How to Find a Great CPA

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If you live in the “real” and “normal” world, you probably can’t imagine income in the millions or billions of dollars – although it would be nice! And sure, it would be great if you had a CPA to manage those millions. However, for some small businesses, it can be an effort just to break even, especially when self-employed or when beginning a new business. You might wonder if you really need a CPA, if you can afford one, or if you can manage the numbers of your business on your own. In this blog we’ll talk about why having a CPA is a necessity for a small business owner, rather you are making millions…or just thousands.

Why do I need a CPA?

Think of hiring a CPA as hiring a member of your team. A CPA does more than prepare your business tax documents and file your return, they can actually save you money. A good CPA can advise you on ways to reduce your tax liability and how to find creative tax breaks. They can also stay up to date on the myriad of tax changes that occur each year and will represent you if you are audited by the IRS.  Business financials can be difficult to understand and having a CPA will add a knowledgeable guide to help with all of the financial aspects of your small business.

CPA’s are most knows for filing quarterly and yearly tax documents, but they can do so much more for you and your small business. Here are some things your CPA can handle:

  • Counsel you on ways to increase profits and decrease expenses
  • Give advice on individual investments or retirement planning
  • Help with bookkeeping, payroll and monthly or quarterly reports
  • Forensic accounting (tracing where money comes and goes)

How do I find a great CPA?

First, I would suggest checking your local chamber of commerce business directory.  Our local chambers serving our PJC areas are vested in our business community and a great resource.  Your local SBDC will give you a resource list of local CPA’s.

Next, remember is not every CPA is alike. CPA’s specialize in different industries. Some CPA’s only do industrial management, while others take care of financial matters related to government entities or even non-profit organizations. Take into consideration the type of CPA you are looking for: one who specializes in your small business-type. Here is a list of things to do when finding your own great CPA:

  • Determine their specialty
  • Look up their license: All CPA’s are required to be licensed.
  • Verity their tax ID number: The IRS requires CPAs who prepare taxes to register with the IRS and have a Preparer Tax Identification Number (PTIN). To verify that a CPA is registered with a PTIN, simply search the IRS Return Preparer Office Directory. 
  • Ask about their experience: Have they filed electronically? Can they manage spreadsheets and different types of software?
  • Will they sign your tax returns? Consider it a red flag if they won’t sign your returns as the preparer.
  • Check their Yelp and Google reviews.
  • Check your local Better Business Bureau
  • Ask your friends and business associates: They may have a CPA that they love and trust
  • Determine their fees: Are they in line with other CPAs? Do they have a fee schedule they share with prospective clients?
  • Conduct your own interview: Make an appointment and sit down with your prospective CPA. If you can ask questions and get answers, while feeling comfortable and confident in their knowledge (and the way they respond to your needs) that will go a long way in helping you determine the best CPA for your small business.

What should a CPA cost?

CPA’s have different costs for different tasks and their fees can vary. Below is an example (only) of “normal” CPA fees in the state of Texas. Please keep in mind that the more specialize your business, the bigger range of fees. In general, the average prices in Texas are:

  • Tax preparation
    • $250 for Form 1040 without itemized deductions.
    • $300 – $500 for an itemized Form 1040 with Schedule A and C.
    • $900 for Form 1120S – S corporation
  • Hourly rate: *Be careful of hourly fees and get a maximum amount ahead of time.
    • $50+ average
  • Quarterly tax documents
    • $50 – $200, depending on complexity

How to save money on a CPA:

CPA’s are necessary for things like tax documentation and filing returns, however you might ask your CPA if they have accountants on hand within their firm. An accountant can often do bookkeeping and prepare financial statements at a lower cost than a CPA.

For additional information how to find a great CPA, or on how to maximize your small business dollar by using an accountant along with a CPA, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Cyber Security

Cyber Security for Small Business

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Does the term “Cyber Security” make you think of the CIA, FBI and homeland security? Maybe the thought of Cyber Security sounds a bit intimidating, especially when you hear news about companies being “hacked” and large-scale data-breaches?

Businesses and consumers use online resources for transactions more and more, so look for secure sites and precautions you can do to keep data secure.  Cyber security doesn’t need to be complicated or difficult for small business owners and in today’s blog we’ll talk about what you need to know, and how to get your small business “Secure.”

What is Cyber Security?

Simply put – cyber security is the protection of internet-connected systems such as software, hardware, and data from cyberbreaches (hackers). In small business, this is the practices and tools used to prevent unauthorized entities from obtaining data from your business. So in layman terms, cyber security is how you protect your business information. That may include your financial records, customer database, sales, collections and credit card transactions.

 

Do I really need cyber security in my small business?

It is easy to imagine that hackers will go after big business and all the information they have (especially anything they can steal, like social security numbers and customer’s private information.) However, did you know that 43% of cyber-attacks were directed at small business last year? The most popular business sectors for cyber-attack were:

  • Healthcare
  • Legal
  • Insurance
  • Financial
  • Retail

How do I avoid a data-breech from hackers?

