2020 new year small business plan

A Small Business New Year Checklist to Help You Ring in the 2020s

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After crunching for year-end deadlines, the arrival of a new year–and decade–gives you a chance to take a breath, reevaluate your business and get back on track. Depending on the seasonality of your products, January may be a good time to make changes and begin long-term projects to help your company run better. Here’s a list of items to consider adding to your Small Business New Year Checklist for 2020 and beyond.

Formal Goal Setting

This may be the year to start setting clear business goals if you haven’t done so in the past. What do you want to get out of your company? What are some areas of potential improvement? Are you happy with the amount of business you bring in, or would you like to try new strategies to increase growth? Setting formal goals with a supporting action plan can help you propel your business forward.

Implementing Process Changes

If something is simply not working and causing you unnecessary stress, the start of the new year is a good time to revamp a broken process. Does your equipment need to be upgraded? Have you outgrown your manual record-keeping system? Would you benefit from technology that streamlines financial recordkeeping?

Develop a Budget

Goal setting and strategizing are big picture tasks. Experienced owners also recognize the importance of setting a detailed budget to keep spending in check. At the very least, start tracking your business spending. Open a separate bank account or credit card to help determine where the company’s money goes. Look for opportunities to improve profitability by lowering expenses.

Review Insurance Coverage

Has your business changed significantly in the last year? You should review insurance policies annually and add new items to coverages to reduce loss risk.

Tax Preparation

The beginning of the year is also tax prep season. Resolve to start the process early and know when your deadlines are. You may also want to research small business tax credits that you may qualify for.

Tax Planning

As you prepare tax forms for last year, keep an eye out for opportunities to save in the future. If tax laws change, research the ways they may affect your company. Consult with a tax expert, if warranted.

Facilitate Growth

You may need to invest in your business and prepare to handle more customers and higher sales volumes to increase growth. A new truck, expanding to another storefront, or hiring more employees will increase your expenses in the short-term, but also help to facilitate expansion. To help manage cash flow during growth periods, look into business financing options.

Start the new decade off right by using this small business new year checklist: set clear goals supported by tangible actions steps. Develop a budget and keep an eye on cash flow to determine how you’ll manage your company through the coming weeks and months. The new year is a chance to start over and improve your business aspirations. It is the perfect time to make improvements and upgrades to your company.

New Year Business Plan 2020

2020 Economy: Make Sure Your Business is Ready

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Thinking about creating a new year business plan for 2020? If so, consider spending a little extra time to make three instead. That way, you can operate your business with the ability to accelerate and slow down to reach your destination as soon as possible, while avoiding an accident. That’s why three plans are better than one.

No need to worry, though. It won’t take three times as long as writing a single new year business plan. The second and third plans are simple modifications of your basic “medium speed” plan. The foundational plan is based on your best guess of what you can expect business conditions to be in the coming year. You can downshift or upshift to the other two plans a few months into 2020 if things are turning out not as well as you had expected, or, ideally, even better.

What Are Your Sales Drivers?

If you usually create a business plan by extrapolating current year revenue and expense trends and put them into the next year’s budget, it’s time to sharpen your pencil. What are the main drivers of your sales?

First, you’ll need to think about how your business is affected by various factors. Identify the most important ones. Then, try to estimate the impact each has on your business performance.

Depending upon the kind of business you’re in, you’re likely to find that some of the following “macro” factors impact your annual revenue results:

  • The overall strength of the local and / or national economy
  • The population growth rate in your community, particularly any influx of the kind of new residents who are your best sales prospects
  • Consumer and commercial interest rates
  • Labor market conditions impacting your ability to find and keep good employees on board affordably

Add to that set of revenue forecast variables any factors unique to your business, including:

  • The planned introduction of new products and services, or discontinuation of any current ones
  • The anticipated impact of any new sales and marketing strategy, including planned opening of new business locations
  • Projected efficiency gains, whether through new technology, processes or staff training, enabling an increase in your output of products or services at competitive prices

Setting An Expense Budget

The other side of the budgeting part of creating a new year business plan is expenses. Those are usually easier to predict than revenue. Most expense categories correlate to your current fixed expenses, such as rent and equipment lease payments, or are variable expenses (e.g. raw materials) driven by your revenue projections.

There’s more to a business plan than a budget, of course. But, you can’t have one without the other. It helps to start thinking of ways to grow or strengthen your business. After, give those ideas a reality check through the budgeting process.

There’s another audience to keep in mind: potential lenders and investors. Finding a supportive lender might be essential to fulfilling your base level plan.

While lenders rely heavily on your financial track record, balance sheet and possible business collateral or personal asset pledges when evaluating a loan proposal, they also want to know how you intend to use the loan proceeds. In general, the more effort you have put into the plan, the better your chances of getting the loan approved. Or the lower the interest rate you would otherwise be charged.

Creating a business roadmap for the coming year that’s compatible with the three-plan strategy involves giving careful thought to the timing-specific planned expenditures. You need to think carefully about the relationship between the revenue and related expense categories on a timeline basis.

