Put Some Christmas Spirit in Your Business

Have some holiday cheer and try any one of the following:

Send Christmas cards and gifts - It’s a no-brainer to send out Christmas cards to customers, vendors, and anyone else you deal with, because it's a great time of the year to reach out and show people how much you appreciate them, and remind them how your business can help them. Don’t be afraid to include a coupon or any other call to action in your card, just do it in good taste. Also, if it is a very good customer or vendor do something less generic and more meaningful. Taking the time to find a personally appropriate gift will mean the world to your customers, vendors, and other people that can send you business.


Decorate - Whether you’re web-based, home-based, vehicle-based, or if you’re a brick-and-mortar entity (or some combination of all of the above), don’t hesitate to spread some holiday cheer. Put up some lights, turn on some Christmas music, and decorate a tree. Let people know you’re happy to celebrate the season and meet their needs.

Special offers - Highlight products that you expect to be popular during the holidays. Make an economy bundle of everyday products, such as a collection of personal care items or essentials that most customers need.



The TSBDC also offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.


Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdc


The Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Small Business Jobs Act - Lending

• SBA Enhanced Loan Provisions – $14 billion more in lending support
• The law extends SBA loan provisions (with the 90% guarantee and reduced fees) through Dec. 31. The $505 million in subsidy for Jobs Act loans will support about $14 billion in overall small business lending. In the first week of the Jobs Act, SBA provided nearly 2,000 loans totaling nearly $1 billion in lending support.
• Higher Loan Limits — significantly increases maximum loan sizes in top loan programs
• The law permanently increased 7(a) and 504 limits from $2 million to $5 million (for manufacturers in 504 loan program, up to $5.5 million).
• The law permanently increased microloan limits from $35,000 to $50,000, helping larger entrepreneurs with start-up costs and small business owners in underserved communities.
• Alternative Size Standards — more small businesses eligible to get SBA loans
• The law expanded the number of small businesses eligible for SBA loans by increasing the alternate size standard to those with less than $15 million in net worth and $5 million in average net income.
• Temporary Enhancements to Help with Working Capital, Commercial Real Estate Refinancing
• The law increased the maximum amount of SBA Express loans from $350,000 to $1 million (expires 9/27/2011).
• In coming months, the law will allow some small businesses to refinance their owner-occupied commercial real estate mortgages into the 504 loan program (expires 9/27/2012).
• Dealer Floor Plan Pilot Extension, Expansion
• The pilot program (begun 2009) will be extended to 2013. Though the old pilot has expired, the new, larger pilot will be implemented in coming months. This will help small businesses owners who sell cars, RVs, boats, other titleable inventory.
• Small Business Intermediary Lending Pilot  
• In six to twelve months, the law will provide for funding up to $20 million per year in small business loans over the next three years for an intermediary-facilitated loan program targeting small businesses that need loans up to $200,000.

The TSBDC also offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.


Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdc




The Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Small Business Jobs Act - The Tax Breaks

On September. 27, 2010, the Small Business Jobs Act was passed. The new bill extends the SBA loan provisions, tax cuts, and other opportunities in government contracting, exporting, and counseling for small business owners. You can learn about all of the new legislation at http://www.sba.gov/jobsact/.  For the purpose of this article we will focus on the tax breaks for small businesses, since they will affect the most businesses.

The eight tax breaks for small businesses contained in the Small Business Jobs Act are as follows:


1. The expensing limit has been expanded to $500,000 for the years 2010 and 2011. This is a large increase over the $250,000 that would have been eligible for expensing under Section 179 for 2010, and only $25,000 for 2011.

2. There is a carryback of general business credits increase from 1 year to 5 years. This allows most small businesses to offset as many as five years of taxes as well as the Alternative Minimum Tax.

3. The accelerated/bonus depreciation in the Recovery Act has been extended through 2010. Bonus depreciation (the additional depreciation is 50% of the basis of the property placed in service) would have expired after December 31, 2009 if it were not for its extension for 2010 in this bill.

