Mark

A: I suppose it is not surprising that I am getting more and more questions like this every day.  It used to be that small businesses were better able to handle a recession because other avenues were available to help keep things afloat – home equity, credit cards, SBA loans, etc.

Sadly, those options have mostly dried up so that now, with the economy as battered as it has been, there is not much of a small business ‘safety net’ any longer.

If this is your unenviable plight, here are your choices:

Negotiate: With so many people and business in trouble these days, banks and other creditors are having a hard time of their own keeping their accounts up to date.  This presents for the small business owner a potential opportunity.

The last thing your creditors need right now  is another 90-day delinquent account, or worse, another account to sell or write-off. You are, strangely, in a power position with not a little bit of leverage.

Use it. (Your ultimate leverage is the threat of bankruptcy.)

Negotiate the best deal you can, whether that means a deal whereby you keep the doors open and pay more slowly or one where you close the business and agree to pay off the debts.

But the sort of business you have also matters.  If you are incorporated, you are not personally liable for the business’ debts unless you signed a personal guaranty.  If yours is a sole proprietorship, you and the business are one in the same. You better be a darn good negotiator in that case.

Do nothing: A few times when I was a practicing bankruptcy attorney, I gave business owners this advice. Sometimes things are not as bad as they seem.  Credit card companies, while more aggressive today, also still carefully consider whether or not to sue.  The same is true for other creditors.  They may wait longer than you might otherwise think.  This gives you extra time to try and get things in order.

Sell it: If things are really bad, this may be unlikely, and if you are seriously considering filing bankruptcy, you have to be extra careful about selling assets before filing as that can be a deception upon your creditors.  But with all of those caveats out of the way, selling business assets to pay business debts and then closing up shop is not a bad plan.

Close: Have a Going Out of Business Sale, pay off as many debts as you can, return inventory to your suppliers, and call it a day.  You will live to roar another day; most entrepreneurs have a failure or two in their past.

File bankruptcy: The type of bankruptcy you may file depends upon your circumstances and desires:

Chapter 7: Also called a liquidation, this BK would be used to close the business, sell the assets, pay the creditors, and wipe out your personal unsecured debt.  Remember though that Congress made this type of bankruptcy much more difficult for the average American a few years ago.

Chapter 13: This would conceivably allow you to keep the business open and come up with a repayment plan.

Chapter 11: This corporate bankruptcy would mean that your creditors would work with you to restructure your corporate debts while keeping the business open.

This is one of those times when you really need to meet with your advisers to figure out the best way to go.  Getting a consultation with an accountant, business or bankruptcy lawyer will be well worth the money.

Today’s tip: Tired of the bill collectors harassing you? Here’s a great trick.  Next time they call at home or work, tell them that pursuant to the Fair Debt Collections Practices Act they must stop calling  you.  And once so warned, they must.  Yes, they can sue still, and they might, but they often don’t and they have to stop calling.

Sales are slow at the major retail outlets and stock that sits too long is being liquidated.  This is our chance to purchase overstocks, shelf pulls and customer returns and become creative in our marketing to the hundreds of thousands of people who love to find a bargain.

For a small investment of $500 – $3,000 you can start your “side business” reselling merchandise on Craigslist, through eBay or even at the flea market.

I grew up in a family of business owners and have always felt that I could make a living without receiving a paycheck.  Even though I do not like the idea of having a boss, I am happy in my marriage taking orders from my wife.  The orders stop with her; I do not rely on anyone else for my income.

What about you?  Are you looking to start some sort of business on the side or maybe full time?  Does the thought scare you in any way…are you uncertain about profit margins, taxes or a myriad of other issues?  I thought it would be a great time to dig through my personal bookmarks and offer a few websites that just might give you the answers and confidence you are looking for.

The following links are in no special order, but they do have one thing in common, they offer great information for those looking at starting a small or large business.  Please understand that no matter how small your venture might be planning and organizing will insure success as your business grows.

12 Helpful Links to Get your Business Started

1. Business Liability Insurance - Here are a few scenarios that will prove “protecting the bottom line” is one of the most important issues to consider.
2. SBA Business Intro Videos - Taking your idea to the next step
3. SBA Resources – The Small Business Association has numerous resources to get you started on the right foot.

See the remaining nine helpful links

]]> http://www.gowholesale.com/content/2009/08/04/planning-for-success-with-a-liquidation-business/feed/ 0 http://www.gowholesale.com/content/2009/07/22/11-steps-to-reach-peak-business-performance/ http://www.gowholesale.com/content/2009/07/22/11-steps-to-reach-peak-business-performance/#comments Wed, 22 Jul 2009 19:12:35 +0000 Jonathan Staley http://www.gowholesale.com/content/?p=4169 Do you have a business plan that has been updated in the last three months?  If yes, you are already ahead of the curve according to the Small Business Administration’s (SBA) Peak Performance assessment.  If you answered “no” to that question or any of the subsequent nine yes or no questions then it might be time to look for an organized approach to sloughing off the downward pull of the current economy.

