1. Retirement plans help with recruitment.

In the past, pension plans were the norm but in these difficult economic times, they are becoming rarer. Offering a 401K plan will serve as a draw in terms of recruiting top talent.
If an employee has a choice among two offers with similar responsibilities, the chances are that s/he will choose the job that offers a pension plan as part of its benefit package.
In short, 401K plans will attract highly skilled candidates to your firm and perhaps even compensate for a smaller starting salary.

2. Pension plans reduce employee resignations.

The journal Plan Advisor, reports that about 40 percent of small business employees would resign from their current job for a new job that provides a pension plan.
As per an AARP survey, retirement plans count among the top 10 factors in why employees choose to work for a given employer. Offering a pension plan sends the message that your firm cares about its employees,
while also helping your firm remain competitive within its niche by retaining top talent. Employee retention also has a direct impact on your company’s bottom line as it reduces recruiting and training costs.

3. Pension Plans reduce the tax burden of small firms.

If you offer a 401K plan, your business may be eligible for a $500. tax credit during the first three years of the planís existence.
Also a consideration is the tax deductions your firm will be able to take for all contributions it makes to employee pension plans.
Since it is likely that you will be adding to your pension plan as well, you will also save on personal income taxes.

4. 401K plans are easy to arrange and manage.

Current Web-based pension plans for small business owners are easy to set-up and manage.
Utilizing online set-up and management requires little time commitment with little, if any, paperwork.
Employees will also have 24/7 access to their 401K accounts, along with the email and phone number of a retirement advisor.

5. 401K plans help small business owners manage their own retirement savings.

Too often, small business owners focus on growing their business and neglect building a nest egg.
Having a 401K will motivate small business owners to start their own retirement savings.
Even should you start another business, it is simple to rollover your 401K savings into a new account.

6. Pension plans contribute to the overall economy.

By helping employees build a nest egg and retire comfortably, small business owners contribute to building a healthy economy overall by enabling people to have a greater amount of disposable income during their senior years.

Daniela Baker is a small business blogger and helps small business owners compare business credit card offers at CreditDonkey.

• How A Small Business Can Perform Like Wynn Resorts
• How is Investing and Owning a Small Business Related?
• The 7 Steps to Starting a Business
• Could Your Business Handle Another Recession?
• How To Help Small Businesses

Why Your Small Business Should Offer a 401K is from Investor Junkie Copyright © Empowering Media, Inc.

Normally I’m not wanting to talk about the inner workings of what it takes to make a web site successful. I don’t want to turn this blog into another Internet marketing blog. Ironically most of their income is from telling others how to make money on the Internet. It’s a suckers game, and regardless of what Google thinks of my site, I want to add real value to my readers. I’ll promise to keep this rant on topic, and related to one of my primary purposes of the blog – small business owners.

What is SEO?

Most of my readers may not have a clue to what this techno mumbo jumbo means, but other fellow personal finance bloggers might. If you have any sort of online business (who doesn’t in this day and age) it’s critical you understand how SEO (Search Engine Optimization) works.

Let me start off with a little back story. For many bloggers, and most online presences for that matter, search engine traffic is the primary method to monetize your efforts. Without going into details that will bore most, it’s because search engine vistors are very action orientated. They are looking to satisfy a specific need.

Repeat visitors on the other hand, while add value via comments or though other means, typically do not monetize well. It’s just the nature of the beast. No different than traditional off-line services. They buy from your store once, and you usually don’t hear from them again. They’ll visit you again only if they think of your brand while having a similar need. So it also makes sense to make your site memorable, and somehow maintain that relationship.

All of this is in alignment with the “Google gods”, and what’s considered “good” content by them. Creating good unique content has been always Google’s mantra. Something I thought I was doing at Investor Junkie, until the latest Google update reflected otherwise.

In the past year, Google has been trying to improve their search results. Their search results have always been riddled with spammers, and black hat SEO techniques to “game” the system. Many people who use Google’s Search don’t realize how rigged the system is.

Previous Panda updates were actually good for this site. Every time my site would increase in ranking comparative to other blogs. For the search terms I followed, the search results overall seemed to get better in quality. Though Google’s updates were far from perfect. I still saw many other blogs buying back links to their site, and using link farms to help. All of this was supposed to be resolved with the Panda updates, yet didn’t see this happening with every update they performed.

