| Frequently Asked Questions |
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| Q.1 Bookkeeping & Financial Help? |
| Q.2 Protecting Your Business Name? |
| Q.3 Going Into Business With Relatives? |
| Q.4 As a sole proprietor, do I need an employer identification number (EIN)? |
| Q.5 Why Do I Need A Business Plan? |
| Q.6 Employee Health Care? |
| Q.7 Growing Your Business? |
| Q.8 Prevent Burn Out? |
| Q.9 Day Care In My Home? |
| Q.10 Are Computers A 'Must' For Businesses? |
| Q.11 Where Does the Money Go? |
| Q.12 Riding The E-Commerce Wave? |
| Q.13 How Do I Differentiate Between An Employee And An Independent Contractor. |
| Q.14 Federal Trademarks. |
| Q.15 How To Manage Accounts Receivable. |
| Q.16 Don't Get Burned -- Back Up Computer Files. |
| Q.17 When A Good Employee Goes To The Competition. |
| Q.18 Lead Me To The Money. |
| Q.19 Filling In The Slow Days. |
| Q.20 We're Pros Who Want To Be More Pro-Active. |
| Q.21. Can I Use A Federal Grant To Start My Business? |
| Q.22. What You Should Know About Franchises? |
| Q.23 How Can I Improve My Selling Technique? |
| Q.24 Obtaining A Start-Up Loan From Family & Friends? |
| Q.25 How Does A Small Business Outsource Some Of Its Work? |
| Q.26 Take An Ethics Refresher Course? |
| Q.27 How To Get Over Rough Spots In Your Business? |
| Q.28 How Can I Get My Foot In The Door? |
| Q.29 What To Look For When Building Your Web Site? |
| Q.30 'Managing' Vs 'Leading'? |
| Q.31 Don't Fall For Those New Business Scams. |
| Q.32 Filling Those Orders. |
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| Q.1 Bookkeeping & Financial Help? |
Q.1 I opened my own auto repair garage about a year ago. Business is booming, but I'm so busy
I don't have time to do all the paperwork that goes along with the business.
I need help on the bookkeeping/financial end of things. How do I go about getting an outside service to help me?
A.1 As you found out after you launched your own business, keeping track of the money and expenses,
as well as preparing tax forms and other financial tasks, can be overwhelming.
It sounds as if you are ready to turn over these chores to an outside specialist.
That's a smart move on your part. Choosing the right type of tax, bookkeeping and other financial help
is an important decision. An outside accountant can be one of your most trusted business advisors and
a key to your continuing success.
Accounting services differ from bookkeeping services. If you plan to hire a separate bookkeeping service,
make sure the person you select is qualified. Obtain references and use the "Bookkeepers Hiring Test,"
available from the American Institute of Professional Bookkeepers at its website, http://www.aipb.org.
Fees vary greatly among accountants and bookkeepers. Be sure to find out about charges in advance,
so you won't be surprised when the bill arrives. |
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| Q.2 Protecting Your Business Name? |
Q.2 We want to start a printing business as a general partnership. Aside from the equipment we will need,
finding the best location for the business and all the other details we will have to take care of, we want to
protect the name we have selected for the business. We think we have a catchy name for the business.
How do we keep someone else from using it?
A.2 We certainly can appreciate why you would want to protect the name you picked for your company.
It takes a couple of steps to register a company name in Pennsylvania by registering with the
Secretary of the Commonwealth, 308 North Office Building, Harrisburg, PA, 17120.
The phone number is (717) 787-1057.
It is always easier to register using your surname in the business name, such as the John Doe & Jane Doe Printing.
If you use another name, it is called a "fictitious name" and you should use it only after it has been properly registered.
The state will check to see if anyone else is using the name you have selected. If that's the case, you'll need to
have an alternate name in mind.
You'll need to complete form DSCB: 54-311-2, that can be downloaded from
http/www.dos.state.pa/corps/lib/corps/20/7/311.pdf.
You'll need Adobe Reader to view and print the form. The instructions for filing the form are on the pdf.
If you want a faster response, call (717) 787-1057. When you get the voice mail menu,
select "Name Availability" and you'll be told immediately if the name you selected is available.
If it is available, the state will send you the form you need to fill out and return with the required registration fee.
But you're not done. As the instructions show, you'll still have to advertise the company name in a
general circulation newspaper, such as the York Daily Record and in the York Legal Record.
After that, you've completed the name game and your company name is all yours.
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| Q.3 Going Into Business With Relatives? |
Q.3 My catering business is growing faster than I can keep up with it. In the 11 years I've been in business,
I've specialized in wedding receptions. People like what I do and my reputation has grown. I need additional help.
My niece said she is interested in joining me in the business, but she also is talking about an ownership interest
by having her parents put some money in to the business. Is this a good idea and what pitfalls are there if she
does join me in my business?
A.3 There are many "red flags" when you have a working relationship with relatives. If you bring your niece into the
business – especially if she or her parents are going to invest money in the business – you should put the
business relationship in writing. It would be wise to have an attorney draft the documents or review them
before they are signed. Your niece's daily duties, pay scale, work schedule, and vacations need to be put in
writing so there are no misunderstandings later.
If your niece or her parents ready to buy into your business by putting money into the company, that doesn't
mean just because they are relatives you should give them a sweetheart deal that shortchanges you.
Your accountant can help you determine what a fair buy-in price should be. You may want to strongly consider
a "test run" with your niece before you allow her or her parents to become equity partners in the business.
Your niece should prove she's interested in the business and capable of performing the many tasks necessary
for a catering company. It would also be wise in your written agreement to have a clause that gives you the
right to buy her out at any time if things go sour. |
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| Q.4 As a sole proprietor, do I need an employer identification number (EIN)? |
| Q.4 As a sole proprietor, do I need an employer identification number (EIN)?
