick-and-mortar businesses or, has brick and mortar’s death been greatly exaggerated? The answer is … no one really seems to know. A cursory search of business headlines reveals a mixed bag. Fortune magazine proclaims that a “Record Amount of Brick and Mortar Stores Will Close in 2017.” Meanwhile, Forbes magazine has just reported “How Brick And Mortar Stores Are Making A Comeback With Millennials And Gen Zers.” Business Insider bleakly intones “The Crash of Brick-and-Mortar is Only Going to Get Worse,” yet earlier the same publication gives “The Simple Reason Brick and Mortar Stores Aren’t Dead.”

So, which is it? They can’t all be true. Should we be buying “Congratulations on Your Recovery” cards or “Condolences for Your Loss” ones? And should we buy the cards at a brick-and-mortar store or online? And if you’re a small business owner, where should you be investing your resources for future growth: in e-commerce or in a new physical location?

Lots of people have crystal balls, but not everyone is seeing the same thing when they peer into them.

For one thing, most of the talk about ecommerce vs. brick-and-mortar revolves around retail outlets and sales. If you’re not a trinket shop in a suburban mall, it may be tough to get relevant information on how this commercial tug-of-war affects you and your business. If you sell or service heavy equipment, you’re probably wondering how you’re going to even sell your products online. If you’re in the tech field, you’re no doubt scratching your head because you’ve been in ecommerce since the very beginning.

For small businesses on the fence about ecommerce versus brick-and-mortar, the first consideration should be your customers and how you can best meet their needs. No matter how they buy – whether at a physical store or via the Internet – there is one sure thing you can always count on: When they are ready to buy, they want to be able to find it and buy it fast. In the end, it’s their choice. Your job is to figure out how they want it and be able to deliver what they want using the channel they prefer. The only way to know that is to know your customers, their needs and how they want to interact with you.

Brick-and-mortar and e-commerce each offer advantages and disadvantages to both the seller and the buyer.

Brick and mortar’s advantages include a physical location where customers can see, touch and even try out your products before they buy. There’s also the sense of legitimacy that comes from having a physical location – people can see you and speak to you and subconsciously that builds a foundation of trust. On the other hand, that physical location also incurs higher startup and ongoing business costs. Operating a physical location also requires the owner put in a lot of long hours at that location, as the owner is frequently not only the ultimate decision-maker, but also the face of the business.

Online businesses likewise have their advantages and disadvantages, too. Unlike physical location, the owner of an ecommerce venture can work from home. As many of the tasks associated with an online company can be automated, an e-commerce entrepreneur doesn’t have to put in nearly the hours as the owner of a physical business. Doing business online also has much lower startup and ongoing costs. But there are drawbacks, as well. Just as having a physical location adds an air of legitimacy, the lack of one may lead some customers to wonder if you’re a fly-by-night business, here today and gone tomorrow. Many prospects may shy away, concerned if there is a human being they can talk to should they encounter problems after the purchase. Finally, an online business is tougher to find than a brick and mortar location. People can drive by a physical business or see a sign and be curious enough to want to learn more. Not so for online businesses. An online business requires much more marketing and promotion to stand out, gain visibility and attract customers.

So, back to the original question: Is brick-and-mortar dead? The answer is, it depends on what type of business you are in. If you sell sweaters or office supplies, the outlook for brick-and-mortar is not so promising. However, if you engage in providing niche business-to-business products and services, the answer is not quite so clear. Perhaps one way to look at it is, “if Amazon sells it, then you need an ecommerce platform.” (Learn more about how to set up an ecommerce business here, in our post from February 2018.)

However, many small businesses aren’t worried about whether brick-and-mortar is dead or if ecommerce is overrated. Why? Because they’ve embraced both. Omnichannel marketing incorporates both concepts and enables a company to offer its customers a choice on how to do business with them. Customers can make use of a traditional brick-and-mortar location to see a vendor’s products, ask questions one-on-one, and take home purchases immediately. Or, if they prefer, they can do all their interactions online. It’s a win-win for both parties.

Again, most of the stories and data concerning brick-and-mortar vs. ecommerce revolve around retailing and not small business in general. That makes it tough to issue predictions or give guidance about the non-retail segment. However, there is one very telling sign that shows brick and mortar has not seen its final days: Several famous online companies are now opening … wait for it … brick and mortar stores. So maybe we should hold up on its obituary. Clearly reports of brick-and-mortar’s death are not only exaggerated, they’re premature.

June 4, 2018
Smartphones – Not Just for Making Calls or Playing Candy Crush; They’re a Powerful Small Business Tool

Powerful Small Business Tool

As a citizen of the late 2010s, you’re very likely already well aware of how smartphones have radically altered personal lives. These handy, almost ubiquitous devices literally put the entire world at your fingertips from anywhere you can get a signal. With technology once found only in a Dick Tracy comic strip, you’re practically never out of touch.

However, while tens of millions of Americans have revolutionized their daily activities thanks to smartphones, their utility as a business solution has lagged behind. Which is unfortunate, because a modern smartphone, believe it or not, has all the functionality and power you need to successfully operate almost any enterprise – project management, meetings/event planning, travel bookings, expense management, customer service – the list is almost endless.

