Learn More How To Reduce Business Debt

Your business is no different than your home—too much debt can cripple you. Although it might be ideal to run a debt-free business, that’s virtually impossible. The best you can do is to manage and reduce it as much as possible. Here are some ideas.

1. Know Your Numbers. Don’t just be familiar with your numbers—know them. Knowing them means that you know the cost of each of your raw materials, labor, rent or lease costs, and everything else. Do you know what each item costs down to the penny? Do you know the interest rate on each of your debts? If you don’t, you’re probably paying too much for something.

2. Be Smart About Your Ordering. Sometimes you stock a poor-margin item that gets people into your store, but as a general rule, if it’s not getting you to the margins that others in the industry report, it may not be worth your time. Sales that result in ultra-low margins are costing you money. Identify unprofitable sales and eliminate them or look for a lower price from suppliers.

3. Increase your Margins. Speaking of margins, each industry has its own benchmark for what are considered strong margins. Do you know yours? Check with your industry trade group, but once you know it, make adjustments. You can raise your prices, lower your costs, or both. The goal should be to raise margins without raising your overhead expenses. What are others charging for the same item? Can you purchase more at a significantly lower cost without losing the savings to debt service?

4. Watch Your Inventory. Like your refrigerator at home, some items tend to linger. Don’t put off ordering more of your popular inventory but look for the product that isn’t selling and liquidate it.

Inventory is probably where most of your money is tied up. You’re probably paying interest on that stale inventory that everybody forgot about. Don’t let it sit in your store unnoticed. Even if you move it at cost or for a small loss, liquidating is better than keeping the money tied up. Sell it online—eBay or Craigslist, for example.

5. Check Your Interest Rates. Business owners are still enjoying an economic climate of low interest rates. If you have older debt, it’s time to renegotiate the terms.

6. Talk About the Terms. If you’re having trouble making payments, talk to the supplier about extending the terms. You aren’t going to save any money but lower payments may give you the financial room you need until the product sells.

7. Sell and Lease Back. Do you have relatively new fleet vehicles or other larger items? Sometimes it makes sense to sell the items and lease them back. Payments might be lower. To gauge the payoff that comes from this strategy, you will likely need help from a professional crunching the numbers.

8. Ask Your Employees. You were an employee at some point. You know that the people on the front lines will see things that the managers may not. Your employees know where money is being wasted. Ask them. They may be skittish about telling you for fear of retaliation. Explain to them why you’re asking and maybe offer a bonus to anybody who helps the company save money.

9. Be Tougher on Your Customers. Don’t become that business owner that every customer hates but do insist that customers meet their payment terms. You probably won’t go to battle if payment is a few days late but when a couple of weeks go by, it’s time to start calling the customer to ask for payment. If late paying customers are a big problem, you may want to add a late fee clause to agreements you have customers sign before you begin work for them. Check with your local professional advisors to find out if there are any laws that regulate what late fees you can charge. Good business relationships happen when both parties feel respected and valued.

10. Reduce Staff. Nobody likes to reduce staff, but if your business fails, the reduction in staff will be much larger. Sometimes you have to make tough decisions that negatively impact the few to protect the many. Are there employees you could do without? Could you consolidate positions by paying one person more rather than paying benefits for two employees?

11. Speak to a Credit Counselor. Most credit counselors are consumer-based but some work with small businesses. If you’re having trouble negotiating better terms, a credit counselor might be able to help.

12. Hire a Debt Management Company. Debt Management companies come into your business and sniff out where you’re losing money unnecessarily. They may be expensive but worth it in the long-run.

13. Bring on an Investor. If things are really bad, an investor can offer an injection of cash often in exchange for a piece of your company. In general, avoiding this option is best since it involves signing away a portion of your future profits but if times are really tough, it’s worth considering. However, finding investors is difficult. Don’t wait too long to start looking

Know The Kinds of Insurance That SMB Need

The answer to the question: “it all depends.” There’s no one answer that’s right for all small businesses. Although every business will have some business insurance needs, a small manufacturer is going to have somewhat different needs than a web development firm with five employees, and an environmental testing company’s insurance requirements are likely to be different from those of a home-based virtual assistant.

With that in mind, take a look at a few types of insurance, and some of the factors that will help you understand whether that insurance fits your business needs:

Business Owner Policy (BOP)

A business owner policy is a single policy that many businesses can get that covers several general types of insurance needs. This is the type of policy you need if your small business rents space, if you have employees or customers come to your business location (or if you go to their location), and if you want to protect equipment, inventory, furniture and other items against loss from fire and theft.