A.4 As a sole proprietor, you would need to obtain an identification number if either of the following apply:
(1) You pay wages to one or more employees; or
(2) You file pension or excise tax returns.
If these conditions do not apply to your business situation and you are a sole proprietor, then your
Social Security number is your taxpayer identification number.
However, if you are a husband and wife are working together in a business, the rules may change a bit.
If both you carry on a business together and share in the profits and losses, you are a partnership and
each of you would receive a Form 1065, Schedule K-1 that is important for determining your self-employment income.
If you work for your spouse, you should receive a Form W-2, showing taxes withheld and the owner spouse
would then claim the wages paid to you as a deduction. Both a partnership and a sole proprietorship with an
employee must have an EIN. |
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| Q.5 Why Do I Need A Business Plan? |
Q.5 I know banks and other lenders want to see a written business plan from budding entrepreneurs
who need to borrow money. I'm fortunate enough to be able to finance my business myself.
I think writing a business plan in my case is unnecessary, not to mention boring. What do you think?
A.5 You're moving a little too fast. Boring or not, writing a business plan is a critical part of starting a business.
How about this for a reality check for you: The failure rate for new businesses in their first year hovers
between the 70 percent to 80 percent mark. Now look at this: The success rate of businesses with
complete business plans is about 80 percent.
Writing a business plan significantly boosts your chances of success. That's why York SCORE, in conjunction
with the Kutztown University Small Business Development Center, offers workshops on writing business plans.
The description, dates, location, and registration information of the York workshops can be found at
http://www.YorkSCORE.org see Workshops or call 717-845-8830.
A former workshop participant was in a similar situation to yours. She initially balked at writing a business plan,
but did so anyway. She says, "Writing the business plan forced me to ask myself questions that I wouldn't
have thought of it I hadn't written one.''
Business plan templates and guides are also available on-line, at libraries and the SCORE workshops,
but it is important that you not just go through the motions, you have to personalize your own
business plan so it is meaningful to your situation. |
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| Q.6 Employee Health Care? |
Q.6 The dry cleaning business, owned by my wife and me, has grown rapidly in recent years.
We now have a number of employees, but we've experienced a lot of turnover because we don't offer a medical plan.
I've heard that Health Savings Accounts are an affordable way to provide coverage. What do you know about them?
A.6 You're not alone. Between 2001 and 2005, group health premiums increased by double digits each year,
socking small businesses with the highest jump in rates. And the prognosis for future increases is not good.
Health Savings Accounts (HSAs) offer some hope. They work somewhat like an IRA to cover out-of-pocket
medical expenses with tax sheltered money. The HSA must be linked to an insurance plan that has a high deductible.
The money from the plan pays health expenses until the insurance kicks in. Unspent money can accumulate in the account.
There are a lot of details associated with HSAs. You should check with a health insurance professional or go to
http://www.nahu.org , the website of the National Association of Health Underwriters, for basic information on HSAs. |
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| Q.7 Growing Your Business? |
Q.7 My Dad and I have operated our HVAC business for more than five years. We have developed an excellent reputation.
That's part of our problem. We have a backlog of work and we're probably losing business because the two of us can't
handle much more by ourselves. We know we have to bring on additional people, if we want to grow.
But, if we hire qualified people we will be taking on a large administrative burden. Is there a way we can heat up
our business and stay cool at the same time?
A.7 You're experiencing "growing pains."
Many small businesses are overwhelmed when it comes time to hire employees and setting up all the
administrative functions that go along with growth.
A number of business owners in your same situation are turning to professional employer organizations, or PEOs.
They can help you find and hire employees and manage such things as health benefits, workers compensation
claims, payroll, retirement plans, OSHA compliance and unemployment insurance.
More than that, a PEO will do pre-employment testing of job-seekers so you're interviewing only the most qualified applicants.
That leaves you and your Dad free to concentrate on the revenue-producing side of your business.
The National Association of Professional Employer Organizations is an outstanding source of information by logging onto http://www.napeo.org. |
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| Q.8 Prevent Burn Out? |
Q.8 I started my own tool manufacturing business six years ago. While I have some excellent people working for me,
I am afraid to take a vacation away from the business, even for a short time. I keep thinking that if I go away,
something will go wrong or I'll miss a big opportunity. My wife says I'm heading for burnout. Can you help me?
A.8 You knew when you started your business that it would involve a lot of hard work and long hours.
As you struggle to build your business, you must be careful not to overdo it. Your wife is right,
business owner burnout is a real possibility.
It's vital to take some time off to recharge your batteries.
It's also vital that you learn to delegate responsibilities to key employees.
With a little advance planning, here's how you can take some time off:
-- Draw up a list of worst-case scenarios. Then brief those who will be in charge on the possibilities
and chief concerns of each customer.
-- Tell key customers you're planning to be away from the office for a few days.
Introduce those customers to the person who will be filling in for you.
Be sure to express confidence in that person's ability to handle any situation that may come up while you're away.
So go on that vacation. Try to relax. And don't call the office "to find out what's going on." |
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| Q.9 Day Care In My Home? |
Q.9 I really like children and I'm thinking about starting a business to provide day care for children in my home.
I know there is a demand for this type of care, but I don't know what I have to do to get started. Can you help me?
A.9 If you are good with children, you must have a lot of patience. You'll need that trait to go through
all the steps necessary to set up a childcare program in your home.
It involves a lot more than opening your front door and saying, "Come on in."
The Commonwealth of Pennsylvania sets the standards and regulations for childcare.
And rightly so, since parents want to know their child is in a safe and caring place.
First off, details for operating a day care facility for children can be found at this website: www.dpw.state.pa.us/Child/ChildCare/003670907.htm .
