Small Business Tips

June 2016 Archive
Effective Logo Design for Small Businesses

Effective Logo Design for Small Businesses

McDonald’s has the golden arches, Coca-Cola the scripted font, and Apple… a multicolored apple. A logo is probably one of the most important elements of marketing your business. As your business develops, your logo will become synonymous with the quality of service you provide.

Your logo also conveys information to new clientele. The style and dynamics can speak volumes. Take Coca-Cola’s logo for example. The scripted text not only gives the familiarity of hand-written words, but also provides and indication that the drink is cool and refreshing. The style of the logo makes you want to say “aaahhhhh,” and I’m sure that’s something they were going for.

Continue Reading: “Effective Logo Design for Small Businesses”

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By Michelle Cramer
Thursday, June 30th, 2016 @ 12:04 AM CDT

Marketing |

Why Your Business Isn’t Growing

As we can all probably guess, most of the growth a business will undergo occurs in the beginning. And it is much easier to grow a small business than a large one. Therefore, if your small business isn’t seeing much growth, it’s likely because you’re missing a necessary element.

Examine these areas of your business:

Continue Reading: “Why Your Business Isn’t Growing”

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By Michelle Cramer
Wednesday, June 29th, 2016 @ 12:02 AM CDT

Marketing |

Fire Bad Clients to Increase Profits

Are your profits being hindered by deadbeat clients?

Examples of client bad-habits you should consider cutting loose:

• Non-paying or Low-profit Clients
If they’re not paying you for your services, then they are obviously not worth working for. There is, of course, an exception to this rule. If a client is generally appreciative and can’t afford their entire bill, make payment arrangements that work for both of you. If they still won’t pay, even after you’ve given them a break, then drop them and consider suing them for the unpaid balance.

Continue Reading: “Fire Bad Clients to Increase Profits”

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By Michelle Cramer
Tuesday, June 28th, 2016 @ 12:00 AM CDT

Money, Operations |

Technology Could Make Waitresses Obsolete

Within the past ten years, most restaurants have installed touch-screens at the server work stations, for the servers to enter in the order for their tables. Now, technology has taken things one step further by recently giving restauranteurs the opportunity to put touch-screen ordering terminals at the table, replacing waiters and waitresses all together.

uWink Media Bistro, which opened in a Los Angeles area mall in October 2006, is the first of it’s kind. The restaurant was founded by Nolan Bushnell, who also founded Atari and Chuck E. Cheese’s, and he hopes to begin franchising this year.

Diners order on a touch-screen terminal at their table, and runners bring the food when it’s ready. In the interim, the terminal doubles as a video-game console to pass the time. If you need a refill on your drink, you simply touch “refill,” and 30 seconds later you have a full glass in front of you.

Lets weigh the pros and cons, shall we:

Continue Reading: “Technology Could Make Waitresses Obsolete”

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By Michelle Cramer
Monday, June 27th, 2016 @ 12:03 AM CDT

Technology |

Learning from Google’s HR Techniques

Fortune Magazine released it’s “100 Best Companies to Work For 2007″ and Google’s Mountain View, California campus was number one. Their employees are exceedingly loyal. “A team of wild horses couldn’t drag me away,” says one employee. They’re even more than willing to work all night without question or complaint.

What would make someone want to enjoy working that much? Check out these college-like incentives:

Continue Reading: “Learning from Google’s HR Techniques”

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By Michelle Cramer
Sunday, June 26th, 2016 @ 12:00 AM CDT

Human Resources |

What Ever Happened to Customer Service?

Customer service is hard to come by these days. So much so that advertising agencies are coming up with ad campaigns that emphasize the effective customer service a business provides. Instead of it being an expected part of everyday business dealings, quality customer service has become a commodity. I know I’m not the only one who finds that appalling.

Let’s look at recent news for an example, shall we. How about that American Airlines flight the Friday before New Year’s, traveling from San Francisco to Dallas (usually a 3.5 hour flight). The flight was diverted to Austin, Texas because of bad tornado weather in Dallas.

Continue Reading: “What Ever Happened to Customer Service?”

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By Michelle Cramer
Saturday, June 25th, 2016 @ 12:00 AM CDT

Customer Service |

Pulling Your Teen Out of the Financial Hole

Regardless of how old your child is, it’s never too late to teach him how to properly handle his money. The lessons that you can teach your teenager are vitally important. He is on the verge of being on his own. If he doesn’t know how to handle his money the right way, you are going to have to watch him endure years of financial woes. Take what little time you have left as an authority in his life and show him how it’s done.

Checking and Savings
Start by opening checking and savings accounts under your teen’s name. Whether she have a part-time job or just does some babysitting on the weekends, use the opportunity to show her that its better to use a checking account so that you can keep track of where the money goes.

Sit down with her each month when the account statement comes in and be sure she understands how to balance her checkbook. Explain the importance of recording every transaction in the register and figuring the current balance after each purchase or deposit.
Be sure that she understands the ATM balance shown after a withdrawal is rarely accurate and to never depend on it.

These tasks may seem common sense, but many people have no idea. I have a close friend who works in banking and she could tell you crazy stories. For example, she has many people who have bounced checks and swear by the fact that they thought there was still money in the bank just because there were still checks in their checkbook (Hello!)

Establish a Budget
Help your teen come up with her own budget to determine how her personal earnings will be spent. Determine whether she will be responsible for paying the insurance on her car, what she will be putting in savings each month, if she will be responsible for buying her own new clothes, etc. Compare her budget to the family budget so that she gains an understanding of how easy she really has it at this stage in her life.

Make a chart, indicating each spending category and how much each is allotted every month. Have your teen keep tabs on how much is left in the budget by writing down what she spends in each category and how much remains after that purchase. This will help her to know where she is overspending and to see how she can stick with it. It may be difficult for her in the beginning, but she’ll get it eventually.

Teach Real Debt
Nothing gets me more that parents who buy their teen a brand new Mustang for their 16th birthday… and, when he totals it, a Mustang convertible to replace it. Grrr. Those parents aren’t teaching their kids anything except that they can always count on daddy to get them whatever they want.

If you want your teenage to understand the real world, then teach him what it means to really be in debt. Go ahead and buy him a car, if you have the means, but get something more reasonable (say, less than $5,000) and have your child pay you back, with interest.

Make a monthly payment plan — something that is feasible based upon your teen’s income. Predetermine a percentage rate that won’t overwhelm him, but will convey the weight interest bears to him. Five percent is a good number.

Put the entire matter in writing, and be sure to include what the consequences will be for a late or missed payment (loss of driving privileges, TV time, etc.). Having a written document as a reference point helps to eliminate excuses. Also, map out a “loan payoff” chart, showing when each payment should be made and what remains on the loan after its application, all the way to zero. This will help your teen to see how much they will really be paying in the end and just how long it takes to get out of debt.

I also recommend you show them how long it would take to pay off (and how much more it would be) if they purchased the car on a credit card with the average 18-21% interest rate. I would imagine this would deter your teen from ever wanting to use a credit card for anything they couldn’t pay off each month.

In my opinion, this method is far more effective than the “prepaid card” that many parents use because the prepaid card is not teaching them the reality of debt. All it teaches is that prepayment is different from debt, but not the consequences and hardships debt can bring. Many teens end up getting a credit card anyway when they move out, without the proper education on how to handle one.

Truthfully, the possibilities are endless for teaching your teenagers about money. Anything you can do to help them understand being on their own (anything comparable to what you do) will help tremendously. Just don’t give up and don’t get frustrated. It will be well worth it to see them succeed.

Related Readings:
• Teens, young adults need money skills
• Teach Your Teen Financial Responsibility
• 5 Steps to Teach Your Teen to Budget
• Teaching Your Teen About Money

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By Michelle Cramer
Friday, June 24th, 2016 @ 12:01 AM CDT

Family Business, Money |

Teaching Your Child About Money

For most of my life I knew very little about how to handle money. My examples growing up were usually of living paycheck to paycheck, and, when finally on my own I followed suit for a long time. The only advice I ever received was from my grandmother who told me regularly to “save, save, save,” but never told me how to get to a point where I could actually do that.

