How To Effectively Use Business Cards to Knowledge Network Your Small Business

I admit I'm guilty of collecting lots of business cards and failing to tap into the expertise and experience of the people I've just met. It seems the act of small business networking often boils down to exchanging business cards. And, that's where it begins and ends, card collecting, not business building via networking.

What's on the Card?

If gathering business cards for the purpose of sending someone an email, giving them a call, sending a text or doing some social networking is your goal, then all you're looking for is contact information. That may technically qualify as small business networking but it's not "knowledge networking".

To gain more business in today's marketplace, it takes more than gathering cards and making contact. It takes connecting. So, what you're looking for is more than information to insert into your contact management system. You're looking to learn something about the business and it's expertise and experience. Use the business card as a resource to do the research you'll need to effective network with the person you've just met.

Who Needs the Card?

Well, maybe you do to solve a problem you're experiencing in your own small business. Chances are you've exchanged business cards in the hope the person giving you the card needs your product or services in their business right now!

All in due time, but it may serve you better to learn enough about the business you now have a card for so you can pass it on to another small business owner who, in fact, has a problem they want to solve right now. Exchanging business cards at an event is the perfect starting point for building your own referral network.

Where is the Card?

The first challenge of an active business networker is location. Yes, where do you put the card so it doesn't end up as part of that pile of cards you've collected and never contacted and, certainly never passed on to someone else who could benefit from it to solve a problem they have.

As fast as it possible, you need to get the basic information and how it can help another small business in front of others. Doing that makes the information available to yourself and others. There's no reason you can't do some quick research and feel comfortable posting the core information to the appropriate social media network. By getting the business card, I don't mean the email address and cell phone number, in play everybody wins. Simply provide a quick comment about the person or business and the business area they provide expertise and experience in.

Card Problem Solved

The biggest problem many of us have with small business networking is not doing something with the business card we've collected and not gaining any new business as a result of the business card networking we've done.

The solution is found in networking the business expertise and experience embodied in the business card we've collected by passing it on to others. By doing so you eliminate the guilt of adding one more card to the pile on our desk without doing something with it.

Plus, let the person you exchanged your business card with know that you have passed it one and are actively networking them. The appreciation you gain from them over time will get you a lifetime of referrals as you expand your small business knowledge network.

Various End-Games for Businesses and Why You Should Know Yours

Knowing what your end-game is for your business will help you determine the business structure that is right for you now and in the future. The major variables that determine your best end-game include the size of your business, the amount of assets and liabilities, your desire to maintain control and your desire to liquidate ownership. Obviously, as a business owner, you want to limit the complications, the expenditures and the liabilities while maximizing your tax benefits. These goals exist when the business is created, but also extend to the "end-game" of your business. And just like selecting which business entity is best for you at the creation of your business, the end-game you choose for your business will affect the liability, the tax benefits and obligations, the expenditures and the complications.

The major end-game options are:

(1) Take your business public through an IPO (initial public offering).

(2) Sell the business in its entirety.

(3) Sell the assets from the business and dissolve the remaining entity.

"Going Public"

Taking your business from a private company to a public company through the process of an Initial Public Offering can help you raise exponentially more money to use in your company than other avenues. Access to more money provides the means to grow your business, or "cash out" your ownership. Raising money for a public company is much easier that raising money for a private company. And if you, as the owner, wish to liquidate more of your ownership, it is much easier to sell your ownership through selling shares in the stock market than to try to sell the entire company and/or assets.

However, the process of taking your business public is expensive and complicated. Also, not all types of business entities can become public without first merging with another entity that can become public. Further, after your business becomes public, your business will then be subject to transparency requirements from the Securities Exchange Commission. Most of these requirements involve reporting and filing your financial information publicly. Another consideration is the amount of control you wish to maintain in your business. When your business becomes public, there will be a board of directors that will make all the business decisions. It is possible to be on the board of directors, however, that is more limited than being the owner.

Selling the Entire Business

Another alternative end-game is simply to sell your business. Doing so transfers all the assets, liabilities, clients, etc. This is an easy and seamless process if your business is small with few assets. However, with a larger business that has many assets, the process may become time-consuming, complicated and costly to switch over the assets and liabilities. The liabilities the purchaser inherits include the potential lawsuits that may arise from the business's prior actions. In most cases, purchasers will prefer an asset purchases so that they don't have to acquire the selling liabilities. That issue will be one for the buyer and seller to negotiate.

