Small Business Loans Changing in Big Ways
A recent headline said, “Small Business Lending Reaching ‘New Normal.’” The story outlined how the Pepperdine Private Capital Access Index for small businesses rose to 27.7 from 27.1 in February. It gives us a measure of demand for and ease in getting financing, including loans. Further, 44 percent of the small businesses surveyed last month said they received bank loans during the previous three months. That’s a pretty big jump from 39 percent in February and 34 percent last fall. Restrictions easing This is being called the “new normal” and it’s good to see banks easing up somewhat on the lending restrictions that have been in place since the recession. However, it’s not the only change the lending industry is experiencing that define a “new normal.” New sources of financing are emerging as well as new places small business owners turn to when they need an influx of cash. A solopreneur friend of mine just received an unsolicited offer from PayPal for a cash advance. Most of his clients pay through the online payment provider, so he has a long history of pumping cash through his PayPal account. So far he hasn’t taken them up on the deal, but if he does, they’ll just take a percentage of his cash flow until the debt is repaid. This is similar to the Square Reader cash advance program we discussed here recently. Online lenders Lending Club has pioneered the peer-to-peer loan model, including loans to small businesses. Unlike the Square Reader and PayPal cash advances, Lending Club loans are more conventional, with fixed monthly payments. Other online lenders include Kabbage, CAN Capital, Swift Capital, and OnDeck. Perhaps it’s increasing competition from these newer lenders that is pushing traditional banks to loosen up the purse strings a bit on small business loans. But, whatever forces are driving the changes, I’m glad to see that it’s getting easier to obtain credit and I’m overjoyed to see more options for small businesses when it’s time to take out a...
read moreTHE Small Business Expert’s 4 Step Process for Hiring The Right Employee
Hiring employees is one of the most difficult and expensive aspects of building a business. Therefore, I’ve created a four step process to help you make sure your investing in the right talent from the beginning. The first step in this process is to Identify Your Needs. Examine what’s happening in your business right now. Are things starting to slip through the cracks? Are you missing deadlines? Are you reaching the point of being burned out? Any of these situations can be indicators that it’s time to bring someone on board to assist you. My strategy for adding employees is what I call MYTOP, or multiply yourself through other people. Your first employee should be someone who complements your skill set, allowing you to focus your time and energy on the things you do well and that add the most value to your business. So before you hire anyone, identify and analyze your own strengths and weaknesses. The second step is to Determine and Convey Exactly What You Want for the position. After you’ve settled on the skills that would be most helpful to you, write a job description that encompasses those skills. Yes, I realize this is challenging because, since the job never existed, you’re not yet sure what the job is going to entail. It doesn’t matter. You still need to map out the responsibilities of the position and document it before you start your search. To identify the right candidate, it’s important to establish your expectations. This is also important for your new employee. Without articulating your specific expectations, the chances of your new hire failing are great. And that will be frustrating and unpleasant for both of you. Let me explain. During a question-and-answer session at one of my seminars, an attendee wanted to know why she couldn’t seem to find a good administrative assistant. She told me how several people she’d hired for the position hadn’t worked out, and she was ready to give up. She concluded that there wasn’t anyone out there to fit the job. Then I asked the obvious question: “Do you have a job description that lays out expectations?” The woman responded with a vague “sure,” mumbled, and gave rambling explanations. So I asked again . . . and again. Finally, she admitted that she hadn’t actually written anything down. Voilà! Problem identified. If you don’t know specifically what you expect the new hire to do for your business, then don’t be surprised when it doesn’t work out. Take the time to draft a comprehensive job description before you begin your employee search. Once you’ve done that, it’s time to move on to the third step, which is Determining the Salary Range. I realize that committing to a salary amount is scary, but it’s also necessary. You also need to come to grips with the fact that sometimes, in order to hire the type and caliber of individual who can help you grow your business, you may have to take a salary cut yourself. In fact, many entrepreneurs find they have to miss a paycheck here and there in order to make sure their employees are paid. Be sure you are ready to make that sacrifice. Don’t forget, your employees are a financial investment in your business. However, if you...
read moreIs Innovation Dead? Hardly.