Google considers black hat SEO techniques bad, and you would think their updates would catch these sites. So far it hasn’t but caught all but the obvious offenders. In the process Google’s created collateral damage with sites such as mine. Mind you, I don’t use any of these techniques they consider “bad”, at least not anything mentioned publicly by Google. The problem is of course what is considered good content by Google is a complex computer algorithm that is as secret as Coke Cola’s formula. So instead you have to reverse engineer their process, and for the most part it’s a guessing game.

Issues with Google

My beef with Google is twofold:

1. It’s a bunch of computer science nerds with lack of real world understanding
2. Communication is poor at best

Computer Science Nerds

Being a reformed computer scientist, I understand the path they are taking. Google is primarily a technology based company with very little other skills. Sales and marketing? Almost none. Typical with most computer scientists, Google lacks in the “social interaction” skills area. If Google were a child in school, it would get a report card stating it doesn’t play well with others.

Their search engine is perhaps the biggest, and most complex computer technology deployment. They use over 200 variables to determine how each site should rank. In less than two hours an update to this very site shows up in their search results. They have hundred of thousands of servers in their data centers around the world. It’s pretty amazing how they accomplish these engineering feats.

The problem with Google search it is mostly computer algorithm driven. They believe their search engine results should be primarily driven by an automated system. Google’s bots scan your content to determine relevancy, and how your content should be weighted against other web sites. It’s a very complex process that I won’t go into detail here. Then as a last resort if needed Google use humans to help sort out the edge cases.

As shown by this very web site, an algorithm works until it doesn’t. Same applies to the quants that blew up on Wall Street in 2008 and 2009. Software is only as good as the programmer modeling the problem. Miss an exception or edge case, and things blow up. Sometimes the effects can be dramatic.

If I had a dollar for every time I heard “well we didn’t test for that use case” I’d be richer than Google.

Unfortunately with most computer scientists, most feel a computer algorithm can replace the human element. When in fact a human should always be in the loop in some fashion.

Communication is Poor

For a technology company that is all about social media, it certainly has a piss poor methods to contact them. Sure they are great at broadcasting a message out to millions, but to communicate back to them in many cases is non existant.

If it does exist, it’s parsed through (again) computer algorithms to see if it can automatically answer your question. So related to my decrease in traffic, you can contact Google via their Webmaster site. Here is Google’s response to my submission with my emphasis in bold.

We’ve received a request from a site owner to reconsider how we index the following site: http://investorjunkie.com/
We’ll review the site. If we find that it’s no longer in violation of our Webmaster Guidelines, we’ll reconsider our indexing of the site. Please allow several weeks for the reconsideration request. We do review all requests, but unfortunately we can’t reply individually to each request.

Several weeks?!?! A decrease in search ranking is effectively cutting off most if not all traffic to a web site. Which then affects the web site’s income stream.

This is equivalent to shutting down the server running the site, or turning off the power to a store front. In my business if I did this to my customers, I would be out of business very quickly. For a company as large as Google, communication with them is worse than dealing with a government agency.

This is how Google is applying their “do no evil” mantra?

Google should be either communicating with me either before and/or after a major change in my ranking because of X reason. If not then much quicker turn around time when you do contact them. Currently they only contact you when they outright block your site because of black hat SEO techniques.

Why does Google do this? Some may say it’s because they have an effective monopoly on search. That is somewhat true, but the real reason is to follow the money. Their income is from ad banners, not organic search results. Not that I can blame them for this, but once you realize organic search is mostly an annoyance to them, it makes perfect sense. In reality they don’t care they just knocked your site out of search results from a decent ranking previously.

In Summary

The Panda updates almost make a good case for going black hat with SEO techniques. After all, I played by what I thought were their rules, and still got punished for some unknown reason. Google decides with their automated algorithms I now have spammy non unique content. At least with black hat SEO if you get banned, you know exactly why. There are many examples of black hat SEO is still beating out people who play fair in the eyes of Google. I have no problem playing by Google’s rules, but I don’t have the slightest clue what that is. If Google made the rules clear, perhaps black hat SEO will decease in the process.

