CoverStory-Success

Success By Example: Q&A’s

CoverStory-Success

Story originally from In Business Magazine Greater Phoenix Area.

Small business is thriving in Arizona, and in Metro Phoenix specifically. Arizona State University and Grand Canyon University have programs focused on fostering entrepreneurialism; many of the Maricopa County community colleges are also active in this space with specialized programs, notably GateWay Community College‘s incubator, Center for Entrepreneurial Innovation; and numerous business incubators and accelerators throughout the Valley are helping startups launch successfully into the business community.

Success begets success, and In Business Magazine asked Joel Gottesman, Prinicpal at Liquid Capital of Arizona, to share insights on best practices and the changing business environment, based on his experience in these core concerns of all business enterprises: finance, human resources, leadership and management, marketing and communication, sales, and technology.

Question: Are there traditional “truths” (attitudes, ways of doing things) that need to be discarded in today’s business world?

Answer: Traditional “truths” would hold that you fund growth by obtaining capital (from yourself, friends and family, or established investor infrastructure), and then obtain working capital debt through alternative financing such as factoring or asset-based lending, or through a bank loan if the more stringent credit standards can be met. If additional capital is still needed, there are some new ways of raising capital through crowd funding, which is becoming more of a reality and utilizes social media to reach investors more readily. Other options include contract manufacturing or joint venturing for an initial period to reduce the time it takes to move forward on your growth plan.

Question 2: What is an innovative best practice you would advise to a fellow small-businessperson?

Answer: Find your sweet spot on how to engage prospective or existing customers or referral sources for growing your business. Social media provides a great opportunity to be out there to establish your business brand in a way that is not a “hard sell.” You have the opportunity to associate yourself and your business with creative trends and new ideas. Depending on your business model, LinkedIn and Twitter offer opportunities to build your network and business brand.

tax deductions

8 Tax Deductions You Need To Know Right Now

tax deductions

Come tax season, everyone should try and get a little something back, and businesses are no exception. Tax deductions won’t save a floundering business from closing up shop – but to the shrewd business owner, they can make the difference between a good year and a great year.

Note: The deductions listed below may not be recognized in your area. Be sure to consult a tax specialist for more information on how you can save your business money through prudent financial planning.

1.    Get Networking and Get a Deduction

Remember that expenses like membership fees to professional organizations are completely deductible, so you’ll never have to make the hard choice between getting the inside edge on a potential client or paying annual membership in order to attend networking events. Professional fees and licenses are also deductible.

2.    Real Estate Interest

If your business owns a physical location or any real estate, be sure to claim the entire amount of interest you paid during the year.

3.    Maintenance and Repair Fees

You spend money keeping your machinery and equipment in proper working order, and these amounts are often deductible. Just be mindful that you might run into exceptions if the repairs add additional value to the property. Your accountant should flag those circumstances.

4.    Meals and Entertainment

Meeting a client? Attending a business lunch? You don’t necessarily have to pay completely out of pocket. Claim a meals and entertainment deduction equal to 50% of the amount you paid for attending these activities. A $40 lunch may not sound like a big deal, but over the course of the year it adds up to more than you might think.

Tip: Before you leave the table, turn the receipt over and write who you were there with and what you discussed. This little note will help justify your claims in the event of a future audit.

5.    Your Car

Let’s face it – if you’re using your personal vehicle to get the job done and keep your clients happy, then you should be compensated for mileage, gas, wear and tear. Keep a logbook in your glove compartment to write down when you’ve used your personal vehicle for business use. Or go digital and use an app like MileIQ or TaxMileage that keeps it all logged on your smartphone. If you want to avoid the headache altogether, ask your accountant about your tax rules – you may be able to simplify your car expenses by using a percentage of total costs as your business deduction.

6.    Bad Debt

If you have a customer that hasn’t paid their due for your products or services, or maybe they’re simply taking too long to pay, then your accounts receivable is at risk of becoming bad debt. In spite of the name, bad debts aren’t “all bad” – as these amounts can be deducted.

But in the end, nobody likes bad debts. So if you’re keen on avoiding them altogether, consider factoring your accounts receivable. Full disclosure – this is a service we offer at Liquid Capital, and we’ve seen this strategy work very well for clients over and over again.

