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Tips on Making the Perfect Video for Your Small Business

October 3, 2022/in Business Productivity, Featured Stories/by Vince Calio

If you’re a small business owner, being camera shy is more than just a personal insecurity – it’s a trait that can threaten your livelihood. Study after study has shown that using videos is now more important than ever to promote your business. Consider that online shoppers, on average, consume up to 16 hours of videos per week, according to a study on video marketing statistics by Wyzowl.

Videos provide what text can’t, which is both audio and visual stimulation. A little more than 87% of consumers surveyed said they’d rather watch a video about a product than read about it. Additionally, over half of consumers say that they watch video product reviews before making a purchase, and most said that they believe videos explain products better than text.

How Can Videos Benefit Your Business?

Many small business owners, however, are still reluctant to make videos to benefit their enterprises, either because they believe video production will cost too much, or they simply aren’t comfortable with the idea of putting themselves in front of a camera. Including videos on your website or for social media, however, can benefit your business in a myriad of ways and may not cost as much as you think. Videos can:

Gain a following on social media. A strong social media strategy for your business can invite thousands of followers and produce a huge return on investment. In 2021, the video-based social media platform TikTok surpassed Google as the most popular domain in the world, showing that browsers prefer watching videos on their social media platforms than all other types of posts. Since then, Instagram and Facebook created algorithms prioritizing videos over photo-based posts.
Tell your story. A short video introducing your story and how you became a small business owner can form an emotional connection with your customers and thus increase your sales. Whether it’s on Youtube, Facebook, Instagram, or your own website, a clever video about you and your brand – rather than a block of text that drones on – can bring followers and increase business.
Win grants and other contests. Winning free money is always good for business. Grant opportunities for small businesses have increased since the COVID-19 pandemic began in 2020. Many grant contests, including Kapitus’ $250,000 Building Resilient Businesses contest and the FedEx Small Business Grant contests accept video submissions for prizes.
Provide customer testimonials/product demos. Consumer researchers have shown that a large majority of buyers watch product reviews before making purchases, so it’s no surprise that one of the most effective marketing tools are videos showing customers raving about your product and demonstrating how your product is meeting their needs.
Improve your internet search rankings. Much like you do with your website and blog articles, you can add meta data and descriptions for your videos, thus increasing your chances of popping up in search results on Google and other search engines.

Should you Hire a Video Production Company?

There are hundreds of companies out there that can provide you with the necessary equipment and expertise on how to create effective videos for both your website and social media and give you a much better chance of getting an ROI on your videos than if you made them yourself. While a good video production company can help you tremendously, their services will probably set you back thousands of dollars, depending on the video you’re making and how long you plan to be shooting.

If you believe that investing in a video production company will help you, you need to do your research as you would before purchasing any other product or service. Search for reviews and testimonials about the company before you hire them, and have the company give you examples of past videos they’ve made for other clients to get a sense of their style.

How can I Create a Video?

If you decide to go it alone, there are several cost-effective ways to make your own promotional videos. Whether you’re creating a video to promote your products, telling the story of your business or submitting a video as part of a grant contest, you’re most likely going to need to invest in some equipment and editing software, take time to learn how to make an effective video, as well as get your creative juices flowing on how you will connect with your audience.

That said, to make a video that will grab the attention of your viewers, there are several steps and suggestions you’re going to need to follow:

#1 Invest in Video Editing Software

You want your video to be sharp, visually appealing, have the right background and be well-edited. Including minor special effects and a custom background will also help make your video more attractive, and this is where video editing software will come in handy. Popular software editing video packages such as InVideo, Adobe Premiere Pro and Cyberlink’s PowerDirector 365 can easily walk you through the process of making a great video and add the effects you’re looking for, such as customized backgrounds, audio effects, streaming images and lighting options.

These packages can typically cost several hundred dollars but are significantly cheaper than hiring a video production company.

For example, check out this storytelling video from a small business, which used video editing software to compile and smoothly streamline images and audio to tell the story of Sipping Streams Tea Company.

#2 Purchase Video Equipment

Obviously, you want your viewers to be able to clearly see and hear you in your video, so it’s worth making an investment in some basic video equipment. Video equipment doesn’t have to cost a fortune either. While a $2,000, high quality hand-held video recorder would certainly be useful, you don’t have to spend that much. A basic tripod, an updated smartphone with high quality camera/video recorder, a small microphone and the right lighting can do the trick. These are low-cost items that can turn you into a video wizard overnight.

