Business Owners Share: How I Will Grow My Business This Year

To be more successful , business owners often look back at all they accomplished in the past year. What did they do well? What strategies and changes did they make that resulted in growth? And what should they consider doing differently in the coming year to reap even bigger rewards?

We asked small business owners what resolutions they’re making in order to build on their past successes, and this is what they told us.

1. Identify goals that affect your bottom line.

Looking back on 2018, Francis Rusnak of Windy City Solutions discovered it’s possible to set goals for external purposes that don’t necessarily move the business forward. He calls these kind of goals, “vanity goals.” These are designed primarily to look good on paper and impress others; however, he says, vanity goals aren’t nearly as important as “production goals,” which have a direct impact on the business’s bottom line.

For 2019, Rusnak resolved to maintain a 20% ROI on each house his company flips, rather than focusing as much on the total number of homes he flips.

2. Create year-long action plans for company goals.

As a business owner, it can be tempting to focus on short-term wins instead of focusing on big-picture goals throughout the year. Paul Davis, CEO of creative agency Paul Davis Solutions, LLC recommends putting consistent effort towards his firm’s annual goals. The key to achieving them he says is developing specific, measurable action plans for how to achieve them. If your goal is generating $1 million in sales, for example, it’s critical that you then determine what you need to do to attract that amount of business. That might mean making 10,000 sales calls over the next 12 months, or 40 sales calls each work day, he says.

In 2019, he resolved to make those big goals a reality by breaking them down into daily action-oriented tasks and tracking them.

3. Base business decisions on data and analytics, not gut-feel.

Many business owners develop a sixth sense about opportunities that may help guide their business. Matthew Ross, co-owner and COO of RIZKNOWS, which operates several internet properties, realized, “Sometimes I act ‘impulsively,’ just because I want to move on to the next thing.”

Though money does love speed, Ross has resolved to rely more on data and past performance metrics in order to aid business decisions.

4. Document standard operating procedures.

To be able to hand off tasks to others, it may be helpful to stop and document how certain tasks should be completed. Dustyn Ferguson of coupon and rebate site Dime Will Tellsays that until now, he didn’t feel his company needed to build standard operating procedures (SOPs) in order to get things done.

To grow beyond its current size, Ferguson now sees how documented systems and SOPs will be necessary for the company. “Our New Year’s resolution was to start creating standard operating procedures for the main areas of our business … which should lead to more growth, better organization, and overall better business processes.”

5. Reduce workplace interruptions.

The worst enemy of productivity is interruptions, says Cristian Rennella, CEO of el Mejor Trato. Throughout 2019, he intends to do something about reducing workplace interruptions in the form of needless internal meetings by banning them.

“The objective is to eliminate interruptions at work as much as possible,” he says, explaining that a 30-minute meeting takes up much more than just 30 minutes — there’s the prep time and the time needed to refocus post-meeting, says Rennella.

6. Create efficiencies by delegating.

Jason Lavis of UK-based Out of the Box Innovations Ltd. recognized last year that he was trying to do too much himself. “It’s impossible for my company to grow unless I start to delegate.”

For 2019 Lavis resolved, “To look at every aspect of the business and see if it can be taken care of by someone else. Doing this will free up time for me to win new contracts and plan for growth.”

We’re so far into the new year that yet. As a business owner, you still have time to shift your focus to accomplish your business goals and to help ensure you end 2019 on solid footing. Take some time to set resolutions for your business that inspire you, and then take time to think through your approach on how to make them a reality.

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Are Credit Card Cash Advances Bad? 4 Reasons to Think Twice About Using Your Credit Card for Cash

Do you use your credit card to make withdrawals for your business? If so, you might be making an expensive mistake.

Whether it’s a business card or a personal credit card, it’s time to think twice about using your credit card as a debit card. Here’s what you need to know.

4 Costs of Taking Cash From Your Credit Card

Withdrawing money via your credit card could be costly for these four reasons.

1. Cash Advance Fee

It costs more to borrow cash from your credit card than to make a purchase using your card because of what’s known as a “cash advance fee.” Depending on the terms in your agreement, credit card issuers could charge you either a flat rate fee or a percentage fee of the withdrawal amount — whichever is greater.

2. No Grace Periods

Like personal credit cards, business credit cards usually offer a grace period. A grace period is the time period between the end date of a billing cycle and your next credit card due date. Cash advance transactions typically do NOT have a grace period. Instead, interest begins accruing immediately upon withdrawal, resulting in a higher total interest charge on cash advances than you’d see on a purchase transaction.

