Small Business Owners Have Much To Be Thankful For
Has the “turkey shortage” rumor crossed your path? Supposedly prices are going to jump just in time for Thanksgiving. Hogwash! (Unfortunately, “turkeywash” just doesn’t sound right.) You’re still going to be able to get great deals on turkeys at your local supermarket. However, the “yes there is a shortage and no there’s not a shortage” news stories remind me of what the media has been saying about the small business climate for months now. Economists and statisticians just can’t decide if this is the best of times or the worst of times. Here’s what I say: You decide. One of the things small business owners have to be truly thankful for is that in many ways they make their own future. Smart and hard-working small business owners can do well even in soft economies. In fact, it is those smart and hard-working small business owners who pull our economy out of its doldrums. And if things aren’t going quite as well for you as you would like, do what small business owners have always done: pull harder. I am thankful for the legions of you who keep plugging away even when the talking heads on TV say you should be crying in your beer. Here are more things I’m thankful for: The app revolution. Clever programmers seem to be at work 24/7 developing inexpensive or free apps that allow small business to compete directly with the major corporations. For example, you can easily have a social media marketing campaign that one ups your Fortune 500 competition by making smart use of apps. A more small-business friendly Congress. Okay, admittedly I have to take somewhat of a “wait-and-see” attitude here, but early indications are that this Congress will make some moves favorable to small business. The Senate Small Business and Entrepreneurship Committee will get a new chairman. Sen. James Risch should shine the light on the impact of federal regulations. There’s also a chance that business taxes will be overhauled. More tax-cutting state governments. Republicans running on tax-cutting platforms won a lot of state elections in this last cycle. If they keep their promises, it should be good for small business owners. Crowdfunding taking off. Who cares that banks aren’t lending if we have crowdfunding to pick up the slack? For many startups, it’s a much better idea to bring in investors than it is to incur debt. Just a few years ago, this route to capital didn’t even exist. The economy really is getting better. As I sit here today, I think it is undeniably true that the economy is improving. Small business owners can take heart in that and not be so worried about following through on future expansion plans. You have some great employees. The connections small business owners make to their employees and vice versa are priceless. Unlike corporations where faceless HR departments often lose the personal touch, coworkers in small businesses can be “comrades in arms.” You’re in charge. Many start small businesses because they are just plain tired of working for other people. To be master of your own destiny is indeed something to be thankful for. What would you add to my list? I’d love to know what you are especially thankful...
read moreHey Startup! Want Funds in a Flash? Part II
In my first article on Flashfunders I described how they were meeting the needs of both startups and investors. They’re giving startups a fast and clean way to access seed money and they’re giving accredited investors an easy way to get a portion of their portfolios in startups. And, I need to mention, at no cost to startups or investors at this point. Now I want to focus on additional information that is critical to anyone involved in a startup or with plans to launch one in the future. Vincent Bradley, from previous experience and through Flashfunders has some important insights into what makes a startup ready for seed money and successful. What’s your MVP? The single most important quality for a startup is to have a minimal viable product (MVP). Having an idea alone isn’t enough. There has to be enough groundwork in place to show how the MVP addresses a problem that needs to be solved. This is several steps further than saying, “I want to build a website where people can organize their music collections.” You have to design it to the point where it becomes something that people would actually look at and say, “Yeah, I’d buy that.” “It’s very difficult to raise capital on an idea. Zuckerberg could probably raise $100 million from anyone he wanted on just an idea. But that’s because he’s a very successful entrepreneur…. For the everyday entrepreneur, having an idea isn’t good enough anymore. You need to have shown that you’re committed, that you’re willing to persevere and that you have a product,” Bradley explains. Do you have traction? At Flashfunders this is looking for “traction.” They want to see a project that generates enough enthusiasm and confidence that the originators of the idea themselves have been willing to spend their own money. That shows a real commitment and demonstrates that the founders are going to invest the effort needed to see their project through to the end. These points make a great checklist if you’ve been mulling over a business idea. Can you clearly define what your product is and how it solves a problem? Are you willing to put your own money into the project? Are you willing to put the time it’s going to take to make it happen? I’ve explained how Flashfunders has all the paperwork and regulatory details taken care of for startups; they also help with the next steps, which involve finding the investors willing to put in seed money for a stake in your project. Startups should come to the table with some idea about who will invest in their companies. It could be family, industry associates or other connections. Certainly, potential investors will find projects through the listings on Flashfunders, but it’s a smart idea to be able to “prime the pump” with your own investors. Help with the details But to get the process going you need to establish a valuation, have your pitch and develop good promotional materials. Flashfunders has professionals who have been through the process several times and they are available to offer feedback as you put together the package that investors will see. There are already several startups on the site that are getting a lot of support from investors and Bradley says they are essentially...
