Improve Your Business Credit with These 7 Steps

It can take a while for a small business to establish a credit rating and even longer to improve one. But make no mistake, your credit rating is an essential element when you seek credit or a loan. It also helps get you approved by landlords, suppliers, and vendors.

Business credit scores are available from several sources, such as FICO, Dunn & Bradstreet, Equifax, and Experian. Although each provider uses its own methodology, the following steps should improve any business credit score.

Check Credit Reports

Each business credit bureau maintains credit reports. You want to check those reports to make sure they don’t have any errors that can hurt your score. You do not have the automatic right to look at your credit reports — usually, a little money has to pass hands. The big three providers are Dunn & Bradstreet, Equifax, and Experian, and they all charge fees. You can also access your credit report through Nav.com. Check your reports for any errors and dispute them.

Establish Your Credit

What if you come up empty when you search for your business credit report? It means that you haven’t established your credit yet. Perhaps you’ve been paying your business bills with your personal credit card, a definite no-no. Naturally, those payments will be reported on your personal credit, not your business report.

You must take some steps to establish business credit:

  • Form an LLC, partnership, or corporation for your business.
  • Receive a federal employer identification number from the IRS.
  • Create a business checking account separate from your personal one. Ensure that the account is titled in your company’s name.
  • Get a new phone line just for your business, listed under your business name.
  • Get a D-U-N-S number by registering with Dun & Bradstreet. It helps you secure federal grants and contracts.

Your business credit report will record credit-related transactions. It might also include certain public records and other information.

Get a Business Credit Card

This will help you build your credit profile quickly. Use it for business purchases such as travel, entertaining, office supplies, and so forth. Pick a card that offers good rewards, like high cashback rates or miles. Add employees to the card to collect rewards on their business purchases.

Use Vendors that Report Payments

Many vendors report their received payments to the large business credit bureaus. This applies when you pay on terms, i.e., 2/10 net 30, etc. You might already use vendors that extend terms but make sure they report transactions based on those terms. If not, find alternate vendors that do report payments and switch.

Pay Vendors Early

Some business credit bureaus, such as Dun & Bradstreet, give you higher marks when you pay your vendor bills before they are due. For instance, the D&B PAYDEX score tops out at 100, and you can achieve an 80 score by paying your vendors on time. However, to max it at 100, you need to pay your vendors early.

Manage Your Cash Flow with Credit

Your credit score can help you better manage your vendor relations. A good score might entitle you to better terms and lower rates from vendors. That’s a critical aspect of optimizing your operations and financing. Take advantage of the credit limits on your business credit cards to manage your purchase. These are often cheaper than alternatives, such as merchant cash advances. The more interest you save, the less of a drag on your profits.

Borrow Wisely

There will be times when it makes terrific sense to borrow money for your business. For example, you might be presented with an enticing opportunity that requires more cash than you currently have available. Alternatively, you might use business loans to help smooth out volatile or seasonal sales. You can use loans to grow your business and expand its reach.

Let IOU Financial Help

If you need a business loan that is affordable and easy to repay, look no further than IOU Financial. We’ll lend you up to half a million dollars with flexible and convenient repayment methods, including daily automatic payments. This way, you never face a monthly mountainous loan repayment. And remember, IOU Financial reports your payments to the major business credit bureaus, so you can build your credit quickly. Contact us today for more details!

6 Ways eCommerce Businesses Can Cut Their Shipping Costs

Shipping can either make or break new eCommerce businesses. Massive corporations like Walmart and Amazon have shipping down to an exact science, with order fulfillment centers all over the country. Amazon already accounts for around 40 percent of all online sales. To compete, small businesses need to find a way to get their products to consumers quickly without charging them a fortune in shipping. In fact, 28 percent of online shoppers abandon carts because of unexpected shipping costs. When it comes to winning over new consumers, new e-retailers need to do everything they can to lower the cost of shipping without impacting the overall quality of their delivery services. Here are six tips for cutting shipping costs in the eCommerce industry.

Purchase Used Shipping Materials

It all starts with finding the right shipping materials. Companies looking to save money on their shipping costs should consider purchasing used shipping containers. Consumers don’t really care how their packages arrive as long as the product is intact and arrives on time. Purchasing used plastic containers, gaylord boxes and other shipping materials can help these companies save a fortune over time. Many of these containers will just end up being recycled or disposed of eventually so this is one of the best places to reduce costs. Companies can even label their used shipping containers to create more brand awareness. It’s just about finding low-cost materials that keep the company’s products secure.