3. Higher Borrowing Rates

Another expense to consider with a credit card cash advance are the potentially higher interest rates. Interest rates on cash advances may be higher than the rate charged for purchases on the card. Refer to the fine print in your credit card agreement or contact your card issuer for more information.

4. Potential Unlimited Personal Liability

Does your business credit card have a personal liability clause?

If you’ve provided a personal guarantee for your business credit card, you’re personally on the hook for paying off that credit card debt if your business fails. That debt could include all the cash advance withdrawals from that credit card. This is the case even if the way you’ve incorporated your business (for example as an LLC) protects your personal assets against business litigation.

How to Calculate Your Credit Card Cash Advance Cost

If you’re wondering just how much a credit card cash withdrawal could cost, here’s how to figure it out

  1. Calculate the initial cash advance fee based on the withdrawal amount. For example, the fee on a $3,000 withdrawal from a card with a 3% cash advance fee is $90.00.Next, calculate the interest charges. Divide the annual percentage rate (APR) for cash advances on your card by 365. Then multiply that figure by the number of days you’ll carry the balance and the withdrawal amount. Based on the example above, a $3,000 advance at an APR of 21% for seven days, the calculations look like this: 21/365 = 0.00274 daily interest x 7 days = 0.019178 x $3,000 = $75.53.Add the interest charge to the credit card advance fee for a total cost of $165.53 (90 + 75.53) in charges and interest to take a $3,000 cash advance for seven days.

Alternatives to Business Credit Card Cash Advances

Luckily, there are less expensive ways to borrow money for your business.

  • A business credit line gives access to funds as needed, and you’ll only pay interest when and if your business uses it.
  • Short term loans and equipment financing often have comparatively low rates, especially when they’re secured against collateral such as real estate, equipment, or machinery.
  • Other business financing options include borrowing against your accounts receivables and invoices through revenue-based financing or invoice factoring.

Look into the other business financing options available to you before taking a credit card cash advance. Doing so could save your business a bundle.


How Concierge Physicians Keep Costs Simple

From new resolutions to new insurance plans, choices abound for the medical community when it comes to determining how to best serve their patients. Some physicians, however, eschew traditional insurance-based billing and opt for simplified concierge/direct primary care models. By eliminating the heavy administrative support insurance billing requires, concierge physicians may be able to provide a higher level of care.

Simple Costs, a Simple Goal

Dr. Alex Lickerman spent 21 years as a primary care physician before switching to a membership-based, concierge model. While his three-year-old concierge practice doesn’t accept insurance, it provides care the same way through a membership fee-based model. “We bill patients directly via a monthly membership fee,” says Lickerman. “All our services are covered by this fee. Meaning, whether a patient sees us only once a year for an annual exam or once a week for an acute medical issue, our fee is the same.”

Through this simplified billing model, Lickerman achieved a simple goal: To provide a higher level of care for a concentrated patient base.

“Our electronic medical records have transformed from insurance billing documents back into electronic medical records,” Lickerman says. “We’re no longer incentivized to bring patients in for visits they don’t need because we don’t get paid per visit. Our incentives are finally what they should be: take great care of patients, so they remain healthy and happy and want to stay with us.”

As a result, Lickerman’s practice can now schedule two-hour new patient appointments within a week of a patient joining. And they are able to schedule one-hour return visits the same-day or next-day. This generous approach to time-per-patient wasn’t an option under his previous insurance-centric practice.

Small Patient Loads, Big Benefits

Dr. Jennifer Gaudiani, the founder of the Denver-based Gaudiani Clinic, also chose a simplified, membership-based billing model for her eating disorder clinic. “Where most traditional medical offices have thousands of patients, each of our physicians carries a patient load of only about 70 patients,” says Gaudiani. “This simplified billing model allows our physicians to have space. They now have the ability to better coordinate care with other professionals, such as therapists, dietitians, and other physicians.  And finally, they’re able communicate directly with their patients via email, phone, and appointments.”

Practice, Perfected

With their concierge-model practices, both Gaudiani and Lickerman say they have seen a substantial transformation in costs and overall practice overhead.

“We don’t have to hire staff to ensure that insurance companies are paying us for our services. This has enabled us to reduce our expenses by 30-40% below traditional fee-for-service practices,” says Lickerman. In addition to similar overhead reductions, Gaudiani’s clinic has been able to make significant staffing and environmental reinvestments with the resources saved by bypassing insurance billing. “We’re able to use funds to pay for expert physicians, nurses, and operational staff.  In the past we had to hire multiple individuals to handle insurance billing, collections, and more,” Gaudiani says. “We’ve utilized funds to ensure that our office space is warm and welcoming for anyone who comes through our door.  Whereas before we didn’t have the ability to be thoughtful about our surroundings.”

