Should I Use Purchase Order Financing? When Does It Make Sense?

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There is a great deal of misinformation and erroneous assumptions around purchase order financing. You know what a purchase order is but how do you finance it? This is so-called asset-based lending but a purchase order is not an asset. In short, your question is, “should I use purchase order financing and, if so, when?”

Scenario

You are ecstatic that you just landed a huge order from a corporate customer you have been chasing for months. You and your team celebrate this seminal moment in your company’s history. The next day, however, you feel a pit in your stomach. You realize the money your firm has in the bank and the small credit line you can tap are not enough to fulfill even half of this order. You run through the scenarios. You could cancel the order, but you know you will not get an opportunity like this again. You could divide the order in half and wait on pushing the second half until you get paid for the first. Although this is not as poor an option as cancelling, it is not good. You could request a deposit or require that the order be pre-paid, but you remember that your controller already made this request. The response was that the firm would consider it in the future but not right now. You believe that they want to make sure your firm is viable enough to handle orders of this size.

Since you are hitting a mental wall with your options, you convene with your team to brainstorm. You discard accounts receivable financing because you would have to work out an arrangement with your bank to exclude the A/Rs from this customer. That may be doable, but you will not actually have a receivable until you invoice your customer AFTER the product comes in from the manufacturer. Your vice president exclaims, “I wish we could finance the purchase order itself!” Something in that statement resonates with your controller and she googles “purchase order financing” and voila! You discover it does exist.

What exactly is purchase order financing?

Before we go any further, it is important that you understand both what purchase order financing is and what it is not. Purchase order financing is essentially an advance provided to you on a specific customer’s purchase order to purchase readily available inventory or manufactured goods from a supplier. Hence, this is potentially a viable option if you are a reseller or distributor or if you outsource all of your manufacturing. Typically used for a sizable order, your PO financing firm will either advance funds directly to your supplier / manufacturer or issue a letter of credit or payment guarantee to release funds when the goods are delivered. The PO financing then collects payment directly from your end customer, thus acting as an invoice factoring firm.

Basically, the PO financing firm acts as a substitute for you, ensuring payment to the supplier / manufacturer so that you can fulfill your order. PO financing is not a general inventory financing option for you as it does not allow you to buy and hold inventory to sell later. It requires a specific purchase order for a specific customer. Your PO financing firm will need a copy of both the signed PO from your customer and your signed purchase order to the supplier.

What PO financing provides

The PO financing option allows startups and other rapidly growing or cash-restricted firms to accept large, new orders for their products from credit-worthy customers. According to Entrepreneur magazine, “Purchase-order financing can be beneficial to small businesses because it relies mostly on the company that has placed the order with the startup, and not the startup itself.” Although most PO financing firms require the goods to be shipped directly to the end customer, there are some that will allow shipment to a third party warehouse and even to your facility for light assembly, packaging and distribution. In these cases, according to Entrepreneur, “purchase-order financing often covers a large portion of the requisite supplies (needed to produce those goods), and sometimes even all of them.” Furthermore, the PO financing process is often much easier to navigate – and more straightforward – than traditional bank financing.

How does it work?

  • The PO funder obtains a copy of your customer’s purchase order and your purchase order with the supplier / manufacturer. After analysis, the PO funder agrees to finance your customer’s purchase order.
  • The PO funder sends payment or issues a letter of credit directly to the supplier or manufacturer.
  • The supplier receives the letter of credit or outright payment from the PO .
  • The supplier fulfills the order and ships the goods directly to the customer specified in the purchase order.
  • The customer receives the order from the supplier and receives the invoice from you.
  • The customer pays the invoice directly to the PO funder. If the customer pays immediately, the PO funder accepts the payment, takes out its fees, then remits the remaining gross profits from the sale to you. If the customer has terms (typical for large corporations and government entities), the PO funder factors the invoice – buys the invoice at a discount – and provides you with the funds, less the discount.
  • The customer remits full payment in 30 days to the funding company. The funding company releases any reserves to you that had been held.

If your company does light manufacturing such as assembly, printing and/or packaging, additional steps will be necessary as the inventory and supplies will be delivered to you then you will deliver the finished products to your customer. This increases the risk to the PO funder and hence, increases the fees.

