Ron Consolino Advises Small Business

How to Survive the Seasonal Sales Cycle

2012-01-15T22:00:00.001-06:00

Q: Any tips on how to survive a highly seasonal small business?

A: For many retailers the holidays are a time when they encounter a huge spike in business. Seasonal businesses dedicate a large part of the year preparing for those certain weeks or months when most of their revenue is generated.

Those boom times come at a price—financial survival throughout the remainder of the year when business slows to a trickle.

To help smooth the bumps it will be important to create a tight budget and stick to it throughout the year. Create a special cash reserve account for use only in leaner months. Set money aside whenever you can. Creating a cash flow forecast will help you identify patterns and see what you are up against. Include a worst-case plan to anticipate any nasty shocks.

Operating a seasonal business also requires that you plan and use your time more efficiently than other business owners. Some periods may call for only 25-hour workweeks, while others go far beyond that. To make sure everything gets done and also avoid burnout, you’ll need to schedule your time carefully.

Put slower times to good use by using them to update your Web site, catch up on maintenance, strengthen customer relationships or write marketing plans. You may want to employ only a small core of permanent workers and use temps or interns to fill in. Consider offering off-season sales or rates, and look for ways to generate revenue during quieter periods.

Owners of seasonal businesses can also take advantage of CAPlines, an umbrella SBA 7(a) loan program providing guaranteed loans designed to help small businesses meet short-term and cyclical needs for working capital. With the Seasonal Line, your business must have established a definite pattern of seasonal activity. Eligibility is based on the size and type of business, how the loan will be used, and the availability of funds from other sources. To learn more about CAPlines, click Research SBA Loan Programs under the Loans and Grants section of www.sba.gov, then go to Special Purpose Loans.

To learn more about operating seasonally, contact SCORE, America’s free and confidential source of small business mentoring and coaching. SCORE is a nonprofit association of more than 12,000 business experts nationwide and 90 in the Houston area who volunteer as mentors. SCORE Houston offers low-cost seminars and workshops. Visit www.scorehouston.org to learn more about valuable SCORE resources.

Help with worker classification issues

2012-01-03T10:29:00.002-06:00

Q: When I started my small business a few years ago, I paid my workers appropriately as independent contractors because I was using them on a project basis without a lot of supervision. As my business has grown, though, I’ve evolved to the point where I use them continuously under my supervision and they really should now be classified as employees. Is there any way that I can switch their classification without exposing myself to heavy IRS penalties and back taxes?

A: It’s not unusual for employers to find themselves in this situation. Fortunately, the Internal Revenue Service recently released a new program that can provide the relief you are looking for. This new IRS program is called the Voluntary Classification Settlement Program (VCSP) and is meant to encourage employers to come in compliance with respect to their worker classifications.

The program allows employers to voluntarily correct misclassification issues going forward for workers who had previously been wrongly classified as nonemployees or independent contractors. While providing protection from the possibility of an employment tax audit for prior years, it offers substantially reduced costs for reclassifying workers.

A business owner who participates in the VCSP agrees to treat the class or classes of workers as employees for future tax periods for employment tax purposes. The employer will pay 10% of the employment tax liability that may have been due on the compensation paid to the workers, calculated at the reduced rates for the most recent year with no liability for any interest or penalties. For example, an employer who misclassified workers and paid them $100,000 in 2010 for wages below the Social Security wage base would owe only $1,068 in employment taxes, rather than $10,680, plus interest and penalties, for that year.

Organizations considering this program should keep in mind that the IRS is in the midst of a three-year program that significantly increases the number of worker classification audits.
There are more details to the program than I can describe here. But this may be a good time to “clear the air” with the IRS with respect to employee classifications with minimal cost and exposure. Deciding who can legitimately work as a contractor and who must be given employee status has become a difficult matter for small business owners. So, consult with your CPA or tax attorney to get advice on how best to take advantage of this opportunity.

Can I write off start-up costs?

2011-12-13T21:04:00.000-06:00

Q: Can I write off the money I’ve spent to research and prepare to startup my new small business?

A: Yes, you can claim tax deductions for, i. e., “write off,” amounts incurred in connection with investigating, creating or acquiring an active trade or business before you begin operating. But the tax and accounting rules for startup costs are complex, so you should consult with a CPA.

For tax years beginning in 2010, you can write off up to $10,000 in startup costs and another $10,000 in organizational expenses in the year that you start your business. These deductions are reduced if you have more than $60,000 of either type of expense. Any costs over the $10,000 limits will have to be amortized, or spread out, over 15 years.

Sound like a long time to have to wait to get the full benefit of a startup deduction? It is. But most small business startups typically don’t have much more than $10,000 in total pre-opening costs and can live with these rules.

Startup and organizational costs incurred by new businesses are generally treated as capital expenses. Therefore, they need to be amortized, that is, part of the cost is “written off” in each of a number of years.

Startup expenses include such things as the cost of travel, trade shows, educational or training seminars, consulting fees, building costs, and supplies or materials needed to get your business started (not inventory or raw materials).

Organizational fees include the costs relating to forming or creating the business, such as, fees paid to obtain licenses, and accounting or attorney fees paid to form a legal entity for your company.

But, from a tax standpoint, when does your business actually begin? You can be in business if you are ready to accept customers. The actual event that triggers you being in business will vary by the type of business and your own personal way of operating.

You don't have to have customers or made a profit to be in business, but, if you don't make a profit in three out of five years you could trigger the hobby-loss rule and face restrictions on your startup tax deductions. Review your situation with a good tax pro.

In any event, it should be clear that, for those investigating or starting up a business, it’s important to keep good records of your costs or you will have difficulty recovering all of them.

How to deal with burn-out

2011-11-29T12:24:00.000-06:00

Q: I’ve worked hard for several years to build up my business, but the long hours, missed weekends and pressure-packed deadlines are wearing me down. What can I do?

A: There are a great many rewards in running your own business. But you must also be aware of the trade-offs and sacrifices that come with being in charge. Over time, the stress and strain may take their toll on your physical and emotional health, affecting relations with your employees, family and friends as well as impacting your business. Fortunately, there are many good ways to keep business burnout at bay.

First, identify those responsibilities or activities that are causing the stress. What aspects of running your business regularly cause discomfort or even anxiety? Perhaps you dread mundane tasks like bookkeeping and filing reports, or having to make sales calls. You may have customers who are difficult to work with, or do not pay invoices on time. And, because you are responsible for everything your business does, you may find yourself obsessing about things beyond your control.

One cure for an overburdened mind is to shed some of your responsibilities. Members of your staff with specific skills or leadership potential may be good candidates to take on certain functions. Consider using a company that specializes in offloading the administrative work of businesses. If you’re a solo entrepreneur, it may be time to hire your first employee or outsource to a part-timer.

Schedule some “me” time and stick with it. You follow a regular maintenance schedule for your equipment, so why not treat yourself the same way? A monthly lunch get-together with colleagues and designated family nights are great ways to get your mind off business issues and reconnect with the people who matter most to you. Even a quick walk around the block will do wonders to refresh your mind and spirit.

Sometimes, problems or challenges aren’t the cause of burnout; it’s the lack of them. Look for new challenges to stimulate your interest and energy. Recapture the thrill you experienced when starting your business by considering expanding or enhancing your products or services. Make sure you plan staffing and resources to support any new venture, however, so you don’t unnecessarily add to your workload.

Seek advice from experts, mentors or experts. Many sources of burnout are common to entrepreneurs and you can learn much from their experience. SCORE offers many valuable resources to help you resolve your small business dilemmas.

Anticipate Trends to Capture New Business

2011-11-14T11:56:00.000-06:00

Q: My small business has been relatively successful so far. What’s the key to remaining successful?

A: Owners of new and growing small businesses today know one thing for sure: conditions on the business playing field can change rapidly. The technology that seemed cutting edge last year is now outdated; or worse, obsolete. Buyer moods can swing dramatically, and marketing strategies are in constant flux.

