Business Growth

Compiled By: Jagat Singh Dhami
Business Growth
All Systems Grow
After the 16-hour workdays, eleventh-hour decision making, empty aspirin bottles and half-eaten
sandwiches, your business is finally a success—with the revenue stream to prove it. So how do
you stay ahead of the pack? Riding the success of your introduction is not an option—you've got
to reach new customers and new markets. "There always has to be a next thing," says Bruce
Lynskey, clinical professor of management at Vanderbilt University's Owen Graduate School of
Management in Nashville, Tennessee.
The key to your next move is choosing the expansion method that best fits your company's
product or service, your strengths and weaknesses as a business owner, and the limitations of
cash, credit and existing resources. A business taking on a new growth strategy should be
walking on steady legs, not looking for ways to avoid unresolved problems. And while growth is
the central tenet of business development, be willing to apply the brakes when the expansion rate
is too much to handle.
So what's the best way to develop your company? One or a combination of the seven strategies
below should be enough to turn your acorn into an oak.
1. Introduce a New Product

It takes imagination and a bit of luck to hit on a new product idea that doesn't distract buyers or
make older products seem obsolete. But, as in the case of Greensboro, North Carolina-based
Batanga.com Inc., a product extension can also reinforce connection to a brand and create a
niche all its own. An internet radio station, Batanga.com launched a companion print magazine
called Batanga Latin Music to offer advertisers more ways to reach its young, Hispanic, tech-
savvy audience. What began as a one-time marketing piece quickly grew into a separate media
property. "We started getting calls from newsstand distributors asking if they could carry the
magazine and [from] customers who wanted to subscribe," says Troy McConnell, 42, president
and CEO of Batanga.com. In 2004, the magazine accounted for 10 percent of the company's $2.5
million in revenue, and McConnell predicts that number will grow to at least 30 percent in a few
years.
While you have to be careful when extending your original product, adding products with little
or no connection to your product line can be equally dangerous. Exploiting a trend is tempting,
but acquiring new customers is less revenue-savvy than squeezing more from existing customers.
"The more you can put through the same sales channel, the more cost-effective it is," says Alan
M. Davis, a principal with Revitalization Partners, a Seattle consulting firm specializing in
business turnarounds.
Use your existing customer base to vet a new product's potential market value. A survey
combined with a free gift can prompt customers to share a wealth of information. Fred
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Wainwright, executive director and adjunct assistant professor at the Center for Private Equity
and Entrepreneurship at Dartmouth University's Tuck School of Business, says, "That
preliminary research is essential to getting the pricing right, choosing the right value proposition
and developing a product that meets the needs of the market."
2. Take Your Product to a New Market

Dianne Daniel, president of Handle It LLC in Dublin, Ohio, first marketed GripTwist, an
industrial-strength twist tie made of foam-covered wire, to ski shops as a ski and pole binder. It
soon became obvious that what could hold unwieldy items like skis together could also hold
hoses, tools, ropes and other items—so the company began selling GripTwists to hardware
stores. Next, Handle It took the GripTwist into sporting goods stores. Daniel hopes the expansion
will boost GripTwist sales to $1 million this year.
New market development can help you reach new customers, but reaching too far can overtax
staff, budgets and operational systems. Start small, and check progress as you go, says Ed
Chapman, managing partner of VizQuest Ventures LLC, a sales performance and market
development firm in Waltham, Massachusetts. "Many companies don't consider market
segmentation and target their products too broadly," he says. "Take your solution, sample it
among a couple of microsegments, and see which ones stick."
3. License Your Product

Licensing shifts the financial risk from a product's originator to a company willing to take on the
burden of marketing and advertising, production and distribution. The shift also includes
forfeiting most of the profits, but it may be a fair price to pay for the chance to build a national
reputation when cash flow is low.
For Taggies Inc. of Spencer, Massachusetts, the cachet of its licensing partner more than made
up for sharing its piece of the pie. In late 2002, Scholastic Inc., the children's publishing
behemoth, wanted to license Taggies, a line of blankets and toys with satiny tags attached, for a
book collaboration. "The relationship brought us into a market we weren't in before," says
Danielle Ayotte, 35, co-founder with Julie Dix, 38.
Ayotte and Dix, whose sales increased from $2 million in 2003 to nearly $3 million in 2004,
were lucky to have Scholastic approach them first. Most business owners aren't so fortunate.
Before you shop for a licensee, make sure your product is patented—or at least patent pending—
and have some research showing sales potential. Then, if you don't already know of a company
you'd like to partner with, check out trade shows, online databases and local economic
development agencies. A licensing agent can also help you find appropriate companies and
broker a deal.
Licensees can be picky, and so should the licensor. Davis of Revitalization Partners recommends
choosing a partner who can offer potentially high volumes of distribution. While contracting
with a large company might mean a smaller royalty percentage, the potential customer reach will
more than make up for it. A good licensing partner should also have an established reputation for
quality and service and an aggressive plan to market and advertise your product. For a check on
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past performance, talk to other licensors contracting with your selected company.
4. Start a Chain
A restaurant, retail or service business that's easily reproduced and can be run from a distance is
great for launching a chain. But entrepreneurs must know exactly what makes the original store
work and what won't easily transfer to a new site. "You have to ask, 'How much of this success is
tied to me, my location or my staff?'" says Chris Wheeler, managing director of Ballenger
Cleveland & Issa LLC in Newport Beach, California, a consulting firm specializing in financial
and business turnarounds. Defining operating procedures down to the last detail, sharing staff
between locations to establish the company's culture in the new location, and developing a
training program for new employees all help start things off right.
Launching multiple locations can present some surprises. When Zoots Corp., an eco-friendly dry
cleaning chain in Newton, Massachusetts, opened the doors of its third unit, the company
launched a marketing campaign to herald the new arrival. "Suddenly, we had three stores doing
three times the business of our first two stores," says Todd Krasnow, 47, chair and co-founder.
The company, which had about $50 million in sales in 2004, found it difficult to meet its service
standards. To avoid similar deluges in the future, Zoots cut back on big promotions, relying
instead on word-of-mouth and periodic advertising.
5. Turn Your Business Into a Franchise

Who wouldn't love the idea of collecting fees and royalties while fellow entrepreneurs expand
your business? Once you get past the startup costs—on average, between $125,000 and $150,000
for moderate initial growth of five to 10 franchises per year-franchising is an efficient way to
expand brand awareness while pooling the business acumen, financial resources and buying
power of multiple owners.
Don't expect a motivated franchisee to make up for existing shortfalls, however. "Make sure
there's a market for your product, do your competitive analysis and be sufficiently capitalized,"
says Andrew Loewinger, an international franchise attorney with law firm Nixon Peabody LLP
in Washington, DC. Otherwise, franchisees can be a prickly bunch to deal with. "You might have
franchisees who don't want to follow the program, who want to break out on their own or don't
want to pay their royalties because they think you're not delivering value," Loewinger says. "It
can be a challenge."
Joe Barbat, 29, founder and CEO of Wireless Toyz Ltd., a cellular retailer in Farmington Hills,
Michigan, keeps in touch with franchisees through store visits and a company-wide intranet
detailing new cellular plans and promotions. These contacts remind franchisees that the company
is always there to help, says Barbat. It also helps the company, which brought in over $50
million in revenue last year, maintain sales and service standards.
For more on franchising your business, see the "Franchising Your Business" section of
Entrepreneur's Franchise Zone.
6. Join Forces
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A merger or acquisition combines the best of two companies, expands your customer base,
increases intellectual capital and delivers operational efficiencies. The trick is finding the right
partner. "You have to share the same vision of what it is you're trying to build," says Davis.
Such a step is usually the domain of established companies, but acquisitions are how Thought
Equity Inc. got off the ground. When Thought Equity's CEO, Kevin Schaff, started his Denver
business providing stock footage and production-ready commercials to media companies, he first
acquired a nearly bankrupt company selling similar ready-to-use commercials. "We wanted to
[increase] the size of our library and provide a critical mass for people when they came to search
our libraries," Schaff, 30, says.
The next target, an advertising agency, supplied the expertise of professionals steeped in TV
advertising sales. With this "plug and play team," as Schaff calls the agency, Schaff estimates the
company got up and running with its first customers 18 months earlier than it could have had it
tried to create these resources in-house. Both acquisitions were completed in 2002, the year
Thought Equity was founded. Sales in 2004 reached $3 million.
7. Go Global
Growing markets, rising consumer spending, improved business climate—sometimes the only
place to find these things is overseas. Doing business internationally can take the form of
exporting, licensing, a joint venture or manufacturing, but whatever form you choose, the same
basic business rules of assessing customer demand, gaining legal and accounting assistance,
protecting intellectual property and obeying regulations apply.
What don't come so easily are the nuances of cultural differences. In some countries, particularly
those in Asia, a local partner is virtually a requirement. Your first stop should be your target
country's economic development agency, which can help marshal local resources to get you on
your way, possibly with a small financial boost.
Melody Brenna, 48, co-founder and CEO of Milestone Architectural Ornamentation Inc. in
Amarillo, Texas, emphasizes the importance of the internet in growing an international business.
That's how overseas customers first found out about her construction technology firm, which
specializes in historic reproductions. Today, Milestone's international business includes
exporting product machinery, materials and molds to Thailand, and deals with other countries are
in the works. To streamline service, the company creates a project-specific website with
regularly updated project news, photos and scheduling information.
Online access also helps businesses overcome the delays of time zone differences. "If there's
something I forgot to tell a client," says Brenna, "I throw it on the web and it's there when they
get to work in the morning."
Pre-Expansion Checkup
Answer these questions before you make your move.
 Do employees have the necessary skills to support your growth strategy? Will you need to
hire new staff or provide additional training?
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 Can existing operations handle a sudden boost in demand? How will you maintain service
levels while reaching for new business?
 Are current operations, including order management, customer service, record keeping and
inventory control, running smoothly and ready to take on more?
 Where's the money coming from? Will cash flow from sales be enough to support your
expansion, or will you need lender or investor financing?
 What will you need the money for? Study historical cash-flow statements as a guideline, then
determine cash-flow needs on a weekly, monthly and annual basis to plan your funding
strategies.
 Are you ready to delegate more tasks and give managers more control?
 Does expansion rest on a reliable mix of intuition, solid competitive analysis and customer
research?
 Do you have a time-defined exit strategy if expansion plans fail?
Back to Business
September still feels like the start of a new year for many of us, a result of years of looking
forward to (or dreading) going back to school. But it’s a great time to get back to business—to
ensure you finish 2009 on a positive note.
Take a look at your business plan, which you should consult and update at least quarterly. Assess
whether you’ve gone off track. If you have, figure out what you can do now to get back on
course. If you need help doing this, talk to SCORE, and get advice online or make an
appointment to meet an advisor in person.
Many believe The Great Recession is ending. So channel your high-school self and start
prepping now for the upcoming big tests—in this case, the coming recovery. Here are four things
you can do:
1. Manage your inventory. A lot of entrepreneurs have (smartly) trimmed inventories. But
make sure you’re not caught with outdated products or empty shelves when consumer spending
picks up. Find the happy medium between spending smart and offering current stock.
2. Focus on customer care. Customer loyalty may end up being a casualty of the recession.
Value-conscious customers have left their brand and business loyalties behind in search of a
better deal. Are you offering your loyal customers what they’re looking for, at a price they’re
currently willing to pay?
3. Staff up. I’m not saying hire now, but think about the staffing levels you’ll need when
business starts to rebound. Can you bring on interns you can train now and possibly hire later?
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Did you lay anyone off in the past few months? Check in with those you’d consider rehiring, just
to get a status update. Or tap into the millions of unemployed Americans, many of whom are
looking to be retrained in new industries or willing to work for far less than their usual salaries.
4. Renegotiate. If you haven't done so already, this is a great time to talk to your landlord, your
banker, your suppliers and your vendors. So much is negotiable these days. The better the terms
you get now, the better poised you’ll be for recovery.
Develop Strategic Alliances
Many allies are small, says Mitchell Lee Marks, co-author of Joining Forces, a book on business
partnerships. This statement is supported by a recent survey of CEOs of small, fast-growing
companies in which 90 percent reported forming alliances.
Small businesses in search of growth favor alliances because they can quickly and inexpensively
provide access to technology, expertise, marketing, production, distribution and other
capabilities. Studies show businesses that participate in alliances grow faster, increase
productivity faster and report higher revenues than abstainers.
Alliances are excellent for testing the waters before a full-scale merger. Because no ownership
changes, it's easy to back out, notes Marks. Another advantage to alliances compared to mergers
or acquisitions is that you can participate in several at the same time.
Synergy is the benefit most alliances are after. If you have a product but lack distribution, you
may seek synergy by allying with a company that has good distribution and no competing
product. Companies that own technologies that can be combined with yours to create a
compelling product are also potential allies. In international alliances, one company can provide
local market skills while another supplies imported products or technologies. Allies may also
benefit by purchasing cooperatively, marketing jointly, combining research and development,
co-sponsoring training, or agreeing to set standards in a new technology.
Yet it requires skills to maintain healthy alliances. Three out of four corporate alliances
disappoint, producing higher costs or lower returns than expected, according to Marks.
Seeking Allies Successfully

Allying well is almost as difficult as marrying well. Here are keys to finding and making a match
that will last:
• Plan first, pick later. You should know exactly what traits your ally needs before you start
looking for one.
• Network. The most likely place to find an ally is among customers, suppliers, competitors
and other professional associates.
• Look for synergy. A combination of allies should add up to more than either does
separately.
• Value trust more than competence. An expert ally you can't trust is no ally at all.
• Listen to your gut. Check a potential ally's credit rating, financial reports and reputation
in the industry, but trust your feelings when it comes to the final decision.
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• Identify benefits, including synergistic effects. Make sure the benefit isn't lopsided so that
no one will feel he or she is being taken advantage of.
• Set precise goals for what you want to accomplish. Without goals, an alliance can
flounder.
• Carefully and frankly communicate expectations, along with the ways performance will
be measured, to allies and your own employees. Describe what and when each party will
invest, as well as expected returns and how any disputes will be resolved. Put it in a legal
document.
• Don't forget to devise an exit strategy. It's a serious mistake not to have a comprehensive
plan for ending the alliance.
Before You Finalize the Deal

Questions to consider before finalizing an alliance, from Emer Dooley, who lectures on strategic
management at the University of Washington:
• What are everyone's objectives? There are three sets of objectives: yours, your partners'
and the alliance's. Figure out all three in advance and determine whether they're
compatible.
• Is it a great deal for both sides? Don't just negotiate to get the best for yourself. If the
other side thinks the deal is unfair, they won't put much effort behind its success. Who's
holding the reins? Know how dependent you will be on your partner. Negotiate a credible
commitment so you're not subject to "hold up," where they've got you over a barrel.
• What happens if you break up? Establish a set of exit conditions around default and
failure to meet objectives. Make sure you understand and have control over how (and in
what jurisdiction, if it comes to that) these disputes will be resolved.
Now That It's Underway...

Once you've started an alliance, keep it going. Refer frequently to your original objectives. See
how you measure up and communicate the results and any changes to everyone involved.
Many alliances are based on hoped-for savings, but alliances involve inevitable costs.
Management time is the biggest one. Underestimating the amount of time it will take to manage
an alliance is a common cause of failure.
Earn Green By Going Green
Green business is an area of incredible opportunity and growth right now. (A green business, for
our purposes, is a business that either sells environmentally-friendly products and/or that runs its
business in an eco-friendly manner. These are also sometimes called sustainable businesses.)
Now it is true that the green market is currently a bit of a niche market, but what a niche it is! It
is exactly the sort of market most small businesses yearn for: People willing to put their money
where their values are. A recent study by the Natural Marketing Institute found that 23% of the
U.S. adult population makes up the green market given they have a “profound sense of
environmental and social responsibility.” That’s 50 million people folks. No, there is no shortage
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of people who want to buy green.

That is certainly what Mitch Rofsky has found. Not only has he created a great sustainable
business, but he did so going up against the giant in his industry—The Automobile Club, i.e.,
AAA.
Rykofsky is the President of the Betterworld Club, a green alternative to Triple A. While the
Betterworld Club offers the same services as AAA (at a lower price)—24/7 emergency roadside
assistance and towing, flat tire and lockout service, jumpstarts and so on—it also incorporates
many environmental and social initiatives, such as:
• Dedicating 1% of gross revenues to environmental cleanup and advocacy

• Offering carbon offsets
• Offering roadside bicycle assistance
• Discounting fees for owners of hybrid cars
• Offering discounts on eco-travel
• Treating domestic partners as joint members
• Offering a lighthearted, useful e-newsletter containing consumer advice, environmental
information, and member savings, called “Kicking Asphalt”
It’s no wonder that the club has an 80% renewal rate and membership is soaring. Indeed, the
Betterworld club is leading the pack for auto clubs in this green era.
When I spoke with Rofsky recently, asking him what it takes to create a successful green
business, he was unequivocal in his enthusiasm for the business model. Not only is it a growing
market, but for people under 30 he said, the environment is easily the preeminent issue. As such,
“There is no doubt that in every marketplace there is room for socially responsible businesses”
he said.
According to Rofsky, the key to creating a successful green business is to differentiate your
business, and then let people know that you are different. That means…
• Have a niche: Finding a way to express your passion for the environment in a business
way can be both creative, and eventually lucrative.
• Advertising and marketing in the right places: “You have to advertise in places where
people who see what you offer will want it.” For the Betterworld Club, that means places
like the Sierra Club magazine, Air America radio, and NPR’s Car Talk.
• Walk your talk: Rykofsky stresses that your business must reflect the values it espouses.
• Don’t forget it’s still a business: Your first job is to break even, and then make a profit.
Offer competitive prices and exceptional customer service.
Are You Waiting for a Market Turnaround? Don’t. Act Now.
If you are waiting for the market to turn around, you are losing ground. Take control of your
future. You can steer your business to accelerate your success.
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Take a deep breathe and take a hard look at your company. Right now, today is the time to act.
Start planning how you can weather this storm and prepare for the good times when the recession
recedes.
Get good advice. As an entrepreneur, you are a smart risk taker. My question is, “Do you have
all the answers?” No. Well, no one person knows it all. Surround yourself with a variety of
experts who can add to your knowledge and expertise. SCORE mentors offer free and
confidential advice. They are business owners and corporate executives who have successfully
run companies. Ask a mentor for advice or find a SCORE office in your community.
Pull in your horns. At this time, postpone plans for expansion. Reduce inventory orders to
minimums and review existing contracts to determine the possibility of delays or cancellation.
Also, suspend the addition of new products until demand is confirmed. These steps will help
avoid unnecessary expenses.
Conserve cash. Collect accounts receivable and contact suppliers to extend accounts payable.
Focus on delaying expenditures for new equipment and expanded inventory. To cover any
additional work, use freelancers and contractors rather than hiring new staff. Also, do not add
new employee benefits or pay bonuses. Employees are usually willing to forgo perks in order to
keep their jobs. When necessary, consider reducing your staff.
Use time wisely. Think about contracting tax and payroll preparation to outside suppliers if you
would use your time more productively for sales development or floor participation. Conversely,
if these items can be handled more effectively and less expensively in-house, then transfer them
to another employee.
Utilize marketing. Develop aggressive plans to improve sales volume. Consider special events
to attract customers. To get free publicity from the media, look for newsworthy items about your
business. Get to know reporters or publishers and keep them informed or offer story suggestions.
Collect email addresses from clients & prospects and follow up with monthly messages.
Consider personal visits to connect with existing clients and find out how their needs have
changed and how your product or service can help.
Failure, Resiliency and Confidence to Achieve Success
A nationally recognized expert on entrepreneurship, Barry Moltz has founded and run small
businesses for the past 15 years, experiencing both great success and great failure along the way.
His latest book, BOUNCE!: Failure, Resiliency, and Confidence to Achieve Your Next Great
Success, offers entrepreneurs a new perspective on the concept of failure, and how recognizing
and even embracing it can set the stage for bigger successes.
Use Your Failures to Propel Success

Forget about having “no fear,” or asserting that, “failure is not an option.” Actually, it is a very
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real option, and often happens. It’s okay to be afraid and it's okay to fail. Not everything works.
Learn from failure and bounce to the next action and success. It's about resilience.
If an action does turns to out negatively, then grieve over failures if you have to, but don't get
demoralized. Being able to recover quickly and move to a new place where success is again
possible is what matters. I use the analogy of a baseball team. Your opponent can beat you only
once per game, whether it’s by 1 run or 15. But the next day, everything’s even and you have a
new chance to succeed.
Creat Your Own Model of Success

When it comes to success, there is no one model or type. People want to find the easy, magical
steps to success. In reality, success isn’t always a straight line, but a series of ups and downs.
There are some great success stories out there, but they rarely apply to anyone else because those
individuals have unique experiences and access to certain resources that may not apply to you. If
you attempt to follow those same steps, you’re likely to be disappointed.
To create your own measurement systems for success and failure, you should look for other
things that are important to you—what I call “money-plus goals.” What is it that makes you want
to do something to make money and have fun? Are you building customer loyalty? Are you
learning things that will be helpful down the road? The key is to establish these systems from the
outset so that you know what to work for, and how to recognize success when it arrives.
Plan for Success

Business plans are valuable planning tools in mapping success. But, the process of creating them
is even more valuable because it forces you to ask questions and search for information. You
shouldn’t stop once you have the document, however, because business conditions are
continually changing, and what you projected may be not be accurate in a matter of months or
even weeks. Instead, you need to continue asking questions.
Get a Mentor
Lastly, remember that other people have traveled this path. Mentors like SCORE can help you
assess a situation and figure out the best direction to take. Whenever you find people who can
help you in this way, you will have a better chance of success. Having a mentor–someone who
has been there and done it successfully–is absolutely invaluable. No one can, or should, do it
alone. Even elite athletes have mentors and coaches. And, in my opinion, every entrepreneur
should become best friends with SCORE..
The Fast Lane
Entrepreneurs don't follow rules—they break them. Rules about tradition, rules about
convention, and rules about what can and cannot be done—they all fall before the perseverance
and innovation of entrepreneurs.
At least that's the legend. But what about the rules for creating a fast-growing company? Are
there certain financial, market or other conditions that must be met for a company to grow
rapidly? To find out, we asked experts in small-business growth what they saw as the rules for
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rapid business expansion. Then we talked to successful fast-growth entrepreneurs for their takes.
We found that entrepreneurs do not all take the same paths to fast growth, but they do all believe
that rules were made to be broken.
1. You Must Have Big Money

Of all the conceptions about what it takes to be an entrepreneurial success, access to bountiful
sources of investment capital is probably the most widely held. There are good reasons for that,
says George Foster, Wattis professor of management and director of the Executive Program for
Growing Companies at Stanford University in Palo Alto, California. "Dollars clearly enable a
company to invest in research and development to fast-track a process," Foster says. "Dollars
enable you to hire a sales force of 40 as opposed to 10."
But starting a business with little capital can also work—if you find innovative ways to cut costs.
Tampa, Florida, entrepreneur Stuart Suddath, 34, started self-service moving company Movex
Inc. in a spare bedroom of his father's home in January 2000. Its customers save money by
loading their own household goods onto professionally driven trucks supplied by Movex. The
company did well almost from the start, generating $2 million in revenues its first year. In 2004,
Movex made $13.7 million with just 34 employees.
The company's major outlays include advertising its nationwide service and developing software
to monitor the moves in progress. But other than that, capital outlays have been minimal. "The
real kicker of the whole thing is that Movex is a non-asset-based business," says Suddath. Rather
than rent or buy a fleet of trucks, Suddath contracts with independent truckers and trucking
companies and monitors their locations, keeping them fully loaded at all times. "It's a lot cheaper
than owning the trucks," he says. "We'd have to spend $100 million to haul what we need to get
hauled."
2. You Must Have a Deep Management Team

Another standard ingredient in the fast-growth recipe is a broad and deep management team with
high-end skills and experience—"a resilient, focused, top-shelf management team" is how Foster
puts it. "Until you have been knocked down and shown you can pick yourself up, take an
obstacle and overcome it and make an opportunity of it, it's hard to become a viable company,"
he says.
Executives of Round Table Group Inc., a business that connects independent subject-matter
experts with attorneys and money managers to help with litigation support and investment
research, have certainly been resilient: All three co-founders of the Chicago company have been
there since it was founded in 1994. The organizational chart is not, however, particularly deep--
the company still has just 12 employees despite growing to $6 million in 2004 revenue, nearly
doubling 2003's $3.6 million. And CEO Russ Rosenzweig was just 24 and fresh out of college
when he co-founded the company.
Rosenzweig says that keeping the business simple and focused has helped grow revenue rapidly
while keeping the management ranks thin. "Having a simple story and a focused customer
segment were the two key ingredients for fast growth for us," says Rosenzweig. "It can't be a
complex business that's hard to explain. You need to be able to explain yourself in a sentence."
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3. You Must Have a Technological Competitive Advantage

The dotcom boom may be long gone, but the idea that proprietary technology is a prime
component of the jet fuel that powers fast growth is still around—and for good reason. "We like
a technology-based competitive advantage because it allows you to create wealth, not just move
it around," says venture capitalist Jack Biddle, co-founder and general partner of Novak Biddle
Venture Partners in Bethesda, Maryland. When a company has a technological edge, it can
essentially create brand-new markets for its products and services, he explains. Then it doesn't
have to take sales away from established competitors to grow.
It might be said that Karen Booth Adams succeeded in spite of technology. The 35-year-old from
Atlanta had founded four startups in the IT field when she and a partner began PoshTots, an
online retailer of baby décor items, in November 2000. At that time, of course, the fuse on the
dotcom implosion had already been lit, and yet the company not only survived the blast, but also
grew to 22 employees and a projected $10 million in sales for 2005.
Despite Adams' tech background, PoshTots had no particular technological edge over its
competitors in online retailing. And the company's plan to sell furniture such as cribs and beds
online was, at the time, almost an icon of internet futility, having been the same strategy adopted
by a number of spectacularly unsuccessful dotcom ventures. PoshTots prospered for the simple
reason that no one, online or offline, offered what Adams did—a single, convenient place to go
for high-end children's décor and furnishings.
"We picked a niche, stuck to it and did it the best," she says. Another factor was that Adams'
partner, Andrea Edmunds, skillfully made the most of the firm's celebrity clients, and nurtured
relationships with media outlets that provided lots of free publicity for the upstart retailer and its
sometimes amazingly pricey products.
4. You Must Tap a Hot Market

Being in a rapidly expanding market can make up for a lot of mistakes. But is it a requirement
for rapid growth? In addition to a new technology or new application of technology, Jerome Katz
says it usually is. "[You need] a tipping-point-type market, where something has been building
and all of a sudden it's hot," elaborates the St. Louis University Coleman Foundation Chair in
Entrepreneurship. Entrepreneurs can choose to market aggressively and ramp up demand
themselves, or husband their resources and build slowly until the market reaches a tipping point
on its own. Either way, a fast-growing market is practically a prerequisite for a fast-growing
company, Katz argues.
It's a persuasive argument, although it doesn't account for companies like Movex. "The industry
is stagnant," concedes Movex founder Suddath. "But it's a $12 billion industry." Under that roof,
Suddath, who previously worked in his family's full-service moving business, found ample space
for innovation, essentially creating a new market for a service midway between full-service
movers and drive-it-yourself truck rentals. The CEO thinks the sky's the limit. "We're hoping to
brand this type of service," he says. "People say they're going to U-Haul something. We're
hoping they'll say they're going to Movex it."
5. You Must Have the Desire

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Inside the chest of every fast-growth entrepreneur beats a heart full of passion for business, says
Jeff Williams, president of business startup training and coaching company Bizstarters.com in
Arlington Heights, Illinois. Williams is most scornful of the pantheon of fast-growth idols,
including the requirements for lots of money, teams of managers and best-in-class products and
services.
But after helping more than 4,000 small firms get under-way, Williams does feel that a true
passion for the business is essential. "It is so demanding, and almost always takes longer to be
rewarded than you think it would, that it requires passion," he says. "You truly love the product
or service, you love the selling, you love the customers, you don't even mind customer-service
problems."
That's one rule Adams agrees with. "[Passion] plays a role in every startup if they're successful,"
the serial entrepreneur says. "You'd better be tenacious and you'd better be determined to make
that business successful no matter what—even if it requires a lot of sacrifice and late hours."
So is passion the truly unbreakable rule for fast-growth companies? Perhaps, but it depends on
what your passion is for. Venture capitalist Biddle points out that for most companies to expand
rapidly, the founders must have more passion for growth than for control. "You have to
distinguish between those companies that have the capacity to fast-track and those that are
willing to do it," he says. In many cases of unfulfilled potential, he says, the reason is that the
founder cared more about keeping control than experiencing growth.
The Rules About Rules

Part of the reason that the rules of fast growth appear to frequently be broken may have to do
with sheer numbers. After all, there are millions of entrepreneurial businesses in the United
States, all unique. "There isn't just one way," Katz says. "You can pick any 50 characteristics you
want, and there are a hundred thousand people that fit that model." At the same time, there
probably isn't a model without a hundred thousand exceptions.
Is your company one of those exceptions? Adams urges entrepreneurs not to be too quick to
follow the advice of investors. "We were fortunate that we had already had some successful
startups, so we didn't need venture capital to start it up," she says. "But had I presented [my idea]
to [VCs] at the time, they would have laughed me out of the room."
Rule breaking may, in fact, be inescapable for fast-growth entrepreneurs, many of whom
attribute their success specifically to being unlike anything that has ever been seen before. "It's
something different-a hybrid," Suddath says of Movex. "We're building an industry where there
wasn't an industry before."
How to Cope With Overnight Success
You'd think that getting discovered by Walmart or Oprah would be every small-business owner's
dream come true. Yet, too often, overnight success can quickly become a company's worst
nightmare. A small business that lacks the capital, staff or infrastructure to handle a big order or
nationwide publicity can promptly get crushed when its product or service becomes a hit.
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Even though every company should have a strategic plan in place before the big day arrives,
most small business owners are so busy just trying to survive that planning usually gets put on
the back burner. That's why we have put together this 10-step survival guide to help you think
fast and react quickly when you wake up one morning to find the world beating a path to your
door.
1. Take a deep breath. Don't max out your credit cards, splurge on a big bottle of champagne or
do anything crazy. While it's only natural to want to celebrate the good news, remember that a
big contract or great press doesn't mean dollars in your bank account—at least, not today. So
hold off on that Ferrari or tropical vacation. Also, remember that the additional sales you ring up
will probably require you to lay out more money for people, materials and overhead—and may
require you to borrow additional capital as well. "The financial success was sweet, but it didn't
change the way I live my life," says Barbara Unell, a Leawood, Kansas, parenting book author
who hit it big on Oprah eight years ago.
2. Map out a strategy. Make a to-do list, crunch the numbers and marshal your human and
production resources. It's always easier to fight a battle on paper (or a computer spreadsheet)
than to shoot first and ask questions later. No matter how much pressure you're getting from your
customers to deliver the goods right now, you need to take the time to sit down with your partner
or staff to map out a plan of attack. For a manufacturing company or a wholesale distributor, this
means estimating how many units of your product you think your customers will buy and how
much it'll cost to produce or import them. A service company like an ad agency or a web design
firm will have to estimate how many additional employees or independent contractors will be
needed to service the expected influx of new accounts.
3. Get the money. Before you go on a hiring binge or start placing orders overseas, it's important
to figure out how much working capital you're going to need to meet the market demand.
Because employees and manufacturers generally won't wait until you've sold the products and
collected the money before you pay them, you'll need a source of capital that you can tap
immediately.
If you've got an existing business with good credit, your first call should be to your bank to set
up a credit line or increase the one you have. (A credit line works like a revolving charge account
in which you draw down money as you need it and only pay interest on the amount you owe.)
Suppliers may also be willing to extend the capital and/or credit you need to fill the order. And
don't forget about credit cards. Says Andrew Brunger, co-founder of Kol Design, a New York
City company that produces high-end bath and body products, "Because your personal credit
record is at risk, credit cards should only be used to finance a reputable purchase order, not to
fund the business as a whole. With good credit, you can build a $250,000 credit line for your
business with very little effort."
4. Reach out for help. Call on suppliers, personal contacts and the Internet to find extra hands to
help you. If you think you can do it alone, think again. No matter how hard you work, there are
only 24 hours in a day and you've got to sleep during seven or eight of them. That's why it's
important to reach out to people who can help you.
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If your company already has employees, ask them to put in extra hours to help you get over the
hump. If you're a one-person show, you can reach out to friends and family members to help you
or, if they don't have the skills you need, you can post ads on Web sites like craigslist to find
skilled freelancers and independent contractors. But beware: Your overnight success may not last
forever, so don't commit to hiring full-time employees with payroll taxes and benefits until
you're sure your company's good fortune is here to stay.
5. Forge production partnerships. A small business making handcrafted soaps is going to be

hard-pressed to fill a million-unit order from a large national chain completely on its own. That's
why it's important to partner with manufacturers in the United States and overseas who can take
your samples or prototypes and produce them in large quantities. While there's no shortage of
suppliers listed on the Internet, a reliable manufacturer that delivers high-quality goods is not so
easy to find. Your best bet may be to contact your industry's trade association and its leading
trade publications (industry newspapers) for consultants and referrals.
6. Create a distribution network. As news of your product or service spreads, you may start
getting orders from consumers and retailers all over the country. If you're like most businesses,
you're going to need help selling and servicing those accounts. Rather than hiring a national sales
manager and opening offices in major cities, a more cost-effective option may be to sell your
product through manufacturers' reps. These reps (or rep firms) act as independent sales agents for
multiple product lines and work on a commission-only basis. In the apparel, shoe and toy
industries, for example, reps typically earn a 20 percent commission on any products they sell.
Most reps generally have long-standing relationships with the retailers they sell to and often
sponsor booths at leading trade shows to showcase their customers' products.
7. Communicate with your customers. Communication is the lifeblood of any business

relationship, but it's even more important when your product or service suddenly takes off. The
biggest mistake a business owner can make is failing to warn customers of shipping or
production delays until it's too late. This is especially critical in the apparel and toy industries
where seasonality is important.
Manufacturers who fail to communicate with key retail and wholesale customers may find
themselves not only with egg on their faces but with unsold inventory in their warehouses as
well. David Bradford, a Holtsville, New York, general contractor, puts it this way: "In
construction, there are so many things that are beyond your control. I would rather tell my
customers the truth and have them be angry at me for five minutes than make excuses and burn
my bridges forever."
8. Leverage your success. The hardest thing about achieving overnight success is keeping it
going. The last thing you want is to get stuck with a warehouse full of pet rocks. Creating line
extensions like the Chicken Soup books or the For Dummies series is one way to keep your
brand alive. Another is to find new markets for your products and services or new ways to
publicize them. Barbara Unell, the nationally known parenting book author, got her big break in
1996 when her book, 20 Teachable Virtues, was spotted by a producer for Oprah who called and
asked her help in creating an entire show around her title. Not only did her book's sales double,
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but the publicity from the show also led to speaking engagements, workshops and other projects.
"Before I went on the show, I'd be introduced with my credentials," Unell recalls. "Afterwards, it
was 'as seen on Oprah.'"
9. Invest for the future. While it may be tempting to reap the profits from your hit product right
away, it's important to re-invest some of those profits to help your business grow. Whether this
means paying down debt, buying new equipment, hiring another employee or opening another
location, don't pass up this opportunity to make your money work for you. It's always cheaper to
put your own cash to work in your business than to borrow money from a bank or give up equity
to an investor. Dan Parisi, owner of the highly-trafficked website, House.com, which connects
home buyers with real estate brokers, says he's re-invested his profits into public relations efforts
and technology. "As we've grown organically without raising capital, our goal is reach out for the
assistance we need while maintaining profitability," Parisi says.
10. Learn from your mistakes. After the excitement of the initial sales rush has died down, take
a few hours to sit down with your staff to figure out what went right, what went wrong and what
you think you could do better in the future. This will help you put a strategy in place for the next
time you come out with a hit product—which could be sooner than you think!
More Resources Got a hit on your hands and don't know where to turn? Check out the Web links
below to get the help you need today.
craigslist: This is a great place to find freelancers and independent contractors, and it's free to
search and—in most cities—post.
VendorSeek: This online marketplace helps match companies with vendors of products,
services, equipment and staffing.
Net-Temps: Here you'll find employment listings for employers and seekers of full-time, part-
time and temporary jobs.
Manufacturers' Agents National Association: This Web site offers a searchable directory of
manufacturers' reps and agents in the United States and worldwide.
Credit-Card-Source.com: Go here to find help navigating your way through the maze of credit
card offers so you can pick the best card for you and your business.
Increase Profits through Expansion and Diversification
Although the economy is contracting, your business doesn’t have to. If your sales have slumped
and your profits waned, win over clients with new and diversified products.
One of the biggest misconceptions of the current economy is that all businesses are contracting.
That’s simply not true. There are companies that are not only surviving, but thriving. The key to
success is market research. Find out what products and services are in demand. Also, focus on
why customers choose one product over another. Right now, the green movement and charitable
giving are big motivators for public spending. To find out what works best for your business,
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research and planning are imperative.

Once you’ve re-evaluated who your customers are and what they want, consider providing
variations of your product or service at multiple price points. Diversification is a key profit-
building strategy. Your focus needs to be on generating multiple and complimentary streams of
income.
If you own a bakery, you should have high-end customizable offerings to appeal to corporations
and wedding planners, mid-range options for small businesses and special events, as well as
affordable pastries for the every-day customer. If you are a consultant, then provide a
downloadable e-book or white paper, a paid webinar, a local workshop and a larger seminar or
conference each at a different price. These options allow customers to choose the item that best
fits their needs and budgets.
In addition to providing multiple price points, create packages or customizable plans that give
the customer greater freedom and flexibility. Offer your new product or service as part of a
bundled deal or provide free samples or trials with purchase of popular items. This allows
customers to test new offerings that they might not have tried otherwise. Also, consider the
buffet concept. Consumers love customization and flexibility. Give them the ability to pick and
choose exactly what they want, rather than getting the standard package that includes items they
don’t need.
In regards to flexibility and product positioning, take a lesson from online retail giant,
Amazon.com. When selling a book, they provide both new and used versions for sale, as well as
bundled deals where the customer can get two or three similar books at a slightly reduced price.
To successfully expand your offerings and increase revenue, strategic marketing is essential.
In the end, your ultimate goal is increased profits. But, the process includes multiple steps. To be
successful, you need to take a comprehensive approach. Make sure you fully understand your
market before developing new products. Also, diversify your offerings with various price points
in mind. Then use cross-promotion, package deals and other marketing strategies to promote
your new line. And remember, if you need help expanding your products or services, contact a
SCORE business mentor online or in-person.
Seven Keys to Growing Your Business
Your ability to think, analyze and decide is the key determining factor of your profitability. To
help you sharpen this ability, here are some key principles for business success that are relevant
and important at every stage of your business life. If ever you aren't happy with the business
results you're getting, revisit these key points.
1. The Product Must Satisfy an Immediate Need

The first principle to consider in selecting any new product or service is to determine if it fills a
genuine, existing need that customers have right now. A new product or service must solve a
problem of some kind for the customer or make the life or work of the customer better in a cost-
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effective way. You must be very clear, from the beginning, about exactly what your product or
service does to improve the quality of the life or work of your customer.
2. Offer Good Quality at a Fair Price

The second principle for business success with any product or service is that it must be of good
quality at a fair price. If it's in competition with other similar products or services, it must have
what's called a Unique Selling Proposition—one or more features or benefits that make it unique,
different and superior to any competitive product or service.
This area of uniqueness is central to success in business. No product or service can succeed
unless it's somehow unique and superior to any other product or service that competes with it.
There's seldom any opportunity to build a business around a "me too" product—a product or
service that's just the same as all the others, where the only difference is that it's you who
happens to be selling it.
The safest business strategy is to start off with an accepted product that already has a widespread
market and then find a way to improve upon it in some way. Deliver it faster, make it better or of
higher quality, or lower the price of the product or service in some way. Instead of trying to
invent a new business or industry, start off with a product or service that people are already using
and find some way to make it more desirable.
3. Be Careful With Your Money

The third principle for business success is tight financial controls and good budgeting. Successful
companies use accurate bookkeeping and accounting systems. They put these systems in place at
the very beginning and carefully record penny they spend.
Even the largest multi-national companies—those that do billions of dollars in sales each year—
tend to be very careful with their expenditures. They're constantly looking for ways to cut costs
while maintaining the same level of quality. They focus on frugality at all times.
4. Cash Flow Is Essential

Especially with a small business, you must hold onto your cash as a drowning man would hold
on to a life preserver. Cash is the lifeblood of the business. Cash flow is a critical measure and
determining factor of business success. All successful entrepreneurs install careful financial
controls and monitor them every day. They carefully consider every expenditure. They take the
time to analyze the use of every dollar. They work from detailed budgets and they review them
every week and every month.
The basic rule for entrepreneurial success is this: only spend money to earn money. In business
there are only two categories: revenue and expense. The basic rule for running your business is
"If it's not revenue, it's expense!"
5. Guard Your Cash Carefully

One key to business survival, with regard to your operations, is "frugality, frugality, frugality."
Once I worked for a man who had started with nothing and built an $800 million dollar business
empire by the time he was 55. I was amazed to see that he ate lunch at a small diner across the
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street from the office, and drove a used car. He delighted in saving money.
Wal-Mart founder Sam Walton, when he was worth more than $25 billion dollars, still drove his
own pick-up truck to and from work. This attitude of frugality from the top permeated every
aspect of Wal-Mart all the way down and throughout every department. The practice of frugality
assured that the business was profitable, year after year.
6. Maximize Your Marketing

Perhaps one of the most important principles for business success is strong momentum in the
sales department. This requires an emphasis on marketing that permeates the entire organization.
Everybody must think about selling and satisfying customers all day long.
What's the purpose of a business? Some people say that it's to "make a profit." But this isn't
correct. The true purpose of a business is to "create and keep a customer." Profits are the result of
creating and keeping a sufficient number of customers in a cost-effective way. All emphasis has
to be on creating and keeping customers.
7. Selling Is the Core Skill of a Successful Business

The keys to business success are simple. With regard to the product, the keys are to "Sell! Sell!
Sell!" One of the most important single skills you must develop for succeeding in your own
business is the ability to sell yourself and your product to your customers.
In fact, the ability to sell is one of the key skills for a successful life. With very few exceptions,
all successful businesses begin with a single person who's excited about the product and who's
very good at selling it to others. He likes the product so much that he can hardly wait to talk to
other people about it. He's eager to make new customer contacts. But where there's no sales
expertise, the finest product or service will fail.
Profit-Increasing Strategies
Last month I gave you "Seven Keys to Growing Your Business." This month I'm returning with
even more principles you can implement today that'll increase your sales at every stage of
business.
1. Love Your Customers

In successful businesses, concern for the customer at all times is a top priority. In a successful
business, everyone in the business thinks about creating, serving and satisfying customers
throughout the entire day. Ten years after the book In Search Of Excellence, by Thomas Peters
and Robert Waterman, became a bestseller, a journalist asked Peters which of the seven
principles in the book he felt were still the most important. Without hesitating he replied that it
was "an obsession with customer service."
In the best businesses—large and small—the key people love their customers. They think about
their customers day and night. They see themselves as personal representatives or agents of their
customers, working on their customers' behalf. This attitude of devotion to customer wants and
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needs permeates the entire organization and causes people to want to do business with the
company—and continue doing business with it in the future.
You can always tell a good business by the way they treat their customers—how they answer the
phone and deal with customer requests and inquiries, and how they deal with customer needs and
complaints. Concern for the customer at all times is a top priority in all successful businesses.
2. Develop a Complete Business Plan Before Starting

A major reason for business success is that the founders developed a complete business plan
before starting operations. Successful businesses are those that have carefully thought through
every part of the business, completed very careful budgets, and conducted a breakeven analysis
on their activities before they open their doors. They organized and laid out a business plan, like
a blueprint, before they began spending money and engaging in business activities.
Here's an interesting discovery: Once the business plan is developed, it's seldom referred to.
Very often companies will spend many months developing a business plan and spend several
weeks each year updating the business plan, but once it's complete, it's put into a drawer and
seldom referred to again.
Why is this? It's usually because once operations begin, what happens in the business is quite
different from what was expected or predicted.
What use then is a business plan? The answer is that the very exercise of working out a business
plan in advance forces the entrepreneur to think through all the critical issues that are involved,
or will be involved, in the operation of the business.
3. Think Through the Critical Issues

Writing out a business plan forces the business owner to think about the products and services to
be offered, the prices at which they'll be sold, and the likely volume of sales that'll be achieved. It
forces the business owner to carefully think through all of the expenses that'll be incurred in
bringing that product to market. It forces the business owner to project the people they'll require;
the offices and facilities necessary; the money necessary for rent, utilities and payroll; and all the
little factors that go into making a business successful. By writing out a business plan—in
advance—the entrepreneur is forced to think through and carefully analyze every one of these
numbers and combine them into a total blueprint—before starting.
4. Can You Get There From Here?

Over the years I've worked with entrepreneurs who have been eager to start new businesses.
However, once they were forced to think through and gather all the information necessary to
complete a business plan, they realized the business wouldn't work. Either they couldn't charge
enough for the product or service relative to the costs of bringing it to the market, or the market
wasn't large enough. Sometimes the length of time to break even was too long, or some other
factor they hadn't considered comes up. You've heard the old saying, "You can't get there from
here." By writing up a business plan, it often becomes clear that this business isn't a good idea in
the first place.
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Interestingly enough, when you go to a bank to borrow money, or to a venture capitalist, or even
to hire a senior executive, the very first thing they'll ask you for is a business plan. If you don't
have a business plan you immediately reveal yourself as an incompetent manager--the number-
one reason for business failure. With no business plan, you have no credibility and you'll find it
almost impossible to get the support you need to build your business.
5. Never Give Up
This last key to business success is a high degree of determination, persistence and patience on
the part of the business owner. Venture capitalists are people who look at hundreds of business
plans and seldom fund more than 1 percent of them. They'll tell you that they look for character
and ability more than anything else in deciding whether or not to invest in a business. They look
not only at the product or service to be offered, but the people whose talents, ability and
experience will be essential to making the business successful.
Determination, persistence and patience go hand in hand with business success. Nothing ever
works out the way you think it will. You'll have to chop and change and try different things
continually. Your best-laid plans will be met with disappointment and frustration. But your
ability to persist and to continue seeking faster, better, more innovative ways of achieving your
business goals is the key to your future.
Moving Beyond Your Home Office
Home sweet home—as a home-based business owner, that perennial country sampler phrase
encompasses your world. From sharing lunch with your kids in the kitchen and your hallway
commute to your linen closet-cum-storage room, your home is your life. So why would you ever
give up your home office?
Depending on which camp you reside in, your answer may be a simple “Hell no, I won’t go!” or
the appreciably more complex, “It’s inevitable. My kids (and spouse) don’t understand the
concept of a closed door. I have no space. The refrigerator and television constantly beckon to
me.” But no matter what the problem, is it really necessary to (gasp!) find an office away from
home?
Moving On Out
Several years ago, a friend asked me when I was going to get a “real office.” Puzzled, I asked her
what she meant. “You know,” she said, “a place you drive to every day.” A home office can be a
real office, but as your business grows, you’ll probably need to move on and out of your home
office.
Many of my clients have taken the leap from a home office to an out-of-the-home office for
several reasons:
• Interruptions. As one client’s family grew, his inability to work uninterrupted (as well
as his growing responsibility to serve as the backup babysitter on a regular basis) affected
his bottom line and his relationship with his family. What initially was an ideal working
situation for his freelance writing business became his worst nightmare. He missed
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deadlines, alienated clients and reached his wit’s end on a daily basis. His choices were to
continue a less-than-ideal work situation or relocate his office. The choice was obvious.
• Loneliness. Some people work better alone, while others need to be surrounded by
people to stay motivated. These people thrive on the communal office energy that can’t
be recreated at home. These “people persons” are more productive in an outside office
than they’ll ever be at home. Instead of trying to overcompensate for being home alone
by playing loud music, visiting neighbors or running an excessive amount of errands,
move out. One client, a sales rep who always considered himself productive, finally
realized that his personality was better suited for an outside office. He took the time to
dress for work each day and diligently made it to his desk by 9 a.m. each morning. By 11
a.m., however, his energy waned, his mind wandered, and he often rushed to make lunch
plans with colleagues or anyone else he could find. After moving to an outside office
with other business professionals nearby, his productivity soared along with his income.
• Growth. A successful business is a curse and a blessing rolled into one. A growing
business requires more room, equipment and storage space. It may also require
employees--and here’s where things really get crowded. It’s important for an office staff
to be able to work well together, but asking them to work on top of one another is asking
too much. At that point, you’ll need to rent outside space unless you’re willing to
renovate your home to create more office space. Zoning laws may also restrict you from
running a homebased business with more than one employee.
Pros and Cons

The advantages of moving out of your home office boil down to increased professionalism, more
space to work and unlimited growth potential. Of course, with any advantage come a few
disadvantages, but nothing that can’t be overcome:
• Your daily commute will be longer (and not on foot), but if your office is located near
your home, the lost time and frustration should be minimal.
• You’ll need to furnish your office professionally. The dining room chair doubling as an
office chair will have to go—especially since clients will be visiting your office.
• Your overhead will increase, but your revenues could grow proportionately as you attract
larger or more clients.
Decisions, Decisions
Making the decision to move your office out of your home may be easier than deciding where to
move. Ask yourself these questions:
• Do you want a shared office suite vs. an office you rent by yourself? The advantage of a
shared suite is obvious: You share the cost of the office and receptionist with others. You
can rent one or several offices and make use of the community conference room. You’ll
save a bit on rent and eliminate any loneliness issues you may have had when you
worked from home.
• Can you find an office close to your home and avoid a long commute? The less time you
waste driving to work, the more time you’ll have to work.
• Can you sign a short-term lease (one year or less) in case your new arrangement doesn’t
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work out as planned? A short-term lease will also be handy if you need more space or
add more staff as your business continues to grow and need more space.
When You Really Don't Want to Leave...

Relocating a home office isn’t for everyone. When future growth, your bottom line and your
professionalism are at stake, however, you've got to do something—and if you're completely
opposed to moving out, here are some other ideas:
• If you’re running out of space, move to a new home with a bigger office. Or build your
own home, designing your new office for your every anticipated need and want.
• Reinvent your present office by hiring a professional organizer to help you make the best
use of your space.
• Turn an unused room in your home into a storage facility, warehouse or a second office
for employees.
• Outsource work to other free agents instead of trying to squeeze employees into your
already packed space.
• Utilize business centers. These temporary offices provide a traditional office space for
you to work in, and usually come with amenities like Internet access, videoconferencing,
conference space, office equipment like copiers, and even receptionists.
Next Business Step? Success
"If you don't know where you're going, you'll probably end up someplace else," Yogi Berra said.
A goal is a way to make sure you don't wind up someplace other than where you want to be.
At its simplest, a goal is just something you aim for. But goals are powerful contributors to
successful business growth in several ways. To begin with, the process of setting goals forces
you to think through what you want from your business and how growth may—or may not—
provide that. This process helps suggest directions for pursuing that growth, which can greatly
improve your chances of achieving your goals in the first place.
Goals also give you a framework within which to work. This tends to focus your efforts by
helping you rule out actions that won't contribute to achieving the goals you have set. A very
important part of that framework is a timetable. Any good goal has a timetable, and that
timetable will influence your actions profoundly. For instance, if your goal is to retire by age 50,
you'll know that any growth plan with a payoff that won't occur by your 51st birthday is not one
you'll consider, no matter how attractive it might otherwise seem.
Evaluating Goals
It's not enough just to have goals. They need to be the right goals and ones that are appropriate to
your ambitions and abilities. When entrepreneurs talk about their goals, whether they are for the
past year or for a lifetime, the most frequent issue is whether those goals were the best ones to
have.
If your goals appear to be holding you back or directing your efforts into unproductive areas,
then there is definitely something you can do about it. In fact, setting new goals for yourself and
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your business is both easy and essential if you're going to grow. When looking at new goals,
make sure they have the following qualities:
• Specificity. You stand a better chance of achieving a goal if it's specific. "Raising
capital" isn't a specific goal; "raising $10,000 by July 1" is.
• Optimism. Goals should be positive and uplifting. "Being able to pay the bills" is not
exactly an inspirational goal. "Achieving financial security" phrases your goal in a more
positive manner, thus firing up your energy to attain it.
• Realism. If you set a goal to earn $100,000 per month when you've never earned that
much in a year, that goal is unrealistic. Begin with small steps, such as increasing your
monthly income by 25 percent. Once your first goal is met, you can reach for larger ones.
• Thinking short- and long-term. Short-term goals are attainable in a period of weeks to a
year. Long-term goals can be achieved five, 10 or even 20 years from now; they should
be substantially greater than short-term goals but should still be realistic.
• Income. Many entrepreneurs want growth to provide financial security. Consider how
much money you want to make each year when planning your growth.
• Lifestyle. This includes areas such as travel, hours of work, investment of personal assets
and geographic location. Are you willing to travel extensively or to move if that's what it
takes? How many hours are you willing to work? Which assets are you willing to risk?
• Type of work. Your growth plan may require changes in the type of work you do. When
setting goals for type of work, you need to determine whether you like working outdoors,
in an office, with computers, on the phone, with lots of people, with children, and so on.
• Ego gratification. Face it—many people want to grow their business to satisfy their
egos. Owning a bigger business can be very ego-gratifying. You need to decide how
important ego gratification is to you and what size business best fills that need.
• Honesty. The most important rule of goal-setting is honesty. Building a business with
your eyes wide open about your strengths and weaknesses, your likes and dislikes and
your ultimate goals allows you to confront dilemmas with greater confidence and a
greater chance of success.
Cost-Benefit Analysis
There's no free lunch when it comes to achieving goals. Any goal you set will require some
investment of time, effort and money that will cause you to forego other goals. One way you can
figure out whether a goal is going to be worth it is to do a cost-benefit analysis. This doesn't have
to be complicated. Simply draw a line down the middle of a piece of paper to create two
columns. On the left, list the benefits of achieving a given goal. On the right, list what it will cost
you to get there. You can simply count the benefits and costs columns and see which has more,
or assign weighted scores to each entry and total them at the bottom. You may not want to let
this quick and easy analysis make the final decision for you. And it may sometimes be the
nearest thing to a tossup. But even a simple cost-benefit analysis can give you an idea of whether
a given goal is worth investigating further.
The difference between a dream and a plan is that the first simply expresses a desire to be
someone or to achieve something, while the second expresses a method for accomplishing the
first. If you really want to achieve your dreams, you need a plan or a map that is going to show
you how to get from here to there. A good road map for future growth needs to have the
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characteristics of specificity and realism, just like a good goal. It should also contain benchmarks
to measure your progress and tools to measure how well you're doing.
Setting Benefits
An important part of any growth plan is establishing a way to tell when you have reached
important points in the process. These mile markers can be composed of any number of
benchmarks. Overall sales revenue is a common one. Many companies recognize the first year
they topped $1 million, $5 million and $10 million in sales. Sales is an obvious, important, easily
grasped benchmark. You can look at sales growth rates and overall sales volume as valuable
benchmarks.
Sales, however, are not the only benchmark. You can also look at benchmarks for such critical
variables as number of stores, number of customers and transaction volume. Many industries
have benchmarks unique to them. For instance, air carriers think in terms of percentage of seats
filled and revenue generated per mile flown. E-commerce businesses measure Web page views
and time spent on each page. Your business may be concerned with even more esoteric
benchmarks, such as percentage of repeat customers or average sale amount per customer.
Not all benchmarks have to do with growth. You can set benchmarks related to cost savings,
error rates, employee turnover and many other aspects of your business. About the only
characteristics all benchmarks share are that they should be significant, relevant and measurable.
Establishing Measurement Tools

One of the biggest differences between small companies and large ones is the amount of effort
each devotes to measurement. Big firms are famous for generating mounds of reports containing
measurements of all kinds of performance data. These reports describing what is happening in a
company are handy for enterprises with thousands of employees that may be spread all over the
globe but still need to be guided in the same direction.
If you're a one- or two-location venture and you've personally hired all the employees and see
them every day, doing a lot of measurement and creating reports may seem like a waste of time.
And it probably isn't necessary for small firms to spend as much energy tracking performance as
it is for big companies. At the same time, most entrepreneurs go out of their way to avoid
paperwork. More so than large company executives, entrepreneurs' decision-making is
hamstrung by a lack of adequate information about their companies. Although their intuitive
knowledge of their companies may be superior to the grasp exhibited by Fortune 500 CEOs,
entrepreneurs could generally do a better job of gathering data about their companies.
Entrepreneurs often lack enough data to be able to answer questions such as: What is my most
profitable product? What are the traits of my best customers? Which types of promotions have
the highest payback?
You will find your growth plan much easier to implement if—along with setting up financing,
hiring and other functions to achieve it—you create measurement tools to tell you how you're
doing along the way. These need not be overly complex. You need to decide the things that are
most critical to achieving your growth objective and then find a way to measure them. If, for
instance, competitive pricing is the main thing you feel will determine your fate in the
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marketplace, you could assign one employee to make a weekly or daily trip to an outlet where
your products are sold alongside those of competitors, just to make sure you're not being
undersold. It's easy to overdo measurement, spending valuable resources collecting data that isn't
useful. But that doesn't mean all measurement is bad.
Revisiting Goals
The value of a goal lies in the way it provides you with a relatively steady, unblinking light
toward which to steer in the fog of everyday business life. But that doesn't mean a goal should be
as immovable as a lighthouse. You should periodically take a fresh look at your goals to see if
they need to be changed or, perhaps, dumped. Changes in your personal situation, such as a
desire to spend more time with family, may cause some goals to become irrelevant to your true
desires. Of course, the best reason to scrap a goal is because it has been accomplished.
The last thing you need to know about goals is that they are just that—goals. They aren't
preordained events that will occur whether or not you work toward them. In other words, just
having a goal of reaching $10 million in sales doesn't mean you'll achieve it. Nor should the
accomplishment of a goal be considered absolutely necessary to your personal well-being. Some
goals are more important than others, but it's not wise to be so committed to a given goal that, if
you don't achieve it or it's not all you hoped it would be, you'll be emotionally destroyed.
Remember, as that great philosopher Yogi Berra also said, "The future ain't what it used to be."
Pay Dirt
Imagine you just made a profit. Now, imagine the worst thing that can happen to your new
company during the next few days, weeks or months. Think of downturns in the economy or of
losing your one big account. Think locusts. Think plagues.
OK, now go spend your money.
When it comes to knowing what to do with the first dollars you earn, it's likely nobody has to tell
you. Once the bills have been paid, that profit needs to go back into your business. But where
exactly should you put it? Your money could go to stocking your inventory or hiring your first
employee. You could upgrade your computer system or buy a more comfortable office chair.
You could even spend it on advertising. The possibilities are limitless, but unfortunately, your
budget isn't.
The average business doesn't even make an actual profit until after its fourth year, according to
Brian Tracy, author of more than 26 business books, including The 100 Absolutely Unbreakable
Laws of Business Success (Berrett-Koehler Publishers). "You have two years of scrambling, two
years of getting [to the break-even point], and in your fourth year, you start to make a profit,"
says Tracy, who has spent more than 30 years speaking and consulting on corporate issues.
Chances are, if it takes four years to become profitable, you'll want to invest any extra money in
the development of your company as soon as you possibly can. So, to crib from that old TV
game show, the $64,000 question is: Where should you spend that first $64,000? Or, if you're not
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fortunate enough to have that much profit, your first $64?

Unfortunately, there isn't just one simple answer. If there were, of course, the secret would have
been out years ago, and we would all be filthy rich. But some solutions for investing that first
dollar are smarter than others. Here are just a few of them.
Build It Up
For a business, the term "infrastructure" can mean just about anything from inventory to new
computer equipment to making sure you can transport goods from one place to another. But the
bottom line is that improving your infrastructure improves your bottom line. Wherever most of
your energy goes, that's likely the most vital component of your infrastructure. For Robin
Kershner, that means inventory.
Kershner, 43, owns Fox & Hounds Ltd., an Alexandria, Virginia, company with seven
employees. Her business designs fashionable pet accessories and, in 2002, the company brought
in $1.5 million in sales, $100,000 of which was pure profit. If pet owners need a fancy dog bed,
collar, leash or dog toy, Kershner's firm provides pet stores nationwide with all that and more.
But if she gets an order and doesn't have product in stock, she risks losing money and her
reputation.
Securing enough inventory has always been where her profits have headed—ever since a little
disaster a few months into her business. "I remember the first Christmas trade show I went to,"
says Kershner, who launched her business in 1996. "I got more orders than I could handle."
It sounds like the type of problem you want, but Kershner sees it differently. "I didn't have
inventory in stock to ship, and it took time to get orders out the door, and people canceled," she
says. "Having inventory in stock and being ready to ship the next day is the best way to make
people happy and increase your cash flow."
Kershner was also smart not to expand her inventory too quickly and incur more costs for order
shipping and storing. She began by offering collars, leashes and bedding; it's only this year that
she's diversifying into pet carriers, toys and other novelty items, such as squeaky toys.
Of course, you may have plenty of inventory, but if your dying computer or transportation
problems are threatening your firm's efficiency, then that's also a problem in your infrastructure.
Or maybe you have a phenomenal product, but you lack customers.
"One thing that can help is to invest a little of your money into promoting your business. Almost
every business can use some kind of public relations," says Fred Siegel, a New Orleans financial
analyst who owns his own investment firm, The Siegel Group, and whose radio show, Talking
Money, is heard throughout much of the South on CBS Radio. Advertising is where Siegel says
the first profits should go—after paying the bills and investing in your personal future with an
IRA or your own individual 401(k), that is.
"Spend your money only on those things that will help you earn more money," says Tracy. "In
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other words, you reinvest—not in your office furniture or car or the premises, but [in] more
products, better packaging, advertising, training and salespeople."
"Number-crunching is the best exercise for keeping you in line," says Kershner, who still hasn't
laid carpet in the parts of her office space where visitors never tread. And when money comes in,
she adds, "You have to carefully parcel it out—but then that's why you have a business plan, so
you can see what cash you need and when."
Always consider your finances when you think of putting your profits into improving
infrastructure, says Bob Oberstein, managing partner of Oberstein, Stock & Friedenthal LLP, a
tax and accounting firm in Los Angeles. "If your books and records are shoddy, you may not
know what you have," he says. "And in many cases, when businesses don't analyze their
financial situation, they realize [later] that they might have made money if they had been keeping
an eye on things." If you're dazed and confused when it comes to finances, says Oberstein, hire a
professional to help with the books.
It may be the last thing you want to hear, but the best way to spend your profit is not to spend it.
"Cash is to a business [as] oxygen and blood are to the brain," Tracy explains. "You must
conserve your cash at all costs."
That's what James Wright, 36, did, and he's not complaining. He's a partner of Bridge Technical
Solutions LLC, an IT staffing company, which he bought in June 2002 with Joe Devine, 42,
who's also a partner. They've been growing the Providence, Rhode Island, firm ever since.
Bridge Technical Solutions brought in about $1 million in sales by the end of 2002, with profits
of about $50,000—and the great temptation was to spend a lot of it as it came rolling in.
But they listened to their accountant and put most of their profits aside for the following (in this
order): taxes, cash reserves and paying down debt.
Wright adds that just because your books say that your company has a $5,000—or $50,000—
profit, it may not all be in your account. "Our money is tied up in paying off payroll in advance
of receiving payments from our clients," notes Wright. "Profits don't necessarily mean ready
cash. You have to plan for how your money is tied up and realize that even if you're profitable,
you may not benefit from it right away in terms of having money to spend."
Last year, Wright and Devine reserved about 30 percent of their anticipated profits and put that
straight into paying down their taxes. Then they each took out another 5 percent to help them
catch up on their personal finances.
But usually, explains Wright, the partners kept whatever extra cash they had on hand available
"because in our business, cash requirements are always rotating every pay period, and you never
know when it's going to be another crunch time."
Dollars and Cents

So you've made your first dollar, and you're trying to figure out what to with it. If you're stuck,
who better to ask than a banker? We asked Robin C. Paterson, senior vice president and chief
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credit officer of American Business Bank in Los Angeles, how he would suggest spending that
first dollar of profit.
First, he corrects us, the idea is to invest, not spend. "That first dollar of profit is really your first
addition to capital, and it should be invested to ensure the second dollar and future growth of the
company," he says. So if Paterson was back to making his first buck, in an ideal world, here's
where his cents would go:
• Sales (marketing, hiring employees), so you can develop your business: 60 cents
• Infrastructure (customer service, communication systems), so you can keep your
business: 25 cents
• Product development (new products and services), so you can maintain a competitive
edge: 8 cents
• Technology (enhancing what you already have), so you aren't left behind: 5 cents
• Professional services (accounting, legal), so you can keep everything legal and under
control: 2 cents
Grand total: $1.00
Robin C. Paterson, 41, is an unusual entrepreneur. After all, how many guys do you know who
have started a bank?
In 1998, Paterson and his four partners—Leon Blankstein, 44; Donald P. Johnson, 57; Robert F.
Schack, 56; and Wes Schaefer, 52—pooled their money and co-founded American Business
Bank in Los Angeles with $50,000, each contributing $10,000. Then they raised the rest of their
start-up capital until they had accumulated about $14 million.
That doesn't seem like a hardship, but when you're opening a bank, $14 million isn't a huge
amount. In their first month in business, they lost $212,000; the next month, they were another
$228,000 in the hole. Paterson, senior vice president and chief credit officer, says that for the
first months when they were still raising money, the five of them worked in an 8-by-10-foot
office with one desk and two chairs, and nobody drew a salary.
After they opened in 1998, it took them 13 months to make their first profit of $2,365. "Once
you've made that first dollar, it's no longer a dream," says Paterson. "You've become a real
business. You've crossed over."
The priority for their profits was to bring in more employees. "That's still our biggest challenge,
to find good people to help us continue to grow," says Paterson.
In the beginning, of course, you may hardly be able to pay yourself, let alone somebody else.
Which is why employee recruitment expert Clark Waterfall recommends nepotism. "Your
brothers or sisters or in-laws have some free time, and you can pay them on the cheap, and they'll
work out of your basement," he says. "This can work for the very early stages of a business." But
even though they're your relatives, don't hire them unless they can be professional.
Once your business starts to grow, then you can worry about finding better talent, adds Waterfall,
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managing director and co-founder of Boston Search Group Inc., a Boston company that recruits
executives and professionals in technological fields.
"Turning over employees across the growth curve of a company is not a bad thing," explains
Waterfall. "It's like clothes. You don't wear the same clothes as a teenager that you wore when
you were a toddler. You have different needs [as your company grows], and very few employees
have that much Spandex, or elasticity, in them."
Even with $14 million fueling them, these bank founders could only afford one teller when they
really needed three, so the executives helped out when necessary. Because they only had one
teller, Paterson says, their bank couldn't offer all the services you'd expect from a full-service
bank.
And while they wanted to hire a full staff, they operated conservatively and didn't hire a second
teller until six months had passed and business was thriving. Nine months later, they reached
their magical number three. Admits Paterson, "We're in reactive mode when it comes to
overhead."
The Land of Milk and Money

Today, American Business Bank manages $350 million in assets, and while Bridge Technical
Solutions and Fox & Hounds aren't anywhere near that level, the entrepreneurs behind both
businesses feel they're on solid ground.
Wright is careful to make sure he earns enough to treat himself, and Kershner, who routinely jets
off to places such as London and Hong Kong to meet with her manufacturers, enjoys the travel
that has become one of the perks of her business.
Additionally, "I've been able to give bonuses and raises to the staff, which was wonderful," says
Kershner. "And we can do nicer things for the staff, like stocking the refrigerator with sodas."
In short, Kershner's business is thriving because she had a little foresight in the beginning. She
was cautious with her money and tried to see what the future could be with it. Thanks to her
foresight, her future looks bright.
Be Good to Yourself
You might think it's a rich man's world, but the point at which your company finally makes a
profit is not the time to start living high on the hog.
"Making a profit after not making a profit for a long time—it's like a drug to the brain," says
Brian Tracy, a prolific author and public speaker on numerous business issues. "There's a natural
tendency to associate spending or buying stuff with rewards—Christmas, birthdays, getting a
new car. Sometimes entrepreneurs will take an expensive trip; often they'll buy a house. It's a
very heady thing, to make your first profit."
Of course, that doesn't mean you can't be good to yourself—just remember to do it within reason
and, even better, make sure there is a reason. James Wright, president of Bridge Technical
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Solutions LLC in Providence, Rhode Island, fondly recalls blowing a significant wad of cash on
a big holiday dinner last December. "We went out with my partner's wife and my girlfriend,"
says Wright. "But it wasn't just about pampering ourselves. It sent a [positive] message to my
partner's wife. Here are two guys who feel comfortable to do this and can talk positively about
their business. It was important that we did that."
But going out for dinner every night or every week? That may not be such a good idea. "Now
that you have won, it's important you don't lose," says Tracy. "I have a friend who is an
entrepreneur. He bought a BMW, a $40,000 car, and the next month his business took a dip, and
he went into a complete panic. A few months later, his business was gone. Once you put the cash
in a new car, you can't get it back."
Profit Pipeline Strategies
Follow these tips to increase profits and grow your business.
Prioritize Your Leads

Classify your A, B and C leads in terms of the revenue they can produce. Each company needs
large, medium and small clients. Always go after your large prospects first, but pursue small and
medium clients simultaneously. Larger deals usually require more time and effort to close. In the
interim, smaller customers can provide the cash flow you need to maintain and grow your
business. The total gross revenue of your smaller clients may even be greater than that of your
larger ones.
Pursue Profitable Industries

Do your research. Find out which industries have been labeled “recession-proof” and those that
are growing in spite of the economy. There are numerous case studies available on this topic. A
good indicator of growth is if an industry is hiring, rather than firing employees. Focus your
business on these segments and make sure to diversify. If your products and services are tailored
to a specific industry, try modifying or expanding your offerings. And, if your target audience
has been negatively affected by the recession, find a way to market yourself to other segments.
Don’t Lower Your Prices

Price reduction is not an effective growth strategy. There will always be companies that offer the
same services at lower prices. Instead, explain to clients what makes your offerings unique.
Convince prospects that you can provide the best possible service in your market. Intelligent
customers realize that they get what they pay for, so don’t rely on competitive pricing. Now
more than ever, the key to closing a deal is quality and service. Make the customer feel like
they’re getting more than they paid for, while charging all that your worth.
Profit Planning Revs up Results, Part I
It was a smart move, that so many of you slowed hiring and capital spending while inventories
dwindled, according to NFIB’s Small Business Economic Trends - January 2009. Profits are
impacted by overhead and your quick response to rein in costs is a big help in weathering a
recession that still has months for us to work through.
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It takes time for the economy to improve that’s true. But, if you wait it out with no strategy, you
could miss out on future opportunities. You can profit even in a recession it just takes a step back
to:
• Focus your mind.

• Redefine your plan.
• Seek out opportunities.
• Dedicate yourself to client retention.
• Surround yourself with supporters.
Now is a good time to revisit your business plan, which may not have been updated since you
initially developed it. Don’t get bogged down in the document. Focus on the thinking.
Here’s what you can talk about. Ask your self the following questions:
Customers
Has my customer base changed?
Has my product/service offering changed?
How often/how many new customers have I obtained in the last year?
Competitors
Do I have new competitors? Who?
Do I have more/fewer competitors? Why?
What are the current competitive threats to my business?
Price Points
It is never a good idea to cut your price, even in tough economic times. If you do cut your prices,
only do it for a limited time encouraging customers to “act now.” This should be a last resort
effort. Look at two large retailers Home Depot and Macy’s. Both had sales and profit declines in
the fourth quarter of 2008, but Home Depot’s results were much better than Macy’s “because
[they] held margins by not cutting the price,” while Macy’s had terrible results due to across the
board price cuts.
Business Partners
Look for businesses that you can partner with to cross-promote your products and services while
sharing the costs. For example, a laundry mat offers free detergent with each washer load and the
free detergent is paid for by both the owner of the laundry mat and the supplier of the detergent.
The price was not reduced, but there is a unique incentive for the customer with a specific start
and end date, which will get the customer to “act now.”
Planning your path to profit takes a small amount of time. Make time to meet with a mentor to
map out your plan for success. Now read Profit Planning Revs up Results, Part II.
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Profit Planning Revs up Results, Part II

Profit with sales this year. Explore new markets, new prospects and new products and pitches.
This year, the three Ps of marketing your business are: prospects, products and pitches. All three
may need to change a bit to get you to a profitable year.
You can do it. Surround yourself with mentors who you can talk to plan for success. It’s amazing
the difference it makes just talking through your ideas. Think of planning as preparing yourself
for success with a clear profit picture in mind.
New Markets
As you review your business plan, ask yourself where else you can sell your product or service.
Go back to those customers who have not bought from you in a while. Have a compelling reason
for them to buy from you now, such as improved service, different products or greater customer
satisfaction just to name a few. Does it make sense to enter new geographic markets? Have any
competitors in that market left or ‘retrenched, waiting for better times’?
Update Your Offerings

After reviewing your business plan is it necessary to change or update your product or service
offering? Will product or service changes or additions allow you to sell more to your existing
customers? An “update” here could mean a redesign of your web site, starting a blog, joining a
social network. Essentially any way you can expand your reach to potential customers. The
reason newspapers across the country are closing is due to lack of readership. People are moving
to the internet for their news and information…and to find your business!
Improve Your Pitch

Thoroughly understand your product and service and why someone should buy it from you. Use
written testimonials from some of your satisfied customers.
• Tell your story in five minutes or less.

• Use demos to illustrate your story.
• Practice to perfect your pitch “before” the sales call.
• Listen well. Ask questions & really listen to the client’s needs and concerns.
Relocate Your Business
Every year, the grass on the other side of the fence looks greener to many entrepreneurs, and a
change of place looks like the most promising path to growth. So they pull up stakes and move to
a new place, where they hope to find better odds for business success than they had in their
previous location. They're in good company. The U.S. Census Bureau reports that approximately
40 million Americans relocate each year, and the U.S. Postal Service processes about 38 million
change-of-address forms annually. Although no one keeps a similar count of business moves,
given the multitude of valid business reasons for making a move, almost any entrepreneur will,
at some time, consider relocating as a way to expand.
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Why Location Matters

Businesses commonly cite five main reasons for moving, according to Sharon K. Ward, an
economic development consultant in Allentown, Pennsylvania. These are labor and work force
issues, the desire to reach new markets, the need to upgrade facilities or equipment, the desire to
lower costs or increase cash flow, and considerations about quality of life. For different
businesses and at different times, certain concerns are more important than others, Ward notes.
But just about all moves can be attributed to some combination of these issues.
Chief among current reasons for relocation is the need for a suitable work force. You may have a
shortage of qualified workers for some occupations, especially those requiring technical
expertise. For firms that need specialized employees, it may be well worth it to relocate to an
area where you can easily find these kinds of employees.
When a company finds itself in outmoded or undersized facilities, that's another reason to look at
moving. Most businesses start in a small facility, such as the founder's garage, and then move to
bigger quarters in the same city, says L. Clinton Hoch, director of location advisory services for
DCG Corplan Consulting, a site selection consultancy in West Orange, New Jersey. Later, the
business outgrows that location or begins to find fault with its facilities, services, utilities,
infrastructure or other features. "Usually only after [a business owner] goes through those stages
is he or she ready to make a move out of the original area," says Hoch.
Cost Issues
Cost is a concern in any business decision, and a move can cure—or create—many cost issues.
For starters, the cost of living varies widely among cities. In Little Rock, Arkansas, for example,
the cost of living is 13 percent below the national average. At the other end of the spectrum, New
York City's costs are more than twice the U.S. average. Theoretically, a move from Manhattan to
Little Rock could yield significant savings.
But costs involve more than living expenses, cautions Hoch, and differences in geographic costs
have leveled out in recent years. Companies often find themselves forced to compromise
between staying close to target markets and choosing the lowest-cost facility. That's one reason
for the exodus of employees from central cities to nearby suburbs, which, according to the U.S.
Census Bureau, resulted in 3 million people leaving the cities, while the suburbs gained 2.8
million in one recent year.
Depending on circumstances, you may have other financial issues to consider. Large companies
seeking to build semiconductor factories or auto plants, for instance, often land well-publicized
tax concessions worth billions of dollars. Economic development consultant Sharon Ward, a
former research and marketing director for the Committee for Economic Growth, a private
organization that markets the Wilkes-Barre area of Pennsylvania to businesses, points out that
small companies rarely receive such perks because incentives are based on the number of jobs
the business will create. However, an entrepreneur may be able to tap a cash flow windfall by
selling a building or land that has appreciated in value, then purchasing or renting lower-cost
space.
An even more intangible issue is quality of life. Companies evaluating relocation often look at
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recreational opportunities, education facilities, crime rates, health care, climate and other factors
when evaluating a city's quality of life. That's another reason deteriorating inner cities are losing
businesses, as companies seek an improved quality of life elsewhere. "Maybe it's an unhealthy or
unsafe area to live in," notes Ward. "Or it may be hard to recruit workers because of [the
location]."
Relocation Results
While moving carries risks, a move can be one of the best things you ever do for your business.
When you move or expand to a new location, the odds are stacked in your favor, according to
relocation expert Luigi Salvaneschi, who has overseen the selection of new sites for thousands of
retail establishments. "Because you have been in business for some time," he says, "you are fully
aware of all the problems your current location has. If you have poor traffic and know that's the
problem, you look for a new location that has good traffic."
But there are no guarantees in relocation, and as many things can go wrong with a move as can
go right. Ward cites a study of readers of Area Development magazine that identified a number
of common mistakes. They included rushing the decision, focusing too narrowly on a few costs,
failing to use available economic development services, ignoring quality-of-life factors, missing
important environmental or regulatory concerns, and, believe it or not, failing to plan for future
expansion. These mistakes can be boiled down to hurrying too much and trying to do a move too
cheaply.
Part of the problem is the complexity of these two issues. There's no set time for how long it
should take to move, Ward says, and sometimes you don't have a choice. "I've worked with
companies that made a decision in three or four months because they didn't have a choice," she
says. Others might expend two or three years in the process, with no better results.
Unfamiliar factors complicate cost calculations, adds Salvaneschi. For instance, an entrepreneur
must figure in the cost of business interruption. Almost inevitably, a business's productivity will
be reduced for a period of days or even weeks after a move. And that's not all. "You may also
have some loss of goodwill," he says. "Especially if you've been in that location for many years,
you're going to lose some loyal customers."
Moving is one way to obtain room to expand, but it's not the only one. You may be able to
expand by taking in adjoining space, increasing productivity of existing employees and facilities,
or by splitting up your facilities in separate locations.
Absorbing adjoining space is probably the most convenient and inexpensive way to add room for
more employees and equipment. You save on moving costs, interruption is minimal, and your
old customers won't have trouble finding you because you will be in the same place. When
you're picking your original location, in fact, it's not a bad idea to consider the availability of
adjacent expansion room as one of your criteria. If space next to your current operation becomes
vacant at a time when you are considering expanding, you may want to let the owner of the
property know you may require more room soon. You may be able to take out an option on the
space that will preserve your flexibility.
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You may be able to grow your business without moving if you can increase the productivity of
your current operation. You can generate more production without adding staff by training your
employees to work more efficiently. You can also replace slower machines with faster models,
or make alterations to existing equipment to increase output.
Another way to grow without moving your whole company is to split your operation into more
than one location. A company that manufactures and sells from a single location can move its
warehousing and manufacturing to another facility while leaving its sales outlet in the same place
so customers won't have to find it in a new spot. Although the logistics of working from more
than one location can be tricky, it's one way to have some of the benefits of moving without all
the drawbacks.
Lease Options
One of the classic business decisions involves balancing the tradeoffs between buying real estate
to quarter your business and renting or leasing the space. While each situation offers nuances to
consider, the basic difference is that buying requires more upfront capital investment but
provides security and the opportunity for capital appreciation. It costs less to get into leased
space—and it's easier to get out, too—but monthly payments may be higher, and you may have
to find a new place to do business when your lease is up.
One option open is to make a personal purchase of property and then lease it to your business.
The business gets to deduct the lease payment, while you receive added income.
If you don't want to take on a long-term mortgage to buy office space, consider a lease with an
option to own. Terms of this arrangement will allow you to buy the property for a preset sum at
the end of the lease. You will be able to lock in a price now and save the expenses of having to
move someplace new when you're ready to buy.
Making the Move

Although deciding to move is tough, it's nothing compared to actually making the move. That
starts with writing detailed specifications about what your new location must offer. If your main
reason for moving is to tap a better labor market, don't get distracted by a favorable lease offered
by a prospective landlord or incentives dangled before you by an economic development agency.
"You would not want to move to find a well-qualified work force only to find that it's worse in
your new location," says Ward.
You'll also need accurate and complete information about the new location before you can
commit to moving there. Reference publications such as The Statistical Abstract of the United
States and magazines such as American Demographics are good places to start. You can also
subscribe for a month or two to newspapers in the cities you're considering (or read them online)
to get a general feel for local circumstances.
Be specific when gathering information from Chambers of Commerce, utility companies,

economic development agencies, real estate brokers, employment agencies, other small-business
owners, and so on. Don't ask general questions like "Is there a good supply of affordable office
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buildings?" Instead, ask "How many 10,000-square-foot blocks of vacant Class-A downtown
office space exist, and what are the going terms and prices?"
You should also visit all sites on the short list of your targets. "I have a saying: You walk it; you
drive it; you fly it," says relocation expert Salvaneschi. Only by walking and driving around a
location from various angles can you get a feel for traffic patterns. Aerial views from small
planes or helicopters can help you grasp the dynamics of a particular retail zone, he adds.
Making the move itself is another challenge in making the relocation work. It's important to
decide what equipment, fixtures, records and other items to actually move. It might be better to
dispose of inventory at fire-sale prices rather than pay to haul it across the country.
Once you have decided where, when, what and who you'll move, assign someone to be in charge
of the relocation. He or she will be very busy with tasks from soliciting bids from movers to
keeping employees informed about the plans.
In business, as in your personal life, not every move works out. But by looking closely at their
reasons for moving and making sure the chosen spot addresses their needs, entrepreneurs
increase the odds that the grass really will be greener and that what appears to be a better city for
their business will turn out to be the best.
Stay on Top With Fresh Products

Innovative new products are the fuel for the most powerful growth engine you can connect
to. You can grow without new products—AT&T sold essentially the same telephones for
decades while becoming the world’s largest telecommunications concern—but most small
companies will find it difficult to grow at all, much less rapidly, without a constant stream of
new products that meet customer needs.
8 Symptoms of a Declining Product Line

How do you know when you need new products? Early detection of a problem with existing
products is critical. The following eight symptoms of a declining product line will provide
clues far enough in advance to help you do something about the problem before it’s too late.
Not all the symptoms will be evident in every situation, but you can start suspecting your
product line when more than just one or two crop up.
1. You are experiencing slow growth or no growth. A short-term glitch in product sales
can happen any time. If, however, company revenue either flattens or declines over an
extended period, you have to look for explanations and solutions. If it isn’t the economy or
some outside force beyond your control, if your competitors didn’t suddenly become more
brilliant, if you still have confidence in your sales force, and if there are no major problems
with suppliers, examine your product line.
2. Your top customers give you less and less business. It may not be worth your trouble to
determine your exact market share when a rough idea of where you stand will suffice. But
knowing how much business you get compared to your competitors is critical. Every piece
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of business your competitors are getting is business you aren’t getting—and may never get.
If your customers’ businesses are growing and the business you get from them isn’t, your
product may be the culprit. Chances are, someone else is meeting your customers’ needs.
3. You find yourself competing with companies you’ve never heard of. If you’ve never
heard of a new competitor or don’t know much about them, watch out! They have found a
way to jump into a market with new products and technology that could leave you
wondering what hit you. It might not be that your product has a fundamental flaw. It’s more
often the case that someone has brought innovation to the industry. You earn no points for
status quo thinking.
4. You are under increasing pressure to lower your prices. No one likes to compete
strictly on price. When your product is clearly superior and offers more value than lower-
priced competitors, you don’t have to. Everyone understands that great new products
eventually run their course and turn into commodities. One day, a customer tells you she
can’t distinguish the benefits of your widget from those of one or more of your competitors,
and now you are in a price squeeze. If you want the business, you have to lower your prices
to stay competitive. If that was where it ended, things might stabilize, although at a lower
price level. But lower prices usually mean lower profit margins, which usually mean less
investment in keeping the product current, which means more price pressure, lower
margins…and so it goes.
5. You experience higher-than-normal turnover in your sales force. Good salespeople

want to win customers so they can make more money. When they have trouble competing,
they can’t win customers or make money. So they look for new opportunities and challenges
that will bring them what they want. You’ll always have turnover, but heavy turnover is a
symptom of something very wrong. It could be an ill-advised change in the compensation
scheme or a new sales manager coming in with a negative attitude. But it could also be that
members of your sales team are frustrated because they’re having trouble selling your
products. When business owners start to pressure their sales forces to get order levels up,
morale drops because the salespeople know there isn’t much they can do.
6. You see fewer and fewer inquiries from prospective customers. We all dread the time
when the phone stops ringing and prospects stop coming in. When advertising or other forms
of promotion aren’t creating the results you want, and you see fewer positive results from the
money spent, something could be wrong with the way customers see your company. An
obsolete product line positions you as an obsolete company.
7. Customers ask for product changes you can not or do not want to make. Here is a
not-too-subtle sign that your product may no longer meet market needs. There will be times
when you have to decide whether filling a customer’s request is in your company’s best
interests. When customers say "I want it this way," you may want to say no because you
doubt you could ever recover the costs of the change, even by raising the selling price. But
when the customer says "I want it this way, and it’s standard at ABC Widgets," you should
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suspect you aren’t keeping up with changing customer needs. When your competitors have
leapt ahead of you in features and benefits, you must either catch up or leap ahead of them
with innovations of your own, or you’ll fall so far behind you become a marketplace
postscript.
8. Some of your competitors are leaving the market. In the short term, this sounds great.
Your competitors drop out, and you pick up the business they leave behind. The pie is
shrinking, and as it does, business gets better than ever. But beware: This is a classic signal
of a declining market. Nobody walks away from a growth business. Vibrant growth markets
attract new competitors; they don’t discourage them.
Implementing Your Idea

If you decide to develop new products as part of your growth plan, you’re in good company.
Small companies like yours contribute at least half of the major industrial innovations
occurring in the United States, according to the SBA. At the same time, approximately one-
third of all new products are unsuccessful, and in some industries the percentage of failures
is much higher. The way to increase your chances of coming up with good ideas is to follow
the tested track to new product development success.
New product development can be described as a five-stage process, beginning with

generating ideas and progressing to marketing completed products. In between are processes
where you evaluate and screen product ideas, take steps to protect your ideas, and finalize
design in an R&D stage. Following are details on each stage:
• Generating ideas. Generating ideas consists of two parts: creating an idea and
developing it for commercial sale. There are many good techniques for idea creation,
including brainstorming, random association and even daydreaming. You may want
to generate a long list of ideas and then whittle them down to a very few that appear
to have commercial appeal.
• Evaluating and screening product ideas. Everybody likes their own ideas, but that
doesn’t mean others will. When you are evaluating ideas for their potential, it’s
important to get objective opinions. For help with technical issues, many companies
take their ideas to testing laboratories, engineering consultants, product development
firms, and university and college technical testing services. When it comes to
evaluating an idea’s commercial potential, many entrepreneurs use the Preliminary
Innovation Evaluation System (PIES) technique. This is a formal methodology for
assessing the commercial potential of inventions and innovations.
• Protecting your ideas. If you think you’ve come up with a valuable idea for a new
product, you should take steps to protect it. Most people who want to protect ideas
think first of patents. There are good reasons for this. For one thing, you will find it
difficult to license your idea to other companies, should you wish to do so, without
patent protection. However, getting a patent is a lengthy, complicated process, and
one you shouldn’t embark on without professional help; this makes the process
expensive. If you wish to pursue a patent for your ideas, contact a registered patent
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attorney or patent agent.

