business investment

10 Small Business Money Myths to Reconsider

Annie Mueller — Fri, 23 Dec 2011 22:42:09 +0000

Link:

http://www.openforum.com/articles/10-small-business-money-myths-to-reconsider?

Money is obviously something a small business owner thinks about often. How much money do you have? How much money will it cost? How much money can you make?

While money itself may not be your sole aim in building a successful business, money-making is a necessary component of business success. Maybe your motive in business is to help people, or be creative, or change an industry. Or, perhaps, your aim is to make money. It doesn't really matter, because any business, no matter its purpose, must make money in order to sustain itself.

The Plunging-Profit Pattern

Unfortunately, what often happens at this point is a pattern that leads to less profit, not more.

The pattern starts with some long-held belief about money, and about how making money happens. You pull it out, eyeball it, and decide to try it out again. Or, more likely, you don't even consciously note it; you just allow it to control your decisions.

Maybe it's your Granddaddy's voice in your ear, saying that slashing prices is the only way to boost sales. Or maybe it's your old business mentor, giving you his tips on how to cut corner after corner, because that's his version of bootstrapping. Maybe it's your accounting professor, your tax guy, your lawyer, your spouse, your best friend, your own fears.

Whatever old hat it is you're waving around, it doesn't fit on your new business head. It doesn't work, and your profits plunge.

The Problem with Money Myths

Money myths aren't always incorrect. That's the trick, and that's why you keep believing them. Sometimes they do work, so their power over you remains. In fact, money myths are accurate in certain situations, but are not universally true. Applying a limited or faulty money belief as if it is universal or flawless is how small businesses wind up in trouble.

Ten Common Money Myths

Do any of these statements sound familiar? Have you heard yourself saying them or heard something similar echoing through your brain?

Myth #1: "Lowering my overhead (spending less) is the only/best way to increase my profits."

Myth #2: "Debt is the devil."

Myth #3: "Payroll is my biggest expense."

Myth #4: "I can't afford to __________ ."

Myth #5: "I have to offer the lowest prices to beat my competitors."

Myth #6: "Lack of money is my biggest business problem."

Myth #7: "Dumping money into XYZ area of my business would solve my problems."

Myth #8: "I'm doing the best I can with the money I have."

Myth #9: "Cutting jobs/cutting costs/cutting corners is my only option."

Myth #10: "Lack of profit is justifiable because it's a down economy."

Busting the Money Myths

Your job is to see the myths for what they are and are not. They are not universally true, unerringly accurate statements. They are limited. All you have to do is figure out their limitations. In other words, when should you keep the faith, and when should you stop believing?

Use these myth-busting questions to figure out if your money belief works for your current situation.

Why do I think this is true?
Where did I learn this?
What policies do successful businesses have about this money issue?
Is this the only option?
Is this the best option?
What are the alternatives? (There are always alternatives.)
What's the opposite?
What's the long-term outcome of applying this option?
If this were the only thing people would know about my business, would I do it?
What possible positive effects could this have?
What possible negative effects could this have?
What effect am I looking for?

Like it or not, part of your job is dealing with the money and being smart about the money. If the nuts and bolts of money-making don't appeal to you, you'll be tempted to divert to the easiest plan. The easiest plan will be the method that's most comfortable, and that's where the danger lies. Pay attention to your own money beliefs and make sure they're accurate for your actual situation before you act.

This article is from Annie Mueller of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Ways to Inject Cash into Your Business

Jacob Harper — Sat, 10 Dec 2011 23:39:21 +0000

Link:

http://www.openforum.com/articles/4-ways-to-inject-cash-into-your-business

If you are a business owner you could probably use a bigger number on the positive side of your cash flow. Of course, the grand question is how best to accomplish that. You might think the answer to "How do I get more money for my business?" is "sell more of the goods and services my company provides," and you'd be right. But employing the economic skills honed at the lemonade stand isn’t the only way to succeed in business.

There are other strategies for injecting cash into your business that don't involve praying for an uptick in sales to flood your coffers. You probably offer important things you hadn’t thought of before that might be of keen interest to a buyer. And no, not your kidneys. We mean exploring options that you may not have considered previously.

1. Learn Your Grants

You’ve undoubtedly heard all the ballyhoo about stimulus packages and other nice, shiny presents for the “job creators.” Well guess what, Mr. and Mrs. Q. Business Owner: you are one of those fabled job creators. The grants are there, and the federal government is just dying to give you one! Well, “dying” is a strong word. Let’s just say “possibly willing to consider doing so after you fill out the paperwork.”

A grant is a gift to you for moving your business into the future, as a job creator in a desired area, or maybe even as a business that employs cutting-edge energy saving measures. Just check it out—maybe your business qualifies for one of these gifts from one of the 26 federal agencies that provide grants. What’s to lose in finding out?