There are several recommendations made by the FCC (Federal Communications Commission) that can help you secure the data of your small business:

  • Establish safe practices:

    • Train employees to use strong passwords
    • Shred paper information regularly
    • Establish appropriate internet usage guidelines
    • Have a procedure of how to handle and protect customer information

  • Protect computers, networks and software:

    • Use and keep up to date antivirus programs
    • Keep the latest security software
    • Create and use firewalls
    • Install updates immediately

  • Use Firewalls:

    • Check regularly on the installation and use of your firewalls
    • If employees are working from home, make sure they have a firewall

  • Consider mobile devices:

    • Require password protection on all mobile devices
    • Make sure data is encrypted
    • Install security apps
    • Have a plan for stolen devices (lock out, remote erase, etc.)

  • Control access to computers and sensitive information:

    • Have different levels of security, so only the employees who need sensitive information have access.
    • Lock up and protect devices and information when not in use.
    • Have individual access and monitor access frequently.
    • Have a “time-out” function in case employees step away for a time.

  • Secure Wi-Fi Networks:

    • Make sure your WiFi networks have a firewall. It should be password protected and encrypted. Set it up so that it doesn’t broadcast your name or the business name

  • Protect the information from Credit Cards:

    • Work with your bank or credit card processor to ensure anti-fraud systems are in place.
    • Have a separate system for credit cards that is not linked to the same computer you use to surf the internet.

 

 

Lear more about Cyber Security from the FTC:

The Federal Trace Commission has excellent resources for small business. If you aren’t really sure what cyber security is about, or what many of the terms we’ve used in this blog mean, here is a great place to find information:

Federal Trade Commission (FTC)

Cyber Security Basics from the FTC

Federal Communication Commission (FCC): Downloadable Tip Sheet for Small Businesses 

 

Who can help me with Cyber Security?

*Please note: Paris SBDC does not endorse any of the following businesses, the following is intended as a list of available resources:

Score 

GCA Cyber Security Toolkit

Microsoft Small Business Security

Paris Junior College offers classes and even a degree in cyber security

 

For additional information on cyber security and the steps you need to take as a small business owner,  please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Money Smart Business

Money Smart for Small Business

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Money Smart for Small Business Training August 2 to September 27th, 2022 Tuesdays @ Noon – 1pm

Click to Register for the zoom link 

A Financial Education Program by the FDIC and SBA.   Benefits:

  • Build a business and create wealth
  • Understand skills required in a start-up
  • Learn skills in business management and operations

Download participant guide to use each week.  We will not be giving a test during this online class, however the pretest in each booklet will help you assess your knowledge and guide questions you may want to address during the weekly session.  See the materials per week:

Week 1:   Is Owning A Business A Good Fit For You?

Week 2: 0809_SB_Planning_for_a_Healthy_Business_PG

Week 3: 0816_SB_Financial_Management_PG

  • Jim Struwe, SBDC Advisor
  • Jennifer Johnston, SBDC Director

Week 4:  0823_SB_Managing_Cash_Flow_PG

Cash Flow Worksheet using Wired Cup example – practice changes to improve the cash flow

  • Jennifer Johnston, SBDC Director

Week 5:  0830_SB_Building_Credit_PG     Extra Resource: FTC Guide on Credit Repair

  • Martin Orrostieta, SBDC Advisor
  • Lender

Week 6:  Happy Labor Day, we will not meet on 9/6/22.

Week 7: 0913_SB_Insurance_PG  we will continue with the banking discussion as well as addressing insurance/risk management.

Week 8: 0920_SB_Tax_Planning_and_Reporting_PG

Week 9: 0927 SB_Selling_Your_Business_and_Succession_Planning_PG

 

Please provide feedback on the course with the SBA-Training-Evaluation-Form  upload to Click here  or email: Jennifer Johnston, jjohnston@parisjc.edu

If you have any questions, contact us at 903.782.0224

#ParisTX #GreenvilleTX  #SulphurSpringsTX #CooperTX #ClarksvilleTX

Automations for Small Business

Automation for Small Business

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Think of all the daily tasks your business requires to function properly. How many of these tasks are done manually on spreadsheets, by entering data into the computer or through generating individual responses to customers? These repetitive duties can eat up time and bog down a business.

Imagine implementing an app and with the push of a button all your tasks were completed in little time with less effort. Not to mention, the app followed up, scheduled the next marketing email, and tracked useful data that resulted in sales. This is all possible.

Apps have become a necessary part to running an efficient business. These are not finger foods served at cocktails parties, but computer programs built for automating daily tasks. If your small business relies on you to do much of the work at the very least you should consider automation for bookkeeping, a payroll tax and sales tax system, email marketing, and meeting scheduling with automated follow up reminders.

 

What is automation for small businesses?

Automation is the implementation of a computer application or subscription to a service that streamlines workflow and accomplishes tasks that a person would manually have to do. The days of switchboard operators asking how they can direct your call are a simple example of what automation has become. Now it’s an electronic voice giving you a list of choices and numbers to push for service.