Many firms choose to protect ideas using trade secrecy. This is simply a matter of
keeping knowledge of your ideas, designs, processes, techniques or any other unique
component of your creation limited to yourself or a small group of people. Most trade
secrets are in the areas of chemical formulas, factory equipment, and machines and
manufacturing processes. The formula for Coca-Cola is one of the best-recognized
and most successful trade secrets.
• Finalizing design research and development. Research and development is

necessary for refining most designs for new products and services. As the owner of a
growing company, you are in a good position when it comes to this stage. Most
independent inventors don’t have the resources to pay for this costly and often
protracted stage of product introduction. Most lenders and investors are trapped by a
Catch-22 mentality that makes them reluctant to invest in ideas until after they’re
proven viable in the marketplace. If you believe in your idea, you can be the first to
market.
R&D consists of producing prototypes, testing them for usability and other features,
and refining the design until you wind up with something you think you can make
and sell for a profit. This may involve test-marketing, beta testing, analysis of
marketing plans and sales projections, cost studies, and more. As the last step before
you commit to rolling your product out, R&D is perhaps the most important step of
all.
• Promoting and marketing your product. Now that you have a ready-for-sale
product, it’s time to promote, market and distribute it. Many of the rules that apply to
existing products also apply to promoting, marketing and distributing new products.
However, new products have some additional wrinkles. For instance, your promotion
will probably consist of a larger amount of customer education, since you will be
offering them something they have never seen before. Your marketing may have to
be broader than the niche efforts you’ve used in the past because, odds are, you’ll be
a little unsure about the actual market out there. Finally, you may need to test some
completely new distribution channels until you find the right place to sell your
product.
Saving Your Current Product Line

If you find yourself faced with a declining product line, the correct action may not be to rush
to develop new products. Here are a few other options:
• Do nothing. This attitude says “The business has run its course, and it may be time
to move on.” One of the beauties of continuing to sell in a business you think has
little future is that you can stop investing in it. Instead, you can simply squeeze it for
all the profit you can get. The resulting boost to your bottom line can provide funds
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to start a new, more promising business or, eventually, develop new products in a
different field.
• Look for niche markets. There are still companies out there that make vacuum
tubes, typewriter ribbons, dot matrix printers, vinyl records and perhaps even buggy
whips. Demand for a product rarely falls to zero. There are always customers who
will continue to buy obsolete products to keep from making major changes in the
way they’ve always done things. The beauty of serving a niche market well is you
could end up having it all to yourself. If this happens, you’ll be able to maximize
profits--perhaps far more than you would be able to do with a different product entry
that commands only a modest share of a fast-growing market.
As a rule, new product development drives growth. But rules are made to be broken. Don’t
rush to abandon the tried-and-true products that have helped you grow your company so far
unless you’ve carefully evaluated all the options. In business, as in ballrooms, sometimes it’s
best to dance with the one you came with.
Keeping Products Fresh

Whether you’re saving an old product line or starting a new one, you want to make sure you
keep on top of the market. Here are practical things you can do to make sure your products
stay fresh and viable:
• Keep current with technology changes. The word processor ensured the demise of
the typewriter, and voice messaging has changed the way people use the telephone.
While your product line may not have the global impact these developments have,
changes in technology will always affect your business. Isn’t it better to lead the way
than to react to events?
• Anticipate changing customer needs. If you want your customers to keep buying
from you, you have to let them know you’ll be there to fulfill their changing
requirements. Customers have a way of not knowing exactly what they want. When
they finally make their choice, they will go with the supplier who is there with the
right product at the right time.
• Track your competitors’ actions. Keeping on top of what your competitors are
doing means you’ll find out when they make effective product developments. If they
get to the market before you do, there’s a good chance you’ll end up the loser.
Organize some sort of competitive-intelligence-gathering system that will help you
keep track of what they’re doing.
• Keep up to date with changing trends in the marketplace. How many clothing
manufacturers saw the "casual Fridays" trend coming? If you were a maker of men’s
suits, wouldn’t it have been nice to see into the future before you experienced a 20-
percent decline in sales? There’s no substitute for keeping your eyes and ears open.
Improve your awareness of the market around you. Participate in trade associations
and business roundtables. Know all you can know about your customers and your
customers’ customers.
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When and How to Hire Additional Employees

As a business owner, one of your most important tasks is workforce management. It's your job to
make sure you have the right people—and the right number of people—to keep your company
running smoothly. Now let's say your business is growing and you're sensing you need to hire
new employees. How can you really be sure the time is right to bring in additional staff? There
are at least seven common clues:
1. Your employees are working very hard—perhaps too hard—and they're letting you know
—or complaining—that they have too much to do. Complaints of this nature aren't
uncommon, but your task is to determine if they're legitimate. How can you do that? Try
talking to your employees and asking them to validate their concerns of being
"overworked." Then look at attendance and productivity indicators to substantiate their
claims. If what you find confirms their feedback, then you might decide to reorganize and
restructure roles and responsibilities to better deal with the workflow. Or you could use
your new knowledge as a guide to hiring additional employees.
2. Employees claim they want to take on more tasks or spend additional time on current
ones—if only they had the time.
3. The growth curve for your products or services is increasing, and you identify that as a
positive trend, not just a blip on the consumer radar.
4. You see an opportunity for growth and expansion in your industry or related industries,
and decide that now's the time to take a calculated risk to expand. But current employees
aren't available to assume additional responsibilities.
5. You determine that your employee's existing job skills and knowledge are fine for your
company's current level of productivity, but to expand, you'll need either increased skills
and knowledge or a new and different set of skills and knowledge.
6. Revenue is at or above target and you project it to continue; other than financially
rewarding yourself and/or your employees, you wonder what to do with the increased
revenue.
After taking a long, hard look at the state of your business, you decide to expand by hiring
additional employees. But what do you have to take into account and do when adding a new
position and a new hire? First, you need to create a comprehensive, clearly written job
description that includes these factors:
• The major and related duties, responsibilities and tasks the employee must perform
• The expected standards of job performance
• The reporting relationships—the people or job title to whom the employee will report and
who, if anyone, will report to the new hire
• The financial and fiscal responsibilities and spending limits—if any
• The standards of acceptable behavior
• The working conditions
Besides being used when hiring new staff, this same document is crucial in serving as a basis for
evaluating employee performance. If it's too general, non-specific or doesn't adequately reflect
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what the employee actually does on the job, then it's a waste of your time and effort.
When it comes to actually choosing the best candidate for the job, the best advice I can give you
is this: Hiring someone simply because you need an "extra body" is foolish and inevitably results
in poor performance, decreased productivity and decreased morale. So be sure to hire only
someone who actually fits the job description you've created. In fact, shooting for the stars by
knowingly increasing your standards to hire the best possible candidate—even it takes some time
to find the right person—is well worth it.
Once you've hired someone, you need to decide what you'll do to maximize the person's
strengths while addressing and minimizing limitations. Here are some tips that will help you get
the most of your new hire:
• Set up a process with the new hire's direct supervisor to monitor progress. Provide
immediate feedback on all aspects of job performance. Don't wait for the end of the
typical 90-day review period to catch the person doing something right or wrong.
Immediate feedback provides the immediate opportunity for growth and improved
performance.
• Create a training program, either formal or informal, depending on the size of your
company. The goal of this program will be to bring the new person up to speed with the
knowledge, skills and abilities necessary for successful completion of their new job.
Simply because a candidate was successful in a similar job at another organization does
not ensure this person will be successful in your organization.
• Develop a mentoring system: Select an individual who can serve as "Big Brother"
or "Big Sister" to offer advice, especially on "how things are done around here" as well
as possible landmines, such as difficult people, issues, politics, processes, norms or
unwritten rules. This mentor should be a respected individual in your company, but
should not be the person's direct supervisor. (Creating such a system is also a good idea
for existing employees.)
By following these guidelines, you'll be able to decide whether or not to expand your workforce,
create a workable job description, provide feedback to the new hire, and created a training and
mentoring system to increase the potential for success. Good luck!
Buiness Planning
What's Your Plan

In the old days, which in our entrepreneurial world is not too long ago, business owners were
advised to have five-year plans. Today, that concept seems almost quaint. To succeed through
good and bad economic times, you should add business planning to your monthly--if not weekly
—to-do list.
It’s not just the economy that’s riding a rollercoaster. Depending on what industry you’re in,
what market you target and even where that market lives, the plans you made a year ago aren’t
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worth much today.
This is not just about business plans, though far too many business owners think once they’ve
started, they never need to refer to their business plan again. I’m of the school that a business
plan is a “living and breathing” document that you must revisit regularly. So if you haven’t
looked at yours in a while, check it over. If you never had one (a situation more common than
you’d think), write one now. If you need help, get some good software, check out
SCORE’s business plan templates or head to your local SCORE office.
The truth is you need many mini-plans. All business owners need a marketing plan, which
should be updated often. But some of you also need a technology plan, a financing plan or a
staffing plan. How about a plan for expansion, be it across town or around the world? Do you
eventually want to franchise your company? You need to start laying the groundwork now—and
you need to a plan to help you get there.
You’ll also need a disaster plan, a succession plan (no matter your age) and... well, you get the
picture.
And then there’s the most important plan of all—Plan B. Come up with some what-if scenarios
and possible solutions in case they occur.
Don’t let any of this discourage or overwhelm you. It’s not as bad as it sounds. Some of these
mini-plans don’t require constant upkeep, and some can be delegated to other people in your
business.
The most important thing to remember when doing any type of business planning is to focus not
just on where the opportunity is, but where it’s heading—and remember to plan for both.
How to Form Your Advisory Board

An advisory board is an informal group. This is not a board of directors. It is a group of mentors.
The group has no financial interest in your firm. This is a group of outside advisors who share
their knowledge to help you be more competitive, think strategically and offer specific advice in
key skill areas.
First and foremost do NOT accept any member to an advisory board who is unwilling to sign a
non-disclosure agreement and a non-compete agreement. Make it formal and clear in writing that
these are confidential meetings.
The benefits of an advisory board include: setting aside time to think strategically, obtain
feedback and insights from outside the company, and gather information and expertise from
peers who have knowledge in different areas than your own.
In general, a three to five person board will likely meet your needs.
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Advisory Board Attributes:

 Objective and honest.

 Knowledge and expertise outside your skill set.
 A genuine interest in helping you/your business succeed.
 Problem solvers who are good communicators.
 Diverse in skills, work and life backgrounds.
 Top or well-respected individuals in their field.
 Well-connected with networks that might be leveraged to assist you.
Legalities/Ground Rules:
 Require a non-disclosure and non-compete agreement.

 Set expectations for the time commitment you expect & duration of appointment.
 Provide a written invitation letter and spell out if there is an honorarium or not.
 Let each member know the specific type of assistance you hope to gain from him/her.
 Always provide a meeting agenda. This is your elite advisory team. Respect their time.
 Say thank you. This is mostly an honorary role. Express appreciation.
Advisory Board Value:
 Identify the result you want from engaging an advisory board.

 Ask yourself, howwill my business be different in one year, because of this board?
 Think about the questions you want to ask your advisors. Prepare in advance of meetings.
 How often do I plan to rotate members? Is this ongoing or just a one time board?
Defining Goals for Your Small Business

If our vision is the destination, the ideal structure we see on the horizon, then goals are the
substance that gives flight to our ideas. For example, assuming you’ve chosen the type of
building your want, you can now decide how many rooms it will have and how they will be
furnished—the style and ambience you want to achieve.
Business goals are as diverse as the people who establish them. Some are no-brainers, such as
“win enough clients to pay the rent and my salary.” A goal can be as specific as “install a new
graphics program, so I can target that client who demands this capability from its vendors.” A
goal might be as short-term as “get this done by Friday” or as long-term as “in 10 years I want to
be reporting $10 million in sales.”
Goals are measuring sticks; but on these sticks, we get to draw the dividing marks. We determine
what we’d like to achieve during a specific time frame; we design a particular outcome. You
define your goals to meet your needs.
Goals are also your guideposts, established to keep you on the right path and to help you assess
your progress.
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Manage Tactics
We all wrestle with innumerable tasks that fill up our daily “To-Do” lists. Most new business
owners, and many experienced ones, too, are all too familiar with activities that can take us in a
dozen different directions at the same time. They scatter our focus, until at the end of the day
we’re exhausted—but find ourselves wondering whether we've accomplished anything of
importance.
No doubt about it, such tasks can derail the most capable business owner. That’s why it’s
important to make the distinction between a tactic, an approach to accomplishing something, and
an activity, which, while necessary, could be assigned a lower priority or delegated elsewhere,
freeing you to keep your eye on the prize.
Formulate Strategies
Unlike establishing a vision, defining goals and employing daily tactics, which are individual
undertakings, strategies can be shared, adapted and refined among other entrepreneurs in other
field.
Strategies are the blueprints you draw to help you achieve your goals; they are the systems you
use to get yourself where you want to be. Employing strategies is putting brain before brawn,
planning before you act. Strategies are so important that I had no difficulty filling an entire book
with them! But to give you the power you need to succeed, strategies must be put in the context
of your business “building”—integrated with your vision, your goals, and your tactics.
Do You Have the Mindset and Skills to be an Entrepreneur?

You probably already know that starting a small business requires extensive research and
analysis of many factors. But the one requiring the most critical assessment is often overlooked
by many entrepreneurs. And, it’s as close as the nearest mirror.
That’s because wanting to be an entrepreneur is one thing; being one is quite another. You will
take on responsibilities and commitments far different from those of an employee, even if you
have management experience. It’s a challenge that can be exhilarating and rewarding. Unless
you’re prepared mentally and emotionally, however, it can also be overwhelming.
Before you study financing options and plan store layouts, sit down and conduct a probing
interview with yourself to see if you’re the right person for the all-important job of entrepreneur-
owner-boss.
Are You a Self-Starter?

Nothing in business happens by itself. As the owner, you’re responsible for everything from
establishing your firm’s vision to setting the daily work schedule. The fact that you’re exploring
small business ownership and asking questions is a good sign.
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Are You a Positive Thinker?

The moment you become a business owner, you represent yourself, your business and your
expectations for success. What you say and do must convey confidence and commitment to
moving forward. Employees who sense these qualities will share that determination to succeed,
even under difficult circumstances. If you work alone, there will be days when you have to be
your own cheerleader.
Are You Disciplined?

Your days of the “9-to-5 routine” are over. Running a small business requires a continuous
commitment to quality and detail. You cannot afford to cut corners, miss deadlines or make
promises beyond your capabilities. If you plan to run the business from home, you must be able
to resist temptations and distractions in order to get your work done.
Are You a Lifelong Learner? Entrepreneurs who continually seek information, new ideas and
sound advice have the best chance for success. Being attuned to market trends and issues makes
it easier to adjust products and services to customers’ needs and preferences. You’re also in a
better position to enhance your competitive advantage and efficiency, and address potential
problems before they harm your business.
Can You Market Yourself and Your Business? Some people have trouble with this one because
of the negative (and often unfair) connotations associated with being a “salesperson.” No
business, no matter how good, will succeed without some kind of marketing. The good news is
that promoting your business is easier than you may think as long as you know what to do and
how to do it. After all, we all enjoy saying good things about ourselves. When you craft and tell
your story in the right way, more people will be willing and eager to hear it.
Can You be Objective?

Your ideas and practices may seem “bulletproof,” but reality may be far different. Is there really
a need for a particular product or service in your area? Are the hours of operation fair to your
employees? Is renting equipment better than owning it? A good business owner knows how to
examine an issue from many perspectives and understand that strengths and limitations of each.
So how did your “candidate” for entrepreneur-owner-boss do? If every answer was a “yes,” your
small business dream is on its way to becoming a reality. For areas of concern, the solution may
be business counseling, management courses, or a concerted effort to discard some unproductive
habits in favor new ones.
Finally, make it a point to conduct regular self-reviews. Thinking and approaches that worked in
the start-up phase may not be as appropriate for a thriving concern, or if a major market shift
occurs. When you work for yourself, you want to be confident the entrepreneur-owner-boss
knows exactly what he or she is doing.
Entrepreneurship—An Alternate Career Choice

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If you’ve recently started your own business—or if you’re thinking about it—you have a lot of
company. Entrepreneurship is becoming an increasingly popular career choice in today’s
marketplace.
While many individuals go on their own internal reasons—a passionate need to be independent,
a burning desire to turn a hobby into a profession, or the love of a challenge—others have chosen
the entrepreneur route in response to external situations, including layoffs, frustration with their
current workplace culture, or a need for greater flexibility in their lives.
Owning a business has become the twenty-first century version of the 1950s American dream of
owning a home. But entrepreneurship is not for everyone. It’s important to consider whether you
have what it takes to start a business and run it successfully.
You’ve probably heard that start-up statistics are grim. The truth is that just 30 percent of
business start-ups survive more than five years. Stories of overnight successes and young
millionaires are rare. The dot.com era ended two years ago, and venture capital money is
increasingly hard to secure. The hardworking, determined, visionary who dedicates long hours
and endless energy to his or her business is the more realistic picture of today’s entrepreneur.
Entrepreneurs face a myriad of internal and external challenges. Within their companies, they
need to offer a superior product or service. They need to manage cash flow and maintain
profitability and hire and retain the right mix of people. Externally, factors such as access to
financing, the economy, government regulations, and technological issues impact entrepreneurs
on a regular basis.
Many small businesses fail because of weaknesses in general management, financial

management, and marketing (Statistics Canada, “Failing Concerns: Business Bankruptcy in
Canada”). Undercapitalization—or insufficient funds—is another common pitfall. Michael
Gerber cites the “entrepreneurial seizure” as a primary reason for failure in his book “The E
Myth, Why Most Small Businesses Don’t Work, and What To Do About It.” Gerber says many
entrepreneurs pursue the dream of being their own boss but fatally assume that an understanding
of the technical nature of a business is enough to achieve success.
To avoid becoming a casualty of the start-up craze, it’s critical to be aware of the pros and cons
of running a business. Sure, you have the potential to earn gobs of money, you can set your own
hours and be your own boss. But there are many long hours, substantial risk and lots of dirty
work required in the growing stages of any young firm.
“What surprised me the most was the sense of isolation I initially felt,” says Susan LaPlante-
Dube, 38, who runs Precision Marketing Group out of her home in Upton, MA. “I was used to
walking down the hall to bounce ideas off someone, and that was suddenly not an option. I
quickly learned to schedule time out of the office to meet with people and gain a different
perspective.”
Are You an Entrepreneur?

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One recent study of entrepreneurs (William E. Jennings, “A Profile of the Entrepreneur”) asked
subjects to rank several traits and attitudes related to business ownership in order of importance.
Results showed the most important attributes to be:
 Perseverance
 Desire and willingness to take initiative
 Competitiveness
 Self-reliance
 Strong need to achieve
 Self-confidence
 Good physical health
Filling out the bottom of the list were some surprising attributes, including a strong desire for
money, patience, organizational skills, and a need for power. Today’s entrepreneurs are more
interested in competition and achievement than money or power.
So do you have what it takes to run a business? Ask yourself these questions to help you decide.
 Are you willing to work long hours and make the sacrifices necessary to get your
business going?
 Do you want to bear the responsibility for all business decisions and responsibilities
related to your company?
 Are you independent, disciplined, and committed to entrepreneurship?
 Are you ready to serve multi-roles within your organization?
Finally, successful entrepreneurs often allude to good old-fashioned luck as playing a role in
their success. But successful business owners prepare themselves to recognize and seize
opportunities when they arise.
Where To Start
Gather as much information as you can about your idea. Learn about the industry, the best ways
to deliver your product or service, your competition, and potential obstacles. Talk to other
entrepreneurs about what has worked for them, and read relevant trade journals, books, and
business publications. Attend some gatherings of a professional association of entrepreneurs or
prospective customers. Stay abreast of trends within your chosen field and keep current on issues
affecting entrepreneurs.
Create a detailed plan for your business. If your venture will require any outside funding, you’ll
need a business plan. These plans are a key building block for any successful business. Set goals
for your business, then break the goals down into achievable steps. A good plan will help you
maintain focus when things become overwhelming.
Networking can begin immediately when starting a business. If you’ve chosen to keep your day
job until your business gets going, then maintain good relationships at work. Tap into
professional organizations and your personal network of friends and family. Keep in mind that
effective networking creates mutually beneficial relationships.
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Research all financial aspects of your business. Access to capital is the “make or break” of many
firms, so learn about the various ways to obtain funding—friends and family, bank loans, venture
capitalists, angel investors. Know how much money you have, how much you’ll need to get
going, and how much you need to make to achieve your goals.
Determine what types of equipment and materials you may need. For some—consultants,
writers, coaches—a computer and a phone line may be sufficient. Those seeking to manufacture
products may need to set up an entire assembly line.
Human resources are a huge asset to successful firms. While it may not be realistic when a
business is just starting, hire out your weaknesses as soon as possible. If bookkeeping is a time-
consuming chore, hire an accountant. Get an assistant to handle clerical work. This frees you up
to spend time strategizing and growing the business.
Trying to decide when to give up your day job can be tricky. Go gradually. Wait until you have
some regular clients lined up, a plan in place.
Starting a business can be overwhelming, especially for those who are maintaining other
employment. Remember to carve out time for friends, family, and fun. Create boundaries
between your business and your personal life and honor them.
Entrepreneurship is not for the faint-hearted. There is no magic formula. But for those willing to
work hard and take a chance, dreams can come true.
How to Research a New Business Idea, Part 1: Analyzing the Market

You have a fantastic idea for starting your own business. But, will others get excited about it
too? Who will find that it meets their needs or desires? Business ideas can appear in many forms,
but all ideas need to be analyzed to help make decisions that will increase your chances of
success.
The first step in researching your idea is to gather data to understand the market and
demographic details. Who is your potential customer? Good market research can give you the
answers and help you create a solid basis for intelligent planning. So, how do you proceed?
Below are some simple steps to get started.
1. Identify the value of your product or service to potential customers. Why would someone
buy your product or service? Who will be your potential customers? Where are they? Who is
your competition? How do they market their products? What advantage will you have?
2. Assess the characteristics of the market. Is it business-to-business or consumer-oriented? A

realistic assessment of the market must include its size, location and competitors. How do you
find all the right information that can help you make business decisions? You need to use
standard market research methods such as surveys, interviews, focus groups and test markets.
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Using these different methods is covered in Part 2.
3. If you have a product or service that you plan to sell to businesses, list the types of
businesses that are potential customers and get company names and locations from the reference
books in main libraries or the Internet. One standard reference guide for business information is
the Thomas Register. Two good examples of Internet databases are Reference USA and Standard
and Poor’s Net Advantage.
4. If you plan to sell directly to consumers, analyze the consumer market. This is usually more
complex than the business market. Research demographics including population, age, sex,
location, income levels, housing and purchasing patterns. In addition to the Internet resources
mentioned above, you can refer to statistics from the U.S. Department of
Commerce and Census data.
How to Research a New Business Idea, Part 2: Analyzing Market Appeal

You have a fantastic idea for starting your own business and you have researched your market
in Part 1. Now you need to analyze the market appeal of your product or service to help you
make decisions that will increase your chances of success.
There are four basic methods of measuring reactions to the appeal of your product or service:
interviews, surveys, focus groups or test markets. No matter what type of research you conduct,
formulating a good questionnaire is a key factor for success. The questions must be straight-
forward, easily understood, and able to be completed quickly. Each method also requires a
review of the situations in which the questions are asked and detailed summaries of the results.
Comparisons of the results of the different methods can lead to reliable decisions to accept or
reject a set of data.
Here are some tips on the four main types of evaluation methods.
1. Interviews - When conducting interviews, you can start with friends, neighbors and relatives,
but you must include strangers to achieve a more objective set of answers. Be sure to tabulate
answers in a way that can also be used for the results from surveys and focus groups.
2. Surveys - Use the same questions in surveys as you did for interviews. Surveys can be
conducted by mail, telephone or in public places. Recognize that surveys often involve costs in
postage, time and labor. The percentage of people responding will be low without some sort of
incentive.
3. Focus groups - Focus groups usually require payment to each individual for the time they
spend in each session. So be sure to consider the cost factor in using this method of research. In
some locations, the marketing department of a university may be willing to conduct the focus
group for a reasonable fee. The facilitator (leader) should introduce each of the questions used
for surveys and individual interviews. Comments from the group should be tabulated into the
same categories as other results so that they can be compared.
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4. Test marketing - Test marketing is a way to expose your product or service idea to the real
world. This method of research can be more difficult to analyze because the results, or sales, can
be influenced by any one of the five Ps of marketing: product, packaging, price, promotion or
placement. Try to isolate one of the factors in order to get meaningful results.
So, is your fantastic idea for a business going to result in ultimate success or plunge you into a
world of mystery? Good meaningful research can help you answer that question and make the
right decisions.
How To Set Up a Home-based Business

Home-based businesses are fast becoming a popular way to operate your small company, while
reducing expensive start-up costs such as leasing space, lease hold improvements, utility and
phone deposits and major office equipment. Thousands of people across the country are finding
that working from home provides them with the advantages of earning an income with the
flexibility to work when it is best for them and take care of family and other responsibilities that
often arise throughout the work day. However, before starting your home-based business,
consider the following advice:
 Determine local and state requirements for licensing and zoning regulations. Be sure to
check with your local zoning office to find out how the zoning regulations in your area may
affect your business plans. Determine if your business requires any licenses and file the
necessary forms.
 Rent a post office box and use that address on your promotional mail and stationery,
doing this will make it less obvious that you are working from home. The professional image
you portray is very important to your clientele.
 Install a phone line in your home dedicated to your business.
 Use an answering machine for incoming business calls.
 Organize your work space with great care. Make sure that you have sufficient space to
meet your needs.
 When scheduling appointments with clients, consider meeting at your client's office or
renting a conference room to maintain a professional image.
 Establish contacts with your competitors and join associations pertinent to your business.
Have your clients suggest possible new clients and ask if they will recommend you.
 Keep excellent records of entertainment and travel expenses. The Internal Revenue
Service (IRS) tends to audit home-based businesses more frequently—especially when they
are writing off a variety of expenses, including the percentage of the mortgage or rent for your
office space. There are several good record keepers such as Day Timer®, Franklin Quest®
and Day Planner that will help you keep track of your expenses. Your accountant, a CPA is
recommended, can advise you on deductions you can take and records you must keep for the
IRS.
 And above all, put some of your earnings into a savings account for those times when
your business is in a slump . . . and it will happen.
Discipline yourself. You must be a self-starter and follow a routine, just as if you were
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
working for any other business. In many cases, you are the only person you can rely on to get
the job done. Unless it's an emergency, do not baby-sit or chat with your neighbors.
Identify What Drives You To Run Your Own Small Business

To jump-start your thinking about your values, consider these five driving factors, named here
the “five F's": fortune, fame, family, freedom and fun. They are primary motivators for any
entrepreneur. Let’s take a look at each one.
Fortune. Many entrepreneurs place fortune first on their list of goals. After deeper thought,
however, they usually find that the accumulation of money, while certainly important, is not
necessarily where they derive their greatest satisfaction. Probably more gratifying is
acknowledging how closely their bottom line is tied to their efforts, talent, and capabilities. So
though they may not strike it rich overnight, as they work to build their business, they will reap
the rewards that come from being responsible for its growth.
Fame. A healthy love of self is another key drive of entrepreneurs. They are very comfortable
seeing their name in lights—or (more commonly) on company letterhead. Making their mark on
the world is part of why they struck out on their own in the first place.
Family. Many solo entrepreneurs seek a better way to balance the competing demands of their
home and professional lives. They want to be able to spend more quality time with their families,
and they want to provide a good livelihood for their loved ones.
Freedom. Not surprisingly, more important than money to many entrepreneurs is the ability to
call their own shots. Many turn down better-paying jobs because they place a high value on
working for themselves; they want to set their own schedule, to ensure that it honors the needs of
both their clients and their family. And they want the freedom to pursue new prospects when
these come along.
Fun. There often isn’t a lot of tolerance (or respect) for self-expression in the corporate
workaday world. Entrepreneurs, in general, are creative individuals who need an environment in
which they can express their personalities in the context of a business. Incorporating a sense of
self is also the way they ensure that those intangible inner, spiritual needs are met.
Keep an Eye on the Big Picture of Your Small Business

Keep your eye on the big picture and prepare for the worst now.
Do Hard Analysis, Don’t Get Bogged Down

When things are good, it’s the right time to conduct an in-depth analysis of your business.
Consider doing a SWOT analysis (strengths, weaknesses, opportunities, threats) when business is
good, so you can repair your weaknesses while things are running smoothly.
Many small business owners fail to look at the big picture because they’re too bogged down in
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minutiae—the everyday challenges of running the business. But it’s a mistake to ignore the big
picture. Take the time to shut out everyday things and force yourself to gain a longer perspective
on what’s going on. Look at much longer metrics, such as what’s happened in your business over
the past couple of years.
Ways to Look at the Big Picture

Mission and vision statements are good to jump start your thinking about who you are and what
you’re really about. What winds up in the statement is secondary. It is the process you go
through when forced to take a hard look at your business that is most valuable.
Small business owners should have a good team in place to help them keep the big picture in
mind. It’s important that everyone on the team commit to the direction in which you’re trying to
move the business. If you disagree with the advice and have good reason, consider getting a new
team.
Don’t Forget the Industry as a Whole

It’s dangerous to look at just your own performance on sales and profits. You have to check out
the competition. Remember that our economy changes. You can achieve success from making
comparisons over time to learn what the competition is doing, what’s different about his or her
customers and what’s happening with your own suppliers.
Use Advisors
For small business owners, teams of advisors can be expensive, which is why it is so helpful to
seek free advice from organizations such as industry trade associations, SCORE or the U.S.
Small Business Administration.
Advisors will be able to identify trends in your business sector, new developments, and who’s
succeeding and why. It can be hard for business owners to do this after operating on their own
for a number of years, but the outside perspective is invaluable and will help you evaluate your
business more effectively.
Let the Countdown Begin: A Six-Month Plan for Transitioning from Employee to
Entrepreneur
Aspiring entrepreneurs often wonder how long it takes to get a small business started. The
answer is, “it depends.” Some new enterprises can be up and running in a matter of weeks; others
may require several months or more of diligent planning.
If you currently have a job, you can pursue your small business ambitions without risking your
family’s financial security (assuming, of course, that your research doesn’t interfere with your 9-
to-5 responsibilities). If you’re unemployed or facing a layoff, you’re obviously eager to move
things along.
A good rule of thumb is to allow six months to make a complete transition from employee to
entrepreneur. By following the steps below, you’ll be able to wisely invest this time in building a
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sound foundation for your new business, and your future.
Assess Your Personal Strengths & Experience

Determine if you have experience in the business you are planning to start. If you don't have
experience, how will you get it? An honest and thorough review of your experience and
education should give you some leads about whether a particular venture is right for you. Be
honest; your review must consider both personal weaknesses and strengths.
Be sure to consider the most common reason why a small business does not succeed: lack of
management skills such as record keeping, personnel management, market analysis,
communication skills and taxes. Many universities, community colleges and adult learning
programs offer courses and seminars in these and related topics.
Begin Planning What Your Business Will Sell or Do

Ask other small business owners how they got started, what mistakes they made, and how they’d
do things differently. Research your potential markets and determine whether there’s enough
demand to sustain your proposed business. And, examine your idea from the customer’s point of
view. What will you offer to attract them, especially if you’re competing with existing
businesses?
Attend a SCORE Workshop on Starting a Business

This is a great way to learn the nuts and bolts of launching a business from veterans of the
business world. The workshops cover the process of building a sound business plan with tips on
information resources, legal considerations, working with lending institutions and other
important topics.
Work With a SCORE Counselor on Different Aspects of Your Business

Experienced business counselors make valuable sounding boards to answer questions, evaluate
ideas and point you in the right direction to find additional information. Depending on the nature
of your business idea, you may work with one SCORE volunteer counselor or several.
Develop a Business Plan to See that the Business is Viable

The information you gain from research, workshops and conversations with SCORE counselors
will help you understand everything necessary to start and manage your small business. Now, it’s
time to put your plan on paper. Don’t worry if the answers lead to more questions. Evaluation is
an ongoing process, even for long-standing businesses. And, as you address and eliminate
unknowns, you greatly increase your chances of success.
Finalize Your Plan & Gather the People and Money to Start Your Business
If you’ve prepared a thorough business plan, you’ll be ready to make a strong case for acquiring
the resources you need to bring your small business planning into the “home stretch.” You’ll
know what banks to approach, where to “set up shop,” how to market yourself and contact
potential customers, who to hire, and what other tasks necessary to make the big jump.
Ready to Roll?
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Don’t worry if, after six months, you feel unsure about moving forward. Many variables
involved with starting a small business are beyond your control. Your research may also reveal
that the wisest course is to wait and gain additional experience, explore other ideas or simply put
your entrepreneurship dreams aside temporarily.
But if everything is ready, you’ll enjoy that proud moment when you can look at yourself in the
mirror with confidence and say, “Hi boss!”
Location, Location, Location

Searching out a location for this wonderful business you’ve been enthusiastically planning might
seem to be a daunting task. Where do you start? What factors make this location better than that
one? Who will help you?
Although I certainly don’t have all the answers, I have been through the drill and I can assure
you that if you pursue your search in a calm and organized manner, you will find the location
that most benefits your business.
Getting Started
Begin by asking yourself what the space is to be used for. For example, do you need office
space, a place to manufacture or assemble products, a distribution consolidation point or a
storefront?
With these answers, you can make a proper determination as to whether you need a destination
location, a traffic location or maybe something in-between.
A destination location is a place that your customer specifically sets out to visit, such as a nail
salon, a doctor’s office, a favorite restaurant or an accountant.
A traffic location is dependent upon heavy pedestrian and perhaps drive-by traffic. Examples
might be a women’s apparel boutique, a shoe store, a candy store or a gift shop.
What Other Factors Should Be Considered?
 Ease of access and egress. This is particularly important when deliveries or shipments
need to be made. Do you need relative access to highways, trains, air and seaports? If yours is
a destination or a traffic location, be sure to evaluate your parking needs and access to public
transportation. This is important for both your customers and your employees.
 Synergy of similar businesses. Synergistic value is most obvious in the retail sector
where other apparel, accessory, shoe and similar sorts of stores help build traffic in a given
area. While one store might draw 20 customers, two stores might draw 50 and three stores
100. Synergy increases the per-store activity for all stores.
The same growth potential may exist for a manufacturing or distribution facility, a technically-
oriented business or a restaurant in proximity to like facilities. Locating your business near
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others in the industry may also help you to find a workforce and assure you the ease of finding
public transportation as well as commercial pickup and a delivery.
 Proper zoning. Be sure and check zoning requirements for the location that you choose
to make sure that the space you wish to lease or purchase is properly zoned for what you want
to do. Sign the lease or purchase papers only after you are approved to do business in that
space, or sign it contingent upon obtaining approval.
 Price. The rental rates or purchase price on space are always a consideration. In general,
a greater rent per square foot usually means more traffic and/or better quality of space. Be sure
to account for these costs in the gross margin in your business plan.
Who Can Help Me?
 Real estate agent. When searching for space, it is often a good idea to use a commercial
real estate agent. Many available properties do not have a sign or ad to identify them. Agents
also know about properties about to come on the market before the general public does. They
can show you multiple sites so that you can evaluate and choose the best for your needs.
Today’s leases are long and complex. They are frequently slanted to the benefit of the landlord
and include many restrictions that may not be to your benefit and, in fact, may actually hinder
your operation. However, lease points may be negotiated. It is often easier to negotiate
through an intermediary such as the real estate agent.
 Real estate attorney. A real estate attorney is also useful. As you read the lease, note
where you don’t understand the language, or where you think a point might be re-negotiated.
Show the lease and your questions to an attorney for help and direction. An attorney is
practiced at looking for items you may not realize will be difficult, if not impossible, to
comply with.
 Landlord. The landlord himself may be of help to you. Landlords often demand a
business plan as a condition of approval for obtaining a rental agreement. With a well-crafted
plan you increase your odds of success. Since a landlord wants you to succeed, this may
increase your leverage with him and help you to negotiate in your favor.
 SCORE. Last, but not least, lean on a SCORE counselor to advise and guide you as you
search for the best location for your business. Seek help from your nearest SCORE
office or online counselor. SCORE counseling is always free and confidential.
Make Mission and Vision a Part of Your Business

“Where do you want to be in five years?”
You likely heard this question long before launching your quest to be a small business owner.
And though it may sound like a cliché, it’s one you should try to answer. After all, business
success is all about making progress towards a goal. But first, you must know where you’re
going and, perhaps more importantly, why.
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Every entrepreneur should include mission and vision as part of their planning process. They
help jump-start your thinking and provide guidance in making critical decisions, and supply
motivation to plow through the details and minutiae that accompany every new enterprise.
Note that mission and vision are not merely things you codify into statements and post on the
wall. They are, in fact, processes that help you make an objective assessment of proverbial “big
picture” of your business and the environment in which it exists. With that understanding, you
are better able to make decisions, shape policies and implement other practices that will help you
capitalize on opportunity and cope with challenge.
Find your Focus Building mission and vision into your business planning is not always easy.
Brian Ward, C.H.R.P., a principal with Affinity Consulting and a specialist in the development
of quality management systems, notes that, “achieving a balance between ‘dreaming’ about a
desired future state and living in the current state is difficult…There is a constant tug-of-war
going on between dealing with 'current reality' and developing a lofty vision of who we want to
be, what we want to do and what we want to have.”
Here are some tips for stretching your vision to include the day-to-day and the big picture…plus
everything in between:
Give Your Business a Periodic Check-up

Take time out from the daily routine and force yourself to examine more long-term metrics, such
as what’s happened in your business over the past couple of years. A SWOT analysis (Strengths,
Weaknesses, Opportunities, Threats) will provide a clearer picture of what brought you to this
point, and how conditions might evolve in the future.
Look Beyond the Boundaries of Your Business

Competitors and other forces beyond your control will influence much of what you decide and
accomplish. As you examine the trends that influence all aspects of your business, learn how
they came about and why.
Don’t Fear the Downside

Even the most optimistic vision faces challenges, risks and even threats. These are issues that
should be acknowledged and understood, not ignored. Author, columnist and motivational
speaker Jim Stovall notes that, “we should never fear the facts. We should, instead, fear being
ignorant or uninformed. If you know where you are, who you are dealing with, and fully
understand all the terms and conditions, coming up with a mutually-satisfactory outcome in
either your personal or professional life is usually fairly simple.”
Consult Advisors
Few resources are more valuable than an informed, objective perspective capable of identifying
trends in your business sector, new developments, and who’s succeeding and why. The best
advisors are those who will tell you what you need to hear, and help you make decisions for
taking appropriate action.
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Don’t “Set and Forget It”

Change is inevitable, so your mission and vision should be equally as flexible to reflect current
realities, and keep you looking forward.
Give It All You Got

Just as achieving small business success requires a total commitment on your part, so too should
be process of developing your mission and vision. Author and enterprise leadership consultant
Jamie Walters sums it up this way:
“While there may be many reasons that something isn't happening the way we'd hope or
envisioned it, one common cause is that we really haven't envisioned it at all—we've simply
thought about it in an abstract or intellectual way…A half-hearted, partial-focus effort yields a
like-quality result.
In contrast, if we want to bring something about—an organizational vision, attracting a certain

quality of client or project, a writing or art project, a collaborative effort, or any number of other
endeavors or outcomes—we might remember that a whole-hearted effort will bring about a
fuller, richer, truer result.”
Obtaining a Business License or Permit

Most city, county and state governments require business owners to obtain business licenses and
permits. In some instances, the federal government may also require you to secure special
licenses or permits, depending on your kind of business.
Local Business Licenses

Nearly all businesses need a county or city license. This is a general license that grants you, as
the business owner, the privilege of legally operating a business within a certain city and/or
county jurisdiction. Fees are typically low and these kinds of licenses are easy to obtain, though
application procedures may vary.
To obtain a local license:
 Have your business paperwork in order, including any fictitious name certificates
and your Employer Identification Number (EIN).
 Contact your city hall and/or county government offices to determine the kind of
license you need and obtain necessary application paperwork.
 Complete the application and file it, along with a fee, with the appropriate
government office. (Most often, this must be done in person).
 Be sure to file renewals. Once granted, local business licenses usually must be
renewed (and renewal fees paid) annually.
State Business Licenses

State business licenses are issued to businesses that provide products or services regulated by
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state law. For example, special state licenses are required for doctors, lawyers, hairdressers,
realtors, auto mechanics, private investigators, building contractors and others who must meet
state licensing requirements—i.e., a certain level of "certified" training or education. State
licenses are also required of businesses that must meet certain state standards or codes, such as
restaurants and other establishments that serve alcohol. Each state has different agencies
regulating these types of businesses.
To obtain a state license:
 Contact your local government offices to see if your particular business requires a
state license. Local libraries are another good source for state-specific licensing
information.
 Obtain license requirement information and application paperwork from the state
agency regulating your kind of business.
 Complete the application and file it with the appropriate state office, and pay
filing fees as required.
 Stay on top of annual renewals and/or other kinds of procedures as required by
state law for your kind of business.
Sales Tax Licenses

In some states, business licenses are the exception rather than the rule. However, almost all states
require a sales tax license or permit for all retail businesses. This allows you to charge sales tax
to customers on items purchased. Check with your State Franchise Tax Board on how to obtain
this license.
Federal Licenses
For a very few businesses, federal licensing is required. In general, federal licensing is required if
the business is highly regulated by the government. For example, firms providing investment
advice, interstate-trucking companies, businesses involved with meat preparation, and those that
sell heavily regulated products such as firearms. If you need a federal license, consider
consulting an attorney to either advise you on or handle the entire application process for you.
Your business may require more than one business license. Make sure you understand which
licenses you must have, as well as the order in which you need to obtain them.
Permits
Many businesses are also required to obtain permits. Generally, permits regulate the safety,
structure, and appearance of the community as defined by local and/or state laws, typically
referred to as "ordinances." Once your jurisdiction determines that your business is in
compliance with such ordinances, you will be issued the relevant permit(s) enabling you to
legally operate your business.
Local permit requirements vary by jurisdiction. Failure to have the proper permits may prevent
your business from opening, and could result in fines or even being shut down. Usually it is best
to first research the kinds of permits your business will need and find out what the regulating
agency requires. This helps ensure that you are in compliance with regulations and avoid costly
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delays and expenses related to re-tooling your business after the fact.
Applying for business permits is similar to applying for a business license:
 Research the permits you need through the appropriate agency.

 Make sure your business complies with the ordinances in your area.
 Obtain the proper application forms and/or set-up the proper applications
procedures (in some cases, this might be an on-site inspection).
 File the necessary paperwork to obtain the relevant permit(s), and pay any filing
fees.
Types of Permits
Types of permits your business may need include:
 Seller's Permit
If you'll be purchasing wholesale merchandise for resale, your state will probably require you
to register for a seller's (sometimes called a reseller's) permit or sales tax permit. Usually your
State Franchise Tax Board agency grants seller's permits.
 Building Permit
If you plan on remodeling or building a commercial space, check local building codes to find
out if you'll need to get a building permit. Make sure as well that your business space is in
compliance with other local ordinances, such as access and facilities for the disabled, so that
your business is eligible to receive the other permits you will need.
 Health Permit
If you'll be preparing food as part of your business, you'll also need to get a health permit. Call
the governing health department to research the requirements, then make sure you are in
compliance and arrange for an inspection.
 Zoning Permit
Don't sign a lease without first checking that the space is properly zoned for the use you have
in mind. Some cities require that all new businesses get a zoning compliance permit before
they open. You can research this through your local library, planning department or zoning
board.
 Home Occupation Permit
If your business is home-based, many local governments require that you obtain a home
occupation permit. The cost is usually a flat fee or a percentage of annual receipts from your
business. Call your city hall and ask them for zoning information in your area. (Also check
with your building's management (if you rent) or the local homeowners association).
If for some reason your business is unable or unwilling to comply with an ordinance, you can
petition the jurisdiction for a special permit, called a variance, which would allow you to, in
effect, violate the ordinance. If you're interested in a variance, talk to your lawyer. Because
variances are not routinely granted and can be expensive (in terms of legal fees) to obtain, make
sure you really need the variance before you request it.
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Finally, if you're not sure which agency in your city or state to contact for specific questions
about what your business will require, start with unofficial sources of information. The Small
Business Administration (SBA), your local chamber of commerce, trade associations and even
other businesspeople or attorneys working with your kind of business should be able to point you
in the right direction.
Resources that Give You a Head Start on Business Planning

What’s the biggest obstacle to writing a sound business plan? For many aspiring entrepreneurs,
it’s a matter of simply getting started—knowing what information is needed and where to find it,
then actually putting it down on paper.
Interestingly, this proverbial first step of the thousand-mile journey is relatively easy. For
starters, you’re not venturing into unknown territory. Millions of people such as yourself have
transformed their bright ideas into thriving enterprises. Putting together a business plan is also a
valuable learning experience, an opportunity to learn about your chosen new field, and yourself.
And as you learn more, your energy and enthusiasm for this venture are sure to increase as well.
Best of all, there are many valuable resources available that can guide you through the process
from start to finish. These aides can’t do the work for you; you will still 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.
Use Tools & Templates to Get Started To get a complete picture of how a business plan is
structured, visit the Small Business Administration’s online Business Planning Basics page. The
pages outline the elements found in most business plans, and provides 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.
Because you’ve already logged on to SCORE’s Web site, another valuable resource is virtually
next door: business plan templates. These easy-to-follow templates are available in Word and
PDF formats. Download them directly to your computer and get started.
Each section explains the type of information that’s needed, why it’s essential to the plan, and
questions you will need to answer when seeking financing. The templates are also a great way to
organize your plan as it’s being developed. You see immediately what areas are complete or
have gaps, and what sections are ready for editorial fine-tuning.
You’ll also find templates for bank loan requests, competitive analyses, personal financial
statements, opening day and projected balance sheets. There’s even one for existing businesses
looking to expand or add new services.
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Remember, however that while these tools can provide valuable guidance, they are by no means
all-inclusive. The nature of your business or industry may require considering of specific issues
beyond a “generic” business plan.
A Word on Business Plan Software Other popular options for aspiring entrepreneurs are business
planning and financial software programs. Among the most popular products are Business Plan
Pro (Palo Alto Software, Inc.), Plan Write (Business Resources Software, Inc.) and BizPlan
Builder (JIAN). Each offers step-by-step guides for developing business plan sections;
spreadsheets and forecasting tools; industry analyses and financial resource guides, and other
valuable features.
For small businesses that are already up and running, accounting and financial software from
MYOB-US, Inc., and Intuit’s family of Quicken/QuickBooks products can help you with both
day-to-day management (printing checks and invoices, recording expenses and income), business
performance analysis and short- and long-term forecasting.
Be sure to examine and compare these products carefully before you make a purchase. You may
find one program easy to follow and another too complicated to use. The industry information
may not be as current or detailed as you need. And, you should avoid paying for more features
than you really need.
Finally, even though your business plan looks complete, there may be more work to do. Share it
with others who can prove an informed, objective critique and suggestions for improvement.
And don’t file your plan away after you get your business started. Periodic reviews will help you
gauge your progress, identify areas for improvement and opportunities for growth.
Scenario Planning for Your Small Business’s Future

You wouldn’t think that looking into a crystal ball would be a productive use of your time, but
looking into the future is exactly what most small businesses must do on a regular basis.
Scenario planning is crucial to small business success.
What is Scenario Planning?

Scenario planning involves looking at a number of vectors and asking, “What will the future look
like for this vector?” in order to paint a picture of the future. You should look at:
 Technology
 Customer needs
 Suppliers
 The environment
 Organizational dynamics
The objective is to identify the most probable change in dynamics and to understand how those
changes will affect your business. You may not have gotten each scenario exactly right, but at
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least when change occurs you are prepared to be proactive rather than reactive.
How Often Should Business Owners Engage in Scenario Planning?

Most small businesses say they’ll put a stake in the ground and think that everything will remain
constant. The truth is that everything changes on a consistent basis. It is likely there will be a
major change in some area that will have a significant impact on your business strategy and
planning.
I recommend that small businesses engage in scenario planning about once a year—more if the
industry is fast-paced.
There’s no one-size-fits-all answer to how often a business should engage in scenario planning.
It depends on the speed of the industry. But let me tell you, if you’re a software vendor, once a
year won’t be enough.
Make the Time

Most small business owners don’t get bogged down in planning for the future. They get bogged
down in the day-to-day. You have to allocate time on an annual basis to plan for the future, and
you have to allocate a few hours each month to talk about what is happening in the marketplace.
Bringing in a Third Party

I recommend bringing in an objective third party to help with scenario planning. I even get an
outsider to help with my own scenario planning, and scenario planning is what my company
does!
There are several resources to help small business owners with scenario planning, including
SCORE, state and federal resources, and consultants. It’s a real leap of faith for some small
business owners to engage in scenario planning, but you have to be ready for change on a
consistent basis.

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SCORE Helps You Test Your Small Business Plan

So you’ve done a fantastic business plan. Now you can forget about it and focus on running the
business, right? Wrong! Your business plan may take you in the wrong direction—or your
business could grow in a way that makes your old business plan fit you as poorly as the old
clothes you’ve relegated to the attic.
Give Your Business Plan an Annual Check-up

You should revisit your business plan at least annually, if not more often. At these annual
“checkups” of your business plan, tweak your plan and understand how decisions you make are
consistent with it, or are changing in reaction to the market.
And don’t forget to consider e-commerce, if it makes sense for your business. Any plan that
leaves out e-commerce leaves itself open to skepticism from investors, although there are some
venture capitalists dedicated to funding more traditional businesses.
If the Plan Isn’t Working . . .

We hope you would have done a good enough job with your initial business plan that you would
not be abandoning the business plan entirely, but merely making some changes based on
changing market conditions. For example, if you’re selling a product and realize that there’s a
use for that product that neither you nor the manufacturer anticipated, you need to respond
quickly and well to that.
You want to make changes that are logical. You don’t want to deny your business the
opportunity to change just because your business plan says you should be doing it one way,
when another way makes more sense and is more effective. But don’t abandon your business
plan entirely unless you’re changing your business significantly. If you do, it means you did a
poor job of planning on the front end.
And how do you know whether to make that significant business change?
It’s a matter of doing some market research—and doing some soul-searching to know whether or
not this significant change is the right move for you. Look at your competencies relative to the
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market. Take a look at what the competition looks like; ask yourself whether you can produce
the product or service and if you can deliver.
Do You Really Need a Business Plan?

Is it possible to start a business without a plan? You can, but that’s doing things the hard way.
There have always been people who’ve jumped into business without ever spending the time to
create a plan. Some are successful regardless. But they would probably have been even more
successful if they had used a plan. The road might have been a little less rocky and the stress
levels a little lower, if they had taken time to anticipate the business’s ups and downs.
Once You Have a Plan . . .

To save yourself the headaches and heartaches of a failed plan, it’s a good idea to test it prior to
starting the business.
You can get valuable feedback from a:
 SCORE chapter
 Banker
 Relative or friend
 CPA
Just make sure that whomever you ask for feedback is neutral and likely to be constructive. For
instance, a family member, in an effort to be supportive, may not mention things you need to
hear. Go to someone who will ask you the hard questions.
SCORE Identifies the Importance of the Executive Summary

First impressions do matter, and the first part of your business plan that a potential client or
funder will see is your executive summary, so be sure to get it right.
Executive Summaries—The Basics

The executive summary will make a potential funder, partner or customer want to go further. In
many instances, it could be all that they look at to make a decision on something important to
you and your business success.
The executive summary should not be:
 Cumbersome
 Lengthy
 Hard to understand
It should be:
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 Quick
 Clear and concise
 Focused and to the point
What Should Go Into an Executive Summary?

The executive summary should include the high points of your business, without covering up the
challenges. What it should not include is facts that are irrelevant to your audience.
Put yourself in your audience’s place. If you’re a banker, you might want to know about the
finances, backed by sales figures contingent on marketing. A banker wouldn’t be interested in
the whirlwind unique inventory management system your business has.
The audience for your executive summary includes any individual or entity that you want to
partner with in some fashion—partner being a very broad term. It could be a bank, a potential
venture capitalist or a supplier. It also might mean a customer to whom you’re selling, or an
organization with which you want to do cooperative advertising. It is anybody you want to
influence relative to your business.
Don’t Make It Too Long

There is no real rule of thumb about how long an executive summary should be, but most people
lose patience after two pages.
If an executive summary is more than two pages, the reader will likely only skim it. Remember
that your summary has to “grab” the reader immediately—you’re competing for eyeball and
brain time against everyone else out there.
Getting Help with the Executive Summary

There are many online resources for writing an executive summary, but a good way to test your
presentation is to visit your local SCORE chapter for that essential second set of eyes to look at
your summary. SCORE mentors have been there and will take the time to thoroughly read your
summary.
Business owners don’t have to be the ones to write the executive summary, but they had better
know the summary from top to bottom and be prepared to answer detailed questions about it.
Investors know that if there are questions the owner can’t answer, it is a red flag that something
is not right and that the business owner has not thought out the business proposal to the level
necessary to be successful.
Starting a Home-based Business—Is It Right for You?

Hundreds of thousands of individuals decide to start a home-based business each year. Many
succeed. About 70 percent of all home based businesses are in operation after two years. Before
entering this venture, entrepreneurs should consider several key questions:
 Can you operate the business alone with little help?

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 Do you have contact with buyers or your services?

 Is the location such that distributors, sales staff, clients and others can reach it without
difficulty?
 Is start-up and operations capital available for the first year?

 Can the business really be operated from the home?
 Do you have separate spaces for storage, records, isolation, parking, etc.?
 Can a business in the home compete with similar businesses?
As in most businesses, there are advantages and disadvantages to the home-based business. A
business in the home permits flexibility of working hours, lower start-up costs and allows family
affairs to continue during business hours. There are also disadvantages—zoning restrictions may
prohibit business, the IRS may raise tax questions, it may be difficult to get materials and
customers to the location and financing the business could be challenging.
The IRS specifies that a home-based business must have its own location away from the family
living space that is devoted exclusively to the business. The business must be in regular
operation, profits must exceed expenses in order to claim deductions, the business must be
conducted almost exclusively in the home and the motive must be profit.
A major challenge in operating a home-based business is isolation from distributors, merchants,

clients and interested parties. Modern communications help to alleviate the problem—a
computer is a necessity. A fax machine and Internet access are almost certainly necessary for
communications within the business community. In addition, separate telephone phone lines
must be installed for telephone, fax and Internet access and the business phone needs some type
of answering service.
In summary, the business must be run as a business not as an extension of the home. It is
essential that the prospective business owner have a good business and financial plan, separate
from the family finances, that clearly spells out the present and future of the business.
Be aware that many neighborhoods have deed restrictions forbidding the operation of a business.
Some require extra off street parking, others forbid deliveries and signs, etc. It is wise to check
with your Home Owners Association and with your local government for a complete survey of
your city or county regulations.
It may be difficult to raise capital. The average home-based business requires about $10,000 in
start-up costs. Although this may be much less than opening a business outside the home, both
the start-up and operating funds should be in hand before beginning the business operation.
Help is available. The National Association of the Self-employed (NASE) can provide help and
information, as well as your local SCORE office. Find SCORE on this Web site to meet face-to-
face with a professional business counselor.
This article was written by J.H.U. Brown, a counselor with the Houston SCORE Chapter, and a
former director with the National Institutes of Health and a health care administrator.
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Valuing A Small Business For Sale

Pricing a business correctly is important if you really want to sell it. As a consultant I talk to
many business owners, brokers, and agents on a daily basis about valuing businesses. It always
amazes me on how some of these individuals come up with the values on small businesses being
sold. No wonder only 30% of all businesses sell. In many instances no consideration is given to
the total picture—will the available cash flow of the business be able to pay the debt of a loan,
will the deal as structured or priced be attractive to financing sources, "cash" price vs. "note"
price and how these factors figure into the equation.
I have seen many "professional valuations" where the price just doesn't make sense—and sellers
wonder why their business for sale just sits there with no action.
1. Market Approach
There is a solution that is grounded in the fundamentals of economics, and time tested in the
marketplace, where the influences of supply and demand ultimately determine where a business
belongs on the price scale. One economist explains this market approach by comparing a
business to a machine which has the purpose of making money: The more money it makes, the
more it's worth. And that explains why, for example, there is a strong demand for a very
profitable distribution business with few hard assets; and why it is worth more in the marketplace
of available businesses, than a large machine shop that would cost nearly $1 million to duplicate,
but can't make a living for its owner.
2. Adjusted Net Income
The first category of information needed is called adjusted net income, and is the total amount of
cash produced by the "money machine." It's a figure that includes the profits, the owner's salary
and all of the many cash-related benefits which are enjoyed by the principals of small businesses.
Those benefits can include the use of a company car, the company-paid premiums for health, life
and auto insurance, plus personal expenditures tucked into travel and entertainment,
subscriptions and similar business "expense" categories. Interest expense should be added to
adjusted net income, along with accounting entries—such as depreciation and amortization—that
can divert money to the owner's pocket so that it never appears on the bottom line of the P&L.
While some of these items vary from business to business, any owner knows which categories of
expenses in his or her financial records include sums of money that should be added to adjusted
net income. Many business owners also know of cash income that never sees the business
records in any way, shape or form. Some owners feel they should get credit for these sums in the
calculation of value. But it's a poor policy to collect unreported income and then attempt to have
it included in adjusted net income for evaluation purposes. When selling, your buyer prospects
want any statements you make about your business to be supported by evidence in the form of
accounting records and other reliable sources. To admit that you are doing business "off the
books" not only exposes you to problems with the IRS, it also sets a bad tone with prospects who
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—if they are going to be interested in your business—need to believe your practices and record
keeping are above reproach.
Adjusted net income is usually the first thing any buyer wants to know about when investigating
a business; and not just the past few months' worth of income. A seller should be prepared to
demonstrate a history of earnings, and have the documentation to back it up.
3. Multiplier Method
The next piece of the equation comes from the expectations working in the marketplace to shape
the multiplier—a figure which will be computed, along with the cash flow, to calculate a rough
value. The validity of the multiple is that it reflects behavior in the market. There is no need to
theorize about a proper multiplier. It's calculated by determining what people actually pay for
small businesses.
The experience with low risk businesses is that their high market demand is reflected in a fairly
strong multiple. A lot of buyers want, for example, a well-established franchise, or a grocery
store with a long lease in a densely populated area and little direct competition. Its multiple
might be in the range of two to three times annual adjusted net income.
A one or two multiple, on the other hand, would be associated with an enterprise in which the
buyer is assuming greater risk. An example is a retail store near a large shopping area, which
leaves the buyer of the smaller business vulnerable to the competitive marketing activities of
much larger companies. The lower multiple is a consequence of lower market demand. Fewer
people want that kind of business.
Since profitable distributorships and manufacturing companies are much sought after, it's not
unusual to see them command a price upwards of four times annual adjusted net profit. The
company in this category providing adjusted net profit of $200,000 might realize a selling price
in the range of $800,000, assuming a favorable deal structure (more about that shortly). Also
warranting a high multiple are businesses loaded with assets—equipment, trade fixtures and
inventory. But remember that a seller must be able to establish the company's "history of
earnings" with financial reports and tax returns, before the higher price will be offered.
More commonly available businesses, such as restaurants, are priced with a lower multiple—in
the one to two range—to reflect the abundance of this kind of business available for sale at any
one time. In this case it's purely a matter of supply and demand.
4. Importance of Deal Structure/Terms
And the final factor thrown into this equation is particularly useful in determining the value of
businesses offered for sale. It recognizes that the terms of a transaction--in other words, how a
price is paid--are critical in calculating that price. When sellers demand all cash for their
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businesses, for example, the market tells us that they can expect to receive about 60% to 80% of
the sum they would have gotten by taking a down payment and financing the balance.
It's easy to understand why deal structure is such a vital component in the valuation process. For
a business to be affordable, the cash flow needs to be substantial enough to support the price at
the multiple being used. A deal that requires a lot of cash up front, in relation to the expected
amount of adjusted cash flow, will place a greater burden on the buyer. That principle, translated
into the language of the marketplace, means the business will only be appealing at a low price. If,
on the other hand, the level of adjusted net income supports the buyer's ability to make payments
to the seller in order to purchase the business—this opportunity will interest more potential
buyers and the result is a higher achievable sales price.
Other ways an attractive deal structure can be used to build market appeal include a delay of a
few months—after close of escrow—before monthly payments on the seller's financing are due
to begin, a low interest rate, and interest only payments for awhile, until a new owner is able to
build the business to more easily meet the loan obligation. Creative deal structures always help
sell a business and will usually command a higher market price for the business (remember it has
to make sense).
Pricing a business is as much or more of an art than a science. Sellers who take a look at the big
picture—looking at both deal structure and price are usually the ones who are successful in
selling their business.
Buying or Selling a Business
Buying a Small Business—Facts All Potential Business Buyers Need To Know
Here are the facts—80% of all business buyers never end up buying a business. Many factors
contribute to this statistic, but by following the points below, you should be successful in
locating and buying a business that interests you and completing the transaction.
Identify the Types/Sizes/Locations of Businesses you Want to Purchase

Before you start calling/contacting business brokers, owner/sellers, and agents make sure you
know what types, sizes, and locations of businesses you are looking to buy. If you seem
uncertain about your search criteria, brokers and agents will not spend a lot of time with you.
There are many more buyers than sellers on the market and brokers/agents and owner/sellers like
to work with buyers, who are serious, motivated, and know what they are looking for. Have
available and send/fax/email to potential sellers and brokers/agents an Acquisition Criteria sheet
that goes over your current search criteria—it pays off and shows you're serious.
Know how much Money you are Willing to Put Down

When buying a business you need to know how much money you are willing to spend on a down
payment for a business. Most of the time you will be putting down 30-100% down to buy a
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business. Depending on the amount of money your willing to put down determines the size of
business you are able to purchase. Also know in advance if you would be willing to pledge the
collateral in any real estate you own for a note the seller may be taking back in the deal—this
will save you a lot of time in the search process and in negotiations.
Know Where the Down Payment/Purchase Money Will Come From

Money for a down payment or purchase can come from many different sources. They are: cash
on hand in savings, pulling equity out of your home, your retirement funds, SBA loans, seller
financing/note. Knowing where and what you are willing to do upfront will save you a lot of
time in the search process. You definitely want to get pre-approved/reviewed for SBA loan and
other financing options before you write any offers—you need to know what your financing
opportunities are early in the process of buying.
Keep the Negotiating & Communications Moving Forward

Remember: Time Kills Deals. Make sure when you are negotiating the contract, allocation of
purchase price, new or restructured lease, etc. always be moving forward. Don't let any situation
sit too long—it will most likely kill the deal.
Non-Disclosure, Confidentiality Agreements are Important

To view or get any detailed information on any businesses for sale you will probably need to
sign a confidentiality agreement. Respect this part of the process and keep the sale of all
businesses confidential. There are also legal ramifications if it is traced back to you that you
were the one who leaked the word that the business was for sale.
Professionals Should Be Lined Up Before you Sign a Contract

You will be utilizing many professionals to buy a business. Make sure you have a CPA or Due
Diligence Consultant to help you look at the financials and paperwork of the business to make
sure it is in order. You will also possible need financing (a loan for the purchase), escrow
services, an attorney to review contracts and possible other services to assist you in the buying of
your business.
Make an Offer if you Like a Business – Get the Process Started

A majority of business buyers are too timid when buying a business and are not willing to "pull
the trigger" and sign a purchase agreement to start the process of buying a business. Many
serious buyers lose out on great deals because they're too analytical or pensive about writing up
an offer. Writing up an offer also usually "locks out" other potential buyers (your competition)
for a period of time so you can take a look at important business records and info.
After signing the purchase agreement there will be a Due Diligence period with contingencies
that will have to be met before the deal is closed. If those contingencies are not met or the books
and records are not exactly as represented you are in most instances able to pull out of the deal
and go on searching for other businesses—make sure you have all contracts/agreements
reviewed by an attorney before signing.
Get the Signed Purchase Agreement into Escrow

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Get the signed purchase agreement into escrow immediately and sign off any contingencies as
they are removed. Remember: TIME KILLS DEALS. Make sure you go through the Allocation
of Purchase Price in the beginning of the escrow process not at the end which happens most of
the time. By getting into the escrow process usually takes the deal out of play and out of reach
for other potential buyers.
The Costs of Starting a Franchise
First, let me say that as a general rule, I really like franchising a lot as a business model,
especially for new entrepreneurs. The way it is supposed to work is that an entrepreneur creates a
successful business, irons out the kinks, is able to turn it into a franchise system that most anyone
could follow, sells the system and brand to franchisees, and then supports those franchisees with
ongoing training, advertising, and other services. For a new entrepreneur, most of the mistakes
have hopefully already been made and therefore they are buying a business good to go.
But remember this, too: Rules are made to be broken, and not all franchisers are created equal.
Some are scrupulous, and others are not. Some give lots of training and support and are easy to
work with, and others don’t. Some do not have problems with their network of franchisees and
others have far too many.
So before you get too excited and start thinking with your wallet instead of your head, find out
the answers to these sorts of issues long before you sign any documents:
What are the real costs associated with the franchise? There are several fees that come with a
franchise and you have to understand them all to get the whole picture:
• The franchise fee: This is the charge to buy the system and use the logo, etc. Usually not
astronomical, it can run between, say, $5,000 and $50,000.
• The build-out: This cost may surprise you. If you buy a retail franchise, the franchiser
will want you to build the store, according to their specifications of course. This may
mean hiring an architect, leasing or buying a building, remodeling and so on. It easily
could be hundreds of thousands of dollars, or not.
• Other costs: What about equipment leases, monthly advertising fees, or ongoing royalty
payments?
What about exclusivity? In all likelihood, you do not want competing businesses of the same
franchise in your neck of the woods. Find out how big your exclusive territory is, what sort of
commitment you get, and for how long. And, if you do get exclusivity, do you also get an option
for new franchises in the area? Multiple units can be sweet.
What’s the deal with suppliers? If the franchiser mandates that you buy supplies directly from
the franchiser, or from a franchiser-authorized dealer, they better have a pretty nice deal in place
for you, too. If not, not only will your choices be limited, but you will be unable to shop for a
better price.
How much money can you reasonably expect to make? Maybe not surprisingly, few
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franchisors offer this sort of information, and the reason makes sense: If you don’t make as
much, you just might sue. So mum’s often the word on their end.
Because of that, and for other reasons as well, it is vital that you meet with as many current
franchisees as possible as part of your research. How much do they make? What is the franchiser
really like to work with? Are franchisees generally happy or unhappy with their choice? You can
learn these sorts of things best from current franchisees.
How many leave within two years? Either from failure or selling out, a high percentage of
dropouts is a bad sign indeed. By the same token, find out what one of these franchises goes for
on the open market, and maybe even more importantly, whether you even have the right to sell it
on the open market.
Franchising can be great, but you have to get answers to questions like these before plunking
down your hard-earned money and signing any contracts.
Five Franchise Tips
If you are thinking about purchasing a franchise, keep the following 5 tips in mind.
1. You are a customer to the franchisor. Many people believe that going into a franchise is like
joining a partnership where you, the franchisee, will be protected from failure. This is not true.
While franchisee companies have a much higher success rate than individual start-up companies,
up to 20 percent of all franchises do not do well. However, this failure rate is far lower than that
of individual start ups.
2. You and the franchisor have different goals. Although both parties; franchisee and
franchisor, have the common goal of building the brand, the franchisor’s goal is to sell franchises
and the franchisee’s goal is to service the consumer or end user.
3. You may not have an ongoing relationship with the franchisor sales representative. If
you are dealing with an independent agent or with one of the brokerage houses which represent
franchisors, chances are that although they are knowledgeable about the franchise, you will not
see that person after the point of sale. If you are dealing with a sales person salaried by the
franchisor, s/he will want to work with you in the future, and that may cause the sales process to
take on a different perspective.
4. You have legal rights when dealing with the franchisor. Be careful if the franchisor tells
you how much you can earn if you invest in their system. The Federal Trade Commission (FTC)
requires that franchisors who make such claims provide you with written substantiation. Be sure
to ask for and receive this. If they don’t provide it, consider the claims to be suspect.
5. You are protected by the UFOC. The Uniform Franchise Offering Circular (UFOC) defines
what the franchisor will do for you and expects of you. You must carefully review the UFOC
before purchasing the franchise. The FTC protects franchisee prospects up until the point of sale,
but after this, the UFOC becomes vitally important. Read more.
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SCORE has over 10,500 volunteers ready to help mentor you, many of whom have franchise
experience. Seek help from your nearest SCORE office or online counselor. SCORE counseling
is always free and confidential.
Read Part 1, Should I Buy a Franchise?
Read Part 2, Selecting the Right Franchise for You
Read Part 3, Growing the Successful Franchise
What is the UFOC?
Should I Buy a Franchise?
When most of us think about franchises, we are referring to the business-based franchise like the
top 500 franchises published in Entrepreneur magazine each year. Entrepreneur’s 75 different
categories range from automotive to services, but they all have one thing in common—a
systematic method to deliver services or products.
Franchising is not for everyone, but for an individual who has limited business experience or
someone who enjoys working within an established system, franchising can be the best possible
path.
Franchising is simply a method of distributing products or services, with at least two levels of
people involved. The first is the franchisor, who lends his trademark or trade name and a
business system. The other is the franchisee, who pays a royalty and often an initial fee for the
right to do business under the franchisor’s name and system. The contract binding the two parties
is the “franchise,” but that term is often used to mean the actual business that the franchisee
operates.
Do You Have What It Takes?

Before you go into any business, franchise or not, it is important to first ask yourself these
important questions:
• Do you have strong motivation and drive to achieve success?

• Do you have confidence and enthusiasm for the product or service you will be
representing?
• Are you able to motivate yourself and others and train employees?
• Do you have experience in the industry?
• Are you willing to promote your business and the brand?
The Franchise Lifestyle

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Figure out if a franchise lifestyle fits into your own lifestyle. Do you have the necessary support
system to open this franchise? Does your family support this decision? Do you have an
accountant, banker and attorney who will assist you in your start up and growth phases?
The Importance of the Brand

In the franchise world, belonging to a system gives you, the franchisee, a competitive edge,
which partially compensates for the cost of being in the system. The main value in franchising is
the identity related to the brand. McDonald’s is the largest franchisor in the world with over
31,000 units. Due to consistency of product delivery and global advertising, McDonald’s has a
major advantage over, say, Joe’s Diner.
It is important to remember that since the brand’s value is more important than anything else,
including the service or the product, the customer’s loyalty is to the brand, NOT the individual
franchisee. No consumer walks into a Dunkin Donuts franchise because they know the owner.
They know Dunkin Donuts. What this means is that within a franchise system, you have to play
by their rules. You couldn’t open a McDonald’s and sell pizza, for example.
Your success as a franchisee is based on your willingness to work with in a pre-existing system,
and help to build the value inherent in the brand. This kind of a business is not for everyone, so
you have to be honest with your ego on this one.
Choosing a Franchise
So let’s say you are willing to work within a system promoting their brand or service and you are
not concerned that customer loyalty is not directed to you personally. Now what? What kind of
business should you think about?
The choices can be overwhelming. Approximately 45% of all retail sales are franchise driven—
everything from tires to laser hair removal. One out of every 12 businesses is a franchise, with a
new outlet opening every 8 minutes. In addition, there are over 75 industries to choose from,
with many of those industries having dozens and dozens of options. How do you decide?
Go back to your personal likes and dislikes. Don’t gravitate to fast foods just because you
already know how to make a sandwich. Some top industry categories include auto, children,
cleaning, exercise and chicken. Find an industry that you wouldn’t mind doing and thinking
about 24/7. Then research all the different options within that industry. Some good resources
include Entrepreneur Magazine’s annual top 500 franchises list, the International Franchise
Association, franmarket.com or even Google.
Taking the Next Step

You have decided that you don’t mind building the brand and you confess that you will most
likely have a higher success rate within a franchise than on your own. You also want to be a part
of the annual $1.55 trillion dollar franchising revenue and you have selected your industry. Now
what?
Selecting the Right Franchise
In Part 1, you checked out your franchise options and decided to purchase a franchise. You have
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decided which one of the 75 franchising industries is right for you and have narrowed it down to
maybe three or four different companies. The big decision now is to select the one franchise that
is right for you.
Business demands that we think with our head and our heart, but when doing research, the head
must take the lead. You are risking your money, your time and your career, so the choice you
make must be congruent with your lifestyle and needs. Researching each option is the key. Here
are five simple steps to help you.
1. Contact the franchisor directly and fill out a preliminary application form.
This tells the franchisor you are serious and a viable customer for his franchise. You will likely
have a series of interviews with the franchisor.
2. Receive and review the company’s Uniform Franchise Offering Circular (UFOC). Once
the franchisor believes you are serious, he will send you a copy of the UFOC which contains 23
important parts to review. The UFOC very clearly defines what the franchisor will do for you
and what s/he expects of you. You will probably want to have an attorney review the UFOC;
however, it is crucial that you understand every statement in each of the 23 parts.
The Federal Trade Commission (FTC) protects franchisee prospects up until the point of sale,
but once the franchise is purchased, the FTC looks upon the business as any other start up, so the
UFOC becomes vitally important. More on the UFOC.
3. Visit locations and talk to existing franchisees. This vital step will help you to determine the
level of satisfaction of other franchisees in the system. You need to know if the franchisor
delivers his promises and research is the best possible way to find that out. In addition, it gives
you a chance to get an inside look at the business to figure out if you can see yourself in the
franchise.
4. Find answers to important questions. What is the initial purchase price? What are the
royalty fees? What kind of training and ongoing support is provided? You will most likely be
expected to participate in a national marketing budget. What percent of gross is expected? How
often do you get new marketing materials? Do you have sufficient funding for ramping up and
maintaining until profits begin?
5. Research the brand and operating system. Will customers gravitate towards your product or
service because they know the brand? Has the franchisor provided an operating system which
has been proven successful and is easy to learn and use? Will being part of the franchise system
help in competing in the market place? Will you be a part of a growth industry?
Growing the Franchise
When most of us think about franchises, we are referring to the business-based franchise like the
top 500 franchises published in Entrepreneur magazine each year. Entrepreneur’s 75 different
categories range from automotive to services, but they all have one thing in common—a
systematic method to deliver services or products.
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You, the franchisee, have supported this system with your royalties and initial purchase price and
it now will be one of your biggest assets as you decide to grow your business.
Since the systems for the franchise are already in place, your biggest concerns as you grow your
business are:
• Finances –having sufficient capital and resources

• Location – for many businesses, location is critical. More on location.
• Employee training
• Culture transition
Employee Training and Culture Transition

You have worked the business in the first franchise location, so those employees have translated
your style into their work habits. They have seen by example how to handle a customer. To
expand, you are required to hire people who will accept your style and be able to train other
employees in that culture without your presence. Turnover of employees is expensive and time-
consuming. Finding the right managers who can train and translate your wishes should be high
on your priority list before taking on that second location.
How will your role change? Will you still manage the first location with a manager in the second
or will you try to manage both? Trying to be in two places at once is difficult if not impossible.
Will you put a manager in each location and personally tackle marketing and public relations?
Can you relinquish control? It may be harder to do than you think.
Due Diligence
Be sure you exercise due diligence and investigate the following before you decide to expand:
1. Figure out why the franchisee is selling. If it’s because the franchise is not successful, you
need to figure out why. Lack of motivation or self-discipline, poor territory, inability to keep
employees—there could and will be many reasons. You have the advantage of knowing the
system so it is easier to differentiate perception from reality.
2. Protect yourself from liabilities. You will want to do a net asset sale to protect yourself from
liabilities connected to the present owner with an indemnification clause. Even though s/he may
have given you several reasons they want to sell, you may never know the true reason, so make
sure to protect yourself from any outstanding legal actions.
3. Check financial statements. It is mandatory to check out the owners financial statements for
5 years or as long as they have been in business. What has the growth pattern been over this time
period? Look at the sales tax returns and the income tax returns. It is easier to determine accounts
payable, but equally important, in some businesses, is the accounts receivable. Often last minute
games are played with receivables.
4. Can you assume an existing lease? It is important to check with the landlord if you are
taking on an existing location. Many resources are available online to define due diligence
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requirements for the purchase of a business. Read one from SCORE.