2. Sell Your Debt

Banks love buying debt. Even today. Even after banks buying debt is what got the banks and the rest of us into the current, ongoing, global, catastrophic economic meltdown. But while banks have (mostly) quit absorbing the toxic loans that first sickened them, banks simply need loans to survive, especially good loans. And your loan—the loan made to a small business with good credit—might look mighty tasty to them.

If you show a history of having enough money coming in to pay off your loan in a timely manner (banks have learned their lesson on that one!), you might qualify for a new loan that pays off your current small-business loan at a lower rate. Of course, shopping around for a new loan is not guarantee of a better deal, but, as with grants, the effort could be more than worth the cost of your time to investigate.

3. Talk to the City, Talk to the County, Talk to the State

The local government in which your business operates has an interest in seeing your business succeed and subsequently create more jobs. Thus, there is a chance that the community, the county, or the state would be willing to give you an ultra low-interest loan to establish, expand, or simply keep your business afloat. Or maybe the local authorities are offering tax incentives to encourage you.

There are many possibilities— tax breaks for locating in gentrifying neighborhoods, resources for getting your store used as a film location, among others. Visit the websites of your various local government entities, call up the civic chain, and find out what’s available.

4. Move the Dead Weight!

"Dead weight" here does not mean the employees who are actively dragging your business under, although, by all means, get rid of them, too. Dead weight means any and all inventory and equipment that is taking up space rather than producing income. If you need cash, move the stuff that’s slowing you down.

One truth for everybody—individuals and businesses alike—is the longer they stick around in one place, the more stuff they acquire. But you can break this habit of accumulation if you just remember that everything you have is wanted by someone. No business should go under when they still have stuff, even if it appears outwardly useless. Someone, somewhere will take it and pay you for the privilege. I have yet to find a single thing that cannot be sold via Craigslist.

Move that dead weight, upgrade your business with the cash you realize, and move forward, footloose and fancy free.

This article is from Jacob Harper of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Examples of Great (Small) Investments for Small Business

Annie Mueller — Fri, 09 Sep 2011 18:57:52 +0000

Link:

http://www.openforum.com/articles/10-examples-of-great-small-investments-for-sma...

Don't be afraid to spend money on your business; just be sure you're spending on stuff that will help your business grow.

Here are 10 stories, from real small businesses, of small investments that have turned out to be well worth the cost.

1. Administrative Help

"One of the most important investments that I've made was setting a budget to have office help. Although it was challenging to spend resources on hiring an administrator, the move turned out to be vital to the company's functioning. We have been more organized, more productive, and I have had the time to think beyond the daily operations." – Alexandra Mayler, founder of Thinking Caps Tutoring and author of Tutor in a Book (Adams 2010).

2. Visible Blogging

"My biz partner and I created a simple blog as a way to increase visibility... We made an initial investment of about 6k to have the blog created and within the first few weeks, the blog had netted us projects worth several times the initial investment." – Julie Upton, M.S., R.D., CSSD, Appetite for Health.

3. Tailor-Made Training

"We decided to invest in a more streamlined training program for our new employees. We created twenty 10-minute videos describing the different parts of our company, our procedures, and our history. The videos have been a big hit – our new hires love them, they save us time, and they guarantee that nothing slips through the cracks in our training program." – Sander Daniels, Co-Founder of website, Thumbtack.com.

4. Buzz-Worthy Giveaways

"I've conducted giveaways of all sorts of products from t shirts to electronics and have realized that I get the most bang for my buck through these sweepstakes. ...The better the prize, the more exposure. I've also given away an Xbox 360 and that received over 11,000 views and thousands of entries." – Ismail Humet, Co-Founder of MyFreebeez.

5. Smart Sponsorships

"I agreed to sponsor the state-wide gathering of the MCEEA (Michigan Career Educators and Employer Alliance). The price was right – only $300 for a Silver Sponsorship plus attendance and one year membership in the organization. It was a great investment! Not only was my name on the literature and all the Powerpoint presentations, but also I met great employers and candidate referrers at the conference." – Adam Kaplan, Big Tent Jobs, LLC.

6. Clever Contact Management

"We invested in using Highrise, a CRM software-as-a-service by 37 Signals, and you could make a claim that it's the best $24 a month we spend. ...Highrise has paid us back by helping to remind us who we should be following-up with, and keeping a history of it, so that we know right away how we met, what we've talked about, when and where it happened." – Philip S. Chang, partner, Carbon: Publicity & Strategic Communications for Talent.

7. Submersive Learning

"Hands down the best investment has been to attend conferences. Spending days submerged in my business increased my focus, given me new product ideas, and placed me in a room of aggressive and successful entrepreneurs." – Lauri Flaquer, Author, Speaker, Business Consultant, Saltar Solutions.

