Tag: small business

Small businesses and small business owners

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
Made in America: Real Progress or Manufactured Hype?

Made in America: Real Progress or Manufactured Hype?

Made in America. At one time, those words stamped on a product meant you, the buyer, were getting a quality-made product manufactured by trained, well-paid American workers. However, in the last few decades, that phrase has not only vanished from a number of products, it’s also lost its luster as more and more Americans have chosen to purchase cheaper foreign goods.

Made in America has slowly been coming back into play in recent years. Wal-Mart famously uses the slogan in its advertising and in-store signage. President Donald Trump made it part of his 2016 campaign, promising to bring manufacturing jobs back from overseas (a process called “reshoring”). The White House held a Made in America event last summer. There’s even a nationwide organization with the stated purpose of getting more Americans to buy products made in the U.S.A.

As Dr. Phil might ask, “How’s that worked out?” Has Made in America manufactured a comeback, or is it just a lot of clever advertising and branding?

There is a market for made in America goods. According to a Consumer Reports survey, 8 out of 10 Americans say they prefer to buy American-made products instead of imported ones. The same survey indicates 60 percent say they’re willing to pay up to 10 percent more to buy an American product. Nevertheless, Consumer Reports reveals a lot of confusion in the public about what is really made in America and what isn’t.

For example, many American-based car manufacturers make their cars overseas, while many foreign car companies make cars for the American market here in the U.S. If you simply go by the nameplate and buy a car from an American company, you may really be buying a car put together overseas, And, vice-versa, if you purchase a car or truck with a foreign nameplate, you may be putting more Americans to work.

According to the Reshoring Initiative, government and private reshoring efforts brought 171,000 overseas manufacturing jobs back to the U.S. in 2017. That’s up 2,800 percent since 2010. The group also says those 171,000 jobs represent 90 percent of the total 189,000 manufacturing jobs added in the country last year. That’s in stark contrast to the early years of the 21st century, when American manufacturers were sending an estimated average of 240,000 jobs overseas between 2000 and 2003.

Domestic factories have gained – and kept – a solid momentum of job creation. American manufacturers added 24,000 new jobs in April 2018, 2,000 more than in March. These new jobs greatly aid the local and the national economy. Manufacturing employs nearly nine percent of all American workers, so when manufacturing is ailing, it has a large impact everywhere.

Several factors have stemmed the flow of manufacturing jobs overseas and have helped bring such jobs back to the U.S. One of the biggest is proximity to customers. Manufacturing close to a customer base helps lower shipping costs and can make a company more flexible in response to market trends. Branding and imaging are other key factors, enabling manufacturers to build good will and take advantage of patriotic sentiment.

It also draws a stark, positive comparison between a domestic company that manufacturers at home versus a competitor that makes its products overseas. Finally, government incentives and tax breaks have caused companies to rethink sending manufacturing jobs overseas and instead to focus on bringing them back or keeping them in the U.S.

So, regarding the question posed in the headline … Made in America: Real Progress or Manufactured Hype? Thus far the numbers point to solid progress, which means more jobs for U.S. workers, more choices for American consumers and a better image for domestic manufacturers.

May 14, 2018
Three Things That Can Hinder Business Growth

Selling to other businesses on credit terms?

Is this hurting your cash flow and hindering your company growth?

Achieving and maintaining an effective and flexible cash flow is essential to the success of your business – particularly if you sell on credit terms. But, all too often you can find yourself facing a long wait for payment – an unwelcome strain on your cash flow – while chasing payment, which wastes valuable time and resources that could be more profitably employed elsewhere.

Our invoice factoring services can help you fund, manage, and protect your invoices, unlocking the power of your accounts receivable and freeing up valuable time, resources, and cash.

Many companies have realized the benefits of factoring their invoices in order to establish a long-term positive cash flow solution for their business. Factoring is nothing more than selling the invoices at a discount to a third party (Charter Capital) in exchange for immediate payment. In return, companies can heal their cash flow pains almost overnight, enabling them to put more money back into their business, maintaining their operation and capital for growth.

