How to Reduce Small Business Costs

According to a recent post on About.com’s Small Business Information page, reducing costs in small business doesn’t have to be a headache. The article points out 10 simple steps small businesses can use to make smart choices about where their funds go and ultimately improve the bottom line.

1. Use Technology

Use teleconference and online payment tools to reduce travel and paper costs

2. Ditch Your Landline

Cell phones, VoIP, or virtual phone lines can be a better less expensive option

3. Go Paperless

The cost of ink, mailing, and postage adds up

4. Start Marketing Your Business Online

Use low cost, fast-paced, high-result Internet marketing

5. Reduce Credit Card Debt

This will help with long term business management

6. Create and Stick to a Business Budget

Keep yourself on track by outlining costs beforehand

7. Explore Alternative Places for Business

If possible, exploring a coworking or home based business can be beneficial

8. Cut Back on Software

Some software goes unused, so don’t bother with anything you don’t need

9. Buy Refurbished Equipment

Refurbished equipment can be just as good as new, at a fraction of the price

10. Look Into Bartering

Exchanging your goods or services for others means no cash changes hands

Exploring these options can mean all the difference to a small business. Make smart decisions in the outset, and your business will benefit in the long run.

Check out the original article  How to Reduce Small Business Costs.

$30M Investment Helps Kabbage Keep Growing

Kabbage, an online financial service, plans to expand internationally with its recently raised $30 million dollars from providing working capital in less than seven minutes. Company CEO Rob Frohwein cites the lack of available capital for small companies the reason behind his company’s recent growth. Kabbage, one of the first companies to advance loans to “mom-and-pop” merchants, is the provider for online sellers to purchase inventory and resell them on eBay, Amazon, etc. The company makes their funds by taking a fairly small percentage of the advanced capital. Due to their success, the company is attracting investor attention from key investors of blockbusters Google, Facebook, and PayPal. Since last summer, Kabbage has managed to more than double their value with the new capital, in which they aim to devote in supply development, sales, marketing, and expansion into the United Kingdom. Not only is the company planning to diversify geologically, but also beyond the online merchant market. With the apparent financial growth, Kabbage expects to add jobs and square-feet to its office in Midtown Atlanta office. See the full story $30M Investment Helps Kabbage Keep Growing.

Small Business “Pre-Nups”

They say people can be married to their business — well, it follows that people can also go through messy business divorces. In a recent article in Crain’s Cleveland Business, U of M entrepreneurship professor James Price discusses how he often advises small business co-founders to sign a prenuptial-like contract in order to avoid conflict if one or more founder should jump ship.

Much like young love, entrepreneurial partners are often enamored with the start-up at first and might think that nothing could go wrong. Price advises that business partners instead think rationally and come up with an agreement that will force them to reason through what should happen in case of a break-up.

The fickle nature of business, with its soaring highs and Mariana Trench lows, can put stress on the best of partners. Sometimes “love” is not enough, and that is where a start-up pre-nup comes into play. Price claims that these contracts are a “clear-eyed way of building flexibility” so that both business and personal relationships can remain intact regardless of how it all plays out. See the full article at Why I Always Tell Co-Founders to Sign a ‘Pre-nup’.

Nuance Announces Proposed $350 Million Offering of 5.375% Senior Notes due 2020

Burlington, Massachusetts based Nuance Communications, Inc. will add approximately $200 million to acquisition war chest as a portion of a $350 million bond offering. Although the Senior Note is unsecured, it is fully and unconditionally guaranteed on a Nuance’s domestic subsidiaries. Nuance plans to repurchase the notes from holders upon a change of controls at 101% of the principal amount as well as any accrued and unpaid interest, nearly $354.2 million dollars with which they will use to repay debts and acquisitions. See the full story Nuance Announces Proposed $350 Million Offering of 5.375% Senior Notes due 2020.

Four Ways to Deal with Non-Paying Customers

The TemPay Staffing Times recently published an article that highlights a major problem facing modern staffing agencies: cash flow interruptions due to non-paying customers.  In a seasonal and fluctuating industry like temporary staffing, timely payments are extremely important as they are used to cover payroll and other expenses.

Dealing with problematic customers requires a delicate balance between firmness and lenience. The article outlines four ways to deal with these types of customers:

1. Keep on top of trends such as payment histories, so it’s easier to examine problems when they arise rather than figuring it out retrospectively.

2. Before getting frustrated with the customer, make sure that a change in your own protocol isn’t the cause of the problem.

3. Maintain composure while talking with delinquent customers, and focus on indentifying the problem and coming up with solutions.

4. Consider making customers who are routinely behind deliver payment directly to your offices.

If you attempt these steps and the customer still won’t pay, it may be time to cut off services. But, the article points out, if you have made an honest effort to help then the fault lies with the customer, not you. Click here for the original story, Not Getting Paid? 4 Ways to Deal with It.

Trends in Microlending Good for Small Businesses

The Wall Street Journal Online recently published an article highlighting the story of a New York city cab driver who was able to keep afloat in his business through a type of financing called microlending.

Microlending was formerly only popular in developing countries such as Mexico and Bangladesh. This is one positive outcome that seems to be on the rise, in part, in the wake of U.S. economic struggles: Small business owners with no credit history are still able to obtain a few thousand dollars through the process.