5. Right of first refusal. In many franchise agreements, the franchisor has the right of first
refusal. That means if the existing franchisee has someone who is willing to purchase the
business, the franchisor has first right to come in and make the purchase at that price.
How to Grow the Franchise

There are two basic ways to grow your franchise:
• Purchasing another territory. One way to expand is to purchase a territory from

another franchisee. The same due diligence must take place here, however, as with the
purchase of any business.
• Purchase more territory or locations directly. Exercising this option means you will
adhere to the same requirements published in the Uniform Franchise Offering Circular
(UFOC) for the given year. UFOCs need to be renewed each year within the state of the
sale. California and New York are the two states with the strictest requirements. More on
UFOCs.
In many ways, growing a franchise is easier than growing an independent business. Take
advantage of the network of other franchisees in the system. You all share a common goal and
work within a given framework. Call them for marketing, PR and management tips.
Marketing & Advertising a Small Business for Sale Successfully
It always amazes me when a small business owner or business broker goes to sell a business that
they usually don't know how to successfully advertise or market a business for sale. They go to
all the trouble of getting it ready for sale, collect all the info needed for the sale, and then "rush"
the advertising portion of the process. After posting their limited, ineffective advertising they
complain that the buyers they are getting calls from are "unqualified," "unprofessional" and
"time wasters."
Hundreds of business buyers interviewed for my book either in person or in my focus groups
gave me many valuable insights on how owner/sellers and broker/agents can "get it right" when
they go to advertise a business for sale.
1. More Information Is Better than Less
Most (business for sale) advertisers think that less is more—that buyers will be more apt to call
about a business for sale if little information is given (the old tease strategy). I have found this
has quite the opposite effect on buyers. Buyers in many instances will bypass the business
feeling that since there is little information, the broker/agent probably doesn't know that much
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about the listing and they don't want to waste their time on such a business.
Buyers and successful advertisers on business for sale websites have told me that more is better.
In fact when you give a lot of information it gives buyers a sense of comfort—they feel they
already know a lot about you before they even meet you. Another reason this idea works so well
is that by the time a buyer reads your detailed description in your ad they are 80% pre-qualified
when they do call or email you—saving you a lot of time. Buyers tell me that they feel more
"trustful" of the seller with this type of advertising, which helps in the negotiating and selling
process later down the road.
I understand that confidentiality in many cases is paramount when selling a business, however
you can still be detailed about the business being sold without giving out the identity or exact
location of the business being sold.
Motivated serious business buyers find it extremely helpful if you write about the following
information in the detailed profile part of the ad:
• Length of time in business

• How many employees – part time and full time
• General geographic area of the business location
• History of the business
• How you would grow the business in the future – give them a "vision"
• General industry info – how it's growing, changes etc.
• Competitive analysis
• General info on surrounding geographic area, especially if it's a lifestyle business
• Include great pictures of the business if you can
• Know what your true adjusted net income is and how you figured it
• Write about the financial picture of the business – growth, changes, history, etc
• Let them know if the business is computerized, has a great website, etc.
• Always include multiple phone numbers where you can be reached
You will find that the quality of buyers calling you about your ad will be very high and you will
spend much less time answering the same old questions over and over.
2. Make Your Ad Stand Out – Feature Your Ad for More Exposure
If you have the advertising option to "Feature" a business and get more exposure by having it
appear in the top of listing results or with pictures it is usually worth it—many more serious
buyers will see it more repeatedly and respond quicker.
3. Track Your Advertising Results
Make sure you know where your buyers see your ads. Track your results. Ask every caller where
they saw your ad. Possible use a different voicemail phone numbers for each media in the early
stages to determine where your getting your response. See which sites your emails are coming in
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from. After you determine where the better, more qualified buyers are coming from stick with
that media for your advertising.
4. The First 30 to 45 Days Are Critical
Thousands of motivated buyers will first see your ad when it first comes out and first
impressions are important. If you have all the info in your advertising, can explain any nuances
over the phone when called, you will have a better chance of a meeting with buyers quickly.
5. Don't Stop Your Marketing/Advertising Until You Have Check in Hand
50% of all offers to purchase businesses are never completed. Make sure you keep your
advertising running until you have the final check from the buyer. Make sure you have backup
buyers at all times. Keep taking phone calls/emails from interested parties, record their names in
a folder and get back to them should things sour with the current buyer. Keep things moving
forward at all times. I can't tell you how many times I have received thank you calls from
grateful advertisers (owner/sellers and broker/agents) who followed this advice.
6. Get Back to Potential Buyers Immediately
One of the biggest complaints I hear from business buyers about advertisers is they take a too
long of time to get back to them. Make sure you call back a buyer within 4-8 hours of receiving
their phone call or email. Remember you are in competition with other businesses for sale—they
are calling and emailing others also.
7. Putting It All Together
Advertisers who follow the above advise when selling their small business will have over a 90%
success rate of selling as long as other aspects of the sales process are in line such as a realistic
selling price and terms, etc.
Selecting A Business Broker to Sell Your Business—12 Quick Tips
1. Know up front what your expectations are in a business broker who will be selling your
business. Make sure you discuss and convey those expectations to the business broker you select.
Direct and open communications about expectations and other issues with your business broker
is critical in selling your business.
2. Ask the business broker how they are going to advertise and get the word out about your
business for sale. Make sure they allocate an adequate budget for advertising and marketing to
sell your business. It takes approximately a budget of $400-$1500 in advertising and marketing
costs to get successful exposure in the marketplace and reach the best qualified business buyers.
3. Have the business broker determine the valuation of your business before you sign a listing
agreement. Ask them about a cash price vs. a price with terms involved. This is very important
since over 70% of all small businesses never sell, usually due to the price being too high for the
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marketplace or unrealistic terms and conditions on selling the business. There are many ways to
structure a deal—you need a business broker who can be honest with you and discuss these
variances with you.
4. If the sale of your business is confidential, you need to know how the business broker is going
to keep the sale of your business quiet while still marketing it. Make sure the business broker is
using a professional Confidentiality Agreement form for your protection and keeps these on file
at all times.
5. Make sure the business broker you select has prepared your business for marketplace—are all
the financials and tax returns in good order and understandable? Do you have all documents
ready for review like your lease agreement, equipment leases, and contracts with vendors, etc.?
Time kills deals and if your business broker doesn't have it together, business buyers will leave
fast for another business for sale.
6. Make sure the business broker you select to sell your business is comfortable with selling your
type, location, and size of business. It amazes me to see how many owners pick a business broker
quickly out of the yellow pages without doing much homework on them. This is probably one of
the most important decisions you will make for your business—make sure you pick the right
business broker to sell your business.
7. Returning phone calls in a timely manner is critical. Make sure the business broker you select
is good about getting back promptly to potential buyers. You would be surprised how many
business brokers delay calling back buyers—remember the sale of your business is in
"competition" with the sale of thousands of other businesses so you want to make sure your
business broker is responsive in getting back to potential buyers.
8. Time kills deals. Make sure the business broker you select is responsive in getting things
accomplished and moving things along. Deals tend to go south when parties aren't moving
forward on a deal at all times.
9. Constant and continuous communication with your business broker is important. Make sure
you let your business broker know what your expectations are for letting you know how things
are progressing (i.e., once a week updates, only call when something is going on, etc.) It’s up to
you; however, it is important that sellers and business brokers have at least weekly dialogues to
see how things are moving forward. Find out how many buyers have responded, and any
feedback on all buyers who have expressed an interest in your business for sale.
10. Make sure you pick a business broker who spends the needed time on your business for sale.
Some business brokers take on too many listings knowing that some may not sell—it's a numbers
game to them. You need someone who understands your business, what your expectations are,
and who can properly get your business sold.
11. Businesses on average typically take 6 months to 2 years to sell. If your business broker does
his job correctly (and utilizes the methods within this article) your business should easily sell
within 6 months.
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12. The listing agreement/contract should include: length of time they will be representing you
(3-12 months is typical), how they are going to advertise and market your business for sale (get
the details and budget), how often they should be contacting you about buyers and deal updates
(at least weekly), what happens when the agreement expires (with all the buyers who have signed
confidentiality agreements during this period, what happens if you find a buyer), what is the
commission when the agreement expires, will they cooperate with other business brokers/agents
on your listing (this opens the market to more buyers), etc. Get everything in writing so you both
know what the expectations are.
Selling A Small Business—12 Crucial Steps
Only 30 percent of all businesses for sale that are put on the market are sold—a surprising
statistic to most owners, agents, and business brokers trying to sell a business. If however you
follow the steps and tips below your chances of selling dramatically increases.
Have All Records Ready Before You Go To Market
Have these items ready before the business goes on the market to be sold: The last three years of
federal tax returns for the business being sold, the last three years of financials (profit & loss
statement, balance sheet), the last three years of monthly bank statements, copy of current lease,
list of all equipment being sold with the business, etc. Many parties during the selling process
will need this info—serious business buyers, your landlord for a new lease for the new buyer,
lenders (for a possible loan/financing for the buyer, note buyback firm (in case you want to sell
the note for cash after the business sells).
Also make sure you know what the correct Adjusted Net income has been for the last three years.
Serious business buyers will want to know this. Adjusted Net income is: Net Income Owners
Salary Depreciation Interest Expenses Other Business Expenses Written Off (Deducted) That
May Not Necessarily Be Business Expenses To The New Owner Of The Business.
Have a Professional Business Valuation Performed
Getting a 3rd party professional business appraisal/valuation is important and critical for the
process. 70% of all businesses NEVER SELL usually due to too high of price (and/or a bad deal
structure) placed on the business being sold. Getting a professional 3rd party valuation is well
worth the expense and will be utilized by many parties during the selling process: possible
business buyers, lender/financing companies for the buyer, and others.
Keep a Folder of All Info/Contacts
Keep a folder of all contacts, notes, and paperwork for your business for sale transaction. Keep a
log of all buyers who contact you—get their phone numbers, email address and keep notes about
them (this will come in handy down the line, trust me). You want to make sure you have backup
buyers in case your first choice drops out during the selling process. Keep all escrow info,
purchase agreements, signed non-disclosure/confidentiality forms, contact phones of CPAs,
Attorneys, etc. and other pertinent data/info in this folder.
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Write up a Comprehensive Summary of the Business

Buyers are going to need to know many details about the business being sold. Instead of having
to re-explain to many buyers about the business (and probably forgetting many important facts)
make a one page summary of the business being sold. Include: History of the business, date
established, number of employees, important attributes about the business and surrounding area,
what you would recommend to a new buyer to increase business once they take over, what
geographic area the business covers, the competition, the reason for selling, how much training
will be provided after the sale, etc.
Confidentiality Agreements are Important
Have all potential business buyers sign and date a Non-Disclosure/Confidentiality Agreement
before giving out any info. Make sure potential buyers understand how important it is to keep the
sale of the business confidential and that there are legal ramifications if they don't.
Get Controlled Maximum Exposure on the Sale of the Business
One of the most important items is to make sure that many, many buyers (ones that are qualified
to buy) see the business is for sale. Expect to spend $400-$2000 for advertising and marketing to
adequately get the word out to the right business buyers. Yes it does only take one buyer to buy
the business, but you want to make sure you have multiple buyers (and backups if possible)
ready to go.
Get the Business you are Selling Pre-Qualified For Financing
You are probably saying "that is the buyers responsibility." You couldn't be more wrong. This is
a critical step in ensuring that possible buyers can get financing in the first place to buy the
business. This is highly important, since if a buyer can't get financing from a lending institution
that means the owner will have to take back a note, or sell the note after it sells for a discount etc.
By doing this step early you will know what some very important options will be for potential
business buyers without a lot of time being wasted. Remember: TIME KILLS DEALS. Get this
step done before you go to market.
Keep the Negotiating & Communications Moving Forward
Make sure when you are negotiating the contract, allocation of purchase price, new or
restructured lease, etc. always be moving forward. Don't let any situation sit too long–it will
most likely kill the deal.
Get the Signed Purchase Agreement into Escrow
Get the signed purchase agreement into escrow immediately and sign off any contingencies
quickly. Make sure you go through the Allocation of Purchase Price in the beginning of the
escrow process not at the end which happens most of the time.
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Due Diligence by the Buyer Should Not Last Forever

Due diligence by the buyer should only last 4-14 days. Since you are going to be organized and
ready with all important info and documents, this is all the time any competent business buyer
(and CPA for the buyer) should need to investigate the business for sale. You do not want the
business off the market for a prolonged period so be firm about the length of time for Due
Diligence. Get it in writing (purchase agreement) and make sure all parties to the transaction stay
with the schedule.
The Business Isn’t Sold Until you have the Check in Hand
Always continue to collect names of business buyers and their phone numbers etc. even if you
are in escrow (50% of all deals fall out for one reason or another) You want to make sure you
have a successful deal and a business buyer that is going to complete the deal. Try to have 2-3
potential business buyer back-ups who are willing to take the buyers place within the escrow
should the current business buyer drop out.
Keep a Positive Attitude—It Will Happen
Keep calm and a have a positive attitude. By following the above steps you will definitely find a
qualified buyer for your business. Things happen pretty quickly when selling a business. If you
are prepared, follow through with all buyers professionally and keep up on the selling process,
you will be successful.
Small Business Purchase Financing—Obtaining Your Down Payment
Most lenders insist that business buyers/borrowers "have some skin in the game" such as a down
payment on a business purchase. Most lenders require anywhere between 10%-30% down on a
business purchase depending on the type of business, the deal structure, and the lenders general
requirements.
All lenders are different and many times their requirements change throughout the year. Below
are a few ideas that can be utilized to maximize the amount for a down payment on a business
purchase and to obtain financing to complete your deal.
Here are a few ideas of where to source possible sources for a down payment:
Cash & Savings - An obvious source for a complete or partial down payment. You do not want
to utilize your entire pile of cash since lenders will be accessing your "personal liquidity".
Lenders do not want you to utilize all your cash on a down payment in case the new business you
purchase has a few bad months financially. They want to make sure you have the funds
personally to pay your families monthly bills etc.
Cash Gifts from Family Members - Many lenders will allow gifts of cash as long as there are
"no strings attached" i.e., they are not meant as loans. As long as a letter from the family member
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providing the funds spells out that the gift is solely for a business purchase and not a loan you
should be fine with most lenders and financial institutions.
Home Equity - With home equity growing rapidly many buyers utilize these funds to either buy
a business or utilize it for a down payment. Before you pull all your funds out of your house for a
down payment make sure it won't jeopardize the deal and structure of the deal in case the equity
(or partial equity) would be needed to help secure a loan.
Partial Owner Financing - Usually the buyer will put down 20% to 50% (utilizing one of the
methods included in this article), and the sometimes the owner will carry back a note of between
10% to 50%. Interest rates vary on seller notes but they usually will be higher than banks or
commercial resources. Even though the owner takes back a note, the buyer of the business still
needs to "inject" a down payment between 10% and 30% of the total purchase price.
Retirement Funds/Plans - Many buyers have built up sizeable amounts in their work 401K
plans. There is a way to tap this money tax free—put it into a "special trust" that then buys the
business for you. Many corporate refuges/individuals coming out of corporate America are going
this route.
They key to all this is to be creative - possibly tap several of these sources to get your down
payment funds together. Keep in mind to start this process early (pre-qualify and arrange for
your down payment to be liquid and ready so that when you do find a business to buy and need
financing you are ready to go.
What is an FDD?
A franchisor will send you the company’s Franchise Disclosure Document (FDD) once you have
filled out an application and indicated serious interest in the franchise.
The FDD very clearly defines what the franchisor will do for you and what s/he expects of you.
There are 23 important parts to review.
The Federal Trade Commission (FTC) protects franchisee prospects up until the point of sale,
but once the franchise is purchased, the FTC looks upon the business as any other start up so the
UFOC becomes vitally important in providing you protection at this point.
You will probably want to have an attorney review the FDD, but it is crucial that you understand
every statement in each of the 23 parts.
• Items 1 through 4 – describe the franchisor, his background, business ethics and
possible bankruptcy history.
• Items 5 through 10 – deal with the fees, royalties, advertising fees and all financial
arrangements including restrictions as to sources of products and services.
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• Items 11 through 19 – detail the franchisee’s obligations and provisions in the

agreement. These are very important as they define what restrictions there are on
products that can be sold, transfer assignments, terminations, dispute resolutions and the
like.
• Items 20 through 23 – provide a list of existing franchisees, both active and those who
have left the system. They also provide financial statements of the franchisor and copies
of contracts used in connection with the franchise offering, including the Franchise
Agreement.
Item 20, the list of franchisees, is one of the most important items and provides a valuable
opportunity to call or visit many existing stores or services. It is crucial that you call many of the
existing franchisees to determine their level of satisfaction. You need to know if the franchisor
delivers his promises, and this is the best possible way to find that out.
SCORE has over 12,400 volunteers ready to help mentor you, many of whom have franchise
experience. Seek help from your nearest SCORE office or online counselor. SCORE counseling
is always free and confidential.
Read Part 1, Should I Buy a Franchise?
Read Part 2, Selecting the Right Franchise for You
Read Part 3, Growing the Successful Franchise
5 Tips on Buying a Franchise
Disaster Assistance
Are You Waiting for a Market Turnaround? Don’t. Act Now.
If you are waiting for the market to turn around, you are losing ground. Take control of your
future. You can steer your business to accelerate your success.
Take a deep breathe and take a hard look at your company. Right now, today is the time to act.
Start planning how you can weather this storm and prepare for the good times when the recession
recedes.
Get good advice. As an entrepreneur, you are a smart risk taker. My question is, “Do you have
all the answers?” No. Well, no one person knows it all. Surround yourself with a variety of
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experts who can add to your knowledge and expertise. SCORE mentors offer free and
confidential advice. They are business owners and corporate executives who have successfully
run companies. Ask a mentor for advice or find a SCORE office in your community.
Pull in your horns. At this time, postpone plans for expansion. Reduce inventory orders to
minimums and review existing contracts to determine the possibility of delays or cancellation.
Also, suspend the addition of new products until demand is confirmed. These steps will help
avoid unnecessary expenses.
Conserve cash. Collect accounts receivable and contact suppliers to extend accounts payable.
Focus on delaying expenditures for new equipment and expanded inventory. To cover any
additional work, use freelancers and contractors rather than hiring new staff. Also, do not add
new employee benefits or pay bonuses. Employees are usually willing to forgo perks in order to
keep their jobs. When necessary, consider reducing your staff.
Use time wisely. Think about contracting tax and payroll preparation to outside suppliers if you
would use your time more productively for sales development or floor participation. Conversely,
if these items can be handled more effectively and less expensively in-house, then transfer them
to another employee.
Utilize marketing. Develop aggressive plans to improve sales volume. Consider special events
to attract customers. To get free publicity from the media, look for newsworthy items about your
business. Get to know reporters or publishers and keep them informed or offer story suggestions.
Collect email addresses from clients & prospects and follow up with monthly messages.
Consider personal visits to connect with existing clients and find out how their needs have
changed and how your product or service can help.
Disaster Insurance Keeps Your Business Running
If you suspected that a car had faulty brakes, would you feel safe behind the wheel? Probably
not. Even the most skilled professional drivers will not trust their lives to something that may or
may not work when it’s needed. The same holds true for operating a small business. When
you’ve invested so much time and effort in your enterprise, it makes sense to have a sound
business insurance policy to protect it.
Business insurance guards against the consequences of fire, theft and liability, and other risks.
But your checklist for business protection should not be limited to the obvious. Special tools or
equipment used in your business may require special coverage. In the event you had to close
down your business for a period of time, business interruption insurance would help cover some
of your ongoing expenses. At first, guarding against a highly unlikely occurrence may seem
unnecessary, but remember that even a relatively minor event can cause disrupt a business and its
surrounding economy for several weeks. A catastrophic event could just as easily threaten the
long-term viability of your business.
To help analyze your insurance needs, seek out a reputable and qualified broker agent or
consultant to explain insurance options. Insurance is a complex and detailed subject, and a
qualified professional will recommend coverage options and help you avoid financial loss. He or
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she will also help you evaluate the kind of protection and level of insurance coverage your
business needs. You don’t want to spend money on needless insurance or to guard against
extremely remote possibilities. Insurance is a fixed expense, and you should make wise choices
before increasing that amount.
Before purchasing a policy or increasing your insurance coverage, consider all the possible ways
of holding down the costs. Cover the most risky and largest peril first, then work down your list
of priorities. Don’t get needless coverage, but don’t try to save money by under-insuring or
overlooking risks that could cause significant loss. If the probability is small, the premium will
be also. Use a deductible as high as you feel your cash flow will allow, given the need to use
insurance in the event of an unexpected occurrence.
Many package policies are tailored especially for small businesses, and provide the less-
expensive option of adding riders as opposed to buying separate policies. As such, you should
usually buy all of your coverage from a single agency or broker. If you do opt to purchase more
than one policy, avoid duplications of coverage. Make sure the same risk is not covered under
two different policies.
Crisis Planning: You Can’t Do Too Much of It
The old adage—the best defense is a good offense—also applies to crisis planning. As a small
business owner, you have to ask yourself some difficult questions about potential disasters: What
if the “worst” did happen? How would it affect my business, my family, and my employees?
Would we survive if the business were shut down for weeks, months, or perhaps the entire
revenue season?
The possibilities may not be pleasant to think about. But a proactive approach to managing
potential disasters may help mitigate the effects on your business, and lessen the time and
resources necessary to resume normal operations. Here are some tips for developing a crisis
management strategy for your business:
• Begin by identifying potential hazards. Every part of the country is susceptible to some
kind of natural disaster—hurricanes, floods, earthquakes, and ice storms, to name but a
few. Likewise, man-made disasters such as oil or chemical spills, fires, and civil unrest
can occur almost everywhere. The fact that your area has not experienced such events is
no guarantee that they cannot or will not happen eventually, and with little or no warning.
• Develop contingency plans to continue operations if your office, plant, or store is
unusable. Assess the feasibility of operating out of your home or a nearby storefront, and
what may be necessary to quickly transport critical items such as computers, inventory,
and equipment. It may also be helpful to maintain a secure off-site inventory of any hard-
to-replace parts or supplies.
• Take steps to ensure the safety of employees and customers. Every business should have
an evacuation plan, even if you lease the space. Make sure that telephone numbers for an
emergency are clearly posted, and that you have updated emergency contacts and
essential medical information for all employees. Training staff members in CPR and first
aid is also a worthwhile investment for any business.
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• Perform a safety inventory of your business location. Ordinary items could cause
problems, especially anything that can move, fall, break, or cause a fire. Make sure
shelves are securely fastened, and that large, heavy objects are placed near the floor.
Store important documents, back-up copies of computer records and software, and other
vital information in a safe, fireproof container. Clean and test smoke detectors regularly,
and change the batteries at least once a year.
• Have proper emergency equipment ready and accessible. You should have well-stocked
first-aid kits, fire extinguishers, and fully charged batteries for things like portable
telephones. If you have portable generators for emergency power, make sure that the fuel
is fresh and safely stored to prevent possible fires. For locations that are vulnerable to
recurring events such as hurricanes, maintaining a supply of appropriate materials such as
plywood to protect large windows will free you from scrambling for these hard-to-find
items at the last minute.
Review your business insurance coverage and make updates where necessary. At a minimum,
your coverage should be enough to get your business back in operation, and cover the
replacement cost of vital facilities. Also know what your insurance does not cover. For example,
most general casualty policies do not cover flood damage, and they may require riders for
windstorms, sewer backups, or earth movement. Business interruption insurance will assist with
ongoing expenses during a forced shutdown, and help you meet payrolls, pay vendors, and
purchase inventory until you return to full operation. And don’t overlook the extraordinary costs
of a disaster such as leasing temporary equipment, restoring lost data, and hiring temporary
workers.
Small Businesses Can Face Economic Cycles With Confidence
Dealing with an uncertain economy is never easy, especially for small businesses. Unlike their
larger counterparts, small businesses rarely have the resources to monitor and take corrective
action for every trend and issue. And even those owners who have weathered numerous business
cycles may be faced with new circumstances that confound their otherwise successful instincts
and knowledge.
While there is no crystal ball that accurately predicts the future, small business owners can take a
number of steps that will help their enterprises endure the worst of times, and position them for
success when conditions inevitably improve.
• Consult your bank about your business’s financial status. Lenders have vast
experience in economic cycles, and can advise you on issues specific to your business
and industry. It may also be helpful to arrange a line of credit. You may not need it for
several months or at all. But if a lag in cash flow occurs, you will have a ready source of
bridge money in place.
• Make sure you have good relations with your creditors. You may find it necessary to
renegotiate terms, but overdue bills and inconsistent payment practices will not help your
position. What’s more, your creditors may be experiencing financial difficulties as well.
Any flexibility will hinge on whether they perceive you as a reliable partner, or a risk.
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• Similarly, keep a close watch on your receivables. Follow up with whoever owes your
company money and make sure they are meeting their terms. Be firm when dealing
problem accounts, but also be willing to negotiate where appropriate. It may take only a
matter of months for a struggling customer can become a highly stable source of income.
If you can accommodate such situations without adversely affecting your company’s
financial position, everybody wins.
• Make sure expenditures can be justified, and that they contribute to the financial
health of your business. You may find it necessary to redirect money to areas that will
enhance business performance. If you carry an inventory of products, check the accuracy
of your records and procedures to prevent losses. It may also be helpful to adjust your
order amounts to match projected sales.
• Review your operations and expenses on a regular basis. If you monitor your
profitability on a monthly basis, it’s a good idea to do it weekly or biweekly during slow
economic times. Likewise, review your business plan more often. Monthly or quarterly
reviews will make it easier to make adjustments and keep your business on track.
• Step up your marketing efforts. Many businesses mistakenly see marketing as a luxury
when money is tight. The truth is that this is the time you need marketing most. Along
with reassuring your current customers that you are still there to serve them, marketing
can help you reach new markets that will sustain your business now, and facilitate its
growth in the future.
E-Business
Choosing a Vendor To Process Your Online Transactions
To process online orders, you must offer online payment options. The most widely used form of
payment currently is the credit card. Marketing studies show that you'll lose 60 percent to 80
percent of your potential orders if your Web site is not set up to accept credit cards; they also
show that if you offer credit card payment, not only will you receive more orders, but those
orders will be substantially larger.
Credit cards enable impulse buying, reassure customers of your legitimacy, and simplify your
billing. Other methods of collecting payment are becoming available and include charging
purchases to a phone bill, using electronic funds transfers (EFT), paying by electronic check and
various forms of prepayment. Each of these methods requires payment processing either in the
form of software added to your Web site or by linking to a payment processing service.
Understand Merchant Accounts and Their Fees

To accept credit cards, you must establish a merchant account, a special bank account for
handling the revenue (and fees) from credit card transactions. Your merchant account provider
(MAP)—a bank or other institution that processes online credit card transactions—will verify the
credit card, process the transaction, and deposit the results into your account, usually within two
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to four days.
Evaluate Alternative Online Payment Methods

Credit cards still reign as the leading method of payment for online purchases, but other payment
options are available. Your product and your customers' buying preferences will influence which
payment methods you accept. In other countries, credit cards are not as pervasive, so you may
want to consider offering alternatives for your international customers.
Offering multiple payment options on your Web site, if you can afford it and maintain your
profit margin, is a means to increase sales by increasing customer convenience and confidence.
Many alternative methods are better suited to micro-payments, charges under $1, because the
processing costs are often lower and credit card merchant-account fees don't apply.
Determine The Fee Structure That Maximizes Your Profit Margin

Not every product sells the same way, and not every merchant account provider charges you the
same way. Choose a provider that suits your business. Begin by considering the nature of the
products you sell—are they large and expensive? Perhaps then you ought to seek a MAP that
offers a higher flat-rate transaction fee and minimizes the discount rate, since even a hefty $1
transaction fee will be far lower than a 2.5 percent deduction from the charge. On the other hand,
if you rely on small, high-volume sales, even a $0.30 transaction fee can erase your profits.
Specify Your Technical Requirements

Different MAPs require different “gateways” on your site. These gateways are the pieces of code
that transmit your customers’ orders to and from your bank’s transaction authorizing agent. If
you plan to manually process your orders, a secure Web form might be good enough to capture
credit card information that you can process offline.
Evaluate Your Business's Credit-Worthiness

MAPs, like most banks, pay close attention to the companies with which they do business. Such
factors as your company's length of time in business, outstanding debt, debt payment history,
goods and services offered and even your personal history (for new businesses) will affect the
fees your company pays to process credit card transactions on the Net.
Find MAPs You Can Work With

Many merchant account providers refuse accounts to start-up firms or firms and individuals with
bad credit histories. Some MAPs will not accept "high-risk" accounts, a term that usually
encompasses adult sites, online casinos, and sites operated by firms outside the MAP's own
nation. Others refuse to process any transactions that originate on the Internet—even from their
own existing brick-and-mortar clients—or may require that you create a separate merchant
account to process orders that are not taken face-to-face but are received by mail, phone, or via
the Internet.
Compare Fees and Technical Capabilities

Once you've developed a list of merchant account providers who might offer you an account,
you need to compare the different MAP offerings. Be certain to ask detailed questions about each
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MAP's technical requirements, and make sure your system can work with your MAP's gateways
—the software that actually submits your customers' credit card information for payment
authorization.
Minimize Credit Card Chargebacks

Discussion about consumer credit card protection for Internet purchases has become intense. But
the fact is that U.S. federal law limits a consumer’s liability for unauthorized charges to $50,
whether the purchase was made face-to-face or on the Internet. No such protective legislation
exists for merchants, however, and they bear the full cost of fraudulent charges as chargebacks
from their banks.
When a fraudulent credit card transaction takes place without the physical card being presented
to the merchant, or funds are uncollectible for some other reason, merchants are charged the sale
amount by the cardholder's bank. This is known in the industry as a chargeback. Merchants may
also be asked to pay penalty fees in addition to the cost of the original charge. Though it has not
been as hot a topic for e-tailers, credit card chargebacks pose a serious threat to profits. To
reduce revenue losses due to credit card fraud, online businesses need to take steps to reduce the
risk they take with every order received through their Web sites. Find out how credit card
chargebacks occur and what you can do to protect yourself.
Secure All Your Transaction Data and Prevent Fraud

Credit card information is extremely sensitive, and plenty of villains are waiting to exploit any
breach in your security. Additionally, online merchants are as susceptible to credit-card fraud as
face-to-face retailers. Make sure your merchant account provider has addressed these issues.
Prepare for International Payment Processing

Many payment processing and merchant account providers do not accommodate international
commerce. If you plan to market your product globally, you may need to search specifically for
an international provider.
E-commerce: Small Businesses Become Virtual Giants on The Internet
Small businesses on the Internet are racing up beside large multi-national corporations on the
information superhighway and giving them quite a scare. On the Internet a small business like
can compete with, and even surpass, large national firms.
But can all businesses profit online? The best selling products online appeal to the technology
savvy or a wide geographic audience. They are computer related items, specialty items difficult
to locate elsewhere, or items that can be purchased less expensively over the Internet.
E-Commerce Lowers Business Costs

A global business on the Internet does not require bricks and mortar or staff around the world,
just a Web site and perhaps one central warehouse. An e-commerce (electronic commerce) Web
site costs about $600 a month. Generally, the cost of the site is about 8 percent of that business'
revenues. Because business transactions are primarily handled electronically, there is no need for
a large sales staff. The virtual storefront also minimizes theft, damage, or breakage of the
inventory.
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E-Commerce Is Accessible Anywhere, Anytime

The audience on the Internet is global. Consumers all over the world are shopping online. A Web
site can be multi-lingual, allowing visitors to choose their language upon entering a site. When it
is 3:00 am here, a customer in Sweden, where it is 10:00 am, can make a purchase. A business
on-line is open seven days a week, 24 hours a day. Customers can shop at their convenience. The
cash register is open all day and night, even while the business owner is sleeping.
E-Commerce Strengthens Customer Service

A Web site allows a business to address its customers on a personal level. The computer can
recognize and greet repeat shoppers.
For example, when Mr. Smith, a frequent buyer of books on the Civil War, logs onto
"booksale.com" a message could read, "Welcome back Mr. Smith! Check out our new book on
The Civil War." The business owner can also follow up with Mr. Smith by sending him a
catalogue of Civil War books. The computer can track customer's buying trends so the business
owner can market accordingly.
E-Commerce Develops Customer Loyalty

How often do you learn all about a business upon entering a store? How often do you walk away
with a free sample? A Web site allows businesses the opportunity to give customers information
about their company while offering something of value.
For example, a company selling cooking utensils could offer the visitor recipes, a software
company could provide interesting articles about the industry, a music store could offer sound
bites of new music. By reading about the history and background of a company, the customer
feels they have chatted with the owner. Personalizing a company creates customer loyalty. A
Web site is soft sell. It gives the business an opportunity to market itself while gently leading the
audience to purchase its products.
Nine Common E-commerce Mistakes—and How To Avoid Them
Whether you're new to e-commerce or have a well-established site, you should be aware of nine
mistakes that will cost you money:
Making Hasty—and Costly—Decisions

Who will build and/or host your site? Who will process your online credit-card orders? You don't
need to be able to do all these tasks yourself, but you should learn the basics so you can evaluate
vendors. Contact at least five before signing a contract.
Neglecting Customer Service

The lack of personal contact in e-commerce transactions often translates into an impersonal
experience for your customers. You can deliver quality online customer service by:
• Sending email to customers when an order is received and when it is shipped. Your
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messages should encourage customers to contact you if the products don't meet their
expectations.
• Answering email promptly (and adding a personal touch, such as using the customer's
name).
• Listing your physical business address and phone number on your site.
Forgetting to Use "Meta" and "Title" Tags

Most e-commerce sites receive 30 percent to 50 percent of their traffic from search engines.
Meta and title tags in your site's HTML code help search engines identify and categorize your
site.
Even if you don't know HTML, you can write text for the "keywords" and "description" meta
tags and have your Web developer insert it in your Web pages. Keywords are the terms
customers might type into a search engine to find your site. The description tag determines how
search engines categorize your site, and the title tag determines how your page will be labeled in
customers' browsers and online bookmark lists.
Here's an example of some effective tags:
<TITLE>BabyZone — Pregnancy and Baby Care Center</TITLE>
<META Name="description" Content="BabyZone offers resources for pregnancy and baby care,
including articles, news, a baby name index, parent chat rooms, and more.">
<META Name="keywords" Content="babies, baby, baby items, baby names, baby naming, baby
products, birth, child, children, expecting, infant [etc.]">
Forgetting to Integrate Your Web Site with Your Traditional Business

Don't forget to include your Web site address in your traditional print advertising, press releases,
and other business documents, including:
• Direct marketing materials (mailers, point-of-sale packaging, trade show displays).

• Advertising (classifieds, resource guides, Yellow Pages).
• Collateral material (company brochures and stationery).
Neglecting to Test Your Site

You don't want customers to leave your site because of an error-prone ordering process. Test
your site frequently to see what sort of experience your customers are having.
• Test your order form and view your pages while using different versions of Internet
Explorer and Netscape Navigator.
• Cancel and restart an order to see what happens in both the customer's browser and your
order-processing software.
Failing to Prepare for Success

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Successful online businesses grow at phenomenal rates. When success arrives, you'll face far
greater expansion costs if you neglect to do some planning now. Consider in advance how you'll
add additional capacity to your site to avoid:
• Traffic jams. Consider contracting for additional bandwidth from your Web hosting
service (to ensure your Web pages load quickly no matter how many users are accessing
your site), or buying your own server and getting a high-speed connection.
• E-commerce overload. Installing high-capacity hardware and e-commerce software now
may be expensive, but it can save money by delaying or eliminating expansion costs later
on.
• Slow/faulty fulfillment. Have a contingency fulfillment plan for holiday seasons and
future business growth.
Underestimating Marketing Needs

Getting your site listed with search engines is the best way to drive traffic to your site, but here
are some other suggestions for your marketing campaign:
• Participate in banner ad exchange networks. It's free, and organizations such as

LinkExchange help their members trade banner ads with other sites.
• Pursue linking opportunities. Seek out sites aimed at your target market (but not direct
competitors) and ask them to link to your site.
Submitting Customers to Overlong Download Times

To keep your site speedy and efficient, set a maximum file size for your pages, such as 30
kilobytes (users with outdated browsers and/or low-bandwidth Internet connections will
experience long download times on pages with file sizes larger than this).
Serving Up Aging and Out-of-Date Content

Update your content periodically. Customers are put off by outdated content, which gives the
impression that your site is stale and no one's "minding the store."
Finance & Capital
Five Sources of Quick Cash
During the current recession, many businesses could use a little more cash…and fast. Here are
five quick & practical ways to get the cash you need in a tight credit market.
1. Get Paid Up front

First, try to obtain payment up front. Require customers to make deposits. Consider offering an
incentive for payment upon signing. Secure cash to help your business flow through the project.
Secure the cash you need in advance of the work. Up front payments not only work in the
professional service industry, but are also applicable to retailers through the purchase of gift
cards. Did you know that:
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• Almost 50 million adults purchased gift cards in the last year.

• 61 percent spent more than the card value.
• 55 percent of gift card holders make more than one trip to deplete the value of the card.
• 33 percent of total the value is never used or redeemed by the user.

• 17 percent of gift cards are never redeemed.
(Source: Standard Register's National Consumer Retailer Survey of Plastic Card Usage)
Whether it’s through gift cards or down payments, get your cash upfront.
2. Collect Payment
Now that you’re obtaining pre-payments from current customers, make sure to collect from past
clients. Be polite, yet persistent with 14, 30 and 45 day terms. Shorten from 30 and 60 day
collections. Encourage clients to make progress payments as soon as possible. It’s better to get 5
percent of what is owed on a weekly basis rather than nothing at all. Above all, try to maintain a
good relationship with your clients. These are difficult times for everyone.
3. Try Factoring
Factoring is a long accepted financing model that allows your business to get paid immediately
on outstanding invoices. A factor will pay you the balance of an invoice in advance, minus his
fees, and wait to receive payment from the client. First, however, a factor must verify that your
client is willing and able to pay. Accordingly, this method works best for well established
customers with good payment histories. This is a quick and relatively risk-free way of getting the
cash you need without having to wait 30, 60 or 90 days for payment.
4. Slow Your Payments

Another way to free up extra cash is to slow or reduce your payments. Contact your vendors,
lenders and credit card companies to renegotiate your rates, fees and repayment schedule. The
key is to do so before you begin to have payment issues. You should be able to leverage your
good repayment history to obtain more advantageous terms.
5. Borrow from Alternate Sources

When all else fails, borrow cautiously. Many experts agree that borrowing from yourself to aid
cashflow is preferable to losing your business. Start by liquidating inventory, equipment and
depositing cash owner equity. However, as you would with a bank, you should always have a
plan to pay yourself back. If you have a line of credit, meet with your bank about keeping your
line open and explore the potential of increasing the line or removing the condition that requires
you to rest the line periodically.
5 Tips for Handling Business Finances
How well you handle your business finances is vital to your success as a small business owner.
Here are five key ways to effectively manage your finances.
1. Good record keeping.

The starting point for managing finances is good record keeping of all revenue and expenditures.
It is best to use an integrated financial software package such as QuickBooks, because all
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business transactions need to be recorded only once. In addition, software programs provide all
the required business information in reports tailored for the specific business. If you are not able
to use such a program, make sure that all records are kept in a single, easily accessible location
and maintain a summary of file contents. It is imperative to maintain a separate bank account for
your business. Personal income or expenses should never go into or come out of this account.
2. Revenue and expenditure budgeting.

Budgeting will help to ensure that your business has enough cash for its operations. All revenue
and expenditures need to be budgeted at least three months in advance to make sure there are
adequate funds to run the business. In many businesses, the budget will be a part of a business
plan. Existing businesses should create a budget using past history as a guide, and make
modifications based on knowledge of specific circumstances and events which could cause
variation from historical data. Keep in mind that budgets need to be flexible, as the assumptions
on which the plan is based may change.
3. Cash flow and credit management.

With a budget in place, you must manage cash flow by comparing actual revenue and
expenditures with the budget. You will need to either provide additional cash or reduce
expenditures if it seems that there might be a cash shortage at some point. If your business has
employees, make sure that sufficient cash will be available to meet all obligations related to the
handling of amounts withheld from employee paychecks, which must be passed on to
government entities at some later date.
Effective management of customer credit (accounts receivable) is necessary to make certain your
cash flow forecasts for receiving payments from customers will allow timely payment of your
own expenses (accounts payable). Establish a standard policy for payment and make sure all
customers granted credit are aware of it. If a customer is not paying invoices on time, find out
why. It may have to do with a faulty product or poor service which needs to be corrected. Work
out a payment plan acceptable to both parties and monitor closely.
4. Financial statement review.

A regular review of financial statements helps with budgeting and cash flow forecasting. The
three basic statements which should be prepared and reviewed every month are the balance
sheet, the profit and loss statement and the cash flow statement. These statements will also be
important if you need to get a loan to help with your cash flow.
5. Sufficient cash reserves.

Sufficient cash reserves must be maintained so that the business is never in jeopardy because of
some unexpected expenditure or shortage in expected revenue. Reserve funds should only be
used in an emergency and should be replenished as soon as possible. Some reserve options
include a CD, marketable security or even your personal borrowing ability so that money can be
put into the business on a temporary basis if needed.
Barter Tax and Accounting Issues
Barter transactions can provide your company with important financial, sales and marketing
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benefits. Like other transactions, however, barter sales are taxable, and your company must
report them to the IRS. This is also true of credits you receive or spend through a barter
exchange; regardless of how you use barter credits, they are taxable as though they were cash.
Barter Income and the IRS

The U.S. government considers barter exchanges to be legal third-party record keepers, similar to
banks, brokerages and other firms that deal with taxpayer records. Barter exchanges are required
to complete and submit Form 1099-B, "Proceeds from Broker and Barter Exchange
Transactions," for each of their members and the IRS. In order for the exchange to complete this
form, you'll need to give the broker your taxpayer identification number.
As far as the IRS is concerned, barter dollars are identical to real dollars. As a result, you won't
get any special tax benefits (or penalties, for that matter) from using a barter exchange. If you
conduct any direct barter — that is, barter for another company's products or services — you'll
have to declare the fair market value of the items you sold as taxable income.
This same-as-cash standard also applies to barter purchases: If a barter purchase is business-
related, you can deduct it from your taxes, but if it's for personal use you can't deduct it.
Barter Accounting Tips

There are a few accounting guidelines to remember when you conduct barter transactions. First,
keep in mind that all barter income is dealt with on the cash basis, and the IRS treats barter as
income received whether you use accrual-basis or cash-basis accounting. Also, you must report
and pay taxes on barter income for the year in which it accrues; if your business is profitable you
should try not to have unspent barter credits at the end of the fiscal year. (If you're unprofitable,
and your barter income does not make you profitable, the IRS won't tax it.)
What should you do if you have unspent barter credits at the end of the fiscal year? If your barter
exchange allows it, you may be able to contribute them to charity and deduct them from your
taxes.
Using Barter as Compensation

Barter can be a great way to provide bonuses or other types of compensation without raiding
your company's bank account. Just keep in mind that barter compensation, like cash, is subject to
personal taxes. If you use barter to compensate a contractor, include it on their Form 1099; if the
recipient is a regular employee, declare it on their W-2 and withhold all appropriate taxes.
What Does the IRS Think about Barter?

Some business people believe that the IRS takes a dim view of barter transactions. As a result,
they may assume that using barter subjects them to possible audits or to other legal scrutiny.
The truth is that a company using barter is no more likely to get audited than any other business.
IRS rules concerning barter are now well established, and the government considers the barter
industry to be a perfectly legitimate business.
Treat barter just as you would any other business activity. Keep good records, work with a
reputable barter exchange and consult a qualified CPA if you have any questions or problems. If
you handle barter transactions properly, they can be a useful — and profitable — part of your
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business.
Basic Bookkeeping Tips

Basic Bookkeeping Tips

For many small businesses, the most common bookkeeping errors are also the easiest to fix. Use
these six tips to help keep your business on sound financial footing.
1. Use the right accounting system. Most businesses use either cash-based or accrual-based
accounting. If you use the cash method, you count income when you receive it and expenses
when you pay them. Under the accrual method, you count income and expenses when they
happen, not when you actually receive or pay them.
In practical terms, this difference in timing is relevant if your company keeps inventory on hand
or handles transactions on credit. In these cases, the accrual method might be a better choice for
your business. And in fact, if your firm has more than $5 million in sales or keeps an inventory,
the IRS might require that you use the accrual system. In other cases, however, the simpler cash
system could be all you need.
2. Maintain daily records. This is one of the most basic rules: If you don't keep accurate daily
records, you don't have an accurate way to track the financial condition of your business.
Different people use different record-keeping systems; what matters is that you have one and use
it every day. Once you have a good system set up, accurate record keeping will take just a few
minutes a day.
3. Handle and review checks carefully. It's easy to be on autopilot when you're writing checks
and tossing canceled ones into a filing cabinet without reviewing them. Remember: Those
checks are as good as cash. And if something goes wrong, you — not the bank — will be on the
hook. Take the same care with checks as you would with cash. Sign checks using a clear,
distinctive signature that won't invite forgery. Review canceled checks before anyone else,
including your bookkeeper or employees, sees them; that way you can catch unauthorized
checks. And if your business is a partnership, it's a good idea to have at least one of the partners
co-sign the checks.
4. Get a bank statement with a month-end cutoff. This is another basic tip that can reap big
rewards. Synchronizing your bank statement with other monthly records will make it much
easier to reconcile your statement and track expenses.
5. Leave an audit trail. Your record keeping will be much more effective if you have a system
that allows you to quickly and easily retrace your company's financial activities. This means
keeping your invoices and checks in numeric order, not skipping check or invoice numbers, and
keeping separate bank accounts for your business and personal funds. If you can't go back a year
and reconstruct your company's finances, you probably aren't leaving an effective audit trail.
6. Use a computer. Computer bookkeeping software is absolutely essential for all but the
smallest businesses. These applications make it easy to track income and expenses, prepare tax
documents, summarize your company's financial activities and back up records for safekeeping.
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If you're working with an outside bookkeeper, make sure they know how to use a computer.
Business Cash Advance Costs

What does a cash advance cost?

Cash advances are expensive–they should be taken rarely, and only when absolutely necessary.
In rare cases, the “factor rate” or advance fee can be anywhere from 20% to 80%.
Advance rates are similar to an interest rate on a loan or factoring fees–they reflect the cost of
taking out the advance. Rates are usually expressed as a percentage of the advance amount, and
will vary depending upon the length of time you’ve been in business, your sales volume and
other factors. Most cash advance providers charge up to 35% for most business cash advance
transactions. The higher the risk the provider bears in advancing payment to your business, the
higher your rates will be.
By accepting a business cash advance, your business is obligated to pay back the total advance
amount plus the advance fee, like this:
• Advance Amount: $100,000

• Factor Rate: 35%
• Repayment Amount: $135,500 ($100,000 $35,000 Factor Rate or “Fee”)
The total amount, or $135,000, would be repaid automatically to the provider as portion of daily
credit card sales like this:
• Daily Credit Card Sales: $10,000

• Daily Retrieval Rate: 25%
• Daily Repayment: $2,500
In the above example, $2,500 would be set aside from sales each day to repay the advance–your
business would keep the remaining $7,500. The total advance would be completely repaid in 54
days, or a little less than two months. Much of this time (14 days) would be spent paying back
fees, rather than paying down the actual advance amount.
A business cash advance can be tempting–transactions have quick repayment terms, so you’re
not bound to years of repayments, and they are easy to qualify for. It’s important to consider the
total costs of the advance transaction–for example, will setting aside sales amounts adversely
impact the operations of your business? Will you need to put off purchasing equipment, taking
advantage of business opportunities, or reinvesting profits to grow your company? Before taking
a cash advance, make sure you also consider these potentially “hidden” costs.
Business Financing Basics: How to Find Startup Cash
Finding financing your business is an essential part of any start-up operation. Few businesses can
grow without a financing plan and organizing your funding during the beginning stage of
operation can set your business up for success in the long run. Here are a few of your options
when it comes to looking for start-up capital and some pros and cons for each:
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Bootstrapping
Bootstrapping is exactly what it sounds like–pulling yourself up by your “bootstraps” and using
your own savings, personally guaranteed debt (think credit cards or personally guaranteed bank
loans) or cash to start your business. Many entrepreneurs take cash advances on credit cards, take
out a home equity line of credit or even sell personal possessions in order to get a business
venture off the ground.
The pros of bootstrapping mostly have to do with the control you’ll have over your business. Not
having any investors means you don’t need to listen to anyone else’s feedback when it comes to
business decisions–you can trust your own vision for your business and not be ruled by the
“bottom line.” Since you’re using your own money, you can make spending decisions more
quickly.
You’re also on the hook for business debt if the business fails or doesn’t grow as quickly as
you’ve anticipated. And let’s face it–unless you’ve been saving for quite a while or have a trove
of expensive family heirlooms to sell, you might not net as much as you need from personal
funds alone. Bootstrapping can be used along with other funding methods, though and tends to
be a powerful motivator for new business owners.
Nontraditional Loans
Banks aren’t the only lenders you can turn to. Many business owners borrow money from friends
or family members in order to get the start-up cash they need. This option can be tricky–though
your family and friends might not know anything about your venture, they might feel like they
can give advice (and encourage you to follow it!) because it’s their money you’re using.
Most nontraditional loans don’t carry interest (unless you agree to it) and repayment terms are
negotiable. There aren’t any complicated contracts to sign (usually) or collateral to pledge. If you
go this route, ask for more money than you really need and put the excess in a savings account
for future payback. That way, if your business isn’t profitable (and you can’t spare the cash)
when the loan comes due, you’ll have cash on hand to make a few good faith payments as your
business grows.
Grants or Government Assistance

Specific types of businesses or companies in certain industries can apply for government grants
or other assistance (such as assistance in bidding for contracts or purchase guarantees). Grant
money is usually available to businesses who offer certain types of products or services
(technology or science) or for business owners who come from traditionally underrepresented
groups (minority, veteran, women). Most grants are reserved for existing businesses, so you
might need to be a bit farther along than the start-up stage to qualify.
Grants are awards–they don’t need to be repaid. The downside is that the grant writing process
can be complicated and time consuming. There are also restrictions on how money can be used.
If you’re applying for grants, it’s a good idea to consult a business organization that provides
advice and counseling for application writing or to hire a professional grant writer.
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Business Loans and Credit

Business loans and credit can be tough to get if you’re just starting out. Many banks require at
least a 2-year operational history for business loans, since so many new businesses take a while
to become profitable. It’s a good idea to apply for a new business loan backed or guaranteed by a
government organization, like the SBA. The SBA doesn’t directly offer the loan–you’ll need to
choose a lender and loan terms. The paperwork involved can be tedious and time consuming, so
it’s usually a good idea to enlist the help of a professional or experienced business owner.
Bank loans usually offer lengthy repayment terms and you’ll build your business credit as you
pay back the loan. It’s also a great way to get funding without giving up partial control of your
business to investors. Make sure you understand the terms of the loan-many lending
organizations ask business owners to pledge personal collateral as a repayment guarantee if the
loan is not backed by an organization like the SBA.
Private Angel Investors and Venture Capital

Angel investors are pretty much what they sound like–the “angel” your business needs to get a
large amount of funding quickly. Angel investors and Venture capital firms almost always
require an equity stake (partial ownership) in your company if they invest. Investors will work
with you on repayment terms–many require repayment once your company goes public, is sold
or becomes profitable.
Angel investors usually work with companies that need-and plan to make–a large amount of
money, usually upwards of $1m for most startups. Venture capital firms vary in the types of
companies they assist, but most do not work with very small companies or those with less than
several million in projected income or value once the business becomes operational. Most
require a specified return on their initial investment. The pros here are obvious–you get a flexible
loan that you start paying back when you can afford to. The downside is that your own stake in
your company will be diluted. Since the investors have a stake in your profitability, they may
require the ability to assist in management decisions. Large-sum investors are also very difficult
to find.
No matter which method you use to finance your business, make sure you know your options
and responsibilities. You should also choose a financing method that fits your business–small,
home based businesses that don’t have aggressive growth strategies probably shouldn’t be
seeking venture capital. Start smart by researching your financing options and coming up with a
comprehensive funding plan for your business.
Choosing a Merchant Account Provider

Your business has quite a few options when it comes to selecting a credit card processing
service. Here are some of the most popular types of providers:
Banks
Banks don’t usually provide merchant processing services themselves, but most banks can refer
you to a reputable merchant account provider. Banks usually have preferred merchant account
providers, and since banks are more highly regulated, asking your bank is a “safe” option when
you’re looking for an account provider. If you have an account with a particular bank, ask if they
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are willing to provide credit references for your business.
Credit Card Companies

Credit card companies, such as American Express or Discover card, will allow you to set up a
direct account to process their cards. This option can cost more than setting an account up to
process all card varieties and can be a bad move if most of your customers use more widely
distributed card brands, such ash Visa and MasterCard (Both Visa and MasterCard require third
party processors for verifying card transactions).
International Providers
Businesses in high-risk industries, those headquartered overseas or those that cannot qualify for
an account with a domestic provider often open overseas accounts for processing credit card
transactions. These accounts usually have more relaxed qualification standards and are not
subject to American regulations of merchant service providers.
Online Providers
An online account provider acts the intermediary between a customer credit account and your
business bank account. Online providers usually require you to purchase or “lease” hosted
processing software. Online providers only differ from traditional providers in the method by
which they collect transaction information. The same standards of reputation, trustworthiness
and customer service that apply to traditional account providers should also apply to online
providers.
How “risky” your business is plays a big role in the type of provider you are able to choose. If
your company presents high risk for chargebacks or fraud, you’ll be subject to higher rates and
additional fees. Even if you are dubbed “high-risk,” it’s important not to jump at the first
company that extends you an account or offers the cheapest services. The best way to choose a
merchant account provider is through comparison shopping–you should compare the types of
services offered (for example, whether or not processing can be linked to a POS system),
references, security mechanisms and costs associated with at least 3-5 different providers. Armed
with this information, you can choose the provider that’s the best fit for your business.
Credit Card Processing Terms and Vocabulary
Credit card processing companies offer a variety of different services. Whether you process
credit cards using online processing software or use a credit card swipe terminal, you’ll probably
need to open some type of merchant processing account. Here are some common industry terms
that you’ll need to know before you start to shop for services.
Cardholder: An owner or “holder” of a credit, debit or ATM card or the person who is using a
credit card to pay for goods or services.
Issuing Bank: The institution or organization that provides credit or a card to a customer.
Issuing banks need not be actual banks–card issuing companies such as American Express or
payroll debit card companies can issue cards.
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Merchant Account: The “go-between” account that acts as an intermediary between your
business bank account and your customers’ credit accounts. Merchant service account providers
verify and process credit cards transactions and then transfer funds in “batches” to your business’
bank account.
Chargebacks: Returns from a merchant account or funds that are “charged back” to a purchaser.
Chargebacks are usually associated with fraudulent or unauthorized transactions.
Chargeback Fees: The penalties or fees associated with processing a chargeback. Chargebacks
are taken from your merchant account and carry a high level of risk for the merchant account
provider–fees are usually calculated per-occurrence (like a bank overdraft fee) or according to
the merchant account provider’s policies.
Magnetic Transactions: Processing a credit card transaction using a magnetic terminal or POS
system. Magnetic transactions typically carry less risk than online or phone transactions because
the card is physically present–rates are usually lower for this type of transaction.
Processing Software: Software needed to process cards online. Processing software collects
card information similarly to the way a swipe machine would and sends the information to the
merchant account provider for verification and processing.
Net Settlement: The total dollar amount transferred into your own business bank account after a
“batch” of sales has been processed, usually at the end of a business day.
Pass-through Fee: A fee assessed when a transaction fails, typically because account
information cannot be verified.
Billing Time and Expenses: The Dos and Don'ts
If your time and expenses are your main source of revenue, you don't want to take chances with
your livelihood. Use this simple list of dos and don'ts to help maximize your efficiency and avoid
tracking and accounting problems.
Do:
• Track your time and expenses immediately and accurately. If you work four billable
hours on Monday, don't wait until Friday to enter those hours in your ledger; this can
only lead to mistakes. Also, if you make a practice of reporting your time and expenses
immediately and accurately, customers will be less likely to dispute their invoices.
• Set a billing period and stick to it. If your billing period is one week, prepare and send
your invoices at the end of the week, not the end of the month. Waiting to send your
invoices only adds unnecessary days or weeks to your cash-conversion process.
• Treat your time and expense reports and invoices as cash. Look at it this way: without
them, you will never see a dime for your hard work. Consider them the most important
documents for your business, particularly if you bill time as your primary source of
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revenue.
• Give your customers an incentive to pay their bills early. Offer a 2 percent to 3 percent
discount for payment within 10 days, for example.
Don't:
• Give your customers an excuse for not paying on time. If you call them to ask about late
payment, don't ask them if they received the bill, for example.
• Delay preparing and sending your invoices to customers. This only prolongs the amount
of time it takes to see those invoices turned into cash and can leave your company with
an anemic cash flow.
• Think you still have to write down time and expenses with a pen and paper. If this is the
method you prefer, fine. But there are also a number of computer and online programs
available to track time and expenses, including some that can be accessed with a cell
phone or Palm Pilot. This can make it easier to report your time and expenses when you
are away from your office or computer.
Cash vs. Accrual Accounting Methods

Q: Can you explain the difference between cash and accrual accounting and tell me what
difference it makes to the bottom line?
A. For accounting purposes, the best method regardless of the type of business (except possibly a
doctor) is the accrual-based method. Cash-based accounting can distort the true operations of
your business and incorrectly reflect income.
Cash-based accounting recognizes income when money is received. Accrual-based accounting

recognizes income when goods are shipped or services are rendered. Under the cash method, an
expense is recognized when it's paid. Under the accrual method, an expense is recognized when
the business is obligated to pay it.
So, for example, if in a given period you collect little or no receivables and you pay lots of bills,
under the cash-accounting method you have expense without income; you've lost money. On the
other hand, if you collect a lot of money and don't pay your bills, you have big income. That's a
major distortion of what actually occurred. Accrual-based accounting doesn't care whether
you've collected or paid your bills. Income (received or not) is matched to an expense (paid or
not), resulting in a proper match of revenue with the expense generated to produce the revenue.
This provides a truer picture of operations.
It's possible to use one method for tax purposes and the other for accounting purposes. But as
usual with tax issues, nothing is that simple. Consult with a professional tax advisor for the best
tax method for you. But for accounting purposes, always use the accrual-based method.
Clean Up Your FICO Score
It’s human nature to focus on what’s important when it’s right now and that can be true when
we’re making a major financial decision like buying a house or a car, or committing to a business
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loan. Then of course we’re suddenly motivated to learn about credit scoring. It’s best of course to
learn now and take steps to improve your score before you go into the market looking for the
best deal. Improving our FICO scores is like getting in shape, it takes time and practice. So while
it is never too late to begin down the path to be in great shape, it is helpful to understand that the
path may take time and there’s no quick fix. In fact quick-fix efforts are costly and can backfire.
• Pay your bills on time. Delinquent payments and collections can have a significant
adverse impact on your FICO score. Therefore, make sure that you get your payments to
your creditors on or before the due date on your statements.
• Keep revolving credit balances low. The key point here is that you need to be aware
that the FICO scoring model uses a sliding scale and that the LOWER a person’s
utilization rate (outstanding debt to your available line of credit) on any one account the
better! There is no magic number, just the lower the better.
• Get current and stay current if you have missed payments.
Crisis in your credit is not going to impact you forever. Credit crises can be overcome by
changing payment patterns. Scores do improve over time. The longer you pay your bills on time,
the better your credit score.
• Pay off debt rather than moving it around.

• Contact your creditors if you are having trouble making ends meet.
• Don't close unused credit cards as a short-term strategy to raise your score.
• Use each of your credit cards at least once every six months.
• Open new accounts responsibly. And, don't open a number of new credit cards that you
don't need, just to increase your available credit.
• Don't open many new accounts too rapidly if you have been managing credit for a short
time.
Committing Your Nickel To Build Your Small Business
In 1984, at the age of 33, I accepted a buy-out package from AT&T and jumped feet first into my
first full-time entrepreneurial venture with a business partner, Clare Wherley. At the same time, I
confronted an all-too-common reality for entrepreneurs: that I would have to commit my own
nickel—indeed, many, many nickels—to the building of the company.
While it is always preferable for entrepreneurs to use other people's money—resources from
relatives, friends, or best of all, a bank—getting outside funding is difficult during the early years
of any business. In a service business such as our financial-planning firm, it is virtually
impossible. That is because banks, for one, demand tangible assets or evidence of significant
revenue to secure a loan.
In short, entrepreneurs learn a hard lesson early on: that their personal finances are inextricably
bound up with their businesses. And the hardest part of the lesson is the initiation rite: the fact
that they must, more often than not, use their own money to fund both business and personal
needs for at least three years, if not much longer.
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It wasn't until 1991, six years after Clare and I launched Lassus Wherley & Associates, P.C., that
we achieved the critical milestone of a bank credit line. In the early years, we had to focus on not
only covering business expenses, but also keeping a roof over our heads and eating, which we
are very fond of doing. What follows is a discussion of our strategy, as well as tips for other
entrepreneurs.
Committing Assets, Conserving Cash

Like most entrepreneurs, Clare and I were too optimistic about our ability to generate enough
revenue in the early years to support a growing business's cash-flow appetite. Unlike many
professionals who may leave an employer with a client or two—and thus some revenue—we had
no clients. Indeed, I spent the bulk of the first year earning my certified financial planner
designation.
We did, however, have expenses. A computer system and related equipment were essential right
from the start. After three years in a home-based office, we needed to put down rental deposits
for office space. As our revenue increased to $70,000 in the third year from $10,000 in the first,
we had to meet an annual payroll of $60,000 for three part-time employees.
So how did we manage? Simply, we built up our assets. And, as two single women, we utilized
every money-saving device we could find. My buy-out package from AT&T included a year's
salary, which was paid over two years. I sold my home and moved into Clare's, adding to my
reserves and paring housing costs. Clare, who had been my boss at AT&T during the Olympics
project in Los Angeles in 1984, stayed employed for two years to keep money coming in while
we nurtured the business. In 1987, she sought and received a buy out.
We used personal savings and after-tax dollars from retirement accounts for equipment
purchases, deposits on rent, and ultimately, to meet expenses in slow periods. We frequently
bought on time and slowed down payments. We paid vendors when money became available.
Partial payments were commonplace, and we even asked employees to hold paychecks if cash
was not available. And, of course, there were times when we wrote checks to the company
instead of the other way around.
Using Credit Judiciously

We also used $50,000 on an equity line on Clare's house to finance the bulk of the equipment,
our biggest single purchase. This less-expensive debt helped us reduce the cost of borrowing for
several years.
Finally, the dollars of last resort, which we did resort to...the almighty credit card. With rates so
high, in the 18 percent to 22 percent range, this type of debt was very painful to use. But like
many entrepreneurs, we knew we could make our business work, and we were willing to risk
everything to do it.
Credit cards got us past the last hurdle, as we reached the point at which I got to use my favorite
words—positive cash flow. We used the cards to make purchases and make the payroll. To ease
the pain, we moved to low-interest rate cards as they came available and made use of the grace
periods. We never topped $25,000, the far side of our personal comfort level. And when the
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business finally qualified for a credit line, paying off credit cards became the first priority.
By the early 1990s, we felt the business was generating enough revenue to qualify for a credit
line to level out our cash flow. We had developed a relationship with a woman executive at
CoreStates NJ National Bank through the National Association of Women Business Owners, or
NAWBO. When we were ready to apply, we approached her. She personally came with the loan
officer to help us determine whether we could qualify. We were prepared with a stack of data a
foot high. About an hour into our presentation, the bank executive said, "This is far more
information than we really need. This is a done deal. I'm just here to wrap it up."
With those words—the sweetest we've ever heard—we realized we had arrived! With our shiny
new $50,000 bank credit line, at a reasonable 11 percent, we were finally freed from having to
dig continually into our own pockets.
Assessing the Odds

For those of you who still aren't free, consider the following two guidelines for the sane spending
of a precious resource—your own nickels—on a business venture.
Your assets.
How much should you commit? The guideline: It depends. If you're worth $100,000, you'll
probably have to commit most of your assets. Otherwise, you won't have a realistic chance of
making a go of the business. If you're worth a half million, you can easily agree with yourself to
commit a lot less.
Your capacity for debt.

How much should you borrow? Entrepreneurs, by definition, have boundless faith in their ideas
and an enormous capacity for risk. They tend to keep borrowing even as it becomes unlikely that
the corner will be turned. Stick, instead, to the guideline: Borrow no more than what you can
repay in five years earning a salary. That's just in case your business folds, and you're left with
having to take a job.
With these two guidelines as your backdrop, you might also consider this checklist of specifics:
• When starting out, have a realistic plan to keep a roof over your head and to eat. You
might also, if you can, take the next step of setting aside some funds that won't ever be
used for the business. Pre-tax retirement dollars come immediately to mind, because of
the tax consequences and heavy penalties associated with early withdrawals.
• Make sure you have credit cards available, preferably with high limits and low interest
rates—just in case. It is much easier to get credit before you need it. Plan not to use it
unless you absolutely have to, and pay it down quickly.
• Set aside your own savings, outside of pre-tax retirement accounts, to be used as
collateral for early loans. The banks will probably put a lien on this resource, but will
remove the lien as your payment history demonstrates credibility. Even with the lien,
you're better off using their money than yours.
• Be aggressive about building a relationship with a banker. Your goal is to move to bank
credit as soon as possible. It's tougher these days with continual bank buy-outs. But
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always focus on the relationship. It counts more than the business plan.
• Go to the bank for money before you go through your own funds. Although $10,000
equipment loans from many sources and $25,000 credit-card lines are more available
than a decade ago, it is still tough to get a line of credit from a bank. Note: Women can
get bank credit more easily today, even though they'll still have to be aggressive. Bankers
are beginning to realize that women are more likely than men to repay borrowed money,
even in the case of failure.
Finally, recognize that you can't finance a fast-growing business on current cash flow. Using
other people's money—and because that usually isn't possible in the beginning, dipping into your
own—is the only way to grow! So get out there and contribute to America's economy. Spend
those nickels. Borrow, grow, and succeed!
Creating Personal Wealth Through Small Business Ownership
When I was a young man of 34, with limitless dreams but a small bank account, I founded my
mutual-funds company with a personal investment of just $2,000. Today, 41 years later, the
value of my investment in American Century Companies, the management company of
American Century Mutual Funds, has grown to more than $1 billion.
This fantastic appreciation came about mainly because of the way the company was initially
financed. Decisions you make while establishing a venture or when seeking early financing will
have long-term ramifications on your personal wealth. I can offer today's beginning
entrepreneurs no better counsel than to describe how I did it.
Ideas to Ponder
First, let me give you some ideas to ponder: Why give away half or more of your company to get
financing from investors? You are going to work day and night to make the business succeed, so
you deserve to own the biggest part of the company.
As you struggle to find financing, you may be tempted to accept the terms proposed by would-be
investors, but why not resist those terms and structure the financing to satisfy your own long-
term needs, both for the business and for you personally?
Although we did not realize it at the time, my wife and I found that the initial financing plan
became a key component in building our personal net worth to a level where we are now able to
create and endow a major medical research center. The success of our first dream is making our
second dream possible.
Smart Financing
Back in 1958, a smart lawyer—and a smart mother—saw to it that my partner and I started on a
firm financial footing. When we decided to launch the company, my mother impressed upon us
the need to have the best and brightest lawyer we could find. She sent us to a lawyer she knew,
but he had too much work, so he passed us to his brother, Irving Kuraner. Irving was a graduate
of Columbia University Law School and member of Phi Beta Kappa, who had worked a year for
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Sullivan and Cromwell on Wall Street before returning to Kansas City to go into practice.
After Irving did the legal work to form the company, we turned to the question of how to obtain
our start-up financing. Irving came up with the concept that has been critical to our success and
for which I have always been grateful. He told us that if we sold only common stock to others in
order to obtain our initial financing, we would greatly dilute our own interest in the company.
Instead, Irving suggested that we consider using primarily preferred stock, along with a little
common stock, to obtain the initial operating capital.
Putting It Together
The idea intrigued us. Irving asked how much of the common stock we each wanted to own. I
wanted one half, and my partner, a CPA, asked for one fourth. Irving then suggested that the
company take the following steps:
• Authorize 400,000 shares of common stock at 1 cent par value for $4,000, and...
• Authorize 1,000 shares of 5 percent Non-Cumulative preferred stock at $100 par for
$100,000. The preferred stock wouldn't pay a cash dividend, but the value of the
preferred stock would increase each year by five percent until the company repurchased
the stock.
Then, I would buy 200,000 shares of the common stock for $2,000, equivalent to half of the
company. My partner would buy 100,000 shares of common stock for $1,000, equivalent to one
fourth of the company. We would offer each other investor 10,000 shares of common stock for
$100, as well as 50 shares of the 5 percent Non-Cumulative preferred stock for $5,000. These
outside investors could not buy the common stock, with its potential for great rewards later,
unless they bought the preferred stock. The preferred stock would give us our operating capital.
Finding Investors
To find outside investors, I turned to people in a field that I knew well—medical doctors. I had
gone to medical school before choosing investments as my career, and my wife, Virginia, was a
registered nurse. The first doctor I tried to interest said we had the investment plan backwards.
He said that management—my partner and I—should limit ourselves to 25 percent of the
common stock and let the outside investors, those putting up the most money, take 75 percent.
To which I replied: "No way. We are taking the 75 percent, because we are investing our time to
make the company a success. Time is money."
This man didn't invest, but nine other people—six of them MDs—invested when we made our
initial offering. Each bought 10,000 shares of common for $100 and 50 shares of preferred for
$5,000. Subsequent transactions brought in more capital. Over the years, my wife and I increased
our share of the ownership, such as when my partner and some early investors wanted to sell
their stock.
Investing in Entrepreneurs
A lot of venture capitalists, both then and now, would agree with the doctor who thought my
partner and I should take the minority stake. But entrepreneurs need to understand that if they are
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going to have to sell the dream, people must believe in you, believe in your dream and invest in a
company. The person doing the work must have an incentive to do a good job and to be
successful.
If you are going into business, you must believe that you have the ability to make your dream
happen. I sincerely believe I could accomplish the same thing today.
In 1980, 22 years after the initial financing, the company was able to buy back all of the
preferred stock. Each investor received $16,100 for the preferred stock purchased in 1958 for
$5,000, a long-term profit of $11,100. Each investor still held 10,000 shares of common stock.
Creating Wealth
About that time, the company really began to prosper, and many stock splits followed. The
wisdom of the investment became spectacularly clear in 1998, 40 years after the initial financing,
when American Century agreed to sell a large minority stake to J.P. Morgan for $900 million. By
then, the common stock for which each investor had paid just $100 in 1958 was worth more than
$60 million each!
Not a bad investment. Some investors sold at that time. Most important to me, there had been
little dilution in the original financing, meaning I was able to benefit from the fruits of my labor
and use the wealth I had created for my family and for society.
Investing in the Future

Several investors, including doctors who were then retired or thinking of retirement, used a
portion of their riches to endow chairs at the universities they had attended and to create
foundations to make gifts to other worthy causes.
As for my wife and me, we are busy investing in our new dream, the biomedical research facility
in Kansas City called the Stowers Institute. We have given assets that are today worth $340
million, and when we die, the remainder of our estate—about $1 billion—will go to the Institute.
We are giving back something more valuable than money to the millions of people who made
our success possible. We want to improve the quality of everyone's life.
Deal Structure Is Critical For Financing When Purchasing A Business
Most buyers and sellers of businesses don't realize how important deal structure and loan
presentation (deal package) is to financing. Components like down payment, small owner notes
(sometimes), purchase price, and the way it is presented to a lender all makes the difference
whether a loan is approved or not.
Most lenders consider approximately 32 different factors when considering a business purchase
loan for approval, some of them are:
1. Is the business overpriced? If it is the lender will either kill the deal or have the owner carry
back a bigger note or have the borrower put more down. Most owners tend to overprice their
business—it pays to have a 3rd party do a valuation before it goes on the market. This
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Valuation/Report can then be presented to both potential business buyers and to lenders for
financing.
2. The deal must be structured correctly so that debt service of the loan can easily be covered (all
lenders utilize different ratios for this) with provable (lender friendly) adjusted net income or
cash flow from the business.
3. Owners must be willing sometimes to take back a small note to get a deal done, sometimes on
a standby basis meaning they may get interest only for 2 years then a balloon payment etc. All
lenders vary on this.
4. Buyers must demonstrate they have knowledge of the industry they are buying into or working
skill sets that can transfer easily over to the business they are purchasing. Purchasing a franchise
is different since buyers usually get extensive training from the franchisor.
5. Be flexible in your deal structure knowing that when you turn a package into a lender they
may want to make changes to it to get it done.
6. Putting up personal real estate collateral on a deal always helps and sometimes mitigates lower
credit scores, work experience that isn't direct, or other deal factors that can negate a loan.
Perfect loan presentation (for business purchases) and filling out all appropriate forms correctly
the first time saves both time and possible the loan with most lenders—that is why many
borrowers, business brokers, and agents utilize our services to secure business purchase
financing.
Five Grant Resources for Small Businesses
There are many business concepts that never come to fruition due to lack of funding. You may
have a strong business plan but may not qualify for traditional bank financing because you lack
sufficient collateral, a down payment, or a business track record. Fortunately there are grant
programs available through government agencies and private organizations. Here are five of the
top sources of small business grants.
1. The Small Business Administration. While the SBA does not offer grants to start or expand
small businesses, it can help connect you with government resources for business grants. Visit
their Federal Grant Resources page for more information.
2. Grants.gov. You can find and apply for more than 900 different grants from 26 government
agencies.
3. State economic development agencies. Each state has an agency that administers business
grants. Agency names vary by state, but usually the Department of Commerce or Economic
Development Agency is responsible for disbursing business grants. About.com has assembled a
list of links to these agencies’ Web sites here.
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4. Economic Development Directory. This site hosts an extensive directory of more than 2,000
economic development agencies, consultants, and associations worldwide. Links are constantly
updated, providing access to economic development information for business people, real estate
departments, consultants, and brokers.
5. The Foundation Center. This subscription service also offers an extensive amount of free
information. It also offers a helpful online orientation to grant seeking, which will take you
through the funding research process step by step. The subscription fee entitles you to access to
its directory of more than to 80,000 grant makers.
5 Tips for Handling Business Finances
How well you handle your business finances is vital to your success as a small business owner.
Here are five key ways to effectively manage your finances.
1. Good record keeping.

The starting point for managing finances is good record keeping of all revenue and expenditures.
It is best to use an integrated financial software package such as QuickBooks, because all
business transactions need to be recorded only once. In addition, software programs provide all
the required business information in reports tailored for the specific business. If you are not able
to use such a program, make sure that all records are kept in a single, easily accessible location
and maintain a summary of file contents. It is imperative to maintain a separate bank account for
your business. Personal income or expenses should never go into or come out of this account.
2. Revenue and expenditure budgeting.

Budgeting will help to ensure that your business has enough cash for its operations. All revenue
and expenditures need to be budgeted at least three months in advance to make sure there are
adequate funds to run the business. In many businesses, the budget will be a part of a business
plan. Existing businesses should create a budget using past history as a guide, and make
modifications based on knowledge of specific circumstances and events which could cause
variation from historical data. Keep in mind that budgets need to be flexible, as the assumptions
on which the plan is based may change.
3. Cash flow and credit management.

With a budget in place, you must manage cash flow by comparing actual revenue and
expenditures with the budget. You will need to either provide additional cash or reduce
expenditures if it seems that there might be a cash shortage at some point. If your business has
employees, make sure that sufficient cash will be available to meet all obligations related to the
handling of amounts withheld from employee paychecks, which must be passed on to
government entities at some later date.
Effective management of customer credit (accounts receivable) is necessary to make certain your
cash flow forecasts for receiving payments from customers will allow timely payment of your
own expenses (accounts payable). Establish a standard policy for payment and make sure all
customers granted credit are aware of it. If a customer is not paying invoices on time, find out
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why. It may have to do with a faulty product or poor service which needs to be corrected. Work
out a payment plan acceptable to both parties and monitor closely.
4. Financial statement review.

A regular review of financial statements helps with budgeting and cash flow forecasting. The
three basic statements which should be prepared and reviewed every month are the balance
sheet, the profit and loss statement and the cash flow statement. These statements will also be
important if you need to get a loan to help with your cash flow.
5. Sufficient cash reserves.

Sufficient cash reserves must be maintained so that the business is never in jeopardy because of
some unexpected expenditure or shortage in expected revenue. Reserve funds should only be
used in an emergency and should be replenished as soon as possible. Some reserve options
include a CD, marketable security or even your personal borrowing ability so that money can be
put into the business on a temporary basis if needed.
Funny Money: Claims of "Free" Government Funding for Entrepreneurs are No Laughing
Matter
Let’s get the bad news out of the way first: there is no such thing as free money from the federal
government to start or expand your small business.
Does that mean all those ads for books, seminars and courses claiming to help you tap into little-
known programs are wrong? It depends. While there are some patently false and misleading
advertisers out there, most “free money” pitches simply do not tell the entire story. There is a
reason why the proverbial “fine print” is so small.
True, many government agencies provide grants to small businesses, as do private organizations
and institutions. But as home-business-savvy.com notes, “they generally direct their assistance
toward specific projects, charities, lending institutions, non-profit organizations, educational
institutions, etc. Very little money goes to individuals.”
The U.S. Small Business Administration (SBA), an agency dedicated to the growth and success
of the nation’s entrepreneurs, is no different. What few grant programs the SBA has are directed
mainly to non-profits, intermediary lending institutions and programs administered by states and
localities for purposes such as economic revitalization and technology research.
Pay a Little, Get a Lot

Now, for the good news. Though free government money may be a myth, the next best thing—a
business loan with a favorable interest rate—is very real and very available to new and
established small businesses. The SBA’s guaranteed loan program, for example, has helped
millions of small businesses get off the ground, expand and acquire new facilities and
equipment.
To be sure, qualifying for a business loan or line of credit is far more complicated than, say, car
financing or a home mortgage. Applicants must do their homework and make a strong case for
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the viability of their business plan. Properly prepared, a business loan application almost always
succeeds, even when the applicant has few other financial resources to contribute.
Specific types of small businesses may be able to take advantage of non-grant assistance
programs administered by other federal agencies. The online Catalog of Federal Domestic
Assistance is an ideal starting point. The searchable database lists all federal programs,
eligibility requirements and contact information.
No-Cost Alternatives
Just because the government is not in the free money business doesn’t mean you can’t turn to
other sources. Friends, relatives, employees, customers and colleagues may be willing to provide
you with funds either as outright gifts or as no-interest loans payable “whenever.” However, such
arrangements carry just as many risks—if not more—as business loans, and should always be
approached with caution. For more information on borrowing money from friends and family,
download a free copy of SCORE and CircleLending’s free Small Business Financing Guide.
The ultimate source of free money, of course, is you. Personal savings, sales of possessions and
other resources can generate the necessary start-up or expansion cash. There is a trade-off in that
you may be risking your “cushion” against future needs (i.e., illness, family obligations, etc.). As
such, careful consideration of your long-term financial position is a must.
Don’t overlook other sources of financing that may be suitable to your small business goals—
venture capital, equity, institutional investors and others. Each has unique risks and rewards that
may or may not be suitable to your needs.
And always remember that more often than not, a deal that promises access to free money is like
any other claim that sounds too good to be true—it probably is.
Get What’s Coming to You

Many entrepreneurs are challenged—even intimidated—by the prospect of collecting what is
owed to them, partly because most don’t like being confrontational and partly because they are
afraid to find out they’ve been had. In spite of this discomfort or fear, however, you must be
proactive in collecting your receivables. If you’re not, you gain nothing and lose everything.
Certainly, nonexistent or sloppy bookkeeping practices will slow down the process and
exacerbate the discomfort, simply because you can’t remember and/or can’t prove that a
customer is in arrears. Even when you’re well organized, collecting overdue accounts is not easy
or pleasant.
Over the years I’ve had my share of collection experiences, and I’ve formulated some collection
tips as a result:
• Invoice promptly! If your customers don’t have the paperwork, they can’t pay you. And
the longer you wait to invoice, the more distant your client’s memory of the product or
service you provided will be.
• Invoice clearly and completely. As defined previously in this chapter, state all you terms
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and the circumstances of the business exchange. If your invoice is vague or does not state
all the terms of the agreement, you’ll have a more difficult time collecting, especially on
an overdue account.
• Know your customer’s invoicing and payment policies. Do they need more than one copy
of the invoice? Must the invoices be original hard copies, or are faxed or emailed
invoices acceptable? Should the invoice be included inside a shipment or be sent to a
separate department? In many cases, if you don’t enter the system properly, your invoice
may be delayed—or never paid at all.
• Accurately record each payment you receive to keep your accounts current. It’s unsettling
to have to pursue an overdue account, but it is humiliating to ask for a payment you’ve
already received. You’ll come off as unprofessional and may jeopardize a good client
relationship.
• With large-companies, call the accounts payable department a few days before a payment
is due and politely ask if the invoice has been processed properly. Invoices often have a
way of getting lost along the payment route. And be aware that large company
accounting departments frequently delay payments to small companies and independents
to manipulate their cash flow. So if you wait until you’re supposed to receive payment,
you may be unpleasantly surprised to learn your invoice is on the bottom of some pile
and you’ll have to wait another payment cycle for your money.
• Take action the day an account becomes past due. Make a phone inquiry or fax a second
notice with a polite reminder. A fax carries with it immediacy and creates a visual image
that often generates better response than transcribed notes from your phone call. But if
you still don’t get paid, phone the customer and request payment.
• Stay proactive. If you don’t ,your weak demeanor will make it easier for your client to
put you off.
Get Your Real, Free Credit Report
To get on top of your credit situation, you need to know what’s in your credit report. Perusing
your report is how you are going to discover mistakes that can unjustly hurt your score and is a
crucial tool for detecting identity theft.
The good news is that, due to consumer pressure, Congress finally passed legislation under the
Fair Credit Reporting Act that gives consumers the right to obtain three free credit reports a year.
By spacing a request every four months, you can get one from each of the three credit reporting
agencies during the year. The less than good news is that the credit reporting agencies have
sought to make this process difficult. When you go on the internet to get your free credit report,
they steer you as best they can toward information or products that must be purchased.
There are three ways to request your free credit report: online, by phone and via mail.
How to request your credit report online.
• Visit www.annualcreditreport.com. That is the official and only site for getting your
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free credit report. Beware of other sites that may look and sound similar and liberally use
the word “free.” They are not free; they are selling a product along with the report. Also,
be careful if you’re doing a search and use phrases like “free credit report,” since that can
lead to one of these commercial sites.
• Once at annualcreditreport.com, click on your state first. Do not click on one of the
three credit agency logos or you will be redirected to their site.
• Then, fill out a simple verification of identity form that will ask for your social security
number, address and date of birth.
• Next, select which of the three nationwide credit reporting agencies you want to
obtain a report from.
• On their sites you will again be asked to verify your identity through verification
questions like who is your current mortgage holder, what is a former street you lived on,
etc.
• Then, you can print out your free credit report. But remember, you can only get one
free report per year from each agency.
Take Advantage of Home Business Tax
Running a business out of your home has many advantages: no commute, you can dress how you
want (well, most of the time), easy access to your kids, etc. One extra advantage of a sideline
home-based business is that you often qualify for extra tax breaks.
When you use part of your home for business, you're allowed to deduct a "pro-rata" share of
expenses such as rent or mortgage payments, real estate taxes, security system, home insurance
premiums, heat, water, electricity, air conditioning and depreciation. If your office space covers
500 square feet and your home is 2,000 square feet, 25% of your home expenses qualify. You
can also deduct the pro-rata portion of any repairs or maintenance of your home that "benefit"
your home office. Cosmetic upkeep -- aluminum siding and landscaping, for example -- are
trickier.
Be aware that these deductions send up a red flag to the IRS. Don't be scared off, just be
prepared to justify, justify, justify the deductible portion of the cost. For added protection, file
IRS Form 8829 with your tax return to explain why you need your home office and how it is
used.
The amount you can deduct for home office expenses can't be more than your business's net
income, after you've deducted your business expenses, such as supplies, travel expenses and
phone charges. For example, if you have $4,000 in deductions, you can deduct the entire amount,
as long as your business had at least $4,000 in net profit. Home office expenses that exceed your
net income can be carried over to succeeding years as a loss.
To qualify for these tax breaks, your home office must be the main place where your goods and
services are provided to customers and your revenues are generated. You can maximize your tax
breaks, and keep more of what you earn if you:
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Use your home office exclusively for business. The IRS won't let you take a deduction for your
kitchen, just because you use the kitchen table as your desk. You must have a separate room or
partitioned area that's devoted to business use.
List your home address as your principal place of business, even if part of your business, like a
warehouse, is outside your home. Make sure you have a desk, filing cabinet and separate phone
line for your business.
Store your merchandise or supplies on your property -- in a detached shed, spare closet or your
garage -- instead of renting a warehouse. You'll save on rental costs and get a tax break for the
space you use.
How to Avoid Check Fraud
Business owners face a growing risk of check fraud as computers make it easier to create phony
checks and banks allow customers to open accounts via telephone and the Internet.
The retail industry alone loses $12 billion a year to bad checks, with industry estimates
attributing half of those losses to check fraud. Some industry analysts see the problem of bad
checks growing as much as 25 percent annually in the years ahead.
Many businesses rely on check guarantee, check verification, and collection services to fight
check fraud. But preventing acceptance of fraudulent checks in the first place is the best policy.
According to a recent Ernst & Young survey, 75 percent of merchants used a third-party
verification service to pre-approve checks, 16 percent used manual approval methods, and 13
percent used in-house authorization systems.
Here are some other steps to combat check fraud:
Establish a check acceptance policy. Be sure to follow it consistently. Your policy should
define acceptable forms of identification, necessary information to accompany checks, and dollar
limits for check writing. Be careful: Laws in several states prohibit check acceptance policies
that require a credit card number on the check.
Get ID. Cashiers accepting checks should be certain the customer name, address and phone
number are imprinted on the check and that they match the information on the ID. Be sure the
written and numerical amounts on the check correspond. If a bank agrees to process a check with
differing amounts, the written amount overrides the numerical figure.
Confirm the customer's identification is current. More than 50 percent of forged checks are
cashed with an expired driver's license.
Record the cashier's ID number or initials on the check. This information will be needed if
there's a prosecution.
Feel the check. Merchants should also consider the "feel" of the check since most check paper
has the same weight and texture. Except for those checks issued by the government, commercial
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checks should have a perforated edge. The type style should also be consistent and aligned.
Check the numbers. Ninety percent of bad checks are numbered below 500. But keep in mind
that there's little to stop a customer from opening a checking account and starting checks with a
higher number.
Don't accept second- or third-party checks.