4. There will be zero capital gains taxes for those who invest in small businesses before December 31, 2010, and hold for at least five years.

5. There is a temporary increase in deductions for start-up. Entrepreneurs can deduct $10,000 from their taxes for this year. The limit was previously $5,000. These expenses to open up a new business, incurred while you are setting up or researching the business, may include the cost of advertising, travel, market research or training employees prior to opening the business.

6. The act removes cell phone and similar telecommunications equipment from “listed property” classification, thereby relieving it from the listed property rules, and relaxing the rules on their deductibility. This basically means it will be easier to deduct the use of cell phones.

7. There are deductions for health insurance costs for the self-employed for 2010. All self-employed business owners, members of limited liability companies, 2% S-Corporation shareholders who are employees can deduct health insurance costs for themselves and their families on their tax returns. This means that business owners will be allowed the deduction of health insurance premiums on the business tax returns and schedules of the pass-through entities, rather than as adjustments to gross income on Form 1040.

8. There will be limitations on penalties for errors in tax reporting that disproportionately affect small business. Penalties for errors in tax reporting have been based on a fixed dollar amount and will now be on a percentage basis of the error itself.



Almost all of these new tax breaks are for this year only, so make sure to consult your accountant right away. And by the way, this article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. Again, for further information, please consult appropriate professional tax advice from your accountant. We have several in Sumner and surrounding counties.

More Time Management - Importance versus Urgency

Perhaps one of the simplest, yet most revealing concepts behind time management is importance versus urgency. Important items have a direct impact on your bottom line. They make you money and grow your business. Often, they are not glamorous or even pressing, but will have the most impact on your small business. Urgent items require immediate action, are visible, and often easy to do which gives us a sense of accomplishment. However, they usually have very little impact on our bottom line and can stagnate the growth in a small business.



Let’s take a look at Ava’s Catering Company to see how certain tasks in her business fall into important and urgent categories.

Important, Urgent

• A bid for a very desirable catering event needs to be submitted by the end of this week. This is a quality event and has a quick deadline. There is a tendency to ignore something like this, because the effort needed is heavy and just say “we’ll get it next time”.

Important, not Urgent

• Spending time at food service trade shows and other networking events that can assist in developing relationships with potential clients, other vendors, anyone else that can offer qualified referrals.

Not Important, Urgent

• Ava receives certain phone calls and emails that seem to need immediate reaction. If this is a customer with a specific issue take it, but in usually it is just someone else’s emergency. That call or email can be addressed at the end of the day.

Not Important, Not Urgent

• Facebook – Let me clarify. Facebook is a great marketing tool, it’s free, and becoming increasingly popular. However, just updating the status of your business, can easily send you into a four-hour research session to see “how that guy that was in the office next to yours, at that place you used to work, seven years ago, is doing”. This is fun, but IT IS NOT PRODUCTIVE. Yes, in theory he could become a customer, but be honest, he’s not. You just want to see how many kids he has. Update your business information and go back to work.

Take a look at the previous tasks. Where is most of your time spent? Remember the important ones result in revenue and the others result in stress. Take the time to identify the important tasks and spend your energy on them. The others need to be minimized, delegated, or just plain ignored.

Management Tips for Surviving the Economy

• Analyze the amount of inventory and other assets you have on hand. While you need products and equipment to make sales, you do not need an excess of either.

• Take this opportunity to focus on tasks that may include professional development and training or research and planning. If it is possible, you might even use this slow period for personal development, which will help you maintain the right attitude, while you begin to practice the other tips mentioned previously.

• High employee productivity is essential in poor economic times. You may need to look at your business and identify “that isn’t in MY job description” attitudes and make adjustments. It often cuts across the grain with small business owners, but surviving with a few employees is better than failing with all employees.