Print Labels at Home or the Office

Companies can also print their shipping labels at home instead of going to the post office. Websites like Stamps.com make it easy to print shipping labels, which saves the company a trip to the post office. They can have the carrier pick up the package right from their home, office or warehouse without having to worry about pick-ups and drop-offs. If the retailer is using a sales platform, they can connect this software to their printer and the machine will automatically print off shipping labels every time a new order comes in. When getting products out the door as fast as possible is the only way to succeed in the eCommerce industry, companies should try to shave off as much time as they can from the order fulfillment process.

Reduce Package Size and Weight

Most package carriers like UPS, FedEx, and the U.S. Post Office will charge companies for shipping based on the size and weight of their packages. Companies should find shipping containers that match the size of their products, so they don’t end up overpaying for shipping. They still need to leave room for packaging materials that keep their products safe, but the smaller the container, the less the company will end up paying for shipping.

Retailers should also look for lightweight used shipping materials such as cardboard boxes and plastic totes. Reducing the overall weight of the package can be just as important as its size when it comes to trimming costs. To keep their items safe, retailers can use recycled shipping materials like recycled newspaper, cardboard pellets, and other low-cost items. These materials tend to weigh less than other types of shipping materials and they cost less upfront as well. Not to mention they’re also good for the environment.

Partner with Regional or Local Carriers Whenever Possible

While UPS and FedEx might seem like the obvious choice when it comes to shipping, there are other carrier services that might charge less. Companies should spend some time researching the carriers in their area until they find the lowest possible price. They can even use this research as leverage to negotiate with carriers, especially if they plan on shipping out hundreds of items per year.

Some regional and local carriers may only serve a certain part of the country, but if the company’s consumers also happen to live in this area, it might be the company’s best choice when it comes to shipping. Some smaller carriers are doing everything they can to compete with the likes of UPS and FedEx, so some companies might be able to negotiate a lower price, considering the carrier will be grateful for their business.

Purchase Insurance from a Third Party

Depending on the overall value of the package in question, some retailers may want to get insurance for their packages, or at least offer their consumers the option. While signing up for shipping insurance through a major carrier like UPS might be more convenient in the moment, going to a third party can help these companies save money. Third-party shipping insurance providers usually offer a lower rate than some of the biggest carriers in town. Retailers should establish a lasting relationship with an insurance provider, so they can quickly insure their packages without having to go through a carrier like UPS. If the company is doing a lot of shipping, they might be able to negotiate a lower rate per package.

Be Aware of Hidden Fees

There are all kinds of hidden fees involved in shipping, especially if the company is shipping to a remote area or a foreign country. Having the customer sign for packages, shipping insurance, rush hour surcharges and more could easily inflate the cost of shipping. Most consumers don’t want to deal with these kinds of fees. They just want to see “Free Shipping” and move along with their day. That’s why the retailer should do this research beforehand, calculating the entire cost of the shipment instead of surprising the customer with a last-minute fee. Retailers should try to find carriers that limit these kinds of fees altogether

Final Thoughts

Reducing the cost of shipping is about more than saving retailers money. Low-cost, reliable shipping is one of the only ways these companies can compete with massive e-retailers like Amazon and Walmart. The more a retailer can save on shipping, the more they can pass on these savings to the consumer.

Guest Post: About the Author


David Madden is an efficiency expert, as well as being the Founder and President of Container Exchanger. His passion and business is to save companies money through the use of used reusable and repurposed industrial packaging such as plastic and metal bulk containers, gaylord boxes, bulk bags, pallets, IBC totes, and industrial racks. He holds an MBA as well as a certificate from Daimler Chrysler Quality Institute for completion of six-sigma black belt training.

Retail Businesses: Improve Your Instagram with These Tips

Instagram is a leading video- and photo-sharing platform that belongs to Facebook. It includes many business-friendly features, including ads, analytics, business profiles, tagged products, purchase page links, shopping lists, support for e-commerce purchases, and more. Instagram is characterized by more engagement and less competition than other social media titans such as Twitter or Facebook. That means you can market your offerings at reasonable ad rates. Check out the following tips to extract maximum value from your commitment to Instagram.

1.    Let Your Creative Juices Flow

To start with, concentrate on solutions rather than products. If you’re a service organization, discuss the processes underlying your offerings. Remember, Instagram is a visually-oriented platform, so you have to look good as you explain the value you provide. Like it or not, you’ll sink or swim based on your visual content. Liberally sprinkle your presence with photos and videos that celebrate your company’s mission, culture, and ways you help your customers.

