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Natural disaster

Can Your Small Business Use SBA Disaster Mitigation Assistance?

September 26, 2022/in Business Expansion, Featured Stories, Operations/by Brandon Wyson

Damage from natural disasters happens to businesses in every climate and on every corner of the United States. No business is wholly insulated from extreme weather or natural phenomena, and nothing is more frustrating than if your business suffers damage that could have been avoided. Weatherizing and mediating damage from natural disasters at your place of business is as important as any other precaution you can take. One of the major reasons small businesses may put off building improvements for the purpose of mitigating damage from natural disasters is undoubtedly the high price tag of many of those improvements. While there are several more general financing options when planning to improve your business, the SBA’s Mitigation Assistance Program – an expansion of their larger Disaster Loan system – may seem like an attractive option for making safety improvements to your business. It is then essential that small businesses understand where and when SBA-backed mitigation assistance is possible.

What is SBA Mitigation Assistance?

The SBA’s disaster mitigation assistance program allows businesses within declared disaster zones to apply for additional funds specifically for improving their businesses to better protect against future disasters. To see if your business is in a current disaster zone, use the SBA’s classifying tool. Existing disaster loans can be expanded up to 20% in the name of mitigation assistance, but the total value of the disaster loan may not exceed $2 million. There are, however, several examples of when that cap has been waived.

This means, however, that your business must first be approved for a disaster loan to qualify for mitigation assistance. Approval for a disaster loan, of course, requires that your business suffer damage because of a declared and recognized natural disaster. The SBA directly explains that if you suffer damage to not only property or leased spaces but machinery, equipment, fixtures, or even inventory, you may be eligible for disaster assistance. That means even if your damage is rather small or not immediately pressing, applying for a disaster loan could also open the door to applying for that additional mitigation assistance up to 20% of your principle.

Applying for mitigation assistance is only allowed once your business has been approved for a disaster loan of any kind. There is no additional application for mitigation assistance and applicants must call the SBA directly (800-659-2955) or speak to your already-assigned inspector. It is then up to the business owner to explain their intended mitigation project.

What Qualifies as Mitigation Improvements?

Flood Mitigation Measures: Among the SBA’s examples of viable improvements can run from comparatively small projects like sealing a roof all the way to relocating your business outside of an existing flood plain. Depending on the size of the principle of your existing disaster loan, of course, larger projects will only apply to larger cases of damage. Mitigation examples also include landscaping to improve natural drainage, installing a sump pump, converting the lowest level of your building to reduce flood risk, or even elevating your entire business.

Wind Mitigation Measures: Wind damage can be related to anything from tornados to winter storms. Especially in colder climates, it is very common for the SBA to declare a disaster where heavy snowfall and storms impede daily life. Examples of viable projects include installing pressure-rated windows or a pressure-rated garage door, investing in hurricane roof straps, or even building a full storm shelter.

Wildfire Mitigation Measures: Considering how wide west coast wildfires tend to spread, it is possible for a business to be within a declared disaster zone and not necessarily suffer catastrophic damage. Thus, the SBA gives examples of improvements like installing a fire-rated roof, replacing combustible fences or gates, removing debris brought about by the wildfire, installing tempered-glass window panes or mesh screens to prevent ash from coming through air vents.

Earthquake Mitigation Measures: While several states require that new buildings be fitted with earthquake resistant materials, businesses in buildings built before those modern processes are often the most susceptible to damage. The SBA offers examples of mitigation such as buying anchors for rooftop-mounted materials, buying window film to reduce glass spread during a quake, or retrofitting masonry or concrete buildings. Once again, the SBA offers an extremely wide range (economic and manpower) of projects meaning that even if your project is not specifically listed, there is a fair chance it will still be considered.

Hail Mitigation Measures: Hail damage isn’t likely to level your entire place of business but if that damage is sustained over the length of a storm, hail damage can become very costly. If you are seeking mitigation in connection to a hail-based disaster loan, the SBA gives these examples of acceptable projects: installing steel gutters, replacing existing structures like skylights or shingles with more weather-resistant alternatives, or installing hail guards.