(Pro Tip: Make sure you don’t have bright lights behind you when you’re speaking into the camera, so you don’t end up looking like a shadow. Also, use a good microphone so that your audience can clearly hear you.)

#3 Have a Script Ready

Before you make a video, carefully consider who your audience is and spend time crafting your message to say exactly what it is that you are seeking to convey.

Remember, when you make a video, this is your chance to speak directly to your audience. You may want to make flash cards highlighting the most important points you wish to make, as well as informing your viewers of the value you bring to them.

For example, this educational video from River Pools is a great example of a small business owner succinctly articulating the informative points he wants to make in a visually friendly way.

#3 ‘Same as it Ever was, Same as it Ever was’

Kapitus small business video lending Vince Calio

You never want to be a “talking head” in your business video, unless you’re a member of the 80’s band, Talking Heads.

That’s what viewers will be saying if your entire business video is simply someone’s face blandly speaking in front of a plain white wall. So, unless you’re a member of the popular 80s band Talking Heads, you generally want to avoid being a talking head in your video. You can do this by featuring varied and colorful backgrounds to keep the viewer engaged.

This video from the 2022 winner of the FedEx Small Business Grant competition, the SuitShop, for example, does an excellent job of smoothly transitioning between visually appealing images and clearly articulating its message, which set it apart from other contestants.

#4 Plan and Coordinate for Product Demos/Customer Testimonials

One of the most effective videos for your business is a video of real customers demonstrating and raving about your product. These videos, however, will take more time and effort to produce than others. While advice about lighting, sound and colorful backgrounds still apply, you’re probably going to have to get real life customers to agree to be in your video and create scripts for each of them. Second, you may have to shoot in multiple locations, and third, you must make sure your product can be easily demonstrated.

This is where you may want to hire a video production company to ensure you get the highest possible ROI on your video. A great example of a high-quality customer testimonial video is this one from Magic Flask, which showcases customers using the product.

#5 Social Media is a Different Animal

Social media video posts, especially for the world’s most popular video platform, TikTok, require different types of videos than ones you would create for your website or YouTube. These videos shouldn’t be professionally made, rather, viewers should be able to relate to them on a personal level.

When making a short video for TikTok or Instagram, you should first ask the question, “What aspect of a person’s life should I be showcasing, and how can I showcase that in an amusing and entertaining way?”

Here are some examples of successful small business videos on TikTok that are both affable and entertaining.

#6 SEO Your Videos

Now that you’ve made a video for your business, you want people to be able to find it. Google, however, loves content that has a mix of text, videos and images, so when you go to embed your video on your website, it’s important that you optimize it with keywords in the description, as well as meta tags and descriptions so your video appears in the results of searches on multiple search engines.

#7 Don’t get into Legal Trouble

We live in the most litigious environment at any point in our history, so when you make a video for your business, you want to make sure you avoid legal trouble. This means (among other things):

Getting permission to use music. Musicians are especially touchy these days, so you want to obtain the proper permission to play a song by a popular artist in the background of your video.
Avoiding the sight of company logos (aside from your own) in your video. This can even include a Starbucks coffee mug or any other item with another company logo on it, as that has the potential for a copyright infringement lawsuit against you.
Not having children under the age of 13 in your videos – even though you have the best of intentions, this is something you want to avoid, as the Federal Trade Commission has strict laws against advertising to children, especially if your product involves alcohol.

You may want to run your video by your small business’ attorney before you publish it to make sure everything is hunky dory.

Videos are Essential

Making videos for your business will take time, effort, and some money – depending on the equipment you purchase and whether you hire a production company – but videos now should be an essential part of your marketing strategy no matter what type of small business you own. A well-made video clearly appeals to consumers more than texts and can increase brand awareness, consumer engagement and even revenue for your business.

Kapitus small business rent crisis lending

Small Business Rent Crisis: What You can do to Survive

September 28, 2022/in Featured Stories, Operations/by Vince Calio

Small businesses, facing a markedly different world than the one they faced at the height of the COVID-19 pandemic, are getting hammered by rising rents and demands for back rent payments. Rising inflation, employee shortages, rent increases and federal pandemic relief funding running dry have all contributed to 40% of small businesses in the US not making the rent in August 2022, according to Alignable – up from 33% in March. Another 45% of small businesses said that their rent has increased since 2021.