2.    Optimize Your Entries

You have limited space per posting, so don’t try to cram in too many ideas. Rather, give a single focus to each posting, such as a special promotion, a new product, or a company event. Frequently update the single clickable link (in the Bio section) to point to new content on your website or elsewhere. Use Instagram Business Profiles to give out your phone number and collect comprehensive analytical data.

3.    Make It Meta

You can use Instagram to give viewers a behind-the-scenes glimpse of your company. You can show them how you build your products or deliver your services. Highlight special characteristics of your offerings, such as sustainability and fair trade practices. If you are a manufacturer, show each step in the fabrication process, from raw inputs to production to distribution. Get creative by showing pictures of brainstorming whiteboards and other inside information. As you get feedback, sharpen your postings to reflect the types that work better than others. And to prevent clutter, archive your older posts.

4.    Use Hashtags

Hashtags can increase your reach. You can tailor them to specific campaigns or topics, but always keep them relevant to your content. Set up your main hashtag (e.g., #yourbrandname) and use it occasionally on Instagram and other social media sites such as Twitter. Hashtags help folks find the content they desire. Don’t overuse hashtags — three to five are a good number, even though you can add 30 per post. Also, try some popular ones like #instagood or #tech. Vary where you work hashtags into your postings, from inline to comments to the end of your post.

5.    Share Customer Success Stories

You can @mention others to showcase successful customers and clever collaborators. After all, you can let their excellence reflect back upon you. It’s good marketing (and just good) to support a charity or two, and you can tag them to show your commitment to a worthwhile cause that aligns with your company’s values. You don’t have to be an “official sponsor” of a charity in order to tag them. This technique supplements hashtags, which aren’t necessarily monitored by some visitors. Also, use reciprocal unpaid “shout-outs” to and from your partners. If you prefer, you can use paid shout-outs if your marketing budget permits. Typically, these require payments to a popular brand or influencer in return for their shout-out to you. This can increase your viewership quickly and efficiently.

6.    Offer Exclusive Content to Loyal Followers

Give your Instagram followers first access to exclusive content and upcoming promotions. Let them know that they are being singled out to early information about new events, services, and products. You can even tease upcoming events with enticing photos to build anticipation. Satisfy their curiosity about new offerings, offices, or stores. Try to make your Instagram followers feel special.

7.    Use Analytics to Build Success

You won’t know whether your marketing is successful unless you can measure results. You can use Instagram’s analytics and/or those available from third-parties to measure followers, click-throughs, and engagement. Integrate your Instagram analytics with that from other social media sites.

Conclusion

Is your marketing budget sufficient to meet your needs? Marketing is an essential ingredient when you want to grow your business, but it can get expensive. IOU Financial can help you bulk up your marketing budget for a special push. We feature friendly terms, fast funding, and convenient payment options. Contact us today to get a business loan that you can use to elevate your company to the next level.

10 Ways to Get Traffic to Your Website

The buzz word for increasing sales and conversions for any website is traffic, traffic, traffic. As a small business owner, one of the most significant digital assets you have is your website.

When it comes to driving quality traffic to your small business website, there is no one-size-fits-all approach. There is also no single set-it-and-forget-it tool that is capable of driving quality traffic to your site on auto-pilot.

You’ll need to combine a mix of different channels and approaches with the aim of driving the right visitors to your website, increasing conversions, engagement, and sales for your small business.

In today’s online business world, competition is cut-throat. The internet today has over 1.5 billion websites, and over 200 million are active. How can you generate the much-needed quality traffic to ensure that your small business stands out like the North Star?

As a small business owner, you may not have the big marketing budget to undertake expensive marketing campaigns and paid ads aimed at driving quality traffic to your website.

Are you looking for simple, budget-friendly, and highly effective ways to get more traffic to your small business website? Here are some guidelines you should consider.

Create quality content.

When it comes to generating the right traffic for your website, good quality content is sacrosanct. Content is indeed King, and it ranks as one of the top 5 factors for generating quality traffic to your website as outlined by Google.

You can use a mixture of short and long-form content, infographics, or video formats depending on the kind of audience or readers you are targeting with your content.

Your readers should also be able to share your content on various social media platforms easily. Including a share button in your content would be a great way to achieve that.

You can create top-quality content in various forms like;

  • Webinars
  • Whitepapers
  • Emails and Newsletters
  • Podcasts
  • Articles or Blog content
  • Videos
  • Infographics
  • eBooks, and many more.

Although you may not need to use all these formats, having a plethora of content formats at your disposal will help you to reach a wider audience. Good quality content is a great way to keep your visitors engaged.