Benefits for Your Company

If your customer has a strong credit history and has a record for prompt payment, and if you have a reputable supplier or manufacturer, your lack of business longevity or your weak credit profile will matter little, if at all, to a PO funding company. As outlined above, only the administrative components of the transaction, the purchase order and later, the invoice, rely on you.

When asking yourself, “should I use purchase order financing”, consider this. According to Forbes, “purchase order financing provides “sufficient working capital to cover payroll and start-up costs for a new contract.” This funding can also provide you with negotiating leverage to obtain better terms and pricing from suppliers. “Taking the calculated risk of a working capital loan that enables the small business to accept a job and grow is often critical to succeeding in government contracting” and other arenas.

Risks for the Funding Company and Associated Fees

In purchase order financing, there is no interest rate quoted. Instead, you pay a discount rate and fees. This means that you receive less than 100% of the amount the customer pays on the invoice, typically 1.5% to 6% less or, put another way, 98.5% to 94% of the invoice. This embedded interest rate captures the higher risk that purchase order financing typically has for the financing firm. The risks vary. The supplier / manufacturer may not deliver the product. (This risk is greatly reduced if a letter of credit is used.) Your customer could refuse delivery or refuse to pay because of issues with the product. Furthermore, your credit worthy customer could have financial issues. If you take delivery of the product, the risk is even higher as more could go wrong. Thus, rates for light manufacturers that process and repackage the inventory are generally higher, at least initially until a strong track record is created. The PO funder will not get paid in all these scenarios, which drives up the risk and hence, the rate.

The answer to the question, “should I use purchase order financing” is multi-layered. It depends on what type of firm you have, what your growth stage is, and what your current sources of funds are. Be aware of the risks but fully understand the benefits. According to Medium, if you can monetize your inventory by eliminating or reducing what you actually hold onsite, this will allow you “to sell more goods, grow the company, employ more people and feed more families.” Purchase order financing provides an asset-based form of working capital that, if used wisely, ultimately allows you to invest in your firm and its future.

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How to build business credit, and why it’s so important!

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A strong credit score can make all the difference on whether your business qualifies for financing. But while business owners typically understand how to manage personal credit, they may not realize they can also build business credit under a separate report. Not only does this make it easier to borrow money and at better terms, it can also protect your personal finances. Here’s how.

What Is a Business Credit Score?

A credit score is a three-digit number that represents how safe or risky someone is to borrow money, based on their past behavior. Someone with a high score has paid their bills on-time whereas someone with a lower score may have maxed out their credit cards or missed payment deadlines. If you need help remembering deadlines, check out how to put banking and credit card alerts to work.

You develop a personal credit score based on loans in your private life like your mortgage, student loans, car loans and credit cards. But if you own a business, you can also build credit under its separate tax ID number, called an Employer Identification Number (EIN). If you don’t already have one, you can apply for an EIN with the IRS.

Then when you apply for a loan or credit card, you can request to borrow under your EIN instead of your Social Security Number. This will create a new business credit report prepared by the rating agencies Dun & Bradstreet, Experian and Equifax.

Financial Benefits of a Business Credit Score

When you apply for a loan, the lender could ask if you have a business credit score. While you may qualify without one, having an impressive business credit report will help your chances.

A stronger application can also lead to lower loan interest rate. Since business loans can be for such a large amount of money, even a slightly lower rate could mean big savings. For example, if you’re looking to borrow $2,000,000 for your business, just a 0.5% reduction in the rate saves you $10,000 of interest per year.

Finally, a strong business credit score can help you negotiate better terms with your suppliers, like you have 30 days to pay for equipment and inventory rather than paying 100 percent on delivery. Once again, these trades terms are more common for businesses with established credit.

Protecting Your Personal Credit

When you build small business credit, you also protect your personal finances. Part of your personal score is based on how close you are to maxing out your credit cards each month.

If you’re running business expenses through a personal card, you could get close to maxing out each month which can hurt your personal credit score. This would make it more difficult to qualify for mortgages, car loans and other types of loans in your personal life. Setting up business cards or a line of credit keeps things separate.

