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2016

Business_Debt_body.jpgBy Heather R. Johnson.

 

Small business growth requires a certain amount of debt. That additional funding can help a small business expand its operations, spend more money on product development and marketing, or survive a slump. But how much is too much? If the business doesn’t generate the sales to cover loan payments, it may find itself hustling to cut costs or, at worst, in bankruptcy.

 

Dileep Rao, clinical professor at Florida International University, and a former VC and venture financier and business consultant, offers one golden rule of business debt: “Only borrow what you can pay back with certainty.”

 

Here are some other points to consider when determining whether your business has too much debt:

 

Determine your debt-to-equity ratio

The amount you owe creditors compared to how much equity you have in the business determines debt-to-equity ratio. Industry norms for debt-to-equity ratio vary, so it’s best to identify a debt-to-equity ratio that suits your business. This data can help you determine whether you should pay down debt or move forward and finance that second location.

 

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Understand your finances

Even businesses that just emerged from bankruptcy may receive loan offers from lenders. Don’t be swayed. “They often want to take over collateral,” says Rao.

 

Instead, use your balance sheet and cash flow statements to help you make borrowing decisions. If you don’t understand these statements—learn. “If you’re not finance smart, you’re not going to get to the next level,” says Rao. “Know how to use financial statements to develop a stronger business. Your accountant shouldn’t be the only one that knows.”

 

Analyze cash flow

If you have high profits but not much cash on hand, you may have too much debt. Making principal payments on loans is essentially a transfer between accounts, so paying back principal isn’t reflected in profits figures.

 

To reverse sluggish cash flow, it may make more sense to pay off the debt slowly to free up available cash. On the other hand, you may need to borrow to bolster cash flow if you don’t have much debt to begin with.

 

Know your industry risk

When you need to boost cash flow or finance an expansion, borrowing makes sense—but only within the limits of your business. Analyze the amount of risk involved in your business and industry. “If you’re a startup, the uncertainty is very high,” says Rao. “What certainties do you face?” Businesses in a volatile industry, such as technology or energy, should maintain less debt than more stabile industries, such as consumer goods, which can handle more debt.

 

Borrowing can make good financial sense for a growing small business, “but only when money is used productively,” says Rao. “All debt has cost. The business owner should consider the return on the money they borrow and how certain that return is.”

 

If you want to finance that expansion or hire a few new salespeople (both wise reasons to borrow), remember Rao’s rule and “only borrow if you’re sure you can pay it back.”

 

 

Bank of America, N.A. engages with Touchpoint Media Inc. to provide informational materials for your discussion or review purposes only. Touchpoint Media Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media Inc. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

 

©2016 Bank of America Corporation

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Our country is built on businesses like yours

 

That’s why we’d like to thank you for everything you do, and we look forward to helping your business grow even stronger. Check out our infographic to learn how small businesses across the country are making a difference every day.

 

Click here to view the infographic.

 

 

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Small Business: The Backbone of the Economy (infographic) Big corporations may make headlines, but small businesses make the economy hum. Of the nearly 23 million new jobs created between 1993 and 2013, 63 percent came from small businesses, and more than half of those companies are planning to hire additional workers this year.

 

View our infographic to discover the many other ways that small businesses are the backbone of the U.S. economy.

 

Click here to view the infographic. 

 

 

You can also download a PDF version
for printing by clicking here.

Franchising_body.jpgBy Heather R. Johnson.

 

If you want to see your brand become a household name, franchise your small business. “Franchising is one of the quickest ways to grow a company,” says Michael Ciccarelli, senior vice president for Franchise Group LLC, a consulting firm based in Atlanta, Georgia. “As a franchise, you have other people with a vested interest in your business and your brand being successful.”

 

A report from the International Franchise Association reports that sales from franchised businesses rose 5.4 percent in 2015, up from 4.8 the previous year. The study also predicted an increase in jobs at franchises for 2016.

 

Although franchising sounds like a win-win situation, there are many things to consider before heading down this road. Ask yourself these five important questions before you make the move.