The "dpw" stands for Department of Public Welfare.
The Adams County and York County office of the DPW can contacted at 800-222-2117.
Regulations for home based childcare providers is covered under the government-eze name of:
Title 55 –Public Welfare, Part V. Children, Youth and Families Manual, Subpart E. Residential Agencies, Facilities and Services.
To make it easier for you, you can find that information on line at www.pacode.com/secure/data/055/055toc.html .
You're still not done. The requirements for child home care depend on the number of children you plan to have in your home.
For six or fewer children, Chapter 3290 is applicable. Seven to 12 children requires that you check out Chapter 3280. If you plan to include any children who have physical disabilities, you have to go to Chapter 3300.
York SCORE can help you comply with all the federal, state and local requirements that all business must meet.
Another source of information on childcare is available from the U.S. Small Business Administration web site:
www.sba.gov/library/pubs/mp-29.doc and www.sba.gov/library/pubs/mp-30.doc. |
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| Q.10 Are Computers A 'Must' For Businesses? |
Q.10 My brother and I have worked for other employers. We have strong backgrounds in our field and are ready to
strike out on our own. Although we know our trade, we don't know a lot about computers. What should we be aware of?
A.10 There's no way around it: Operating a successful small business today means keeping up with technology.
You'll need a basic computer system and perhaps laptops.
The key is to find what works best for you. Some folks starting new businesses try to do it on the cheap.
They'll buy only bargain-shelf programs or install pirated software -- the latter is a criminal offense.
Setting up an e-mail account without controls and a web site that doesn't work will bring you nothing but headaches.
If you're not computer savvy, invest in professional help. The person who provides your computer support is as
vital to a small business as a trusted accountant and attorney.
For help in finding a tech consultant, contact the Independent Computer Consultants Association.
That is a national, non-profit membership group. The best way to reach the organization is at
http://www.icaa.org . The web site has a free feature that will allow you to search for consultants
by area or special skills. |
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| Q.11 Where Does the Money Go? |
Q.11 I have a small business in a small town. My business is off the beaten path, so we don't have much competition
from those big box stores. Although I constantly show a profit on paper, I never seem to have a lot of cash on hand
to stay current with my bills. What advice can you offer?
A.11 You probably feel as if you are swimming upstream. Without a steady flow of cash to cover your expenses,
your business can quickly stumble. It just makes sense that you want to make sure you have more cash coming
in to your business than going out of it.
First, you need to translate sales into real money as quickly as possible. Surprises – such as slow or non-paying
customers or unexpected expenses – are your worst cash flow enemies. One way to shift the cash flow balance
is to ask for all or a portion of a payment up front. Asking for a deposit in advance is a great way to jump-start
your cash flow. If you establish the policy fairly and apply it properly, you shouldn't alienate good customers.
Do you accept credit cards? If not, you may want to consider doing so. You will have to pay a fee for this service,
but credit cards speed cash into your account and the cost is generally small.
You may also want to keep a closer eye on your receivables. Create a detailed "aging" list of how much you
are owed, by whom and for how long. Focusing on the largest amounts due, call your customers and ask for payments.
Make a list of your payables, too, and pay your suppliers as close to the due date as possible and still be able to
take advantage of any discounts they may offer.
Finally, don't overlook the power of an operating budget. Note specific dates for payables and receivables.
Although the balance between the two won't always be predictable, at least you'll have a snapshot of where you
stand on cash flow. |
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| Q.12 Riding The E-Commerce Wave? |
| Q.12 My daughter wants to set up an internet-based business to sell specialized beauty products. Since my husband and I have operated our own beauty salon/barbershop for almost 20 years, we think we can help her with the basics of running a business. However, neither of us knows much about what our daughter calls "e-commerce." What should we do to help her?
A.12 E-commerce is booming. On-line sales by small businesses could double, triple or go even higher in the next five years.
The key to success in e-commerce – in addition to the products, of course – is the web site. Today, "less is more" applies to web sites that can deliver for your business. Forget the bells and whistles -- those flashing images and scrolling messages of a few years ago. Dump them in favor of graphics that enhance your site's usability.
Make sure your web site is a priority in your daily operations. Keep it updated with messages and contact information. Be sure the contact information is in an easy-to-find location.
Don't overlook setting up a tracking system for activity on the site.
Simple and inexpensive analytical tools can point to areas that need improvement. Two sources for such programs are: http://www.Webtrends.com and http://www.SiteCatalyst.com . Both have free trial offers.
Designing a web site that allows on-line purchases and payments (E-Commerce) may require more knowledge that your daughter can provide. She may want to consult a web design company.
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| Q.13 How Do I Differentiate Between An Employee And An Independent Contractor. |
| Q.13 One of my competitors uses a number of independent contractors to supplement his employees. I'd like to do the same thing, but want to make sure I am doing it legally. Can you give me a "heads up" on how to handle independent contractors?
A.13 Small business owners often try to save money – especially in the early going – by using independent contractors instead of hiring full or part-time employees. Using independent contractors means the business doesn't have to withhold taxes, pay social security or Medicare, workman’s compensation or meet a raft of other employee responsibilities. Many such arrangements, however, can sink under IRS or workman’s compensation scrutiny.
There are a number of issues that you should consider. In a valid contractor/sub-contractor relationship the contractor can tell the sub “what” is to be accomplished, but must avoid specifying “how” it is to be accomplished. For example, the written contract can specify: a) what is to be accomplished, b) the date the work can start, c) the date the work must be finished, and d) the compensation ($) the sub will receive. This written contract cannot specify how the sub will accomplish the task. For example, unless there are extenuating circumstances, the sub may decide to work at night or on weekends or at odd hours. Or the sub may perform some of the work at their shop and other work at the job site. Also, most sub-contractors will be performing work for several general contractors during the year.