 

Does automating really save money?

The goal of automating is to simplify your business. Through automation, a company can reduce effort, time and the costs required to do manual tasks. By freeing up staff, more time can be spent on primary goals that move the company forward. Not only does automation save money it can drive up revenue, complete repetitive tasks faster, at higher quality and without human error. Automating can help with the following:

  • Reduce operating costs by saving time and labor costs
  • Reduce factory lead times with systems that keep production on schedule
  • Improve shipping times and costs
  • Increase returns on investment (ROI) rates by reducing operating costs. Efficiencies in labor expenses means less overhead.
  • Create the ability to compete globally
  • Streamline communications. Plan meetings, set task reminders, follow ups, and work schedules
  • Reduce the need for accounting personnel

 

What processes or things should I automate?

In the Sci fi thriller Independence Day, a giant green-eyed creature sat in the control room of a spacecraft and pushed a single button to launch thousands of ships to invade earth. You don’t have to be an alien creature to instantly launch thousands of online marketing campaigns across all social media platforms. Nor does the result have to be scary. There’s an app for that and you can even add a smiley face to your message if you like. Check out these aps for email marketing:

Take time and review all the manual tasks that your company performs. Look for areas where you can make changes. Consider the following:

  • Bookkeeping especially if you are still doing this manually on a spreadsheet
  • A payroll and accounting app like QuickBooks or a payroll service company with online automation that sends your data for them to process.
  • Invoicing and collections. Keep your cash flow moving with automatic payment due notices that allow customers to pay via credit card, PayPal, Zelle or Venmo.
  • Sales tax collection and payment, especially if your business sells in multiple states. Check out taxjar.com
  • Social media and email marketing apps with a scheduling tool that can launch campaigns across all platforms at once
  • Drop shipping and warehousing automation for manufacturers or print on demand companies
  • Sales and order processing apps or outsource to companies with data and processing services
  • Task management system with follow up reminders and scheduling. This may also include an intercompany communication system

As with any suggestion, do your research and as always do what is best for your company.

 

Top automation tools for businesses:

If you are looking for some proven, great automation tools for your small business, we’ve compiled a list.

*Of course, we don’t endorse or recommend which apps and which automations to use for your business, the following is only intended to get you started and is in no way a complete list:

  • Zapier can automate your work across 5,000 + apps
  • IFTTT is like Zapier. Use this to create automations between apps so you don’t have to bounce around
  • Activecampain for advance email marketing
  •  Hootsuite or buffer are social media essentials
  • Calendly A simple automation tool that cuts out back-and-forth emails for scheduling meetings, phone calls and other appointments with email links to a calendar system (we use that here, at Paris SBDC)
  • Xero As your business grows your accounting needs increase. Xero can minimize the workload otherwise handled by an accounting department
  • Constant Contact Great for emails, newsletters and keeping customers up-to-date

 

 

Are you considering switching a few of your small business tasks to be automated? We can help you evaluate and decide the best processes and automations to have. Contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Back to School Marketing for Small Business

Back to School Marketing Ideas for Small Business

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For many businesses, students going back to school can present an opportunity for sales. Unlike a gleeful house fly rubbing its forelegs over a drop of honey on the kitchen table, a few companies are not so thrilled. Losing valuable summer workers, a change in consumer buying habits, and losing the lunch crowd that will no longer be hanging out near their store, can add up to financial losses. The good news is, there are many ways to tap into back-to-school opportunities. Here are a few ideas to think about:

Be flexible:

Offer students part time positions with flexible hours that work with their school schedule. This can include adjusting hours and offering extended breaks for times when an employee needs to study.

Get social:

Create a friend of (your business) social following page where customers and former employees can keep up with what is happening now that they are in school. Offer future coupons, organize quarterly social gatherings, or create loyalty programs to keep interest.

Enlist help:

Outsource influencers that are willing to post products, information or ideas related to your company. With the ease of posting pictures on Instagram, pinning on Pinterest, or TikTok videos, marketing can be done at any time even while in school. Look for influencers with an active and substantial following. Unlike Jessie who hangs out with your daughter. Her promise that if you give her free stuff, she’ll post a picture to all three hundred of her friends, is not going to get the results you want.

 

Back to school marketing is not just for retailers:

Retail sales are on track to be the highest in the past five years. (Despite the looming recession.) The National Retail Federation estimates $36 billion will be spent in back-to-school related sales and $73 billion is expected for back to college spending this year. While it appears that consumers are undeterred by the current high rate of inflation, they are making cuts elsewhere. If you are a non-retail business facing a shift in spending caused by these cuts, marketing is essential.

For the food and restaurant industry, create before and after school specials. Market a “bring a school pal and get a free coffee or soda” promotion. Offer special takeout or boxed school lunches or discount deliveries. Try discounts for kid’s meals during back-to-school shopping hours.