 

1. Do you have the right business model?

Franchises span dozens of industries, from restaurant chains to real estate companies. Small businesses with the most franchise potential have the following qualities:

  • Familiarity with originality. Massage is nothing new, but Massage Envy’s extended hours, easy appointment scheduling, and affordable prices make it a nationwide hit. 
  • Adaptability. Is there a demand for your product or service in other regions of the United States?
  • Easily replicated. Do you have to have systems and processes in place that franchisees can use to run their business?

 

2. Are you financially ready?

“It’s critical that a business is proven and has two to three years of operational history,” says Ciccarelli. “Ask yourself, would franchisees get at least 20 percent return on their investment in two to four years?”

 

Franchising_PQ.jpg3. Do you already have more than one location?

If your pasta shop successfully opened two additional locations in your region, you are on your way to franchise success. Five Guys Burgers and Fries grew from one burger joint to five before it franchised. It now has more than 1,000 locations nationwide.

 

“A franchisee is making a big investment,” says Ciccarelli. “They have to know that they can replicate that business and that you have proven systems, processes, and infrastructure in place to support franchisees.”

 

4. Are you willing to take on new responsibilities?

Small business owners wear many hats. As a franchisor, you will likely take on new tasks designed to help franchisees run their businesses successfully.

 

The franchisor will have to continually refine and improve systems, processes, infrastructure, and resources to support their franchisees,” Ciccarelli says. “This will help create strong-unit economics and positive franchisee and franchisor relationships, which are two critical components of a healthy franchise system.” For specialized roles, he recommends considering outside resources, such as franchise consulting and development firms, to help develop sales and marketing strategies, provide territorial planning, and navigate legal and regulatory requirements.

 

5. Are you prepared to take the financial risk?

It could cost $250,000 or more to franchise a business according to the Small Business Administration. Initial costs include legal, consulting, and accounting fees, marketing materials, franchisee training manuals and systems, and more. 

 

While franchising isn’t a guaranteed path to riches, with the right concept and strategic planning, a small business has the potential for mainstream appeal. As Ciccarelli says, “If you have the right business model, a franchise operation can perform as well as, or better than, company operated businesses.”

 

Bank of America, N.A. engages with Touchpoint Media Inc. to provide informational materials for your discussion or review purposes only. Touchpoint Media Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media Inc. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

 

©2016 Bank of America Corporation

In many ways, marketing today is vastly superior to even a generation ago. Back then, marketing was an endeavor that relied more on hope than it did on skill, for example:

 

  • You could put an ad in the paper, but would hope that it showed up on page A3 and not buried somewhere in the back.
  • You could pass out 25 business cards at the chamber mixer, but would hope someone might look at it later and decide to call.
  • You could buy an expensive internet banner ad, and would definitely hope someone would click-through on it.

 

The good news is that if you do it right, marketing in today’s digital age relies far more on knowledge and skill than it does on hope. This begs the question: Just what does “do it right” mean?

 

Here are 5 tips:

 

1. Cast a wide net: Consider all of the different ways you can market your business in the e-age. You can

 

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  • Have a website
  • Create a video
  • Start a blog
  • Blast out an e-newsletter
  • Engage in social media
  • Have a podcast

  • Check out pay-per-click
  • Try mobile marketing

 

And that list is just for starters; each one of these offers even more choices (e.g., SEO for your website, drilling down into the different social media sites, etc.)

 

Maybe the best news is that trying these different methods does not cost much at all. Marketing today is vastly less expensive than when small businesses had little option but to rely on mass media like television and radio. Yes, things like SEO and podcasting take time, but it’s relatively inexpensive.

 

So my first tip for marketing in the e-age is to cast a wide net and try out as many of these affordable ideas as you can.

 

Click here to read more articles from small business expert Steve Strauss

 

2. Test, test, test: Again, a comparison with an earlier era is illustrative. If you ran a television ad back in the day and it didn’t work, you wouldn’t know until you had spent a lot of money and it was too late. That was the nature of the beast. Marketing in the e-age is more effective, far easier and more affordable to test and see what works.