Tips for Making the Simplicity Shift

For other physicians curious about making the shift to simplified, no-insurance billing models, both Gaudiani and Lickerman have some advice. Lickerman emphasizes setting an appropriate membership fee from the get-go, and not selling your services short. Gaudiani recommends establishing a business plan, detailing the number of staff and patients needed to make the practice a success. Potential direct primary care/concierge practices may also want to explore automated billing software.  This software provides ways to reduce billing friction and increase overall patient satisfaction.

For both professionals, however, the patient is at the center of the membership model decision.  Simple billing, more focused care, and a smaller practice size allows each to deliver a personalized level of care for each patient at every visit, every time.


Everything You Always Wanted To Know About Payables Turnover Ratio But Were Afraid To Ask

Editor’s Note: This is one of an eight-part series about key financial terms all entrepreneurs should know.

If you’ve never taken an accounting course, “Payables Turnover Ratio” might sound like a complex, intimidating term. Thankfully, that’s not the case. By the end of this article, you’ll understand what it means, why it matters, and how it can impact your ability to raise capital. Who knows … you may even find yourself calculating your business’s most recent payables turnover ratio just for fun.

What is a payables turnover ratio?

In simple terms, payables turnover ratio means how quickly a business is able to pay back its suppliers. The ratio is calculated by dividing cost of sales and dividing it by the average accounts payable amount during the period you’re measuring. Businesses looking to raise capital should be prepared to show payables turnover ratio on an annual basis for the past three years (assuming the company is three years old), and on a quarterly basis for at least the previous eight quarters. Some potential investors may also request monthly reports. The payables amount can be found on a company’s balance sheet under “current liabilities.”

Why does a payables turnover ratio matter?

In general, healthy companies are able to pay back their debts quickly because they’re generating income and operating in the black. The payables turnover ratio gives potential investors a quick look at how frequently a company is paying down its debt obligations. If a turnover ratio is increasing over time, a company may be paying off its debts faster. A decreasing ratio may mean pay back is taking longer, which could be a sign that a company’s financial condition is declining.

A decreasing ratio isn’t always a bad thing. For instance, if your company has one major supplier who provides many of your raw materials and you negotiate longer payment terms (moving from Net 30 to Net 60, for instance), your payables turnover ratio will decrease. Be prepared to explain any such change to a would-be investor, along with its benefits or challenges.

How can payables turnover ratio impact your financing options?

Alissa Bryden, author of 100 Entrepreneurs and a CPA at Virtual Heights Accounting says liquidity ratio is important as entrepreneurs seek funding for their businesses. “The payable turnover ratio is used by creditors and lenders to consider a company’s ability to pay off its current debts (specifically its trade or accounts payables),” Bryden explains.

“If a company can easily pay off its current accounts payable and continues to do so, then it indicates that the company will not burn through additional capital catching up on old debts.” That’s important, she says, because it “offers an indication that the additional capital can be used for future growth,” which is the kind of investment firms look for.

How can I improve my payables turnover ratio before seeking funding?

“To increase this ratio, a start-up can ensure it is paying down its debts prior to month or period end,” Bryden says. “This is because the average payables are based on an opening and closing month end calculation. Funders want to see you are putting their funds to good use.”

What does it mean to put funds to good use? Although the exact interpretation will vary by industry and company, Bryden says an across-the-board measure is minimizing costs that are not related to growth. “Reducing administrative costs and streamlining processes can assist you in increasing this ratio without affecting your future growth — or the lender’s future return,” she says.

Does the payables turnover ratio go by any other name?

Yes! You’ll sometimes see payables turnover ratio referred to as “accounts payable turnover” or “the creditors’ turnover ratio.” Each term means the same thing and can be used interchangeably.

What’s next?

Just like it’s easier to travel in a foreign country when you know the language, it’s easier to raise capital (or secure any kind of funding for your business) when you’re familiar with key financial terms and their real-life applications. Don’t forget to check out our previous installments on turnover ratiodebt to income ratio and current ratio.


Introverted Entrepreneur? Learn These 5 Techniques Successful Networkers Use

Editor’s Note: This is one of an eight-part series about key financial terms all entrepreneurs should know.

If you’ve never taken an accounting course, “Payables Turnover Ratio” might sound like a complex, intimidating term. Thankfully, that’s not the case. By the end of this article, you’ll understand what it means, why it matters, and how it can impact your ability to raise capital. Who knows … you may even find yourself calculating your business’s most recent payables turnover ratio just for fun.