Sell the Business Assets and Dissolve the Remaining Entity

Selling the business assets and dissolving the remaining entity is another option. Depending on the amount of assets once again, this process may be easy or it could be complicated. However, as mentioned previously, purchasers sometimes prefer this because they are essentially purchasing the business without inheriting any of the liability.

Learn How To Recover From Business Insolvency



Business insolvency numbers has hit record high in February 2012. According to the Australian Securities and Investments Commission or ASIC, 1,123 businesses entered administration in February compared to 518 businesses in administration last January 2012. Furthermore, 449 businesses had to undergo court wind-ups in February 2012 compared to 79 businesses the previous month.

Insolvency is a difficult situation for any business. Insolvency is generally described as a company's inability to pay its debts and other liabilities. An insolvent business has insufficient funds to pay its creditors despite liquidation through selling all assets and is unable to generate new funds through capital markets. Insolvency is caused by many factors including an ineffective business model, capital market values, competing technologies and poor cash flow management.

If your business is facing insolvency, it is crucial to take immediate action if the business is to survive. Directors must be wary of trading while insolvent as they will be held liable for insolvent trading in which civil or criminal penalties may apply. In this article, we provide some guidelines on how you can save your business from insolvency and continue operating legally.

Manage your cash flow

Cash flow management can be especially difficult when the business is already in financial distress. However, proper cash flow management is crucial if you are to recover from insolvency. To drive your cash flow, follow up on late payments of your customers and implement a shorter credit term for future contracts. Implement penalties for late payments to put some pressure on your customers to pay on time. It can also help to delegate a staff member to focus on follow-up and collection of payments.

In managing your cash flow, it is also important to manage the competing priorities for payment. Priority for payments will be payroll, suppliers as you need them to keep your business operating, then followed by ATO payment plan and others creditor's payment plans.

Consider business restructuring

A business restructure is when a company reorganises its ownership, legal structure, assets and debts, business model, cost structure and ways of doing business. A restructure can be a positive way to respond to insolvency as it allows the business to generate new revenue, making the new company more effective and efficient while keeping the core business intact.

If you see business restructuring as a viable means to recover from insolvency, discuss your requirements with a business turnaround specialist or insolvency specialist as they can help you establish restructuring strategies to meet target operating profits and target cost structure. They can also assist in the implementation and monitoring of the agreed business restructuring strategies.

Seek professional help

Insolvency does not always lead to bankruptcy as some businesses are able to recover and successfully increase their profitability. However, this is not always the case for many businesses facing insolvency as seen in the record number of 449 businesses winding up in February 2012. If your business is at risk of insolvency, do not hesitate to get the help of a professional business turnaround specialist as they can give you the assistance you need to save your business. A turnaround specialist is an expert in negotiating with debtors, debt and cash flow management, business restructuring and business recovery and can help you avoid the pitfalls that other insolvent businesses has fallen into.

What is Customer Service to Online Business

The chances are that your customer is coming to your online business in the first place to save time as well as money. Customer service is one area in which small or sole proprietor outshine giant stores and even well establish online competitors. It does not matter whether you are competing in the areas of e-trading, e-music or e-tail sales of any sort. Tools such as e-mail and forms as well as an online commerce site that can provide information on a 24 hours by 7 days basis, give you a powerful advantage when it comes to retaining customers and building customer loyalty.

The satisfaction customer is always informed customer that how we manage our customers expectation. So here are some of the ways or tools your e-commerce sites must have in order to be competitive in internet world.

1. FAQ page - It may not be the most elegant of concepts, but it h as worked for an infinite number of online business people and it will work for you. A set of frequently asked questions (FAQs) is a familiar feature on many online business sites - so familiar, in fact, that Web surfers expect to find a FAQ page on every business site.

2. Newsletter - You may define yourself as an online businessperson, not a newsletter editor. But sharing information with customers and potential customers through an e-mail newsletter is a great way to build credibility for yourself and your business.

