Basic Tips for New Small Business Owners

When the Harris Poll recently surveyed more than 500 small business entrepreneurs, it learned that many of them wished they had approached business startup differently. Though these entrepreneurs did not regret becoming business owners, approximately 80 percent admitted they felt unprepared while getting their ventures off the ground. Four in every ten said they did not create a contingency plan for economic downturns and others failed to consider expenses such as health insurance and taxes. Learn from their mistakes by following the guidance below before starting a small business.

More than one-third of the entrepreneurs surveyed noted the importance of separating personal and business finances. Most used household income or other personal assets to fund their businesses. Only one in every five used a bank-offered business loan. This third-party financing can be very helpful because it separates business finances, preventing them from bleeding the household dry.

Managing cash flow is important for any business but particularly for a small one. Immediate billing and reminder notices regarding issued invoices can help. However, timely customer payment is not guaranteed, so it is wise to have enough reserve cash to keep the business going and always operate according to a budget. Establishing a budget at the start and revising it annually helps to prevent financial surprises.

Technology is an essential part of our lives but some entrepreneurs fail to invest in it during startup. Consider technology as important as employees and spend the money required to create a strong foundation. Also, budget an ample amount for a strong marketing campaign to introduce the new business to the world. Promotion gets the business on the map and builds a customer base. Spending money on advertising and other marketing efforts when the business is new can help the company grow more quickly.

New business owners tend to feel like trailblazers, facing the world alone. They should not be afraid to ask for help by consulting experts in tax, marketing, technology, and the law. One in every five of the entrepreneurs surveyed by Harris Poll admitted lacking the required legal and tax expertise and almost 40 percent wished they ran their marketing strategies by an expert before implementing them. Expert assistance is especially valuable when money is scarce, making an accountant a good resource for a new entrepreneur.

Experts also help entrepreneurs keep their businesses running and growing. Attorneys provide legal guidance when entering new markets or expanding product lines. Financial advisors reduce the confusion involved in decisions regarding money. By asking these experts questions when they arise, entrepreneurs can avoid problems and streamline business growth. The most successful business owners admit they would not be where they are without some help.

Small business ownership is exciting but starting and running a business is not usually a smooth road. It requires money, effort, resources, and perseverance. Would-be entrepreneurs should learn best practices and pitfalls from those who have gone before them. After getting their new ventures up and running, these business owners can serve as advisors to the next generation of entrepreneurs.

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Does Your Small Business Need an HR Department?

Three Good Reasons Why Every Small Business Needs a Human Resources Professional

As a small business owner, there is constant pressure to cut costs and eliminate unneeded overhead in order to keep sales growing. While it may be tempting to cut certain “non-critical” positions, it is important to stop and think about how the absence of those departments may impact your business. One of the most undervalued positions that are often not included in the small business structure is the presence of a Human Resources professional or department. While it may be appealing to eliminate this position and save money, here are three reasons why your business needs an HR department.

Small Businesses Need Someone who Knows Employment Law

One of the best reasons for a small business to have a Human Resources professional or department is that these individuals know everything there is to know about Employment Law and know what needs to be done in order to stay compliant with these regulations. When it comes to hiring and firing employees, one mistake could mean huge fines for a business owner and their company. Having an HR professional will help to eliminate these types of mistakes and although it may be another employee on the payroll, it will save the business from potential fines and embarrassment down the line.

Human Resources Professional can manage the Hiring or Firing Process

Bringing on new talent and letting employees who are not benefiting the company go can be a long, time consuming and confusing process. There is a lot of paperwork that needs to be filled out, filed, submitted and verified in order for these processes to run smoothly. Small business owners are short on time as it is, so having someone in the company who can handle these processes and knows about the law surrounding them is an invaluable resource. Leaving the hiring and firing process up to an HR professional means business owners can focus on more important items, like running their business.

Handling Employee Files, Employee Handbooks and Business Manuals

All good small business has a running record of employee files as well as consistent, updated handbooks and manuals. Although a business owner may initially create these items, it is almost impossible for them to keep up with changes and edits along the way. A Human Resources professional is skilled at keeping employee files organized and up to date and will be able to easily make changes and updates to all employee material, not to mention they will own sending these updates to other employees and holding them responsible for knowing these changes and acknowledging they understand them.

Having a Human Resource professional or department in a small business is very important to keeping the company on track, for more reasons than those listed here. HR professionals allow small business owners to focus on their business and also help them to avoid violating any Employment Law and manage the hiring and firing of employees with ease. While this may seem like an added expense, it actually helps to save the business money by avoiding fines and lawsuits as well as eliminating the time spent by the owner or other employees to keep files up to date and current.

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Starting a Small Business with Little or No Investment

Nearly 28 million businesses in the United States have fewer than 500 employees, qualifying them as small businesses. Approximately 120 million people in this country, more than half of the working population, work in small businesses. These businesses are the lifeblood of the United States, generating more than 65 percent of net new jobs within the past 30 years. Each month more than 540,000 new businesses get off the ground.

Starting a business is exciting but it is also challenging. Only about seven of every ten new businesses last for at least two years and approximately half close their doors within five years. A mere quarter manage to stay in business for at least 15 years. Lack of capital is a major reason for small business failure.

Unfortunately, inability to secure funding prevents many would-be entrepreneurs from transforming their ideas into reality. However, money should not be an obstacle to taking a great idea from paper to the marketplace. By following a simple plan, anyone with a good idea and a smart plan for executing it can realize success.

The key is to build the small business around what you know and do best. Creating a business based on personal knowledge and skills prevents the need to rely on other people whose expertise often comes at a steep price. After developing a business plan, inform everyone in the personal network about the new venture. Do this in person and via email and telephone, each of which represent free marketing avenues. Ask these folks to spread the word and provide introductions to new professional contacts.

