In contemplating an essay about the definition of a small business, I considered many characteristics. The SBA defines a business as “small” based on annual revenue, and the SBA size standards are assigned according to industry. In other words, in one industry a company is considered a small business if it generates less than $7 million per year, while in another industry a company may be considered a small business if it generates less than $500,000 per year. For the SBA, the term “small business” denotes a business that qualifies for SBA programs and resources.
A business can also be categorized as “small” based on number of employees. In general, the IRS considers a small business as one that has less than 100 employees. Various government agencies in the U.S. have their own standards for determining whether a business is technically considered small. For the purposes of financing, official classification, and eligibility for government and private programs for small businesses, you will need to research the specific organization’s definition of small business to see if your business would be included in the definition.
Although the official definition of small business varies from one organization to another, in my mind, there are certain essential characteristics that define a small business, regardless of number of employees or annual revenue.
1. Small Staff that Works as a Team to Divide Tasks
In any small business, the number of employees is smaller than the number of job descriptions included in the company. This means that each employee has to fill multiple roles. For example, in a traditional small business the owner might act as a salesperson, accountant, and inventory manager. One employee may handle customer service, signage, and cleaning tasks. It’s true, in most businesses big and small there is incomplete division of labor. Most employees have at least a few tasks to handle. But in a small business, an employee’s tasks are often incongruous. The same employee with expertise in engineering may be called upon to handle marketing, even though he/she has no experience in marketing.
2. Limited Resources to Hire New People
A small business usually has a core staff who functions as a team to complete all the included tasks. As an employee or even an owner of a small business, you will more than likely be required to branch out into tasks that are not your forte, because the business cannot afford to hire a specialized person for every job.
3. Synergy Between Employees
The third aspect I think is essential to small businesses is that everyone involved must have passion for the work, the mission, and/or the company. A heightened level of dedication by every team member is essential for a small business to flourish. In psychology, this is called synergy, and is defined as a system in which the team as a whole surpasses the sum of its parts. In other words, when we work together, the shared energy allows us to achieve more than we would have achieved separately.
Most small businesses struggle with growth because the owner is too busy to take on marketing singlehandedly. But, unless you opened your doors to a huge client base from the start, you will need to grow in order to stay in business. If your staff doesn’t synergize, you may find that growing your business is next to impossible.
Growth comes from keeping existing customers AND finding new customers, not just one or the other. While everyone in your staff doesn’t necessarily have to participate in marketing efforts, you need everyone to be “on board” with your plans. Your entire staff has to believe in what you’re doing, and in the future of your business, or your growth will be stifled from day one. At the very least, your entire staff should talk up your business and help draw traffic to your doorstep or to your website.
In this post I’ve discussed some hallmarks of successful small businesses, but one of the great things about small businesses is that there is no single formula for success. Your passion is what got you into business in the first place, and your single biggest mistake could be becoming too busy with daily maintenance to let your passion carry the business in new directions.
Do you have a small business or are you a solo-preneur? Are you in need of administrative support help? Do you find that you use the time that you should be earning money to complete day-to-day support tasks? Hiring a virtual assistant may be the perfect solution for you.
According to the International Virtual Assistant Association, “A Virtual Assistant (VA) is an independent entrepreneur providing administrative, creative and/or technical services. Utilizing advanced technological modes of communication and data delivery, a professional VA assists clients in his/her area of expertise from his/her own office on a contractual basis.”
Virtual assistants have a multitude of skills, and work with business owners as office support staff. In the business world, they are referred to as secretaries, office assistants, administrative, and executive assistants. Virtual assistants work from their own office and have their own equipment. They pay their own taxes, and charge only for actual time worked. By contrast, for in-house support staff, you are responsible for salaries, benefits, equipment, office space, and employment tax. Virtual assistants are a cost-effective way to run your business.
Hiring a virtual assistant is a necessity for many small business owners. VAs can be responsible for such tasks as general administrative support, web design, content creation, article writing, blog updates, and email campaigns – or your social marketing needs. With your busy work covered, you are able to concentrate on the task of earning revenue for your business.
Most virtual assistants see themselves as a partners working with you to help grow your business. They can also be a source of networking for business resources and tools. Although they work off-site and independently, they can become an important part of your team.
Finding and hiring the virtual assistant is not something that you want to rush into. Before choosing a VA, you should to discuss their skills, services, and fees, and you should check their references. Ask for referrals from friends, business contacts, and other small business owners. You can search online virtual assistant organizations such as www.ivaa.org or www.virtualassistantnetworking.com.