Improving Business Growth Through Strategic Resource Management

In today’s competitive market, small business owners and entrepreneurs must navigate numerous challenges that can hinder business growth. It’s not just about managing cash flow or implementing the right business plan; it’s also about understanding every aspect of the business, from customer research to strategic planning. By focusing on efficient resource management, businesses can gain valuable insights into their target market, allowing them to make informed decisions that align with their business goals. Effective use of business resources, coupled with a keen eye on market trends and customer needs, enables small businesses to evolve their business models, ensuring sustainable growth. Strategic planning goes a long way in identifying potential competitors and clients, while also pinpointing the ideal customer profile. This approach not only maximizes profitability but also ensures that every entrepreneur is ready to take their business to the next stage of growth. Whether you’re just starting out or looking to expand, focusing on the right strategies, hiring the right people, and maintaining alignment with your company’s growth objectives are crucial steps toward building a successful business.

If you would like to know more about how our services could help your business, please contact us at1-877-960-1818

April 25, 2018
Wall St. Megamergers Can (and Do) Affect Even Small Businesses
In baseball, it’s often said “you can’t tell the players without a scorecard.” What that means is that the lineup and roster changes so often that your favorite home team player may be here today and gone tomorrow.

In the business world, it’s gotten that way with companies and brands. Thanks to deregulation, major mergers and acquisitions have replaced or erased many long-time familiar names and created a host of new ones. And it’s not just big companies swallowing smaller ones. The smaller ones are gobbling up the big ones, too. Where once “too big to fail” was the buzzword of the day, now it may as well be “who’s next?”

The news is filled with daily stories of megamergers and superacquisitions. And why not? It makes for exciting copy and video clips. Here are just a few of the dozens of major mergers that happened in 2017:
- Pharmacy retailer CVS buys health insurance giant Aetna.
- Internet retailer Amazon takes over organic grocer Whole Foods.
- Cereal-maker General Mills grabs pet food manufacturer Blue Buffalo.
- Health insurer Cigna acquires pharmacy benefits manager Express Scripts.
- Magazine publisher Meredith absorbs media titan Time, Inc.
- Grocer Albertson buys competitor Rite Aid.
- Tech giant Broadcom acquires Qualcomm.
- These are just some of the more prominent.
Obviously there are scores more mergers – enough to fill this entire story, and maybe the next one, too. So there’s a lot of conjoining and getting together in the world of big business. How does a megamerger affect the small- or medium-sized business?

A small business isn’t usually going to be competing directly against a megabusiness. And a medium-sized one may occasionally go head-to-head with a global titan. Many small- and medium-sized businesses have carved a specialty niche in the marketplace, one that is not well served by one of the giants. However, despite the apparent lack of much of connection, megamergers do often negatively impact small and medium-sized business and their bottom lines. For this reason, the smart ones scan the daily headlines looking for impeding such mergers so they can plan for the aftermath on their operations.

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

What is the potential negative impact? The companies have often carved a niche and become suppliers to the corporate Goliaths. After the merger, the acquiring company frequently makes decisions on vendor redundancies. If the acquiring company is more comfortable with its own supplier, it will opt to keep it rather than switch to the vendor of the purchased company. That, of course, means the redundant vendor is now out of a potentially lucrative contract post-merger. If the lost contract was large enough, it could even kill a small or even a medium-sized business.

Layoffs at the merged big company following the acquisition also could affect future business. If the small or medium-sized business has established a good working relationship with a buyer, the smaller outfit could lose a champion if that buyer is later laid off due to the merger. When a contract comes up for renewal or the smaller company wants to expand sales, it may have to deal with someone either unfamiliar with them or even potentially hostile towards them, jeopardizing a valuable account.

Another potential trouble spot for a smaller vendor company dealing with a post-merger megafirm is getting paid for its services. Where the small company’s first client may have paid invoices every 30 or 60 days, the new supersized giant may decide it will only pay every 90 to 120. This can put a serious crimp on a smaller firm’s cash flow and ability to operate.

Then there is the other side of the coin. Rather than the large, merged company being a customer of the smaller firm, it’s the opposite – the small company relies on the megacorporation to supply it with a valuable component. Combining two companies of any size is a long, difficult process, fraught with confusion. If the large company suffers any inefficiency after a merger, such as in shipping out product or customer service, this could negatively impact the smaller company. Perhaps the new supply chain is not well thought out and as a result, the small company does not receive a needed shipment in time to complete its own manufacturing or customer service process. It could then face angry clients and lose business of its own due to now suddenly unreliable big business suppliers.