This is where the three-speed triple business planning strategy comes into the picture. Think of it as advance planning for alternative business scenarios, relying on revenue benchmarks along the way.

understanding the sba microloan

Understanding the SBA Microloan

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The SBA Microloan program can provide small business owners with small-scale, low-interest loans with very good repayment terms to either launch or expand a business. Here is what prospective borrowers need to know.

What Is a Microloan?

The SBA Microloan program offers loans up to $50,000. They help women, low income, veteran and minority entrepreneurs, certain not-for-profit childcare centers and other small businesses startup and expand. The average microloan is approximately $13,000, according to the U.S. Small Business Administration (SBA).

Microloan lending is different from other SBA loan products from traditional financial channels. The SBA microloan program provides funds through nonprofit community-based organizations. These nonprofit organizations act as intermediaries and have knowledge in lending, management and technical assistance. They are also responsible for administering the microloan program for eligible borrowers.

Uses for Microloans

Microloans are applicable for working capital purposes or for purchasing supplies, inventory, furniture, fixtures, machinery and equipment. Ineligible uses include real estate, leasehold improvements and anything not listed as eligible by the SBA.

Microloans are a great option for businesses with smaller capital requirements. If you need additional financial assistance with purchasing real estate or help with refinancing debt, other SBA Loan Programs are available, such as the 7(a) loan or 504 loan.

Microloan Stipulations

According to SBA, microloans have certain stipulations. For instance, any borrower receiving more than $20,000 must pass a credit elsewhere test. The analysis from the credit elsewhere test determines whether the borrower is able to obtain some or all of the requested loan funds from alternative sources without causing undue hardship. No business or single borrower may owe more than $50,000 at any one time. Furthermore, proceeds cannot contribute to real estate purchases or pay for existing debts.

Microloan Qualification Requirements

Each microloan intermediary has their own credit and lending requirements. In general, intermediaries require some type of collateral in addition to the personal guarantee of the business owner.

Eligible microloan businesses must certify before closing their loan from the intermediary that their business is a legal, for-profit business. Not-for-profit child care centers are the exception and are eligible to receive SBA microloans. Qualified businesses are in the intermediary’s set area of operations and meet SBA small business size standards. Another requirement is that neither the business nor the owner are prohibited from receiving funds from any Federal department or agency. Furthermore, no owner of more than 50 percent of the business is more than 60 days delinquent in child support payments, according to SBA.

Prospective microborrowers must also complete SBA Form 1624.

Microloan Repayment Terms, Interest Rates and Fees

Microloan loan repayment terms, interest rates and fees will vary depending on your loan amount, planned use of funds, the intermediary lender’s requirements and your needs.

The maximum repayment term allowed for an SBA microloan is six years or 72 months. Loans are fixed-term, fixed-rate with scheduled payments. Interest rates will depend on the intermediary lender and costs to the intermediary from the U.S. Treasury. The maximum interest rates permitted are based on the intermediary’s cost of funds. Normally, these rates will be between 8 and 13 percent.

Microloans aren’t structured as a line of credit nor have a balloon payment. Microloans are malleable if the loan term does not exceed 72 months, but not exclusively for the purpose of delaying off a charge. They allow refinancing. However, any microloan that is more than 120 days delinquent, or in default, must be charged off, according to SBA.

There are certain microloan fees and charges. You might have to pay out-of-pocket for the direct cost for closing your loan. Examples of these costs include Uniform Commercial Code (UCC) filing fees and credit report costs. You may also have to pay an annual contribution of up to $100. This contribution isn’t a fee and can’t be part of the loan. Late fees on microloans are generally not more than 5 percent of the payment due.

How to Apply for a Microloan

To begin the application process, you will need to find an SBA approved intermediary in your area. Approved intermediaries make all credit decisions on SBA microloans. Prospective applicants can also use the SBA’s Lender Match referral tool to connect them with participating SBA-approved lenders. Document requirements and processing times will vary by lender.

You may need to participate in training or planning requirements before the SBA considers your loan. This business training helps individuals launch or expand their business.

For more information, you can contact your local SBA District Office or get in touch with a financing specialist at Kapitus.

celebrating festivus

Festivus Brews: How the Beer Industry is Embracing this Non-Holiday

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The holiday season is diverse with traditions from many religions and cultures. One somewhat new tradition, Festivus, isn’t really a holiday, at all. It’s gaining steam in the beer community, though. From special recipes to all-out parties, the beer industry adapted Festivus into their marketing plans in unique ways.

What is Festivus?

December 23rd marks the annual secular celebration, Festivus. It was created as a way to push back against all of the commercialism that other holidays bring. While not widely known until a 1997 Seinfeld episode brought it into the popular mainstream, Festivus’ simplicity and theme attracts many fans. Must-have’s for the “non-holiday” include an undecorated metal pole instead of a lavish tree and the “airing of grievances.”