Preparing for the Worst Leads to Weathering the Best

The mitigation assistance program is best used by businesses who suffer enough damage from a natural disaster to justify a disaster loan but are not devastated so fully that they need to find a new place of business. Disaster loans are meant to bring your business back to working order as quickly as possible, and thus, the money from those loans is generally only allowed to be used on strictly essential elements. Mitigation assistance, then, is a fantastic opportunity to take up improvements and safety measures at the same rate of your disaster loan which is likely considerably less than non-SBA-backed loans. Further, the SBA gives an extremely broad spectrum of examples when explaining what applies as mitigation. Especially as hurricane season looms on the East Coast and Wildfires continue in the West, there are likely quite a few small businesses who could benefit from further mitigation.

https://kapitus.com/wp-content/uploads/iStock-852285320.jpg 1469 2200 Brandon Wyson https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Brandon Wyson2022-09-26 00:00:052022-09-27 15:11:20Can Your Small Business Use SBA Disaster Mitigation Assistance?
Bubbles with business related images inside floating above a bird view of the city.

Tips on Starting, Funding a New Business

August 20, 2021/in Business Expansion, Operations/by Vince Calio

Small businesses are being created now more than ever, thanks to people being laid off or furloughed during the COVID-19 pandemic and the advent of online tools aimed at helping budding entrepreneurs. In April 2021, roughly 500,000 people in the U.S. applied for new business applications, compared to just 300,000 in the same month of 2020, according to the Bureau of Labor Statistics.

While the current climate may make the decision to start your own business easier than ever before, it certainly doesn’t mean that starting a new business is easy. While creating your small business from scratch does start with a dream, a great idea and some funding, you’ll probably also need online training, business acumen and an understanding of some basic financial and marketing principles to get going. 

Mapping Out Your Business

Whether you are launching a construction business, retail store, business services firm or an eCommerce site, before you even think about funding, you’ll need to produce a business plan. 

A business plan is a specific outline of your business, what it will entail and how it will make money. If you plan to seek initial investors for your business, be it angel or venture cap investors or through crowdsourcing, you’re going to need one. 

Source: Growthink

There are cost-effective online tools out there that can provide you with a template for a presentable business plan, such as this one from Growthink, that can make it easy for you – all you have to do is plug in the text and the program will do the rest for you. The basic ingredients of a plan for a new business are:

  • Executive Summary

The executive summary should clearly tell the reader what you want to accomplish as a business, and why your business is special. This is often referred to as a mission statement and is extremely important to potential investors. All too often, this is buried in the middle of the business plan but needs to be stated upfront.

  • Business Description 

The business description should include a clear description of your industry, as well as the products or services you are seeking to sell within it. This is your chance to describe why your product or service stands out in the industry and why you think customers will choose it over your competitors. 

  • Marketing Strategy

This part of the business plan requires a meticulous analysis of the market you are trying to sell your product in, and who you want to sell your product or services to. As an entrepreneur, you need to be familiar with all aspects of the market you’re looking to sell in, as well as carefully define your target market so that your company can be positioned to garner its share of sales.

  • Competitive Analysis

Present a description of what your competitors offer, what their strengths and weaknesses are, and how big the market is in which you are trying to sell. Then, clearly explain what gives your business a competitive advantage. Put simply, why do you think consumers will choose your products or services over your competitors? 

  • Design and Development Plan

The purpose of a design and development plan is to provide a description of the design of your products or services, chart their development within the context of production, marketing and the company itself, and create a development budget that will enable your company to reach its goals.

  • Operations and Management Plan

This plan describes how your business will function on a continuing basis. Who, if anyone, is going to be in charge besides yourself? Where will your business function and what kind of equipment and inventory will you need? Who will you need to hire and for what functions? 

Put simply, the plan will clearly explain the various responsibilities of your management team (if you plan to have one), the tasks assigned to each person in your company, as well as the capital and expense requirements related to the operations of the business. 

If the only employee will be you, you need to clearly spell out what kind of compensation you will need for yourself, as well as the equipment, supplies and space you will need to make your business operate smoothly. 

Business Basics

In planning out a new business, you need to learn basic business terms and why they’re important. There are online courses (and many of them are free!) to teach you the basics of managing a business, such as what sales and profit margins are, customer retention and conversion, etc. 