Unfortunately, my story is all too common. Today’s children are tomorrow’s business owners and many of them will go through years of financial struggles because they were never taught by their parents how to properly handle money. I firmly believe that teaching our children about money from the moment they are able to count (around 2 years old), is vital to their future happiness and survival.

The Boxes Method
When you’re little one can count to 10, she can begin to understand money. Remember, kids learn by observation and repetition. Give her a small allowance in increments that can be divided. I recommend starting with three pennies each day. I know, pennies sound small, but that is about all that will hold their attention span at a young age. Provide her with three small boxes and label them: spend, save and give. Show her each day that she should put a penny in each.

The “spend” box is, of course, the money that she gets to spend. Buy some stickers and new barrettes or, for your little man, a packet of baseball cards or bubblegum. Give him the opportunity to buy a piece of gum immediately, or wait until tomorrow so he will have two cents to buy a baseball card. What seems like an insignificant process will help him to understand how spending works.

The purpose of the “save” box is obvious as well. Give him ideas of things he can save for and buy at the store within the next month, such as a matchbox car. Tell him how many pennies it will take and remind him how close he is to buying it each day.

Avoid the temptation to help him along by adding extra funds. At such a young age, he may get the idea that mommy and daddy will always help him get what he wants. You want him to learn personal responsibility, not dependence on you.

Using the “give” box depends on your preferences. I am a firm believer in giving to charity, whether it be offering at church or donating to the local shelter, so it’s part of my teaching strategy. I believe that giving will eventually produce a return.

For example, the Rockefellers are an extremely well-known and wealthy family. What most don’t realize is that from John D. Rockefeller on down, the family has always been predominately givers. John Rockefeller gave over half of his $1 billion fortune during his lifetime, and the tradition continues through the generations.

Get Them Involved
As your child gets older, expand the financial lessons (and the amount of allowance) accordingly. Make her aware of your family’s position on finances – explain where your money goes.

Too many parents feel that it’s none of their child’s business how their money is spent, but that attitude is all wrong. You child learns by watching you. Your attitude about finances will become hers as she gets older. Openness will only help her to learn more and be more responsible with her own money down the road.

Let your child have input on what the family saves for, such as a family vacation, summer camp, or new family bikes. Map out how much you will need to set aside as a family each month in order to reach your goal, and have the kids contribute some of their allowance savings (such as $5 a month). Show them how even a small amount helps you to get there that much quicker.

Teach Debt Early
It’s also important to start teaching your child the shackles of debt. When you child begins to ask for a luxury item, such as an X-Box, agree to purchase that item with the understanding that your child will pay you back out of a portion of his allowance (Christmas is an exception, of course).

You may even consider adding a small percentage of interest, say 2%. Seem harsh? Well, it might be to some, but it’s highly effective. He will soon realize that it’s better to save up for something big and be patient than to spend money that you don’t even have yet. This will also begin to teach him the difference between needs and desires.

But what if your child is already a teenager and you are starting to witness the repercussions of not teaching her earlier about finances? Don’t worry, it’s not too late. As long as she is still under your roof, you still have ample opportunity to teach her how to handle money correctly — before she gets in trouble out on her own.

Tomorrow I will cover how to reach a teenager about finances, even when it seems impossible.

Related Reading:
• 15 Ways to Teach Kids About Money

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By Michelle Cramer
Thursday, June 23rd, 2016 @ 12:04 AM CDT

Family Business, Money |

Relating to NBC’s “The Office”

If you haven’t seen NBC’s “The Office yet, and you’ve ever worked in an office, then you should definitely catch an episode. Its Nominations for two golden globes this year are not surprising, as the show just keeps you rolling. It’s one of my favorites and I think the appeal is not only in it’s humor, but that at least one of the characters on the show reminds each of us of someone we’ve worked with.

Angela from Accounting
I think I can probably generalize that everyone has unfortunately had the pleasure of working with someone like Angela. There have been too many to count for me.

The woman is tiresome. Her holier-than-thou complex is just down right rude, not to mention obnoxious. She is absolutely convinced that no one can do anything as well as she can — that everyone in the world but her is a moron. We could all do without the “If I were you” statements that continually spill out of the mouths of the Angelas in our office.

Inevitably, however, everyone puts up with Angela, doing nothing about her behavior. Despite the fact that we couldn’t help but feel relieved if the soda machine tragically fell over on her (or is that just me?).

Face it, when it comes to the Angelas in our office, we all just roll our eyes, mumble obscenities to ourselves and move on. We don’t say anything because the boss clearly sees something in them that keeps them around and we don’t want to risk losing our job by pointing out the elephant in the room. Say la vi.

Michael, The Manager
Incompetent is the word that comes to my mind. How the man obtained the position of manager, I’ll never understand. How did he kept a job at Dunder-Mifflin long enough to even be considered?

I have most definitely had managers like him, especially in the food service industry. You’d be surprised how many managers in a fast food restaurant stand around dumb-founded most of the time (well, maybe you wouldn’t).

I’ll have to give it to him though, he tries. Well, he doesn’t try to do the job, he tries to get everyone to like him. Granted, his attempts are often ridiculous, but the occasionally margarita party would probably bode well in any office.

Michael is genuinely concerned about what people think of him. He lacks the self-confidence that most stereotypical managers thrive on. He’s a rarity in that regard, at least in my experience.

Dwight, the…. Uh…
What does he do again? Besides brown-nose, that is. Much like the Angelas, we could all do without the suck-up Dwights of the business world. When was the last time we heard anything about Dwight’s actual job on the show? While he deems his position “Assistant Regional Manager,” Michael is often quick to correct him, noting that he is “assistant TO THE regional manager.”

The basic scenario is all too familiar — Dwight’s desire to be more than he is requires him to spend too much of his time at the bosses beck and call to get anything done. And guess who is stuck with picking up the slack, while the Dwights try and take all the credit? But we keep on doing the work, with the meager hope that someone will notice.

Pam, The Receptionist
Now she is the type of co-worker that everyone could get along with. The co-worker we all wish sat next to us. And she is a rare jewel. Pam is sweet, caring and even funny. When Michael is down, despite the fact that she often loathes him, she will help to pick him back up. She even covers him when he’s messed up (as usual).

If we all just strived to be like Pam, work would be much more bearable. The reality is, however, that there will always be someone you work with whose personality clashes with your own. That’s just how it is. The best way to cope is to watch “The Office” and find some laughter in the familiarity.

Related Readings:
• Is Your Office Like “The Office?”

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By Michelle Cramer
Wednesday, June 22nd, 2016 @ 12:06 AM CDT

Operations |

Baby Boomers Expected to Lead Business Boom

Baby boomers, those born between the years 1946 and 1964, represent 75 million of the nation’s population. And, in 2008, the first of that generation will hit the early retirement age of 62. Many boomers, however, don’t plan to retire. The new wave of business start-ups that is expected in the next couple of years will probably not be headed-up by 20-somethings as in recent years, but, rather, by potential retirees.

I Dream of Ownership
Of over 2100 people surveyed in a Yahoo poll conducted last year, 55% checked “own my own business” as the work they would prefer to do late in life. And 37% of those plan to start their businesses in the next five years. Ten percent of the general population owns their own business and, as a basis of comparison, 16% of baby boomers do. They make up 54% of all business owners.

Is there something in the water these days that has caused the boomers to keep on working through their golden years? You could say that. Many have a love of labor (who would of thought). But overwhelmingly it is their desire to be free and independent. Baby boomers are known to have what is called a “Peter Pan Complex.” They reject growing old in the traditional fashion, instead seeking new stimulations and challenges in their lives.

I can’t help but think about those commercials for retirement investments that talk about how, these days, retirees are looking at retirement in a whole new way. Instead of sitting in the rocking chair watching TV and darning socks, boomers reaching retirement age are taking motorcycle trips across country, skydiving, and just overall living the life they always wanted to. Why not add starting a business doing something you love to the list?

Want-to or Have-to?
Many boomers are going into business for themselves at retirement age out of necessity rather than desire. It’s the only way they will have an income during the latter part of their life. An unfortunate 90% of 45-54 year olds have less than $250,000 saved up for retirement. That equates to less than $10,000 annually to live on for 30 years.