This type of lending offers just the right amount of support without setting up small business owners for failure: According to the Business Center for New Americans, a nonprofit lender, the default rate is only about 6%.

Little formal data exists, but bankers report some numbers that indicate the growth of microlending in the U.S. The U.S. Small Business Administration distributed about $47.5 million dollars towards microlending in the 2011 fiscal year – the largest amount in its history. Additionally, in the past ten years the average size of microloans has decreased 17% – down to $11,750; showing a trend toward even smaller loans.

Microlenders can be both for-profit and nonprofit. Nonprofits are able to fund because of private donations and support from federal and state programs.

Large US banks frequently turn down small business for loans, offering them business credit cards instead; which can create even more debt. Many small businesses striving for financial stability and independence
have been frustrated in their efforts because they have so little to fall back on in the first place; but microlending offers some hope for the future of small businesses.

Click here to read the full story Mini Loans Feed Bigger Ambitions.

CBiz Small Business Employment Index is Up in August

Just released: The CBiz Payroll Services announced that its Small Business Employment Index, a barometer of hiring trends among companies with 300 or fewer employees, went up by 1.15% in August, after a decline of 1.57% in July. Additionally, 29% of survey respondents increased staffing, while 20% let go employees.

Moreover, Philip Noftsinger, business unit president for CBiz Payroll Services, said the data sets, taken together, “provide some hope that employment is at least on solid ground and increasing moderately.”

Click here to read the entire announcement: CBiz Small Business Employment Index rises in August.

Overview of Nurse Staffing Accounts Receivable Factoring

When your nurse staffing agency bills clients, you know that medical providers (i.e. hospitals, nursing homes, medical clinics, etc.) can take months to compensate you for your staff’s time. When you use nurse staffing accounts receivable factoring to secure funding for your company, you can:

  • Rest assured that you can pay bills and employees on time.
  • Have the confidence to make the necessary moves toward expansion.

What Is Nurse Staffing Accounts Receivable Factoring?
In nurse staffing accounts receivable factoring, outstanding invoices are converted into cash through a ‘factor’ for a discount. This means that instead of waiting for your clients to pay you for your staffing services, you will be able to use the money your workers have already earned right away.

Most factors offer nurse staffing non-recourse factoring: this allows a factor to be held responsible for unpaid invoices if the staffing agency goes out of business or declares bankruptcy during the time in which the owner’s invoice was factored. Non-recourse factoring does not cover:

  • Very late payments where there is no bankruptcy.
  • Disputes over invoices.
  • General collections issues.

With accounts receivable factoring, you won’t hesitate to accept large staffing requests due to lack of funding.

Click here to read more about nurse staffing accounts receivables factoring.

Credit Index Drops: Consider Small Business Factoring Instead

Earlier this month, ABFJournal.com, cited a report from the National Association of Credit Management (NACM) that the small business factoring experts at The Factoring Blog thought would be of some interest to our small business owners looking for financing. In a nutshell, the ABF Journal’s Credit Managers Index (CMI) dropped from 54.5 to 53.4 in July.

The article reported the difficulty in predicting the long term effects that the nation’s drought is bound to have on manufacturing factoring customers and invoice factoring clientele that are service providers, which has been hit hardest by the decline, says NACM.

The report indicated a stabilization in credit applications, which dropped from 57.5 to 57.2 between June and July. Dollar collections also dropped, along with a decline in dollar collections. The favorable factor index (the index that measures all of the optimistic components of the report) also dropped from 60.2 to 58.9.

If you’re having trouble applying for a credit card, small business factoring may be the best option for your firm because the process requires no credit check. With dollar collections at an all-time low, it may be time to factor your receivables. Though your clients whose invoices are factored will be subject to credit check, after a 3-5 day approval, invoices take 24 hours to advance.

How Business Owners Can Avoid Employment Claims

Employment litigation is a widespread discipline of the law, one that any business owner should should be both familiar with and wary of.

Employment law ought to provide guideline for how to treat and care for employees. Of course, any small business factoring client ought to go above and beyond the call of the law (for pragmatism’s sake at least), but Manufacturing.net offers a set of “Seven Steps to Avoid Employment Claims” for business owners’ safety:

  1. Provide Employee Handbooks to Make your Rules and Requirements clear
  2. Make Pre-Employment Inquiries (background checks, drug tests, etc.)
  3. Use Accurate Written Job Descriptions (make sure your employees know what they’re in for).
  4. Know the Family and Medical Leave Act (and State Law equivalents) to provide your employees with the proper amount of sick days.
  5. Understand Wage and Hour Laws
  6. Handle Harassment Policies and Investigations in accordance with federal law
  7. Document all Performance Deficiencies, Misconduct, and Employment Terminations

By following these simple steps, you can ensure a healthy, happy workforce that will not sue your business and cost you massive amounts of money. Of course, one thing writer Fred Mendelsohn–the author of the article–forgot to mention was The Factoring Blog’s 8th step to avoiding employment claims:

Always make payroll.

When you fail to provide payroll, you put your company and employees at tremendous risk, which is why, when you have problems with cash flow or meeting basic expenses such as payroll or insurance, it is prudent to factor one’s accounts receivable in order to meet these expenses. Make sure your employees and their families are paid and satisfied, as your business runs smoothly towards growth and greater prosperity. Factoring can do that for you.

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