Factoring means that you sell your accounts receivables to a third party company and they will do all the work to collect from your client. While you may not be collecting the full face value of your A/R, the trade-off is quite beneficial. You’ll get certainty that you’ll be paid, your cash flow is instantly increased with money at hand, and the cost of factoring is fully tax deductible.

7.    Travel Deductions

Depending on your business, you may spend a considerable amount of time and money on the road meeting clients, stakeholders, suppliers and attending conferences. Any costs for transportation and lodging while out of town on a business trip are deductible. Sadly, regular local commuting is not, so that could be a benefit to attending an out-of-town event.

8.    Advertising

Advertising and promotion could also fall under your tax deductions as the “cost of doing business.” Some business owners shy away from advertising because the costs lower your profits, but keep in mind that this also lowers your taxable income. And the rewards of additional advertising could bring significantly higher future revenues. You’ll have to determine the right balance of cash in hand vs. advertising for future growth.

In the end, it’s always important to talk with your accountant about all expenses and tax deductions. What may be an acceptable deduction this year may not be the same next year.

manufacturing

Factoring & Purchase Order Financing Combine To Build A Distributor’s Business

manufacturing

When a Canadian distributor for a European manufacturer of innovative ground screws needed funding for large orders they turned to Greg Norris at Liquid Capital in Toronto and Mark Polinsky of Gateway Trade Funding near Chicago.

The distributor’s products are used in construction to establish a foundation in virtually any terrain. As an alternative to concrete slab foundations, the ground screws allow quick and stable foundations to be installed where traditional solutions may not be ideal. However, shipping the product from the Czech Republic meant that there was a considerable lag time between when payment to the manufacturer was due and when the distributor could collect from the purchaser.

Traditional bank financing was not available because of a number of hurdles including international currency conversions, the innovative and non-traditional nature of the product and the involvement of somewhat risky construction projects.

Funding the transaction

Norris was able to structure a solution involving purchase order financing and factoring that worked well for the distributor, allowing them to create the cash flow needed to complete transactions for customers in both the US and Canada.

“This solution was not without several challenges,” said Norris. “Working with multiple players in multiple countries and funding the significant transportation time all complicated the transactions. Working with Gateway Trade Funding outside Chicago, we were able to fund this and then manage all of the logistics and needs of each participant.”

Funding these transactions is expected to exceed $2.5 million (USD). “The financing solution allows this particular distributor to capture business they would not otherwise be able to transact,” said Polinsky. “It’s helping them to grow their business while introducing innovative solutions to their customers.”

How your business can do the same

Liquid Capital may be able to offer your business purchase order financing and factoring similar to this case. If you’ve been denied traditional bank loans because of issues like international currency conversions or what the banks deem as a risky project, then there is another option with Liquid Capital.

BNN finance video

Watch BNN Video: Funding Alternative To Hard-To-Get Bank Loans

You may be one of the many businesses all across the U.S. and Canada that have a hard time getting access to bank loans. Either you don’t have the required assets deemed necessary by the banks, your gross income is deemed ‘too low,’ or you may have a limited operating history.

Without access to capital, your company will have a hard time growing and becoming more profitable.

“Factoring” is an alternative to the traditional bank loan—and it’s not yet widely known. This funding option is already very popular overseas and allows you to increase your cash flow to put your resources towards operating your business the way you want.

Watch Robert Thompson-So, Chief Strategy Officer of Liquid Capital explain to BNN how factoring finance solutions help small to medium-sized business leverage their accounts receivable to get to the next level.

Consider factoring as an option for your business, and make the most of your working capital.

old school marketing

7 Old-School SMB Marketing Tricks To Put Up Your Sleeve

old school marketing

Running a small or medium-sized business isn’t easy. One of the hardest parts is figuring out how to market and promote your company. You’re not alone.

There are traditional methods like newspapers, radio and TV, along with newer media tactics including digital advertising, search marketing and social media. How will you figure out which tactics to invest your time and energy into, and what will give you the most bang for you buck?

There’s no doubt that new-school digital marketing methods are effective, but you might be neglecting traditional tried, tested and true methods that are still valuable. And with everybody rushing to the new strategies, there could be less competition back in old-school marketing.