Only about one percent of the 60 billion checks written each year actually bounce. One-third of
check fraud stems from closed accounts and "check kiting," according to the Nilson Report, a
news service for the payment services industry. Another 27 percent is due to counterfeit checks,
24 percent to forgery, and 12 percent to bankruptcy, and 5 percent of check fraud is attributed to
other reasons.
Business owners in restaurants and hospitality businesses run a higher than average risk of check
fraud. Merchants operating in industries where stolen goods -- such as electronics -- can easily be
resold also run a higher risk of check fraud.
Collecting on bad checks can be difficult if not impossible. Nationally, less than a third of checks
returned for insufficient funds are ever paid in full. But collection efforts are far more successful
if the merchant acts quickly to seek payment.
How to Choose a Cash Advance Provider
Taking the time to choose the right business cash advance provider can be tough–especially if
your business needs cash immediately. Don’t make the mistake of rushing into a cash advance
transaction with the first company you’re approved by–shopping around can give you bargaining
power and allow you to compare rates, fees and terms.
Where to Look for Providers

You can turn to a large company or a small business to obtain cash advance or factoring services.
A good place to begin your search is with businesses you already work with–your current credit
card processor or bank, for example, might offer a cash advance or factoring service in addition
to providing business loans or merchant account services. You’ll usually be able to negotiate a
better rate with a business you already work with or a company that is already familiar with your
business history. Online searches can also yield numerous results. If you’re not familiar with a
particular company, make sure you ask for references, and contact current and past customers
before signing a service agreement.
Industry Experience
Make sure you compare providers that have worked with businesses in your industry and have
served companies similar to yours in size. In some industries, statutory regulations or state and
local laws can restrict factoring or cash advance transactions (think law firms, medical billing
companies, etc.). If your business accepts customer retainer payments for future services, you
may be restricted in how you can use a cash advance transaction. Choosing a company with
industry experience ensures you comply with applicable rules and standards.
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Customer Service
Your relationship with the provider doesn’t end after your application is approved. You’ll also be
communicating regularly during the repayment process. Make sure you choose a provider that is
accessible, able to negotiate new terms if necessary and assist you during the process of
obtaining an advance. Reputable providers thoroughly explain the application and repayment
process, help you set up your credit card processing system for repayment and are available to
answer any questions during the cash advance repayment process.
Make sure the provider is concerned with what is best for your business. Stay away from
companies that try to steer you toward a too-high advance amount or those that propose
unrealistic repayment terms. Processing or administrative fees are not generally attached to
merchant advances–you should be skeptical of any provider who attempts to charge such
amounts. Providers also should not require that you use their company for merchant processing
or other services.
No matter which type of provider you choose, make sure you evaluate all of your options before
making a decision. Comparing rates and terms from several different providers is the best way to
determine if you are getting the best deal available for your business.
How to Reduce the Cost of Bounced Checks
The cost of bounced checks to small-business owners goes far beyond the penalty fees the banks
charge for depositing bad checks. The time spent handling bounced checks and the havoc they
wreak on cash flow are also part of the toll.
Fees and Costs
A merchant's bank typically charges a "protest fee" of $3 to $5 per bounced check. Some banks
impose higher fees, and a handful charge up to $25 for each bad check--matching the fee
typically charged to the person writing the bad check.
To avoid some of these costs, a business can use check verification and check guarantee services
or collection agencies. A collection agency will typically handle the collection process at no
charge to the business, instead collecting a $15 to $20 fee from the check writer.
Business owners can also use a check verification service, which electronically compares the
check writer's name against a database of people who have previously written bad checks and not
made good on them. In addition, businesses can enlist a check guarantee service, which actually
buys the check at face value from the merchant and then attempts to collect the check itself.
Check guarantee services are more expensive, but they may be well-suited to small business
owners operating in locations or in industries at high risk for bad checks. Often these business
owners sign up for a guarantee service because they can't afford the losses stemming from bad
checks.
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Electronic Check Collection

Some businesses prepare for bounced-check collections at the time of purchase by asking
customers to authorize electronic check collection. This allows the merchant to electronically
debit the customer's bank account if their check is returned.
Electronic collection is cheaper and easier to do than re-sending a paper check that bounced back
through the banking system. It also gives the merchant greater control over when the debit is
presented to the customer's bank--after payday, for instance.
Electronic collection has been around for awhile but wasn't widely used until recently. The
National Automated Clearing House Association (NACHA) created rules in late 1998 clarifying
a merchant's responsibilities in using electronic collection for bounced checks. The rules require
merchants to notify customers at the point of sale about the electronic collection policy. Retailers
are permitted to do so with in-store signage, and utilities can include notifications with monthly
bills.
The NACHA estimates that businesses using electronic collection can improve their recovery
rates on bounced checks by 25 to 50 percent, significantly reducing the costs associated with
bounced checks.
Manage Other Financial Paperwork
In addition to general data management issues, there are other financial records whose
management you need to systematize. These will improve the security and stability of your
business as well as help you meet the requirements of the IRS. You’ll have others specific to
your business and the market you serve, but here are some general guidelines:
• Keep copies of your business tax returns in a special file forever. Retain all tax-related
documents for at least seven years.
• Maintain a file of capital equipment expenses (computers, manufacturing equipment,
office equipment, and so forth) forever.
• Make and maintain copes of any legal documents (commercial leases, contracts and so
forth) in one place.
• On a regular basis, back up on floppy or removable disks any financial records you
maintain on your computer. Remember, there are only two types of people: those who’ve
lost data, and those who will. Don’t learn the hard way. Also, make a duplicate backup
disk and store it in your safe deposit box or other secure off-site location. Replace the
stored disk with an updated version on a regular basis.
• Keep your invoice file up to date.
• Establish a central location for storing regular financial reports regarding your business,
to chart your business growth over time.
• When it’s time to purge financial records, use a shredder. Compact shredders that perch
over standard office wastebaskets are about $100 and are a wise investment for
maintaining business security.
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Merchant Account Costs

Equipment Costs
Credit card processing equipment costs depend on your requirements. Businesses that process
cards online won’t need any equipment at all–credit card processing software takes the place of a
magnetic swipe machine or card reader. If you’re processing cards at a retail store or a business
where cards will be physically present, you’ve got a few options:
Magnetic swipe machines are probably the most common piece of credit card processing
equipment. Charges for swipe machines are lower than those for online transactions or “keyed”
in transactions, where a customer places a phone order–the physical presence of the card makes
the transaction easier to verify and cuts the risk of fraud. You can also use a swipe machine that
is integrated into a POS system, eliminating the need to purchase or lease a credit card terminal.
Magnetic card readers can cost up to several hundred dollars to purchase.
Mobile terminals use a wireless internet connection to transmit payment information. You can
use mobile terminals within a store or at different locations, such as trade shows, concerts or
community markets. Using a mobile terminal is a convenient and reliable method of collecting
customer payment, but the terminal equipment itself might be more costly. Merchant service
account providers should be able to tell you more about your options when it comes to portable
or mobile terminals.
Credit Card Processing Software

Credit card processing software, which takes the place of a credit card swipe terminal, can be
purchased or “leased” from a hosted software provider. Purchasing the software allows for a
higher level of customization, but might require more management–you’ll need to perform
upgrades and maintenance yourself. Hosted software is maintained and updated by the provider
regularly, and is available for a lower initial cost than purchased options–you’ll pay a monthly
rate to use the software for credit card processing. Hosted software is more difficult to customize
and allows you less flexibility in terms of control and use.
Service Costs
The majority of the costs associated with credit card processing are service charges–merchant
account providers typically charge a fee for each transaction. The per-transaction rates depend on
several factors: the “risk” level of your business, past transaction volume and how the card
information is collected. For example, fees transactions made using a credit card terminal
(http://www.resourcenation.com/landing/specialtystoreservices/pos-systems) are typically lower
than those for “keyed in” or even online transactions. Rates can vary, but typically range from 1
to 3% of each transaction amount.
The Nuts and Bolts of Credit Card Processing
Consumers increasingly are turning to plastic over paper when they open their wallets. Credit
and debit card spending exceeded $1 trillion in 1998, making it a necessary payment option for
most businesses.
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Yet many small businesses still don't accept credit cards. If you're one of the laggards, the entire
transaction may retain the aura of a mystic ritual—swipe a card, input some numbers, and money
magically appears in the bank. In reality, though, credit card transactions involve coordination
between multiple high-speed computer networks.
How the Process Works
When a merchant makes a sale and swipes a customer's credit card, the card number, the amount,
and the merchant ID travel over the credit card processor's computer network. The credit card
processor can either be a bank or a company that does nothing but provide credit card processing
services.
From the processor's network the transaction goes to a credit card computer network. If the
customer is using Visa, for example, the transaction will go to Visa's network. In turn, the
electronic transaction goes to the bank that actually issued the card. The bank then checks the
account and verifies the customer has adequate credit to cover the purchase. The bank then sends
the merchant an authorization over the network. Now the sale is complete, but the transaction is
not—no money has changed hands yet.
At the end of the business day, the merchant sends that day's charges, in a batch, to the credit
card network for processing. The transactions travel via the merchant's credit card processor.
Individual transactions are then stripped out and sent back to the individual cardholders' banks.
Banks then debit cardholders' accounts and make appropriate payments to the merchant's credit
card processor through the Federal Reserve Bank's Automated Clearing House.
The credit card processor then credits the merchant's bank account for the transaction amount,
minus its fees for the transaction. Those fees also go toward paying transaction fees to the
issuing bank and the credit card network. Despite the use of computers, it can take two business
days before the merchant's account is credited.
Opening a Merchant Account
In order to accept credit cards, you must open a merchant account with a bank. However, many
banks have gotten out of the credit card processing business, and those that remain are often
skittish about servicing small businesses, particularly ones with limited operating histories.
Many small businesses must therefore go through a specialized credit card processor or an
independent sales organization, commonly referred to as an "ISO." Whether you use a bank or a
credit card processor, you need a merchant account to receive credit card payments.
Though businesses can contact credit card processors directly, banks unable or unwilling to
process credit transactions often refer customers to an ISO to help them find a credit card
processor and get the necessary equipment and training to begin accepting credit cards.
Qualifying for a Business Cash Advance

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A business cash advance is a financing option for businesses. Many seek a business cash advance
when they don’t have the time or favorable credit history necessary to qualify for a traditional
bank loan. Qualification for a business cash advance isn’t based on credit history–providers will
be more interested in your current and future sales. Here are a few factors a provider will take
into consideration:
Monthly credit card transaction volume. Most providers require a monthly sales volume of at
least $3,000–some even require more for large advance amounts. Cash advance providers will
use your current sales volume to predict future sales–a regular, steady sales volume is a good
indication that a business will be able to repay the advance on time.
No existing merchant cash advance repayments. If you have an existing merchant advance
balance or a factoring loan balance outstanding, the new advance will be subordinate to it–the
new provider will be second in line behind the advance provider you’re already paying back.
Providers don’t like to be placed in this position and usually require that all cash advance
transactions with other providers be repaid before a new advance can be issued.
No existing liens on business-owned property. Similarly, most providers also deny businesses
with existing liens on property. Other credit obligations are an indication that your business isn’t
financially healthy and might not be able to repay the advance.
Information about past sales volume. Providers generally will want as much information as
possible about past sales–this way, they can more accurately predict the future financial health
and solvency of your business.
Other Qualifiers
Specific providers will have qualification standards for the types of businesses they will provide
advances for. Some providers will only work with businesses that have been operational for over
a year. Others require existing property or equipment leases. Providers look for anything that
indicates that your business is an ongoing, profitable enterprise–the more information you can
provide, the better rates you’re likelier to get and the more favorable repayment terms you’ll
qualify for.
The Cash Advance Process
Applying for a business cash advance is a fairly simple and straightforward process. Here’s a
quick step-by-step guide to the cash advance process:
1. Collect financial information.

Collect information about credit references, sales history and other relevant documents before
you apply. Similar to a business factoring application, a cash advance application generally asks
for specific information about credit card sales amounts, current financial information and
business operation costs.
2. Apply.
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Most cash advance providers offer online applications that can be completed in as little as an
hour. Providers are generally more interested in your ability to operate your business reliably and
pay back the loan than in your credit history, so often there is no credit check–just a request for
recent credit card sales information and current business credit references. Providers will ask for
information to help them determine repayment terms and advance amounts.
3. If you’re approved…
After you fill out the application, the provider will contact you with an approval or a request for
more information. Though approval can take as little as a few hours, the process typically takes
up to a week. Your advance amount will be based on your current sales volume, operating costs
and credit or debt obligations.
4. Agree on terms and conditions.

Once you’re approved, the provider will draft a contract that specifies the terms of your
agreement, such as the “safe retrieval rate,” or the percentage of daily credit card sales that can
be set aside and used for repayment of the advance. The provider uses this amount to determine
the daily retrieval rate. The daily retrieval rate cannot be higher than the “safe” rate–the higher
the amount set aside each day, the faster you’ll be able to repay the advance.
Any prospective agreement should address pre-payment–if you want to pay the advance off
early–and default options. Typically, providers reserve the right to collect the full outstanding
balance if payments are not made according to the agreement. Providers often place liens on
business property, and in some cases, even force sale of business assets to collect unpaid
amounts. Make sure you’re aware of all responsibilities before the advance agreement is
finalized.
5. Ensure merchant account compatibility.

Once terms are agreed upon, the provider will send you a contract and arrange to transfer the
advance amount to your business. You will need to make sure the provider will have access to
your merchant account in order to collect repayment. Some credit card processing companies
charge additional fees for third party access or do not allow third party transfers at all. If this is
the case, you may need to switch to another merchant account provider. Make sure you consider
any cost associated with switching providers in order to take the advance.
Top 10 Account Collection Mistakes
It would be wonderful if everyone simply paid their invoices immediately. However, in business,
you need to diligently collect and follow up on accounts. Below are some of the common
mistakes that can slow down and hinder the process.
1. Making payment application errors. Perhaps the most common mistake is the simple
error made by applying payment information to the wrong account or applying it twice to
the same account.
2. Not sending invoices promptly. Invoices should be sent upon the completion of either
the service or the sale of the product. If it is a recurring invoice, it should be sent
promptly at the same time each month. Failure to do so delays payment and suggests to
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the other party that they have more time in which to pay.
3. Not having a standard policy. From the onset, you need to have a policy in place (and
in writing) that makes it clear when payment is due and what the follow-up steps are for
late payment. Make sure the customer knows there is a fee for late payment.
4. Not having thorough follow up. Someone from your company needs to follow up when
trying to collect payments that are late. This means having the information handy and
making repeated efforts to receive payment.
5. Not updating your database regularly. Far too many payments are not collected
because the invoices went to the wrong address or the business was sold and someone
new is handling payables. Collection mistakes made through the fault of your company
should be easy to correct by establishing a smooth process for updating all contact
information.
6. Failing to address problems early on. Often, it becomes evident that either payments
are routinely late or that you need to be aggressive to collect from a specific account. In
these instances, you should address the situation early on. Perhaps another payment
schedule will make it easier to receive payments on time. Don't ignore such problems in
the making.
7. Accepting the runaround. It's very easy in business today to avoid calls, emails, and
other means of communications. Don't allow a company to give you the runaround. Be
persistent and reach the person with whom you need to discuss outstanding payment.
8. Failing to apply payments promptly. If you receive a payment and do not apply it
promptly and accurately, you run the risk later on of not knowing whether or not payment
has been made. This can result in duplicate billing of an invoice that was paid.
9. Failing to lock in a payment date. It is worthwhile to try and lock in a payment date
early on in the collection process. This way, if you are still waiting for payment, you have
a specific date set and can use that for leverage.
10. Not increasing the level of your collection attempts. Each invoice should indicate that
payment is late and attempts to collect should become more frequent. You should be
prepared to take more aggressive action if necessary. But make sure you comply with
laws applicable to collection practices.
Top 10 Bookeeping Mistakes by Small Businesses
From one-person entities to major corporations, bookkeeping is a significant part of

any business endeavor. While it is typically not one of the more glamorous jobs,
bookkeeping is at the heart of a company's success, and errors can cost the company
significantly. Below are 10 of the most common errors that you want to avoid.
1. Not saving receipts of less than $75. While such receipts may not be required by the
IRS, they provide backup documentation for the many deductions you may claim. It is
very simple to have a folder for such receipts, which can prove valuable at tax time.
2. Doing it yourself. No matter how much they hate it, many small business owners insist
upon handling the books themselves. Having a competent bookkeeper coming in to
handle the books can be extremely beneficial in that they have the skills to do the job
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quickly and efficiently and will provide a second pair of eyes to find errors and make
suggestions.
3. Forgetting to track reimbursable expenses. Small business owners often pay for
expenses out of pocket or with their own personal credit card then make the mistakes of
failing to track these expenses. They then fail to submit the expenses to the company for
reimbursement.
4. Not properly classifying employees. The proliferation of independent contractors,
consultants, and freelancers has made it difficult to determine who is on staff and who is
not. This results in misfiling when it comes to filing taxes since there are different rules
and regulations for employees and non-employees.
5. Lack of communication. Having someone handling bookkeeping is only effective if
they are filled in and kept up to date on all financial transactions. A frequent mistake is
paying someone a bonus and not reporting it or buying supplies and not providing the
bookkeeper with the information or receipts.
6. Not reconciling the books with the bank statement each month. One of the
fundamental aspects of bookkeeping is reconciling the books and bank statements every
month. Nonetheless, there are businesses that do not do this and others where errors are
made by not doing it properly. Again, this is a good reason for hiring an experienced
bookkeeper.
7. No backup. The paperless office does not exist in the real world, where audits do still
exist. A paper trail, documentation or verification in the form of backup documents
should be available, especially if all files are on the computer system, which could be
prone to technical problems.
8. Not deducting sales tax. A common mistake in retail businesses is not deducting the
sales tax from the total sales. This results in a higher total sales amount and does not
lower the amount of taxes due.
9. Petty cash nonchalance. A system should be set up whereby a set amount of money is in
petty cash and each time money is taken out for any purpose, a petty cash slip is filled
out. When the fund is exhausted, the slips will total the original amount and a check can
be written to cash to set up the full amount again. Many offices are nonchalant about
using the petty cash fund without keeping accurate records.
10. Miscategorization or overcategorization. There are fairly standard categories for
expenses. However, often expenses are entered into the wrong categories or too many
categories are created. Use general bookkeeping guidelines for standard categorization
and create as few new categories as possible. Try to follow generally accepted accounting
practices.
Top 10 Payroll Mistakes
Any business with employees must have a system in place for handling payroll activities, which
includes paying employees, filing all necessary government forms, and paying taxes promptly.
There are numerous aspects to payroll, particularly in larger companies with full-time and part-
time employees plus independent contractors. Here are 10 of the most common payroll mistakes
to be aware of.
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1. Missing deadlines. It is imperative that you mark your payroll calendar and report and
deposit and payroll taxes to federal and state agencies in a timely manner. Late deposits
can result in penalties and interest charges.
2. Misclassifying workers. Because of the growing number of temporary employees,

consultants, and other independent contractors, it is essential that you properly determine
the classification of everyone working for your company so you can determine how to
report payroll information for tax purposes.
3. Neglecting to send 1099s. All independent contractors who receive $600 or more in
compensation during a given year are supposed to receive a 1099 form by January 31st of
the following year. Often companies neglect to send these out in a timely fashion.
4. Poor record keeping and data entry. Mismatching names and Social Security numbers
is so common that the Social Security Administration has even established a special
verification phone number. Numerous data entry mistakes, including poor records of
employee hours, cost companies millions of dollars annually and can result in
government penalties.
5. Not properly handling garnishments, levies, or child support. Employees may owe
money by way of a court order to other parties. This means whoever is handling payroll
will be responsible for sending the payment to the appropriate recipient.
6. Miscalculating overtime pay. There are guidelines that must be followed when
determining overtime pay and miscalculations can be costly. Litigation has been
increasing in recent years claiming that employees who were treated as "exempt"
employees and therefore not entitled to overtime were misclassified.
7. Leaving too much responsibility to the software program. There are several excellent
programs available for doing payroll such as QuickBooks. However, the old garbage-in,
garbage-out theory still applies. Too many people neglect to enter all of the data or
assume that the program can perform calculations without all of the necessary
information.
8. Not saving payroll records. While states and specific agencies vary, typically records,
including time sheets, cancelled checks, and W-4 forms, need to be held for anywhere
from four to six years.
9. Not maintaining confidentiality. Payroll information should not be disclosed to anyone
outside of the payroll department or the senior management team. It is important that
such confidentiality be maintained and that payroll is handled in a secure environment.
10. Not having adequate backup. Should the individual responsible for payroll be away or
sick, the IRS and the state still need to receive payments on time as do employees waiting
for paychecks. There needs to be more than one person capable of both understanding
and handling the payroll functions. In addition, if the computer is "down" for whatever
reason, you need to have a manual backup system for handling all payroll functions.
Top 10 Tax Tips for Small and Growing Businesses
Taxes are one of the most important issues facing small and growing businesses. And like a
company's profits, its annual tax bill will in part reflect the owner's skills and knowledge.
Business owners need to be sure that they are meeting all of their responsibilities to the tax man
-- and also seizing every opportunity to reduce their taxes. These tax tips will ensure Uncle Sam
is not getting more than his due.
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1. Writing It Off: Deductions. Businesses can deduct all "ordinary and necessary" business
expenses from their revenues to reduce their taxable income. Some deductions are obvious—
expenditures in such areas as business travel, equipment, salaries, or rent. But the rules
governing write-offs aren't always simple. Don't overlook these potential deductions:
• Business losses. Business losses can be deducted against a business owner's personal
income to reduce taxes. If a business owner's losses exceed personal income for the year,
some of the year's business losses can be used to reduce taxable income in future years.
• Trips that combine business and pleasure. If more than half of a business trip is
devoted to business, deduct the traveling costs, as well as other business-related
expenses.
2. Employee Taxes. If a business has employees, a variety of taxes will have to be withheld
from their salaries. Among them are:
• Withholding. Social Security (FICA), Medicare and federal and state income taxes must
be withheld from employees' pay.
• Employer matching. Businesses must match the FICA and Medicare taxes and pay them
along with employees.
• Unemployment tax. Businesses must pay federal and state unemployment taxes.
3. Quarterly Estimated. This area trips up many an entrepreneur and is especially vexing for
home-based businesses. Failure to keep up with estimated tax bills can create cash flow problems
as well as the potential for punishing IRS penalties. Among the issues are:
• Who should pay? A business probably must pay quarterly estimated taxes if the total tax
bill in a given year will exceed $500.
• How much should you pay? By the end of the year, either 90 percent of the tax that is
owed or 100 percent of last year's tax must be paid (the figure is 110 percent if a
business's income exceeds $150,000). Businesses can subtract their expenses from their
income each quarter and apply their income tax rate (and any self-employment tax rate)
to the resulting figure (their quarterly profit).
4. Sales Taxes. Most services remain exempt from sales tax, but most products are taxable
(typical exceptions are food and drugs). If a business owner sells a product or service that is
subject to sales tax, he or she must register with the state's tax department. Then taxable and
nontaxable sales must be tracked and included on the company's sales tax return.
• Having what is considered a "presence" in a state is the criteria used by the IRS to
determine whether or not you are liable for paying state sales tax.
• If you do not have a physical presence in another state, but sell items via the Internet or
by catalog in that state, you can be subject to a state’s "use tax," but typically not to their
state sales tax. A "presence" in another state does not necessarily mean that you have a
retail outlet in that state. If you have an office, warehouse, or employees working for you
in that state, the IRS may consider you to have a presence in that state. Make sure you are
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aware of your sales tax responsibilities in all states in which you are doing business.
5. Keep Tax Documents for at Least Seven Years. Good record keeping saves money. Some
things like copies of business tax returns, licenses, incorporation papers, and capital equipment
expenses should be preserved indefinitely. Keep any tax-related documents (e.g., expense
receipts, client 1099 forms, and vehicle mileage logs) for a minimum of seven years.
6. Charitable Contributions. Unless your business is a C corporation, charitable contributions

typically "flow through" the business and are claimed as deductions on the individual tax returns
of the shareholders of the company. That's true whether you're running a sole proprietorship,
partnership, limited liability corporation, or S corporation.
• If you want to get the maximum tax benefits, you should know these basic rules:
• Only contributions to charities listed as "qualified organizations" by the IRS are
deductible. Consult IRS Publication 78 for a list of qualified organizations or search
online at the IRS home page.
• Contributions of more than $250 require a letter of receipt from the qualified
organization. For contributions of less than $250, a canceled check is sufficient.
• In general, donations of property can be deducted for their fair market value at the time of
the contribution. You cannot deduct a contribution that has already been written off as a
depreciated asset.
• You cannot deduct the value of time or services that you volunteer.
• You cannot deduct the part of a contribution that benefits you. If you receive a gift in
exchange for a charitable donation, for example, you can deduct only the amount of the
contribution that exceeds the value of the gift.
• In general, you can deduct contributions only in the year you make them. Pledged
contributions cannot be deducted until they are actually paid.
7. Important Tax Deadlines for Businesses. April 15 isn't the only important tax date for
business owners. The following dates are important to keep in mind:
• Annual returns. Most annual returns are due April 15 for unincorporated companies and
S corporations. C corporations must file annual corporate returns within two-and-a-half
months after the close of their fiscal year.
• Estimated taxes. Estimated taxes are due four times a year: April 15, June 15, September
15, and January 15.
• Sales taxes. Sales taxes are due quarterly or monthly, depending on the rules in your
state.
• Employee taxes. Depending on the size of your payroll, employee taxes are due weekly,
monthly or quarterly.
8. Deducting Loans. Most business loans are not considered business income. One notable
exception is a situation in which you negotiate with a creditor or lender to reduce your debt. If
any debt is forgiven, you will owe taxes on this amount. On the other hand, business loans can
offer substantial tax benefits. The principal and interest you pay on your loan are business
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expenses, and you can deduct them from your taxes as such. In order to take advantage of a tax
deduction, you must report the total amount of the loan, and the assets and expenditures financed
must be necessary to operating the business.
9. Tax Audits. The very thought of an IRS audit is enough to make most business owners break
into a cold sweat. But not all audits are created alike: There are several different types of tax
audits, ranging from simple requests for a particular piece of information to comprehensive
reviews that cover every aspect of a business.
• Correspondence Audit This is a relatively simple procedure in which the IRS asks you
to document an item on your return by a specified date. This is usually a routine test for
compliance with certain items on your return.
• Office Audit The IRS may ask you to report to a nearby IRS office and document one or
more items on your return. You may be able to send them copies of this proof in advance
of the appointment and resolve the issue without actually going to the office.
• Field Audit This is the audit most people dread. The IRS will ask you to provide
documentation of various items on your return and to meet with an IRS agent for a
thorough review of your records. Be prepared to answer the auditor’s questions, but don’t
volunteer information.
• Taxpayer Compliance Measurement Program Audit This rather lengthy and detailed
audit asks you to document and prove every single item in your return. The IRS and
Congress use the data from these audits for research and statistical purposes. These audits
are arbitrary, and anyone can face them regardless of how carefully they prepare their tax
returns.
• Criminal-Investigation Audit If you are suspected of tax evasion, the IRS will conduct
a criminal-investigation audit. If they prove that you have purposefully not paid your
income taxes, you can face substantial fines and even jail time. Obviously, you should
retain qualified legal counsel if you face this type of audit.
10. The IRS. The IRS small business Web site provides a wealth of information to small and
growing businesses. There's a section for businesses getting off the ground that includes a
handing checklist and advice on choosing business structure. It's particularly helpful on
important topics such as employee taxes and business tax deductions. In addition, it has a list of
small business resources with links to other government resources for small businesses.
The Truth About Your FICO Score
Fair Isaac Corporation is the founder and the originator of credit scoring models that date back to
the late 1950s. Their goal is to help businesses make smarter decisions when assessing risk. The
FICO score – an acronym formed from the company’s name, Fair Isaac Corporation – remains
the golden standard to date. The FICO score is used by 90 percent of all banks and lenders.
The FICO score is a number that summarizes your credit risk, based on a snapshot of your data
at the three national credit bureaus, Experian, Equifax and TransUnion at a particular point in
time.
The FICO score ranges from 300 to 850 and evaluates your payment behavior, how much you
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owe and your payment history. So, for a bank or a creditor who’s making a decision about
extending you credit, the higher your score, the more likely you are to pay your bills on time.
This will help you get approved for lower interest rates and fewer fees. The lower your score, the
less likely you are to pay your obligations on time in the future. If approved for credit, you will
be charged higher rates and ridiculous fees.
All three credit bureaus use the FICO scoring model developed by Fair Isaac in 1980, although
they all have different names:
• Equifax: Beacon
• Experian: Experian/Fair Isaac Risk Model
• TransUnion: FICO Risk Score, Classic
In general, when discussing your “credit score,” you really mean your FICO score. And when
creditors request your scores from the three national credit bureaus to make a credit decision
about you, they demand and receive FICO scores. However, when you purchase your credit
score directly from the credit bureaus (with the exception of Equifax’s Power Score) you are
without a doubt getting fako scores. This is an imitation of the FICO score, which is completely
unrelated to Fair Isaac and your FICO score. Here is a breakdown of what you’re really
receiving:
• Plus Score and Credit Expert Score from Experian,

• Trans-Risk Score from TransUnion /True Credit
• Vantage Score from all three; Experian, Equifax & TransUnion
These generic scores are called educational scores and sold to us under the pretence that they are
the actual scores that lenders and creditors use. Sadly, the three credit bureaus don’t go out of
their way in their advertising campaigns to tell us the cheerless truth about the scores they
provide. To obtain a free copy of your educational score from the three major credit bureaus,
visit www.annualcreditreport.com. However, to get your real FICO score you can go straight to
www.myfico.com! Remember, getting your own score will not hurt you, it will simply make you
aware and help you better plan when applying for credit.
Using a Merchant Account for Credit Card Processing
Before merchant accounts became commonplace, processing credit card transactions could be
time consuming and risky. Business owners could only verify credit card account information by
making a phone call to the issuing bank, which would then authenticate the information and
transfer funds to the business’ account. When the purchaser and the vendor both held accounts at
the same bank, this was a fairly simple process–but form most businesses, credit card processing
transactions were more complex. What about those transactions that occurred at night or on the
weekend, after most banks were closed? What about those customers whose banks were in
different time zones? Since transactions could not be processed immediately, many businesses
effectively “advancing” purchased goods or services to customers for the promise of future
payment by the issuing bank.
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Merchant processing accounts eliminate these risks to a business owner. A merchant account acts
as a “holding” location for completed transactions before funds are transferred. When a business
collects credit card information, funds aren’t transferred immediately. A merchant account
provider bears the risk of unverifiable transactions by advancing funds at the end of each
business day to the business owner.
Merchant accounts can work with magnetic swipe machines or online processing software to
collect card information for processing. Card readers or swipe machines can link to your POS
equipment or can function as a stand-alone terminal. When a card is swiped, account information
is sent to the merchant account, where it is verified. The account provider processes the
transaction, advances the funds to your business and then collects payment from the customer’s
issuing bank. Transactions using card readers present less risk of fraud and are usually less
expensive to process.
Transactions can also be processed without swiping a card. In non-magnetic transactions, the
merchant account provider verifies the information using a keypad or online processing software.
Many merchant account providers specialize in ecommerce services and only offer online
accounts. Since internet or phone transactions are riskier (you can’t check identification,
signatures, etc.) they generally carry higher rates.
Merchant accounts typically hold funds and “settle” a group of transactions as a batch, usually at
the end of the business day. Batches can also be settled once sales totals reach a certain amount
or automatically at a specific time of day.
Who Uses a Merchant Cash Advance?
Usually, businesses that use merchant cash advance or business cash advance transactions have
chosen not to pursue more traditional financing options, like bank loans. Bank loans can take
time to qualify for and are often out of reach for new businesses, companies in “high risk”
industries or those with many existing credit obligations. Though businesses that don’t qualify
for a bank loan might still qualify for a cash advance, merchant advances are a much more
expensive type of financing.
You should think carefully about the ways your business will benefit from a cash advance.
Ineligibility for traditional financing might be a sign that your business is not be planning for
cash flow problems properly. Before you decide to pursue a cash advance, consider the
following:
• Can you obtain other financing? Cash advances are easier to qualify for than bank
loans or even factoring loans, but fees and rates make them much more expensive than a
traditional business loan. You should seek out other financing first–you’ll be able to get
operating cash at a better rate.
• Do you need flexible repayment terms? Most bank loan repayment takes years, and
terms are difficult–sometimes impossible–to change or modify. Cash advances offer
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more flexibility, though they are paid back more quickly. Many providers are flexible and
open to renegotiation of terms if you are a good customer.
• What are your credit obligations? If you have existing credit obligations and would
like to take out a traditional loan in the near future, a cash advance might be a better
option than traditional financing. Merchant cash advance transactions are not technically
“loans,” and they will not be reflected on your credit report.
• Do you have a reliable sales volume? Most providers require a certain sales volume to
extend an advance in the first place. Businesses with stable or increasing sales will find it
easier to repay a cash advance.
• Can you repay the advance? Since repayment of the advance is automatic and
determined by daily sales (taken from daily sales volume), repayment amounts increase
as sales volume increases. You need to make sure your business can accommodate
repayment amounts.
What Information Should My Invoices Include?
Your invoices may be the most important documents in your business; without them, you won't
be paid. Your invoices should always include the following information:
• The amount due. While this may seem obvious, it's essential to clearly display the exact
amount of the payment due. Any confusion could lead a customer to delay payment.
• The payment due date. Along with the amount of payment due, this is one of the most
important elements of your invoice. Without it, you can't count on being paid on time and
have no real method to track your accounts receivable.
• The date of the invoice. This shows customers when the grace period for payment
begins and gives them a general idea of when the purchase was made.
• A description of the goods or services purchased. This lets customers know what
they're paying for. Without this information, the customer might not know what the
invoice is for and not return payment.
• The customer's information. Include the customer's address, phone number, social
security or tax ID number, and any other relevant information. When a customer sends
you a payment, you'll know exactly whom it's from.
Preparing and sending accurate invoices promptly after a sale will help speed up the process of
turning your outstanding invoices into cash.
Which Financial Records Should You Keep (And For How Long?)
Good financial records are very important … especially come tax time. But if you keep every
snippet of paper forever, you'll need to put an addition onto your house! Let's do some
maintenance and get rid of the paperwork that's cluttering your life.
Before we talk about what you can throw out, let's look at papers you should stash away in your
permanent file. Keep the following documents forever:
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• Records that relate to your home (mortgage, deeds, capital improvements, etc.)
• Documents showing non-deductible and deductible IRA contributions
• Tax returns and checks used to pay taxes or to substantiate deductions.
Once those papers are safely tucked away, grab your trash bag because here we go!
• Accident reports/claims – 7 years

• Back-up tax paperwork – 10 years
• Bank reconciliations – 1 year rolling
• Bank statements – 3 years
• Brokerage statements – Year end only
• Contracts, notes and leases (expired) – 7 years
• Credit card statements – 1 year rolling
• Insurance policies (expired) – 3 years
• Mutual fund statements (after sold) – 10 years
• Paycheck stubs: normal – 1 year
Now maybe your home will be big enough for you, your family and your financial records!
Why Accept Credit Cards?
With over ¾ of the American population using some form of plastic for regular purchases,
businesses–especially online retailers–can’t afford not accept credit cards as a form of payment.
Credit or debit/ATM cards make transactions fast, easy and error free. Credit cards are also
reliable payment method for businesses that are not able to accept cash or checks.
Accepting credit cards isn’t only beneficial to retail stores. Professional service firms
(accountants, attorneys, dentists, physicians, etc.) are also jumping on board, allowing customers
to use credit cards to pay bills or invoices for services rendered. Accepting credit cards online
allows you to take client payments quickly and easily.
To accept credit cards, you’ll need to open a merchant services or online credit card processing
account. A merchant services account is the intermediary between your business bank account
and your customers’ credit account. When a customer pays with a credit card, funds will usually
reach your business bank account several days after the actual transaction–the merchant account
provider verifies credit limits, processes the transaction and transfers the funds. Though credit
card payments are not as fast as cash, they can definitely be faster and more reliable than the
traditional invoicing process. There is no need to wait for customers to transfer funds or send a
check.
Opening a merchant account provides several benefits. Businesses without merchant accounts
usually use the “phone in” method to verify transactions. With a merchant account, you can use a
credit card terminal or link processing functions to your POS system. Customer payments will
take seconds to approve, and in some cases only a few hours to verify and transfer. Using a
merchant account eliminates the need to phone a customers’ credit card company, verify the
credit card number, customer information or relay purchase amount details.
Some businesses choose to accept credit cards without opening a merchant account. You can
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user an online payment service, such as paypal, to accept customer credit card payments easily.
Most payment services transfer funds from a customer’s bank account into their service account
(such as a paypal account) and then from their service account into your service account when a
purchase is made. A drawback to using service accounts is that both the seller and the buyer must
set up accounts well before any purchases can be made. Opening a service account usually takes
several days for bank account verification.
Merchant accounts present an advantage over service accounts in that your business is able to
accept payment from any customer, whether or not they use the same payment service you’ve
linked to your site (PayPal is a good example). The most common credit cards, such as Visa and
MasterCard, are used by millions of customers–setting up a merchant account allows you to
accept payments from anyone who holds these cards.
Human Resources
Common Hiring Mistakes Entrepreneurs Can Avoid
When most entrepreneurs are ready to hire their first employee, they can’t afford the services of
an experienced executive recruiter. But attracting people with the right skills and chemistry is
essential to getting a new business off the ground.
“Your first people are your most critical hires,” says Francois Gossieux, an entrepreneur in
Andover, MA, who has three start-ups under his belt including his latest, Synopia, which makes
software used in product development. “If you ask a venture capitalist, he'll tell you the team is
the top thing they look for.”
Whether you plan to seek outside investors or intend to grow your company by its bootstraps,
finding and keeping good people is a top priority.
Hiring isn’t easy. You need to find people who not only have the experience you need, but also
whose personalities complement your own, and who appreciate and can stomach the financial
risks and unpredictability that go with working for a fledgling company. And you need to protect
yourself by making sure everything you negotiate with your new hires is clear and in writing.
With start-up activity on the rise again, more budding business owners are facing this complex
hiring equation. The Kauffman Foundation of Kansas City, MO, reports that 11.3 percent of
American adults were “engaged in entrepreneurial activity” in 2003, up from 10.5 percent in
2002.
Veteran entrepreneurs and venture capitalists cite common hiring mistakes and suggest some
practical solutions:
Don’t Oversell Your Company

Because founders often “are good salespeople, they can persuade a person to take a job,”
observes David Friend, who started five companies as an entrepreneur and is now a partner with
the Boston venture firm Orchid Partners.
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But too often, such personalities focus too much on the positive and too little on what can go
wrong, he says. “I've pushed too hard to convince someone to join me when they weren't sure
they had the temperament for a start-up,” Mr. Friend says. "It backfired because from day one
they were saying to themselves, ‘What have I done?’”
Jim Finkelstein, who has recently been hiring key executives for his Silicon Valley start-up,
Futuresense, spends a lot of time talking with prospective employees to make sure they fit both
him and his start-up. “I tell people that I can offer them total flexibility and a lot of freedom to
act. And I ask if they like a lot of structure and guidance. If they do, this is not the place for
them,” he says. When possible, Mr. Finkelstein brings even top-level managers in on a
consulting basis for three to six months before offering them a full-time job. “This is an
opportunity to see their work style,” and to make sure they enjoy and understand his company's
unstructured, fast-paced environment before committing to it.
Don't Call All Your Old Cronies

“Your first instinct is grab people you know and trust, with whom you were successful in
another setting, but sometimes that's not appropriate,” says Chris Pacitti, a general partner at
Austin Ventures in Austin.
Such hiring causes Mr. Pacitti's caution flag to go up because, even though the old cronies
clearly have good chemistry, it could signal that the founder has simply fallen back on the
familiar and comfortable rather then thinking through what skills and experience he'll need to
make his venture work.
For example, you might love the crackerjack sales director who successfully launched a new
product with you at the large company you just left. But he might not be as good at selling
without the resources and reputation of a big company behind him. Mr. Pacitti says he likes to
see “a balance of old folks and new in the mix.”
Mr. Gossieux took that approach when hiring for Synopia. "Out of six of us here now, only two
have worked together before," he says. “If you're going to tackle a new product in a new space in
a new time you have to be able to do things differently. If you have only people who have
worked together before, you can fall back on what you did before, which might not work,” he
explains. Instead, “You need people who will challenge what you did before. If you get different
backgrounds, you have different kinds of ideas and questions coming in.”
Think Like a VC
Before you seek outside money, put yourself in the shoes of venture capitalists, think about the
shortcomings they'll see in your team and set to work addressing them. Mr. Friend explains,
“You might think ‘Shoot, I don't need a sales guy for six months. Why pay for him now?’ But
you might need the whole team to be credible to an investor.
“I might know you're a good engineer and the product is good, but if you don't have a
salesperson I don't know who's gonna open the door and get his or her hands on those key first
customers,” he says. “Or, I might see good engineers and salesmen, but I know none of them are
good at controlling budgets, so I want to see a [chief financial officer] in there, even if you don't
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need it at the moment.” In other words, “have at the ready all the people who will reduce the
risk” of your company failing.
Put Everything in Writing

Finally, Mr. Friend observes, put together an employee handbook or write up detailed
employment-offer letters, even though you may be pressed for time. “People who are [starting a
business] for the first time are distracted. They have things that are more interesting and
important to do." And, he adds, “they haven't been bitten yet.”
James O'Hare, an attorney who works with start-ups at the Boston office of Kirkpatrick &
Lockhart, says a detailed offer letter can prevent future disagreements that could damage your
credibility and relationships. “You do make a mistake if you don't lay it all out,” he says. “And it
could affect your ability to get funding.”
He suggests making sure an offer letter covers not only issues such as compensation, options and
the parameters for bonuses and severance, but also intellectual property rights, nondisclosure and
noncompete clauses.
Mr. Gossieux concurs. “I'm a firm believer that you should put everything on paper. Incorporate
right away, get a company lawyer right away," he says. "It's real people and real money, so it’s
better to have it all in writing.”
Beyond the legal and financial entanglements, Mr. O'Hare points out that misunderstandings
with employees can also hurt your long-term career prospects. “People are part of your network
and reputation,” he says. You might want to sell your successful company and start a new one.
You might need to try again if your first venture fails. Or you might one day want to stop being
an entrepreneur and work for someone else again. “The way you treat people will affect your
ability to do" any of those things,” Mr. O'Hare cautions.
Create an Entrepreneurial Culture Among Your Employees
One motivation cited by many small business owners is the opportunity to be one’s own boss.
But that doesn’t mean you’re free to forget what it is like to be an employee.
Think about the people working for you now. Are they contributing to your company’s growth
through their energy and ideas? Or, are they merely putting in the hours until a better opportunity
comes along?
People want to contribute to a cause they believe in, and one that recognizes the value of their
participation. Your small business is no different. Along with being the “eyes and ears” of your
business, employees can help solve (and, often, avoid) problems, identify opportunities to
improve efficiency and strengthen your niche, and offer insights that you might otherwise have
overlooked.
In other words, your employees should approach their jobs the same way you tackle the roles of
founder and owner—as entrepreneurs.
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It’s All About People

Instilling that kind of thinking is not difficult, but it doesn’t happen just because you include “we
will be entrepreneurs” in your mission statement. An entrepreneurial culture is created in part
from your leadership. But don’t think that you need to adapt yourself into an inspirational zealot,
a General Patton, or a Captain Kirk. Simply be yourself. The most effective leaders are those
who set a good example—timeliness, throughness, integrity, consistency in words and actions,
unconditional respect for others’ opinions and an openness to new ideas—including those that
may be unworkable.
Likewise, entrepreneurial employees must be creative, proactive thinkers. That’s why it is

important to look for these qualities during the interview and selection process. Employment
consultants can help you develop methods to gauge a candidate’s initiative and responsiveness,
including their ability to craft life’s proverbial lemons into lemonade.
Another approach for many types of service and retail businesses is to hire people who are as
much as possible like their customers. They are in a better position to give customers what they
want because they know what customers want now…and in the future.
Open Season
All entrepreneurs need information to succeed, so it makes sense to make information sharing a
routine part of your entrepreneurial culture. Communication also reduces the potential for
mistakes, miscommunications, intra-office politics and other problems that can hold companies
back or poison the working dynamic.
Jamie Walters, author of Big Vision, Small Business and founder of the enterprise leadership
consulting firm Ivy Sea (www.ivysea.com), notes that “while this information-sharing trait is not
intrinsic to all entrepreneurs, I believe it’s one they should adopt if they want retain their
employees and thrive in business…Sharing information about your business with employees can
help them become better collaborators as you work to create your vision.”
This means more than simply cc’ing everybody on memos. Information-sharing is a highly
dynamic, multifaceted process. Inc. magazine writer John Case documented several examples of
how fostering interaction among employees “maintains that creative edge by promoting open
debate and the combustive rub of ideas.”
Returns on Investment
Employees are better able to contribute when they understand the expectations and desired
outcomes of their work, both individually and for the business as a whole. Writes Walters,
“Knowing the business’ big picture allows an employee to see where he might contribute talents
other than the ones you’ve identified as applicable to the success of the business and his growth.
Welcoming this participation builds commitment, too.”
Of course, it doesn’t hurt to augment this supportive environment with perks and other tangible
rewards. But as www.employer-employee.com notes, you must understand the difference
between “retainers”—benefits, vacation, salary; “morale boosters”—a parking spot or weekly
pizza parties; and true “employee motivators.” These include input and choice in how they do
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their work, encouraging responsibility and leadership opportunities, tolerance of learning errors
and other practices that promote job ownership.
Encouraging entrepreneurship among your employees will also remove some of the mental
burden from your shoulders. You can draw on more resources to overcome challenges, capitalize
on opportunities, and improve productivity. With that kind of approach, the whole truly is greater
than the sum of its parts.
Creative Benefits: Telecommuting
At the moment, gas prices have stabilized. But, this could just be a momentary reprieve. Even at
the current prices, the cost of gas really impacts employee satisfaction.
Lately there’s been a lot more talk about companies of all sizes creating telecommuting
programs. Several months ago the Workforce Institute surveyed businesses and found that while
many employers claimed they let staffers telecommute, in reality, only about 8 percent of
companies had telecommuting programs in place.
Telecommuting is not just about saving gas money, it affects employee productivity as well.
Many workers would much rather work from home than sit in traffic for hours. And, the time
they save from not commuting helps make them more efficient, as well as more satisfied with
their work.
It might be a good time to consider starting a telecommuting program in your business. If you’re
a little nervous about plunging in, you can wade into the telecommuting waters slowly. The
director of the Workforce Institute, Joyce Maroney, suggests some ways to get started:
• Allow flextime. You can be flexible with starting hours, or even with the number of days
you require people to work in the office.
• Offer compressed workweeks of four 10-hour days.
• Help employees organize carpools or provide shuttles to public transportation.
Some state (or cities) might even provide incentives for companies that have telecommuting
programs. Check with your local and state government to find out more.
How to Attract and Keep Generation Y Employees
America’s largest generation (Generation Y) is rapidly becoming one of greatest sources of

employees for the nation’s businesses, large and small. But in order to attract and keep these
young staffers (they’re currently in their 20s and early 30s), you need to understand how
different they are from past generations of young workers.
What can you do to attract Gen Y? In an article for “4 Hoteliers,” leadership expert, Bea Fields,
points out ways that some big businesses attract young workers and how these strategies can be
used by small companies too.
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Opportunities for Development

To get young workers interested in working for their company, Disney offers internships to
college students. For your business, interns can be a low-cost (or possibly free) source of labor.
Interns often have creative and innovative ideas that can change the way you run your business.
Internships are also a great way to test potential employees before you make a full-time job offer.
Management consulting firm Deloitte and Touche offers a leadership, coaching and mentoring
program. For small businesses, a less formal program would work just as well. And since Gen Y
loves getting feedback from their supervisors, an informal mentoring arrangement is something
that might be particularly attractive to these candidates.
Opportunities to Make a Difference

Generation Y wants to make a difference. They are looking for a way to change the
world. Hence, if your company “does good”—if you work to improve people’s lives, if you are a
non-profit, involved in a charity or simply offer your staff opportunities to volunteer—you have
an edge in attracting this generation of employees.
Opportunities for Fun

Everyone wants to have fun, especially Gen Y. They gravitate to companies that are known for
having enjoyable workplaces (like Southwest Airlines). Small businesses, with their lack of
“corporate” culture and laidback environments, are often better at providing this type of
atmosphere. If your business offers a family feel and teamwork
atmosphere, Generation Y staffers will be more eager to go to work in the morning.
Opportunities for Fitness

Can you make fitness part of your corporate culture? Maybe you can barter your products or
services with a local gym, so they’ll offer discounts on memberships. Or, think about offering
yoga, stretch or walking breaks in the morning. Organize a 5K run/walk for a charity event.
By implementing a few of these creative and low-cost options, your company will create a more
welcoming environment for Generation Y employees.
In a Recession, Preserve Employee Perks
Many businesses think the best way to deal with tough economic times is to cut back on
employee perks. If you’re considering eliminating these to save money, stop now. It’s actually
one of the worst things you can do.
Taking away a perk or benefit your staff looks forward to or relies upon will have major
repercussions. Even “small” cutbacks like free weekly breakfasts, monthly lunches or coffee and
soft drinks can create a negative work atmosphere. At best, employees will grumble and
badmouth you. At worst, they’ll see the cut as a sign of worse times, or even layoffs, to come.
That just makes employees fearful, and people who are frightened for their jobs don't perform
their best work.
The irony is, when the economy gets tough, you need your employees to be operating at peak
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efficiency more than ever. All employees must be fired up, motivated and working together as a
team. Perks are a vital part of employee motivation. Before you make any cuts, see if you can cut
costs by streamlining processes, trimming other expenses like mailing and shipping costs or
utilities. Or, perhaps you can create a more effective marketing campaign to drum up new
business.
If you have no choice and must make cuts, be upfront with your employees about what you’re
doing and why. They’ll not only appreciate your honesty, but they’ll be less likely to feel the
other shoe is about to drop. If possible, try to balance out the perks you’re eliminating by adding
some new ones that cost you little or nothing. For instance, if you take away free breakfast
Fridays, you could even it out by offering to let employees telecommute one day a week. Or, you
could institute summer Fridays and close at noon.
Think long and hard before you make any moves that might affect employee morale, since it is
bound to have a significant impact on your business.
Small Business Hiring: Think Salesmanship
If you, a small-company owner, have recently had trouble hiring qualified job candidates, you're
in good company. Last spring, Abuzz, the software concern I co-founded, was doubling its staff
of ten. We were looking for highly skilled people—the kind who can easily command the large-
company paychecks that we could never hope to offer. We had openings for an office manager, a
controller, an executive vice president of sales, and seven software developers.
So it wasn't too surprising when a candidate we had been recruiting for months wouldn't take the
executive sales job we'd offered. What was unusual, however, was our response. We could have
said, "OK, see you around." Instead, as president and CEO, I placed a telephone call, and told the
candidate, "You gave the wrong answer."
Over breakfast the next morning (at my invitation), I agreed to be flexible about the issue that
was holding him back. He wanted to start at a later date than Abuzz had targeted. When he
finally changed his mind and said he would take the job, I had a gift basket wired immediately,
welcoming him to the company.
Such techniques are part and parcel of an approach Abuzz uses to entice the best people to our
team. In short, when we think about hiring, we think "salesmanship." We've proven that this
approach goes a long way toward leveling the playing field for entrepreneurs trying to secure top
talent. In this article, I'll describe what I believe are the necessary steps for making salesmanship
work.
Recruiting Talent, Thinking Sales

When hiring becomes "salesmanship," component analogies fall neatly into place. The applicant
pool becomes the "target market." The job becomes the "product" we're selling. And the
candidate becomes our "customer."
The "customer" is at the center of this approach: he or she will be your toughest "sale" ever. Yet
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viewed from the perspective of the recruit as "customer," job candidates are already cast in a
different light. You'll likely treat them with more care and respect than might otherwise have
been the case.
With this revised attitude—an attitude that leads to personal calls, individual accommodations,
and welcoming gift baskets—providing the backdrop, small companies should then maximize
their job offers. While small companies generally can't outbid major corporations on salaries,
they can—indeed, they must—create the most value out of benefits, responsibilities, and culture.
Here's how:
Benefits
Most small, young companies can't match such pricey tangible benefits as health and life
insurance that large, established companies can offer. At Abuzz, for example, we don't offer a
dental plan. We can, however, compensate by granting equity. From his or her first day on the
job, every Abuzz employee owns a stake in the business. That's a major draw.
Beyond tangible benefits, small companies can and should provide benefits that don't cost a lot
of money. At Abuzz, for instance, we strive to maintain a "family-friendly" environment. Our
employees have individual freedom to structure the 35-hour work week, and they may elect to
work at home for part of the time. They may also request unpaid leaves of absence.
Responsibilities
At entrepreneurial companies with lean staffs and tight budgets, employees are likely to acquire
new skills and assume wide-ranging responsibility early in their careers. Use this advantage for
all it's worth. Job responsibility is what talented people want most of all, but they don't
necessarily tell that to their employers. Opportunities to learn and advance give your company a
distinct edge.
Culture
Taken together such factors comprise an intangible called "entrepreneurial culture," a small
company's most valuable asset. Make the most of people's desire to work for a company that is
close-knit, exciting, and fun. What's crucial is to "package" your culture, and that brings us back
to hiring as salesmanship. You want to make sure job candidates get a good glimpse of your
culture and that they can easily perceive its value.
Closing Your Toughest "Customer"

Because job candidates are your toughest customers, closing these sales is as much an art as a
game plan. You'll succeed if you know what counts, and here's what counts:
• First Impressions Count. When you invite candidates for an interview, start by creating
an outstanding first impression on the telephone. Offer to reimburse prospects for all
travel and meal costs. That's a small price to make people feel welcome, wanted, and at
ease. When they arrive at your company, greet them and let them know you're expecting
them. Take the extra effort to show them to a comfortable room where they can sit and
read prior to the meeting.
• Interviewing Skills Count. Often pressed for time, many small-business owners take a
laissez-faire approach to interviewing. Salesmanship, however, calls for using the
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interviews as much to sell candidates on the company as to determine whether they fit the
job you're filling. I think it's a good idea to provide candidates with two pieces of paper,
an agenda of their day and a list of the questions they'll be asked. That tactic puts people
at ease, and it demonstrates that the company is organized.
• Social Skills Count. Allow candidates to meet with more than one person. Not only does
this make good social sense, but you also want prospects to meet as many of your people
as possible, even at this early stage. A person who doesn't "click" with one person might
do very well with another.
• Courtesy and Flattery Count. The wag who said, "Flattery gets you everywhere,"
wasn't far from the mark. Once you decide you want to hire a candidate and you make an
offer, it's useful to send a small flower basket or gift box. You're indicating to candidates
that you realize they have choices and you'd like them to choose your company. It might
also be a good idea to have the CEO call the candidate personally to discuss the offer.
The two of them could address last-minute problems or potential glitches, and the CEO's
interest would make the candidate feel especially welcome.
• Good Beginnings Count. Once you've made your sale, it's just the beginning of the real
sale. The final step in putting your prospect—now your employee—at ease is to treat the
person's first day as one would treat the first day at school. For an incoming employee,
the day might be filled with anxiety. Take an active role: provide an agenda, introduce
the newcomer to all co-workers, treat him or her to lunch, light the candles on a
welcome-to-our-company cake, and celebrate...as much for yourself as your new
employee.
I'm happy to report that since last spring, employment at Abuzz has grown to 22 employees.
During our search for new hires, we found that it was easy to collect resumes but hard to find
people who could both do the job and fit our culture. At times, it was tempting to hire the first
warm body that walked through the door, regardless of qualifications.
But we didn't have to do that. We met our hiring goal in what I consider an incredibly brief span
of six weeks. We succeeded because of our philosophy: hiring, and especially hiring in this job
market, needs to be treated like salesmanship.
Your relationships with prospects and new hires are like relationships with customers. Ideally,
they should be long and profitable for both parties. Taking steps to "sell" candidates on your
company helps close the most important sales your company ever makes, and you get each new
employee relationship off to a good start.
Small Business Payroll Solutions
Outsourcing payroll isn’t just for big companies–small and large businesses alike can enjoy the
convenience, cost savings and peace of mind that outsourcing can create. Here are a few of the
benefits outsourcing provides.
Cost Savings
Most payroll companies have packages for as little as a few dollars per check, including basic
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services like employment tax calculations and direct deposit. Full time (or even part time)
bookkeepers can cost thousands a month, especially when you consider that they need to keep up
with changes to state and federal tax laws, adjustments to employee information and changes to
regulations that can impact employee pay. Payroll companies can perform the services you need
at a cost far less than performing payroll calculations yourself or hiring a bookkeeper.
Accuracy
Computing pay and withholding amounts can be tough–one mistake and you’re responsible for
hundreds, maybe thousands, in penalties or fees. Payroll services have experts on staff that
ensure your payroll is accurate every time and many even guarantee their work by offering to
pay any penalties that result from their calculations.
Time Saved
Most business owners spend between 5 and 20 hours a month on payroll related tasks. Devote
this time to running your business–let a payroll company handle the calculations and paperwork.
Expert Help
Payroll services employ tax attorneys, CPAs and other knowledgeable business professionals
to ensure that all payroll calculations conform with current tax laws and regulations. You
might be able to catch tax savings you would have missed otherwise and you can consult the
payroll company on the best way to structure benefits and employee commissions in order to
maximize savings. Expert help brings peace of mind–make sure you choose a payroll
company with a reputation for accuracy and good customer service.
What to Look for in an HR Outsourcing Company

Outsourcing is a great way for any business to save time and money while ensuring quality
results. HR companies can be used for recruiting, benefits administration and other Human
Resources tasks for a fraction of what it would cost your business to hire a full-time HR
professional. Here are a few things to look for in an HR company:
Industry Specific Experience

Choose an HR company that has worked with businesses in your industry and businesses the
same size as yours. The needs of small businesses and large companies can vary–to ensure
you get the highest possible degree of service, choose a company based on recommendations
or references from businesses similar to yours.
Services Provided
HR companies can handle taxes, benefits administration (such as health insurance) 401K
plans, recruiting and many more services. It’s a good idea to make a list of the services you
require and ask companies how they handle them. For example, if you’re looking for a
company that specializes in recruiting, make sure all prospects you speak with are familiar
with recruiting at the level you require–some companies specialize in finding executives,
while others are pros at finding temp administrative workers.
Costs
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Hiring an HR or payroll company will definitely save you money in the long run, but you
should still select a company that is within your budget. Companies can bill per employee
for services like paycheck processing, per candidate for recruiting services or use other
billing structures. Get an idea of the cost of the services you need before you sign an
agreement.
When and How to Hire Additional Employees
As a business owner, one of your most important tasks is workforce management. It's your job to
make sure you have the right people—and the right number of people—to keep your company
running smoothly. Now let's say your business is growing and you're sensing you need to hire
new employees. How can you really be sure the time is right to bring in additional staff? There
are at least seven common clues:
1. Your employees are working very hard—perhaps too hard—and they're letting you know
—or complaining—that they have too much to do. Complaints of this nature aren't
uncommon, but your task is to determine if they're legitimate. How can you do that? Try
talking to your employees and asking them to validate their concerns of being
"overworked." Then look at attendance and productivity indicators to substantiate their
claims. If what you find confirms their feedback, then you might decide to reorganize and
restructure roles and responsibilities to better deal with the workflow. Or you could use
your new knowledge as a guide to hiring additional employees.
2. Employees claim they want to take on more tasks or spend additional time on current
ones—if only they had the time.
3. The growth curve for your products or services is increasing, and you identify that as a
positive trend, not just a blip on the consumer radar.
4. You see an opportunity for growth and expansion in your industry or related industries,
and decide that now's the time to take a calculated risk to expand. But current employees
aren't available to assume additional responsibilities.
5. You determine that your employee's existing job skills and knowledge are fine for your
company's current level of productivity, but to expand, you'll need either increased skills
and knowledge or a new and different set of skills and knowledge.
6. Revenue is at or above target and you project it to continue; other than financially
rewarding yourself and/or your employees, you wonder what to do with the increased
revenue.
After taking a long, hard look at the state of your business, you decide to expand by hiring
additional employees. But what do you have to take into account and do when adding a new
position and a new hire? First, you need to create a comprehensive, clearly written job
description that includes these factors:
• The major and related duties, responsibilities and tasks the employee must perform
• The expected standards of job performance
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• The reporting relationships—the people or job title to whom the employee will report and
who, if anyone, will report to the new hire
• The financial and fiscal responsibilities and spending limits—if any
• The standards of acceptable behavior

• The working conditions
Besides being used when hiring new staff, this same document is crucial in serving as a basis for
evaluating employee performance. If it's too general, non-specific or doesn't adequately reflect
what the employee actually does on the job, then it's a waste of your time and effort.
When it comes to actually choosing the best candidate for the job, the best advice I can give you
is this: Hiring someone simply because you need an "extra body" is foolish and inevitably results
in poor performance, decreased productivity and decreased morale. So be sure to hire only
someone who actually fits the job description you've created. In fact, shooting for the stars by
knowingly increasing your standards to hire the best possible candidate—even it takes some time
to find the right person—is well worth it.
Once you've hired someone, you need to decide what you'll do to maximize the person's
strengths while addressing and minimizing limitations. Here are some tips that will help you get
the most of your new hire:
• Set up a process with the new hire's direct supervisor to monitor progress. Provide
immediate feedback on all aspects of job performance. Don't wait for the end of the
typical 90-day review period to catch the person doing something right or wrong.
Immediate feedback provides the immediate opportunity for growth and improved
performance.
• Create a training program, either formal or informal, depending on the size of your
company. The goal of this program will be to bring the new person up to speed with the
knowledge, skills and abilities necessary for successful completion of their new job.
Simply because a candidate was successful in a similar job at another organization does
not ensure this person will be successful in your organization.
• Develop a mentoring system: Select an individual who can serve as "Big Brother"
or "Big Sister" to offer advice, especially on "how things are done around here" as well
as possible landmines, such as difficult people, issues, politics, processes, norms or
unwritten rules. This mentor should be a respected individual in your company, but
should not be the person's direct supervisor. (Creating such a system is also a good idea
for existing employees.)
By following these guidelines, you'll be able to decide whether or not to expand your workforce,
create a workable job description, provide feedback to the new hire, and created a training and
mentoring system to increase the potential for success. Good luck!
Legal
Eight Easy Things To Do Before You Form Your Company

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Incorporating or forming an LLC is a fast, affordable and easy process. It benefits the business
owner by protecting personal and family assets from the risks and debts of the business. Here are
eight easy things business owners can do to make incorporating a breeze.
1. Select Your Company Name

Your company name can identify the type of products/services your business provides, or
it can simply tout the name of the founder. The two main requirements for a company
name are: no other entity in the same state may have the same or similar name; the name
must include an ending like company, incorporated, corporation, association, foundation,
institute, fund, society, union, syndicate, or limited. Words like "bank', "trust" or
"education" may not be used without approval from the appropriate state agency.
Select Your Business Structure

A general corporation, also known as a "C" corporation, is the most common corporate
structure. It may have an unlimited number of stockholders. A "close" corporation is
appropriate only for the individual starting a company alone or with a small number of
people. An LLC is not a corporation, but it offers many of the same advantages,
combining the limited liability protection of a corporation with the "pass through""
taxation of a sole proprietorship or partnership. For more information, see SCORE's
article entitled "Understanding Business Structures."
2. Select Your State

Many business owners incorporate or form an LLC in the state where they are planning
to operate because it is often least complicated and most cost effective. However,
Delaware still holds appeal for new companies because of its low incorporation fees, low
annual franchise taxes, and lack of state income tax for corporations operating outside of
Delaware. Likewise, Nevada has become increasingly business-friendly with its
advantageous tax advantages. For more information on selecting your state, see SCORE's
article entitled "Selecting Your State."
3. Select Your Management Team

Naming initial directors for your corporation is straightforward. Directors are typically
the key players or owners in the business. In most states, only one director is required and
you may simply name yourself. In an LLC, managers or members are selected.
4. Select Your Number of Stock Shares and Par Value

Stock represents ownership in a corporation. Par value is the minimum selling price for
each share of stock. Many states allow you to elect a $0 par value, to give you the most
flexibility. LLC's do not issue stock, so LLC ownership is like a partnership.
5. Choose a Corporate Kit

A Corporate Kit will help you organize and save your important company documents.
They often include a corporate seal, stock certificates, stock transfer ledger, and sample
forms for bylaws and minutes.
6. Designate a Registered Agent

The Registered Agent serves a critical purpose and is an important part of protecting your
corporate status. Select a highly reliable company to serve in this role. Look for a
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company that maintains a nationwide network of offices and serves as a full time
Registered Agent in all 50 states plus District of Columbia, so that they can service your
company's needs as you grow.
7. Worry Not!
Your decisions about company formation may be changed after your company is formed,
simply by filing an amendment. Broad flexibility is available to you as your company
grows and its needs change.
Choosing Between an S Corporation and a Limited Liability Company (LLC)
It's smart to protect personal assets from business debts and liabilities. Both owners of S
Corporations and LLC's enjoy limited personal liability. By contrast, sole proprietors and
partners have unlimited personal risk.
Traditionally, business owners who chose to form an entity to protect personal assets but allow
income/losses to be reported on a personal tax return had to create an S Corporation. Today, that
can also be accomplished with an LLC. All 50 states and District of Columbia recognize LLC's,
and their popularity has soared. Nolo's Legal Guide for Starting and Running a Small Business
states, "For the majority of small businesses, the relative simplicity and flexibility of the LLC
make it the better choice. This is especially true if your business will hold property, such as real
estate, that's likely to increase in value."
Both S Corporations and LLC's allow owners to avoid "double taxation" and to pay income taxes
on a flow-through basis like sole proprietors and partners. However, LLC's are quickly becoming
a preferred entity among small business. Here are some key examples of the benefits of an LLC
verses an S Corporation:
• An LLC is simpler and faster to form. It may be formed in one step, while an S
Corporation election can only be made after a General Corporation is formed first.
• An LLC is not required to hold annual meetings or to keep formal minutes, while an S
Corporation is required to do so.
• LLC members can split profits/losses in any way they choose. In an S corporation,
shareholders must receive dividends according to the number of shares that they own,
regardless of the amount of effort put into the business.
• An LLC can be owned by any combination of individuals or business entities. Only

United States citizens and resident aliens may own an S Corporation. Other entities
generally may not own an S Corporation.
While many business owners are enjoying the simplicity and flexibility of the LLC, it may not be
the best choice in every case:
• Most states allow single-member LLC's, however Massachusetts requires two members.
Married owners often accommodate this by naming a spouse. If you prefer not to share
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ownership, you may need to form a Massachusetts corporation instead.

• Enticing or compensating employees with stock options or stock bonuses requires

forming a corporation since LLC's do not issue stock.
• S Corporation shareholders pay Medicare and Social Security tax only on money
received as wages or salary, but not on profits received as dividends or that stay within
the company. Under certain conditions, LLC members may need to pay Social Security
and Medicare taxes on the entire amount of LLC profits. In particular, LLC's that provide
professional services such as health, law or engineering should consult a tax advisor on
this issue.
Choosing the Right Name for My Corporation or Limited Liability Company
Incorporating or forming a Limited Liability Company (LLC) is a great way to protect your
company name. Once the secretary of state approves the name for your corporation or LLC, no
other company in your state may use it. Plus, naming your company is one of the most enjoyable
activities associated with forming your company.
Here are general rules of thumb for selecting a company name:
• A company name can help identify the type of products or services the business provides,
such as Apartment Rentals, LLC.
• A company name can simply refer to the founder or founding members, such as John
Smith and Associates, Inc.
• A company name can evoke an image, emotion or ideal, such as Blue Sky, Inc. or
Freedom, LLC.
There are two main requirements for a company name. First, the name must be available—no
other corporation in the same state is previously registered using the same or a similar name.
States vary in their level of matching too similar-sounding or similar-spelled names. Some, but
not all, states allow names to be reserved in advance of forming your company. An
incorporation service company can guide you through the rules and practices of your particular
state.
Second, your company's name must include one of the following endings: company,
incorporated, corporation, association, foundation, institute, fund, society, union, syndicate, or
limited. Abbreviations are acceptable in most states: Co., Inc., Ltd., or Corp. Specific words like
"bank', "trust" or "education" may not be used without approval from the appropriate state
regulatory agency. Also, most states require you to provide proof of licensing if your name
company implies that you are a medical, dental, accounting or legal practice. Again, state
requirements vary and your service company can guide you.
Tip: to save you time, have both a preferred and an alternate name ready, before you begin the
filing process. That way, if your first choice is not available, you will still be ready to go!
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Know the Rules For Hiring Contract Labor

If you’re a SoHo (small office, home office) entrepreneur, you’ve probably built your business
in part by working for other companies as an independent contractor (IC). But what happens
when your workload puts you in the position of needing additional or specialized help? Before
you post a “Help Wanted” sign (literally or figuratively), it’s important to know the rules for
hiring and working with contract labor.
Be Certain of the Terms

As you probably know, an IC is a person contracted to perform services for another business.
The relationship may be for a single project or ongoing as needs arise. The most important
distinction is that an IC does not have the legal status of employees. As such, employers do not
have to pay the individual’s federal or state payroll taxes, workers compensation premiums, or
benefits (e.g., health insurance, vacation and sick leave, etc.).
Employers are also required to follow the Internal Revenue Services’ procedures for reporting
each IC’s compensation. Payments of more than $600 in any year must be reported for income
tax purposes. Forms for submitting this information to both the IC and IRS are available at most
office supply stores. (Note that a 1099 need not be filed if the IC has incorporated.)
Unfortunately, the distinction between IC and employee varies among state and federal agencies.
According to Nolo, a publisher and online resource of legal information for small businesses,
“Each is concerned with worker classification for different reasons, and has different biases and
practices. Each agency normally makes classification decisions on its own and need not consider
what other agencies have done, which means that one agency can find that a worker is an IC
while another decides that he or she is an employee. It’s also possible, though rare, for a worker
to be deemed an IC in one state and an employee in another.”
Without a clear mutual understanding of this relationship, a SoHo employer risks discovering too
late that the IC qualifies to be legally classified as an employee—usually the result of a dispute
or the individual’s appeal to a state labor relations agency. Not only must the individual receive
appropriate compensation, the SoHo may also face paying back taxes with interest and penalties,
and possibly fines.
Plan Ahead
One way to help avoid these problems is to prepare a written independent contractor agreement
that fully describes the services to be performed by the IC (including time, location, milestone
deadlines and results, etc.), and the IC’s compensation for these services. For certain types of
services, the agreement should clearly assign copyright ownership of the IC’s work either to the
IC, the SoHo, or the SoHo’s customer.
Nolo also recommends that employers retain all documents that show the individual’s intent to
work as a contractor. This includes business cards and stationary, advertising and invoices.
Employers may also consider asking prospective contractors to complete a questionnaire that
will help establish the individual as a separate business entity. The questionnaire should request
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information such as the contractor’s business name (if any), address, phone and structure;
professional licenses and affiliations; facilities and contacts of other companies that the
individual has served as an IC.
Note that agreements, documentation, and questionnaires may not guarantee that the relationship
will be considered employer-contractor. They can, however, demonstrate the intent of both the
SoHo and the IC at the outset of the relationship.
Legal Entity FAQs
If you’re considering forming a business entity, it’s a good idea to hire an expert–an attorney that
specializes in corporate formations. Most attorneys will be able to advise you about the different
types of entities and benefits that they offer. Here’s a few of them most frequently asked
questions about business entities:
Do I need to incorporate?
It depends. Businesses that want a high level of liability protection from company debts or
obligations or those that want a more formalized management structure usually choose to
incorporate. There are different types of corporations, each with different requirements. Whether
or not you incorporate will depend on the level of liability protection you require, tax
considerations and investor or shareholder requirements. A qualified attorney can advise you
about your options.
Is an LLC right for me?

Again, the type of entity you form depends on a variety of factors. A Limited Liability
Corporation (LLC) isn’t a corporation–it’s a specific type of organization with some
characteristics of different entities. LLCs can’t sell stocks or bonds and place restrictions on the
types of members (owners) that are allowed to invest. LLCs provide more flexibility than a
corporation would. If you’re considering incorporating, ask your attorney if an LLC might be a
more favorable option.
What if I don’t form an entity at all?

Some types of business organizations don’t require a state filing or even a formal operating
agreement. Sole Proprietorships are formed when a solo entrepreneur begins operations without
forming a legal entity. Profits are taxed to the business owner on their personal tax return and
some business expenses can be deducted. Partnerships can operate similarly in that no formal
agreement must be in place to begin operations, though it’s a good idea to form a basic
partnership agreement to detail the responsibilities of each partner.
How much does formation cost?

Costs vary, depending on the type of business you want to form and the state you operate in. You
have two options when it comes to formalizing your business structure–hiring a professional (an
attorney) or going it alone, usually with the help of online forms or an online incorporation
service. Online incorporation services can cost several hundred dollars to file basic documents,
while hiring an attorney can run into the thousands or more, depending on the complexity of
your business structure and how detailed the management procedures will be. Hiring an attorney
can be well worth the cost–you’ll receive specific, quality advice and will avoid any costs or
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charges that might be associated with incorrect documentation.
Plan Now to Preserve Your Partnership

The partnership has been the foundation for millions of successful small businesses.
Unfortunately, it has also been the source for innumerable disputes, arguments, irreparable
relationships and lawsuits, all of which exacted economic and personal costs on the people
involved.
Many of these problems can be avoided if partners invest some time at the outset to discuss and
agree upon their respective responsibilities and obligations to the business. Those decisions
should be documented in a legally binding partnership agreement.
What to Include in Your Partnership Agreement

Though not required by law, a partnership agreement can help eliminate uncertainties and
assumptions that can and have doomed otherwise mutually productive business relationships.
Partners can make their agreement as general or specific as they feel is necessary.
Factors such as the type of partnership (general or limited), the number of people involved and
their roles, the business’s products or services, plans for growth will influence what goes into the
agreement. It is also possible to cover issues such as salaries, opening and closing shop,
negotiating with suppliers, personnel decisions and approving invoice payments.
Regardless of the level of detail, partners should draw up their agreement with the assistance of a
qualified attorney to prevent conflicts and misunderstandings.
Nolo, Inc. (www.nolo.com), a publisher and online resource of legal information for small
businesses, recommends that partnership agreements cover these major areas:
• Name of the partnership. Most partnerships use either the partners’ names or initials
(and there easily could be disagreement over who gets top billing), or a fictitious name
not already in use.
• Contributions. Determine who will contribute cash, property, or services to the business,
as well as each partner’s ownership percentage.
• Allocation of profits, losses and draws. Will profits and losses be allocated in
proportion to a partner’s percentage interest in the business? Will each partner be entitled
to a regular draw (a withdrawal of allocated profits from the business), or will all profits
be distributed at the end of each year?
• Partners’ authority. Make clear whether some or all business actions require the
consent of all partners. Otherwise, one partner can bind the entire business to a contract
or business deal without the approval of the others.
• Decision-making. There are a number of ways to approach this issue. One is to require a
unanimous vote of all the partners for every business decision. Another is a unanimous
vote for major decisions, with individual partners authorized to make minor decisions
alone. In that case, the partnership agreement must define what constitutes a major or
minor decision.
• Management duties. This section can be as broad or detailed as the partners consider
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necessary for effectively managing the business. Specific designations for some duties
and guidelines for others may prove to be the best combination.
• Admitting new partners. Expansion may be far in the future, if ever. Still, it’s helpful to
establish a procedure in case the opportunity arises.
• Resolving disputes. If you and your partners become deadlocked on an issue, do you
want to go straight to court? It might benefit everyone involved if your partnership
agreement provides for alternative dispute resolution, such as mediation or arbitration.
Think About the Unthinkable

Partnership agreements should also have contingencies for the departure of a partner under
certain circumstances, including death. In the absence of legal safeguards, a partnership
automatically dissolves at or shortly after the death of any partner. Surviving family members are
also entitled to the deceased partner’s assets. Trust agreements, wills and buy-and-sell
agreements can address these issues in advance, and keep the business in operation through the
transition and beyond.
Even if you and your partners have covered every possible scenario, the agreement should not
languish in a file cabinet until someone has a question. Keep the agreement fresh through
periodic reviews to address changes in the business, partner responsibilities and family
relationships.
Selecting a State for Your Corporation or Limited Liability Company: Delaware, Nevada
or the State Where Your Business is Operated?
When small businesses incorporate or form a Limited Liability Company (LLC), they must
choose a state jurisdiction in which to form their entity. Some form Delaware companies
regardless of the state where their business is actually operated. Delaware corporations and LLCs
have enjoyed significant advantages over the years and Nevada has more recently enacted
business-friendly laws. Other business owners choose to form their company in the state where
they plan to conduct business. Simply choose the option that best fits your needs.
Forming a Company in the State Where Your Business is Operated

Many business owners incorporate or form an LLC in the state where they are physically located.
This is typically the least complicated and most cost effective solution. If you form a Delaware
or Nevada company but are located elsewhere, you may then be required to qualify or register in
the state where you actually conduct your business. The cost of a local incorporation or LLC
formation will usually be less than incorporating in Delaware or Nevada and then qualifying to
do business in your local state as a "foreign" (out of state) corporation. Plus, you may avoid
paying franchise taxes and filing annual reports in two different states.
• Advantages and disadvantages of forming a Delaware Company

Over 50 percent of companies on the NY Stock Exchange are Delaware corporations.
Delaware is known as a business-friendly state and is a good choice if you intend to "go
public." Delaware has many advantages, including very low incorporation and LLC
formation fees, low annual franchise taxes, and no state corporate income tax for
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companies that operate outside Delaware. Delaware maintains a separate "Chancery

Court" specifically for business disputes, known for its well-established record of
decisions and speed. Delaware's court system helps business owners spend more time
running the business and less time in court. Delaware companies may need to qualify or
register to do business in their local jurisdiction, requiring an additional fee to the state
where the business is operated.
• Advantages and disadvantages of forming a Nevada Company
Business-friendly Nevada has both privacy and tax advantages. Nevada has no state tax
on corporate profits, no state annual franchise tax, and no state personal income tax.
Stockholders of Nevada corporations are not a matter of public record, allowing complete
anonymity. Nevada companies may need to qualify or register to do business in their
local jurisdiction, requiring an additional fee to the state where the business is operated.
Plus, Nevada's corporation and LLC formation fees are higher than many other states.
• Doing Business in More Than One State

Many companies conduct business throughout the United States and abroad. A
corporation or LLC having business locations in multiple states will typically be formed
in a single state, then "qualify to do business" in the other states. When companies
formally register in other states, additional franchise taxes and annual reports are
required.
Spotlight on Limited Liability Companies
The Limited Liability Company (LLC) is now a recognized business structure in all 50 states
plus the District of Columbia. LLCs are gaining popularity with small business owners because
they combine the advantages of a corporation with the tax advantages and management
flexibility of a partnership.
The main similarities between LLCs and corporations are:
• both are legal entities created by a state filing

• both help protect your personal assets from your business liabilities
• both have few ownership restrictions
The main differences between LLCs and corporations are: corporations issue stock and are
owned via stock. LLCs do not issue stock. Like partnerships, LLCs are simply owned by the
members and/or the managers of the company.
• corporations are required to hold annual meetings and to keep written minutes. LLCs do
not have this requirement, resulting in less official paperwork.
• corporations are taxable entities, and (except for Subchapter S corporations) they must
pay taxes on their profits at the corporate tax rate. LLCs, like sole proprietors,
partnerships and S Corporations, are "pass-through" tax entities. This means that the
profit or loss generated by the business is reflected on the personal income tax return of
the owners, thus avoiding the double taxation of paying first corporate tax on profits and
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then personal income tax on distributions of profits.