What is a payables turnover ratio?

In simple terms, payables turnover ratio means how quickly a business is able to pay back its suppliers. The ratio is calculated by dividing cost of sales and dividing it by the average accounts payable amount during the period you’re measuring. Businesses looking to raise capital should be prepared to show payables turnover ratio on an annual basis for the past three years (assuming the company is three years old), and on a quarterly basis for at least the previous eight quarters. Some potential investors may also request monthly reports. The payables amount can be found on a company’s balance sheet under “current liabilities.”

Why does a payables turnover ratio matter?

In general, healthy companies are able to pay back their debts quickly because they’re generating income and operating in the black. The payables turnover ratio gives potential investors a quick look at how frequently a company is paying down its debt obligations. If a turnover ratio is increasing over time, a company may be paying off its debts faster. A decreasing ratio may mean pay back is taking longer, which could be a sign that a company’s financial condition is declining.

A decreasing ratio isn’t always a bad thing. For instance, if your company has one major supplier who provides many of your raw materials and you negotiate longer payment terms (moving from Net 30 to Net 60, for instance), your payables turnover ratio will decrease. Be prepared to explain any such change to a would-be investor, along with its benefits or challenges.

How can payables turnover ratio impact your financing options?

Alissa Bryden, author of 100 Entrepreneurs and a CPA at Virtual Heights Accounting says liquidity ratio is important as entrepreneurs seek funding for their businesses. “The payable turnover ratio is used by creditors and lenders to consider a company’s ability to pay off its current debts (specifically its trade or accounts payables),” Bryden explains.

“If a company can easily pay off its current accounts payable and continues to do so, then it indicates that the company will not burn through additional capital catching up on old debts.” That’s important, she says, because it “offers an indication that the additional capital can be used for future growth,” which is the kind of investment firms look for.

How can I improve my payables turnover ratio before seeking funding?

“To increase this ratio, a start-up can ensure it is paying down its debts prior to month or period end,” Bryden says. “This is because the average payables are based on an opening and closing month end calculation. Funders want to see you are putting their funds to good use.”

What does it mean to put funds to good use? Although the exact interpretation will vary by industry and company, Bryden says an across-the-board measure is minimizing costs that are not related to growth. “Reducing administrative costs and streamlining processes can assist you in increasing this ratio without affecting your future growth — or the lender’s future return,” she says.

Does the payables turnover ratio go by any other name?

Yes! You’ll sometimes see payables turnover ratio referred to as “accounts payable turnover” or “the creditors’ turnover ratio.” Each term means the same thing and can be used interchangeably.

What’s next?

Just like it’s easier to travel in a foreign country when you know the language, it’s easier to raise capital (or secure any kind of funding for your business) when you’re familiar with key financial terms and their real-life applications. Don’t forget to check out our previous installments on turnover ratiodebt to income ratio and current ratio.


Why you should consider going hyperlocal

Small businesses can often be better positioned than larger firms, thanks to their ability to pivot, anticipate trends and respond to their customer needs faster than larger competitors. That’s why many businesses are focusing on becoming hyperlocal.

A hyperlocal focus means a business targets a narrow geographic area, typically online and driven by search. Google near-me searches are no longer about just where to go, but about finding a specific thing, in a specific area, and in a specific period of time says Lisa Gevelber, Google’s VP of Marketing for the Americas in a piece for Think with Google.

Gevelber points out that online searches have changed; “near-me” mobile searches that contain a variant of, “can I buy,” or, “to buy” have grown more than 500 percent between 2015 and 2018. Many of the users were including location qualifiers like ZIP codes and neighborhood names in local searches because users assume, she says, the results will be automatically relevant to their location thanks to their devices.

These local search trends are important because learning how to be discovered at the hyperlocal level can help businesses grow a loyal, consistent customer base.

Here’s what small businesses can do to improve their hyperlocal traffic.

Grow Loyalty in Small Batches

Focusing on your city and region, as well as things of interest to your target audience can have a big payoff. Some large businesses create hypertargeted connections to create a virtual bridge to feel more local, even if they aren’t. The rationale is simple: dedicated customers who are embracing your product or service can help to grow your business on a hyperlocal level by creating a personal connection among their concentrated local sphere of influence.

Instead of going after mega-influencers who have thousands of followers on social media, many companies are looking for the “non-influencer” who has a lot of pull within a smaller, more intimate circle.

For example, Pedialyte, the toddler flu remedy, has widened its market with hyperlocal marketing as a hangover remedy.