In order to successfully launch your business, here are some basic business terms you should familiarize yourself with right off the bat:

  • Sales Margin 

Also known as contribution margin, this metric basically determines what you should be charging for your products or services in order to be profitable. It is the amount of money you charge for your product minus the cost associated with producing your product or service. Those costs include manufacturing costs, advertising/marketing and salaries. 

  • Customer Acquisition Cost

This metric helps determine what each sale costs. Simply add up the cost of marketing and sales — including salaries and overhead — and divide by the number of customers you land during a specific time frame.

  • Customer Retention Rate

Customer retention rate is a key metric that essentially tells you if your customers are happy, and will help you determine how quickly you can grow your business. It measures what percentage of your customers have kept coming back over a period of time, and can be calculated over a weekly, monthly or annual basis, depending on your preference.

  • Customer Conversion Rate

This metric basically tells you whether your marketing and sales efforts are paying off. It is simply the percentage of people who walk into your business or visit your website who end up becoming customers. If the conversion rate is low, you may want to change the way you are marketing or advertising your business. You may want to offer more discounts on your website if your conversion rate is low, for example. 

  • Revenue Percentages

If your small business is like most, you probably have more than one source of revenue. Where your revenue is coming from will tell you about shifting trends in your market and what consumers are spending money on. 

For example, if you run a small contracting business, you may get revenue from customers who want to build new homes and revenue from customers who want to renovate their homes. If you notice that, suddenly, many more customers are interested in home renovation rather than new home building, you may want to change your marketing efforts accordingly. 

Build a Website

Whether you’re a doctor or a plumber, it is virtually impossible today to run your business without having an online presence. When consumers search for your services, the first place they will search is the internet. 

Having an online presence means that potential customers can easily find you via a web search, know what products or services you offer, and what makes you unique. You can even set up your website to make direct sales.

Building your own website does not have to be costly, as there are plenty of do-it-yourself website builders such as Wix and SQUARESPACE that can make it easy. In a previous article, Kapitus offered a step-by-step guide to building your own site.

Potential Funding Sources

When you’re looking to start a business, traditional and alternative small business lending sources are probably not an option, since most require years in business. There are funding sources available to you, however, if your personal savings and help from friends and family members are not enough to start your own business:

  • Angel Investors

This option is pretty much what the hit show “Shark Tank” is about. Angel investors are individuals who are willing to invest in start-ups or early stage companies, typically between $25,000 to $100,000, in exchange for a piece of ownership. Their hope is that their investments will pay off big when your company either goes public or when your company becomes big enough so that you can comfortably buy out their pieces of ownership for a hefty sum more than the amount that they originally invested. 

Source: Angel List

Angel investors are often successful entrepreneurs themselves and can offer mentorship and business advice, and typically want to see a strong business plan as well as your plans for growth before they invest. You can find angel investors from other entrepreneurs, or search online through sites such as Angel List.

  • Crowdfunding 

Crowdfunding is becoming one of the most popular ways to garner funds for startup businesses. It is the practice of raising funds through popular crowdfunding websites. 

Setting up a crowdfunding campaign is relatively easy. In most cases, all it takes is setting up a profile on a crowdfunding site, describing your company and its business, and the amount of money you are seeking to raise. In order to attract investors, your business plan and products must seem compelling and differentiating. 

One of the best features of a typical crowdfunding plan is that you usually don’t have to give up pieces of ownership in your business, as people who are interested in investing typically do so in exchange for some kind of reward from your business, such as a discount based on the amount donated, or some form of profit sharing in your business.

Equity crowdfunding, however, is when you are selling stock or some other interest in your company in exchange for cash, and requires compliance with federal and state securities laws. In this form of crowdfunding, you should consult with an investment attorney.

Crowdfunding sites usually charge a fee to list your campaign, which will either be a processing fee or a percentage of the funds raised. Some of the most popular sites include Kickstarter, Indiegogo, Crowd Supply, Crowdfunder and SeedInvest.

  • Grants

There are several private grants available through application for startup and small businesses that could reward you with $10,000 to $150,000 in startup cash, especially if you are launching a woman- or minority-owned business.  Additionally, there are some grants offered through the U.S. Small Business Administration. Some of these grants usually require a business to be community-related or involve mentorship of some kind, so be sure to carefully examine the requirements before applying. 

