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Business Growth

Business Growth

The Why & How of Business Referrals for San Francisco Bay Area Owners

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Firstly, before I jump into what business referrals could mean for your San Francisco Bay Area business, I wanted you to see this. You may have already heard me talk about this … but the explosion of shady flim-flammers gaming the Employee Retention Credit and making questionable claims on behalf of business owners is raising all kinds of red flags at the IRS. As it should. Here is the headline of the IRS’s most recent “Dirty Dozen” release: IRS opens 2023 Dirty Dozen with warning about Employee Retention Credit claims; increased scrutiny follows aggressive promoters making offers too good to be true. Indeed. And I will have more to say about this in the future. But if you’ve been potentially victimized by one of these overly-aggressive promoters, let’s talk:(408) 775-7790 One of the strategies employed by these slim shadies is offering extravagant referral fees. And I’m not opposed to a nice referral bonus. But when they made it so large (sometimes into the five figures), it became a recipe to attract the sharks.  However, when you do things right — working ethically, professionally, and well behind the scenes with vendors, clients, and other businesses — it means good things for your San Francisco Bay Area small business. After all, you’re small fish in an economic tank with much bigger fish (and those sharks). Survival chances are greater when you swim with others. That will be the subject of today’s Note. But before I dive more into that, I do want to make one more brief diversion to revisit the global banking situation… and the vulnerability of the banking world right now.  It’s easy to let panic set in. The reality that your San Francisco Bay Area business could take a big hit because the bank fails in which your money is invested, means you might be tempted to scramble to pre-emptively right the ship.  Yes, things could get rough ahead, and the recession that’s been threatening for the last year is almost a certainty. And if you’re looking for a business loan, banks are going to be much more stringent about giving those out. They want to make sure you’ll make good on their investment.  As far as the possibility of your business being threatened by a bank failure, if you’ve got under $250,000 in FDIC insured US bank account, then you can take a breath (also, joint accounts are covered up to $500,000).  More than that, we should take a look at what that means for your business. It might be time to “kick the tires” of your bank to ensure reliability. It might even mean making a switch. And we can talk about what that looks like. Just grab a time with us.(408) 775-7790 Most of all, don’t get caught up in hysteria.  Alright. So, today I want to talk about a way that you can build your business and create some strength in your financial framework through a bit of an indirect method. (A little something called business referrals.)  What does building a referral system mean for you? The Why & How of Business Referrals for San Francisco Bay Area Owners”You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” – Dale Carnegie Everybody knows aboutcustomer and employee referral programs, which usually offer a quick, monetized reward for sending business your way. They’re great when they work well. (Most word-of-mouth programs are as long as your company has a good reputation.)  As small business owners, we all know referrals are GOLD. Most customers who have a good experience with a company will recommend that company. Leads from those referrals tend to be worth more in both the short and long term, and most people trust referrals from people they know personally.  It’s like having salespeople you don’t have to pay.  Then there are other businesses (non-competitors of yours) who may be willing to recommend your company to their own customers. You, of course, must be willing to recommend your customers to them. You may well already have an ad hoc, informal version of this arrangement. Nowadays, this is called a “referral team.” You can formalize this process for an even better payoff.  Here’s how to start on the business referrals track.   Building a business referrals team: Who to approach? Ideally, you’re looking to put together a team of about six or so associates who have companies that complement — but do not compete directly — with what your company does. Your prospective team members are determined by your company’s goals, your market and industry, your (presumably good) opinion of your prospective fellow team members, and your idea of who’d be most willing to spread the word about you. Regarding competition, there is wiggle room in your choices: In our line of work, for instance, one accounting firm that does only tax preparation might make an excellent referral teammate for an accounting firm that does only business advising. Maybe an accounting firm that handles tax and accounting could find good prospective teammates in lawyers, insurance agents, IT providers, and so on.  The point is to create a steady, two-way flow of new customers. An effective referral team is also usually a small one. That’s the best way to hold every member (including you) accountable for sending referrals to each other.  A little common sense here: Make sure your company is ready to participate in this network and handle the new business. If there are any problems handling the business coming through your door already or any customer service issues you’ve been meaning to clean up, now’s the time! You do not want team members referring customers to you and then having those new relationships consistently go south — there’s no quicker way to see your referral team unravel.  Building a business referrals team: Formalities As we said, you probably have informal referral arrangements with some businesses already. A proper business referrals team (sometimes called a cross-referral network)