Policies vary somewhat based on the insurer and your business needs, but in general they cover these types of losses:

  • General Liability Insurance. This insurance covers you in routine situations for bodily injury or property damage to a client or customer. These situations include things like trips and falls, or accidental damage. They are the “oops” minutes your business has, such as when a client’s assistant tripped on your employee’s sample case and broke her ankle, or your salesperson put his caramel latte down on a customer’s desk and then knocked it over onto the customer’s laptop keyboard, causing the computer to stop working.
  • Property Insurance. Think fire and theft here. Property insurance covers losses you would incur if a fire destroyed all or part of your business, or your equipment or inventory is stolen from your premises.
  • Business Interruption Insurance. The fire that destroys your restaurant’s kitchen may prevent you from reopening for and bringing in income for months, but chances are you’ll still have to continue payment on business loans and other ongoing business expenses. Business interruption insurance is the type of insurance that will help you with these expenses.

  • Industry-based coverages. If you’re running certain types of businesses, you may need or want an industry specific insurance package. This might be a BOPs that’s written based on the type of industry you are in, giving additional types of protection against things such as data loss, for example. Or it could be a heaver-duty commercial package. Be sure to ask your insurance provider about such specialty coverages and also be sure to closely read your policy and watch for change notices. It’s not unusual for insurance companies to specifically exclude some types of coverage from these policies.

Home Business Insurance

Most home insurance policies offer little or no protection for a business in your home. So, if you don’t think you need the business owner policy described above, you should at least look into getting an endorsement (an add-on) to your homeowner (or renter) policy to cover your business. An endorsement will cover equipment and inventory up to a set amount, and provide some protection against liability if delivery person or other business visitor is injured on your property. This type of endorsement is relatively inexpensive, but be sure you find out exactly what will be covered, and what the dollar limits of the coverage will be.

SEE ALSO: Does Your Home Business Need Insurance?

Product Liability Insurance

If you manufacture or distribute any kind of material product, and that product causes a physical injury, how would you pay for the financial damages and the legal fees if sued? A general business owner policy typically won’t cover this type of risk. So ask your broker about buying a product liability insurance policy in addition to the general business insurance you buy. It may be available as an add-on to your Business Owner Policy or as a separate policy.

Professional Liability

Doctors and lawyers carry thick professional liability insurance policies. Makes sense – who else gets sued more than them?

But other professionals, like accountants, need it, too. It protects you in the event someone sues you for malpractice or errors you or your employees commit as you provide a service to your clients. Again, this is coverage you may need over and above your general business insurance.

SEE ALSO: How to Minimize Law Suits and Legal Fees

Data Breach Insurance

Our modern world has created the necessity for this newer type of insurance. Have you heard of Heartbleed? Or the Target data breach? Things like this happen to small businesses, too, and the associated costs can put you out of business. Data breach insurance can help limit the financial damage to your company if private information you store about employees or clients is stolen.

Key Person Insurance

Does your company’s success highly depend on a particular individual? Maybe that’s you. What would you do if you or that person suddenly died?

That’s where key person insurance comes in. You purchase a life insurance policy for you and other key employees. The policy is for the company, not for you personally.

If someone dies, then you can use the insurance benefits to cover business expenses until a replacement person can be found. If it’s inevitable your company will need to shut down, you can do so slowly and more orderly.

If you’re a sole proprietor, you don’t need this insurance, as it does not cover your family if you die. That’s what life insurance is for.

Worker’s Compensation and Disability Insurance

If you have any employees, you’re required in most states to carry Worker’s Compensation Insurance and Disability (two separate policies). Failure to comply with the laws can result in very steep penalties. To find out about purchasing this insurance and complying with yearly audits that may be required, check with your accountant or your state department of labor. Some payroll services also can help you – for a fee – with getting and paying for workers compensation and disability insurance.

Health Insurance

You probably already know about this one. And it’s possible to dedicate a whole series of articles to it. The basics are these: you do not have to offer health insurance to full-time equivalent employees if you have fewer than 50. Once you hit that threshold, though, you do.

And, if you have less than 25 full-time equivalent employees who make less than $50,000 per year on average, you might qualify for a tax credit. For-profit small businesses can take a tax credit up to 50% of their employee premium costs, while tax-exempt employers can get up to 35%. But it’s only available if you go through Healthcare.gov’s Marketplace.