Fortunately for me this site is one of many revenue streams, and all income from this blog is not lost. I do plan on to keep updating this site, fighting the good fight against Google’s stupidity, and relying less on Google for visitors. For any online business it makes sense to do this because at anytime you could be deemed a spammer in the eyes of Google’s Skynet terminator. Your business can literally end overnight. I’ve unfortunately seen too many online business rely on search engine traffic, only to get completely wiped out from an update.

For me to get around relying on Google this includes ramping up other online businesses to diversify more. So if one takes a hit, I’m not completely at a loss. So instead of focusing on one great web site, Google is almost saying I should focus on many average quality content sites. It’s one of those unintended consequences that always seems to show up in new government rules and regulations also.

No related posts.

Why Google’s Panda is Not Cute and Cuddly is from Investor Junkie Copyright © Empowering Media, Inc.

I agree completely with Steve’s sentiment. Some may argue that Steve is a crybaby, and using Obama as a scapegoat for his poor business performance. That’s the thing: his stock is on a 52 week high, and had outstanding quarterly results. Steve, instead of just complaining, took action against the poor business policies, and invested abroad. Their resort in China: the Macau, is growing like gangbusters.

I find it interesting he rails against Obama, but mentions good things about Senator Harry Reid. Harry was the biggest proponent in getting Obamacare passed. I suspect one of two things is going on:

1. He understands crony capitalism, and won’t bite the hand that controls the purse strings to get new casinos created in Nevada.
2. Is politically uninformed.

Steve Wynn is a smart guy, very smart, and not some average smoe. You don’t become one of the biggest players in Las Vegas without understanding the policial, and union environment in that town. So I would suspect it’s #1, and not #2. Which then speaks volumes on how much control politicians have over business in our country. He basically does not want to make his life a complete living hell. I suspect if he was completely honest, he would be railing against Harry Reid also.

The point is, in a time of economic slowness, the last thing a political leader should be doing is bashing the productive. It lacks common sense. The hint (not even actual laws) of more rules and regulation, businesses start taking proactive measures. This alone is not a smart idea in low (no?) economic growth, but that is what this administration keeps doing and doing and doing… One week it’s visiting Las Vegas, the next it’s rich jet owners, the next it’s Joe the plumber, or it’s evil doctors who’ll amputee legs just for a profit.

Mind you I’m not nieve to make Obama a scapegoat for all of our country’s ills. There is plenty of blame all around. My point is a leader should act like a leader, and not constantly vilify or blame others. Obama’s first, second and third concern should have been about job creation. It has been anything but that, and the results in the next year will continue to show this. At best the Obama administration is not helping with the recovery, and at worst hurting it.

So What Should Small Businesses Do?

As a small business owner, I also completely disagree with President Obama’s business policies. I unfortunately have less control over my destiny compared to Steve Wynn. I don’t have as much flexibility in investing abroad with my business.

With my “day” job, business has been slow. When speaking with my accountant; he states the same sentiment among other business owners he talks to. Most of my customers are small businesses themselves, and speak about the same issues to me. All I hear is people are treading water, and they expect this to continue for the foreseeable future.

So like any intelligent business person, I’m using my time and money to the best of my advantage. What I am doing is investing my time: researching new business opportunities, and educating myself in things I did not have time for previously. I’ve been reading like a fiend lately, and strategizing.

I’ll be honest: there have been times when I’ve wanted to give up. The point is you should never give up, and keep pursuing your dreams by taking action. Yes I’ve felt like I’ve been spinning my wheels for the past few years, but I know eventually it will pay off.

The economy will eventually get better, it always does. Large companies are sitting on Trillions of dollars. More money than ever. They’ve made themselves lean and mean, and more productive than ever. This means at some point we should see a quick rebound, but also possible high inflation. It just may not occur with this administration in office because of said policies. So sit tight, but also plan. If it does not happen here in the US, there are other countries that would more than welcome business owners.

I take a Zen approach with my investing and with my business. When this administration yins – I yang. Based upon monetary and fiscal policies: I will continue to invest in gold, silver, alternative investments, looking at methods that protect ourselves against inflation, and invest in stocks that have international exposure.

• Why Your Small Business Should Offer a 401K
• How is Investing and Owning a Small Business Related?
• The 7 Steps to Starting a Business
• Could Your Business Handle Another Recession?
• Starting a Business: Monetize What You Know

How A Small Business Can Perform Like Wynn Resorts is from Investor Junkie Copyright © Empowering Media, Inc.