3. Contact Us page - But being anonymous is not the way to go when you are running an online business. Of course, you do not have to promise to be available 24 hours by 7 days to your customers in the flesh. But they need to believe that they will get attention no matter what time of day or night. When you are online, contact information can take several forms.

4. Advance e-mail Features - An autoresponder is a computer program that automatically answers e-mail sent to it, can be setup to send automatic replies to requests for information about a product or service, or to respond to people subscribing to an e-mail publication or service. Beside, Setup a signature file is a good way to keep in touch with customer. A signature file or block is a block of text automatically appended at the bottom of an e-mail message, usenet article or forum post. You want your signature file to tell the readers of your message something about you and your business; you can include information such as your company name and how to contact you.

5. Personalize Attention to Customer - How often does an employee personally greet you as you walk through the door of a store? On the Web as well as in real life, people like a prompt and personal response. Your challenge is to provide someone on your web site who is available to provide live customer support. By providing online support to customer is definitely added edge to your online business.

In short, what constitutes good online customer service are being responsive and available as well as other essential components such as providing information, communicating effectively, and enabling your clientele to interact with you online become the must have tools in today online business.

A Sample Business Plan for a Small Business May Not Be the Best Way

You can find a sample business plan for a small business in all kinds of formats. There is a sample business plan for a small business where you basically fill in the blanks or you can have access to a sample business plan for a small business where you can pattern yours from it or you can develop a business plan that is centered on what you want for your dreams and your life.

I don't know of better way than to let your business give you what you want for your lifestyle. Whether it's a sample business plan for a small business or one where your business gives you a plan, it should tell you what is needed to take you where you want to go and when and how you can get there and it should be in clear simple terms, supported with all the specifics.

So using a sample business plan for a small business is just one of many ways to make a business plan but frankly I think designing one that will have your business give you exactly what you want is by far the best way.

So, why not start out with what you would like to have in life for you and your family? Then develop a business plan that could show you exactly what your business would need to do to give you that life style. If you think about it, there is no other way where you have more control over what you want in life than letting your own business do it for you. If you work for someone else, you're sure not going to have as much control over your future.

So how would you go about making a plan like this? Well if you know a fair amount about business, you can. It will take some special calculations and some work but if you know how to put together a Profit & Loss Statement, you can probably do it.

You would first do a P&L for the present year for your existing business and the first year and as many years after as you would like to have your plan cover. Your existing business financials will be the foundation for building yourself a business plan for as many years out as you want. This data will tell you a number of things but first if you want to build your plan around what you want in life, you would need to decide some things about your life:

1. You would need to decide how much income you would like to have for yourself for each of the years you plan for.
2. You would need to determine what kind of profit margin you would want from your business for each of the years.
3. And by combining these 2 things into a P&L format you can develop a financial business plan that can extend as for into the future as you would like.
4. The first thing it will show you is how much sales you would need each year to give you the income and profit you would like. Once you see the sales needed, if you know your business well enough, you should be able to estimate those additional expenses needed to overcome capacity constraints that will occur as your business grows.

With this information you can actually predict not only what your sales will be, but you can see how much your fixed and variable expenses will be, what your labor cost will be, your material cost, and your profit.

1. So let's first look at what exactly are fixed expenses? They are exactly what they say they are; they are fixed. This simply means these are expenses that are ongoing whether you have a lot of sales or "0" sales. They are expenses like utilities, taxes, rent, salaries other than the wages used in the making of the actual product or doing a service, business fees, telephone, etc. See how these expenses would continue on even if you have 0 sales? Any expenses that fall into this category are fixed expenses. Far too many small business owners never divide their expenses into fixed and variable. As a matter of fact, if you could have a business that had "0" fixed expenses; this would be the best of all worlds, why? If you had "0" sales, you would have "0" expenses. So the closer you could get to this the better you would be.

2. Variable expenses are those expenses that track directly with sales. If sales stop they stop. These are expenses like supplies used to support in the making of your product or doing your service. Such things as shipping cost for raw materials for your product or service. If you have no sales then you're not going to be purchasing materials so your shipping cost for those materials will stop as well. As an example, if you have a lawn mowing business and there are no lawns to mow, then you wouldn't be buying gasoline to travel to your lawn mowing site. These kinds of things are variable expenses. If you're producing a product, it would include supplies used to produce that product like sand paper, glue, finishing materials, cutting tools, etc.