The millennial generation prefers texting to talking. Use short message systems (SMS) for targeting and making people aware of your e-commerce business. Add links with coupons and discounts to direct them to your site.

Tweak your website with back-to-school themes, ideas, and blogs with helpful information. Add limited time discounts on services that create a sense of urgency.

 

Top back-to-school promotional items for 2022:

Curious as to which items are “hot” this year for back to school?  Here’s a list:

  • Electronics are expected to make up a considerable portion of school spending.
  • Shoes and clothing
  • Educational books and supplies
  • Furniture and bedding
  • Stationery

 

Non-retail items to promote:

For health and fitness: Create a fitness challenge that can be followed on social media. Offer back to school specials on classes or services. Discount with a two for one special on manicure, pedicure, facials, and neck massage to relieve post shopping stress.

Restaurants and food service industry: Offer a free dessert with after school specials. Give out cookies or small snacks during peak shopping hours to increase awareness.

Education and teaching: offer an hour of free tutoring services. Raffle a free notebook or stationery with online courses. Conduct how to courses on improving Wi-Fi, computer speed, or organizing your dorm and office.

 

Partnering with schools:

Each year many businesses partner with local schools providing everything from I.T. services, sports equipment, food and beverage vendors to yearbook and class ring vendors. The competition to become a school vendor is fierce. It is more about the relationship than the money that draws the interest of the school administrator. Your company must be reliable and have an edge over the competition. Do your homework and be prepared.

Get your face out there:

The school administrator is responsible for selecting vendors. With endless contacts by vendors seeking contracts, it is often the administrative assistants who act as the dragons guarding the gate. Becoming friends with the assistants can often get you on the administrator’s schedule. Meet with purchasing agents, district officials, or do a presentation at a parent /teacher organizational meeting.

Timing is everything:

Do your research and find out when vendor selection begins. Evaluations, needs assessments and goal setting tends to start at the beginning of the summer for most seasonal schools. Spending starts in July in preparation for opening in late August or early September.

 

Should I partner with local businesses?

ABSOLUTELY!  Teaming up with another business for back-to-school can increase your customer reach. Create an event with food vendors, music and giveaways to draw attention to your company.

Holding a supply drive, a bake sale or fun run event while donating to a school-oriented charity can also bring awareness to your company.

 

Back to school will be here before you know it!  Do you need some ideas on how to promote your small business and take advantage of the back-to-school rush?  We can help!  Contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

Are You Ready for the Shark Tank? Pitching Your Business to Investors

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** Look at the FREE information we have for you online here with Paris SBDC: Finding and attracting investors

 

Why would you need investors in your small business?

An investor can make a difference that often leads to success for a small business or an inventor looking to promote a distinctive idea or product.

Imagine having a product or unique business that is a Rockstar in the community and you are finding it nearly impossible to keep up with the demand for what you do. The very thought of adding more locations might sound like a slow death sentence by overworking. An investor with the right connections could be the answer to growing your company without increasing your workload. Perhaps that hot sauce your friends and neighbors have promised their first born in exchange for the recipe needs a steady money supply to become a commercial product. This too could happen with the right investor.

For Steve Ells, founder of Chipotle restaurants, family and friends were the investors he sourced the eighty-five thousand dollars he used to open his Mexican grill. While taco shops are nothing new, Chipotle’s fresh grill inspiration came from street vendors in San Francisco. Even today new and interesting taco shops are consistently opening. However, it was Ells’ concept of promoting naturally grown foods that saw it generate seven plus billion dollars of revenue in 2021. That is a lot of tacos and burritos.

 

How do you find investors?

There are many different types of investors for a small business owner to consider. Above all, it comes down to research and finding the right fit for your company. Here are a few options.

-Crowd funding.

Somewhat like a bake sale to help a sick or needy child, this type of funding can also be sophisticated. A concept that relies on a large group of small investors, often the company provides incentives or perks in return. In equity crowdfunding, private company securities are offered to a group of several investors in return for financial backing.

-Bootstrapping.

Bootstrapping, a method of finance by reinvesting your company’s revenue, is how Mrs. Field’s grew her cookie business in the nineteen-seventies. With the concept of selling freshly baked homestyle cookies, they opened several stores and eventually started franchising. Along the way, they purchased other companies offering franchises for those stores as well. Relying on revenue from your company may not be the best for long-term growth. However, investors tend to be keen on businesses willing to put up their own money as part of any potential investment.

-Friends and family.

Those who know your business as well as you do, are often friends or family members. While this may be less complicated than sourcing traditional investors it can come with high expectations that may jeopardize the relationship. If you should decide this is the only method of fundraising, treat the potential investors as you would any other professional. Provide a portfolio and a business outline. Define the when, where and how’s of returns on the investment. Make certain your relationship is sold beforehand, otherwise this may not end well.

-Angel investors.

Angel investors are not from heaven. They are wealthy investors often in your community that are willing to put money into a new business in exchange for equity. Network close to home to find willing angel investors. Go to local startup events, chamber of commerce meetings, even fundraisers. Also, check the internet for places like these:

-Venture Capital.