According to Vox, “Pedialyte’s social media team started commenting on every single post that mentioned the brand, most commonly with, “You made our day!” and, “Stay hydrated,” paired with a sunglasses emoji. Then they started hopping into DMs, writing, “You’re a big fan of ours, it’s no secret. Well, we noticed and were wondering if you’d consider joining #TeamPedialyte? And we aren’t just asking anybody. … Only real-deals like yourself.”

Then Pedialyte sent out care packages and summer survival kits, recommended hashtags such as #TeamPedialyte and sharing an Amazon discount code.

What was surprising: “Almost none of these fans have more than 800 followers, and most have between 200 and 300. They’re not influencers, except in their very immediate social circles.”

A small business, such as a local coffee shop, can do this on a more intimate scale by reaching out to it’s social media followers and invite them to come in for a free cup of java or to try a new menu item as a public thank you for their loyalty coupled with a creative hashtag that can easily be tracked and followed.

Maintain Mobile Compatibility and Location Information

To connect on a hyperlocal level, it’s important to be easy to find.

Make sure your business is listed and verified on Google maps as well as BingYelpYahoo! Small Business’ LocalworksDexKnowsYellow Pages, and TripAdvisor, for travelers who are looking for a more local experience.

Double check to ensure your website is mobile optimized to make your business easily accessible, and ask for online referrals to help build traffic.

Be present on social channels like Instagram, Facebook, Twitter, and LinkedIn and make sure to add location tags into social media posts.

To help your ranking, make sure your basic information, sometimes also referred to as NAP— name, address, phone number— is listed, verified, and matches across as many services as possible to help with search rankings. For other search tips, review this post on Convince & Convert with Jay Baer.

Geotarget Potential Customers

Being in the right place at the right time can make a big difference. Offering a promotion to the correct audience can be even more important.

Small businesses can actively reach out on a hyperlocal level by geotargeting a specific group of influencers or potential customers based on a state, region or city, typically by using IP addresses.

Geotargeting can be done on a state, city or zip code level with IP addresses, through GPS signals or by geofencing, setting up a virtual perimeter where a promotion is valid. Although it’s not 100 percent accurate, the first three digits of a person’s IP address typically corresponds to the country code, while the remaining digits usually refer to specific areas.

Your company’s location will help determine how big or small of a geographic region you should create. Small businesses in more rural areas may want to set a larger target radius of 20 or 30 miles in diameter. For large urban areas, many businesses only target a one-mile radius, according to Adweek.

Create a Hashtag

Want things to trend locally or spread virally? The #MeToo movement has proven that a worthy hashtag and topic will go viral in a very short amount of time. That methodology can also help small businesses who might want to promote a trend, theme or sale on a hyperlocal level.

Not sure what hashtag to use? CreativeandCoffee blog offers a comprehensive list of hashtags for small businesses. Consider using local hashtags along with more general hashtags like #ShopLocal, #SmallBusiness, #Entrepreneur and #MakeItHappen to help align your business with others.


Introverted Entrepreneur? Learn These 5 Techniques Successful Networkers Use

Are you an introverted business owner who doesn’t know where to begin when it comes to networking? If so, you need a plan. Start by focusing on these five techniques commonly used by top networkers.

1. Be Community-Minded

It’s easier to network or get to know new people when you’re united for a common purpose or cause. Top networkers follow their personal interests to find volunteer opportunities, sports, and service organizations to join, expanding their circle of acquaintances.

Look for opportunities to give back to your community in a group setting. Volunteer as a board or committee member, or at your child’s favorite activity or school event. Focusing on completing a task or fulfilling a mission can help you ease into conversations when small-talk isn’t your strong suit.

2. Be a Listener

Don’t like to talk a lot? Don’t worry. The best networkers aren’t always gregarious, outgoing people. Instead, they ask questions, and then simply listen.

People love to talk about themselves, and this is how you’ll learn about an individual’s passions, skills, and other contacts. And pay attention – you never know who can help you down the road.

Start by approaching an individual who appears to be on their own. Encourage others to talk by asking open ended questions such as, “So why were you interested in coming to this event/meeting?” Or, “How did you get involved in this cause/organization?”

3. Keep Track of Who’s Who

Cultivating a network as a useful business resource requires keeping track of who’s who, as well as how to contact them.

Whether you track your contact list on your iPhone, your LinkedIn account, or a favorite app, the best networkers follow a systematic approach to organizing contact lists so individual information is easy to find when needed. Make a note of where/when you met, any pertinent details of conversations, and other acquaintances you may have in common. This can make it easier to find the individual in your list when you’re ready to connect again in the future.