3. Labor and material costs are also directly proportionate to sales. These are things that go directly into the making of the product or into doing the service.

a. Labor cost is the actual direct labor used in the making of product or doing the service. The cost would also include all the fringe benefits like social security, payroll taxes, vacation pay, holidays, sick pay days, etc.
b. Material costs are all the materials used in the making of product or in doing the service. In the lawn mower service as an example it would be the gasoline used in the mower and any other materials used directly in that service. For producing a product it would be all the materials used in the product that is sent to the customer including all the packaging materials.

Average Selling Price

Now when you calculate your average selling price which is your cost of sales (material + labor) divided by (1-gross profit), you can determine how many customers you would need and then come up with what you think your conversion rate would be for converting leads to customers, you can determine how many leads you would need. Then from this and with the aid of the U.S. Census Bureau and some basic research on your own you can actually have a pretty decent idea of what size your market is and is going to be in the future so you can see if it will support your business plan or not.

So if you can put this all together, you can have a complete business operating plan that would show you exactly what your business would need to do to give you the income and profit you would like to have and a rough idea whether your market would support it or not. All you would have left to do would be to figure out how to make it all happen.

It's like planning backwards.

1. Determine what you want in life
2. Figure out what your business would need to do to give you that life.
3. Figure out how long it would take you to reach it.
4. Figure out how big of a market it would take each of the years you're planning for.
5. Then see if that market is big enough.

Isn't this a much better way to go about planning your business? Shouldn't your business be designed to give you want you want instead of you working yourself to death just hoping for the best?

So how would you go about calculating all this?

There is quite a bit of calculations and you should know a little about business principles but it isn't that complicated. So first let's look at figuring out your future needed sales with this formula:

Projected sales = fixed expenses divided by (1-(var exp % of existing sales + mat cost % of existing sales + lab cost % of existing sales + desired net prof %))

So, let's say you existing sales is $850,000 annually, your fixed expenses are $275,000, variable expenses is $55,000 or 6.5% of the $850,000, material cost is $236,000 or 27.8%, labor cost is $109,000 or 12.8%, and your existing profit margin is $175,000 or 20.6%.

Now let's say next year you want to have a profit margin of 25% so what would your sales need to be to give you that profit margin? Now you might think you would simply tack on 4.4% more to sales (25% - 20.6%) and you would have it. Well not quiet. it doesn't work that way because you are going to have the additional variable expenses, material cost, and labor cost too. Remember, the more sales the more each of these expenses and cost will be.

So here is how you would do it:

Projected sales = fixed exp ($275,000) divided by 1-(6.5% + 27.8% + 12.8% + 25% (your new profit margin) = $896,057 (new sales)

You can do this for as many years out as you want. Obviously this is based on your first year's fixed expenses remaining constant and no consideration of depreciation, inflation, or taxes.

But most likely you would need to increase your fixed expenses because you're going to probably have more rent, utilities, or such as your business grows. So, you would simple put in your new fixed expense number in place of the existing one for each of the years you would be planning for.

So, you see if you decided you wanted a 35% profit margin at year 5 then you could see how much sales it would take to give you that.

Now it's also important to know how many more customers you would need as well so you should always look at that unless you have another way of growing your sales other than with new customers.

Let's say your average selling price for your service is $925.50 and you have one transaction per year per customer.

Using that first years sales example we used above, you would calculate it this way.

$896,057 divided by $925.50 = 968 customers needed for the year. Now if your average transactions per customer are more than 1, then you would need fewer customers. As an example, let's say your average transaction per customers per year is 2.5 then 968 divided by 2.5 = 387 customers per year.

The Best Way To Buy A Business Today

We wanted to revisit the issue of owner financing for one major reason:

It might just be the last way (and best way) for a budding entrepreneur to purchase a business these days.

Face it - banks are not lending to those seeking to purchase a business and, to even get them to look at your deal, you better have twice or three times the collateral in relation to the potential loan amount (regardless if the business is extremely profitable or not) - and just because they might look at your business loan request does not mean they will approve it.