Venture capital is a private equity form of investment, often sourced during later stages of a grown business startup. Venture capital firms often look for massive growth potential in a company. Think Chipotle Mexican grill after the friends and family investment. Later as the company grew, it was necessary to secure venture capital to finance further expansion across the country. Do your research. Connect with Venture capital companies on LinkedIn or attend a pitch event.

 

What are investors looking for? 

While not all investors have the same end goal, a good return is often a common interest. Otherwise, investors often look for the following.

  • A company or industry they are familiar with
  • Solid data and a strong business plan
  • A management team they can get behind and believe in
  • A unique concept or idea with a large market and competitive advantage
  • A growing company with momentum and solid footing in the marketplace
  • An idea that will generate cash flow with a clear investment strategy

 

Pitching your business to investors

 A business pitch is a persuasive argument to convince a person or investors to invest into your business. Pitches can be as short as twenty second or up to an hour so long as you keep the investors interested. A presentation should include:

  • Correct information including the value of your proposition
  • Specific benefits of your unique product or idea
  • What advantages you have over your competitors
  • Target market, demographics and why customers should choose your product
  • Sales strategies and revenue projections
  • Team members
  • Exit strategy
  • Amount of funding needed

A great business pitch tells a story. Much like the stories of Steve Ells and Mrs. Field found earlier in this blog, these are things easily remembered. In telling your story, draw upon your own experience tying in how your business resolved a relevant problem or solved a need.

Be sure to provide contact information. Should you pitch to an audience, this will help them find you.

Remember to plan for various situations. Slow down, be confident and practice, practice, practice, so that your pitch sounds professional. Be respectful and prepare for difficult questions. Often investors are looking for a resolution to a problem that will make them money.

Be sure to follow up afterward with a brief email or phone call that reminds them of you and your product. Also ask for feedback and correct any issues for any potential future pitches.

 

Do you own a small business and would like additional investors? We can give you the resources you’ll need to pitch your business to investors. Please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

 

How to Manage Cash Flow | Paris SBDC

How to Manage Cash Flow

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CASH FLOW! 

It’s not a giant surprise that one of the top 10 search topics for small business on Google this year is “How to Manage Cash Flow.” Every small business, and even big-business owner knows that cash is king and managing it properly is the key to turning a profit and being successful.

In today’s blog we’ll talk about cash flow and give you some tips to manage your own cashflow.

 

What is Cash Flow?

Cash flow is the movement of money in and out of a small business. Cash received is the inflow, where money spent is the outflow. A positive cash flow is when you have more money coming in than you have going out.

Cash flow is important, because it shows the “health” of a business overtime. A positive cash flow can help secure loans with lower interest rates, attract investors, and sustain your business overtime.

 

Cash Flow Difficulty for Small Business:

A recent study from Intuit (Quick Books) discovered that 61% of small businesses around the world struggle with cash flow. As many as one-third of surveyed small businesses said they were unable to pay financial obligations such as vendors, loans, payroll or themselves because of cash flow issues. Negative cash flow is also the main reason why 20% of small businesses fail in the first year.

 

Tips for achieving and maintaining a positive cash flow:

Let’s talk about things you can do right now to improve and maintain a positive cash flow in your small business:

1 – Send Invoices!

We are told that one of the most difficult things for small business owners and entrepreneurs to do is to ask for money. When it comes to cash flow, “put on your big boy/girl pants” and do it!  Don’t forget to send those reminders early and often, too.

If you are struggling with cash flow, you may want to send invoices as they occur, instead of on a 30-day billing cycle. Set your terms to net-15 days instead of 30-days.

2 – Collect Receivables:

Just sending invoices isn’t usually enough to get money coming in the door. Don’t be afraid to call to make sure the payments are being processed. Other receivables strategies could include:

  • Request a deposit up front for large orders
  • Offer discounts for early payment
  • Consider online invoicing with payment options online
  • Offer deep discounts on items that are not moving
  • Offer automatic transfer and deposits
  • Establish a credit policy and stick to it
  • Move slow or non-payors to a cash-up-front type of sales only

 

3 – Lease Equipment, Instead of Buying:

Yes, it is often cheaper (over the long term) to buy instead of lease. However, leasing gives you several cash-flow advantages:

  • Lessens short-term financial burden with the use of a smaller “chunk” of your capital budget.
  • You can keep your equipment up-to-date easier.
  • Repair costs are usually the responsibility of the Lessor.
  • Equipment leases often qualify for tax breaks.

 

4 – Adjust Your Inventory When Necessary:

Check on the items that are not moving or being sold in a timely manner.  Selling them at a discount may not only get it out of your inventory but may give you immediate cash flow. Spend money instead on those items that are selling.