Anticipating trends can be extremely valuable in keeping you current on everything from sales strategies and customer desires to technology tools and the general economy. As your business grows, change will be inevitable and small business owners should constantly look ahead and seek out ways to shake things up. You need the attitude that whatever is done today can always be done better.

But how can you tell the difference between a fleeting fad and a true trend? Louis Patler, a market research guru for companies such as American Express and Dell, has spent decades tracking emerging trends and studying their impact on business. He says the key to successfully piloting a business in the years ahead will be embracing new ways of thinking.

For example, Patler says that truisms like “stick to what your business does best” are outmoded. If you want your business to grow, consider that past business traditions and processes might only hold you back. Trying new approaches is vital.

Not all customers are created equal. Some are more valuable and loyal than others, and those are the ones you should lavish the most attention on with special savings and service offers.

Advances in technology will continue to radically change how small companies do business. You will need to keep up. Small business owners who know how to acquire and manage information will achieve the most success. Capturing and analyzing data about customer needs, wants, behavior and how they use your product or service will become increasingly critical.

And just as your customers will put pressure on you, you should challenge your suppliers to find ways to reduce their prices, improve their delivery times, or evolve their materials or services to better meet your changing requirements.

To get ideas about new products, services or markets talk to your customers and suppliers, attend trade association meetings, and read trade journals and other materials. Anticipating trends in the business environment is not easy but is essential in remaining successful over the long term.

Why buy a failing business?

2011-01-09T19:51:00.000-06:00

A SCORE client told me recently that a friend of hers suggested that she consider buying a business that was not doing well. She asked me why she would ever want to do that.

Well a failing business might present an attractive investment opportunity for any number of reasons. When businesses for sale are failing, i. e., they have low or negative cash flow to the owner, you need to look under the cover to see what’s really going on in the business. The reasons the business is struggling could be correctable by the right buyer. And, if that’s the case, you need to make sure that what you are buying, with the necessary adjustments, will fit into a business plan that you believe will be successful.

Actually, the evaluation you should conduct is not much different than if you were considering buying a business that is profitable. You may find that the strong earnings of a successful business is based on factors which are temporary or depend on skills which you don’t have or are difficult to acquire.

A business may be failing because of owner mismanagement. Perhaps the owner doesn’t have the marketing skills needed to boost sales or maybe is not managing inventory in a cost effective way. This could create an opportunity for a motivated buyer with the capability to properly manage the business.

The owner may just be burnt out and may not have the energy to make the adjustments needed to improve the business. For instance, a business owner I visited recently has been running his business for a long time. His market has changed but he doesn’t want to make the investment in time and money to advertise and take orders over the internet even though the rest of his business infrastructure will support this. Again, this could be a good opportunity for the right buyer.

Sometimes early stage businesses fail because they run out of cash and can‘t raise more capital. This can happen even though their sales volume is growing nicely and can reasonably be expected to continue to grow. But a seller may have a long term lease or a loan payment that he or she can’t support any longer. A buyer with the financial resources and the know-how can treat the business as a startup but with a head start, thereby, avoiding many of the headaches entrepreneurs normally encounter when starting from scratch.

Of course, your evaluation may discover that a business is failing for reasons that can’t be easily resolved. In this case, you just keep looking for that good investment opportunity. There are many of them out there.

Why prepare a business plan?

2010-11-14T06:48:00.000-06:00

Q: My partner and I are planning to start our own business in a field in which we are very experienced. We don’t need financing, so why should we spend time preparing a business plan? My father didn’t have a business plan when he successfully started and ran his business many years ago.

A: Starting your own business can be the most rewarding experience of your life or it could become your worst nightmare. Though the overall statistics vary, at a minimum, half of the small businesses fail within the first two years and 80% fail within the first five years.

Why do so many small businesses fail?

Business is risky, especially starting a new one. You may be risking your own, someone else’s, or borrowed money, but, at the very least, you are risking your own time, energy and self-esteem.

Many things have to go right for a business to succeed. You need the right idea, right market, right place, right time, right management and right amount of capital.

A well prepared business plan will help you answer these questions and reduce the risk. The value of a business plan lies in the thought process – not necessarily in the finished document. The disciplined, systematic approach helps you, and your advisors, to think things through thoroughly, to research to ensure all relevant facts are known and correct, and to look at your ideas critically.

So taking prudent steps to prepare an appropriate business plan which increases your chances of success would seem to make good sense.

A business plan does not necessarily guarantee success - you can start up successfully without one and you can fail with a good one. It simply increases your odds of success.

And, of course, business planning does not stop with a successful startup. Our business environment is always changing. The process of keeping your business plan current will provide you with a good decision making tool to deal with new challenges and opportunities when they arise.

Get help in preparing a business plan by attending SCORE educational events and using our free counseling services. Visit the SCORE website, www.scorehouston.org, where you will find training schedules, useful templates, links and other information to help you deal with many business issues including preparing a good business plan.

Lessons from an experienced entrepreneur

2010-11-06T15:59:00.001-05:00

My SCORE colleague, Irwin Miller, spoke at a luncheon some time ago about his long and very successful career in the pharmaceutical business in Houston. He spoke about his struggles to get started and the difficulties and many successes along the way. He concluded by identifying several key lessons based on his experience in running a successful small business.

• Hire good people. Effectively managing people is, of course, very important in running small businesses but it all starts by hiring trustworthy, hardworking, and capable people in the first place. If you don’t, you’ll spend more time doing their job than doing yours.

• Constantly improve. Irwin says, “If it’s not broken, fix it.” If it works today, it may not work tomorrow because the environment is always changing. You need the attitude that whatever is done today, can always be done better.

• Always innovate. Finding new ways of doing things is the best way to beat competition. The market rewards those who are the first to produce a new and valuable product or service.

• Put the customer first. Business starts and ends with your customers. If they feel they are your first priority they will keep coming back. Understand their needs and do everything you can to satisfy them. Satisfied customers are your most effective marketing tool and often are the best source of information for improving your business. So, ask them what you can do better.

• Take care of internal customers. Internal customers are your employees, suppliers, and service providers who are indispensable to operating a profitable business. Treat them well and they’ll spend that little extra effort to get the job done well and help you through difficult situations.

• Always keep commitments. Never let anybody down even if you have to eat some additional expense or spend some extra time to do what you promised. Your word must be golden and is essential to building a good, long-term reputation.

• Work hard. Most small businesses require a tremendous effort by the owners especially in the early going. You’ve got to attend to all the little details. Running a small business is not for the faint of heart. There will be many bumps along the road but you need to keep plowing through to succeed.

Other successful business men or women may have other key points but they won’t be too dissimilar to Irwin’s.

Common Mistakes Small Businesses Make

2010-09-19T16:18:00.002-05:00

Q: Now that I’ve gotten through the startup phase, what are some of the most frequent mistakes made by small business owners?

A: Our SCORE counselors talk to small business owners from time to time who may be struggling for a variety of poor decisions they may have made. While the list is long, the following are a few of the more common and serious mistakes we see.

People usually start with enough money to open the door, but often not enough to keep the door open. Their customers are happy, sales are growing, and they may even have broken even. Then that unexpected expenditure appears or a large inventory invoice or tax payment comes due, but there’s no money in the bank! Things snow ball from there and the business is in real trouble. The bank won’t lend them more funds, vendors won’t extend credit or a big customer won’t or can’t pay his invoice on time. They needed more contingency in their working capital budget at startup.

Sometimes, they stop planning. In particular, they don’t continue doing the kind of market research they did before they started up. So something in their environment starts changing and they are not aware of it. Their competition adjusts to the change before they do and takes the advantage. Our business environment is always changing and we need to frequently reassess where we are and where we are going to stay on the right track.

Why do they stop planning? Often it’s because they spend so much time running their business that they can’t find time to manage their business. They are so deeply involved in the operations they can’t see the future. Small business owners need to set aside specific time to attend to the management functions that keep their businesses running smoothly.

