Spencer Sheinin, Founder of Shift Financial Insights

Shift Financial Insights: Using Unconventional Humor to Stand Out

/in , /by

It’s tempting to play it safe when it comes to small business marketing. After all, you could risk upsetting potential customers if you try something a little silly or different. But then, every ad starts to look similar to the last, and people will continue to ignore them. That’s why Spencer Sheinin, CEO of Shift Financial Insights, uses a different approach. His accounting firm sees fantastic results from using unconventional humor in their marketing strategy.

Coming in with a different perspective

Sheinin wasn’t an accountant in the beginning. First, he was a serial entrepreneur. Over the years, he ran a contract manufacturer of skin cream products, a construction business and a cold storage business. During this time, he realized accountants and business owners look at the same information, just from very different perspectives.

“Accountants and entrepreneurs are basically speaking two different languages. That’s one of the reasons the typical entrepreneur hates dealing with their books.” It’s no wonder 23% of small business owners feel anxious about their accounting, according to Intuit.

Sheinin launched his firm to help entrepreneurs with their bookkeeping and accounting. But he also wanted to present financial insights in understandable and digestible ways.

Using humor to stand out

Sheinin’s entrepreneurial experience adds extra insight into his target customer persona. He felt that his target audience would appreciate a different style of marketing. Rather than sending out traditionally dry accounting brochures, he weaves in his sense of humor and sarcasm, whenever he can.

In a recent campaign, they sent marketing agency owners a Shift-branded metal straw along with their business card saying, “Some things have to suck. Accounting isn’t one of them.” Sheinin found that a humorous approach works for several reasons.

“The straw-shaped package created a mysterious surprise arriving in the mail. Who could resist opening? Second, it’s designed to make prospects laugh and there’s an immediate connection.”

Creating fun and unique campaigns

Sheinin explains a few of his other ideas that show off his humor. To create buzz for his upcoming book, Entreprenumbers, Sheinin sent copies to influencers along with a pair of socks saying, “For when your socks get blown off.” He’s also sent out yoga mats to prospects with the catchphrase, “We’ll bend over backwards for you.”

In the end, Shift Financial Insights gets more attention when they go against the grain. “Every business sends out Christmas cards and they all get ignored. We don’t and instead send a Valentine card telling our clients how much we love working with them.” Rather than reaching out during traditional holidays, your business may get more attention embracing non-holidays like Festivus, or the Summer Solstice.

Seeing results versus traditional marketing

Sheinin told us that the results from his humorous campaigns have been overwhelmingly positive. “We’ve sent out about 100 straws so far. The conversion rate is around 3-5%, with more still coming in. Even agencies that didn’t need our services called back to say how much they enjoyed the laugh.”

We asked if there were any complaints or negative results, and he said not at all. “Worst case is we just never heard back from a prospect. I’m sure a few packages ended up in the garbage, but no one ever got angry.”

In the past, Sheinin tried traditional marketing, but the results weren’t impressive. “We tried sending out a typical cold message to business owners through LinkedIn asking whether they wanted to talk. We ended up with zero results.”

Shift Financial Insights prefers humor and it seems as though so does their target market. “Assuming that the quality of the work is the same, people would rather deal with a company they can have a laugh with.”

Advice for your own marketing

When it comes to humorous marketing, Sheinin says it’s all about practice. “Every week I try to come up with 10 marketing ideas. I once read if you can’t come up with one good idea, come up with 10 bad ones. You’re searching for the one piece of gold amongst the rubble.” Keep experimenting with humorous ideas and you’ll eventually find one that works.

He also reminds readers that you’re just trying to make the experience more enjoyable for people on the other end. “It’s easy to get too stiff, traditional and wooden, especially with B2B outreach. Don’t forget your ads are being read by people who work at the business.”

Above all, he says don’t be scared to get creative. “If you can approach marketing from a surprise and delight perspective, especially for something that is kind of boring, you can really stand out.” By adding some humor to your marketing, you can improve your results while having some fun at the same time.

applying for small business grants

5 Things to Consider When Applying for Small Business Grants

/in /by

When you’re a small business, cash is king. But you know what’s even bigger and better than cash? Free cash! However, unless you’re a trust fund baby or lucky enough to win the lottery (A bad investment BTW), then free cash is hard to come by. Aside from the two previously mentioned methods or a rich uncle, your main option for free cash is small business grants.

Don’t get too excited yet though

Small business grants have their pros and cons. Free money is usually a good thing, but just keep in mind, there are some hang-ups that come along with “free” stuff. So, before you decide this is the best funding option for your small business let’s take a closer look.

First, what is a small business grant anyway?

Think of a grant like a scholarship for small businesses. They usually come from federal, state, county or local governments, but sometimes private businesses or corporations will offer them as well. Just like a scholarship, there are a bunch out there, and they are usually set aside for “people” that meet certain criteria. Some are for online companies, some are for veterans, others for women and/or minority owned businesses. The list goes on and on, and they all have different application requirements.

Here’s the key to getting a small business grant.

It all comes down to research. There are thousands of grants available out there, but your chances of getting one really come down to two things: How much work will you put into finding one that you qualify for, and how much work are you willing to put in throughout the application process. Are you seeing a theme here?

Let’s get you up to speed on the process.

A good place to start is the Small Business Administration website at www.sba.gov. This is where you’ll find a lot of helpful information to start your search. Our best advice is to save it to your favorites and just explore the site. There is a lot of information to consume.