So, what potential megamergers and acquisitions lurk on the horizon? Some news sources say Salesforce will look to buy software company Mulesoft and Amazon is eyeing e-commerce retailer Wayfair. However, predicting the weather is often more accurate than trying to figure out the next corporate conjoining. Mergers and acquisitions is a fast-paced topic, and what could be a potential deal today could be reduced to an unfounded rumor tomorrow.

Much like the baseball scorecard mentioned at the beginning of this article, to keep track of all of them would require a stack of blank scorecards, a school’s worth of sharpened pencils and maybe even a crystal ball.
April 3, 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
Blockchain. Bitcoin. Big Deal… or Just Big Hype for Small Business?

Blockchain itself has many types of uses beyond cryptocurrency.

“Two bitcoins, four bitcoins, six bitcoins, a dollar… all for blockchain, stand up and holler!”

It’s unlikely varsity cheerleaders are going to do that routine along sidelines anytime soon. However, there are a lot of people rooting for the increasingly popular blockchain and bitcoin, and headlines about these technological phenomenon now fill the news.

If you don’t know what either of these does, you’re rapidly becoming a minority. Both are sweeping the business world. First because each offers a revolutionary new way to conduct commerce, and second because they have become the “next big thing,” much like the dot.com bubble of nearly 20 years ago. Are blockchain and bitcoin appropriate for small business? And will this bubble, like all other bubbles before it, burst?

Let’s start with a few simplistic explanations. Blockchain began as technology that allowed digital information to be shared, but not copied. As far as the business world goes, blockchain serves as a ledger or spreadsheet of sorts, to record value. Unlike a paper ledger or an Excel spreadsheet, Blockchain resides on the Internet. As such, it can be used to verify and record endless transactions – initially monetary transactions, but eventually any type of transaction involving something of value. A key selling point is that by utilizing Blockchain, users never have to go through a bank, credit card, etc.

Blockchain is digital, however it is not housed in any single server or database. Rather it utilizes peer-to-peer network sharing (remember Napster, an early example of peer-to-peer?). This means, essentially, that blockchain is everywhere. It is truly public and transparent, and its files are continuously updated and reconciled. As for security, proponents say that its decentralized nature protects it from hacking and interference (blockchain also employs encryption). It is not controlled by a single entity that can be corrupted and it has no fixed location that can be compromised or fail.

Bitcoin is an outgrowth of blockchain. More accurately, bitcoin is, itself a blockchain. Bitcoin is what is more accurately known as a cryptocurrency – a digital currency in which encryption techniques are used to regulate and verify the transfer of funds, operating independently of a central bank. According to one source, bitcoin has been in existence since 2008. However, only in recent years has it grabbed the attention of the business world, and in particular, investors.

Trading in bitcoin has seen a rollercoaster of activity, with dazzling highs and terrifying falls. It is definitely not an investment for the faint hearted. At the moment, many respected observers claim the bitcoin market not only has all the trappings of a classic speculation bubble, but that the bubble may have already burst.

This article is not about bitcoin investing. However, with the incredible volatility surrounding bitcoin trading, many concerned national governments are considering cracking down on both Bitcoin and other cryptocurrencies. This could put its future in doubt. One of the touted benefits of bitcoin is that it is not regulated or controlled by any entity. If that were to change, who knows what could happen?

This article is more concerned with whether utilizing blockchain and bitcoin are a good idea for a small business. On those subjects, the results are mixed. Bitcoin is a cryptocurrency that is an outgrowth of blockchain. In other words, bitcoin is just one feature of Blockchain. Blockchain itself has many types of uses beyond cryptocurrency.

Blockchain, for example, can be employed to bring products and services to market cheaply and quickly. It can also help reduce data storage and security costs, easing the economies of scale problems that often hinder small businesses. Best of all, in terms of our discussion, it can help enforce contracts, particularly so-called smart contracts or cryptocontracts. These are computer programs stored on blockchain technology that directly control the transfer of digital currencies or assets between parties under certain conditions. Smart contracts can be of help in paying employees, paying bills, filling orders or invoicing.