Another benefit is that once your business credit history is strong enough, lenders may be willing to set up future loans completely under your business name, so you don’t have to secure the loan personally. This means that in the worst-case scenario when you can’t pay off the debt, the lender could only go after your business assets for repayment. Not your personal savings or belongings.

Building Your Business Credit Score

Chances are, you will not be able to take out a standalone bank loan for your business without an established credit history but there are other easy ways to build up your score. One option is to take out a business credit card under your EIN and pay off the balance each month. Every on-time payment adds points to your score.

You could also take out a short-term cash flow loan from an alternative lender. These loans are easier to qualify for since these lenders make decisions based more on your past business revenues and less on your credit history. You can use the loan to grow your business and develop business credit history at the same time.

One other option is to use equipment financing to buy a new asset for your business. These loans are secured by the equipment.  Therefore, once again, your chances of qualifying are better, even without a high credit score. And making the loan payments will build small business credit.

Even if you don’t need to borrow money for your business now, consider using one of these strategies to start building up your business credit score anyway as it does take time. By taking action now, you’ll be in a strong position to borrow when your business does need money in the future.

Picture of money and mini shopping cart

6 Business Alternatives for Bank Loans and When They Make Sense

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Borrowing money is an essential part of building a small business. But when you need a loan, traditional lenders like the bank might not be an option. They tend to have strict small business lending standards. For example, you need established business credit, collateral and detailed financial statements for bank loan approval. This is a difficult hurdle for companies that have only been around for a couple years.  Fortunately, as a business owner, you have other options, with a number of business alternatives for bank loans on the market today.

These alternative options can be your financing lifeline until you build enough of a financial track record to qualify for more traditional financial products.

Let’s take a look at these business alternatives for bank loans and when they make the most sense.

1 – Online Loans

Banks aren’t the only ones lending money. Alternative and online lenders are also a quality source of small business financing. They offer stand-alone cash flow loans that you can invest into your business and spend however you choose. If you want more flexibility, you could also open a line of credit.  A line of credit lets you borrow, pay the money back and re-borrow again as many times as you want.

It’s easier to qualify for loans from alternative lenders because their requirements are not as strict as with banks. Another advantage is you often don’t have to secure the loan with your future business revenue or other collateral. However, your business will need to meet some standards like stable revenue and a good business plan for how you will use the loan proceeds.

Best fit for: A business with stable revenue looking to borrow cash quickly, without putting up collateral.

2 – SBA Loans

Another way to borrow is through the Small Business Association. This government organization assists small business owners and one of their services is to help them qualify for loans. The SBA doesn’t actually lend money. Instead they agree to back a certain percentage of the loan, guaranteeing repayment to the lender. This makes the lenders more likely to accept your application.

SBA loans can be a great tool provided you can qualify. The process does take time and you’ll need to submit, at minimum, similar documents that you would include as part of a bank loan application – such as a business plan, bank statements and your credit report.

Understanding the SBA system can improve your chances of qualifying so be sure to work with a lender that regularly works with these types of loans.

Best fit for: A business that can meet the SBA standards for a loan and also knows a lender that understands the application process.

3 – Equipment Financing

If your small business needs money specifically to buy a new piece of equipment or machinery, then equipment financing could be the answer. These small business loans can only be used to buy an asset, which also counts as the loan’s collateral. This makes it easier to qualify because if you end up not paying off the debt, the lender can take back the equipment as repayment.

With this type of financing, you can often buy new equipment with no money down but you’ll still receive the full tax break for the business investment, as if you bought the equipment with cash. You can also set up the financing as a lease which would let you replace the equipment earlier with new versions as they come out.

Best fit for: Buying or leasing new equipment for your business.

4 – Purchase Order Financing

A lack of cash can put even thriving businesses in trouble. 52% of small business owners had to forgo a project or sales worth $10,000 because of insufficient cash, according to an Intuit Quickbooks survey (slide 2). If you’ve got a project lined up but need some extra money to make it happen, purchase order financing could be the answer.

These short-term loans cover up to 100% of your supplier costs if you can show that you’ve got an order that will turn things around. Once you make the sale, the lender will deduct their fees from the proceeds. That way you still fulfill your order without taking on any extra debt. And since you can prove that you’ll be able to pay the money back quickly this financing is easier to qualify for. You just need to prove the upcoming purchase order.