Because of their flexibility and relative simplicity, the LLC is well suited for both start-up
businesses and more mature businesses. LLCs have been gaining speed in recent years. In fact,
new LLC formations now out-number new corporation formations in several states. LLCs have
several "ease of use" advantages:
• LLCs provide greater management flexibility than do corporations. For instance,

corporations are required to have a formal structure with directors and corporate officers.
LLCs are simply run by the members and/or managers.
• LLCs provide greater flexibility with regard to income distribution than do corporations.
When corporations pay dividends, those profits must be distributed evenly on a dollar per
share basis. LLCs may distribute income as desired.
• if a small business is interested in "pass-through" taxation, then LLCs have an advantage
over S Corporations with regard to ownership flexibility. All shareholders of S
Corporations must be citizens or permanent residents of the United States and there may
be no more than 75 shareholders in total. LLCs do not have these restrictions, again
allowing greater flexibility.
When would an LCC not make sense? Corporations issue stock and LLCs do not. Corporate
ownership is most easily transferred using sale of stock. If your business intends to sell shares of
stock to investors or if a public stock offering are in your plans, then an LLC may not be right for
you.
Be it a corporation or an LLC, it is very important to form a business entity that protects your
personal assets and your family. If an LLC is right for you, it can be formed for you in any state
with a simple phone call. The good news is—as the needs of your company changes, the existing
business structure can be amended or a new business structure can be formed quickly, easily and
affordably.
Starting Over as an Entrepreneur? Incorporation May Be Right for You
In its recent study, The Entrepreneur Next Door, the Kauffman Foundation indicates that
entrepreneurship is as widespread in the United States as getting married or having a baby. More
than 10 million U.S. adults are actively engaged in creating businesses, often with a friend or
colleague. With lay-offs and corporate downsizing filling the news, no wonder sources as
mainstream as USA Today and MSN are recommending entrepreneurship as the new corporate
lifestyle.
Laid-off and downsized workers are “making lemonade.” Instead of sending resumes, they are
investing in themselves by starting businesses or purchasing franchises. Gladys Edmunds, USA
Today, says it best—when you leave your job, you take with you the skills and talents that you
own—plus the experience you got during employment. Many choose to become consultants or
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independent contractors in familiar industries. Others take transferable skills like salesmanship or
project management and apply them to new ventures. Some use their newfound freedom to turn
a hobby into a profit center.
Whichever entrepreneurial direction you choose, select a business structure that works for you
and your family. Many businesses start as sole proprietorships or partnerships. However, these
structures have unlimited personal liability for company debts. As a result, many business
owners opt to incorporate or form a limited liability company (LLC) to protect their families and
financial interests. Businesses may change structure at any time. Here are the most critical items
to consider when selecting—or re-selecting—your business structure.
1. Protection of personal assets—Sole proprietors and partners have unlimited personal liability
for business debt or law suits against their company. Creditors can attach homes, cars, savings or
other personal assets. Incorporating or forming an LLC helps separate your personal identity
from your business identity. Corporation shareholders or LLC members have only the money
they put into the company to lose.
2. Pass-Through Taxation—For sole proprietors and partners, company profits/losses pass

directly through to their personal tax returns. For corporations, profits are taxed, then the profits
that are distributed to shareholders as dividends are taxed again on the personal level. This
“double taxation” can be avoided while still enjoying the benefits of personal asset protection by
forming an LLC or by electing an S Corporation. S Corporations and LLCs can be taxed just like
partnerships.
3. Uninterrupted business—Sole proprietorships and partnerships may automatically end or

become legally entangled when one owner dies or retires. Corporations and LLCs are enduring
legal business structures. They may continue regardless of individual officers, managers or
shareholders. Corporation ownership may be transferred, without substantially disrupting
operations, through sale of stock.
4. Access to Capital—Sole proprietorships and partnerships may find investors hard to attract
because of personal liability. Investors are more likely to purchase shares in a corporation where
they can separate personal and business assets.
5. Credibility with vendors and customers—Adding “Inc.” or “LLC” to your company name
helps your business seem larger and more established!
Top 10 Practical Tips for Strategic Patent Portfolio Management

Some common issues encountered by companies in the management of the company’s patent
portfolio includes:
1. Use preliminary and supplemental claim amendments.

A straight-forward approach to applying for patent protection is to file claims which directly
cover your invention. In addition to this, other types of claiming strategies can be helpful in both
offensive and defensive ways. Craft claims to cover any related inventions that address trends in
the industry and/or any future needs that may arise. Such trends or needs can become clearer
between the time a patent application is filed and the time a first response is received from the
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U.S. Patent and Trademark Office (USPTO). Also craft claims to cover alternative ways in
which competitors can (or do) address the trends or needs. Then, submit these claims to the
USPTO as a preliminary or supplemental amendment. These types of amendments should be
aggressively used throughout the prosecution of the patent application in order to obtain the
greatest scope of protection possible.
2. Manage continuation or divisional patent applications and/or RCE’s.

During the course of prosecution of a patent application, a procedural point can be reached where
you must decide between several courses of action: continue prosecution, file an appeal, or
abandon the application. If you decide to continue prosecution, then you can file either a
continuation application, a divisional application, or a Request for Continuing Examination
(RCE). The claims file in any of these ways should be aligned with your company’s portfolio
strategy. Thus, it is imperative that such filings are carefully managed.
3. Partition your technology into inventions.

Once you identify the technology to patent, you have to determine how to partition the
technology into inventions. Although it is tempting to approach a patent application as a
technical document, the application is in actuality a legal document containing technical
information. As a rule of thumb, each patent application should describe its invention in a
focused, clear, and concise manner. Such a description would remove many potential
ambiguities when the meanings of the claims are being determined.
4. Consider the strategy or cost of pursuing improvements or extensions of your existing

technology.
It is common to create improvements or extensions upon an invention after a patent application
has been filed on the invention. In such a case, consider filing a new and separate patent
application or as a Continuing-in-Part (CIP) application. A CIP is closely related to the original
filing but which contains “new matter”, i.e., descriptions not included in the original filing. How
this new filing fits within the company’s overall portfolio strategy must be considered. Cost may
also be a factor, especially if filing in countries other than the U.S. is contemplated.
Often neglected by early-stage startup companies and entrepreneurs are off-shore strategies for
mitigating federal tax exposure. Such international tax strategies are especially relevant when
foreign licensees of intellectual property rights are contemplated possibly in the company
business plan. In many cases in fact, it is particularly beneficial to deploy one or more corporate
entities off-shore much sooner, rather than after licenses are identified.
5. Consider low-cost procedural options.

When under budgetary or time constraints, consider low-cost procedural options such as
provisional applications. A provisional application has fewer requirements than regular patent
applications and a lower filing fee. You then have one-year from the filing date of the
provisional application to file a regular patent application. In addition, if your company is a small
entity (i.e., fewer than 500 employees), you can pay a discounted filing fee by filing your patent
application electronically.
6. Utilize appeals, teleconferences, and affidavits during prosecution.

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If you and the USPTO examiner have trouble agreeing as to the patentability of some claims,
request an interview with the examiner to further explain your arguments. The interview can be
in person or via teleconference. Such interviews often move the prosecution forward and can
expedite allowance of your claims. If additional evidence would be helpful, then file affidavits
setting forth the relevant facts along with your arguments. If agreement is still elusive, consider
appealing the examiner’s rejections to the Board of Patent Appeals and Interferences. Oral
arguments in front of the Board can be requested.
7. Meet your duty of disclosure to the USPTO of known prior art.

The USPTO impose a duty of disclosure of known prior art documents on each applicant and
his/her representative. This means that any known documents or publications relevant to your
invention are to be disclosed to the USPTO in a timely manner through the filing of an
Information Disclosure Statement (IDS). The duty of disclosure duty applies even if the
documents describe technology that can be distinguished from yours. As this duty of disclosure
applies throughout the prosecution of the application, continue to disclose prior art documents as
you become aware of them. Thus, if a document comes to your attention after the filing of a
patent application, an IDS must be filed to bring the USPTO’s attention to it. Failure to meet
your duty may jeopardize the validity of the patent.
There is no duty to perform a search for prior art in order to file a patent application or at any
time during its prosecution. However, if such a search is performed, any relevant documents
must be disclosed to the USPTO as soon as possible. In addition, be aware that if you file a
patent application for the invention in a foreign country, the results of the search by the foreign
examination body may be required to be disclosed to the USPTO as well.
8. Learn to let go when you need to and consider alternative approaches.

When certain claims in a patent application prove to be difficult to prosecute, or if they later
prove to be of little value to your company, consider canceling these claims. If this applies to all
the claims of an application, then abandon the entire application. If the application has not yet
been published, then you can still maintain the invention as a trade secret, if appropriate. You
can also choose to voluntarily publish a description of the invention to place it into the public
domain and to prevents others from blocking your use of the invention.
9. Identify licensing opportunities as well as litigation possibilities.

The possibilities of licensing and enforcing patents in your portfolio should both be a part of
your strategy. In some cases, such as when a direct competitor might be infringing your patents,
litigating to enforce your patent may be the best avenue to achieve the desired result. However,
infringement lawsuits are expensive and can be quite lengthy. A more realistic approach may be
to formulate a licensing strategy, where you analyze your technological space to identify
potential licensees. Licensing is less costly than litigation, and the licensing fees your company
receives become part of your income stream.
10. Use reissue, reexamination and interferences.

Even after the issuance of a patent, broader claims may still be pursued by filing a reissue
application. Errors made during prosecution can also be corrected using this process. If a prior
art document comes to your attention after the patent issues, and you believe this prior art
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document may negatively impacts your patent, then you can request a reexamination of your
patent based on this document. Claims of different scopes can result from the reexamination,
however, the chances of your patent being invalidated due to this document is greatly minimized.
If you become aware of a patent application filed by another on technology which you believe
was first invented by you, you can file a patent application with claims specifically geared
toward triggering an interference. When two entities each file a patent application for the same
invention, the USPTO declares an interference. A “mini trial” is then held to determine who
invented it first. The one who first invented is the one entitled to pursue a patent.
Types of Legal Entities
Choosing the legal structure of your business is an important first step to beginning operations.
Different business entities offer different levels of protection, control and potential tax savings.
Here are some of the most common types of business organizations:
Sole Proprietorships
A sole proprietorship is created by default–if you begin business operations solo, without
forming a specific organization, you’re a sole proprietor. Sole proprietorships have the least
amount of liability protection for the business owner. If your company is sued or pursued for
unpaid debt, creditors can seize your personal assets as repayment. Sole proprietors pay tax on
business income on their personal income tax returns–the business does not pay its own taxes.
Partnerships
Partnerships are similar to Sole Proprietorships in that income “passes through” the business to
be taxed at a personal level. Partnerships can offer some liability protection if they are structured
as limited liability partnerships. A partnership can allocate profits and losses among the partners
as it sees fit–usually specified in the partnership agreement. Partnerships can also be “formed”
very informally in some cases, without filing any legal documents.
C-Corporation
Most for-profit companies operate as C-Corporations. The owners of a C-Corporation, called
shareholders, are taxed twice–once at the corporate level (the corporation files its own tax return)
and once at the personal level on income received from the company. C-Corporations offer
heightened protection for owners and allow a more formal, defined structure for business
owners–you’re required to file articles of incorporation, hold annual meetings and meet other
requirements, depending on which state you choose to incorporate in.
S-Corporation
S-Corporations also provide personal liability protection against business debts. S-Corporations
are similar to C-Corporations in many respects–there are certain requirements for formation and
operation and the corporation is its own legal entity–but income “passes through” the corporation
to shareholders, similar to taxation at the Partnership or Sole Proprietorship level. An S-
Corporation offers many of the benefits of incorporation without exposing the shareholders to
the double taxation a C-Corporation requires.
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LLC
A Limited Liability Company (LLC) is a hybrid entity that has some characteristics of a
corporation. Rules for LLCs are usually determined at the state level and can vary depending on
which state you form your business in. LLCs have fewer ownership restrictions than corporations
and more flexible management structures, but allow owners fewer options when it comes to
raising capital for business operations or finding investors.
No matter which type of business organization you choose to form, make sure you consider all of
your options before making a decision. It’s a good idea to consult with an attorney, so you can
fully understand the benefits and drawbacks to each type of entity.
Understanding Business Structures
Business owners may choose from a variety of company structures, based on their needs and
preferences. Especially with the advent of the Limited Liability Company (LLC), the choices for
small business are wider and better than ever before. More good news for small business—as the
needs of the company changes, the existing business structure can be amended or a new business
structure can be formed quickly, easily and affordably. Below are useful descriptions of the most
popular business structures to help you get started.
General Corporation
A general corporation, also known as a "C" corporation, is the most common corporate structure.
A general corporation may have an unlimited number of stockholders. Consequently, it is usually
chosen by those companies planning to have more than 30 stockholders or large public stock
offerings. Since a corporation is a separate legal entity, a stockholder's personal liability is
usually limited to the amount of investment in the corporation and no more.
Close Corporation
A close corporation is most appropriate for the individual starting a company alone or with a
small number of people. There are a few significant differences between a general corporation
and a close corporation. A close corporation limits stockholders to a maximum of 30. In addition,
many close corporation statutes require that the directors of a close corporation must first offer
the shares to existing stockholders before selling to new stockholders. Not all states recognize
close corporations.
Subchapter S Corporation
A Subchapter S Corporation is a general corporation that has elected a special tax status with the
IRS after the corporation has been formed. Subchapter S corporations are most appropriate for
small business owners and entrepreneurs who prefer to be taxed as if they were still sole
proprietors or partners. When a general corporation makes a profit, it pays a federal corporate
income tax on the profit. If the company also declares a dividend, the stockholders must report
the dividend as personal income and pay more taxes. S Corporations avoid this "double taxation"
(once at the corporate level and again at the personal level) because all income or loss is reported
only once on the personal tax returns of the stockholders. For many small businesses, the S
Corporation offers the best of both worlds, combining the tax advantages of a sole proprietorship
or partnership with the limited liability and enduring life of a corporate structure.
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Limited Liability Company (LLC)

The LLC is not a corporation, but it offers many of the same advantages. Many small business
owners and entrepreneurs prefer LLC's because they combine the limited liability protection of a
corporation with the "pass through"" taxation of a sole proprietorship or partnership. LLC's have
additional advantages over corporations:
• LLC's allow greater flexibility in management and business organization.

• LLC's do not have the ownership restrictions of S Corporations, making them ideal
business structures for foreign investors.
• LLC's accomplish these aims without the IRS' restrictions of an S Corporation.
LLC's are now available in all 50 states and Washington, D.C. Guidelines for corporations and
LLCs are set by each individual state, and vary by state.
Understanding the Stock Structure of Your Corporation
Forming a corporation is a great way for entrepreneurs and small business owners to protect their
personal and family assets from the risks of doing business. No matter how large or small the
business venture, all corporations have stock—even those that are privately owned. While stock
structure and par value of stock shares may sound complicated at first, these helpful tips should
help make forming your corporation a breeze. Let’s start with some simple definitions:
Stock: Stock simply represents ownership of the business. For you or anyone else to have an
ownership stake in a corporation, shares of stock must be issued. When you form your
corporation, you will designate the number of shares that you prefer to issue and those shares
will exist as soon as your corporation is filed with the secretary of state. Stock structure is
flexible and can be amended as the needs of your company changes.
Stockholders: Stockholders are the owners of a corporation. Their interest in the company is
proportional to the amount of shares that they own. For example, if a stockholder owns 50
percent of all shares, then he or she is half owner in the company. Stockholders own an interest
in the corporation rather than owning specific corporate property. Many small corporations have
only one stockholder—the person who started and runs the business. Often, a founder’s spouse
or children are stockholders. Other typical stockholders include investors, friends, business
partners and employees. Stockholders are also referred to as shareholders.
Stock certificate: A stock certificate is the physical evidence of ownership of shares in a

corporation. It is also referred to as a share certificate.
Par Value: Par value is the minimum selling price for a share of stock. Stock may be sold at
any price equal to or above the par value (whatever the market will bear), but stock may not be
sold below the par value. The par value is designated when the corporation is formed but may be
amended as the needs of your company changes.
Hopefully, stock shares and par values no longer sound mysterious. Here are some helpful
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“stock tips” when forming your corporation:

• Ask for a corporate kit that includes a stock transfer ledger to help keep track of all
company stock transactions. Your corporate kit should also include sample and blank
stock certificates.
• Some states allow you to designate a $0/share par value. Business owners often select a
zero par value for the greatest stock-pricing flexibility for the future.
• Some states have a maximum number of shares that they allow while staying within the
lowest franchise tax payment. If so, then selecting that number of shares will give you the
greatest flexibility at the lowest franchise tax cost. For example, Delaware allows up to
1500 shares of stock to be issued without any increase in annual franchise tax. You can
always amend your corporation at a later date if you need to issue additional shares.
What is a Registered Agent and Do I Need One?
Business owners choose to incorporate or form a Limited Liability Company (LLC) to help
protect personal assets from business liabilities and to provide tax-deductible benefits for
employees and owners. Both of these useful structures for small businesses and entrepreneurs are
formed via an official state filing. As a state-recognized business entity, there are several legal
and tax documents that your company will receive each year from the state.
Most jurisdictions require corporations and LLCs to designate and maintain a Registered Agent
to receive and forward such documents on behalf of your company. The Registered Agent for
your corporation or LLC must be located at a legal address (not a PO Box) within that state,
hence they are sometimes referred to as "Resident" Agent. Your company's Registered Agent is
required to be available at all times during normal business hours to receive documents and tax
notices from the state and service of process from any legal proceedings.
Failure to maintain a Registered Agent can result in loss of corporate or LLC status. Equally
important—if a responsible party is not available to receive service of process at all times, then
your company could be unaware of a legal claim and a judgment may be entered against you.
It is not a good idea for businesses to serve as their own Registered Agent. Rather, the safest
route is to select a reliable third party such as a service company. Using a service company as
Registered Agent provides peace-of-mind for busy business owners:
• It gives you the freedom to let business (and vacation!) take you out of the office.
• It provides a layer of privacy, protecting you from being served with a legal proceeding
in front of customers, clients, vendors or neighbors.
• It allows you freedom to change locations as your company grows, without filing costly
changes of address with the state each time.
The Registered Agent serves a critical purpose and is an important part of protecting your
corporate status and your company's future. It is important that small businesses select a highly
reliable company to serve as their Registered Agent. Incorporation and LLC service companies
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often provide Registered Agent service as part of their formation package. Look for a company
that maintains a nationwide network of offices and serves as a full time Registered Agent in all
50 states plus District of Columbia, so that they can service your company's needs as you grow.
A good Registered Agent has long-standing relationships with Secretaries of State. They should
forward to you, via traceable overnight courier, all service of process the same day it arrives,
summarizing the vital information, including who is bringing suit, in what court, when process
was served, the nature of the case and how much time you have to respond. Plus, they should
receive and promptly forward official state documents such as franchise tax notices and annual
reports. Visit www.aboutregisteredagent.com for more information on the ins and outs of
Registered Agent service.
When to Incorporate...Timing Matters
Each December, business owners ask whether they should hurry to form their corporation or
Limited Liability Company (LLC) before the close of the current calendar year or wait to start
fresh in the New Year.
Confusing information abounds regarding timing for company formation. Here are some facts to
help you sort it out.
• If you are the owner of a business that is already up and running, the primary benefit to
incorporating immediately, rather than waiting until January, is protection of personal
assets. "Any minute you wait before incorporating or forming an LLC is another minute
you are exposed," says Glen Ross, a New York CPA.
• An active company that incorporates before year-end must prepare two tax returns: one
as the proprietorship/partnership and one as the new corporate entity. However, costs to
prepare the additional returns may be dwarfed by the potential savings on "self-
employment tax." Glen Ross, CPA, explains it. "Self-employed business owners must
pay 15.3 percent of their earnings to cover Medicare and Social Security obligations.
Contrast this with the business owner who chooses to incorporate or form an LLC before
year-end. He no longer pays self-employment tax on any profit that remains in the
corporation or LLC. If the business owner incorporates during November or December
rather than waiting until the following year, he stands to save on self-employment tax for
that portion of the corporate profit that is not distributed as salary."
• It may make sense for the aspiring business owner to wait until January to incorporate or
form an LLC if the business is not yet operating. Since there is no business activity, the
risk of waiting is reduced.
• Practical cost savings exist when an inactive business waits until January. If the aspiring
business owner incorporates in December, they will be responsible to submit a tax return
for that calendar year—even there is no revenue. CPA's may charge over $200 to prepare
returns for inactive companies. Furthermore, many states have a minimum filing tax for
submitting the return, even if there are no earnings. For instance, New York has a
minimum fee of $325. An aspiring business owner in New York therefore may save
upwards of $525 by waiting to form their company in January.
• A word of caution for those who plan to wait until January to file: January is a busy
month for state offices across the country. States often develop backlogs and long waits
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for corporation and LLC formations at the start of the year. Good news: an incorporation
service company can help you avoid the rush by placing your order in advance and
submitting your company formation for you immediately upon start of the year.
In summary, operating businesses may prefer to incorporate before year-end to minimize

personal asset exposure and to maximize self-employment tax savings. Businesses that are not
yet active may prefer to incorporate in January to avoid the costs associated with submitting a
prior year tax return for their inactive company.
What You Need to Know About Incorporating your Business
Incorporation is often one of the first steps toward becoming an operational business. Still, many
businesses don’t incorporate because they think it’s too expensive, time consuming or
unnecessary. This can be a big mistake–failing to properly register or set up your business as an
entity can end up costing you in the long run. Here are a few reasons why you should
incorporate:
It’s not as expensive as you think. Incorporation or entity formation usually costs a few
thousand dollars–sometimes far less for businesses with simple organizational structures.
You need to protect your personal assets. If you don’t form your business as a separate legal
entity, creditors or parties in a lawsuit can seize or place liens on your personal property-your
house, cars or other assets. Forming a legal entity limits your exposure to responsibility for
business debts.
You need to incorporate if you want to issue shares. Once you file the articles of
incorporation, you can bring on investors and offer stocks and bonds to help finance operations.
You can save on taxes. Registering your business as a separate legal entity can potentially save
you thousands of dollars in taxes.
Protect your business. Corporations will generally not be impacted by the death or bankruptcy
of shareholders. A corporation continues to exist even if original founders are no longer involved
in business operations.
The requirements aren’t as hard to meet as most people think. Not every corporation has to
hold lots of meetings or file a ton of paperwork. Ask your attorney about your options if you
form an “S” corporation or LLC.
It’s definitely a good idea to consult with a professional and consider all your options before
incorporating your business. A reputable attorney can let you know about your options and file
all of the necessary paperwork for you. Make sure you consider the benefits of the different types
of legal entities–not just corporations–before you make your decision.
Marketing and Public Relations
Advertising Ideas on a Small Budget

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To be effective, advertising must be interruptive—that is, it must make you stop thumbing
through the newspaper or thinking about your day long enough to read or hear the ad.
Advertising must also be credible, unique, and memorable in order to work. And finally, enough
money must be spent to provide a media schedule for ad frequency, the most important element
for ad memorability.
Advertising Checklist:
• Communicate a simple, single message. People have trouble remembering someone's

name, let alone a complicated ad message. For print ads, the simpler the headline, the
better. And every ad element should support the headline message, whether that message
is "price," "selection," "quality," or any other concept.
• Stick with a likable style. Ads have personality and style. Find a likable style and
personality and stay with it for at least a year, to avoid confusing buyers. Be credible. If
you say your quality or value is the "best" and it clearly is not, advertising will speed
your demise, not increase your business. Identifying and denigrating the competition
should also be avoided. It is potentially confusing and distracting and may backfire on
you by making buyers more loyal to competitors.
• Ask for the sale. Provide easily visible information in the ad for potential customers to
buy: location, telephone number, store hours, charge cards accepted.
• Make sure the ad looks professional. If you have the time and talent, computer graphics
and desktop publishing software can provide professional-looking templates to create
good-looking print ads. Consider obtaining writing, artistic, and graphics help from local
agencies or art studios who have experienced professionals on staff, with expensive and
creative computer software in-house. Electronic ads (e.g., TV, radio, Internet) and
outdoor ads are best left to professionals to produce.
• Be truthful. Whatever advertising medium you select, make sure your message is ethical
and truthful. There are stringent laws regarding deceptive practices and false advertising.
• There's an old adage that holds that at least 50 percent of all advertising is a waste of
money. It's probably true—and if you can figure out which half of your ad budget is
useless, you'll save a bundle. But until you achieve this wisdom (which has so far eluded
most marketers), you'd be wise to continue advertising full tilt and not take a chance on
eliminating something that just might work.
Low-and No-Cost Advertising:
• Print attractive and informative business cards that include your logo and hand them out
everywhere, consistently! If you use letterhead stationery in your business, have it match
your business card. Keep your identity as consistent as possible.
• Print up some gift certificates. These let your customers introduce you to new customers.
Since you get paid up front for the product or service, they are good for your cash flow.
• Brochures let you provide a lot of detail about your product or service. Simple three-fold
brochure stock may be purchased from mail order suppliers such as Paper Direct (800-
272-7377) in small quantities.
• Flyers can be created very inexpensively on your computer, or by a local print shop. You
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can use as much color as you like, with a color printer or old-fashioned colored paper
stock. They can be used as bag stuffers or inserts to include with billings.
• Doorhangers are very effective and widely used by fast food and home delivery and
service businesses. If you choose this medium, use heavy stock so it won't blow off
doorknobs and litter the neighborhood.
• Inserted ads include mailbox inserts and free-standing inserts. The science behind the
mass distribution of inserts is beyond the scope of our discussion here. If you think that
inserts could successfully reach your market, call one of the big distributors and learn
how much it would cost you to try this kind of program. The industry leaders are ADVO
(call 860-520-3200, and they'll give you the local contact) and Val-Pak which is so big
that you can find it under "V" in most local phone books.
• Paper or plastic bags and packaging make economical billboards. Print your name, logo,
and message on anything you can, on all sides. Mailing labels are another perfect
medium. Everyone who handles your mail will see your ad at no cost to you.
The Basics of Global Brand Protection
A trademark isn’t just a name, symbol or logo–it’s also the way your company is identified in the
marketplace. Recognizable trademarks add to a brand’s value by identifying your unique product
or service. Here’s how to make sure your brand is protected:
Basic Considerations
The level of protection you need depends on your company. It’s not necessary to seek global
protection for a trademark that will only be used in a few key markets. You should also take into
account the local laws in each jurisdiction–some will not require as much heightened protection.
Also consider the cultural impact of your brand. Is your logo or name “catchy,” and more
importantly, not offensive, in the language of the country you wish to expand into? Is your
message clear?
Intellectual Property Laws

Many countries follow a “first-to-use” approach to trademark rights–the first organization to use
a specific mark may maintain rights to it, even if another company filed for a trademark first. Of
course, it’s always a good idea to perform a basic search before you begin using a certain logo or
mark and you should file your trademark with the U.S. Patent and Trademark Office (PTO) to
obtain the highest levels of protection. Filing also serves as constructive notice to other
businesses that you are using the mark.
Most countries only enforce rights to a mark if it has been filed and registered (“first to file”).
Know the laws and do your research before you begin using a specific logo or mark.
Trademark Searching
A trademark search is key before entering a new market to avoid litigation, bad press and wasted
efforts. Generally, mark must be substantially similar to an existing mark and used to sell similar
or related goods to be considered “confusingly similar” and thus subject to legal action. The
company name doesn’t need to be exactly the same to be considered similar. For example, an
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energy drink called “Blue Wave” might be challenged by a caffeinated drink called “Ocean
Blue.” Trademarks can also be challenged across industries–for example, selling a “MicroSoft”
brand DVD player.
Professional search firms can help you avoid the consequences of infringing on an existing mark.
Firms offer several different “screening” services, where you can look for marks and names
resembling yours across dozens of global trademark databases. A professional, full search can be
conducted for any country and customized to your specific needs.
Watch Services
Trademark watch services monitor marks globally so you can ensure that no infringement is
taking place, at a cost far less than hiring an attorney or monitoring the mark yourself.
Trademarks, domain names and internet content can be monitored at both global and local levels.
A trademark watch service can help you protect the equity of your brand and ensure that no
confusion is created in the market by companies using similar marks.
It can be difficult to determine the scope of monitoring services needed. A good rule of thumb is
to consider the value of the brand and future plans–if your brand is very valuable in terms of
recognition, goodwill or research and development funding to bring a product to market, you
should use the most comprehensive monitoring system possible. You should also consider future
plans for expansion, concentrating on searching only in those markets where expansion is
planned.
Trademark search services are a key element in planning to expand to international markets.
Protect your company and your reputation by choosing a search firm that meets your needs.
Being a Small Business Entrepreneur Means Being a Market Researcher
As an entrepreneur in technology companies, I've spent my fair share of time digging out from
common pitfalls entrepreneurs make. As a venture capitalist investing in business-to-business
technology, I've observed many entrepreneurs encounter those same mistakes in their quest for
success.
By far, the most prevalent of these traps, particularly among entrepreneurs with a technical
background, is mistaking the ability to build a product for the ability to satisfy a market need.
Like Goldilocks in the home of the three bears, most customers are seeking the product that is
"just right" for them. For entrepreneurs, the challenge is to understand what makes a product
"just right enough" to satisfy the needs of a large enough group of customers so that one can
claim there is a sizeable market to address.
Determine Your Market

Three key questions to answer when starting a company are:
• Who, if anyone, has a real need for the thing I propose to sell, and how many of those
potential customers are there?
• How much, if anything, are they spending to address that need today?
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• Does my product offering meet that need in a manner that either saves or
makes them substantial amounts of money?
This will not only help you determine the market for your product, it will also provide
information that is critical if you are to secure financing. In addition, the process will yield
valuable information about your customers that will help you fine-tune your ideas.
Failure to Research Customers Can Be Costly

In 1990, I was a director of product marketing at Verity Inc., which made sophisticated software
for document search and retrieval. We made an assumption that our product would be managed
by high-caliber technicians at the companies that used it.
Because of our software's complexity, it was difficult to set up and maintain. Though we thought
the product was important enough to our customers for them to justify using highly-skilled
personnel to run it, our customers felt they had scarce resources and that it was difficult to get
people with the skills needed to use it.
In fact, the only report we had of a customer successfully installing the software on their own
came from NASA's Jet Propulsion Labs, a clear sign to us that maybe you did have to be a rocket
scientist to use it.
Our solution was to reengineer the software to make it simpler to install and use. We did that,
and the product was very successful, but the delay cost us a year and we lost significant repeat
sales early on because we didn't do our homework. Had we simply started by asking ourselves
and our customers the questions we should have, we would not have wasted all that time and
money.
Know Your Customer Cold

To really ask and answer those questions, entrepreneurs need to be willing to be told they're
wrong. Often people have not taken the time needed to know their customers cold. It's not
surprising that the entrepreneurs who are most successful are those who visit as many potential
customers as possible with two critical, if conflicting, outcomes in mind.
First, they try to sell the prospect the notion that they are right and the prospect should become a
customer. Second, they listen to the prospect to learn why they are wrong and the prospect
shouldn't be a customer.
The successful entrepreneur is listening from the very beginning, in order to change and adapt
more quickly to real market needs. Entrepreneurs who spend a lot of time trying to understand
why they don't have it right are very likely to be selling a lot more of their product, a year later,
than those who only try to prove they are right and insist the customer is wrong.
Good Research Doesn't Have to Be Expensive

A dearth of market research is a common deficiency in entrepreneurial endeavors because it can
seem difficult and expensive. The trick to avoiding the trap is to apply dogged determination to
the task. That means subjecting yourself to sometimes harsh market feedback. Though it might
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be unpleasant, it's the only way, short of getting lucky, to actually succeed.
Some entrepreneurs in emerging markets rely on secondary market research because it's an easy
solution—but don't do it! If you are starting a new business in a previously untapped market,
there is no substitute for primary research. All the secondary market research statistics in the
world won't get you funded, but hard data from real prospects just might.
I've found over the years that even poor entrepreneurs without much of a budget can successfully
perform quality research if they are creative, resourceful and brave. Entrepreneurs on a budget
may feel unable to apply formal market research techniques, but a simple four-step process can
be effective:
• Determine how to perform the research (one-on-one interviews, focus groups, surveys).
• Develop the research instrument (interview questions, survey questionnaire, hands-on
tasks).
• Identify and recruit participants.
• Understand what will be done with the results of the research.
The type of business you're in will dictate the most appropriate approach. If your product is for a
highly targeted market, and direct sales calls will be your method of selling, start by identifying
the type of person you expect to sell to and engage in a mock sales call to understand what such
people find interesting. If your product is aimed at a mass market, it may be more beneficial to
recruit small numbers of people for focus groups until you have a feel for the market, and then
validate it further using a survey.
Research Enables Decision-Making

The market research process is a prelude to selling. It teaches you a great deal about what you
will need to know to develop your offering for the market and whether your offering is even
worth developing. A positive and aggressive attitude towards market research enables
entrepreneurs to make that most critical of decisions: Should I spend the next several years of my
life on this business? If you have decided to be an entrepreneur, then also decide to become a
market researcher. Ultimately, the two are inseparable.
Business Branding Basics
Your business “brand” is important–it impacts how customers perceive your company and your
reputation in your industry. Strong brands are associated with quality products–a customer
knows what they’re getting because of the name associated with a particular product or service.
Taking steps to ensure your brand is well-recognized and perceived positively is key when
beginning your business.
What is a brand?
A “brand” is the collection of images or ideas that identify your business. A brand isn’t just a
name, logo or trademark–it’s also the way your brand is perceived. For example, if you own a
bike store, you can choose to associate with extreme sports (BMX racing) popular figures (Lance
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Armstrong) or even a certain community (weekend mountain bikers). Who you identify with
matters in the long run–it’s tough to transition to new markets when you have an established
reputation that new customers might not identify with.
Brand Elements
There are many different elements that can be associated with a business brand:
Name and Web site Domain: Make sure you choose a name strategically, with your target
market in mind. Your domain should be your business name (for example,
www.drmitchellcosmeticdentistry.com) or, if that isn’t available, something that’s frequently
searched (www.delmardentist.com). Try to avoid a domain name that’s too complicated or
contains alternate spellings or wordings of your brand or slogan–this can confuse customers and
make your business hard to identify.
Slogan: The best slogans are simple and catchy–and short. Your slogan can be a quote from a
customer, something interesting about your product or even describe an award or honor you’ve
received. Make sure your slogan stands out and isn’t easily confused with other business tag
lines.
Business Logo: Memorable logos (think the Nike swoosh) stand out in customers’ minds. You
can hire a design firm to craft a logo or come up with one yourself.
Image: Image is arguably the toughest element of branding. Look to your target customers–what
do they want, what do they identify with? Your image should project your business accurately to
the people that will be buying your products.
Getting help
One of the best things you can do to build your brand is to hire a professional Web developer to
work on your Web site. An online presence is key to building a brand–many times, your Web
site will be the first interaction customers have with your business. Make sure the site is easy to
understand and navigate and clearly shows your business name, logo or slogan.
Building your brand should be an evolving process. Make sure your reputation is protected by
controlling your brand identity at all stages.
Catch More Clients Using Strategic Networking

Is networking helping you bring in the new clients you want? If you are like most independent
professionals and small business owners, you put hard work into getting your name out there and
distribute your business card wherever you go. You may even attend a weekly or monthly
networking group or occasional business conference where people share leads. And like most
people, your time and effort isn’t generating a steady stream of new business.
The problem is that most people think that networking consists of telling as many people as
possible what they do, and handing out as many business cards as they can. They waste the few
precious moments they have with new and existing contacts by focusing on themselves.
Its possible to meet someone in the airport, hand them your card after a brief conversation, and
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have them call you to request your services, but this random approach is like playing the lottery.
You can’t count on it to produce results. It is a push and pray technique: you push your
information out to others and pray that they respond.
It rarely works. Your contact loses your card or simply forgets about you, or the timing wasn’t
right, or, in spite of the connection you thought you’d made, a single conversation usually isn’t
enough to launch a client relationship.
That initial conversation should be about understanding your prospects’ problems, needs and
concerns and collecting their contact information. The objective of networking is not to expound
on your credentials.
Spend the time you have with prospects (or people who might know a prospect) asking questions
and collecting information. Then you can determine whether they would have any genuine
interest in/need for the solutions you provide. Use this client problem centered networking
strategy to initiate and build profitable relationships.
Pull Information
1. See how many cards you can collect from prospects, and don’t worry about how many of your
own business cards you distribute. Some successful marketers don’t even have a business card.
2. When you meet people, use the time to gather information from them, including:
• Primary concerns about their business
• Problems they want solved
• Unmet business needs.
• Areas where the solutions you provide overlap with their needs
• Their contact information
3. Continue to expand your network. Whenever you make a contact, ask for referrals to other
prospects.
4. Once you have this information, enter it into your database or contact manager.
Build Relationships
1. People have short memories. Follow-up after your initial contact and then stay in touch with
your network on a regular basis. If you let more than a month go by without making contact
they’ll forget that you exist and that you are the best person to solve their financial, legal, human
resource, design or other problems.
You’ll want to make personal contact with some people on your prospect list, but in most cases,
a letter, newsletter or ezine will do the job. Use the merge function in your software to
personalize your mailings.
2. Demonstrate the value of your expertise or products by sending prospects and clients an idea
or suggestion they can use right away. You could present this in an article you’ve written, or one
you’ve read. Your contact will then associate you with the problems you solve.
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Pull information from prospects and clients to grow your network, stay in touch and regularly
demonstrate the value of your products and services.
Networking should be one of the core marketing tactics of most independent professionals and
small business owners. Use client-centered networking to lessen your reliance on costly and time
consuming cold calling/telemarketing and advertising. Over time, this business building strategy
will reward you with a steady stream of new clients.
The Communications Cycle
A good public relations strategy allows an organization to communicate effectively with its
target audience. To achieve optimum value, business owners need a process for executing that
strategy as effectively and efficiently as possible. Without the right framework, you may be
faced with short-lived gains or unnecessary expense.
The good news is that there's a simple method to follow--the Communications Cycle--that can
serve as a guide for small business owners who want a simple and effective method for
developing their public relations strategies.
Ted Skinner, vice president of PR Products at PR Newswire, answers key questions about
making the method work for your business.
What is the "Communications Cycle"?

The Communications Cycle can be broken down into five steps:
1. Messaging: Before implementing a public relations strategy, you must first determine what
you're going to say and how you're going to say it. What are the key points you want to convey?
What is the most effective format in which to communicate the message: text, video or
multimedia?
2. Targeting: The most important aspect of public relations, as in sales, is knowing your target
audience. A common public relations misconception is viewing reporters as the primary
audience. True, reporters will be your main communications conduit and a very important group
for tailoring your messages, but the ultimate target of a PR campaign should be customers,
investors and potential partners. Before engaging in any public relations outreach, determine who
your audience is, where they're located and what information sources they use to drive their
business decisions. The more detailed your targeting, the more effective your communications
will be.
3. Distribution: There are several methods you can use to get the word out, ranging from the
very basic to the more robust. As with messaging and targeting, tailor your distribution to each
audience based on how it accesses information.
E-mailing or faxing to a pre-determined list is the simplest and least costly method for
disseminating information. However, this approach is limiting because only those on the list will
get the information.
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Newswire distribution services come with a price tag, but the expense ensures a much wider
audience through direct contact with reporters and postings to news and consumer sites around
the world. Further, some newswires offer search engine optimization of news releases, which
increases the likelihood of your release being picked up by Yahoo! or Google. Social media
elements, such as tagging technology and blog monitoring, are also being incorporated to
augment the standard press release distribution.
Speaking of which, blogs and social media sites offer an increasingly important and very cost-
effective channel for PR activities. However, with reward--reaching a highly targeted, motivated
audience--comes risk. Blogs and social media sites open you up to criticism.
4. Monitoring and measurement: Monitoring and measuring the effectiveness of a PR program

is crucial and should be ongoing. The most straightforward and cost effective way to monitor PR
activity is to manually collect articles from printed publications or websites. Services, such as
Google News, offer a relatively easy and free way to track coverage that's posted online.
However, collecting and clipping articles can be time consuming, especially for a small business
owner. Professional clipping services can assume this burden, but at a price.
Equally important to the number of articles generated is the effectiveness of the coverage. Were
your key messages properly conveyed? What tone did the media take in relating your news? Was
it discussed in the blogosphere? These are all important factors in weighing the success or failure
of a PR program and should be evaluated after each campaign.
5. Assessment: The final stage in the cycle is taking what you've learned from your campaign
and applying it to future work. If the media wasn't interested in your news, look for a different
angle or different publication. If lack of understanding was a problem, refine your messages. If
the wrong people read your news, re-examine your distribution methods. Over time you'll hone
your campaign to achieve the greatest results for your business.
How can the Communications Cycle benefit a small business?

The Communications Cycle is designed to generate targeted exposure in a cost- and time-
effective manner. For small business owners with limited experience planning or executing
public relations strategies, the step-by-step approach allows them to organize their activities
around a framework that will help produce measurable results. Public relations will always be
more of an art than a science. The Communications Cycle helps clear up some of the vagaries.
What simple tools and practices can small business owners with limited resources use?
A solid media list should be at the core of every public relations campaign. Media lists can be
built from first-hand knowledge, online sources or from media databases. Although there's a cost
involved, media databases offer the most efficient means for gathering information and accessing
important details about specific reporters.
• Newswire distribution services can also be valuable to the PR efforts of a small

company. Again, there are costs involved, but the scale of distribution that a newswire
provides can't be matched by other comparable means.
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• An online media room is another tool that can be valuable to small businesses. Very
simply, a media room is a section on a corporate website dedicated to news and materials
that are valuable to reporters and other individuals seeking information on the company.
Media rooms can range from the basic, such as a chronology of recent announcements, to
the more sophisticated, including technology that automatically posts releases, allows for
the download of multimedia content and provides direct communication to company
contacts.
• Expert sources, individuals at your company who can discuss topics related to your
business or industry, are highly desirable to the media and can offer companies a way to
gain notoriety even when news isn't available. There are several ways to leverage an
expert source. The most direct approach is to proactively offer a list of reporters access to
the individual if a need arises. Once a relationship is developed, very often it will be the
reporter who approaches your company for future commentary.
• Online services, such as ProfNet, connect your experts with journalists looking for quote
sources. The services allow companies to create profiles for their experts, which are then
made available to reporters who are registered on the site. The sites also allow
companies to access postings from reporters who are seeking experts for articles currently
in production.
• Blogs offer a forum for your expert to voice his or her opinion on a wide range of matters
and, in turn, showcase his or her knowledge to readers. The risk with blogs, as mentioned
previously, is the potential for critical or negative comments.
In the future, what will be the most important PR tools for small businesses?
The growth and maturation of social networking will continue to influence the PR landscape. As
these technologies become more mainstream, we should begin to see more localized, Zagat-like
content available in communities across the country. Such sites should afford small businesses
even greater opportunities for exposure. Traditional tools and practices will continue to be the
foundation of public relations, but more and more we'll see the influence of shared content and
communications.
Developing a PR Plan
Want to make sure your business's name gets heard this year? You need to plan for PR.
For most businesses, the new year is a time for assessment, goal setting and strategic planning.
When it comes to PR, this is the time to set objectives and formulate a clear, defined plan that'll
help your business achieve optimum results in the media.
When planning your PR activities for the year, as a general rule, consider the full year ahead,
plan for six months, and expect to revise after three months. Like most business activities, PR
requires flexibility and a recognition that things will change over time. However, there are a
number of factors that'll make a measurable difference to your company’s success if you take
them into account at this early stage.
Assess & Plan

First, review the past year in terms of PR activity. If your business received media attention last
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year, review the resulting coverage with an analytical eye. Determine the angles and pitches that
worked well and resulted in positive coverage. Take note of which journalists reported in your
favor and which didn't. Look at the overall amount of positive, negative or neutral coverage you
received. If you subscribed to a media measurement service, assess the results of your campaigns
and, if possible, compare your progress against your competitors.
Next, consider your overall business objectives, and use these as a basis for developing your key
media messages. Make sure that what you say and how you say it reflects what you’re trying to
achieve. Your messages will form the backbone of your communication activity for the year.
Finally, develop a plan of attack. Review your business plan through the eyes of a journalist--
what would be of interest to your customers or investors? Identify potential media opportunities
that could occur during the year, such as product launches, expansion activities and
new service offerings, and develop a calendar that lists the events. If you can, try to organize
major news events to create the most buzz. For instance, if your company is introducing a new
line of beach apparel, time the launch in the spring to coincide with warming temperatures.
Always remember to put your goals and objectives in writing so you can refer back to them
throughout the year and evaluate your success.
Tools & Tactics

Once you’ve sketched out your plans for the year, it’s time to consider the activities that'll enable
you to achieve your objectives.
• Establish a news release calendar to plan out the news releases you intend to issue
throughout the year. You may need to revise this calendar as you move through the year,
but it'll give you some initial structure to adhere to and help you stay focused on
generating news.
• Media outreach in the form of pitching reporters and placing articles is still the essence
of PR, and the foundation for any PR program is a solid media list. Before engaging in
any PR activities, take the time to carefully research and build a database of key
reporters. Your list should contain the contact details of the publications and journalists
that pertain to your industry and be organized according to how valuable each is in terms
of reaching your target audience.
Once you've created a list, schedule time on your calendar for media outreach. Contact
each reporter individually to introduce yourself and to arrange informal meetings where
you can discuss the outlook for your company and industry.
• Publications' editorial calendars offer an excellent vehicle for planning media

exposure. Researching them will enable you to identify opportunities to offer yourself as
an expert source, contribute an article or even suggest a feature on your company. Once
you’ve set your list of targets, begin contacting them as soon as possible. Most editorial
outlets have deadlines several months ahead of their publication dates. Pay careful
attention to the closing dates, or you'll risk losing out on the opportunity.
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• Contributed or "bylined" articles can be an excellent way to generate exposure and

establish yourself as an industry expert. Research magazines, newspapers and websites to
find those outlets that are open to such articles, then contact the editor to propose a topic.
Remember to make sure the focus of the media outlet is in sync with your business
objectives and the article contains your key messages.
• Case studies are very attractive to the media because they offer a tangible, real-world
example of the benefits of your product or service. The challenge with developing case
studies is they require active customer participation. So talk to your clients and ask them
if you can report on their successes. While this'll require your customers to share their
“war stories,” it offers them--and you--a chance to shine.
• Speaking opportunities offer another avenue for generating exposure. When planning
your PR activities for the year, research conferences, trade shows and webinars for
opportunities to nominate yourself as a keynote speaker or a member of a panel
discussion. The value in securing such engagements can be tremendous, especially for a
growing business; however, they also require vigilant planning because most speaking
opportunities are finalized several months in advance.
• Blogs and social media have grown in popularity as communications tools because they
offer a way to have an active discussion with a motivated audience. When considering
PR tactics, don’t forget to research the blogs that relate to your industry and get to know
the styles and personalities of their authors. Technorati, the leading blog search engine, is
a great place to start. A presence in the blogosphere can add to your company’s
perception as a thought leader. But remember, all material published on a blog is open to
a wide audience and can initiate a line of discussion that may not always jive with your
point of view.
If you want to launch your own blog, there are free tools, such as Blogger and Blog.com,
that enable you to do this easily. When it's all set up, make sure it gets listed on
Technorati.
The internet also contains a number of social media networks such as del.icio.us and
Digg. These networks are used to store and share content and information--like articles--
among members. Additionally, if you have video content that you’d like to share with a
consumer audience, you should familiarize yourself with video sharing sites such as
YouTube and Metacafe.
• Crisis planning is also an essential part of your business's PR plan. This should include
all possible negative scenarios and the appropriate responses to them. Ensure that other
members of your business are aware of crisis procedures, and take time to do a test run to
help iron out any inconsistencies or holes in your plan.
Planning your PR strategy now will not only help generate new ideas and opportunities for you
and your business to shine, it'll give you peace of mind in your day-to-day operations. While PR
plans are always subject to change, planning ahead will enable you to stick to your overall goals
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and maintain your focus.

Drive Media Interest at a Trade Show
Follow these steps to get your business noticed before, during and after the show.
Trade shows are a key component of most companies’ marketing efforts. And for small
businesses, trade shows are especially beneficial because they provide an opportunity to reach a
plethora of potential customers, investors, industry analysts and journalists over a very short
period of time.
Susan McPherson, vice president of global trade show services at PR Newswire, shares her tips
for leveraging your participation in a trade show.
Entrepreneur.com: What tools and resources should a small business use to plan for a
trade show?
Trade shows begin booking exhibitors at least six months in advance. An important step is
finding out if the trade show management offers any tools to help exhibitors reap the full
benefits. These might include media lists, a website for posting exhibitors' news before, during
and even after the show, and special packages and pricing with service providers. These benefits
can be especially helpful to a business with limited resources.
You should also consider asking the trade show management about their PR plans. In many
cases, there'll be opportunities for riding the coattails of the show's promotional activities. For
example, if they're issuing a news release about the event, consider asking if your company can
be listed in it as an exhibitor; or offer your participation as a case study for their marketing
materials.
If you're launching a new product or service, make sure to target the daily show magazine or
newspaper, both online and in print. Also consult the editorial calendars of industry trade
publications. Many will run show editions. Keep in mind that most magazines have long lead
deadlines, so be sure to make contact early.
And last, but certainly not least, if you're launching a trade show-specific website, be sure to
have it populated with relevant content at least three to four weeks beforehand, and make sure
that you're able to update it while you're on the road. Use your special event URL in all show-
related correspondence, press releases and invitations, and include a link to it from your main
website. A well-managed site could be the difference in converting leads to customers.
What's the best way to manage a product launch at a show?

There are a few simple steps for getting the most out of launching products at a trade show:
• Plan ahead. Develop a calendar of tasks to complete prior to the launch. The calendar
should extend at least a month in advance and should account for such activities as
drafting and finalizing the launch release and marketing materials, producing graphics or
product photos, securing customer testimonials and performing media outreach. Then,
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align these activities within the timeframe of the trade show. Some tasks may need to be
adjusted based on trade show rules and deadlines.
• If media coverage of your launch is a priority, preview your product for select journalists
and analysts ahead of the event. Doing so will enable those reporters to break the story
the day of your official launch. Make sure to obtain the trade show media list as far in
advance as possible.
• A well-orchestrated product announcement is key to generating publicity. Check with
event organizers to see if there’s an official newswire sponsor and if there are any
regulations for issuing news at the event.
• Create a standalone website or product page that can be updated quickly and easily.
Populate the site with information about the launch, including marketing materials, the
official launch release, photos, fact sheets and a link to encourage further communication.
• Make sure you have the right people staffing your booth. Product managers are essential
if you're going to be demonstrating a new service. If you have happy customers who have
used your product, you might consider asking them to act as live testimonials at the
booth.
• Unless you're introducing the next iPhone or similar product, don't hold a press
conference. The cost will outweigh the benefits.
How should a company structure its product launch announcement if the news is being
issued at a show?
Follow the same basic news release writing guidelines as you would for any other
announcement. Make sure to address the five W’s--who, what, where, when and why--avoid
jargon and write a catchy headline that directly relates to the news.
The only major difference between a trade show-based announcement and a standard release will
be the dateline. The lead paragraph should indicate that the launch is taking place at the event.
This'll add an element of timeliness to the news and attract the attention of reporters assigned to
the show.
What's the best way to secure media interviews?

Again, plan ahead. Use the media list given by show management, and send out e-mails to
reporters who'll be attending. If the show doesn’t supply a media list, search for past articles on
the event and develop a list of publications and reporters on your own. The same reporter may be
assigned to cover the show again. And if not, he or she should be able to point you in the right
direction.
Be sure to initiate contact at least two weeks prior to the show. Remember, your company won't
be the only one trying to set up an interview. Reporters’ calendars fill up quickly. And give the
media a reason to take notice. Offer breaking news or a unique angle that distinguishes your
company from the other businesses.
Also look for opportunities to secure speaking engagements, either as a keynote speaker or as a
participant in a panel discussion. Speaking engagements require extensive planning and
creativity, so start early and identify several themes you’re comfortable discussing. Don’t focus
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solely on topics directly related to your business. The most enticing speakers are those who can
branch out beyond the standard subjects.
What marketing materials should you have on hand?

Minimal ones. No journalist wants to carry reams of paper, and with concern for the environment
growing, no one likes to see waste. Consider placing all your marketing materials on branded
jump drives. You should also include these materials on your trade show website for easy
download by journalists when the show is over.
Eight Reasons Why Direct Mail Is So Powerful
Direct mail is perhaps, one of the most powerful marketing mediums in use today. Few other
marketing tools can deliver your message with exact precision at such a low cost. The amount of
mail in your mailbox everyday attests to the effectiveness of this medium (If it didn't work, your
mailbox would be empty!).
Here are eight reasons why I believe direct mail is still king of the marketing mediums:
Reason # 1: It works when you're not

Like the old saying goes, "In rain, sleet, or snow" the mail arrives. Whether you're sleeping,
vacationing, working, or walking, your direct mail is working for you. It gives your best sales
presentation over and over again without you having to be present.
Reason # 2: It leverages your efforts

Do you want to know how to waste your time? Give your best sales presentation to one person at
a time. If you do this, you'll only sell one widget at a time. Send out thousands of letters and your
best sales pitch is being presented to thousands of people simultaneously. That's called
"leverage!"
Reason # 3: Allows you to target with precision

Instead of "spraying and praying" your message to people who may or may not be interested or
even qualified to take advantage of your offer, direct mail allows you to pinpoint the people who
fit your psychographic, demographic, and geographic profile.
Reason # 4: You get an immediate response

Once you send out your direct mail piece it doesn't take long to get a response. Within one to two
weeks you'll receive about 80 percent to 90 percent of all those who are going to respond. If your
campaign works, you'll know about it quickly. If it's a bomb, you'll that quickly as well.
Reason # 5: It's easy to track your return on investment

If you're a small business owner you can't afford to waste a single penny on wasteful marketing.
With direct mail marketing you can code your mail pieces to determine the exact number of
responses you received from each campaign.
And as I said before, the results of your direct mail campaign come back fast, so once you know
what worked and what didn't, you can immediately start to "tweak" your mail piece to increase
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your response and hold your marketing dollars accountable.

Reason # 6: It's relatively inexpensive

With just $.34 (at the time of this writing) you can send out a direct mail piece that includes your
full marketing message. It is amazing what you can get into a small business size envelope and
keep under the $.34 limit. Photos, newspaper articles, letters, special reports, and more can be
put in these envelopes for under $.34. This means you can reach 100 target prospects for only
$34. Comparatively speaking, that's a bargain!
Reason # 7: It gets one-on-one attention

One of the best things about direct mail is that it gets one-on-one attention from your target
prospect. Unlike billboards or radio and television commercials that get your attention while two
to three other things also have your attention. Direct mail is opened one piece at a time and read
one piece at a time. It gives you the best chance of catching your prospect's attention and keeping
it for a period of time.
Reason # 8: It's something you can touch and feel—it hangs around
Direct mail is something that you can hold in your hand. It's not made of electrons that can be
deleted with the twitch of a finger. It's not a radio frequency signal that is here and then gone a
moment later. It is physical. It is something that can hang around for a period of time. It has
"lingering" marketing effects.
All these reasons I've mentioned make direct mail a very powerful marketing medium that, if
done right, can have a very high return on your marketing dollar.
Email Marketing: Tips To Not Being Forgettable
Are you forgettable?

The average person can store up to seven things in his short-term memory. If you’re banking
solely on the idea that a customer’s memory of his last face-to-face encounter with you will bring
him back to your business or organization, then remember this: the odds are clearly not in your
favor.
Let’s say you own a restaurant and you provide great customer service and a quality meal. How
long after the patron walks out the door will it take for the memory of that experience to fade?
Would it be a day, a week, or until the customer has another good meal somewhere else? With
that in mind, what can you do as a business owner to stay “top-of-mind,” and make your way
into your customer’s longer-term memory?
According to Wikipedia, short-term memory “can become long-term memory through the
process of rehearsal and meaningful association.” In my mind, that means if you invest time in
building a relationship where you demonstrate your knowledge and value, you will become more
memorable to your customers.
And that’s where email marketing comes in. Email marketing, when done right, is the most cost-
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effective way for you to stay top-of-mind with your customers, clients, and members when you
are no longer face-to-face.
Email marketing, done the right way, requires just three things of you:
1) Building a quality, permission-based list — as opposed to simply a large one

2) Sending communications that look professional; and
3) Writing great content that doesn’t just sell. Instead, share your knowledge, because that’s what
your readers find the most valuable.
While it’s not hard to send email communications, it’s a learned skill to send email marketing
messages that have your customers looking forward to receiving them in their email box. Follow
some of these steps and you may just become unforgettable!
Getting More Out of Consumer Promotions
By Jim Pyles, SCORE Volunteer, SCORE Board Chair, 2004-2006
Consumer promotions can provide your business with a short-term boost in product sales or
services requested. However, promotions should be thought of as an “add-on” to your existing
brand advertising and marketing strategies. If you are considering running special consumer
promotions, there is good rationale for incorporating them into your marketing mix.
Reasons to Promote:
• Create a general hype in sales

• Launch a new product or service, generating initial trial
• Announce news about an existing product or service, e.g., a new form, package size,
product use, bonus offer, extended service, location, etc.
• Offset new competition or other competitive threat
• Induce repeat purchases, product upgrades or services used
• Announce a tie-in product or service, e.g., free suntan product with the purchase of
sunglasses
• Capitalize on holiday or seasonal occasions, e.g., Valentine’s Day, President Day Sales,
Back-to-School Sales, Holiday Sales
• Enhance product or service awareness
Who Is Your Primary Target For the Promotion?

When planning a promotion, it is important to know which customers you are trying to reach.
Will your promotion target new users or current customers? Deciding on a target audience will
depend on factors such as current sales trends, competitive activity, seasonality or a combination
of factors. Targeting your customers is key to a promotion’s success. You also need to know
your customers’ behavior, reading or listening habits or use of the Internet. Once you have
determined which customers to target and how to reach them, you can decide how to best use
your available funds.
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What Is Your Promotion Budget?

Your marketing budget should include an allocation for promotions, both planned and
contingency (i.e., for unexpected events). How you create awareness of the promotion will
depend on how much money you have to spend. Think about hidden promotional costs, which
can reduce the cost efficiency of the promotion if overlooked. Luckily, there are many forms of
media available at all different price ranges. Just be sure that the cost of your promotion will not
outweigh the benefit.
What Type of Promotion Works Best?

Promotions come in different forms, with different budgets, and can yield very different results.
Sometimes it is a good idea to conduct a test promotion before launching a large-scale effort.
This can help you to stay within your promotion budget and ensure that your promotion tactics
are sound.
As a starting point in figuring out what promotion will work best for your business, research
common promotion techniques in your industry and review the effectiveness of competitors’
promotions. Examples of common, effective promotions include:
• Short-term price reductions such as coupons, rebates or bonus offers

• On-pack premiums or cross/companion product promotions, like a free toothbrush with
toothpaste
• One free month of service for new customers
• Free services for referring a new customer, for example a Laundromat offering free wash
and dry
Analyze the benefits and drawbacks of each promotion type before you launch your promotion.
For example, will offering bonus packs or extended discounts postpone future purchases which
potentially could impact profits? Could frequent cost reductions negatively impact your brand
image? How much will deep promotional price reductions affect profits? Some other factors to
consider include ease of implementation (which you want) and ease of duplication by
competition (which you don’t want).
What Are the “Econometrics” of the Promotion?

In simpler terms, did your promotion pay off? Did it generate sufficient incremental sales or in-
store traffic to justify the additional costs? Did your customer “load-up” or buy-in heavily,
delaying future purchases? Will there be repeat purchases sufficient enough to pay for the
promotion? These are important questions to answer when planning your promotion, as well as
when evaluating it after the fact. In many cases a promotion will only generate a short-term
switch in customer choice, but this can still be important for product or service growth.
Promotion Evaluation
Evaluation is the most critical, yet the most overlooked, step in any promotion. Most promotion
planners fail to incorporate measurement devices to assess whether the promotion worked or not.
Consequently, except for a “gut feeling,” they never really know if their promotion was
successful. To measure the success or failure of a promotion, you must set specific, measurable,
realistic objectives prior to launching the promotion. Post-promotion, evaluate your success by
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comparing original objectives and criteria to actual outcomes.
Guarantee Marketing: How To Turn Your Guarantee Into a Competitive Weapon

One of the reasons people don't buy from you is the perceived risk they believe they are taking in
purchasing your product or service. These risks include:
1. Making the wrong decision

2. Losing money
3. Not receiving what they paid for
4. Not being satisfied and then not being able to recoup their investment.
There are a number of risks that people must hurdle over to purchase your product or service.
One strategy to overcome these risks is to offer a rock solid guarantee that will make their
purchase risk free, or at least decrease the risk as much as possible.
A strong guarantee makes it less threatening for people to consider your offer. You lower the
barriers that prevent people from doing business with you. You give them a compelling reason to
buy today without fear of looking bad tomorrow. By removing the risk to buyers through
guarantees, your business will stand out. You'll make it easy and fun for people to buy from you
and your profits will dramatically increase.
I understand that delivering any product or service is not risk free, but by stating and trumpeting
your guarantee will decrease the risk in your prospects mind and increase their trust and
willingness to buy from you.
The Guarantee Myth Revealed!

Businesses shy away from making strong guarantees because they think that a large percentage
of their customers will take them up on it. Studies have proven this belief to be false. At most,
only about 1-2 percent of your customers will ever take you up on your guarantee.
Ask yourself the following questions:
• How many of my current customers have complained to me about my products or

services in the past month?
• In the past year?
• How many of my customers have asked me for their money back or to replace a product
or redo a service that you've provided?
You'll find that if your product or service is of acceptable quality (even mediocre quality), you
should have few complaints, if any.
The notion that your customers will take you up on your guarantee too often is a myth. It doesn't
happen. Humans are generally non-confrontative and don't want to make a big issue of things.
If your customers are mostly satisfied now, there's nothing to worry about. By offering a risk-
free guarantee, you'll simply call more attention to the quality you already have in place.
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Make the strongest promise you can comfortably live up to, and feature it prominently in all your
marketing materials and don't worry about the myth that you'll lose your shirt redoing services or
replacing products. It just doesn't happen.
The Invisible Guarantee

What's that you say, you don't have a guarantee? Wrong. 99 percent of all small businesses
already have a guarantee—but they just don't know it nor do they publicize it.
Let me explain. If a customer called to complain that the work you did was unsatisfactory, what
would you do to fix the problem? Would you tell them, "Sorry, we can't fix that for you." or
"Sorry, let the buyer beware."? No, you would probably offer to redo the work or replace the
product. You would do what it takes to make your customer happy.
You see, you probably already have a strong guarantee but you don't publicize it because you
think that a bunch of your customers would come back and take you up on it (I'll talk more about
that in a minute).
If you're already honoring an invisible guarantee you need to start publicizing it. It's a powerful
hidden asset in your business that you're not exploiting.
Six Steps to Creating a Rock Solid Guarantee
Now, here's a step-by-step method for creating your guarantee and using it to supercharge your
marketing efforts.
Look At Your Competitors.

Go through the Yellow Pages or the newspaper to search for other business' guarantees. Better
yet, just have someone call and ask them about their guarantee. Look outside of your specific
marketplace for good guarantees. Write them down. When you finish your research, what
patterns do you see? Are there many guarantees in this industry? What kind did you find? Did
you find guarantees of specific performance or the more common, dull-as-dishwater,
"Satisfaction Guaranteed" variety?
Look At Your Strengths.

What area of your business is a strong point for you? Do you do very fast installations, are you
great at maintenance, do you respond quickly to customer queries? Do your products or services
produce consistently outstanding results? Do you have the widest selection in town? Do you save
money for your customers?
Guarantee Results.
Think about what specific results a customer wants when he or she buys your products for
services. What good things happen when customers use your products? Better relationships?
More money? Reduced stress? Write down the answer in specific detail, and then guarantee that
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outcome. (Just make sure you can fulfill on your promise.)

A delivery company that works fast can guarantee delivery times—by 10:00 a.m., or within 24
hours. Do you have the widest selection in town? Guarantee it by daring customers and
competitors to find more products somewhere else (just be sure you can back this up). Do not
simply guarantee "satisfaction." Guarantee in detail what that satisfaction will look like to your
customer.
Choose A Payback.
As unlikely as it is that you'll be making good on your guarantee (remember—only about 2
percent of customers will ever take you up on it), you want to create an attractive payback in
case customers are unsatisfied. Ideally, it won't cost you much but will have a high perceived
value.
A hassle-free, money-back guarantee is a good place to start. But try to dress it up a bit.
Remember, a better-than-risk-free best guarantee is the best guarantee of all. Yours should
exceed customer expectations and be memorable.
Start Small, Test And Track Your Results

This is vital! You must know how well your guarantee is performing before you make it a
permanent part of your marketing. How? You might advertise the guarantee in only one of the
publications you advertise in, mention it on your telephone message, on one set of business
cards, or in a letter that you send to a small segment of your customer base. Then, track the
results.
How much have sales increased over your previous totals before you had a guarantee? Be sure to
test at least two combinations of your guarantee to find the one that works best for you. You can
guarantee results for 30 days in one test and 90 days in another (longer guarantees generally
work better). You might even use a lifetime guarantee. Experiment!
Get The Word Out.

Once you've tested and found a guarantee that you're comfortable with, publicize it! Make your
full guarantee—in writing—a part of your advertisements and marketing communications. Put it
in your newspaper and Yellow Pages ads, your business cards, your Website, your letterhead,
your brochures, etc.
Breaking Down Your "Soft" Guarantee

Breaking down your guarantee into specifics can turn a weak guarantee into something powerful
that builds trust and reduces skepticism. This tactic works well not only for "hard" guarantees but
especially for "soft" guarantees.
A technique for turning your soft guarantee into a powerful statement is to break it down into
pieces and explain what each part of your guarantee means. The following is a live example from
a credit counseling company for which I just did some copywriting.
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Allow me to give you an example from a recent copywriting project that I did for a credit
counseling firm. This company didn't want to make any hard, fast promises (unfortunately, that's
typical of most businesses). But they did want to express that they were willing to stand behind
their product.
So what I did was take their general marketing statements and break them down into guarantees.
Each guarantee taken separately is weak but when they are put together it makes for an
impressive statement.
The "Broken Down Soft Guarantee" - A Live Example
We stand behind our promise to help you reach your financial goals. We don't just talk the talk.
We walk the walk. In fact, we'll walk with you every step of the way.
Here at Acme, we not only stand behind our services but we tell you what it means by clearly
spelling it out for you.
Guarantee #1 - The "Pay Off Your Debt Faster" Guarantee

We have experienced counselors who help people like you every day to develop a
comprehensive financial plan that results in paying off your debts faster than you ever could
have on your own. In nearly every case, we'll take years off your payment schedule allowing you
to reach your financial goals sooner than expected.
Guarantee #2 - The "Be Courteous and Understanding of Your Situation" Guarantee

Our representatives are understanding and respectful of your situation and will talk with you on a
human level. Many of our counselors were in the same position as you not long ago and so they
intimately understand what you are going through and can empathize with your situation.
Guarantee #3 - The "Pay You Money Back" Guarantee

At Acme we have created an exclusive and unique incentive plan called the "Pay Off Your Debt"
program. We promise that if you qualify for this program and make all your payments in full and
on time for six months, you'll received 50 percent of the "fair share" funds that we've collected
on your behalf.
Guarantee #4 - The "Simplify Your Debt Payment Effort" Guarantee

We make bill paying ultra-simple. You'll make only one simple payment to Acme and we'll do
all the dirty work of paying all your bills. We will stop all the creditor hassles, nagging phone
calls, and bill collection letters by helping you consolidate your payments into one simple
monthly payment.
Guarantee #5 - The "Provide 24/7 Access to Payment History Information" Guarantee

Our state-of-the-art telephone system allows you to access your payment information twenty-
four hours a day, seven days a week. You'll never be in the dark again about when your
payments come in, when they go out, and any other payment information you need to know.
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Notice that each one of the guarantees is general in nature. Individually, they are weak
guarantees but put together they make a strong statement and in the credit counseling industry
(where no one makes any promises) it has set them apart from their competitors.
Making Your Guarantee Your Unique Competitive Advantage

Companies that make their guarantee part of their Unique Selling Proposition have prospered.
Have you seen the commercials for the Men's Warehouse in which the CEO, George Zimmer
says, "You're gonna look good. I GUARANTEE it." That one phrase has made the Men's
Warehouse the most successful men's retail chain in the nation.
The ability to differentiate your business by the guarantee that you provide will set you apart
from your competition because most companies don't use their guarantee as a unique selling
proposition.
What I'm suggesting is that you make your guarantee a focal point in your marketing efforts.
Your opportunity lies in how aggressively you're willing to tell the world about your guarantee.
To the extent that you do, you'll enjoy a competitive advantage over all other companies in your
industry. Your business courage will pay you tremendous long-term dividends.
Magic Words to Create Powerful Guarantees

How you word your guarantee can make all the difference in the world. Power words and
phrases significantly boost your sales and response rates. Here are few strong words and phrase
that will bring some zing to your guarantee:
• Take-It-To-The-Bank
• Better-Than-Risk-Free
• You Can't Lose
• Unconditional, Money-Back Guarantee
• Your Money Back, No Questions Asked
• I Personally Guarantee
• No Way That You Can Lose
• 30-Day Free Examination
• No-Questions, No-Quibbles, Money-Back Guarantee
• Iron-Clad Money-Back Guarantee
• 100 percent On-The-Spot Full Refund
• My 110 percent "Call me Crazy" GUARANTEE!
• Absolutely No Risk To You!
• 100 percent, no-hassle refund!
• My 110 percent, No-Fuss, No-Questions, "Take-It-or-Leave-It" PROMISE!
• No Pussyfooting Around And Get Every Single Penny Back GUARANTEE!
There's no better place to find some of the most powerful copy written guarantees than on the
Internet.
Conclusion
Your guarantee can be one of your most powerful marketing tools. Unfortunately, the vast
majority of businesses just don't want to place a strong guarantee on their product or service.
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They're too afraid of the perceived negative consequences. It's a pity.

Develop a guarantee today that stretches you to the limits and test it. If it doesn't work for
you...fine. I "guarantee" that it will though and you'll start winning customers with ease.
Happy guarantees!
How to Get Free Publicity for Your Small Business
The other day I picked up the newspaper and read the headline, "Ex-High School Teacher Helps
Struggling Students Improve Their Grades." The headline immediately caught my eye because I
recently developed a system for high school and college students to improve their academic
performance.
In the article it talked about a Houston woman who retired from high school teaching and now
holds study skills workshops around town for high school students that need academic help. It
included her contact information and web site address.
It was a quarter page article in the Houston Chronicle with over one million circulation. When I
saw the article I wondered to myself how much that same article would have cost her if she had
paid for it.
LOTS!
The Power of the Humble News Article

There is only two ways to land the name of your business in the local newspaper, by paying for
an advertisement or by having a newsworthy event that is covered by the local press. Both can be
very effective but the all-mighty news release can provide the level of credibility and respect that
can spark on-the-spot sales for your business.
Advertisements contain information that people know are biased. Surveys have shown that the
vast majority of people believe that all advertisements contain false or misleading information.
News articles, on the other hand, are written by third-party news organizations that have nothing
to gain by endorsing your business. Hence, their believability is high. That's exactly why your
print ads should use an editorial style format. People read editorial style (news article format)
seven times more than an advertisement!
Why Are Some News Releases Chosen and Other Not?

Knowing how the press chooses one news release over another will give you an advantage in
getting the coverage you're looking for. Most large pressrooms get hundreds of news releases a
day. When yours comes in, it competes with all the others that come in with it.
Typically, an "Assignment Editor" is the person who has the responsibility to determine what is
"news" and what isn't. This person is in charge of reviewing the incoming releases and either
assigning them to editors or trashing them. Typically, an Assignment Editor will sift through
press releases like you go through your mail...over a wastebasket.
If a news release doesn't catch their eye they immediately trash it. The first item on the press
release that is read is the headline. If you don't have a catchy headline that grabs the editor's
attention then it won't stand much of a chance making it to the next step, which is the first
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paragraph.
Your first paragraph should tell what your news is, whom it's about, where it will be, why it's
important, and when it will be held. The opening paragraph needs to get to the point fast with no
fluff. If it's as compelling as the headline, you have a good chance of having the entire release
read.
What News Stories Get Covered?

To give your business the best chance of being covered by the local news media give them what
they are looking for. Generally speaking, each of the different media is looking for specific types
of news events.
Newspapers want information that is interesting and informative. Newspapers like to educate
their readers with timely news and articles that people will find interesting and educational.
Radio is a bit more loose and has an "anything goes" type of style. Radio stations like
information that is controversial, funny, or weird. One of the most popular five minutes of a local
radio station here in Houston is the "Birthday Scam," in which the DJ's call up an unsuspecting
person (on their birthday) and proceed to create a combative and hostile conversation full of
accusations and lies. The sparks start to fly and so do the ratings.
Television gets excited about anything that can provide great visuals. Sponsoring a local high
school reading contest in which the principal gets dunked in a tub of kool aid will get the T.V.
station's attention.
All media love human interest stories. They know that people like to know about other people. In
fact, the number one topic of talk radio is relationships. If you have a good human interest story
that others would find interesting you're on your way to getting lots of free publicity.
Lastly, the biggest mistake that most PR novices make is to pitch an advertisement for their
business. The media publishes news...they are not your personal marketing department! You
must be newsworthy!
How Muhammad Ali Landed In Life Magazine (I love this story!)

Getting free publicity is more about making yourself newsworthy than being newsworthy. As
George MacKenzie, a publicity expert, once told me, "There is no boring stories, just boring
approaches to interesting stories." With creativity and a little effort you can make almost any
situation newsworthy. The following story is a perfect example of what I mean. It's a story about
how Muhammad Ali received massive amounts of free press in Life magazine, the biggest
magazine in the country in those days.
After Muhammad Ali turned pro, Sports Illustrated did an editorial piece on him. During the
photo shoot with the Sports Illustrated photographer, Ali asked whom else the photographer did
work for. He replied, Life magazine. But quickly told Muhammad that he didn't have a chance of
being covered in the popular magazine.
Muhammad knew that if he made himself stand out somehow, that the magazine might write him
up. After a few minutes of consideration Ali asked the photographer what other kinds of photos
he took? The photographer responded, "All kinds, but my specialty is underwater photography."
So the quick-thinking Muhammad Ali said, "Did you know that I'm the only fighter in the world
who trains underwater?" The photographer immediately got interested. Ali then told him that
he'd do an exclusive if Life wanted to do a story about him.
Before you knew it, Ali was in a pool up to his neck in water dancing and throwing punches with
the photographer reeling off pictures. It wasn't long after that Life did a huge spread on
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Muhammad Ali. He gave the photographer and Life magazine what they wanted, and in turn,
received massive free publicity.
20 Ways to Make Your Small Business Newsworthy

As I previously mentioned, the key to getting publicity for your business is to make yourself
newsworthy. The Muhammad Ali story is a good example of how one man made his own
publicity opportunity by being creative and interesting.
To get your creative juices flowing let me suggest 20 ways you can make your business
newsworthy.
1. Do a customer survey and include controversial questions. Write articles about the results
of the survey. The media loves survey results.
2. Create a top ten list about something in your business. If you're a beautician, write an
article titled, "Top Ten Most Popular Hairstyles for Women." Top ten lists are very
popular, just ask David Letterman.
3. Develop an annual award that you give out to someone in the community or a business in
your industry. For instance, give an award to a local outstanding teacher that has gone
above and beyond the call of duty. Or if you're a supplier you can give an award to the
"Best" business (customer) in the industry your service.
4. Offer surprising facts about your industry or business. For instance, if you're a
recruitment firm write an article titled, "The Average Starting Salary of An MBA
Graduate is 40 percent Higher Than Their Pre-MBA Earnings."
5. Piggyback off a national story. For example, when the rumors of a recession hit one
business wrote a story about how their business actually improved as a result of the
recession (It was a utility expense auditing firm).
6. Tie your business in with holidays or special days. For example, tell the media how your
massage therapy business helps to reduce stress during the Christmas season and provides
gift certificates for welcome relief.
7. Give a rags-to-riches story about yourself as a high school nobody that starts her own
business and becomes successful. Remember, the media loves human interest stories.
8. Tie your business into something that took place in the past. Go to your local library and
find articles from 50 years ago that may somehow tie into the product or services you
provide.
9. Be first. Be the first to offer a 200 percent double your money back guarantee. Be the
first to offer an on-site car wash with every sale. Be the first to give your employees
ownership in your business. Think of something at which you can claim to be the first.
10. Host a "Kids are the Boss Day!" Hand your business over to your 14 year old kid or one
of your employee's young children for the day.
11. Run a "silliest thing" or "dumb mistakes" contest with your customers. For instance, if
you're a shoe repair shop, ask your customers for the silliest things they've ever done with
their shoes. If you're a sport goods retailer ask your customers for the dumbest mistakes
they've made while camping. These are great human interest stories that the press will
love.
12. Sponsor a local community service project. For example, if you're a dry cleaner, clean the
clothes for all the visitors of the local food shelter. If you're a fast food retailer, hold a
free lunch day for disabled children. If you're a car repair shop, offer oil and lubes to the
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parents of boy scouts and donate all the proceeds to the Boy Scouts of America.
13. Throw a one-of-a-kind customer appreciation theme party such as a luau with Polynesian
cultural dancers or a magical theme party in which customers can bring their children to
watch a magician do incredible tricks.
14. Do you have a customer that uses your products in an unusual way or uses your product
to become a high achiever? If you run a gym is one of your customers a bodybuilding
champion? If you own a bike shop is one of your customers a champion trial racer? If
you manage an electronics store do you have a customer who has invented a whiz-bang
contraption?
15. Take on the sacred cows of your industry and challenge them. If you're a human resource
consultant, give employee-of-the-month programs a severe drubbing. If you're a Taco
Bell manager, tell consumers how "real" Mexican food actually tastes bland and boring.
If you're a home-based business person, write about how corporate America is
suffocating good people.
16. Close down your business for one day a year and have your entire staff do a day of
charity work. Headlines would read, "Local Print Shop Closes Doors to Help the Needy!"
17. Recently I had a client whose business burnt down last year. He built it back up and is
doing more business than ever. Has your business survived a tragic incident (like the
recession) and made is through with flying colors?
18. Write a general interest story about the problem that your product or service solves. If
you're a car detailer you could write about how oxidation and rust destroys the integrity
of your car and makes it unsafe to drive. If you sell website services write about hosting
problems or the effects of poor website design and how to solve it.
19. Why did you start your business? If you started your business because you were
dissatisfied with the provider you were using (or the employer you worked for), let the
press know. For instance, you went into the Italian restaurant business because the Italian
food in the local area wasn't authentic. Maybe you started pool cleaning service because
of the lousy job service providers were doing on your own pool.
20. Prove a myth or stereotype in your industry wrong. For instance, if you're a hot tub
dealer, show a man who sits in his hot tub every night and has 12 children (meaning the
hot water really doesn't kill your sperm!).
How you make your business newsworthy is only limited by your creativity and ingenuity.
Remember, there are no boring stories, just boring approaches to interesting stories.
David Frey, President of Marketing Best Practices Inc., a Houston-based small business
marketing consulting firm. and is the senior editor of the Marketing Best Practices Newsletter
featuring small business marketing best practices.
How to Stay Connected
As an entrepreneur, you are especially vulnerable to all the “what ifs” of your business. What if I
fail? What if I raise prices? What if I don’t? And on and on and on. Simply put, the “what ifs”
are endless, and at times seem daunting. Accepting this, there are some resources that will help
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you develop productive relationships and also provide sources of encouragement, and there isn’t
a person on the planet who doesn’t need encouragement.
Productive relationships and encouragement are “antibiotics” to many an entrepreneur’s lament

of feeling isolated, unconnected, out-of-touch or even downright alone. The good news is that
there are many ways to help counter these traps. This article will suggest several that are based
on the overriding theme or mantra, “The Lone Ranger is dead. Gone. History.”
What resources and tools should you consider to feel better connected?
1. If you don’t have at least one mentor, seek out one or even several for the purpose of
challenging and confirming business decisions. Mentors can provide checks and balances to
the business. Mentors prevent myopia and are often a good source of ideas. Virtually every
“success guru” champions mentors. A mentor is like a board of directors, or a monitoring group
to larger business. Your business may not be big enough to require a board, but you can have a
mini-board, or group of mentors.
Selecting a mentor is a process that calls for considerable evaluation of “who.” Who do you like,
trust and respect? Who has world-class experience in the field? SCORE volunteers have become
mentors to many clients over the years. While the Lone Ranger is dead, we all need a Tonto or
two in our lives.
2. Avail yourself to as much business advice and counseling as you feel you need.
Thankfully, there is an abundance of qualified, free or low-cost counseling available to small
businesses in virtually every city in the United States. In addition to SCORE counselors, the U.S.
Small Business Administration’s Small Business Development Centers are located at community
colleges nationwide. Local business entities also offer free or low-cost advice. Check out local
business incubators. You can also try online business consulting services, Microsoft or various
university business schools. The point is, there probably isn’t a single question or issue related to
your business that cannot be addressed quickly and, in most cases, at a low or reasonable cost. If
you ask, you won’t feel like you’re going it alone.
3. Rethink the impact of strong relationships that stand to advance your business. Over the
long term, relationships connected to your business will be an important variable in determining
your long-term success or failure. Most of you are already deeply ensconced with people and
organizations helpful to your business. Toward this end, ask yourself if you are currently
maximizing your business’s connection with customers, employees, vendors, distributors, local
business entities such as Chambers of Commerce, rotaries, local politicians, civic groups,
charitable organizations, and yes, even competitors. It’s amazing what you can learn having
lunch with a competitor.
I realize that none of these ideas represents a “silver bullet.” However, hopefully some of these
tools will be useful in helping you to reduce some of the anguish that comes from all the “what
ifs” in entrepreneurship.
How To Use the Power of Packaging To Double Your Sales

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Packaging your products and service can be a powerful marketing technique to move more
products and services and add more value. By packaging I'm not talking about how you wrap up
the package. I'm talking about the "package offer" you present to your customer, sometimes
called a bundled offer.
To give you an example, not long ago I purchased a vacation to Mexico that included our flight,
food, hotel accommodations, and various entertainment specials in one "all-inclusive" package.
We had a great time and saved tons of money. Using creative packaging deals can boost sales
and impress your customer.
Another great example of this strategy is presented to you nearly everyday at fast food
restaurants. When you buy a "happy meal" for your child, you are buying a package deal. Instead
of purchasing a soft drink, fries, and burger separately, it all comes together in one happy meal
package (they even throw in a toy!). Packaging is so common in the fast food industry that 98
percent of all sales are package sales.
The Benefits of Packaging or Bundling

Assembling multiple products or services to sell in a package not only increases your overall
sales but it also...
1. Gives you the ability to sell slow moving merchandise.