Here are seven useful tips and tricks you can use to build a successful marketing campaign using those traditional methods of marketing.

1. Get Your Story Published in the Local Newspaper

Newspapers might seem outdated, but there are great opportunities that still exist in your local paper – especially since most papers also have a supporting website where stories are published.

Contact the Editor of the business section and show how your startup is different from all the others out there. Create a compelling story about your history, what you offer the community and how you are raising the bar in the business world. Every publication is interested in intriguing stories, and by offering a cost effective pitch (aka free), you may be able to persuade them to write a profile-raising piece on you.

2. Talk to Magazine Editors

You may be thinking, “What? First outdated newspapers and now outdated magazines?” It’s true – magazines can be a great way to get exposure for your business, and there are plenty around looking to publish your story.

Local exposure is the best, so start with the most local publication possible. It may be a small town or niche business magazine that you target. And make sure you get links to your website included in the online version of the story so that the readers can quickly click to your business site.

Bonus: Ask the magazine if you can contribute to an ‘Ask the Expert’ column. Then provide ongoing expert pieces for them to publish, either in the print version or online.

3. Make Effective Business Cards, and Don’t Forget to Hand Them Out

Business cards are low tech but remain important for networking. Don’t leave home without them, as you never know who you’ll bump into.

Make sure your business card contains all relevant contact information, like your website address and any social media accounts – especially LinkedIn if you’re a B2B professional.

And make use of any blank space on your cards to provide details about your products, services and a reason for people to connect with you. For example, you could include a special discount only to people with your business card. That gives them a reason to hold onto your card.

Bonus: Get their business card as well, and then connect with them on LinkedIn or other social media accounts that same day. Make sure to follow-up with a message to add a personal touch to your new business relationship.

4. Set Up a Referral Program

If you have a large number of suppliers you regularly work with, set up a referral program to get your customers rewards. Imagine being able to offer your customers exclusive discounts on additional products and services? That would be reason enough to keep coming back to you.

And if you take this traditional program into the new-school, you can offer your referral program as part of your company e-newsletter. By signing up for these emails, your customers will have handy access to all the promotions at your business and other partner stores.

5. Offer Seasonal Discounts and Sales

Everyone likes a summer saving or a winter deal! It doesn’t really matter the season, just give your customers a discount for shopping at a particular time of year. Or create a theme around a seasonal holiday like Halloween, to offer Spooky Savings and Frighteningly Low Prices. There’s a certain charm to having specials around holidays, and it shows your customers that you can have a little fun with your business as well.

6. Send Good Old Fashioned Snail Mail

Mail drops are definitely old-school, but don’t underestimate them. Dropping leaflets through people’s mailboxes still has a measurable effect as long as you do this strategically. Keep your radius tight if you have a physical store location, so people will have a better chance of popping in your store.

Make sure your mailer has a clear call-to-action on it as well. Better yet, give them an incentive to hold on to that piece of mail. For example, include a code they need to enter for a website promotion or tell them to present that mailer in your store to receive a free piece of swag.

Bonus: Create a hard copy flyer, then take advantage of the message boards available at other local businesses. A flyer can be a quick, cheap and easy promotion of your company. Make sure you get permission first, and don’t forget your strong calls-to-action.

7. Connect with Your Local Chamber of Commerce

Your local Chamber of Commerce can always offer some valuable help. Make sure you join up so that you can network with other local business owners. It’s surprisingly effective to chat with other business owners in your area and learn the tactics they use to market to their customers and prospects.

Then follow the Chamber of Commerce online and make sure you attend events throughout the year. You may be able to get ongoing support and assistance that would cost thousands of dollars from third party sources.

Do you have an old-school method of marketing your business that has worked effectively? Tell us in the comments section.

cash flow solutions

3 Cash Flow Solutions To Relieve Your Business Funding Woes

cash flow solutions

4 out of 5 businesses fail within the first 18 months!” Sound familiar?

How about, “Companies without experienced managers are more likely to crash and burn.”

You’ve undoubtedly heard these quotes about new business ventures.

Sadly, legions of entrepreneurs have come face-to-face with the realization that the companies they’ve built and nurtured from day one were much more likely to fail than they were to succeed.