The beer industry responds

Part of Festivus’ allure is how it’s presented as a way for everyone to get together and reject commercialism, no matter your background or religion. Beer found its way into the celebration quite easily. Beer fits in at any event, even one marked by a jovial pushing back at the norm. Sitting around drinking the perfect pale ale with friends sounds like perfection. It’s even given many brewers ideas for concocting recipes for the occasion. Several small-batch breweries offer themed drinks in celebration of the holiday. The brewery, Northern Brewer, sells a DIY Festivus Miracle Holiday Ale Extract Beer Recipe Kit, complete with yeast, fizz drops and canned wort (which is optional).

Festivus beers and ales come in bottles, cans, and on-tap. One of the breweries seeing success with their Festivus brew is Market Garden Brewery in Cleveland, Ohio. Sam McNulty, one of the co-founders, reveals how they came up with the seasonal brew.

“When brewmaster Andy Tveekrem was perfecting the recipe, and we tried the beer for the first time, we knew at first sip that this was going to be a winning brew. But how to set it apart from all the other Christmas beers crowding the shelves and draft towers? My business partner, Mike Foran, is a massive Seinfeld fan and came up with the idea of naming it for the ‘rest of us.”

That’s how their Festivus Holiday Ale was born.

More than ale

This holiday can be more than creating the perfect brew. Market Garden Brewery takes the holiday further. They throw a big party on December 23rd, complete with the airing of grievances, feats of strengths, and a Festivus pole. This is an addition to their Festivus-themed beer recipe, which gained overwhelming popularity over the years.

“Each year, we’ve had to add brewing capacity just to keep up with holiday ale sales increases. Every year we brew more than we think we’ll sell, but every year we’ve run out of it too early,” says McNulty.

Tips for others considering a Festivus marketing plan

It’s tempting to latch onto the idea of Festivus as your next big holiday. But, it’s important that small businesses understand its true essence. It’s not really about purchasing anything at all. After Black Friday, Cyber Monday and the lead-up to Christmas sales, most consumers are tired from shopping.

However, Festivus offers a chance for consumers to get away from the noise, kick back, and celebrate all things simple. It’s a break in the chaos before Christmas and New Year’s. For many, it’s a little silly, too. Festivus is for Seinfeld fans, those who don’t celebrate any traditional holidays, or anyone who just needs to complain and enjoy a new kind of ale. It gives people the space to air their grievances and have fun while doing so. In a world where not everything is always merry and bright, Festivus brings that joy for us when we need it most.

Financing for Business Expansion

Financing for Business Expansion

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How do you find financing for business expansion, when the time is right? No matter how successful a business might be, the decision to proceed with expansion inevitably comes with more spending, not less, and therefore a need to identify funding sources early in the process.

Often, the single best solution is to obtain a small business expansion loan. Traditional lenders (such as a bank) will naturally want to know what you plan to spend the money on, in order to finance your growth plans.

Reasons for financing growth

Typical areas where business leaders focus their expansion efforts include the following:

Opening a new location.

A retail business with a bricks-and-mortar presence may wish to expand to a second or third location. For this and other related goals, it’s important to gauge the anticipated costs.

As Inc. notes, “you’ll need to acquire estimates for leasing space, building out your location, hiring staff and procuring additional inventory.” To make sure the numbers work, conduct a “break-even analysis to determine how long you’ll need to support your new venture before it becomes profitable.”

Hire additional staff.

Your current workforce might not match the needs of expansion. You’ll have to find time, money and other resources to recruit new team members (to pay them, once they’re hired). This is an important area to focus on, so that you and your workforce aren’t stretched too thin by your company’s “growing pains.”

Purchase new equipment.

Technology or other business-related equipment represents another area impacted by expansion. Whether it’s needed to facilitate greater employee productivity, respond to increased fulfillment and delivery demands or other needs, funding for equipment might be a key part of your expansion plans.

Other expansion-related areas include large-scale product upgrades or a new product launch and/or breaking into a new market. All of these objectives require new sources of financing.

Options for financing for business expansion

If attempting to secure a traditional bank loan isn’t your ideal financing strategy, consider these alternative funding options:

Online loans.

These stand-alone cash flow loans are fairly easy to qualify for, because requirements are less strict than for a bank loan. Also, it’s not necessary to secure the loan with future business revenue or other collateral. But stable revenue and a solid business plan are essential factors for approval.

SBA loans.

The Small Business Administration doesn’t actually loan money, but they agree to back a certain percentage of the loan. They guarantee repayment to the lender, which in term facilitates loan approval. Many small businesses opt for this approach.

Purchase order financing.

These short-term loans cover up to 100% of supplier costs, as long as it’s determined a big order is just about to close. After the sale, the lender deducts their fees from the proceeds.

Invoice factoring.

With this approach, you transfer over an unpaid invoice to a financing company (the “factor”), and receive an advance on payment. The factor takes over collecting payment from the clients. After deducting their fee (which can be as low as 1.5% of the invoice amount), you receive the rest of the invoice amount. Under this arrangement, you’re not obliged to wait 30-90 days for payment on your products or services.

Revenue based financing.

This type of loan involves a quick, simplified application process. Lenders approve financing after reviewing historic revenue and use this to forecast future cash flow. You receive a lump sum of cash. The lender collects a specified percentage of future sales, either on a daily or weekly basis.