2. Automatically upsells your customers without having to ask for it.
3. Lowers your marketing costs because it allows you to move multiple types of products or
services through one advertisement.
4. If you joint venture it exposes your product or service to a new list prospects.
5. Promotes a higher perceived value to your customer.
The list of benefits are many. Packaging and bundling provides a huge leverage in your business
and your marketing efforts.
The Psychology of Combining Products and Services

The idea behind creating packaging deals is to combine products and services together and
offering them at a lower price than you would pay if you purchased them individually. Bundling
goods at a discount price plays a few psychological tricks on your mind that triggers you to buy.
When you see a bundled offer of interest your mind says to you:
1. "I want that product or service."

2. "I'm going to need an extra unit of that product or service anyway (or, I'm also interested
in the additional product or service that's being offered)."
3. "They're offering me a pretty good price if I agree to buy more than one unit so I will end
up saving money in the long run."
4. "I might as well save some money and take the bundled offer right now."
Remember, marketing is simply a psychological battle that goes on in the mind of a consumer
that fights for balance between price and benefits. The winner will be the option that provides the
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best balance between price and benefits in the mind of your prospect. Another way of saying this
is, "the better value in the mind of the consumer always wins."
What is "Value"
It's important to know what value is when developing "packaged" products or services so allow
me to take a moment and explain the true definition of "value." Value is...
• Always variable depending on the consumer

• Is based on perception rather than reality
• Is a tradeoff between price (your investment) and benefits (what you get)
I like to think of value as an equation...Value = Perceived Benefits / Price. Now let's play with
the value equation to see how it works in the mind of a consumer.
Scenario 1 - If Price goes up, and Perceived Benefits stay the same, Value goes down.
Scenario 2 - If Perceived Benefits goes up, and Price stays the same, Value goes up.
Scenario 3 - If Perceived Benefits goes up, and Price goes down, Value goes way up!
As a marketer, you always want to position your offer with the value going up. To do this you
must either lower your price, increase your benefits, or increase your benefits more than you
increase your price. Whatever you do, your value must go up because that's how consumers
choose you over your competitor.
Okay, enough of the theoretical stuff, but its important to understand this when creating a
bundled offer. Why? Because if you bundle your products and services right, you will be able to
add even more benefits to your customer at a lower unit price, thus dramatically increasing the
value of your offer in the mind of the consumer.
Examples of Packaging and Bundling are Everywhere!

You can see examples of bundling and packaging everywhere. Just look around you when you
go out to shop for men's and women's clothing. Merchandisers have figured out that people will
buy matching belts, ties, scarves, and even jewelry in different stores just to match the outfit they
purchased at their store.
That's why you see suits with matching ties and shirts for one low price. Or you'll find women's
suits with matching blouses and jewelry for one price.
Bundling products and services is so powerful that it revolutionized the software industry in the
early 90's. Once Microsoft started the era of bundling desktop software, if you were a provider of
just one software product you had very little chance of survival. Just ask Wordperfect, Novell
(still struggling), Borland, Lotus and a list of other companies that were literally destroyed
because they didn't bundle.
Using Joint Ventures to Bundle Products and Services

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If you don't have (or can't offer by yourself) multiple products or services you may consider joint
venturing to provide additional products or services of other businesses to bundle together with
your offering.
For instance, if you are a men's clothing store, you could bundle the services of a local clothing
tailor and a dry cleaner to provide a "Perfect Suit" program. The clothing store sells the
untailored suit, the tailor fits the suit, and the dry cleaner cleans it. Everyone benefits resulting in
more sales and new customers.
Suppose you were a marketing consultant and you noticed that many of your clients not only had
marketing issues, but also bookkeeping and legal problems. Instead of doing a simple referral to
other businesses you may consider forming a joint venture and offering a "Small Business
Diagnostic" service that all three parties (consultant, bookkeeper, and lawyer) sell to their clients.
How To Develop a "Package Offer"

To develop different package offers think of the problems that your customers often experience
and the potential solutions that you offer to help solve the problem. Then think of something else
you may be able to add with the package that costs you little but adds great value.
For instance, the following are a four common problems that customers of various small
businesses face and examples of potential "packages" that might offered to solve the problem.
Example 1 - Service Station

Customer Problem - Auto deterioration from cold winter weather
Package Offer - "Winterization Package"
Winterization Silver Package
1. Flush radiator
2. New coolant
3. Oil change to lighter viscosity
4. New window wipers and fluid
5. Fix windshield cracks
Winterization Gold Package
1. Winterization Silver Package

2. Rust sealant package
Winterization Platinum Package
1. Winterization Gold Package

2. New set of winter tires
Example 2 - Hair Salon

Customer Problem - Need to look your very best for your (or your friend's) wedding
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Package Offer - "Wedding Day Miracle Makeover" (for brides and bridesmaids)
Wedding Day Miracle Makeover Basic Package
1. Hair cut
2. Hair wash
3. Hair perm
Wedding Day Miracle Makeover Fashion Package
1. Wedding and Bridesmaid Makeover Basic Package

2. Full facial
3. Nail restoration
Wedding Day Miracle Makeover Supermodel Package
1. Wedding and Bridesmaid Makeover Fashion Package

2. Beauty makeover
Example 3 - Laundromat
Customer Problem - Clean your dirty clothes
Package Offer - "Fresh Family Clothing Service"
Fresh Family Clothing Starter Package
1. Unlimited use of washing machines

2. Unlimited use of drying machines
3. Unlimited use of laundry detergent
Fresh Family Clothing Super Package
1. Fresh Family Clothing Starter Package

2. Unlimited use of ironing room
3. Unlimited use of high speed large steam press
Fresh Family Clothing Ultimate Service Package
1. Fresh Family Clothing Super Package

2. We do washing, drying, pressing for you while you wait in our social lounge (TV, drinks,
snacks etc.)
Example 4 - Grocer Store

Customer Problem - You're hungry!
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Package Offer - "Life Cereal Sale Special"
Life Cereal Value Special

1. Two 24 oz. Boxes of Life cereal
Life Cereal Mega Value Special
1. Two 24 oz. Boxes of Life cereal

2. Two more 24 oz. Boxes of Life cereal
Important Packaging and Bundling Principles

Now that you have reviewed these four examples I hope that you get the idea of how to package
products and services for maximum value and price. Let's take a moment and review each of
these examples and pick out the important principles that you need to keep in mind when
creating a package offer.
Principle # 1 - Each of the three packages offered was a solution to a customer's problem. Don't
offer a packaged product or service unless it offers a solution to a problem. Why? Because
people only buy things that solve problems they are experiencing.
Principle # 2 - Each offer actually had three unique offers that built off the lower priced
package. Giving the consumer choices is what packaging and bundling is all about. Providing
options with increasing value is what motivates consumers to "upsell" themselves by choosing
the more expensive option.
Principle # 3 - The names of the different packages denoted increasing value such as, silver,
gold, platinum or starter, super, ultimate. Notice that each word has increasing value. Also notice
that the name of the lowest package denoted value. That's why we started with silver instead of
bronze. It says that even the lowest option is valuable.
Principle # 4 - The additional products or services that are added on to the basic package have a
low cost to you. The "add-ons" need to be cost effective because the incremental price you are
charging needs to provide significant margin to the package.
Principle # 5 - I threw the Life cereal example in for two reasons, one, because it's my favorite
cereal and two, because I wanted to show you that you don't have to have a bunch of different
products to create a package. You can just add more of the same product to the package.
In fact, just yesterday I purchased two units of potato salad. A single unit of potato salad costs
$2.00 and the double package costs $3.00. I bought the $3.00 package, ate the first unit and took
the second one home!
Look Around for Packaging Options

Yes, you do have packaging options in your business. You just need to open your eyes to find
them. In some way, shape, or form you can create unique packages of your product or service
that will solve one or more of your customer's problems.
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Packaging creates a higher perceived value by increasing the benefits and lowering the unit
price. Examples of packaging and bundling are everywhere. If you don't have enough products
or services to create a package offer, consider joint venturing with a company that does.
Remember to provide a strong upsell option in your package by offering multiple options, each
progressively more valuable and expensive.
Keys to Telemarketing Success
A successful telemarketing campaign takes planning, strategy and smart thinking. Your work
isn’t done when you choose a telemarketing services firm. After you’ve chosen a company to
work with, you’ll need to help design the campaign, set call guidelines, purchase or compile a
phone list and track and monitor telemarketing efforts and results. Here are a few things to thing
about while designing a telemarketing campaign.
Phone Script
You can hire a telemarketing firm or independent copywriter to write the script for you, write it
yourself or work with a company or writer to craft the perfect text. No matter which route you
choose to go, make sure the script relays a clear message to your customers. Are TSRs
(telephone service representatives) selling products, collecting or verifying customer information
or taking inbound calls? Make sure the script suits the purpose of the telemarketing campaign.
You should also set guidelines that determine when or if TSRs are allowed to go “off script”–
usually TSRs can speak more freely when making sales, as opposed to when just collecting
information. Consider your potential customers–would they prefer a relaxed, conversational tone
or professional manners?
Phone Guidelines
TSRs should understand exactly how to communicate with potential customers. You can train
TSRs yourself or provide specific guidelines that describe the time of day calls should be placed,
the number of times to call, whether or not to leave a message and what to say if a voicemail
message is recorded.
Effective TSRs
TSRs, even those you train yourself, are employees of the telemarketing company. That’s why
it’s a good idea to choose a firm that treats employees well–TSR interactions might be the first
contact potential customers have with a representative of your business. You can sit in on sample
calls, talk with TSRs, ask for references and ask the telemarketing company for statistics about
employee retention, bonuses, commissions or turnover. TSRs should always have a clear idea of
what they are trying to accomplish. For example, TSRs following up on sales leads should know
how long to speak with each customer, what information they need to get and if they should be
trying to set up or schedule a sales appointment.
Database or Phone List

The phone list or outbound call list is key to a successful campaign. If you’re using outbound
telemarketing services, make sure you are able to use a reliable, up-to-date phone list. List can be
purchased from telemarketing companies, list brokers or even generated in-house if you’re
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planning on calling existing or past customers. Make sure you’re using accurate information to
connect with customers.
Reporting and Tracking

One of the benefits of hiring a call center is the tracking and reporting software used to tell you
how well a telemarketing effort is working. Make sure you allow at least a few weeks to track
the campaign and then analyze the statistics provided. You can make changes to the phone script,
phone guidelines and even re-train TSRs in a fairly short amount of time. If your efforts aren’t
yielding the results you expected, make the necessary changes immediately. Reporting and
tracking allow you to manage a campaign in order to ensure the success of your efforts.
Managing Bad Press
When writing stories, most reporters strive to present an educated, balanced view that neither
overly disparages nor glorifies the subjects. It's not in the reporter's or the media outlet's best
interests to present a false or biased article.
However, there may be a time when your company is confronted with an unflattering article.
While bad press usually ends up not being as bad as it seems at first, it could hurt your business'
reputation and affect relationships with your customers and business contacts. In such instances,
action may be warranted.
When assessing options for dealing with negative press, there are three basic scenarios to
consider. Each scenario takes into account several variables that could occur as the article gains
attention. While there's no set formula for handling such a situation, the company that keeps its
focus usually ends up in the best position.
1. Take no action.
For any recipient of bad press, the impact almost inevitably seems worse than it really is.
Downbeat perspectives can seem like personal attacks, which engender emotional reactions. But
it's especially important to keep a cool head and follow procedures to deal with the situation
most effectively.
First, take a step back and breathe. Then ask yourself the following questions: Is the situation
really so dire? Will the news definitely impact sales or business relationships? Is the publication
well known and widely read by your target audience? Is the article factually inaccurate or unduly
biased?
If your answers to these questions are uncertain, then the best initial response is to hold steady
and continue to monitor the situation. News cycles aren't very long, and bad press usually fades
over time. How much of last week's news can you recall in detail? Not responding to an article
limits the attention given to it. Responding publicly, on the other hand, can validate the reporter's
claims and train a harsher spotlight on the issue.
Not responding, however, doesn't mean doing nothing at all. Concentrate on your key
relationships, ensuring that any incoming queries are answered quickly, clearly and succinctly.
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It's always useful to prepare counterpoints and key facts for addressing employees, business
partners and customers. When responding to queries, use direct and personal communication
whenever you can.
The bottom line: Don't dig a deeper hole than you're already in.
2. Contact the reporter or editor.

If the story is factually incorrect or unduly biased, consider contacting the reporter or editor
involved. All publications, with the exception of a very rare few, will issue corrections for
factual errors. If the issue is purely one of perception, however, a correction is unlikely. But the
reporter may be open to hearing your side of the story, especially if he or she didn't offer you
the opportunity to provide commentary for the initial article.
Most reporters and editors are open to taking calls and discussing the article. When initiating
such a conversation, focus on trying to clear up misunderstandings and build a relationship of
trust. If you instill in the reporter a deeper understanding of your business, he or she will be more
likely to call on you for contributions to future articles.
Don't use the call as a forum to air grievances. This will cause the reporter to take a defensive
stance and make it extremely difficult for him or her to accept your point of view. Also, don't
expect the reporter to issue an immediate follow-up story. Such a response is rare as it would
hint to readers that the reporter may have been wrong. Further, the reporter will likely feel that
the topic has been covered and is no longer "hot" enough for news.
However, it may be possible to pique a reporter's interest by offering a different angle on the
story that includes fresh information or opposing evidence. Third party industry experts can be a
tremendous resource in such situations because they can support your company's position
without being directly tied to your business. This adds credibility and should provide the reporter
a valid reason to reconsider his or her stance.
Another option is to target publications that compete with the negatively biased outlet to
encourage positive, "contradictory" coverage. Competing publications often read each other's
work and have an incentive to find stories that counter or discredit their rival. A third party
expert, as described above, can provide the necessary ammunition to create this opportunity.
However, before taking such an approach, it's best to weigh the potential risks. It's possible that
instead of encouraging a contradictory piece, you could set the stage for an article that reinforces
many of the negative claims.
3. Issue a public response.

Sometimes bad press can damage a business' or executive's reputation. If so, it may be necessary
to issue a public response.
A straightforward news release sent over the wires and directly to individual publications offers
the most efficient means of disseminating information. Publishing a response on a website or
blog is also worth considering, although the latter invites public commentary that may be
contentious and possibly inflammatory.
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Another possible approach is to write an op-ed piece or letter to the editor of the publication in
question. The key benefit of this approach is that it targets the publication directly. But keep in
mind that if your letter is published, there may be a considerable amount of time between
submission and publication.
Any public statement should directly address only the issues put forward in the original article in
a factual, non-emotive and balanced style. If issuing a news release, consider a "CEO letter"
format, rather than the standard format. Write the news release as if it were a personal letter from
the CEO, rather than an announcement or proclamation of fact. Using a personal approach
presents a "take charge" image--one that is built on rational thought and leadership. The aim is to
calm and dissolve any apprehension that customers or employees may have.
Resist the urge to directly accuse the reporter or publication of malicious behavior or bad
reporting. This is no time to burn bridges. In the future, you may wish to promote a new product
or service, and any relationships you can maintain while simultaneously defending your business
will be of value. Stick to the facts, and let them speak for themselves.
The vast majority of media coverage is balanced or positive, especially when it involves small
businesses. If bad press occurs, the best approach is to remain calm, keep a level head and try to
put it into perspective, as overreaction can worsen the situation. Think through your options and
respond accordingly. Bad press can be a chance not only for you to make your case clearly
known, but to show leadership and clarity of mind under pressure.
Marketing in a Weak Economy: A Dozen Ideas
1. Always think Marketing

Keep a file of good ideas, direct mail samples, great ads, for future use or brainstorming.
2. Target your Market

Read up on industry trends, developments, etc. Know your competition and keep a competitive
intelligence file.
3. Develop your Brands

Create new services or products. Update them. Trademark protect them. Try to always keep
things fresh so your customers see progress.
4. Build a Team
Establish a marketing/public relations advisory team composed of key personnel in or outside of
your organization. Attend seminars, read marketing publications, join listserves. Consult outside
marketing professionals to get unbiased opinions.
5. Establish a Budget
How much are you currently spending on marketing? How much do you want to spend? How
much can you afford to spend? Determine a percentage of gross income that can be spent on
marketing. Try to establish a market presence monthly whether through advertising or public
relations.
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6. Stay Top of Mind

Publish a newsletter. Create a survey. Develop a Web site. Use uniformed signatures denoting
contact information/Web site address and slogan at the bottom of every email you send out. Send
postcards or electronic briefs to stay connected and offer value add to clients.
7. Meet the Press

Create a press kit. Be sure to include an online version with executive bios and high-resolution
photographs.
8. Service is Job #1
Return calls promptly. Refer callers to others when you’re not available. Send out email tips or
dedicate a part of your Web site specifically to client needs. Make sure it is easy for people to
contact you. Always follow up on calls or messages.
9. Word of Mouth
Hold an open house. Join community organizations and network! Contact speakers at
conferences you attend.
10. Advertise
Develop a new or improved logo. Get a memorable phone number, such as “1-800-GOT-
DEBT.” Include your Web address, email and slogan consistently on all marketing materials.
11. Reach Out

Sponsor a booth at a tradeshow, hold an event at your office or give a speech at a community
gathering.
12. Put it in Writing

Write a column for the local newspaper, local business journal or trade publication. Publish an
article and circulate reprints.
Marketing on a Budget
A successful marketing plan doesn't have to include an athletic superstar, prime-time placement,
state-of-the-art computer graphics or a massive budget. Being resourceful and smart can be just
as effective.
Business promotion doesn't have to cost a fortune. Often, it's the personal touch that seals the
deal. Here are ideas gathered from marketing experts to help you make the most of a slim
marketing budget:
Use Press Release Power

You might not realize it, but reporters sometimes need you as much as you need them. The key
to getting their attention is coming up with a newsworthy item that is concisely written.
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• Peg your release to real events, such as fundraising drives or a new service your business
offers. Don't be witty to amuse yourself the idea must have a concrete purpose.
• If you can't figure out why your company might be newsworthy, ask your friends what
they find interesting about your company.
• You can also utilize your built-in research tool your customers. If you have an offbeat
idea, bounce it off them or have them fill out a short questionnaire. Ask them why they
use your business.
Think Differently
Concoct an event to draw media coverage. For instance, a Japanese restaurant could create the
world's largest sushi roll and advertise its record-breaking "sushi queue."
Put A Face On It
Placing your photograph on your business card creates a personal relationship, even if they don't
know you. Not only will people remember your name, they'll remember your face.
Print The Praise

If someone says, "You do a great job," say, "Thanks, very much, that means an awful lot to me. I
would appreciate it if you would write a testimonial letter." Then make the testimonial part of
your promotional package.
Borrow A Message
When you see an article on a subject that might interest your clients, send them a photocopy with
a note that says, "I thought you might be interested in this." You're making a personal connection
with a client and associating yourself with the authority quoted in the article in the process.
Think Outside The Box

You don't have to outspend your competition, you just have to outthink them. Some examples:
Buy a billboard ad every other month for a year. Chances are, the billboard won't be replaced on
the off months, so you'll get more exposure at no extra cost.
This concept also relates to how you run your business: Always try to figure out how to give
your customers something they can't find elsewhere, such as a children's play area at a restaurant.
Try The Old Faithfuls

Don't dismiss time-honored solutions that increase your company's community profile, such as
sponsoring a charity event or outfitting a local little league team. You'll get your name out there,
and that's what counts.
Plan Your Sales Pitch Down to the Word; Here’s Why
You’ve probably heard hundreds of sales pitches in your life. Some immediately captured your
interest, while others were tuned out almost as soon as they began.
What made the difference? The most effective sales pitches were those that were well prepared
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and delivered with confidence. And even if you weren’t interested in that product or service at
the time, you remembered the pitches that made a positive impression when conditions changed
or somebody asked for a recommendation.
Now that you’re an entrepreneur, you want the sales pitch for your small business to have that
kind of positive impact on your prospective customers. Don’t worry that you’re not a “born
salesperson;” in truth, few people are. All it takes is research and planning—the same steps
needed for every other business decision you make as an entrepreneur.
Prepare Several Pitches for Different Situations

Because you’ll find yourself in many types of selling situations—both expected and impromptu
—it’s best to prepare several pitches, each with the same basic facts tailored to the setting and
audience. Here are three that you will likely need:
The in-person pitch—a formal presentation about your business given to one or more people.
The phone pitch—a variation of the formal presentation designed for cold calling or following
up on inquiries. (An email version of your phone pitch may be good if you expect to market
online. Just remember that the content written text varies in format and style from the spoken
word.)
The elevator speech—a concise description of your business for informal situations, such as
social gatherings and plane trips. Imagine yourself on an elevator with only a few “floors” of
time to explain to someone what you do.
Putting It Together
Of course, the content and delivery of these and other sales pitches will vary depending on the
setting, who initiates the conversation, the product or service you’re describing, whether you’re
providing general information or pursuing a specific assignment, etc. The fundamental
ingredients are a full understanding of your business, and as much knowledge as possible about
the interests of your listeners. Yes, your pitch is about you, but it’s also all them—what they do,
what they need, and whether there’s a way you can help.
Here are some other guidelines for making any kind of sales pitch successful:
Know what to say, even if you don’t say it. Structure your pitch like the trunk of a tree that
leads to multiple branches of increasingly specific information. You may not need all of them
over the course of a conversation, but you’ll be prepared to field any question that arises.
Organize around your key selling points. The first 30 seconds usually determines whether you
capture your listener’s attention. You have far less time for phone calls and conversations. You
want your pitch to have a logical order, with a defined beginning and conclusion.
Be flexible. If your pitch it too tightly scripted, an unexpected question or distraction may throw
you off track. Being aware of your listeners and surroundings will make it easier to answer or
defer questions, or take up a new conversation thread of more interest to your listener.
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Be honest. Avoid the temptation to tell prospective customers everything they want to hear, as
you may not be capable of following through.
Practice Makes Perfect

As you develop your sales pitch, practice with people who can provide honest and fair feedback,
and who understand your customers’ perspective. Encourage them to pose questions to practice
your ability to respond, improvise and keep your pitch on track.
And always be alert to for ways to keep your sales pitch fresh timely, whether it’s a different
setting, trends in your prospective customers’ businesses, or changes in your product or service.
While is particularly important for formal pitches, your elevator speech may require periodic
tweaking as well.
Promote Your URL on All Communications
ROI Potential: Medium Return/Low Cost

Once you've invested time and effort to produce a great Web site for your company, don't forget
to actively let your customers know it's there. Place your URL prominently on all your
stationery, promotional materials, t-shirts, as well as on packaging, invoices, receipts—in other
words, wherever you would print your company's name or telephone number.
If you have only a limited budget to promote your Web site, including the URL on all
communications is one inexpensive way to increase traffic. If your potential customers know
they can find out more about your products or services by visiting your Web site, many will do
so.
On any business letters your company sends out before your letterhead has been reprinted with
the web site URL, always type the URL and the company's main email address under the
signature of the sender. There are three main areas to consider when you set out to promote your
URL. Follow our checklists, and work through the various pieces as you reprint current material
or design new advertising. If you can think of more, let us know!
Checklist for Developing Direct Marketing

Direct marketing materials, including direct-mail pieces, point-of-sale packaging and trade show
displays, should include the Web site URL and, wherever possible, an email contact address.
Run through the checklist to make sure your company is making use of the marketing dollars you
would have budgeted anyway.
• Direct mail letters

• Direct mail envelopes
• Flyers, or inclusions with other senders' direct mail
• Product displays, for retail or trade
• Trade show brochures
• Tent cards
• Postcards, or direct response cards
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• Entry forms, for contests or sweepstakes

• Promotional items or giveaways, such as pens or pencils, T-shirts, calendars, memo
magnets, coffee mugs
Checklist for Developing Awareness Advertising

Another essential place to include your URL is on your company's awareness advertising.
Wherever you've found advertising to be effective, such as display or classified ads you purchase
in trade journals or newspapers, your URL should direct customers to your Web site.
Remember to include even less obvious awareness advertising, like resource guides or your
Yellow Pages listing. View your site as a second layer of information connected to the ad. Your
ad will catch readers' attention; then your web page should offer a more detailed explanation of
your product, and perhaps offer the opportunity to place an order on the spot.
• Print advertising, in newspapers, magazines, or trade journals

• TV advertising
• Radio advertising, if your URL is short and easy to remember
• Yellow Pages listing or page ad
• Business White Pages listing or page ad
• Other directory listings, in trade journals or local resource guides
• Classified advertising
• Employment advertising
Checklist for Developing Collateral

Collateral material includes all your company's literature, whether it's traditional stationery
materials or flashier four-color brochures you might send to potential customers. Don't forget
materials on this list that wouldn't be controlled from a marketing department.
Here's our checklist:
• Letterhead, all sizes

• Envelopes, all sizes
• Boxes or other packaging
• Business cards
• Receipts
• Invoices
• Packaging inventory lists for mailing
• Fax cover pages
• Account statements
• Order confirmations
• Thank-you cards
• Annual reports or informational brochures
PR 2.0
If you've ever read a blog, joined an online discussion group or uploaded a photo to Flickr,
you've engaged in social media. Social media websites encourage users to share, change or
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otherwise participate in the site's content. Opinions, comments and dissection of news are
encouraged, giving greater insight into what consumers and influencers are thinking.
In the past, social media sites—especially social networking sites such as MySpace—dhave been
seen as a vehicle mainly for young people. Now, however, people of all ages and professions
read blogs, tag articles, join online discussion groups, have profiles on professional social
networking sites and post video files. In fact, according to a recent industry report by
comScore, more than half of the visitors to social networking websites such as MySpace,
Facebook, Flickr and Live Journal are now 35 and older.
In terms of PR, social media is a maturing business tool, offering new and innovative ways to
drive business and communicate to customers--often using less expensive techniques than
traditional advertising or marketing campaigns. It's worth being aware of the various elements
that make up the social media landscape, and concentrating on the ones that are particularly
applicable to your business.
Blogs
The blogosphere has become a valuable resource for tracking industry trends and hot-button
topics. Unfiltered and opinionated, blogs combine the insightfulness of industry journals with the
instant feedback of a focus group.
For small business owners, blogs offer a wealth of opportunity. However, to reap the rewards,
you must first understand the medium and then determine the best way to leverage this dynamic
and far-reaching online universe.
Each industry has its blog 'stars.' A simple Technorati or Google Blog search on an industry topic
will uncover many of the prominent bloggers.
A blog's interactivity offers the opportunity to extend your company's messages to a wider
audience. Providing commentary in response to a blog post, for instance, can help you position
yourself as a thought leader and subtly market your products and services.
Small business owners can also create their own blogs to showcase themselves and their business
philosophy. However, you should first consider the upsides and the downsides of blogging
before proceeding. While blogs can elevate your profile, establish credibility and open a two-
way conversation with customers, they also require a significant amount of time and effort.
As with any foray into media, bloggers must be prepared to accept, and potentially refute,
criticism. Think carefully before putting your finger to keyboard, because once a response is
posted, there's no turning back. What seemed like a hard-hitting response at the time could be
detrimental in the long run.
Multimedia
Online video sharing sites represent one of the fastest-growing media sectors, with sites such as
YouTube attracting thousands of viewers every day. For small business marketers, web video
can be an especially enticing proposition because producing and distributing the content is far
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less expensive than creating traditional broadcast materials. Online video offers the potential to
"level the playing field" with larger companies.
To maximize exposure, once a video is featured on a site such as YouTube, it's easy to send out
an e-mail to your contacts with a direct link to the clip. One way to indirectly submit content to
video sharing websites is through multimedia news releases, a platform that combines text with
digital video, audio and still images, and includes social bookmarking capabilities.
As with all marketing, the key to success is knowing your audience. YouTube viewers, for
instance, are attuned to new, interesting and often humorous material. For an online video to
have a truly substantial impact, it must be compelling enough to generate a groundswell of
interest that leads to viral sharing. Creativity and catchiness are as important as messaging.
The bottom line: When considering an online video campaign, make sure you're pursuing it for
the right reasons--to grow your business.
Social Media News Releases

Traditionally, news releases take a text-only form, emulating the style and format of a news
article. The social media news release, on the other hand, is a news release that combines text
with a host of social and multimedia elements, including photos and video, links to blogs, digital
tags, RSS feeds and search engine optimization.
The social media news release is intended to help companies reach their markets directly using
new social media tools. This level of interactivity is especially beneficial to bloggers because it
allows them to select information, and the format encourages readers to provide feedback to the
authors and their websites or blogs.
While full integration of the social media release may be some years away, for some small
businesses--especially those in the technology industry--it may prove immediately useful in
reaching an audience of tech-savvy bloggers and reporters. The relative novelty value of the
template may even gain your business attention.
Bookmarking and News Sharing

One way to elevate the readership of your news releases online is to use a newswire service that
includes buttons for tagging the release on sites such as Digg and Del.icio.us.
Digg is a rating site that lists the most popular online stories from sources including blogs,
traditional news sites and company websites. You can use Digg to track the popularity of news
about your business, and to see the reaction to specific news releases.
Del.icio.us is a popular tool for bookmarking and finding interesting sites on the web. Del.icio.us
links can be incorporated into news releases in much the same way as Digg tags, making it easy
for readers to save the announcement as a favorite.
Social Networking Sites

While sites such as MySpace are useful for musicians, they're unlikely to attract the sort of
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customers--or dialogue--that would be suitable to encourage business transactions. However,

professional networking sites do exist, and the number of industry-related networks is growing
steadily.
LinkedIn is probably the most well-known social networking site for professionals. Users display
their professional background and links to other people, usually in related industries.
As social networking grows, so will its complexity and influence. Even if such sites don't offer
immediate routes to transactions, it's worth keeping abreast of developments that could influence
future business activity.
Looking ahead
Social media sites are ever-evolving, and so are the opportunities they offer. One example of this
is the interactive site Second Life, a "parallel world" where participants live, meet and exchange
goods and services. Second Life currently has more than 1 million "residents"--real people who
have created avatars--who spend real money on goods, services and even real estate that only
exist in the online world.
Another recent development is Twitter, which allows users to keep their friends, family, website
or blog readers up-to-date on what they're doing, moment by moment. (See our recent profile of
Twitter, "Reinventing the Conversation.") Twitter represents an ever-evolving, real-time online
conversation.
There are drawbacks to involvement in social media. The constant and consistent interaction
requires substantial time and effort--something small business owners have in scarce amounts.
However, by keeping abreast of developments and experimenting in various formats,
entrepreneurs have an opportunity to be ever more in touch with customers, influencers and the
media.
Setting a Marketing Budget
Spending on marketing support—promotion, advertising and public relations—varies widely,

from less than 1 percent of net sales for industrial business-to-business operations to 10 percent
or more for companies marketing consumer-packaged goods.
Consumer packaged goods companies may spend 50 percent of net sales for introductory
marketing programs in the first year, subsequently lowering the percentage spent to a stable 8 to
10 percent within a few years. Retail stores that advertise and promote spend an average of 4 to 6
percent of net sales for marketing support.
Often, small businesses estimate their sales revenue, cost-of-goods, overhead and salaries, and
then gross profit. Anything left is considered available funds for marketing support. That's not
such a good idea. A more rational approach for setting your marketing budget is to estimate what
your direct competitors spend in marketing support and then try to at least match that amount.
If you are the new competitor in the marketplace, you will have to spend more aggressively to
establish your market share objective. Here's a sample case study demonstrating how one small
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business set its marketing budget.

Joe's Redhots, a hot-dog cart selling to office workers, wanted to use popular media such as TV,
radio and newspapers to advertise, along with promotional free product samples and coupons.
Joe learned from his suppliers that his competitors in the downtown office area were spending
little or no money to promote and advertise their cart luncheon businesses. He estimated that the
most successful hot-dog cart spent 5 percent of net sales revenue for promotion and advertising.
Joe decided to spend at least 10 percent of his net sales during the first year.
Joe ranked all his possibilities in order of probable effectiveness, with estimated costs:
Advertising
TV ($500/30-second ad/station)
Radio ($50-$100/60-second ad/station)
Newspaper ads ($500/ad)
Cart signage ($100)
Flyers ($100 @$0.10 each)
Promotion
Free samples ($25/day @$0.25 each)
Coupons ($5/day @$.025 each)
Frequent purchase book ($15/day)
Soft drink premiums (supplied by drink companies.)
Joe found that any broadcast ad required additional production costs that were at least as much as
the cost of a single ad. In addition, he needed to run at least four or five ads per station to be
effective. Breakeven cost coverage would be exorbitant, with over a year's estimated sales
needed just to pay for a small TV and radio campaign. And it's difficult to advertise with
available media just to his target group of office workers within a radius of six city blocks.
Joe decided to have his cart painted ($100) with a clever message ("The best place to have a
quick lunch"), hand out 1,000 flyers ($100) over three months to offices, do the soft drink
premium program (collect can tabs for free gifts provided by local soft drink distributors), and
try to get a free PR article mention in local newspapers and downtown TV and radio stations by
sending free samples to editorial staff before lunch. He figured he could afford to hand out flyers
and samples all year long and stay within his 10 percent budget limit.
Sizing Up the Competition
Conceptually, all of marketing is based on the idea that you must thoroughly know the
environment in which your business operates in order to successfully promote and sell your
product or service.
All successful business owners know their markets, competitors, customer wants and needs, and
"what it takes to be competitive." To help you become a successful owner, let's look at what you
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should know in particular about your competitors.

Identifying your direct competitors is important before you finalize your decision about which
business category and market segment to compete in. It is vital to the success of a new or
existing business because it reduces risk, time, required resources and expense.
It may help to think of your competitors as a series of concentric circles, like a bulls-eye target.
In the center are your most direct competitors and moving outward from the center the
competition grows progressively less direct.
• First ring, center of target—the specific businesses in your geographic area that offer a
product or service that's interchangeable with yours in the consumer's eyes (although of
course you hope you hold the advantage with better quality, more convenient distribution
and other special features). For example, if you operate a local garden center, you may
compete against the other garden centers within a 10-mile radius.
• Second ring—competitors who offer similar products in a different business category or
who are more geographically remote. Using the example of the garden center, a discount
chain tat sells garden supplies and plants in season is also your competitor, as is a
landscaping contractor who will provide and install the plants and a mail-order house
who sells garden tools and plants in seed or bulb form. None of these competitors
provides exactly the same mix of products and services as you, but they may be picking
off the most lucrative parts of your business.
• Third ring—competitors who compete for the "same-occasion" dollars. To the extent that
gardening is a hobby, third-level competitors might be companies that provide other
types of entertainment or hobby equipment; to the extent that gardening is a type of
home-improvement, competitors might be providers of other home-improvement supplies
and services.
The point of this analysis is to consider carefully, from the buyer's point of view, all the
alternatives that there are to purchasing from you. Knowing that, you can attempt to make sure
that your business provides advantages over your competitors, beginning with those who are in
the most directly similar to you. In fact, you can even borrow ideas from second- or third-level
competitors in order to compete more effectively against your first-tier competitors.
It's to your advantage to know as much as you reasonably can about the details of your
competitor's businesses. Study their ads, brochures and promotional materials. Drive past their
location (and if it's a retail business, make some purchases there, incognito if necessary). Talk to
their customers and examine their pricing. What are they doing well, that you can copy and what
are they doing poorly, that you can capitalize on?
Secondary data, as well as information from your sales force or other contacts among your
suppliers and customers, can provide rich information about competitors' strengths and
weaknesses. Basic information every company should know about their competitors includes:
• Each competitor's market share, as compared to your own.

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• How target buyers perceive or judge your competitors' products and services.
• Your competitors' financial strength, which affects their ability to spend money on
advertising and promotions among other things.
• Each competitor's ability and speed of innovation for new products and services.
There may be a wealth of other facts that you need to know, depending on the type of business
you have. For example, if you're in catalog sales, you'll want to know how fast your competitors
can fulfill a typical customer's order, what they charge for shipping and handling, etc.
Once you know the identity of your most direct competitors and have a good idea as to your
second- and third-tier competitors as well, you should give some thought to which actions they
are likely to take in the next year or so. Estimates of competitors' future activity depend on your
knowing and understanding their objectives, strength in the marketplace and resources. This
important intelligence is key to your company's:
• Annual forecast of sales, spending and profits promotion and advertising programs
• Introduction, support and success of new products and services
• Market, product, or service category and sub-category trends
• Direction for future growth.
Gathering competitive intelligence can be the difference between realizing your company's
annual plan and losing business that may never be recouped.
Tapping into the Hispanic Market
While we all hear plenty these days about the rise of the Latino consumer, sometimes lost in
translation is an understanding of how to tap this growing market. So today we are going to
figure out how to do that, but first, a caveat: While it is problematic to characterize any group as
a monolithic whole, that is sometimes part of our job as businesspeople, is it not? What will
attract my women customers? Will kids buy this? Would older men be persuaded by this ad?
When it comes to ethnicity, we are on even more treacherous ground, and even I, who married
into a Hispanic family, am not altogether comfortable saying what will and won’t work for
Latin-culture consumers. So I have turned to an expert for help, but first some facts:
• The U.S. Hispanic market, some 50 million people, is the second-largest in the world,
trailing only Mexico.
• Hispanic consumers have one of the largest disposable incomes of any minority group,
and the U.S. Census Bureau predicts 29% growth in the Hispanic population in the next
eight years, vs. 9% generally.
So what we have is a growing market with plenty of money to spend. Even better is that,
according to George San Jose, president of The San Jose Group of Chicago, “many of these
Hispanic consumers do not yet have any strong brand loyalty because they tend to be younger
than the general U.S. population.” San Jose knows what he is talking about. His company is one
of the top three Hispanic marketing companies in the U.S.
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According to San Jose, there are two trends entrepreneurs need to keep in mind as they begin to
figure out how to tap the Hispanic marketplace:
First, many Hispanics are still comfortable with Spanish as the language of choice. “The
grandparents may still speak Spanish exclusively, while their children may be bilingual, and the
20-something generation may speak primarily English while still being fluent in Spanish,” San
Jose says.
It is vital to understand this, San Jose says. “If you want to reach the older generation for
instance, advertise in Spanish, and do not translate your ads!” He suggests that network TV
remains a strong medium for reaching the Hispanic market (90% saturation), as are radio and
newspapers; Spanish-language radio and newspapers especially may be a good avenue, he says.
The second factor to understand is how much family is integral to the Hispanic lifestyle. Not
only does the burgeoning younger generation tend to have more children than the general U.S.
population, making baby and family products a big seller, but many also have extended families
throughout Latin America, offering even more opportunities.
For example, San Jose shared the story of the Midwest airline that was unsuccessful in selling to
the Hispanic market. The problem, he says, was that the airline’s slogan was “Use Our Airline to
Get Away!” But Latino families don’t want to “get away,” instead, they want meet up with their
extended families and vacation together. A new slogan, “The Official Airline of Family
Vacations” worked wonders.
So the takeaway here is that to sell to this mushrooming demographic you have to begin by
understanding the culture. It is not merely a matter of using Latin music in your ads, but rather,
understanding the psychology of the Hispanic consumer and running with that.
Do that, and you may have mucha buena suerte.
Target and Influence the Appropriate Media
The most important aspect of a PR program is knowing the target audience and where they go to
get information that drives their business decisions. Is it the trade publications that cover their
industry? Is it the business reporter at their local daily newspaper? Or is it where your
competitors are advertising? Talk to customers and industry experts to find answers to these
questions. The reporters who write for these publications are the ones you want to target.
A second factor is today’s media environment. The 24-hour news cycle brought about by the
Internet and cable television has created news holes that need to be continuously supplied. Yet,
despite this need for news, many outlets around the country and the world are operating with
fewer reporters than they did five years ago. The resulting pressure to churn out more content
with less staff can open doors to opportunities for coverage—because of a need to fill these
‘holes’ with interesting, newsworthy information—that might not have otherwise been available.
In a report published jointly by the Pew Research Center for the People & the Press, and the
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Project for Excellence in Journalism and the Committee of Concerned Journalists, called,
"Bottom-Line Pressures Now Hurting Coverage, Say Journalists" (Published May 23, 2004) 62
percent of online journalists surveyed said the size of their newsroom staff had decreased
compared with three years earlier; 48 percent of national print journalists and 54 percent of local
print journalists concur.
With knowledge of where your audience goes for their information and an understanding of the
current media environment, you can now begin to build an effective media list. Consider these
tips to get started.
Tip 1: Build A Media List

After determining what sources your target audiences use, it’s time to build a list of these and
related media outlets. For each outlet, determine what reporters cover news related to your
company, client or issues. There are many ways to do this: some more time- and cost-effective
than others. Whatever method you choose, review several back issues of the publication to learn
what each reporter covers and what interests them and their audience.
• Subscribe to the publications read by your target audience. Consider publications in

your own backyard, as well as others around the country. Review the masthead or beat
sheet of each to build a master list of reporters that cover your industry or news similar to
your own. Some publications provide beat reporter lists upon request. Routinely check
the mastheads for any changes in beat or reporters’ assignments.
• Utilize search engines to find online editions. By plugging appropriate keywords into
major search engines, links to appropriate industry publications will appear. Visit each
site to find the masthead or beat sheet and determine the correct reporter for your news—
this can usually be found in the About Us or Contact Us section of most online
publications. Make sure to routinely return to these sites to keep your list up-to-date.
• Follow media-focused newsletters or publications. There are quite a few newsletters
that cover the media industry, reporting on staff changes at magazines, daily newspapers,
wire services, trade publications and broadcast outlets. Subscribing to these newsletters
may make it easier to stay on top of media movements.
• Use a media database. Media databases are the most cost-effective means of building
up-to-date media lists. Whether it is necessary to cast a wider net or keep the news more
targeted, a media database allows one to research easily the appropriate media at outlets
around the world. With several database services in the marketplace, choose one that
includes the following elements:
1. Online access from anywhere

2. Worldwide contacts
3. Geographic, subject, beat, title, pitching tips, search capabilities
4. Large research team who regularly update the contacts
5. Journalists’ communication preferences (so you can communicate with them in the
manner they prefer)
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6. Distribution and delivery mechanisms

Tip 2: Get to Know the Journalists

With a solid media list in hand, there are a few more steps to consider before embarking on an
outreach program. First and foremost, review the reporters on the list to become familiar with
their writing. Contacting a journalist without prior knowledge of his/her beat, writing style or
interests is a recipe for failure. Conversely, familiarity with a reporter’s past work gives you the
ability to tie an organization’s story to the reporter’s areas of interest and can significantly
enhance your chances for getting coverage.
Tip 3: Determine Delivery Options

If the list being used was created from a media database, that system can probably be used to
distribute your news release directly to the individual media contacts (if the functionality is
available) or as a contact list for individual pitches (all contact information and reporter
preferences can be found within the database). There are many different ways to distribute a
news release, including:
Via the wire
Via a media database
Via the wire and a media database
Via the wire, a media database and individual correspondence
Whichever you choose, distribution is something to consider after you’ve assessed your experts
and defined the messages they will deliver.
Tip 4: Consider Timing

If the news release is not urgent, avoid the time around the open and close of the stock market.
Public companies often issue news releases at either time of day, resulting in a flood of
announcements that could overshadow your news. Additionally, there are four times in the year
when public companies report earnings, and reporters, especially business reporters, tend to
focus on earnings ahead of other events. These quarterly periods are: January 15 through Feb 15,
April 15 through May 15, July 15 through August 15 and October 15 through November 15.
Creating a targeted media list, knowing which reporter to contact, and when to conduct outreach
are important first steps in the process of generating good media coverage.
The following article is an excerpt from PR Newswire’s White Paper “Using Media Intelligence
Tools to Drive Communications Success,” by Nancy Sells, vice president, PR Newswire. To
receive a full copy of the white paper which covers media targeting, expert development and
monitoring/measurement, please email rachel.meranus@prnewswire.com with the subject line
“PR Newswire’s White Paper.”
Target Practice: Identifying That Group of People That Are Your Real Buyers
It's a finely honed skill to locate that group of people who are your real buyers. This is the time
to put away the manners mom so fretfully ingrained and get down right nosy. The more you
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know about your buyers the better your bottom line will be. You know, that line that either reads
red or black? That says spend or worry. Grow or groan. So pick up your marketing bow and let's
do a little target practice.
The worst thing a business owner can do is delude himself into thinking that everyone is his
buying audience. Might as well shoot straight up into the sky and hope to hit a star with your
bow and arrow. That approach won't work and it simply isn't true.
Every business has a defined audience and every business owner instinctively knows something,
some little tiny thing, about his buyers. Think about it, what group of people are most likely to
buy your product or service?
Let's be obvious as an example. Selling gasoline? Car owners, motorcycle owners and, on the
outside, lawnmowers owners are you buyers. But to really pull the buyers in you have to take
that little bit of knowledge and try to pull out other useful tidbits of information until finally you
have a clear picture of just who would buy your product or service.
So let's start with the little tiny thing you know about your buyers right now. Write those details
down. Write down everything you currently know about your potential buyers.
Okay, now we have someplace to start. Expanding on this is called research. A word that usually
sends people flying for cover as thoughts such as “too hard,” “too expensive,” or maybe simply
“how?” come to mind. Relax. Take a deep breath. It's not hard, it's not expensive and we are here
to show you how.
Okay, with the first tiny list of what you already know about your buyers make a second list of
what you want to know about your buyers. Your list of questions should include as much as
possible. Get really, obnoxiously nosy on paper, ask politically incorrect questions, pry into
every corner of their lives....it's just a piece of paper and this is just a test. So don't flunk out by
being passive.
Among other questions your list should include:
• Is your buyer male or female?

• What age?
• Are they the person in the family likely to make a buying decision on this product or
service?
• If not, who is?
• What kind of job do they have?
• How much are they paid?
• Are the happy at their jobs?
• What do they do after work?
• What do they wish for?
• What religion are they?
• Do they have children?
• What kind of home, apartment or condo do they live in?
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• Where do they live?

• What do they primarily spend their extra money on?
• What forms of entertainment do they indulge in?
• Where do they vacation?

• What types of transportation do they use?
• What kinds of magazines do they buy?
• What paper do they subscribe to?
• Which parts of the paper do they read?
• What kind of car do they drive?
• What kind of car do they wish they drove?
• What television shows do they watch?
• What restaurants do they eat in?
• What nationality are they?
• What religion are they?
Get the idea? Okay, now take your list and organize it into a polite little survey. Funny thing
about us humans...we love to talk about ourselves. When things are going great we like to talk
about it. When things are going lousy we love to talk about it even more. We aren't terribly picky
as long as we get to tell someone about ourselves.
So this is a prime opportunity to let people do what people love, tell you about them. So once
you have your organized the survey, put it online or in email form. Now, take your tiny list, the
one we told you to put together at the beginning of this tutorial.
The list of characteristics that you already know about your buyer. Yes, that list. Take that list
onto the Internet and find a newsgroup, mailing list, or newsletter that best describes this group
of people. Once you locate a good match, ask them to participate in your survey. Just tell them
like it is. You're starting a new business doing such and such.
In an effort to make your business the best it can be you are asking people to tell you about
themselves. With a little encouragement and a firm declaration that everything will be kept
confidential you will have a large supply of data to add to your original information about your
buyers.
WOW, now your really beginning to know your buying audience.
What does all this information tell you? Tons. It tells you how to reach them both physically and
emotionally. It tells you how to meet their needs. And it tells you how to improve on what you
are doing, how to price your product or service and where to advertise.
The more you know, the more power you have. Guard this information as if it were cold hard
cash, because eventually it will be.
Once you're armed with oodles of information, pat yourself on the back because research
companies charge thousands of dollars to do this same thing. This thing you just did all by
yourself. And that's hitting the target right smack in the middle of future profits.
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Telemarketing Laws and Guidelines

Telemarketing services are required to comply with several different federal, state and local laws
that regulate phone solicitation. By outsourcing telemarketing, you can ensure compliance
without researching the regulations yourself. Telemarketing companies face stiff penalties and
fees for violations–and so can your business, if a telemarketing company is acting on your
behalf. Ask any company you plan on working with what their procedures are for ensuring
compliance with the following regulations:
National ‘do not call’ registry

Anyone who wishes to “opt out” of telephone sales calls can add their number to this list.
Numbers on the “do not call” registry must be stricken or omitted from phone lists used in
telemarketing campaigns, unless some exception to the rule applies–for example, if the company
and the party called have an existing business relationship. Most call centers or telemarketing
companies have software that “flags” these numbers, exempting them from call lists. It’s a good
idea to ask any telemarketing firm you are considering working with how what procedures they
use to ensure Do Not Call compliance.
TSR
The Telemarketing Sales Rule (TSR) is enforced by the Federal Trade Commission (FTC) and
sets forth regulations that pertain to telemarketing campaigns. Telemarketing companies that
make or receive calls across state lines are generally subject to the TSR’s provisions. Here’s a
basic overview of what the TSR requires, with more information available at the FTC Web site.
• Requires disclosures of key “material” information in sales calls and caller ID

information.
• Prohibits misrepresentations in sales, lead generation or information collection calls and
unauthorized billing.
• Places limits on the times when telemarketers may place calls.
• Places requirements on the length of time that telemarketing business records must be
retained.
TCPA
The Telephone Consumer Protection Act of 1991 (TCPA) acts together with the TSR to ensure
that customers’ rights are protected. The Federal Communication Commission, or FCC, enforces
the TCPA. For more information about regulations and compliance, see the FCC Web site.
Other
Different state and local laws also regulate telemarketing practices. It’s important to recognize
where rules apply, especially if you’re working with an outbound call center that makes
interstate calls. The telemarketing company you work with should have a procedure in place to
make sure your campaign complies with all local, state and federal regulations.
The Two Faces of Niche Marketing

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So when I started asking myself what I knew about niche marketing, two points came
immediately to mind. First, NDA, the company I co-founded seven years ago, doesn't do a lot of
marketing. Second, we clearly operate in a niche. Pretty much all our marketing efforts target
this niche, which would be my definition of niche marketing. So what I know and what I can
share comes from experience.
From NDA, which provides computer consulting services to high-technology companies, I've
learned that niche marketing can play two ways. The first, which is what we do, is to have a
niche-oriented company that you support with marketing and other "branding" efforts. The
second is to have a broad-based company that seeks new markets, or a deeper experience, within
a specific piece of the broad market.
Two Faces, Five Points

One starts as a niche, the other carves a niche within a broader space. So when formulating your
niche marketing campaign, you must first decide where you fit. Once you do, consider
implementing the following five-point plan, which can play to either niche "face."
Know Yourself
Understand who you are as a company and what your strengths are. When you use marketing,
you either draw attention to a well-known and understood pre-existing strength, or you try to
define a strength that you have recently acknowledged or are creating. Your strength becomes
the focus of your niche marketing campaign; it also becomes what differentiates you—what
makes you not one of the Joneses, but a Super Jones.
Consider NDA's high-technology service niche. NDA doesn't just service computer networks, or
merely provide the best computer-networking services. Our niche is servicing high technology,
as opposed to law or medical firms, large corporations, companies in general, or any other slice
of the business landscape. Our niche—where we do 80 percent of our business—is clearly
defined and specific. Lots of vendors provide computer-consulting services; not a lot support
high-technology companies.
Know Your Goal

Understand why you want to emphasize your niche; in other words, what is your goal? Is it to
increase name recognition among current or potential clients? Is it to announce that you are a
player in your specified niche, or to launch a new part of your business? Niche marketing is all
about leverage. You are using your niche to leverage your position in the marketplace beyond
where you would have been without the niche.
In somewhat of a departure for NDA, we've recently used our high-technology expertise to target
the education market at the elementary and high school level. We are an approved Department of
Education K-12 vendor, and I have been an adviser on the Mayor's Blue Ribbon Commission in
Boston and the newly formed venture, Youth Tech Entrepreneurs. We got the word out that we
care about K-12, and as a result, we've become known in the Boston area for this niche.
Know Your Customer

If you don't know whom your niche is going to affect, then you will not have a very effective
marketing campaign. You might want to target K-12 teachers specifically, or companies that use
Microsoft rather than Unix-based computers, or tulips as opposed to flowers. In each case, to
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market your products or services successfully, you need to find the teachers, or the Microsoft-
based businesses, or the people who buy tulips.
Keep It Simple
As with any marketing campaign, make it easy to understand and susceptible to sound bytes.
Don't overcomplicate what you are trying to do. Keep it dead simple. You rarely lose with
simple.
Example? I love Volkswagen's recent niche marketing campaign for the New Bug; it is simple,
clean, humorous and visible. VW has succeeded in leveraging a niche—the overwhelming
popularity of the bug in general—to increase the value of the VW name and awareness of VW in
general, especially with a new generation of buyers. (It might have even helped that the car itself
was kick-ass.)
Counter the VW campaign with the bevy of cell phone companies tripping over themselves to
define their niche, only to come up short with advertising that is overcrowded, inarticulate,
hardly memorable, and not at all distinctive. A cell phone is a cell phone is a cell phone, these
efforts appear to be saying.
Have Fun!
You are creating an intensity with a niche that you don't have with a general product. So you
might as well stir up intensity within yourself and have fun with it! Intensity allows for a levity
that you don't always have the option to use. So allow yourself humor, slapstick, parody, and
oversimplification to emphasize and increase the intensity that naturally engulfs your given
niche.
One Last Word

You might think of niche marketing as the small town rather than the mall during frenzied
shopping periods, such as back-to-school or the holidays, when merchants are trying to get you
to buy, buy, buy. Big players don't have much opportunity to use niches to help. Even mall-
situated niche stores, such as Kitchen Etc. and Petco, don't use their niche when they blitz us
during prime time.
Enter the small town—that's you. You know yourself, your goals, and your customer. You keep
it simple and you have fun. Then you mix it up, marketing your whole self and also emphasizing
a portion of who you are: your niche. Soon you'll be able to create a niche within your
niche...and you'll keep it going.
Top 10 Tips On How To Build Your Referral Network
Referrals and positive word-of-mouth are the most effective ways to build a small business.
While you can't directly control how referrals are made, you can create an environment in which
they can be made easily. Here are ten ways to make your small business more magnetic to
referrals.
1. Join and become active in two different types of associations.

Choose an association that is related to your industry or field, and another that has more of a
general business focus. You'll meet experts in your specific market in the first type, and mix with
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successful entrepreneurs from all areas in the other kind. Each will provide valuable contacts.
2. Share your knowledge freely.

Consider giving presentations at no charge for a local Chamber of Commerce or other
associations in which you participate. Donate samples of your product or service for fundraisers.
Volunteer to write articles for smaller publications that reach your target audience. All these
activities serve to increase your visibility while giving you an opportunity to showcase your
expertise and generate good will.
3. Provide referrals yourself.

This not only highlights your credibility and connections, but it's also likely to generate in-kind
referrals on the part of those colleagues and associates for whom you've generated business.
4. Recruit cheerleaders.
Build a team of supporters for your business. This may be a group of friends, family members,
and colleagues who not only cheer you along, but sing your praises to others they know,
spreading the word about your business.
5. Create an informal advisory board.

Establish a group of professional advisors that you can call on to help you with planning and
problem solving in your business. These may be associates you meet at a trade show or
conference, someone you've done volunteer work with, or former client contacts. This equation
works both ways-be prepared to give strategic assistance to their businesses as well.
6. Do a good job for your clients.

This strategy may sound like common sense, but it's the most powerful one of all. When you do
a good job for your clients, they not only bring you repeat business, but will send other business
your way as well.
7. Maintain visibility at the local level.

Be an active member of your local business community. Volunteer for select nonprofits aligned
with your field, attend Chamber of Commerce mixers, and participate in local activities as your
schedule allows. The personal bonds you create can fuel new business opportunities.
8. Put technology to work.

Stay connected to your market and accessible to your customers by leveraging your time and
reach with technology. Everything from voice mail, cell phones and desktop publishing to the
instant communication via email and the Internet can help you.
9. Have a backup network.

If circumstances result in you not being available or able to complete a customer's work, make
sure you have a method in place to handle the disruption. Your backup system will ensure that
the work gets done on time, and your customers will appreciate your professionalism and
reliability-and send more business your way.
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10. Ask.
Many entrepreneurs continually pass up this golden opportunity to build their business. Train
yourself at the conclusion of a successful project to ask for your client's business again, and to
suggest that they pass along your name to others. Be sure your customers know that the
experience of working with them was one you'd like to repeat, and that you'd like more
customers just like them!
Unleash the Power of the National Media
In December 1994, five years after my partner and I launched what we believe is the world's
most unique patisserie, Three Dog Bakery, we spotted a man in our shop who was suspiciously
picking up every package, examining them, taking notes. He peered into our bakery cases,
sometimes chuckling, but insisting he didn't need any help.
Finally, after nearly an hour, he approached our register and shocked us by confessing he was a
reporter for The Wall Street Journal. He had never, EVER! seen or heard of a concept like ours
—we make canine confections extraordinaire, with PupCakes, Great Danish, and SnickerPoodles
among our 125 incredible bakery treats for dogs—and he would love to feature us on the front
page of the newspaper's "Marketplace" section.
When the story broke a few days later, little did we know our lives were about to change forever.
WOW! We unlocked our bakery door that day to the phone ringing off the hook—at one point,
the sheer volume of calls caused the line to go dead for a while. People were calling from all
over the country, requesting biscuits, flyers, information, anything we could shove into a box and
ship to them.
By the end of the first day, we were six weeks backlogged on mail orders. By the end of the
second day, we were ten weeks backlogged. We were besieged with calls for almost two weeks.
After that came a deluge of requests for interviews from so many other national media that we
eventually stopped counting: People, Entrepreneur, The Oprah Winfrey Show, USA Today, The
New York Times Magazine, National Public Radio, The Tonight Show...
The Power of the National Press

While all of this was going on, we were, of course, tending to the more mundane tasks of
building a business. We have managed to boost sales nearly eightfold, to an estimated $7.8
million this year from $498,000 in 1994. (With an expected 42 bakeries by the end of this year,
we expect revenue to soar to $39 million in 1999.)
Along the way, we've had our share of setbacks, but at Three Dog Bakery, we've never, EVER!
had trouble getting the word out. The national press did that for us—and then some. In fact, since
our founding in 1989, we've spent less than $10,000 on paid advertising, mostly for small
placements in local newspapers during our early days and currently for tourist-information
guides slipped into hotel rooms.
Looking back, I believe that public relations, or PR, has been the single greatest contributor to
our company's growth. In our case, the PR was that much more powerful for being national. A
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single one-page, black-and-white advertisement in People magazine costs $135,000. We got a

three-page feature story with color photographs. That's a half-million bucks—for FREE! A year
later, we were still getting calls on that story.
Go With the Flow

Given our experience, I believe entrepreneurs must make effective public relations as central to
their businesses as controlling inventories and collecting receivables. What's more, they must
become wise in the ways of the national press.
Now, I'm the first to admit that as the Ben & Jerry's of the dog world, Three Dog Bakery grabs
the likes of Oprah, Jay (Leno), and the folks at NPR in a way few other businesses could. I'll also
admit the role of luck in our story: that WSJ reporter just happened to have spotted a tiny ad that
we had placed in a local weekly called The Pitch when holed up in a Kansas City hotel room.
Having said this, however, I still believe PR—and, in particular, national PR—has been
uncharted territory for too long for too many entrepreneurs. Unbelievably, many small
businesses place little or no value on PR. Perhaps their owners are timid (although it's hard to
imagine a timid entrepreneur), or don't think what they're doing is newsworthy. Maybe they're
ignorant about what PR can accomplish. Or openly hostile to the press.
As for national PR, entrepreneurs might also be intimidated. Big mistake! Oprah, Jay and The
New York Times are out there, and as hungry for news as the tiniest local publication. It's a good
idea to go with that flow.
Breaking In
Even if your business is more mainstream than our bakery for dogs (and what business wouldn't
be!), you can take steps to break into the national media. At the very least, you can avoid
mistakes that would cause them to lose interest once they discover you. Here are some "bare
bones" pointers to get you started.
• Start Local, Go National. A journey of a 1,000 miles starts with a single step, a dog-
bakery business with one biscuit cutter. The typical national PR equivalent (our
experience with the WSJ reporter notwithstanding) is the call from the local weekly or
daily newspaper. Seize that opportunity and...
• Paint a Universal Story. It's your job to explain why your business is more than just of
local interest, because local reporters might free-lance for other publications. During an
interview with The Des Moines Register, we emphasized the "fun" aspect of our bakery.
Turns out the reporter was a freelance writer who also contributed to People, which was
how we were able to get a half-million dollars worth of exposure without paying a cent.
And which is why it always pays to...
• Establish Rapport. We work hard to get to know journalists on a human, or emotional,
level. We listen carefully to them. When a reporter for Fox said she was going out of
town for a relative's confirmation, I mentioned that my nephew had just been confirmed.
All of which might prompt a writer to go to bat for our story, or to bump it up, assuming
we...
• Have Patience. The national press works in mysterious ways. An interview might not
become a story for weeks or months, if at all. You must accept that fact. It isn't your job
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to question, and complaining is a real no-no. Just keep updating your Rolodex—ours
contains more than 200 media contacts. When we sent out a press release about our latest
book, we figured, maybe they'll do a story, maybe they won't. That was good figuring. It
took six months for a call to come from NBC's Late Night with Conan O'Brien, at which
point we...
• Follow Up Promptly. When a reporter calls, drop everything and pick up the telephone
(or return the call immediately). Don't mull things over. Next week might be too late.
Then be prepared to provide whatever else the reporter wants: a press kit, an interview, a
tour of your company. And do it with a smile. While waiting to appear on a national TV
show that goes into millions of homes, we watched backstage as an author complained
about having to arrive an hour and a half early. Guess who won't be invited back? Oh,
and one last suggestion: If ever we're the ones not to be invited back...in other words, if
we can't lick 'em, we...
• Join 'em! All good things come to an end. In the eyes of the national media, even dog-
bakery businesses eventually become more commercial than newsworthy. As guests of
NBC's talk-show host Conan O'Brien last December, we were flattered when
representatives from the show contacted People, saying, "You've got to do a story, it's
very visual: two guys, three big dogs jumping all over them." At which point People said
it wouldn't revisit a story it had already done, three years earlier. That was fine with us,
because we, too, had moved on . . .
We'll soon be taping 30 more segments of our nationally televised cooking show for dogs...And
putting the finishing touches on our second book...And preparing for our new line of children's
books...And introducing a super-premium dog food called BakeryBlend, as well as bakery treats
for cats and horses...Which, in turn, might just bring us full circle, back to where the WSJ gets
interested again.
With the national press, one thing flows into another. As you must when working with
journalists from these media. Because the cumulative effect is awesome PR. For us, it's been a
great gig. If you deal with your own unique situation with all the passion, energy and dedication
that you put into your business, it will be great for you, too.
Women Entrepreneurs Growing in Numbers & Importance
With corporations ever more eager to work with women-owned businesses, and a host of
organizations to help get them up and running, there's rarely been a better time for a woman with
the will, and an idea, to start a business.
In the early 1990s, when companies were scrambling to keep up with rapidly changing
technology, Kelly Gilmore noticed an unmet need for independent information technology
contractors. At the time she was thinking about starting a family, but her job in sales for a
Fortune 500 firm left little time for the demands of new motherhood.
So Gilmore carved out a dual solution in the form of Connect, a Littleton, Colorado-based IT
staffing company she founded with partner Maureen Clarry. The business allows the two women
the flexibility they crave while providing them with an outlet for their entrepreneurial drive. In
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the years since, Connect has grown to a $6.8 million business.

• The number of women-owned businesses in this country grew at twice the rate of all
firms between 1997 and 2002, jumping 14 percent to 6.2 million, according to the Center
for Women's Business Research.
• Women-owned businesses account for 28 percent of all privately-owned businesses, and
employ 9.2 million people. They contribute $2.38 trillion in revenue to the U.S.
economy, according to the Small-Business Association.
In her book, "When Money Isn't Enough," Connie Glaser reported that male entrepreneurs are
motivated by the potential to earn lots of money, while women start their own companies
because they seek greater control over their personal and professional lives. "Many women feel
frustrated by the restraints and the glass ceiling of corporate America," says Glaser. "They feel
like stepping out of that structure."
However, women-owned businesses have also attracted the attention of American corporations,
many of which seek them out as vendors under supplier diversity programs. Some companies
take this interest a step further by developing programs specifically designed to nurture women
as business owners.
Office Depot Chairman and CEO Bruce Nelson says it makes good business sense to cultivate
this market, noting that one of Office Depot's goals is to provide a forum for women to gain the
knowledge and the expertise necessary to grow and manage their own businesses. To meet this
goal, Office Depot turns to the Women's Business Enterprise National Council (WBENC) to find
vendors to do business with.
WBENC offers national certification for women-owned businesses as well as business

networking opportunities. "WBENC helps women business owners connect with companies such
as Office Depot, UPS and Bank of America, who are sincerely interested and committed to doing
business with women," says Susan Bari, president of WBENC.
Andrea Learned makes a living from helping corporations reach out to women. An expert on
marketing to women, Learned says women have a different management style than do men. They
are less hierarchical, more deliberate in their decisions and are more collaborative than men.
Women also tend to view their business holistically, and not only see where it's heading, but are
patient about how to get it there.
"With women, the power is from the center out," Learned says. "And they show that businesses
can make it at a slow and steady pace." The hurdles for women entrepreneurs tend to be higher
than those for men. Startup money is harder to find, for instance. According to Nell Merlino,
only 7 percent of the roughly $12 billion invested in new ventures in 1999 went to women-
owned businesses.
Merlino is president and CEO of Count Me In for Women's Economic Independence, a nonprofit
organization that provides access to business loans, consultation and education for women
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entrepreneurs across America. Loans from $500-$10,000 are available through an online
application process and are analyzed using a unique women-friendly credit scoring system.
Even with adequate funding, women entrepreneurs face a range of pitfalls. However, these can
be avoided. Following are tips to help women business owners succeed:
• DON'T UNDERVALUE YOURSELF. Women tend to give away too much and charge
too little, Learned says, especially those in service-based businesses. Learned suggests
women in the service industry adopt value-based fees, rather than hourly. This involves
pinning a dollar amount to your knowledge and services, and charging per project, not
per hour.
• REMEMBER WHY YOU STARTED YOUR OWN COMPANY. Women can
quickly lose site of their desire to have a balanced life in the face of a demanding new
business. Gilmore says she regularly has to stop and weigh the value of the task at the
moment against her personal needs.
• NETWORK, BUT IN A WAY YOU FEEL COMFORTABLE WITH. Many people
who go into business for themselves flock to networking groups because they believe it's
the smart thing to do. This is true for men as well as women. But depending on your
personality and preferences, these groups may not be the best forum for networking.
• DON'T FORGET YOU ARE RUNNING A BUSINESS. Piling on the work/life
benefits won't do anyone any good if doing so cuts too deeply into the company's bottom
line. "One of the biggest lessons I've learned is how to create a culture that is attentive to
the individual and allows you to still make it as a business," says Gilmore.
• DON'T BE AFRAID TO PROMOTE YOURSELF. "If your business is to thrive,"
says Glaser, "you must market yourself and take credit for your achievements. If you
don't market your business, no one will know what you have to offer."
Looking into the future, the Small Business Administration predicts there will be about 4.7
million self-employed women by 2005—an increase of 77 percent since 1983. Since,
increasingly, conditions are lining up to help these women succeed, including corporations being
ever more eager to work with women-owned companies, the future for the woman entrepreneur
seems very bright indeed.
Office Management
10 Ways To Set Priorities
1. Use a paper-based, electronic or computerized list to keep track of your tasks, instead of
relying on your memory. A list will give you a clear idea of what you need to accomplish.
2. Which tasks could you handle another day? If you would face no consequences by moving a
task forward, move it ahead another day or another week.
3. Know the difference between important and urgent. Important means a task needs to be done,
while urgent means it must be done immediately. Knowing the difference between the two will
make prioritizing easier.
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4. Realize that you can't do everything. This will help you to realistically prioritize your tasks.
5. Determine if postponing the task would affect other projects you are working on. Tasks and
projects can have a domino effect. If you do one task, yet fail to do another, you may have
wasted effort on the first task.
6. Set clear goals. There's a saying, "If you don't know where you're going, how will you know
when you get there?" By not setting clear goals, you may be accomplishing tasks with short-term
benefits.
7. Decide if the task will help you achieve your goals. If so, give it a higher priority.
8. Are you making a task a top priority because it's easy? Don't be fooled by easy tasks,
especially when they could be done days or weeks later.
9. Focus on quality, not quantity of tasks. Accomplishing a few tasks that are a higher priority is
better than accomplishing several lower priority tasks.
10. Which task will increase your income? If the task will only serve to keep you busy, it is not a
top priority. Think in terms of how the task will improve your productivity and performance.
Eight Ways To Get More Out of Your Day
As a business professional, you undoubtedly wear many hats—from that of juggler (of yours and
others' projects) to firefighter, putting out the fires (crises) you face each day. Ideally you should
be able to walk into your office each morning, cross everything off your to-do list and go home
with a sense of accomplishment. In reality, that's not always possible. Your day is filled with
tasks and interruptions that devour your time, talents and energy. There are several ways to make
each minute count, starting with these tips.
1. Before you agree to handle a task from a client, make sure that you're the most qualified
person to handle it. If a client wants to hire you for something outside of your field of
knowledge, rather than jeopardize your reputation, recommend someone else who could handle
the task better. Don't be surprised if several months later, the same client calls you again to
utilize your expertise.
2. Throughout the day, ask yourself if what you are doing is the best use of your time. You may
not be working on an activity you enjoy, yet if it is a top priority, continue doing it.
3. Don't assume; ask questions. When a client asks you to do something, don't do it
automatically. Ask questions to ensure that you understand what your client wants and in what
form. If you complete a task then realize that it wasn't what your client had in mind, you'll waste
more time and energy redoing your work. Get a clear understanding of the request, then start to
work on it.
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4. Don't reinvent the wheel. If your client asks you to do something that you or someone else has
done previously, let him or her know. Your client may have forgotten that the same project was
completed the year before. There is no sense in replicating something that has been done already.
5. Get off the phone as soon as possible. When a caller keeps you on the phone longer than
necessary, gently prompt him to end the call. You could tell them that you have another call, that
you are on a tight deadline or, if they have requested something, tell them that you want to get
started on it immediately.
6. Make your environment conducive to working. This covers two areas: your actual work space
and the area surrounding it. If your office is disorganized, you will waste time throughout the day
searching for files, replacing lost information and "running in place." Take the time to clear your
desk of any distractions, from magazines to knick-knacks, that could be placed on your credenza
or shelf near your desk. If you only use an item on your desk every few months, move it to a
space that is not in the main flow of your office.
7. In retail they say, "Location, location, location." The same is true in a home office. A desk
located in a high-traffic area is as welcome as a marching band in a library. If your desk is in the
kitchen, you will soon notice a few of your office supplies missing. If possible, move to a new
location that is away from the flow of traffic but not so far away that you feel isolated.
8. Stay focused on the activity at hand. When you're tired of working on something, move on to
something else, but avoid jumping from project to project.
Keep Your Office In Your Office
When you worked in a corporate office, your storage space probably was limited to your office
or cubicle and any other rooms that were designated for storage. At home, your storage space can
easily go from your office, to your basement, to your garage and attic. Before you know it, you
may consider adding on to your home or investing in an outside storage shed to hold more
"stuff."
1. Be realistic about what you need to keep vs. what you want to keep and how much storage
space you have.
2. Store anything related to your business in your office, rather than scattering it throughout your
home. If your office is bursting with information, supplies and products, designate another closet
or portion of your home to storage.
3. Don't go overboard and turn every empty space into a storage annex. The more places you
have to look for something, the more likely you are to end your search empty-handed.
4. If you use a spare bedroom or guestroom as your office, convert the closet into storage space
for files, supplies and reference materials. Take anything out of the closet that is not related to
your business (if you have the room) and devote the closet to business supply storage. If you
can't spare the entire closet, devote a portion of it to your business.
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Make the Most of Technology in Your Small Business
Equipping your office with the right technology will help you increase your productivity.
However, the technology in your office, whether a PC, printer, fax, or any other electronic
equipment, is only as effective as the person using it and can create a few organizing challenges.
• If you keep too much information stored in your computer, get in the habit of purging
documents on your hard drive the same way you would the papers in your file cabinets. If
you know that you will never refer to a document again, dump it. Otherwise, when you
need to find an important document, you'll waste too much time searching through
unnecessary documents, until you finally find what you need.
• Don't wait until your computer crashes to think about backing up your data. One of the
best investments you can make is in a reliable back up system. You can choose between
removable media drives or external hard drives. If you don't backup your data, you'll
waste endless hours attempting to recreate the information and will inevitably lose
valuable, irreplaceable data. Equipment is easy to replace, while data is not.
• Buy the highest quality printer that you can afford. It's easy to spend more money on your
computer and skimp on your printer, yet keep in mind that instead of seeing your
computer, your clients will probably only see your correspondence or any other
information that you generate from your office. Whether you're preparing a resume,
newsletter, or four-color brochure, it's important to give your clients the highest quality
printouts that you can afford.
• When faxing documents, include on your cover page a brief listing of everything you are
faxing in case the entire fax is not transmitted. It also serves as a record of what you
faxed. Remember that if you have a thermal paper fax and want to save a particular fax,
you must photocopy it before the fax fades.
• If you want to minimize your paper files, you can convert them to computer documents
by using a scanner. There are handheld, sheet-fed, flatbed and optical pen scanners
available for use in a corporate or home office. You can even use a scanner to enter
business cards into a contact management software program.
• Make sure that your voice mail system is high quality and able to handle the volume of
calls you receive. Also, your system should be equipped with enough options to meet
your needs (for example, a call tree that allows callers to press one or two for more
options). When recording your outgoing message, identify yourself or your company,
make sure your message is audible and ask the caller to leave the best time to return your
call. The latter will reduce the amount of time you spend playing phone tag.
Technology will help you save time and increase your efficiency. If you find the right technology
to meet your needs, learn how to use it and more importantly, take time to use it.
Managing a Virtual Office
An advantage of owning your own business is deciding where to locate your office. I decided to
open my company in the same city I live in, eliminating the need for hour-long commutes. But
even though my partners and I all live within 20 miles of the office, there are days we don’t
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come in at all. Instead, we telecommute, or work from home.

As the owner of a small business, you and your employees can do the same every day of the
week. You can easily create a virtual company, avoiding the expense and upkeep of an office.
Here are a few points to consider.
Have a solid technology infrastructure.

Make sure employees can access necessary files and programs from home. If your company does
not have a large IT department, online applications are a great alternative. There are numerous,
online file sharing and project management programs. Many are very inexpensive or even free
and enable your employees to access their work from anywhere with an internet connection.
Take advantage of instant messaging.

IM is even more efficient than email and allows you and your employees to interact quickly. It's
as fast as if you were talking in the same office. Additionally, most major IM platforms allow
users to save conversations, allowing you and your staff to keep records of all exchanges.
Communicate constantly.
You need to keep your staff on the same page. Although you are not all under the same roof, you
do need to be working toward the same goals. Your employees need to be kept informed and so
do you. Make sure your staff is clear about deadlines and priorities. Conducting regular phone or
video conference calls can help to facilitate open communication.
Schedule face-to-face time.

Consider holding weekly or monthly meetings in your home office, at a hotel or restaurant.
Or, find an executive building that lets you rent conference rooms on an as-needed basis. In-
person meetings will help keep your team motivated and on-task. Plus, the cost of meeting
regularly is still cheapter than the cost of renting office space.
Running a virtual office has many advantages. Not only does it save time that would normally be
spent commuting, but it can also help your business eliminate unecessary expenses. Without an
office to maintain, you can avoid rent and reduce the amount spent on office equipment and
supplies. Plus, providing flexible work schedules and the ability to telecommute are important
benefits for many employees. If your small business can not afford the expensive perks of larger
corporations, being part of a virtual team can be a great incentive for potential employees.
Seven Ways To Cut Costs in the Home Office
Bootstrapping is a way of life for many in the home-office setting. With no corporate chief
financial officer (CFO) to pay for the tools and hardware needed to run the business, cutting
costs—without cutting corners—can help stretch the balance sheet.
Between start-up and daily operations, launching and sustaining a small business can be a
constant battle. Look for savings by looking at everyday items to nip and tuck. From procuring
hardware to getting the best telephone services at the right price, slice fractions off existing bills
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and lower the monthly nut.
Here's a few other ideas:

1. Used-office-furniture stores or office-equipment leasing companies often have quality

desks to sell at reduced prices; quality filing cabinets might be more difficult to find.
Shop around for price and quality. Visit the local thrift or consignment shop and read the
classified ads for sales, auctions and liquidations.
2. Know anyone in a business? Sometimes businesses preparing to upgrade their furniture
would part with it cheaply.
3. No matter the savings, don't buy your chair used. A good—and reasonably priced—
ergonomic chair can be found at the office superstore or even a warehouse club for less
than $200. Your body—and health insurer—with thank you with reduced strain and
fewer visits to the orthopedist or chiropractor.
4. Hit a local retailer to find out when they're going to replace their furnishings and
displays, which often make good, sturdy office hardware (for bookshelves, storage areas
and filing racks).
5. Monitor your use of long-distance calling, and invoice clients where appropriate
(remember also to charge clients for the taxes related to the long-distance calls you made
on their behalf). Call long-distance at off-peak times and enroll in long-distance-calling
programs. Also remember that rates change frequently, so call the providers to get the
best rate. Don't be afraid to switch, or to threaten to in order to secure a better deal.
6. Also monitor energy consumption. Track and cut waste. Use auto-setback thermostats
and automatic light switches. Savings can be dramatic.
7. Don't order a "business" telephone or fax line for the home office. A residential telephone
line can be one-fourth the cost of a "business" line and serve the same purpose. Also, call
your phone company to see if you can bundle long-distance, cellular and even Internet
access into one, less-expensive package. At the very least, you might be able to write one
check at month's end—instead of three.
SOHO Doesn't Have To Mean Solo
Home-based Business Operators Can Make Friends—and Money—By Breaking Out of

Their Cocoons
Working from home can place the proprietor in a cocoon. Break out from the confines of the
small or home office (SOHO) to keep yourself—and your enterprise—plugged into the
community. Networking can help grow your area of influence, introduce you to other important
players in your community or industry, and keep fresh, new ideas percolating in your mind. Here
are some ways to get started in your networking:
Peruse and attend.

Read through the business calendar sections of your local newspapers (and browse their Web
sites) to learn of networking events, business expositions or trade fairs being held in your
community. Call the chamber of commerce or Better Business Bureau and request their schedule
of upcoming business-networking events. Once at an event, walk the aisles, meet and greet other
small business owners and vendors, hand out business cards, attend lectures and gather literature
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—all with a keen eye on how other people "work the floor."
Align yourself with VIPs.

Ferret out professionals who are experienced and connected in your area of business, and
establish friendly, non-competitive working relationships with them. Apprentice with them to
grow your circle of acquaintances, business contacts or just your skill sets in your industry niche.
This will help you capitalize on their information and expand your enterprise—and your
horizons.
Partner and conquer.