This is not necessarily due to the entrepreneur’s lack of business acumen. And it doesn’t mean that the products or services they offered were poorly executed. So what could it be?

The truth of the matter is that many businesses fail because of a lack of funding and irregular cash flow. How do you avoid these pitfalls?

Why Traditional Small and Medium Business Funding Doesn’t Work

Traditionally, if you were looking to build your own business you needed two things: an idea and the money to make it happen.

With a fully fleshed out idea, an eager entrepreneur would then approach an investor or financial institution. Both sides would agree to the method of investment (shares or debt) and then determine how interest or dividends will be paid. That’s a pretty typical scenario we’re all used to seeing.

The problem is that many new companies have incredibly volatile start-up years, and very few businesses experience a regular income stream. Failure to make repayments on loans could not only result in penalties, but also a freeze or recall of capital at a crucial time. Or worse, it could force the business to close their doors altogether.

Owners are finding that this “capital rigidity” is no longer the best way to do business in an economy that is seeing more than 500,000 small businesses emerge each and every month in the United States alone.

Because small businesses continue to represent a growing portion of the economy, it is in everyone’s best interest to ensure fledgling enterprises succeed – and that means securing capital.

Insufficient or unreliable capital can cripple an emerging business. Not having enough cash on hand to purchase inventory or hire employees can result in a delay or inability to fulfill orders. Either way, your company’s reputation can take a hit and you may not recover.

This is where creative cash flow solutions come into play. You may not have even realized these were options for your business, but take a closer look. It just may save your business.

Cash Flow Solution #1: Factoring and Invoice Advancements

Rather than funding your business through the use of credit cards or your own personal finances, many entrepreneurs are adopting a better strategy – factoring.

Factoring your ‘accounts receivables’ is essentially selling a company’s account receivables to a third party firm. The third party gets repaid for those accounts once the entrepreneur’s clients have paid up, but in the meantime you get access to cash flow now.

In this way, factoring and invoice advancements act as a short-term loan that allows the business owner to get around the tough loan requirements from a bank.

With that up-front cash, you can invest money in your business operations and execute on your growth strategies in order to secure new accounts and bring more clients into your company. It’s a win-win.

Cash Flow Solution #2: Demand Dividends through private investors

For the micro-enterprise, debt repayments can place a heavy burden on the business owner. That’s where private investment based on your free cash flow can come in handy.

Demand dividends is a loan system based on repayment only when you enter a more stable period where you have free cash flow. That system helps to align investor and entrepreneur goals in three ways:

  1. Determining a reasonable timeframe for capital return (a grace period may be between 10—24 months until repayment may begin)a
  2. Matching the return to the volatility of the market segment
  3. Tying repayments to the business owner’s ability to make payments (simply put, eliminating fixed repayments)

 Demand dividends tie repayments to cash flow and provides a greater grace period than traditional capital loans.

In plain English, you get a loan, can grow your business, and pay that loan back once you’re becoming more profitable. Just make sure you reach that stage fast enough!

Cash Flow Solution #3: Crowdfunding – Give the People What they Want

Crowdfunding has grown dramatically in popularity among small business owners as a means of raising capital.

If the public finds a business plan compelling and the entrepreneur has motivated potential investors, this can work extremely well.

For example, by offering a significant discount on an awesome new product concept when it goes to market, an entrepreneur can gain huge attention on crowdfunding sites like Indiegogo and Kickstarter.

The risk to investors is much smaller because typical investment levels are small and shared with hundreds or even thousands of other investors.

In fact, many investors may not even think of themselves as an “investor” in the traditional sense. These new sites are set up more closely to e-commerce retailers, and to investors the experience is more closely related to a Black Friday deal where you need to scoop the other shoppers to get the coolest new product.

content marketing

Cash In With Content Marketing

content marketing

Whatever term you use – content marketing, sponsored content, or content strategy – it all comes down to giving buying audiences substantive, relevant, useful information in an easy-to-access format, enabling them to consider doing business with you.

Here’s how Content Marketing Institute (CMI) explains this strategic marketing approach: “Instead of pitching your products or services, you are delivering information that makes your buyer more intelligent. The essence of this content strategy is the belief that if we, as businesses, deliver consistent, ongoing valuable information to buyers, they ultimately reward us with their business and loyalty.”