Crowdfunding.

Financing business expansion through crowdfunding has become more popular in recent years. Online platforms like Kickstarter enable interested micro-investors to put up funding for your expansion plans, with numbers that can significantly boost your chances for successful growth.

Repayment, or debt crowdfunding, follows a similar approach to traditional small business loans. Here, the business owes money back to the individual lenders at a set (agreed-upon) interest rate for these deals.

Angel Investing.

It’s worth exploring ways to secure venture capital financing, or enlisting the services of an angel investor to help grow your business. Some investors seek to play an active role in a business’s next steps. A business owner must relinquish some equity in order to obtain investor funding.

Financing business expansion can be stressful, but knowing you have options can lessen the anxiety involved. Your expansion plans may or may not meet traditional lending requirements, but with the range of lending alternatives available these days, a growing business is likely to find the financing it needs elsewhere.

Copyright 2021 • Kapitus • All Rights Reserved
Signs that business expansion is on the horizon

Signs that Business Expansion is on the Horizon

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When it comes to business expansion, business owners face a daunting challenge. Is now the right time to expand your enterprise? If not now, when? What type of expansion makes the most sense–new customer acquisition, upgrading or launching a new product line or opening a second retail location? The choices may feel overwhelming at first. But it doesn’t have to be – if you watch for signs that expansion really is the wisest move in the months ahead.

As Forbes notes, while “no single factor can dictate success or failure in business expansion,” intuition plays a key role, “knowing precisely which signs to focus on and follow in planning your business’s growth.” Here are widely acknowledged key factors that indicate successful business expansion could be on the horizon.

High demand

An increased demand for your products or services indicates the need for a new growth strategy. (Of course, by “need,” we mean an ongoing demand from customers, not a one-time or seasonal spike in sales.) A new, more effective marketing strategy could generate such demand. As is often the case, an increased cadre of repeat customers know what you have and want more of it.

Favorable trends

It’s not enough to focus only on what’s happening within your own organization. Successful business owners closely monitor industry-related forecasts and trends in order to gauge potential challenges and opportunities that might lie ahead. In fact, the more often you engage in this market analysis, the more knowledgeable you become at detecting small or significant shifts within the industry that can favorably impact your business.

Keep an eye on the big picture. Watch for signs of slowdown in the national economy or, conversely, indicators that consumption might soon be on the rise. Armed with this information, you can embark on a growth plan based on a solid foundation.

Healthy cash flow

As every business owner knows, cash flow is the lifeblood of any enterprise. While entrepreneurs may struggle at first to master this key element, businesses that enjoy success in the marketplace often find themselves with sufficient funds to explore new avenues of growth.

So while “cash can be consumed by any number of incremental expenses,” notes Inc., when you’re “confident that you can cover additional outlays and can weather any number of storms … then your prospects for growth look awfully good.”

Strong workforce

Business owners continuously grapple with the challenge of recruiting and retaining quality talent. But if you’re fortunate enough to have a strong workforce in place, the moment could be right for expansion.

Take time to identify your current top performers. Look for ways to encourage their development. Maybe add training and development sessions. Through more access to technology and other resources, your employees will become more effective in their jobs.

Clearly communicate your company’s mission and objectives. This way, each of your skilled employees will understand where they fit in the bigger picture.

Hungry for a Challenge

When you first start out, every aspect of the business represents a challenge. The owner of a successful business might feel like they need a new challenge. What was once exciting has become a daily grind. If you “are actually bored, your business has probably reached a plateau and it is time for you to grow it,” says the UPS Store.

As noted, successful business expansion relies upon a number of factors. But if your business is presently doing well–and all indications show that consumer demand will remain consistently high–don’t put off making plans for growth. No business can afford to “run in place.” Opportunities for expansion don’t come along every day, so it’s critical to recognize positive signs and take action as soon as possible. A bright future lies ahead!

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Irish Heating and Air Conditioning Creative Marketing story

How This “Boring” Business Got Great Results From Content Marketing…By Trying Something Different

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Do you ever feel like your business is too “boring” to try creative marketing? Even if you’re in an industry that is rather technical; if you’re normally by-the-books, or behind-the-scenes; even if your business works in ways that don’t always mesh well with the most exciting and innovative marketing campaigns; there are still some surprising ways to get creative with your business marketing.

The home heating and air conditioning business isn’t typically the most creative industry for digital marketing. How can such a straightforward business come up with clever marketing ideas or a flashy social media presence? But one HVAC company, Irish Heating and Air Conditioning–based in California’s Central Valley–found a way to generate big marketing success by doing something creative.

Irish Heating and Air Conditioning

Ryyan Murphy is the owner of Irish Heating and Air Conditioning. He worked with Contractor Calls, a digital marketing agency for contractors and home service businesses, on a new strategy to generate website traffic. Ryyan didn’t publish the usual industry-related blog posts about heating and air conditioning. They focused their content marketing strategy on creatively responding to the needs and seasonal interests of the local community in Modesto, California.