Next, try going to www.grants.gov. It’s a federal website as well that lets you search for available government grants. Just make sure you ensure you’re eligible for a grant before you spend too much time applying.

Last, it’s a good idea to check your state’s official web page. A lot of states offer not only grants to small businesses, but also tax incentives and other economic incentives for you to bring jobs to the state.

Now let’s talk about what you need to know as you begin your hunt for free money! And to be totally honest, some of these factors may outweigh the benefits of free money. So, to ensure you’re going into this with your eyes wide open, let’s begin.

1. Small business grants take A LOT of you and your staff’s time!

Like most government processes, getting a federal or even local government grant is very time consuming. It’s important to understand how much your time is worth, and then evaluate how much you’re getting vs. how much time it’s going to take to get the money. There’s a lot of paperwork and there’s a lot of required documentation/market reports/demographic reports/etc that will have your staff jumping through hoops. Just make sure it’s all worth it before you dedicate all that time – time you could be spending on your own growth strategy or business development

2. Don’t expect the money any time soon.

As we just mentioned in the first section, remember this is the government we’re dealing with here. Don’t expect things to move quickly. Once you submit your application, it can take weeks, or even months before you get a response or find out if you’re approved. Yes, it’s frustrating, but if you understand that’s part of the game, you won’t lose as much sleep over it.

3. The competition for small business grants is stiff!

This is FREE money we’re talking about here. You won’t be the only one applying. The brightest and the best will have their teams working to get this money, so be ready for fierce competition. The key is to know your strengths, and know how you can present your business in the best light possible. Show them why you deserve it more than anyone else! And another thing… make sure you’re applying for grants that fit your strengths as a company. That will significantly improve your chances.

4. Grants come with strings attached.

If you are lucky enough to be one of the few grant recipients, remember this usually comes with strings. Be ready to sacrifice a little privacy and understand you’ll have to do a little better job of keeping your “house in order”. Many grant issuers like to check in on your progress. This often means monthly or quarterly “check ins” where they will ask for proof that you’re meeting the requirements as outlined in your grant. Also, there can be other strings such as contingency agreements. I.E. State and local programs will give you the money contingent on matching funds or a loan to supplement the grant.

5. Small business grants may not be the money you want.

Grants usually come with rules on what you can use the money for. If you think it’s a get out of debt free card, think again. Federal and state grants are funded with taxpayer dollars so they do their best to ensure it’s used for purposes that will benefit the community as a whole, and not just to pay down debt for your business. (They want more jobs, improved technology, etc.) It’s not a loan. It’s generally a gift for a specific purpose.

Wrapping it all up.

Small business grants can be incredible opportunities for your business, but they can also be money pits that don’t have the ROI you imagined when you heard the word “FREE MONEY!” To determine if they are right for your business, do some research and keep all these factors in mind. Now that you’re informed, you’ll make the right decision!

Know Your States -- and Their Sales Tax Laws

Know Your States — and Their Sales Tax Laws

/in /by

Walk around any neighborhood and on just about every front step you’ll see boxes containing merchandise that was purchased online. What you see has everything to do with sales tax laws.

Consumers consistently turn to online shopping.  It’s convenient and is often less costly than buying from a brick-and-mortar store. For years, sales tax laws didn’t cover online orders. Forty-five states collect sales taxes on in-person purchases but couldn’t apply them to online ones – until now. A 2018 U.S. Supreme Court ruling now gives states collection rights for online sales tax. This was the result after South Dakota sued the online retailer, Wayfair.

The court decision almost immediately filled states’ coffers. Twenty-three states saw a five percent increase in year-over-year sales tax during the third quarter of 2019, according to a study by the nonprofit Urban Institute. The study attributed most of that growth to the new online sales tax laws.

While a boon for state budgets, online sales taxes have stressed small business owners. The internet opens the door to customers beyond a business’ geographic reach. The varying rates and rules for each state’s online tax is, understandably so, a source of confusion and frustration.

Getting Caught in a Nexus

Before the Wayfair ruling, a state could only tax companies that had a physical presence within its borders. But now, economic activity in a state – the “economic nexus” – can trigger an online sales tax. This can happen even if the business has no physical presence there.

Many small business owners feel as if they’ve been sucked into a complicated nexus of varying rules and expectations. That’s because what is subject to the online tax and what is owed differs from state to state. Some states have uniform standards for companies to follow, but other states, usually the big ones, have their own rules to sort through. Further complicating things, Alabama and Louisiana are two of five states that let their municipalities administer their own taxes.

Many small businesses typically lack the staffing and insight to grasp it all. As The Wall Street Journal recently reported, while larger businesses have the people and technology to keep track of online sales in each state and what that means for taxes, small businesses don’t have the means to keep up.

“Small businesses are definitely the ones that are really adversely affected,” Clark Calhoun, a state and local tax attorney in Atlanta, told the Journal. “A bigger business is typically going to have more robust sales-tax software,” he said, and “a better sense of where their products are going and will be well over the sales thresholds every single year.”

You Need a Scorecard to Keep Up

About those online sales thresholds. Some states exempt out-of-state sellers from paying online taxes if they had $100,000 or less in sales or fewer than 200 transactions in the state per year. A few other states don’t have a transaction threshold but have one for total sales. Some states set a $200,000 minimum, while California, New York, Tennessee and Texas set a $500,000 minimum. Kansas doesn’t have one.