4. Connect Others

Connecting with others isn’t always about who can do something for you right now. The most successful networkers look for opportunities to connect others to their mutual benefit. And then those individuals are more likely to help you when you’re looking for a favor down the road.

5. Network with a Purpose

When you’re an introverted business owner or entrepreneur, it may help to remind yourself of why you’re reaching out to people at an event or meeting. Maybe you want to get local exposure for your business, or get recommendations for professional services such as a new attorney or accountant.

Whether you’re attending a community event, or checking out a local business meetup, focus on getting to know just one personal at a time. Even if you make just three meaningful connections at each meeting, you’re expanding your network steadily and purposefully.


How the SBA May Help You Recover From Natural Disasters

Hurricanes, wildfires, earthquakes, volcanoes, mudslides — all can be devastating to the health of your small business.

In 2017, 40 percent of small businesses located within a FEMA-designated disaster zone reported natural disaster-related losses, according to the Federal Reserve. Forty-five percent of affected businesses reported asset losses of up to $25,000, while 61 percent reported revenue losses of up to $25,000.

Recovering from a natural disaster can be an uphill climb but the Small Business Administration offers relief in the form of Economic Injury Disaster Loans (EIDL). These loans can help you get your business back on solid ground.

How Economic Injury Disaster Loans Work

The EIDL program provides small businesses with funding to repair and rebuild following a natural disaster. As of 2018, qualifying businesses can borrow up to $2 million, which can be used for:

  • Replacing or repairing damaged equipment or machinery
  • Buying new inventory or replacing other assets, such as computers, that were damaged or destroyed
  • Repairing or rebuilding your physical premises if they were damaged or destroyed
  • Making improvements that could help reduce the risk of natural disaster-related damage in the future, such as installing generators or storm windows and doors

The main goal of the program is to help businesses that have been affected by a natural disaster get back to normal operations as quickly as possible. These loans are low-cost, with a maximum interest rate of four percent per year, with terms that can extend up to 30 years.

Who’s Eligible for a Disaster Loan?

In addition to small businesses, the EIDL program is also open to small agricultural cooperatives, small aquaculture operations and most private nonprofits.

It goes without saying that your business needs to be located in a federally declared disaster area to qualify. But, physical property damage to your business isn’t a requirement for eligibility.

There is one caveat, however. The program only offers these loans to small businesses if the SBA determines they’re unable to get credit elsewhere. If you’re able to get approved for an equipment or term loan, for instance, an EIDL wouldn’t be an option.

Covering the Gap When Insurance Falls Short

The SBA has a second program to help businesses that have physical property damages which aren’t covered by insurance. The Business Physical Disaster Loan program also offers up to $2 million to small businesses that need to repair or replace property, equipment, inventory or fixtures following a natural disaster.

The maximum interest rate is four percent if you’re unable to get credit elsewhere. If you have other borrowing options, the max rate tops out at eight percent. Like the EIDL program, repayment terms can stretch up to 30 years.

It’s possible to qualify for both an EIDL and a physical disaster loan — you’re just limited to borrowing $2 million total through both programs. You can submit an application for each loan program online to get the ball rolling on disaster relief for your business.


How to Plan for a Strong Fourth Quarter Finish

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.


Everything You Always Wanted to Know About Inventory Turnover Ratio but Were Afraid to Ask

Editor’s Note: This is one of an eight-part series about key financial terms all entrepreneurs should know.

Any entrepreneur who’s worked in retail knows that a misstep in inventory can cost the company money; and getting caught with obsolete inventory when consumer tastes change can spell major trouble for an otherwise-thriving business. Ask anyone whose company is sitting on inventory of fidget spinners or Snuggies. It’s no wonder, then, that would-be investors often take a close look a business’s inventory turnover ratio (ITR) before making funding decisions. Here’s a quick primer on ITR, why it’s important, and how one expert CFO recommends business owners keep the ratio in check.

What is inventory turnover ratio?

ITR is a measure of how efficiently a company is managing the goods in has in stock. ITR is calculated by dividing either sales or cost of goods sold (COGS) by average inventory — depending on your industry’s standard practice. The latter method does not take markups into account, so investors may consider it a more accurate representation of true cost. When divided by the number of days in a given period (month, quarter, year, etc.) a company can quickly tell how many days it is taking, on average, for inventory to “turn,” or sell.

Why is inventory turnover ratio important?

Having too much inventory on hand — or having the same inventory on hand for too long — may be detrimental for a business. Not only does it tie up capital, but it also creates a potential liability as inventory is less liquid than other assets.