Imbibe SEO best practices.

Making your website content friendly to search engines is a great way to drive quality traffic to your small business website. Make sure you leverage both off-page and on-page SEO to get the maximum benefits for your website. When it comes to maximizing SEO for your website, here are some must-haves you’ll need to consider;

  • Title tags: This is the unique title or clickable headline given to a particular web page on your website.
  • Meta Descriptions: This is a summary of about 155 characters that describes a particular web page.
  • Keywords: They are relevant words and phrases added to your online content to help improve rankings on search engines.
  • Image ALT tags: They are used to describe images on your website.

Optimizing your website with proper SEO practices is a great way to drive high-quality organic traffic to your site.

Use Hashtags.

Using hashtags in your posts on social media is a great way to extend your reach to a broader audience. When users search for products and services with your hashtags, you’ll get more quality traffic to your website.

Ensure your website is mobile-friendly.

There are lots of visitors who want to access your website through the use of their mobile phones, tablets, and other devices; you need to make sure that your website caters to their needs by ensuring that your website has a responsive design.

Research undertaken by Statista revealed that over 52% of website traffic was generated through mobile phones in 2018. Today, more and more users are accessing websites through their mobile devices; you don’t want to miss out on a large amount of traffic all because you do not have a mobile-friendly website.

To check the mobile-friendliness of your website, you can use this Google tool.

Use email marketing.

If you’re looking for a cost-effective way to drive quality, organic traffic to your website, then email marketing will quickly be your best friend. A lot of marketers today say that email marketing is dead, yet, it is still one of the most powerful tools to create awareness for your offer and drive a ton of traffic to your small business website.

Do you know that a staggering 72% of customers prefer to receive information about products and services through their emails? As a small business owner with a limited marketing budget, email marketing is a pocket-friendly approach you can use. If you are yet to take advantage of email marketing, you need to start building your email list now.

List Your Business on GMB, Bing Places, etc.

Creating and optimizing a free Google My Business (GMB) listing is a great way to drive traffic to your website. In fact, you can get as much as 7 times more visitors if your Google My Business listing is well optimized.

A lot of potential customers are looking for businesses daily on Google My Business and other online business directories such as Bing Places and Yelp. Make sure to link your website to these online business directories so that you can drive more traffic to your website and grow your business.

Leverage social video sites

Videos are valuable assets and great tools that can be used to attract new customers and keep your existing customers engaged. Thankfully, social video sites like YouTube or Vimeo are great platforms you can use to host your video content online.

When you create captivating and engaging video content, you can add your website address in the video description column on the social video site. This way, you’ll get traffic back to your website when visitors click on your website link.

Always make sure you post interesting, captivating, and informative video content online. Do not forget to include a call to action (CTA) so your audience can take a particular action.

Use Guest Blogging

Guest blogging is another way to increase traffic to your website. Guest post on reputable blogs in your niche; invite other prominent business owners in your niche to guest blog on your site. You can use both ways to drive blog traffic to your small business website.

You can post content on relevant blogs in the local language of your target audience with the help of online translation services like The Word Point and other brands. Guest blogging also portrays you as an industry leader in your niche.

Be Active on Social Media

The enormous role played by social media in driving traffic to websites of business owners and entrepreneurs cannot be over-emphasized. Your social media audience can quickly become visitors to your website when you share engaging content on your social media page from time to time.

As a small business owner, you should endeavor to maximize the use of top-performing social sites like Facebook, Twitter, Instagram, Pinterest, YouTube, Linkedin, etc. Being active on social media is also a cost-effective way for you to interact with your target audience and build a community of loyal customers.

A survey carried out by Campaign Monitor revealed that 69.6% of small business owners use Facebook to drive traffic to their website, while 48.3% and 47% of small business owners use Instagram and Twitter, respectively.

Build Backlinks

Create links on other reputable websites of industry influencers in your niche that points back to your site. This way, your business is exposed to a larger audience, and your website will reap the benefits in terms of quality traffic.

Moreover, when reputable websites link to your small business website, Google trusts your site more. Here are some link building strategies that you can use to kick start your link building campaign;

  • Ask your friends to refer to your website from theirs.
  • Have a working business relationship with other brands.
  • List your business on reputable and trustworthy online business directories such as Yelp, Thumbtack, Yellow Pages, Better Business Bureau, etc.
  • Post content on aggregator websites like Reddit, Popurls, AllTop, Feedly, etc.

Wrapping things up

Generating quality traffic to grow your small business website can seem like a hard nut to crack if you do not know how to go about it.