The Federation of Tax Administrators, a group that represents state taxing authorities, created a handy chart that outlines the expectations for remote sellers. FTA, however, urges business owners to always double-check with a state in case of any changes.

Small businesses could turn to a marketplace facilitator to handle the sale and the burden of collecting tax. As The Wall Street Journal noted, 38 states and the District of Columbia now have laws requiring marketplaces such as Amazon, Etsy and eBay to collect and remit sales tax on behalf of third-party sellers.

Indeed, those marketplaces could relieve a burden for small businesses, especially with these big online sellers benefitting from a grace period that gives them time to align their procedures with the many state laws. Forbes notes that all but one state with marketplace facilitator laws allows up to three years to be fully compliant with online tax laws.

Do Your Online Tax Homework

Still, not every business wants to put the fate of its goods in the hands of Amazon or eBay. If you’re one of those businesses, having a deeper understanding of the vast online tax landscape should be a priority.

That won’t be easy, though. In the Journal of Accountancy, a publication for CPAs, attorney David Brennan points to how the U.S. has more than 10,000 tax jurisdictions. “While it is possible in some states to register at the state level for counties and municipalities, in other cases the law requires a separate registration in each state, county, and municipality” he wrote. On top of ensuring that they are registered with every possible government entity, businesses also have worry about the many different exemptions to goods. For instance, using Brennan’s example, many states tax the sales of clothing but a few exempt them, while some apply a cost threshold.

Two pieces of advice that Brennan offers to CPAs who represent businesses can also apply to small businesses themselves. First, know your company’s sales and number of transactions for each state and determine potential economic nexus exposure. This requires knowing which products and services are taxable in which states. Also, know the sales tax collection requirement in those states and whether there are any exemptions.

Don’t Go it Alone; Find Expert Help

Even though it’s best to know your businesses’ internet sales inside and out, trying to figure it all out against the backdrop of every state’s expectation might be too much when you already have a long list of financial obligations. You can seek the counsel of an accountant or go a step further and outsource all tax and accounting work to an outside service. Financial services provide not only expert advice but also, more often than not, the latest accounting software. They’ll bring a fresh perspective to your online sales and will already work closely with federal, state and municipal tax and revenue departments.

The expectations and chance of risk are far too enormous to try to handle this alone. Online sales introduce small businesses to a whole new world of customers, but also a whole new world of complexity. As daunting as the vast online sales tax landscape might be, with the right help and proper approach, your business won’t have to sweat the many small details and instead focus on serving your many virtual customers.

Do You Want to Boost Your Revenue? Try Working on Your Elevator Pitch

Do You Want to Boost Your Revenue? Try Working on Your Elevator Pitch

/in , /by

A good elevator pitch, either on your website or in person, can help convert customers. A bad pitch can lose them. And it isn’t easy. Just ask James Lawrence, whose company makes advance software system that ensures drone operators stay in compliance with the ever-changing rules and regulations for their airborne devices. “The question was how to winnow that down to a big idea I could present in two minutes that would resonate with people who know nothing about my product,” he says in an interview with Inc. magazine.

Conveying your life dream to a stranger — who might have only a fleeting interest in what you’re saying – in a couple of minutes, or a few words online, can be a pressure-filled challenge. Here are five steps to creating an elevator pitch that keeps people’s attention and may win over clients and investors.

Open Strong.

Your opening line or headline should grab the listener’s attention and leave them wanting more. Small business expert Alyssa Gregory gives this example: “Have you ever felt held back by lack of time and wished you could clone yourself so you could get everything done, when you want to get it done, the way you want it done?” If you’re reaction is, tell me more, it’s a winning pitch.

Change Your POV. 

Understandably, a lot of people begin their elevator pitch with “I.” But, a better beginning starts with: “You.” Explain the problem you’re addressing and the benefit you offer from the listener’s POV. As Fast Company puts it: Instead of blandly stating, “I’m an accountant,” say: “You know how everybody is interested in maximizing the amount of money that they keep when it comes time to talk to Uncle Sam in April? That’s what I help my clients do. My name’s Peter Smith, I’m an accountant.”

Create a Few Versions. 

Rather than robotically saying the identical elevator pitch to everyone, have a few versions at the ready for different situations. “Keep that opening sentence the same, but use five different stories of success to illustrate five different reasons customers pay you money,” says the American Management Association.

Spell Out the Next Step. 

An elevator pitch shouldn’t end between floors. Let the person you’re talking with know what you want next – be it a sale or other objective.

Test Yourself. 

Even the most skilled actors rehearse and listen to their director. Practice your pitch in front of friends and ask their opinion. “What may seem clear in your mind might come across as convoluted, long-winded, or fragmented to an outside observer,” says consultant Lauren Katen. Online, try different language and measure the results.

 

An elevator pitch is a powerful tool – but half of small business owners don’t have one at the ready. And that can keep a business stuck on the ground floor rather than racing to the penthouse.

How to Strengthen Your Balance Sheet to Qualify for a Loan

How to Strengthen Your Balance Sheet to Qualify for a Loan

/in , /by

Admittedly, some business owners neglect to review their financial statements monthly. Some, actually, only review financial statements yearly–and only for tax purposes! If you want a true ideal picture of your company’s financial health, you absolutely need to regularly monitor your financials, including your balance sheet. While lenders want to see that your firm is profitable, they are most concerned with whether or not you have sufficient working capital, a manageable debt to equity ratio and a strong operating history. Since your balance sheet provides all this information and more, you will definitely want to strengthen your balance sheet if you are seeking a loan.