 

Take pay-per-click for example. You can create some small PPC ads that show up on a Google result or a Facebook page and know instantly whether they are working or not. If not, you can tweak the headline, or the call to action, or you can try different keywords.

 

3. Be different: Some people call this the “Age of Distraction” and it is not hard to see why. Whether it is checking that darned phone all day long, the constant onslaught of media we’re surrounded by, or the never-ending rash of advertising coming in from all quarters, people are distracted.

 

Your job is not an easy one. You must be heard above the din. And the best way to do that is to be different. Zig when everyone else zags. Go black and white when everyone else is in color (or vice versa.) Be different.

 

4. Remain customer-centric: Not only do you have many more choices in this brave, new digital world, but so do your customers. At the click of a mouse, your customers have the ability to promote or destroy your business. Get some good Yelp reviews and you will be thrilled, but get some bad ones and you will see why it’s called Yelp.

 

The answer is to double-down on customer service, and that means branching out digitally. Engage with customers on social media and reach out to them on your blog and e-newsletter. If you get a bad review, respond to it immediately. Encourage people to email you and respond to what they say.

 

Customers these days like interacting with brands and expect to be able to do so.

 

5. Remember, content is king: Content is not prince or duke, it is called “king” for a reason. As you know, there is no shortage of content available today and most of it is free. This offers you both an opportunity and a challenge.

 

The challenge is to create content that people like, and when I say content, I am speaking broadly. Whether it is a clever pay-per-click ad, social media post, or a valuable e-newsletter, the key is to offer people something of value.

 

The opportunity is if you market your business with these e-tips in mind, you won’t need to hope that you will be will be rewarded for your efforts. You will be.

 

About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

Bank of America, N.A. Member FDIC.

©2016 Bank of America Corporation

Most new business people start their venture by creating a business that is an extension of themselves.

 

Not only is the enterprise a manifestation of the entrepreneur’s vision, but it is also, a physical expression of their financial life because they oftentimes use their own assets and credit to get the business up and running. If the business is not started as a corporation (and most are not), then the business’ assets and liabilities become even more inextricably linked with that of the owner.

 

There are many things that can go wrong with this type of financial blend:

 

First, a new business is a risk. By having your personal credit tied in with the business, you risk personal financial ruin if something we

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re to go wrong. By the same token, if you get sued personally, your business would be an asset that your creditors can go after.

 

Second, you limit the growth potential of the business. Lenders and investors want to see that the business is a separate entity, separate and apart from the entrepreneur.

 

The smart move therefore is to separate your business and personal credit as soon as possible after starting the enterprise. The problem is that most people, while knowing how to create and improve their own personal credit, have little understanding as to how to do this for a business.

 

Here’s how:

 

1. Incorporate: As indicated above, for a variety of reasons, it is beneficial for your business to be a separate legal entity, and this can only be done by incorporating. Corporations are stand-alone entities, legally. A partnership is not a corporation and a sole proprietorship is not a corporation. Only S corps, C corps, and Limited Liability Companies (LLCs) are corporations.By incorporating, you begin to separate your personal credit from that of the business.

 

2. Get Employer Identification number: If it is true that your personal credit is tied to your social security number, then it should follow that you need a different sort of number for your business. That number is obtained from the IRS and is called an “Employer Identification number” or EIN.

 

You can apply for one here.

 

3. Open a bank account in the name of the business. Once you have a corporation with it’s own EIN, then the next step is to go to a bank and open a checking and savings account in the name of the business using the business’ tax ID number. (It is critical that you do not use your own social security number here as that would once again tie your personal credit to that of the business, and that is precisely what we are trying to avoid.)

 

In my experience, our friends here at Bank of America are the most small business friendly bank around. You can find their offerings here.

 

Click here to read more articles from small business expert Steve Strauss

 

4. Register your business with a business credit bureau: The main company that tracks business credit is Dun & Bradstreet and you will want to establish a credit reporting relationship with them by getting what is known as a DUNS number.

 

5. Establish commercial credit: Next, put your business credit accounts in the name of the business, using your EIN and DUNS number – telephone and internet, shipping, bottled water, whatever. Additionally, see if any of your vendors will extend you business credit.

