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2014

Mother_Daughter_Business_body.jpgby Erin O’Donnell.


When Kit Seay retired, she thought she’d tour the country in an old camper. Instead, she found herself running a pie business with her daughter—and loving it.


Seay and her daughter, Amanda Wadsworth Bates, started Tiny Pies three years ago in Austin, Texas. Seay was retired from a career in state government and working as a sorority housemother. Wadsworth Bates was working unhappily in real estate. The mother/daughter duo had always baked together, but hadn’t considered doing it for a living until Wadsworth Bates’ son asked for a pie he could pack in his lunch.


After a few months of testing recipes, Tiny Pies was born. Their handheld pies come in signature and regional flavors, such as strawberry rhubarb and the family’s pecan pie recipe. The business was focused on catering and wholesale until last month, when Tiny Pies opened its first storefront.

Mother-daughter firms are a different type of family business. The women who run them say their businesses directly benefit from their unique bond. An estimated 2.3 million such companies are operating in the U.S., according to the National Association for Mothers and Daughters in Business (NAMDB), and their ranks are growing.


“There’s no competition between us. There’s no ego involved. There’s no lack of trust,” Seay says of the work arrangement with her daughter. “I never give a second thought to anything she says or does.”


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Tiny Pies is typical of many mother-daughter businesses that NAMDB founder Jamie Kizer sees. The daughters tend to be in their 30s, with mothers in their 50s or 60s, often retired from a previous career. The younger generation wants more work-life balance, Kizer says, and the older generation is in a position to help them with that.


“In my generation, we worked, and our children were latchkey kids,” says Kizer, who lives in York, Pennsylvania. “We don’t want our daughters to be in that situation. We want to give them flexibility with their own business or self employment.”


Kizer has run a dozen businesses, from an art gallery to a teen magazine. After her daughter Jordan graduated college, she decided they should open a clothing store together. But they quickly found they didn’t work well together.


“I had to make the decision that this business is not worth jeopardizing our relationship,” Kizer says. “My daughter had to be very brave to speak up and say, ‘This is your dream, it isn’t mine.’”


When Kizer had trouble finding resources for their situation, she decided to coach other mother-daughter entrepreneurs through their challenges. It’s an intense bond, and that can be both a strength and a weakness.


Handling conflict

Alexandria Keener never dreamed she would open her own retail store, much less partner with her mother, Deborah Daugherty, to do it. In 2012 they launched My Girlfriend’s Wardrobe, a consignment clothing shop in York, Pennsylvania, as a website. A brick-and-mortar store followed last year.

Keener says she and her mother have always been close, but working together puts them on equal footing. They both have strong opinions on things such as how the shop windows should look or which outfits they should spotlight.


“One of us is always right, and it’s never the other person,” Keener says. “Sometimes I yell at my mom, and she knows I’m just frustrated about a whole bunch of other things. And she’ll do the same to me. But if you did that to an employee, they’d be out the door.”


They are learning to divide the labor. Keener says they share the retail operations, with only one other part-time employee. Daugherty, who also works full time with special needs teens, takes the lead on tasks like accounting. Keener handles the website and marketing. And Daugherty is able to step in when Keener can’t be there, because she’s also a full-time student at the Harrisburg University of Science and Technology. She’ll graduate in May with a degree in new media design and production.


At Tiny Pies, Wadsworth Bates and Seay say they discovered they have complementary strengths. Wadsworth Bates takes care of sales, marketing, and business development, while Seay oversees what’s happening in the kitchen. They now have a staff of 11.


Wadsworth Bates says it’s important for mother-daughter entrepreneurs to separate business and family. Starting a new business is inherently stressful, but they’ve learned not to bring conflicts home.


“If we get crosswise over a work issue, we can still go to dinner, and she can still hang out with the kids,” Wadsworth Bates says. “It’s not changing that side of our relationship.” 