“Engagement for HVAC-related content is typically fairly low, especially during the off season between summer and winter,” Ryyan said. “We have been trying to expand our business into the Modesto market over the past year, so our digital marketing team decided to try something new that would be locally focused and Halloween related.”

Halloween Fun for the Community

Irish Heating and Air Conditioning created and published a special guide on their website for “The Best Family Friendly Halloween Events in Modesto (2019).” They knew that people were looking for ideas for family Halloween events in Modesto, and they provided a piece of content to help answer that local need on Google search results.

“The other search results for ‘the best family friendly Halloween events in Modesto’ were overall low quality, we decided to develop and publish a Halloween events guide that would boost Irish Heating and Air Conditioning’s engagement with local parents,” said Joe Goldstein, Director of SEO & Operations for Contractor Calls. “Many of the local parents are also local homeowners and potential HVAC customers in a very broad sense.”

The Halloween events guide is helpful, detailed and locally specific. It lists locations for pumpkin farms, trick or treating events, haunted houses and more. They even incorporated photos and videos. Anyone in Modesto, California could use this guide as a resource for fun Halloween ideas for their family.

Irish Heating and Air Conditioning achieved a month-over-month website traffic increase of 57.29 percent during the autumn, which is usually slow.

What are some lessons that other “boring” businesses can take away from this success story?

Make Content for Your Community

Irish Heating and Air Conditioning are experts in HVAC services, not experts in “Halloween”. That doesn’t matter! They got great results from publishing community-focused content that didn’t even involve the company’s services. They created trust and goodwill by helping people in Modesto get good information about family-friendly Halloween activities.

Go Hyperlocal

Ryyan and his team saw an opportunity where high-traffic search keywords in their local target market were underserved. They created a new piece of content to own that space. How many other search keywords are currently up for grabs in your local market? Selling to a specific geographic area, opens up opportunities for your website to serve your community with hyperfocused content.

Get Out of Your Comfort Zone

Lots of HVAC company owners might be reluctant to get too “creative” with their content marketing. People want their HVAC service providers to be smart, capable, and on time – not wild and wacky. It’s possible, though, for a “boring” business to succeed by trying something different.

“A lot of people in this industry might push back on an idea that is outside of their usual service offerings,” said Joe Goldstein. “But we have a particularly good rapport with Ryyan Murphy at Irish Heating and Air Conditioning, and he trusts us and he was open to trying this new approach.”

Cross-Promote Your Local Content

There are a variety of ways to cross-promote your “creative” content. For future opportunities, Joe Goldstein recommends using other strategies with community-focused, seasonal content.

“The traffic increase from this Halloween guide was great, and we also got strong engagement with it on Facebook,” Joe Goldstein said. “To get even bigger results next time, we would probably try featuring the guide more heavily on other landing pages, reaching out to the local Halloween attractions sooner and asking them to share our guide on their social channels, and encouraging more conversation in the comments. In the future, we will also include more than one major promotion in the landing page to turn a wider variety of casual visitors into leads.”

Once your business has published your locally-focused, community-oriented content, look for ways to get local link-building and press mentions. People love to read about what’s happening in their local area; make your website part of the conversation – even if it’s not immediately related to your business or industry.

Be Generous

Business owners love involving themselves in their communities by donating, volunteering and contributing to the community in other ways. Why not take that same attitude of community spirit with your content marketing? There are many ways to be generous with your creative content marketing. You can solve problems and helps make people’s lives better…even if it’s not “about” your business at all.

“People often respond better to content when they can’t immediately see how the business will benefit, when they don’t feel like they’re being sold something,” Joe Goldstein said.

The last line invites people to contact Irish Heating and Air Conditioning if they need furnace repair. But other than that, there’s no mention of the business at all; it’s just a helpful website article to show people some ideas for how to have a happier Halloween.

“We’re in business to help people, solve problems, and serve our communities, and it’s been fun to see how our content marketing can accomplish that, even if it doesn’t have anything to do with HVAC services,” said Ryyan Murphy. “We hope to keep trying more of these creative content marketing ideas in the future.”

Want to learn more about creative marketing ideas for “boring” businesses? Check out this article from Contractor Calls: “Local Content: The Key to Content Marketing in a Boring Industry.”

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long island aikikai

What Can Your Business Learn About Marketing from a Japanese Martial Arts Dojo?

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Josephine Fan is co-owner of Long Island Aikikai, a martial arts dojo in Bay Shore, New York, that teaches the Japanese martial art of Aikido. Aikido involves various techniques for close combat self-defense; it’s featured in movies like the John Wick trilogy. It has strong visual components that make it ideal for videos.

Last year, Josephine started to focus on expanding her dojo’s social media presence. She started out with only 64 followers on Instagram, and in less than year they now have 14,600 followers – all from organic content, not any paid promotion or purchased followers. Josephine shared videos and photos of their dojo’s Aikido martial arts. She built up a significant online presence for her business.

“We built this following just from consistently posting cool and interesting videos, and we became more and more well known in the community,” Josephine said. “We have had students come in saying they were interested in taking lessons at our dojo because of what they saw on social media.”