Increase your working capital.

The more cash or assets you have readily on hand that can be converted into cash to pay your current obligations, the lower the risk you will default on a loan. In other words? Lots of cash and equivalents encourage a lender to lend. Working capital is short-term assets less short-term liabilities. Short-term assets include cash and cash equivalents as well as inventory and receivables. Short-term liabilities include all payables. Hence why lenders focus on working capital.

However, your working capital calculation can significantly differ from the lender’s. Lenders will drastically discount older current assets. If your inventory does not have quick turnover (this timing varies by industry), then lenders will discount its value from what shows on your balance sheet. Furthermore, if you are in an industry with shorter inventory lifespans such as retail and you have unsold inventory that is over two years old, when you sell it, you likely will only get a fraction of what you paid for it. Obviously, lenders cannot count on that cash for bill payment. They will thus exclude that inventory from your firm’s working capital calculation. The same applies to receivables. If your receivables are due in 30 days but 40 percent are over 90 days old, the lender will completely ignore that 40 percent. The exceptions are slow-paying industries such as industrial construction.

Since your old inventory and receivables will be totally excluded by lenders in their working capital calculation, convert those assets to cash. The cash will be included. Sell off your old inventory. Vigorously pursue all overdue receivables. To ensure your inventory turns over in a reasonable amount of time, only buy what sells or ramp up your marketing efforts. To square up your receivables within 30-day terms, create and implement strong accounts receivable and credit policies.

Decrease your debt.

Lenders look at your overall debt, your interest-bearing debt or both, compared to your equity. A high debt burden could mean trouble. Acceptable debt to equity ratios vary by industry. A capital-intensive industry like manufacturing will require much more capital investment than a services-oriented industry like marketing firms.

If you have unused or chronically underused equipment, strongly consider selling it. The purpose of an asset is to help produce or deliver the goods or services your firm provides. If a large asset is just sitting there, it is not fulfilling its mission. Not only will selling reduce your debt, it will convert the associated asset from PP&E to cash on the balance sheet. Although both are assets, the additional cash is much more powerful because it increases your working capital. Remember, working capital indicates your firm’s ability to repay debt in the near term.

Increase your equity.

The lender wants to see that your company has a profitable history. She also wants to know that you reinvest in the company. Why? That shows you both believe in your firm and expect it to grow. Therefore, the owner’s equity piece is very important. Do you retain a sizable portion of the earnings or do you pull every last dollar out you can? If it’s the latter, stop. Your owner’s equity needs to be high enough to be compelling.

One way to both decrease debt and increase owner’s equity at the same time is to convert any shareholder loans to equity. Owners often provide loans to the company instead of injecting equity capital for several reasons. The most notable reason is that you can receive a loan repayment of principal tax-free. But, you must pay taxes on any distributions received. However, if you are seeking funding, a strong balance sheet trumps your lower taxes. Make that conversion and immediately strengthen your balance sheet.

Reviewing your financial statements is important as they serve as the barometer of your firm’s financial condition. This is especially true of the balance sheet. If your firm is in expansion mode, use one or more of these suggestions to proactively strengthen your balance sheet to qualify for a loan.

The ins and outs of equipment financing

The Ins and Outs of Equipment Leasing

/in /by

Suppose you need expensive equipment to run or grow your business. If you pay cash for it, your employees’ paychecks would bounce. Equipment leasing might be the rescuing you need.

1. What is Equipment Leasing?

Equipment leasing is a payment strategy accounting for around one-third of all equipment in use, from desktop computers to jumbo jets. “Evidence suggests,” according to the Commerce Finance Institute (CFI), “that an origin of leasing may have started… in the ancient Sumerian civilization.” Leasing has since evolved into an accessible financial resource.

The CFI defines an equipment lease as “a contract for the use of a piece of equipment over a specified period of time where the user of the equipment becomes the lessee and agrees to make periodic payments to the lessor of the equipment with specific end of term options.” In other words: you’re renting the equipment. Unlike renting a home, for example, the opportunity to buy the equipment outright when you enter the lease, is typically an option.

The accompanying illustration provides a breakdown of the categories of equipment leased today, and their share of the leasing universe. In the following pages we will explain when, why and how it is done.

https://www.elfaonline.org/data/market-trends/facts-about-industry-sectors (NEED TO CREATE AN IMAGE FROM THIS ARTICLE – BA)

2. When Should I Lease Equipment?

Before you begin to think of different ways you can bring in new equipment, whether by leasing, borrowing or even paying cash, give the idea a reality check. Ask yourself the same questions that a leasing company or a lender will probably ask you:

  • Will the equipment meet an important business need that’s currently unmet?
  • Does the cost of continuing to use the equipment I already have, in repairs and/or inefficiency, justify the price of acquiring new equipment?
  • Is now a good time to get new equipment due to special “deals” in the market?
  • How does the new equipment fit into my overall business plan?
  • If I wait a little longer before bringing in new equipment, might more advanced models become available that will give my business more bang for my buck?
  • What is my expected return on investment?
  • Do I have adequate free cash flow to enter a lease agreement without needing to sacrifice more urgent spending priorities today or down the road?

Another important consideration pertains to your company’s tax situation. With an “operating lease,” you are unable to take advantage of an important tax code provision known as Section 179. That benefit is available to companies using a different kind of lease known as a “capital lease.” It’s also available to companies that buy equipment through borrowing.

