Making the Most of Your Purchases
Every business has to invest in goods and services to operate and grow. Small business owners juggling multiple demands, with limited resources, have to be particularly strategic in how they finance their purchases. The good news is a wide range of new solutions are now available to help owners save while they spend. For example, credit cards with cash rewards are becoming increasingly popular with small business owners. By offering the opportunity to earn cash back on purchases from office supply stores, gas stations, computer network companies and restaurants, cards can make expenses less expensive and preserve cash reserves.

“A key driver to small business success is finding ways to make less go a long way,” says Steve Strauss, small business expert and columnist. “By offering up to 3 percent cash back on certain purchases, and no cap on the cash back you can earn, cards like Bank of America’s Cash Rewards for Business MasterCard credit cards (R) are actually paying you to purchase.”

Reward cards are one important tool to help small businesses maximize assets and manage cash flow. Here are some additional suggestions to help you prevent shortfalls and keep your small business in financial order:

Think ahead. Even the smallest businesses can no longer afford to roll the dice with casual “back of the envelope” calculations. Budgeting should be done routinely and systematically on both a short-term (weekly, monthly depending on company size) and a long-term (annual, 3 to 5 years) basis to forecast impending needs.

Don’t silo. A company’s cash position is tied to business operations, so it is wise to assess production schedules, overtime, supplier choices and delivery dates against cash availability and make adjustments regularly.

Expedite incoming payments. Speed up receivables collection by sending out invoices as soon as orders are shipped and ask customers to make electronic payments wherever possible. Always deposit checks the same day they are received.

Remember that inventory is not cash. The items on your shelves need to be sold to be transformed into cash, therefore you should do everything in your power to move inventory, including offering discounts or installment payments if necessary.

To learn more on smart spending and other small business issues, visit http://www.bankofamerica.com/learn and http://smallbusinessonlinecommunity.bankofamerica.com.

To help educate entrepreneurs on available capital resources, the Initiative for a Competitive Inner City (ICIC) and the Staples Foundation have compiled a short guide for CEOs about federally funded capital access programs.

SBA 7(a) Loan Program: The SBA’s 7(a) loan program is the largest government-backed loan program for entrepreneurs and is designed to encourage lenders to work with companies they might otherwise consider too risky. The 7(a) loan program can help finance up to $5 million, which can be used to buy a business, for long-term working capital or to purchase equipment.

Depending on the size of the loan, the SBA generally guarantees from 75 to 85 percent of the total loan amount. The caveat is that SBA loans can come with hefty fees—In a sense, the business owner is buying insurance on the loan. Such fees currently start at 3.5 percent of the guaranteed amount of the loan and can be financed as part of the loan. Learn more at http://www.sba.gov.

Community Development Financial Institutions (CDFI): CDFIs are financial institutions that support the economic revitalization of low-income communities, including the businesses there. Banks, credit unions and venture funds may all be certified as CDFIs and use federal funds to invest in businesses or real estate, to make consumer loans or to provide other services in communities that lack them. Entrepreneurs who have worked with CDFIs describe the due diligence process as being more intensive than that used by most banks but often say they get a valuable mentoring relationship—in addition to cash—in return. The availability of CDFI financing varies greatly. You can learn about this resource at http://www.cdfifund.gov/.

New Markets Tax Credits (NMTC): This program is designed to encourage investment in low-income areas. Investments in qualifying projects can get a 39 percent tax credit taken over seven years. More than $25 billion in tax credits has already been granted. NMTC money is chiefly used for real estate, with about 82 percent being used this way. Entrepreneurs of all kinds can also benefit from the program, using it to build new physical locations. For more information, visit http://www.icic.org.

A Huggies-commissioned study also cited access to financial resources (65 percent) as the No. 1 barrier preventing moms from turning their business ideas into a reality. Other significant barriers include risk of failure (43 percent) and not knowing where to start (36 percent).

As Maria Bailey, mother of four and founder of working mother resource http://BlueSuitMom.com, explains, “Moms are some of the most inventive people I know; they develop great business ideas but lack access to the financial tools necessary to launch a business.”

Bailey offers prospective entrepreneurs these tips to getting started:

Determine dedication level. Decide whether your passion is a business or a hobby to determine the time, money and resources that you are willing to dedicate.

Do your homework. Search the Internet and store shelves to see if your idea already exists. If so, think about how your product can answer a need that existing ones don’t.

Test the idea. Get the input of your target consumers by hosting an informal focus group.

Write a business plan. Even if it’s a simple one-page outline, consider the following: What will you produce? How will you manufacture it? How will you market and sell it? What is your exit strategy for the business?

Find a mentor. Online communities of successful women can offer support, insight and guidance.

