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Friday, May 30, 2014

Common New Business Issues

Market Research - before you invest do market research

Fiscal Motivation - financial risk for the right reason

Business Plan - focus the business

Startup Money - plan for the worst, at least two years without a profit

Marketing Strategy - what and how you sell and spend

Charging Less - you won't get lower prices than high volume buyers

Family - major time commitment strains families

Borrowing from Friends & Family - not the best money

Doing It Yourself - need at least a lawyer and accountant

Business Location – Office needed? Zoning? Home?


How is your business doing on these issues?

Steve Koenig, SCORE Counselor



Tuesday, May 27, 2014

Master the Balance Sheet or else...

I recently came across a Forbes magazine article by Jeff Thermond that addressed the need a for a startup business to focus on the balance sheet and it made a lot of sense. Most startup entrepreneurs do not have keen financial backgrounds. They very often come from marketing, sales, or operations. They may even understand income statements, and gross margins and be able to talk to financial analysts and bankers.

The balance sheet lists (read as BALANCES) the assets against the liabilities plus stockholders equity of a company. The two sides of this equation must be equal. In businesses generating positive cash flow and operating income, current assets will be greater than current liabilities resulting in increased stockholder equity. This situation generally does not exist in the early days of a startup. During this time profits are not being generated and losses are mounting with negative shareholder equity. In the beginning it is not uncommon, even with high margins (if they are possible), to be unable to cover operating costs.

The article makes the point that the startup CEO should admit that there is a gap between the amount of time it will take the cash to run out and his experience and seek experienced help. This is not a bookkeeper, but someone, even on a part time basis, experienced with startups.

How are you handling this in your business?

Steve Koenig, SCORE Counselor

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Monday, May 19, 2014

Financial Troubles? 5 Ways to Improve Your Situation

If you are having trouble paying your debts, it is important to take action sooner rather than later. Doing nothing leads to much larger problems in the future, whether it's a bad credit record or bankruptcy resulting in the loss of assets and even your home. If you're in financial trouble, then here are some steps to take to avoid financial ruin in the future.

If you've accumulated a large amount of debt and are having difficulty paying your bills each month, now is the time to take action--before the bill collectors start calling.

1. Review each debt. Make sure that the debt creditors claim you owe is really what you owe and that the amount is correct. If you dispute a debt, first contact the creditor directly to resolve your questions. If you still have questions about the debt, contact your state or local consumer protection office or, in cases of serious creditor abuse, your state Attorney General.

2. Contact your creditors. Let your creditors know you are having difficulty making your payments. Tell them why you are having trouble-perhaps it is because you recently lost your job or have unexpected medical bills. Try to work out an acceptable payment schedule with your creditors. Most are willing to work with you and will appreciate your honesty and forthrightness.

Tip: Most automobile financing agreements permit your creditor to repossess your car any time you are in default, with no advance notice. If your car is repossessed you may have to pay the full balance due on the loan, as well as towing and storage costs, to get it back. Do not wait until you are in default. Try to solve the problem with your creditor when you realize you will not be able to meet your payments. It may be better to sell the car yourself and pay off your debt than to incur the added costs of repossession.

3. Budget your expenses. Create a spending plan that allows you to reduce your debts. Itemize your necessary expenses (such as housing and health care) and optional expenses (such as entertainment and vacation travel). Stick to the plan.

4. Try to reduce your expenses. Cut out any unnecessary spending such as eating out and purchasing expensive entertainment. Consider taking public transportation or using a car sharing service rather than owning a car. Clip coupons, purchase generic products at the supermarket and avoid impulse purchases. Above all, stop incurring new debt. Leave your credit cards at home. Pay for all purchases in cash or use a debit card instead of a credit card.

5. Pay down and consolidate your debts. Withdrawing savings from low-interest accounts to settle high-rate loans or credit card debt usually makes sense. In addition, there are a number of ways to pay off high-interest loans, such as credit cards, by getting a refinancing or consolidation loan, such as a second mortgage.

Tip: Selling off a second car not only provides cash but also reduces insurance and other maintenance expenses.

Caution: Be wary of any loan consolidations or other refinancing that actually increase interest owed, or require payments of points or large fees.

Caution: Second mortgages greatly increase the risk that you may lose your home.

You can regain financial health if you act responsibly. But don't wait until bankruptcy court is your only option. If you're having financial troubles, don't hesitate to call us. We can help you get back on your feet.

Barry Eisenberg, SCORE Counselor



Best For The World

The B Corp (Benefit Corporations) Best For The World recognizes companies creating the most impact for a better world.  They get a designation as a Certified B Corporation and recognized for creating the most positive social and environmental impact. Their web site: identifies the group as follows:

B Corp certification is to sustainable business what LEED certification is to green building or Fair Trade certification is to coffee. B Corps are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Today, there is a growing community of more than 800 Certified B Corps from 27 countries and 60 industries working together toward 1 unifying goal: to redefine success in business.

We have one of these Best For The World Corporations right here in Delray Beach, Florida, the first south Florida firm with this designation. Among other things it does, consulting firm Sequel Systems Inc. helps clients obtain eco-friendly building certification; offers employee’s unlimited time off; pays all employee health insurance costs; provides an electric car; and all employees must volunteer in the community.

How does your company stack up?

Steve Koenig, SCORE Counselor