If you do not want your website to become a glorified business card, then you need to start using the tips mentioned above to ensure that your website gets the right amount of traffic.

One thing is certain; you need to find ways to grow your small business irrespective of the marketing budget available to you. You need to start seeing good returns from your small business website, and generating quality traffic is one way to ensure that this happens.

Guest Post: About the Author

Thomas Lore is a 23-year old translator. He is also a creative and diligent freelance blogger, who is always seeking for new ways to improve himself. Thomas is very versatile and he wants to reach the tops with his writing skills.

Taxes in 2020 — Small Business Checklist

As we ease into the next tax year, it’s the right time to assess what’s new for businesses:

  1. Minimum wages:

    They went up in 13 states. You’ll need to refigure the withholding and deductions on affected employees.

  2. W-4 forms:

    They’re new for 2020, reflecting the removal of allowances for calculating paycheck withholdings.

  3. Overtime rules:

    About 1.3 million additional workers will now get overtime if they earn less than $35,568, up from last year’s threshold of $23,660.

  4. Retirement plans:

    If you offer a 401(k) or similar plan, you can:

    1. More easily recommend annuities.
    2. Collect a larger ($500) credit to set up a retirement plan if you have 100 or fewer employees.
    3. Collect a $500 credit for the adoption of auto-enrollment.
    4. Increase the maximum default percentage of compensation from 10% to 15%.
    5. Include more part-time workers in your retirement plan by reducing the minimum requirement from 1,000 hours to 500 hours in at least three consecutive years.
    6. More easily establish Multiple Employer Retirement Plans among two or more employers.
    7. Set up a new plan by your filing date in the following year rather than December 31 of the current year.
    8. Face higher penalties for failing to file returns and employee benefit plan reports.

As you assimilate these changes, you should prepare your checklist for 2020 taxes.

The 2020 Checklist

Hopefully, you’ve already started on your 2020 Tax Checklist. Here are the items we recommend you include:

  1. Mark your calendar for important deadlines:

    1. January 31, 2020: W-2/1099-MISC form distribution.
    2. March 15, 2020: S-Corporations and partnerships filing deadline.
    3. April 15, 2020: Deadline for sole proprietorships, single-member LLCs and C-Corporations.
    4. October 15, 2020: Deadline for filing extension returns.
  1. Identify the required forms for company filings:

    1. W-2 and 1099-MISC for employees and independent workers.
    2. Sole proprietors require Form 1040 and Schedule C.
    3. S-Corporations require Form 1120-S.
    4. C-Corporations require Form 1120.
    5. Partnerships require Schedule K-1 and Form 1065.
  1. Assemble your information:

    1. Bank statements
    2. Credit statements
    3. Income and expenditure reports
    4. Accounting documents
    5. Gross receipts
    6. Sales records
    7. Previous year’s return
    8. Depreciation schedule

 

  1. Compare business and personal expenses.

    • You need to avoid inconsistencies and overlaps between the two. Be careful to explain when you used personal funds to pay business expenses and business funds to pay personal expenses.
  2. Get on top of your 1099s.

    • You may be issuing them to contract labor and vendors. Also, you’ll be receiving them from some customers. Keep tabs on all of these in case of audits.
  3. Review your deduction opportunities.

    • This is best done with or by your CPA or bookkeeper. You must properly account for your business deductions, including items like equipment, travel, and supplies. But you should also search out less obvious deductions. If you work at home, make sure you take the maximum home office deduction. The same is true business mileage. Keep good records in case the IRS seeks proof.
  4. Review your estimated payments and payroll deposits.

    • You don’t want to overpay these items, because you can use the surplus payments for other reasons.
  5. Consider an extension.

    • If you find yourself facing complexities you hadn’t anticipated, you can file for an extension to work out the solutions. You’ll still have to pay your taxes on the due date, but you’ll be able to take the time necessary to file a clean return.

What If You Owe Taxes?

You may find that you own significant taxes for 2019. Maybe its because you earned more than estimated, or that you failed to take sufficient payroll withholdings. If you are a sole proprietor, you might have posted insufficient quarterly estimates.

Whatever the cause, if you have an additional five- or six-figure tax bill, a business loan will allow you to meet your tax obligations without draining equity from the business. Turn to IOU Financial for fast, easy funding with convenient repayment terms. We can take some of the sting out of owed taxes by allowing you to pay the IRS on time and then repaying your loan in affordable installments. We look forward to helping your business sail smoothly through this year’s tax filing.

