Monthly Archives: August 2015

10 Tips for Successful Marketing with Promotional Items

Promo products for businessI sometimes get the question- can I write off all these old “blanks” that we bought to give away but never did?

Usually the question comes while the business owner is pointing to a stack of old boxes filled with T-shirts that say “Have a Great Summer-2008” or chipped and broken coffee cups with the old phone number on them or the stack of Frisbees that have “Smith & Son” on them but the son has since moved out of town…

Well, you can’t “write them off” in your bookkeeping because they were already an expense when you bought them in the first place.

But you can avoid wasting your time and money on promotional items that don’t really help you market your business.

Promotional items can be a nice way to get your name out or keep in front of clients who may want to use your services again, but that only applies if the item makes sense for your business and fits with your goal.

Many people get the same old items: pens, coffee mugs, t-shirts, mouse pads as everyone else but don’t really think through what they are trying to achieve or who they are giving these things to in the first place.

I came up with some general ideas that I use to guide myself when investing in this type of marketing.

If you have any more ideas, by all means post them in the comments section!

Here are my ten suggestions for making sure your promo item budget is well spent and provides a decent ROI for the effort:

  1. To make it memorable, try and get something that ties in with your business, or that will last for more than one use.
  2. Don’t order more than you will use in a reasonable time frame and try to avoid using a message that expires or is time sensitive so it can’t be reused or given away after a specific event.
  3. If you promote something with a partner company, you can share the cost but still get the same value.
  4. Decide on the purpose upfront- to get your name out, as a thank you, to increase sales, and then pick the item type accordingly.
  5. Don’t forget to factor shipping and design costs into your budget when figuring costs.
  6. Apparel doesn’t have to just be for give away purposes- you can outfit your employees in custom t-shirts or polo shirts to give them a more professional feel for a relatively small cash outlay, and it may help drive additional business if any of your employees work out in public.
  7. Don’t forget to include a phone number and your website along with your name on whatever you buy.
  8. Spending a little more to get something unique may be worth it if it creates a buzz and gets people talking about your item.
  9. Calendars can work well if your business inspires unique photo images, but don’t get more than you can give away since obviously calendars are worthless after the end of February or so.
  10. If you have a popular logo or slogan, you can make some extra money and generate free advertising by putting the image on t-shirts and stickers and selling or giving them away to customers likely to show them off. You’ll know this is the case if people start asking you where they can get your shirts!

SBA Loan Myths and Realities Uncovered

Myths have surrounded the SBA loan program for as long as it has been around. Now that they are back and many banks are actively funding them again, it’s time to revisit and hopefully put these to bed once and for all and to really understand what the SBA can and can’t do to help you.

Dispelling the myths is the goal of this article.

There are many ideas about what the SBA is and what it does, many of which are wrong. You need to make yourself aware of these so that you don’t go in under false pretenses or inadvertently raise unrealistic expectations.

Myth #1: The SBA is for Startups.

The most predominant myth is that the SBA is for start-ups and struggling businesses–in other words, for businesses on shaky ground. This is not the case. In practically all cases, you must demonstrate the stability and profitability of your business proposal. (The SBA specifically states it is “not actively seeking loans to businesses in existence less than one year.”)

The reason is that the SBA primarily issues loan guarantees to banks and other lenders. The SBA acts as a cosigner for the borrower–you. The SBA has its own requirements that must be met, and the lenders also require minimum qualifications before approving a loan, even with an SBA guarantee.

Because of this cosigner relationship, banks are growing ever fonder of the SBA guarantee. The stigma that used to be attached to SBA loans by the banks has disappeared.

Now, if you are a new business, this doesn’t mean you can’t get a loan. It just means that you have to be even better prepared and even more convincing that someone with an existing business has to be to get approved. But this is why many business start ups get turned down for loans, and why by using this guide you can greatly improve your chances of overcoming this hurdle.

Myth #2: It takes forever to get an SBA loan

Another myth regards the time required to go through the loan process. Many small business owners, for fear of red tape and perceived lengthy delays in obtaining approval, avoid the SBA. But if your proposal is properly submitted, actual processing will normally require three to six weeks, and a bank can usually release funds within a week after SBA approval.