This has become an urgent crisis for Main Street businesses in virtually every industry that operates out of physical locations. Small agricultural businesses, independent restaurants, nonprofits, automotive dealerships, and the travel/lodging industry have been hit the hardest, with 50% of agricultural companies and 46% of restaurants missing their rent payments in August 2022.

Small Business Kapitus lending rent crisis Alignable

Roughly 40% of small businesses missed their rent payment in August 2022, according to Alignable.

What can Small Businesses do?

If your small business has missed a rent payment or if you are struggling to figure out how you’re going to meet your next rent payment, your options obviously aren’t great. There are, however, some steps you can take to try to help ease your situation.

Kapitus spoke to Stephen Cameron, president and founder of Level On Demand, a real estate services company that provides small businesses with real estate services such as contract reviews and property analysis. Cameron, a 20-year veteran of the commercial real estate market, shared his advice on how to deal with the current rent crisis.

#1 Know Your Landlord’s Situation

Before you try to negotiate with your landlord on missed or late rent payments, it’s important to first research whether the landlord is even allowed to compromise. Commercial real estate spaces are often owned by investment funds such as hedge funds or private equity firms, or even by pension funds or family offices.

Hedge funds and private equity firms often require their landlords to enforce lease agreements to the letter with no room for negotiation, while a family office or pension fund will see some payment as better than nothing. If this is the case, you may want to consider moving your business to another space altogether.

#2 Read Your Lease Carefully!

If you informed your landlord that you’re going to be late on your next rent payment, it’s important to

Kapitus Small Business Real Estate Stephen Cameron Level On Demand rent crisis

Stephen Cameron, president of real estate consulting firm Level On Demand, stressed that small businesses should know their lease agreement before negotiating with their landlord.

read your original lease agreement, as most agreements do contain a grace period to make the payment on time. Often, these grace periods are three- to five days, and sometimes can even be up to 15 days.

“The more important part of the lease to check is how many days you – as a tenant – have before you’re in default,” said Cameron. “This is much harder to recover from than just making a late payment.

Cameron also stressed the importance of notifying your landlord in writing if you know you’re going to be late with rent, let them know you’re going to make that payment and see if it’s possible to negotiate late fees, as many landlords would rather avoid going through the hassle of looking for a new tenant.

“If you have missed your payment deadline and any grace period, in most cases it is to your advantage to make written contact with your landlord as soon as possible,” said Cameron. “Sometimes it’s easy to forget that, in many cases, landlords are not large corporations, but just people who have a mortgage to pay and just want everything to work out with minimal problems.”

#3 Can You Negotiate Late Fees?

Negotiating late fees often depends on the goodwill of your landlord, because those fees are usually spelt out in your lease agreement. According to Cameron, these fees can range from 5% to 15% of one month’s rent, and a tenant won’t be in good standing with the rent until the full rent and late fees are paid. Cameron warned that “This is a commercial space, not a house; the eviction process is not as friendly here.”

Eviction rent crisis small business Kapitus Stephen Cameron Level On Demand

Negotiate with your landlord early, as the eviction process for small businesses is a lot harsher than for residential properties.

He also emphasized that it’s important to negotiate late fees and a grace period before you sign a lease. “For anyone contemplating signing a new lease right now, who may be concerned they will need a longer grace period, there are options,” he said. “Especially in the case of new, seasonal or sales-dependent businesses, negotiating with a landlord to get a few ‘freebies’ or months per year in which rent can be paid late without a penalty or fee is not out of the question. Just be prepared for a landlord to ask for something in return.”

#4 How do you Negotiate Your Lease?

If you are looking for a lower rent but don’t want to move, one strategy you may want to consider is negotiating a new lease with your landlord.

This isn’t going to be easy because landlords, like small businesses, felt the brunt of the economic impact of the pandemic. Many small businesses could not pay rent for months during the height of COVID, and many more still owe back rent.

Before you attempt to negotiate, Cameron suggests trying to gauge whether your landlord is in good shape or hurting financially before you negotiate a new lease.

“There are a lot of motivations, financial and otherwise, in play these days, so asking for a reduction in rent or to keep it at its previous rate is very common right now,” he said. “I’m seeing tenants across the country having more success negotiating down their base rental rates in exchange for increases on their variable expenses, such as common area maintenance, utility reimbursements, etc.”