You might need money to pay for start-up costs such as buying office equipment, or for the ongoing costs of business such as rent or telephone bills.

Unless you are already a person of independent means, this decision is likely to come down to one of two choices: whether to get a loan, or whether to get people to invest in your business.

You can get loans from financial investors, or from friends and family.

Either way you’ll need a fully-thought out business plan to present, together with a timetable for paying back the money.

If you’re attempting to get finance from friends and family, your first try should always be for the interest-free loan. As well as not having to pay back any more than you have borrowed in the first instance (a problem with all other types of loan), this has the advantage of having the fewest tax implications.

Your contacts may, however, want some return on their money. If this is the case, then you should always make sure that any agreement for the loan is entered into in writing. This way, both parties will know where they stand should there later be any problems.

Your loan agreement should include such issues as how long the loan is for, when it will be repaid and under what circumstances and what rates of interest apply to the loan.

If you decide to take a loan from a business lender, then check to see that you’re getting a good deal on the interest rate.

Price comparison websites can be an excellent place to look, as they’ll help you to find the best deal on your loan.

Business lenders will often need security on their capital, so consider carefully what you’ll be putting in place should you for any reason be unable to repay the full amount.

As an alternative to a loan, you may instead want to offer any potential partners a share in the business itself. Be careful not to dilute your own shareholding too much if you take this route, though. You’ll ideally want to keep at least 70% of the business in your own hands.

Any money invested in the business by a partner should be considered as risk capital and you’ll need to make it clear to those involved that there is a possibility that they may not receive all of their money back.

If, on the other hand, the business does extremely well, then the investors’ return should be sure to compensate for the degree of risk that their money was put at.

Investors may also bring extra knowledge or contacts into the company and the fact that they have committed their money directly to the company itself means that they will have a direct interest in helping it succeed.

Both ways of raising money have their pros and cons, but each will bring an influx of capital into your business that will help you to move forwards.

This is a guest post from moneysupermarket.com

• The 7 Steps to Starting a Business
• Starting a Business: Monetize What You Know
• Payday Loans VS. Loan Sharks
• Five Ways to Improve your P2P Investment
• There’s No Such Thing as a “Risk Free” Investment.

Just Starting Up: Loan or Investment? is from Investor Junkie Copyright © Empowering Media, Inc.

I’ve owned a business for over ten years now. It’s hard running a small business. Being an entrepreneur can sometimes be a thankless task. You are taking risks, and may not have anything to show for it. You can be burning the midnight oil many nights with little income to show for it. You have to wear many hats, and sometimes you don’t have the capital or human capital to get the work you need done. So what happens? You work yourself to death, and typically wind up doing an eighty hour work week. At today’s current minmum wage of $7.25, that comes out to be a little over $30k annually. Especially at the beginning, you might barely take home this amount in the first two years in business.

So What Can You Do About It?

The one equalizer in the world is everyone has the same amount of time. Others might be richer, have more resources, better connections, etc., but we all have the same amount of time available to us. How effectively we use that time is what sets us apart. Make sure the time you have is used wisely.

If you are working for someone else, understand hard work usually pays off. Directly by your boss seeing your results, and rewarding you for your effort. Indirectly by gaining skills in which can get you a better paying job somewhere else. Unfortunately it sometimes takes moving on to a new company to get better pay.

As a small business owner realize it can be short term pain for long term gain. It’s part of the risk of being a small business owner. The eventual goal is you are making a decent income, and the business is sizable part of your net worth.

It’s common for entrepreneurs to think about creating companies and building them. From my experience, it’s rare an entrepreneur thinks about their exit strategy. I have too many friends that the business and them are one and the same. If they leave, the business falls apart.

The goal as an entrepreneur, is to build a business that can exist without you, or can be sold to someone else. Doing consulting work, while nice in pay, is not a sustainable business plan. The ultimate goal of any business owner is building a business based upon a product or service. With consulting you aren’t building anything, and probably best to work for someone else. The book “The E-myth Revisited” talks about this in depth, and I highly recommend you read it.

