Mary Schmidt, Marketing Advisor, The Loan Fund

Even if people shop at real stores, they use the Web first to research products, find service providers or stores and get directions. Without a Web site, you miss out on this traffic.

But finding someone to design your Web site can be a challenge — especially when bids on the same specifications can range from $500 to $15,000 (and some of the worst sites cost the most to create).

Before thinking Web, think results. An online store isn’t separate from your “real” business: It’s your cyber storefront, and it’s open for business all the time. Just as you wouldn’t expect a great store on a back road to generate much business if you never mentioned it or visited it, you can’t expect automatic sales just because you’ve opened an outlet on the Web.

The fundamentals of online and offline marketing are the same. You still need a plan, good products, great service and the ability to communicate all this to potential customers. Remember those e-commerce sites you’ve visited only to abandon your cart without buying anything? Or the marketing agency whose site was so creative you couldn’t find out what they did or how to call them? You don’t want to make the same mistakes.
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Leslie Hoffman, Director of Lending and Client Service, ACCION New Mexico

Have you ever gotten midway through a vacation to discover you’ve already blown through most of the money you saved for the trip? You probably didn’t pack up your bags and go home. Instead, you may have taken a look at your trip budget, compared it against what you had actually spent and made some adjustments in your personal finances to enjoy the rest of the journey.

Owners of small businesses can run into the same problem. By keeping an eye on monthly changes between budgeted costs and what is actually spent, adjustments can be made to improve the situation.  Budgets can help determine how well a business is performing by comparing expected costs with actual costs. It is important, however, that you adjust your budget to reflect actual sales so that you will be comparing apples to apples. This is called flexible budgeting and it can illuminate changes you can make that may improve the performance of your business.

For example, let’s say the owner of a gift basket business is having a hard time figuring out how to make more money on her high-end baskets. She planned to sell 1,000 baskets last month but only 900 were sold. Midway through the month when she saw sales were lagging a bit, she reduced her price to try to boost sales. She didn’t think the reduction in price would hurt too badly because she was also able to reduce some of her costs by making fewer baskets. So why did her revenue turn up shorter than expected?  To find the answer, she must adjust her budget to the actual sales volume of 900 baskets before comparing it to her actual costs.
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Sandra Taylor Sawyer, Director, SBDC at Clovis Community College

A mistake many small-business owners make — especially when the economy is on solid ground and a business seems healthy — is failing to monitor their financial position. Such neglect can have catastrophic consequences in times like these, when orders are falling and money is tight.

To see where your business stands, start with your financial statements. All businesses should have monthly or quarterly financial statements prepared by a bookkeeper or accountant. Waiting until the end of the year when reports are needed by the IRS or a lender robs you of an opportunity to make midyear corrections if the numbers warrant it.

Financial statements consist of the balance sheet and income statement, also called the profit and loss statement or statement of revenue and expenses. A third element, the statement of cash flow, should also be compiled.

The statement typically overlooked by small-business owners is the balance sheet, which offers a snapshot of the business’s health. The balance sheet should be reviewed before you buy equipment, hire employees, expand the customer base, extend credit or initiate advertising. It’s a daily account of the business’s assets and liabilities and the owner’s equity transactions.

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Kim T. Blueher, Director of Lending, WESST Corp.

America’s debt crisis is a collective one. Our government is spending beyond its means, and so are businesses and individuals.

How much debt is too much? When we can’t afford to make payments on time.

How did we get here? Sometimes we spend too much. Sometimes divorce, illness or unexpected unemployment affects our ability to meet financial obligations. A sudden drop in sales can evaporate cash flow for a small business. And if loan payments are late, that business might have trouble ever getting another loan.

A successful relationship with your creditor depends on communication. At the first sign of difficulty, warn lenders of your predicament. They will respect you for taking responsibility and are more likely to be flexible about restructuring your payment plan.