It will take longer if you don’t have all your ducks in a row, if you haven’t filed recent tax returns, if you delay in getting back up information requested, etc. It can also sometimes take longer at certain times of year, but much of it is in your control, so don’t let the cause of delay be on your side.

Myth #3: The SBA itself will make loans if the bank won’t.

The SBA does make direct loans but only for very specific situations. The vast majority of SBA lending assistance takes the form of loan guarantees. The SBA will guarantee 80 to 90 percent of the lender’s loan amount in case you default. The two most common guarantees are the 7(a) Loan Program and the 504 Loan Program. Your local SBA office can direct you to lenders who participate in each.

SBA direct loans are targeted to particular categories of individuals or circumstances. They are normally difficult to qualify for, but if you meet the criteria and don’t fall into one of these denial traps, you should apply. Here are the principal reasons why the SBA will reject a loan application:

  • Funds are available elsewhere on reasonable terms.
  • Funds are to be used for speculation.
  • A portion of the business income is derived from gambling activities.
  • The loan will be used by an enterprise primarily engaged in lending or investing.
  • The loan is used to purchase real property to be held for resale or investment.
  • The loan is used to relocate your business for other than sound business purposes.
  • Some of the direct loans made by the SBA are issued to help businesses comply with environmental and safety laws and assist in cases of forced relocation. It also offers loans to minorities, and disadvantaged individuals. The terms of these direct loans always beat standard commercial loans, having lower interest rates and longer maturities.

Don’t count of getting a loan direct from the SBA though- these funds are in short supply. You should prepare to get your funding via an SBA guaranteed bank loan.

Myth #4: The SBA program is primarily/or women and minorities.

This is not true. The SBA guaranty programs are available for participation by all persons, regardless of race, color, creed, age, or ethnicity. In fact, 65% of all SBA loan guarantees were made for white males.

The agency does employ a relatively new initiative to encourage women and minority borrowers to utilize the program. These borrower categories are permitted to be pre-approved for loan guarantees before a lender has formally approved their loan requests. However, the agency does not provide any special funding allocations for these categories. Nor do women or minority participants receive any special consideration or credit-scoring that would provide agency assistance in a situation in which other borrowers would be denied.

Myth #5: Anybody can get an SBA loan.

There are limits in how big your business can be, your net worth, business profits, number of employees and industry segment, among other qualifiers. Participation with the SBA guaranty program is restricted to borrowers who qualify under certain conditions relating to the size of the small business concern and the nature of the business activity.

Borrowers seeking to benefit under the 7 (a) guaranty program are restricted by either gross revenues of $5.0 million (with some exceptions based on the industry of the borrower) or limited by 500 employees in some specific industries that are labor intensive, such as manufacturing. Questions of eligibility can be directed to the agency for clarification about specific situations.

Borrowers seeking to get assistance under the 504 Development Program are restricted by their average net income over the past three years (no more than $2.0 million annually, including affiliates) and net worth (no more than $6.0 million, including affiliates).

Businesses involved in real estate development, lending activities, gambling, and illegal activities are prohibited from receiving assistance from the loan guaranty program.

Myth #6: The government will monitor the business.

Fears of “Big Brother” cause many small businesses to hesitate about the SBA guaranty program. Participation with the SBA includes no monitoring of the borrower’s business activities, no government audits, and no inter-agency communications about the business operations.

The SBA does not have the interest, personnel, or mandate to provide any extraordinary supervision of the business unless the borrower is in default of the loan. When the borrower is in default, the SBA’s interest will be strictly focused on working with the lender to recover the loan.

Obtaining SBA assistance does not increase the borrower’s chances of being audited by the IRS or being examined by OSHA, the EPA, the Corps of Engineers, or any other government agency that regulates the operations of business and industry.

Basically, once you are approved, as long as you make your payments on time, no one will come around to bother you ever again from the SBA’s point of view.

Myth #7: The lender does not care how good or bad the business is.