Smart contracts can offer small businesses several advantages over regular legal contracts drawn up by a lawyer. For one, they are quicker and cheaper to execute as they cut out intermediaries and third parties. As they are stored electronically, there is backup, meaning the other party can’t claim to have lost it. Finally, they are encrypted to provide safety. Here is an example of how to set up a smart contract.

Of course, bear in mind that few, if any, systems are perfect. Such is the case with a blockchain smart contract. Obviously, with any type of computerized, electronic technology, bugs can impair programming. Human error can also occur during coding. Lastly, at the moment, there are almost no government regulations regarding smart contracts.

So, are blockchain and bitcoins an effective solution for your small business? That’s ultimately a question only you can answer. As with any business decision, it requires proper due diligence and careful consideration. There is a lot of hype and cheerleading going on about blockchain and how it’s the next “big thing” in business. Sometimes it can be deafening. We’ve presented some advantages and disadvantages to blockchain, bitcoins and smart contracts to get you started on making an informed decision.

March 2, 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
What’s in Store for Small Business in 2018?

What’s in Store for Small Business in 2018?

The just finished 2017 was a banner year for investors and publically traded companies. The Dow Jones Average opened 2017 at 19,762 and closed 12 months later at a near record of 24,719 (up a hefty 25 percent). That’s nearly double the average of five years ago, when the Dow closed 2012 at 13,104. The rally shows no signs of stopping, as the average rose even higher to 25,295 in the first week of 2018.

So clearly, investors enjoyed the past year and are looking for more strong gains in the months ahead. But what about small businesses?What are their prospects for the New Year?

The overwhelming majority of small businesses are not publically traded companies. A rising stock market may have little to no effect on them. Do they have reason for optimism as we enter 2018?

According to the Metlife/U.S. Chamber of Commerce’s Small Business Index, the answer is yes. During the most recent survey, a healthy 63.2 percent of small business owners queried say they were confident in their local economies, the overall small business climate in the United States and in the health of their companies.

The South leads in small business confidence, while the Northeast comes in last of the four regions. However, the difference between the highest and lowest confidence scores is only 2.6 percent. However, confidence and optimism are not necessarily the same thing. While 63.2 percent were confident about their companies, only 38 percent were optimistic about the future.

That lower optimism rate could be a simple by-product of operating a small business, where the odds of long-lasting success can sometimes seem daunting. Another factor that could affect optimism is something that is actually good: increased competition. One-in-five small businesses owners expect to see increased competition in the coming months. That could indicate a growing economy, with more entrepreneurs willing to risk capital to start new companies. Indeed, nearly half of those surveyed say they believe their local economies are strong. That number has increased six percent since the second quarter survey of 2017.

Other survey highlights include 57 percent responding that they expect their revenues will rise in 2018. A quarter of small business owners plan to increase their investments in the coming year, a number that may rise following the recent tax bill enacted by Congress. Finally, 27 percent anticipate hiring more workers, up three percent over the last quarterly survey.

A Bank of America poll of small business owners found that optimism runs highest among the youngest operators. Millennial entrepreneurs expressed the greatest belief their revenues would rise in 2018 (81 percent), while Baby Boomer owners seemed rather dour in comparison (40 percent). Gen X came in between with 60 percent confident in rising revenues.

In another survey, conducted by Microsoft, 37.6 percent of small business owner respondents answered they planned to introduce new products and services in 2018, indicating optimism about the future. A similar number (35.7 percent) revealed they intend to adopt a new marketing strategy within the next 12 months. Nearly 20 percent said they were considering partnering with other small businesses to expand their markets.

While most small businesses then seem quite confident and fairly optimistic regarding the new year, there still are several areas of concern. Quite a few probably sound all too familiar.

First, of course, are taxes. However, this concern may lessen as a result of the recently passed tax legislation. Obviously, it’s far too early to tell the impact that these new tax rates will have on small businesses. Some time will have to pass before it can be determined if the effects were positive or negative.

A second small business concern is technology. Cybersecurity looms large here as companies conduct more business over the internet. Surprisingly, however, a significant portion of small businesses have little or no internet presence – be it the ability to fulfill orders online or market via social media – possibly due to cybersecurity concerns.

Finally, effective cash-flow management is a growing concern for small businesses. A weak cash-flow management system puts a company at constant risk. As a result, services such as invoice factoring have developed to help companies get a better grip on incoming payments.