Those are various types of insurance your business may or may not need. What’s important is that now you know what each can cover, so you can make a decision regarding which your company should carry

Entrepreneurs Can Take Away From the Tour de France

Cycling is similar to many other professional sports. Beyond dealing with grueling physical challenges, cyclists rely on a strategy, and despite the fact that one person is ultimately awarded the title, a large degree of teamwork.

Many aspects of cycling have helped me understand and manage business teams more efficiently and effectively. In honor of the start of the 2014 Tour de France on July 5, here are three cycling truths that even non-cyclists can learn from:

 1. Members of the group know their leader and the leader knows the importance of the group. In multiday stage races like the Tour de France, each leg has a distinct challenge. One might be covering the distance. Another might be related to the terrain. Each leg requires different skills, and while professional riders are good in all areas, some specialize in one.

To effectively put together a winning tour, the members of a team cannot all be conditioned to excel in short individual time trials, sprint finishes and long climbs. Individuals must specialize in one of these. Likewise, employees on a team need to complement one another’s skills — not duplicate them.

Most businesses do a decent job in diversifying their talent. The real challenge, however, is in making these differences clear to employees.

In cycling, each team member knows his individual role. He may be there to catch a breakaway and bring a person back to the pack (or peloton). Or he may be there to try to push the pace — with the goal of tiring out members of other teams. Others are there simply to protect the chosen leader. By sacrificing themselves and making the leader’s ride safer and easier, the whole team goes for the yellow jersey.

Related: The Art of Keeping Your Team Focused on the Same Goal

2. There’s an art to suffering. In every Tour de France, there are epic mountain stages with long, punishing climbs through the Alps. Probably a rider will question at some point why exactly he got on the bike in the first place.

Sometimes I arrive at a point of questioning why I even own a bicycle (and this arises while trying to conquer a hill in my home state of Illinois, recently rated the second flattest state in the United States). Perhaps it’s due to the physical exhaustion. Or maybe sitting on the same, hard saddle for hours has worn on my disposition.

Such is the case with businesses. Entrepreneurs continuously pivot and push their companies forward — a long process that can be physically and mentally taxing.

Suffering with grace is critical, however. Sure, it may be the fourth 16-hour day in a row, but the whole team is likely in a similar position (or recently was). And while injecting negative energy into a company is not done on purpose, complaining is detrimental to those looking for inspiration, particularly during an uphill climb.

Let’s take a lesson from Jens Voigt (riding this year in his last tour), who famously pleads with his body while leading breakaways up mountains, “Shut up, legs!”

Related: This Is Why You Should Be Excited for the ‘Internet of Bikes’

3. Every battle matters. Whether in a stage race with natural breaks or during a long one-day race, competitors constantly have a distinct strategy to win the battle over the next 10, 20 or 50 kilometers. Even those who are long shots to win the race need to have a plant to conquer each of these battles.

The winner of the tour gets the yellow jersey, but each stage has a winner as well. And there are jerseys for best climber and most aggressive rider. These are not consolation prizes. They are serious competitions in and of themselves.

Many entrepreneurs are similarly tackling problems while pitted against larger competitors. Trying to unseat one of these competitors or win a client is a task that needs to be broken up into a million small battles. Acknowledging incremental progress builds momentum and morale. Yes, the goal is to win the war, but the individual battles do matter.

It’s often said, “None of us is as smart as all of us.” That is certainly the case in the Tour de France, where an individual operating alone, regardless of skill and fitness, would have no chance against a person backed by a team. Business is no different. Even sole proprietors need to rely on partners and teammates.

When a winner dons the yellow jersey this year, remember that it took a team of nine riders, all suffering through 21 different stages, to get him there.

Innovation Flowing as Your Startup Grows

Successful entrepreneurs often complain that their companies have lost much of the innovativeness they had when they were small startups. They miss the environment where new ideas are constantly being debated and acted upon to generate new products, services and value-adding enhancements — or to improve the way the company functions.

At the same time, the company’s growing size distances managers from the front lines and separates people in different departments. This is why an entrepreneur should also put in place formal management systems to allow for the same free flow of ideas that occurred naturally when the company was small.

 

Setting up a fast track for ideas. The first step for leaders who want their now-larger organizations to regain their sense of innovation is to set up a high-performance idea system for front-line employees — that is, a system capable of implementing 20, 50 or even a 100 ideas per person a year.