Form alliances with a support team of non-competing but complementary businesses so everyone
can prosper. This will help you expand your product offering and marketing influence. If you're a
graphic designer who can't write, find a writer or editor to handle your copy needs. If you're a
small business accountant, team up with a financial planner and lawyer who can flesh out your
service offerings. If you're a photographer, align with a local professional event planner,
dressmaker and baker, so together you have a team to plan and create special events, like
weddings, parties or other engagements. What's more, together you expand each other's circle of
influence, marketing reach and new business development efforts.
Give back.
By volunteering with community organizations or offering up your services in local chambers,
civic organizations or business groups, you show that you're a reliable and involved corporate
citizen and good neighbor. The effort also gets you out in the community and among potential
clients.
Get active.
Join the boards or committees of local groups to get you in front of potential clients. Co-directors
and officers often will steer business your way. Join trade groups to learn ideas, make contacts—
and stay sociable.
The SoHo Office of Today Makes Multi-Tasking a Must
Ah, the joys of having a small office or home office (SoHo). There’s nobody to enforce dress or
decoration codes, no white-knuckle commutes, no stress at all.
That is, until you start to get busy. Then life in a SoHo can become every bit as hectic as the
cubicle environment you left behind. Because you’re probably on your own, there’s probably no
one else to take phone calls, track down information, or start a fresh batch of coffee while you
handle your assignments.
Every SoHo entrepreneur needs the ability to multi-task. Fortunately, there are plenty of
practices and products available to help you do it. And while it is necessary to multi-task only
occasionally, these same tools will help you be more efficient and better able to keep your
business growing.
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Use Your Space Sense

You probably already have the basics for a SoHo office—desk, chair, telephone, storage space,
computer, etc. But how well is it organized? Things you use everyday should be in easy reach,
while files and replacement office supplies should be stored in a more out-of-the way location.
If you work in different parts of your SoHo—a drafting table or workbench in addition to a
conventional desk—consider what specific items you need for each area (tools, art supplies,
construction materials) as well as things that will be needed wherever you are (telephone, writing
pad and pen, calendar).
For SoHo entrepreneurs who spend a lot of time on the telephone, a hands-free headset is a great
way to take calls or conduct interviews while doing other things. They also have far better audio
quality than most speakerphones, which some people at the other end may find annoying and
impersonal.
Voice mail is also a must for most every SoHo’s telephone service, but don’t abuse it. Yes, you
can screen calls or save messages while focusing on a particular project. However, some callers
may find a repeated voice mail response frustrating to the point where they decide it’s not worth
calling back. If your voice mail system routes calls to several people in your business, make sure
the messages are clear and the selections are easy to navigate.
You’ll likely have a computer for at least some aspects of your SoHo business, so make sure it
has the processing power for all your needs. Keep your printer, fax or copier readily stocked with
and enough ink or toner, and follow any recommended cleaning procedures. If you’re juggling
multiple deadlines, the last thing you need is a paper jam or fading print quality.
A cable modem or DSL service is likewise a must for your Internet access. Waiting for a dial-up
service to connect may be less expensive, but you risk getting bogged down. And if you have a
single phone line, you’ll be cut off from your customers.
Set Your Schedule

Multi-tasking is also easier when your workday has a plan. Prepare a “to-do” list for the coming
workweek noting priorities, deadlines, and routine activities. You can plan time for tasks that
can be done concurrently, and those that require your full attention. Periodically reviewing the
list will help you determine if you need to make changes. And, you’ll be able to respond quickly
to unexpected opportunities, problems, or questions and rearrange your schedule accordingly.
Finally, never feel obligated to multi-task just because you can. Trying to do too much for too
long can lead to emotional and physical burnout, mistakes, and poor quality work. Always take
time out during the day to refresh yourself—a stretch or walk around the block, your laundry, or
a quick snack. You’ll then be reenergized and ready to do…well, everything!
When Home Is Where the Office Is
The modern home office is not the land of cubicle farms and staid corporate landscapes. Home-
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based workers—entrepreneurs and teleworkers alike—can turn an bedroom or other residential

space into a functional, comfortable and inviting workspace.
But first, you have to put some thought into the space, your existing furniture and your plans—
both immediate and future. Nothing's worse than buying an expensive desk that can't grow with
your business. Here with some rules of thumb to follow when designing your space.
• Think ahead. What will you need-today and in the future? A desk with writing and
computer area, some filing cabinets and shelves are common features of a desk or
workstation. But how will your needs change as your business changes?
• Scope it out. Can you fit your equipment and furnishings into the space you've chosen in
the home? Will new equipment fit there as well (with prices of scanners, copiers and
other hardware dropping, equipment once reserved for large companies today is finding a
home in the home office)? Will you need to use a closet or another room for storage or
another workstation? Might your home business eventually take on employees, meaning
you'll need additional space?
• Establish boundaries. This is a place of business, not a hobby shop (also a key point for
potential tax deductibility of the home office). Decide where in the home a home office
would provide the greatest functionality away from the hustle of family life, and establish
rules about respecting its space and function.
• Stay focused. If the office shares space in another room, design the desk so it faces a wall
and inhibits the distractions of household activity or the television. Place a Japanese
Shoju screen between the workspace and the room to create a barrier (this also helps
"close" the office when the workday's done).
• See the light. When choosing an office and designing or placing your desk, integrate
plenty of light, either from windows or lamps. Place the computer station where glare
from windows or lamps doesn't inhibit the view of the screen.
• Stay stimulated. Is there a window nearby? Integrate it into the design to provide outside
views that stimulate the mind-and allow you to keep a watchful eye on your children
while they're at play.
Guide to Buying Wholesale
Many retail gift shops are faced with the challenge of finding merchandise available at
wholesale. Take advantage of permanent wholesale showrooms or marts, located in most major
cities in the United States. Before you go, keep in mind the following tips to make your buying
trip as successful as possible.
Plan Ahead
• Be sure to have a budget to work with.

• Plan for seasonal buying months in advance of the holiday.
• Bring plenty of business cards with you.
Merchandise Mart Basics

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• All merchandise marts have strict entrance policies. Be sure to check the mart’s Web site
before you go.
• You must be a business owner or buyer for a retail business to make a purchase. Buyers
are strongly urged not to bring guests unless the guest is an employee. In addition, most
marts do not allow children under 12 years old.
• All buyers must clearly demonstrate that they are there strictly to conduct business.
• Regular buyers might want to consider a permanent badge to enter the mart. To apply,
buyers need to establish their credentials by bringing a photocopy of the state tax permit
or confirmation letter from the Department of Revenue, and either a business check or
business card.
Payment and Shipping
• Individual rooms in the marts may be owned by a small business person who represents
many different companies or a large manufacturer or import company. This rep does not
handle payments or ship the merchandise. The company itself ships the merchandise and
bills you directly. Each company sets their opening and reorder minimum sales amounts.
• A credit card in the name of your business is the easiest method of payment.
• Products are in constant flux. You may not receive everything you order. Merchandise
could be out of stock or discontinued. Be flexible.
• Returns and credits are handled by the company you purchased from, not the rep firm.
However, the manufacturer’s rep can intercede for you if you have a major problem with
an item. Their goal is a satisfied customer.
Sales & Customer Service
Develop Strong Follow-up Techniques
Have you ever had that nagging feeling in the pit of your stomach that you have forgotten to call
someone, then followed up only to find out that your competitor has just landed your dream
client? Your competitor may not be more qualified for the assignment, yet he or she called at the
right time. Chalk it up to strong follow-up techniques.
1. Persistence coupled with a clear follow-up plan definitely pays off. If you call a prospect and
he or she asks you to contact the company in a few months, take steps to ensure that you call. If
you don't, someone else will.
2. Make the task of following up easier by using a paper-based or computerized to-do list. The
list will let you know what you need to do and when you need to do it. The list works only if you
use it—a bit of common sense that is sometimes ignored. The time to remember that you need to
place a call is before, not after, the deadline.
3. Use a calendar in conjunction with your to-do list. If you have more than one calendar,
consolidate the calendars into one. Using more than one to record appointments and deadlines is
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time-consuming and confusing. You will be more apt to use your calendar if you keep it readily
accessible.
4. If you tell someone that you are going to follow up on a certain day, and even at a certain time,
do it. You could lose a sale simply by saying one thing and doing another.
The Do’s and Don’ts of Sales
Some of us love selling, others hate it, but there is no doubt we all do it, and often. Whether it’s
prospecting, schmoozing or closing, sales are part of our everyday business life.
While it is difficult to say what the average entrepreneur needs to know about sales (as we are all
at different levels), I think I can safely say that there are some mistakes that are fairly common
and also fairly easy to avoid.
Not listening closely enough: When you go to the car lot and the salesman walks up, what is the
first thing he or she does? Usually, it is to ask you some seemingly innocent questions: What are
you looking for, how much do you have to spend and maybe even a bit about your family. It’s
not just small talk. These uber-salespeople listen closely to your answers, knowing that doing so
will help them find your sweet spot.
Look, of course sales is not about talking someone into something, that never works. Rather, it’s
about finding out what they want or need and then showing them that what you offer fits the bill.
You find out what they need, and therefore what tack to take, by listening carefully.
Excessive talking: A corollary is that sometimes it’s imperative that you show some self-control
and stop yer yapping. People who love sales often are gregarious and garrulous, but that gets in
the way when they like to hear the sound of their own voice more than that of their customers’.
Talking is good as it can create rapport and is used to explain key elements of your product, but
talking too much not only can turn customers off, it prevents you from asking questions. When
you are not talking, you are listening.
Trying too hard: Overselling, making grand pronouncements, using hyperbole and not trusting
your product or pitch enough to leave the customer alone for a while make you look needy. No
one likes needy people. It’s like that boyfriend or girlfriend you once had who just couldn’t leave
you alone. You finally left them alone, right?
The same is true in sales. When you look, act or sound needy—or worse, desperate—potential
customers are turned off. Trust yourself and your product enough to not oversell, and know when
to back off. To bastardize a perfectly fine axiom: "When you love a customer, let him go. If he
comes back, he’s yours, if he doesn’t, he never was yours in the first place."
Not knowing when to push: Whether it is helping the undecided to finally get off the fence or
explaining to a prospect why they need to act now, you have to know when a gentle push can
make a difference. If your push has their best interest in mind (rather than yours) it won’t look
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like pushiness.
Not asking for the sale: Similarly, there comes a time to ask for the sale, to get a prospect to
commit. Again, at the right time and for the right reason, it should be more welcome than
threatening.
Resting on your laurels: There are three types of customers: New customers, existing customers
and customers who are leaving for whatever reason. Too often, when things are good, we fail to
replenish the stock because the customers we have are plentiful and bountiful. But sooner or
later, existing customers become exiting customers, and if you haven’t been prospecting and
bringing in new customers, you will be in trouble.
By following these tips, not only will you make more sales, but you will also continue to create
customers.
Find Customer Service Opportunities During the Purchase Cycle
Buyers remember customer service: The more attention you pay to customer service, the more
likely it is that you’ll see return business. If your customer service is lacking, it doesn't matter
how slick your Web site is, or that your prices are a bit better than your competitors': You’ve put
your repeat business at risk.
Remember that it’s less expensive to market and sell to an existing customer than to find a new
one. Here are four customer service opportunities and how to handle them:
• After a purchase has been made, confirm the order via email. Even if you display a
standard thank-you screen after the order is entered, follow up with a short email message
confirming that you have received it. Offer as much additional information as you can to
assure customers that you received the order correctly.
Your email message might include the order number, order total, items ordered, date by which to
expect shipment, and contact information, such as a telephone number or e-mail address they can
use to contact you.
• After the item has been shipped, confirm the shipment via e-mail. A quick note to let the
customer know that the item is on its way alleviates potential concern about delivery. The
customer can now anticipate when the package will arrive. If you shipped the package via
a service that provides tracking numbers, send the tracking number to the customer, who
can then follow up on the delivery date.
• After the package has been delivered, send another quick e-mail. This provides an easy
way for the purchaser to contact you in case the item was damaged during shipment:
Replying to the email message is a lot easier than looking up a telephone number or email
address! Also, by asking questions in this message—Did the item arrive safely? Do you
have any questions?—you prompt customers to respond with positive feedback. As a
result of doing this, I have received many testimonials that I might not have gotten any
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other way.
• After the transaction has been completed, consider sending a thank-you card. In some
retail businesses, such as mine, you can really impress your customer if you follow up
each transaction with a handwritten thank-you note. You could also use this thank-you
note as an opportunity to ask your customers to recommend your business to their
friends.
These standard points of customer service in the cycle of a sale might be supplemented with two
more customer service opportunities:
• When a shipment won't arrive on time, e-mail your customers to inform them. Customers
understand that delays happen, and they will be generous in their expectations. But they
do not understand when companies fail to take the time to notify them; they may perceive
this as a disregard for common courtesy.
• When an item arrives damaged or is not what the customer expected, take the opportunity
to render excellent customer service. Earn that repeat purchase by showing customers a
level of respect and courtesy that they were not expecting to receive. More often than not,
customers whose legitimate concerns have been appropriately addressed become loyal
lifetime repeat buyers.
Make Someone Happy—Your Customer
In 1951, when I started Lillian Vernon Corporation from the yellow Formica kitchen table in my
apartment in Mount Vernon, a suburb of New York City, I spent hours looking at the
advertisements in popular women's magazines, such as Seventeen and Vogue. I was trying to
figure out what type of products appealed to readers of these magazines.
Eventually, I decided to sell two simple products—a monogrammed handbag and matching belt
for teenagers—by placing an ad for $495 in Seventeen. From that single ad, I received a response
that astounded me: 50 orders! I immediately set about recording the name of each customer on a
3" x 5" index card, as well as other basic information, such as the customer's address and
whether he or she placed a repeat order. I kept updating those cards, trying hard to eliminate
duplicate names.
I didn't realize it then, but everything I ever needed to know about selling I was learning at my
kitchen table: I was learning how to identify, find and keep customers. In pouring over the ads in
the magazines, I was conducting my first exercise in market research, determining whether there
would be a demand for the products I wanted to sell. On my index cards, I was keeping a record
of just who my buyers were, what types of orders they were placing, and eventually, whether
they would continue to buy my products.
In the intervening 47 years, the system I devised has served me well. In 1956, when I launched
my first Lillian Vernon catalog, those 50 original names had mushroomed into 125,000, all
sound prospects who had made at least one purchase. These days, our company's mailing list
comprises in excess of 21 million households nationwide.
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Selling as Philosophy
Selling, in short, is the core of any business, no more so than in catalog retailing where an
entrepreneur's relationship is entwined directly with the customer. To sell effectively,
entrepreneurs must focus on what I call the crown jewels: those names on the mailing list that
you took great effort to develop and must take an even greater effort to keep. About 20 percent
of those names are lost each year; to replace them, you must strive to add more than that 20
percent. Doing all of this comes down to a mix of the right philosophy and some astute practical
considerations.
Let's start with my philosophy. At Lillian Vernon, we believe that the foundation of any mailing
list is customer loyalty, which is the result of customers developing a trusting relationship with a
company. Trust is established when people—or a company and its customers—understand and
rely upon each other.
In my view, each of my 21 million customers is a real person. I always keep a clear image of her
—and our customer is typically a "she." She yearns for a more personal time, a time when simple
values and an upbeat attitude were the norm for American families; yet she also wants to save
time, solve a problem, and brighten her life. So we design our catalogs to have the appeal of an
old-fashioned general store, while featuring merchandise that will make her life easier and a bit
happier.
That "bit happier" is the key. I have a rule of thumb that says a happy customer may tell three
others about what you have to offer. Which is good. An unhappy customer, more ominously, will
tell ten others about the bad experience. Which is very bad. In striving to build that crucial
foundation of trust, strive to make your customer happy.
Selling as Practicality
With making customers happy as your guide, an entrepreneur's next step is to ferret out the
building blocks of happiness. In my opinion, there are three: selecting the right products, being
honest with customers, and welcoming communications between the company and its customers.
What follows are suggestions for integrating these practicalities into your salesmanship.
• Know Your Market.

Find the right product for the right customer, and find the right customer by advertising in
the right place. This is the basic premise that drove my initial bag-and-belt success story
in 1951. Aiming to reach teenage girls, I secured a product that would appeal to them and
advertised in a publication they read.
A few months later, I advertised the same product in Vogue, resulting in very few orders.
Teenagers didn't read Vogue. Mature women who did read it wanted haute couture, not
matching bag-and-belt sets. All of a sudden, what had been the right product became the
wrong product, sold to the wrong customer, through the wrong advertising venue. It made
all the difference.
• Sell, Don't Oversell

We've always made sure that our products represent quality and good value. I was a
stickler for this, because back in the 1950s, mail order had a questionable reputation. Lots
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of products sold through catalogs were shoddy. I wanted to make sure my customers
weren't disappointed.
For the same reason, we want the photographs and copy in our catalogs to provide an
accurate representation of each product. Once, we featured a handsome purple poncho

that, unfortunately, photographed with a bluish tinge. A schoolteacher wrote: "I would
have bought your poncho, but, although the caption said it was purple, it looked blue in
the picture. I couldn't afford to take a chance." That's the kind of catalog pitfall that we at
Lillian Vernon can't afford either.
Similarly, we steer clear of hype in our copy writing. Aiming to sell, we don't want to
oversell. We don't want our customers to be disappointed. It's even better if they're
happier with their purchases than they thought they'd be.
• Offer a Money-Back Guarantee

To overcome the questionable image that plagued the mail-order business in the early
days, we also made it our policy to provide a 100 percent money-back guarantee. We
have always refunded in cash or in credit, always without hesitation and with no time
limits.
Once, a customer who was packing up her house to move found an unopened box of Old
Foley stoneware from England. She had ordered it 20 years earlier and now had no use
for it. When she returned it to us, it took me a little while to dig through the old catalogs
for the price, $79.98, but we sent her the refund.
While some retailers fear abuses of such a policy, we don't see it that way. We believe the
no-questions-asked, money-back guarantee shows respect for our customers as
enlightened consumers. Forty-seven years later, it has paid off: the Lillian Vernon name
is synonymous with outstanding customer service.
• Communicate with Customers

Customer service is a two-way street. From the beginning, we have always listened to our
customers and encouraged them to contact us. When we offered a $1 bookmark that
became one of our all-time bestsellers, we heard them loudly and clearly. When they
rejected a rolling pin that could be filled with ice to make rolling out pastry easier, we
also heard that.
We read and respond to all customer letters, cheers and jeers alike, and we welcome and
have acted upon many suggestions from customers. One of the best was listing age-
appropriate guidelines on products in Lilly's Kids, our specialty children's catalog. Since
we incorporated this idea, we have received countless compliments from readers who
view it as an important service.
• Interact With Customers

Communicating with customers needs to go further, however. In my view, an
entrepreneur must be involved personally. In the early days, I myself answered the
telephones and talked with customers. While that isn't possible any longer, I have tried to
maintain that same spirit by personally writing introductions for each of our catalogs.
Readers consider this message, complete with my photograph, a personal tie to me.
These days, the kitchen table and the index cards have been replaced by sophisticated
focus groups for identifying customers, computers for keeping track of their preferences
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to a degree unimaginable 47 years ago, and state-of-the-art personalization and

distribution facilities for making sure that disappointments are even fewer.
But these are just the trappings. The basics haven't changed. At Lillian Vernon, we strive
to keep customers happy. From a catalog image that attempts to tap into their yearnings
to be "a bit happier," to the steps we have taken to assure they aren't disappointed, we
deliver on both a philosophical and practical level.
In doing so, we are guarding our crown jewels. Without the loyal following that those
names represent, our company wouldn't exist. Making customers happy has made Lillian
Vernon Corporation successful beyond my wildest expectations.
Sales Strategies in an Economic Downturn
By Rod Means, SCORE Marketing Advisory Council
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.
Be Creative
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.
Focus on Existing Clients

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 citizen’s day and holiday specials. Don't forget incentives to pay now.
Think cash! Cash is always king, especially in recessionary times.
Think Long Term

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. Narrow your product line or the
services you offer. Now is not the time to introduce fringe products or allied services. Don't
forget customer service with this definition: An unexpected service, delivered at random, a
memorable event! Unexpected, random, memorable. Make use of sincere thank you's. Follow up.
Follow up again.
Use the Web

Valuable tools are available today that didn't exist during previous downturns. Technology has
given you the internet, email marketing and search engines. What about cell phones and text
messages? There are professional networking sites such as Linkedin, Facebook and Twitter.
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Be Smarter in Your Marketing

Maximize utilization of inexpensive items like press releases, trade shows, speaking
opportunities and email marketing. Network at chamber of commerce events and other “mixers.”
Offer to provide a door prize in order to get recognition and exposure. Investigate business
networking groups like Business Network International (BNI), Leads Club and business Meetup
groups. Don't forget to read industry trade journals, newsletters, and visit appropriate websites
for the latest industry trends and fresh ideas.
Professionalize Your Web Site

Finally clean up your Web site and make sure it’s user friendly. Offer up-to-date professional
product or service information to those who provide an email address. Also, utilize search engine
optimization (SEO) techniques to drive visitors to your site.
Selling Relationships
When I first started my company, Net Daemons Associates Inc., I thought of myself as a
technical person. As someone who could make computers and networks work. Not as someone
who could sell.
Since NDA was two people when we were founded—me, the geek, and my partner, the even
bigger geek—someone had to handle all the non-technical and non-consulting parts of the
company. That ended up being me. So, while Chris Caldwell and I put in our 40 hours a week of
contract work, I also put in plenty of time doing the books, making phone calls to people who
might need jobs, incorporating the company, and most of all, securing and writing contracts. I'd
never seen a proposal or contract in my life, and now I not only had to write them but I had to
sell them.
The cool part about the way NDA started was that we had "ready-made business." Because NDA
was a spin-off of the failed Stardent Computer, other spin-off companies were looking for our
services. These people became our first clients. I didn't have to pound the streets for them, but I
did have to sell them on our concept, which was definitely a departure from the norm. We sell
the idea of a third party, namely NDA, supporting a company's computer networks, an idea that
is now well-accepted and understood but was new at the time. As a well-known quantity in a
fledgling business, we found that we had to sell the validity of our service rather than our ability
to perform the work.
Selling Relationships
Our company grew at a rapid pace despite "no selling"; we grew through pure referrals. Of
course, looking back, I realize that lot of selling was involved in this "non-selling." Because we
sell a service rather than a product, we were actively engaged in the mechanics of a different type
of salesmanship, what might be called "relationship selling."
We had to sell on our reputation, quality, ability to perform, consistency and stability. Every time
we solved a problem for a client, finished a project on schedule, and repeated that performance,
we were proving that our business made sense, that we made sense. We were nurturing the
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relationships that would lead to further sales. After three years of holding down the sales fort—
when I finally recognized what I was doing for what it was—we realized that we needed to
refine our sales process and sell to buyers who weren't necessarily friends, or friends of friends.
No longer could we wait for clients to come to us.
So over these years, I've become a salesperson. I think now that I actually always had the "stuff"
to be a salesperson, but didn't recognize those skills for what they are. I always knew that a
strong point of mine was being honest, forthright and open-minded. I also knew that I could talk
to people about what their problems were and explain to them the solutions in a way that they
understood. I have always been a big proponent of teaching people how to talk technology so
that they are more impressive at cocktail parties and occasionally may be swayed to join the
technology work force.
Becoming a Salesperson
I remember the day I woke up and realized that I was addicted to selling. I realized that I liked
the challenge of telling someone about what we do and fitting our services in with their needs.
And, yes, I liked the thrill of winning the contract, of making the sale.
Now, I would tell anyone about what we do, how great our company is, how great our employees
are, and why one needs our services. I went from being terrified of talking to strangers to talking
to the people next to me on the plane, behind me in the line at a store, or sitting next to me at a
networking event. I became unstoppable. I began to know a lot of people in many different
industries. I'd fly to New York, and what do you know? I'd know more than one person on the
plane. I'd go out to dinner and make sure that I cruised the restaurant to say "hi" to people I
knew.
Of course, all of this was at odds with what I thought about sales people. I thought sales people
are the people you run from at CompUSA, or the person on the used-car lot who really wants
you to buy that Buick without a gas tank. I haven't really changed, though; I've only gained more
confidence interacting with people I don't know. And I've begun to realize that, ultimately, those
interactions become the relationships that comprise the backbone of salesmanship in a service
business.
Ten Tips for Relationship Selling

Along the way, I've come to believe that certain tenets are critical to this "relationship selling."
What follows are what I consider the top 10:
1. Always be honest and open. A lot of our business is referral business, and if Joe is going to
tell Mary at a different company to use our services, then the story that I tell to Mary needs to be
the same one that Joe heard.
2. Along with being honest and open, be consistent. With referral and relationship-based selling,
you are often not the first person telling your story. If you change your rates, for example,
depending upon whom you are talking to, you'll stop getting referrals. You need to be the same
to the Inc. 500 company as you are to the Fortune 100 company.
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3. Listen. And then listen some more. A sales call is all about careful listening. I listen, write
down what I heard, summarize what I heard, and let the person know what I will do based on the
information that I heard.
4. Follow-up. This means deliver accurately and on time. If you do what you say you are going
to do, when you say you will get something done, you start building trust from the beginning of a
sale.
5. Take pride in what you have to sell. If you know what you have to sell, inside out, and you
also know background information about your client, you'll close a sale faster. Be educated. Take
the time to know both your service and your client's needs. Then practice what you have to say.
And remember, the worst that can happen is that someone will say "no."
6. Know when not to sell and whom to refer a sale to. Sometimes you aren't the right fit for a
sale. Nothing is better than being able to tell a prospective client that you aren't the right fit, but
you know someone who is the perfect fit. That client will call you time and time again if you
always "do right" by them.
7. Care about your clients. Respect your clients' time. Always ask if they have the time to meet
or talk, and always (always!) be on time. If a client has an urgent need, a vexing problem, feels
lost and intimidated, help out! No problem is too small to get help. If you are genuine about what
you want to do for your client, you will have a lifelong client.
8. Never make a client feel like "just a sale." You are there first, to take away your client's pain,
and second, to add the client to your quota list. At the same time, you are in business to make
money. Explain to your client what comprises your costs and fees so that the client understands
your business, too. If asked to compromise value for cost, take the high road and let the client
know that you pride yourself on your values and can't compromise them even for the biggest
sale.
9. Stay focused. To be consistent and timely and reliable, you need to be organized and focused.
Manage your time, allocate the right amount of time to making a sale so that you are able to be
on time and not rushed.
10. Have fun! If you don't have fun doing your job, you'll sell less! Selling isn't about pulling one
over on someone. It's about problem-solving and working with a client toward a solution. A
client needs something from you. You have a service (or product) that solves a problem that the
client has. The client has something you want—a problem that the client will pay you to solve.
Remember that it's a two-way street.
I consider myself a sales person. At the same time, I don't consider myself a "used-car
salesman," and for the longest time, I thought that meant that I wasn't a sales person. No longer.
I don't look the part, but I listen well, follow up with timely, accurate information, provide
consistent guidance, work to solve a client's needs in a cost-effective way, provide top value to
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people and often win the sale!
Understand Online Customer Service

Before developing your online customer service plan, it helps to understand the differences
between online and offline customer support, the advantages and disadvantages of an online
customer service program, the importance of keeping up with customer expectations, and the
elements that every online customer service plan should include.
Know the Differences Between Online Customer Support and Traditional Methods
Since the world of e-commerce is largely an impersonal culture—with virtually no face-to-face
contact with customers—customer support enters a whole new dimension. Online, you must do
things that you wouldn't need to in the brick-and-mortar world, such as:
• Offer customer-friendly site design and navigation

• Give sales transactions a personal touch, even when you may never speak to your
customers
• Ensure ordering instructions are clearly outlined on your site
• Answer questions and confirm orders electronically
• Provide assurance of security of personal information transmitted over the Web
Understand the Advantages and Shortcomings of Online Customer Service

Overall, the Internet allows you to make it easier for customers to do business with you because
they can do it all right from their desktop any time of the day or night. While online customer
support is certainly different than the traditional method, there are some distinct advantages:
• Lower customer handling costs

• Improved efficiencies due to the use of posted ordering instructions and FAQ lists
• Increased rate of customer retention if you make online shopping easier and more
convenient than real-world shopping
On the other hand, there are some shortcomings associated with virtual customer service that you
should be aware of:
• Your relationship with customers will be less personalized just because of the nature of
online shopping—and they may have greater expectations of you as a result. After all,
they can always run down to their local mall merchant to buy similar products from
someone who knows them personally.
• There's a higher learning curve for your support staff as they learn the ins and outs of
dealing with customers in the virtual realm.
• You'll need to make investments in expensive technologies and software solutions that
aren't needed in the offline world.
Get Familiar with the Essential Components of Online Customer Service

While every e-commerce site's customer service plan is—and should be—different, there are
some features that should be staples. They include:
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• Web-based facets such as simple navigation and design, fast image download times, and
fast access to information.
• Human facets such as quick email responses, 800 customer service phone numbers, and
offline purchasing assistance from customer service representatives.
• Product information such as descriptions, specifications, pricing, FAQs, bundling, smart
shopping carts, and cross-purchasing suggestions.
• Incentives such as gift-wrapping, promotions, money-back and on-time delivery
guarantees, and offers of free shipping and handling.
• Trust factors such as explanations of secure transactions, information regarding privacy
of data collected, branding (company logos and slogans), and endorsements by and/or
membership in the Better Business Bureau, professional associations, etc.
• Fulfillment follow-through such as confirmation emails, an automated shipping/tracking
system, prompt delivery, and email satisfaction surveys.
Training
Going Back to College for Entrepreneurial Resources
Is there a college, junior college, or university near you? If there is, and you're not making use of
it, you may be neglecting a powerful business resource. Many colleges have set up "centers,"
frequently with state money, to assist entrepreneurs. In addition, you may be able to tap a wide
variety of services earmarked for students but available to the larger community.
Three years ago, the importance of academia to entrepreneurship became apparent to my wife
and me, when we moved our company from Boston to Staunton, Virginia. Aiming to refocus
Omnet Inc. from a provider of proprietary electronic mail for scientists to a broad supplier of
online services, we factored proximity to higher education into our search for a new place to live
and work.
Shortly after we re-established in Staunton, we were introduced by our landlord to a local

entrepreneur, who asked us to help him put together a presentation at James Madison University
in nearby Harrisonburg. This was the beginning of a chain of connections that led us to
cooperative and mutually beneficial relationships with three universities—University of Virginia
and Virginia Polytechnic Institute and State University, known more casually as Virginia Tech,
as well as JMU.
The people we met at JMU pointed us to the Virginia Center for Innovative Technology, or CIT,
a state-funded organization that networks technology businesses with one another as well as with
universities and colleges in Virginia. CIT, in turn, put us in touch with faculty and developmental
centers at the two other schools.
Tapping Resources
From what we've learned, academic support for entrepreneurship comes down to a cup
overflowing with books, brains, and bodies. Here's what we've gained from having that access
and how you can tap into these resources.
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1. Books—Let's start with the library. In some states, such as my own of Virginia, anyone with
an in-state driver's license can automatically get free library privileges at any state-funded
college or university. Other institutions may offer a library card for a very affordable annual fee.
To make it even more attractive, many schools offer access to the library catalog via the Internet.
You can log on, determine if they have the book you need, and find out if it is on the shelf or out.
In some cases, you can reserve the book until you can get there to check it out. Also, see if your
local library can get books from the university library on inter-library loan.
2. Brains—These days, many faculty members consult in both technology and business areas.
Since they are local, you save expenses over out-of-town consultants, and having them nearby
can greatly improve communications. A couple of chats over coffee in the faculty club can
sometimes accomplish more than a dozen expensive long-distance phone calls or flying in an
expert. In addition, campus-related brainpower comes in the form of simple business contacts.
Colleges and universities deal every day with a wide variety of business people in the form
of vendors, fund raisers, benefactors, directors, contractors, and even parents. Academic events
of all types are opportunities to rub shoulders with such people. In the course of attending
academic events, we have met web designers, programmers, bankers, and funding contacts.
3. Bodies—Then, we have that great pool of energy: the student body. But don't just think of
students as bodies you hire part time to stuff envelopes. Think of them as smart, ambitious
people with credits to earn. Do you need software written? Check with the computer science
department to see if anyone needs to do a project for credit. You should also check whether the
school has an internship or cooperative program. Or perhaps a team of undergraduates in a
business course needs to do a marketing study or focus group.
Getting Results
Our company has benefited enormously from access to academic resources. When we were
considering an opportunity to work with a local start-up, we turned to the UVA library for
engineering books to help us evaluate the company's technology.
Through our work with local entrepreneurs, we met the president of JMU, who invited us to sit
on the regional technology council in our area, spawning more contacts for our company. One of
those contacts was a JMU professor, who is now our partner on a proposal for funding from the
National Science Foundation to develop a new way of looking at environmental data sets.
During the past academic year, for a modest fee, JMU students did three marketing studies for
Omnet, an invaluable resource as we attempt to find new markets. We briefed the student teams
and their professors about what our business is and what we were interested in learning. After
preparing plans and getting our approval, they did the legwork and research. (In one case, we
were invited to watch the focus group session from an adjoining room through a one-way
window and were given a videotape afterward.) Finally, they prepared presentations for us.
In these studies, we were trying to get a handle on the market among professional associations in
the United States for managed on-line membership services. In some cases, we and the students
interpreted the data differently. In one, they wrote off any organization that was not already
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providing some on-line services to its membership. We figured, however, that those could be
prime prospects. In any case, we were able to discuss our differing interpretations with the
students. After all, they're students. That's why they are taking the course. They learned
something, and we got some very useful data, which helped us focus our marketing efforts in this
new area.
This fall, another student, a senior majoring in computer sciences, will be onboard at Omnet,
working on a programming project for us. She was steered to us by a professor in her department
whom we had briefed on the projects we have available. She gets academic credit, and we get
some software written, as well as—who knows?—a future employee?
You may also find, as we did, that making regular forays to the library and working with a bunch
of bright young students and faculty will keep you on your toes. Just explaining your business
forces you to think about what it is you are really doing. Working closely together 24 hours a
day, my wife and I were perhaps a bit lax at writing down formal plans. In order for the business
students to do our surveys, we had to give them a clear picture, in writing, of what we were
doing and where we wanted to go. In the process of preparing those briefing papers, we
discovered questions that we had never discussed.
Making Contacts
Suppose there is a school near you. How do you make contacts in that forbidding ivy-covered
citadel across town? Each school—each department, for that matter—has its own style, culture,
and rules. You might start by walking around campus. Get a good map and a copy of the
campus-activities listing. (You will probably find an events schedule on the Web site, but
frequently the printed version is more complete. At some schools, you'll find stacks of them at
strategic points on campus.)
In addition to finding out about business-oriented outreach events, look for seminars and talks on
technical topics that might be of interest. Sit in the back and listen. Frequently, such talks finish
up with coffee and doughnuts and a chance to meet the speaker or chat with other people who
were in the audience.
On the other hand, you may have a specific project in mind and need a carefully targeted contact.
In that case, an organization like Virginia's CIT is invaluable. Most universities have set up
special technical centers to, in part, facilitate working with businesses. Some federal and state
technical-development grant programs, such as Small Business Innovation Research, or SBIR,
grants, require that you have an academic partner on your proposal. These technical centers are a
perfect way to locate one.
Contact them and find out what they do and how they work. But note that these centers tend to
be more project-oriented, so you need to know pretty much what you need and want before you
make contact. We currently have one proposal pending with a federal agency in partnership with
a lab at Virginia Tech, and another proposal in preparation in collaboration with UVA for direct
funding by CIT. The universities supply technical expertise under our direction, and we will
commercialize the product resulting from the development work. CIT puts in one-fourth of the
seed funding, and we come up with the remainder.
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On the downside, be prepared to work within the academic year, and remember that neither the
professors nor the students will work on your project full time, so it will take longer than if you
bought a solution from a consultant or commercial outfit.
Your local institutions of higher learning are vast reservoirs of management training, business
help, youthful energy, and technical expertise. Check them out and see what they have that you
need.
Learn From Others
Experienced independent professionals know that working solo is not working alone: We have
clients, suppliers, support services, and the like. So the ROI (return on investment) we gain by
learning from other is incalculable. Here are three ways to extend and strengthen your
connections with the many individuals who make important contributions to your work and your
life.
• Infect your staff with the learning bug. One of the most valuable benefits you can offer
your staff is your enthusiasm for lifelong learning. The time, energy, and dollars you
invest in employees—whether they’re freelance, part-time, or full-time—to expand their
knowledge and skills helps you and your business, too. Set aside time and budget for
their training.
• Expand your network. The strength of your business is directly related to the depth of
your network of advisors, colleagues, and friends. Never stop reaching out and making
new connections. Some entrepreneurs set specific targets for contacting potential new
sources—say, two a week. Others make a point of accepting invitations to business
networking events and then working the room.
• Find an approach that best fits your style, then use it. Give as good as you get. Often
we learn the most about ourselves when we’re learning about and helping others: We
realize we’re stronger than we thought; we acknowledge that we’re talented and capable;
we see how far we’ve come. So be generous in you support of others. You will be repaid
many times over.
Learn From Resources
Set aside specific amounts of time, energy, and/or funding to explore some of the innumerable
opportunities knocking on the doors of today’s solo entrepreneurs and small business owners.
Don’t let the good ones pass you by. Here are three areas worthy of your commitment:
• Earmark 5 percent of your annual revenue for personal and professional development.
Figure out how you learn best—by reading, by listening, or by other means—and find
ways to incorporate that process in your life. For example, attend a conference, listen to
audiotapes while running errands or at the gym, or read at least two new books each
month.
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• Focus on one new area. Maintaining focus is particularly important when you’re
expanding your knowledge base—there’s so much out there! Set up your learning
program so that you derive maximum benefit. For most of us that means making a
commitment to mastering one specific area at a time. Let’s say you dedicate June to
mastering that spreadsheet program you bought and never use, or choose tomorrow
afternoon to really learn to make use of all those great capabilities that convinced you to
buy that new printer. Or designate next quarter for learning how to create an effective
email newsletter. You get the idea.
• Try something brand-new—just for the learning experience. Don’t become so intent on
keeping all the business balls in the air that you become too timid to step outside your
frame of reference and take a risk. Doing so can bring unexpected paybacks—and lead
you straight into your future. For example, about 10 years ago I launched a small mail-
order project to sell a set of sample sheets of laser printer papers. At the time, I knew
little about mail order. I invested $5,000 in the project, knowing that if nothing came of it
I still would earn what I called my MBA in direct mail.
Ultimately, the project brought me only a modest financial return, but what I learned was
significantly more valuable than the original investment. Among other things, I discovered the
challenges of selling a $20 product by mail, the profit limitations of a single-product company,
and what to do when you land an article in the Sunday New York Times and your phone rings
nonstop. Most of all, I learned what’s needed to make mail order work for my business, on my
scale.
Mentoring Is for Entrepreneurs, Too
Let me tell you a story that I think says a lot about how entrepreneurs interact with advice-givers,
who are often called "mentors." While mentoring is a given in corporations—indeed, careers rise
or fall upon associations with powerful senior executives—entrepreneurs tend to shy away from
the concept. By nature, entrepreneurs are more likely to be lone wolves, rugged-individual types
who think they can do it all themselves. To be fair, building a company on one's own doesn't
leave much time for cultivating mentoring relationships, even if there were scores of potential
mentors waiting to be cultivated—which for entrepreneurs, there usually aren't.
So consider how I once interacted with two of my mentors. In 1989, as I did occasionally
throughout my career, I went to see the late Ewing Marion Kauffman, the founder of the Ewing
Marion Kauffman Foundation, a non-profit organization based in Kansas City, MO. Kauffman
gave me advice from time to time on how I should run my business, a jewelry chain called
Helzberg Diamond Shops, also based in Kansas City. This time, Kauffman spotted a potential
problem that I hadn't yet sighted on my own radar screen. He said my company had gotten too
big, that I needed "depth of management." I went home and promptly did nothing.
Then I went to talk things over with another person, Bob Schweich, a retail analyst on Wall
Street, whom I had met as a youngster when we were cabin mates for several summers at an
overnight camp. I had long admired Schweich's analytical skills. Schweich gave me the same
advice, and I went home and promptly did the same thing: nothing.
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Finally, when Schweich came to Kansas City on a business trip, we went together to Kauffman's
office. It turned out that my two mentors had rented hobnailed boots. In the boots, they jumped
up and down and all around, insisting that I bring new management into Helzberg Diamond
Shops. It was only then that I acted. I hired a president, naming myself chairman, and also a new
merchandising chief.
The results speak for themselves: Within five years, I was able to achieve a goal that had eluded
me for years. Specifically, at Helzberg Diamond Shops, per-store volume more than doubled to
well above the industry average. In 1995, I was able to sell the company for a lot more than I
otherwise would have gotten.
Becoming a Believer
My experience turned me into a believer, anxious to bring the message of mentoring to
entrepreneurs. So in 1995, I founded the Helzberg Entrepreneurial Mentoring Program, or
HEMP, aiming to do, at least for entrepreneurs in the Kansas City area, what I couldn't do (at
least on some occasions) for myself: make the best of such relationships.
At HEMP, results have been encouraging. Owners of 32 young companies—typically two to five
years old, with 10 to 20 employees, and with more than $1 million in annual revenue—have been
coupled with 35 seasoned business owners who have agreed to serve as "mentors." All of the
mentors are actively engaged in their own companies; more often than not, the pairings involve
mentors and proteges who aren't in the same industries. I myself serve as a mentor to six
entrepreneurs. I also teach a course called "Achieving Management Excellence" at Rockhurst
College in Kansas City, MO, in which I emphasize mentoring, further spreading the word.
Accepting Advice
From my experience as both a recipient and giver of advice, I have a few points to make to
today's entrepreneurs:
• First, forget "Atlas Shrugged." Even entrepreneurs can benefit from assistance from the
outside. Advice might be easier to accept if you, the entrepreneur, also forget the word
advice." Think of mentoring, as I do, as marinade for the brain, making your thought
processes clearer, sharper and more richly seasoned.
• Second, seek advice from multiple mentors. If mentoring is marinade for the brain,
consider that a marinade is comprised of many ingredients. If you get a good idea from
one outsider, namely A, another good idea from B, and a third from C, chances are your
solution will be X. That is the composite of the good ideas from each of the outsiders plus
your own good ideas. In all cases, help from at least a couple of mentors outweighs a
mantra from a lone guru.
• Third, peers make terrific mentors. In corporate parlance, mentors are generally older and
wiser executives. As an entrepreneur, you needn't be so limited. While for me the late
Kauffman was indeed of the older and wiser vintage, consider my camp buddy, Bob
Schweich. Though a contemporary, he brought to the table a set of skills that were
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different from my own and from which I could benefit. Considering this, at the Helzberg
Entrepreneurial Mentoring Program, we encourage young entrepreneurs to serve as
advisers to each other's companies.
• Finally, and most of all, it's the chemistry that counts. At HEMP, we strive first and
foremost to pair people who work well together, humbly acknowledging that we won't
always be right about something as elusive as chemistry. What we do know is that
simpatico has little to do with superficial factors, such as mentor and protege being in the
same industry. That's one reason why most of our pairings aren't industry-specific. We
also know that we want our pairs to develop associations that continue throughout the
years. When we succeed, there are no words to describe the sense of accomplishment;
when we fail, we uncouple, re-couple, and move on.
Giving Advice
Now, I have some advice for the advice-givers. Once again, let me illustrate with a story. When
my father would consult with his attorney, he would go armed with a list of questions. During
the meeting, he would raise the questions, then proceed to provide his own answer to each of the
questions. Finally, he would turn to the attorney and say, "Why am I paying you $100 an hour
when I'm supplying all of the answers?" Well, that's one great way to be a mentor: like my
father's attorney, simply listen.
Another good way is to enable the advice-seeker to come to his or her own decision, by
suggesting that the person list, on a long sheet of yellow paper, the pros and cons of several
possible approaches. Only when the protege persists should you take the next step and actually
offer advice—and only after taking care to couch the advice so that it doesn't sound like advice.
One of my favorite phrases is: "In my opinion, I'd do it this way..." With any of these three
techniques—in my opinion, in descending order of preference—I believe a mentor fulfills his or
her obligation: that of forcing a protege's own thought processes to solve problems.
One last piece of advice, if I may: pass it on! Not only does being a mentor make good business
sense, but it also might be the only way you can thank your own mentors. One day, as I tried to
thank Ewing Marion Kauffman for his years of support for me, he said, "That's OK. Someday
you will help someone, too." With the Helzberg Entrepreneurial Mentoring Program, I'd like to
think I'm doing just that.
Web
5 Ways to Make the Most Out of Social Media for PR
Social Media has taken over most conversations in the realm of communications and marketing.
Some people think that social media will cure all. The truth is that the technology behind social
media has just made it easier for professionals in the communications industry to connect with
their audiences more than ever before.
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This brings up the question of who is the audience. Today, that audience is vast. It’s no longer
just the traditional media, but really, anyone who wants to exercise their voice. According to the
2009 Edelman Trust Barometer, people trust “a person like themselves” more often than anyone
else. The survey also revealed that 60% of people need to hear a message 3-5 times in order to
believe it.
So, how can you make the most of social media?
1. Listen – Listening is often rule number one. Learn how to listen and learn from multiple
platforms online–blogs, YouTube, Facebook, forums and more. The better you listen and learn,
the better you are going to be able to create a relationship with your audience. There are lots of
tools to help you listen from free tools like RSS readers to tools like PR Newswire’s Social
Media Metrics.
2. Multimedia – Today, it is said that YouTube is now the second largest search engine. If you
want to reach people where they are, then use of video is a great way to reach a fast growing
audience. More than just reaching your audience, it’s about allowing them to find you in search.
3. SEO (Search Engine Optimization) – Today, we have to think about search in everything
that we do. Understanding how people look for and find your information is incredibly
important.
4. Share – If it is true that people trust “a person like themselves”, then we need to make sure
that our content today (whatever form that content is in) is easy for people to share with their
friends or peers.
5. Transparency –Today, more than ever, we have to be transparent in everything that we do.
Companies need to be transparent about the messages that they are sending and conform to the
platform you are on.
Finally, don’t be afraid to try something new. Social Media for brands is all about
experimentation. Focus on what your goals are before trying something and that way you can
measure whether it’s a success or just simply time to try something else.
Visit PR Newswire's PR Toolkit to access practical tips and resources to help you create an
effective public relations program for your small business. You’ll receive a free annual
membership ($195 value) and more than $2,000 in discounts and free services.
Choose a Turnkey Solution Provider To Build Your Small Business Site
If your company has a staff of Web designers and programmers, or a budget to hire savvy
Internet consultants, you have a broad range of options for building a Web site. But for small
businesses with limited staff and budget resources, a turnkey solution may be more appropriate.
You'll need to determine what features you need in order to choose whether this is the right
approach for you.
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Once you've decided to go with a turnkey solution, you'll need to compare features and costs
among providers. Do your homework to find a turnkey solution that's a good fit from the start to
avoid unexpected fees, restrictions and service problems that can accompany making an
uninformed choice. Once you've identified a prospective turnkey solution provider, you need to
determine whether they can really perform and clarify the solution's features and costs before
signing up.
Decide Whether a Turnkey Solution Is Right for You

Claims of implementing a complete Web site in 10 to 15 minutes may be exaggerated, but
turnkey solutions do offer a quick and affordable means of taking your business online. The
turnkey provider builds your site for you, so you don't have to learn the technology yourself. But
before you decide to use a turnkey solution, identify your Web site requirements and business
objectives, then closely consider the various features and costs to determine whether a turnkey
solution will meet your needs.
Identify The Features You Need in A Turnkey Solution

Whether you're building a storefront that requires a merchant account and inventory management
software to handle sales or just an online brochure-style site with dazzling photos and a map to
your brick-and-mortar location, there's probably a turnkey solution that can meet your site
requirements. You'll need to determine what features you need to choose the right one.
Evaluate Your Turnkey Solution Options

If you've decided that a turnkey solution can offer the features you're looking for, comparing
features and costs among the available providers is the next step.
Search for a Turnkey Solution Provider

Do your homework to find a turnkey solution that's a good fit from the start. Avoid unexpected
fees, restrictions, and service problems that can result from making an uninformed choice. After
taking the time to design and market your site, you don't want to have to start over because your
solution provider doesn't meet your needs.
Test Your Prospective Turnkey Solution Provider

Once you've identified a prospective turnkey solution provider, you need to determine whether it
can really perform.
Sign Up with a Turnkey Solution Provider

Before you sign up for a turnkey solution, it is a good idea to make a list of your requirements.
Once you've found the turnkey solution that looks like it will meet your needs, carefully read the
terms and conditions of use to make sure you haven't missed anything. Note what your
understanding is of the fees, contract terms, services, features and technical support, and look for
specials.
Communicate With Your Web Customers To Keep Them Coming Back
Whether on the Web or in the bricks and mortar world, business owners devote a great deal of
time to reaching new customers. But what about keeping the customers you already have? That's
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just as important on the Internet as in the "real" world. Thanks to emerging online technologies,
staying in touch with your established customers—and building loyalty and repeat business—is
often easier on line than on land. Here are six ideas to help you build customer loyalty on the
Web.
1. Provide a Personal Touch.

A personal touch can make all the difference. Customers should feel like you're connecting with
them one-to-one. In the online world, email is a powerful tool to help achieve that.
After a customer makes a purchase or inquires about your products or services, send an email
offering thanks and asking about the experience. If the customer is unhappy and replies to your
message, you have an opportunity to correct the situation—and create an experience that helps
build customer loyalty.
Make sure that customer email inquiries are routed to a person who can answer them in a timely
manner. Generally, people expect an answer within 24 hours.
2. Make Every Visit to Your Site a New Experience.

Regularly provide new information on your site, such as product updates, tips, special offers and
promotions that encourage your customers to visit frequently. Highlight information that is likely
to matter to your customers. For example, if you're in the gift business, provide reminders of
upcoming holidays; if you're an accountant, offer financial and tax-saving tips to help your
clients.
Always welcome back your customers, too. Now, Web site building allow personalization
—"Welcome back, Kathy"—each time a customer visits. By personalizing, you establish a
positive, friendly tone. In fact, small business owners who have built sites on Bigstep.com report
that personalization is one of their most customer-pleasing features.
3. Create a FAQ.
A FAQ is a page (or set of pages) that contains Frequently Asked Questions and is one of the
most helpful resources a business owner can offer. FAQs are presented in a Q&A format, with
topics appearing in the form of questions that either have been asked by customers or have been
formulated to resemble real questions.
First, think of the questions your customers or prospects are most likely to ask. Then, invite them
to understand the answers in your FAQ area. If your answers are clear, concise and informative,
you impress customers immensely. Moreover, at any time, from anywhere in the world,
customers can find answers to questions they have at that very moment.
4. Set-up a Customer Database.

Gather email addresses at your Web site when people register at your site, purchase a product or
sign up to receive your e-newsletter. With integrated e-business services like Bigstep.com, when
customers place orders on your Web site or sign up for your e-newsletter, they'll automatically
be added to your customer database.
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Ask questions that help you categorize visitors. The more information you gather during the
registration process, the easier it is to customize email campaigns. After you get a substantial
number of email addresses, consider targeting a specific email message to a select portion of
those visitors. For example, the owner of a wine shop might ask customers whether they prefer
red or white wine. Then, when the shop is overstocked in Merlot, the owner can send an email to
the customer group that prefers red wines.
5. Survey Your Customers.

Asking for feedback from your customers is one of the best ways to get information about
improving your products and services—and an online survey is a fast, convenient and
inexpensive method to gather information, including:
• What do your customers want to buy?

• How do they like your current product or service?
• How would they improve it?
• What do they think of your competition?
Remember: always respond quickly to your customers with thanks and praise for their
participation and good ideas. This helps create the bond that keeps customers for life.
6. Develop Your Own Customer Loyalty Program.

Retailers have long sought to retain good customers with incentives. For example, Loehmann's, a
women's clothing store, sends coupons to customers with discounts that are in proportion to the
amount of money spent by the customer over the preceding season. Grocery stores have reward
programs that give customers special discounts based on spending above a certain level.
Always reward your best customers. If a customer purchases a certain dollar amount this month,
send him a coupon for a discount off his first purchase next month. Be as creative about using
the online world for loyalty-building programs and promotions as businesses are in the "real"
world.
Final Thoughts.
If you're doing business on the Web, collecting and acting on customer input is easier than ever.
Good customer service makes your customers feel like members of a special community. If you
make your customers feel like members of this community, they will look forward to visiting
your site repeatedly.
Ellen Leanse is Director of Membership for Bigstep.com, a free, all-in-one service that lets small
businesses easily build their Internet presence. Before joining Bigstep.com, Leanse led loyalty
marketing initiatives at Apple Computer, Inc. She has also run a home-based business for nearly
30 years.
Costs of Installing a VoIP System
Most businesses are aware of the reputation of VoIP systems–they are very cost-effective, easy
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to use and quick to install. Even so, it is important to take all potential costs into account before
making the switch to a VoIP system.
The best way to maximize savings is to choose a reputable VoIP provider. Providers with
experience in your industry or those that have worked with businesses similar to yours can offer
you advice, tips and tricks to help you make the most of the switch. Reputable providers can also
offer discounts on phones and adapters, can help you install the system quickly and can provide
maintenance as you use the system over the years.
A basic VoIP service package is billed to you similarly to traditional phone service. You’ll pay a
monthly charge for your internet connection and a charge for phone system services such as
voicemail, conference calling, etc. If you use a hosted system, you’ll pay for these minus
equipment charges–hosted providers maintain and repair all equipment at a separate facility.
Internet service providers charge for internet connections based on service and speed–the faster
the connection your system requires, the more costly your monthly bill. In addition to these
monthly service costs, consider the following expenses associated with installing a VoIP system:
• Start up costs: The actual installation of system equipment will not be included in a
monthly service charge. Service technicians will test your current internet connection,
make sure your office has a stable power supply and ascertain whether your connection is
fast enough to support a VoIP phone system. You may need to install additional routers
or other equipment as needed.
• Training: If you plan to use advanced or tracking features, you may want to have the
VoIP service provider train you in their use. You can also ask for a training session for
employees. Training is a “hidden” cost of switching–you’ll need to pay employees for
their time as they learn how to use the new system.
• Operational costs: These costs include equipment upgrades and maintenance charges.
Some providers charge monthly fee for maintenance and charge for upgrades as they are
needed. Whichever route you choose to go, make sure that your maintenance contract
establishes acceptable “downtime” and the wait time for a service technician.
New offices without an established internet connection usually find VoIP phone systems
especially cost effective, because you can configure connection requirements to fit the system
before any routers or equipment are purchased or installed. There is also no need to dispose of
older telephone equipment, purchase adapters or make adjustments to your current system to
support VoIP calls. Choosing to install a VoIP system in your new office can save your business
a considerable amount of money.
Resource Nation is your source for small business success providing how-to purchasing guides
from VoIP services to phone systems. Resource Nation also helps businesses select and choose
vendors in over 100 categories.
Design a Customer-Friendly Site

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To be a successful online merchant you must provide a product your customers want to buy, a
well-advertised place where your customers can find you, and a comfortable way for your
customers to make their purchases.
In the winter of 1998, researchers from Consumers International (CI) ordered 151 items from
Web sites based in 17 different countries.
This extensive study, prepared jointly by consumer organizations in 11 countries, provides a

template for a business-to-consumer e-commerce site. In response to its findings, the CI
organized the online buying process into three parts: the ordering process, the delivery process
and the returns process. This checklist uses the CI findings to guide you through the design of a
consumer-friendly e-commerce site.
Review the Consumers International Findings

The results of the Consumers International study show that both retailers and regulators have
much work to do before the Internet can offer a reliable environment in which consumers can
shop with confidence.
Provide Complete Information Throughout Your Ordering Process

The quality of the information provided on your site before, during, and after the ordering
process determines how comfortable consumers feel purchasing items from you.
Set and Fulfill Expectations in the Delivery Process

You can manage your customers’ delivery expectations by confirming their order, debiting their
account only when their order has been shipped, notifying them when the goods ship and making
sure that the price they were quoted is the price they are charged (with minor variations allowed
due to exchange-rate fluctuations).
Clearly Define the Returns Process

Straightforward communications with your customers about your returns policy can improve
your customer retention. You should include a written explanation of your returns process in
every package you ship and take time to streamline that process. In addition, you should post any
costs associated with returns and review your policies on returning goods or any restrictions that
discriminate against overseas buyers.
Know Consumer Rights and Protections in the U.S. and Other Countries
Wherever a transaction is conducted, the consumer must not be deprived of the protections
offered by the law of his or her own country of residence. It's your responsibility to become
familiar with the expectations of your market. In addition, several international governmental
organizations are also working to define new rules to cover e-commerce transactions.
Design Your Web Pages for Fast Loading
As they watch page after slow-loading page gradually appear on their computer screens, some
folks have started to refer to this medium as the World Wide Wait. There is no good reason that
your Web site should exacerbate this problem when it is so easy to optimize your pages so that
they load quickly.
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Make Your Pages Small

Not small in dimension, but small in the number of kilobytes (K) of information they contain.
The size of a web page is the sum of the page's HTML code and all the scripts, text and graphics
that go on the page. Research shows that the optimum load time for a Web page is one second,
but Web users will tolerate load times of 10 and even as many as 15 seconds. In order to load
within 15 seconds over a typical modem connection, this means that any one page's total size—
HTML, text, and graphics—should be less than 30K. If your pages are larger than this, you will
lose customers who don't feel like waiting for your pages to load.
According to a recent survey, the average page on the Web now is 60K (up from 44K in an
earlier survey). The good news is that half of the Web sites surveyed met the 30K-per-page
criterion. It is not difficult to keep your pages under 30K—if you avoid unnecessary and/or
unnecessarily large graphics and create a site design that specifies reasonably sized blocks of
content on each page.
For examples of how to keep your page size small (but still attractive and functional), check out
the major search sites (e.g., Yahoo! and HotBot) and the big e-commerce sites (e.g.,
Amazon.com and Dell) and note how quickly they load. Then check out your competitors, sites
and see how quickly they load.
Making your site load faster than your competitors' is a first step toward dominating your
market.
The very nature of the Internet makes small, fast-loading pages even more important. Your
customers' browsers are at the end of a long line of potential bottlenecks. Any and all of the
following factors can affect the download time of your page:
• The performance of the Web server your customers are getting your page from
• The speed and reliability of that server's connection to the Internet
• The amount of traffic on the Internet when your customers request the page
• The speed and reliability of your customers' connection to the Internet
• The power of the computer their browser is running on
Unnecessarily large Web pages just add another potential snag to this list.
Use Tables and Frames Wisely

Most Web pages use tables to create appealing and useful page layouts. Clean, simple HTML
coding and imaginative layout can speed the loading of the content that appears in the tables on
your pages. Browsers load the layout of each table before loading the content into it. If you put
all the content on your page into one table, then your customers will see only a blank page until
the layout of the page is completed. Your customers may get impatient and leave while the page
finishes loading, or they may think there is something wrong with your site or their computer.
You can prevent this problem by using a layout composed of several different tables. That way,
instead of a blank page your customers will see, for example, quick-loading header and
navigation tables while the (usually bigger) content table loads. Webmonkey has a page that
shows you how to do this.
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You can further streamline your page-load times by using the WIDTH attributes in your
<TABLE> and <TD> tags. Specifying the width of all your tables and each of their cells helps
the browser render the tables more quickly. Be careful if you "nest" tables (that is, put a table
inside of another table). This adds complexity to the layout, which may bog down your
customers' browsers.
Using frames for your pages is generally not a good idea. The Web is a hypertext medium, but
frames can quickly undo the hypertextuality that makes the Web go round. Frames-based sites
typically abandon the page metaphor that makes the Web work, creating all sorts of navigation
problems and logical conundrums for customers (e.g., "Why does my 'back' button work this
way on non-frames pages and that way on frames pages?"). When a site is built entirely within
framed pages, customers lose the ability to bookmark pages for later reference. This is because
the display they are looking at no longer has a unique URL associated with it. In addition,
frames-based sites seem to suffer from many more display problems than table-based sites.
Use Text Instead of Graphics Whenever Possible

One picture may be worth a thousand words, but on the Web you might want to use the words
instead of the picture. The 7K of space that 1,000 words take up is enough room for only one or
two small web graphics. If a piece of content such as a navigation menu choice or a headline can
be portrayed with words, it is generally a good idea to do so (and it is relatively easy to do so in a
graphically pleasing fashion by combining different font faces and colors with background
colors).
One notable exception to this rule is when you need to control the look of your logo or another
image that contributes to your brand identity. Another exception is when the same graphic will
be used on most pages in your site. In this case, the image will be in your customers' browser's
caches, and therefore won't be downloaded for each page.
Many graphic designers dislike the lack of typographic precision that HTML entails and try to
regain control by rendering type with web graphics. This can make it difficult to keep your pages
in the 30K range. If your designer tries to convince you that the word "catalog" needs to be
portrayed with a 1.1K graphic, ask whether they could make a 0.01K text representation work as
well. Whenever you use Web graphics, be sure to include the ALT, HEIGHT and WIDTH
attributes in your <IMG> tag.
Use Browser Gadgets and Enhancements Sparingly

In general, it is a good idea to stay away from the "bleeding edge" of Web-browsing gadgetry.
The number of your customers who will benefit from gizmos such as RealMedia or Flash plug-
ins and Java applets is still relatively small. And while they offer a lot of promise to Web
developers, cascading style sheets, dynamic HTML and similar advances are supported only by
the latest browsers. Furthermore, as long as the percentage of browsers that supports any of these
enhancements is less than 100 percent, you will want to provide a lower-tech alternative for your
trailing-edge customers. You can do your customers a big favor by doing your cool stuff (e.g.,
dynamically generated pages out of a database) on your server and giving your customers clean,
simple, fast-loading HTML pages.
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The Bottom Line

Don't exacerbate the World Wide Wait. By optimizing your pages so that they load quickly you
make it easier for your customers to shop at your site, and you reduce the risk that they will leave
your site entirely rather than waiting for your pages to load.
workz.com is the trusted information and services community that helps small businesses grow
and prosper online.
Determine the Goals for Your Small Business Web Site
To ensure that your site benefits your business and its users, clearly define your site goals from
the beginning. Focus on a primary function and build your site around delivering that to your
visitors. Clearly defined goals will help to keep your priorities in perspective as you manage the
process of building your online presence.
You'll need to balance your business goals, the needs of your audience and your resources to
create an effective Web site. You'll also want to keep in mind your longer-term goals, so that you
design your site with some room to grow.
Some common goals for Web sites are:
• Online sales. If your primary business is selling physical goods, focus on creating an
online store that gives visitors a sense of place (so they can easily find what they are
looking for) and makes purchasing simple and easy.
• Marketing. If your primary business is delivering an offline service, you may want an
online brochure. This sort of Web site can deliver useful, practical information about
your service and enable you to develop your image and build trust and customer loyalty.
• Online service. If you deliver an online service, you'll need to build an infrastructure for
the delivery of your service. This type of site is more complex than the first two and
requires you to anticipate what you'll feature in your product catalog and how you'll
handle online payments and process online orders.
• Information delivery. If your primary business is publishing information, then your site
will be some form of online publication. You'll need to determine how to charge a fee for
your content. You can do this either through subscriptions (which you could bill monthly
or annually) or on a per-use basis (which may require that you use sophisticated
applications to handle billing through your Web site).
• Customer support. While every business with a Web site may want to provide some
level of customer support, a higher level of support will require a much more
sophisticated design. Whether you're selling directly from the Web or from a physical
storefront, providing up-to-date product information, tips and tricks for using your
product, and a page for frequently asked questions makes it easy for customers to get the
information they need. You may want to plan to automate these functions.
Regardless of the primary purpose of your Web site, a number of design fundamentals apply
broadly to all good Web site design. One of the biggest shortcomings of many Web site designs
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is a failure to put the needs of the customer at the forefront.

Give people what they want. It seems obvious, but sometimes we forget and give people what we
want instead of what they want.
and prosper online.
Develop and Post Your Online Media Kit
Some sites choose to publish rates on their site, while others prefer to list only a contact email
address. Either way, make sure you post the rest of your online media kit in a highly visible spot
and keep the URL handy to email to interested advertisers. Some companies also print this
information to send via snail mail.
Here are some items to include in your media kit:
Site description. Help your advertisers understand your site by giving them a quick overview.
Don't make them search your site to learn what you have to offer—give them a quick one- or
two-paragraph description right in your media kit. Here's an example for a fictitious site called
Puppysupplies.com:
"Puppysupplies.com is an online pet store specializing in supplies for young dogs. From pet food
to toys, Puppysupplies.com is the Internet's largest provider of pet supplies to help nurture your
puppy through his first year of life."
Potential advertisers, such as veterinarians or dog trainers, immediately understand the scope of
Puppysupplies.com and can make an instant judgment about the site's content in relation to the
viewers they are trying to attract.
Rates. Top sites, with close to a million page views per month, can demand top dollar. Ads sold
per impression are typically less expensive than ads sold per click-through. Ads sold on a CPC
(cost per click) basis pay only when a user clicks on the ad. Thus, for the advertiser to make
money, they will have to sell many more CPC ads than they would cost-per-impression ads. The
basic rule is that the more targeted your advertising gets, the more it should cost.
List your CPM and the minimum number of impressions (page views) an advertiser can contract
for. Decide also whether you'll give discounts for larger contracts and if you'll pay the standard
15 percent commission to agencies.
Banner Ad Sizes. Industry standards are 468 x 60 pixels and 234 x 60 pixels. State a limit in
kilobytes to keep downloading times to a minimum. (7-12KB is a good range to shoot for.)
Traffic. If possible, give a monthly total of page views, number of visits, average visit length,
most popular days and times and most frequently requested pages. (Your banner ad rotation
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software may provide this information for you.)

Demographics. List demographic information such as gender, age, household income,

geography and buying habits, if you have this information available. This is very valuable to
your advertiser and will help you ensure your site is filled with advertising messages that are
appropriate to your audience.
Auditing information. If you have independent audit information, list it on your rate card. This
shows that the information you are presenting is accurate and nonbiased. Smaller Web sites may
not be able to afford this luxury, however. For auditing information, visit the Audit Bureau of
Circulation, BPA International, or Nielsen Media Research.
and prosper online.
Develop Procedures To Update & Proofread Your Content
New and fresh content on your site will attract new visitors and keep your current site users
coming back. These checklists cover procedures for updating and refreshing your content,
including creating content, maintaining site structure and navigation, checking your links and
more.
Proof Web Site Content

Before you publish any new or revised content on your Web site, take the time to double-check
your work. Proofing is even more important for Web content than for your print ads and other
materials—a single typo can ruin links and keep your pages from being displayed. Mistakes can
be embarrassing and even costly. Completing this checklist will help ensure that your visitors see
the content you want them to see.
Proofread Your New Content

Spelling errors and other mistakes can diminish your credibility and turn off potential customers
and lead to costly customer service problems. Plan to proofread everything you publish to ensure
professional, organized content.
Verify Your HTML Code

Verifying the HTML code that makes up a Web page requires more than viewing the page in
your browser—there are several different browsers, each with several versions, and pages don't
always work the same in each. HTML errors can also open up security holes in your pages,
exposing your site (and your customers) to trouble. Use this checklist to ensure that your HTML
code meets all standards and produces your web pages the way you want them.
Check Your Links

Adding or editing content on your Web site often involves reworking your links—adding new
links so visitors can find new content and editing current links to reflect changes in your site
structure. Link management doesn't need to be a time-consuming chore.
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Review Look and Feel

Visitors experience your site in different ways depending upon their browsers, connection speed
and preferences. Don't let hastily published content ruin their experience. This checklist will help
you ensure that site changes fit in well with the rest of your content, programming components
still function, graphics display properly and other elements that make up your site's look and feel.
Confirm Accessibility
Adapting your content for disabled Web surfers is not as difficult as one might expect. A few
simple steps can make your Web pages accessible to people with sight, hearing and motor-
function disabilities.
and prosper online.
Develop Your Small Business’s Technology Plan
Here's a checklist for deciding what your site should be able to do—its functionality. All of the
items on this checklist require a fair degree of consideration, but you can drill down on any of
them to find the information you need to make decisions. You don't have to complete all of these
items but you should consider them all, regardless of the scope of your Web plan. Even if you
plan to do it all yourself after work from your home office and your garage, you should still
review the entire checklist.
The benefits you get from a little up-front technology planning include:
• Lower programming costs

• Less development time
• More control over your information systems
• Stronger model for integrating online sales with your other business systems
Completing this list will yield a complete list of the hardware, software and services you
need to launch your web site. Within each checklist item prioritize the capabilities you want.
Your priority list will help you make compromises later on in the development process. It will
also help you develop a multi-phased roll-out of your Web site's capabilities that will allow you
to test key systems individually and add incremental improvements to your site.
Of course, everything you "decide" here will likely change once you get into actual site
construction but after this process, you'll know exactly what your compromises mean.
Define the Optimal Visitor Experience

Market research will help you identify the common browsers, modem speeds and other restraints
in the computing power of your target market. This helps you avoid developing site technology
that your customers don't have the capabilities to use. For example, knowing 40 percent of your
prospective customers still connect via 14.4 kbps modems will definitely impact the number and
size of graphics you use on a given page, as well as your use of Java, JavaScript and other
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programming tools and techniques.

Evaluate the Technology Required to Deliver Your Content

Content is a combination of text and graphics that showcases, merchandises and sells your
product or service. Different kinds of content require different kinds of technology to serve to
customers. Your designated site producer should be involved at this level, to define the customer
experience as an integral part of defining the site requirements. There are two parts to this
discussion: content serving and content retrieval.
Plan to Track Prospects and Customers through Your Site

Tracking your customer through your site is the equivalent of watching a customer evaluate your
merchandise and interact with your sales force. Most ISPs and hosts provide some minor
enhancements that let you analyze traffic trends on your site. As you get more sophisticated in
marketing to your customers, you may want to add tools that can track unique users through your
site in real-time, presenting targeted offers or advertising. This requires additional site tracking
technologies and incurs higher technology costs.
Define Your Order-Processing Needs

Your e-commerce software will be responsible for taking your customer's order and transmitting
it to you. You'll have to decide whether you'll accept credit cards online and a host of related
decisions that will impact your technology investments. For example, the decisions you make
will also impact the integration of your e-commerce software with your back-end systems.
Throughout the site development process—and on into your improvement cycles, once you're up
and running—you'll be making decisions on order processing software and services that trade-off
cost, features and development time.
Specify Your Site Maintenance Requirements

Your site maintenance requirements will vary depending upon the volumes of visitors or
customers you expect to attract. For example, a highly trafficked site conducting time-sensitive
transactions, such as a securities trader, will require fast access anytime of the day or night. This
is called 24 x 7 site availability. To ensure the best performance per user, the owner of the
securities trading site might also require that additional servers become available when too many
people try to access the site at the same time (server load balancing at peak times). Most sites
won't be as demanding, but you should know what it will take to keep your site running and
consider these requirements when shopping for your hosting service.
Outline Your Web Site Security

Once you place a site on the Internet, security becomes an issue. You must protect three
significant areas of your information systems:
• the transaction between you and your customer

• any information stored on your Web server, such as customer names, authorizations, or
credit card account numbers
• any computer networks connected to your Web server, such as your internal business
networks
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Define Localization Requirements

If you think your product or service has international appeal, you can save lots of money by
following simple guidelines for creating international-friendly content. You'll need to consider
not only language differences but cultural and—most important—currency differences, as well.
Prioritize Community-Building Options

Communication among visitors to your site-often called "community"—is one of the main
reasons customers revisit a site. A number of technologies are specifically devoted to making
this communication possible. For example, these include chat, bulletin boards, ICQ and
discussion lists. You may want to implement some or all of these.
Decide on Your Advertising Display Strategy

Over time, as you begin to occupy your market share, you become attractive to others who want
to advertise on your site. Even if you have no intentions of selling advertising space to others,
you might want to use banner advertising technologies on your site to communicate with your
customers. Identify now where and how you will accommodate advertising. If advertising is a
primary component of your revenue or content model, you'll want to incorporate ad management
technologies early in your site development plan.
and prosper online.
Experiment With Your Site: How To Generate Good Ideas and Weed Out Bad Ones
Once your business Web site is up and running, it's time to work on attracting customers and
increasing sales. This phase of your business development should include online and offline
marketing efforts, but should also focus on expanding and improving your Web site.
A unique feature of doing business on the Web is: You can change your site quickly and easily.
By contrast, if you opened a restaurant, and after one month of operation discovered that your
kitchen layout was inefficient, it would be time consuming and expensive to fix the problem. Not
so for an e-business! In fact, you should be updating and improving your Web site continuously.
Here are some things to consider as you forge ahead.
Solicit Feedback
Use an online survey or guest book to solicit feedback from your customers. When you tell
family, friends, and colleagues about your site, be sure to ask them what they thought of it. How
many pages did they look at? Did they find what they were looking for? Will they come back?
Once you know how your customers feel, give them what they want! Cynthia Miller, owner of
Peaches and Boo Boo, a women's accessories ebusiness, makes regular changes to her site in
response to customer feedback.
"I recently changed the colors on my site because customers were telling me that the site didn't
look 'girlie' enough. I'm also planning to add pictures of my jewelry, shoes, and handbags to my
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home page because my visitors want to see pictures right up front. For my customer base, I've
learned that a picture on the Web really is worth a thousand words."
Watch Your Traffic Patterns

Study your site statistics and traffic patterns. You'll learn which parts of your site work well, and
which don't. For example, when you know how many people visit each day, and can compare
that with how many orders are placed each day, you'll be able to judge the success of your site.
Key metrics you should know:
• Which page most of your visitors see first (not all come through your homepage)
• The last page visitors read before leaving
• The most popular page(s)
• The least popular page(s)
• The percentage of visitors who don't go past your homepage
• Where your visitors are coming from (also known as "referrer information")
Elizabeth Magallon-Fleury of Gourmet Goods to You says statistics about customer behavior
helped her make important changes to her site.
"When we first launched our site, no one was going beyond our homepage. We quickly figured
out that it was taking too long to load and visitors were growing impatient and leaving. As soon
as we made changes so the page would load quickly, we saw an immediate climb in the number
of people going deeper into our site."
Make Informed Decisions

Using both customer feedback and your site's statistical information helps you make informed
decisions. Be sure to also consider whether you think each change will:
• Improve your business's image

• Generate more traffic
• Create repeat business
• Encourage homepage visitors to explore the site further
After all, change is good only if it helps you achieve your goals.
Audition Your Ideas

If making a major change to your site seems like too big of a risk, give it a test drive before you
commit. Make the change in an isolated section of your site, and see how your visitors respond.
You can even let them know that it's an experiment, and ask for their feedback before
implementing the change site-wide. If you have several changes in mind, conduct a short email
or online survey to determine your visitors' preferences.
Avoid Complacency
Don't let success lull you into complacency, and keep searching for new ideas. Keep and eye on
newsgroups, search engines, other Web sites, and Internet-related periodicals—they're constant
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sources for ideas. Study your competitors. Borrow ideas from the best. Chances are you'll
discover some great ideas for your site—and have fun doing it!
Ellen Leanse is Director of Membership for Bigstep.com, a free online service that small
businesses can use to create and manage their own Web businesses. Before joining Bigstep.com,
Ellen led loyalty marketing initiatives at Apple Computer, Inc. She has also run a home-based
business for nearly 30 years.
Find Out What Content Is Working
Your Web site is your only face to many of your customers. If you post your original content
and forget about it, they will be able to tell. You need to keep refreshing your features to make
sure your site is up-to-date and keeps the interest of your customers.
The only way you'll know whether your site is meeting your customers' needs and how it might
need to be changed is to keep monitoring it after it is built. You can use a number of methods to
make sure your content is right for your audience. Log analysis tools to track traffic patterns on
your site, keyword tracking, and surveying your customers can all help you make sure that you
don't waste your resources on content that no one is reading or that turns your customers away.
• Determine traffic patterns for your site's areas on a regular basis. Use log analysis tools,
such as Web Trends Log Analyzer,-to determine high and low traffic areas of your site. If
one of your sections has had a decrease in traffic or has become an exit page, you may
need to make some changes. Think about how long it has been since you last added
content—it may have grown stale. Don't waste your resources on content that no one is
reading.
• Determine which keywords you've registered lead to the most hits on your site. This will
be a good indicator of your site's readership and help you determine what your customers
are most interested in. Don't forget to register new keywords as you add or revise content.
And, of course, if someone is conducting a Web search and finds your site because you've meta-
tagged the same words they've searched for, you should ensure that those words describe topics
that are actually on your site. If not, your site visitor—a potential customer—may view this
experience as a waste of time and not return.
You can also survey your customers to find out what sections they like.
and prosper online.
Find the Best Domain Name
The domain name for your Web site can make or break your online business. Domain names that
are hard to spell or sound too similar to other businesses can divert traffic from your site and
decrease overall sales. How do you come up with a great domain name? How do you make sure
you can use it? Here's a quick guide to finding and reserving the best domain name.
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Selecting the perfect name

Your first choice should be the name of your business. If that’s not available, you have a few
options:
Descriptive names: If your company name is taken, you can choose a name that describes the
service you provide or products you offer. For example, instead of BellaBeautySalon.com, try
HillcrestHairandNails.com. Try to think of common search words customers would use to find
your business–not only will the name be descriptive of your company, it will also be easier for
search engines to find when customers who want to find you don’t know the name of your
company.
Variations on your business name: Stay away from extreme variations on your business name
(BellazSanDiegoHairPlace), which can be confusing to potential customers and difficult to
search for. Don’t misspell the name of your business or add too many extra words.
You shouldn’t use a joke, a play on words or a silly nonsense name. Remember, you’ll be using
the domain name for years to come. It will be featured on your business cards, marketing
materials and other prominent places. Made-up words are also much more difficult for search
engines to pin down–you’ll miss out on valuable search traffic if you stray too far from key
descriptive terms. Stick to something simple that customers and search engines alike can
understand.
Reserving the name

Reserving a name is a fast, simple process. Visit a domain-registrar/Web hosting company, such
as GoDaddy.com and perform a search for your proposed URL. You should know whether the
name is available and how much it will cost within a few seconds. GoDaddy also generates
suggestions if the name you want is taken, which can be valuable in deciding which name to
choose.
Domain names can be purchased immediately with a credit card for a specified length of time.
Choose the option that best meets your needs–if you want to build a thriving business, you’ll
need that domain name for several years at least.
Free Ways To Drive Traffic to Your Web Site
You've developed a new Web site. Congratulations! How exciting! Now all you have to do is sit
back and watch the business roll in, right? Not really.
Web sites, unlike other marketing tools, have to be publicized. When you write a radio
commercial, you pay a radio station to run the ad. When you design a brochure, you give it away.
But when you publish a Web site, you must promote it to drive in business.
An excellent way to lead people to your site is to use a specialist. But, even if you hire a search
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engine positioning specialist to help place you among the Top 10 on Yahoo, there are still many
other ways you can promote your site... and they're effective and free!
Links
A study by the Georgia Institute of Technology (GIT) gives us proof. On one site they observed,
84 percent of visitors came in via links from other sites. Be sure you trade links with as many
people as you can. You might consider a "Helpful Links" page on your site devoted to just his
purpose. One word of caution—be sure the links are appropriate. Arrange to exchange links with
companies that are reaching the same target audience. For example, if you are a lawn care
company you might exchange links with a landscaper. Another effective idea to incorporate links
into your site is a "Testimonials" page.
We all love to receive "praise letters" on our email. Ask permission to use these as testimonials
on your Web site. We should be just as liberal with our praises. When you appreciate a product
or service, be sure to write a note of thanks. Mention in the letter that the person (or company) is
free to use your kind words as a testimonial if they will simply include your name and Web
address.
Signatures
Another site observed by the GIT indicated 35 percent of visitors were brought to the site via
signature files on email messages they received. Often times this feature is overlooked due to
lack of knowledge.
A signature file is a feature most email programs (even free ones) offer. You may type in a
message and that statement will be added at the bottom of every email you send. This saves you
the time of having to type in the message repeatedly. Usually this feature is found under the
heading of "Options" in the email program. One note: be sure to include the "http://" before the
Web address so a link will be created for people who receive plain text emails as well as html.
Write Ups
In one instance, 62 percent of visitors came to a site through articles in newspapers and
magazines. When sending out your press releases be sure to include your Web address along
with other contact information. The same applies for interviews on the radio or public
addresses/seminars you may offer.
Other Ways
The most simple of all ways is to tell people. Mention it in conversation. Bring it up when others
discuss Web sites they have visited.
Include your Web address on all your business cards. Make it bold. If your business derives
most of its revenue from sales made on the web site, be sure the Web address is on the front of
the card.
When printing letterhead, include your Web address. Most Web addresses don't take up much
space and can be easily incorporated along with the company's physical address and phone
number.
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Don't forget to mention your Web site in all your advertising efforts. Whether it be a
promotional video, television commercial or brochure, make it a point to position your Web
address where it is visible. For radio commercials, include it in the copy. A great way to work it
in is when providing other ordering information. For example: "...visit us at 1234 Oak Street or
log onto www.ktamarketing.com."
Be creative! Always remember to include your Web site information in everything you do and
your efforts will pay off in additional hits!
FINALLY! The first copywriting course that takes you step-by-step through the process of
writing emotion stirring, profit generating copy and gives you the LIVE feedback you need to
succeed! Get it today—with three FREE bonuses! http://www.copywritingcourse.com.
(c) 2002 Karon Thackston.
How to Use Social Media to Reach New Customers
What is Social Media?

Like any emerging idea, the definition of social media is still a little blurry around the edges.
And, like that other popular Internet pastime, social media may be something that is difficult to
define, but you'll know it when you see it.
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--if not thousands--of social media Web sites out there, but here are a few of the more
popular ones:
• MySpace: Originally a place for bands to promote themselves, it has become one of the
most popular sites on the Web today. Anyone can create a profile and there are no
identity checks. Companies targeting consumers often set up shop here.
• 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.
• Facebook: One of the fastest growing social media sites out there. It started as a site just
for college students but is now open to everyone. Although it has fewer members than
MySpace, its growth and buzz is enough to make Google nervous.
As you travel outside the U.S., there are plenty of other social networking sites that are more
popular in other parts of the world.
Why Should You Care About Social Networking Sites?

Location, location, location. If you had a retail outlet you wouldn't set up shop where there's no
foot traffic, would you? Well, your customers and clients are already at social media Web sites.
They're on MySpace, they're LinkedIn, and they have Facebook pages. They share photos at
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Flickr and upload family movies to YouTube. You need to go to where your customers are.
How Do You Get Started with Social Media?

Don't worry: every person and every business had to make a first, tentative step into the social
media landscape. This won't be any more painful than a freshmen mixer or a Business After
Hours event in a strange town. (Yikes!)
• Look: With so many social media sites out there, 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.
• Listen: 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.
• Join In: 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.
• Start: 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.
How Do You Succeed with Social Media?