If you haven’t payed a lot of business taxes lately and don’t expect to soon, you won’t get the full benefit of Sec. 179. It could make sense to use an operating lease. That way, the lessor—the company you lease the equipment from—gets that tax benefit. This helps you because the lessor takes into account the tax benefits factors when deciding how much to charge.

3. What’s The Difference Between Leasing Equipment And Financing Equipment?

When you lease equipment, you’re essentially renting it. Equipment “financing” means you buy equipment with money borrowed from a lender. You own the equipment. There are advantages and disadvantages to both approaches.

A third way to obtain business equipment is buying it outright without borrowing or leasing.

4. What Are The Pros And Cons of Financing?

Equipment financing pros:

  • If you have a strong balance sheet and profitability, you might be able to obtain a very competitively priced loan to purchase the equipment at a lower total cost than leasing. Having the purchased equipment as collateral for the loan already makes the loan less risky for the lender than an unsecured loan. A strong balance sheet makes you more attractive to lenders.
  • Depending on your financial strength, you might be able to borrow all of the money you need to buy the equipment without a down payment.
  • As the owner of the financed equipment, you may be able to claim tax benefits such as Sec. 179 and deductions for loan interest.
  • With a loan, you have the option to pay the principal balance off if you want to–without penalty. This allows you to reduce the total interest you pay, and ultimately, the cost of getting the equipment.
  • If you own the equipment and can pay off the loan, you can dispose of the equipment at your discretion.

Equipment financing cons:

  • Borrowing to purchase equipment could limit your ability to borrow for other purposes, if lenders believe you’re assuming too much debt.
  • An equipment loan appears as a liability on your balance sheet.
  • Depending on the size of your down payment for the equipment, the lender might need more assets to secure the loan than just the equipment being financed, possibly including personal assets. The equipment might depreciate faster than the amortization schedule for paying off the loan.
  • The equipment could be obsolete before you pay the loan off.

5. What Are The Pros and Cons of Leasing?

Equipment leasing pros:

  • For companies of average or even sub-par financial standing, equipment leases are generally easier to obtain than loans.
  • It is often easier to obtain equipment via leasing without having to put any money down, than with a loan.
  • The only “security” you need to pledge is the equipment itself—which technically isn’t yours anyway since you’re borrowing it from a lessor.
  • Leasing equipment is known as “off balance sheet financing.” At least with an “operating lease,” the liability associated with your lease obligation isn’t reported as a liability on your balance sheet. Also, lease payments are treated as operating expenses–and tax deductible.
  • At the end of the lease term, which should coincide with the time you want to replace old equipment with newer models, selling or otherwise disposing of it isn’t your problem. You just return it to the leasing company. This is helpful with high-tech equipment which becomes obsolete more quickly than other equipment, and thus more difficult to sell.
  • Flexibility is a hallmark of leasing. There are many ways to structure a lease agreement.

Equipment leasing cons:

  • Because the leasing company is typically assuming greater credit and technology obsolescence risk rather than a lender making a loan to a financially strong company, lease payments often have a higher built-in cost structure than loans.
  • You are obligated to make all of the payments prescribed by the lease contract. You typically cannot pay it off ahead of the original schedule. Or if you can and want to, you would incur a large financial penalty.
  • Many lease agreements place the burden on you to pay for certain repairs and maintenance services.

6. What’s Involved In Entering A Lease Agreement?

The first decision you’ll face, after you decide on the equipment, is what kind of a lease agreement suits your needs. You’ll probably have several options, you just need to figure out which is best for you.

What can you really afford? While a leasing company makes its own judgments about that, you might want to be more conservative in the appraisal of your financial capacity. This will give your company plenty of breathing room for future financial needs.

Another task associated with entering an equipment lease agreement is which leasing company to work with (see Section 10). Some equipment manufacturers have their own “built-in” leasing companies. But, you owe it to yourself to be sure you’ve found the best deal before signing on the dotted line.

The final step in the process is persuading a lessor that you’re the kind of company with which it wants to do business. That may involve turning over reams of financial documents, along with good explanations of why you need the equipment and what it’ll do for your business. The process is like applying for a bank loan. However, it will probably be less rigorous since you aren’t borrowing money. You’re simply paying rent on property that you don’t own.

7. What Are The Main Categories of Equipment Leases?

There are two basic kinds of equipment leases: capital and operating. With a capital lease, you’re treated (for tax purposes) as the owner of the leased equipment. That means you can take depreciation deductions or, if you’re eligible, a Section 179 deduction. With an operating lease, you are treated more as a renter than an owner, and not eligible for that tax benefit. The only tax benefit is that lease payments are tax deductible.

Under Section 179 of the Internal Revenue Code, you are able–in 2019–to take a deduction for up to $1 million in equipment acquisition by purchase or through capital leasing. There are strings attached, however. You’re only eligible if a) you don’t acquire more than $2.5 million of equipment in that year (although you might still be eligible for a partial deduction) and b) the equipment is used at least 50% of the time for your business.

The Section 179 deduction is phased out dollar for dollar, for every dollar your equipment acquisitions exceed $2.5 million. For example, if you acquire $2.7 million in equipment, your maximum Section 179 deduction would be $800,000. The kinds of equipment eligible for deductions are restricted.

Any of the following criteria must be met in order for a lease to be treated as a capital lease.

  • You automatically become the owner of the leased property at the end of the lease term.
  • You have the option to purchase leased property at a subsidized price.
  • The lease term is long enough to cover at least 75 percent of the “useful life” of the equipment.