Sometimes the owner burns out and the business starts deteriorating. Owners can spend an enormous amount of time and energy starting and running a small business. This can take a heavy toll on the owners. Owners need to take time to relax and enjoy family and friends to recharge those business batteries.

And then they don’t seek timely advice. Small business owners need trusted advisors or mentors. They need someone to provide them objective opinions, someone they can bounce ideas off of. Family and friends may not always provide that unbiased opinion. Your advisors might include your attorney, accountant, banker or SCORE counselor. And keep your mentors informed so they can provide timely advice when needed.

Characteristics of successful franchisees

2010-07-27T20:24:00.002-05:00

Q: Is going the franchise route a better choice than starting your own business?

A: During the past several decades, franchising has become not only a uniquely American institution, but also one of the leading doorways into small business ownership. Every year, thousands of individuals choose to get into business ownership via the franchise route. But not everyone is suited to successfully operate a franchise.

To make the right choice for your own situation requires careful thought about your own goals, skills and personality and should be done before searching for and evaluating franchises. So what are the characteristics of people best suited for franchises?

If your appetite for risk is low, a franchise may be your best choice. A franchise lowers the risk because someone else has already pioneered the concept, tested the ideas and found out what works and what doesn’t. If you want to do all of those things with your own idea, then start a business yourself.

Successful franchisees don’t like to reinvent the wheel. They like to work within the proven systems and established procedures of the franchisor. They constantly ask advice of the franchisor support staff and other successful franchisees and follow the advice they get. They understand that they don't know all the answers and are willing to ask for help when they need it. This attitude enables them to achieve success more quickly.

Franchisees need to be prepared to give up some independence of action in exchange for the advantages the franchise offers them. The franchisor will specify how certain things must be done as part of the franchise agreement, but a good franchisor will be able to provide the training and support services needed to position the franchisee for success.

People and team-building skills are usually required of franchisees as are the abilities to plan, organize, administer and direct the work activities of employees. These skills are used to create loyalty, value and trust, and are probably the most important characteristics of all.

Those who have a firm sense of what they want to achieve and the drive and ability to execute a proven business model are far more likely to be successful. They will do whatever it takes to get the job done. This attitude shows in their every action like putting in long hours and handling multiple tasks. No matter what franchise you're interested in, you can be sure it's going to take work to make it successful.

After you can honestly say that you have these characteristics, then begin your franchise search and prepare a business plan.

What does it take to succeed in small business?

2010-07-12T09:39:00.000-05:00

Q: I’m trying to decide whether to start my own retail business. I have the experience to successfully operate the business, but what else does it take to succeed?

A: The fact that you are looking for success criteria indicates a realistic approach to entrepreneurship. Many folks jump in with both feet and ask questions later.

Entrepreneurs are generally inspired by at least one of two factors – independence and financial gain. Independence is sought to take risks and escape from other people’s direction. Many seek a haven from corporate bureaucracy. They want to be their own master, have a strong need for achievement and the freedom to make decisions. In short, they want the freedom that they did not have as employees.

The motivation for financial gain is generally considered to be unlimited. Importantly, the gains that are possible in new businesses must be great enough to offset the high degree of risk. Many entrepreneurs are so focused on escape that they ignore the unbalanced relationship between risk and reward and forge ahead in a high risk enterprise without taking the prudent steps to minimize risk, e.g., preparing a good business plan.

A Small Business Administration study identified five important predictors of an entrepreneur’s success. Drive is the most important attribute. New small business owners can expect long hours, high stress and endless problems, as they launch a business. The ability to maintain the necessary stamina should not be confused with the desire to succeed, although they are often interrelated.

Thinking ability encompasses creativity, critical thinking, analytical abilities, and originality. Often questions in this area include: Can I make a reasonable decision? Can I plan my strategy and take responsibility for carrying it out? Do I know when I need help and where to get it? No genius required here, just the ability to think clearly and analyze options.

People skill recognizes the importance of the ability to motivate employees, sell customers, negotiate with suppliers, and convince lenders. Personality plays a big part in success in this area.

Communication skill is the ability to make yourself understood. Part of this skill is the acknowledgement that muddled or abusive communications go unheeded.

Technical ability speaks to the need for entrepreneurs to know their product or service and their market. They must be experts in their field to operate their business with ease.

Finally, speak with a veteran SCORE counselor to get an objective assessment of your probability of success.

Family Businesses Meed Extra Care

2010-06-28T05:18:00.002-05:00

The family business is an American small business tradition, one that gives parents, spouses, children, and other relatives an opportunity to contribute to and share in a dream that can grow and prosper over many generations.

But without proper planning and management, family businesses can also be the source of contention, acrimony, and even irreparable harm to once-loving relationships. That’s why it’s important for aspiring entrepreneurs to fully understand the pros and cons of going into business with relatives and in-laws. The needs of the business may not always be compatible with family harmony, resulting in a situation that if handled improperly, can jeopardize the survival of both.

When bringing family members into a business for the first time, especially as investors or in a startup situation, you should consider putting the business relationship in writing. Family members sometimes buy into the excitement of a business startup without a clear idea of their role once the business is underway.

In an ongoing family business, it’s important to treat family members fairly. While some experts advise against hiring family members, that sacrifices one of the great benefits of a family business. Countless small companies would never have survived without dedicated family members. But avoid favoritism. Pay scales, promotions, work schedules, criticism and praise should be evenhanded between family and non-family employees.

Don’t become the employer of last resort for every distant relation who calls. Base employment on the skills or knowledge they can bring to the business. If your kids will be joining the business, make them get several years of business experience elsewhere first to help them gain perspective of how the business world works outside of a family setting.

Problems and differences of opinion are common in a family business, so it’s important to keep lines of communication clear. Weekly meetings to assess progress, air differences and resolve disputes work well for many family firms.

Just as solo entrepreneurs and non-related partners need to separate their business and personal lives, owners of family businesses need to prevent work-related issues from dominating family activities. While it may be difficult to totally confine shop-talk to the workplace, make it a standing rule not to discuss work and business issues at social gatherings or at designated “family times” where the focus should be on other things.

Many SCORE counselors owned family businesses. Why not have a chat with one of them and take advantage of their experience. Visit the SCORE website, www.scorehouston.org, to learn about our counseling, mentoring and education resources.

Are You A Duck or An Eagle?

2010-03-26T13:10:00.001-05:00

Are You A Duck or An Eagle?

Harvey Mackay is the author of two previous New York Times #1 bestsellers, “Swim With The Sharks Without Being Eaten Alive” and “Beware the Naked Man Who Offers You His Shirt”. In total, Harvey's books have sold 10 million copies worldwide, and have been translated into 37 languages. He also is one of America's most popular and entertaining business speakers. Toastmasters International named him one of the top five speakers in the world.

In 1959, at the age of 26, Harvey purchased a small and failing company that produced envelopes. Today that company has grown into a $100 million business employing over 600 people. It’s one of the nation's major envelope manufacturers, producing 25 million envelopes a day. As chairman, Harvey's philosophy is engrained in the company, beginning with its motto:

“Do what you love, love what you do and deliver more than you promise.”

Harvey Mackay tells a wonderful story about a cab driver that proves his point. Allow me to paraphrase the story of Wally the cab driver.

McKay was waiting in line for a ride at the airport. When a cab pulled up, the first thing Harvey noticed was that the taxi was polished to a bright shine. Smartly dressed in a white shirt, black tie, and freshly pressed black slacks, the cab driver jumped out and rounded the car to open the back passenger door for Harvey. The driver then handed him a laminated card and said:

'I'm Wally, your driver. While I'm loading your bags in the trunk I'd like you to read my mission statement.'

That was something totally unexpected from a cab driven, but something that immediately caught the attention of a business strategist like Harvey McKay.

Mission Statement: To get my customers to their destination in the quickest, safest and cheapest way possible in a friendly environment.

This blew Harvey away. And, as he got into the cab, he noticed that the inside of the cab was as spotlessly clean as the outside. As he slid behind the wheel, the driver asked, 'Would you like a cup of coffee? I have a thermos of regular and one of decaf.'