Buzzwords

On the right you will notice what I consider the be the most annoying buzzwords.  If you have any further suggestions for the poll or just like to post your most annoying buzzword, feel free to leave them here in the comments.  For inspiration, see below:

http://www.businessbuzzwordbingo.com/bbbingo.html


http://therussler.tripod.com/ling/corporate_buzzwords.html


http://www.buzzwhack.com/buzzcomp/indac.htm

Marketing Tips for Surviving the Economy

Marketing


• I know that I just said last week that it may be time to cut costs, but this is the area you may need to increase costs. That doesn’t mean to keep marketing with the same methods, but if sales are slow, you may need to actually increase marketing instead of cutting back.

• We have all heard the statistics about how much easier and profitable it is to keep a customer than it is to create a new one. Armed with that knowledge you should consider developing a customer loyalty program that will assist you in these tough times.

• Ask your customers what they want. Consider a customer survey. Internet survey tools like Zoomerang™ or SurveyMonkey™ can be free or very low cost.

• Identify and develop your competitive advantage. Why does the customer want to do business with you? What do you do better than your competition?

Financial Tips for Surviving the Economy

Financial
· Review your monthly income statement and cash flow statement. You want to look for trends and upcoming problems. If necessary, sit down with your accountant to review these financial statements.
· While increasing income takes a little time, decreasing expenses can be immediate. That doesn’t mean to just make broad cuts across the board. Instead, look for specific fixed expenses you can lower. Odds are that there are some expenses that you haven’t taken a look at in quite some time.
· If you carry an Accounts Receivable, make sure you have a collections policy and follow it. Don’t let customer credit become bad debt that burdens your finances.
· In uncertain economic times, there may be the tendency to pay off debt more rapidly than is required. However, building reserves cash may offer you a level of safety for future needs since the borrowing capacity of most small businesses has declined.

Chaos Management

Many of the clients I work with have become amateur fire fighters -- not in the literal sense, but in their business. Many business owners spend a disproportionate amount of time redirecting employees, on the phone with vendors and customers, and running errands. In fact, most of these business owners even thrive on it. It gives them a feeling that they are managing controlled chaos, and who doesn’t want to feel like a hero saving the day. Although fire fighting might be fun and make you feel important, in reality, you are spinning your wheels. This type of management usually leads to stagnant growth and disgruntled employees.
In order to avoid this type of management, you should strongly consider following a few basic rules that will allow you to run your business instead of your business running you.

Develop Routines
If you find yourself handling a piece of paper or email several times before being able to make a decision, you need a new routine. Every piece of paper or email that comes into your business should be handled only once, acted upon, and filed. Paper and email should not be shuffled around until the office fairy does something with it. If your desk is covered with paper or your inbox cluttered with old emails, consider cleaning them up and creating routines to prevent this from reoccurring.

Create Clear Responsibilities
Real business management means knowing who is responsible for what. If you have a business where everyone just “pitches in” to get stuff done and everyone does a little of everything, you have a real possibility for chaos. Although it is admirable to have a team atmosphere, you should have very clear job descriptions that describe in detail what everyone should be doing.

Delegate and/or Outsource
This point goes hand-in-hand with the previous point. Repeat after me, “I cannot do it all”. The famous last words of many strong business owners are, if you want something done right, you’ve got to do it yourself. That may only work for the first year or so. After that, it can become counterproductive. Delegating and outsourcing cannot only improve your business’ management, but also improve your revenue. The key to delegating and outsourcing is to find good employees, vendors, accountants, attorneys, and other professional advisors.

Make Business Planning Priority #1“I’m so busy I don’t have time to plan”. If this is your M.O. take another look at your work style. One of the greatest myths about planning is that it takes more time than it’s worth. Many small business owners spend their time reacting to issues, rather than being proactive. They then wonder why they seem to be spinning their wheels. Successful small business owners spend time every day on business planning. Right now is a good time to take time to create plans to reach your revenue and growth goals.