Business Growth

Leadership Development in Your San Francisco Bay Area Business

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Unless you’ve been living in a cave like this woman, you know that business ownership is a tough gig right now — it’s nearly an Olympic sport to keep things running and moving ahead.  But, despite all that, being a business owner is also pretty great. And I’d make a guess that a big part of that for YOU is getting to be your own boss. You get to build something that has impact and move it any way you feel is the right way forward.  But the crazy thing is, a lot of business owners fall into the same traps as their previous employers when it comes to employee management. (Now, before I elaborate on that topic, I want to make sure I do my part as your go-to San Francisco Bay Area accounting pro to keep you on track for what you should be doing *right now.*  It’s April. Do you have a plan for analysis of your Q1 numbers? If you had the ability to understand those financial data points and respond to them quickly, imagine how a pivot now can affect the rest of 2023. In this economy where the banking world is reeling, you’ve got to know what’s happening in your business. That’s something we can sit down and talk about: Patti (408) 775-7790   Gale 408-775-7800  In the same way, employee care is an area where awareness and response pay big dividends. You have to be intentional about how you lead your employees, and you need to make sure you’re creating a work environment that makes them feel like what they’re giving is a central part. Today I want to specifically target employee empowerment. Making a pivot to let your employees have more “ownership,” a little more autonomy, means really good things for you and the future of your San Francisco Bay Area business. Let’s look at what I mean… Leadership Development in Your San Francisco Bay Area Business“Independence is happiness.” – Susan B. Anthony Eventually, all companies find they need to shift certain responsibilities from the owner to select employees. That time will come in your own growing business (if it hasn’t already) — and when it does, you’re going to need those people to be able to think for themselves in the best interests of your operation.  Don’t wait until you personally are too overburdened and have to roll the dice on one of your employees. Get them ready now by encouraging initiative and independence. This is where leadership development for your employees begins. Start with yourself Employee leadership development begins with looking at yourself as a boss. It’s important to be honest with yourself here.  Do you naturally empower your people — or is micromanaging a habit you’re going to have to break? Do you resist delegating? Do you ask for updates to the same project too frequently? Maybe you fixate on details, redo work, or get mad when decisions are made without you? If you want something done right, do you have to do it yourself?  You might have other work to do — on your own attitude. Look at it this way: You must trust the abilities of a given employee. If you don’t, it’s time to change what they do for your company (or get rid of them). Here’s why: If you do trust them, you’re safe making them more independent. Spotting the right people Employee leadership development is first about giving them the means to lend their talents and interests to a company. (Didn’t your own talents and interests motivate you to start the company in the first place? …) This lays the groundwork for giving them more independence and decision-making power — plus it can arm your business with fresh perspectives and skills without having to pay for outsourcing and consultants.  Some bosses (we’re not saying you’re one) like to think you can learn an employee’s interest through the shortcut of a survey. Could be — but your better bet is to simply talk with your people to find out what part of working for your company excites them most (and of course overlaps with what you need done — you’re running a business, not an after-school program …). This identifies who would be a good fit for a promotion or some more responsibility. What and how to teach Here’s an idea for leadership development: Try having younger staff take on managerial tasks.  Let’s use meetings as an example. Love’em or hate’em, by Zoom or otherwise, they’re a mainstay of business these days. And more goes into a good one than meets the eye: planning, communication, sticking to an agenda, and thinking on your feet with the dynamics of attendees. An employee’s successful conducting of a meeting is a useful tool for you to see who can work independently and who can take the initiative on a task with a lot of moving parts.  Sit with the employee before they conduct the meeting and go over all those parts. See how they do and afterward debrief on what went wrong — and right. You don’t want to punish and discourage but give feedback and educate. Mention but soft-peddle the negatives, at least for a time in someone’s development.  You’ll also want to keep questions open-ended during your assessment. Instead of just finding out what happened, ask them why they think it happened. What would they do differently next time? What do they think their next initiative should be, and why?  This leadership development strategy can apply to teaching other management skills, from overseeing sales calls to leading whole departments. All of these pointers also work equally well with remote employees, using your usual media. By the way, you and your senior staff should be prepared to keep your doors unusually open during this empowerment exercise; it’s going to fizzle quickly if your junior employees don’t feel they can always ask questions.  Speaking of which, sound out your senior staff on becoming in-house mentors, which means taking on the responsibility of informal but regular meetings with junior