 

5 – Develop a Strategy for Paying Bills:

Spread out your payments and try to extend your payables as long as possible. This can be tricky – you don’t want to incur late fees or earn a bad reputation as a “non-payor” so make sure you pay your obligations – but maybe consider paying weekly or bi-monthly, instead of all on the 1st of the month which can deplete your cashflow in one day.

Don’t forget to negotiate payments with your suppliers. Ask ahead of time your supplier’s payment terms and if possible, negotiate interest-free scenarios with longer pay-back terms. It will also help to time these payments with your actual cash flow.

 

6 – Establish Your Business Credit Before You Need It:

It’s a lot easier to get money when you don’t need it. If your business is running smoothly, open a line of credit so you’ll have a fallback if cashflow gets short. Often interest rates are lower and banks are more willing to lend money or lines of credit while your cashflows are positive. This type of strategy is particularly helpful for those businesses that tend to be seasonal.

 

7 – Consistently Evaluate Your Business Structure:

Especially now, as a recession looms, it is important to look at your business strategy and be willing to change or adapt. Different areas of your business operations can be updated for efficiency such as shipping costs, use of middlemen, extra employees, overtime and even stocking up on materials before a price increase hits.

Often outsourcing or hiring freelancers can provide cashflow benefits by allowing you to get the job done and avoid paying salaries, benefits and insurance.

 

8 – Take a Look at What You Are Spending Money On:

Make sure you are not treating your line of credit like “regular” income. Lines of credit have expenses such as fees and interest. Take a hard look at your interest rates and make sure you are making progress with your loans or lines of credit and not just paying interest.

Check other expenditures such as:

  • Insurance rates (evaluate and “shop” annually)
  • Utility rates
  • Terms of payment to and from suppliers
  • Overtime
  • Number of employees
  • Cost of goods (Is it increasing and are you changing your price to reflect the costs?)
  • Petty cash expenditures

 

9 – Take Advantage of Technology:

The right technology and the right business structure can make a huge difference when it comes to cash flow. Technology can streamline your business processes and increase efficiency; and yes, you can even use it to project cash flow!

A great example of taking advantage of technology in a small business can be seen with online retailers who use automated systems to bill and collect, send shipping and tracking information, and even a thank-you for their purchase. These simple systems can cut down on having to pay your lazy nephew, who charges too much and messes up every order. Instead, it’s done automatically.

 

 

For additional information on how to get your cash flow going in a positive direction, or on the best way of increasing your cash flow, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

What business to franchise

What is the Best Business to Franchise

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What is a Franchise? 

**Check out our Introduction to Franchising for young entrepreneurs in our learning center! 

 

A franchise is like a temporary lease or contract with an established company for the rights to sell the franchisor’s goods or services using their established business model and trademark.

A franchisor is a business that grants the license or agreement to franchisees (investor).

Starting any business can be a risk. An estimate of twenty percent of new businesses will not survive beyond the first year. Fifty percent make it to five years and thirty percent make it ten years or more. A possible way to minimize the risk of starting a new business is to consider a franchise agreement with a company that already has a well-established name brand and business strategy to follow.

In the nineteen-eighties I worked at a McDonald’s restaurant.  As an entrepreneurial spirited teenager, I imagined one day owning a franchise of my own. At the time, it cost the owner of the restaurant one-hundred thousand dollars to get on a six-year waiting list for a franchise contract. While I was babysitting a sizzling vat of French fries, I thought back to when I was eight years old and bought a pair of hamsters with grand plans to breed them and make money. If I sold the babies for a dollar each and used some of the money to buy more breeding pairs, I’d make thousands of dollars, I had calculated, as surely every kid in school needed a soft, fuzzy hamster. Thank goodness for a mother with a low tolerance for smelly, short-tailed mice.

 

How does a franchise work?

There are many costs involved in owning a franchise. Firstly, you must pay the franchisor a franchise fee. This allows you the right to sell goods and services under the franchisor’s brand name for a limited time with support for a specified number of years. These said contracts or agreements do not give the investor (franchisee) any rights or ownership of the franchising company.

Contracts between the franchisor and franchisee can vary and are complex. Depending on how the contracts are written they can last five years and up to thirty years often with heavy penalties for premature termination. Support from the franchisee may include helping you find a suitable location for the business, training, operation manuals, newsletters, a website, access to workshops, and seminars.

Besides the initial startup fee there is an annual licensing fee and ongoing royalties paid to the franchisor. Depending upon the industry, royalties can vary from 4.6% to 12.5%.

A good thing to know is the Federal Trade Commission’s (FTC) has set rules for franchisors and require that they must give you a list of documents to evaluate any potential investment opportunity.  https://www.ftc.gov/legal-library/browse/rules/franchise-rule

 

What are the risks to owning a franchise?