Communicate openly and often

Communication skills are important in any business. But successful mother-daughter teams say it’s critical to their survival.


Kizer cautions them not to make assumptions and to check their expectations. Dedicate time to learning how to communicate in an emotionally healthy way, she says. “My motto is, ‘let’s put it all out on the table and clean it up later.’”


Sandy and Stevie Lynn D’Andrea say they almost never stop talking about their company, Jewels for Hope. They run their handmade jewelry business from their home in Stamford, Connecticut. Ten percent of the firm’s net profits go to charities such as the American Cancer Society and Labs 4 Rescue.


Sandy D’Andrea started the company in 2009. She made jewelry to pass the time during her mother’s final months in hospice and gave pieces to the nurses in thanks. Eventually, D’Andrea opened a store on Etsy.com. Stevie Lynn, a graduate of Fashion Institute of Technology, joined the company a year later to handle advertising and marketing.


“I taught my mom how to use Facebook, and she taught me how to make jewelry,” Stevie Lynn says.


Jewels for Hope has been featured in coveted celebrity gift bags for events such as the Oscars, the Emmys, and the Golden Globes. Meredith Vieira, whose husband has multiple sclerosis, has been photographed often wearing her Jewels for Hope bracelet, created to benefit the National MS Society. Other pieces have been worn by stylist Stacy London and actress Jennifer Love Hewitt.


Living and working together can blur the lines between business and family, Sandy D’Andrea says. She had to remind herself to respect Stevie Lynn as an equal in business even when her instinct was to advise her as a mother. They also make a conscious effort to put business aside and have fun, together and separately.


Stevie Lynn D’Andrea says, “I don’t think the business would have done so well if we weren’t working together. We both complete the unit.”


Leaving a legacy

For younger daughters like Keener, it can be an ongoing struggle to convince other people that she is an equal partner with her mother. Sometimes customers and vendors assume it is Daugherty’s shop, and 22-year-old Keener is her employee.


“Mom has taken the approach of telling them ‘it’s her store,’ because she thinks people won’t respect my decisions if she doesn’t,” Keener says.

Kizer says she values how mother-daughter businesses provide both women involved with financial independence, a creative outlet, empowerment, and mentorship. And it builds a legacy that, like any family business, can be passed on.


In the days before Tiny Pies’ grand opening, Wadsworth Bates says, she was struck by how meaningful it was to be opening a shop with her mother, in a space designed by her sister, an architect, and to have her teenage son proudly helping with last-minute preparations, too.

Wadsworth Bates says of working with her mother, “Our relationship is so much better than it would have been. This is a priceless experience.”

Clearing_Inventory_body.jpgby Iris Dorbian.


If you're a small business owner who sells clothes, electronics or other products, there’s a good chance that from time to time you might be left with excess or unsold inventory from the previous year. You could try to clear out these items with a special sale, of course. But suppose the items are seasonal—such as ski equipment—or customers are simply indifferent, having moved onto the latest gadget or trend. What are the most efficient and cost effective ways to clear out last year's inventory?


Donate surplus items to charity

Rather than simply dispose of last year's products, you could consider earmarking them for charity. For instance, if you are a small fashion retailer saddled with last season's styles, your local Salvation Army might be interested in picking up these items. Not only will you be clearing space for current merchandise, you’ll be performing a good deed while also getting a tax write-off on these donated clothes.


And if you're confused about which charities will accept your extra inventory as donations, you can always consult a company like Zealous Good, which helps connect businesses to local organizations in need.


Brittany Martin Graunke, founder and CEO of the three-year-old Chicago-based Zealous Good, says her company frequently works with small businesses. Most donate office equipment, furniture and supplies, she says, but others also offer up excess inventory.

"We like to think of it as a new and easy way to give back to your community while also being savvy about your business needs," she says, explaining her firm’s mission.