 

6. Get a loan: You may want to take out a small loan in the name of the business, simply for the purpose of establishing a good repayment history.

 

7. Pay on time: As we all know, paying in full and on time is how you reinforce a positive credit profile.

 

The good news is that before long, you will have two separate credit profiles, one for your business and one personally, and that is as it should be.

 

About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

©2016 Bank of America Corporation

Pro_Network_body.jpgBy Robert Lerose.

 

It's so easy for small business owners to get caught up in the daily running of their operation that they forget to devote time to an essential activity—building and maintaining their professional network. Along with servicing their existing customers, refining their products and services, and staying ahead of the competition, cultivating relationships with people in different fields can lead to new business opportunities.

 

Jonathan Long, the founder and CEO of Market Domination Media, a Miami Beach, Florida-based online marketing agency, recommends these steps for growing and nurturing a productive professional network:

 

1. Announce yourself to the community

Tell your existing network what your business is doing now and what's coming up down the road. A straightforward message sent by email, on social media, or in person at meetings will keep your network informed about and involved in your business—and cause them to think of you first when they need your services.

 

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2. Participate in networking events

Attending trade shows and conferences within your industry is a great way to find people to add to your network under one roof. Also, don't overlook local events and get-togethers. Meeting with businesspeople in your own neighborhood or region may even give you an edge over national competitors. Look for online networking opportunities. LinkedIn and Twitter both have groups where people with similar interests or needs congregate.

 

3. Meet them on their own turf

"Frequent the places that the people you want to connect with can be found at,” says Long. “This could be a particular lunch spot. Be friendly and social and you will make new connections."

 

4. Give of yourself

Be willing to share what you know to help others out, whether offering your expertise or connecting people together—without expecting or asking for a return favor. Demonstrating that you genuinely want to do good for others will motivate them to reciprocate on their own.

 

5. Be diligent about following up

Whenever you make a new connection, follow up promptly. Send an email to express your satisfaction at meeting them and invite them to get in touch with you if they ever need your help—and fulfill any promise that you make.

 

Maintaining a presence among the people who need your products, services, or expertise—whether in offline get-togethers or through online communications—can be an inexpensive but effective way to amass a strategic professional network.

 

Bank of America, N.A. engages with Touchpoint Media Inc. to provide informational materials for your discussion or review purposes only. Touchpoint Media Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media Inc. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

 

©2016 Bank of America Corporation

Ad_Blocking_body.jpgBy Jennifer Shaheen.

 

More than 50 percent of millennials use ad-blocking software, according to Oxford University’s Reuter’s Institute. More than 200 million people in the U.S. have internet browser extensions that block the majority of pay-per-click and display advertisements. This is bad news for the online publishing industry, which derives 85 percent of its revenue from advertising. But it’s also worrisome for small business owners, who are now facing the dual challenge of diminished ad reach and higher marketing costs.

 

Understanding ad blocking’s appeal

Using ad blockers can make surfing the internet a profoundly more satisfying experience, particularly for mobile device users. Forbes magazine reports that with ad blocking enabled, page size drops by 44 percent and load speed doubles. This is very important to customers who keep an eye on data costs. After all, nobody wants to pay money to be shown ads.

 

Additionally, ad blockers appeal to people who are worried about online security. Ads have often been the delivery mechanism of malware; eliminating the ads means potentially eliminating the risk of infection. Some malware ads contain scripts that have been used to gain access to users’ personal information, putting them at risk for identity theft. Furthermore, the New York Times has reported that using ad blockers extends a mobile device’s battery life.

 

However, not everyone is using ad blocking. Todd Bairstow of Keywords Connect, a performance marketing company, says that while younger people have embraced the technology, older people have not. “Local advertisers aren’t going to see this as such a large problem because they are looking to reach a much more geographically targeted audience,” he explains, “and that’s most often done through search and SEO.”