Discover capital in untapped sources. Look for unique funding sources such as brand-sponsored grant programs. Huggies offers grants, annually awarding a total of $250,000 to 12 mom entrepreneurs. Named “MomInspired,” the program provides resources and funding to women-owned business startups and new products inspired by motherhood. Leslie Espowe, one of the first grant recipients, recognized a parenting need and developed a solution with her hands-free, waterproof WateRoo infant carrier, now marketed under the Lucky Ducky Baby brand thanks to her grant money.

To be considered for a grant, moms must submit an application online by June 30. Twelve individuals will receive $15,000 in funding to support their idea or business. Interested moms, 21 or older who live in the U.S., can visit http://www.HuggiesMomInspired.com to apply.

“I am proud of my family’s optimistic and entrepreneurial spirit that has served as the foundation for Mirassou Winery,” said David Mirassou, wine expert and sixth generation family member. “We’re celebrating that spirit and paying it forward by supporting the best and brightest ideas through our first-ever national grant program.”

The Mirassou family has been growing grapes and crafting superior wines in California since 1854, earning them the distinction of being America’s oldest winemaking family. Today, the Mirassou wine style is refreshing and fruit-forward. Mirassou’s premium wines – Pinot Grigio, Chardonnay, Sauvignon Blanc, Riesling, Pinot Noir, Merlot and Cabernet Sauvignon – retail for approximately $12 per bottle and are widely available in all 50 states, as well as on their website, http://thebarrelroom.com.

Mirassou’s Bright Ideas Grant Program will award five $3,000 grants to individuals with bright ideas to help turn their ideas into reality. In addition, the five grant recipients will also be voted on at the Mirassou Winery’s Facebook page, with the highest vote earner being awarded an additional grant of $5,000.

From now until October 31, 2011, applicants may submit their bright idea (large or small) at http://www.facebook.com/MirassouWinery for consideration. Applications may not exceed 1,000 words and will be judged on criteria that includes relevance of the bright idea to the Mirassou spirit of entrepreneurism, innovation and empowerment.

To apply for a grant and view the official terms and conditions, please visit http://www.facebook.com/MirassouWinery.

However, the survey, conducted quarterly by Javelin Strategy & Research, also has good news.

“In spite of the difficult economy, Gen Y is engaging in smart financial behavior to help build their better future,” says David Shapiro, senior vice president, Western Union. “This survey shows Gen Y using tools such as online banking and online bill pay to manage their budget and credit standing.”

Here are some tips to get you started:

Credit and Debt Game Plan:
Establish the Base. Open a bank account, and start saving and paying down debt: online banking, online bill payment, automatic deduction and mobile banking are helpful tools.

Establish a Budget. Check out online budget management tools to get your budget started. Also check the applications available for smart phones.

Establish Credit. Approximately 30 percent of your credit score is based on bill payment history. Look into scheduling automatic payments through your banks or biller.

Establish Credit — Part II. Even if it’s just one bill payment, establish credit in your name.

Check Your Credit Scores. Know how to obtain your credit scores and read them. Forty percent of Gen Y-ers have not seen their credit scores in the past year, and 44 percent have never seen them. Check sources such as http://annualcreditreport.com and http://myfico.com for how-to’s.

Set up an Emergency Fund. Set up an automatic rainy-day savings plan now.

Work It Both Ways. Understand there are two paths to financial success. Make more money and save it. Or spend less money and save it. Or do both.

That could be because many of us don’t fully grasp the mechanics of credit scores and credit reports. You may realize that having good credit can profoundly affect your financial health, but you may not be sure how to take control of your credit.

Fortunately, it’s not difficult to demystify credit management. A few simple steps can put you on track to take control of your credit this year.

Know where you stand
Your first step toward a healthier credit future is to get a clear perspective on where you are now. If you haven’t looked at your credit report in a while, now is the time. Websites like http://CreditReport.com allow you to obtain and review your credit report – a move that can empower you to make better financial decisions. You’ll get your free credit score as a reward for enrolling in Experian’s credit monitoring product, a membership that can help keep you abreast of changes – both good and bad – in your credit report and score.

By monitoring your credit report and score on a regular basis, you’ll be better equipped to make financial decisions, and will be more aware of your ability to use credit. Get educated on what’s on a credit report and how credit bureaus use that information to calculate your credit score. Generally, credit reports include detailed information of an individual’s payment history with various creditors. Among other factors, bureaus consider three key things when calculating your score – the length of time you’ve had credit, the ratio of available credit to credit used, and if you pay your bills on time.