In Summary

In the end it’s short term pain, vs. long term potential gains. You’ve heard the phrase, “The harder I work, the lucker I get”. That axiom is somewhat true. Understand though, you are taking risks with a lower salary for an eventual higher payout. Make sure you realize this calculation anytime you take a new job, start a new business, or start working with a new customer. Every job you do has a risk/reward. Make sure, if you are working for minimum wage, that the eventual payout is higher. This payout can be in various forms. This can be a bonus with your employer, stock options, or an exit strategy when you sell the company you created.

• You’re Always Working For “The Man”

Are You Working For Minimum Wage? is from Investor Junkie Copyright © Empowering Media, Inc.

Sole Proprietorships are often frowned upon because this particular legal structure does not offer liability protection. If your company has many debts that cannot be repaid, your personal assets will need to be sold in order to cover those debts. This could mean your cars, your house, personal accounts….anything. I almost always advise against starting a Sole Proprietorship for this reason.

New Business

I’m sure that with all of these new business start-ups, there is quite a range in the size of these companies. Some may be very small – a one-person operation with no real customer interaction (other than online), whereas others might be quite sizable – a 50-person company that pays employee salaries and benefits. Is there one right option for each of these companies?

LLC

The LLC is a fairly basic way to legalize your business. Here are the main points of an LLC:

• No real tax benefits to an LLC – in fact, in some states, this may actually increase your state tax percent because there are “franchise” taxes. Please refer to the Tax Foundation – this will show you if your state enforces this tax
• Liability Protection
• “Pass-through” entity for tax purposes – meaning, taxes will be passed through the owner, and filed through his/her personal income tax
• Easy set-up and flexible for change
• Profits divided according to personal agreements

S-Corporation

The S-Corporation is basically the next step up beyond the LLC. Here are the main points of the S-Corporation:

• Not subject to Self-Employment Tax, which most likely means tax savings
• Must have no more than 75 shareholders/employees, and they cannot be non-resident aliens
• Are run the same as a C-Corporation (a large company like Coca-Cola is a C-Corporation), and all the same record keeping applies – this means that you’ll spend many more hours with your accountant vs. the LLC
• “Pass-through” entity for tax purposes – meaning, taxes will be passed through the owner, and filed through his/her personal income tax
• Profits are divided according to the ratio of ownership

So Which Set-Up is Right for my Business?

Ultimately, this is up to you (obviously), but it mostly depends on the size of your company. Let’s look at a few examples.

1. Ron has recently started a blog and is already creating some revenue from advertisements, staff writing, and from SEO servicing. He does everything himself and therefore has no need for any employees. His yearly income is projected at about $8,000.

   In this example, since Ron does not have employees, it’s best if he keeps his business set-up as simple as possible. He should start an LLC.

2. Lynn has always been great at styling and cutting hair. A few years ago, she was happy cutting her friends’ hair for free. It was relaxing and somewhat of a win-win. Lynn recently felt like her day-job was in trouble and decided to do something bold. She purchased a vacant retail shop and converted it into a hair salon. Lynn plans on employing 6 workers for now, but if it goes well, she might open up another salon in a nearby city.

Lynn’s business is much more complicated than Ron’s. She has to organize payroll and needs to withhold taxes from her employees’ paychecks; plus, she might even expand her business to another location, which would most definitely mean more employees. An S-Corporation would be best for Lynn. It will require her to focus more efforts on the accounting side, but she will benefit from the tax savings of the S-Corporation.

Is Your Business Simple? Go with the LLC

Most small businesses are run by one person, the owner. If this is the case with your business, you’ll most likely benefit from the LLC set-up.

Do you currently own your own business? Are you an LLC or an S-Corporation?

This is a guest post by Derek from Life And My Finances. Derek currently has his degree in Finance and enjoys using his knowledge to help others get out of debt, save money, and get rich!

No related posts.

S Corporation vs. LLC is from Investor Junkie Copyright © Empowering Media, Inc.

Write Your Business Plan

The first step in any successful business is a plan. Believe me, I’m not talking about planning out every step you make to the infinite detail. I am the type that recommends more action than planning. It could be a one page brief summary of what the company is about, and what products or services you’ll offer. It should be about not only what you’ll do, but also what you won’t do. The common mistake is getting caught up in trying to please everyone.

A successful business must be focused, as you cannot be a jack-of-all-trades. Ultimately, write enough detail so it makes you feel confortable. By writing it down it will help organize your thoughts into one congruent process. If you were looking for partnering with others or getting outside investments, would it be enough information? In most cases no. You will need to do much more research and planning, than say starting a part-time business that is self funded.