Depending on the business, inventory may spoil (groceries or imported luxury food products), go out of style (fashion or fad items), become obsolete (tech products), or otherwise lose value based on how long it is stored. Plus, warehousing excessive inventory can be an expensive line-item. A business’s ability to forecast demand correctly and move through its inventory efficiently can be critical to success.

How can inventory turnover ratio impact your ability to raise capital?

The faster a company turns over inventory, the more successful (and often profitable) it is likely to be. Although there are industry exceptions (ultra-luxury purchases like high-end sports cars and real estate properties), investors often look for companies with products that are in-demand. If you’re considering raising capital in the near future, understand your inventory turnover before you enter into serious discussions. It may be prudent to offer a one-time sale or discount on existing inventory to improve your turnover ratio and decrease the amount of assets tied up in inventory.

Ask an Expert

Even if entrepreneurs have never heard of ITR before, they likely have an intuitive sense of how their inventory is turning. Strategic Funding asked Brad Shanahan, COO/CFO of VitaPerk, the world’s first nutrient coffee enhancer, why ITR is so important for business owners to keep an eye on at any stage.

Why is calculating the ITR — and keeping an eye on it — important?

ITR is important because a company often has a significant amount of money tied up in inventory. If the items in inventory do not get sold, the company’s money will not become available to pay its employees, suppliers, lenders, etc. It’s also possible that a company’s inventory will become less in demand, obsolete, or even deteriorate. If that occurs, the company’s money will be lost. Having slow-moving items in inventory also uses valuable space and makes the warehouse less efficient.

How often should businesses be calculating their ITR? Does it vary based on where the business is in its lifecycle?

In my opinion, a company should calculate their ITR on a quarterly basis (for a rolling 12-month time period), whether an early-stage startup or an established business.

What’s next?

A key to success as an entrepreneur is never being afraid to admit what you don’t know. Don’t know as many financial terms as you’d like to? No problem! We’ve got you covered with the next installment of this series, where you will learn everything you wanted to know about payable turnover ratio. And don’t forget to check out our previous installments on debt to income ratio and current ratio.


Everything You Always Wanted to Know About Debt-to-Income Ratio but Were Afraid to Ask

Editor’s Note: This is one of an eight-part series about key financial terms all entrepreneurs should know.

Your company’s debt-to-income ratio (DTI) is quick and easy to calculate, and it can tell you a lot about your financial situation. Many entrepreneurs look at this key performance indicator (KPI) for their businesses and their personal finances each time new recurring debt is added or subtracted. Be warned: calculating it may even become somewhat addictive!

What is debt-to-income ratio?

Debt-to-income ratio is exactly what its name implies: A measure comparing the percentage of a company’s debt to its overall income. It is calculated by dividing total recurring debt by gross income. It’s most commonly calculated and shown on a monthly basis, but DTI can be expressed over any period of time.

Why is debt-to-income ratio important?

Debt-to-income ratio is important because it is an indication of how much money is left over after your obligations are paid. This money may be used to promote or grow your business, allocated toward purchases or improvements, or taken as earnings.

The lower your debt-to-income ratio, the smaller your debts are compared to your overall income. That’s why higher DTIs are less attractive to entrepreneurs and their potential investors. The best way to lower your DTI may be to pay off recurring debt or costs, although doing so isn’t always advantageous. Talk to your accountant or CFO if you have questions about your DTI.

How can debt-to-income ratio impact your ability to raise capital?

All lenders will consider your DTI before making a funding decision, because DTI allows them to determine your ability to pay back additional debt. Traditional lenders want to ensure you’ll be able to meet the repayment obligations of your agreement. Equity investors, who may not be recouping money in the immediate future, want to ensure you’re not seeking a capital infusion just to repay existing debt. DTI is an important metric for determining your company’s runway, or the amount of time your business can continue to survive if your income and debts stay the same.

Ask an Expert

Alissa Bryden, author of 100 Entrepreneurs and a CPA at Virtual Heights Accounting explains why debt-to-income ratio is so important as entrepreneurs seek funding for their businesses:

How often should entrepreneurs be analyzing their debt-to-income ratio?

The debt-to-income ratio should only increase when you add additional monthly payments (debt) to the company. Thus, it is an indicator that can be analyzed when new debt is being considered or as a baseline each month, quarter, and year. In this way you can baseline your revenue growth over your monthly debt payments. It is a KPI that is of value to have included with your period reporting (month, quarter or year) but likely does not need to be considered more than that.

Does the percentage of acceptable debt-to-income ratio vary by industry?