Manage your debt
At a time when debt is high in many American households, it may be difficult to remember that not all debt is bad. Debt that is secured by a tangible asset, such as a home loan, or that builds your family’s future, like a college loan, can be good debt as long as you manage it wisely. When looking for a mortgage or college loan, start out by knowing your credit score, then shop around for the best rate and terms. And be sure to avoid borrowing more than you can comfortably repay.

Pay down credit card debt, which is generally perceived as higher-risk – and higher interest – debt. Avoid using credit cards to pay for things that you should be paying cash for, such as groceries, utilities, restaurant meals or vacations. If you use credit for these things, which rapidly get consumed, and you can’t pay off your bill in full right away, you could wind up in debt very quickly.

If you already have credit card debt, never pay just the minimum balance due each month; it would take years to pay off just a few thousand dollars at that rate and you’ll pay much more in interest than the amount you originally borrowed. Always pay more than the minimum, and concentrate on paying off cards or loans with the highest interest rate first.

One exception to the pay-it-off quick rule may be your mortgage. If you’re able to make your monthly mortgage payments without struggling, concentrate on paying off other, higher interest, unsecured debt first. The interest you pay on your mortgage may be tax deductible, but the interest you pay on credit cards is definitely not. If your mortgage’s interest rate is high, look into refinancing to lower the rate.

To spend the least amount of time and resources to get the highest number of people, a growing number of nonprofits are using online event marketing tools. If you have a computer and Internet connection, you can track registration and organize the events in less time.

“We love that people RSVP online so we don’t have to field as many phone calls,” says Robin Lee, from Quest Sports Travel in Malverne, New York.

Here are a few tips on choosing an online event marketing tool from Erik Mintz, a marketing expert with Constant Contact.

Go professional
Choose a tool made for business users. For example, find a tool that allows you to customize your invitation to match your brand design. Some free tools place ads in the invitations, which can look unprofessional. Upgrading to a low-cost paid service eliminates this hassle and ensures a professional look and feel.

Make a wish list
Identify the features you want and arrange them by “must have” and “nice to have.” Do you need invitation templates or ticketing capabilities? Do you want to track both yes and no responses so you can tailor follow-up e-mails? Do you need the ability to collect payment or to allow attendees to register guests?

Look for perks
Look for product-plus pricing: Pay for the tool and get free coaching and training, ensuring that expert training and re?sources are always just a phone call, e-mail, Web click or webinar away.

Think social
Social media is a free and easy way to boost your event promotion. Look for a tool that lets you and your attendees easily share your events on social networks such as Twitter and Facebook, allowing your organization to broaden its reach and gain exposure with new audiences.

More information about choosing and using online event marketing tools is available at http://www.constantcontact.com/eventmarketing.

Between closing your books on 2010 and preparing for 2011′s tax season, knowing how creditors and others perceive your business may not be top of mind. Yet, now is the perfect time to verify the information in your business credit report and update it with current and relevant facts about your growing business.

It can help you better prepare your business for the coming year. The credit experts at Experian offer some insight into the factors that affect your small business credit report and business credit score, and why it’s important to your business.

Why it matters
Does your business credit report really matter? Absolutely. It paints a picture of your small business for the world to see. Outdated or incorrect information can give the wrong impression about your business, resulting in unfavorable decisions by potential lenders and creditors – which can negatively impact your bottom line. Plus, anyone, including partners and investors, can view your business credit report for any reason.

If your business has grown or changed over the last year, it’s important to update the data reflected in your report and know the score. There are several factors that make up a business credit score, including but not limited to previous payment history, industry type and business size.

An accurate business credit report and a good business credit score can:

Save you money because lenders usually offer their best interest rates to businesses with good credit.

• Reduce your personal liability and protect your personal assets by enabling you to obtain business credit without the need for a personal guarantee.
• Help you offer your customers competitive prices by passing your interest savings on to them, while still keeping a larger margin of profit for yourself.
• Get you the money and capital you need to keep your business running.

What’s on your report?
Your business credit report provides an up-to-date, objective overview of your business and how it manages financial obligations. It can include information on your payment history, public records about your business, background on the company, collections information and comparative information that places your business payment history in context with your industry.

You can find out how your business compares to others like it across the nation in terms of business credit with an interactive map by visiting http://www.businesscreditfacts.com/map.

Managing and monitoring
Web-based services are a great way to monitor and manage your business credit report. Sites like http://SmartBusinessReports.com and http://Experian.com/SmallBusinessCredit not only allow you to view your own business credit report and score, but also provide useful information on how Experian arrives at your credit score and how your business practices affect your score and report. These sites also allow you to check the business credit of your suppliers, customers, prospects, partners and competitors.

Your business credit information is as important to your business’ financial health as your personal credit information is to your ability to borrow money privately. While you’re wrapping up last year’s financial matters and preparing for the coming year, now is a good time to think about your business credit and how you’ll manage it throughout the new year.