Jokingly, McKay said, 'No, I'd prefer a soft drink.'

Wally smiled and said, 'No problem. I have a cooler up front with regular and Diet Coke, water and orange juice. Which would you prefer?”

Almost stuttering, Harvey said, 'I'll take a Diet Coke.'

Handing him his drink, the driver continued, 'If you'd like something to read, I have The Wall Street Journal, Time, Sports Illustrated and USA Today.' Then the driver handed him another laminated card, explaining, 'These are the stations I get on my satellite radio, in case you'd like to listen to some music. I have the air conditioning on. Is the temperature comfortable for you?”

Still stunned, Harvey muttered, “Yeah, sure, that feels great. Tell me Wally, have you always served customers like this?'

Wally smiled into the rear view mirror. 'No, sir, not always. In fact, it's only been in the last couple of years. My first five years as a cabbie, I spent most of my time complaining like all the rest of the drivers do. Then one day I heard some personal growth guru on the radio. He said that if you get up in the morning expecting to have a bad day, you will rarely disappoint yourself. He also said, 'Stop complaining! Differentiate yourself from your competition. Don't be a duck. Be an eagle’. I thought that was pretty funny. But the man on the radio explained that ducks quack and complain. Eagles soar above the crowd.''

'That hit me right between the eyes,' Wally said. I realized that I was a duck, always quacking and complaining, so I decided to change my attitude and become an eagle. I looked around at the other cabs and their drivers. The cabs were dirty, the drivers were unfriendly, and their customers were unhappy. So I decided to make some changes. I put in a few at a time. When my customers responded well, I did more.'

'I take it that has paid off for you,' Harvey said.

'It sure has,' Wally replied. 'My first year as an eagle, I doubled my income from the previous year. This year I'll probably quadruple it. You were lucky to get me today. I had just delivered one of my regular customers to the airport. I don't sit at cabstands anymore. My customers call me for appointments on my cell phone or leave a message on my answering machine. If I can't pick them up myself, I get a reliable cabbie friend to do it and I take a piece of the action.'

Wally the cab driver made a phenomenal discovery, and ended up running a limo service out of a Yellow Cab, doubling, then quadrupling his income. He decided to stop quacking like a duck and start soaring like an eagle.

How about you? How could your business profit from the same attitude change that Wally the cab driver made? What changes would be necessary for you to differentiate yourself from the competition and begin to soar like an eagle?

Advisory boards are powerful tools

2010-02-21T13:26:00.000-06:00

Q: I overheard some business people talking about using advisory boards. What are they and what can they do for me?

A: There is no way you can have all the information and answers to every nuance of the business world. There’s just too much to know and the world keeps changing. So, you need to gather around you people with a genuine interest in your company and with the knowledge and experience to guide you in your business decision making.

These advisors could be friends from a different industry or field who provide a unique perspective. Or they may be recently retired executives or managers, vendors, or other business people who want to see you succeed. They are typically called an Advisory Board and serve as a sounding board, provide a source of ideas and expertise, and tell you if you are about to mess up.

Two to three people is sufficient for an Advisory Board for a small business. They will be expected to meet with you (usually on a quarterly basis) to discuss and advise. While being an active part of your business is payment of a sort, you could also pay your Advisory Board members by hosting a nice lunch each meeting, or by possibly paying each Advisory Board member an honorarium each time.

Prepare for each meeting of your Advisory Board by distributing an agenda to your Board members ahead of time. Include any related materials necessary. Perhaps more difficult, you need to be prepared to be completely open and frank with your Advisory Board, sharing both your hopes and your fears. They won't be able to advise you properly or well if you hold back.

If you are unable to find the right advisors, try the SCORE SMART Squad (Score Mentoring And Resource Team). This is a free service for small business owners and managers. They can provide one or a team of SCORE counselors with the experience to serve on your Advisory Board. Send an email to smartsquad@scorehouston.org with your name, contact information, and a brief description of your business and the nature of the challenges you are facing.

An Advisory Board is an especially valuable management resource for small businesses. No single person can know everything, and ad hoc, on the fly advice can be worse than none. An Advisory Board that meets regularly gets to know you and your business and can provide the management expertise you need to avoid mistakes and keep your business on the right course.

Using social networks could pay

2009-12-01T07:15:00.001-06:00

Q: What exactly is Social Media and can it help bring in business?

A: Like any emerging idea, the definition of social media is still a little blurry around the edges. Social media is an umbrella term that includes interactive broadcasts such as blogs and podcasts, as well as social networking Web sites. These Web sites often allow visitors to become users or members, create profiles, and upload and share content through the Web site.

There are hundreds of social media Web sites out there. One of the most popular is MySpace which was originally a place for bands to promote themselves. Anyone can create a profile and there are no identity checks. Companies targeting consumers often set up shop there.

Another is LinkedIn. This networking Web site allows you to create a profile and connect with colleagues, give and get recommendations, and find people outside your immediate network for new opportunities. One of the fastest growing social media sites is Facebook.

Why should you care about social networking sites? If you had a retail outlet you wouldn't set up shop where there's no foot traffic, would you? Well, many of your customers and clients may already be at social media Web sites. You need to go to where your customers are.

To get started with social networking, you may want to do some investigative work to find out where your best customers are. Since these sites offer free memberships, it only costs you in time to join multiple sites. Once you've joined, listen to the conversations around you. Each site may have its own mores, but generally people don't want you storming into a conversation to tell them how great your products or services are.

Once you feel comfortable with your surroundings, feel free to join in. Just don't make it a sales pitch. Find a group that you can participate in. If you sell dog products, find and join dog lovers' groups. If you're feeling really daring, start your own group, and invite current clients and colleagues to join in. A real estate agent might start a group focused on the local area (restaurants, schools, taxes, etc.), getting local business owners and residents to join together.

Using social media as a marketing or networking tool is in its infancy. Like a lot of marketing endeavors, the results may be difficult to track. But if you're on the sidelines, your competitors may be making connections and building relationships with your prospects. Are you willing to take that chance?

Volunteering with SCORE

2009-11-27T21:15:00.000-06:00

Q: I’m at the age of retirement and have an opportunity to sell my business. Although I’d like to slow down, I’m not ready to stop working entirely. Any advice?

A: Why not spend some of your time helping promising entrepreneurs start or run their own small businesses? You could share your business expertise, give back to your community, gain satisfaction from seeing others succeed and connect with like-minded people by volunteering with SCORE. Each year, SCORE counselors touch thousands of lives, generously sharing their knowledge and experience so that entrepreneurs can realize their dreams of business success.

Nationwide 10,500 men and women in 389 SCORE offices donate their time and talent to assist America's small businesses. At SCORE Houston, volunteers provide confidential one-to-one and team business counseling and low-cost training workshops and seminars. In addition, many counselors are virtual volunteers, providing email counseling directly from their homes or offices. SCORE members can not get paid for the services they provide to our small business clients.

Counselors come from a variety of occupations and backgrounds. Both retired and working professionals are welcome in SCORE. Many volunteers owned small businesses for years while others worked for large corporations.

Whatever their background, SCORE counselors share a belief that small business owners are more likely to succeed if they have a business mentor to guide them. We currently are seeking new members of diverse backgrounds and experiences to complement our current team of over 70 volunteers in the Houston area.

Our members choose from a variety of ways to contribute to our mission; but, a most of our counselors are focused primarily on helping aspiring entrepreneurs develop their business plans and launch their first business. Many work with clients to find the financing needed to start or expand a small business. Others are involved in organizing client educational sessions, carrying out our chapter treasury and accounting activities, managing our internal computer network, publishing newsletters, or other administrative functions.

New members go through an orientation program to get familiar with SCORE and comfortable with the counseling process. All members stay up-to-date by attending regular monthly training sessions.

In Houston, we share offices and work closely with the Small Business Administration. We have several satellite locations throughout the city. Check out our web site, www.scorehouston.org.