Owning the rights to sell a brand name or goods is no guarantee of success. There are risks. The financial costs alone can be overwhelming and may include:

  • Grand opening or other initial business promotions
  • Business and operating licenses, food handlers permit and ongoing inspections for certain businesses.
  • Product or service supply costs like foods for a restaurant or production line clothing for a retailer.
  • Real estate and leasehold improvements to house the business.
  • Required equipment such as a computer system, machinery, security systems, visual displays may be required and leased from the franchisor.
  • While the franchisor may provide this, it may not be free and can include travel expenses to seminars or training facilities.
  • Business insurance
  • Compliance with local ordinances, such as zoning, waste removal, fire, and other safety codes
  • Employee salaries
  • Advertising cost locally and or a contribution requirement for national campaigns.

Other risks may include:

  • Limited sales territory
  • Restrictions on goods or services the franchisee can sell or supplier they must buy from
  • Contract terminations and renewal
  • Competition
  • Demand for the product
  • Internet limits on services, areas, and customer solicitation

Ultimately, like any company, success relies heavily on the investor having the skills and business savvy to make it all work.

 

What are the benefits of owning a franchise?

Owning a franchise can bring instant name recognition that a new upstart business may take years to establish. Take McDonald’s for example, in the right location the reward can be worth the expense. Not only is the name well established, but they also have their own university to help train and educate the franchisee about how to run a successful business. With a time-tested brand, surviving a downturn in the economy can be less risky. Established products and methods of selling can help cut the learning curve of a new business venture.

 

Which type of franchises make the most money?

 It’s no surprise that I have yet to see a single hamster factory franchise make the list, but according to Hubspot the top franchises to buy in 2021 were:

  1. McDonalds
  2. 7-Eleven
  3. Dunkin’ Doughnuts
  4. The UPS Store
  5. Popeyes
  6. Sonic Drive-In
  7. Great Clips
  8. Taco Bell
  9. Kumon Math and Reading Centers
  10. Sports Clips

 

While evaluating a business opportunity, knowing if the investment is worth the risk, is paramount. Consider the following:

  • How many franchise locations have opened in recent years?
  • Check out the success rate. What percentage of the newest franchises are still open?
  • Factor in real estate costs. A successful business franchise in one location may not be profitable if you are paying a higher lease or property expenses in a different area, or if traffic is limited.
  • Be sure to read the financial disclosure the FTC requires that franchisors must provide to potential investors. This as well as more information can be found at the FTC Business Guidance Resource Center.

 

 

If you are interested in starting a franchise or if you have questions about what type of franchise is good for your skill set, we can help!  Please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

 

Before you start a small business

What I Wish I’d Known Before Starting a Small Business

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Richard Armour, a humorist from California, is said to have coined the phrase: “Most people’s hindsight is 20-20.” It comes from the way people describe good vision or seeing things clearly.  In today’s blog, we’ll talk about a few things many successful small business owners wish they had known, before starting a small business.

 

Thoroughly investigate the type of business you want to own:

You might think that there is a giant need for the type of business you want to start, that everyone would love to own one of your widgets or hand-knitted stuffed animals. But is this a reality? Ask around, try a few test-sales, investigate similar companies.

Investigate the location of where you want to put your small business. If, for instance you want to start a restaurant selling gourmet tacos, but there are 2 other taco restaurants on the same street…is it the right place for your small business?  What about accessibility? Can people get to your business easily? Will you be able to offer delivery, or curb-side options?

Many entrepreneurs wish they had investigated the type of business, location, and overall effort it would take, before they began their small business.

 

Spend the time and money to set up your business correctly:

It’s important to get all of the legal and financial structures in place before you open a small business. Spend the time and money to get everything set up correctly the first time. Dot your legal “I’s” and cross your financial “t’s” with the best experts for your small business. Purchase the right equipment and have in place the experts you will need.

 

Understand that great help will be hard to find and keep:

It’s not just a cliché that “good help is hard to find” it really is difficult for any business. Prepare for the fact that it will be difficult to hire and keep good people. Some industries have higher turnover, others aren’t able to offer a wage high enough to motivate employees to stay. Have a plan for the times you can’t get help; maybe you have family you can bring in, close friends or even eager, happy customers. Be ready to be flexible with your hiring strategy to make it work.

 

Prepare for Stress:

Many entrepreneurs have reported that they knew starting a small business would be stressful, but they under-estimated just how stressful things could get. It helps to keep reminding yourself that the most stressful days are temporary, that in the long run, the work and frustrations will be worth it.  Pre-plan time to get away from your business. Work in vacations or a day off a week. Find a mentor to talk to, or even a business counselor to keep you mentally on track to run your business.

Other entrepreneurs told us it helped to keep a part-time job while they were setting up their new business. Part time work helped them meet financial obligations of the new business and gave them peace-of-mind while getting started.

 

Work smarter not harder:

Yes, another cliché, but many successful business owners tell us that working themselves into burnout did nothing to improve their small business. As an entrepreneur, remember to delegate as much as you possibly can. Get automated processes for your business which could include computerizing the order process, hiring a company to do your payroll, or purchasing machines to do tasks.

 

Take time out for education:

Simple things like spending an hour a week to further your business knowledge can go a long way in making you succeed. Free programs – like those we have available at Paris SBDC – are extremely beneficial and take very little time. In fact, check out our calendar HERE to see some of the programs and education available right now!