  • Small Business Credit Cards

Since traditional and alternative business loans are not typically available for startup businesses, you may want to apply for a business credit card. These types of cards often require a strong personal credit score – not years in business – so they may be a good alternative funding source. Like with any credit card, interest is only charged on the amount borrowed, and these cards often come with perks such as cash back rewards, airline mileage points and discounts with selected retailers. 

In the past year, a number of credit card issuers have offered cards that specifically focus on the small business market and do not require personal guarantees, which means use of the card will not impact your personal credit score. One example is Brex, which offers a small business card for early-stage technology companies with professional funding. The credit limits may be substantially higher than traditional credit cards, and they often provide valuable rewards.

  • Venture Capital

Of course, VC funding is usually thought of first as a funding source for startup companies, but they often have the most stringent requirements. VC managers typically want to see strong business plans, and often require seats on company boards, right of first refusal, anti-dilution protection and high ownership stakes. It is often difficult to obtain VC funding as most fund managers are inundated with funding requests and often only accept pitches through referrals from trusted sources, such as other successful startups and successful entrepreneurs. 

Several rounds of funding are often involved, and most VC fund managers are seeking highly profitable exit strategies, such as an IPO or an acquisition, even though most startup businesses do not have any such plans on their horizons. If your startup business does have grand plans of becoming the next Amazon or Microsoft, then VC funding may be for you. 

Starting your own business may be a complex, exhausting task that will require hard work and long hours, but in the end, the thought of being your own boss, setting your own hours and not having limits on your compensation to support you and your family may be worth it if you have a dream and a great idea.

https://kapitus.com/wp-content/uploads/Entrepreneurs-8.11.21.jpg 1154 2100 Vince Calio https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Vince Calio2021-08-20 16:05:202022-04-07 17:21:16Tips on Starting, Funding a New Business
Regional support for your business

Forget the Feds! Take advantage of Regional Support for Your Business

October 19, 2020/in Business Expansion, Operations/by Wil Rivera

If your business is looking for financing, especially during these times, there are various places you can turn. While many small business owners applied for Federal grants and loans, in the form of the Paycheck Protection Program (PPP) and the EIDL, some of these financing opportunities have come and gone.  But have you considered regional support for your business?

Today, many localities across the country have all sorts of support mechanisms and are ready to help small business owners looking for COVID-19 relief. All you need to do is know where to look to take advantage of them.

Here’s where you can start looking.

Small Business Administration Regional Offices

The SBA doesn’t just operate out of Washington, D.C., all across the country, you’ll find SBA District and Regional Offices set up to help local small businesses in that area.

Within these local offices, the SBA offers programs such as SCORE for free and low cost mentoring and counseling, Women’s and Veteran’s Business Centers to help small business owners create business plans, networking, and marketing help.

This summer, the SBA also introduced the Community Advantage Recovery Loan (CARL) Program, which provides funding for small business owners in underserved markets.

U.S. Chamber of Commerce

Virtually every community around the country has a branch of the Chamber of Commerce (CoC). It can be an excellent source for small business owners to network and get in touch with local funding programs.

Many local Chambers of Commerce are also offering free help and guidance during this time. Search your state or local CoC website. There, you might find a list of local member brands providing grants, training and other free services to small business owners in the region.

State, County and City Government

Many states and county governments are also offering small business loans and grants for COVID-19 relief. To find these, search for your local city, county and state’s economic development offices and small business programs, which tend to administer these programs.

Statewide programs vary in size and scale. However, many offer smaller grants and funding to businesses serving in front line work or operating culturally essential institution.  These new options are in addition to more traditional options. Many of these loans focus on keeping struggling small businesses afloat, offering funding to keep employees on the payroll to prevent staff reductions and cover the costs of sick workers.

Rents are also a continuing concern for small business owners. So, check your state, local, and city governments to see if they have enacted rent moratoriums or offer rent assistance.

Several state and county governments are also facilitating personal protective equipment (PPE) to small business owners for employees at no additional cost.

Business Improvement District Programs

Business Improvement Districts (BID) are geographical areas that are overseen by a non-profit organization that helps maintain, improve and promote the area.

An essential part of the growth and improvement of any BID is through its small local businesses. Many BIDs have economic development programs that offer loan and grant programs to qualifying small business owners, especially those who might be underserved in the community, such as women and people of color.