Josephine Fan has also used the lessons from her company’s success story to write a social media marketing guide for dojos – and the lessons are the same for many businesses.

What can you learn from Long Island Aikikai, besides “self-defense?”

Embrace the Visual Element

Since Aikido is so visually impactful, it’s interesting that Josephine Fan got inspiration from fashion Instagrams.

“One of my good friends is a fashion blogger with more than 60,000 Instagram followers and she actually gave me the idea and the starting tips,” Josephine said. “I knew we needed to get onto the social media marketing train since technology is evolving so fast.”

Long Island Aikikai’s social media videos do a great job of visually capturing the essence of aikido, often in a minute or less. The company’s social media presence makes the martial art look much more real and accessible. People who’re interested but hesitant to sign up might see these videos and reevaluate.

How can your business maximize the visual elements of what you offer? If you run a restaurant, try posting well-plated, stylishly composed food photography. If you run a brick-and-mortar retail store, think about which products look best on camera. Think about how to capture the visual appeal of your store with favorable lighting and camera angles. Consider hiring a professional photographer or videographer to capture some good shots of your business. Good visuals are more important than ever, especially on Instagram.

Be Consistent

Another lesson that Josephine learned is that it’s important to keep a consistent schedule for social media. Post every day, or on a regular schedule.

Don’t get discouraged if results aren’t immediate. Trial and error is necessary before you figure out which social media strategies work best for your business.

“To be honest, the first couple of weeks felt like hitting my head against a brick wall,” Josephine said. “I couldn’t tell if what I was doing was working because we would only get a follower here and there. Then when I got the ‘formula’ down, the followers began to cascade.”

And don’t feel like you have to manage your business’s social media all by yourself. There are a lot of great marketing apps available now, many of them for free or at low cost, that can help you schedule your social media posts in advance, track results, make visually appealing images to share, and more.

Ignore the Trolls

Negativity might come your way when you start out. There are unfortunately many angry people on social media who just want to criticize your business and your social media posts.

Josephine learned to shut them out and focus on growing her audience of enthusiastic fans.

“I realized that I had to throw away the previous hangups about getting criticisms on the videos via social media troll comments, and just do it no matter what,” Josephine said. “That was a difficult hurdle to cross but once I did, it was very liberating to not care so much about those one or two aggressive comments and just keep focusing on the positive.”

Engage with the people who care about your business, and ignore the rest.

Find the Right “Formula” for Social Media Success

There is no one right answer for “how to get more followers on social media,” because it all depends on your business, your brand, your target market, and your particular skills and savvy for how to create and share content. Certain times of day or days of the week might work best for your business or industry, depending on which types of customers you’re trying to reach.

Josephine Fan found a successful formula for Instagram marketing, which she describes in her social media marketing guide:

  • Post 1-4 posts per day, spaced out evenly. This means that if you post 4 times a day, make sure to space the posts 6 hours apart. Don’t post too frequently.
  • Prepare a week’s worth of content at a time. Social media marketing apps make it easy to prepare and pre-schedule a week’s worth of posts. This way, you can focus on social media one day and run your business the others.
  • Don’t skip a day – you’ll lose followers. People love consistency. When Josephine took a few weeks off of posting during the holidays, the number of new followers per post decreased dramatically. She went from 60 followers per post to 1-2 followers per post. “I noticed that if I stopped posting for even a few days, I had to build up the momentum again later,” Josephine said.

Some types of content might result in massive numbers of new shares and new followers. Others might not get any results. However, if you keep trying and testing, you can find a comfortable and repeatable formula for social media success. Long Island Aikikai is a great example.

Learn more about Long Island Aikikai and check out their awesome martial arts videos on Instagram at @liaikikai!

Audit vs. Review: How to Choose the Right CPA Firm for Your Business

How to Choose the Right CPA Firm for Your Business

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You feel pretty confident in the accuracy of your financial statements. But, you know that “trust me” won’t cut it with outsiders when you’re looking for a loan or investment capital. And, perhaps, you just want some reassurance that whoever is doing your books (even if it’s you!) is up to the task – and honest. If this is you, it looks like it’s time for you to to face the audit vs. review and compilation question. This is where CPAs, and the assurance services they provide, come into the picture.

Audit vs. review

There are tiers of assurance services and levels of scrutiny that CPA auditors can apply to your books, with corresponding confidence levels. It ranges from a “compilation” at the low end, to a full-blown audit at the top. Each has a different purpose, and price tag.

Cost depends upon the amount of time spent performing the service, and the level of complexity (also impacting time requirements and thus cost). The range is wide, say from around $2,000 to $10,000, $20,000 or more.

A compilation of financial statements technically does not belong in the same category as assurance services because the CPA isn’t passing judgment on the accuracy of your financial statements, as they do in the audit vs. review area. A compilation, which does not need to be performed by a bona fide CPA, is basically just a set of financial statements compiled by an accountant using your financial records.

The accountant (or CPA) who performs the compilation should know your industry enough to understand your numbers, and adapt them to standard financial statement formats. Those statements will then be understandable to anyone who needs to look at them.