 

Be prepared to adapt:

You may have five or six planned product lines, but only two sell regularly. Be prepared to adapt your business to cater to those bigger sales. Maybe one of the special types of yarn that you use for your stuffed unicorn is no longer available – be prepared to substitute and adjust pricing as necessary. Have a plan for adapting to crazy situations – like a pandemic.

 

It will get lonely:

This one surprised us – but nearly every entrepreneur and small business owner surveyed last year admitted that building a business is a lonely endeavor. Unlike working for a company, where you have co-workers and a sense of community, suddenly every decision and responsibility falls on your shoulders. For some, that can be a heavy, lonesome burden to carry. Here are some tips to help combat that loneliness:

  • Consider a co-owner or partner.
  • Create a safety net of people: maybe your family, spouse or good friends.
  • Don’t hesitate to get outside help, advice or counseling.
  • Network to talk to other entrepreneurs. Sometimes it just helps to hear that others are having the same struggles you are having.
  • Take some “me time” away from the business and with people you enjoy.

 

It is incredibly rewarding:

Making your own business successful is incredibly rewarding. You will have the flexibility, independence and eventually, monetary rewards you’ve been hoping for. Watching your business grow and do well gives you a sense of satisfaction and fulfillment. Over half of the entrepreneurs surveyed by Manta said the top reward of owning a company is having the freedom to control your own destiny.

 

For additional information on owning your own small business and for ideas of how to start a small business, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.

 

Mid-Year Business Check

Mid-Year Check-In for Small Business

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If you are anything like us at Paris SBDC, you’re wondering where the first half of the year went. And while our fiscal year will be wrapping up soon, many small businesses run on a calendar year. So whether you are at mid-year or end of year, it’s a great time to stop and do a brief check-up on the tasks and goals for your small business. A mid-year check-in should be viewed as a positive task, meant to evaluate your business and give you time to change or improve a few things before the end of the year. Here are a few things you can do for your check-in.

 

Take the time to sit down and evaluate your business plan:

Depending upon the type of industry you are in, you may need to plan this task off-site. A day or two retreat sounds great, doesn’t it? If you are too involved or busy to take a few days for evaluation, cut it up into parts and perhaps leave for ½ a day so you can focus. Whatever works best for you, put it on your calendar and plan for your review.

 

How is your business doing financially?

Time to run a few reports! It is important during the ½ year check-in to see where you are financially. Are you breaking even, making great money, or are you losing money?  Here are a few reports to look at:

  • Cash flow
  • Income
  • Expenses
  • Profit
  • Taxes
  • Operating expense

These statements or reports will give you a clear “Number” for how your business is doing. Once you have this information, it’s time to consider where you are as a business and as a boss. Will you be able to meet your financial obligations by the end of the year? Are you where you expected to be, financially, by this time of year?

 

What does your company culture look like?

Consider your employees: Are they happy? How is your turn-over and how is the energy with your team?  Check on the following:

  • Have you kept the promises you made at the beginning of the year regarding wages, feedback and training?
  • How is your employee productivity?
  • How connected and motivated are your team members?
  • Do you need more/less employees?

 

How are your processes?

You’ve heard the saying “If it isn’t broken, don’t fix it.” This is a great thing to remember with your processes. Take a look to see if you and your team are as efficient as possible. Would further automation help make everyone’s job easier? Perhaps those new iPads you’ve invested in for customer orders are slowing everyone down and they need further training. Take a look at the “things” everyone is doing and decide if the tasks are helping or hindering your business. Are there things you can contract out to do like payroll or marketing?

 

How do your customers see you?

Is your business perceived as positive – a great addition to the community in which you live?  Are you spending enough time networking, advertising and participating in outreach programs? There are a few ways you can discover if your customers are seeing you in a positive light – here are some ideas:

  • Customer Retention: Are you keeping customers? Do they come back for more?
  • Survey: Ask customers how you are doing.
  • Reviews: Look at your online reviews – what are people saying and are you hearing good comments?
  • Increase: Have you had an increase in customers and/or sales.

 

Look at what’s next:

Are you on target with your business plan and where you wanted to be by midyear? If not, what needs to be changed or adapted? If so, what do you want to accomplish the second half of the year? Here are some good questions to ask yourself:

  • What obstacles am I facing and what do I need to watch for this year?
  • How are you going to accomplish your goals this year?
  • What resources do you need?
  • Who can help you stay on track?

 

Give yourself credit!

Are you having fun? Are you accomplishing at least a good number of your small business goals? Don’t forget to celebrate your successes! You are still in business after a pandemic, price increases, and inflation (things you cannot control); give yourself credit for your own perseverance! Even if it is something as small as breaking even this quarter, make a point to celebrate your success!  Don’t forget that small businesses are the true heartbeat of America!

 

For additional information on how to do a mid-year check-in for your small business, or on ideas of what to look for and how to improve your small business, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.