Social media is perhaps the best form of free advertising for an entrepreneur today. It provides exposure to prospective customers all over the world at no charge. Facebook, Twitter, Instagram, and other social media channels allow small business owners to interact with prospects and customers on a personal level without leaving their offices. Using social media to expand the contact list and engage and respond to customers regularly are easy ways to generate free buzz and develop corporate branding.

Monitor other startup expenditures carefully and use credit only when there is no other alternative. Expenses related to a home office can mount quickly, causing a new entrepreneur to begin in debt. Rather than equipping the home office with brand new furnishings, equipment, and supplies purchase used versions or buy items gradually, using revenue from the business to pay for them. Avoid unnecessary expenses such as top-of-the-line coffeemakers and flashy, overpriced business cards. Traditional cards with a catchy slogan will capture just as much attention at a lower price.

Individuals in the service business should think carefully when creating their receivables policy. Though customers may want to pay within 30, 60, or 90 days this may not be feasible for business operations. Base the policy on what facilitates continued business growth. Then, get to work because effort will increase the value of the business over the long-term. New entrepreneurs with little capital to invest must put their hearts and souls into their ventures in order for these to be successful.

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Create Customer Loyalty to Improve Sales

How to Attract Return Customers to Your Small Business

It is no secret that customer loyalty is directly related to higher sales. When a customer is loyal to a company or business, they will go out of their way to make purchases with that organization. Creating customer loyalty is especially important for small businesses – larger companies attract enough one-time buyers to continue to hit their sales numbers but small businesses need to rely on repeat business to make a profit. What many small business owners struggle with is creating the customer loyalty and developing customer relationships that keep consumers coming back time and time again.

Develop the Best Customer Service

One of the keys to creating customer loyalty is having great customer service. Although customer service is something that every business prides themselves on, more often than not customer receives bad service which discourages them from purchasing from the organization again. Make sure to develop a great customer service culture within your business – set the bar high for how customers are treated, make sure they are greeted in a friendly manner and their needs are taken care of quickly and effectively. Customers will remember great service and be more likely to purchase from you again.

Be Careful Not to Oversell

While it is important to try and sell your products and services to a customer, it is important to also try to not be pushy or overbearing with your sales pitch. Consumers who feel that they are bullied into making purchases or hounded by a sales person are not likely to return to that business again. A better approach is to focus on how your business, products and services can help improve the customer’s life – when consumers feel as though a business owner truly cares about them, their needs, and their wants, they are much more comfortable and happy to return to the business to fill their needs in the future.

Stay in Touch

Once you have developed a rapport with a customer, make sure to be in regular communication with them. Develop a key customer list and send emails or direct mail pieces to let them know about specials or sales in your business. Also, it never hurts to send a note just checking in with them if they have not done business with the company in a while. Consumers want to know they are cared about and really appreciate a business or an owner who reaches out to them on a personal level. Developing these kinds of relationships will easily transition into customer loyalty and can truly help boost sales overall.

When a business has loyal customers, they usually have higher sales. Loyal customers not only make regular purchases from the business but they also suggest the company to their family and friends. Consumers who are happy with a business’s customer service and the relationship they have with employees or the owner are much more likely to tell others about their experience and encourage them to also make purchases. When a customer’s loyalty is combined with the word of mouth marketing they can provide, the possibilities for growth and increased sales are endless!

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Should You Create Bonus Programs for Your Small Business Employees?

Choosing and Executing a Successful Bonus Program

Bonus programs are on the rise in corporate America. The increase in these programs is due to companies having the need to identify and ensure they have the right talents to continue to grow. All different types of bonus programs, including signing, referral and spot programs, have exponentially increased over the past four years. While it is generally larger organizations that employ these programs, small business will start feeling the effects when they begin to compete for job candidates. Because of this, it may be worthwhile to investigate a bonus program for your small business.

Information on Signing Bonus Programs

Signing bonus programs are probably the least likely to be used in small business. Although uncommon, this type of bonus program can still be beneficial in certain situations. Signing bonuses are great for small businesses if they are standard practice in the industry, employers need to motivate desirable talent to move to the area or when attracting candidates with hard to find skills. It is important, however, to make sure signing bonuses are employed carefully. Consider staggering the bonus payment – this will help prevent any candidates who would simply use the bonus to “job hop.” It is also important to remember that this bonus cannot be a candidate’s sole attraction to the business but should be an addition to other employee development opportunities.

Information on Referral Bonuses

Referral bonuses are given to employees who refer new talent as job candidates who in turn get hired by the company. The theory behind this bonus program is that talented individuals know and are friends with other talented individuals – if a great employee refers someone for a position, chances are they will also be a great employee. To implement this type of referral program, it is important to develop a policy and procedure for how payment of the bonus works before presenting it to your staff. Ask questions such as,  "Should a referral bonus be offered for every position or just specific jobs?" "Is the program ongoing or is it only employed during times of need?" " Should the bonus be paid in full when the referral is hired, or partially paid out until the new employee makes it through a probationary period?" The answers to these questions will help guide how the program works.

Information on Spot Bonuses

Spot bonuses are given to employees “on the spot” for desirable behavior. These bonuses are most frequently rewarded for special recognition, project completion and going above and beyond the employee’s outline responsibilities. Larger companies have spot bonuses north of $1,000, but for smaller businesses, gift cards and small amounts of money can be just as effective. This is another bonus program that should be well developed before presenting it to employees – decide whether or not the bonus program will have levels, set a strict budget for how much of the business’s money will be used and make sure to publicize the program well once it is fully established. Studies have shown that employees who have goals to work toward often perform better and more efficiently.

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