As an organization grows and managers become more distant from front-line activities, regular employees see more and more problems  — and opportunities — that these managers can’t. Our research has shown that in organizations of any size, roughly 80 percent of the improvement potential is locked up in the ideas of their front-line people.

It may seem strange that a leader looking to increase innovativeness should make it a top priority to go after (mostly smaller) front-line ideas. But there is a multifaceted interplay between innovation and front-line ideas, an interplay that most managers are not aware of and so fail to exploit. Consider the following examples:

 

Making a Post-it that sticks around. Because large innovations are novel and complex, often many smaller ideas are required to get them to work effectively or in some cases even to work at all. Art Fry, inventor of the Post-it note, once told us that the main reason the 3M product is still superior to other sticky notes is the large number of small improvement ideas that went into it — ideas that competitors have difficulty duplicating.

Large numbers of small ideas can create substantial new capabilities that allow an organization to offer innovative products and services that competitors can’t match.

In 2009, Allianz China brought out a highly customizable novel life-insurance policy called SuperFit. In an industry in which new products and services are usually quickly imitated, competitors were still struggling two years later to figure out how Allianz China was able to offer such a product. CEO Wilf Blackburn told us that the reason was his company’s extraordinary flexibility, which came from all the front-line ideas his high-performing idea system brought in.

Front-line ideas can transform routine innovations into major breakthroughs. Task Force Tips, a fire-fighting equipment maker, has a policy that it will not introduce a new product unless it is substantially better than its competitor’s products. TFT relies on front-line ideas to make the difference. No surprise that its award-winning lightweight water cannon had 21 innovative features, all suggested by front-line workers.

Front-line ideas can directly open up new opportunities for innovation. One of Whirlpool’s highest margin product lines, Laundry 123, was based on direct suggestions from front-line workers.

Related: The 10 Must-Have Ingredients for a Successful Invention

Staffing up with 900 inventors. A high-performing idea system allows a company to continue exploiting these synergies as it matures and grows. Take Brasilata, for example, a steel can maker that despite its mature market is routinely named one of the top-10 most innovative companies in Brazil. Its roughly 900 “inventors” (the job title of its workers) average some 150 implemented ideas a person per year!

We once spent several days tracking the development of one of Brasilata’s award-winning products. At one point, when we on the production lines tracking a particular feature of the can, we casually asked, “By the way, who thought of this feature?”

A heated discussion ensued in Portuguese.

Finally, a worker turned to us and said, “We’re not sure whether that was us or R&D”.

Later, we asked the R&D department the same question. No one there could tell us either.

Now that’s a large company that has kept the ideas flowing

Improve Quality at Your Business

 

The business world is full of quality experts and quality programs, but for most small to midsize businesses, an extensive quality program utilizing higher-level mathematics is not going to be the best solution.

 1. Document your processes

For small and midsize businesses to improve quality, processes must be consistent across the organization and over time. This can best be accomplished documenting your processes and ensuring that the way the work is actually done matches the documentation. Documenting your processes is not glamorous work, but quality improvement requires that things be done consistently.

2. Identify quality issues

Employees and management must embrace quality issues as opportunities to improve. Management must take extra care not to “shoot the messenger.”

No company wants to discover that quality issues exist in its processes. However, companies must view raising the issues that do exist as a positive thing. They should not sweep them under the carpet. Companies are all too often surprised when they routinely chastise people who raise quality concerns and then find that people hide these issues.

Reward employees who identify quality issues, don’t punish them.

3. Fix the problem for the customer

Mistakes happen. Most people understand that. The issue is how you deal with the problem when one occurs. Handled poorly, the mistake can result in the loss of a customer. Handled well, the result can be a loyal customer who feels well cared for. The key is to accept full responsibility and ensure that you treat the customer more than fairly.

When a problem occurs, resolving the issue for the customer must always be the top priority.

4. Ensure that the problem doesn’t reoccur

Having executed the three prior steps, too many companies call the issue closed. After all, the customer has been satisfied.

The urgent issue is resolved, but this approach misses the opportunity to prevent future quality problems. It is imperative to ask, “What caused this problem, and what do we need to do to ensure that it never happens again?” Once you have answered these questions, you can correct the process.

This is why having well documented processes is the first step to quality improvement. When a flaw in the process is identified, the fix can quickly be rolled out across the entire organization only if everyone is doing things in the same way.