Private Local Groups and Entrepreneurs

Don’t forget to look to local groups and entrepreneurs as well. Many of these groups and individuals offer grants, loans and even microloans to qualifying local business owners in the area.

There are already thousands of groups and non-profit organizations that work regionally providing small business and SBA loans during so-called “normal” times. They are working to continue their efforts during COVID-19 by expanding current loan options and offering new loans and grants.

You Have Options

Even though your business might be struggling under the weight of everything happening in the world right now, know that there are funding options out there for you.

Once you’ve gone through your opportunities at the Federal level, look look a little closer to home and consider taking advantage of regional support for your business. More often than not, you’ll find people and other businesses who want to help you get through this tough time.

 

https://kapitus.com/wp-content/uploads/forget-the-feds-take-advantage-of-regional-support-for-your-business.jpg 1670 2200 Wil Rivera https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Wil Rivera2020-10-19 10:25:102022-04-07 17:26:18Forget the Feds! Take advantage of Regional Support for Your Business
2020 new year small business plan

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

December 31, 2019/in Business Expansion, Operations/by Jennifer A. DiGiovanni

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.

https://kapitus.com/wp-content/uploads/2019/12/iStock-1170530863.jpg 1414 2121 Jennifer A. DiGiovanni https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Jennifer A. DiGiovanni2019-12-31 09:52:332022-04-07 18:04:45A Small Business New Year Checklist to Help You Ring in the 2020s
three-ways-to-evaluate-a-capital-investment

3 Ways to Evaluate a Capital Investment

June 27, 2019/in Business Expansion, Operations/by Bernadette Abel

Small business owners often find themselves in a situation where they have to evaluate a capital investment project and decide whether or not how to expand their company, purchase new equipment or move to a new location. Availability of internal funds and the ability to borrow money are often limited.  So, making the decision on whether or not to move forward with a project or purchase is critical to the health of a business.

Let’s look at an example: Suppose an owner has an extremely popular restaurant and wants to take advantage of its esteemed reputation. Should the owner expand the existing facility or open a new location on the other side of town?

Expanding the existing restaurant will cost $75,000 and is expected to produce additional annual cash flow of $25,000. A new location will require an investment of $300,000. It is projected to have an annual cash flow of $75,000 after it is up and running for a few years.

Which of these projects should the owner choose?

Fortunately, several tools are available to evaluate a capital investment that will help small business owners determine the feasibility of each project:

  • Payback method
  • Net present value of cash flows
  • Internal rate of return

Evaluate a Capital Investment with the Payback Method

The payback method is the simplest to use. It is the time needed for cash inflows to cover the initial cost of the investment. The formula is the initial investment divided by the annual cash flow.

Take the example of the choices facing the restaurant owner. The payback period for the expansion of the existing facility is three years ($75,000 divided by $25,000). Since the restaurant is already operating, the increase in cash flow will take place fairly quickly.

Alternatively,  once there is a steady customer base, the payback period for opening a new location could be four years ($300,000 divided by $75,000). However, the cash flow for the early years after opening is uncertain, so the payback period may be longer.

The payback method has the following weaknesses:

  • The payback method won’t include cash flows beyond the payback period.
  • It does not consider the risk of receiving future cash flows.
  • This method fails to take into account the time value of money.

Evaluate a Capital Investment with Net Present Value

Unlike the payback method, the net present value calculation considers the time value of money. It includes future cash flows after the payback period and for as long as the project generates cash.

NPV takes a stream of future cash flows and discounts them back to their present value at the current interest rate on loans or the rate of return required by an investor or owner.

The amount that the present value of cash inflows exceeds the present value of the initial investment is the project’s NPV. This makes it possible to compare projects to each other by determining which one has the highest NPV. This method has a bias toward larger projects. This is because larger projects can show higher a higher NPV than smaller projects which have fewer dollars invested.

You can adjust the discount rate used to calculate the NPV so that you can compensate for the risk level of future cash flows. In the restaurant example, the discount rate used to calculate the NPV for a new location will be higher because of the greater uncertainty of future cash flows. Cash flows from expansion of the existing facility is more certain.