Virtual Admin Professionals is a virtual assistant company that provides online business management services to business owners seeking administrative help. If you are interested in hiring me as a VA, visit my website at www.virtual-admin-professionals.com. I offer a 30-minute free complimentary consultation so that we can discuss your needs, and how I can be of assistance to you and your business.
As part of President Obama’s efforts to help us recover from the economic disaster of the past few years, from June 15, 2009 to September 30, 2010, the Small Business Administration is offering a guaranteed loan program for small businesses. This program, called the ARC loan program (Americans’ Recovery Capital), is designed to provide short-term financial relief to struggling but promising small business throughout the United States.
ARC loans are capped at $35,000 and are intended to be used to make payments on interest and principal of existing loans and other debts (including suppliers, credit card companies, and other major expenses), thereby allowing small businesses to defer their income directly to operating expenses such as payroll, utilities, and necessary supplies.
These loans are not granted by the SBA directly, but by other lenders. The loan funds can be drawn down over a 6-month period. The loans are interest free and the borrower is not required to begin making payments on the ARC loan for 12 months after the final disbursement. Repayment may be extended over a period of up to 5 years.
Although the SBA guarantees repayment of the loan to your lender, the SBA does not charge a fee for its involvement in this program. The entire goal of the program is to help small businesses to stay in business while the economy is struggling. The SBA has taken the position that by decreasing the risk to lenders, they will be increasing our access to much-needed funds. It’s a win-win situation.
To be eligible for an ARC loan, a small business must demonstrate its viability or past success. The loan funds can only be used for approved debt, and you may be required to provide various documentation to your lending institution. In some cases, your regular bank may be able to offer you access to this program.
On behalf of small business owners, I think it is admirable that our president has taken measures to help small businesses, which generate billions in revenue in the U.S. every year.
Call your bank or visit the SBA website and learn more about how to apply for an ARC loan.
Most small business owners I know are looking for the same things: more money, more personal time, more energy, smarter employees, more customers, and the return of the forty hour work week.
Let’s look more closely at one today…more customers and clients.
As you’ve probably heard, it is easier to keep a customer than it is to find a new one. Small business owners reward loyalty in a variety of ways: preview invitations to seasonal sales, birthday freebies, buy one get one at a reduced price, email specials and even the familiar fish bowl that allows visitors to throw a business card in for the lucky draw.
I read an article in the ClickZ Archives dating back to 2004 about an effective approach towards customer loyalty that was provocative and award-winning. It wasn’t a small business but we can take a lesson from it, I think. No suspense here…it was Avis. Remember the commercial slogan “We’re #2?” That campaign was so successful it “won the prestigious Brand Keys Award for the most loyal brand in the U.S. three years running.” I’m quoting the author of the article, Fredrick Marckini, the original founder of iProspect. His company was the first SEM only firm in the country in 1996. Talk about being ahead of the curve on ‘going green.’
Mr. Marckini was writing about Ron Masini, who at the time was in the development department at Avis.
Three of Mr. Masini’s propositions stand out in the article:
Sidebar: Clickz Network is a resource for knowledge about the cutting edge of internet marketing.
The summary is, I think, that we are better off scratching our heads about how we can deliver the value behind the price we put on our goods and services, rather than throwing a sign up offering a free belt with every pair of pants.
Free or cheap prices rarely, if ever, keep the customer or client coming back for more of the same. There is always somebody out there cheaper.
Have some fun with your business! The 4th of July is coming…dress up as Uncle Sam and charge full price with a smile.
With the recent credit crisis, everyone’s talking about how hard it is to borrow money, even for small businesses that are showing profit and have established a good credit history. A lot of small businesses get financing through the owner’s personal credit/equity, or from family and friends, but even friends and family may be hesitant to part with the savings they still have after two years of economic downturn and investment value loss. While it seems natural to query whatever bank you use for your regular business account for financing, you may find that larger banks are unwilling or unable to offer you the financing you need to stay in business.
Before you go out in search of a loan or other financing, do some research. You’ll need a business plan with projected earnings and, if available, past earning records. You’ll also need a basic understanding of how loans work, including compound interest and penalties for missed or late payments. If you’re using your personal finances as the backbone of your request, lenders will examine aspects of your financial history like past utility payments, historical income, and other factors. It is a good idea to talk to a lawyer and to read whatever you can find about borrowing money. Most importantly, when you go in for the meeting with a prospective lender, you want to make sure you have all your ducks in a row. Call ahead and find out everything you’ll need to bring to your meeting. Make sure you have all the necessary paperwork, and keep it organized, so you can avoid prolonging the process.