You may be asking what the baby boomers have to offer that can lend to their success as entrepreneurs. Well, the typical stereotype associated with those reaching retirement age generally doesn’t apply to the boomer generation.

Baby Boomers:
1. are better educated that previous retiree generations.
2. are more willing to take on challenges.
3. have more funds available that younger entrepreneurs because they typically don’t have kids at home to support and have their mortgage paid off.
4. have more time available to develop their business correctly.
5. have years of experience in the real world.
6. have a vast network of connections from, frankly, years of being a part of this world.

I can’t help but cheer the boomer generation on. That’s what retirement should be… doing what you love. And why not make money doing it to support you in the years ahead? And let’s not forget, the successful businesses to come from the boomer generation will help the rest of us too, by creating new jobs, decreasing the tax burden and aiding the economy.

All I have left to say is, in the words of the 20-something generation to which I belong: “More power to ya!

• Start-Up Explosion on the Horizon
• Most Americans Dream of Starting Business
• Entrepreneurship and the Retiree
• Baby Boomers Boost Home-Based Business Market

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By Michelle Cramer
Tuesday, June 21st, 2016 @ 12:02 AM CDT

Ownership |

What to Expect from Technology in 2007

Have you seen Apple’s PC vs. Mac commercials (click to view ads)? You know, the ones where:

Two men stand side by side in front of a featureless, white background. “Hello, I’m a Mac,” says the guy on the right (who is much younger and dressed in jeans). “And I’m a PC,” says the guy on the left (who wears dorky glasses, ill-fitting khakis, and a jacket and tie). The two men discuss the many advantages of using a Mac and seem to agree that Macs are “better” than PCs [description courtesy of].

I love those commercials, and I’m utterly a PC fan. But they are so well made and appealing (which, of course, is the idea). In fact, the ad campaign is rather brilliant, I’d say.

And, with 2007 being a war of new technology release between Microsoft and Apple, I would say that we’ll be seeing this ad campaign for awhile. Both companies will be releasing new versions of their main computing operation systems this year. The releases are expected to lead to upgrades to both the inside and outside of computers as we know them, as well as increase the selling price, for the first time in nearly 10 years, by 20-25%.

Microsoft will be releasing Windows Vista toward the end of January. The new operating system boasts features such as Windows SideShow, a technology that enables laptop manufacturers to include a secondary or auxiliary display in future laptop designs, which can be used to easily view the critical information you need (such as e-mails), whether the laptop is on, off, or in sleep mode.

Other Windows Vista features include voice recognition and Windows Backup, which allows you to access lost elements of your hard-drive more readily, even if the system crashes.

Apple’s new operating system is called Leopard. Some features include Time Machine, a similar program to Windows Backup, which allows you to search for deleted or lost files. Another feature, Spaces, organizes your on-screen windows into categories such as “work” and “play.”

Apple is also due to release iTV, a video-streaming technology, this year. This unit, a box similar to the Mac mini and designed to send video from a computer or iPod to your television screen, is expected to sell for around $300.

Intel has jumped on the release train as well. Due to release this year is their new wireless technology, Santa-Rosa, which will feature the latest Wi-Fi as well as greater power saving capabilities and faster access to memory. Robson, another innovation that is designed for Windows Vista, helps to speed up the start-up and application loading processes, making them up to two times faster (finally!).

There is also expected to be a boom in the ultra-mobile PC industry that Sony and other electronics manufacturers have already tapped in to. A cross between a notebook and smart phone, ultra-mobile PCs are designed for the consumer to be able to take their entire computer absolutely anywhere.

I don’t know about you, but I’m looking forward to the innovations coming our way in 2007. It never ceases to amaze me how rapidly technology advances right under our noses. Who knows, maybe we aren’t far from the world of The Jetsons afterall.

• Tech – The Look Ahead to 2007

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By Michelle Cramer
Monday, June 20th, 2016 @ 12:03 AM CDT

Technology |

Business Trends in 2007

Ah, the joyous time for New Year’s resolutions. Dieting to getting fit, spending more time with your family, redecorate a bedroom… the list goes on and on. I’ve made more of a commitment than a resolution this year. I plan to start my own business.

I know, it seems kind of odd that I would write all of this information about small business and not have my own. But I have learned so much writing this blog the past few months. Enough, in fact, that I have the confidence to really follow my dreams and start something.

Some 671,800 small businesses started up in 2006, two-thirds of which can expect to be in business for at least two years. So, now it’s our turn. Are you ready? 2007 is our year, right?

Okay, so you may be with me on a positive outlook for starting a business this year, but your enthusiasm may be lacking due to the fact that you don’t know what kind of business to start. We all have ideas, but whose to say that our ideas land in a flourishing market? Don’t worry, help is out there.

The most important key to picking the right business to start in 2007 is to pay attention to the world around you. Find a trend and revamp it to fit your style and a specialized market. If ideas are scarce, is ready for you with their Hot Center — a list of the hottest business trends for 2007. And it’s a long list. You’re bound to find something you would enjoy.

Here are some possible ideas to get you brainstorming:

Home Sales Parties
Many stay-at-home moms are tuning into this trend in order to add a little adult time to their lives, as well as bring in some extra funds. Pick a product you believe in, whether it be makeup, jewelry, spa treatment supplies, home décor, scrapbooking supplies, etc., and arrange to have “parties” at other people’s homes. You get a certain percentage of the profits and your friends who host the party get special incentives as well.

Personal Service Industry
Put simply, saving time for someone else. It could be anything from a grocery shopping service, to walking their dogs, to putting together the scrapbooks others can never seem to get around to (one of the areas I plan to make part of my business).

If you have the talent, then put it to good use. One of the largest growing internet industries these days is a need for copywriters. Businesses want their webpage text to draw the consumer in, and they need good writers to do that. One of the best parts is that, typically, it’s a freelance job so the possibilities are endless.

This is an industry that will probably never go out of style. People want beautiful yards, whether it be for their home or business location. If you have a talent for sculpting the spectacular from rocks, water and flowers, then you should definitely consider this industry.

In a category all their own, despite the fact that you can practically find one on every corner. Thing is, if you have a block near you that doesn’t have a coffeehouse, chances are that you could start one there and be very successful. Everyone’s got to have their coffee. And if you can beat the prices and selection of “those other guys,” you’re in business.

I could go on and on. There are so many wonderful possibilities for a successful business in 2007 that, as long as you stick to the trends, you really can’t go wrong.


• What’s Hot for 2007?
• 13 Niches to Investigate for Part-Time Business

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By Michelle Cramer
Sunday, June 19th, 2016 @ 12:02 AM CDT

Ownership |

Elements of a Franchise Agreement

If you’re planning on investing in a franchise, it’s important to know what you’re getting into. Though I can’t speak from experience on this issue, it’s clear from my research that most Franchise Agreements (which I will hereafter refer to as “FA”) are complicated and highly weighted toward the favor of the franchiser. defines a FA better than I could as representing a license to use a specific business operating system employing registered brands and trademarks for a specific period of time in exchange for a specified payment structure. And there is no doubt that a FA is specific about every little detail.

A Franchise Agreement does not mean that you are becoming part owner in the company. On the contrary, all rights to the brand, trademarks and operating systems remain solely the property of the franchiser. As a franchisee, you are more or less an investor, often temporarily.

Be sure that the terms of the FA reflect how the business is portrayed in the UFOC mentioned in yesterday’s post, Finding the Right Franchise. Though every FA varies tremendously based upon the company and product or service provided, most contain the following basic elements:

Operation of the Business
The rules, restrictions and obligations of the franchiser and franchisee regarding the successful operation of the business from the franchiser’s perspective. This includes the repair and maintenance that you are expected to contribute as well as the regulations regarding trademarks, patents, advertising policies, etc.

Where your specific business will operate and any exclusivity rights that may apply. Be aware that part of your investment in a franchise may be the purchase of real property for the business location. Many FAs require that, upon the termination of the agreement, the property be sold to the franchise company, often under market value.

The training and operational support provided by the franchiser throughout the lifetime of the FA. However, this is typically at some cost to the franchisee.