Evaluate a Capital Investment with Internal Rate of Return

The internal rate of return for a project is the discount rate that makes the net present value of the investment equal to zero.  You should consider accepting a project if its IRR exceeds your required hurdle rate. As the business owner, you determine your hurdle rate.

When using the IRR approach, you can compare projects with each other.  Upon comparing, you should select the project with the higher IRR, assuming the IRR exceeds the required hurtle rate.

None of these methods will provide the ultimate answer by themselves. Each approach has its advantages and shortcomings. The payback method is simple to use but does not include cash flows beyond the payback period. The net present value calculations favor large projects over small ones.  In addition, the internal rate of return gives multiple answers when cash flows are both positive and negative.

The most sensible approach is to use all three methods to get comparison figures for guidance and then apply experienced judgement and common sense.

https://kapitus.com/wp-content/uploads/2019/06/3-methods-to-evaluate-a-capital-investment.jpg 1650 2200 Bernadette Abel https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Bernadette Abel2019-06-27 17:12:112022-04-07 18:12:133 Ways to Evaluate a Capital Investment
How to Plan for a Strong Fourth Quarter Finish

How to Plan for a Strong Fourth Quarter Finish

October 1, 2018/in Business Expansion, Operations/by Wil Rivera

A strong economic outlook is driving consumer optimism, and as a business owner, you may be similarly inspired to pursue growth. Small businesses are looking towards the future with a bright outlook, according to the NFIB Research Foundation’s latest optimism index survey. The August 2018 report found a record number of business owners — 34 percent — have plans to expand.

As the fourth quarter approaches, consider what you can do now to wrap up the year on a high note.

Fill out the Ranks if Necessary

If you run a retail store or a service-based business that tends to be busier during the holidays, now’s the time to think about increasing your staff.

Review last year’s sales and run an estimated projection for this year’s numbers to get an idea of how strong customer demand is likely to be. That can help you gauge how many employees you need to hire and how to schedule them. Remember to give yourself enough time to fully on-board new hires ahead of the holiday rush.

Check Your Inventory Numbers

The business owners included in the small business optimism index report had an eye on boosting their inventory stock. Ten percent said they planned to increase inventory, the strongest numbers since 2005.

Go back to the sales projections you calculated earlier and compare those numbers to the inventory you have on hand. If certain items tend to be scarce around the holidays, get in touch with your vendors to see if you can pre-order those to avoid selling out when customer traffic peaks. Also, work out delivery schedules in advance so you know when new inventory will arrive.

Begin Your Tax Prep

The next payment deadline for quarterly estimated taxes is right around the corner in January. Yet another good reason to run estimates of sales projections through the fourth quarter is to ensure that you’re setting aside enough money over the next few months to cover your estimated tax obligation.

You can also use the fourth quarter to begin prepping for next year’s tax filing. Start looking for deductible expenses and add up business losses (if any) year to date. If you’re planning to spend capital on something big, such as new equipment, consider whether it makes more sense to do that now or defer your purchase until the beginning of the year.

Consider Financing Sooner, Rather Than Later

One thing small business owners aren’t optimistic about, according to the survey, is an improvement in credit conditions. With interest rates continuing to rise, borrowing may become more expensive.

If you think you may need an equipment or inventory loan, or just a working capital loan to finish up the fourth quarter, check your credit to see how likely you are to qualify. And of course, take time to compare borrowing options from different lenders to find the best fit for your financing needs.

https://kapitus.com/wp-content/uploads/2018/11/how-to-plan-for-a-strong-fourth-quarter-finish.jpg 1395 2149 Wil Rivera https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Wil Rivera2018-10-01 00:00:002022-08-09 20:16:35How to Plan for a Strong Fourth Quarter Finish
How to Avoid Growing Too Fast: When Putting on the Brakes is the Key to Success

Is Your Business Growing Too Fast?

September 17, 2018/in Business Expansion, Operations/by Bernadette Abel

Business Growing Too Fast: When Putting on the Brakes is the Key to Success

Vishal Singh, an entrepreneur in Lincoln, Nebraska, was getting calls from as far away as Brazil and Argentina about his company’s product — technology that could determine if cattle in feedlots were becoming sick.

As the inquiries came from around the globe, Singh gave them an answer you won’t find in many sales books: No, thanks.