If your regular bank turns you down for financing, there are other options:
Visit smaller, independent banks in your area. Smaller banks deal with a smaller overall amount of money and therefore are not in as great a danger of losing everything and going out of business. As per my post on April 3rd, small businesses are persevering through the economic crisis better than big businesses because they have already cut out the fat. Big businesses have been overstaffed and pampered for years, and aren’t accustomed to cutting corners. The same goes for banks. Big banks that have loaned billions of dollars to individuals and businesses stand to lose everything if the bulk of their borrowers default on loans. Small banks may be less panicked right now, and therefore more willing to loan money to strong, promising small businesses.
Every city has organizations designed to provide financing to small businesses and individual entrepreneurs. They can often offer competitive interest rates and more flexible payback schedules than banks, who are bound to their corporate policies. The SBA may be able to help you find independent lenders in your state or locality. In my family business, a bakery, we once borrowed $3500 for an emergency refrigerator repair, from a small lending company just a few blocks from our storefront. These independent lenders offer personal service, less red tape, and a much smaller bureaucracy than big banks.
Another idea is to seek out grants. The Small Business Administration not only offers federal loans to small businesses, but also has programs that may allow access to grants (which do not need to be paid back). Grants are available for various types of businesses, especially minority-owned and women-owned businesses.
These are just a few ideas. The main point is not to be discouraged if your first attempt at getting financing is unsuccessful. At the federal, state, and local levels, there are a variety of possible financing sources for any business that shows promise. If you’ve only checked with one bank, you may be missing out on better opportunities elsewhere.
I admire people that pack up a good book along with their swimming attire before a summer vacation. Like most small business owners, I spend too much time working and thinking about work, so I decided to take a break and actually read a book for pleasure. I recommend that all of you overworked businesspeople try to work in some reading this summer too, and if you do, I wanted to offer this recommendation of a book coming out this July.
The small business blog reader can learn a lesson from the big political figures on “living with the consequences” of their actions.
Many Americans have already read the version published in the UK in January ‘09. The original came out in Sweden in 2006. It is the second book in a trilogy titled The Millennium Trilogy and is the posthumous work of Steig Larsson, a Swedish journalist and novelist. His politics are to the right; however, he engages a wide audience with his novel writing.
The first novel in the trilogy is The Girl With The Dragon Tattoo. It was published by Knopf last fall and according to the Editor-In-Chief, Sonny Mehta, it appeals to the “darker elements in contemporary society”. Now we’re talking language that Americans can understand; this is a series of books about the moral bankruptcy of big business and its impact on individuals who try to operate within its system, only to discover they are dismissed by the political power at large.
Who could have known that Larsson, who died in 2004 of a heart attack at the age of fifty, could write such an exposé on crooked men in power and the corruption that government will allow to go on under their noses. For most of us…he could have written it yesterday.
In his first novel, an aging man hires a journalist, Mikael Bloomvist, and a pierced, tattooed computer genius, Lisbeth Salandor, to dig through the layers of greed, lust, and conspiracy that have spread like a cancer in Swedish industry. The man wants to find out why and how his niece disappeared some forty years ago.
Noted writer Hamish Ford, PhD, has pointed out “the danger of a revisionist approach to history and culture.” The recent buzz phrase “urban legend” comes to mind. Some of us like to get the facts and stories from the actual participants and not the media. Mr. Larsson has served his characterizations well, it seems. Let’s start looking for The Girl Who Played With Fire.
More on Swedish culture, politics and this author coming soon…
Surprisingly, not many. Although we are a nation of cardholders, most of us don’t really understand how the system works. So recently, the US government has taken steps to help make the system more affordable and user-friendly.
On May 20, Congress passed new legislation that makes some key changes to the way credit card companies do business. Included in the bill are regulations preventing credit card companies from charging late fees for payments that arrive on the afternoon of the due date, and preventing the companies from raising interest rates without fair notice. The companies will also be prevented from charging hidden fees for such things as phone payments. For cardholders who pay over the minimum balance, credit card companies will also be required to apply the extra amount to the highest-interest segment of the cardholders’ debt.