Business on a Budget: Smart Spending Tips for Business Owners

For new and experienced business owners, balancing income and expenditures is never as easy as it seems. There is a qualitative cost to every decision made, and extreme cost-saving measures can make it hard to attract employees. Spending too little on marketing can cause a business to become invisible to potential customers, too.

Short-term profits can inspire investor confidence but sustaining a company over the long term requires a different kind of thinking. Retaining employees that can grow a company is hard, especially in an era when the internet allows employees to search for a new job with a click of a button. Employees need to be motivated to maximize their output—and that motivation often comes from feeling like they’re being invested in.

Cutting corners isn’t worth it if it kills a business’s image or employee morale. Here are the basic ways owners can spend their money wisely while still investing in the future.

Employee Benefits That Matter

Sometimes business leaders assume that “networking opportunities” are a great way to attract young professionals. While this is true for extroverts who want to build a name for themselves, many entry-level employees are more concerned with basics like health insurance. Older employees may also be seeking good 401k contributions, and time off matters to employees who have kids or want to travel—but one thing is for sure: Free luncheons and gym memberships don’t retain employees.

Health insurance is expensive, but it’s a much better use of money than catered networking events and yoga classes. Even if your labor force isn’t facing a high turnover right now, remember that employees’ priorities change as they have families or start to face health problems. They may seem to enjoy working for you, but they may seek out employers that offer better health insurance benefits, leaving you scrambling to find their replacements.

Keep Travel Costs Low

Travel can seem like an inevitable cost of wooing new clients and establishing trust with suppliers, but now it can often be replaced with video calls. While sometimes in-person meetings are necessary for inspecting supplier facilities or other manufacturing-related work, they are often just to make meetings clearer and more efficient than the standard conference call. Video calls offer a perfect balance of coordinated visuals and reduced costs for all parties. Travel can also burn out employees with families at home, so it’s not always a perk that attracts or motivates employees.

If clients begin to expect visits from executives, then it can be hard to stop those visits later on, so it may be best not to start them in the first place. Plus, the money saved by minimizing travel can be passed on to customers. Since travel is such an avoidable cost, it makes sense to keep it low at first, and then increase that budget if managers insist that it is needed.

Buy in Bulk

While buying in bulk requires some foresight and planning, it can be well worth it in the long run. Basic office staples like paper and printer ink cartridges have a near-indefinite shelf life, so stocking up on them is an excellent option for reducing long-term costs. It can also make it more worthwhile for you to do specific tasks in-house—like printing large quantities of newsletters and other essential documents.

Coffee and other cheap food items should be kept around the office as well. Instead of having someone run out for coffee ahead of meetings, encourage employees to use a basic stock of coffee, sugar, and creamer to avoid wasting time or being late for the meeting. For employees who are on a deadline or simply forgot to eat lunch, having granola bars stashed in the kitchen can make a huge difference in how quickly they’re able to get back to work.

Avoid Catering

Catered lunches are nice for meetings on a tight schedule, but they’re ultimately a waste of money. In many metro areas, even having sandwiches and chips delivered can cost over $15 per serving. Pizza can be cheaper but can still add up to hundreds of dollars per month for large departments.

Catering is only necessary for meetings with clients when the meeting location is far from most lunch options. It’s great for offices in a far-flung industrial park, but for urban offices with a variety of sandwich shops nearby, it’s better to give employees time to grab their lunch. Plus, catering for a large group can be tricky due to allergies and other dietary restrictions.

Choose the Right Location

Having office space in a high-traffic area is important for businesses that need to regularly attract new clients and customers. However, the exact location of that office can be tricky to figure out, especially in expensive metropolitan areas. While downtown offices can be great for visibility and networking, they might not be feasible for new startups or companies with razor-thin profit margins.

For businesses that have a strong manufacturing focus, offices near an industrial park can be just as good as downtown space. Opening a store downtown may seem like a great way to grow a business, but if most local shops are closer to the suburbs or in another trendy area, then that downtown location may be a waste of money.

Getting the best value possible will come down to a balance of location, size, and available amenities, so be prepared to sacrifice one of those three. Depending on the location, parking and other auxiliary costs could be more expensive as well.

Seek Employee Development

Sending employees off to special training can seem like an unnecessary cost, but it can be a huge asset to a growing business. Clients care about reliability and skill and being able to tout your employees’ certifications can help significantly in competitive and crowded industries. Even if the training doesn’t matter to clients or customers, it could be worth it for small businesses that need to run more efficiently on a shoestring budget.

Carefully research training in your industry to determine which ones will offer a significant return on investment. A vaguely titled training provided by a random consultant may not be worth the money, but a certification course offered by a university could be a game-changer. Of course, local and online options are preferable to far-flung training with high travel costs.