Duration and Renewal
The initial duration of the agreement and your renewal options. The initial term can range from 5-20 years, more frequently toward the shorter end with multiple renewal periods. Most franchisers prefer this policy because any changes made to the FA during the initial term are automatically put into effect upon renewal, and you typically have no idea what those new regulations will be beforehand. Therefore, the longer the initial duration of the FA, the better it is for you, the franchisee. Also remember that, the better your performance, the more favorable the changes will be.

Typically ongoing and usually 4-8% of monthly sales.

What your rights are regarding the sale or transfer of your franchised unit. Usually this contains an option for the franchiser to buy back the unit or have “right of first refusal.”

Dispute Resolution & Termination
The franchise regulations regarding the policy for resolving disputes between franchiser and franchisee, as well as the process for termination of the FA, if necessary.

As a legal assistant, I cannot stress enough how important it is that you have an attorney assist you with your review of the Franchise Agreement. An attorney can interpret the legal jargon usually found in a FA, and consult you accordingly to avoid an unfavorable situation later on.

• Free What’s in a Franchise Agreement?
• Buying a Franchise – Ready to Commit?
• Ten Key Provisions of Franchise Agreements

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Competing for Business with a Former Employer

By Michelle Cramer
Saturday, June 18th, 2016 @ 12:00 AM CDT

Business Law, Startup |

Finding the Right Franchise for You

McDonald’s, Two Men and a Truck Movers, AlphaGraphics printing — well known national franchises whose appeal can be quite positive to the potential businessperson. With more than 5,000 franchise opportunities spanning the globe, knowing where to begin can be a bit cumbersome.

Should you invest in a franchise?
You must first determine if a franchise is even the right business endeavor for you. It’s important to understand that franchises are all about consistency. Each franchise unit is run by the same standards as the rest of them. If you are interested, you need to be able to answer “yes” to the following questions:

1. Am I willing to follow and embrace someone else’s business system?
2. Am I capable of being a follower?
3. Am I willing to be part of the franchise network, including accepting decisions that benefit the whole network, but not necessarily me as an individual?

It’s also important to evaluate your professional strengths. A franchise owner must have strong management and customer service skills to fully succeed in this type of business.

What franchises are you interested in?
With so many choices available, you will have to narrow your search to those options you are most interested in. The International Franchise Association and The American Association of Franchisees & Dealers provide franchise directories, reviews and guides to help you sift through the options. The Franchise Business Review provides reports on franchises based upon surveys taken by the franchisees themselves.

There are franchise consultants out there, but before you rely on one, be aware of the fact that franchisers pay them for the new prospects they bring in, so a consultant’s motivation may be a bit biased in favor of the companies they are working for.

What do the details tell you?
Once you’ve narrowed it down to the few franchises you are interested in, it’s time to dive into the details for each of them and figure out which is best for you. Be sure to obtain a Uniform Franchise Offering Circular (UFOC) from each franchise. The UFOC contains information regarding how the business is ran, any litigation or bankruptcy filings, investment costs and fee requirements, the franchise rules and restrictions, and contact information for each of their franchise units.

Take advantage of the fact that you have the contact information for those who have been where you are. Contact other owners in the franchise and get feedback from them. Find out how long it took him to earn a profit. Ask her if the franchiser is as helpful and supportive as he should be. And most importantly, has it been worth the time and money — would he do it all again?

How do you make it official?
Once you’ve determined which franchise you would like to get involved with, you should hire an attorney who specializes in franchising. It’s important that you don’t make a final decision until you’ve consulted an attorney and he/she has examined the Franchise Agreement thoroughly on your behalf.

Franchise Agreements can be tricky and, depending on the details, can turn you off to the idea completely. If you go it on your own, you may not know the fine print requirements. An attorney will help you to comb through the details so that you can be certain that the potential franchise is the right fit for you.

Check back tomorrow for more information on what a Franchise Agreement should contain and what snags to look for.

• Business Week Online: Finding the Perfect Franchise Fit
• How Can I Tell if Franchising is Right for Me?

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Knowing Your Customers

By Michelle Cramer
Friday, June 17th, 2016 @ 12:05 AM CDT

Startup |

MasterCard Global Small Business Survey 2006

Mastercard Corporation has posted an interesting global survey of small business owners and their outlook for the future.

A total of 4000 small business owners from around the world who manage businesses with 1 — 99 employees were polled. A total of 500 respondents were surveyed from eight countries, including the United States, United Kingdom, Mexico, France, Brazil, China, Hong Kong and Australia.

Small business owners around the world have differing views on the current business climate but feel more optimistic (28%) than not (21%) about the upcoming year. They work a little more than 50 hours a week but spend 18 of those hours on administrative tasks. While competition was seen as the top challenge they will face next year, half of small business owners around the world feel that globalization will help their business, rather than hurt it.

The section that stuck out the most to me was the question of what motivates small business owners to run their businesses:

Globally, small business owners say that making enough money to cover living expenses (70%) and having more control over the future (64%) are important motivations for running their own business. Small business owners in Brazil are the most likely out of all those surveyed to say that providing employment (71%) and contributing to society or the community (64%) are important motivations, while small business owners in China are the most likely to say that building something that can be passed on to their family (59%) is an important motivation. Those in the United States are the most likely to say that being their own boss (67%) is an important motivation.

MasterCard Global Small Business Survey 2006

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By Chris Brunner
Thursday, June 16th, 2016 @ 12:02 AM CDT

Ownership |

Preparing for an IRS Audit

Unfortunately, no matter how hard you try, sometimes you might make a mistake on your tax returns and the IRS will audit your business. Most audits are prompted by large losses in your business over a number of years, which would lead the IRS to wonder how you’re producing an income.

Typically, IRS audits are face-to-face, but about one-third of them are letters from the IRS asking for an explanation regarding a specific item on your tax return. Audits can be regarding your entire return or just a portion that the IRS has questions about.

If you receive a letter requesting an explanation, first consult whoever prepared your return. If it was prepared by someone who is not a professional accountant, you should consult one to find out the best way to handle it. Respond in writing, on your company’s letterhead, and provide copies of all related documentation. Always send any correspondence with the IRS by certified mail, so that you can confirm the package was received.

If you have to face the IRS in a personal meeting, make sure that you obtain representation by either a lawyer or CPA (Certified Public Accountant). Don’t try and take care of the situation by yourself, as there are probably many laws and regulations you aren’t fully aware of. You can also have the meeting video taped, but you must give the IRS ten days written notice if you choose to do so.

Logically organize all of your records regarding the issue(s) in question, categorically and chronologically. Neatness and organization will build your credibility with the auditor. Also, be sure that you only bring documentation related to the items that the IRS wants information about. Extra documentation is burdensome and unnecessary, and you don’t want to volunteer information about your taxes if they don’t ask about it.

At minimum, you will need to provide the following documentation:
• bank statements and cancelled checks
• receipts
• print-outs and disk copies of electronic records and logs
• appointment books, calendars and/or journals
• worksheets showing your calculations for each item
• an extra copy of all documentation

It’s important that you keep your cool and don’t get overly defensive, as that might make you seem guilty to the IRS auditor. You may even want to prepare some notes for yourself to remember events and explanations. When you’re in the meeting and under that kind of pressure, you can often simply go blank or stumble over words. Having notes on what you want to convey to the auditor will help you to keep things straight in your head.

After the meeting is over, the auditor will provide a written report regarding his conclusions and what additional taxes, if any, you owe. Keep in mind that, if the meeting and result are unsatisfactory, there is an appeals process available. This is where having a video tape of the meeting will come in handy, especially if the auditor was not willing to hear you out. There is also an appeals process available for any liens, levies or property seizures resulting from an audit, including appeals for hardship reasons.

Overall, if you are prepared and organized and can show that the issue at hand was a legitimate and unintentional mistake, then you will probably only face paying additional taxes. If nothing else, you will have definitely learned from the experience.

• Preparing for an Audit
• WorldWideWeb Tax: How to Prepare for an IRS Audit

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By Michelle Cramer
Wednesday, June 15th, 2016 @ 12:01 AM CDT

Taxes |

The Right Way to Write-Off Business Expenses (Part 2)


As a continuation of yesterday’s post, below are some additional tax deductions you should handle carefully.

Home Office
If you work from home, you can only write-off the percentage of your bills related to the area dedicated solely to your business. For accuracy, which is something the IRS appreciates, hire a contractor to measure your home office space professionally and provide the square footage that your home office occupies.