On the whole, 2018 looks to hold promise for small business owners. What does the future truly hold? Only time will tell.

January 9, 2018
It’s Small Companies, Not Big Business, That Create Jobs
It’s Small Companies, Not Big Business, That Create Jobs.

Exxon Mobil. WalMart. JPMorgan Chase. Coca-Cola. General Motors.

You’ve no doubt heard of these giant, multinational companies. Their names are synonymous with “Big Business.” No, they ARE Big Business. Each has a large presence in the market place, each employ thousands of workers and each have billions of dollars in capitalization.

Because of their sheer size and tremendous wealth, many people assume the American economy revolves around giant corporations like these. When it comes time to look for a job, the best place to go is one of the titans of Big Business. After all, don’t they create the most jobs?

The answer is… no.

According to the federal government’s Small Business Administration (SBA), small businesses (defined as companies with fewer than 500 employees) have created 66 percent of net new private sector jobs in the U.S. over the last 20 years. That’s two out of every three since the mid-1990s! Narrowing the focus to just the years after the end of the 2008 recession, that number has remained fairly steady at 62 percent (8.3 million jobs created out of a total of 13.4 million overall). This growth played a major role in helping the nation’s economy recover.

Related Article: How a Factoring Company Can Aid Small Business Success

Related Article: How Factoring Companies Work

Here are a few more astounding and surprising facts about small businesses, courtesy of the SBA. Small businesses make up:
- 99.7 percent of U.S. employer firms
- 49.2 percent of private-sector employment
- 42.9 percent of private-sector payroll
- 46 percent of private-sector output
- 43 percent of high-tech employment
- 98 percent of firms exporting goods
- and 33 percent of exporting value
Now, it must be pointed out that 78 percent of the nation’s nearly 28 million small businesses are classified as non-employers. That is, they consist solely of the owner/proprietor and do not hire anyone. Most of these are home-based businesses.

That means the remaining small businesses do a lot of hiring in order to make up the 66 percent of all new net U.S. jobs.

More than half of small businesses opened survive five years or more, and about a third stay in business for 10 years. This means small businesses tend to provide fairly stable employment for millions of U.S. workers.

So, despite all the press and all the focus on Big Business, it certainly seems as if their smaller cousins are really the engines driving the American economy. How can small businesses be so successful when they face constant challenges from capitalization, supplies, logistics, and lack of resources in comparison to bigger companies?

A recent business study mentions several factors that often give smaller and medium-sized firms a decided edge. These include:

Speed to Market – Smaller companies aren’t burdened by a large decision-making bureaucracy or slaves to meeting analysts’ quarterly forecasts. They are more nimble and able to respond quickly to market forces. This means they can rapidly come out with new products and services before their big business competition and adapt their offerings as needed to meet changing customer demands.

Technology – Today’s powerful technology – from computers and analytical software to manufacturing and logistical solutions – has proven to be a great equalizer. It has given small businesses a way to catch up to and pass their larger competitors, who have previously enjoyed benefits from manpower advantages to economies of scale.

Capital – Small businesses now have greater access to financing than ever before, helping them get off the ground and to the market. Many investors and money managers now specialize in the small cap companies, knowing it’s this arena where the next great innovation often originates.

Small business, while often operating in the giant shadow of big business, is actually the true bright, shining light of the national economy. It’s where dreams begin, new ideas flourish and jobs are created. America would not be the powerhouse it is today without a strong small business sector.
September 8, 2017
Recovering Your Business After the Disaster
Recovering Your Business After the Disaster

Your business may run smoothly, but you should be Disaster preparation and recovery is a complex topic that is hard to cover fully and completely in one online article, you should be prepared for any business disaster. Here we discuss how you can recover from business disaster and or recovering your business after the disaster.

Houston and the Texas Gulf Coast have always been proud of their friendly, outgoing nature. However, the region recently had an unwelcome visitor that hung around far too long and left a big mess when it finally left.

Hurricane Harvey dumped more than 50 inches of rain on the Houston area – an entire year’s worth of precipitation for the city – in a matter of days. Flooded homes and anguished victims continue to dominate the news. However, homeowners and apartment dwellers weren’t the only victims of the deluge. Numerous small business owners/operators are also struggling with putting their enterprises back in operation post-storm.