8. What Are Some Subcategories Of Leases?

Under a capital lease, there are several subcategories. The most expensive (in terms of monthly payments) is the $1 buyout lease. You have the option to buy the leased equipment for $1 at the end of the lease term. In effect, you’re buying the equipment over the lease term, since the lessor is prepared to turn it over to you at that time for the price of $1.

This type of lease may be the easiest to qualify for as the lessor is getting more money from you. You might not want to use a $1 buyout lease unless you plan to buy the equipment, and expect to use it for years to come.

Another common capital lease is the 10 percent option lease. As the name suggests, it gives you the option to buy leased equipment for 10 percent of the original value when the lease is up. Your monthly payments might be lower than the $1 buyout lease since you’re only paying for 90 percent of the equipment. Yet, the interest rate the lessor uses to calculate the payment might be higher, because it’s assuming the risk that you’ll decide not to buy the equipment at the end of the term.

A variation on the 10 percent option lease is the 10 percent “purchase upon termination” (PUT) lease. You’re obligated to purchase the equipment for 10 percent of the original equipment cost when the lease is up. This is more of a financial risk to you, thus giving you lower monthly lease payments. Of course, you have to come up with the cash simultaneously.

What are the terms?

Terms for a standard operating lease, in which there are no special tax benefits (beyond writing off lease payments), is the FMV lease. It gives you the option of purchasing leased equipment for its fair market value (as set by the lessor) at the end of the lease term, return the equipment or renew the lease. It’s an operating lease because it’s more like a simple rental arrangement. Lessors set approval standards highest for FMV leases.

A fifth lease category, known as a TRAC (Terminal Rental Adjustment Clause) is a hybrid contract. Depending on specifications, it can be a finance or an operating lease. They’re used primarily for commercial vehicle leases.

9. How Much Does Leasing Cost?

The cost of leasing equipment varies. These are the factors determining the cost:

  • The value of the equipment
  • The competitive state in the market of lessors that specialize in companies like yours
  • The interest rate environment
  • The way credit and obsolescence risk are allocated between you and the lessor
  • The assigment of which party gets the tax benefits

Also critical is your credit history. In a perfect world, the stronger your credit score is, the lower your lease payments will be. You can find lease payment calculators online to give you ballpark numbers for your own leasing situation.

10. How Do I Decide Which Equipment Leasing Company Is Right For Me?

When you start looking for an equipment lessor, you’ll find four kinds:

  1. A company that just puts together equipment leases.
  2. A “captive”: a subsidiary of a company making costly equipment.
  3. A financial institution offering equipment leasing among a variety of other financial services.
  4. A lease broker, who helps you find a suitable lessor.

Considering the long-term financial commitment involved, shop around. Your best bet might be a leasing company that specializes in working with companies like yours, and / or specializes in the kind of equipment you want to lease. Getting competitive terms is important, but so is the strength and integrity of the leasing company.

[skyword_tracking /]

best books for small business owners

Best Books for Small Business Owners: Start with Why

/in , , , , /by

January Monthly Must-Reads: Best Books for Small Business Owners

It’s easier to say you’ll make time to learn new things that really doing it, especially when you own and operate your own business. But research has shown that continuous learning is essential to business and careers success. So, how do you make time in your busy schedule to think about new ideas and how you might apply them at work? Read—or listen—to great business books. With our pick of the best books for small business owners, you’re sure to find the inspiration you need to succeed.

To help you choose the best business books for your situation, we’ve created our Monthly Must-Reads Series. This series highlights helpful books for small business owners and also save you time. How? For each featured book, we share the main focus, key take-aways, and even reader reviews, so you can quickly determine whether the book is worth your valuable time. We hope this makes it easier for you to keep up with current innovation, management and workforce trends.

To kick off 2020, we’re sharing Start with Why by Simon Sinek. For a list of past Monthly Must-Reads, like December’s Multipliers: How the Best Leaders Make Everyone Smarter, check out the bottom of this article.

Business Book:

Start with Why: How Great Leaders Inspire Everyone to Take Action, by Simon Sinek

Focus:

Identifying how the most influential leaders think about, act on, and communicate their why.

Main Idea:

Understanding the underlying purpose–the why— behind an idea, product or service inspires people to make positive changes in their lives.

Great for Small Business Owners Who:

Want to innovate and inspire by discovering their true mission and operating from it.

Synopsis:

Simon Sinek’s 2009 TED talk, How Great Leaders Inspire Action, is the third most-viewed TED talk of all time. In it, he urges all leaders to start asking, “Why?”

“Why do I get out of bed in the morning?”

“Why does my company exist?”

“And why should anyone care?”

And he named his book with that in mind. Start with Why delves deeper into his central idea, offering real world examples that illustrate what happens when companies successfully communicate their why.

Key Take-Aways:

  • Too many companies start with, focus on, and talk about their what: the product or service they sell.
  • When companies understand their why’ (i.e. their mission and the values that support it; the reason they’re in business), they can better identify appropriate audiences and more effectively market to them, creating a loyal customer base in the process.
  • A company’s why should also influence its culture, its hiring decisions, and its teambuilding strategies. Employees, not just customers, should understand and buy into your company’s why.
  • When you organize everything from your operations to your marketing efforts keeping your why in mind, you build a loyal customer base and an engaged, motivated team.