read moreMore Tips For Local Business Retail Success
Earlier I related part of a conversation I had with Alignable cofounder and CEO Eric Groves. I explored his excellent observation that the biggest advantage small businesses have over their mega-corporate competitors is “proximity to the customer.” Our conversation ranged beyond that point and I want to share a few more areas that we covered. With Alignable‘s goal of promoting local businesses, we touched on some of the efforts currently underway to increase awareness and boost sales. These range from the cash mob movement, to think-shop-buy-local, to mombizmondays twitter parties and Small Business Saturday. Small Business Saturday is an American Express program and because it’s backed by a huge company, it is probably more well known than some of the other efforts to promote small businesses and shop locally. We see the Small Business Saturdays being publicized by American Express quite a lot right now, and that’s a good thing. SBS strength and weakness “The greatest strength of the program (Small Business Saturday) is the attention it brings to supporting local business communities at a time when a significant percent of consumer spending is occurring,” Eric notes. Interestingly, its ties to American Express is at once what gives the program its power, but it is also what hampers the overall impact of Small Business Saturday. “The greatest weakness (of Small Business Saturday) is that by design it can’t become a national movement,” Eric explains. “For that to happen Amex would have to be willing to let go of it as a marketing campaign, allowing it to be co-opted completely by local businesses regardless of the cards they accept.” Because of its fee structure, many small business owners take a pass on accepting American Express cards. If the company would let the movement grow beyond its merchants, it would serve the greater good of small businesses. And, I’d be willing to venture that ultimately, American Express would enroll more merchants. Holiday season strategies With the big retail sales days of the year fast approaching – Black Friday and Cyber Monday – we talked about ways local businesses could compete with the national brands and Eric pointed out that consumers are always attracted to unique experiences. (By the way, are you watching The Paradise on PBS? If you’re a retailer you should. You’ll get some very interesting promotional ideas.) I’m certain that you and the employees of your small business have a level of product knowledge that exceeds what is available in the big box stores – even when you can find an employee among their aisles. Local businesses should use that edge “to create unique in-store experiences for their consumers – tastings, demonstrations, hand-on training, pop-up stores, and more – rather than follow the big box retailers down the path of deep discounts and free shipping,” Eric suggests. Those suggestions sound like a good blueprint for holiday season sales success. Be inventive and find the ones that are the best fit for your business and don’t stop when this season is over. Continue being more clever than the big players through the entire year. Image: Secretary Kathleen Sebelius participates in a cooking demonstration, US government...