There are several Federal and State agencies that get involved in contractor/sub-contractor relationships. These include: the Internal Revenue Service, OSHA, EPA, and PA Dept of Labor & Industry. For example, the IRS can decide if a true sub-contractor status is involved for tax purposes (FICA & unemployment). While the PA Dept of Labor and Industry can make similar decisions for unemployment tax and workman’s compensation insurance. OSHA & the EPA are primarily involved in safety issues. You can find yourself in a major legal and financial dilemma, if you wrongly classify and treat an employee as a sub-contractor. If you misclassify a worker, you could be liable for back employment taxes and medical bills.
If you are at all uncertain, you should contact a tax accountant and a workman’s compensation attorney. The following web resources may help clarify this issue.
http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
http://www.nolo.com/
http://www.alliancetac.com/ContactorStatusCourse.html |
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| Q.14 Federal Trademarks. |
| Q.14 My son-in-law is a graphic designer and he has come up with a new logo for my business. What do I have to do to keep the new logo from being copied by others?
A.14 If you've developed a business name, catch phrase, logo design or a combination of those identifying marketing tools for your business, you'll need to bone up on trademarks.
Trademarks are a relatively low cost legal protection for these items, called "intellectual property."
Applying for a federal trademark – or its companion, the service mark – is a crucial step toward protecting your logo. But be aware that trademarks are not the same as patents and copyrights although a lot people confuse them.
The U.S. Patent and Trademark Office says a trademark is a word, name, symbol or device used in a business with a product to distinguish it from another business.
A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service, rather than a product.
A patent for an invention grants specific legal property rights to the inventor that prevents anyone else from making or selling that invention.
A copyright is the most difficult to define. It is mainly protection for creators of original works, including books, dramas, music, art and other creative works, either published or unpublished.
Thanks to the Internet, the trademark application process is very accessible. It's a tricky and complicated process, but if you stick with it, you may be able to handle all the questions. A far better way to move ahead is to consult a trademark attorney who can handle all the paperwork for you.
The U.S. Patent and Trademark Office website can be found at www.uspto.gov.
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| Q.15 How To Manage Accounts Receivable. |
| Q.15 I have a building supply business. I clearly state on my bills that payment is due in 30 days. Many of my customers pay promptly. However, I have some contractors who stretch out paying me for 45, 60 or even 90 days. What can I do to close these open accounts?
A.15 Welcome to one of the biggest headaches in business. Small business owners quickly find out the meaning of the word "receivables," the money owed to you by others.
If your receivables are getting out of hand – customers are slow to pay, or worse yet, won't pay – you need to come up with a strategy to improve your collectibles.
There are several steps you can take to prevent slow payments:
Make smart credit-granting decisions. Make no mistake about it, a company is granting credit whenever it delivers a product or service without first collecting payment.
Make sure your original invoices are sent in a timely manner. Also be sure the itemized invoice is clear, simple, and accurate. If you're creating your own invoices, make them business-like, with your logo, name and contact information. Including a return envelope may help. There are accounting programs that can generate invoices.
Send a reminder if you are not paid in 30 days. On a long-term project, consider progress billings.
If you need to press for collections, send a customized personal letter, not a lifeless form letter. Remind the debtor of the original promise to pay. Ask for immediate payment in full.
Get on the telephone and call the slow-payer. Most businesses wait too long to pick up the phone, but collections experts say a phone call is 10 times more effective than writing a letter or e-mailing a message.
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| Q.16 Don't Get Burned -- Back Up Computer Files. |
| Q.16 My son was handling the computer record keeping for my electrical business. Now he has moved to another state. He says I should "back up" my files periodically. What can you tell me about this process?
A.16 Backing up your computer files is very important because most small businesses will face a computer crisis of some sort sooner or later. Simple laziness or, perhaps, a lack of information and the belief that backups are too costly or time consuming cause many business owners to put it off. That can cause disastrous consequences.
Damaged or lost data files have cost many small or home-based businesses weeks, months or even years of work. Stolen laptops, hard drives that begin making grinding sounds, pushing a wrong button, and computer viruses that can lead to vanished files are all good reasons to back-up your data files. Backup files can be the difference between a business remaining open or shutting down.
There are two issues when backing up your files, media and applications. For media, an external (or removable) Hard Drive, Tape Drive , CD, & DVD are easy to use. Another option is to use a service that lets you back up your data over the Internet. There are also a number of backup applications that expedite the process or backing up and recovering a backup. A review of several of these can be found at http://www.pcworld.com/reviews/article/0,aid,121969,00.asp
The key is to make sure one set of files is kept in an off-site secure location. Keep one set of backup files on site for convenience, but store another one far enough way that if a disaster strikes, both sets won't be in the same location. A bank safe deposit boxes is ideal for this.
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| Q.17 When A Good Employee Goes To The Competition. |
| Q.17 I'm really bummed out. My best employee just left me to go with my much larger competitor. In the seven years he was with me, I had come to view him as my right hand man in all facets of my business. It's going to take me some time and money to recover from this. I'm wondering if you can give me advice on preventing this from happening again. Bart
A.17 Losing a valued employee is something business owners hate to see happen. As hard as it if for a small business to find and train good people, it's even more difficult to hang on to them once they become top performers.
Motivated, productive employees can be vital in getting a business off the ground or help it soar. The issue of retaining good people is an especially tricky one for a small business. The number one reason good employees leave is a lack of advancement opportunity, precisely the thing that many small businesses can't offer.
A recent survey reveals the reasons "top" employees leave a small business:
Limited advancement opportunity – 39 percent.
Unhappy with management – 23 percent.
Lack of recognition – 17 percent.
Inadequate salary/benefits – 11 percent.
Bored – 6 percent.