Conveniently, the ten yes or no question evaluation leads you to eleven steps:

Step 1: Reality Check – Candidly answer the assessment questions above and take appropriate action to address issues receiving a “no” response.

Step 2: Get Lean and Mean…

Step 3: Maximize Cash Flow…

If after the reality check you find yourself at a loss for ways to start tackling each step, the SBA also includes thirteen separate performance resources.  Most are aimed at their loan programs and business plan writing but there is a marketing guide, a website construction primer and information on government contracts in the Free Online Courses section.

“Small businesses have often ignored the international marketplace because they could,” the report stated.”In a globalized economy, more and more small firms will need to consider export opportunities as an important key to survival and growth.”

In ten years, from 1996 to 2006, the total value of exports nearly doubled, from $500.7 billion to $910.5 billion. But within that same time period, the share of small businesses decreased from 31.1 to 28.9 percent, according to the report. The declining share of wholesalers became even more pronounced, dropping from 74.1 percent to 53.6 percent.

And while the weakened dollar helped make U.S. goods and services more competitive in the global market, the administration’s call for small business contributions is still timely. After all, the United States still faces a $560 billion trade deficit, and its consummation of imports continues to grow faster than real GDP.

“To shrink the trade deficit with the rest of the world, it will be important to either curtail the growth of real imports or to encourage rapid increases in real exports or both,” the administration said in the report. “A cheaper dollar helps, but the solution lies within finding new markets for American goods and services.”

Wholesalers have proven before that they can drive growth in U.S. exports and with this, the economy as a whole. After declining with the economy during the 2001 recession, the number of exporters rose back to peak levels by 2006. Wholesalers contributed to 51.0 percent of these exporters with fewer than 20 employees, whose value added up to $21 million.

Small businesses are also especially important, because they are more likely than large firms to create innovative goods and services, according to a cited study by Acs, Morck and Yeung.

For more information, call 202-205-6533 or read the report.

The newest addition is an online course, “Down-shifting in a Slowing Economy: A Business Planning Guide.” The presentation, while running less than 25 minutes, takes small business owners through a step-by-step process of how to reevaluate and streamline their strategies.

“When sales have slowed and credit markets are tough, it’s easy to become overwhelmed and to view planning as a great idea, but something you just don’t have time for,” the course states in its introduction. “On the contrary, business planning is a constructive and necessary tool.”

The Small Business Administration has also made an online presentation that explains its 7(a) loan guaranty program in detail, then touches upon its micro-loan and Company 504 programs. Like “Downshift in a Slowing Economy,” the “Finance Primer” is also equipped with audio and targeted links. Small business owners can access the guide through the Web site’s new “Helping Main Street” section, which is linked on the home page.

Both presentations are free with registration.

The Small Business Administration cumulated them, along with other edits throughout the Web site, into the first online update it has made to deliberately address the economic crisis. The administration expects to further expand the “Helping Main Street” section with more online courses and targeted business tools.

For more information or to access its new online presentations, visit www.sba.gov.

The idea for this poll occurred after the SBA queried "How Important is Small Business to the U.S. Economy?"  Here’s what they concluded:

• Represents 99.7 percent of all employer firms.
• Employs about half of all private sector employees.
• Pays more than 45 percent of total U.S. private payroll.
• Have generated 60 to 80 percent of net new jobs annually
over the last decade.
• Creates more than half of nonfarm private gross domestic
product (GDP).
• Supplied 22.8% of the total value of federal prime
contracts in FY 2006.
• Hires 40% of high tech workers (such as scientists,
engineers and computer workers).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97% of all identified exporters and produced
28.6% of the known export value in FY 2004.

Vote for your favorite candidate on DollarDays and don’t forget to vote for real on November 4th!

Q: Will the proposed new “G.I. Bill of Rights” do anything to help veteran-owned small businesses?

Will

A: I wish that were so, but it’s not. The new G.I. Bill would help returning veterans with education, and it would help small business owners hire better qualified veteran employees, but it is not intended to help veteran small business owners per se.

That said, the good news is that there are nevertheless some very good programs out there for the veteran entrepreneur. (More on that in a moment.)

First, some background:

As World War II wound down, Congress passed the Servicemen’s Readjustment Act of 1944, more commonly known as the G.I. Bill of Rights. That law gave every veteran the financial wherewithal to go to the college of their choice.

That is no small thing.

Fully 90% of enlisted men and women do not have a college degree because most enter the service right after high school. At the same time, almost 400,000 service men and women now leave the armed forces every year. This means that most end up entering the job market without much needed higher education.

And employers, small business and large corporation alike, often like to hire employees with a college degree. But without a G.I. Bill for today, these troops are left to their own devices.

Yes, over the years, Congress has increased the amount offered for veteran education, but it still lags far behind the current cost of a higher education.