Do not let chaos management be the way you continue operating your business. Once you start using some of these basic practices, you’ll find yourself running your business instead of it running you.

The Magic Sales Box

* Disclaimer: I'll make this short and sweet. Having a presence online in today's economy is downright crucial. It's a way for customers to find you, learn about you, and even buy from you. I highly recommend that any business have a website, with someone working diligently on search engine optimization.
Now that I have my disclaimer there, I also want to express the importance of YOU selling your product and service. The internet or "Magic Sales Box", will not do it all, on its own. The reason that I state this (although most small business owners see this as obvious) is that many folks do not want to put in the tireless effort of marketing their business. They feel like if they just get an online presence, the hard will work will be done for them. Many times over, it does not! It is a supplement to other efforts, but that's all.
Think of it like exercising, without changing your diet will have only a moderate affect on your weight. You have to all of the hard stuff.

Target Marketing

One of my favorite topics with regard to small businesses is target marketing. Target marketing is concentrating your efforts toward the group of people or businesses that will bring you the most revenue. It is the bull's eye at which you aim your marketing efforts. The reason that this is one of my favorite topics, is that so many small business owners have the mindset that everyone is a potential customer, so that is who the target is -- everyone. For example, if I were to ask someone who owns a retail hat store who their target market is, it is not uncommon for me to receive the answer “well I sell hats, so anyone with a head.” While it is true that everyone could be a customer, it is highly unlikely that your customer breakdown will include an even amount of every type of person or business that is out there. It is probably true that 20% of the people or businesses that bring you 80% of your revenue have very common characteristics, such as demographics (personal information such as age, income, occupation, married or single, etc.), psychographics (purchasing preferences and interests such as personality, values, attitudes, interests, or lifestyles) and geographic (location such as home address, business address, etc.) location.

Once you have identified who your target market is, then you can design a specific marketing message catered to that group with similar characteristics.

Let’s say you know your target market is 15 to 25 year-old men who like country music, are frequent hat buyers, and live in rural areas. You can create an advertising message to appeal to those types of buyers. Additionally, you could buy spots in a newspaper or a magazine that appeals to this type of buyer, rather than use advertising that tries to be all things to all people.

Collections for Small Businesses

In this recent economy, customer budgets have been stretched. As many of you may have discovered, the last person to get paid may be you, the business owner. Although it may be understandable from the customer’s point of view, you are in this slowing economy as well, and the people you owe money to (insurance, rent, loan, payroll) will not care that you have not received all of your money. According to the Commercial Collection Agency Association, the probability of collecting on a bill drops to 70% after 90 days. And it plummets to 23% after a year.

Let’s take a look at some proven collection methods. I’ll warn you there are no silver bullets or magic pills, just good old fashioned proven processes.
· Create payment guidelines and get it in writing – This will create clear expectations of prompt payment. Make sure that the payment guidelines are on your order form, brochure and/or Web site. Also make sure they clearly spell out your terms of sale and payment options. Do not use generic terms, such as “due on receipt” and then not follow through. This will set the wrong example. If you say due on receipt, and the customer doesn’t pay immediately, then penalize them for late payment.
· Review Accounts Receivable reports frequently – Assuming that you have an accounting system in place, you should have an Accounts Receivable report that you can review at least on a weekly basis. This report will tell you what customers are 30, 60, and 90 days late. If you make this analysis a recurring task, just like processing payroll or any other weekly task, you will make it a habit of being informed about collection issues.
· Send a series of reminders – As soon as the payment date is missed, you need to have a system in place that reminds the customer. Using letters, emails, or phone calls will work. You can use software, such as QuickBooks®, to assist you in setting up reminders and even for processing collection letters. Also if you have a late payment charge policy, you need to enforce it each time.
· Be consistent with your collections process – One of the toughest things about staying on top of the collections process is getting too comfortable with the status quo of a tight cash flow. Sometimes you may think it is easier to put the pressure on yourself, your business, and even your family then it is to listen to hard luck stories or to chase deadbeats. But the simple truth is that your business and your stress level will be in much better shape if you are willing to make the tough decisions.
· What to do if all else fails – Many of you know that you will not always win in the collections process and there has to be some type of resolution. You may have to sacrifice at least 50% of the debt to collect anything at all. This may mean that, at some point, you may have to be willing to sue or send the debt to collections. Either option may be costly, but if the debt is significant enough it may well be worth it. Sometimes you may just need to know when enough is enough, and give up on the debt and chalk it up as a lesson learned. I would suggest that should always be your last option