Once you have the measurements, figure out what percentage of your home is dedicated to your business. You can then write-off that percentage of your mortgage/rent, utility bills, etc. Keep in mind, however, that this area of your home must be used exclusively for your business. If it is, in any way, used for personal matters (i.e., your home computer is used for both business and personal), then you cannot right off percentages of your household bills.

Home Computer
If your home computer is used for both personal and business matters, then the expense of the computer is not deductible. Instead, you will need to keep a log of the time you use it for business purposes, much like with your home office. Then, determine a percentage of your time in which you use the computer for business and that is how much of the computer is deductible.

Another option would be to invest in a laptop that you use for business purposes only. This will allow for the entire expense of the laptop to be deductible.

Phone Bills
If you have a home office, phone bills do not fall under the category of bills you can write off a percentage of. As long as your phone, whether a mobile or landline, is not used a lot for personal calls, then you can write off the entire bill.

However, if you use the phone for both, then you will have to be sure and get an itemized bill from the phone company and indicate which calls, both incoming and outgoing, were business related. It’s a good idea to also indicate which client each call was related to.

The best and easiest way to avoid extra time and effort is to simply purchase a separate cell phone or get a separate phone line in your home for business calls only. If you opt for the separate cell phone, you can also write-off the phone itself.

As a general rule, if you can wear it outside of your job, such as a new suit you wore for work but also to church or a funeral, then it is not deductible. However, if you perform as a clown for children’s birthday parties, then your clown costume is deductible. Another example would be the costume a Las Vegas showgirl might wear.

These are just a handful of the vast expenses that you might be able to write-off each year. It’s a good idea to consult with a professional accountant if you are not familiar with all the regulations. It’s better to spend a little extra money getting some help the first few times than to make a mistake and get audited.

Part 1: Travel Expenses and Vehicle Usage

• Top Tax Write-Offs That Could Get You in Trouble

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• Top Business Write-Off Audit-Triggers
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By Michelle Cramer
Tuesday, June 14th, 2016 @ 12:00 AM CDT

Taxes |

The Right Way to Write-Off Business Expenses (Part 1)


Write-offs can be headache when it comes to preparing income tax returns for your business. They are often what causes a business to be red-flagged by the IRS because there are so many regulations and many small business owners just aren’t sure how to do it right. I will be addressing this in two parts, simply because there are so many different items to cover.

Here are some pointers on how to handle a couple of the most common tax write-offs correctly.

Travel Expenses
With any travel expenses that you plan to write-off, you will need to be able to prove that the travel was directly related to your business, such as a product convention or meeting with a client.

Flight costs typically aren’t a problem, even if you always fly first class. It’s the limo from the airport to the hotel that would be cause for concern. Meals are deductible at a rate of 50% of the bill. If you are taking client to dinner, you will need to be able to show that you discussed business at the meal.

This is where a journal or electronic log really comes in handy. When traveling on business, be sure to document your daily events, like which clients you spoke to, where and when you met and what you discussed. Should your business ever be audited, the IRS will require you to produce such a journal.

Family vacations are not a tax deduction, unless your family members are part of your business. You have to justify that by holding business meetings or by all parties attending a business convention while on the trip. If you go to the Bahamas and lay on the beach all five days, chances are you really shouldn’t try to write that off.

Vehicle Usage
If a vehicle is used exclusively for your business, then generally you can deduct the entire expenses for operation of the car. However, the standards of “exclusive use” are hard to meet. It’s more likely that your vehicle is used for both personal and business and you will, therefore, have to determine what operation expenses are considered deductible.

Generally, travel between two business destinations is considered a deductible operation of the vehicle. This can mean travel from your home office to the post office to deliver mail or the supply store to get office supplies. This also includes travel from one client’s location to another’s and back to your place of business.

Travel to work locations that are different from that of your regular place of business also count. However, travel from your home to your regular place of business on a daily basis is NOT deductible, even if you have your business advertised on the side of your car.

Generally, travel deductions using a vehicle are calculated by mileage. Again, in your journal, indicate the odometer reading upon departure from a business location and upon arrival at your new business destination. Also indicate how this travel relates to your business.

Part 2: Home Office and Clothing

• Top Tax Write-Offs That Could Get You in Trouble
• Travel Expenses, Meals & Entertainment

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By Michelle Cramer
Monday, June 13th, 2016 @ 12:00 AM CDT

Taxes |

IRS Audit Triggers

IRS Audit

Part of being a self-employed business owner is the requirement for a lot of record keeping. Incomes and expenses probably make up the majority of those records, simply because it is necessary in order to keep up with the IRS and their grueling and complex rules governing taxes on the income your business generates. If you don’t meet their expectations, your business could be red-flagged and even audited, and that’s something I’m pretty sure we all want to avoid.

So, how do you avoid it? First and foremost, you must keep accurate records. Estimates and assumptions about the income and expenses associated with your business will only draw attention to you. Your best bet is to write everything down, each and every day, even if it seems insignificant.

There are a number of things that trigger the IRS into examining your business practices more thoroughly. They are:

1) Not Filing
This is probably the most obvious trigger, and you would expect it would often be avoided. But many business owners, especially those who are just starting out, fear they won’t have the funds to pay the taxes they will owe. So they simply don’t file returns. Bad idea. It’s better to file and owe back taxes than to go to jail for not filing at all.

2) Overpaying Family Members
If a family member works for you, be sure that you pay them according to their actual responsibilities and experience and at a rate comparable to the rest of the job market. Don’t pay them more than they’re worth just because they’re family.

3) Income Boost
If your income for the current year is excessively higher than previous years, the IRS will want to know why. The reason may be legitimate, like the fact that the demand for your business skyrocketed. But keep in mind that the IRS will then expect your return to show additional expenses in order to meet that increase in demand.

4) Inconsistencies
Make sure your federal tax return is consistent with your state tax return; that the income and expenses match down to the last penny. If there are differences, even subtle ones, you’ve caught their eye.

5) Bad Accountant
The IRS has a checks and balances system with which they keep tabs on accountants and other tax preparers. If a preparer is doing something wrong, not only will they get audited, but so will all of their clients. This means you. So check your accountant’s references thoroughly before hiring him.

6) Extreme Expenses
If you have an itemized expense on your tax return that just doesn’t match up with your income, the IRS will notice. For example, if you’re claiming an income of $30,000 and itemizing a $5,000 desk for your home office… well, it’s pretty obvious that something’s not right and the IRS will want to follow-up.

7) Write-offs
As every business owner knows, incorrect write-offs are one of the largest triggers for an audit. If what you’re writing off doesn’t match what is expected of your business practices, the IRS will probably want an explanation. There are so many rules regarding write-offs that it’s a whole other topic in itself, which I will address tomorrow.

Bottom line: pay attention and be thorough when it comes to your income and expenses throughout the entire year. Don’t wait until January to put everything together for the previous year, but keep record as you go. This will help you to avoid mistakes that trigger audits.

Also, be smart. Don’t try to find loopholes and “work the system.” That’s what gets business owners in trouble. The IRS is cracking down on small business these days, so it’s best to just stick to the rules, even if it hurts a little.

• Top Tax Write-Offs That Could Get You in Trouble
• WorldWideWeb Tax: How to Avoid an IRS Audit

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By Michelle Cramer
Sunday, June 12th, 2016 @ 12:00 AM CDT

Taxes |

The Warning Signs of a Doomed Partnership

Just as in an unhappy marriage, the problems in an unstable business partnership tend to result in feeling unappreciated and ungratified, having unmet expectations and facing events that cause doubt and distrust. Problems left unattended will result in one or both of you dissolving the partnership.

To keep your partnership in tact, watch for the warning signs:

1) Communication Breakdown
If every conversation you attempt to have with your business partner turns into a war of words, then chances are you’re having a hard time communicating. When we’re holding a grudge against someone, we often have a tendency to always go on the defensive. Our ears shut off and our mouth won’t quit. If you can’t listen to each other, then you’re not communicating at all.

2) Everything is a Competition
Your partnership should be a compliment of each other’s strengths and weaknesses, but, when tensions rise, things tend to become competitive rather than complimentary. If you are constantly trying to out-do your partner, rather than work with him, then there’s probably an underlying issue that needs to be addressed.