#5 Consider a WFH Arrangement or Shared Space

Obviously, a working from home arrangement isn’t an option for businesses such as independent

Kapitus Level On Demand small business lending

Many small businesses have turned to shared workspace arrangements to mitigate rising rents.

restaurants and small construction companies. However, if your business operates out of an office, working from home or even moving to a cheaper, shared space through companies such as Industrious or Regus can be a much more cost-effective option for you, as it has become for many companies since the beginning of the pandemic.

“For smaller or more agile companies, having a dedicated mailing address may be enough,” said Cameron. “I’ve seen many of these companies supplement their occasional need for dedicated space by having company retreats at larger Airbnb homes or even reserving hotel-style conference rooms.”

#6 Is it Worth Buying Your Property?

If you believe you can save enough for a down payment and can afford to wait until interest rates come down again, there are definite advantages to purchasing the space in which your business is housed outright. The biggest being that (depending on the purchase arrangement with your bank) your monthly payments will be fixed and never increase, and you’ll never have to beg for an extension or negotiate a lease with a landlord again. Not only will your property become an investment, but purchasing the property can also reap tax and depreciation benefits of ownership.

There are also disadvantages of ownership, however. For one thing, it takes away your ability to easily move locations. Second, just as you are responsible for maintaining your house, you will be responsible for maintaining your business property, which can be costly. If you need a new roof or wish to re-landscape the space, you will be responsible for paying for that.

“Ultimately, the choice for a small- to medium-sized business between remaining a tenant or purchasing a property should be looked at objectively,” Cameron warned. “I’ve seen many business owners absolutely fall in love with a space that was perfect for their business but had no real value to anyone else. When it came time to move the business and find a new tenant, there were none to be found.”

#7 If you Have to Move…

As we are living in uncertain economic times, moving your business and finding a cheaper location won’t

Kapitus moving small business rent crisis Level On Demand

If you have to move your business to another location, you may have to settle for less space if you want a decrease in rent.

be easy, but if you’re unable to reach an agreement with your current landlord, you may not have a choice.

If your business relies on local customers, you’re probably going to need a space in the same neighborhood in which you currently operate. Since you’d be seeking a space that is ideally cheaper than the one you’re moving from, you may have to consider making due with a smaller space since the commercial rent market is fluctuating right now.

As previously mentioned, if you do move to a new space, carefully negotiate your lease with your new landlord.

Carefully Consider Your Options!

Being late on or missing your rent payment is never ideal and comes with few easy answers. The worst thing you can do, however, is to just ignore the situation. You should realize that you do have a few options, the first being to make sure you keep your landlord in the loop as to what’s going on. Carefully try to renegotiate, and in case that fails, it’s crucial to have a backup plan.

Small Business Acquisitions and How to Finance Them

August 5, 2021/in Operations, Raising Capital/by Vince Calio

Acquiring another business can be a complicated task, but one that could very well be worth the effort to ensure the survival of your small or micro business.

The time may also be right for considering an acquisition, as interest rates are low, making borrowing for an acquisition relatively cheap. Additionally, according to the most recent NFIB Small Business Optimism Index, the net percent of owners raising average selling prices increased 10 points to 36%, the highest reading since April 1981.

While deal volume is not back at a pre-pandemic level, according to the NFIB, sectors such as liquor stores, home improvement businesses, e-commerce sites, medical businesses, manufacturers, and distributors are seeing high activity.

Reasons to Consider an Acquisition

One reason you may consider acquiring another business is that, now that we are (hopefully) in the waning days of the COVID-19 pandemic, your business may very well have taken a financial hit, and you may need to scale up by purchasing a similar business if you wish to survive going forward.

Purchasing a similar business would give you an entirely new stream of revenue and a new pool of clients, as well as increase branding in your market – even if you’re a microbusiness such as an independent restaurant or retail store owner. If you’re an accounting or law firm or other type of business services firm or medical practice, it may even increase your client base to other regions of the country, depending on the location of the business you are seeking to purchase.

Another potential reason to make an acquisition is that you may want to complement your business by offering additional services. For example, if you own and operate a construction firm that specializes in building houses, you may want to purchase a company that specializes in masonry and paving work so that you don’t have to subcontract that work whenever you build a new home.

Due Your Due Diligence

If you’re interested in making a strategic acquisition, your first task will be to work with an M&A advisor or even an accounting firm. While most banks are not interested in M&A advisory work for small businesses, there are several advisors that do specialize in handling acquisitions for small to medium-sized businesses (SMBs).