CMI was founded by Joe Pulizzi, a leader in the content marketing movement. His weekly blog, This Week In Content Marketing, recently explored one of the most frequently asked questions about the practice: How does content marketing differ from advertising? Think of content marketing as an invitation vs. advertising, which is unsolicited information and oftentimes an unwanted interruption.

Understanding the difference between advertising and content marketing is half the battle of implementing a content marketing program. The bigger hurdle for many companies is thinking they don’t have meaningful content to share. Every business does! For example, a golf equipment supplier can create a blog with posts on golf trends, the difference in clubs, or how to choose apparel to ensure a comfortable playing experience in extreme heat. A security company could provide prospects with a whitepaper featuring tips for avoiding burglaries. A staffing firm’s e-newsletters can feature articles on how to develop an employee manual or the difference between independent contractors and employees.

PRNewswire explains how to distribute and drive content in its whitepaper “Why Content Marketing’s Really a Question of Marketing Your Content.” A key takeaway from the report: “Developing and executing a content distribution strategy is important because it can help you from both a search and social sharing perspective. After all, people are more likely to share content that you have actively distributed socially yourself. That sharing generates positive signals that search engines not only detect but could also reward with better rankings, which in turn can lead to more organic search traffic and even more social sharing.”

Take time to brainstorm what content would be interesting and valuable to your target audience; then build messages and delivery methods from there. The bonus: Metrics. The data from website visits, email campaigns, and social media activities will influence your content strategy and efforts as you work toward maintaining long-term relationships with your audiences.

Image via Joe the Goat Farmer

Embrace The Internet Of Things

Is your business ready for the Internet of Things (IoT)?

In your everyday life you may already be a part of the IoT, e.g. thermostats, home alarms and entertainment centers joined together digitally and managed from a computer or mobile device. Businesses also can, and increasingly are, bringing together sensors and cloud-computing with office equipment, factory machinery and order fulfillment/inventory systems, streamlining sales and production processes wirelessly. This improves customer relations, productivity and on-time delivery.

There’s no time like the present to get involved. Knowledge@Wharton is an online business analysis journal of The Wharton School at the University of Pennsylvania. In March its experts in collaboration with Dell posted an article to guide businesses through the ever-expanding digital landscape. Leveraging the Internet of Things for Competitive Advantage describes IoT as an “ecosystem” that “consists of data sensors, networks, cloud storage, applications and devices all working together to help companies and consumers manage their digital lives…”

How hot is the topic? What are the trends? International Data Corporation (IDC) is a premier global provider of market intelligence for IT professionals and business executives. Its infographic Connecting the IoT describes what is and forecasts what lies ahead through connectivity. A few insights from IDC:

  • There are currently 13 billion connected things worldwide, expected to grow to 30 billion by 2020.
  • By 2018 60% of IT solutions will become open-sourced allowing vertically-driven IoT markets to form.
  • Millennials, representing 16% of population, will accelerate IoT adoption.

Now is the time to embrace IoT. Consider what devices you frequently use and what data you would like to leverage. Is there client information you want to capture and share with your sales team? What operational systems could be integrated and managed remotely?

Of course there is cost. eMarketer.com cites an Accenture study showing that Internet users worldwide (62%) have concerns that purchasing IoT devices and services would be too expensive. Many (47%) are concerned about privacy and security issues. Businesses might require a cloud-based platform to serve as a data center or eCommerce solution. They might need technical support to set up the network and train employees. Plus, what devices should each employee have: a tablet, a smartphone, a laptop?

When you’re ready to look at IoT capabilities for your business, seek the guidance of an IT expert. Though the upfront investment may seem steep, the savings gained from a connected workforce and improved customer relations quickly prove the value of IoT.

mentorship

Mentorship Grows Business

mentorship

What if someone told you that doing one thing – at no cost – would increase your company’s revenue by 83%? It might sound too good to be true but that’s what micromentor.org found in its 2014 Business Outcomes Survey. Whether you’re a mentee in need of a mentor or a company grooming mentees to build your business, there is great value in mentorship.