If you have any questions or would like to volunteer, please e-mail us at score37@scorehouston.org, or, call our office at 713-773-6565 and leave a message for our membership coordinator to call you.

Financing a Business with Retirement Funds

2009-10-18T09:12:00.000-05:00

Q: I’d like to buy a business but most of my funds are tied up in a rollover IRA. Is there any way to use those funds for a new business?

A: Yes, you can invest your retirement account funds in your own business. This can help get you off to a good start by building equity and reducing the need for debt and cash flow. These are important factors for the long-term success of your business.

Funding a small business through the use of retirement plans is ever more prevalent in today’s economic environment, as bank loans and other sources of capital have become more difficult to obtain. It can be attractive for individuals who have suffered from downsizing, closures and lay-offs or who have just retired early.

This type of self-reliant funding is available to just about anyone who has an existing retirement plan and who has terminated employment with the employer where the funds were accumulated or for someone who just has an IRA. The money invested through a properly designed retirement plan can be used to fund the start-up of a new business, purchase a franchise, purchase an existing business, and in some instances, raise capital for an existing business.

The process calls for the assets in your existing retirement plan to be rolled over – tax-deferred and penalty-free – into a newly established qualified retirement plan for you and your new company’s employees. Then the new IRA assets can be invested in the stock of the new company as well as mutual funds, individual stocks and other types of investments.

At the completion of the process, your new company can raise cash from the sale of stock to the retirement plan which in turn holds company stock as a plan asset. The cash can be used for legitimate investments in the business or to pay legitimate business expenses.

With this type of funding, it’s extremely important to consult with a firm that specializes in retirement plan design and administration. As with any qualified plan, compliance with rules and regulations is critical.

Business financing of any kind comes with risks – the risks inherently associated with opening a new business or purchasing an existing one. Before you decide to use your retirement funds, or any other type of financing for that matter, you should ensure that you have a viable business idea, a comprehensive business plan, adequate capital, and the consultation of small business professionals, like those at SCORE, who can provide advice and guidance for your new venture.

A Strategy for Beating Burnout

2009-10-04T13:40:00.000-05:00

Q: I’ve worked hard for several years to build up my business, but the long hours, missed weekends and pressure-packed deadlines are wearing me down. What can I do?

A: There are a great many rewards in running your own business. But you must also be aware of the trade-offs and sacrifices that come with being in charge. Over time, the stress and strain may take their toll on your physical and emotional health, affecting relations with your employees, family and friends as well as impacting your business. Fortunately, there are many good ways to keep business burnout at bay.

First, identify those responsibilities or activities that are causing the stress. What aspects of running your business regularly cause discomfort or even anxiety? Perhaps you dread mundane tasks like bookkeeping and filing reports, or having to make sales calls. You may have customers who are difficult to work with, or do not pay invoices on time. And, because you are responsible for everything your business does, you may find yourself obsessing about things beyond your control.

One cure for an overburdened mind is to shed some of your responsibilities. Members of your staff with specific skills or leadership potential may be good candidates to take on certain functions. Consider using a company that specializes in offloading the administrative work of businesses. If you’re a solo entrepreneur, it may be time to hire your first employee or outsource to a part-timer.

Schedule some “me” time and stick with it. You follow a regular maintenance schedule for your equipment, so why not treat yourself the same way? A monthly lunch get-together with colleagues and designated family nights are great ways to get your mind off business issues and reconnect with the people who matter most to you. Even a quick walk around the block will do wonders to refresh your mind and spirit.

Sometimes, problems or challenges aren’t the cause of burnout; it’s the lack of them. Look for new challenges to stimulate your interest and energy. Recapture the thrill you experienced when starting your business by considering expanding or enhancing your products or services. Make sure you plan staffing and resources to support any new venture, however, so you don’t unnecessarily add to your workload.

Seek advice from experts, mentors or experts. Many sources of burnout are common to entrepreneurs and you can learn much from their experience. SCORE offers many valuable resources to help you resolve your small business dilemmas.

Make sure customers always win

2009-09-21T21:25:00.000-05:00

Q: I know that customer service is vitally important to my business. But how do I go about making good customer service the way we do business?

A: No matter what you’ve heard, the customer isn’t always right. But that doesn’t mean you should be the one to tell him. A better line to live by might be, “The customer always wins,” because if the customer doesn’t win, he doesn’t come back—and then you lose!

Linda Novey-White, international customer service consultant and former SCORE director, believes you should establish a customer service standard that depends on your particular business. Is your core value that the customer always walks out of the door happy, or is it that the customer always gets the best product even if he doesn’t want to pay for it? Those core values are your customer service standards. But whatever those standards are, they should be designed to engender loyalty with each customer who comes in contact with your business.

Novey-White says, “Once you know what the standard is, you have to manage to that standard. The business owner has to be the evangelist for the customer service standard and also its chief enforcer.”

If customer service is important, it’s not enough to say so. The business owner has to be prepared to hire—and fire—based on customer service performance. Customer service should be foremost in annual evaluations, and it should be attached to measurable goals.

If you want to improve your customer service, benchmark it against others in your industry. But if you really want to vastly improve customer service, compare it to others outside of your industry. You might learn a whole new creative process for implementing customer service if you go outside of your industry.

You should be evaluating your customer service on an ongoing basis. Don’t wait until evaluation time to set an employee straight—your customers won’t wait to find someone else if they’ve been disappointed.

It’s not enough to train your employees in customer service. The reinforcement has to be ongoing. Some of the best ways to do this are to let the customer help. One hotel distributes tokens to guests and encourages them to hand the tokens out to employees who have done an exemplary job. Those tokens can later be redeemed by the employees for merchandise. Another company used evaluation cards as the basis for days off for employees who consistently rank high in customer evaluations.

Corporate refugees can make good small business owners

2009-09-06T12:12:00.001-05:00

Q: I’ve been working in a large corporation for a long time and now have the opportunity to terminate with a severance package. I’m considering starting or buying a small business but how do I know if I can or should?

A: Many people in similar situations these days are wondering the same thing. Not only are the newly unemployed looking for business opportunities, others currently employed are seeing “the writing on the wall” or “just don’t like” what they observe going on in their workplace. They all need income replacement and seek investment opportunity. Going into business for themselves might just be what they need.

First, people coming out of corporate environments are usually better suited for small business ownership than they may think.

Many skills do travel from one environment to the next and experience working with big companies has some advantages. Training is an important one. Sales courses, budgeting classes, management seminars and other learning experiences are standard offerings at most large corporations.

Big-company employees may have industry-specific or technical experience that they can build a business around, if they can handle all of the other responsibilities of running a small business.

Corporate refugees normally have learned how to execute, plan and budget. If you’ve had management or supervisory background, then you’ve had the chance to develop organizational and time-management skills.

But refugees from big businesses could have some weaknesses. One is a desire or expectation to earn more than is realistic especially at the beginning. The monetary benefits of owning a privately-held business often arrive after the business is well established.

Some corporate employees are specialists--unable or unwilling to perform the kind of multitasking that is second nature to successful small business owners. Corporate executives sometimes are not ready to roll up their sleeves and do whatever is necessary to get the job done.

Most corporate employees don’t have experience managing cash. Someone else paid the bills and received the money. But in most cases small business cash management is much like managing your own personal bank account.

Risk taking is something some refugees can’t come to grips with. They’re used to a steady salary whatever the business conditions. Not having that guaranteed income can be uncomfortable.

So, if you’ve been “downsized for the last time” or are ready “to take control of your own destiny” speak to a SCORE counselor or attend a SCORE seminar for help in getting started.

First-rate customer service truly stands out

2009-08-23T07:14:00.001-05:00

Aug. 22, 2009, 1:48AM

Q: I know that businesses that provide good customer service usually have more repeat business and therefore greater sales than those that don't, but how do you go about doing that?

A: It's the businesses that personalize their customer service that gain the most customers who come back.

Linda Novey-White, former SCORE board director and international hospitality consultant, says: “Never let your client forget who you are. You want to use every method possible to keep yourself in the front of their minds.”