Talk to your advisor about:

Why you want to make an acquisition;
What type of company you are seeking to purchase;
The location of the company in which you wish to purchase;
The feasibility of merging your company’s balance sheet with the acquired company;
The value of similar businesses in your industry and in your geographic location;
A realistic amount you wish to spend on an acquisition;
The logistics of merging your company with another, and
How to fund the acquisition through debt.

A reputable M&A advisor should be able to do the due diligence for you and find you a list of companies in your area that may be a compatible target for an acquisition based on their business models, revenue, management structure and other factors. The advisor should also come up with a fair value of the acquisition target based on the financials of the target business.

Create a Combined Business Plan

Once you and your M&A advisor has found an acquisition target that meets your criteria and agrees to be acquired, you will have to produce new short- and long-term business plans for your new, combined entity in order to get financing to fund the acquisition. The basic ingredients of a business plan for a newly combined business typically include:

#1 Creating a New Management Team, Staff

Discuss with the head of the company that you are looking to acquire the logistics of combining your staff. Start with who will oversee the new company, and what functions each of you will have. If you are a microbusiness and the new company will only have 6 or 7 employees, then combining your respective workforces should not be too challenging. If your newly formed company will have 20 or more employees, you may wish to create new departments with new department heads, with each serving a different function.

Staffing redundancies, such as two people from each respective company essentially serving the same purpose, may be a red flag in the eyes of a prospective lender, so make sure your new staff structure is as efficient as possible. These factors will be crucial in the contingency –or 12-month plan– that you will need to present to a prospective lender to finance your acquisition.

#2 Creating a New Mission Statement in Line with Your New Capabilities

Your new company’s mission statement should detail the new array of products that you offer, how employees approach their work to reach goals and why your new company is improved in the way it provides products and services as a result of the acquisition.

Next, ascertain the capabilities that your new entity has to offer in terms of sales. For example, the company that you are acquiring may offer eCommerce capabilities, while you have more retail locations. Post acquisition, your new company will offer both and your mission statement needs to reflect this. Your new company may now offer business-to-business, business-to-consumers capabilities or combinations thereof as a result of the acquisition. In addition to being a key component of your mission, these factors should be the benchmarks for your five-year business plan.

#3 Showing That You Can Absorb Debt

Typically, the company that you acquire will have some debt that you have to absorb. In order to get financing for your acquisition, you have to convince the lender that you can handle that debt, especially since you are using debt to finance the acquisition.

Joshua Jones, Chief Revenue Officer at Kapitus, said the ability to take on new debt is key to acquisition financing.

“The [lending] bank is going to say, ‘does this asset (the acquired company) cover the new debt service on that business?’” said Joshua Jones, chief revenue officer at Kapitus. “Because now, you’ve just applied a whole new payment (through the financing of the acquisition) and the best way to show in your business plan that you can absorb that debt and increase your gross profit is either through efficiency gain or scale.”

#4 Projecting Gross Income of the Newly Formed Company

Work closely with your accountant or M&A advisor to project a 12-month income. There are various ways to project income, and it is typically far more complicated than simply adding the gross income of your company to that of the company you are acquiring, so talk to a financial expert on this.

“An effective planning tool is through the use of projections,” said Michael Kuru, a CPA specializing in family-owned businesses. “When a business is acquired, there is a strong indication of the gross income that should be generated. The experienced business owner should have an idea as to the underlying cost to generate that income.’

Obtaining Financing for an Acquisition

Generally, the best type of financing for a small business acquisition would be an SBA loan, with the most common being the 7(a) loan. You may also want to consider a business loan, since the requirements for a SBA loan are typically stringent, require a high credit score, and are generally not easy to obtain.

According to Jones, however, “An SBA loan will always be the most seamless with the acquisition strategy because it is going to provide the length of payback that’s more applicable to an owner buying a business and having the available profits to pay down the loan as a percentage of profits over time.”

SBA loans are typically offered by two different entities – a brick-and-mortar bank, or an accredited non-bank SBA lender (of which there are only 14). Many alternative lenders such as Kapitus do not directly provide the SBA loan, but have built a wide array of accredited lending partners and uses modern technology to underwrite, approve and manage the loan disbursement and repayment process, often in a timeframe that is much quicker than that of a traditional lender and often has fewer requirements.

Executing an acquisition could be an expensive and extremely complicated task. At the very least, however, buying another small business could help your business survive in the post-pandemic world. At most, an acquisition could help you thrive as it would allow your company to expand, scale up products and offerings, and ultimately pull in new business.