Business Growth

A Step-by-Step Guide to Business Loans

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Ever feel like the whole world is taking a summer vacation except you? That’s real: Small business owners can’t always afford to step away from the helm to take those long, glorious vacations you see on social media (maybe beach and Europe photos are already popping up in your feed?). Whether you do have some breathing room in the next few months, or whether this is your busy time of year, I just want to remind you: Your work matters. And as a business owner in San Francisco Bay Area, the opportunity you have to make a difference in the lives of your employees and customers is full of beautiful, astounding potential. Also — you may want to take a few moments to think back to your quarterly or annual company goals for this year. Now that 2023 is half over, how are things going? Have you met expectations, exceeded them, fallen behind on other goals? What things could you shift this summer to set your business up for success in the latter part of this year?  If you want to brainstorm and strategize about this together, you know where to find me:Patti (408) 775-7790  Gale 408-775-7800 And if getting some more funding for your business happens to be on the list of things you’d like to see this year (there are more of you than you might think), let’s seize the moment by looking at a few options for that. (This is, of course, just the starting point.) A Step-by-Step Guide to Business Loans“It is thrifty to prepare today for the wants of tomorrow.” – Aesop So, you’d like to get some more funding for your business. Or maybe you’re just curious and want to know what your options are. From evaluating your need for a loan to ticking all the boxes correctly on the final application, securing financing for your small business is a job you want to get right from the start. Because business loans aren’t a one-size-fits-all type of scenario, let’s look at the steps you must take (and what order to do those in). Next time, we’ll flesh out some other funding options, so you can be fully aware of what your choices are and choose what is best for your business.  Step 1: Why do you need a loan? Your business might need money for many reasons. You’re likely thinking of capital improvements, daily operations, starting a new line or a spin-off company…  But a bank loan isn’t necessarily the answer to all of them — a key point as interest rates are up and borrowing has become costlier for San Francisco Bay Area business owners. Traditional bank loans, for instance, tend to have higher borrowing limits, making them better for collateral-secured funding best for a large purchase (such as equipment). If you’re looking to cover day-to-day operations with fluctuating but smaller spending needs, a business line of credit might be better as you can tap it as needed. Traditional lenders also often don’t like to lend to startups, so you may need a personal loan or a business credit card if the project in mind doesn’t have enough of a track record.  (I’ll dig deeper into other types of business funding in my next note. Today is all about traditional business loans.)  Also — limit your loan search. Applying for too many can ding your credit score. Find out various lenders’ qualification criteria first and then cherry-pick a few best options. Ask lenders about their credit-check policies, too, since the deeper they probe the more likely they are to affect your credit score. Step 2: Do you qualify? Before starting your applications, take a hard look at some of your company’s financials.  Here you’ll need to consider your cash flow and your ability to make your loan payments. (This calculator can help.)  Step 3: Compare lenders Traditional bank options include term loans, lines of credit, and commercial real estate loans. The U.S. Small Business Administration also guarantees certain small-business loans through banks in its 7(a) program. Additionally, the SBA has a 504 loan program for fixed assets such as land, buildings, or equipment.  Weigh all options for funding before applying, with an eye to the best terms versus convenience — and the possibility of actually getting the loan. Again, banks can be among the strictest lenders for conditions and can take the longest for approval and access to the money. Credit unions may be almost as good as banks for loans but may have membership requirements.  Find out as much about the terms as possible — interest and repayment schedule, for starters, as well as possibilities for early repayment (there can be a penalty for this). Compare lenders of similar types and sizes.  Step 4: Assemble your paperwork You’ll need business plans, a year’s personal and business bank statements, personal and business tax returns for at least a couple of years, and details about any previous and current business loans.  Also gather your business licenses and legal documents, articles of incorporation, owners’ details, P&Ls and financials, and other documents pertaining to your business such as leases or deeds.  A detailed proposal on how you plan to use the loan will help, too. You can never have too much paperwork on hand right before applying. Then check with the lender to make sure you left nothing out. (As I’m sure you’ve noticed by now, different lenders might have different requirements.)  Step 5: Apply You may be able to do this online. For significant business loans, many lenders want the application done in person or at least over the phone. This will vary depending on which lender you go with. Before submitting your application, have a knowledgeable third party give it a once over. You may find such a person in your business network or from the local chamber of commerce. And of course, we’re always happy to lend a hand.  You may very well find that a business loan is the way to go for your company. If you want to look into that, we’re here to walk

Business Growth

Alternative Small Business Financing Options for San Francisco Bay Area SMBs

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I’ve talked to you before about the ERC scams running rampant and how to steer clear of them, but there’s a recent update worth mentioning: They’re also partially responsible for the IRS’s delay in issuing ERC refunds — especially for small businesses. And funds like that could be exactly the kind of boost needed for struggling businesses.  Now, maybe the ERC credit isn’t for your San Francisco Bay Area business (or you’ve already received it), and you’re still in need of a cash flow infusion. The banking crisis certainly isn’t making that easy for you. Which is why I want to talk about some alternatives to bank loans in today’s article. Before I do, though…  Besides getting capital, another strategy you might consider to boost your biz is working with large businesses. The U.S. Chamber of Commerce is hosting a little forum on June 22 to talk more about that. It seems big businesses see the value in working with and creating partnerships with small businesses like yours. Take Apple. They’ve recently been working on Tap to Pay capabilities for secure payments for businesses (among other things). And they’re not the only ones making moves to help improve various aspects of business operations. And though I’m no big business, I am here, looking out for you and your business’s future especially when it comes to tax obligations. If we haven’t talked yet about optimizing your tax situation for next year’s filing, let’s make some time. Reach out to me here:Patti (408) 775-7790 Gale 408-775-7800 Now, for a look at alternative small business financing options for your San Francisco Bay Area business… Alternative Small Business Financing Options for San Francisco Bay Area SMBs“Fortune befriends the bold.” – Emily Dickinson Sure, banks come to mind first when your small business needs capital. But in these days of higher interest rates and tighter lending, it pays for you to know where else to turn for financing.  Because sometimes, banks are the best option. And sometimes, they aren’t. Last time, we looked at the process for getting a bank loan. Today, let’s examine a few lenders for your business other than banks. Alternative Small Business Financing Option 1: Small Business Administration The U.S. SBA offers a ton of loan programs through lenders. One of them is the 7(a) Program for “businesses with special requirements.”  The SBA bills it as a good option when real estate is part of a business purchase, but it can also be used for short- and long-term working capital, refinancing debt, and purchasing of machinery, equipment, furniture, and supplies. The max amount for a 7(a) is 5 million dollars.  Eligibility is based on what your business does for income, credit history, and where you operate. Repayment is usually monthly, and generally these loans require a 10% down payment (potentially more for startups).  To apply, you’ll need an SBA form and much the same paperwork as for a bank business loan (though this can vary by lender): financial statements (including personal and projected), P&Ls, owners’ info, business licenses, loan application history, and tax returns — among other documents.  The SBA also has other biz financing, including its SBA Express Loan. Approval times can be faster depending on the lender. Repayment terms vary with loan and purpose. Interest depends on the lender but does max out at prime plus 6.5% for loans of 50,000 dollars or less, and prime plus 4.5% for loans greater than that. Express loans for more than 25,000 require collateral. Funding speeds also vary by lenders, but you often get your money within 90 days.  (If you’re interested, you can find SBA loan application info here and a lender-match tool here.)  Alternative Small Business Financing Option 2: Online lenders Just like about everything else, business lending has blossomed on the internet. These lenders can give faster access to money for your business — sometimes in just days — but at (not surprisingly) higher rates and fees and lower maximums.  Often the lenders are financial tech companies rather than banks. Their eligibility requirements can be more flexible and the documentation requirements easier. No interviews will be in person (up to you if this is a plus or a minus). They’re also more likely to work with startups or businesses whose credit has been dinged.  Typical online financing options include:  For businesses, rather than individuals, paying extra to get the fiscal fuel for initiatives may be worth the price. (Nerdwallet has a good interactive layout of various lenders where you can wash a few of your company’s specifics to see what you get.)  … Still more small business financing options Each alternative small business financing option has its pros and cons, but the point is: You’ve got a lot more options for funding than just the bank. If you are on the hunt for more funding for your business, we’d love to sift through the options with you and discover what would be the optimal fit. Don’t hesitate to reach out and let us know how we can help. Here for you, Patti ONeill and Gale Bergado