Best fit for: When you’ve almost completed a sale and need a quick cash infusion to reach the finish line.

5 – Invoice Factoring

After you make a sale, your job still isn’t done because you you’ll need to collect payment. This can take between 30 to 90 days, depending on your payment terms.  And, as many know, it could take even longer when customers miss payment deadlines.  Not to mention there’s always the risk they don’t pay.

If your invoices are piling up and you need cash, invoice factoring could be the solution. You transfer over an unpaid invoice to a financing company, called the factor, and they’ll give you an advance on the payment.

From there, the factor takes over collecting from your clients. Once they get paid, they’ll give you the rest of the invoice amount minus their fee, which could be as little as 1.5% of the invoice amount.

Best fit for: A business with unpaid client invoices that wants to improve cash flow.

6 – Revenue Based Financing

Revenue based financing is the last of our business alternatives for bank loans. These loans have a simplified and fast application process, a great solution if your business needs money now. Lenders can approve this financing quickly because they just look at your historic revenue and how long you’ve been in business. They use this to forecast your future cash flow.

Based on that, they’ll give you a lump sum of cash. The lender will then collect a set percentage of your future sales on a daily or weekly basis.

Best fit for: A business with a proven history of revenue that needs money but does not want to go through a lengthy loan application process.

Don’t let a bank loan rejection discourage you from raising the money your business needs. As you can see, there are plenty of alternatives. If you have any questions to figure out which of these solutions is the right fit, reach out to a loan specialist today.

Public Speaking Boosts Brand Awareness

Marketing and Public Speaking as Tools for Your Small Business

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The combination of marketing and public speaking has proven immensely successful for a great many small business owners. Standing before a “live audience” is an effective way of building greater brand awareness and impressing a whole new crop of prospective customers.

In other words, done right, marketing and public speaking is a win-win for all involved.

How does becoming a public speaker benefit a business owner?

  • Public speaking demands that an individual analyze his or her proposed content and mold it in ways that emphasize clarity, originality, and concise speech. Being able to thoroughly prepare beforehand, and then making time adjustments in a presentation while standing before an audience, can enhance one’s abilities with respect to making sales calls, negotiating deals, and crafting a new, more imaginative approach to marketing.
  • Public speakers project confidence and powerful self-esteem. These traits inspire trust and faith in those around them, as Upwork notes: “When you speak with more conviction, it may encourage employees, customers, and other supporters to remain passionate and dedicated to your company.”

How marketing and public speaking go together

As you embark on a public speaking venture, you’re also developing new ways to market your small business. For example, as you put together a presentation based on your unique experiences and expertise, you can identify groups that would benefit most from your efforts. Your target audience likely has a calendar of events (conferences, tradeshows, etc.). It’s up to you to locate and identify these groups and events and begin to establish your credentials as a sought-after presenter.

You also learn to tailor your speech to emphasize what’s in it for the audience, rather than making the presentation all about yourself.

“You can’t just give an hour-long sales pitch,” notes Small Biz Triage. The key is identifying a topic “that is useful for audience members, yet related to your business so that they will see you as an expert in the field.”

Other tips to keep in mind as you prepare for your public speaking gig:

  • Use anecdotes or interesting personal experiences to “sneak” a mention of your business into the presentation.
  • Always supply materials audience members can take away from the event. These can range from brochures and fliers to printed slides or samples of your products. Just be sure everything you provide is sufficiently branded (i.e., includes contact information and link to your website.)
  • Distribute a sign-up sheet to audience members. This is a great way to gather potential new leads for sales calls. Just make sure that, in exchange for asking for peoples’ contact information, you offer an appealing incentive, such as free delivery of your company newsletter, a “how-to” sheet addressing some problem common to audience members, a prize drawing, and/or a way to get a discount on your product.

