Small business risk: Fire ranks high

Going into business is heavy with financial risk but, once in business, natural disasters or unforeseen problems can create catastrophe.
Fire ranks high as a potentially devastating risk for business.
More than 75 percent of companies that experience a serious fire go out of business within three years of reopening, according to Phoenix Fire Protection.
Proper insurance can cushion destruction of assets and business interruption costs, but it won’t stem loss of customers, employees and data.
Of these three risks, data loss may be the easiest to mitigate.

* Daily off-site backups are key. On-site backups may seem sufficient unless a fire begins on the weekend or a holiday.

* Check backups regularly.

* Make sure at least two people know how to retrieve backups.

Make a pre-fire or disaster plan: Some of the questions you can ask:

* How can you protect IT equipment from fire or other disasters? If you can’t protect equipment, how will you replace it after the emergency?

* How will you retrieve data? Who will do it?

* Where will you operate? Will you need a generator for electricity? If so, where will you get the fuel to power the generator?

* What are the steps you will take to replace inventory? Is it necessary or possible to insure inventory? What is the worst-case scenario if it isn’t insured?

How to buy a home when there aren’t many on the market

In economic parlance, many describe today’s housing market this way: demand is high and supply is low. In practical terms, this means there are more buyers than homes for sale. While this isn’t true in all areas of the country, it is true in many areas.

According to USA Today, there was a 4.3 month supply of homes nationally in August of 2017. That means it would take a little more than four months to run out of homes for sale if no other homes came on the market. This number was down from earlier in the summer when there was a 4.6-month supply. The normal number of homes for sale is a 6-month supply.

Why is supply of homes for sale so low? Baby Boomers don’t want to sell, according to USA Today. A recent realtor.com survey showed that 85 percent of Baby Boomers aren’t selling but 60 percent of millennials are.

In this market, sellers may easily get the price they want, but buyers must have all their shingles in a row these days.

Here’s how you have the best chance of snagging the house you want:

*Get your financing ready
First get pre-qualified for a loan. This is an informal process where you visit with various lenders, giving them an overview of your financial situation. The lenders can then give you an idea of how much you can borrow and an idea of interest rates. But, beware, this is not a promise to loan you the money. It merely gives you working numbers.

*Shop around
The good thing about pre-qualification is that you can start shopping around before you are ready to buy. You can get an idea of what you can afford and what you want in a house. Even if this isn’t your first time in the market, don’t skip the growing period, according to USNews. If you have been out of the market for more than a year, then you don’t know what is out there.

*Get pre-approved
When you know you want to take the plunge, get pre-approved for a loan. At this point, you should have an idea of which lender you might want to use. The lender checks your credit, verifies employment, and confirms your ability to qualify for a mortgage. With a pre-approval in hand, you are ready to make a credible offer when you find the home you want.

Visa campaigns for cashless small businesses

Money talks to small business and one credit card company is speaking loudly.

Earlier this year Visa unveiled a campaign to encourage small business food service owners to stop taking cash as payment. The effort highlighted the continued move by merchants to make it easier for customers to pay with credit cards, and now even digital currency, like Bitcoin.

For Visa’s campaign, small business food service owners who committed to join its 100 percent Cashless Quest could be awarded up to $500,000.
According to Visa, 70 percent of the world’s people, or about five billion, will have a connected mobile device by 2020.

That is an “incredible opportunity to educate merchants and consumers alike on the effectiveness of going cashless,” Visa noted.

The card company’s campaign was a call-to-action for small business restaurants, cafes, and food truck owners to describe what cashless meant for them, their employees, and customers. It also highlighted the opportunities for small business merchants.

Visa found that if businesses in 100 cities switched from cash to digital, their cities stood to gain $312 billion of savings, largely in the form of labor costs.

Small food service businesses already have been making the move away from cash with the explosion of easy ways to accept with credit cards. Now that tide is even turning as people take advantage of digital currency, like Bitcoin, to make their purchases. The number of ways for merchants to accept digital currency is growing, as Bitcoin, and other types of cryptocurrencies, shed their negative reputations.

Hurricane Harvey highlights small business risk

The devastation left by Hurricane Harvey is a good reminder to small business owners that preparing for disaster is essential. The devastation left by Hurricane Harvey is a good reminder to small business owners that preparing for disaster is essential. Catastrophic hurricanes claim close to 40 percent of small businesses, according to FEMA. It can take years for even the most prosperous businesses to recover. Most Mom-and-Pop operations running on the edge never reopen. According to a 2016 study by Harvard Business Review, small and young businesses, already taking big financial risks, are notably unprepared for a disaster such as a hurricane. The study focused on small and young business recovery one year after Hurricane Sandy in 2012. Among its findings:

* Many firms were uninsured. Nearly one-third of companies affected by Sandy had no insurance of any kind. Of firms less than five years old, about 60 percent were uninsured. Those that were insured found that their insurance covered none of their losses.

* Businesses increased their debt load when they could. More businesses applied for credit after Sandy than received insurance payments. * Credit was often constrained. Firms unprepared for disaster found that their interest rates went up after Sandy. Smaller firms were unable to secure credit because they did not meet the requirements, according to an informal survey by the New York Daily News.

* Community banks reduced lending. After Sandy, so many households and businesses were affected at once that small banks found loan defaults depleted capital. They were unable to lend. The study concluded that risk analysis had to be made a strategic priority.