Once you create your plan, be flexible. I’ve personally had countless business ideas that have turned into major duds. Don’t be afraid to change course. Realize that selling ice cream to Eskimos wasn’t such a hot idea after all. Understand successful businesses (and individuals for that matter), give a new idea enough time to let the idea blossom. If it doesn’t work out, they move on to the next idea. Don’t get caught up that your business idea is a “failure”. You can’t succeed, until you fail.

Incorporate Your Business

Ok you know what you are going to do, but how do you create a business? This is commonly where people get tripped up on. Too many entrepreneurs incorporate after they start generating income. In my opinion is a bad idea. Creating a DBA (Doing Business As) is too risky in today’s litigious society. There are many reasons to incorporate into a business. The two major reasons are:

• Legal Entity – A business is a separate entity than the owner(s). A business can be sued, while not affecting the shareholders. A business in legal terms is like it’s a person and has a unlimited life.
• Taxes – There are many advantages with taxes that cannot be done with your personal taxes, and can be taxed at a lower rate.

One service I can recommend is from The Company Corporation. Incorporating can be a complex process. Their process makes it easy and gives you incorporation recommendations based upon your business needs.

In my case my primary business is an S corporation, but for your situation it make make sense to be an LLC. The Company Corporation gives some great advice on which to pick, but you may also want to ask the advice of your accountant (see my other recommendation below).

Create a Logo

Ok you’ve got step one and two down. Now let’s talk about the identity of the company. A logo in my opinion is a crucial part of your business. It’s your welcome mat for your customers. How your logo looks reflects how your company looks. An unprofessional logo can immediately turn off a potential new customer.

I personally recommend 99designs. Want to see a sample of their work? Look no further than to the Investor Junkie logo. They offer a pool of talented graphic designers than can bid on your logo. You pick the one you like best. All of this is available for a reasonable fee. Going to a traditional advertising agency and getting a logo done can cost thousands of dollars.

Purchase a Domain Name and Website

In this day and age, you need to be on the interwebs. With how cheap web hosting is, there is absolutely NO excuse to have your own domain name and at least your own E-mail. In many cases for less than two Starbucks Mocca Frappachinos a month, you can have your own web site and domain name. I cringe anytime I get an E-mail from a small business owner who uses one of the free E-mail services like AOL. It looks completely unprofessional and unacceptable. So cut down on the coffee, and get your self a web site.

I recommend using HostGator. When ordering if you enter INVESTORJUNKIE as the coupon code you’ll get an additional 25% off your order. They also have an easy to use SiteBuilder, so you can get your web site up in no time!. No web designer is needed, but if you do want a more professional look, 99designs can also help find a web designer.

Accounting Software

You need to be able to invoice and pay bills. Also track your income and expenses. This especially becomes important when it’s tax time. My recommendation is using Intuit’s QuickBooks. At my company we use QuickBooks Pro 2011. It’s the most popular account package for small business owners. They have many different versions of their product to suit the needs of many types of companies. They offer desktop based software, to completely hosting your accounting software within the cloud, options for the service industry, and point of sale (POS) software. If you aren’t up for a full accounting software package, a cheaper alternative that is also from Intuit is their Quicken Home & Business 2011 product (see my Quicken review).

Find an Accountant

I do not recommend a small business owner do their taxes themselves. I’ve personally seen too many fellow business owners not in legal compliance with our government. With things like the new 1099 requirement coming down the pipeline, it’s crucial you aren’t voliating any tax laws. Do the right thing and find a reputable accountant. This means they should be CPA certified. Find one through your friends, and ask other fellow small business owners who they use. Finding a good accountant should be the first advisor on your team.

Get Funding

There are various means to get bootstrapped. Self funding is usually what most small business owners do, but it depends upon your business idea. Possible funding sources are:

• Self funded through personal savings
• Getting loans from friends and family
• Personal credit cards and business credit cards
• Bank loans
• Angel investors
• Venture capital
• Peer-to-Peer Lending

Lack of capital and keeping cash flow going is the typical reason why small businesses fail. So while you may not need funding, at minimum you should at least keep possible funding sources in mind. One recent viable alternative is getting loan from Lending Club. Lending Club can be a great alternative than going to a bank and applying for a loan. You can borrow up to $35,000 for 5 years and at decent interest rates. For more information see my Lending Club review.