She does offer a few caveats:


"Never donate something you wouldn't give to a friend," she advises. “At the same time, use common sense as well. If it’s 2014 and you have thousands of 2013 calendars, there is likely no reason to donate these.” Also, don’t assume that a charity is going to be interested in everything you deem dispensable.


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“Just because you're donating to a charity in need, doesn't mean they need everything,” says Graunke. For example, if you’re looking to donate excess sweatshirts, you might be surprised to learn that some shelters want only professional clothing or certain sizes. By determining in advance if a charity can actually benefit from your excess inventory, you'll save yourself the stress and frustration of giving a charity inventory they don't need, she adds.


Go paperless

If your excess inventory is in the form of old documents, some of which you have might have held onto longer than necessary, turn to technology to lessen the paper trail.


Donna David, a professional organizer in New York City, is a staunch proponent of this tip. “Use technology to help clear the clutter,” counsels David, who works with many small businesses on their spring cleaning. “Scan your documents and store online and in the cloud so you can shred most originals.” She urges small business owners to do this on a regular basis. “Discard the things you don't need: recycle, shred, or toss,” she says.

And if you've have an excess stack of business cards, David suggests that you eliminate them by using either the Camcard or Cardmuch app. “Just snap a picture of the card and data will be stored in your contacts,” she notes.


Recycle electronics for cash

Rather than discard old or excess items like cell phones, tablets, or other similar gadgets, you might consider using a company such as Gizmogul, which specializes in paying people for their old working or non-working electronics and excess furniture.


According to Barry Schneider, co-founder of Gizmogul, this is a great way for consumers and businesses to get the most value out of unwanted electronics or furniture. Not only does this afford business owners the opportunity to buy new equipment or furniture with the cash they receive via recycling, but it can also remove clutter and open up some much needed space.


However, if you consider this option, Schneider shares a few tips:


       --Trade in early. The longer you wait, the more your phone will depreciate in value.


       --Before taking your old cell phones to a recycling company like Gizmogul, make sure the device can be used with a difference service provider, suggests Schneider. “It will increase the value of your phone instantly,” he says.


       --Perform a basic data wipe on all electronics or gadgets. To completely delete any other data on your computer equipment or device, e-cycle your trash with a company that provides a certificate of data destruction. This allows you to be sure that sensitive information won’t end up in the wrong hands.


Clearing out excess or old inventory is a terrific way for a small business to make space for new merchandise. When done regularly it can help a company stay current with customer preferences and help out charitable organizations along the way.

Touchpoint

How to Get Paid Faster

Posted by Touchpoint Apr 14, 2014

Get_Paid_Faster_body.jpgby Erin O’Donnell.


Christiane Waldron once spent a month chasing $600. As president and CEO of Jenetiqa, a luxury skin care products company, she sells to salons, physicians, and boutiques on consignment. That means she’s often waiting to get paid.


One client dodged her for weeks, with a new excuse each time. She didn’t have her checkbook. She had a meeting. She needed to transfer money. Waldron drove back and forth across town time and again, trying to meet up with her in person.


“I told her, ‘I can’t extend credit. We’re both small businesses, and I have to get paid,’ Waldron recalls. “She asked for another discount.”


Waldron says clients make similar excuses with maddening regularity. Since she started Jenetiqa in 2011, she’s learned some lessons the hard way. “As a small business, you cannot operate on trust, but sometimes you don’t have a choice,” she says.


It’s common for small businesses to struggle with uneven cash flow. But business advisors say there are ways to even out the feast/famine cycle by getting paid faster. It takes planning, communication, and lots of follow up. Below, some small business owners explain how they get customers to pay on time.


Require some payment up front

Business consultant Shell Black advises business owners to require a percentage of payment up front for project-based work. His Dallas-based company, ShellBlack.com, is a Salesforce Cloud Alliance Partner that helps other small businesses set up and make use of Salesforce’s customer relationship management products.