If the CPA has questions about where some numbers come from, you need to provide clarification. If the accountant / CPA isn’t satisfied with your answers, they quit the engagement.

Even if the accountant has no problem compiling the statements with a compilation, a letter accompanying those statements must be shared with anyone you give them to, making it clear that no opinions are expressed about their accuracy. The letter should describe the process used to perform the compilation, and any issues that arose.

Who Uses Compilations?

There’s a lack of assurance that goes with compilations. You might use them to seek a small loan or a larger one if you pledge sufficient collateral.

The entry level assurance services category is the review. According to the American Institute of CPAs (AICPA), the review service “is one in which the CPA performs analytical procedures, inquiries and other procedures to obtain limited assurance on the financial statements and is intended to provide a user with a level of comfort on their accuracy.” To produce a review, the CPA needs to gain a basic understanding of your business and your accounting procedures and principles.

Still, in performing a review, the CPA “does not contemplate obtaining an understanding of your business’s internal controls, assessing fraud risk, testing accounting records through inspection, observation, outside confirmation or the examination of source documents ordinarily performed in an audit,” the AICPA explains.

A review is only performed by a CPA who has no ties to you that could compromise the CPA’s independence.

“Material Modifications”

A report accompanies a report, giving the CPA’s opinion on any  necessary “material modifications” for statements. This will bring them in line with applicable accounting standards.

A review may get you by if you’re applying for a larger loan and prospective lenders will tell you what they need. They’ll provide a basic level of assurance, too. But a review is closer to a compilation than an audit, which involves significantly more digging on the CPA’s part. The audit is the gold standard of financial statement scrutiny. It provides what the AICPA describes as a “high level of comfort” in terms of accuracy.

An audit only reassures yourself, lenders, investors or prospective business buyers that your financial statements are solid. And if the auditor does have some issues with your numbers or your internal accounting quality control systems, anyone reading the audit report will know that, too.

A Roadmap for Improvement

Any reported weaknesses in your financial controls can give you a roadmap on how to improve them. Once you fix the deficiencies, your next audit report will be cleaner.

However, an audit report indicates that it only provides ‘reasonable’–as opposed to absolute–assurance of your financial statements’ integrity.

Think about an audit vs. review and keep this in mind: In an audit, the CPA can’t rely on numbers from last year’s statements as the starting point for the current year’s audit. Instead, the auditor might first need to perform tests on the prior year’s numbers (and possibly earlier years). That suggests that the sooner you have an audit performed, the less expensive it will be.

There are steps you can take to reduce the cost of an audit, or for that matter, a review. Make sure your bookkeeping system is reliable, and that your financial records are easy to decipher. Consider bringing in a pro in to clean things up before you engage a CPA.

The CPA tells you the documents you need for and inspection. Be sure to have all your papers ready before the review or audit.

Pick an appropriate auditor to get an efficient audit. Large CPA firms tend to be more expensive than mid-sized or smaller firms. You probably don’t need a large national firm. However, a firm that’s large enough to have experienced auditors might be cheaper than a tiny firm. If it can perform your audit more efficiently, take it into consideration.

The public accounting industry is highly competitive. Don’t hesitate to shop around. Before signing an engagement letter, gain a high comfort level with a firm. Check the firm’s client references, fees, promised turnaround times, scope of services, audit procedures and technology infrastructure.

Choose wisely and build a strong relationship with a CPA firm. This can benefit you not only in assuring your financial statements are trustworthy, but ultimately help you to build a strong financial foundation for your business.

 

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Can I Get Approved for the 7a Loan Program

Can I Get Approved for the 7(a) Loan Program

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Any small business owner who spends time searching for small business loans–both through banks and online–has likely come across the SBA 7(a) loan program. It’s one of the more popular small business lending options out there. With that, many small business owners look to the Small Business Administration (SBA) to help with financing.

One way the SBA helps small business owners is through their Loan Guarantee Program. Here, you’ll learn what you need to know about the SBA 7(a) loan program and the requirements for approval.

What is the SBA loan program?

SBA loans don’t actually go through the government. Instead, the SBA offers guarantees to participating lenders, including traditional banks, credit unions, online lenders and private lenders.

The goal is to make small business loans less risky for these lenders. This means that more business owners can secure funding to help grow their businesses.

Guarantees typically cover anywhere from 50 to 85 percent of the total loan amount, depending on the loan. The SBA has a variety of loan options, including the 7(a) program, the 504 program, microloans and disaster loans.

However, the SBA 7(a) program is the focus here.

What is a 7a loan?

SBA 7(a) loans are some of the most popular options available for small business owners. In the 2019 fiscal year, over $23 billion in loans saw approval. An average loan was for just under $450,000.

The flexibility of the 7(a) loan program makes it popular among small business owners. 7(a) loans are guaranteed up to $5 million. For loans up to $150,000, the SBA guarantees 85 percent. The SBA guarantees 75 percent for loans over $150,000, up to $3.75 million on the $5 million maximum loan amount.

