How Small Businesses Are Getting Squeezed

                                                

According to the Office Depot Small Business Index approximately 40% of small business owners have seen decreased profits this year or have not seen an increase in profits since last year. 

Many small businesses have had a harder time getting approved for business loans.  In some instances business loan limits have been reduced which prevents small business owners from getting additional work and makes it more difficult to pay employees and pay for equipment and supplies.  Small business owners have been forced to apply for business credit cards with higher interest rates.  

I renewed my business license this year and the cost increased by 62.5% with no warning.  I was shocked to see the price increase and called to verify.  The price had increased in January 2012 with no notification sent to business owners.  This seems like poor customer service. This is just one small example of the increased costs required to manage a small business.

Many invoices are paid 45 to 90 days or more after receipt for small businesses which makes it difficult when paying creditors, payroll and other business expenses.  An alternative is to seek non-traditional funding sources such as venture capitalists, angel investors or bank with credit unions.  

However, some credit unions have a cap on the amount of lending they can offer.  Small businesses employ approximately 50% of the private sector and lead in innovation of new products, services and technologies.  Lack of access to bank credit prevents small businesses from becoming innovative by developing new products or services or having resources to grow their business. 

Some small business owners try to offset costs by increasing their prices or selling more products and services but that is just a temporary solution.   Here are 9 tips to prevent getting squeezed.

1. Late fee.  Charge a late fee for unpaid invoices over 90 days late.  Offer discounts and incentives to customers who pay on time.
2. Plan B.  Look for additional ways to increase revenue to offset unpaid invoices and reduced access to credit.
3. Quit.  Fire customers who repeatedly pay invoices late or not at all.  Consider hiring a collection agency to collect on unpaid invoices for large amounts.
4. Sales.  Increase your marketing efforts.  Offer a referral or affiliate program to gain new sales.  Use free ways to advertise such as social media.
5. Service. Provide exceptional customer service.  This will ensure you retain customers and helps to gain new customers.
6. Think Outside. Think outside the box for inexpensive ways to gain new customers and gain exposure for the business.
7. Reinvent.  Revamp email messages, business plan or marketing plan, slogans, mottos, logos, business cards to show off new ideas, products and services.
8. Partner. Partner with local social and civic organizations or other businesses to offer special to members and employees.
9. Verify.  Verify all orders, inventory, customer service levels, etc. to ensure you are providing 100% to customers and suppliers at all times.

16 Ways Small Businesses Can Save Money

When considering whether or not to pursue a career as an entrepreneur, you must consider choosing getting a steady paycheck versus starting your own company with possibly no salary or medical benefits that can be costly.

If you are considering becoming an entrepreneur save enough money to cover your living expenses for at least 12 months to carry you while your business is growing.

Some advantages of being an entrepreneur are:  flexibility, creativity, full ownership and being your own boss. Some disadvantages of being an entrepreneur are:  losing a steady paycheck, losing medical benefits, falling in a different tax structure, increased stress and you can’t blame anyone else if you make a bad decision.

Working as a small business owner requires long hours, dedication, persistence, patience and sacrifice. Research conducted by the Forum of Private Business (FPB) stated that 82% of business owners have seen an increase in the cost of raw materials since last year.  

In addition, 74% reported that increases have inhibited their growth expectations and 45% stated that their profitability has been impacted.  Running your own business has many expenses that are not considered when working for someone else.  Here are 16 ways to save money running your small business.

1. Start at Home. Start your business in your home.  Once you have generated a steady profit for at least a year or more then you can consider leasing office space.
2. Sales. Hire virtual assistants, sales or marketing entrepreneurs just starting out or break down large projects into smaller tasks and save money by hiring a resource for each task.
3. Barter. Barter services by visiting the barternews.com site for listings by state.
4. Shop around. Comparison shop to find the best deal on goods and services.
5. Buy used. Visit used-furniture stores, Craigslist or eBay to find used furniture, furnishing and office equipment.
6. Link with Others. Include your advertising materials in mailings, promotional advertising for events, gift bags, coupon mailers or newsletters to save money on advertising.
7. Joint Ventures. Share advertising and promotional costs with nearby businesses.
8. Ask for help. Ask existing customers for referrals and offer a referral fee.
9. Local Ads. Purchase ads on local cable television, radio stations or newspapers.
10. Paid Events. Give a seminar, workshop or class at a local college to generate additional income.
11. Offer Online. Offer your products online using sites like MSN, Yahoo, eBay, Craigslist, social media or shopping product sites like PayPal or We Pay to sell products and services.
12. Promote Yourself. Pass out your business cards to everyone you meet to promote your business.
13. Buy recycled. Buy recycled printer or copier paper, pencils, printer or fax ink and florescent light bulbs to save money.

14. Insurance. Buy adequate insurance to protect your business from losses and potential legal action.

15. Get free help. Hire interns at www.interns.com to assist with tasks and in exchange give college credit.
16. Hire your kids. Hire your kids who have to be at least 14 years old and have them pay their own taxes.