According to the Federal Emergency Disaster Administration (FEMA), 40 percent of small businesses close their doors for good after a natural disaster. Of those that do reopen, less than one-third are still in business two years later. How can small businesses in Houston, Corpus Christi and other affected areas, pardon the pun, keep their companies afloat after Harvey? Here are a few ideas that may be of help in these trying (and drying) days and suggestions on successfully preparing for the next business disaster.

Preparation & Recovery from Business Disaster
1. Assess the situation and determine first if your business can continue after the disaster and if so, can it function in its current location or have to move to different facilities.
2. Document damage to your business with a camera or camcorder. File all insurance claims promptly and keep track of all correspondence.
3. Develop a communications strategy that keeps your employees, suppliers, lenders, customers and the media up to date on your situation, needs and future plans. Failure to do so may cause them to wonder if you’ve ceased operations and abandon you.
4. Reach out to local chambers of commerce, economic development associations, management districts and community support organizations. Each may be able to provide valuable recovery assistance or steer you towards additional resources and help.
5. Provide employees support and assistance. They are the ones who help your business succeed in good times and their loyalty and gratitude for your patience and understanding about their needs will be the biggest force in helping your business recover.
There are several government agencies available to aid in post-disaster recovery. These include:
- The S. Small Business Administration (SBA) can offer low-interest loans to tide your business over through the aftermath or offer deferments on existing SBA loans to ease the financial burden following the storm.
- The SBA also offers other business disaster-recovery assistance and programs. The SBA Small Business Disaster Recovery Center can be reached at 1-800-659-2955.
- The Federal Emergency Management Administration can offer aid and assistance to employees struggling to cope with personal losses post-Harvey.
- In addition, FEMA also has numerous tips and strategies for preparing for the next disaster before it happens.
Which neatly segues into our next topic: There’s no better time to prepare for the next inevitable disaster than right now. “Be Prepared” has been the famous motto of the Boy Scouts for decades and it’s great advice. Coincidentally, September is also National Preparedness Month, according to FEMA. So, here are some ideas to develop a disaster preparedness plan you can implement before the next storm hits. It can also help in the event of a fire, extended power outage, building collapse, terrorism incident, epidemic or whatever other unforeseen event nature or Man should throw your way.

Related Article: Fixing the Problems Facing Small Business is Good Business

Business Disaster Recovery Plan

A proper disaster preparedness plan should have at bare minimum:

An emergency response plan – This includes lists of important contacts and phone numbers/addresses as well as a clear, detailed outline of employee responsibilities in the event of a disaster.

A solid communications strategy – Keep your employees informed about the coming or ongoing emergency so they will know what is expected of them and what they can expect from you in the days ahead. You should also develop means to keep your customers informed in the days before (where possible) and especially following a disaster. Will you be able to continue servicing them? They need to know. Will you be closed or having to reopen in a new location? Will you be extending credit during the emergency to help? They’ll be curious about that.

Regularly scheduled evacuation and procedure drills – Develop a road map of where people should be and what they should be doing in each step of an emergency. Then schedule regular practice sessions where an imaginary emergency is played out. The more familiar people are with the plan in advance, the more confident they will be in the plan and less likely to get confused or panicked when a real emergency actually occurs.

Needed items on-hand before an emergency – Will you need a backup power supply? If so, buy one now. Don’t put it off until next week. The worst time to purchase one is when a storm is on its way. That sounds like common sense, of course, unless you are the one in line trying to buy a backup power system with a storm on its way. Likewise, with other types of business and personal supplies – stock up now when supplies are plentiful.

Way to secure supplies after an emergency – Following Harvey, trucks had an understandably difficult time navigating Houston’s flooded streets. As a result, many businesses (such as restaurants) that were otherwise undamaged could not open because they had no way to get supplies. Wherever possible, potential alternate suppliers should at least be identified beforehand in case they are needed.

Backup data and duplicate documents – Back up your computer files and store the backups off-site. Duplication increases the chance of data survival. If your business is flooded or destroyed but the files are elsewhere, you still have the vital information needed to restart elsewhere.

Obviously, disaster preparation and recovery is a complex topic that is difficult to cover fully and completely in one online article. However, the steps outlined above can help you get started on recovery from the most recent disaster, and put you in a more informed position to prepare for the next one.
September 6, 2017