3) Financial Problems
This can be anything from the business being under financial stress, to different views on how money should be spent, to disagreeing on the division of profits. If money is an issue, than so is something else.

4) Dominance Issues
If you’re fighting for control of the business, then you are probably not happy with the way your partner is managing her share of the responsibility. When you try to do everything yourself it comes down to a trust issue. There is something that has caused an inability to trust your partner’s productivity.

5) Different Goals
It’s safe to assume that, when you started the business, you and your partner had the same vision for the future. But, as time progresses, those goals may change and differ. That in itself is not a danger, but the inability to compromise and combine your visions is.

Keep your eyes open for the warning signs and meet issues head-on before they become problems. And, if things look bleak, you may want to consider going to a partnership coach before calling it quits. More often than not, an unbiased mediator can help put your business partnership back on the path to success.

• Your Partnership About to Crash and Burn?
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By Michelle Cramer
Saturday, June 11th, 2016 @ 12:05 AM CDT

Ownership |

Picking the Right Business Partner

Nearly 70% of all partnerships fail, typically because the people involved were so excited about their idea that they didn’t take the time to make sure that they were compatible for a business relationship. The majority of partnerships are formed between friends who assume that since they already get along, there shouldn’t be a problem. There are distinct differences between getting along with a friend (or family member) socially and the relationship remaining strong under the daily stress of running a business.

Business partnerships are often compared to marriages. In fact, if you are in a partnership, you will likely spend more time with your business partner than you do with your marital spouse. Much like in a marriage, it’s important that you take time to first find out if you and your perspective partner are even compatible for the long term.

When considering starting a partnership with someone, you must first examine your own strengths and weaknesses to determine if you are partner material. If you have a tendency to work better alone, or prefer to do so, then a partnership is probably not for you. If you can consider the suggestions of others and be open-minded when making decisions, then you’d probably make a good partner. Talk to your spouse, family and friends to get their input as well.

Once you have determined that you are able to meet the challenges of being a business partner, you should to examine the relationship you currently have with the other person.

Ask yourself the following questions:

• Do we have the same motivation?
• Do we have the same values and work ethics?
• Do our skills and strengths complement each other?
• Are we able to communicate with each other, even on touchy subjects, in a cool, calm and respectful manner?
• Deep down, do I 100% trust this person?
• Have we been able to adequately resolve conflicts/disagreements in the past?

Hopefully the answer to all these questions is “yes.” If not, then the next item on your list should be to sit down with your prospective partner and discuss the reservations you may have about the partnership. Laying those items on the table, and monitoring the other person’s reaction to them, will be a strong indicator of whether or not the partnership will work.

Also, talk to the other person’s previous partners and employees to get their feedback on how well he/she works with others. Be aware that, should your prospective partner refuse to provide you with contact information for her former counterparts, then that is a red-flag that you probably shouldn’t do business with.

If all signs point to proceeding with the partnership, then it’s time to test the waters. Take on a challenge together, like meeting a deadline, as see how that goes. Determine your expectations for the other person and see if they are met throughout the project. It’s also important to clearly define the responsibilities of each person, as this will be something a partnership requires every day.

Take your time and be sure this partnership is the right one for you. Don’t let the excitement of your idea allow you to rush into such a commitment. The failure of a business partnership can be devastating, both to your business and personal relationship with the other person. Taking time to find the right business partner can result in a mutual motivation and support, as well as a highly successful business.

• Is a Partnership the Right Choice for You?
• The Art of Picking the Right Partner

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By Michelle Cramer
Friday, June 10th, 2016 @ 12:06 AM CDT

Startup |

Internet Business Sees Holiday Shopping Boom

Now is the time to have an Internet business, as holiday shoppers are increasingly finding their stocking stuffers through online retailers.

From November 1st to December 3rd of this year, internet shopping rose to $12.42 billion, an increase of 25% since last year. The number of people making Internet purchases jumped 17%, while the amount of money spent by each buyer increased by 7%.

The retail areas seeing the most increase: videogames, jewelry and even tickets to concerts and shows.

An abundance of holiday Internet shopping occurrs on what is called “Cyber Monday,” the Monday following Thanksgiving each year. That is when online retailers debut their holiday products, virtual door busters and promotions such as free shipping with purchase.

However, with increased Internet shopping comes increased security concerns. An average of 46% of the 155 million web shoppers are concerned about the security of their personal information when making a purchase, but those numbers are typical.

Software developers such as Microsoft have been working hard to counteract shopper woes, such as upgrading security features of Internet Explorer web browser. The new version warns users if the site they are visiting is an imposter rather than an actual retailer. The down side is, as a new system, this only works 30-40% of the time.

Online retailers are also taking extra precautions. More frequently they are purchasing liability insurance that will cover themselves and their customers in the case of identity theft. By advertising this protection on their websites, retailers hope to encourage buyers to proceed with a bit more confidence.

Despite the reservations that the risk of identity theft pose, online purchases are expected to continue to increase over the holiday season and in future years as consumers enjoy shopping from the comfort of their own home. After all, who really wants to fight the crowds when you can get deals just as good online?

Online Holiday Sales Statistics

• Business Week: Web Shoppers Spend More for Holidays
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By Michelle Cramer
Thursday, June 9th, 2016 @ 12:02 AM CDT

Technology |

IRS Puts Small Business Under the Microscope

There’s a new(er) IRS commissioner in town, and he’s doing some extra cleaning. Mark Everson, who took office in March of 2003 has made security his main focus of the IRS. And now small business is facing increased scrutiny.

Enforcement is taking the main stage due to the tax gap currently sitting at about $345 billion. This amounts to all the money that is missing due to non-filers and those who claim the wrong income and don’t pay correctly.

Small business audits more than doubled in 2005, an increase to 17,867 from 7,294 in 2004. Some small business owners have voiced a strong disagreement with the audits, claiming it unfair that small businesses are being targeted and will face penalties for small or unintentional mistakes. Large business owners also have the advantage of the financial ability to hire highly-paid accountants to fend off those mistakes.

Everson feels that a focus on small business will help to minimize the national deficit and avoid possible tax increases in the future. 80% of the tax gap is a result of under-reported income and the majority of culprits tend to be small businesses.

Some experts believe that the funds the IRS is using for enforcement could be better spent on educating the public on an increasingly complex tax code. After all, chances are that the IRS may not even see the revenue they expect to find in small business audits to make up for the funds spent to find it.

Everson claims that there is nothing to fear if you are doing your best to report your income and expenses accurately come tax time. Nothing to fear, that is, except for the time an audit takes away from your business.

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By Michelle Cramer
Wednesday, June 8th, 2016 @ 12:01 AM CDT

Taxes |

Which Business Entity is Right for You? (Part 4)


The first thing you should be aware of when it comes to General Partnerships, whose owners are known as GPs (general partners), is that it is managed by all partners and all partners are liable for the negligence and/or debts of the business.

Each and every partner has a say in how the business is run and, even if only one partner makes a mistake, each and every partner takes the heat for it. Of course, this liability is only a problem if you or your partners cannot be trusted to run the business.

Partnerships are often used when franchising a business or when all partners contribute equally to the success of the business, such as a law firm. Taxes are paid through each partners personal income tax. There are no costs or formalities for designating your business as a partnership entity, and the only document required is a Partnership Agreement, which is crucial and should include:

• Amount each partner will invest in the business and when said investments will be made (upfront, annually, etc.);
• Rights and duties of each partner;
• Method for distributing profits and sharing in losses;
• Policies regarding withdrawals of the business assets;
• Designated division of the business profits among members;
• Policies and methods for dispute resolution;
• Policies and methods for including a new partner;
• Method for dissolving the partnership, when and if necessary.

Typically profits are divided equally among members, but you can designate otherwise in your partnership agreement. Keep in mind that giving one partner a larger percentage of the business assets does indicate that they have a stronger say in the decisions regarding the operation of the business. It is usually in the best interest of all involved to stick to equal distribution.

A partnership lasts only as long as a good relationship between partners. It can be dissolved if the partners no longer wish to work together using the methods indicated in the partnership agreement, which can include the sale of the business as well as dismissing one member and bringing another in.