In Summary

Today it’s easier and cheaper than ever to start your own business. For less than for $1,000 you can have your business started, and on your way to possible financial freedom. The process of starting a business can seem daunting at first. If you complete the seven steps I listed, you’ll be more along the way than most others. My fellow entrepreneurs best of luck with your new business.

• Starting a Business: Monetize What You Know
• Just Starting Up: Loan or Investment?
• How A Small Business Can Perform Like Wynn Resorts
• Could Your Business Handle Another Recession?
• The Best Business Ideas Are The Simplest

The 7 Steps to Starting a Business is from Investor Junkie Copyright © Empowering Media, Inc.

Overall she worked out well, but we noted she was ten minutes late. Her car is currently broken, and took mass transit. She called ahead of time, and stated she was going to be a little late. Reasonable excuse, and was acceptable by me. I understand you are at the whims of mass transit, and delays of 10-15 minutes are not uncommon. If she were an hour late, that would be unacceptable from where she lives. So we brushed off the tardiness.

We were initially indecisive if we needed her today. Last night my son was acting ok, but turns out he had over 102 degree temperature last night. That means he cannot go to daycare. So we called her again last night asking if she would be available. She said yes, but her child was starting his first day of school (her family recently moved from another area). She stated she would be at our house an hour later than the usual time of 7:30 AM. So this morning 8:30AM rolls around – no nanny and no phone call. I call my wife thinking, maybe I misunderstood, maybe said 9:30. She finally rolls in slightly after 9 AM. Of course all apologetic, sorry for being late, the dog ate my homework….yada, yada, yada. Now mind you, I completely understand things happen, especially with children. What she should have stated, she would be here no later than 9:30, than coming half hour later than she originally stated.

I’ve hired quite a few people over the years, both for my business, and for things in my personal life. I’ve never understood why some employees are consistently late. Tardiness in my eyes, tells me your time is more important than mine. One of the simplest things an employee can do is be on time. Even better, be slightly early than the time you are expected. Let me give a little tip that works for employees, but also works when working with clients.

If you do this, you’ll always come out smelling like roses. You’ll look like a hero, when in fact you are doing worse than your own standards. It’s much better to appear to be early, than later than the time you stated. It’s much better to state to a customer you’ll have it ready by Friday, but you deliver it to them on Thursday. Case in point also for me is a new computer from Dell I ordered for my mother. I ordered it last week, and they stated it would be at my door by March 7th. Well low and behold, I got a nock on my door this morning from the FedEx guy with the shipment from Dell. Dell under promised, but over delivered. If you do this, you’ll look good with your employer. It’s the simple things that can make a big difference.

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Note To Employees. Be On Time! is from Investor Junkie Copyright © Empowering Media, Inc.

This list of ideas is not 100% comprehensive.  Each business is unique.  Depending upon your audience and the services that you offer, some ideas may not make sense for your business.

Be Clear

Be clear with payment terms, and list them directly on your invoices.  If the terms are the same for everyone list them on your web site.  List them on the order form.  If you are NET 30, state this on your invoice.  Put the specific date it’s due on the invoice.  If  you are sending your invoices electronically many billing system can remind your customers when an invoice is about to become due, is due, or overdue.  If you state to a customer you will cut off their service, give them a specific date ,and stick to it.  Don’t be afraid to piss off your customer, if they are late they are the one’s who are breaking the relationship, not you.

Give Incentives

Give positive and/or negative reinforcements for paying your bill.  This can include late fees, but it can also reward early payers, or payers that pay via a specific method (i.e. online via credit card, instead of in person via cash).  In my line of business, customers pay a monthly reoccurring fee.  I like to offer prepayment discounts if customers pay for ahead of time for longer terms.  For companies with a product or service that’s for a one-time fee, offer a coupon to customers who pay on time.  You will not only get payment on time, but you may get a repeat customer.

Always Have Leverage

If your service or industry is based upon multiple payments, do not deliver all work until the final payment is received.  If you deliver a product to a customer’s home, and they haven’t fully paid for that product when it’s in their home, it makes it very hard to get that product back.  With credit card payments, you push the responsibility to the credit card vendor to collect full payment.  Let them worry about collecting payment.  Granted some industries expect payment after services are rendered.  If that is the case, start new customers with no credit history on shorter or no terms, and then adjust as they build up a payment history.