read moreBe Vigilant as More Health Insurance Changes Kick In
November is a notable month. Not only do we have Thanksgiving, Black Friday and Cyber Monday, but we have the start of open enrollment in health insurance plans. For years, open enrollment was a fairly routine exercise. Employees waited to see if their carriers would change and how much their out-of-pocket expenses would increase. However, as the Affordable Care Act has been increasingly implemented over the last couple of years, open enrollment has been delivering more than its usual share of surprises. Small biz exchanges go live This year marks the debut of the federal government’s “Small Business Health Options Program” or SHOP exchange. (I guess SBHOP didn’t seem catchy enough.) The federal government rolled the exchanges out early in five states for some live testing. Hopefully, they will avoid the debacle that last year’s exchange debut proved to be. However, the SHOP exchanges are only for small businesses with 50 or more full-time employees. Employees at smaller businesses need to go to the individual exchanges. There’s one more major change this year that you and your employees need to know: the penalty for carrying no health insurance triples. The penalty for tax year 2015 will be 2 percent of a household’s income or $325, whichever is greater. There are some exemptions based on income. Have employes in multiple states? If your small business has employees in more than one state and you want to use the SHOP exchange to get health insurance, it may get tricky. That’s because some states operate their own exchanges. In that case, employers will have to create accounts in state exchanges. Further, plans, participation and eligibility vary from state to state. How will this be sorted out? It could be that state and federal governments will use the same approach they used with the debut of exchanges last year – a combination of figuring it out as they go along, delaying some aspects of the ACA and exempting certain groups. Double check your coverage Let’s look at one more ACA ball that is up in the air for anyone who received health insurance through one of the exchanges last year: Don’t assume your coverage will continue. The federal exchange (healthcare.gov) should be auto-renewing people, however some states do not offer auto-renewal. In addition, everyone who signed up with Medicaid needs to reapply due to eligibility requirements. And finally, everyone who signed up online should revisit their plans and status. Even if your provider auto-renewed you, price changes might make you want to change plans. These are just some of the bumps on the road that we believe are coming our way. There’s a good chance more unintended consequences will come to light as we’re shopping for our Thanksgiving turkey. Stay tuned. Image: “Obama signs health care-20100323” by Pete Souza. Licensed under Creative Commons Attribution 2.0 via Wikimedia...
read moreThe Home Office Deduction for the Rooted and the Rootless
This scenario is becoming more common every year: Digital nomads are roaming the world, seeing the sights, visiting friends and earning a decent income through their web-based businesses and activities. They might be renting apartments as they roam. They may be living on their boats or RVs; there are many possibilities. However, the footloose and fancy free lifestyle gets somewhat less fancy free every April 15. It turns out nomads aren’t exempt from income taxes. But what about one of the basic deductions many small business owners take each year – the home office expense? Can you deduct a portion of the cost of keeping an apartment you only rent for a season, or part of the cost of your boat, or RV? Home sweet home The answer is yes. However, anyone who works closely with a good tax advisor will know that home office deductions can be red flags for the IRS auditors, so you need to be sure that you understand the rules, have your situation documented and are properly calculating your costs. Otherwise, someday you’ll find yourself peering across a desk at a guy from the government, armed only with a prayer and a shoebox full of receipts. The IRS defines “home” to include house, apartment, condominium, mobile home, boat, or similar property which provides basic living accommodations. Whether you’re a digital nomad or located in one place throughout the year there are two basic requirements to qualify some of your living accommodations as a legitimate home office expense. The space must be used “regularly” and “exclusively” for your business. The records you keep must show that you use that portion of your “home” exclusively and regularly for your business activities. You must also have records that document the area of your home that you use for business, the square footage or percentage for example. Two expense methods Until the 2013 tax year there was only one way to claim this deduction and that was by taking percentages of actual, documented expenses. In 2013, the IRS added a second, simplified, way to claim the home office deduction: they decided to allow $5 per square foot, without documenting actual expenses. However, they capped that at 300 square feet. In 2014 you can choose either approach for the deduction; however you have to stick with one method for an entire tax year. Although IRS videos may not be the most popular viewing on the Internet, they can give you some sound information that will be useful to your small business. There’s a video of a webinar on the “business use of your home” as well as a PDF that outlines the basics. The IRS has an extensive collection of presentations available through its video portal. Take a few minutes to explore. You’ll probably find some topics that will help your financial...
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