Partnerships also have the option of including one or more limited or silent partners (LPs). LPs are individuals who invest in the partnership but, based upon the Partnership Agreement, are limited in their involvement in the operation of the business. Also, LPs’ legal liability is generally limited to how much they invest, so they can basically reap the benefits of the partnership (i.e. profits) without being responsible for the debts.

It is important that you examine all of the available options for business entity designation and determine which is best for you and your business before you get the ball rolling. Please consult with a lawyer before before making any legal decisions.

Part 1: Sole Proprietorships
Part 2: Corporations
Part 3: Limited Liability Companies

• Business Structure Basics
• General Partnership
• Corporation, Partnership, or an LLC?
• Partnerships
• General Partnership and Limited Partnership

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Tuesday, June 7th, 2016 @ 12:00 AM CDT

Business Law, Startup |

Which Business Entity is Right for You? (Part 3)


Limited Liability Companies, or LLCs, combine several features of Corporations and Partnerships, but are neither. Often people call them “limited liability corporations,” but that is incorrect. The owners of an LLC are termed “members” rather than partners or shareholders. The number of members is unlimited and can be a combination of individuals, corporations or other LLCs.

LLC members are not held liable for the negligence and/or debt of the LLC they have ownership interest in, unless they sign a personal guarantee. Like a corporation, an LLC is an entirely separate existence from the individuals involved.

Another benefit is that there are fewer requirements for an LLC. It is not necessary to keep meeting minutes or record resolutions, as in a corporation, and you are not required to have a board of directors or make officer designations for the members.

Some states do have minimal requirements for an LLC, but what those are varies from state to state. Typically, you are also required to file Articles of Organization and Operating Agreement when registering your business as an LLC.

The designated distribution of income to the members is entirely flexible, leaving the division to be anywhere from 50-50 to 10-90, and, of course, open for division among any number of members.

As a member, you also have much more access to the assets of the company. You can take assets out for personal and/or business use without incurring tax liability. Owners also have more leeway when it comes to writing off business losses when associated with an LLC.

The lifetime of an LLC is limited. If any member dies or files bankruptcy, the LLC is dissolved. Additionally, an LLC is not nearly as appealing to possible investors, so if you are considering going public with you company, or issuing shares to your employees someday, an LLC is not the route you should go.

However, if legal liability protection and one level of taxation are primary concerns for your business owners — who consist of multiple and diverse individuals and/or businesses — than an LLC is probably just right for you.

Part 4: Partnerships
Part 1: Sole Proprietorships
Part 2: Corporations

• Business Structure Basics
• Limited Liability Company 101
• Limited Liability Company
• Corporation, Partnership, or an LLC?

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By Michelle Cramer
Monday, June 6th, 2016 @ 12:00 AM CDT

Business Law, Startup |

Which Business Entity is Right for You? (Part 2)


Corporations are considered a legal entity which exists separately and independently from the individuals who create and manage it. Only the corporation itself is legally liable for any negligent actions or debts it may produce. The individual shareholders are not liable.

There are a number of requirements for a corporation:

• Must have an elected board of directors or officers
• Must have an operating agreement
• Must keep records such as annual meetings, meeting minutes, record of resolutions and file annual reports.

The benefits of a corporate entity are substantial. A corporation has an unlimited lifespan as it is not dependent on the life of an individual, as proprietorships and partnerships are. As long as annual reports are filed consistently, the corporation will remain in good standing.

The flexible transferability of shares is another large benefit. Ownership of shares in a corporation can be sold, transferred, given or inherited by simply endorsing and signing over an individual’s stock certificates. It is not necessary to file deeds or retitle anything.

You would also benefit from the increased ability to raise investment capital. It’s much easier to attract new investors to back your business if it is registered as a corporation because of the limited liability of shareholders and the easy transfer of shares.

The major disadvantage of registering your business as a corporation is that it can create an additional tax burden. If your business is designated as a C Corporation, then the profits of your corporation are first taxed at the corporate level and then, any distributions to shareholders are also taxed on each individual’s personal income tax. S Corporations, however, are not taxed on the federal level — only the shareholders’ income is taxed.

If your business is large, or headed that direction, you might want to consider establishing your business as a Corporation. This is an especially preferred choice if you want to market your business to a number of investors, because the “Inc.” following the name of your business can be very appealing.

Part 3: Limited Liability Companies
Part 4: Partnerships
Part 1: Sole Proprietorships

• Business Structure Basics
• Corporation, Partnership, or an LLC?

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By Michelle Cramer
Sunday, June 5th, 2016 @ 12:00 AM CDT

Business Law, Startup |

Which Business Entity is Right for You? (Part 1)

When starting a new business, you will be required to determine the type of business entity it is for tax purposes. There are a number of them out there and each one has different benefits and draw backs. It is best to understand them all before determining which is best for your company.

The sole proprietorship is the best option for someone who is starting a business in which she will be the only person involved. Many individuals who work out of their home, such as freelance writers, photographers, eBay business owners, etc., opt for a sole proprietorship for their business.

It is considered the quickest and easiest business setup process. There are no prerequisites for your business, an attorney is not necessary, and there are minimal costs for establishment of the sole proprietor entity. In most states, you simply register your business as a fictitious business name. In other words, [your name] doing business as [name of your business].

A fictitious registration does not, however, protect the name you choose for your business – anyone else can use that name. On the other hand, doing so does allow you to use the name of the business rather than your own for business banking accounts and other documentation.

There are some minimal formalities you may need to address when establishing a sole proprietorship:

• Obtain a Federal Tax Identification Number or EIN (otherwise, you will have to use your social security number).
• Obtain an occupancy permit for your place of business, if it is outside your home, depending on the requirements in your state.
• Obtain a business license, if your state requires.

Profits made on a sole proprietorship are considered the personal income of the owner and are taxed as such. It is best to set aside at least 25% (sometimes more) of any profits to pay in quarterly installments to the government. I recommend that you consult with an accountant to determine your best options regarding the taxes on your business.

There are two distinctive drawbacks to this type of business entity. As sole proprietor, the business you start has no separate existence from you. You are personally liable for the debts of the business, which means any debt you may be in default on will end up on your personal credit record. It is best to start this type of business with little to no debt associated with it.

Also, the existence of a sole proprietorship only lasts as long as you do. If a family member wishes to continue the business after you retire or pass away, he will have to register the business under his own name. Of course, as I pointed out, this process requires very little effort.

If you’re just getting starting as an entrepreneur, then I highly recommend that you designate your business as a sole proprietorship. Should the business begin to boom and grow, and you require some help to keep things moving, then you may want to consider other entity options.

Part 2: Corporations
Part 3: Limited Liability Companies
Part 4: Partnerships

• Business Structure Basics
• Sole Proprietorship
• Corporation, Partnership, or LLC?
• Sole Proprietorship

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By Michelle Cramer
Saturday, June 4th, 2016 @ 12:02 AM CDT

Business Law, Startup |

What Employees Want from You

Keeping your employees happy is one of the key elements to maintaining a successful business. Though it is important, fair and competitive pay is not the only thing that employees look for to remain happy in a position. In fact, it’s only the beginning.

1. Flexibility
Employees want to be able to balance their job and their family responsibilities in a way that benefits both. Providing a flexible work schedule translates into a happier employee. If feasible, provide your employees with the opportunity to set their own hours, as long as the put in a certain amount of time each week. You will find that those employees will be much less likely to let their personal lives interfere with their work.

2. Job Security
Employees in a larger business want to know that they are not expendable. It’s important that you make laying people off an absolute last resort if something goes wrong, and make sure that your employees know that. It’s hard to be committed and loyal to an employer who has no concern about your job.

3. Fair Treatment
Far too many employers believe they must enforce strict rules and discipline in order to obtain the best performance from their employees. Granted, approximately 5% of employees do require a continual kick in the pants to stay on task. But most employees will respond much better to being trusted. Don’t hold it against your employee if he comes back from lunch five minutes late one day. Chances are he’s also the guy that stays a few minutes late without question when you need him.