This is totally false. Lenders participating with the SBA guaranty programs are responsible for making good loans. The SBA guaranty is intended to enhance a loan, not subsidize the lender to build a bad loan portfolio. An unguaranteed portion of every loan will expose the lender to the full risk of the credit, and that portion is likely to increase in the next few years as funding for this program is restricted. Collecting bad loans can be very expensive in terms of time and money.

Bottom Line

An SBA loan can be a great resource for many small businesses, but it does require some effort on your part. It is neither as easy nor as hard as some myths would have you believe. The point is, if you think you are a good candidate, investigate your options. And if it looks promising from there, apply for the loan and see what happens. It may be just the thing your business needs to reach the next level.

Why (Some) Restaurants Fail and How Any Business Can Learn From It

business mistakesOne of the most annoying things you will hear over and over when you tell people you are thinking about starting a restaurant is how often they fail. Everyone seems to be an expert on restaurant failures and everyone seems to “know” they are risky businesses to start.

But is that true? No. There is a risk in starting any business and restaurants are no different. But 9 out of 10 don’t fail in the first year. And the failures that do happen in many cases could have been prevented by better planning. You don’t see 9 out of 10 Starbucks, McDonalds or Chipotles closing a year or less after opening so obviously it doesn’t have to happen.

You may think that is different because they have more money behind them or more marketing but think about it for a minute. The marketing they have is the brand they’ve built but they also took the time to find a good location where their customers live and where there is demand for their products.

They didn’t just pick the first cheap location they could find. And they certainly continue to market all the time even though they do have good brand names. A new independent restaurant can do the same- find a good location based on planning and understanding the market they are going to serve and then aggressively market their concept.

Likewise, although the chains do have solid financial backing, why would you want to start a restaurant without adequate funding? Of course you are going to run the risk of failing if you don’t have the money to do it right. If you plan properly you can very easily establish how much the “right” amount is and not start until you have it secured.

There is no reason for restaurants to be a risky investment if you take the time to create a proper restaurant business plan and actually understand what you are getting into so you can do it right like the successful chains do for each new location they open. If you don’t take the time to plan then you will take on the level of risk you deserve for not doing the simple front end work you could have done to protect yourself from that risk in the first place.

The Myth Persists

“Nine out of 10 restaurants fail in the first year.”

As an associate professor in Ohio State University’s Hospitality Management program, H.G. Parsa had heard it many times before. But based on his 13 years of restaurant-industry experience, he still didn’t buy it.

Parsa says he spent three months trying to track down someone at American Express who could give him a source for the 90% figure quoted in the ad. As it turns out, they didn’t have one. “American Express has not been able to track down a specific data source for the statistic,” reads a written statement a spokesperson sent Parsa in response to his request.

Urban Mythbuster

Parsa wasn’t surprised. He had run several spreadsheet simulations to verify the statistic himself and found that not only is the 90% figure off base, it’s practically impossible, given industry growth rates. He decided to do his own research on failure rates, using Health Dept. records to track turnover among 2,500 restaurants in Columbus, Ohio, over a three-year period.

His research—consistent with similar studies—found that about one in four restaurants close or change ownership within their first year of business. Over three years, that number rises to three in five.

While a 60% failure rate may still sound high, that’s on par with the cross-industry average for new businesses, according to statistics from the Small Business Administration and the Bureau of Labor Statistics.

Parsa’s study garnered serious attention within the hospitality field: Within a year of the paper’s publication in the Cornell Hotel Restaurant Administration Quarterly in August, 2005, Parsa’s research had been downloaded nearly 2,000 times, a record for the trade journal. But in the culture at large, the nine-out-of-10 myth has stubbornly defied debunking.

What Any Business Can Learn from This

Obviously it isn’t just new restaurants that are subject to failure- any business can become a victim. But any business can also do the same things a restaurant owner can do to significantly decrease the risks:

  1. Carefully research the market to understand exactly who the customers are and what they want
  2. Analyze the competition and figure out what your key differentiation will be
  3. Pre-plan the marketing you will do and verify the estimated total costs and cost per customer acquired to make sure the plan is viable
  4. Do realistic and accurate cost forecasting so you have adequate funds to reach the break even point and plenty of cushion in case it takes longer than expected
  5. If you are going into a business in which you compete with franchises, request their info and get to know how they do things- they are successful for a reason and you will benefit from knowing how they work, even if you don’t follow their exact pattern
  6. If you don’t have previous industry experience, bring in someone who does at least to consult with if not to work with you until you have a base of experience yourself

That last one would have saved the bacon of many a restaurant owner I’ve known who succumbed to the failure stat. There are some businesses where you can learn on the job, but not many. If you don’t know what you are doing, then find someone who does and listen to their advice until you have the experience and the data to prove trying something else may also work.