Absolutely. Industries which require higher fixed asset purchases, such as manufacturing or construction, would generally have a higher debt-to-income ratio. However, they have hard assets that support the debt. A service-based company would be expected to have lower debt levels in relation to its income. Each case is different and there is no generic template that can be provided. Everything from newness of the market, industry benchmarks, internal finances and growth projections should be considered when determining where a company’s acceptable target is.

What’s next?

You can walk the walk, but do you talk the talk? If you’re trying to secure funding for your startup, it’s important to be well-versed in financial lingo. Check out part 2 of this series where we discuss current ratio.


Which Bank Is Best for Your Small Business?

As a small business owner, there’s a seemingly endless list of things to worry about, but banking shouldn’t be one of them. Your bank should offer the tools, resources, capabilities and service that are most essential to your business success.

But, what’s the best bank for small business?

Many business owners feel neglected by their bank, according to the J.D. Power 2017 U.S. Small Business Banking Satisfaction Study. If you’re a business owner or CFO who’s considering a banking switch, this guide may help you find your ideal banking match.

How to Find the Best Bank for Small Business

Finding the right bank for your business starts with doing your homework. Here are some of the most important things to consider as you compare banks:

Products and services: A checking account and a savings account are the two most basic financial tools you may need, but in searching for the best bank for small business, it’s important to look beyond that. For instance, you may need help with payroll services, payment processing or inventory management. Wealth management services, cyber security products and services or key person insurance may also be on the list of solutions you need your bank to provide.

Digital banking: Tech is increasingly important among small to medium enterprises, particularly where banking is concerned. Sixty-eight percent of small business bank customers’ interactions are either online or mobile. As you evaluate banks, pay close attention to online and mobile banking capabilities to ensure that you have the access, features and functionality you need to manage your business accounts on the go.

Financing options: You may not be seeking financing for your business right now, but don’t overlook what a bank offers in the way of financing options. Check to see if the bank offers business credit cards, business lines of credit and business loans. Take a look at what’s required to qualify for a loan or line of credit in terms of annual revenue and business longevity. Finally, consider the costs of borrowing with a particular bank. Hone in on the APR for credit cards, loans or lines of credit, as well as origination fees, annual fees and late fees.

Customized advice: Every business owner’s situation is different and there may be specific financial issues that you need guidance on more than others. The bank you choose should be able to offer the type of personalized advice you need most, when you need it.

Deposit account fees: Banking fees can take a significant bite out of your bottom line. In Nav’s 2018 Business Banking Study, 17% of business owners said they chose their current bank because it was least expensive. The biggest fee to watch out for is usually the monthly maintenance fee for checking, savings and money market accounts. Some banks allow you to offset or avoid this fee by maintaining a minimum balance or reaching a certain transaction volume each month, but not all do. Other fees to be aware of include cash deposit processing fees, wire transfer fees, fees for certified or cashier’s checks, overdraft fees, and returned deposit fees.

Deposit account APY: If you’re considering an interest-bearing checking account, savings account or money market account for your business, you want to make sure you’re getting the best rate possible on your balances. Compare the annual percentage yield (APY) for different interest-bearing accounts to see which banks have the most tempting offers. Remember, however, to weigh the interest you could earn on your balances to the fees you may have to pay to maintain your account.

Special incentives: Some banks sweeten the deal for business banking customers by offering special perks or incentives, such as a cash bonus for opening an account or a rewards program that’s linked to your checking account’s debit card. Still others offer discounted rates on financing options, free safe deposit boxes or waived fees on certain services. These extras may be secondary to some of the other criteria mentioned so far but it’s worth looking into see what a particular bank offers.

Convenience and access: If you’re busy running a business, you don’t have time for obstacles when it comes to accessing your accounts. As you scout out banks, consider how many branch and ATM locations there are, and how easily accessible they are to you. Think also about customer service availability. Smaller banks may only offer assistance by phone or email during regular business hours, while larger banks may be available 24/7.

Ease of transitioning accounts over to a new bank: Making the move to a new bank should be a smooth as possible so you’re not wasting valuable time. Some banks offer a switch kit to help you move your accounts over in a streamlined way. That’s something you may want to take advantage of if you want to minimize headaches with transferring accounts.

Reputation and personality: Finally, consider the bank’s reputation and the overall vibe it exudes. A bank that has a track record of engaging in questionable business practices or a reputation for being standoffish to its business clients is one you may want to avoid.

The Best Bank for Small Business Isn’t One Size Fits All

What your business needs from a bank may be entirely different from what another business owner is looking for. Determining which bank is best for you requires an understanding of what your business desires most in a banking relationship. If you’re not sure what that is, think about what’s lacking with your current bank. Then, use that as a guideline to evaluate how different banks may be able to fill in the gaps.