Lifestyle change, such as moving – 2 percent.
Other/don't know – 2 percent.
The message to business owners should be clear: helping top performers to reach their goals is essential in keeping them.
If promotions are not an option in your business you can still find ways to reward extra effort. And it doesn't always have to be money. Consider a more flexible work schedule or larger workspace.
Praise for a job well done should be frequent and personalized. |
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| Q.18 Lead Me To The Money. |
| Q.18 After years of working for other people in the carpet business, I've decided to go out on my own. My family and friends assure me my experience in every phase of the business will guarantee me success. What I don't have is the money I'll need for inventory, equipment and vehicles. What should I do to get financing?
A.18 Finding the right type of financing – or finding ANY financing for that matter – is often one of the most difficult aspects of starting and building a solid small business.
You may have a terrific plan and be talented, but finding funding is a different matter. Business owners often start with too little money. It's one of the most common reasons that new businesses fail.
Sources and types of small business financing fall into a few broad categories. You may be able to get a loan from family and friends, draw on personal credit cards, establish home equity lines of credit, obtain commercial bank loans or get a loan backed by the U.S. Small Business Association (SBA). Sometimes suppliers are willing to help.
Or you could offer investors shares of your business in return for cash. Unlike loans, you are not required to pay back the money, but these investors now own part of your business and will want a return on their investment. Venture capitalists work this way, too.
The SBA 7(a) Loan Guarantee Program is the main tool for financing small businesses. It helps secure loans up to $1,000,000 for small businesses that are unable to find financing through conventional lending channels. For details on the SBA programs, go to www.sba.gov/financing.
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| Q.19 Filling In The Slow Days. |
| Q.19 I work as a freelance photographer. Most of my business is with school systems sporting events in the evenings and on Saturdays. While this pays the bills, I still have a lot of unused weekday time. Any advice on how I can fill up those days?
A.19 Freelancers, sole operators, independent contractors, and free agents are all terms for a similar type of small business operator with a key trait in common: all are constantly looking for new gigs to fill their time and increase their revenue.
For these business owners, the internet has become a boon to finding work. Web sites that play "matchmaker" between employers and freelancers have taken the art of project hunting to a new level.
To be successful as a free agent contractor, you need to hone your project-finding skills and improve your marketing, just like any small business. Two keys to being successful: consistency and dedication.
Most independent contractors already know the search for work is a constant, so you'll enjoy it more if you develop a passion for finding the next big project. To build repeat business, you'll need to be a stickler for client satisfaction. Try to gauge client's expectations at every step -- and then exceed them. Recognize that you are your brand.
The most successful independent contractors try to build new skills and leverage existing ones to higher price levels.
For those freelance websites, check out guru.com, sologig.com and elance.com, which cover all industries and areas. Aquent.com specializes in marketing and creative services. |
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| Q.20 We're Pros Who Want To Be More Pro-Active. |
| Q.20 Our family business is in fast-paced marketplace. Changes seem to take place weekly. We're good at what we do and we've managed to make a profit. My question is: How do we anticipate changes so we can stay ahead of the curve?
A.20 Owners of new and growing businesses know one thing for sure: They're always faced with rapid change.
Technology that seemed cutting-edge last year is outdated today – or worse, obsolete. Buyers' moods can swing dramatically and marketing strategies are in constant flux.
The more you test the winds of change, the better your chances of success. But how can you tell the difference between a fleeting fad and a true trend?
Louis Patler, a market research guru for companies such as American Express and Dell, has spent his career tracking trends and their impact on businesses. He says the key to successfully piloting a business in the years ahead will be embracing new ways of thinking. "Sticking to what your business does best" is an outdated concept, he says. Trying new approaches is vital.
Not all customers are created equal. Some are more valuable and loyal than others. Those are the ones you should lavish the most attention on with special savings and service offers.
Capturing and analyzing data about customer needs, wants, behavior and how they use your product or service will become increasingly critical. |
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| Q.21. Can I Use A Federal Grant To Start My Business? |
| Q.21. I've had it with my current job with a large corporation. I want to set up my own crafts business and figure I will need $35,000 to $40,000 to get started. I've seen ads on television and heard them on radio stating they can get you government grants for just about any type of business. Should I go this route, since I don't have any money of my own?
A.21. You've heard the ads: Just imagine, for a small fee you can get gobs of money, courtesy of the taxpayer !
All you have to do is ask and some nice government worker who will open the public coffers and send you on your way to success beyond your wildest dreams. Well, the door to that bureaucrat's office is right next to Big Rock Candy Mountain.
In other words, forget about grants. They are simply not available for the vast majority of would-be entrepreneurs.
Grants to For-Profit businesses are generally for research and technological innovations. And for Non-Profit businesses are generally for research and technological innovations & direct support of the disadvantaged. Eligible recipients would have to provide these innovations/services in areas such as health care, community development, environment, nutrition, consumer protection, and disaster prevention and relief.
A search for a cancer cure might get funded, but a craft shop would not. Paying a fee to someone to find out you don't qualify just doesn't make sense.
Typically, new businesses are started when the entrepreneur has amassed the money needed to start the business. Many use credit card debt or receive bank loans by pledging their home or other assets of value. Others have family and friends who are willing to take a risk and invest in them.
You are much better off to pursue these avenues of financing to realize your dream business. The majority of new starts should forget about grants.
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| Q.22. What You Should Know About Franchises? |
| Q.22. My brother-in-law and I are considering buying a franchise so we can start a business. What guidance can you give us?
A.22. Franchising has become a uniquely American institution and one of the leading doorways into small business ownership in America. Every year thousands of people choose to go into business via the franchise route.
But is buying a franchise really a better choice for you than starting your own business? That's a question you and your brother-in-law will have to answer for yourselves. It is a big investment on your part and you must carefully investigate before you put up the money.