SBA Economic Injury Loans

For those of you have suffered economically from the recent floods, there are loans available. The SBA Economic Injury Loan is designed to help a business that has suffered substantial economic injury, regardless of physical damage, and is located in adeclared disaster area.

Substantial economic injury is the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses. An Economic Injury Loan can help you meet necessary financial obligations that your business could have met had the disaster not occurred. It provides relief from economic injury caused directly by the disaster and permits you to maintain a reasonable working capital position during the period affected by the disaster.

In a nutshell, if you are unable to pay bills, because others owe money or lack of revenue due to the flood damage, this loan can be very helpful. However you should keep in mind that this is a loan, and if your business cannot handle additional debt, this will not be good route.

To apply for this loan online, go to https://disasterloan.sba.gov/ela/Default.aspx.

To simply learn more about the Economic Injury Loan, click the following link:

http://www.sba.gov/services/disasterassistance/businessesofallsizes/economicinjuryloans/index.html

How to Get Your Business Back on Track after a Disaster

We have definitely had our share of disasters in the Middle Tennessee area over the last few years (tornadoes, ice, drought, flood, etc.). Some of you may even be experts at getting your business back up and running. For those who are new to this, there are a million things running through your mind as you try to decide what to do next. There is no doubt that the next several weeks will be hectic. So the question; where do you begin?

The first thing you have to decide is “what does it take to make my business run”. What are the items you cannot do without? I have identified a list of these “must haves” for most small businesses:

Insurance:
*Your insurance agent will be a busy person for the next several weeks, so do not delay contacting them to inform them of what damages you have. Don’t assume that everything will be covered and make sure to document all of your losses.
Property:
*Make sure your facility is safe and free of water and debris before returning.
*Find an alternate worksite from which you can conduct business.
*If necessary, allow employees to work from home for a period of time. Yes, they may be more distracted at home, but if your workplace is not safe, it is the lesser of two evils.
Records:
*If you have water damage to your computer or laptop, you need to get your hands on another one as soon as possible. You will want to install your programs that you used to run your business, whether that is QuickBooks, Microsoft Outlook, spreadsheets, or any other contact management or industry specific software that you utilized. Once you do that, you can restore your backed up data (this is assuming that you backed up your computer files to something that wasn’t washed away) and get started.
*Gather all of your paper files, wet or not, and identify the processes that may be documented for operating your business from contacting clients, to tracking finances, to distributing your product or service.
Customers:
*Communicate to key customers that you are still operating.
*Use this time to also check on your customers and identify ways that you can support them through this process.
*This will be a difficult time for you financially, but if you carry an Accounts Receivable, you may want to work with several of your customers on payment plans, during this recovery period.
Equipment and inventory:
*Gather any lists of equipment and inventory that is on hand and check for any “unaccounted for” items.
*Order or even borrow any items that you need to operate your business, such as computers, inventory, vehicles, manufacturing, etc.
Employees:
*Locate your employees and make sure that they and their families are okay. If necessary, try to assist them in finding medical care, housing, food, and other necessities before bringing them back to work.
*If all employees are unable to return to work, make sure that you have identified the critical tasks necessary to operate your business and delegate them.
*You may need to modify office rules and procedures for a period of time. Dress codes, rules about children in the office, and restrictions on using telephones for personal business for example, may need to be temporarily disbanded during this recovery period.
*Make sure your employees are ready to come back to work. Exhaustion and lack of sleep can decrease alertness, impair judgment, and make people more vulnerable to accidents and mistakes.
Suppliers:
*Gather a list of all your suppliers. If they are local, they may have the same issues that you are dealing with now, and you may need to make alternate plans for supplies.
*If you are having trouble collecting Accounts Receivable during this period, you may ask your suppliers to work with you on payment plans as well.
With questions regarding SBA Disaster Loans you should visit: https://mail.tsbdc.org/exchweb/bin/redir.asp?URL=http://www.sba.gov/services/disasterassistance/index.html. Generally, SBA Disaster Loans are loans that are made available to help you cover losses that insurance does not cover.