One way is to send a news clip that you think might be of interest to the client, even if you don't have a current contract with that customer. The next time the client needs some work, you may get a call. Another way is to write thank-you notes once a job is done. Handwritten notes stand out from the crowd. It can pay off.

Make it your business to find out your customers' special occasions and send cards or flowers to let them know that you care. Your competition may have a product that is similar to yours, but with personalized customer service, you can distinguish your company.

You need to give your customers something of extra value if you want them to return, Novey-White says.

Try giving them more than they paid for. If you have a product to sell, customers should perceive that it has a greater value than the products offered by your nearest rival. Look at your business like a customer would. What could you be doing better and what is your competition doing better?

It's not enough to meet your customer's needs. You have to anticipate them. Think ahead to what the market is going to be demanding next year and determine what you can do better a year from now. Businesses usually proudly state that their core concept is to exceed expectations, but they neglect the founda-tion of meeting those expec-tations in the first place.

Novey-White says the two top mistakes people make in customer service are not delivering and not listening.

First, deliver what you promise. Delivering a product or service that disappoints is the fastest way to lose your customers.

Second, remember to listen. Too many businesses advertise the next big thing without considering whether their customers want a next big thing. Your customers will tell you what they really want — if you really listen.

Why buy a failing business?

2009-08-22T11:36:00.005-05:00

Aug. 8, 2009, 1:41AM

A: A failing business might present an attractive investment opportunity for any number of reasons. When businesses for sale are failing, i.e., they have low or negative cash flow to the owner, you need to look under the cover to see what's really going on in the business.

The reasons the business is struggling could be correctable by the right buyer. And, if that's the case, you need to make sure that what you are buying, with the necessary adjustments, will fit into a business plan that you believe will be successful.

Actually, the evaluation you should conduct is not much different than if you were considering buying a business that is profitable. You may find that the strong earnings of a successful business are based on factors that are temporary or depend on skills that you don't have or are difficult to acquire.

A business may be failing because of owner mismanagement. Perhaps the owner doesn't have the marketing skills needed to boost sales or maybe is not managing inventory in a cost-effective way.This could create an opportunity for a motivated buyer with the capability to properly manage the business.

The owner may just be burned out and may not have the energy to make the adjustments needed to improve the business.

For instance, an owner I visited recently has been running his business for a long time. His market has changed, but he doesn't want to make the investment in time and money to advertise and take orders over the Internet even though the rest of his business infrastructure will support this. Again, this could be a good opportunity for the right buyer.

Sometimes early-stage businesses fail because they run out of cash and can‘t raise more capital. This can happen even though their sales volume is growing nicely and can reasonably be expected to continue to grow. But a seller may have a long-term lease or a loan payment that he or she can't support any longer.

A buyer with the financial resources and the know-how can treat the business as a startup but with a head start, thereby avoiding many of the headaches entrepreneurs normally encounter when starting from scratch.

Of course, your evaluation may discover that a business is failing for reasons that can't be easily resolved. In this case, you just keep looking for that good investment opportunity. There are many of them out there.

Work hard but get a life

2009-08-22T11:35:00.001-05:00

July 25, 2009, 5:24PM

A: Entrepreneurs often face obstacles that can impede if not block progress on getting started in their new endeavors. These are often more personal than business-related.

Time mis-management is one of those issues that create problems for many who start new business ventures. Either you spend all of your time working, or you can't quite keep yourself on a schedule.

Many businesses fail early because the owner couldn't draw a good balance between work time vs. “the rest of life” time.

While you need to be prepared to spend a lot of time on your business, especially early on, you can't spend every waking minute on your business. You still need to have a life. Otherwise you'll burn out.

If you have organizational skills, you've just passed the next major hurdle. Being disorganized not only means wasting your time as you try to find or do something, you waste the time of others whose assistance you may be depending upon. Being unorganized also makes focus difficult, which leads to the next obstacle — focus or rather “lack of” focus.

A SCORE client of mine decided to resign from his company and focus on consulting. Seemed like a good idea. He knew his field and had a lot of hands-on experience. He also had a fully equipped home office and no kids or spouse around for distraction.

Unfortunately, the idea was better than the venture. He couldn't focus without the structure of an office environment. Instead of being at his desk every morning at a certain time, he'd find other things to do. Lunch hours often turned into taking the afternoon off. It was a “sort of” business — not a serious one.

Also, you need to be able to deal with the fear of failure. Failure and entrepreneurship go hand-in-hand. If you're not fully aware that your business could fail — or if you're terrified of failure — go work for someone else.

If you're not willing to take risks, you shouldn't be in business for yourself. Most successful entrepreneurs have had failures along the way — either companies that didn't succeed or ideas that failed. But that didn't stop them from starting again.

Brand needs clear edge in bad times

2009-08-22T11:23:00.003-05:00

July 11, 2009, 3:58PM

A: Studies have shown that companies that have high brand awareness achieve returns far greater than companies that don't. Taking an active approach to marketing and branding is vital, especially during a tight economy. Spending a lot isn't the key to marketing and branding. Instead, focus on your audience and provide qual-ity, quality and quality in everything you do.

Do what you say you're going to do. This may sound like common sense, but one of the primary drivers of brand loyalty is a consistent experience.

If you say you are going to have the product ready or the service delivered on a set day, be sure it is ready. Positive experiences lead to good feelings, which lead to customers telling their friends. Don't forget that bad experiences spread faster and are harder to overcome — if you get a chance at all.

The first key to successful brand building is to clearly define your brand. If you haven't yet, draft a one-page description of your business.

It helps to get an outside perspective; ask people who interact with your company about their perceptions. How would they describe your business? What do they think you do? What do they like about it? How do you compare to rivals? Could your company improve?

Then, write down what your business stands for.

Examine every component of your brand — for example, your logo, business cards, signage, Web site, on-hold messaging and e-mail signature — and make sure they are consistent with your desired image.

Your employees are important stewards of your brand. Branding is as much about your people as anything else. The best interactions come from one-on-one conversations among managers, employees, suppliers and customers. Employees engaged with your brand philosophy will become brand ambassadors.

A down economy is the time to reaffirm your value proposition with your customers and prospects. Keep your company and brand at the top of their minds. The economy will turn around, and you want to be the first choice when they're ready to buy.

Because branding is a long-term effort, it may take months before a small business will see results.

Don't abandon that effort, even when times are tough. This way, you'll be ready when the economy rebounds, and consumers will remember you were there.

Some ideas on coping in bad times

2009-08-22T11:22:00.003-05:00

June 27, 2009, 1:17AM

Q: What are good ways to stimulate sales when the economy is down?

A: First and foremost, stay calm and don’t panic. Recessions and economic downturns have occurred before. Prepare now to position yourself and your business to benefit from the eventual and inevitable climb back to success.

It’s time to be creative in your sales and marketing efforts. Remember two old clichés, “step out of the box” and “don’t be vanilla.” Now is the time to maximize your sales and marketing effort. Don’t sit back and wait.

Start with obvious fundamentals. Contact all past and present customers as soon as possible. Be enthusiastic. An example would be, “We’re overstocked on items you’ve bought previously.” Offer significant incentives and/or “preferred customer” discounts on everything, including the highest-turnover items.

Liquidate old and slow-moving inventory at cost or less. If you provide a service, create a package offering a “special series,” or an evening and weekend rate. Don’t forget ladies’ day, senior citizens’ day, holiday specials and incentives to pay now. Think cash. Cash is always king, especially in recessionary times.

Revise your marketing and business plan to position yourself for long-term success. What are you good at? Set realistic goals and measure progress often. Review your product line or the services you offer. Can you profitably market to a slightly different customer group? Don’t forget customer service with this definition: An unexpected service when delivered at random, can create a memorable event for your customer. Make use of sincere thank you’s. Follow up. Then, follow up again.

Valuable tools are available today that didn’t exist during previous downturns. Technology has given you the Internet, e-mail marketing and search engines. What about cell phones and text messages? Professional networking sites such as Linkedin, Facebook, and Twitter can create new contacts and new sales opportunities.