No question about it: franchised businesses are growing at a rapid pace. Some 400,000 franchised business now employ nearly 10 million people with payrolls of $230 billion. Curves, for example, a network of franchised women-only fitness centers, grew nearly 38 percent in a single year recently.
If your appetite for risk is low, a franchise may be your best bet. A franchise lowers the risk because someone else has already pioneered the concept, tested the ideas and found out what works and what doesn't work. If you want to do all of those things on yourself, then start your own business. If not, choose a franchise.
As you research franchises, ask about the experience required, if any, as well as the expected hours and personal commitment necessary to run the business.
You should also find out about the franchisor's background: what is the company's track record and how are other franchises in the system doing? The up-front cost of buying the franchise is crucial, of course, but also find out how much you'll pay for the continuing right to operate the business, and what products or services you will be required to buy from the franchisor.
Insist on being given a list of franchisees you can contact to see if their expectations have been met. Review the franchiser’s standard contract and bring in an attorney to clarify anything you don't understand.
You'll also need to know about options for financing your investment. The U.S. Small Business Administration can help. If you are considering an SBA-backed loan, check the SBA-sponsored Franchise Registry. If the franchise is enrolled in this program, you could receive expedited loan processing through the SBA. Check out www.franchiseregistry.com.
The International Franchise Association – www.franchise.org -- offers information on how franchising works and has a searchable database of more than 800 franchise opportunities.
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| Q.23 How Can I Improve My Selling Technique? |
| Q.23 My junior partner told me the other day that he thinks my selling technique stinks. He says that I have a "one-size fits all" approach and I don't hear what my customers are saying. More than that, he thinks I'm driving away customers. I told him I didn't appreciate his opinion and ordered him out of my office. After I calmed down, I decided he might be right, so I apologized. How can I improve my selling approach?
A.23 Your junior partner has given you a wake-up call. Sometimes selling more means saying less.
If your small business is attracting good prospects, but you keep hearing, "no thanks," it may be time to do a little less selling and a little more listening. Take time to learn as much as you can about why your customers are coming to you in the first place. Ask questions and listen carefully to the answers.
Gather information about pat problems and find out what's working for them, what's not and what they are really looking for that your business can provide. Armed with this information, your business can offer the solutions or benefits the customer is seeking.
Do they merely want a wrench? Or do they need one for a specific job? It could be a big difference. Your task is to help customers explore their options and select the right action to achieve their goals. You will gain customer trust by listening, not by rambling on about what you offer. Results are what customers care about the most.
Once you've listened attentively, you have the information you need to create an urgency to act that is based on the client's need, not yours.
To make more sales, you must keep the process in motion by establishing with the customer what action will happen next. It may involve a meeting or a follow-up telephone call, but it needs to be something. In the process, try to identify a consequence the customer may suffer if he doesn't buy from you.
In all cases, you need to reach the decision-maker in the company. Others may be too concerned with trying to "not be wrong." Find someone who is motivated to speed up the buying process. Do whatever you can to raise the comfort level of buying from you. One way is to give the prospective customer a way out with a satisfaction guarantee.
And speaking about listening: you may want to listen more to your junior partner. He apparently has his hand on the pulse of your company and your customers.
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| Q.24 Obtaining A Start-Up Loan From Family & Friends? |
Q.24 I am considering asking my father and a close friend for loans to start up my furniture restoration business. While I know they would provide the cash, I am uncomfortable approaching them since I don't want to endanger the relationships. Can you offer some guidance on how to keep everything on the up and up?
A.24 For many small businesses, bank loans, venture capital, and money from "angel investors" are financing long shots, at best. It is far more common for a small business to secure funds from family members and even friends.
In fact, family and friends is the most common source of funding for start-ups. Availability is the big attraction. The downside is that business loans from family and friends can be a disaster if not done correctly.
Unstructured or loosely structured financing and payback terms can haunt both sides later on. Research shows that 14 percent of business loans from family and friends go in to default, compared to about 1 percent of bank loans.
To increase the odds of success, approach family and friends with a detailed loan proposal, including financials or a pro-forma for your business, just as you would if you were approaching a bank or venture capitalist. Be frank about the risks. If things go badly, they could lose some or all of their money.
Pick a financing structure that works best for your business and make certain everyone understands it. Be clear on whether the deal involves an ownership/decision-making stake in your business, or whether it is a simple debt you plan to repay. Be clear, too, about the repayment terms.
To legally seal the deal, use a document such as a "promissory note." Putting the terms of your borrowing agreement in proper legal form is crucial. You can consult an attorney or find downloadable legal documents you need – including a variety of promissory notes – at www.findforms.com. Self-help publisher, Nolo, also offers loan forms and relation information at www.nolo.com.
Another helpful resource is CircleLending.com, a company that provides loan administration, record keeping, payment processing, and structural support for these types of transactions. The company takes verbal deals and turn them into legitimate business transactions. Go to the small business section of their web site for information.
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| Q.25 How Does A Small Business Outsource Some Of Its Work? |
| Q.25 The overhead for my business has gone through the roof. Every time we take on some new task, we seem to add an entire department. That means I end up with people sitting around doing nothing for at least part of the day. I take full responsibility, but I'm tired of it and would like to outsource some functions to reduce costs. How do I do that?
A.25 Outsourcing – going outside of your business for services you need – is one of the best ways for a small business to get ahead. But using outsourcing to your best advantage does not happen automatically.
The key to outsourcing for a small business is to go about it professionally. Out of pure necessity, small businesses started outsourcing long before there was even a term for it. Most small firms don't have the in-house expertise to perform many different functions. So they hire someone else to do it for them. An outside specialist can do everything from payroll to building websites; managing computer networks to handling telephone sales.