Negotiate with Everyone

Suppliers, vendors, landlords, and even lawyers all come with a price tag. However, that price tag can be surprisingly flexible—especially if you have a long-term healthy relationship with them. In economic downturns, landlords are particularly willing to negotiate a cheaper lease instead of risking losing a major tenant.

Negotiation is an art, so special training may be necessary to get results without hurting relationships with clients and suppliers. Plus, it’s far easier to negotiate cheaper hourly or per-unit costs when buying in bulk, so start with your biggest bulk expenditures. While your savings may not seem like much at first, they’ll add up after just a few months.

Your business’s overall outlook can improve quickly with negotiation skills and other tweaks to spending practices. Even businesses with low overhead can see savings when per-employee expenditures are taken into account.

Guest Post: About the Author

Tania Longeau serves as the Head of Services for InkJet Superstore. Tania oversees a team of Operations and Customer Service Reps from the Los Angeles headquarters. Before joining InkJet Superstore, Tania was a team leader and supervisor working for one of the biggest mortgage and real estate companies in the country. She is a happily married mother of one who enjoys spending time with her family and reading in her leisure hours.

Finance 101 for Small Biz: Debt vs Equity

Small business owners trying to grow their businesses need sufficient capital (i.e., money) to pay for inventory, marketing, equipment, and other vendor-related items. But owners must also have enough capital to pay for operational expenses like rent, utilities, and labor. And let’s not forget about the owner’s salary or draw. After all, most owners rely on the income from their businesses to live on.

So, the question is how to pay for company growth. Basically, you have two funding choices: debt and equity. Here’s how to decide between the two.

Equity

Equity is the money you and investors would have leftover if you liquidated your company and paid off all debts. In other words, it’s the business’ assets minus its liabilities.

Many small businesses have a single owner, meaning that 100% of the equity belongs to the owner. In this case, the owner’s equity is equal to the business’ retained earnings, which is the accumulated profits of your company after you pay all your bills and draw your own income.

Some small businesses have investors. You issue shares of stock to investors and pay them dividends in return for their equity investment. Then, the total equity of the company is money contributed by investors (including yourself) plus retained earnings.

Unlike debt, equity does not have to be repaid. Equity investors are willing to risk their money in return for a return on their investment. You can use equity capital to pay for the growth of your company, but you need to know the cost of doing so.

The cost of equity is equal to the return demanded by investors (including yourself) for investing in your company. Because small businesses are risky, equity investors usually require a higher rate of return than lenders do. The reason is that lenders have the first claim on the business’ assets if it goes bankrupt. For instance, you might be able to get a commercial loan at, say 10%, but have investors requiring a 15% return to justify their investments.

Dividends and owner’s draw are not tax-deductible to your business.

If you want to grow your company without debt, then the amount available for you to pay yourself and perhaps pay dividends to investors is decreased by the money you spend on growth.

Debt

Debt is the capital you borrow. The cost of debt is the interest rate, but since business interest is deductible, you must adjust the interest rate by your tax bracket.

For instance, suppose you take a 10% commercial loan and you are in the 20% tax bracket. Then, your after-tax cost of debt is 0.10 x (1 -0.20), or 8%.

Unlike equity, you have to repay debt. If you are taking a loan to finance growth, then you expect that the increased revenues from growth will allow you to pay the loan interest and repay the loan principal.

Owners looking for financing often prefer debt to equity because they don’t want partners. Lenders have no say about how you run your business, whereas equity investors may want to have input on your decisions. If you don’t want investors questioning or disputing your decisions, you will prefer debt financing.

Weighted Average Cost of Capital (WACC)

If you use both debt and equity to finance your company, then WACC is the percentage of each times the cost of each. For example, if your capital structure consists of 50% equity with a cost of 14% and 50% debt costing 8%, then WACC is 11%.

Preferred Shares

Sometimes, a business will issue preferred shares to equity investors. Preferred stock is a hybrid of equity and debt because it pays a relatively high dividend that must be paid before common stock dividends. The cost of preferred shares is, therefore, a complex calculation.

Conclusion

For many reasons, business owners turn to debt rather than using their own money or that of investors to fund their business’ growth. We at IOU Financial provide small businesses affordable loans of up to $500,000 with instant pre-approval and funding within a day or two. We invite you to contact us today to arrange financing that will help you grow your company and increase your revenues.