I’m willing to go out on a limb and make a prediction today that I pledge to stand by: Tomorrow’s prognosticators will be just as wrong as today’s prognosticators. With apologies to Nostradamus adherents, if history has taught us anything, it’s that those who attempt to predict the future always get it wrong. I bring this up today because once again someone has sounded the death knell of innovation. Recreating a recent debate between two Northwestern University colleagues, The Wall Street Journal reported, “Robert Gordon, a curmudgeonly 73-year-old economist, believes our best days are over. After a century of life-changing innovations that spurred growth, he says, human progress is slowing to a crawl.” A new Dark Age? If what Gordon says is true, it would mean that we’re going into another “dark age” that condemns humans to a stagnation in which neither our material life nor our intellectual life will advance. It’s a gloomy picture and certainly not one that will motivate millennials or any of the other yet-to-be-labelled generations. Professor Gordon may be a brilliant man in many ways, but he suffers from an affliction that plagues many of us: he is unable to see what is not there. I once heard someone reconstruct a conversation that might have very well occurred out in the wilds of Kentucky in the middle of winter, 1809: “What’s new” “Nothing that matters much. I hear the Lincolns had a boy the other day.” A quick look at US patent application figures shows us that the number of applications in 2013 (154,891) was more than three times greater than the figure just 20 years earlier, which were 48,531. I think one lesson we can learn from this is that innovation inspires innovation. Ideas lead to more ideas If we can just take one recent innovation—the smart phone—we can think of hundreds of other significant inventions that were spurred by its invention. The list would include all kinds of apps, services and hardware. For example, right now there seems to be an explosion of fitness monitors coming to market. These would have been inconceivable, Professor Gordon, just a few years ago. Not long ago I wrote about Quirky.com, where they field hundreds of inventive ideas every week, select the best, then manufacture and market them. I love it because the website is built on the age-old essence of invention: find a need and fill it; or as the proverb puts it: Necessity is the mother of invention. This is also the foundation of success for a small business—identifying needs and providing ways to satisfy them. And if you’ve been bogged down recently in the day-to-day operations of your small business, I suggest you devote a little time to reflection and brainstorming. Consider what you have learned about your customers and clients, or re-engage your base in dialog. Identify needs that are currently going unmet, or for which you can design a better solution. Remember, sometimes they won’t even realize what they need until you demonstrate it to...
read moreBusiness Travel is Up: 7 Tips to Hold Costs Down
Clean and safe. That used to be my only criteria for booking business travel. Because business travel can be a significant hit to a small business budget, I, like many entrepreneurs, was willing to make compromises in order to hold the cost down. So as long as I felt safe and my room was clean, I was happy. However, today business travelers don’t have to make huge sacrifices on quality to have both comfort and recently reported that the number of business trips by U.S. companies is on the rise, up 3 percent in the first three months of the year as compared to the same period in 2013. Therefore, I thought it would be the perfect time to review some of my cost-saving business travel tips to make your trip enjoyable as well as economical. 1. Book Airfare in Advance. Try to book your airfare as far in advance as possible. The longer you wait, the higher the fare will most likely be. If you’re afraid you may need to change your flight, then look for airlines with the most flexible change fees. For example, Southwest Airlines doesn’t charge a change fee (a penalty) whereas American Airlines charges a change fee of $200. 2. Fly in and Out. If you can catch an early morning flight to your destination and fly out that same day, you’ll save the cost of a hotel and meals. In fact, if you belong to an airline club, you may be able to arrange for a meeting with your customer right at the airport, saving on ground transportation too. 3. Use Hotels for Business Travelers. There are some hotel chains that cater to road warriors. They aren’t the five star, glitz and glamor hotels, but they are nice and comfortable. Some of my favorites have pillow top beds with fluffy pillows. These chains also typically have an on-site fitness center, free wi-fi and offer a hot breakfast every morning. Recently, I stayed in an Embassy Suites in Boston where the rate also included an evening reception with free appetizers and soft drinks. That was dinner for me! 4. Watch for Deals. If you travel to the same cities frequently, subscribe to fare alerts and keep an eye out for deals. For example, I fly to New York several times a month so I watch for discounted round-trip fares. Fare alerts work particularly well if your travel plans are flexible. 5. Become a Member. Enroll in the airline and hotel loyalty programs. I have so many of these cards that I carry them in a separate wallet. Earning points that you can use for future travel provides a cost savings. If you primarily use one brand, consider getting an affinity credit card so you can earn points or miles when you use it. 6. Watch for Coupons. If you need to stay several days in one city, pick up local publications and/or search the Internet for restaurant coupons. Also, ask the front desk manager or concierge if they have any coupons available for guests. Sometimes restaurants in the area will provide hotels with coupons for their guests to attract new business. 7. Ship in Advance. Tired of baggage fees. If you need to check multiple bags, consider shipping your luggage or cases in advance. ...
read morePeople Can Make or Break Your Small Business: Place Your Trust Wisely.