While following this course of action sounds simple, it requires a disciplined approach and getting the nuances right can be critical. Properly executed, it will put your enterprise on the path to continuous improvement. In the long run, the rewards will be well worth the effort

Startup to Do a Better Job

On Shark Tank, Mark Cuban often says that you have to run a business like there is someone working 24 hours a day to catch you. For many entrepreneurs and small-business owners, this is easy to imagine.

Tablets are promoted with the claim that “thinner is better” or that “higher resolution is better.” Smartphone shoppers are directed to not to settle for the 8-megapixel camera, but to opt for one with 16. By throwing all these metrics at us, consumer-products companies try to differentiate themselves and drive demand.

 For small businesses, however, offering a standout product requires an understanding of what the customer wants — and delivering it.

Don’t fall into the trap of designing your business product according to these three myths:

Myth No. 1: Bigger is better. As Walmart has exemplified, a certain convenience to customers is associated with size. Offering a wide range of products at low prices, Walmart has carved out a very large segment of the market. But bigger is not necessarily better.

For many service-oriented businesses, being bigger can impose a burden. Some customers are looking for a level of service that large manufacturers struggle to provide. Customers (even those who work at large businesses themselves) want to interact with decision-makers. They want to know that their needs are at the forefront and that the right ears are receiving their requests. Large organizations often inspire unneeded bureaucracy, taking a toll on the ability of large firms to be responsive.

And though being large can help in certain ways (by being able to provide a wide range of products), smaller, more nimble and even privately held companies can do well by trying to understand customer needs and reinvesting in growth. Such reinvestments grant firms the opportunity to add additional services or products that customers want, in a natural way.

Myth No. 2: Self-service is better. In this age of self-service, businesses across sectors are offering automation, from online banking to mobile chats, as a way to provide convenience. The challenge is that if you serve customers as a faceless, nameless robot, your value proposition can disappear.

In Chicago, regional supermarket chain Jewel-Osco announced last year that it would discontinue self-checkout lanes. The self-checkout lanes seem to have hurt the company’s customer service. Many customers did not interact with staff — and those going through the normal checkout lanes were perhaps subject to long lines. I suspect that the company decided that the perceived convenience of self-checkout was not an actual convenience. The solution it came up with? Additional quick checkout lanes were added where the self-service lanes had been.

Although online and automated options can be valuable for small businesses to embrace, when a customer needs to troubleshoot an issue or find a representative, it is critical that they are able to do so.

Myth No. 3: Faster is better. As consumers, we are used to getting what we want, when we want it. Amazon has made a business out of being the fastest company to deliver products purchased online. Indeed Amazon is so fast that products can be delivered to our door on the same day (and perhaps in the future by drones). While this can work in the commodities business, most entrepreneurs should shun the “faster is better” mantra.

As small-business owners, we have to look at our work not as a race, but rather as part of a relay. At Ideal, the 90-year-old manufacturer that I run with my brother Yale and our dad, Steve, we manufacture corrugated boxes and point-of-purchase displays, requiring project management, graphic and structural design elements and logistics skills. If one of those aspects is off, then it doesn’t matter how fast the manufacturing plant churn out displays and boxes.

Get back to basics. The reality is that better is better —  and better depends on your core customers’ needs. Customers will always care about size, breadth of services, convenience and speed, but those factors are rarely the primary concern. Provide a great product at a fair price. When small businesses return to this central focus, they will get to “better.”

Avoid Overpaying for Everyday Business Expenses

You’re a small business. You probably don’t have the money-is-no-object budget of big businesses when it comes to every day expenses. In fact, you’re probably trying to pinch pennies while providing your employees the tools they need to do their best work. So how do other business owners save money on—well—everything? Here are a few ideas.

Don’t Hire. Contract!

Gone are the days where you have to bring on a part-time “employee.” Employees need an office and/or equipment, you’re on the hook for a portion of their taxes and insurances, and you have to invest a considerable amount into training.

Instead, hire a contractor or freelancer. They’ll require some training but outside of that, all you pay them is the cost of the job. No taxes, no worker’s comp. insurance—just a fair wage for outstanding work.

But be careful. The IRS has very strict rules when hiring a contractor. For the most part, you can’t have any control over their schedule, you can’t act as their manager, and you shouldn’t provide them with any type of company uniform, among others. If you break the rules, they’re an employee. If you’re not sure, use IRS form SS-8 to figure it out.

Cut the Office Supplies

Nobody is saying not to provide paper for the copier but if you’re still following the old playbook of stocking your closets with binder clips, post-it notes, and boxes of pens, there’s probably not a need. Technology has made offices much more paperless. Those to-do lists that were once kept on post-it notes can now be saved on an app. Filing cabinets have been replaced with Dropbox and Google Drive, and there’s no need to print everything out.