Business Growth

When Your San Francisco Bay Area Business Might Need a Valuation

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We’re nearing June 30 (the mid-year marker), which is a very smart time to move into a different gear in examining your business’s financial situation. Because, like the good business owner that you are, I’m sure you kicked off Q1 with a bunch of exciting goals and objectives for 2023. So, now that we’re nearing the end of H1, it’s a good idea to check in on those goals.  Consider how you’re feeling about your business right now. Are you making progress toward the growth you initially envisioned? Or are you growing in ways you didn’t anticipate? And don’t forget about all those valuable business and client relationships. Measure those too. Take some time to reflect. If your business isn’t quite on the path you intended in Q1, it’s not a crisis. Adjust. And I’m here to help you do that: (408) 775-7790 Doing regular checkups on your San Francisco Bay Area business means you can find a firmer footing as you move ahead. It’s one of the reasons I am continuing to address business valuation and why you should consider it.  Today, let’s dive more into when said valuation would be really helpful to have… When Your San Francisco Bay Area Business Might Need a Valuation“People know the price of everything and the value of nothing.” – Oscar Wilde  Your business will have many milestones when you’ll have to know how much it’s worth. What are some?  Last time, we looked at how a business valuation examines your company’s assets and liabilities, earnings potential, management, and assets’ value. When done right, valuations are expensive for even such non-litigious purposes as a sale, a merger/acquisition, or an owner’s exit. You might still need a valuation of your business in situations you haven’t thought of.  You want one ready when the time comes. Let’s look at the why and the when.  Sale price We business owners know that buyers and sellers entertain wildly different ideas about how much something is worth. The first and obvious occasion where you’ll need a valuation is if you’re planning to sell your company, especially if your company is worth more than similar companies in the same market. You’ll need an accurate starting point for negotiation which allows you to sift prospective buyers faster.  This can also be important when you’re planning to exit your company – whether you’re thinking of selling soon or several years from now, it’ll help you to have a solid idea of what your business is worth.  Looking ahead, if you’re like most business owners, your business constitutes a lot of your personal net worth. Knowing your equity in your company as far ahead as possible makes the planning of taxes and retirement (if you are retiring) easier. Two points:  Financing Getting a loan from a bank or capital from investors is another time a valuation comes in handy. Beyond lending you credibility, a documented and objective measure of your company’s worth, strengths, and future will usually speed up the approval process. (By the way, the more substantial the credentials of the appraiser who did your valuation, the more seriously a lender or investor will take your valuation.)  If your company looks for a loan through the U.S. Small Business Administration, you can perform your own valuation if you look to finance a quarter-million dollars or less. You do need “an independent business valuation from a qualified source” for greater amounts or “if there is a close relationship between the buyer and seller,” such as deals between family members or business partners.  Other reasons Litigation: A document that you want to stand up in court for divorce, a lawsuit, or a partnership dispute must be excruciatingly detailed. Your valuation will be used in discovery, and there may be legal requirements regarding its type and depth.  Expect to pay more for this kind of valuation – and make sure to have it done by the most experienced and credentialed valuation expert you can find and afford: That professional’s credentials will have to stand up to a dispute in front of judge and jury.  Company initiatives: Nothing helps you know where you’re going better than knowing where you are. A complete valuation helps you plan your company’s sales and operational initiatives for the future. Clearly, biz valuations can help you in many situations. But how can you make sure you’re getting the best one for your money? We’ll help you out with that next time.  I’m here to help with whatever your San Francisco Bay Area business needs, whether it’s talking more about setting up a valuation or analyzing your financial data to make sure you’re on track to reach your business goals this year. In your corner, Patti ONeill and Gale Bergado