People can make or break your business. This includes everyone from your professional advisers, suppliers, customers and clients to your employees, business partners, and even your friends and family. Making wrong decisions about any of the people with whom you deal can significantly hurt your business and impede—even destroy—everything you are trying to achieve. When it comes to people, I’ve made both good calls and bad. In most cases, the bad calls were no big deal, but a few of the bad choices left me feeling angry and betrayed. (One of them left my checkbook significantly lighter.) There’s an old saying: Business is business and friendship is friendship, but when it’s your business, it’s always personal. Fortunately, I’ve been able to rebound from bad calls, but not all entrepreneurs are so fortunate. Some find placing their trust in the wrong people to be too devastating, emotionally and financially, to overcome. A number of years ago, I personally saw the tragic ending for a friend who simply couldn’t overcome business betrayal. I’ll call her Sally. Sally had tremendous entrepreneurial drive. She built a business from nothing in 1993 to nearly $100 million in revenue by 2006. She recognized that she didn’t have the sophistication to develop the structure and process for such a large organization, so to help her manage the rapid growth, she hired a chief operating officer. Things seemed to be going well until documents from the IRS arrived indicating she owed $2 million in back taxes. A complicated investigation ensued, and it turned out that the trust Sally had invested in her second-in-command had been misplaced. According to sources close to Sally, the COO, who we later learned had previously been convicted of IRS fraud, failed to pay the Sally’s company’s federal taxes for two years. The IRS troubles caused other financial problems, putting the business in dire financial straits. One Thursday evening, Sally left her office and never returned. Her body was found on Saturday. She had taken her own life. As one of Sally’s friends noted, “Sally believed that she would lose herself if she lost her business. She had fought so hard for so many years to build that company, and she was deeply ashamed about her financial problems.” This is an extreme story, but I feel compelled to share it because it drives home the importance of understanding that your business is only as good as the people involved with it. Surround yourself with quality people, and be careful about where you place your trust. Every choice you make has an impact on your success. Oprah Winfrey says — always sign the checks. Sage advice from a successful entrepreneur....
read moreThe Right Message to the Right Audience – Key to Small Biz Marketing Success
It’s so simple — yet brilliant. “Any time. On Time. All Time Air Conditioning.” I saw this van in the parking lot of a gas station in West Palm Beach, Florida. The temperature was in the mid-90s with extremely high humidity. Think about what happens when your air conditioning goes out during the height of the summer months? You want someone who can come at anytime — even if it’s in the middle of the night. And you want someone to be there when they say they will so you aren’t wasting your time waiting. This is an example of a small business owner who is completely focused on customer needs. When your air conditioning goes on the fritz, you want it fixed now. As a customer, you don’t care that the company has been in business for 25 years or that it’s products are state of the art. You have a problem and you want someone who can solve it — period. Too many small business owners and their sales team spend time telling you how great they are without taking time to focus on the customer’s needs. Smart marketing delivers the right message to the right audience — a message that solves a customer’s problem. Back in the late 80s I had a boutique advertising and PR firm. One of my clients manufactured large pipe casings for major construction sites. After talking with many of the company’s customers I learned that if the wrong pipe arrived at a work site it delayed the project and in many cases cost the developer a significant amount of money. Additionally, if the pipe was delivered early or late, there were costs involved too. Because my client had a solid reputation for ensuring the right pipe was delivered at the scheduled time, we created a marketing slogan that said just that: The Right Pipe. Right on Time. It said everything that needed to be said. So take a look at your marketing messages. Are you focused on your customer’s needs or are you touting your wares? If you have examples of marketing messages that resonate well with customers, share them with us here. ...
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