Even non-bank lenders are not lending for the purchase of a business unless it comes with a huge amount of real estate and then they will only fund based on a small loan-to-value of that real estate.

That leaves two options for most people wanting to buy the business of their dreams:

1) Friends and Family (what some call Friends, Family or Fools). However, unless you have a very rich uncle, most of your friends and family are also facing financing restraints and either will not or cannot help you make a big purchase like buying a business.

2) Owner financing. Where the current owner of the business is willing to sell it to you on terms (meaning they - not the bank - hold the note).

This is what we will discuss here - as this might really be the only way left to purchase a business today.

Owner financing can benefit the purchaser (you) in several ways:

1) Easier to qualify for as you don't have to jump through all the hoops that banks or lenders will make you jump through like cash flow analysis, property appraisals, debt-to-income ratios, personal financial statements, etc.

2) Better terms than most banks will offer - thus, saving the new owner (the purchaser) both time and money - not to mention less in regards to reporting (ongoing financial statements and tax returns) and fewer covenants.

3) More than just financing, since the current owner still has a stake in the business's success, they will provide invaluable guidance and advice well into the future.

Plus, if the current business owner believes in the business (and you can get them to believe in you) - this should be a no brainer for the owner. If they hesitate without giving a very good reason, that might be a red flag to you as it might show that the current owner does not believe in the long-term viability of the business (they know something is wrong or in decline).

Let look at an example to show how owner financing works:

Let's say you find a business for sale - a business that you know you will have the necessary passion to work hard at and grow beyond where it stands today.

The price of the business is $100,000 - yet, you tried to get a bank loan, a SBA loan and even a non-bank loan and have heard nothing but "NO."

Here is where you approach the current business owner and entice them to sell you the business while carrying the note.

How your deal should work:

You tell the current owner that you will provide some down payment (this is to show good faith as well as provide a little cash incentive to the current owner).

This down payment should be around 10% but could be less depending on how much you can raise. But, raising $10,000 is much easier than raising $100,000. Plus, any bank or non-bank lender would require you put up more than 10% - so 10% is really a win for you!

Now, if you put 10% down, that means the current owner would have to finance the remaining 90% or $90,000.

Here is how to approach that:

State that you will pay both principal and a comparable market interest rate (let's say for this example - 10% APR) amortized over (7) seven years (choose a term that makes the payments work for you as well as for the current owner).

But, you will also include a balloon payment in (3) three years - allowing the owner a full exit if necessary.

The longer term (7 years) gives you breathing room by making your payment affordable (the longer the term, the lower the payment).

The balloon payment (meaning that even though the loan amortizes over 7 years, the remaining balance after 3 years will be due in full - the balloon term) gives the current owner a way out in a short period as well as provides you time (3 years) to establish yourself in the business - so that when the time does come, you have a track record that you can take to the bank to finance that balloon balance.

Plus, if both of you are happy with the way things are going; you can always refinance the balance (balloon) with the current owner at the 3 year anniversary date.

Now, if agreed, you get the business (what you were working for to begin with).

The current owner not only sells the business - but, (given our example above) earns $22,700 in interest above the original purchase price - interest that you would have paid to the bank anyway if you were approved for a bank loan - might as well pay it to the current owner.

From our example, your monthly payment would be around $1,500 a month - very affordable and at the 3 year balloon date, the reaming balance would be approximately $60,000 - much easier to get a business loan approved for than the original $100,000.

In the end, you, as the new business owner are no worse off and now have bought yourself some time to show both the selling business owner and the banks that you are a true success.

The other side:

Why, you might ask, would a current business owner, looking to get out of the business, be willing to owner finance?

Two main reasons:

1) The business owner, given this economy and the fact that banks are not lending, might not be able to sell the business any other way.

2) The business owner benefits additionally as he/she receives not only the principal from the loan (what they wanted in the first place) but will also earn interest from the financing as your interest payments go to them and not the bank (e.g. major selling point).

In good times, for a business to succeed, the business owner has to be creative in all aspects of the business. In bad times, like now, to be a successful business owner, you have to get doubly creative, especially when it comes to financing.