Honing your skills as a public speaker

Some individuals come to public speaking naturally. For most of us, however, this can inspire fear and an overwhelming sense of vulnerability and exposure. It doesn’t have to be that way. Keep these tips in mind as you hone your public speaking skills:

Practice! Regardless of your topic or the length of your scheduled presentation, the only way to really become good at this is through practice. Deliver your speech to a group of friends or family members. Ask them to closely evaluate specific elements, such as:

  • Pace of your delivery (too fast? too slow?)
  • Body language (posture, hand gestures, etc.)
  • Content (how interesting is the topic, where does it fall flat)

Their constructive feedback will help you improve your presentation and move closer to the real thing.

Memorize as much as you can. It’s OK to have notes or an outline on paper in front of you as you speak. But reading from a prepared text is perhaps the biggest mistake a public speaker can make. Your hours of practice should help you be prepared to simply talk to your audience, as if you were engaged in a conversation with them.

Anticipate questions and have answers ready. Speaking of conversation, a good speech includes a brief Q&A session afterwards. As an expert, you have a good idea what questions people are likely to have. Be ready with satisfying and informative answers.

A strong public speaker helps boost awareness of his or her brand. It also makes an indelible impression on people that here is someone who knows his or her business, and might be worth exploring further when the need arises for what products or services the speaker is offering.

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Small Business Management Lessons from Gordon Ramsay’s Kitchen Nightmares

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Gordon Ramsay is a world-renowned celebrity chef who is perhaps best known in the U.S. for his high-octane cooking contest shows like “Hell’s Kitchen” and “MasterChef” – but he made his big breakthrough as a TV personality on a show called “Kitchen Nightmares,” a show that’s not just about restaurants, it’s about the right way to handle small business management.

In each episode of “Kitchen Nightmares,” Chef Gordon Ramsay tries to rescue a failing restaurant. He battles everything.  From indifferent owners, to stubborn or incompetent chefs.  To filthy kitchens and unsafe food handling practices. And overly complicated restaurant concepts with fussy menus and doomed marketing. Some of the “Kitchen Nightmares” have a happy ending.  But others end up going bankrupt despite Ramsay’s best efforts. No matter the industry you’re in, whether it’s restaurants or any other type of service business, there are many inspiring lessons about small business management in this show.

Here are a few of the biggest small business management lessons from Ramsay’s “Kitchen Nightmares:”

1. Have high standards for your business.

Many of the restaurants that call Gordon for help are struggling because the owners have fallen into a state of learned helplessness.  They are making all kinds of mistakes.  Some are in over their heads. They’re losing thousands of dollars per week. They’re risking bankruptcy and the loss of their homes and life savings.

A good restaurant is supposed to be buzzing with energy, but too many of the restaurants on “Kitchen Nightmares” are looking lifeless; they’re pushing out sad-looking plates of food to empty dining rooms. Many of the business owners and their employees look rudderless and oddly passive.  They’re defeated; like they don’t know or care anymore how to run a successful business.  And they’re just waiting for the bankruptcy filing to happen. You can see the failure and desperation in the air.

Gordon shows the business owners how to re-establish standards and re-claim their pride. “This is your business!” he says again and again. Sometimes it feels like Ramsay is the only one in the building who really cares.

2. Hire well – and fire when needed.

One of the most important ways to set a positive example in small business management is to hire great people – which is easier said than done! Lots of restaurants on “Kitchen Nightmares” are being dragged down by bad employees who have poisoned the culture of the company: arrogant chefs, incompetent restaurant managers, feuding executives who can’t agree on a shared strategic vision.

Hiring great staff for your restaurant or any other business is not always easy, but it pays to get it right. And don’t be afraid to fire a toxic employee before they drag down the morale of your entire team.

3. Simplify your strategy.

Many of the failing restaurants on “Kitchen Nightmares” have a bad, confusing concept. They’re offering pretentious food. They’re trying to serve multiple types of incompatible cuisine and doing none of them well. Or, their menus are otherwise overly complicated or outdated. Gordon shows them how to simplify and improve the restaurant menu and create a few signature dishes that the kitchen can prepare quickly and profitably at a higher level of quality, while often saving lots of money on food and overhead costs.

What’s the lesson for your business? Are you trying to do too many things, trying to be all things to all people? What if you could simplify your menu, and just offer the services or products that you can absolutely do best?