You also don’t need swanky, high-end desks. If you have an IKEA close by, head there and buy desks on the cheap.

Teleconference your Meetings

Is it essential that you’re all in the same room to hold a meeting? How about a teleconference? There are plenty of conferencing platforms on the market and some are pretty expensive but if you only have a few people in the meeting, consider Google Hangouts. For meetings of 10 or less, all your people need is an Internet connection. It’s completely free and easy to use.

If you need a more robust platform, platforms like GoToMeeting will cost $50 per month for up to 100 people but that’s still cheaper than flying people to one location.

Speaking of Technology

First, Internet. Depending on your type of business, you may not need business-class service. If you have a lot of employees or they’re doing high-end computing tasks that actually require a robust service, then business-class speed is a necessity. But if you only have a couple of employees and they’re performing basic computing tasks, you can probably get by with a slower speed at a lower price. Don’t buy more than what you need.

Second, no need to upgrade your equipment every time something new comes out. Purchase every other software update instead of each one unless there are large amounts of security updates. No need to buy the newest iGadget either. On the other hand, don’t be cheap. New features and faster, more efficient hardware could be a cost saver. Buy and update, skip an update, buy an update—that makes for a reasonable upgrade cycle.

Don’t be Too Loyal

In business, loyalty to vendors can be a plus but don’t be too loyal. That insurance agent you play golf with might not have the lowest rate. The vendor you’ve done business with for decades may not be the best deal. At least once per year, compare prices and don’t be afraid to do some haggling. Loyalty means giving your current vendors the opportunity to match prices. It doesn’t mean paying more for the same product.

Stop Paying Finance Charges

There’s no way around it—if you’re paying finance charges, late fees, or bank charges, you are throwing away money unnecessarily. If you’re paying annual fees on a credit card, unused gym membership fees, and strange fees from a vendor, it’s time to cut these out. Every business ends up having a bit of money bleed. Audit your books regularly. Ask questions about every charge, regardless of how small it is, and refuse to pay unnecessary fees. You can’t avoid taxes but fees are negotiable.

RELATED: 9 Ways to Fix Cash Flow Problems

Advertise Online

Advertising takes a lot of time and research to get right. That doesn’t mean you should pay for a mailing and hope it works. Online advertising gives you more control over the audience that will see your ad and you can spend as little as a few dollars each day if you want to. Carefully measure your advertising efforts and use the platform that converts the most people.

Partner with Other Businesses

Businesses are finding creative ways to cut expenses by sharing. Businesses sometimes rent a large office space and move in together. They can then share Internet service, other utilities, and office equipment. Companies like Uber have made “sharing economy” a household term. There’s no reason your business can’t take advantage of it too

Best Mobile Payment Systems for Retailers

The easier you make it for your customers to do business with you, the more likely they are to consider you first when they need something. According to Pew Research, 90% of Americans own a cell phone, 64% own a smartphone, and 57% use it for online banking. Your smartphone is likely more important to you than a wallet or anything else you would carry with you, according to research.

All of those facts illustrate why companies like Apple, Google, and numerous startups are so interested in mobile payments. It has not yet caught on en masse but it’s coming.

A quick search reveals plenty of options. Which should you choose?

Two Types

Using a mobile device to process payments isn’t new. Many companies have offered the technology for years. The “new” technology involves consumers using their phones in place of a credit card. If you’re not ready for the latter, here are some options to accept credit cards using your smartphone.

PayPal Here- A lot of companies have fallen victim to cybercrime. Despite the widespread attempts to infiltrate PayPal’s systems, it hasn’t happened. This is a company that has earned your trust. PayPal requires you to have a PayPal account and a small credit card reader that plugs into your smartphone. Download the app, and you’re in business. No monthly fees and 2.7% per swipe.

Square- Hats off to Square’s marketing team. In large part, when people think of scanning credit cards with smartphones, they think of Square. You’ve probably seen the commercials and know the brand. Like PayPal, simply plug a reader into your phone, download the app, and you’re set to go for only 2.75% per swipe.

Square is even ready for the switch to EMV and NFC technology. In the Fall of 2015, Square will ship its contactless reader.

Intuit GoPayment- If you use QuickBooks, and there’s a good chance that you do, look at Intuit GoPayment. You get the card reader and the app for free and swipe rates are 1.75% plus 25 cents if you pay the $19.95 per month fee or 2.4% plus 25 cents without the monthly fee.