Luis Velasquez is a leadership coach, employee engagement expert, and management trainer. He says in his mentorcloud.com blog post “7 Trends In Employee Engagement and What Role Mentoring Plays” that employers must mentor their workforce to be competitive in today’s marketplace. The benefits include higher job satisfaction, increased retention and improved productivity. He writes: “Acquiring knowledge through mentoring and applying that knowledge to their current job will not only increase employee output, but will also increase their level of discretionary effort.”

Creating maximum efficiency among your workers means that you’ll need fewer employees to get the job done as your company grows. You’ll avoid the reoccurring expense of searching for and replacing employees. Experts at ZaneBenefits estimate losing a salaried employee can cost as much as two times their annual salary, especially to replace a higher level executive.

Not only will mentoring increase productivity, it will allow you to expand your business without adding more employees. This, of course, leaves you more money for growing your business via strategic planning, marketing analytics, technology, acquisition, or structural/office space, etc.

As an owner of an expanding business you too can tap into the value of mentors. Perhaps you want to grow sales in a new market. A mentor with experience in that arena can shed light on what strategies would be effective and who the “players” are in the industry.

There are many useful resources ready to pair mentors with mentees and visa versa. One helpful organization that matches those in need of mentorship with mentors is SCORE. Its volunteer mentors bring real-world business experience. They are working and retired business owners, executives and managers who have been through the same challenges and decisions that many entrepreneurs face. In addition, SCORE business mentors offer valuable expertise in specific industries.

Engaging pays off. SCORE reports more than 100,000 businesses increased their revenue in 2014 thanks to its mentoring efforts. Those businesspeople with three-plus hours of mentoring not only achieved higher revenue; they experienced an increase in business growth.

Image by The Blue Diamond Gallery

ABL financing tools

Put This Powerful But Overlooked Financing Tool To Work For Your Company

Asset-based lending can be cost-effective, versatile and discreet

ABL financing tools

For some medium-sized companies in a growth phase, cash flow can become an issue when payables get ahead of receivables. For others, there may be opportunities to buy new equipment, to expand business or to acquire new businesses, but there just isn’t enough cash on hand to make a move. Whatever, the reason, there is a flexible, cost-effective and discreet way to finance these occasions. It’s called asset-based lending, or ABL.

Who turns to ABL? Glen Dalzell, Vice-President of Sales and Marketing for Liquid Capital, says that companies who take advantage of ABL are those who may not qualify for traditional bank lending, which is covenant- and ratio-driven. Others may simply not be getting enough funding through conventional bank lending and they need to augment available funds by getting additional availability from their assets.

“ABL is typically a revolving facility,” Dalzell says, “much like a line of credit from a bank.” The difference, he says, is that it’s more flexible and will generate “greater cash availability.” And like a line of credit, you only use as much money as you need, paying back the principal and  interest as you go along.

Long used by very large firms, ABL may have a place in a medium-sized company’s financial toolbox.  “If you took all your cash from receivables and bought equipment with it, you’d have a cash-flow problem,” Dalzell says. ABL can be used to space out that cash-flow shortfall. Firms who have less-than-perfect credit ratings—and there are many understandable reasons why this happens among the very best firms—may also want to turn to ABL.

Corporate assets, including inventory, equipment and real estate, can be considered and margined to raise cash through an ABL facility or you can sell your invoices to a lender. Subject to appraisal, a lender will lend against raw materials, finished goods and even work in progress. Equipment can be margined up to 75% of its liquidation value while real estate can be collateralized up to 75% of its market value. With invoices, a lender “buys” your receivables and when you collect on them you reimburse the lender.

One of the advantages of ABL over other forms of non-traditional lending such as factoring is confidentiality of the relationship between you and the lender. Some clients may question a firm that uses alternative methods such as factoring. With ABL, your receivables are deposited in a sweep account at your bank in your firm’s own name, from which an ABL lender collects its interest and principal payments. The process is invisible to your customers. In addition, with a better credit rating and demonstrable operations processes that the lender can understand and interrogate, your costs for ABL can be lower than with factoring.

Still, asset-based lending is not for everyone. Dalzell says that ABL is generally for medium-sized firms or larger.  “Typically, ABL comprises a minimum of $1 million to $5 million.” Larger firms, he says, have more complex cash needs and the amount of collateral required has to be large enough to warrant the costs of ABL.