Business Growth

How San Francisco Bay Area Owners Can Measure Business Value Correctly

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There’s this comparative analogy about what makes something American that people like to use: “as American as apple pie.” But, I kind of think we should update that comparison to “as American as starting a small business.”  Not as catchy, I know (or as yummy). But, it’s just the truth. Small business ownership is the epitome of independence. Don’t want to work for someone else? Don’t want to depend on someone else to pay your bills? Don’t want to follow someone else’s rules and regulations?  Then start something where you call the shots and own the profit. And that’s what you did. You had a dream, and you made it happen. And your San Francisco Bay Area small business, along with hundreds of thousands of others, are the spirit and backbone of this economy. So, when you’re watching all those fireworks “bursting in air,” know that, in a way, it’s celebrating people like you who have built something valuable. Your business has value in our way of life beyond the dollar signs it produces.  There might come a time though, when you want to know just how valuable it is and how many zeroes are actually attached at the end. Say you want to sell your little empire or exit it and hand the reins over to somebody else.  That’s when you want to consider getting a business valuation. But when you do, you’ll want to make sure the assessor is taking into consideration all the various aspects that affect business value for you. Even when the assessor is qualified, there are still elements of your business and the market you serve that might get overlooked in the process. Let me explain what I mean here… How San Francisco Bay Area Owners Can Measure Business Value Correctly“When things go wrong, don’t go with them.” – Elvis  In our previous two articles, we covered what goes into a business valuation and why and when you might need one — from M&As to divorce. By now, it’s apparent that a valuation can be an important tool for running your company… So it’s especially important to realize what could go wrong with one. Here’s a look at some of the biggest potential trouble spots to determining business value.  Devil in the details A business valuation is a waste of your time and money if it uses wrong or incomplete models. Let’s go through these here so you can check them along the way — and never hesitate to question your valuation specialist. You’re the one paying for this, after all.  Generally, whether the valuation primarily examines your income/earnings, market standing, or overall assets, it should address your company’s non-operating assets and liabilities, taking into account past litigation, tax problems, interest-bearing debt (especially as rates rise), and owners’ worth as related to the business.  Among other possible business value assessment problems are:  Who to look for and what to ask Just as it isn’t cheap, proper valuation is no ad-hoc skill. Look for the right qualifications.  For valuations for some of its loans, for instance, the U.S. Small Business Administration lists such credentials as Accredited Senior Appraiser, accredited through the American Society of Appraisers; Certified Business Appraiser, accredited through the Institute of Business Appraisers; Accredited in Business Valuation, accredited through the American Institute of Certified Public Accountants; and Certified Valuation Analyst, accredited through the National Association of Certified Valuation Analysts.  The questions to ask your valuation profession depend on why you want your business value. If you are:  If you want to do a little preliminary work before shelling out for a valuation pro, M&T Bank also has an online tool to use for a rudimentary valuation of your company. As you can see, a valuation of your San Francisco Bay Area company is a big job — and a really critical one. These are just a few examples of what to watch for.  Need a valuation for your company? I can give recommendations specific to your situation and help ensure it’s done in the way most beneficial for your business. Just reach out. I’m right here: (408) 775-7790 All the best, Patti ONeill and Gale Bergado