Maximize utilization of inexpensive items like press releases, trade shows, speaking opportunities and e-mail marketing. Network at chamber of commerce events and other “mixers.” Offer to provide a door prize in order to get exposure. Investigate business networking groups. Don’t forget to read industry trade journals and newsletters and visit appropriate Web sites for fresh ideas. Finally, clean up your Web site and make sure it’s user-friendly.

Plans need frequent evaluation

2009-08-22T11:21:00.001-05:00

June 13, 2009, 3:23AM

A:You’ve put a lot of time and effort into your business plan. Think of it as a living document, and refer to it and review it often. Use your business plan as a tracking and evaluation tool, so that you can determine if your business is heading in the right direction or if it has wandered off course.

Schedule periodic checkups of your business. Many factors that affect your business are tied to an annual cycle. To ensure that your business plan continues to serve you well, make it a habit to update it annually. Set aside a block of time near the beginning of the calendar year, fiscal year or whenever is convenient.

Make this review a priority activity. Often small-business owners allow their time to get absorbed on the more urgent operational tasks and don’t allow time for vitally important management and planning activities.

Validate the assumptions used in your plan. Our business environment is always changing, so ensure that the basesused for your plan are still appropriate.

Assess your performance by reviewing the data in your plan. Compare your expected results against your actual results. Because your plan sets forth marketing, operational and financial milestones, you should carefully analyze actual operating results against the goals and objectives.

Fine-tune your plan. Parts of your business plan may feel very tight and others may still need some work. Look for ways to improve what you’ve done so far. Incorporate the experience you’ve gained as a business owner into your business plan. Anticipate future events — good and bad — that may affect your business. Take appropriate action if goals outlined in your plan haven’t been met.

Get help from others. After you change and update your business plan, share it with your advisers. SCORE, Counselors to America’s Small Business, is experienced in helping entrepreneurs create and revise business plans.

Strive to operate your business according to your plan. Your business plan will work for you if you use it to remind yourself and your team where you are going and how you will get there.

Whether you’re updating your business plan for the first time or the 20th, treating your business plan as a document that evolves over time proves that you understand your business and you know what is required to make it grow and prosper.

Business plan help is easy to find

2009-08-22T11:19:00.004-05:00

May 30, 2009, 5:24PM

A: When this happens to aspiring entrepreneurs, the obstacle is often just knowing what information is needed and where to find it, and then actually putting it down on paper.

For starters, you’re not venturing into unknown territory. Millions of people have transformed their ideas into thriving enterprises. Putting together a business plan is a valuable learning experience, an opportunity to learn about your chosen new field, and yourself. The proverbial first step of this journey is relatively easy.

Many valuable resources are available that can guide you through the process from start to finish. These aids can’t do all the work for you. You still will need to invest a fair amount of time and effort in research, writing, revising and more research.

But once you do get started, you may well find yourself wondering why you waited so long.

To get a complete picture of how a business plan is structured, visit the Small Business Administration’s Web site, www.sba.gov/smallbusinessplanner. The pages outline the elements found in most business plans and provide a wide range of sample plans for various types of businesses.

The SBA’s basics page also offers helpful guides to financing, marketing, employee relations, taxes and other topics that entrepreneurs should consider as they shape their business plans and strategies. At SCORE’s Web site, www.scorehouston.org (click on free business resources), you’ll find many valuable tools and other information. Download the easy-to-follow templates directly to your computer and get started.

Each section of the business plan templates explains the type of information that’s needed, why it’s essential to the plan, and the questions you will need to answer when seeking financing.

Remember, however, that while these tools can provide a good start, they are by no means all-inclusive and you may need more guidance from experienced business counselors.

Take advantage of free and confidential business counseling at one of SCORE’s several Houston area locations or attend one of SCORE’s workshops or seminars on business planning. If the nature of your business or industry requires considering specific issues, go to www.score.org and request online assistance.

Credit crunch for small businesses may be easing

2009-08-22T11:18:00.003-05:00

May 2, 2009, 5:23PM

Q: Is there any help on the way to encourage lending to small businesses including startups and acquisitions?

A: The American Recovery and Reinvestment Act passed by Congress in mid-February has a number of provisions to enhance the Small Business Administration’s loan programs, and three have already been implemented.

The first deals with the SBA’s 7(a) loan program, which guarantees a portion of bank loans to entrepreneurs looking to start, expand or acquire small businesses. The 7(a) serves as a credit enhancement to the lender and provides collateral to the borrower. Most 7(a) loan program guarantees are temporarily raised to 90 percent of the portion of the loan being insured against default through 2009 or until the funds are exhausted.

The increase in guarantee levels will help banks extend credit and make more capital available to small-business owners around the country.

The act also temporarily waives the guarantee fees passed on to borrowers on 7(a) loans.

On Friday, the SBA temporarily increased the 7(a) loan size standard making more businesses eligible for 7(a) loans. Also , the fees paid by borrowers in the SBA’s 504 loan program are temporarily waived.

This program provides SBA financing for long-term fixed assets such as land, buildings (occupied by the borrower) and substantial machinery and equipment.

Through the SBA’s Surety Bond Guarantee program, the SBA guarantees bid, payment and performance bonds that protect a project owner against financial loss if contractors default or fail to perform. The maximum amount for contracts that qualify for SBA surety bonds has been raised to $5 million or $10 million depending on the type of contract.

The Recovery Act also expands the SBA’s Microloan program, which provides loans up to $35,000 through participating microlenders. These are paired with technical assistance to startup or growing small businesses.

The director of the SBA Houston District, Manuel Gonzalez, says, “In our district, we have seen an increase in 7(a) loan volume of approximately 50 percent over the period just prior to passing the Recovery Act.”

Starting a business? Pick one that blooms in recession

2009-08-22T11:17:00.001-05:00

March 28, 2009, 2:37AM

Q: I would like to start or buy a small business, but the economic news these days is so depressing that I’m wondering if there are any good opportunities in today’s environment. Do you know of any?

A: There are many small businesses in Houston that are doing quite well despite the economic slowdown we face. Some are types of businesses in markets that are weathering the storm better than most. Others have acted aggressively to stimulate sales, have adjusted their product or service mix in response to changing customer needs, or have increased their efficiency to improve their bottom line.

For example, when the conventional wisdom was to trim down and scrutinize costs, Veronica Millstid-Levine, the owner-manager of Bailey Connor Catering, hired a marketing consultant and additional salesperson to root out more customers.

It paid off with a 21 percent increase in sales in 2008, and the company is on course for a greater increase in 2009.

“Auto repair is an example of a sought-after business in these recessionary times,” said Rose Stabler, Managing Partner of Certified Business Brokers.

“With the car dealerships going out of business and their repair shops along with them, there will be more people looking for private auto repair shops. In addition, more people are keeping their cars instead of buying new ones. Therefore, more repairs!” Stabler said.

One of Stabler’s current listings for sale in Houston boosted its earnings last year by 65 percent by providing superior auto service to its local customers.

Debbie Beal, owner-manager of A2Z Educational Supplies in Humble, worked with SCORE business counselor Bob Galbreath.

She emphasizes quality service to her customers, who are mostly schools and teachers.

Her sales increased by 28 percent last year, despite Ike, and are showing about a 40 percent increase year-over-year in 2009.

Vic Bailey of One Voice, a business communication services company, has maintained his sales volume by “hitting the streets” and paying visits to current clients and potential clients.

Improved telecommunications is one way his clients can increase productivity.

So he proactively gets out there to advise them on those improvements.

Marketing your small business successfully

2009-08-22T11:16:00.000-05:00

March 13, 2009, 9:50PM

A: When you’re a freelancer or solo independent contractor, you are your own marketing department. It’s up to you to make the contacts and generate the work that will enable you to expand your business.

Freelance newcomers and veterans alike need to continually broaden and update their work-finding and marketing skills, not only to sustain their current workloads, but also to stay ahead of the competition.