Reviewers Say:

“[Wow.] I cannot rate this book highly enough to take a different, positive approach to life and work. Like others, I have watched Sinek’s TED Talk on this, and questioned whether the book would add anything more, and, boy, yes it did. Imagine the TED Talk expanded to two hours, with more depth, intrigue and examples. What I like most about the book compared to the TED Talk is that it delves more in to how Starting With Why can influence home life, not just work. [It definitely makes you think], and I’m even finding myself taking a different approach around my team at work. I agree, a lot of the examples are repeated (a lot) throughout the book, in particular Apple. I’m not against Apple and found it useful how the different topics are explained using the same companies as examples. It helps provide the fuller picture. However, let me assure any potential readers that there are also plenty of new examples given too.”

“The author’s TED talk is one of the most-viewed ever; and it’s really quite good. In fact, it’s so good that you don’t need to read this book! He takes a very, very simple concept and expands, and expands, and repeats, and seemingly never edits, and then repeats, and expands, and — well, you get the idea. The whole thing could’ve been done in 50 pages or less. Example: Yes, there’s a difference between WHAT one does in business and WHY one does it. And sometimes they diverge. He calls this the “Split” and has a graphic and whole chapter on it. Really?? Not needed.”

Monthly Must-Read Business Books:

August, 2019 – Blitzscaling

September, 2019 – The E-Myth Revisited

October, 2019 – Influence: The Psychology of Persuasion

November, 2019 – Built to Last

December, 2019 – Multipliers

[skyword_tracking /]

Determining Your Small Business Owner Salary

Determining a Small Business Owner Salary

/in , /by

Determining your small business owner salary can be complicated. But, it’s not a big obstacle if you go about it carefully. The central dilemma–as we have noted elsewhere–is that if you “over-compensate yourself, you can put undue pressure on yourself and the business could suffer.” On the other hand, by undercompensating yourself, “you may be unable to give your business a fighting chance.”

To overcome this obstacle, here are key points and action steps to consider:

Focus on profits, not revenue.

Revenue is the money your business derives from sales. But, it’s not the same as profit. Before you see any profit, the income you collect from sales must go to paying your employees, your taxes, overhead expenses and fixed costs.

Therefore, a percentage of profits is the best rule of thumb to follow when determining your salary. According to NFIB, an actual salary figure should be “based on a percentage of profits over the past 2 to 3 years,” not “based solely on projections for the upcoming year or years,” even if you have contractual assurances of business yet to come.

Make sure you still set aside the right percentage of business earnings for:

  • A cash reserve (or emergency fund) account
  • Estimated tax expenses
  • Paying off debts
  • Funds to go back into the business for operating costs, fixed expenses, marketing expenditures, etc.

You can funnel what’s left over after paying for these business expenses into your own small business owner salary. NFIB adds that “most owners of profitable small businesses don’t take out more than 50 percent of profits for themselves.”

Get a sense of what other small business owners pay themselves.

It takes a bit of research, yes. But, finding out what owners of comparable enterprises pay themselves can help you determine your own salary requirements.

On salary comparison sites such as Payscale or Glassdoor, you can look at positions similar to your own. It might help you grasp what’s “market appropriate” in these areas. Often times, the same information is available in industry trade magazines or similar materials.

Keep in mind: Business owners on the east and west coasts generally pay themselves at a higher rate than their counterparts in the south or the Midwest regions.

Consider market-based wages.

Ask yourself, what would you pay another person with the same amount of skill and experience you possess? Other relevant factors include range of expertise, business contacts and overall scope of knowledge.

The salary figure you determine, based on these factors, gives you at the very least a ballpark estimate of what’s appropriate to pay yourself.

Be sure to pay yourself on a regular schedule.

Once you’ve determined what your salary should be, don’t look at the process as something you do from time to time, as profits permit. Instead, according to the accounting software firm Xero, establish payments “for you and your employees … and stick to them.” Following this system, “you’ll get used to the amount of money you receive and won’t have to worry about taking out occasional large lump sums.”

In other words, decide upon an annual salary and then divide that amount by 12 (for monthly payments). Don’t deviate from that figure. Additionally, check in with your accountant to make sure this amount matches what the IRS considers “reasonable compensation” for running a trade or business.

Many factors go into determining the appropriate small business owner salary that’s right for you. Remember that if your business is in the delicate startup phase, you’ll probably have to survive on the bare minimum. This is because all available funds must sink into the business enterprise in order to stay afloat. As time passes and when profits become tangible, then it’s time to start looking at how best to ensure you receive an appropriate base salary.

And for good reason–you’ve earned it!

Houston Small Business Services

Top Houston Small Business Services

/in /by

Are you looking to grow your small business in Houston, Texas? If so, consider the following Houston small business services–many of which are free of costs–to make your business thrive.

SCORE Houston

SCORE (Service Corp of Retired Executives), a leading, nation-wide organization, offers various Houston small business services. They have helped small business owners for over 50 years, and is a resource partner of the Small Business Administration (SBA). The SCORE Association consists of a large network of expert business counselors and mentors. They are specifically trained to offer services to small business owners. Services provide assistance and support in many areas, such as business planning, marketing and financial strategies. This is all at no cost. Mentoring can be conducted face-to-face or remotely and it is always confidential. Additionally, SCORE hosts free or low-cost online workshops on a variety of business topics.