If you default, the SBA will pay out the guaranteed amount. It’s one way the administration removes some of the default risks from lenders. This allows them to offer more attractive repayment terms.

Many small business owners would likely struggle to secure financing from traditional financial institutions without the SBA Loan Guarantee Program.

What are the SBA 7a loan terms and interest rates?

SBA loan terms are set with the long-term goals of small business owners in mind. Repayment terms are often based on your particular financial situation. However, most of these are paid back via monthly installments.

The set terms are as follows:

  • Real estate: up to 25 years
  • Equipment: up to 10 years
  • Working capital and inventory: up to 10 years

Another benefit of an SBA loan is that it sets a maximum with lenders on interest rates. Base rates are tied to Prime Rates, benchmark interest rates and additional spread rates.

The spread rate varies depending on the loan amount and the term. Typically, higher loan amounts with shorter terms have slightly lower spread rates.

The SBA has specific spread rates they use. But, the rates can change as the market rates do over time.

Are there fees involved with the SBA 7(a) loan program?

While you typically won’t find origination, application and processing fees with SBA loans, there still are fees to consider.

These fees can include:

  • SBA loan guarantee fees (which vary depending on the size of the loan; but they only apply to the guaranteed amount)
  • Credit authorization fees
  • Packaging fees and closing costs
  • Appraisal fees for real estate related loans
  • Late payment penalties
  • Prepayment penalties which apply to loans longer than 15 years that are prepaid within the first three years

The guarantee fee is the highest of all associated SBA loan fees. Keep these fees in mind as you figure your total payment amount.

The basics of qualifying for SBA 7(a) loans

The SBA has several eligibility requirements you must meet to qualify for any of their loans, including the 7(a). Since these are popular loans, you should understand the different requirements before you apply.

First, your business must be for-profit and based within the United States or its territories. Also, the SBA has size standards they use to ensure that the definition of small business gets met–since it varies across industries. This standard is generally a combination of employee size and annual average receipts.

Second, the SBA wants you, as the small business owner, to have a stake too. So, they require that you invest your own time and money into your small business. Also, eligibility rules state that you need to have been in business for a sufficient amount of time, typically a few years.

Finally, your business must be eligible for a loan. Some are not including real estate investment firms, rare coin dealers, companies involved in speculative activities, and companies where gambling is the primary activity, among others.

What are the SBA 7(a) loan program requirements?

Your job isn’t over yet, even once your business is eligible for a loan application. You need to meet the loan requirements, too. The SBA requires you to submit information on your “personal background and character”. This includes criminal history (if any), your citizenship status, work history in the form of a resume, past addresses, and other items as well.

You also need to provide a business plan. A solidified business plan goes a long way towards showcasing the strength of your business and your plans for the future. Don’t forget to include detailed information on how you’ll use your loan.

Other documents required are your business financial statements. You need to show your revenue and profitability. The SBA typically approves businesses with at least $100,000 in revenue each year. You should also provide a listing of any debts and your debt schedule, which can help highlight your expected cash flow.

Your personal credit score is important. The SBA and lenders will typically look for a FICO credit score above 650.

Finally, there is some personal risk involved with 7(a) loans too. The SBA requires anyone who owns over 20 percent of the business signs a personal guarantee on the loan.

While each lender is different and requirements vary depending on your situation, keep these requirements in mind as you move through the process.

Types of loans in the 7(a) program

Within the 7(a) loan program, there are different loan options beyond the 7(a) standard loan you can explore.

The 7(a) Small Loan program has all the requirements of the standard 7(a) loan with one significant difference: it offers a maximum loan amount of $350,000.

SBA Express loans are designed with quick turnarounds in mind. They have a maximum loan limit of $350,000. Note that the SBA guarantees 50 percent of the loan amount.

SBA Export Express loans are directed at exporters for lines of credit up to $500,000. The SBA guarantees 90 percent for loans up to $350,000 and 75 percent for amounts beyond that. It’s yet another option with quick turnaround times.

An Export Working Capital loan is for a revolving line of credit up to $5 million with a 90 percent SBA guarantee. This loan often has short terms of up to 12 months.

International Trade loans are set to meet the long-term financing needs of export businesses. The maximum amount is for $5 million, with the SBA guaranteeing 90 percent of the loan.

How can you use a 7(a) loan?

The SBA sets guidelines for both the general loan terms and how funds get used.

These include:

  • Expansion and or renovation needs
  • New construction
  • Purchasing land or buildings
  • Purchasing equipment, fixtures, or lease-hold improvements
  • Working capital
  • Refinancing debt (the SBA cites it must be for “compelling reasons”)
  • Seasonal lines of credit
  • Inventory costs
  • Business startup costs

Understandably so, it’s essential to know this information before you apply. Otherwise, you could lose your funding if you’re using it for unapproved reasons.

The Bottom Line

It’s easy to see why SBA 7(a) loans are so popular with small business owners. They provide funding with flexibility and attractive terms. If you meet the qualifications and requirements for an SBA loan, it just could be what you and your small business need to achieve your long-term goals. To learn more about SBA loans, click here.

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