How to Define and Implement Your Office Culture

These days, if you don’t have an appealing company culture, you can forget about attracting top talent. Office culture is defined as the environment you create for your employees, down to everything from the way your office is decorated to the core values and beliefs of the company at large. And while it may seem insignificant, this stuff matters a whole lot to your most-likely pool of applicants — millennials and Gen Z’ers — who repeatedly say they only want to work for companies that have a positive impact.

In fact, according to the 2019 Deloitte Global Millennial Survey, the vast majority of millennials and Gen Z’ers say they’d leave a company that didn’t align with their values. The study found that they’d ditch an employer that didn’t have a positive impact on local communities (74 percent say they’d leave), didn’t provide a motivating and stimulating work environment (73 percent say they’d leave) or didn’t prioritize diversity and inclusion (75 percent say they’d leave). The study also showed that work-life balance and flexible working practices are non-negotiables for the talent pool.

So, if you want to be at the top of your game and get the best of the best on your team, you’ve got to develop a workplace culture that caters to them. Here’s how.

  1. Brainstorm with Leadership:

    Step one: Figure out what your company believes in. While surveying your workforce will be important, your organization’s core values should start at the top. That’s what being a leader is all about! Once you have a general idea of your cultural foundation, send out a survey to all of your employees to get a general idea of what they believe in and care about.

  2. Create a Mission Statement:

    Once you’ve gathered the data, it’s time to put it into the official rulebook. Look to some game-changing companies to see what their mission statements are all about (remember, Google’s code of conduct famously used to say “don’t be evil”) and to get inspiration. Read good examples of company mission statements from Patagonia, TED and Life is Good.

  3. Brand and Promote with Your Mission Statement:

    Having a mission statement does you no good if you don’t use it to guide your company! Post it around the office and make sure every department references it in their daily decision-making. Remember to feature it in your branding, especially if you’re hoping it will attract a higher caliber of talent to work for you. Lastly, be sure to create a designated page for it on your website (and share it on social media).

  4. Hire with Your Mission Statement in Mind:

    Speaking of talent, your office culture is going to be really important when you’re deciding whom to hire. Now that you’ve got your mission set in stone, you can conduct “cultural fit” interviews, which include culture-focused questions in addition to aptitude-oriented ones. Some examples of culture fit interview questions include:

    1. Outside of work, what are you passionate about?
    2. How do you maintain a good work-life balance, even when you’re especially busy at work?
    3. What’s your view on co-worker relationships?
    4. In what kind of environment do you feel the happiest and productive?
  5. Celebrate Your Culture with New Hires:

    You’ve now got a mission statement as well as branding and employees to support it! Congratulations! Make sure you celebrate your workplace culture with every single new hire by surprising them with unique onboarding gifts and activities. On their first day, give them some company swag coupled with something more lighthearted to demonstrate your culture and break the ice, such as some funny socks or a cute mug.

  6. Designate Culture Captains:

    Perpetuating the culture of your workplace is important to ensure that it keeps its core values at the forefront as it rapidly grows and changes. But leadership can’t always be on the ground ensuring that culture is infused in every factor of business. That’s where your culture captains come in. These workers serve as culture representatives who can keep your mission statement alive through events, games, and awards.

  7. Plan Regular Culture Events:

    Have your culture captains set up a monthly employee activity that involves either the whole company or the whole department, depending on the size of your operation. Getting together periodically for non-work events brings your team closer together and solidifies your workplace culture. Activities like bowling, pro sports games, escape rooms and volunteering make awesome alternatives to the standard happy hour.

  8. Reward Top Performers:

    When you see an employee or department excelling in a certain area that adheres to your company’s core values, reward them! This is the best way to perpetuate workplace culture so it’s something that your entire crew adopts. Consider instituting a monthly culture-focused award and making the prize something everybody really wants, like an extra day of paid vacation or a gift card to the best restaurant in town. Don’t skimp! The better the prize, the more your workforce is likely to take it seriously.

Here’s the thing: All prospective employees want an appealing office culture, which means that modern operations feel the need to manufacture it, and that tends to come off as forced or fake. Plus, the applicants you probably want to hire don’t pay attention to things that they don’t deem authentic. The most important thing to keep in mind while you’re building out your culture is to center it around the things you and your workforce actually care about. Be authentic and reap the rewards!

Guest Post: About the Author

Josette is the Marketing & E-Commerce Associate at The Sock Drawer. She is known as the person you want helping you, who approaches each little detail thoughtfully but also has a strong sense of humor and a whip-smart attitude. Outside of work, she loves to dance, hang out with her cool husband and kids, and inject her upbeat energy everywhere she goes!