Business Growth

Cutting Costs in Your San Francisco Bay Area Business Right Now

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Though things might be tight economically for your San Francisco Bay Area business, keep in mind, cutting corners can become a real issue. Take for example fake reviews that are so pervasive online. Some business owners are tempted to buy reviews to get their product or service seen online. If you’ve ever done that or been tempted to do that, let me just say: DON’T.  If Google catches it, they’ll not only flag the review, they’ll tank your website rankings. And now, the Federal Trade Commission is proposing to slap big fines on businesses that do it (up to 50k for each fake review… YIKES!).  I also saw during the pandemic that business owners were falsely collecting PPP and ERC loans to get a free handout from the government when they didn’t actually need it. The IRS is on the hunt for those kinds of people right now — look at this 53 million in PPP fraud case in north Texas.  What I’m getting at here is you don’t have to choose these routes to help your business in difficult times. And even though times continue to be difficult financially, there are options for you to help your business survive the inflationary chokehold on it. That’s where I want to go today. Instead of cutting corners, let’s talk about cutting costs and helping you find your way right now. Cutting Costs in Your San Francisco Bay Area Business Right Now“The slightest adjustments to your daily routines can dramatically alter the outcomes in your life.” – Darren Hardy Nobody needs to remind us small-business owners that we’re yet again in tough times… still dealing with inflation at about 4% year over year, coupled with nagging and sporadic supply-chain problems and all the other troubles that go with having your own company. Tough times often mean tough decisions. If you have to make cuts, where and how do you decide to do that — for the good of your company, your staff, and yourself? The following are some areas you should consider. Cutting Costs Tactic #1: Pricing Let’s look at the other side of the coin for a second: raising prices. I know what you’re thinking, but raising prices doesn’t raise eyebrows like it did a few years ago. The key question that remains is: Raise by how much?  Before you calculate your own new higher average costs and just slap that down across the board, ask yourself: Do you stand out? What makes you special? Why should your customer pay you? Special services are worth more, and customers know it. Loyal customers will pay more, too — for a while. What’s your competition’s price point and range, and how does it compare with yours? If yours is higher, don’t automatically assume that you have to match your competitors’ deals. Do you offer your customers something the other guy doesn’t? (Be honest.) What do you offer that draws in most of your new customers?  When raising prices, do it gradually and be upfront with customers about price hikes. People will put up with more if they’re kept informed.  It’s possible that maybe your product line needs a revamp. Low sales figures are your first obvious sign of a poorly performing product. Other signs include marketing costs that are too high or price points that are too low. Also watch for bad customer reviews.  Cutting Costs Tactic #2: Making shifts with suppliers Lately, these folks seem intent on hiking prices at will. You may also be dealing with years of consolidation, another ingredient for our perfect storm.  Suppliers may have a lot of companies wanting their goods right now. What if you don’t negotiate with suppliers but their other customers do? You can wind up with poorer products or service with higher prices as your supplier makes up for deals they cut with your competitors. Before you negotiate with suppliers, though, set a price in your head that you’re willing to pay. Double-check that your payment record is good and learn all you can about your suppliers’ expenses. (Wholesale prices are easing but still went up 2.3% in the past year.)  Cutting Costs Tactic #3: Looking at your staff If it comes to this point, there’s probably more arithmetic in reducing pay/hours than any other cost cutting. Who does what and for how long? Who could do each other’s jobs for less money? Communicate with your team that keeping the lights on is more important than temporary payroll reductions; you might even find one or two people willing to volunteer cuts.  Other moves:  Cutting Costs Tactic #4:Examining additional areas Recurring costs. Rather than utilities and other necessities, these are your subscription services that get renewed automatically, usually every month. If forgotten, they drain a lot of cash. Review them frequently.  Insurance. This cost could change year to year — and auto-renewal might be costing you too much for coverage you don’t need anymore. You can also likely save by bundling coverages.  Supplies. Ordering online has made saving money in this category easier. Amazon’s subscribe and save service is one example of how you can find cheaper prices for a galaxy of stuff and even cheaper shipping when you bundle deliveries. Deciding where to make cuts in your San Francisco Bay Area business is tough, especially if it comes down to having to drop some of your staff. I’m always here to help, answer questions, and offer ideas. Don’t hesitate to reach out:  (408) 775-7790 Cheering you on, Patti ONeill and Gale Bergado