Until now, credit card companies used these and other loopholes to interlace hidden fees into what consumers thought was a fair agreement. As a result, cardholders have been facing mounting debt due to increased interest rates, and have recently had more trouble paying off debt than ever before. Thus, at a time when the economy is in great need of consumer spending, the average person is spending less money to avoid paying exorbitant fees on credit cards. This legislation will go into effect early in 2010.
According to the 2008 Nilson report, the US had 700 million credit cards in circulation, which translates to more than two cards per person (including children) in the US. Clearly we are a nation that loves to spend money and we love doing it on credit. So who is to blame for the credit crisis? Is it over-spending consumers or greedy credit card companies?
The answer is, both. Credit card companies are guilty of using fine print and arbitrarily hiked-up interest rates to stay rich. And as a nation of consumers, we are guilty of spending way more money than we earn every year, thereby legitimizing the practices of the companies who provide us our spending cash.
Never in recent history has there been such an obvious need for education on financing and budgeting. It can easily be argued that with a clearer understanding of how credit and debt work, consumers would make better decisions about their own budgets.
The Money Merge Account from United First Financial aims to help consumers and businesses alike to escape the liability of high-interest debt. This ingenious program uses the information you provide about your expenses to calculate a schedule to pay off debt in as little as half the time, and with virtually no interest.
By transferring money between ordinary bank accounts and lines of credit and making payments on strategic days of each month, you can start paying down the principal amounts of your debt and stop putting all your money into interest. The program prompts the user to make transfers through text messages, and is integrated to allow you to approve the transfers directly from your mobile phone.
Amidst a sea of self-proclaimed revolutionary financial software, and debt reduction plans that only serve to add another creditor to the list, this program really does what it claims to do. It even adjusts your payment schedule based on changes in your financial situation, such as lay-offs and big purchases. The best part is, it’s a one-time purchase with no monthly fee or percentage rate. This program is truly innovative.
Get more information about the Money Merge Account.
Find out more about our company, Small Business Web Marketing, and what we do for small businesses.
Outsourcing has a bad rap these days. Most people think of it as sending jobs overseas, seeking out cheap labor by hiring remote workers who will work for less money. The result of this type of outsourcing is a common scenario in which, for example, when you try to call the phone company for tech support, you are connected to someone located in a call center in Bombay, who reads from a script in such a thick accent that even if you understood the technical questions, you wouldn’t be able to decipher the words. For small businesses who wouldn’t even consider hiring international workers, outsourcing can still be a useful tool.
For our purposes, outsourcing can simply mean hiring someone else to do a specific task. If you’ve ever hired a company to take care of your lawn, or even hired a babysitter, you’ve used a form of outsourcing. In a small business, the owner and often very small staff struggle to get everything done. Sometimes there is too much work, and sometimes not enough, so many small businesses can’t afford to hire new employees on the if come.
Sometimes, you’ll end up spending less money and a lot less time by hiring people to complete tasks for your business, either on a one-time or continual basis. Outsourcing can mean calling on a family member that’s good at photography to help with advertising materials, or hiring a nephew to help with a landscaping project for your business. At the same time as you’re relieving yourself of the burden of too many tasks and a shallow pool of labor, you’re offering work to people who will appreciate it and do a good job. To boot, you can hire newbies who will work harder and for less money than seasoned professionals in exchange for referrals and resume material.
Sometimes, insourcing is the answer. Insourcing means assigning new tasks to existing employees of your company. Ask your employees about their other interests. Find out what they’re good at. You might find that you have a salesperson who’s also a good painter or who knows a lot about computers. Part of the charm of small businesses is the feeling of working as a team. You can increase this team mentality by embracing the talents of your employees in multiple ways. You’ll get more done, and your employees will feel more fulfilled.
Small business owners sometimes hurt themselves by refusing to give up tasks, even if doing it themselves isn’t really working out. Case in point, I have a close friend who works for a small business in which the owner is in charge of e-mail marketing. They have a huge subscriber list and the idea is a good one, but it’s so poorly executed that it does more harm than good. For a little bit of money, the owner could hire someone who knows what they’re doing, see more return on the investment, and free up a lot of his time. But he’s so married to the task, he won’t consider giving it up.
Don’t get stuck like this in your own business. Be open to the idea of letting tasks out of your direct control, and finding someone you trust who can do a better job. In the end, it’ll be worth it.
For most small business owners, the bottom line is money. I’ve coined the term “smart-sourcing” to mean finding the smartest way to get tasks done, and one consideration is cost. You’d be surprised to learn that it’s not always cheaper (and it’s definitely not best) to do everything yourself. Particularly if you take into account your time, you’ll find that assigning tasks to someone else clears your plate for more important jobs, and in the long run saves you money. Insourcing and outsourcing, used effectively, can be a small business owner’s best friends.