Contactless Options

If you’re just now looking to get into mobile payments, the above options work, but from a technology perspective, they’re old. If you don’t want to get into contactless options, go with Square until the others have an EMV card reading device or take your chances with a third party EMV reader that hooks into a computer or mobile device.

But let’s talk contactless! Customers simply hold their phone or mobile device over a contactless reader and the payment is complete. It’s that fast—and the more tech savvy consumer is already using it and wants to use it more. There are two systems worth talking about.

Apple Pay- Apple knows how to market and it has the money to do it. If you’re even a little techie, or you watch TV, you’ve heard of Apple Pay. A customer loads their card into Apple’s payment app. When they visit a store that accepts Apple Pay, they simply authenticate the payment with their fingerprint, hold their device over the payment terminal and transaction is done. All you have to do is have a payment terminal that is NFC enabled and you have everything you need. NFC enabled terminals are as little as $250.

Signing up for Apple Pay is easy and free. All you do is contact your payment provider and they’ll do the rest. Apple Pay doesn’t charge you anything so whatever you were paying in credit card fees before you’ll pay the same with Apple Pay.

Contactless payment systems are more secure. Apple Pay assigns a unique number to your transaction instead of transmitting your card number—“Tokenization” in geek speak. This number is used only once so even if a cyber thief got the number, there’s nothing they can do with it.

Google Wallet- Google Wallet is Google’s mobile payment system. Enter your cards into the app, and you’re set to accept payments. Google Wallet is more geared towards e-commerce but works just fine with NFC terminals in your brick and mortar location. As soon as Android Pay is available to the masses, it will better compete with Apple Pay—likely being accepted everywhere consumers can use Apple Pay.

Samsung Pay- Samsung recently released its beta version of Samsung Pay, a payment platform to compete with Apple and Google. At the time of this article, it was only available to about 1,000 people in it’s home country of South Korea but early reports are positive

All About Calculate Your Net Worth

Do you know how much you’re worth? Most people don’t but as a business owner, your personal net worth may be important. Although your business is probably legally separate from your personal assets, a bank that considers giving you a business loan will likely ask for personal collateral if your business has little real value. Calculating your net worth gives you an accurate picture of how much of your personal worth you’re pledging to your business.

On a more personal level, having a clear picture of how much you’re worth helps with financial planning. Do you have enough saved for retirement; where is your debt and are there assets that could help you pay it down it down faster? What percentage of your net worth is in liquid investments and is it allocated appropriately? Your net worth is more than a single number—it’s an entire report full of important data.

Terms

Before diving into the calculations, you need to know a few terms:

Asset- Any property with real value. Real estate, a car, and jewelry or art are a few examples.

Illiquid Asset- Something that can’t be converted to cash quickly without a substantial loss. Remember the housing crisis that left people underwater on their homes? Homes became an illiquid asset for many.

Liability- Something you owe—a debt.

Liquid Asset- Something easily sold for profit. Stocks might be the best example.

Personal Property- Something you own that is movable—boats, cars, collectibles, and furniture are examples of personal property.

Real Property- Property permanently attached like a home, a barn, or detached garage.

Gather the Information

Probably the toughest part of calculating your net worth is gathering the information. Some of the information might be an estimate. Unless your real property was appraised recently, you won’t know it’s current value without paying an appraiser. In the case of your home, look up recent sales of similar homes in your neighborhood and use those as a guide for estimating your home’s worth. These are called “comps” or comparables in the real estate business.

If you have jewelry, some jewelry stores have appraisers on staff or they can recommend somebody.

For assets like your car or some collectibles, look at online guides that list their value. If you haven’t dug into the value of a 401(k) from a past employer or the cash value of a life insurance policy, set up online accounts with the firms holding these investments or call and request a current statement.

If you’re going to invest time into calculating your net worth, do the legwork to compile the most accurate data. The more you estimate, the more inaccurate your final calculation will be.

The Calculation

Calculating your net worth is simple once you have the information. It’s simply your assets (what you own) minus your liabilities (what you owe). Add everything you own including:

  • Money in savings or checking accounts
  • Actual cash
  • CDs or treasury bills
  • Annuities, bonds, mutual funds, pensions and other retirement plans, stocks
  • The cash value of any life insurance policies
  • The value of real and personal property
  • Anything else that you own that has sellable value.