That is why Senator Jim Webb of Virginia introduced a new G.I. Bill. His legislation proposes to raise the annual allowance for college to about $22,000 (currently it is less than half of that.) This would be enough to pay tuition, housing, and living expenses at any public university.

Don’t we owe these vets at least that much?

Apparently the President and his military brass do not think so, worried that the bill would hurt retention efforts. Said one Pentagon official last month, “If the benefit is too large, many troops will leave the military after their first term.”

Nevertheless, last Thursday, the Senate overwhelmingly passed an Iraq war spending bill that included the new G.I. Bill. What will happen to the bill is unclear as President Bush has vowed to veto the spending bill.

Amazing.

But as I said, there is good news too. There are some significant efforts out there intended to help the veteran entrepreneur. Here are a few of the best:

Vetrepreneur Magazine / The National Veteran Owned Business Association (NAVOBA.com): NAVOBA and its magazine (which I write for) are a fantastic resource for any veteran wanting o succeed in their own small business.

The Veterans Corporation (Veteranscorp.org): A great organization that helps all vets, including service disabled veterans obtain the tools and resources they need to be successful entrepreneurs. Specifically, they help with access to capital and bonding, and entrepreneurial education.

The SBA Office of Veterans Business Development: This SBA program helps veteran small business owners in a variety of ways – counseling, advocacy, training, and so on. Importantly, the office also runs Veterans Business Outreach Centers (VBOC) which help veterans start, run, and grow their businesses.

Center for Veterans Enterprise (vetbiz.gov): The CVE works to improve the business climate for veterans, minimize barriers, and to inform the public about the benefits of working with veteran-owned small businesses.

The one last thing we can do to help the small business owner and the veteran small business employee is to pass the new G.I. Bill.

Today’s Tip: Over the past year I have been working to put together a comprehensive free program to help veterans start their own small business. It’s not an easy thing to do, especially in this economy, and you would like to help, we would like to hear from you. Shoot me an email to info@mrallbiz.com.

Here are a few tools that the site offers that will help you analyze where your business currently stands in terms of being prepared to start a business as well as whether you are qualified for the 8(a) Business Development Program .

These tools have only been available for 3 months now and already the SBA says over 125,000 people have used them. Hopefully you will find them helpful as well!

Known as the SBA Patriot Express Loan Program , its aim is to help start and grow the business of people whose military service is over. And with as much as 14% of all businesses in the US owned by veterans, it’s an aid package that will guarantee at least $1 billion every year to these small businesses that are eligible.

One of the benefits of the SBA Patriot Express Loan Program is that it’s not just limited to the military personnel themselves. It’s also open to veterans and vets disabled while in service; National Guard and Reservists; currently serving military personnel who are part of the Transition Assistance Program to help them cope after military life; and even the spouses of any of the eligible personnel, whether still living or not. Altogether, the new program offers an extensive package for those that qualify.

Thanks to the wide range of network business partners that the SBA has built up over the years, the features and incentives that they’re able to offer the vets include:

* Loans up to the value of $500,000
* Guarantee (upon qualification) of a maximum 85% on loans of $150,000 and lower, or up to 75% guarantee for those loans between $150,000 and $500,000
* Lower interest rates, normally between 21/4% to 43/4%
* Counseling services and expert advice from respected partners like SCORE, Women’s Business Centers and Small Business Development Centers to name just a few

Yet the aid doesn’t stop there. As well as the financial package that the SBA Patriot Express Loan program offers, there are also some extremely practical guides as well. For example, they can offer you advice on how to win high-paying government contracts, thanks to their dedicated Government Contacting and Business Development office. There’s also help in putting together a business plan and finance plan, and much more.

Perhaps best of all is that the program will offer loans as high as $1.5 million, should your business be affected by an injury whilst still serving your country in the Reserve Forces. Similar to a Business Protection insurance cover, it ensures that you won’t be too adversely affected should something prevent you from running your business. Indeed with all the features that it offers, the SBA Patriot Express Loan program is the ideal partner to people who have served their country, and now want to help in its success.

• Nationally security and international affairs;
• Coating, engraving, heat treating and allied activities;
• Household and institutional furniture and kitchen cabinet manufacturing;
• Motor vehicle dealers.

Essentially, the proposal would allow contractors to give preference to women-owned businesses in those four categories with the idea being that they would be giving preference to these most underrepresented groups thus increasing the number of contracts granted to women-owned businesses. But this is also where the controversy comes in.

Women who own businesses that do not fall into those four categories are saying that they already have enough trouble landing government contracts only to be further pigeonholed by this proposal (despite its good intentions). The efforts to level the playing field in fact are thrown even more out of balance by singling out specific groups.

On top of it all, this effort began 8 long years ago and it doesn’t appear to be coming to fruition any time soon.

What are your thoughts?

(Click here to read the full SBA proposal )