Business Growth

Keeping Expenses Separate in Your San Francisco Bay Area Business

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Did you see the Barbie movie or Oppenheimer this weekend? Or jump in with the 200,000 other Barbenheimers and see both? In case you didn’t, your social media feed likely filled you in on what you missed (or didn’t, depending on your view of these things). What a weekend for the movie industry as a whole that hasn’t seen these kind of opening weekend numbers since 2019’s one-of-many in the Avengers series. Seems like a good sign in the midst of inflation, right? Well, whether or not we’re headed for a recession is still in question. I’m sure you have your opinions on the matter. We’ll see how the Fed’s interest rate hikes (including the final one expected this week) have impacted things economically. Keep an eye on the Q2 earnings for big A-list corporations (like Mcdonald’s and Exxon) set to release this week. Their performance will be a helpful indicator of just how effective inflation-slowing efforts have been and if we’ll see the economic ship right itself. While we keep our attention on that, I also want you to remember to not let it consume you. Sure, inflation and recession may force you to make big changes, but change is often a really good thing for a business. Not only does it force creative thinking and more laterally-minded measures, it also pushes you to evaluate your systems and decide where you can streamline them. One area that you might not have considered is your system for keeping business and personal expenses separate.  Because it’s easy as a business owner if you don’t have a (good) system in place, to blur the lines here. Believe me, I’ve seen plenty of people come to me whose books are a mess, which complicates operations unnecessarily. That’s why I’m bringing it up. Now, if you know things are messy and you need help to get them cleaned up, I’m happy to meet with you and do an in-depth dive into it. Just set up a time: (408) 775-7790 But let’s start here with a little about WHY it’s so important for you. Keeping Expenses Separate in Your San Francisco Bay Area Business“In diversity there is beauty and there is strength.” – Maya Angelou When you started your San Francisco Bay Area business, I’m sure you felt that sugar high that comes with it. You have this idea that’s been percolating in your mind for months, maybe even years… and now you finally get to open the doors, make the announcement, close your first sale… It’s such an exciting (and hectic) time that many small-business owners (especially new ones) easily forget one basic fact about having your own company: Keep the money separate.  If we’re honest, treating your business’s money as your personal account (or vice-versa) is so easy to do: depositing a client’s fee paid to your business into your personal bank account, dipping into your business account to pay a personal expense, and not keeping the records because you know where the money went, and everything is doing fine.  The harm comes in the recordkeeping, though… because you might depend on it later to keep your company’s doors open. Here’s how.  A caution against commingling If you’re properly in business, having two pots of money confuses your accounting. And accounting is what you’re going to need first and most obviously to determine your company’s strengths and weaknesses, aka profits and losses down the road.  Separating expenses can also be for your own good if you’ve incorporated them. If — heaven forbid — your company goes bankrupt someday, one avenue that creditors will have to your personal money will be if your business and personal finances were intertwined (piercing what’s called your “corporate veil”).  If you’re a sole proprietor, do yourself a favor and look into becoming a limited liability company (LLC), which can offer you some protection from the fallout of debt. You’ll also need a proper audit trail to prove the deductions and losses you take (and believe me, you’ll need those in the first few years) on your business tax return. While we’re on taxes, if you’ve got even a small online business, this could be the first year you get an IRS Form 1099. For tax year 2023, if you use a third-party payment platform like Venmo or PayPal or sell on sites like Etsy or eBay and make just $600 for professional services, you and the IRS will get a Form 1099-K in January 2024, and you must report the income. If you use a payment platform for personal payments, you won’t get a 1099-K – but there’s no guarantee that mistakes won’t be made in this initial year of the 1099 blizzards. You’re probably beginning to see how keeping good records and separating funds will be especially helpful.  The nitty gritty Bank accounts: From the minute you turn on the lights, get a proper business account that’s completely distinct from your personal accounts. To open a biz account, you’ll need to get a federal tax ID number (EIN) and a state tax ID number, as well as any documents you filed for when you formed your company such as articles of incorporation or a certificate of formation. Business accounts typically give you checking, savings, credit card accounts, and a merchant services account that allow credit and debit card transactions from customers. Other perks should include multiple credit cards for you and your employees (more on that in a sec) and merchant services that keep customers’ personal info secure. You’ll probably get a line-of-credit option for your company larger than what you’d get in a personal account.  A business account in the same bank where you keep personal money may get you a break on some fees, but it depends on the bank. It’s the same for introductory offers and sign-up bonuses (which are taxable). Shop around and study the fine print — and don’t forget non-bank sources, like American Express.  Credit cards: Getting a business credit card separate from your personal plastic is just as important as having a

Business Growth

Business Cash Advance: A Loan Alternative for San Francisco Bay Area Businesses

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This year has been a less-than-fun rollercoaster in the world of finance. Well, good news on that front — no more recession bogeyman lurking under the bed, at least that’s what the Fed declared as they raised rates again last week. Doesn’t mean more interest rate hikes aren’t ahead or that inflation’s fully cooled, but things appear to be balancing out. Even with this silver lining, there are still some darker clouds hanging around when it comes to borrowing for your biz. It doesn’t mean you don’t have options, just that things are a bit tougher right now in terms of borrowing to get some extra cash. That’s one reason I’ve been talking more and more about loan alternatives with my San Francisco Bay Area clients. Because, even if it’s difficult, it doesn’t mean you should give up on finding new ways to expand your business and make improvements. You just might need to be a little more creative. I’ve got some ideas on that, but they’ll also depend on your particular situation. If you want some guidance on these matters, I’m here for you, :(408) 775-7790 Today I’d like to give you some details on a loan alternative that might help you circumvent the difficulties with borrowing right now, something called a business cash advance… Business Cash Advance: A Loan Alternative for San Francisco Bay Area Businesses“Put not your trust in money, but put your money in trust.” ― Oliver Wendell Holmes When your San Mateo company needs a little extra change, the first option you consider is probably loans: an infusion of cash that you pay back (if your credit’s good enough to get one in the first place).  But a loan isn’t the only option for a cash infusion, though. There’s another option that comes with its own advantages… as well as disadvantages: a business cash advance (or a merchant cash advance, MCA for short). Let’s take a look and see if this is a finance option for your biz and if it is, what you’ll need to prepare for if you decide to take one.  Banking on your future With a business cash advance (or MCA in this case), a financing company advances you a lump-sum amount of cash against your future revenue at, ostensibly, 0% interest. You agree on a fixed payback amount (aka the Purchased Amount) and have to immediately begin making frequent repayments — daily or weekly — until the advance is paid off. There’s no loan involved. The MCA company is taking a portion of your future credit and debit sales and charging you what’s called “a factor rate.” Let’s say you take a grand in advance and it comes with a 1.5 factor rate. The total amount you’ll have to repay is 1,000 dollars times 1.5, or 1,500 dollars. Obviously, these deals aren’t for every business; for some, they could be downright dangerous. But let’s look at the pros and cons, anyway.  Yay for no regulations Credit is no factor. MCA companies are relatively unregulated, and one of the few advantages of that is they can make advances in unconventional ways — including ignoring credit ratings (though many MCA companies don’t). This can open a flow of capital if you’ve had trouble getting mainstream loans. You get cash fast. Unfettered by most regs, MCA companies can get you money in days. That’s a real boon if you have a deadline and the investment you want the money for will improve your bottom line to cover the business cash advance and its factor rate. (Be certain it will…) Watch out They get their cash fast, too. Just last year, the Federal Trade Commission said this in a news release aboutdefendants (who used “deceptive and illegal means to seize assets,” by the way) in one business financing case: “Typically, a merchant cash advance company will make daily withdrawals from the business’s bank account until the obligation has been met.” That means you won’t just get cash quickly, but you’ll likely have to shell it back out quickly, as well. There is, in fact, “interest.” Let’s say you have to pay off a 10,000-dollar advance at a factor rate of 1.3, or 13 grand. Let’s say the MCA company gives you three months to pay it back. That’s a 229% interest rate. Even if you stretch the payments to a year (12 months), that’s still 57% interest. Fees for missing a payment can also be steep, and there’s no benefit at all to you if you pay the debt off early. The future is unsure. Your advance is against your future sales. If those sales don’t happen, you still have to repay the amount. Defaulting is considered a breach of contract with the MCA company, opening the door to liens and collections on not just your business assets but potentially your personal ones as well.   For real Let’s look at some actual MCA companies. With Credibly and Rapid Finance, you can get advances of upto the mid-six figures, but you have to meet minimums in time of operation, revenue, and credit score (conditions similar to many MCAs recently). With CAN Capital, you can get an advance of just four figures, though there is an administrative fee and the factor rate can hit 1.48. Libertas Funding offers advances of up to a mil, but only says its factor rates “vary.”  If you get into an MCA and find it chewing up too much of your revenue — or, worse, you’re taking out more MCAs to pay off previous ones — there are mitigation methods.  Please be careful before you ink one of these deals, and don’t go at it without having someone in your corner to crank the numbers and make sure whatever agreement you land will actually benefit you in the long run. Remember, we’re always here to offer support. Reach out any time:  (408) 775-7790 Cheering on you and your business, Patti ONeill and Gale Bergado