I recently received a letter from a borrower who owns a small publishing business. She had lost an order, income was down and she worried about her ability to make payments on time. She wrote all her creditors to alert them and said she would do her best to meet payments. To date she has not missed a payment, but if she does, I’ll know why and be prepared to work with her.
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Mary Schmidt, Marketing Advisor, The Loan Fund

Whether you publicize your business through advertising, public relations, brochures or direct-mail appeals, make sure your message is consistent, integrated and versatile enough to be used in multiple ways. And make sure your campaign is measurable, or you’ll never know if it’s working.

This is especially critical in a weak economy, when consumers become conservative about spending. This is when it’s even tougher to draw customers to your door (or to your Web site if customers are unwilling to pay escalating delivery costs).

Know your target market. Unless you know where to find your target customers and how they gather and process information, you might as well throw money into the wind. Once you’ve confirmed your targets, consider how many benefits you can get from the same marketing dollar. Save money and time by keeping messages simple and consistent and by repeating them in every medium (when you’re truly sick of your message is when people start remembering it). Any article you write, for example, can be recast as Web site content, a blog entry or an event handout.
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Leslie Hoffman, Director of Lending & Client Service, ACCION New Mexico

One certainty in the life of a small business is change. Today, business people are riding the wave of economic change, looking for ways to maximize the profitability of their business amid lower consumer spending and higher prices from suppliers.

Every small business has powerful information at its fingertips that can assist them in adjusting to change. The key is costs. Entrepreneurs who understand how the costs of their business respond to changes can make more informed decisions, allowing them to better utilize limited resources.

The first step is to explore the two basic types of costs in a business – fixed and variable. Continue reading →

Mary Schmidt, Marketing Advisor, The Loan Fund

Marketing means more than coming up with clever, eye-catching ads. If you don’t also ensure that your target market sees and remembers your ads and if you don’t deliver on what those ads promise, you’ll find yourself investing large amounts of money trying — and failing — to attract and retain customers.

Because marketing encompasses everything you do as an entrepreneur, a marketing plan — and a budget to support it — is essential to your success. This is especially true when economic times are tough for you and your customers: The less money your customers have to spend, the more they insist on value, not pretty words. But where and how does such a plan begin?

Marketing is defining business goals. Before you start getting quotes for “branding,” marketing campaigns, Web sites and brochures, clear your mind and desk and write down the three most important goals you need to accomplish in the next 30, 60, 90 and 365 days. Keep the list simple but specific. “Get more customers” is too broad: What kind of customers? Where will you find them? For what products or services? How will you keep them? How will you know if you’ve reached your goals? Once you’ve determined your goals and how to measure whether you’ve reached them — X number of new customers for X product in X location by X date — you can think about how to budget for all that marketing stuff.
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Kim T. Blueher, Director of Lending, WESST Corp.

During economically fragile times – when consumers and businesses are holding their collective breath – survival can sometimes be found by fine-tuning key expense areas.  In my household we are eating out less, driving our economy car instead of the more comfortable but gas-hogging SUV, and turning out the lights when we leave a room.

Businesses can also benefit from examining expenses in key areas and cutting costs where possible. They might also respond to a slow market by lowering the selling price of their products or services to spur increased sales. But before a business owner adjusts pricing, he or she needs to be able to answer these questions – how do I know I am operating at a profit, and what are the lowest sales I can have and still break even?

At WESST Corp., we work with many small businesses whose owners have never taken the time to truly account for all the underlying costs of getting their product or service to market. They haven’t identified their breakeven point.

One of my first clients when I started working at WESST in 1990 was a well-known and highly respected artist who made ceramic dishes. She came to WESST for help because even though she was selling well at art and craft fairs, she was having trouble paying her living expenses – things like rent, car payments and even groceries. Once I guided her through a pricing evaluation, she discovered she was only charging about $2.00 on top of the cost of her product. More importantly, she realized she had neglected to add the time of her own labor to her costs.
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