Next, add your liabilities

  • Loans—car, mortgage, home equity, second mortgage, boat
  • Credit card debt
  • Medical bills
  • Student loans
  • Personal loans
  • Taxes due
  • Any other debt or outstanding bills

Subtract your total liabilities from your total assets. Now you know your net worth.

What’s Next?

Once you do the work the first time, the calculation is easier the next time around. If you haven’t already, use a free service like Mint.com to keep many of the numbers up to date in one place. Instead of having to compile the value of each of your investment accounts, credit cards, and everything else, you simply open Mint and copy the numbers into your spreadsheet.

In fact, Mint tracks the estimated value of many of your personal and real assets and gives you your net worth based on the information it has. It won’t be perfect but it will be pretty close

Learn More About Credit Card for Your Business

There are many different types of credit cards available these days, and it can be difficult to know which option best suits your business. Answering a few key questions can help identify and prioritize your choices.

How strong is your personal credit rating? 

Most credit card companies will look at your personal credit rating even when you are applying for a credit card for your business. In fact, in most cases obtaining a business credit card requires the business owner to personally guarantee the balance will be paid. Thus, the higher your credit rating, the better credit terms you can expect to receive. A credit rating over 700 is ideal, but over 650 will usually suffice. Anything less will earn mixed results in the way of outstanding credit card offers.

Do You Want A Personal or Business Credit Card?
You can use a personal credit card for business, but if you do so, it’s advisable for tax and accounting purposes to restrict use of the card to business purposes only. If you use the card only for business, you’ won’t have to separate personal from business expenditure at tax time, and you’ll be able to deduct any interest that accrues if you don’t pay off the balance in full each month. For most very small businesses, the main distinction between the personal and the business credit card will be that the personal credit card may offer some protection against rates that suddenly change and other practices regulated under the consumer credit card laws.

Is there a particular store you shop most?
Maybe you’re a home improvement contractor who frequents a lumber supply store. Or, you’re running a desk-based business, and make frequent purchases at an office supply store. If the store you shop at offers a retail credit card, you may want to consider it. Not only will it consolidate monthly expenses into one bill, but it boosts your credit rating as well. Retail credit cards tend to approve cardholders more freely with fewer restrictions. If paid off each month, it can be a great way to prove yourself as a responsible cardholder and catch the eye of general credit card companies. Bonus: Your monthly credit card bill consolidates your tax records keeping, as most of these purchases will be tax-deductible and you will often earn customer loyalty reward points for frequent shopping. These in turn can be redeemed for “free” store merchandise or cash discounts on future purchases.

Do you plan to carry a balance?

If you do plan to carry a balance, or think there will be times when you won’t be able to pay off the entire amount at the end of the month, pay close attention to interest rates. The real value of any perks you gain (such as those discussed below) can be totally wiped out by the interest rates when you carry a balance for any length of time.

Do you fly a lot?
Frequent flyer cards can go a long way toward reducing business costs. Apply for either a co-branded airlines card or a general credit card that allows you to book travel with any airline. Seek a card that touts no blackout dates and always compare the fine print to locate the best deal.

Do You Prefer Cash Back or All-Purpose-Rewards Cards?
There are a number of credit card programs for personal or business use that have rewards programs. The programs let you accumulate points for each purchase, and then trade in the points for either travel (as mentioned above), gifts, gift cards, or cash back. These programs, in effect, let you earn money when you spend money, but they often carry a higher interest rate than credit card programs without rewards. They make sense, though, if you usually pay off most or all of your balance each month. If you opt for a card with a cash back rewards program, look to see if there is cap on the amount of cash back rewards you can earn per month or per year, and if so, what that cap is.

Do You Need A Credit Card With A Line of Credit?
Some credit card programs include a line of credit option for businesses. This option lets you write a check to anyone – even yourself- for an amount up to your credit limit. It’s handy if you occasionally need funds and don’t want to apply for (or can’t get) a separate bank line of credit. Before opting for this type of credit card account, be sure you know what fees, if any, you will be charged for using the line of credit.

Once you’ve decided on what (in addition to credit) you want from your card, look at the cards that have those features, and compare interest rates.

The right business credit card can offer business owners peace of mind and financial flexibility. Remember, though, that it’s very important, to pay attention to fine print items like APR, annual fees and credit limits.

Once you’ve gained approval for the right business credit card, ensure your payment is submitted on time and you keep your spending under limit. Failure to do so will result in astronomical interest rates and monthly charges, ultimately taking a toll on your business