Let me share a secret with you: I don't know. Using social media as a marketing or networking
tool is in its infancy. What seems like a good idea today may turn out to be a bullet point on "The
Top Ten Mistakes Businesses Make with Social Media" tomorrow.
In addition, like a lot of marketing endeavors, the results may be difficult to track. Did that lead
come from your Facebook profile, your blog, or a newspaper ad you took out? You can certainly
sit back and wait for your competitors to make the first move and learn from their mistakes. But
while you're on the sidelines, they'll be making connections and building relationships with your
prospects. Are you willing to take that chance?
In Conclusion
The social media rules are still being written. Where does social networking end and commercial
networking begin? Is this the future of the Web, or just another evolutionary step? Will today's
social media leaders be around tomorrow, or will some other interupting technology crash the
party?
The only thing that seems certain is that people are congregating at these social networking sites
at an astounding rate. The landscape is changing, and these sites have become the backyard
fences, the coffee shops, and the street corners of the 21st century.
Ignore them at your own risk.
Identify the Primary Audience for Your Small Business Web Site
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Who will be interested in our Web site? Answering this question plays a crucial part in
determining what information to include in your site and how to organize it. If you already have
a brick-and-mortar business, the answer may literally be right in front of you. Simply poll your
customers to get an idea of what segment uses the Web and what they would be interested in
accessing online.
Your product also will help you determine your audience. If you're a 3-D animation artist
marketing your skills to ad agencies and electronic game manufacturers in major metropolitan
areas, you may assume that your audience consists of experienced Web users with high-speed
connections. Motion, sound, and the latest technologies may be what this audience expects from
your Web site.
But if you're marketing tractor parts to small- and medium-scale farm operations, you can
assume that Internet connections available in rural areas may be slower and your customers may
not spend a great deal of time online or use the latest technology available. These customers are
probably visiting your site to fulfill a specific need or to acquire a part for broken equipment and
are not looking for frills on your site.
All your customers need straightforward, well-organized content and ways to help them find it
quickly and easily. You'll need to consider the same issues you face in developing a marketing
strategy and business plan, such as:
• The type of product you sell

• The demographics of your target audience
• The location of your target audience
• Your market niche
• The type of image your want your company to project
There are a few other things you'll need to consider that are unique to the Web delivery model,
which relies on your target audience to supply a portion of the technology to benefit from what
you have to offer. These other considerations include:
• Whether your target audience has access to the latest technology

• Whether your target audience consists of "early adopters" of technology (people who
purchase and use the latest that technology has to offer) or "late adopters" (those who
adopt technology reluctantly)
Keep in mind that your audience may have access to and be an early adopter of one type of
technology but not of another, related, technology.
You'll want to conduct a thorough study of the market to guide your planning. The Internet is an
excellent source of information about user demographics and habits. Visiting competitors' sites,
as well as sites that sell other products that are likely to appeal to your customers, will give you
an idea of your target audience's interests and needs. Determine how you'll distinguish your site
from the other sites that your customers may visit.
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and prosper online.
Jumpstart Your Blog: A Blogging Working Regimen
Do you know what gym regulars call the surge of people who show up in January as part of a
New Year's resolution? Tourists.
The same could be true with the influx of businesses that join the blogosphere each and every
day. Some join with the best of intentions. Others start a blog because someone from marketing
twisted their arm. Still others were on a drunken bender and couldn’t find a tattoo shop, so they
settled for starting a blog.
The fact is that because of lack of time, commitment, or a good strategy, the majority of these
blogs fail. Later, when a prospect finds these abandoned blogs--either through a forgotten link on
the company's Web site or a search engine result--they’re left with a negative impression of the
company.
Don't let this happen to you! A blog is a terrible thing to waste. It does take time and
commitment, but with a plan in place, your blog will increase your search engine visibility,
establish your credibility, and provide more online leads than you can handle.
Here's a regimented workout that will help jumpstart a new or stalled business blog and prevent
you from being just another tourist in the blogosphere. (Please consult your physician before
beginning any new blogging regimen, and always remember to stretch.)
Write Three Posts a Week

Once your blog has an established readership you may be able to cut back on your frequency, but
to begin you should plan on writing three times a week. Schedule recurring blocks of time in
your calendar so "urgent" but less important items don't prevent.
Posts can be of varying lengths and varying styles. Numbered lists, how-to articles and
commentary on your or your customers' industries are proven winners. To ensure that people can
find your posts, use keyword-rich titles that will drive traffic from the search engines. “Some
Thoughts I Shared with HR” will never outperform “Employee Retention: 10 Ways to Keep Star
Performers Happy.”
Estimated Time: 2 hours/week.
Leave Two Comments a Week

One of the most important things you can do for the success of your blog is to network with
other bloggers in your niche and become part of the community. This means reading and
commenting on related blogs.
The comments you leave on other blogs create links back to your own blog. Although comment
links rarely carry any search engine benefit, intelligent comments will attract notice from the
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blog owner and his or her readers, driving qualified leads to your own blog.
Estimated Time: 1 - 2 hours/week, including reading time.

Blog Popular Search Terms

Blog search engines like Icerocket and Technorati often display the most popular current search
terms. If you can work a popular topic into a new post you place your blog in front of thousands
of potential new readers.
Just make sure the topic is relevant to your business; while more visitors are nice, the goal here is
to get prospects reading your blog. Working an American Idol reference into your blog on global
commodities trading probably won’t bring you a lot of repeat visitors.
Estimated Time: 2 minutes/post.
Make It Easy for People Subscribe & Share

I’m always perplexed when I discover a blog that doesn’t offer an RSS feed, or relegates it to
some dusty corner or to the bottom of the page. One of a blog’s biggest strengths is its ability to
syndicate content. People can subscribe and receive new posts whether or not they’re at your
blog.
Feedburner and Feedblitz are two services you can integrate into your blog that allows visitors to
subscribe via RSS feed or email. You should also leverage the current fascination with social
media by adding appropriate bookmarking tools to the bottom of each post. Giving readers the
ability to add your post to Digg, Facebook, Twitter, or any other social networking site with a
single click increases the chance that they’ll spread the word about your blog.
Estimated Time: Less than 1 hour of setup time when you start your blog.
In Conclusion
An abandoned blog is a black eye for any business. A regularly updated, narrowly focused blog
is a powerful magnet for search engines, new business, and journalists looking to speak with an
industry expert.
By dedicating the time necessary to building a strong blog, you’ll have your investment returned
to you a hundred times over in search engine visibility, new prospects and lower customer
acquisition costs.
Know What Advertisers Look For
Advertisers are most interested in a large volume of traffic. But for them to consider you at all,
there are four features you must provide on your site:
Relevant content. Advertisers won't consider your site if it doesn't feature information important
to their viewers. This doesn't mean you should change your site to suit your advertisers! If you
create interesting, well-conceived information pertinent to your viewers, your site will attract
both customers and interested advertisers.
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Professional design. Before soliciting advertisers, make sure your site looks its best. Are there
frequent typos in your copy? Pay a professional proofreader to clean them up. Is your copy
writing clear and professional? If not, pay a writer or editor to scrub the copy. Do your graphics
load too slowly? Then it's time for some redesign. Are your pages cluttered with overlapping
banners? Reallocate advertising space. The point is that advertisers are looking for sites that take
themselves seriously. Sites that feature poor design will not impress advertisers.
Targeted demographics. Give your advertisers as much information about your audience as
possible. Advertising delivered to the wrong demographic will be ineffective and will discourage
your advertiser. By providing exact demographics, you can help your advertisers target the right
groups for their message.
Here's an example for a fictitious site called Puppysupplies.com:
"Puppysupplies.com has viewers who are male and female, ages 20 to 65, with high disposable
incomes."
Be specific! This describes every person on the Internet! Nail it down for your advertiser. Notice
the improvement:
"Puppysupplies.com has viewers who are mostly female, with the majority in the age range of 25
to 35. They typically own two dogs. Most of these female viewers are employed, with annual
household incomes of at least $40,000."
High repeat traffic. Advertisers' favorites sites are those with information that is constantly
updated, because it means that visitors will visit again and again. Repeat traffic means repeat
exposure to their advertisement, and frequency increases the probability of their ad being clicked
on. Examples of sites with high repeat traffic include search engines, weather sites, e-magazines
and shareware and gaming sites.
Give your customers a reason to come back and both you and your advertisers will benefit. If
your site doesn't feature content that is changed regularly, consider creating an online newsletter
that is distributed monthly, featuring product news with hotlinks back to your site. Or send out an
email coupon offering a discount on your product or service to encourage past customers to
revisit. Repeat traffic will boost your numbers and help you develop a loyal clientele to serve
you and your advertisers.
Lost Revenue Found Here: Why Service Businesses Need a Web Site
"I'm a service-oriented small business and don't have any products to sell. Why do I need a Web
site?"
That's a common refrain heard from professional service businesses—from accountants and
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management consultants to chiropractors and dry cleaners. According to Terri Lonier, a small
business consultant and author of Working Solo, "What these businesses fail to see is there's a big
difference between e-business and e-commerce. E-business is so much more than transactions—
and in today's competitive environment, it's crucial for service businesses to have their own Web
sites."
SCORE recently sat down with Lonier to discuss her thoughts on why service firms should
create a strong online presence.
Q: First, what's the difference between e-business and e-commerce?
A: While e-commerce focuses on building a virtual storefront in which to sell products, e-

business focuses on building a compelling online business presence that is individualized for
your customers. E-commerce is one part of the complete e-business equation, which also
includes communicating with customers, marketing your business, and tracking visitors'
behavior.
Q: How does a service firm benefit from having an e-business Web site?
A: Having an e-business enables firms to make better use of their time. If a business owner
chews up billable hours answering the same questions repeatedly, then he or she is losing money.
With a Web site, small businesses can provide basic company information—like services
offered, business history, location, and more—and head off customer questions. E-business
owners can also respond more quickly to customer comments, conduct surveys and ask for
feedback to make sure they're spending their time delivering appropriate services.
Q: What other benefits do you see?
A: A Web site enables a businessperson to do things that he or she can't do well on the phone,
like show a representative client list. Also, the same material presented through your Web site
carries a strong sense of authority and credibility. Potential clients want objective information
they can evaluate themselves. An independent review of your services, particularly if it includes
endorsements from other clients, carries more weight than your own ravings about how great
your services are.
Q: What are the costs associated with building a Web site?
A: Many businesses turn to Web development firms, but that can be costly—often tens of
thousands of dollars. Increasingly, small companies are turning to integrated services that
provide Web site building and hosting tools, targeted marketing, cataloging, as well as reporting
and commerce capabilities. These services make it easy for a business owner to build and
maintain a professional-looking e-business no matter how small his or her business. Plus, it's
free, and you truly have control over your Web site—you can update and add information
whenever you want—making it quicker and less expensive to have a Web site than a printed
brochure!
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Q: What can a service business do to promote customer loyalty through its Web site?
A: Share your expertise. Provide tips and information about your field that your customers may
not have. Point them to all sorts of different resources with links. Publish a simple e-newsletter
that you email to subscribers on a periodic basis. Alternatively, offer to answer questions by
email.
Few things build credibility and ensure return visits like a Web site that presents tips you can't
get anywhere else. The more you can make your visitors feel that they're going to find something
on your site that they can't get anywhere else, the more success you'll have.
Q: You've had a Web site for several years now. How useful has it proven to you?
A: Incredibly useful, particularly for marketing and promoting my business and keeping in touch
with my constituencies. When I write articles, I post them on my site. If I'm mentioned in a
magazine or newspaper article, I link to the site where it appears. I include customer
testimonials. I also have a Frequently Asked Questions (FAQ) page so potential clients get a
sense of the depth of my offerings. In sum, I use my Web site as a sort of clearinghouse of
information, which helps position me as an authority in my field.
Q: Your company has gone through a few transformations in the two decades you've been in
business. Has the Web been helpful during these times?
A: Definitely. Like many small companies, my business has been through many transformations.
In the 1980s, it was a consulting practice and then became a hybrid business-offering consulting
services as well as products. Then in the 1990s, it shifted to being a product business when I was
a publisher. Now it has shifted back to being a consulting business.
I've been online since 1986, and our Web site's been up since 1995, so it's been interesting to
experience the transformation caused by the digital era. The Internet expanded my business in
unexpected, beneficial ways, and I know my experience is not unusual.
Q: Any final thoughts to share?
A: Some service businesses will always be service businesses. However, many entrepreneurs
decide to morph their business into one that also sells products. With e-business services, you
don't have to re-establish your site just because you're selling products. Instead, you have the
tools at hand to easily make that change. For instance, I know of a caterer who has expanded her
business to sell food products online. I also know of a holistic doctor who now offers herbal
remedies, books on healing, and other products related to his practice online.
As these examples show, the Web is opening new business opportunities for small service firms.
With new e-business services, the barriers of cost and complexity have evaporated. By
leveraging the power of a Web site, small business owners can focus on what they love to do:
use their talents, skills, and experience to bring value to their customers' lives.
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Terri Lonier is the creator of the Working Solo series of small business resources, and the
producer of SOHO Summit, an annual executive conference for companies targeting the small
business market. She also serves as Small Business Advocate for Bigstep, a free, all-in-one
service that lets small businesses easily build their Internet presence.
Monitor and Analyze Your Small Business’s Site Traffic
You've built a company Web site, and it does a great job of presenting your business to everyone
who visits it. You've promoted wherever you can, and you've spent your marketing budget
wisely. So where do you begin to find out how your site is performing?
There are several questions you'll need to consider: How many people are visiting my site?
Where are they coming from? Where on the site are they going? Where do they spend the most
time? Those are a few questions to start with, and there are plenty more where they came from.
The good news is that with a solid tracking system you can find reasonably accurate data with
which to measure your site's performance. Follow the steps in our checklist below to help you
through the process.
Understand Web Site Tracking Terms

First you need to know the difference between hits and page views. Are you clear on IP
Addresses and the User Agent String? Make sure you know what you'll be counting before you
get started.
Use Traffic Analysis Tools

The raw data about your site's visitors is there in your server's log files. But how to make sense
of it? We'll examine the various options open to you that can help you analyze your data: from
your basic hit-counter type reports to a more comprehensive approach using off-the-shelf
software programs, outsourcing to a third-party, or building a custom-made solution from your
own database expert.
Examine the Statistical Reports

Once you've got the reporting structure underway, you'll be looking at reports that will most
likely break down into the categories below. We'll examine each one in detail to provide you
with a firm understanding of the data in front of you, and steps you can take to act on that
information.
Ideally, you'd have the email addresses for all your customers, and you'd be able to develop a
customer relationship based on individual demand. However, it's more likely that your casual
browser or customer on your web site will leave you only clues to follow rather than detailed
demographic information about themselves.
Use your Web server statistics to pick up as many clues as you can about your customers. They
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can provide you with information on how many visitors the site is getting, where they are
coming from, which pages they find most interesting, and which keywords they are using to find
your site.
Total stats reports: Get a good overall picture of your site's activity and performance levels and
use the information to track peak usage and identify spikes in your traffic from promotional
campaigns.
Top URLs requested: Find out where your customers spend their time on your site and identify
the parts of your site that are working best and the parts that need improvement.
Referrer report: Who is sending customers your way? Use that information to drive more traffic
to your site.
Search phrase report: Find out the keywords that work on search engines to drive customers to
your site and rework your site's keywords to get higher search engine ratings.
Most common browserused: See what types and versions of browsers your visitors are using and
fine-tune your site design to match them.
Bad URL/referrer report: Links to your site that don't work make you look bad. Use this report
to find and remove the dead links that are causing error messages for your users.
User domain reports: Examine the top-level domains of your users to understand where, both in
cyberspace and worldwide, your customers are coming from. Then you can figure out how to get
more customers like them.
One thing to remember as you mine your Web site statistics for nuggets of information: Take it
slow. Make changes gradually to measure their effectiveness. Changing many things on your site
at once is comparable to starting again in your effort to find the key to those stats.
Name Your Small Business’s Web Design & Management Team
Think "team" when you build your site—even if the entire team is you. When you start out, you
might wear all the hats: developer, designer, IS professional and marketer. But you still need to
know how to organize your project and your time, and, if you’ve got bigger plans for your e-
commerce site, you’ll want a larger staff.
Before you begin, you need to assess prospective team members as well as the roles of each team
member and how the roles interrelate. Some tasks are core (essential), others are optional. Two
or more core positions can be assumed by the same person. Core (essential) positions are
indicated with an asterisk (*).
Within each position is a breakdown of tasks. Here’s a checklist of minimum suggested

qualifications for each member of your team:
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Project Leader
A project leader has management and Web site experience, and good communication skills. This
manager outlines the key steps and milestones for the project, supervises team members,
coordinates tasks, and monitors schedules and budgets. The lead also filters and exchanges
information with other groups in the company, and makes plans for the future.
HTML Lead
An HTML (Hypertext Markup Language) lead will be in charge of preparing the basic HTML
code and links for all site pages, and will add tags for images, scripts, and forms. The HTML
lead should know how to type HTML code "from scratch." To take advantage of shortcuts and
customized macros, experienced HTML Leads prefer customizable non-WYSIWYG editors such
as Allaire’s Homesite. Some groups may require that the HTML lead use a WYSIWYG ("What
you see is what you get") editor such as Microsoft FrontPage so that non-expert team members
can add or alter text and HTML tags.
Creative Director
The Creative Director is a graphic artist who understands the unique challenges of creating
images for Web pages, including file types, file dimensions, and file size. The Creative Director
will study the existing company image, and ensure that the company identity is replicated on the
Web site. The Creative Director will also provide all user interface imagery.
Technical Lead
A Technical Lead has significant experience in "backend operations," and knowledge of one or
more server programming languages, such as UNIX, SQL Server, ColdFusion, or LINUX. This
lead will marry your existing business database (inventory, customer profiles, etc.) to a Web
server and scripted Web pages. A Technical Lead also knows how to set up server- and client-
side scripts, cookies (visitor tracking), search engines, and more.
Multimedia Technology Lead

The specialties of Multimedia Technology Leads vary: some know how to create web-ready
animations and Macromedia Flash (a vector-based animation program); others how to add video
and audio to a site; and some can produce "live" events on your site. Most multimedia add-ons
require users to possess recent browser versions (versions 4.0x and up) or plug-ins, and can add
significant load time to pages. You’ll want to decide if multimedia additions will sufficiently
benefit your target audience to warrant any visitor inconvenience, and the extra expense and time
for you. Then you can seek out the appropriate multimedia specialist.
Testers
Testers should be detail-oriented and deliberate, and can be observant non-professionals as well
as technology experts. If you’re starting out, your friends and family can help you test your site.
Testers check the functionality of every aspect of your Web site, from scripts to navigation cues.
They read and critique the instructions and help guides. Often, test results are used to create "bug
reports" that help the Project Lead focus attention to problem areas.
Marketer
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The Web site marketer will extend the company’s marketing plans to the Web, and will need to
be aware of rapidly changing practices and opportunities to attract visitors, and grow return
visits. The marketer should be aware of web ad banner formats and other Web-relevant
marketing tools.
Public Relations
The Web team’s public relations expert will extend company public relations policies to the site,
and ensure that the media will have access to official company press releases and other
documents.
Customer Service
The customer service expert will extend the company’s current customer service policies to the
site, and address customer service issues unique to Web sites.
Accounting & Distribution Lead

If your Web site will offer online transactions, or sales of goods and services, you will need a
team member who has experience in handling the integration of your electronic orders with your
existing accounting and business infrastructure. This lead will also need to be aware of Web-
specific legal and security issues.
Rules for Writing High-Impact Online Copy
We all know that well-written copy is one of the most highly effective methods of getting
people's attention and attracting them to your product or service, but the importance of the
shortest copy is often overlooked. A lot of people don't even realize that things like their
navigation menus, links, or even their newsletter subscription offers are copy and require careful
consideration.
Ironically, this kind of copy is one of the most valuable tools you have. Think about your...
• Banners
• Classified ads
• Newsletter subscription offers
• Navigation menus
• Links ("click here," "buy now")
This sort of copy is typically asking people to take some sort of action that is vital to your
business: visit your Web site, request more info, subscribe to your newsletter, click through, buy
the product.
Of course it's more difficult to get your message across when you have limited space, but short
copy is the glue that holds your marketing campaign together. And, if every button on your
menu, every ad, every link isn't as absolutely compelling and effective as it can be, you're not
going to get the results you're hoping for, be it more sales, more subscriptions, more referrals,
etc...
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So I'm going to show you four hard and fast rules of copywriting that must be followed in even
the shortest of copy to guarantee you always make the most profitable use of the little space you
have.
Rule #1: Emphasize Benefits, Not Features

I know, I know, you've heard this one before. But I so often see copy—short and long—that
neglects to mention how the features of a product or service will benefit customers that I'm
guessing a good number of you aren't sure what this really means. So let me clarify for you...
• A feature is one of the components or functions of your product or service. For example,
if your toothbrushes come packaged with glow-in-the-dark toothpaste, that's a feature—
not a benefit.
• A benefit is something your product or service will do for your buyer to somehow offer a
solution to a problem. So if your toothbrushes that come with glow-in-the-dark toothpaste
make stubborn kids thrilled to brush their teeth before they go to bed, then you've got
yourself a benefit.
Are you following me? An online real estate agent advertising "real-time mortgage calculations"
is advertising a feature of her site; however, if she writes, "Avoid wasting time haggling at the
bank with my real-time mortgage calculator," then she's advertising a benefit.
Emphasizing benefits is the number-one most overlooked rule of copywriting, and this lack of
emphasis is one of the top reasons advertising falls flat. Short copy is no exception—and you
don't need a lot of room to do it right.
Let's take a look at a short classified ad. If you posted an ad that read:
Real estate on the Internet.

Plenty of listings.
Shop at your convenience.
...you probably wouldn't get the greatest response. The ad is brief and to the point, but it lacks
clarity. First of all, what kind of property is being advertised? Are the listings for commercial
buildings or family homes? What part of the world does the ad refer to? How many listings is
"plenty?" How do we get to see these listings? And, most important, how does this service
benefit me?
There is a vague reference to the benefit of "convenience" in this ad, but it's not really explained.
Let's dress it up a bit:
Take a Personal Tour of 375 of Seattle's Hottest,

Most Affordable Single-Family Homes
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Skip the hassles of house hunting when you search our HUGE online database of single-family
homes:
• 375 homes with pictures, video tours and detailed descriptions!

• Search by price, location, number of bedrooms, number of bathrooms and more!
• Get FREE local school reports, neighborhood information, and mortgage calculations!
Click here now to begin searching our online database of Seattle's hottest, most affordable
family homes—without leaving your computer!
This version expands on the benefit of convenience and details the different ways this
convenience offers solutions to the house-hunter's problems. So the benefits we're clarifying for
the reader are:
1. House hunting is a hassle and now you can avoid it.

2. Physically going to see 375 homes would be practically impossible but you can easily do
it online.
3. You can search the database by very specific criteria to effortlessly find exactly what you
want.
4. Plus you'll get free reports that detail all the information you'll want to know about a new
home and neighborhood that you wouldn't get even if you went there in person.
Also note that this ad targets a specific niche: single-family home buyers in the Seattle area.
Targeting your advertising is the only way to get your benefits in front of your best potential
customers, as we'll discover in the next section...
Rule #2: Write to a Targeted Audience

The fact is, your product or service is just not going to appeal to everyone. And if you try to
market it to everyone, you'll wind up with far fewer sales than if you choose a select group to
direct your copy to. So once you've defined your target market, you need to turn your attention
toward making sure your copy addresses them directly.
For example, let's look at pay-per-click advertising. Let's say you bid 17 cents per click in
Overture.com for the key phrase "single-family homes." Because you pay every time someone
clicks through this link, whether they purchase from you or not, you want to make sure that your
ad carefully targets your best potential customers.
Given that you're targeting single-family home buyers in the Seattle area, you'd want to make
sure your ad includes this vital piece of information. That way, you can be sure you won't waste
money on people searching for single-family homes in San Diego!
And if you bid 41 cents per click for the key phrase "Seattle homes," you'd want to make sure to
write an ad that clearly states that your site features single-family homes... so you don't waste
your advertising dollars on condo-seekers or recreational property buyers.
By writing a separate ad for each of your keywords that carefully targets your market, you'll
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ensure that you attract the most buyers for the least cost. Of course, if you're writing copy for
banner ads, your approach will need to be a bit different. Whether you're:
1. Purchasing blocks of impressions (i.e. you pay a set dollar amount for your banner to be
displayed 1,000... 10,000... etc... times on other Web sites), or
2. Participating in a banner exchange (i.e. you're trading banner impressions with a network
of other site owners)
... you've paid for your advertising up front, so you'll want to do everything you can to attract
viewers' attention and persuade them to click through to your site. And this means you'll want
your ad copy to be a bit more general, to ensure it attracts the highest number of click-throughs.
The title of the above classified ad would make a great banner:
Take a Personal Tour of 375 of Seattle's Hottest, Most Affordable Single-Family Homes!
Click Here Now...
...You're targeting your best potential customers! But you might also try testing banners with
more general copy that read something like this:
Search HUGE Online Database of 375 Seattle Dream Homes and Skip the House-hunting
Headaches! Click Here Now...
The first ad is going to attract the most qualified audience—those people who are looking for a
single-family home in Seattle for a reasonable price. The second version, however, will attract a
slightly broader audience. Still in Seattle and still looking for homes, this group is not necessarily
looking for a single-family dwelling, and they're not necessarily worried about price. They're just
checking out homes in the Seattle area and they're attracted by the size and convenience of the
online database.
While the first ad may generate a higher visitor-to-sale conversion rate (the percentage of people
clicking through who then sign up for the service) because it is more specific, the second ad will
probably solicit more click-throughs in total, because it has a more general appeal. You'd have to
test to see which version would pull the most sign-ups altogether.
Rule #3: Include a Call to Action

Okay, easy enough. BUY NOW! There's a call to action.
But hold on a minute. If it were that simple, everyone marketing online would be rich, and every
online shopper would have to move into a bigger home to accommodate all that happily
purchased stuff.
There are two very important things that you must include in your call to action:
1. You must determine exactly what action you want people to take, and
2. You must provide a reason why people should take that action.
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Isn't buy now exactly the action you want? Not necessarily. Think about what exactly it is that
you are trying to do. Are you trying to generate leads? Do you want people to sign up for your
free newsletter? Are you trying to attract a specific audience and hoping to convert as many of
those people as possible into sales?
It is important to understand that all copy, if possible, should contain a call to action that clearly
identifies what action is desired. I can't emphasize this enough.
Think about the buttons on your site menu. Each one is a call to action. And they are all very
important. If they're not as direct as possible, telling visitors specifically what to do, they will be
useless.
For example, if you have a button that is labeled "sales," you are doing nothing but confusing
your visitors, leaving them guessing whether you are referring to product sales (i.e., online
ordering), products that are on sale (i.e., specials or discounts), or maybe the opportunity to sell
your product (i.e., merchandising opportunities). But your visitors won't guess for long—why
would they bother? They'll just leave your site.
If you change the button copy from "sales" to "order online," you are now asking viewers to take
an action—to order your product. This clarifies the purpose of the button and tells the viewer
what to do to get your product. Another example: instead of writing "email," you could ask your
viewers to "Contact Us"—again, you're asking your visitors to take a specific action!
Of course, you will not always be able to include a call to action in every button; you won't
always have the space. Your best bet in this case is to be as clear as possible.
For example, it would be difficult to include a call to action in a button of your navigation menu
that leads to your newsletter back issues. There would not be room to say "click here now to read
our newsletter back issues." So in this case, you'd just want to make sure that your copy is clear.
Label the button "Newsletter Back Issues" instead of "More" or "Old Stuff."
Now let's think about your links. Supposing "buy now" is the action you want, you have to give
people a reason why they should buy. Huge, garishly colored words on a screen won't do the
trick; added benefits will.
And in your links, you have a little more room to move. The call to action should remain the
central focus of the link, but pack in as many benefits as possible around it. Something like...
"Click Here Now to claim your 'Golfer's Guide to the Green' and instantly receive the
downloadable video that features up-close-and-personal interviews with Pro Golfers who reveal
their hottest golfing secrets, guaranteed to improve your game in 2 weeks or your money back!"
...will win out every time over "Buy now."
Rule #4: Pay Attention to Layout

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Making the most of your layout is especially important when you're writing short copy. The right
blend of emphasis and information is the best way to attract viewers. Don't underestimate the
effectiveness of bolding, italics, underlining, color and white space.
But don't overdo it either.
For example, an offer to subscribe to your newsletter must be brief, compelling, and effective. It
will not be the main feature of your web page or anyone else's, so it must be attractive enough to
grab the attention of a distracted reader. But it also needs to remain readable and informative,
without a gross misuse of formatting tricks.
If your ad has too much going on in it, it will look unattractive, unappealing, and unprofessional
—and the clutter will detract from the meaning of your message.
On the other hand, too little emphasis leaves you in danger of never catching anyone's eye. If
your ad is totally boring, no one will ever even see it—and if they somehow do, they probably
won't look at it long enough to find out what it's about.
So let's try to find a happy medium, emphasizing without crowding...
Subscribe to our FREE "Potato Farmer's" Newsletter
Subscribe today to the FREE "Potato Farmer's" Newsletter and on the first Tuesday of each
month you'll receive tips and strategies from industry leaders who'll reveal...
• Secrets for selling your crops for the highest profits!

• Tricks for cutting down the time you spend in the field!
• Cost-effective strategies for tripling your crop yield!
• Plus much, much more!
...Each issue contains tons of easy-to-implement techniques, guaranteed to reduce your expenses
while dramatically increasing your annual income!
Click Here Now to Subscribe!
Catchy, effective and professional in appearance, this version draws your attention and doesn't
distract you from the information it contains once you're there.
The ad is clearly laid out and easy to read. The title is underlined and in blue, as is the link. This
is the standard way to handle links, and it lets the viewers know they can link to the sign-up page
from either place. Giving readers two chances to link through to your sign-up will always work
better than one. (And never have any blue, underlined text that is not a link!)
I've used only subtle formatting tricks to provide emphasis while keeping the ad visually
appealing. The title of the newsletter is in quotation marks to give it additional emphasis. The
main features of the newsletter—what you'll learn from the experts—are emphasized by the use
of bullet points and a nice amount of white space. And the main benefits of the newsletter—
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reduce your expenses and dramatically increase your annual income—are italicized and
strategically placed right before the call to action.
Because the call to action comes at the end of the ad, it is supported by all that came before it.
And because it is the last bit of text and it is in blue, the viewer's eye is effectively drawn through
the ad after being attracted by the title.
Of course, some of the formatting techniques discussed here are available only to people
formatting their ads in HTML. Obviously, you have more options in HTML and can do pretty
much whatever you like. But in text format, you don't have the choice of adding color, bold,
italics, etc. You DO, however, have the ability to use characters, spacing, capitalization, and
indentation for effect.
So if we had to format our ad in text, it might look like this:
"FREE Subscription to 'Potato Farmer's' Newsletter"
Subscribe today and on the first Tuesday of each month you'll receive tips and strategies from
INDUSTRY LEADERS who'll reveal...
1. Secrets for selling your crops for the HIGHEST PROFITS!

2. Tricks for cutting down the time you spend in the field!
3. Cost-effective strategies for TRIPLING YOUR CROP YIELD!
4. Plus much, much more!
Each issue contains tons of easy-to-implement techniques, guaranteed to REDUCE YOUR

EXPENSES while dramatically INCREASING YOUR ANNUAL INCOME!
Visit http://www.PotatoFarmers.com to subscribe!
Because we don't have the option of hyperlinking the text, effectively highlighting it in blue, I've
moved the capitalized "FREE" to the beginning of the title to attract attention. I've also enclosed
the headline in quotation marks for emphasis, and put the newsletter title in single quotes (which
should always be used inside double quotes).
I've capitalized the benefits that were italicized in the HTML version along with a few more
benefits to make the ad as eye-catching as possible. The general rule in text is to capitalize
whatever you would have bolded or italicized in HTML, but be careful with your use of caps—
they're difficult to read if used excessively.
So now that you know the secrets of fitting high-impact copy into small spaces, I'll let you in on
another little secret...there's a lot more to learn!
In fact, this article itself has been an exercise in fitting tons of information into a relatively small
space! Writing sales copy, designing banner ads, writing powerful classified ads, putting together
an effective newsletter subscription offer... these are all topics that I've devoted entire lessons
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(i.e. hundreds of pages) to in my Insider Secrets course.

However, now that you have some of the basics under your belt, you should be able to start
making dramatic improvements to your short copy... improvements that will attract a much
bigger response and increased sales. If all your copy is written with the rules of benefits,
audience, calls to action, and layout in mind, you simply can't lose.
And remember: no amount of copy is so small that it can be overlooked... every link, button,
banner, and classified ad is either making or breaking your marketing campaign as we speak.
Web Bookmarking Sharing Site Links
"Social bookmarking" sites allow you to create online bookmarks or favorites. You can access
your Web-based list from any computer. You can create a profile in these link sharing sites to
find and share Web content easily with people who have similar interests. You can also add
buttons/icons to your Web site or blog, so people can easily submit your pages/posts to these
sites & drive more traffic your way.
Del.i.cio.us (http://www.delicious.com)
With Del.i.cio.us, create tags for naming and organizing your personal bookmarks. Share these
favorites with others, including people in the del.i.cio.us community. You can also use these tags
to search other people’s content, which makes it easy to collect a lot of information about a topic
that interests you. Your Del.i.cio.us Web page contains all of your bookmarks in one place.
Digg (http://www.digg.com)
In this online community, other users vote to “Digg” or “Bury” your content submissions. If your
submission gets enough “Diggs” from other users, it will be moved to the home page. You can
also invite friends to join Digg and share articles with them.
Furl (http://www.furl.com)
Furl is similar to Digg except you use a “bookmarklet” button to save the article to your Furl
page. Before you save the article, you can add comments, categorize and date the item. Your Furl
page can be public and shared with others by giving them a URL, signing them up for a daily
email digest or RSS feed.
Ma.gnolia (http://www.magnolia.com)
Ma.gnolia works much like Reddit (see below) where members tag and save Web sites as
bookmarks.
Reddit (http://www.reddit.com)
Using Reddit, you can add “bookmarklets” to your toolbar that will let you "reddit this" or
submit the link. You can also like, dislike and save links while you surf the Web. If the link has
already been submitted, you can share it and/or comment on it.
StumbleUpon (http://www.stumbleupon.com)
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StumbleUpon is a popular site has more than 4.6 million users and has won numerous awards,
including from PCWorld and Business 2.0. You can set preferences and get recommendations
from other Stumble users for Web sites matching your personal preferences. This is an easy way
of surfing the Internet based on preferences of like-minded community members.
SEO Tricks: What Not to Do
SEO, the practice of “optimizing” your Web content in order to achieve higher rankings on
search engines like Google and Yahoo!, has become popular among many Web-based
businesses. SEO providers make changes to site content, links and code in order to make sure
search engines can read your site accurately, often resulting in a better rank. But remember, if
something sounds too good to be true, it probably is–no company can “guarantee” that you’ll be
the number-one result on Google for popular keywords 100% of the time. Companies that do
usually deal in shady practices that can actually get your Web site banned from popular search
engine results pages. Here are a few SEO practices to stay away from:
Cloaking
Cloaking refers to code changes that indicate one thing to search engines but provide totally
different content to users. For example, Web programmers can write code that makes a search
engine think your Web site is taking charitable donations for an international organization, when
in fact your site sells internationally produced counterfeit handbags. Cloaking is usually a red
flag that a site (or company) is up to no good and Google is always on the lookout for sites
dealing in illegal activities in order to ban them from search results pages. Even if your business
is legitimate, cloaking can get you banned.
Keyword Stuffing and Hiding Copy

Don’t stuff your site full of irrelevant keywords–the search engines catch on fast if copy isn’t
written in natural language or if totally unrelated keywords are used. Some sites hide these
keywords on pages by using a font the same color as the background, so users get different copy
than the search engines. Both of these practices are pretty easy to spot for the sophisticated
computers used by search engines–the benefits just aren’t worth the risk.
Using a Competitor’s Name

Don’t overload your site with the names of major companies or competitors in order to divert
some of their traffic to your site. Customers will be confused and angry when the site isn’t what
they’re looking for and you could get blacklisted from all the major search engines–not to
mention being sued by the competitor whose traffic you try to steal.
Snaking Content
It’s never a good idea to “borrow” text or copy from another site. Not only does this often violate
copyright laws, it will also get you kicked out of search engine rankings. Write your own content
or make sure copy is totally different if you’re addressing the same subjects as competitors.
When it comes to SEO, quick and easy fixes like those above are almost always a bad idea.
Make sure you preserve your reputation (and search engine ranking) by engaging in honest and
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reputable SEO practices.

Seven Ways To Get Your Web Site Noticed
You've built a great Web site. It's well designed, encourages customer interaction, and is filled
with compelling, well-organized content. Now comes the tough reality: Creating a great site
doesn't automatically mean customers will visit it. With millions of Web sites today, chances are
slim that a customer will randomly happen on to your site.
That's why it's imperative that you use many strategies to get your Web site noticed by the 100
million-plus people who now surf the Web. Here are seven ideas to help get you started:
1. Put your URL everywhere.

These days, your URL—or Uniform Resource Locator, also known as your Web site's address—
is as important as your telephone number. Make sure people know where to find you online by
including your URL on:
• Business cards, letterhead, envelopes, mailing labels

• Packaging, catalogs, statements, invoices
• Advertising, press releases, brochures, even shopping bags
Some businesses also print their URL on giveaways—t-shirts, hats, bumper stickers, and pens.
Clothing-maker Joe Boxer even weaves the company's URL into the waistband of its garments.
2. Add your business to search engines.

List your site in the major search engines, and take the time to index your site with keywords that
accurately describe your business. One benefit of using an integrated e-business service, like
Bigstep.com, is that these services submit your site to search engines for you, based on your
individual business needs.
A cautionary note: Not long ago, when there were just a few thousand Web sites, listing your
business with search engines was enough to attract regular traffic. However, not anymore. With
millions of Web sites, chances are your long-term customers won't come from the ranks of the
curious Web surfer, but rather from your continuing efforts to promote your site.
3. Create an emailing list.

Add a form to your site so visitors can drop their name in your business's "digital fish bowl."
Make them part of your mailing list and send them periodic email publicizing special offers,
bargains, and new merchandise or services. A few caveats, however:
• Make it easy for people to "unsubscribe" from your mailing lists.

• Only send email when you have something valuable to offer or say.
• Keep the length of your emails to two screens—less, if possible—and include links back
to your Web site for more information. Keep in mind, many people skim email messages.
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4. Purchase email lists.

Many vendors sell email lists, targeting a variety of audiences. Purchase a sample list, draft an
appropriate email message, and give the audience an incentive to "click through" to your site.
Then, based on the response rate, determine if the cost of acquiring that customer was worth the
investment. These new customers can be added to your database for future communication.
People should never receive your email in an unsolicited fashion. Make sure they really want to
hear from you. Work only with list vendors who provide "opt-in" mailing lists.
5. Create a regular e-newsletter.

It should be short, lively, and full of valuable information. Some content ideas include:
• Links to new content on your site

• Special offers on products and services and how to order
• Articles on any new products or services
• News on your business' recent accomplishments and other important happenings
• Bonus articles from relevant sites or publications
• Information on how to "subscribe" or "unsubscribe" to the newsletter
Providing an e-newsletter is an instant customer database builder. Moreover, integrated e-

business services offer easy-to-use e-newsletter tools, creating them on your own is quick and
straightforward.
6. Run fun contests or other promotions.

Contests can be as simple as asking people to fill in a form on your site with their name and
email address so they can win a product or service in a random drawing. You can attract
significant attention by running a promotion that is fun and promotes your products and services.
Before you organize any contest, check into the legal ramifications of publishing it on the Web.
By putting your contest on the Web, you make it available to visitors worldwide, which may
make your contest subject to certain laws.
7. Establish reciprocal links and banner exchanges with complementary sites.

Use search engines to find other Web sites that you think your site visitors would find valuable.
Then, send email offering to link to those sites, and requesting that they link to you in exchange.
You also might consider a banner exchange. Banner ads are the most frequently used advertising
method on the Web. Most advertisers pay thousands of dollars to display a banner, but by
becoming a member of an exchange, you can advertise at countless member Web sites without
spending a cent.
Some final advice.

Always promote your site on the Web's terms. For instance, if you're using email as a
promotional tool, never, ever send unsolicited email (also known as "spam") to your list. Also,
before you start any publicity or promotion, make sure you can handle the traffic you anticipate
on your site. Finally, never lose sight of your goal: acquiring and keeping satisfied customers.
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Six Tips for Building a Successful Homepage

As successful business owners know, you only get one chance to make a positive first impression
with a customer. In fact, a recent study from the Technical Assistance Research Program found
that 91 percent of customers who have a bad first encounter with a business never return. While
that first impression in the off-line world may come from any number of sources, in the online
world, there's only one source: your homepage.
With some simple planning, your homepage can deliver your business message with impact.
Here are six tips to guide you.
1. Make the page unique from your competitors' homepages.

To do this, first use a search engine to find Web sites of businesses similar to yours.
• What do these homepages look like?

• What products, services and specials do your competitors' Web sites offer?
• How can you distinguish your homepage from theirs?
• What's unique about your company's products or services?
Make sure you display the most popular products and services and most exceptional facets of
your business front and center.
2. Keep the design simple.

Don't overload your homepage with images, colors and different sizes of text. Large graphics
make your Web pages download slowly over a modem and visitors won't wait to see what's on a
slow-loading page. Filling a page with different images, colors, and many different font
combinations will confuse people who visit your Web site and make them unlikely to spend
much time there.
3. Create an easy-to-navigate Web site.

Place navigation links where people expect to find them, and make sure all pages of your Web
site have a consistent set of navigation links. (Using an integrated e-business service with good
design templates makes this kind of decision a snap.) At the least, make sure every page in your
Web site includes a link to your homepage.
4. Keep the content fresh.

To show your Web site visitors that your site is worth visiting often, update your homepage
frequently—with special offers, information on new products and services, as well as changes to
your business operations. Including the date your Web site was last updated at the bottom of
your homepage lets visitors know that your Web site is constantly evolving. Fresh content lends
credibility to your Web site.
5. Promote your business—online and offline.

List your Web site in the major search engines, and take the time to index your online business
with compelling keywords that describe your business. If you use an integrated e-business
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service, these firms will submit your Web site to search engines for you, based on your
individual business needs. Also, include your Web address on all your advertising, letterhead,
business cards, brochures, even shopping bags.
6. Connect with your customers.

Make it easy for customers to learn more about your business when they come to your
homepage:
• List your email address as a link, and create a small footer on every page with
information such as your business telephone number, fax number, or address if
appropriate.
• Create a sign-up box that invites people to subscribe to your mailing list so you can send
email updates about your Web site to keep them coming back.
With these tips and careful planning, you'll be well on your way to creating a homepage that
supports your business goals and makes a lasting impression.
Six Ways To Get Your Site Ready To Sell
"I just think it's amusing ... and scary," says Purvis, which owns a small business that sells paper
airplanes run by the energy of a common house fly. Since its launch, the site (which has been up
a little more than a year) has been visited by more than 120,000 enthusiasts. And, much to
Purvis' surprise, thousands of the little buggers have been sold.
Okay, that's a great story, but how should a small, niche-driven business prepare to sell its
products online? It's a question that is on the minds of most small businesspeople today. Here are
six tips to help you get your site ready to successfully sell on the Web.
1. A Solid Product
Think out-of-the-box. The Internet isn't just national, it's international. Chances are that if you
sell widgets, several others sell those same widgets. But, you can still market your product in a
savvy way to distinguish it from others, and lock-in a broader market—that's #2.
2. An Internet Business Plan

Similar to any new business venture, you need to develop a careful plan that examines the
essentials of what you are trying to do. What do you expect from the Internet? How are you
going to make it happen? Are you equipped to distribute your products internationally? Set
realistic expectations and goals for your Web site, do not expect a million page views in the first
day. Think smart, and use all of the resources available to you to understand what it takes to
succeed (visit the following URL articles, resources and information on E-commerce for small
businesses.
3. A Simple Site
Once you have a plan in place, keep in mind two key points before you begin building your site:
Make it easy for potential customers to navigate, and easy for you to update.
"Local businesses need a platform that they can manage from inside their store, or in their home
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in the evening, that's as easy as making a new sign for a store shelf," said Bruce Milligan, vice
president of KOZ.com, which builds online communities for local media organizations and
community groups.
With that in mind, you can either hire a professional to design your site or do it yourself. There
are a number of hosting companies where you can build a simple site relatively cheaply. And, in
many cases, you don't have to know HTML. But, if you want a more distinctive or complex site,
your best bet is probably to hire a trusted professional.
4. Deciding Whether To Do Transactions Online

Unless you have a catalogue and a process already set up for delivery, distribution and customer
service, actually doing transactions online may be more trouble than it's worth.
"Most of the businesses in America operate on a foot traffic model—people walking into a store
and walking out," said Milligan. "The Internet holds great promise for local businesses as an
advertising, promotions and customer acquisition tool, not necessarily as a place where you
conduct transactions." On the other hand, there is a big benefit to offering credit card payments
—it's quicker. And, you don't have to deal with paper order forms, checks or money orders.
5. An Advertising and Promotion Strategy

"They [small businesses] think they can just put up the page, request the search engine and sit
back and make money," said Marnie Pehrson, Internet strategist and founder of the Pehrson Web
Group, which creates community-based, industry-specific Web sites. "You need to be working,
actively involved . . . If you can't do it, hire someone."
Whether it's using a banner exchange, indexing (getting your products on a list/site with similar
products), submitting to search engines, joining a community or sending out newsletters, you
simply can't rest when it comes to getting the word out.
6. Updating Often
One mistake that small businesses make is that they don't change their sites frequently enough. If
you change your prices and inventory in your physical store, be sure to do the same thing to your
online store? "You have to keep the site fresh. The focus of the site has to be as pinpointed as
possible, and you've got to make it worthwhile to visit," says Purvis.
SmartAge Corp., helps small businesses build a site, get traffic to that site, and sell products and
services online. No longer do you need a big budget, or a consultant to help you launch your
small business on the Web. Copyright, 1999 SmartAge Corp., San Francisco, CA. All rights
reserved.
Top 10 Tips: Search Engine Marketing
To improve your Web page ranking, search results and traffic, consider both organic (free) and
pay-per click options to get your site noticed. Remember, search engines are looking for quality
content for the end user, not fancy graphics or deceptive tactics.
1. SUBMIT YOUR SITE: Research your presence in and submit your site to the most popular
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search engine indexes and directories:

Google http://www.google.com
Yahoo http://www.yahoo.com
Open Directory Project http://www.dmoz.org

And other industry-specific expert sites
2. LYNX BROWSER: View your site in a text browser like Lynx (http://lynx.isc.org/) to make
sure search engine spiders can see your entire site. Limit flash and images for the best results.
3. BOT SEARCH: Get familiar with how bots search your site so you don’t incorporate things
into your site that block them from finding you. Make use of robots.txt files. Learn more at
http://www.robotstxt.org/faq.html.
4. KEYWORDS: Select effective keywords to drive traffic and place them throughout your Web
site, including headers and tags (description, title and meta). Try:
Google’s https://adwords.google.com/select/KeywordToolExternal
Yahoo’s http://vretoolbar.com/keywords/
Wordtracker’s (www.freekeywords.wordtracker.com)
5. META TAG CAUTION: Properly format meta tags, or search engines may ignore
them.Visit http://www.google.com/support/webmasters/bin/answer.py?
answer=79812&topic=8522.
6. BE FRIENDLY: Create search-engine friendly pages with rich content, bold or italic
keywords, bulleted text, internal links between pages, and site map links. Get links to other well-
indexed sites.
7. AD WORDS: Even if you have a high page rank, consider pay-per-click ads on Google or
Yahoo to supplement your organic efforts. You get charged only when people click on your ad.
8. GOOD HABITS: Avoid practices that can lower your search engine ranking, like
overloading a page with keywords, creating a page with malicious behavior, sneaky redirects or
using hidden links.
9. CONTENT MANAGEMENT SYSTEMS: If purchasing a content management system, be

sure it can export content, so search engine spiders can crawl your site.
10. WEB STATS: Invest in a good Web reporting tool, or use a free one like Google Analytics
(http://www.google.com/analytics/), to analyze your Web stats and understand how people are
finding your site to ensure it stays at the top of the rankings.
Three Ways to Use New Media Strategies in PR to Gain Visibility
There is a lot of noise today all around us. It’s been reported that the average person is exposed
to anywhere from 1500 to 3000 advertisements in a given day. That is a lot of messages! In order
for your message to cut through all of that noise, you have to be sure that you are using all the
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tactics that you have at your fingertips. Today, that includes using new media strategies to break
through to your target audience.
1. Today we need to think about search in everything we do. Search is the great democratizer
of information. CEO’s to middle management to regular consumers use a search engine every
day, and sometimes multiple times a day. Knowing how to write for search is one of the best
things you can learn how to do today as a communications professional. Reaching that audience
with your content when they are looking for it makes you their top resource.
2. Use multimedia to help tell your story. Photos and videos can add tremendous value in an
online environment. They help by making your content much more engaging. Just think if you
would buy something on eBay without seeing a photo of it? Photos don’t have to just be a logo
or a headshot, but often flow charts and graphics find their way into blogs and traditional media.
When it comes to online video, often a less produced video can produce better online results.
Check out some of the most watched videos on the Southwest Airlines YouTube Channel.
3. Spread your messages. Many people are familiar with Search Engine Optimization (SEO),
but are you familiar with Digital Asset Optimization (DAO)? This is one of the fastest growing
trends in online communications. Open up other channels for your content online to be found
outside of your own domain while using descriptions and links to point back to specific sections
of your domain. Think about a video being on multiple channels like YouTube and MetaCafe
that point back to your own content on your site. This is used for all kind of content like positive
media or blog clips posted in a site like Delicious. Making your content more prevalent online
will make it easier for searchers to find your content when they are really looking for it.
There are many more strategies and tactics that can help you reach through the noise to your
audience, but these are three that will score you some quick points on the board.
Use the Most Valuable Real Estate on Your Web Site To Capture Your Visitors' Attention
Just like in spy movies where the hero has 10 suspense-filled seconds to dispose of his or her
latest assignment before it self-destructs, you have an equally short 10 seconds to grab your
visitors' attention before your chances of making a sale self-destruct and your first-time visitors
leave your site forever.
Your mission, should you choose to accept it, is to make those critical 10 seconds count by
ensuring that the first fold of your Web site (the first screen of your Web site visible without
scrolling) snags the attention of your visitors with a compelling benefit that persuades them to
stay just a few minutes longer to find out what you offer.
What's Up With This 10-Second Rule, Anyway? The first fold is literally the most valuable real
estate on your Web site because this is the screen that your visitors absorb during the first 10
seconds of their visit and use to make their "should I stay or should I go" decision. That's why
you'll frequently hear me refer to "the 10-second rule."
The first fold of your Web site needs to be strategically designed so that, in 10 seconds or less, it
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clearly communicates the biggest, most compelling benefit you have to offer your visitors.
I know this concept probably sounds simple enough; however, most Web site owners make fatal
mistakes here that drive visitors away and limit the sales potential of their sites. In the process of
trying to "tell it all" ... "sell it all" ... or "dazzle `em all," they just end up "confusing `em all." Or
they assume that their Web site will sell the offer itself and don't provide any information. Think
about all of those times you've arrived at Web sites that:
• Overwhelms you with graphics

• Points you in 14 different directions with links here, there and everywhere
• Annoys you with flashy banners
• Slows you down with a long, pointless Flash presentation
• Spends the entire first page talking about "Mission Statements"
• And just plain drive you away with a lack of relevant information
... We've all been to (and been frustrated by) these sites. So what can you do to ensure that your
site isn't one of them?
Communicate Your Biggest Benefit With Your Headline

Any professional copywriter will tell you that your headline can make or break your success.
Unfortunately, this is an element that is sorely undervalued by most site owners. The very first
thing that should draw the eyes of your visitors when they arrive at your Web site is a headline
that clearly states the biggest benefit your site has to offer. Graphics, logos, illustrations, menus
and links, should never overpower or distract from this critical element. Your headline should be
located at the very top, center of the page in a larger font size that naturally attracts attention. It
should communicate information about what you offer and how you're going to:
• Make visitors' lives easier

• Save them money
• Save them time
• Help them in their personal lives
• Provide additional income
• Entertain them
• Make them more attractive
• Help them feel better
Plus, it should be visually appealing. For your headline to be most effective, your visitors must
be able to absorb the benefits it shares in a glance. So you not only need to write a killer
headline, you need to strategically format it. Use bolding, italics, and underlining to tastefully
emphasize key points. And watch where your lines break.
To illustrate these points, let's pretend that you're brainstorming headlines for your Web site that
sells plastic cutlery (i.e. plastic knives, forks and spoons):
Headline Comments:
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• "Welcome to PlasticCutlery.net"
Your domain name should never be used as your title. It doesn't communicate a benefit or
give visitors a reason to stay.
• "Buy Our Perfect Picnic Pals"
You know what this means, but your visitors won't. Are you selling bug spray? Wine?
Picnic baskets? Friends to picnic with? Visitors should never have to read through your
site to understand your title. The benefit should be clear to everyone immediately.
• "Stick A Plastic Fork In It When It's Done"
Don't worry about being clever, worry about being clear. While cute slogans might be fun
to write, be careful that they're doing more than amuse—make sure they're selling visitors
on why your site is worth their time.
• "Durable Plastic Nourishment Ingesting Utensils Comprised of Plasticizers, Fillers,
Pigments, and other Additives"
Huh? Speak in a language that your target market is going to understand. You're only
impressing yourself by overusing big words in long, complicated sentences. Good writing
is clear and concise. So are good headlines.
• "Choose From Our Wide Selection Of Brand Name Plastic Cutlery (Over 200 Tested,
Proven Durable Styles)... Including The Top 10 Patterns The Hollywood Stars Use"
Now I admit that this last headline is a bit of a stretch, but if you are in the market for
designer plastic utensils, these might be the major benefits you are looking for. Notice
that this headline clearly expresses benefits like: Choose from a wide selection of plastic
cutlery (over 200 styles)... Choose from brand name cutlery... And choose from patterns
the stars use.
Capture Visitors' Names and Email Addresses

The next critical element that should appear within the first fold of your Web site is an opt-in
email form that offers visitors a compelling reason to become a subscriber. Not every person is
going to buy from you the first time they visit your site, so it's very important that you capture
their names and email addresses before they leave. You've spent the time, money and energy
getting your site listed in the search engines, recruiting link partners, purchasing advertising in
industry newsletters, writing free promotional articles, etc... Why would you let these targeted
visitors slip away?
Of course, these days including an opt-in email form with text like "Subscribe Now" or "Free
Newsletter" is not enough. Email is no longer a novelty for most people, and there are literally
thousands of sites pushing their "free" newsletters. So it's extremely important that you give your
visitors a compelling reason to share their names and email addresses.
For example, referring back to the plastic cutlery Web site, a good subscription offer might read
something like this:
Subscribe to our FREE monthly "Plastic Cutlery" Newsletter and learn the secrets Hollywood
stars use to throw some of the hottest, most talked-about parties... for almost no cost!
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PLUS, Subscribe today, and you'll immediately receive our exclusive report, "10 Secrets About
Buying In Bulk That Plastic Cutlery Manufacturers Don't Want You To Know!"
Notice that you're not only letting visitors know that their subscription will be free, you're telling
them exactly what your newsletter is about, how frequently they'll be receiving it, and how
they're going to benefit from it. Plus, you're giving them the added incentive of a special bonus
report that contains information they're going to value (and that's going to establish your
credibility).
Make Getting Around Easy With Your Navigation Menu

The other critical element that should appear within the first fold of your Web site is your
navigation menu, which should be placed somewhere on the top, left of every page. When
visitors first arrive at your site, they should be able to see in a glance that your site is going to be
easy to navigate.
If your visitors are struggling to get around, then they're not thinking about your offer. And if
they're not thinking about your offer, they're going to leave. So rather than scatter links around
your homepage, group them together in a concise menu that's easy to understand and use.
I should point out that part of making your navigation menu easy to use involves carefully
choosing your menu button names. For example, a poorly labeled menu on your plastic cutlery
site might look something like this:
• What's Cool
• Meet Bob
• Statistics
• Background
• Product
Notice that none of these buttons give the visitor information about how they're going to benefit
from clicking on them. This is a common mistake. Don't assume that your visitors will
instinctively know what these buttons mean. Choose compelling link and button names that are
both benefit-oriented and clear.
A better menu might look something like this:
• Home
• FREE Plastic Cutlery
• Hollywood Star Favorites
• 200 Cutlery Designs
• Cutlery Care Tips
• About Us
• Contact Us
Notice that each of these menu options clearly tells the visitor where they're going to go or what
they're going to get by clicking on them.
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Avoid These Common Design Errors

Once you understand the key elements that should immediately grab your visitors' attention
within the first fold of your Web site, the elements to avoid become obvious:
#1: Avoid Links and Banners that Drive Traffic Away From Your Offer
Be careful not to drive traffic away from your Web site with distracting banners and links. While
there are some situations that warrant placing a banner at the top of your homepage (i.e. you're
promoting an affiliate product or you're selling your advertising space), you need to make sure
you're not driving your traffic right into the hands of your competition.
For example, if you're selling books about plastic cutlery, you shouldn't have a link to
Amazon.com at the top of your homepage. Amazon.com is a huge, well-established bookseller
that has already established its credibility with online book buyers. If you present your visitors
with the choice of purchasing their plastic cutlery books from you or Amazon.com, they're likely
going to choose Amazon.com.
Think carefully before placing any links or banners within the first fold of your Web site; this is
where you should be directing visitors towards your offer, not away from your site.
#2: Avoid Distracting Graphics and Animation

Words sell, not graphics. So if visitors spend the first 10 seconds at your site trying to figure out
how to make your long Flash presentation stop, or waiting for large graphics to load, you can be
sure that they're not going to stick around.
While there is a time and place for graphics and animation, be certain that if you've chosen to
include any on your site, you've done so to strategically enhance your message and illustrate a
benefit—not for your own self-gratification. Your friends and family will be far more impressed
by the long-term profits your site generates than by flashy, spinning images.
#3: Avoid Sharing Ordering Information Too Soon

While your product type and offer will ultimately dictate how you lead your visitors to the sale,
it's generally a good idea to avoid any mention of ordering or buying until you've established the
value of your offer as this tends to scare people away.
Like any good salesperson, you first need to establish your credibility and explain how your
product or service is going to benefit the visitor before asking for the order.
#4: Avoid "About You" Text Like Mission Statements

Here's a personal pet peeve of mine. Sites that seem intent on boring you to death with long,
elaborate pages that talk about company goals and mission statements. Think about it for a
minute... A mission statement is about what your company wants to achieve, not about how your
visitors are going to benefit from doing business with you.
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Yes, in some cases these benefits may be implied in your mission statement. But you can't
honestly expect your visitors to wade through all of your pomp and ceremony to figure out how
you're going to help them. If you must include this information on your site, don't place it in the
first fold of your homepage where visitors are looking for clear, specific details about why your
site is worth their time.
The first fold is the most valuable real estate on your Web site because this is where new visitors
make their 10-second decision to stay or go. That's why you need to side-step the tempting
design errors like misplaced banners, distracting animation, wordy mission statements, and
premature ordering information, and use this space to carefully:
• Communicate the biggest benefit your Web site has to offer,

• Persuade your visitors to opt-in to your mailing list,
• And convince them that your site will be a breeze to navigate.
This is how you'll not only dramatically increase the average length of a visitor's stay, it's how
you'll also dramatically increase your overall sales.
VoIP Terms and Vocabulary
Voice over Internet Protocol phone systems use an internet connection- rather than telephone
lines- to make calls. Switching to a VoIP system can save you thousands on your monthly phone
bill. Before you switch, you’ll need to make sure that your office has the capacity to support a
VoIP option. You’ll need a fast internet connection, VoIP phones or VoIP adapters for your
current telephones, and any necessary equipment required by the VoIP phone system provider
you choose to work with.
Before you begin making equipment purchases or comparing service quotes, you should take the
time to familiarize yourself with some common industry terms. The better you are able to
communicate with phone system vendors, the likelier you are to get the best deal. Here are a few
VoIP phone industry terms:
Asymmetric Digital Subscriber Line (ADSL): A type of internet connection that transmits
information using twisted copper wire cables. This type of connection is faster than a DSL
connection.
Analog (Analogue): A term used to describe a traditional or “land line” phone system. An
analog converts sounds into electrical vibrations and sends them via telephone cables. The
vibrations are reproduced and converted into sound on the other end of the line.
Analog Telephone Adapter (ATA): An adapter converts a traditional or analog phone into a
VoIP phone without the need to buy a separate headset or terminal.
Bandwidth: The speed at which information travels (using a specific type of connection).
Bandwidth is measured in bits per second.
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Broadband: An internet connection that transmits information at a rate of 100kbps or higher.

Data Packet: In the context of VoIP systems, a data packet is the basic unit that voice or sound
data is broken down into before it is transmitted over a VoIP phone.
Digital Subscriber Line (DSL): A type of broadband Internet connection that uses copper
telephone wire to send information. DSL connections are faster than dial-up.
Internet Service Provider (ISP): A company that provides Internet connectivity service.
Public Switched Telephone Network (PSTN): A traditional phone system, where calls have a
geographic origin.
Router: A device needed to connect to the internet.
Web Ads are Great for Small Business Marketing
One of the best things that has ever happened to small business insofar as marketing goes is the
Internet.
For almost ever, if a small business wanted to attract customers using the media, it had to cast a
wide net. That is, the small business needed to run an ad in a wide-circulation newspaper or
magazine, or on the radio or TV, and hope that the intended audience would see or hear that ad.
It worked, but it was also a bit of a crapshoot, especially in the beginning of a campaign–until the
entrepreneur learned which ad worked in which medium on which day. That was usually an
expensive learning curve.
But the Internet changed that dynamic. Now, with options like YellowPages.com or Google
AdWords, a small business owner can have an ad only show up when the ad matches keywords
someone uses in their search. And you only pay for those people interested enough in what you
are selling to click your ad.
That means that you don’t have to spend money getting your ad read by people who have no
interest in it whatsoever. And that, in turn, means that not only will you spend less, but you end
up with a much more qualified lead.
So, how do you best take advantage of this fantastic opportunity to do more with less? I posed
this question to Gretchen Howard, Google’s AdWords Manager for Online Sales and Operations.
She explained that there are three steps to any successful online campaign.
(First, however note that there are all sorts of ways and places to advertise online. Google is of
course the leader, but you may also want to check out Yahoo!, Microsoft’s adCenter, Facebook,
YellowPages.com, or any number of others. They all target different places online.)
1. Plan: As with any ad campaign, you have to know your audience. Just as you would never
advertise your elder vacation business on an alternative rock station, so too do you need to think
about your intended audience and plan accordingly.
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Specifically, this means that you have to put a lot of thought into your keywords. When giving
speeches, I often state that picking the right keywords is akin to that old game show Match Game
(sans Gene Rayburn and a woozy Brett Summers of course!) If the keywords you put in your ad
match the keywords someone searches for, you will have a match and they will see your ad.
There are plenty of online keyword generation tools that can help you choose the right keywords,
and Ms. Howard thought they are a good place to start. “But don’t stop there, be creative, and
make sure to use the free tools. There is no need to pay for that service” she advised.
2. Create an effective ad. Again, this is not a lot different than any other advertising campaign,
in that the old AIDA formula must be applied, albeit in a more truncated form (AIDA stands for
Attention, Interest, Desire, and call to Action). Gretchen Howard called it creating a “gotta click”
ad.
The trick here is that, as you only have three lines of text, you must be very wise and judicious in
the words you choose:
• Keywords must go in the title on the first line

• Stress benefits, benefits, benefits
• Don’t ramble
• Have a call to action that directs people to a specific landing page relating to the
keywords, and not just to your homepage
3. Modify, modify, modify: In a traditional ad campaign, you may have to wait weeks to see
whether it worked. One of the great advantages of online campaigns is that you can see your
results immediately. It is essential therefore to monitor and measure your results–your click-
though rates, your conversion percentages, that sort of thing. If it’s not working as anticipated,
tweak the ad, the keywords, etc.
Ms. Howard stressed that the best ads do 1, 2, and 3 above. Ineffective ads almost always fail in
one of the three–either the ad was vague, or the intended audience was not clear, or there was not
a strong call to action, and so on.
Finally, she stressed that you cannot bid higher in order to create high ranking, as ads are ranked
on both bids and relevancy.
So the lesson again is–choose your keywords carefully!
And remember: Of critical importance when doing any sort of online advertising is that you set a
daily budget. All of the services mentioned above allow you to create a budget for your
campaign and it is imperative that you do so.
Web Design Terms & Vocabulary
Hiring a Web designer can be a tough process–reviewing portfolios, meeting with prospects and
checking references can all be confusing if you don’t know some of the industry specific terms
and concepts. Here’s a quick guide to some common Web design terms.
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Web Designer: Any professional who performs design functions for a Web site. This can
include site architecture, programming, logo design or site layout functions.
Web Programmer/Developer: Someone who works with a site plan or design plan to program
or build, the actual site. Programmers can also be designers.
Hosting Company: Hosting companies provide the online “address” or location for a Web site.
Shopping Cart: A Web tool that allows site visitors to select products and make purchases
online.
Brochure Web Site: A Web site that acts as an online “brochure” by providing very basic
product and contact information. A very simple site to construct, usually based on a template.
Banner Ad: A graphic advertisement that, when clicked on, links to another Web site.
CMS (Content Management System): A tool that allows your business to make changes to
Web site text and graphics easily, without the use of programming code.
Domain Name: The “name” or URL of the Web site. Most domain names are purchased from a
domain name registration company, such as GoDaddy.com.
Links/Hyperlinks: Linking text or graphics to another location so that when they are clicked,
the user is directed to another area of the site or another site entirely.
SEO (Search Engine Optimization): Making changes to a site in order to increase ranking on
search engines such as Google. This can involve textual changes (making changes to site copy),
switching graphics to text format and other techniques.
PPC (Pay-per-click): An advertising method where a company pays for each “click” an ad
receives. When ads are clicked, users can be directed to another Web site or a fillable form to
provide contact information.
Web Site Checklist Can Help You Plan for Success
Web sites are popular. Are Web sites good business? We believe they are. A Web site can help
you establish a brand identity, describe your product or service, sell your product or service
online and create a home for your company—be it a firm with you as the solo entrepreneur or a
small business with 100 or more employees.
First, don’t invest in a Web site without thinking about business strategy, the purpose of the Web
site, maintaining the site and cost. Treat a web site as a component of how you will succeed in
business. If a Web site makes sense to help you grow your business, then and only then take
action.
Second, if you decide to launch a Web site, establish business goals and a Web site outline. Set
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clear expectations for the site and define the scope of the project. Your Web site can be effective
without becoming a monumental project with a lot of complex features. Choose what’s best for
your business and keep the focus on building awareness, marketing products or services and
giving customers/potential customers access to your company.
To help you think through the Web site as a strategic business tool, we have developed a topic-
by-topic checklist. This checklist is designed to give you some key points to consider before
creating a Web site and some ideas about technical questions you will want to answer to be sure
a Web site runs effectively over time.
The topics in this workshop article are:
• Web Site Strategy

• Web Site Set-Up
• Web Site Content
• Web Site Maintenance
• Web Site Marketing
Web Site Strategy
1. AUDIENCE—Who is your target audience? What are characteristics of this audience?

(consumer, business to business, etc.) Who do you want to serve with the site customers
and/or suppliers?
2. PURPOSE—What is the purpose of your site? Do you have a clear picture of the
business need the site will fulfill? Will your site contribute directly or indirectly to
profitability?
3. GOALS—How does the proposed site tie in to company goals? Will you sell a product or
service online? Will you provide a sample portfolio of products or work online? How
does the site help you obtain or retain customers?
4. SIZE—How big will your Web site be? Larger sites cost more money; will your site be
five pages or 500 pages? Have you thought about limits for the size and scope of the site?
5. INTERACTIVE—Will your Web site offer interactive features to visitors? Can visitors
send email, order a product or request information? How can the site give you feedback?
Web Site Set-up
1. WEB HOSTING—Do you plan to maintain the computer server for your Web site in-
house? Will you contract for an Internet Service Provider (ISP) to host your site and
make updates?
2. SERVER VENDOR—If you maintain your own server, does the server vendor
understand the needs of your ISP? Does the Web server have fault-tolerant features, so
you can be up and running 24 hours a day, seven days a week?
3. ISP—Do you know what an ISP is? Have you selected an ISP? Will you have dial-up
access to the Web site to make changes?
4. ONLINE SALES—Do you plan to make sales online? If so, does your ISP offer a
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"secure" server? Are you able to handle credit card payments?

5. CONTACT RESPONSE—Who will be responsible for responding to email messages
from your audience? Can you respond to email messages within 24 hours?
Web Site Content
1. CATEGORIES—Have you decided what the main categories or sections will be on your
site? Will the categories link to products and services or to more general subject areas
with sub-categories?
2. FLOWCHART—Did you think about preparing a flowchart to identify all the
components of the Web site? Have you identified what subjects within the site might link
to other subjects?
3. COMPUTER PROGRAMMING—Will you need custom computer programming to
enable features on your site? Do you plan to have a guest book, shopping cart, order
forms or a calendar of events? Do you want any information or interactive inputs to be
related to a database for marketing or sales purposes?
4. COMPETITION—Who are your competitors online? Of those, which competitor sites do
you like and why? What competitor sites do you dislike and why? How can your site beat
the competition?
5. HOT LINKS—What Web sites would you like to link to? What Web sites do you want to
link to your site? Have you thought about registering your site with search engines?
6. TEXT & GRAPHIC SCANS—Is all of your content both text and graphics in electronic
form? Will you need to have photos or artwork scanned into electronic format?
7. SEARCHABLE—Do you want your entire site to be searchable by users? Have you
thought about what vendor can help you set up this and other features?
Web Site Maintenance
1. FREQUENCY—How often will your Web site be updated? Do you plan to update daily,
weekly or monthly?
2. HYPERTEXT MARKUP LANGUAGE (HTML) SKILLS—How proficient are you or
the person(s) maintaining your site with HTML? Can you afford to have a vendor update
your site or do you need to update in-house?
3. STAFF VS VENDOR—Who do you foresee maintaining your site? How much will it
cost? Will staff prepare content and a vendor handle HTML conversion and posting to the
Web site? Are you willing to pay a monthly fee for site maintenance?
4. TRAINING—If you or your company will maintain the site, have you planned for online
administration tools? Will you or an employee need HTML and web site management
training?
Web Site Marketing
1. MARKETING TOOLS—What forms of marketing will you use to promote the web site?
Do you plan to place the Web address on all stationery, business cards and brochures?
Will you place ads, send direct mail or market the site online or a combination?
2. INTERNET PROMOTION—Are you planning to register the site with search engines?
Will you contact the media to review your Web site? Do you plan to buy any Web banner
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advertising on other sites?

3. STATISTICAL FEEDBACK—What do you want to know about visitors to your web
site? Do you want to know where they came from to reach your site? Do you want to
know what pages on the site were viewed? Do you need to know the total number of hits
and page views?
4. ACCESS LOGS & REPORTS—Who will review the Web sites access logs which record
some of the statistical information mentioned above? Will reports about hits, page views
and popular site elements be compiled monthly?
The World Wide Web has the potential to contribute significant profits to your business by
expanding your market area, providing suppliers information about your current inventory levels,
giving customers online access to product catalogs, allowing online purchases, and by simply
bringing attention to your company.
However, a Web site can also be a drain on company resources: if it is not set up with users in
mind, if usage isn’t measured correctly, if top management isn’t committed to maintenance of
the site or if the site is poorly organized and doesn’t attract visitors. Plan your Web site before
you spend money. With forethought you can create a powerful Web site for your business.
What You Need to Know About Web Design
If you’ve decided to hire a professional Web designer, you’ve just made a smart move. Here are
a few things you should know about the Web design process:
Provide Samples
Be sure to show your designer several sites as examples. Find sites you like and sites you don’t
and pinpoint exactly which qualities you’d like your own site to have. Do you like a particular
layout or color scheme? Do you want to stay away from quick-moving graphics? This
information is valuable to your Web designer.
Use Analytics
Web analytics provide valuable information about how your site is used, so that you or your
designer can make changes to the site as needed. Make sure you can track visitors, conversions
and any other data you find valuable.
Plan Ahead
Having your Web site designed is just the first step of maintaining an online presence. You
should always prepare for future changes to the site in advance. For example, a content
management system will allow you to make changes to site content such as product offerings,
promotion dates and other information without the help of a Web designer. Make sure you know
the long-term plan for maintaining your site and keeping it up-to-date.
Use Third Party Hosting

You can purchase hosting services from a third party provider for very little cost. Your Web
designer will probably be able to recommend a trusted hosting service–make sure you choose
one with over 99% guaranteed uptime to maximize the amount of time your site is accessible to
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potential customers.
Design within your Budget

The total cost of a site design or overhaul depends on the complexity of the site and the length of
time it takes to design. Simple Web sites, such as those created from a template (usually with 4-6
pages of content) usually cost less than $1,000. Make sure you have access to site content to
make your own changes later, as late changes can add to the total cost. Highly customized sites,
such as those that enable you to sell products using different ecommerce tools, can run into the
thousands or more, depending on the complexity of the site.
Make sure you know whether your designer bills hourly or plans to charge a set amount for the
entire project. With complex or database driven sites, costs can easily run into the tens of
thousands of dollars or more, easily exceeding projected budgets. Get an estimated project cost if
the designer bills hourly.
Hire a Copywriter
Most Web design companies do not write site copy or text. You can choose to create site content
yourself or hire a copywriter. Hiring a professional is a good idea–not only can professional
copywriters use search optimization techniques in order to make your site more searchable,
they’re also experienced in writing for internet users. Hiring a copywriter ensures that your site
will be easy to understand.
What You Should Know about VoIP
Written by Resource Nation
Most business owners know that a Voice over Internet Protocol system can save your business a
considerable amount of money on phone bills, increase productivity and make communication
easier. While VoIP systems are an excellent choice for most companies, it’s important to be
aware of the drawbacks to using this type of system. If you’re currently choosing between VoIP
and a traditional phone system, here are a few things you might want to consider:
Power Outages
VoIP phone systems require electricity to make calls. If your office has an unsteady or
interrupted power supply, your phone system “uptime” might be compromised. Most vendors
will assess power needs before installing a system, in order to minimize service interruptions.
You can also install a backup landline in case of emergencies. Since power outages are often
associated with emergency situations, many worry about the inability of VoIP to provide
tracking information to emergency service providers when a 911 call is made. Most vendors now
offer E911 services in addition to backup power plans or backup landlines to ensure you’ll
always have a working phone in case of emergencies.
Packet Loss
Packet loss can occur when your internet connection isn’t fast enough to handle the additional
traffic created by phone calls. Packet loss can result in dropped calls, a “static” sound during
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calls or a “broken up” sound on the other end of the line. You can avoid packet loss by upgrading
your internet connection, purchasing additional routers or making other changes before the
system is installed. Most vendors are able to run tests on your existing connection and make
recommendations that will minimize packet loss.
Security Concerns
Many users that switch to VoIP are concerned about security or call eavesdropping. It’s true that
VoIP phone calls are easier to “hack” than calls made using a landline. Ask vendors about
security features that will prevent such breaches, especially if you will be relaying sensitive
information over the phone, such as financial account numbers, personal data or medical
information.
Resource Nation is your source for small business success, providing how-to purchasing guides,
tips for selecting business service providers and a free quote comparison service that allows
business owners and entrepreneurs to compare price and service offerings in over 100 categories.
From business VoIP systems to VoIP phone service plans, you’ll find the information you need
to get the best deal for your business.
Your 12-Month Web Marketing Plan
It's impossible to draw up a Web marketing plan that works for every type of business...and yet
I've done it!
Below you'll find twelve ideas to drive qualified leads to your Web site over the next year.
Despite the chronological approach, you can mix and match them in any way that works for you.
However, it might make sense to start with January's and February's tasks because they lay the
foundation for the rest of the year.
January: Set Up Google Analytics

The reason why this is first on your month-by-month plan is because you should have a
benchmark to compare to your year-end results. The reason I suggest Google Analytics over any
other traffic report program is the price--free--and the quality, comprehension, and usability of
the program. Already have Google Analytics? Take it to the next level by adding conversion
goals. Here's a step-by-step tutorial on how to add goals to your Google Analytic account.
February: Do a Keyword Analysis

If you use the language of your prospects they'll find you at the search engines. You can uncover
the words they use through an in-depth keyword analysis. We used to recommend keyword
analyses to businesses in competitive industries. Now every industry is competitive on the Web,
and chances are your competition has already had a keyword analysis done. Use a tool like
Keyword Discovery or WordTracker to help you discover what your prospects are Googling, or
have a professional do an in-depth analysis.
March: Review Your Web Site

Take what you learned from your keyword analysis and rewrite the copy on your Web site.
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Focus on page titles, headers, and your body copy. It's also a good idea to read through your site
and excise any out-of-date copy.
April: Gather Information

There are so many amazing resources out there for keeping up with what's going on in your
industry...or your customers' industries. One of the best ways to manage all of this incoming
information is through RSS: Real Simple Syndication. Blogs, podcasts, search engines and many
Web sites can generate newsfeeds that you can subscribe to and manage in one place. Set up a
free account at Bloglines or a personalized Google page and start subscribing. Then watch
targeted news and information flow your way.
May: Get Social with Social Media

Despite the current hubbub surrounding Facebook and privacy issues, social media is here to
stay. Social media Web sites are places where your customers and prospects congregate. You
should be there. Don't look at this as a place to push your products and services, but rather to
listen and learn. For more on social media read "How to Use Social Media to Reach New
Customers."
June: Focus on Your Blog

With your keyword analysis under your belt and a fresh delivery of news and information on
your chosen areas of expertise, posting regularly to your blog should be a snap. I can't think of
anything that can jumpstart your organic search engine visibility and establish your expertise and
credibility more quickly than a focused, content-rich blog.
Beginners: If you don't have a blog and aren't ready to take the leap, consider finding the
influential bloggers in your niche, then read and comment intelligently on their blog. It will be a
good first step into the blogosphere.
Experts: Set a goal of doubling the number of subscribers to both your RSS and email feeds. Put
your feed signup "above the fold," if it's not there already. Don't forget to read The 11 Biggest
Mistakes Small Business Bloggers Make.
July: Get Ready for Your Close Up

Most Web marketers agree: video is the killer app. Videos engage people in ways that words
often fail to do. Search engines such as Google and Ask are returning video results along side
traditional Web pages. If you already have videos on your site consider setting up a free account
at YouTube, starting your own channel, and uploading your videos there. A single video might
bring you thousands of visitors.
August: Spread the Word with Article Marketing

Article marketing is an underutilized method of reaching thousands of prospects that would
never have heard of you otherwise. By sending out short, targeted articles through an article
distribution service such as iSnare or The Phantom Writers, you can drive links and traffic back
to your Web site or blog. Use your completed keyword research to help you write compelling,
click-worthy articles that can't be ignored.
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September: Dust Off Your Email Newsletter

Email may be getting a bad rap these days due to low delivery rates, but it's still a cost-effective
way of reaching a wide swath of Internet users. Remember: no one's ever coming back to your
Web site. Ever. Not even your Mom. So get over it.
Instead, provide a compelling reason for them to subscribe to your email newsletter so that you
can stay in contact with them and retain front-of-mind real estate for when they're ready to make
a buying decision. For more on how to craft compelling hooks check out "Email Marketing:
What's Your Email Bait?"
October: Publish Your eBook

Remember when I told you to set up Google Analytics? Well, now it's time to review your stats
and find out which keyword phrases are driving the most traffic to your site. Maybe it's "deep fry
a turkey." Or "spanking alternatives." Or "buying carbon emission credits." Whatever's driving
traffic to your site is an opportunity for an eBook topic. It's an itch that needs scratching. Now,
start writing.
November: Give an Ear (or a Voice) to Podcasts

You don't have to host your own podcast to realize and leverage the power of podcasting. You
can find podcasts in your niche or industry by browsing the podcast directory in the Apple
iTunes store. (Don't worry: they're almost invariably free, and no, you don't need an iPod to
listen to a podcast, just a computer.) Listening may give you the impetus to start your own or to
at least contact some podcasters in your industry and see if they want to interview you.
December: Put on a Webinar

"Oh, pot," I hear you saying, "I believe you're calling the kettle black." Yes, I have been
promising myself (and others) that I'll be putting on a Webinar for about two years. Well, 2008 is
the year! The cost of putting on Webinars has come down; I'm looking at Yugma as a way of
broadcasting my upcoming Webinars on the cheap, then recording them and selling them as
downloads. Whatever your method for delivery, Webinars allow you to communicate with many
people at once anywhere in the world.
In Conclusion
This is going to be your best year ever...if you start planning now. Don't try and do everything at
once, but budget time every month to accomplish your goals for that month.
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Compiled By: Jagat Singh Dhami

All Systems Grow

1. Introduce a New Product

2. Take Your Product to a New Market

3. License Your Product

5. Turn Your Business Into a Franchise

 Do you have a time-defined exit strategy if expansion plans fail?

Develop Strategic Alliances

Seeking Allies Successfully

Before You Finalize the Deal

Now That It's Underway...

Earn Green By Going Green

of people who want to buy green.

• Dedicating 1% of gross revenues to environmental cleanup and advocacy

Are You Waiting for a Market Turnaround? Don’t. Act Now.

Failure, Resiliency and Confidence to Achieve Success

Use Your Failures to Propel Success

Creat Your Own Model of Success

Plan for Success

The Fast Lane

1. You Must Have Big Money

2. You Must Have a Deep Management Team

3. You Must Have a Technological Competitive Advantage

4. You Must Tap a Hot Market

5. You Must Have the Desire

The Rules About Rules

How to Cope With Overnight Success

5. Forge production partnerships. A small business making handcrafted soaps is going to be

7. Communicate with your customers. Communication is the lifeblood of any business

Increase Profits through Expansion and Diversification

research and planning are imperative.

Seven Keys to Growing Your Business

1. The Product Must Satisfy an Immediate Need

2. Offer Good Quality at a Fair Price

3. Be Careful With Your Money

4. Cash Flow Is Essential

5. Guard Your Cash Carefully

6. Maximize Your Marketing

7. Selling Is the Core Skill of a Successful Business

1. Love Your Customers

2. Develop a Complete Business Plan Before Starting

3. Think Through the Critical Issues

4. Can You Get There From Here?

Moving Beyond Your Home Office

Pros and Cons

When You Really Don't Want to Leave...

Next Business Step? Success

Establishing Measurement Tools

OK, now go spend your money.

fortunate enough to have that much profit, your first $64?

Dollars and Cents

The Land of Milk and Money

Profit Pipeline Strategies

Follow these tips to increase profits and grow your business.

Prioritize Your Leads

Pursue Profitable Industries

Don’t Lower Your Prices

Profit Planning Revs up Results, Part I

• Focus your mind.

Profit Planning Revs up Results, Part II

Update Your Offerings

Improve Your Pitch

• Tell your story in five minutes or less.

Relocate Your Business