Business Growth

ONeill & Bergado’s 4 Straightforward Questions to Uncover Your Business Why

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I suppose there’s never been an easy time to be in business.  It’s tempting to look at the current economic situation and cite all the things working against business owners right now. And Google helps with that… My internet search this morning lent me the following statistics: You can relate to at least one of these stats, no doubt. In fact, if you’re experiencing major financial hurdles right now, I’m more than happy to sit down to talk with you about some possible paths forward: |(408) 775-7790  But has it ever been smooth sailing? When you think back to your first year in business, or your fifth year, or your tenth … there were still struggles then, too. The business ownership circle is truly made up of a family of survivors through hard times. So there’s got to be a constant, driving force to keep you in the game, no matter what. Early on in your entrepreneurship journey, you probably spent time uncovering your business “why”. That process turned into your overarching mission for your San Francisco Bay Area business that probably held you steady through the ups and downs. Is your “why” still driving you forward in business today? I’d posit that your “why” today is more important than ever. Here’s why I think it’s worthwhile to uncover your business why all over again… ONeill & Bergado’s 4 Straightforward Questions to Uncover Your Business Why“The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.” ― Ralph Waldo Emerson In every season of business ownership, remembering the reason you’re in business is often the push you need to keep. going. But knowing your “why” isn’t a one-time thing — you’ve likely discovered this by now. It’s an ongoing journey.  Research shows that businesses that take the time to uncover their business why — and have a strong sense of purpose as a result — tend to do better even when the economy is down. A 2019 study by Harvard Business Review found that companies with a clear purpose grew three times faster than their competitors over a 10-year period. That’s a good incentive, but I’m talking to you as a human being here as well. At the end of the day, your San Mateo business is not just about making money. There’s so much more to be had than dollars and cents. So let’s talk about how to uncover your business why and bring your business’s purpose back to the forefront of your daily decision-making. A purpose that stays the same in the face of ever-changing circumstances, giving you stability and inspiration that lines up with what you really believe in. Here are four straightforward questions to get you going… 1) Why did you start(up)? Take a moment and remember why you started your business. What got you excited about it? Was it a problem you wanted to solve, something you loved doing, or a change you wanted to make?  2) What kind of impact do you want to make? Business has the potential to make a real difference. What kind of impact do you want your business to have on your community, your city … the world? Think purpose beyond profits here. 3) What are you good at? Think about what you’re really good at and how it fits with what your business is trying to achieve. Using your strengths to work toward your “why” doesn’t just make your business better – it provides a framework and boundaries around your purpose. 4) How can you say it simply? Now put all of these answers into words. Create a simple statement that tells your team, customers, and everyone else why your business exists. This exercise might seem overly simplistic, but I actually think there is value in that. The point here of uncovering your business why is to get down to the most foundational roots of why you’re doing what you’re doing. Filtering through your years of business history to find that foundation is work enough … so keeping the process simple should be freeing. And freedom is really what we’re after here. The freedom that comes from knowing what you’re about, keeps you steady in the rolling tide of economy and culture. Now that’s worth the effort, for you and your San Francisco Bay Area business. Here’s to the future, and the past that will get you there, Patti ONeill and Gale Bergado

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