Small Business Loan Workshop Coming Soon!

The How to Apply for an SBA Community Express Loan Workshop will be held at Volunteer State Community College in the Betty Gibson Building on May 12th, 4:00 – 5:30 p.m.

Are you looking for a small business loan for $5K, $10K or $25K?
Apply for a loan at this FREE workshop!

Register at http://www.tsbdc.org/ under the Training tab.

Learn step-by-step how to apply for the SBA Community Express; Patriot Express & Export Express Loans.
Loans are available in following amounts:
· $5,000, $7,500, $10,000, $12,500, $15,000, $20,000 & $25,000
These loans are SBA-guaranteed and payable over 10 years with no prepayment penalty! This is NOT a credit card loan.
SBA Community Express Loan Program Highlights:
· Loans up to $25,000
· No financial statements or collateral required
WHO: Full-time and part-time businesses are eligible.

IMPORTANT NOTES
Bring the following if you wish to apply for a loan:
Photo copy of your driver’s License or official ID,
Social security number or Evidence of LPRA status if not a citizen
Federal Tax ID number (if applicable), and
Your Business Checkbook.

All partners, principals or co-owners of the business must apply together.
Those with a criminal history or anyone who has defaulted on a government loan including student loans is not eligible. Non-profit businesses are not eligible.

Time to Dust Off the Business Plan

This is the time of year that a lot of business owners start looking at a vacation from their business. I’m sure that the landscapers think that I am crazy, but for many business owners this is true. And it is understandable too. The kids will be out of school, the weather is nice, and you rationalize that you have the rest of the year to make your revenue goals.

This is also a good time of year to update the business plan that you developed five years ago. It is probably filed away or on a floppy disk somewhere. A business plan should be a work-in-progress. Even successful, growing businesses should maintain a current business plan. It should be a road map for your business to follow. The importance of a business plan is even more significant now, especially in the face of economic uncertainty. A well developed business plan can help you reconnect with your customers, create happier employees, give you Key Performance Indicators (KPIs) to know when things are going well, and most importantly allow you to work on your business, instead of in your business.

I usually hear the argument that an existing business does not need a business plan. Business owners will also give me the example of how they know of a particularly successful business owner that never developed a business plan, so that proves that a business plan is pointless. That is like saying basketball players don’t need any college experience before playing in the NBA, because Kobe Bryant and Kevin Garnett did it, and hey, they’re all-stars. But for every Kobe Bryant and Kevin Garnett there is a C.J. Miles, Ricky Sanchez, James Lang, Korleone Young, Ndudi Ebi, Kwame Brown, Darius Miles, Sebastian Telfair, Jonathan Bender, Leon Smith, and a dozen other kids that we have never heard of that tried the same thing. Chances are you never heard of these guys and if you did it was for the wrong reasons. So the question is, are you a Kobe Bryant or Kevin Garnett of your industry? If not it may be time to dust off the ole business plan.

If you are interested in jump starting your business plan you can use a business plan outline and websites for research on our site, http://www.volstate.edu/TSBDC/Documents/Business%20Plan%20Outline.pdf.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

More on Small Business Loans - The 5 C's of Credit

Below are the 5 C's of credit that lenders use when they consider a loan.