 

Black says he’ll commonly ask for a 50 percent deposit of the total cost to schedule a consultant’s time. Then, he bills the rest at natural project milestones such as the completion of data migration or user training.


Ironically, the companies with the deepest pockets are the ones that seem to take the longest to pay. “Bigger companies throw their weight around a little bit. Small businesses understand the necessity of getting paid,” Black says.


Set expectations

Be direct with customers about when you need to be paid, says Neil Kristianson, founder of Only Sky Artist, a music management firm in Chicago.


In his current business, Kristianson finds himself using many of the same practices he did when he remodeled homes for a living. Back then, he would draw up a calendar for each project, laying out the work to be done, inspection dates, and so on. Payment dates were written right on the calendar, and every client received a copy. The effect was remarkable. “My accountant was amazed that my receivables rarely went past five days,” Kristianson says.


As a consultant to musicians, he still uses the calendar system. It’s adaptable to any project-based business, Kristianson says, especially those that don’t operate on monthly invoices. And it puts the responsibility on the client to manage his or her cash flow.


“Once I figured that out, I realized I had to do a better job of communicating when I need to get paid,” he says. “I got tired of them saying, ‘Can you wait while I move some money around?’”

 

Create an even stream of cash

Kristianson also timed his invoicing and due dates to his project costs, so that he wasn’t scrambling for cash. In construction, it’s easy to know when you’ll be buying lumber or paying a sub-contractor, so he made sure to structure his payment schedule accordingly. He learned to forecast break-even times, and that’s when he would make the next invoice due.


He also varied the number of payments based on project size. Smaller jobs were broken into three payments, but for bigger jobs he sent out up to seven invoices.


Black recommends more frequent invoices to smooth out the peaks and valleys of cash flow. Even though it means more paperwork, he says, it also means you can invoice for smaller amounts, and that can encourage clients to pay quicker.


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“It pulls the cash flow forward,” Black says. “If you’re waiting until the end of the month to bill, you’ve already paid the payroll or the cost of goods on that deliverable. You’re potentially waiting 30 days to get paid.”


Sending invoices for smaller amounts can also negate the need for the boss’s signature. Black knows of one company where invoices for more than $10,000 require the approval of the CEO, who is notorious for letting things languish on his desk.


Get ahead of excuses

One of the most common excuses business owners hear for non-payment is “I didn’t see that invoice.” Now, technology is helping to eliminate that reason.


Waldron sends her invoices through QuickBooks, but she has also started following up via email, with the invoice attached as a PDF file. A week later, she follows up again with a phone call or text. And she now accepts payments on her mobile phone. “It takes perseverance, but it wears on you because the cash flow is so tight,” Waldron says. “You can’t afford to have $2,000 of accounts receivable out there.”


Software like Salesforce is pulling back the curtain on customers’ claims of ignorance, too, because it tells you when a client has viewed the invoice, Black says.


If you put your expectations in writing, Black says, it’s easy to remind customers about the terms of your agreement. For instance, you can reserve the right to stop work on an unpaid invoice after 30 days. Black says he recalls mentioning that to a client only once. “It’s there because it helps you have a little leverage, in case you get someone who doesn’t pay you for 60 or 80 days,” he says.


Finally, Black says, don’t wait for a bill to go past due. If a couple of weeks have gone by since you sent the invoice, it’s perfectly reasonable to call and remind the customer that it’s due soon.


Waldron says offering multiple ways to pay, including Paypal and wire transfer, also helps eliminate excuses. As much as she hates to lose business, she will also cut off delinquent clients unless they pay in advance.


Waldron says she has learned to be persistent and to set the right tone from the first transaction. “If a customer is late in paying you the first time, chances are it will be that way every time.”

by David Tremblay.


There is no silver bullet when it comes to getting a loan to fund your business.  With Small Business lending on the rise, knowing how to approach the process can help you secure a loan more quickly than others in your industry. When it comes down to it, it’s all about Ability, Stability, and Willingness to Pay, limiting uncertainty on the lender’s side by providing a very detailed plan.