8. Deals on Meals

"I purchased an Entertainment Book for my region that included coupons and reduced priced meal deals for local restaurants... As a result of using the Entertainment Book and other discount meal programs, I have reduced our annual food and entertainment costs by approximately 30%. I have also discovered many new dining options for future meetings as well." Crystal L Kendrick, President, The Voice of Your Customer.

9. Chief Financial Consultant

"When I first launched my business in 1999, I was the bookkeeper/controller/CFO/CEO. As we grew, I added a bookkeeper, then a controller. Last year, as we approached $2 million in revenue, my advisory board recommended I hire a CFO consultant to take our financial performance to a new level. Our CFO consultant has been a key player in our success this year and a great investment." – Bibby Gignilliat, Founder and CEO, Parties That Cook.

10. Technology for Technology

"I added a zBoost-SOHO cell phone signal booster to my home office and the problem with poor phone reception was resolved. No more problems with missed or dropped calls." – Roni Pridemore, AquaPR.

This article is from Annie Mueller of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Bad Financial Habits You Should Drop

Annie Mueller — Wed, 24 Aug 2011 21:38:38 +0000

Link:

http://www.openforum.com/articles/8-bad-financial-habits-you-should-drop

Bad habits, you may have heard, are just as much work as the good ones.

Once you establish a good habit, it's a matter of routine. Imagine having routines in place that keep your finances on course. Sounds great, right? To get those good habits in place, you first must face the bad financial habits you have now. Face them, and then drop them like the hot potatoes they are.

1. Being Disorganized

Disorganization costs money. Lots of money. Money spent on late fees, interest charges, memberships with groups you no longer associate, subscriptions to journals you no longer read, customer invoices that go unpaid, and warranties that never get filed.

Guess what the default system for everything is? Disorganization. Without intervention, the world tends toward chaos. This is especially true of desks.

That means that if you haven't consciously put systems in place, all the paperwork and upkeep of business finances will morph into a hideous beast of chronic disorder. Don't let your papers stack up, your invoices fall behind, or your payments arrive late.

2. Doing Your Own Taxes

Unless you are an accountant, it's good business practice to hire one to make sure your taxes are done properly. It isn't that the system is so complicated you could never handle it. It's more that your time is better spent doing what you already know how to do.

Doing your own taxes may not get you in trouble with the IRS, but it will probably cost you in taxes you didn't actually have to pay.

3. Being Afraid to Get a Loan

There are plenty of bad reasons to get a loan. There are also plenty of good reasons.

You might get a low-interest loan and avoid high interest charges on inventory.
You might get a loan in order to relocate your business to a bigger and or better location, with a resulting increase in profit.
You might need a loan to purchase equipment that will automate some part of your business process, speeding up production and freeing up your employees for more important work.

A good loan is one that will result in your business being able to make more money. Don't let fear keep you from building your business.

4. Undervaluing Your Products or Services

I recently purchased some handmade baby care items from a friend who is much more craftily inclined than I am. Every piece is high quality, hand-sewn, and detailed.

And the amount she charged me? Ridiculously low.

I'm no expert in handmade baby gear, but I know a good thing when I see one, and I'm willing to pay a decent amount of money for it. So are your customers, unless you tell them they don't have to. If your products and services are meeting a demand, allow your prices to rise to that demand. Value what you produce as much as your customers do.

5. Letting Small Leaks Sink Your Big Ship

Two examples: overdraft fees and warranties.

Overdraft fees, late fees, and the like, can suck your bank account dry and can mar your financial reputation with potential lenders and investors. It's money spent on nothing but your own disorganization. Don't do that.

If you perform any type of warranty work but fail to submit a warranty on time or according to proper procedure, you're doing work for free. Is this your intention? I'm guessing not. Don't do that anymore.

Look for the small leaks, because small leaks have a way of becoming big leaks.

6. Ignoring Investments That Boost Productivity

It may be a new piece of equipment, a new hire, or a new system that will take some time and money to implement. If you know you can increase the overall productivity of your business, you shouldn't ignore the opportunity to do so.

There are smart investments that can help your business be a leaner, meaner, profit-producing machine. Or you can stick that money in your pocket and keep chugging along at your current pace.

7. Trusting That You are Getting the Best Value

Your customers do comparison shopping, and you should as well.

Two years ago when you got that new software or signed that phone contract or joined that big box store for better deals on office supplies, it was the best value. Is it still the best value?

By doing a little homework every six months or so on your standard operating costs, you can be sure you're not missing out on a better value. And the best part is that you don't always have to switch services or providers. Keep reading...

8. Failing to Negotiate

Say you do some research on Internet providers and discover that there's a great deal from another source. Don't call your current provider to cancel; call to negotiate.

In order to keep your business, your provider might quickly match the competitor's offer, and you're saved both the hassle of switching and the extra money you were paying.

Don't be afraid to negotiate. It's not bad manners to negotiate; it's good business.

This article is from Annie Mueller of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: