The recent sub-prime mortgage crisis and the interlinked subsequent turmoil in the financial markets has generated many concerns in businesses and the general outlook on the economy. The question we want to answer is: will it affect small businesses?

There is no easy answer to this question. But let’s examine the different drivers at play.

On one hand, we have a mortgage market that’s become a lot tighter. This will make it increasingly harder for people to get mortgages. Traditionally, borrowing against your home has been one of the most common ways of funding a new businesses (according to a survey conducted by the Federation of Small Business 25% of start ups use bank loans as their main source of funding, while 49% use bank overdrafts). So these facts would indicate that the credit crunch will have a knock-on effect on small businesses by affecting entrepreneurs’ ability to raise funding.

Equally, a lot of people who are already on the property ladder will find that their equity is being squeezed by the drop in house prices, so again making it harder to gear up.

On top of this, banks have gone into saving mode, switching from looking aggressively for borrowers to looking for lenders. So even with property to secure against, chances are that people will generally face it more difficulty to get a bank loan.

On the other end of the food chain, larger businesses, who are already geared up may find it harder to service their debt especially if consumer spending is affected (of which there are no clear signs as yet). Consumer spending accounts for about 70% of the GDP so if that goes down… it pretty much all goes down.

With the above in mind, the number of business startup is the next year is estimated, by some, to drop. Barclays bank estimates that new business formations will drop from 420,000 a year for the past three years to about 360,000 next year.

I don’t share that view. Seemingly paradoxically I believe that the above will actually lead to a growth of the small business sector. The small business sector has always been the most resilient in the economy, benefiting from the lack of a cumbersome fixed cost base that burdens large businesses and with little or no debt to service.

There is the question of course of ‘how do we finance a small business without a buoyant property market to piggy-back on’? Well considering that over the past three years, despite abundance of cheap credit, 40% of start-ups (according to the FSB survey 2006) used own savings and retained profits to part-finance their growth, one can argue that that figure will increase in times when credit is tighter and when people are also nervous about their employment prospects.

Added to this is that fact that entrepreneurs today have more tools at their disposal to help them ‘boot-strap’ their venture than any other time in modern business history. Technology of course is the underpinning force behind this, enabling people to work remotely even deploying virtual teams without having to incur the traditional set-up and costs. Sites like ours – www.peopleperhour.com, we’d like to think, are making a distinct positive contribution to that.

Personally, I think the problems of the current financial crisis can be attributed to one key fundamental factor that, unfortunately, is an innate human trait: greed. The past number of years has seen an excess liquidity fuelled by cheap credit, which has led to a frenzy of over-spending and over-exposure. What has this led to? Large organizations eating up more than the can chew. Like Northern Rock.

This downturn will be a smack on the face to those who have got too greedy. And those will be naturally the ones at the top end of the food chain. As people become more nervous of the situation and their job security in those organizations, I think more people will resort to embarking on their postponed hidden desires to branch out on their own.

After all there something uniquely beautiful and paradoxically uplifting about a bleak economic climate: there’s less to lose!



E Law Blog

Running a small business can be a difficult undertaking luckily there are a number of ways you can receive help that you may not even have to worry about paying back. The government offers a number of grants to small businesses to do a variety of things in order to increase the chances of that small business succeeding. The first thing to do is check and see if you qualify for any grants. One of the ways to do this is to check with the chamber of commerce or the better business bureau.

These locations may have information on grants that can help out small business owners who are looking to set up shop in that area. There are many areas that offer grants to small businesses just to get them to open up or they may be offered in order to keep a small business alive within a given area, which may be suffering from a lack of businesses. You can also check with a number of websites, which can list grants that are available to small businesses within your area. The types of grants vary. There are grants for equipment, rental expenses, there are even some grants that can help to pay employee expenses such as for benefits or can help you with your living expenses if you are a single employee business.

The only way to know if there are grants available to you in your area is to check. Once you find out which ones you qualify for you may want to do some research into writing grant proposals or have a professional help you put it together. This will increase your chances of gaining the grants you need. In addition, grants can be a wonderful alternative for small business owners who may not have enough personal credit to take out loans.



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When considering different forms of advertising, always think about postcards. When I refer to postcards I mean 4 inch by 6 inch (4″x6″) flyers. I have many reasons to use them, especially in small business marketing, and I have found them to be very effective. Here are five good reasons why postcards should be included in your marketing campaign.

Reason #1: Low cost to print.

4″x6″ postcards are pretty inexpensive to print in comparison to most other printed items. I can have a box of 5,000 cards designed, printed, and delivered for under $500. Brochures can cost that much for 500. When dealing with small business marketing, these flyers can save a huge amount on marketing and printing costs.

Reason #2: Size.

I’m sure everyone has seen a 4″x6″ flyer at some point. Many times they are placed on your car or left in your door. These flyers are easy to handle, distribute, and save. If someone receives a 4″x6″ flyer with coupons on it, they are more willing to save it than if they receive the same coupons on an 8.5″x11″ sheet of paper. Obviously, everyone will have different reasons for using flyers, but 4″x6″ postcard-size flyers are effective in just about every situation.

Reason #3: Postage Costs.

Postage goes up quite often. It seems like every time I go to the post office, it has gone up again. When determining how small businesses will market to their target markets, postage is always part of the equation. If you are mailing a 4″x6″ flyer, it will cost you the postcard rate, not regular first class, which saves you almost half. Many people tell me they use a mailing house and it helps reduce costs, but I have used them before also. The savings you receive in postage is usually eaten up by the mailing house’s fees, and even before those fees, you still save money with 4″x6″ flyers.

Reason #4: Quality.

4″x6″ flyers are used quite a bit, especially by the entertainment industry. For this reason, there are many printers available for 4″x6″ flyers. You have to be selective in choosing your printer, but the better printers provide a top-quality finished product. The price I quoted earlier is for UV-coated, 14 pt stock, and full-color on both sides. Most small businesses struggle with price of printing because they usually can’t order large quantities. They usually end up using weaker quality products to save money, but 4″x6″ postcards can be top-quality and still save money.

Reason #5: Attention-Grabbing.

Many direct mailers tell me I should send a letter, sample, pen, and other garbage in an envelope. Besides the outrageous cost this brings, it weakens the response. People see a marketing piece in the mail a mile away, including postcard flyers. Will they take the time to open the envelope, maybe. Will they read the postcard flyer because the information is staring at them, definitely! Test the theory yourself: see how many envelopes you decide to open versus the number of postcards you read.



Giga Flux

From the mid seventies we can note that scholars makes the distinction between small and large businesses in terms of needs, level of sophistication and range of strategic planning. Bracker and Pearson (1986), Rue and Ibrahim (1998), Perry (2001) and Wijewardena, Zoysa, Fonseka and Perera (2004) all formulate definitions of strategic planning which take the uniqueness of small businesses into account and allow for the fact that small businesses cannot draw on management and material resources in a manner similar to that of large organizations.

Empiric studies’ findings indicate at a correlation between strategic planning and performance. Nevertheless, the findings are mixed. A survey of twenty-six experimental studies enabled Miller and Cardinal (1994) to identify a significant positive connection between strategic planning and small business performance. Robinson (1982) found a significantly high level of profitability as well as an increase in sales and returns on sales and the number of full time employees in a group of small businesses that employed external consultants for the purpose of strategic planning. Compared with other businesses, Bracker and Pearson (1986) discovered a significant increase in income and remuneration per entrepreneur in businesses that prepared strategic plans (the highest of four designated levels of strategic planning). No significant increase was detected in the measure salary expenditure divided on the sum total of sales. A significant differentiation in the rate of sales increase was found by Rue and Ibrahim (1998) in small businesses that incorporated written planning (basic or sophisticated), as opposed to other businesses. Perry (2001) detected a significant differentiation in the degree to which planning was conducted in small businesses that did not applied for bankruptcy as opposed to those that did. Wijewardena et al. (2004) define three levels of planning: no written planning; basic planning; and detailed planning. The findings indicate that the level of planning stands in direct proportion to the level of increase in sales. Yusuf and Saffu (2005) classify three levels of planning: low; moderate; and high. A connection was found between increase in sales and the low level of planning. No correlation was found between strategic planning and increases in market share or in profitability.



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“Small businesses” is an economically term which generally related to the business scope and extent. The taxing authorities categorize “small business” according to their finance turnover in a defined time duration, in most cases: a year. Another aspect of specifying a business as a “small” one is its field of activity: a single barber shop, or a single “Pizza” parlor, or a single stand in a marketplace, are “small businesses”. When one of those becomes “a chain of…” it’s another story.

 

The behavioral sciences, especially Sociology, regard “small business” as a small organization. From the sociology point of view a business is a type of social organization. The sociology discipline classifies organizations by their internal human relations and interaction. No matter how many people are involved, what’s count is the quality of the inter-relationships among them. If everybody knows everybody, face to face, by each name, and the instrumental communication is informal as the social communication, then it’s a “small organization”. 

Such informal relationships can function when we are talking about 2 to 100 workers, managers and subordinates all together. Probably when it’s a 100 people organization we’ll find formal division of labor, duties definitions and documented regulations. On the other hand – a 4 personnel store: the informality is extreme and there is no room for documentation and definitions, everyone is doing everything and if the boss, the store owner, will keep distance – he’ll lose the great advantage of potential warm instrumental relationships with his three salespersons.

Between the 4 and 100 personnel the most common are the 30-40 personnel small businesses. Even if the business owner will try to establish formal regulations he wouldn’t succeed. In such a small organization people will behave according to the informal habits which dominate the everyday activities. There is no way that a new employee will sit down and read a documented guidance book. What will probably happen is that he’ll be told orally what to do by a senior foreman and will complete his integration by imitating others in his close working environment. If he’ll insist to read written instructions he wouldn’t find it because it doesn’t exist  in such small businesses and if he will – it wouldn’t be updated. This is the great fault of small organizations and yet their great advantage: it makes them much more flexible and adaptable to market real time changes.

The sociologist Max Weber claimed that the ideal desirable theoretical model of the most efficient organization is the ‘bureaucratic” model. Weber argued that this type of model will be the only social organization that will overcome human faults and weaknesses. His organization will leave much longer than the individuals who are working for it. People will have to adapt themselves to the organizational needs and demands and not the other way round. He wanted to fulfill the old cliché saying “The graveyards are packed with people who thought they were irreplaceable”.

Just for the sake of argumentation, I’ll point only two of the criticism on Weber’s model:

One – Bureaucratic organizations suffer of stagnation. When a “big business” wants to react to changes in its businesslike environment its got to be someone whose job is to detect such changes and to call a meeting of the right forum which is nominated in advance to take care of such cases and according to the firm regulations to make decisions which will be accomplished by those who will be appointed to the task. Such a procedure is taking a lot of time while small business are reacting immediately and move forward leaving the big businesses behind.

Two -  The biggest enemy of the bureaucratic organization is the informal organization within the formal one. A lot of money, time and energy are wasted trying to overcome the influence of the informal organization. In small businesses, which are informal by nature, there is no such problem.

 

As a metaphor we can compare big and small businesses to a steam ship and a sailing boat. In the big steam liner, even if the crew members know each other personally, they operate a daily routine under strict regulations carried out by formally ranked officers and other commissioned lower ranked staff. If the weather will change and threat the ship safety, no one will react without a strict command issued by the captain. In the small numbered crew of a 40 feet sailboat there are no ranks or strictly defined jobs. Everybody is doing everything which is needed when it is needed to be done. There is a Skipper but in case of a sudden hazard you can carry on each sailor that he’ll do what’s necessary without waiting to be told what to do. In small teams, who are operating in a stressed environment, a small boat in the big blue sea or a small business in the jungle of the wild markets, crew members know that if they wouldn’t operate shoulder to shoulder they will be hanged neck to neck. The friendly commitment to each other is working for the benefit of the organization.

 

A online print shop is a classic example of a small business. It is organized by the following departments:

Management and administration (3)

Sales and marketing (3)

Accountants (2)

Customer service (3)

Graphic artists studio (5)

Printing machines operators (3)

Production and finish (7)

Shipping (2)

Business development and Internet support (2)

 

Those 30 workers are crowded in 100 square meters shop including machines and furniture.

The print shop is operating on line and off line.

On line, through the Internet, they offer the classical advertising and promoting printed materials like: Business cards, magnets, fliers, stamps, account books, envelopes, letterheads, invitations, stickers, bookmarks, and so on.

Off line, when the customer arrives in person and orders his request face to face. This is when the products are “heavy” like: books, catalogs, folders, small paper made packing materials, and such.

 

The small number of employees, operating under the right managers leadership, creates consolidation, unification, integration, and forging “team spirit” based on interpersonal relationship which creates an identification, involvement and empathy with the business goals. The lack of distance between managers, foremen and other employees do not harm discipline and high standards of working moral and ethics. Discussions, which are taking place from time to time, in open forums, enable all workers criticize constructively or suggesting improvements. Workers can express themselves freely in periodical interviews and all channels of communication, including internal E-mailing, are open unlimited. The closeness relationships enable flexible positioning workers in different stations according to various burdens. The outcomes of 30 workers is synergistic by nature and much more than just aggregative.

              



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Professional website designers pride themselves on creating a visually attractive piece of work. It is actually a very unique skill set brought on by the internet where a website designer needs to not only know about what looks good and works smooth, but also the variety of programming languages behind designing a website. A website these days can be powered by not only HTML, but XHTML, CSS, Perl, ASP, VBScript, Java, Javascript, SQL and of course FLASH.

Flash programming, now more than 10 years old was first developed by an ingenious company called Macromedia which is now owned by once rival, Adobe. The value of FLASH is its ability to deliver multimedia motion graphics for animation and interaction on the web but using the least amount of memory possible, thus making its programmers highly sought-after for upper-end website construction.

So as a small business owner you may have run into a “FLASHY” website in your surfing travels and been in awe (ok, jealous) of how great they look. Well the thing is really, I have seen thousands of small business websites with expensive Flash programming and immediately thought to myself, “What a complete waste of money!”

Creating and designing your small business website using all the latest software, enhanced graphics and in depth programming will almost certainly lead you to eventually lose interest in your own website, commit you to future invoice headaches for every little update you need to make, and cluster your website with a slew of others in your market that are equally as glamorous as they are ineffective.

You do not need a glamorous, gadget-filled website to get a customer to sign up for your email newsletter. You need an incentive. Surfers (potential customers) might be impressed with your website, but you will never impress them more than the next business which has one-upped you, yet again in the Flash department. It’s just a silly waste of time and money. Surely as a small business owner you can see through that.

Give your prospective customer a reason to be interested. In exchange for their email address you can send them a dinner-for-two coupon if you are a restaurant. You can offer them a 15 point safety check on their next oil change. You can catch their interest with a set of free labels for their wine making project. You can offer a free wash and dry with next hair cut. The bottom line is you have to put a financial incentive out there for them because once you have their contact information the likelihood of that web-surfer becoming your customer one day soon is radically multiplied.

Therein lies your distinct advantage over your competition. Their website may be full of bells and whistles, but yours is full of profit.



Giga Flux

1) Not Seeing the Future

Small business software can be tricky when it comes to buying different licenses. As your company grows, your software needs to be able to grow right along with it. Take a customer database for example. At first you have just a few clients, easily manageable with a small, free piece of software or even a spreadsheet. Suddenly, you have hundreds of clients with vital data to store regarding each one. Your software is overloaded and your spreadsheet looks like a bowl of Japanese alphabet soup. When you are choosing the software for your company, choose a software that is designed not just for small businesses, but mid sized businesses as well. Make sure that if it designed to hold employee data, that it can hold an unlimited number of employees without having to buy extra licenses. Also, if there are different levels of licenses available, don’t restrict yourself with a lower license just to save a few bucks, buy a license that will give you room to expand a little without breaking your budget.

2) No Support or Expensive Support

The software you will be using to run your small business will hold very important, time-sensitive information. Be it an invoice or payroll, the slightest computer glitch can cause your employees to be upset, customers to request refunds, and most importantly, money to be lost. When a server goes down the last thing you want to hear is your 20 year old tech guy say, “Sorry dude, looks like your data is pretty much toast.” Choose software that has a solid phone support system. Email support is affordable, but it usually takes 24 hours to get a reply. If your business is worth $200 an hour, how much is that really costing you? On the flip side, don’t pay an arm and a leg for phone support. Annual fees of $100-$200 are about average with per incident fees running about $50-$80 a pop. If someone wants to charge $200+ per incident or per hour for phone calls, be very weary. Their software better be perfection on a screen if it’s going to be worth it.

3) Not Trying it Before You Buy

What is the safest way to make sure you get the software you need with all the features your business demands? Download a demo BEFORE you buy! Nearly all software can be tried before you make a decision to purchase. If you don’t see a clear way to download a demo from their website, give them a call and request one. If they don’t offer one, ask them why and, unless they have a really good excuse, pick up the search again for your software. Demos are great for a lot of reasons. First, you can make sure that the data is compatible with your other programs (i.e. payroll with time tracking). Second, this gives you a chance to test it on your network and operating system to ensure full capability. Third, you can test their support when you encounter issues. If they are unwilling to help you get the demo running, this may be a sign of “monetary myopia” where they only help you once you have given them money. Not only does this show a sign a poor customer service but it shows a lack of confidence in their product.



Wallpaper Union

There’s a lot of doom and gloom out there. Economists from around the country seem to agree that the US economy is in a downturn. How deep or how long it will last is anyone’s best guess. Even the ever optimistic Oracle of Omaha, Warren Buffet, said recently, “My general feeling is that the recession will be longer and deeper than most people think. This will not be short and shallow.”

While recent research from National Small Business Association (NSBA) survey of Small and Mid-Sized Businesses and American Express OPEN seems to back up those assessments, many small business owners remain optimistic about their ability to have a successful year. Among the highlights:

* Increased energy costs have led 37% of businesses to increase their prices, yet 18% have invested in energy efficient equipment or upgrades

* 70% of small business owners remain confident in the outlook of their own business

* 70% of businesses have been able to secure adequate financing, up from 67% in 2007

* 71% of business owners plan to grow their business over the next 6 months

* Almost 40% of small business’ plan to hire in the next six months

* 86% of entrepreneurs describe themselves as “glass half-full” people

As Eric so eloquently spoke of in his recent post(on PaySimple’s blog), and Sarah discussed last Monday, small businesses provide the fuel that powers the US economic engine. On the heels of small business week, and in the midst of what most experts believe to be a recession, we at PaySimple wish you all the best in 2008. We know things are tough yet we remain confident in your ability to remain strong in the face of adversity. We are 110% behind all of you who strive for better lives and a piece of the American Dream.



Photos Union

So AIG is looking to pay $165 million in bonuses and compensation.  There is a good PR move!  Have the government bail you out and then pay millions in bonuses.  Talk about a ready made public relations nightmare.  Perhaps the company figures that it is mitigating some of the well deserved national outcry by identifying banks that received chunks of the company’s billions in federal bailout funds last year.  But what does that accomplish?  That’s not so much transparency as it is sharing the blame.  AIG was recipient of at least $170 billion in federal bailout money (that’s billion with a B) and received an $85 billion loan from the Federal Reserve. 

 If there had been no bailout and no loan, there would be no company and thus no bonuses.  The bailout and bonuses should have come with that caveat – no bonuses.  Bonuses are incentives that are paid out for jobs well done.  Or at least they should be.  No small business would exist or function under this type of framework.  That’s why I’m more convinced than ever that small businesses are what can, and hopefully will, turn the economy around and set the country back on course.  Because there is not a huge bureaucracy in which to hide, small businesses, by their very nature, are forced to be much more transparent.  Because there is little or no fat to absorb poor decisions, small businesses must function properly and turn a profit in order to survive, much less thrive.  We have seen that big is not always better.  In fact if recent history is to be our guide, it seems to be a ready made recipe for failure.  This is not always the case, but seemingly more often than not.  So, if the small business community takes the lead and makes its voice heard, perhaps we’ll look back at this economic mess we find ourselves in and see that it served a purpose.

Copyright © Anthony Mora 2009



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The main two types of accounting process i.e. accounting payment and accounting receiving are always same. It doesn’t matter to the size of the company. Since this process deals with cash so it should be treated with extra care. Though in this generation there are lot of modern gadgets like online bill payments, which save the company’s employees from long tiresome paper work for making invoice but it could not remove it totally. “Still today 80% invoice is done on papers” says the Aberdeen Group research report. This count is more for small business.

Features of Account Data Capture Software

Account Data Capture Software developed by different companies like Kofax , ReadSoft , AnyDoc and Abbyy converts all the paper based invoices, checks, bills, and other documents into data to sent to the accounting or ERP systems. This software has really increased the efficiency of the accounts department of big companies. But small company cannot use this software because of its price and other problems which a large company can bear.

Reason for which small businesses are not using automatic account data capture software

Beside Software cost other factors are:

1. Software License fee (User based or CPU based access)

2. Hardware upgrade for proper interface

3. Employee training

4. Maintenance and support of Software

You should have proper interface to run the software. So you have to check your system by the vendor. Moreover if scanning is done from hand made documents on the scanned paper then error may occur. Vendors still embraced OCR and ICR technologies into their product to capture the account data accurately from the scanned images. Thus there is a long way to go to remove manual entry.

Remedy for Small business companies

These companies can outsource their data securely through Internet to different offshore vendors for different account process. For more details on read Cybelink Secure BPO

Main advantage is we can use existing infrastructure to do all this. Even these companies donot have to change their way of management. Only change is per scanned images will be converted to accounting software or ERP system

After receiving the scanned images, some typical tasks performed by the

offshore vendor which are listed below:

1. Using automated and manual process to extract all the data

2. Hardware upgrade to install the software

3. Insert this extracted data to small business accounts software

4. Perform other accounting operations like Invoice preparing, Bill payment

5. Export the work from the accounting software to a file.

6. Send the file to the small business to import it into their accounting software for verification.

Small business companies can import the finished files into their accounting or ERP systems for verification. Cost of the paper document reduces by 50% if offshore vendors are given for accounting process. Small businesses need to overcome issues like like offshore security and offshore outsourcing cultural issues . Thus by effective cost small companies can also get valuable services.



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