 

Respondents were split when asked by our Fall Small Business Owners Report what they believe is the most important factor in receiving a loan.

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The funny thing is that none of them are wrong.  Most financial institutions look at ALL those things, but in reality, less-than-perfect credit scores or a lack of a previous business borrowing history won’t carry the same weight individually that cash flow does. It’s also important to have a good relationship with your banker, who can provide context if one of those factors comes up short. Figuring out how much to ask for when applying for a business loan is part and parcel of the factors above. Here are a few thoughts on how financial institutions look at those different factors:

 

Cash flow:  Cash flow is typically considered the primary source of repayment for credit. It is important because that’s what repays the lines of credit and loans that banks extend to clients.  Does your business have the financial capacity to support debt and expenses?  Do your assets outweigh your liabilities? Typically a business needs to have between $1.15 and $1.35 of income to support every $1 of debt service, including the new debt being requested. The extra $0.15 to $0.35 provides a cushion for your business to absorb unexpected expenses or a downturn in the economy. It is important for the business to demonstrate more than one year of adequate cash flow history to show consistency in the ability to service debts. The ability to use projected cash flows as opposed to historical cash flows is uncommon.  Inadequate cash flow is a frequent reason why banks are unable to extend new credit to businesses.

 

Image of David TremblayCredit score:  Banks often look at multiple credit scores – business scores, consumer scores of the owners who will act as personal guarantors, and other internal scores based on bank risk factors and relationships. The credit scores of the business and individual owners in and of itself aren’t nearly as important as what is driving them, but the scores still play an important role in predicting creditworthiness.  As Jeannie Kelly also notes in a post running today on the MasterCard Small Business site, important drivers of credit scores are payment history, amounts owed, length of credit history, types of credit used and new credit opened.

 

Track record of ability to repay previous loans:  Relationships are important to banks, whether new or existing. An established borrowing and/or deposit relationship with their bank is often beneficial to the applicant requesting new credit. An existing borrowing and/or deposit relationship can offer immediate insight into the potential creditworthiness of the applicant based on the bank’s established risk guidelines.  When applicants have a proven track record of adequate repayment of previous loans, the decision to extend new credit is often an easier or quicker one to make.  The length of time for a bank to consider a small business to have a proven repayment track record can vary. Two years would be considered a minimum but 5+ years is preferred in order to establish trends that cross different economic cycles. Business borrowing history is less important than credit scores or cash flows but it brings an additional positive factor to the lending decision.

 

Annual revenues:  The gross annual revenues of a business is one factor that helps banks size potential credit needs and guide applicants to the most appropriate products available.  Annual revenue size is an indicator of how marketable the product or service is.  After our established revenue minimum of $250,000 for lines/loans, revenue trends over several years become far more important than the number itself.  Banks also care more about client base diversification to provide cushions in volatile markets. 

 

Personal finances:  Work experience, experience in your industry, and personal credit history are all “character traits” banks will consider. Your personal integrity and good standing—and the integrity and standing of those closely tied to the success of the business—are critically important. Business owners who have demonstrated challenges in managing their personal finances will have higher hurdles to obtaining new credit for their business. Related to this, many banks will ask how much stake the owners have in their business. If leadership is heavily invested monetarily in their own business, the bank sees this as a higher commitment to success, and therefore a higher chance of repaying the loan. To be further prepared for the loan application process, the Small Business Administration website has a Business Loan checklist that goes in more detail.

 

Again, it’s important to develop a strong relationship with your business banker – before you ever ask for credit. If that person understands the story behind the factors above, she can make the process much easier and help you get a yes to your loan request.

 

This month, I’ll be part of a Google Hangout on this very topic, so feel free to revisit this post for an updated start time. Top small business influencers from around the country will be discussing what drives credit decisions.

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