Businesses don’t have to fail- some of it is out of your hands but most of it isn’t! Be smart with how you do things and you are bound to be successful. If not the first time, then the second or third. If you keep failing after that, it’s not the business, it’s the owner!

How to never fill out a paper form again: Gen Y business owners’ secret formula revealed!

This is a Guest Post by Michael G Pullman of FranchiseeConnect.com, 2 August 2015

payroll systemsIn my work with franchisees and small business owners I’ve found the businesses that run the smoothest have completely eliminated paper forms from their payroll process. With a good online system for requesting leave and tracking staff details you can save a good portion of your admin staff’s (or your) time – I’ve seen 80% reductions in the amount of admin time for payroll.

Ever lost a paper form?

Going paperless is a big step but there’s resources out there to help you. With an online system to replace your paper forms you also remove the risk of paper getting lost. How often do you hear a person in the office scrabbling around at their desk, frantically trying to find one piece of paper?

By putting all the forms employees need online in the one place you’ll help staff avoid that last-minute panic before pay day.

Mistakes

I worked with a business just last week who ran what should have been a bi-weekly pay run. Except – they actually ran a pay run every week! Why? They needed run the first pay run to pay the staff, then the second pay run to fix the mistakes! These mistakes came from 3 areas:

  • missing timesheets from out of office staff
  • bad handwriting
  • data entry errors

Out of office staff

Today nearly every business has staff who work out of the office or work from home. Eliminating paper timesheets and paper forms means these staff members don’t have to waste time or mental bandwidth planning how they are going to get back to the office to fill out their paper forms for the week. They can simply fill them out online and submit no matter where they are.

Messy handwriting

Another big advantage of ditching paper forms is the messy handwriting problem. If you ask any staff member who does data entry they would tell you that at least half of your employees were doctors in a past life! Doctor’s handwriting is legendary for being messy since they think and write so fast. Many times payroll staff will receive a timesheet or change of details form and have to ask the person to fill the form out again because they can’t read the details – interrupting both employees’ workflow. Moving forms online eliminates this disruption completely.

Data entry

Data entry is one of the largest time-wasters in business today. Often businesses I work with have 3 or 4 separate systems that don’t talk to each other at all, and employees need to spend hours every week doing data entry to keep these systems in sync. Now many business systems will sync with each other and we can eliminate this wasted time. I’ve seen businesses completely change the information flows by implementing systems like NetSuite.

Options to replace paper forms

There’s many options for replacing paper forms in your payroll process. Here’s 3 that I’ve come across:

  1. Google Forms – with Forms you can create any form in any format you like, and the results will be put in a Google Spreadsheet ready for input into your payroll system. You can access Google Docs if you have a Google account.
  2. While it’s expensive, a fully-loaded payroll system will give you access to online forms and workflows, and might be worth investing in if you consider the savings.
  3. A lightweight bolt-on to your accounting system like Xero’s add ons

A quick note on number 3 – a lot of the major accounting systems have ‘bolt ons’ or ‘add ons’ now which add functionality to your accounting system at a low add-on price. Often the information collected in the add-on flows to the accounting system which reduces data entry.

Put your forms online to save time and money

By placing your paper forms online you’ll save yourself time, save your employees’ time, and reduce mistakes in the payroll process. In my work with franchisees I’ve found this reduces payroll admin time by around 50%, freeing up your admin employees’ time to do higher value business tasks like analysis and reporting – giving you further insights into the business.

For more time saving tips and automations, visit FranchiseeConnect.com’s blog articles and the online radio show – Franchisee Connect Podcast.