4. Your business is your livelihood – make it your passion.

On “Kitchen Nightmares,” Gordon Ramsay goes into restaurants that are facing dire situations and tries to find something to salvage – but often, it’s too late. The rot has set in, and the business has already lost too much momentum and squandered too much goodwill with customers.

Often, when a “Kitchen Nightmares” episode has a happy ending, it’s because there is a change of attitude at the top: the business owner needs to set the tone for the culture of the entire company. If the business owner cares deeply, has passion for the business, attends to details, and maintains high standards, then the employees will follow that positive example.

As a business owner, it’s easier to keep positive momentum going than to dig yourself out of a hole. This is why “Kitchen Nightmares” is so inspiring: it’s a reminder to business owners to keep the passion alive in their businesses, keep showing up, keep caring, and keep trying to make a difference every day for your customers.

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Should I Stay a Sole Proprietorship?

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Sole proprietorships account for the largest number of businesses in the United States. According to the most recent data from the Internal Revenue Service, nonfarm sole proprietorship tax returns totaled approximately 25.5 million. For comparison, C Corporation tax returns were around 2 million.

While extremely popular, every small business owner eventually has to answer the question: Should I stay a sole proprietorship or should I incorporate?

Sole proprietorships have several advantages, but they also come with a few significant disadvantages. Let’s run through both so you can make your own pro/con list to help you make the decision on whether or not to incorporate.

Advantages of Being a Sole Proprietorship

Simple to create– The business can operate in the owner’s name or a fictitious trade name. Creating a trade name only requires filing with the local government authority and obtaining the necessary business licenses.

No formal filings – Sole proprietorships do not need to hold corporate meetings, keep minutes or file annual reports. If you just start running a business – a landscaping business for example – you’ve become a sole proprietor without having to notify any government authority.

Owner control – The owner in a sole proprietorship has 100 percent control and makes all the decisions.

No unemployment tax – The owner does not have to pay an unemployment tax on himself. However, payment of unemployment taxes are required if the business hires employees who are paid regular wages.

Can comingle personal and business funds – Since the owner and the business are the same, one checking account can be used for both business and personal transactions. Although a single checking account is allowed, it’s still a good idea to separate business and personal transactions.

Owner keeps all profits – A sole proprietorship only has one owner;  and the owner reports all profits from the business on his/her tax returns.

Disadvantages of Being a Sole Proprietorship

Personal liability – The owner is personally liable for all the debts and contractual obligations of the business. This liability is unlimited. An owner could lose all business assets plus personal assets in the event of a loan default or adverse ruling from a lawsuit. The risk of losing a home, car, savings accounts and other personal possessions is the most serious disadvantage of a sole proprietorship.

Difficult to raise capital – Sole proprietorships cannot raise capital by selling shares of stock or interests in the business to attract outside investors. A business that needs to attract more capital to support growth will have to convert to a corporate form.

Harder to get bank loans – Banks prefer to make loans to companies with several years of business credit. Sole proprietorships must rely on the creditworthiness of the owner.

Survivability– Sole proprietorships rarely survive the death of the owner. Since the business is usually run entirely by the owner, there is hardly ever any management level person to take over the business. It simply ceases to operate.  However, with advance preparations, a business owner can pass on the business to their heirs.

Taxes

Filing a tax return for a sole proprietorship is fairly simple. The only requirement is for the owner to include a Schedule C with the personal tax return.

Schedule C is a summary of the business’s income and expenses. Losses shown on a Schedule C can be offset against other income the owner might have from other sources.

Should I Stay a Sole Proprietorship?

As a business grows, the owner will eventually face the decision of whether to incorporate or stay a sole proprietorship.

The main issues that affect this decision are liability risk and the need to raise funds.

When a business starts to borrow money to expand or finance growth, the risk to owner’s personal assets goes up. If you find yourself in the situation where you need to raise capital to expand or for growth support, then that is the time to consider the change. In addition, if you are in the situation where you need to begin adding employees, you should consider incorporation. Employees can come with their own host of liabilities and incorporation can help you manage that risk.