“The criminal tempts you by dangling the promise of riches, but he can’t really provide them because they don’t exist,” said John Gannon, president of the FINRA Investor Education Foundation. “That’s why it’s called a phantom.”

Foundation-funded researchers analyzed hundreds of hours of undercover audiotape to determine how fraudsters lured victims. After reviewing 600 tapes supplied by law enforcement agencies, the psychologists and fraud experts were able to identify the most common persuasion tactics the cons used. These tactics, along with tips on how to spot and avoid them, are featured in a free documentary, “Trick$ of the Trade: Outsmarting Investment Fraud.”

“Of all the tactics we uncovered, phantom riches is probably the most powerful and most common,” Gannon said.

“The phantom’s purpose is to get you to stop thinking logically,” said Doug Shadel, the Washington state director of AARP and an expert in financial fraud who led the research team.

“If you want something badly enough, it can really hinder your ability to critically examine an offer,” Shadel said. “A key goal of persuasion is to move you out of the logical reasoning part of your mind into the emotional. It’s what con artists call putting you under the ether.”

Jameson Kauhi of Vancouver, Wash., knows what that ether feels like. He was lured into a scam by a local businessman who promised him millions of dollars in a real estate development investment, but first Kauhi had to pay $82,000 in fees to access that money. All the documents looked good, and the con was a smooth talker.

The businessman was eventually convicted. And while Kauhi was awarded damages, he does not expect to collect anything.

The best way to avoid getting swept up in an offer of phantom riches is to slow down the pitch, Gannon said. Ask a lot of questions and check the answers with the proper authorities. “Asking questions gets you out of that emotional state and puts you back in control,” he said. Be sure to ask:

• Is the seller registered with FINRA, the U.S. Securities and Exchange Commission (SEC) or your state securities regulator?
• Is the investment registered with the SEC or your state?

For more information or to order your free “Trick$ of the Trade” DVD, visit the Foundation’s fraud-fighting website, http://www.SaveAndInvest.org.

There is good reason for entrepreneurs and small business owners to get moving. Banks are now able to lend up to $5 million where previously $2 million was the ceiling for one SBA borrower. Another sweet gift: the estimated three percent borrower’s fee for an SBA loan is being paid by Uncle Sam through December 31, 2010.

While bankers like myself are also encouraged to see the federal guarantee increase from 75 to 90 percent through the end of the year on SBA loans, we still have to be prudent and methodical. After all, it is our money we are lending. And it does our economy no good to issue loans to new businesses that are unlikely to stay in business.

About half of new business start-ups survive the first five years, according to the SBA. Defaults on SBA loans have increased steadily. The agency estimates that 660,900 firms shut down in 2009. Often bankers never know that new businesses are struggling until we receive the keys in the mail.

As a banker who has specialized in small business lending for more than 17 years, I want to help would-be business owners understand what bankers are looking for when considering a small business loan application. There are five key things we look for:

Direct industry experience. If you have worked in the field, you are more likely to have success running a business in the same industry.  But this isn’t a hard and fast rule. Believe it or not, intangibles like personality do matter.

Cash injection. Are you able to invest cash into the project? At Southwest Bank, we look for a 20 percent cash injection for a start-up or an acquisition, and 10 percent for an expansion loan.

The business plan. Your business plan should show that you have thought through all the important issues and done your homework. Is there a demand for your product and services in your market area? Who is your target customer and who are your competitors? What is your pricing and how does it compare to that of your competitors? If it’s higher, I want to see the justification.

Good credit. It doesn’t have to be perfect, but your credit needs to be good. I’ll check your tax return and make sure it matches your assets. For example, if you were earning $1.5 million annually for several years but only saved $100,000, I will wonder if you can handle money. If you are earning $25,000 and have saved $500,000, I will question that as well.

Passion. This is just as important as all the other factors above. Starting your own business may be the hardest thing you’ve ever done   you’ve got to be willing to live it, breath it, sleep it. If you are lukewarm about what you’re embarking on, I’m going to be lukewarm when I present your application to the bank’s loan committee. My job is to tell your story to a group of bankers sitting around a table, and I need to be able to convince them of your determination.

One of the advantages of going to a locally owned community bank for a small business loan is the relationship you’re able to build with your banker for the long term. We know local economic conditions and will look at your application closely, as well as try to get to know you, face-to-face. We want to help you succeed, because your success plays a big part in keeping our local economy strong.

About the Author:
Julie F. Jones is senior vice president of SBA Lending at Southwest Bank, the largest, locally owned, independent commercial bank in Tarrant County. Its mortgage division has offices in Fort Worth, Dallas and Austin.