Developing a successful long-term relationship with an outsourcing partner requires effort on both sides. It's important to treat it like a partnership because that's what it really is.
A vendor who provides a vital service for your business is like part of your staff, so you should go through a similar interviewing and reference checking process before you "hire" the person or business. Most importantly, meet with the key people involved and determine if you think they are compatible with your business.
Be sure to ask detailed questions about the services you will receive and the ready access to someone who can answer questions and solve problems as they arise. For most small business owners, this kind of accessibility is a top priority. If the firm you are considering won't be available when you need help, look elsewhere.
Be sure to ask for the names of current and past clients.
The Outsourcing Institute – www.outsourcing.com -- is a professional association for the outsourcing industry and a neutral "go-to" resource for information. The site's Outsourcing Help Desk lists regional outsourcing events and solutions for small business buyers.
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| Q.26 Take An Ethics Refresher Course? |
Q.26 Our architectural products company employs 38 people. In light of the ethics scandal surrounding Enron and other companies, we want to preserve and protect our squeaky clean reputation. What guidance can you offer?
A.26 In these days of corporate scandals and fiscal misdeeds, small business owners appear to know something their big corporate counterparts do not: ethics count.
Integrity and reputation are everything. These standards are sometimes taken for granted and employees might stumble and could make poor ethical choices that can damage your company.
Putting your business and employees through an ethics refresher course might be a good idea. Two-thirds of small business owners say they are more concerned about ethical business practices today than in the past, according to a survey by a management consultant firm, George S. May International. "It may be difficult to measure the benefit of ethical actions to your bottom line," the president of the firm says, "but a lack of ethics will definitely have a negative impact on a small business."
Although formal ethics training is rare at small companies, there are resources available.
The Josephson Institute of Ethics – www.josephsoninstitute.org -- is a public-benefit, nonpartisan, nonprofit organization that helps advance ethical decision-making. The web site has a free, helpful step-by-step guide to making ethical decisions.
The Ethics Resource Center in Washington, D.C. – www.ethics.org -- is a nonprofit organization offering help in setting up a code of conduct and provides an ethics effectiveness test.
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| Q.27 How To Get Over Rough Spots In Your Business? |
| Q.27 Sometimes I wonder why I went into business for myself, especially when I hit a financial bump in the road. I'm sure my depression rubs off on my employees. My "down mood" usually passes as the business prospects brighten, but I'd like to move beyond this. Any advice?
A.27 In order to be a successful small business, you have to think and act like a successful business.
That sounds simple, but many small business owners and start-up entrepreneurs forget that basic concept. In the face of financial adversity, you have to adopt a "can do" attitude, not a "can't do" state of mind.
As the leader of your business, you should spread a message of success to everyone involved, from employees and vendors to customers and prospects. High performance businesses – large and small – allow people to take risks, generate new ideas, make mistakes, and learn from them.
The most successful entrepreneurs find ways to make successful thinking contagious. One way they do this is by emphasizing long-term potential over short-term thinking.
Emphasize the collective success of your business as a whole, not of any individual, project or product. Then you can accelerate success by identifying a few profitable activities and making them happen even more flawlessly and quickly.
Open the line of communications. Generally, those around you need more information, not less, in order to feel successful. Let people know where you think the business needs to go, the problems it faces and what keeps you up at night. That makes it easier for you to involve them in finding solutions to your biggest challenges.
Be open to new ideas, even if they sound silly or outlandish. One such idea just might be your "next big thing." Be sure you reward people for extra effort. Non-cash incentives – such as time off or a company lunch – are ways to reward employees. But cash bonuses still reign.
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| Q.28 How Can I Get My Foot In The Door? |
Q.28 Our sales people have been trying to get their foot in the door of a major national customer, but we're having little success. How can we make this happen?
A.28 It can be frustrating for a small business trying to land its first sale to a public institution, government agency, or a major corporation.
One of the most helpful steps – meeting personally with the right person – is often the most difficult to take. But a fast-growing program from the U.S. Small Business Administration (SBA) is offering hope to small business owners.
Business Matchmaking, launched in 2003, is a series of regional events that bring corporate and government buyers face to face with small business owners. So far, business owners have landed over 20,000 one-on-one appointments with key government and corporate officials from hundreds of major corporations and agencies.
Business Matchmaking doesn't promise that you'll snag a deal, but it does give you a chance to state your case directly to decision makers. If you have never sold to large corporations or government agencies, this is an excellent starting point.
If you aren't sure how to prepare your pitch, Small Business Procurement Workshops are held a month in advance of each Business Matchmaking event. The workshop can help you:
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Identify potential buyers or your product or service.
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Write and submit successful proposals.
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Plan your marketing and sales approach and line up financing.
The workshops and Matchmaking events are free. You can register, arrange up to three appointments and get all you need to know to participate online.
A word of warning: Matchmaking event slots are limited, so sign up early.
For a calendar of upcoming events and information on how to participate, go to www.businessmatchmaking.com.
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| Q.29 What To Look For When Building Your Web Site? |
| Q.29 I know I have to have a web site if I want my appliance business to be successful. But I don't want to sink a boatload of money into a lot of stuff on a site I won't need. Can you throw me a lifeline here?
A.29 Most small businesses have a web site of some kind. Many are relying more and more on the internet to help their marketing and sales efforts produce greater profits.
Wanting a web site that works hard for your business and actually getting one that does so are two different things.
There are dozens of ways a web site can go wrong. Even if you have a crackerjack designer, he may know little or nothing about building a site that actually produces sales or leads. An eye-pleasing site by itself won't necessarily get the job done.
This is one area, however, where a great deal of help is available to the small business owner. As small businesses gain experience with the web, some clear steps have emerged that can improve your odds for online success.