Capacity to repay is the most important of the five C's. The lender will want to know exactly how you intend to repay the loan, while considering your past credit history and cash flow.

Capital is the money that you will personally invest in the business. Lenders usually want at least a 10%-20% investment from you. This indicates to them that you are willing to risk some of your own money.

Collateral or guarantees are forms of security you can provide the lender in case the loan is defaulted on. This means that the remaining 90%-80% of the loan will need to have something to collateralize or guarantee it for you. This is usually real estate or a fixed asset.

Conditions is what the money will be used for. Will the money be used for working capital, additional equipment, or inventory? The lender also will consider the local economic climate and conditions both within your industry and in other industries that could affect your business.

Character is the general impression you make on the lender. This is made up of your experience in running a business, in this industry and the "gut" feeling they have about you.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Small Business Loans

Right now lending is as tight as it has ever been, however, it is not impossible to get a loan. We have had several clients obtain financing over the past year, but they were more than qualified. I often get questions about how to get a small business loan. Below is what a bank is commonly looking for, especially in a start up business.

Obtain capital/loan if necessary. You will need the following:
1. A complete business plan that discusses how this loan will positively benefit your business.
2. A sources and uses list:
*How much the entire project will cost.
*How much of your own money you are putting into the project (20-25%).
*How much money you need to borrow.
*Provide a list of how the funds will be used (be specific).
3. A completed personal financial statement.
4. Two to three years of tax returns.
5. Cash flow projections for one to three years.
6. If applicable: Copy of leases, purchase and sales agreements, partnership agreements.
7. A completed loan application (provided by the lender).
Any other information that you feel may be helpful to the lender.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Break-even example

Let’s take a look at the example below to calculate break-even for Bill’s Lemonade Stand:

• Fixed Costs=(Rent, insurance, marketing) $300
• Gross Margin % (Covers cost of lemons, water, sugar) 30% (for every $.10 sale $.07 covers immediate costs)
• Break-Even, (FC)/(GM)%, $300/30% or .30 = $1,000

So how many sales will the lemonade stand have to make to break-even?

Divide the break-even point by the unit cost. In this case the break-even is $1,000 and each cup of lemonade is sold for only $.10. $1,000/$.10 = 10,000

This means it will take 10,000 cups of lemonade per month to break even. This will now equip Bill with the information he needs to be successful in making business decisions. It sounds like Bill may want to raise the price a little.

If you would like to take a more in depth look at calculating your break-even use the link below. You will be able to identify the number of units that it will take to break-even. Units could be the number of products or services you have to sell to break-even. http://www.dinkytown.net/java/BreakEven.html

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Break-even for Small Businesses

What is break-even? I could give you a multitude of different definitions and formulas that could make your head spin. However, I think I will opt for the down-to-earth definition. Break-even is the point at which you are not making any money and you are not losing any money. You are simply breaking even.

Knowing your break-even point is one of the most important pieces of information that a business owner should know. Whenever I ask someone if they know what their break-even is, I always get the answer of “I have a ballpark idea of what it is”. This is not good enough to make important decisions in your business such as hiring additional personnel, buying a piece of equipment, or offering a new product or service. You need to know exactly how much money it takes to break-even.

There are a variety of different ways to calculate your break-even point. For the sake of this blog, let’s use the simplest one, which is:

Breakeven = Fixed Costs (FC)/Gross Margin (GM)%

Fixed costs are any costs that your business incurs whether you make money or not, such as, rent, utilities, insurance, taxes, office expenses, etc. Gross margin percentage is what you make after pay immediate expenses associated with the product or service you offer. This could be materials to make the product, payroll for the service, and even sales commissions.