For more advice and extensive small business consulting and marketing services, contact us.
The short answer is, yes. Social networking offers a kind of publicity you won’t find anywhere else: free, word of mouth advertising.
If you’ve ever bought a product or gone to a restaurant on the recommendation of a friend, you’ve already seen the power of social networking in action. Sites like Facebook and Myspace take this same idea and add to it the power of the Internet. The result is that people can instantly share recommendations with hundreds of friends and family members in blink of an eye, or rather, with the click of a mouse.
There is no type of advertising that is more effective than word of mouth. The most expensive and colorful advertising campaigns can’t compete with the power of one person telling another person what to buy or where to go. But that’s not all…
Search engines like Google base their search results on more than just keywords. Of course, a good website must have strong content and keywords to be of any use, but even the most well-constructed sites need traffic.
The more traffic a site receives, the more likely it will show up in search results because Google (and others) will assume that this site has the potential to answer questions and solve problems. Search engines also give preference to sites that make use of interlinking. Imagine the Internet as a series of rooms (sites) with hallways (hyperlinks) leading to and from the rooms. The more hallways lead to a room, the more visitors the room will receive, and those visitors will discuss and hopefully recommend the room to others. In this metaphor, social networking is a source of hallways for your room.
While Facebook and Myspace were invented with the intention of keeping people connected with friends and family, they have also presented businesses (particularly small businesses) with a new way to advertise a brand or service. Research on advertising tells us that people are bombarded with upwards of 50,000 ads per day, most of which we ignore. But at the end of the day, the endorsements we remember are those of our friends and family.
One of the services our company offers is help with social networking. Building and maintaining a profile on one of these sites takes very little time and the payoff in visibility is enormous. Please contact us if you are interested in taking advantage of this service.
Tax season is annoying, especially when the IRS enjoys playing little tricks on small and home based businesses. Large corporations can employ people that keep up with the multiple changes that occur each year and have prominent CPA firms to act as watch dogs.
Not true for small business.
We have to rely on keeping up on what is a legitimate tax deduction, and although some employ accountants, I know a lot of businesses submit their own tax report because it’s cheaper.
A prominent tax advisor stated that overlooked deductions every year allow the IRS to pocket $250,000 that should be left with us.
Here are a few thoughts: generally, you can utilize a Schedule C form if “your intent is to make a profit” and you “work consistently for a minimum of ten hours a week.”
Other things to take note of are keeping an appointment book and a phone log, placing business emails in a folder on your computer, maintaining a client database, having business cards and, of course, keeping all receipts. Information on receipts should include: who, what, when, where, and why.
My personal tax adviser never allows me to claim entertainment…dinners mostly. We run it under advertising. Now, if you and your prospect go Dutch treat, you can deduct 50% of your half of the tab. I also use business gifts, particularly when clients introduce me to a potential prospect.
Car allowances are constantly being fiddled with by the IRS. I believe you can write off the entire lease if you use your car for business well over 50% of the time. Just remember when you are going to the grocery store, be sure to stop off and leave a sample or promotional piece while you are out. For those taking mileage, a simple travel log kept in the car is quite sufficient. If you don’t think the price of gasoline is going to skyrocket again, you may consider that Big Vehicle deduction under IRS 179. Just be sure on the door it reads GVWR6001 – I think that means it weighs 6000 pounds.
Travel expense is always fun if you are going someplace you enjoy. Go to www.gsa.gov and compare the per diem costs of the most popular convention destinations. Here is a little trick that the IRS can’t touch. The per diem cost in San Francisco is $48/day. But if you stayed at Aunt Betty’s house and she drove you to the convention, you could still write off the allowable deduction. Neat, eh?
Hire your children and make them work for that allowance and you can write it off. They must contribute to your business, of course.
Presentation expenses are allowed. That projector and screen that is used at trade shows and other venues can also be used to enjoy family parties.
The bottom line is this. If the IRS comes calling you must be prepared with all the records they want to see. A big smack down is writing off a portion of your home as a home office, including a portion of the utilities, taxes, assessments, etc. The IRS has made it clear that the office must have a separate entrance and the room is actually an office…not the dining room table. I stay away from that one altogether.
Hope this helps…we have a little time left. If you have thoughts or comments on this topic, I’d love to hear from you.
Best,
Ruth Ann Hall