Also, do everything you can to avoid office politics. Yes, you are their boss, but you also couldn’t run your business efficiently without them. You’ll get a much better performance out of employees if you treat them more like equals rather than subordinates. And don’t allow your seasoned employees to treat new employees like doormats. Your business shouldn’t be a hierarchy, it should be a team.

4. Appreciation
Recognize your employees’ achievements. Provide positive feedback when ever you observe a job well done, even if it something as simple as a successful telephone call. Make an effort to say hello each day and care about your employee. On Monday, ask her how her weekend was, and actually listen to her answer. Not only will this motivate your employee to work harder for you, but it will also open lines of communication and allow your employee to feel like she can come to you if she has a concern.

5. A Pleasant Environment
The spectrum of a pleasant working environment includes everything from sitting next to someone who wears deodorant every day to colorful walls, sunlight and fresh air. This also comes back to the fact that you should take time to talk to your employees each day and acknowledge their existence.

Encourage employees to get along with co-workers by hiring people with positive attitudes and great people skills. Consider providing opportunities for employees to socialize a bit, such as a birthday party over the lunch hour once a month for employees whose birthdays fall that month.

Recognize that employees want to be treated like adults and need more from you than a paycheck. Establish a positive relationship with your employees and watch your business thrive as employees become more devoted and enthusiastic about their jobs.

• University of Pennsylvania: Giving Employees What They Want
• What People Want From Work
• Flexibility: What Employees Want in a Job

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By Michelle Cramer
Friday, June 3rd, 2016 @ 12:03 AM CDT

Human Resources |

Determining Your Employee’s Salary

If you are hiring an employee for the first time, one of the most difficult tasks ahead of you is figuring out how much to pay him/her. The salary you offer must be fair and competitive, without paying too much for the job at hand.

The first step to determining how much you will pay your new employee is to determine the ceiling and floor. The ceiling is the maximum amount you are willing the pay, and the floor is the least amount you should pay.

Decide how much the job is worth to you by asking yourself how much value someone in the available position will bring to your company. Also do some number crunching and determine how much you can afford to pay while still making a profit. For a salesperson, the pay is based on revenue and easy to determine. For administrative staff, you need to ask yourself what the cost would be to your company if there was no one filling the position.

Market rates are the source for determining the minimum you should pay. Candidates expectations are based upon the market, so you need to be aware of what the competition offers. You will first need to have a job description handy. Basing the market on title alone leaves lots of room for negotiation. For example, a marketing director can earn anywhere from $50,000 to $500,000 a year. Break the job down and be specific about the responsibilities it entails.

There are a number of sources available to determine the market value of the job you are offering. Call your local chamber of commerce and ask about similar jobs in the area. Read the local classifieds to see what others seeking employees are offering.

Search Google for “salary surveys” to compare business and trade magazine surveys of jobs nationwide. Or, you can also use websites such as the U.S. Bureau of Labor Statistics and/or to determine past and current salaries locally.

There are several ways to pay an employee. Explore all the options based upon the job you are offerings before determining what works best for you. The following are types of pay to offer an employee.

1. Hourly
Hourly pay is typically associated with work product that is a direct result of the time put in, such as assembly line employees. You must meet the minimum wage requirements, which is $5.15 federal, but some state minimum are higher. This is also solely based on eight hour work days for a total of 40 hours a week. Hourly employees typically get time and a half for overtime and working on holidays.

2. Salary
Salaries are a fixed payment amount, usually determined by an annual salary that is divided into 52 weeks a year. Salary is usually associated with administrative positions, such as clerical or managerial jobs. Salaried employees are paid the same each pay period, regardless of sick days or vacation time (as long as it is within the parameters set by the company policy).

3. Commission
Commission pay is most often used in sales positions — a job that contributes directly to revenue. Most salespeople are paid a low base salary and then receive a percentage of the sales they bring into the company. This opens the opportunity for effective salespeople to make six and seven figures a year, which also means they are making 10-20 times that for your business.

4. Bonuses and Benefits
Keep in mind that most every applicant is going to expect some sort of incentive outside of legitimate pay. Consider offering bonuses occasionally as reward for a job well done. You should also look into benefits for your employees. Your first thought is, of course, health insurance and company stocks. But also consider the less obvious benefits such as a set amount of vacation time, paying for the employee to further their education, and even casual dress requirements. All of these make a job much more motivating.

When determining what the starting pay for your new employee will be, remember to leave room to grow. Everyone expects to and strives for earning a raise. Inflation, when the buying power of your employee’s salary drops while the amount is stagnant, occurs on a yearly basis. Salaries need to adjust to accommodate.

Also, consider the fact that, when and employee first starts he won’t know the ropes very well and will make mistakes, but, as time progresses, he will learn more and become more efficient, thus becoming worth more to your company. He will deserve a reflection of such growth in his paycheck.

• How to Set Salaries
• 5 Steps to Determine an Employee’s Salary
• Bliss & Associates, Inc.: Deciding How Much to Pay Employees
• What Other Employers Are Paying

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By Michelle Cramer
Thursday, June 2nd, 2016 @ 12:00 AM CDT

Human Resources |

Hiring an Employee – The Interview Process

If you’re hiring an employee for the first time, the interview process can be just as intimidating for you as it is for those who apply for the job. Here are some tips for smooth and successful interviews.

Get the Word Out
Once you’ve determined exactly what you’re looking for in the person you hire, write out a job description. Be sure to include the work hours, what education and experience is required to fill the position, the characteristics needed to perform the job successfully, and, of course, where resumes should be sent.

It is best to have two job description formats, a brief description for periodical circulations such as your local paper, and a detailed description for online job search engines, such as Also, check with local colleges and see if they have a career center, as most provide an online job search for students.

Review and Prepare
Set aside time each day to review any resumes you’ve received. It’s a good idea to have the job description in front of you as a reminder of what requirements you presented for the position. Rate each candidate on a scale from one to ten. This will give you a quick reference on whom to call first for an interview.

Also, for those candidates you intend to meet with, jot down any questions you may have about information they indicated on their resume, such as why they were unemployed for two years, or why they want to leave their present position. Additionally, you will want to have a list of basic interview questions that you ask each candidate, to give you a basis of comparison.

Some suggested questions:

• What would be the perfect job for you and why?
• What characteristics in a supervisor motivate you to produce your best work?
• Name and explain your top two strengths and weaknesses.
• Where do you see yourself in five years?
• Describe two instances where your work was criticized and how you responded.

Conducting the Interview
Anyone who walks through your doors for an interview is going to be nervous, regardless of their credentials. Put them at ease by starting with small talk and neutral topics such as what the job entails or how and why you started the business and where you see it heading.

Then move on to questions about the information listed on their resume. Avoid questions with yes or no answers, but, rather, keep the questions open-ended. To avoid rehearsed answers use follow-up questions and keep the candidate thinking on their toes.

Have interviewees bring documentation with them to prove the accuracy of their resume, such as college transcripts or letters of recommendation from previous employers. Not everyone is honest on their resume, in fact, nearly 40% of job applications have some sort of inflated or bogus information, so have then verify it.

During the interview keep your eyes open for the expression of qualities you’re looking for in a potential employee. Is the candidate communicating clearly? Does she express passion for the industry? Pay attention to the nonverbal cues such as their posture and outward appearance. Did he take time to iron his shirt?

You may also want to consider having each candidate take a personality or assessment test as part of the interview process. I highly recommend investing in the Personality Puzzle Test developed by Florence and Marita Littauer specifically for employers and employees. Take it yourself and then provide it to potential candidates to see how well your personalities will click.

Before making any decisions, always call all references listed on the resume and anyone that may have written a letter of recommendation (to verify that he actually wrote it). Also, it’s always a good idea to perform background checks on education, judicial matters, and previous employers. You’d be surprised what some people think they can hide.

Be sure to give the potential employees a time frame for when they can expect to hear from you. They will be anxious, so don’t leave them hanging in the air on whether or not they got the job. Make personal calls or write rejection and offer letters. If it is a rejection, be sure to explain why so that they can see where they might need improvement.

For further information on the requirements for becoming a first time employer, be sure to check out yesterday’s post How to Hire Your First Employee.

• Hiring Your First Employee
• Interviewing Applicants

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By Michelle Cramer
Wednesday, June 1st, 2016 @ 12:00 AM CDT

Human Resources |