Because they’re simple to form and don’t require filing complicated legal documents, millions of business owners use sole proprietorships to get started. But, once they begin to grow – and risks to personal assets begin to increase – it’s time to ask yourself the question: Should I stay a sole proprietorship? The answer: looking into incoporation is the right next step.

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The Best Free Online Productivity Tools For Small Businesses

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With the prevalence of digital productivity tools, you might expect businesses to be more productive than ever before. Yet, many business owners still list “improving productivity” as a top concern. Since new tools are coming on the market every week, business owners could find themselves wasting considerable time and money trying out option after option to find the tool that best meets their needs. To help cut through the clutter, we’ve assembled a list of the top 5 most versatile free online productivity tools for small businesses.

1. Wave

Website: http://www.waveapps.com

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Source: waveapps.com

Regardless of your business structure, number of employees, and industry, you’ll need a way to track your business finances. Wave empowers small business owners to handle all aspects of their business funds, including building financial statements, sending invoices, processing payroll, reconciling bank statements, tracking income and expenses, accepting credit cards, and more. Even better, this freemium service offers personalized bookkeeping and accounting advice from professionals for a nominal fee.

2. MindMup

Website: http://www.mindmup.com

Source: Mind Map Facebook

As your business grows and evolves, you’ll need to keep on pace with new ideas for marketing, business development, and lead generation. Mind mapping tools were created for just this purpose, but MindMup is no ordinary mind map. Unlike many free services, MindMup doesn’t limit the number of maps you can create with their free plan. You can include photos, videos, spreadsheets, and other media directly into your maps.  You can also upload finished projects to the cloud for easy sharing.  In addition, you can download projects into a variety of formats, including PDFs and PowerPoints. Perhaps the best quality of this productivity tool, however, is its intuitive interface that allows you to quickly and easily capture all your ideas during brainstorming sessions.

3. Toggl

Website: http://www.toggl.com

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Source: toggl.com

The creators at Toggl understand a fundamental truth about tracking time for small business owners – it is a necessary evil. They designed the browser-based app with a large timer button; toggle it on to start the timer and toggle it off to stop timing. If time tracking gets much more complicated than that, people won’t use it consistently. For users that want an easy-to-use application that still allows for some customization, there are simple point-and-click tagging features that allow for categorization by client and by project type. The Toggl team also recognized that business owners need fairly robust reporting capabilities, so they allow users to create reports by client, by project, or by specifying a preset or custom time period.

4. IFTTT

Website: http://ifttt.com

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Source: thenextweb.com

In today’s interconnected environment, we all use lots of tools, programs, and devices on a daily basis. Unfortunately, the multitude of digital applications vying for our time can be a significant time waster. IFTTT (If This, Then That) is a digital integration tool that allows your apps to work together, allowing you to do less work. The program boasts over 550 different “services” or connected applications that can be used to automate your daily tasks. Wish you could set up an automated reminder in Slack to prompt your team to submit their expense reports? IFTTT can handle it. Want your Whirlpool Smart Dryer to send you a text message when your laundry is done? IFTTT can take care of that too. With thousands of applets (or automated tasks) across hundreds of devices, your ability to improve your productivity and automate more of your workday is limited only by your creativity.

5. Canva

Website: https://www.canva.com

the-best-free-online-productivity-tools-for-small-businesses-canva

Source: canva.com

If this article were titled “The best programs your graphic designer wish you didn’t know about”, Canva would be at the top of the list. Canva’s drag-and-drop interface allows even the tech newbie to create professional looking documents in minutes. These aren’t your typical cookie cutter templates that look like they came from Office 2005. Canva has allowed thousands of business owners to build high quality promotional materials without hiring a professional graphic designer. The free software includes templates for everything from business cards and resumes to social media banners and infographics. While their design platform is a huge asset to your business toolkit on its own, the website also boasts a helpful learning portal that includes free classes on topics such as “Graphic Design Basics” and “Branding Your Business”.

When searching for free online productivity tools for small businesses, it’s important to consider how the tool will be used within your organization, which features are included within the free plan, and what additional costs will be incurred to get premium features if you decide to upgrade. Since each of these tools offer feature-rich services in a free package, they are a great starting point for accomplishing a variety of tasks within your business that would likely otherwise be outsourced to an expensive professional.

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