* The usability of a web site from the consumer's perspective is vital. How easy is it to get around your web site? Can customers quickly find what they want? Nothing is more frustrating for a potential customer than a clumsy or cluttered site.
* Exercise some restraint when providing information. Don't drown a customer in unnecessary details. Give visitors to your site the option of clicking to obtain more information if they want it. Coax customers by stages.
* If customers have to fill out forms online, keep them simple and break them into bite-sized segments. Don't force customers to go through a registration process of endless questions that serves no purpose other than for your future marketing efforts.
* Make sure the photographs and other graphics on your site are compelling. Generic photos just won't cut it. Use graphics of real people and places to add personality to your site.
* Be sure the check-out process on your web site is fast and simple. Avoid last-second choices or pop-up ads.
Every component of your site should address your customer's needs, not just those of your business.
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| Q.30 'Managing' Vs 'Leading'? |
Q.30 My partner and I are having difference on our business philosophy. She says that "managing" and "leading" are the same thing. I say they're not. What's your take on this?
A.30 It's nice to have a philosophical question for a change.
Successful business owners shine at most aspects of operating their business. Usually they're great at planning or marketing or creative thinking or crunching numbers or knowing how to work with customers.
But when it comes to leading, managing and motivating others -- employees, outside sales reps, or key partners -- they sometime fall short.
Leadership experts say "managing" and "leading" are two very different roles, although many small business owners may consider them the same thing.
"Managing" implies structure, control, rules, deadlines, and efficiency, says Ken Blanchard, the author of the best-selling "The One Minute Manager." He says "leadership" is nearly the opposite of "management." Leading requires actions that are more experimental, unstructured, visionary, flexible, and passionate.
Managers and leaders behave differently.
A seven-year study by Blanchard and partner Drea Zigarmi showed that a one-size-fits-all style of leadership does not exist.
Owning a business automatically puts you in a position of leadership. Your goal is to engage others in your venture. Being in a leadership position, however, does not automatically make you a leader.
Many entrepreneurs turn to management techniques to enlist the minds and muscles of the people they lead, but they fail to capture their hearts. "The first step to becoming a better leader is to study yourself and get honest, unfiltered feedback on how you are doing from the people you lead," Blanchard says. "You cannot effectively lead if you do not know your own values."
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| Q.31 Don't Fall For Those New Business Scams. |
| Q.31 I am a single mother and I've seen an ad for a company selling vending machines and guaranteeing 25 locations to place the machines. The upfront cost is $35,000 and they are telling me I can make more than $7,500 a month for just a few hours of work a week. Should I invest the savings I have in this business?
A.31 Oh, my! This appears to fall into the category of "too good to be true."
A few years ago, it was medical billing promises that were common. Now it's vending machines.
Scams involve everything you can think of from bird flu to college scholarships. Victims of scams include everyone from those with lots of money to those with very little funds. You would be amazed at the stupid stuff that otherwise intelligent people will fall for.
There are hundreds of types of scams – fake lotteries and prize drawings; incredible schemes to make money quickly; fake investments plans; work-from-home schemes. The folks who run these scams are clever and sophisticated and know how to separate you from your cash. The internet is filled with these schemes, too. A good spam filter is also a good scam filter.
One way to check on an operation is to contact the Better Business Bureau in the company's hometown. But that's no guarantee, since many of these operations close their doors before the BBB receives complaints. If a company has been in business for less than 24 months, be especially suspicious.
There are other ways to check, too.
Log on to the Dun & Bradstreet web site (www.dnb.com/us). This will cost you $10, but it is money well spent.
You can also check with the office of the Pennsylvania Attorney General as well as have an attorney read the prospectus the company may send to you.
When you think you're done investigating, keep on investigating.
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| Q.32 Filling Those Orders. |
Q.32 My sister and I have a good problem … and a bad problem. We have developed a very profitable business selling oversized stuffed animals over the internet. However, we are having a problem getting our orders delivered on time. We just can't keep up. Help !
A.32 Congratulations on the success of your business. You have obviously found a niche market.
For small businesses that sell products online, by phone, fax, email or mail order, success often brings with it a new problem: order fulfillment backlog.
Packing, shipping and tracking orders can quickly become daunting. And if you are constantly running packages to the post office of UPS store, you're losing valuable time, which you could use to look after other facets of your business.
This may be the time to consider using an outside order fulfillment service to take that burden off of your shoulders. Handling order fulfillment properly can be critical to your success. Poorly packaged items and slow service will annoy customers and harm your reputation. Outsourcing fulfillment can save you time. Your products, labels and other unique packaging can be stored at the fulfillment company's facilities. The company can also handle customer service and returns.
Sure, all of this comes at a cost, but consider the costs you are avoiding, such as storage space, payroll and your own time. If you charge for shipping and handling, you can probably recover all or a portion of those costs.
When looking at order fulfillment companies, here are some things to consider:
* Ask about minimum and maximum order quantities.
* What's the error rate?
* Are there restrictions on what they will ship?
* If you use special packaging, will they utilize it?
The Mailing and Fulfillment Service Association, a professional organization -- www.mfsanet.org -- can help you locate a fulfillment house that's right for your needs.
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| If the information shown below does not answer you question contact York SCORE for free, confidential counseling.
A number of the answers shown below include web sites. These may change with time. In addition, some of the answers discuss Federal and Pennsylvania regulations. These may change. IT ALWAYS PRUDENT TO CHECK THE LATEST REGULATIONS.
The following Frequently Asked Questions have been published in the York Sunday News, Business Section, under the title “The SCOREboard”.
York SCORE welcomes your questions for The SCOREboard. Send your question to: York SCORE, 2101 Pennsylvania Avenue, York, PA 17404, or e-mail your query to Score441@YorkSCORE.org . Please include your name and contact telephone number. |
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