 

Ad_Blocking_PQ.jpgThe impact on small business advertisers

Ad blocking technology impacts many types of ads, including pay-per-click and display ads, Facebook newsfeed ads, Google AdWords, Bing advertising, and more. Determining how much money you want to invest in ads that may never be seen is a very real question. Google has addressed this for its AdWords platform by offering a Cost per Viewable Clicks option (vCPC); the costs for keywords can be slightly higher with this option, but advertisers have the assurance of knowing the ads they’ve paid for are actually viewable.

 

The impact of ad blocking on programmatic advertising, such as remarketing ads that appear on a customer’s search engine results after visiting a retailer’s website, is still being determined. Being white-listed—deemed ‘acceptable advertising’ which is displayed to people who are using ad blocking technology—can come with a cost. The world’s largest brands, including Google, Amazon, and Microsoft, reportedly pay a premium to make it past AdBlock Plus. However, this costly option isn’t available to the typical small business owner, who must find another way to get their message out.

 

Business owners may have an unexpected ally in their efforts to be heard, according to Bairstow. “I can’t believe that Google isn’t actively seeking to solve the ad blocker problem. When companies weren’t sure their competitors weren’t sitting down and clicking on their Google ads, Google saw that issue and immediately set its brainpower to solving it, and largely did. I’ve got to believe they will do something similar with ad blocking.”

 

 

Bank of America, N.A. engages with Touchpoint Media Inc. to provide informational materials for your discussion or review purposes only. Touchpoint Media Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media Inc. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

 

©2016 Bank of America Corporation

Being a small business owner can be tough, especially when the warmer months are right around the corner and you know you might be stuck working the days away instead of taking advantage of the better weather. The upside to this dilemma is that as the owner of your business, you are in the perfect position to implement changes to make sure you’re able to take time off and still get the job done. 

 

You are the boss, after all.

 

Whether you want to spend extra time with your kids, take a much-needed vacation, or just spend a few more of your days outdoors, these tips should help optimize your schedule:

 

Know your slow days: You know your schedule. You know when the store is busy and when it is not. So the first trick to getting some much-needed time off is to use your slow time wisely. Use it to catch up on work and get ahead where possible. Handle payroll, write sales copy, and generally try to get as much done as possible. That way, when the time comes, you will be in far better position to take some time off.

 

Communicate: Make sure to communicate to your clients that you will be out of pocket. As long as you give people enough advanceSteve-Strauss--in-article-Medium.png notice, no one will mind.

 

Train your help: Your business should be able to run without you, but if it can’t, this is a good chance to move in that direction. Teach a trusted staff member what needs to happen, and when.

 

Hire a temp or virtual assistant: If you are a solopreneur and cannot get away without closing business for a few days, then consider hiring part-time help, a temp, or a virtual assistant who can manage the essential functions while you are gone.

 

Automate content: Sale announcements, scheduled updates, and social media posts, are the types of things that don’t need to be done in front of a computer all day to be posted. Use a tool like Hootsuite, for example, to get these tasks done.

 

Go mobile: If all else fails and you simply have to work while you are away, the good news is that our collective newfound ability to work from almost anywhere these days means that your business won’t have to be put on hold. With the plethora of smartphones, tablets and lightweight laptops on the market today, it is incredibly easy (too easy!) to stay on top of your business no matter where you are.

 

Schedule extra time when you get back: Don’t tell everyone you will be back in the office Tuesday, tell them Thursday. Then, when you get back on Tuesday, you can have a few days of uninterrupted time to catch up.

 

Click here to read more articles from small business expert Steve Strauss

 

Take control of your daily schedule: On a smaller scale, while your normal daily routine might not enable you to get out a lot and take advantage of the nicer weather, your schedule can still be adjusted to accommodate school fairs, your favorite band coming to town, or even just getting in a round of golf.

 

How?

 

Wake up an hour early and put in some dedicated work time, or save your to-do list for the evening when the kids are in bed and the sun has gone down. Break your typical workday into blocks of a few hours at a time, and separate those blocks with some hour-long breaks to get outside and enjoy the day.

 

You are the boss. Be a good one - to yourself!

 

About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

©2016 Bank of America Corporation

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