The Office of Business Opportunity Solutions Center

The Houston-based Office of Business Opportunity Solutions Center (OBOSC) provides no-cost services to help small business owners thrive. On-site staff assists with questions regarding permits, licenses, fee schedules and regulations –city, county, state and federal based. Questions also pertain to the operations of Houston area businesses. OBOSC also offers one-on-one business counseling with SCORE business advisors, as well as business workshops and notary services.

OBOSC works closely with the SBA, University of Houston Small Business Development Center, the Harris County Clerk, the Texas State Comptroller, the Minority Business Enterprise Center and other agencies. The center has an extensive referral network of trade organizations, business incubators and educational institutions.

Greater Houston Partnership

The Greater Houston Partnership consists of over 1,000 companies and organizations dedicated to the success of Houston’s positive growth. It’s essentially a meeting place for business people who want to make Houston the best place to work and build a business. Paid members have access to online tools, digital subscriptions and other resources to help make better business decisions. Members receive detailed data and analysis. Information is about the Houston economy, news on economic development and company relocations and expansions. The Greater Houston Partnership also provides networking and business development opportunities with Houston’s business leaders through special partnership events, programs and councils.

Houston Business Development, Inc.

Houston Business Development, Inc. (HBDI) is a non-profit 501(c)(3) corporation established in 1986 by the City of Houston. HBDI provides affordable and flexible small business loans, and Houston small business services designed to enhance small business growth. The organization has a Business Technology Center, a 160,000 square-foot mixed-use business complex, offering administrative services and affordable office space. They also have a Business Information Center (BIC) that provides a comprehensive resource library with databases, computers with commercial software, as well as periodicals to support small business expansion. The BIC is available to the public free of charge. Additionally, experienced professionals from SCORE, HBDI and other agencies are readily available to conduct classes covering a variety of topics, including how to get a small business loan and managing cash flow.

Women’s Business Enterprise Alliance – Houston Women’s Business Center

The Women’s Business Enterprise Alliance (WBEA) offers Women’s Business Centers (WBCs) — a national network of nearly 100 educational centers, established by the SBA, to prepare women small business owners for success. Yes, the organization’s main objective is to assist women. But, they also help men who want to start and own a business.

The Houston WBC offers assistance or training in many areas of small business. This includes loan application and loan package preparation, web development and leadership and management training. Additionally, the Houston WBC provides free consultation services to help small business owners with variety of topics. These topics range from financial management to HR issues to marketing.

With the support and resources from these Houston small business services, your small business will be on the right track.

Free NYC Small Business Services

Free NYC Small Business Services That Give Empire State Entrepreneurs a Competitive Advantage

/in , /by

Did you know that small businesses make up more than 99% of all businesses in New York City–and employ half its public workforce? With such an economic impact, so many NYC small business services are in place to help entrepreneurs accelerate their enterprises.

Although launching and growing a small business can sometimes feel overwhelming, confusing or isolating, support is never far away. Here are some of the best free–and low-cost–NYC small business services available to Empire State entrepreneurs and small business owners.

Free Advisory Services

Do you need help devising your business plan or decoding regulatory requirements? Luckily, a myriad of NYC small business services exist in every borough. They will pair you with experts and mentors who will help you navigate roadblocks. Thousands of small business owners seek advice every year.

Bronx: The Bronx Small Business Development Center offers free small business services ranging from marketing to regulatory training.

Brooklyn: Brooklyn’s Small Business Development Center offers both online and in-person training. They help with everything from funding to financial literacy. Plus, they have an impressive amount of live networking events.

Manhattan: From financing and trade to marketing and government procurement, the Small Business Development Center at Pace University has a host of free resources and events available for entrepreneurs and small business owners.

Queens: The Queens Economic Development Corporation offers workshops, training events, one-on-one-coaching, and networking events free of charge.

Staten Island: The Staten Island Small Business Development Center exists to help both aspiring and established small business owners navigate regulatory requirements, identify viable funding sources and understand e-commerce, among other free services.

City-Wide: NYC Small Business Services Centers exist across all five boroughs. They offer free advice and resources to help small businesses start and grow. You can even take free business courses online! A three-minute application helps pair you with the curriculum best fit for your needs.

Free Meeting Spaces

Are you looking for a spot to host an important business meeting or collaborate with your cofounders? The following locations are available at no cost to entrepreneurs:

  1. The Freelancers Union invites entrepreneurs and freelancers to work from Freelancers Hub, its DUMBO co-working space up to eight days each month at no cost. Their hours are 9-5, Monday – Friday.
  2. The New York Public Library’s Science, Industry and Building Library (SIBL) allows entrepreneurs to reserve meeting rooms online. You can do so for up to six people and for two-hour time blocks, Monday through Saturday.

Free Resources By Classification

New York has one of the most diverse populations in the country. Services exist to help give small business owners of every background a competitive advantage. If you’re a minority, woman, immigrant, or veteran, you will find enormous value in the services tailored to you. The New York State Department of Labor offers a curated list of links on its website.

The important thing to remember is: you’re not alone! Help for entrepreneurs and small business owners looking for NYC small business services is close by. There are dedicated mentors and volunteers who want to help you succeed. They know you have the power to create meaningful impact in your community. Asking for help could mean the difference in your business stalling or skyrocketing. Most importantly, don’t be afraid to take the first step!

Do you need even more resources? The Kapitus Blog has hundreds of resources. It can help you navigate everything from marketing and technology to operations and human resources. Bookmark this page and be sure to return often for more advice and information geared specifically to New York City small business owners.

[skyword_tracking /]

About Us

Products

Contact Us