He was concerned about expanding too quickly. “We have a product that involves both hardware and software, so we have to make sure there’s no hang-ups on the manufacturing side of it,” he says in an interview with Inc. “We keep in touch with them, but we start with the smaller operations — we need to operate in bite-size chunks.”

Slowing to Succeed

As a business owner, you may want to grow as quickly as possible.  But, growing slowly may be a better path to success. The Kauffman Foundation conducted a follow-up study of businesses that made Inc. magazine’s 5,000 fastest-growing companies list. Five to eight years after landing on the list, two-thirds of the company had, “Gotten smaller, been disadvantageously sold or gone out of business entirely.”

Fast growth, while alluring, may create issues hindering companies from developing the processes they need to succeed, including:

  • The quality of the product suffers as the quantity ratchets up too quickly.
  • Communication breaks down and employees leave.
  • The company cannot collect the money it’s owed fast enough.
  • Leadership takes on too many roles, with too many day-to-day tasks depending on their participation.
  • In the rush to fill jobs, the company hires the wrong people, and the culture declines.

Maintaining Your Vision

The signs of your business growing too fast may include customer complaints, cash flow problems, and mission creep. “When a business grows too quickly, many founders lose sight of their original vision,” writes CEO Brandon Vallorani. “They broaden out so far that their team members forget what the product or service was that built the company in the first place.”

The question to ask is whether your growth is a result of realistic planning, anticipation, and orderly preparation. If your growth is getting ahead of you, your business might be getting away from you. Keep an eye out for the warnings signs of excessive growth, and when the temptation comes to press on the gas when you should be working the brake, remember who won the race between the tortoise and the hare.

https://kapitus.com/wp-content/uploads/2018/11/how-to-avoid-growing-too-fast-small.jpg 1414 2121 Bernadette Abel https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Bernadette Abel2018-09-17 00:00:002022-04-07 18:19:20Is Your Business Growing Too Fast?
4 Common Challenges to be Aware of

4 Common Challenges to be Aware of After 1 Year in Business

March 23, 2018/in Business Expansion, Operations/by Wil Rivera

No matter how you look at it, owning a business for one year is a huge accomplishment. You’ve gone through the legal paperwork, filed taxes, signed a lease and a million other things, not to mention you’ve paid your bills! But many common challenges will start to pop up after those 12 months.

This is a time to celebrate, but it’s also a time when new challenges will arrive. To prepare you, here are four of the most common difficulties small business owners face at the one-year mark.

Staying true to your vision

Running a small business is like going through an obstacle course. You may have a path picked out, but navigating the various hurdles, monkey bars, slides and ball pits will ultimately determine the path you take. Many opportunities, as well as problems, may arise during your first year, but stay focused on your original goal and on the thing your business can do better than any other.

Maintaining the momentum

A new business generates buzz and gets people talking. This is a gift for the owner. However, that initial buzz fades out quickly. A challenge many small businesses face is in keeping that momentum alive. To do this, they might have to get creative with marketing efforts, network with the right people, participate in the community and have a robust social media presence. These things might not be directly connected to your day-to-day operations, but are essential parts of a successful marketing effort.

Here are some of the small business marketing trends to be aware of in 2018.

Managing cash flow

One of the most common growing pains small businesses experience is in properly managing their cash flow. This can come in various forms. Whether it’s keeping proper accounting records, paying invoices on time (or getting paid on time), or juggling purchases and inventory, many small business owners are not prepared for some of these more knotty difficulties.

Learning to let others handle it

Your business is your child, and it’s hard let it grow up and out of your sight. Almost every business owner struggles with the problem of when to delegate a task or let someone else handle an important aspect of the business. After a year in business you’ll probably be on track to expand and grow. Success means there will be more work to do, and if you don’t learn how to delegate, you will be stretched beyond capacity.

For many, the first year in business is one of the most exciting — and challenging — years of their life. But it’s only the beginning. With new challenges come new opportunities for growth, job creation and the formation of a company culture.

https://kapitus.com/wp-content/uploads/2018/11/4-common-challenges-to-be-aware-of.jpg 1414 2121 Wil Rivera https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Wil Rivera2018-03-23 00:00:002022-08-17 11:32:214 Common Challenges to be Aware of After 1 Year in Business

Start a New Project Without Getting Financing by Partnering With Your Partners

August 10, 2017/in Business Expansion, Operations/by Wil Rivera

Your partners can be the best asset for starting a new project.