Each Customer Is Unique

Yes there are services like Dun & Bradstreet where you can get a credit report on the company you are working with, but what matters in the end is how they pay you.  You should keep your own detailed records of how quickly items are paid, where they late on any invoices, when contacting them where you promised.  Most accounting packages can do this already.  If you contact the customer about overdue invoices, do they follow up or ignore the request?  If they are avoiding contact with you, I typically turn the knob and get harsher with our collection tactics.  In my opinion, if a customer is in contact with you, even with a boldfaced lie, they at least are keeping communication open.  If they shutting down the communication gateway, to me this means they do not want to pay the invoice owed.  I’ve also seen customers with excellent payment histories go bad, and customers with poor payment histories get straighten out.

Avoid Collections At All Cost!

This is critical.  If you have to send your late payments to a professional collection agency you might as well kiss that money good bye.  Professional collection agencies usually don’t collect.  If they do collect, after fees, you usually get less than half back.  My suggestion is to not let customers get to this point because then it is too late.  Spot customer trends on who might become a future late payer. Keep customers on a short leash, if you see changes in purchasing or payment behavior.

Make It Easy To Pay

This is something that perplexes me with many businesses I use myself. They offer limited methods of payment. Get with the program, it’s not 1989! You should accept ALL major methods, which includes usual and not so usual suspects:

• Cash
• Check
• Credit and Debit Cards
• PayPal

I cringe when I visit a store, and they don’t accept credit cards.  Doctor’s offices seem to be the worst .  Sure the merchant fee might knock off 2% from that $20 co-pay (otherwise known as $0.40), but is it worth your staff’s time to chase them down in the future if they don’t have the cash or a check on them?  I’ll take the pain of paying a merchant fee so I have that money up front thank you!  Time IS money.   There is NO reason, even with mobile professionals, to not accept credit cards at a client’s office.  There now devices that attach to your smart phone in which you can swipe the credit card.  Make an auto-pay option available via a default credit card you have on file.  Why make them give you the same credit card info over and over again?  Remove the amount of steps required to pay you.  By removing these barriers, it gives the customer fewer excuses to not pay. I’m seeing more and more people wanting to pay via PayPal, and I think that this trend will increase in the future.

Offer Many Methods to Pay

Allow your customers to pay from anywhere at anytime.  Allow them to pay:

• In Person
• Via Phone
• Online
• Via Mail

Many of these can be automated today, so it doesn’t cost much to implement.

Upsell

You can use your invoice as a method to reinforce your brand, and the services you sell.  If in your line of business the one who opens the bill is also the one who uses your product, why not include updates to what’s going with your company’s product line?  You can also offer complementary services that you don’t offer, but can partner with another company that does and get a percentage of each sale.

Be Courteous and Professional

Every interaction with a customer can make, or break the relationship. Initially when I started my business, I took it personally when a customer didn’t pay me. How dare they not pay me after all the hours of work and effort I did in completing the project. This type of attitude can turn off the client. Don’t take it personally that they haven’t paid you. You have too much vested and will make you more emotional. Instead I recommend you have someone else do your collections. If you are the only employee, ask a friend, or a relative and pay them for their time. That way your collector can be more objective, yet can also play the “bad” cop, and also be somewhat harsher in their collection tactics. This keeps you out of the loop and you can play somewhat dumb about your harsh collection techniques.  You can then be somewhat of the “good” cop when they ask you about paying.  In any communication with the client, keep out any personal or inflammatory statements.  The communication must be objective (i.e. you are now over 90 days late) instead of be inflammatory (i.e. I know you have the money to pay yourself, why haven’t you paid us yet?). Stick to the facts about the client, what makes them late, and what you will do if they fail to pay.

In Summary

The one factor most entrepreneurs fail to think about is you have a business to run yourself. You have bills to pay yourself, not only for your business but for your family. Entrepreneurs usually take pay cuts before affecting their employees or vendor relationships.  So while it’s important to understand the needs of your client and why they might be late, you also have financial obligations to meet yourself.

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How To Improve Your Billing Collections is from Investor Junkie Copyright © Empowering Media, Inc.