Next week we'll look at an example of how to calculate break-even. And when I say we, I mean me, my wife, and the one other random person that may read this.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Cash Flow for Small Businesses

One of the big issues facing small businesses is trying to figure out where your money is going. Many times you can show a profit on an income statement, but the cash flow (real money in, real money out) will be almost negative. Here's a tip. The cash flow CAN NOT be negative. When it hits the red line, it is usually game over, because there is no money to pay the bills.

Don't ever think you're too busy making sales and working in your business to worry about your cash flow. This way of thinking is the same as burying your head in the sand and just hoping everything will work itself out.

Click here, http://www.volstate.edu/TSBDC/tools.php, for a financial worksheet to get you started.

Remember, your cash flow is not the same as your profits. You can have a profitable business, but a negative cash flow. Prepare a monthly cash flow statement to ensure that you don't get caught unexpectedly without enough cash to handle your day-to-day operations.

Do not hesitate to call or email the TSBDC for assistance in putting together your cash flow.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Interviewing

One question that I get quite a bit is, "How can I make sure that someone can do, what they say they can do, during an interview?". Unless you can get them to agree to a polygraph test, you will have to rely on your own sleuthing skills. One way I have found to be successful for the small business owner is to ask behavioral style interview questions. Behavioral style interview questions ask the candidate how they have handled a particular situation in the past. You may ask for a specific example as well. Instead of asking “how do you handle stressful situations”, ask “how did you handle a stressful situation at the last company you worked for and what was the result”. This prevents elaborate, made-up answers that may or may not have any actual substance to them. What you are looking for is someone who has experience with the skill set that you are seeking. To find more examples of behavioral style interview questions review this link http://career.berkeley.edu/Article/010928a.stm.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Data Backup for Your Small Business

Eventually, almost every computer crashes and takes your data with it. Data files such as, QuickBooks®, Microsoft® files (Outlook, Word, Excel, Access, PowerPoint), pictures, industry specific software databases, or anything else could be lost forever. This can be detrimental to any size business. You need to make an effort to back you data up daily. You can use a variety of methods ranging from something as simple as a DVD backup to something a little more substantial, such as an external hard drive. A flash drive is convenient and easy to use, but not exactly a long term solution.





If you are looking to use an online service and do not have a substantial amount of data, try using a free or inexpensive service to begin with. Consumer Reports suggests the data-backup service Mozy (http://mozy.com/). They say it offers the most features and control, scheduling backups is easy, and customer service is quick and helpful. The service is free for up to 2GB of data, and $4.95 per month gets you unlimited storage. Another service, Xdrive (http://xdrive.com/) lets you store up to 5GB for free; $9.95 per month gets you 50GB.



I’ve always said that the best option is the one that you will personally remember to use. If you feel you need additional assistance, it is always a good idea to consult an I.T. professional.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Time Management Tools

It usually seems that something is always stealing the business owner's time. It's time to enlist some help. The best way to embrace time management is to use one of the following tools:

1. A Day-Timer® - This uses a proven system that is inexpensive and allows you to easily prioritize tasks and document important items.
2. Microsoft Outlook® - This software is a robust calendar, task list, and contact database all rolled into one. It gives you the ability to set electronic reminders that will keep you on task, keep track of all of your tasks and allow you to prioritize them, and keep up with everything that you do with a contact.
3. A PDA/Cell Phone – You can use virtually any pda or cell phone to keep contacts and to set reminders of important activities. In many cases a pda or cell phone can even sync up with Microsoft Outlook® to keep you on track on the road or at your desk.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.

Organization Chart

All of the tasks and activities that you identify to reach goals need to be assigned to someone in your business. The best way to do this is with an organizational chart. Even the smallest businesses should have an organizational chart. An organizational chart allows you to not only identify what departments your organization has, but also to identify what departments that you will need to create. You can then begin to plug in existing employees. Lastly assign tasks to each of the existing employees and you will then get a good idea of how large your organization will have to grow to reach your business goals.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to www.tsbdc.org.Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdcThe Tennessee Small Business Development Center Network is funded by the U.S. Small Business Administration and local community donors.