No man or woman is an island, and neither is a company. Every business has a slew of suppliers for everything from pencils to raw materials. It may even be the case that you have as close a relationship with your suppliers as you do with your customers. In short, they likely know how your business is doing. They should know, because in a sense, they are one of your business partners who will prosper if you do.

Depending on how long they have been supplying you, they may know more about your company than your bank does. If that’s the case, then you also may find it easy to wholly, or partially, finance a new project by asking your supplier for credit. That is to say, you would ask to be billed long after your received the things you purchased from that company. Typically, suppliers don’t charge an interest rate, but instead offer discounts for speedy payment. It may make sense to start small and ratchet up how much credit you request. It’s worth a try and might be easier than the bank.

https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png 0 0 Wil Rivera https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Wil Rivera2017-08-10 00:00:002022-08-26 17:33:47Start a New Project Without Getting Financing by Partnering With Your Partners

It’s now Easier — and Cheaper — to Buy or Sell a Colorado Small Business

May 22, 2017/in Business Expansion, Operations/by Wil Rivera

If you’ve been thinking about selling your Colorado business, or becoming a small business owner in the state, now may be the time to take advantage of the wide selection of businesses up for sale.

According to the 2017 Q1 Insight report by BizBuySell.com, more Colorado businesses are for sale now than in 2016. That’s an increase of 11 percent, and they’re cheaper than a year ago too (down 19 percent from 2016).

For example, in the surrounding Denver metropolitan area, these are metrics from the first quarter of 2017:

  • Businesses listed for sale: 496
  • Median asking price: $275,000
  • Median revenue: $500,000
  • Asking price to revenue average: .72
  • Median cash flow: $102,658

Why Small Business Sales are Increasing in Colorado & Nationwide

According to the year-end Insight Report from BizBuySell.com, 2016 was the healthiest year for business sales since they started recording this data in 2007. There were 7,842 businesses were sold last year. The 2017 Colorado business data shows 2017 is on track to outpace and beat 2016. In the first quarter of 2017, 2,368 small businesses were sold, which is an increase of 29 percent year over year.

But why is this happening?

BizBuySell attributes the growth in business sales to a healthy economy, strong business financials and access to financing. Demographically, the research suggests Baby Boomers are looking to exit small business ownership by capitalizing on the favorable market conditions. Younger buyers looking to purchase a small business are seeing healthy businesses with strong financials. Then are able to easily access the capital they need to purchase the business.

In addition, the data suggests the state of the small business sales industry is becoming more balanced in terms of fair market value. The median sale price for the first quarter of 2017 was $220,000 with the median asking price at $250,000. This means the average-sale-to-asking-price ratio is .92. It’s a very strong ratio that speaks to how both buyers and sellers are close to their assessment in what is fair market value for a United States small business.

How You Can Take Advantage of the Positive Small Business Sales Market

Buying a Business:

Determine the best type of business to buy: You should evaluate your background, education, experience, and personal passions. Don’t forget to keep in mind how much time you want to spend at your business and where you want it to be located. Then research your chosen market and business type to see what’s available and the asking price.

 

Figure out the value of the business you want to buy: Do a thorough research into business history and financials, in addition to business assets. It may be wise to hire a professional appraiser to help you.

 

Review the legal status, location and permits for the business: Make sure the owner has the legal rights to sell the business. And carefully comb through any issues that might crop up before your business can be operational.

Selling Your Business:

Prepare far in advance: It can take a while to gather documents, financials and everything you need to determine the price of your business. Then you will have to wait for the right buyer.

 

Increase profits: While you’re preparing to sell your business, do additional marketing or anything you can do to increase profits and customers. This can add value to your business.

 

Realistically price your business: Use online tools to understand what other businesses similar to yours in your area are selling for. It can be best to have a professional do an evaluation to determine your business’ value.

https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png 0 0 Wil Rivera https://kapitus.com/wp-content/uploads/Kapitus_Logo_white-2-300x81-1-e1615929624763.png Wil Rivera2017-05-22 00:00:002022-04-07 18:31:59It’s now Easier — and Cheaper — to Buy or Sell a Colorado Small Business
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