Two keys to being successful at this are consistency and dedication. The search for work is a constant part of your independent enterprise, so you’ll enjoy it more if you develop a passion for finding the next big project.

The best source of new business is current customers. Doing good work for them will keep them coming back, which is why you also need to be a stickler for client satisfaction. Always stand behind your work and try to exceed client expectations.

It’s also important to stay in touch with your clients, even if you already have a substantial backlog of work. Check in periodically to ask how things are going, what projects or initiatives may be in the works, and remind them that you’re ready to help out if the need arises. They’ll appreciate your proactive interest, and planting that seed may pay off immediately or in several months when things start to slow down on your end.

Also recognize that building your personal brand is important. As a sole operator, your brand is you, so focus on leveraging your special knowledge, style or expertise. But don’t lock yourself in too tightly. The most successful independent contractors try to build new skills and leverage existing ones to higher price levels.

A substantial number of Web sites specialize in matching freelancers with potential clients. Their approaches are as varied as the range of industries they cover. Some work on a bid system where employers post projects and freelancers bid on the work. These sites will likely take a cut of your proceeds.

Then there are job boards, where projects are posted and you respond with a pitch letter and ré sumé directly to the employer. You may need to pay a fee to access these resources, so it’s a good idea to find out whether the amount of work or contacts generated are worth the investment.

Chambers give a range of help to small businesses

2009-08-22T11:14:00.002-05:00

Feb. 27, 2009, 11:50PM

Q. I read your recent article on networking and how to interact with potential business contacts. Are chambers of commerce good places to network and worthwhile to join?

A. Chambers offer companies a range of resources to support, develop and grow their businesses as well as the local economy. From regulatory and legislative issues to enhancement of the business environment of your community, the chambers of our region are quite often at the forefront of positive change.

With chamber membership, a small investment in time and dollars can help contribute to your marketing, public relations, networking and team-building efforts.

Chamber membership expands your information and networking resources dramatically. Networking with other businesspeople gives chamber members the opportunity to meet and exchange information with each other.

“Contributing to chamber of commerce community activities brings visibility to your business as a good corporate citizen,” says Ann Hodge, CEO of the Katy Area Chamber of Commerce.

The chambers’ involvement in local charities, community cleanups, crime prevention programs and more give your business an opportunity to participate in positive changes in your community, often at minimal cost.

Powerful endorsements

“Area chambers are proud to recognize and reward this activity,” Hodge said. A company’s efforts are often lauded for months by other businesses, the community and elected officials. These accolades and respect from other local businesses serve as powerful endorsements and publicity for any company.

Are you concerned about the regulatory climate in your area and want to assume a role toward effective change? Your local chamber is the voice of business in a myriad of issues.

The chambers work to influence the agendas of city, state and national elected officials, keeping the interests of our local businesses in front of decision makers.

In addition to numerous networking events and other resources, most chambers offer educational and business counseling services to help their members resolve issues and improve their businesses.

For instance, SCORE provides free and confidential counseling as members of the Katy Area, Houston Northwest and Houston West chambers of commerce.

Get help coping with the recession

2009-08-22T11:13:00.000-05:00

Feb. 14, 2009, 12:34AM

Q: The economic slowdown is starting to hurt my small business. How can I get ideas and assistance for coping with the challenges that small businesses face today?

A: Small businesses shouldn’t have to face the recession alone. And in Houston, they don’t have to.

Capital One Bank and SCORE have formed the Small Business Development Alliance. Its aim is to help Houston-area small businesses survive and succeed during the tough times. Small-business owners are invited to attend free seminar and networking events planned throughout the year.

At these events, you will take home coping strategies for tough times, meet with lenders of alternative financing, network with other small businesses and enjoy a free lunch.

“We recognize the important role small businesses play in stimulating our economy and rebuilding our communities and the determination it takes to open your own business,” said Laurie Vignaud, a senior vice president at Capital One bank.

At the events, you’ll have the opportunity to meet one-on-one to discuss your situation with SCORE counselors, Capital One bankers and their strategic partners:

• SCORE SMART squad members will explain how they can work with you at your location to help resolve business issues.

The Small Business Administration will explain the SBA Loan Guarantee programs.
Acción Texas provides credit to small businesses that do not have access to loans from commercial sources.
Houston Business Development can provide low-interest-rate loans and an array of support services and management assistance.
The Houston Minority Business Council actively involves its members to increase and expand business opportunities and business growth for minority business enterprises.
The city of Houston One Stop Business Center provides information on city, county, state and federal regulations affecting your business.

The next seminar is at the Church At Bethel’s Family, 14442 Fonmeadow Drive, in Houston next Saturday from 9 a.m. to 3 p.m. and includes a free lunch. Visit www.scorehouston.org to register and see the schedule and locations of the other free seminars.

Network your way to success

2009-08-22T11:11:00.000-05:00

Jan. 31, 2009, 12:03AM

Q. I’ve been told that I need to network more in order to expand my small business, but I’m not very good at it. How does one go about networking?

A. Networking is the process of connecting with people so you may help others and they may help you. The interactions established through effective networking build over time and can make a difference in the amount of business your company generates.

Networking doesn’t come naturally to a lot of people. Many are uncomfortable with starting a conversation with someone they don’t know. Others are concerned it won’t be worth their time.

Successful networking is more than simply exchanging introductions and business cards and then waiting for someone to call.

Donna Fisher, a networking author and speaker, says you should focus on people as they are introduced to you, so that you remember who they are.

Also, don’t waste the few precious moments you have with contacts by focusing on yourself. It’s better to spend most of that time asking questions so you can assess whether or how to follow up.

Fisher’s easy-to-read book Power Networking, which she co-authored with Sandy Vilas, identifies 59 secrets to building powerful networks.

Here are a few.

When introducing yourself, you need to make your company sound spectacular in seven to 10 seconds, Fisher says. Your introduction needs to be “clear, concise and personable to attract people’s attention, generate inquiry and be remembered.”

Look professional and always carry your business card. After all, who knows where or when you’ll meet a fantastic contact. “Treat the act of giving someone your card with respect, and the recipient will also treat the card, interaction and follow-up with respect,” Fisher says.

Give referrals whenever possible. The best networkers believe in the “givers gain” philosophy. In other words, If you don’t attempt to help the people you meet, then you are not networking effectively. If you can’t give someone a bona fide referral, try to offer information that might be of interest to them, such as details about an event. Write notes on the backs of business cards you collect to help remember each person.

You can do all of the above religiously, but if you don’t follow up effectively, you will have wasted your time. Call each person you’ve met. Be sure to fulfill promises.

Putting a value on your business can be crucial

2009-08-22T11:07:00.002-05:00

Jan. 17, 2009, 2:19AM

A: Too often, business owners brush aside valuations, believing them necessary only if they decide to sell. There are many other reasons to value your business. Perhaps you’re thinking about taking on a partner, or a partner is leaving the business.
Other reasons for business valuations could include applying for an expansion loan, spin-offs, disputing an IRS audit, major strategic planning initiatives, estate or gift planning, and divorce. Or how about this: You might simply want to know how your investment is doing.
Going through the valuation process can help you learn about those things that increase the value of your business.
You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.
You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.
The price range can vary from as little as $15 for the simplest software, to thousands for a detailed analysis performed by certified professionals for midsize businesses. Business brokers, hoping to sell your business, may even do valuations for free.
None of the many valuation procedures is perfect. Most valuations are based on an analysis of forecasted cash flow that produces a present value for the business. Also, there are accepted rules of thumb for all kinds of small businesses, in all types of industries.
Bankers and investors, as well as the IRS, are generally skeptical about rules of thumb. You can expect both groups to require a valuation whenever a company seeks either a significant increase in credit or a new infusion of equity capital.
Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.
Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.
Try to match the person or method you use for a valuation with the reason you are doing it. So, if the valuation is for a loan, look for someone who’s done them for that purpose.
The American Society of Appraisers offers a free service online to help you find a business valuation expert in your area. Look for the Find an Appraisal Expert link at www.appraisers.org.