Today we’ll take a closer look at ways you, as a small business owner, can put your smartphone to better use in your everyday work life. Now, we certainly don’t want you to turn into one of these hapless people, so addicted to their smartphones they become completely oblivious to their surroundings. But there are several strategies you can employ to make your smartphone as productive for your business as it is during your free time.

Any business can make efficient use of a smartphone in its operations. However, some are more suited than others. These include social media marketing, consulting, event planning, e-commerce, personal shopping and podcasting, among others. Even if you are engaged in another field, there are many ways you can run a business with a smartphone.

With Smartphones

First, a smartphone can help you better manage your time. You can manage your daily calendar, make appointments, schedule meetings, compose and update to-do lists, or track time for billing purposes. Now, of course, your computer can do those things as well. But a smartphone gives you the ability to perform these tasks anywhere at any time, whether you are at the office, in a meeting, at lunch, waiting at an appointment, etc. You are no longer tethered to a computer… it is tethered to you.

Your smartphone can perform another important task once relegated to the computer. With a mobile device, you can create, update and manage documents from virtually anywhere at your convenience. Cloud storage means you are no longer limited by memory capacity, or by device either. You can work on a document from your work computer during business hours, save it to Google Drive, update it using your smartphone while waiting on a client appointment, and then finish it that night using your tablet. Mobility and versatility can combine to greatly increase your productivity.

Meetings are often a huge time waster, sapping valuable time and productivity. For one thing, it’s a lot of work to gather all the needed personnel on one spot at a convenient time. With your smartphone, you can “virtually” attend a meeting instead from a remote location using Skype or similar app. This allows you and your staff the freedom to be in two places at the same time and eliminates expensive travel or lost productivity.

A smartphone is a great way to manage your company’s finances. The most popular accounting and financial software systems can be utilized via smartphone, giving you instant access to up-to-date corporate information. This can help you make smarter, more informed decisions no matter your location. A smartphone also has the capability to function as your credit card for purchases, or to accept credit card payments from customers.

Finally, vendors now offer apps that enable you to handle customer service on the go via your smartphone. We’re not just referring to making or receiving customer service calls (although a smartphone is ideal for that as well). These apps let you track progress of customer issues, answer questions and measure satisfaction at the end of the process. Again, as with all of the previous uses above, monitoring customer service via a smartphone enables you to accomplish this mission critical task from anywhere, at any time, at your convenience, enhancing personal mobility, productivity and versatility.

So, when examining the potential advantages and benefits of using a smartphone to run a small business, the question isn’t if it is practical or productive – it’s why didn’t you start utilizing this almost magical tool earlier.

March 20, 2018
Online Small Business Loans/Cash Advances – Fast Money, But Often with a High Price

Navigating Your Small Business Financing Options & Cash Advances

When it comes to finding the right loan for your small business, the landscape can be bewildering, especially when considering options like an SBA loan or business credit cards. With the advent of online lenders offering small business loans and financing options, entrepreneurs now have a wealth of opportunities at their fingertips. Whether you’re seeking a merchant cash advance, a business line of credit, or the best small business loans available, understanding your options is critical. The key is to find a financing option that not only meets your immediate business needs but also supports your long-term growth, such as a business credit card for smaller expenses or a substantial SBA loan for larger projects. Small business financing can take various forms, from business term loans to business cash advances, each with its advantages. For those looking to apply for a small business loan online, the application process has become more accessible than ever, offering a streamlined path to funding options like SBA loans and business credit. However, it’s essential to weigh the pros and cons of each type of small business financing, including interest rates, repayment terms, and eligibility requirements. By doing so, you can find a business loan that aligns with your cash flow and helps you grow your business. Remember, the best business loan is one that fits your specific needs, enabling you to capitalize on opportunities without overextending your financial resources.

Online Small Business Loans/Cash Advances

As a small business owner, it’s not news to you that companies need capital to get started, to buy essential equipment and inventory, to grow and if everything goes according to plan, prosper. And it shouldn’t be a surprise to you that sources of capital can sometimes be hard to come by for small businesses.

But what you may not know is that an increasingly popular new source of small business funding – quick online business loans – might not be the boon cash-starved entrepreneurs had hoped would be their salvation.

The Internet has certainly been a boon for small business owners, especially smaller ones. It has often enabled the startups to effectively compete with the giants of commerce in terms of creating a market presence. It has also helped small businesses establish cost-effective ways to do business with their customers and eliminate the expense of a big sales force, brick-and-mortar stores or offices. Over the past several years, a new phenomenon has been sweeping the Web that promises small businesses greater access to much-needed capital through online loans and cash advances.

Small business entrepreneurs once had a limited choice on raising capital to start a company, to keep one going or to help it grow. They could tap into their own savings, ask friends or family for money, fill out an application with the Small Business Administration (SBA), or walk into a neighborhood bank and seek a loan.

Related Article: It’s Small Companies, Not Big Business, That Create Jobs

Some of these methods are easier than others. The easiest, of course, is tapping into personal savings. However, how many people have sufficient savings to keep loaning their businesses money? Asking friends or family for funds can be problematic. A federal loan means you have to deal with a slow government bureaucracy. Going to the bank entails proving your business plan and your creditworthiness (credit score), and banks are becoming more risk-averse, meaning they’re loaning less and less to small businesses. If your credit check shows your business as bad credit risk, it will be near impossible to get a line of credit through a bank.

Enter the online loan industry. Now you can fill out a form on a website and if approved, quickly get much-needed cash for your business. Sounds great, doesn’t it? Perhaps it may even sound too good to be true? And we’ve all heard the old adage that famously says, “If it sounds too good to be true, it probably is.”

Is that the case when it comes to online small business loans? Is a cash advance a bad thing? That depends on factors such as your business credit and time in business. How fast do you need the money, what price are you willing to pay for it, and are you willing to place yourself at risk?

Taking out an online business loan is often much easier than applying for a loan from the SBA or a traditional lender. There are fewer forms, fewer questions, and less documentation. The sites are typically written in easy-to-understand language and can be quickly navigated by anyone. So that may be a competitive plus when compared to the SBA or most banks, but at what cost?

There are potential pitfalls small business owners need to keep in mind should they decide to pursue a business loan online.

For one, fees and interest rates generally tend to be much higher for online loans than for traditional loans from a bank. There are often more fees attached to the online loan than loans from other sources.

“Caveat emptor”—let the buyer beware. The internet is swamped with alternative lenders using gimmicks to gain attention, making it challenging to find a reputable business lender. One such gimmick is to express the interest rate in terms of simple interest as opposed to APR (annual percentage rate) – a more realistic measure of the cost of funds. Expressing the interest rate as “simple” rather than as APR can be confusing, even misleading because the actual interest rate can be much more expensive than it appears.

Repayment terms are another important item to consider. Many online loans have set repayment provisions, and these provisions could wind up making the loan more of a hindrance down the road than a help. If you are expecting a traditional monthly payment plan, for example, you may be surprised to learn the online lender you’ve taken a loan from actually requires payment every week, or in the worst cases, even daily. Can your cash flow handle these strict requirements?

Finally, there is the security issue. News reports come out almost daily about online scams of all kinds. Just because someone has put up a website advertising online business loans does not automatically mean it’s a legitimate firm. There’s the possibility it’s a fly-by-night outfit looking to steal your information and good name for their own nefarious uses or a lead gather who will then sell it to online lenders.

If you are going to use an online lender to obtain a small business loan, here are a few ideas on how to protect your company and find a safe lender. First, make sure the lender has a real physical address, which is crucial whether you’re looking to get a small business loan or open a business bank account. If the site does not provide one, run away. If the site does give an address, use tools like Google Street View to confirm it is an actual location and not an empty field.

Next, search for third-party verification from such sources as the Better Business Bureau and other rating services. One additional tip is to find out who owns the website, how long they’ve been around, and if they are actually an online lender. You can do this using WHOIS.

It’s always best to do strict due diligence on the lender and read all the fine print before taking out any loan, be it online or through a traditional source. Not doing so could put your small business at risk. Yes, small business loans are increasingly harder to come by through traditional lending sources and businesses need capital, sometimes quite quick capital. But by investing a little time, you can save yourself and your businesses from tripping over avoidable pitfalls.

Why Factoring is a Smart Financing Choice for Small Businesses

When it comes to small business financing, factoring emerges as a superior option for many businesses due to its unique advantages over traditional and online loans. Unlike conventional loans, which often require extensive credit checks and collateral and can take time to be approved, factoring provides immediate access to funds by allowing businesses to sell their outstanding invoices at a discount to a third party, known as a factor. This method is especially beneficial for businesses with strong sales but slow-paying customers, as it improves cash flow without the need for taking on new debt.

Factoring stands out for several reasons:

Immediate Liquidity: Factoring converts accounts receivable into immediate working capital, enabling businesses to cover operational costs, take advantage of growth opportunities, and manage cash flow gaps without waiting for customer payments.

Credit Extension Not Required: Unlike business loans, which depend heavily on the business and owner’s creditworthiness, factoring focuses on the creditworthiness of the business’s customers. This makes it an accessible option for new or rapidly growing businesses that may not qualify for traditional financing.

Reduces Administrative Burden: The factor often assumes responsibility for managing the receivables, including collections from customers, which can reduce administrative overhead and allow business owners to focus more on core business activities and growth strategies.

Flexibility: Factoring agreements can be more flexible than traditional loan contracts, with businesses able to choose which invoices to factor and when. This provides businesses with more control over their finances and avoids the long-term commitments often associated with loans.

No Additional Debt: Since factoring is not a loan, it does not add to a company’s debt load. This is crucial for maintaining a healthy balance sheet and can be especially advantageous for businesses looking to keep their debt-to-equity ratios low.

By embracing factoring, small businesses can navigate the challenges of growth and cash flow management with greater ease and flexibility. This financing option supports sustainable business operations by offering a practical solution to the common problem of delayed invoice payments, ensuring that businesses can continue to invest in their growth and stability without the burdens often associated with more traditional financing routes.

January 31, 2018