Finding top talent on small budgets

Key to any successful business is being staffed with the field’s top talent. Small business owners understand this, but their small budgets may limit their efforts.

However, there are steps that small business owners can take to attract top tier talent, and be just as competitive as their larger counterparts.

Your brand

Monster highlights building a strong brand as key to attracting the best talent.

“For example, when describing your company or writing job ads, avoid generic language, such as ‘lots of opportunity, great place to work,'” Susan Strayer LaMotte, founder of Exaqueo, told Monster. She added:

“You have to focus on what’s yours — what makes your company great that’s different from everyone else.”

Local help

Your local chamber of commerce is a good start for listing your job opening. They may list your opportunity in their periodic communications, like emails and newsletters, to members. They may be willing to list it for free. Also, if you are a member of any professional organizations, reach out to them. These groups often have the best access to top talent that could be great fits for your business.

Sell your strengths

Considering many top-talented workers are drawn to large, established companies, you must make sure you stress any standouts for your business. For example, if you have a patent on a product you sell, which shows it’s unique to just your business, point that out.

Logistics

Many top-level professionals have become accustomed to being able to telecommute. While this option may give you pause if you want to keep tabs on your new employee, you should consider it. Telecommuting continues to be one of the things workers rank high on their list of desired perks.

Accept payments like the big guys

Getting paid is becoming increasingly easier for small business merchants thanks to an array of internet-enabled options for consumers.

Apple Pay
Anything related to Apple seems to be a hit, and its payment system is no different. Apple boasts that its payment system’s app allows for ease of use by consumers because they don’t need to have a credit card handy. Merchants only need a contactless payment-capable point-of-sale terminal for Apple Pay, which they can get by contacting Apple’s merchant support.

Square vs. PayPal
Both of these payment methods are especially helpful for owners whose businesses are mobile. Their payment readers can be plugged into any mobile device. Consumers simply swipe their cards, and Square or PayPal processes the transaction. Square wins for its effective POS (point of sale) system. PayPal is hailed for being a good choice for merchants who have low-volume processing needs.
Square charges a flat rate of 2.75 percent per transaction. PayPal charges 2.2 percent to 2.9 percent, plus 30 cents per transaction.

Payline Data
Payline Data is also a formidable choice for processing credit cards. Business News Daily notes that it allows merchants to choose pricing options that jive with their sales volumes. Another benefit it offers is aimed at high-risk businesses. Payline Data offers them merchant accounts, which can be difficult for these businesses to obtain. Payline charges 0.2 percent to 0.5 percent plus 15 cents per transaction.

Bitcoin
The volatile digital currency is becoming increasingly accepted as a reputable form of payment. Reasons to accept the form of cryptocurrency include the fact that there is no fee to the merchant. When it comes to fraud, bitcoin can be more cost-efficient. That’s because bitcoin payments
are irreversible and secure, so the cost of fraud is not shouldered by the merchant that accepts it, explains Bitcoin.org.

IBM leads as big companies rethink remote work

After decades of touting its anytime, anywhere remote workforce, IBM is starting to bring workers back into the office.

About 40 percent of IBM’s 380,000 employees work in non-traditional settings, although the company has offered no information as to how many will be affected by the May announcement.

The tech giant gave affected remote workers 30 days to move back into the office setting or leave the company.

Although the 105-year-old company has experienced 20 quarters of falling revenue, a company spokesperson told the Wall Street Journal that the move was not a cost-cutting measure.

IBM is not the only company abandoning the popular remote work models. Yahoo, in 2013, called telecommuters back to the office as have Bank of America and Aetna. Corporate leaders have argued that putting workers in the same space increases work speed and sparks innovation.

One University of Texas professor who studies telecommuting says companies thought they would reap large savings in office and real estate costs. Jennifer Glass, who also advises companies on remote-work strategies, says these savings have not largely materialized.

IBM spokespeople say the vast majority of remote workers have elected to join a regional office. When Yahoo made the same move, however, it set off a furor.

Small business confidence continues at all-time high

Small business confidence continues at all-time high
Small business owners continue to be very optimistic about future economic growth, according to a recent industry survey.

The National Federation of Independent Business (NFIB) released its February Small Business Optimism Index in March. The reading was at its highest in 43 years.

The NFIB noted that evidence on the economy is mixed.

The New York Federal Reserve puts first quarter growth at 3.1 percent while the Atlanta Federal Reserve is looking for 1.8 percent. Both have access to the same data.
However, the gulf between liberals and conservatives is large. The University of Michigan/Reuters poll in February illustrated this, with the Expectations Index at 55 among Democrats, 120 for Republicans and 89 for Independents. The Democrats expect the worst, the Republicans the best. Spontaneous positive references to economic policy were made by a record 28 percent of consumers, 26 percent made negative references. Reality will resolve the gap.

Small businesses are optimistic that there will be a new health care law, tax reform, and relief from regulations.
It is clear from our data that optimism skyrocketed after the election because small business owners anticipated a change in policy, said NFIB President and CEO Juanita Duggan. “The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November. If the health care and tax policy discussions continue without action, optimism will fade,” Duggan said.

The index fell in February, but still is considered very high. The NFIB noted that the slight decline follows the largest month-over-month increase in the survey’s history in December and another uptick in January.
Despite a small decrease, nearly half of owners expect better business conditions in the coming months.

The elephant in the room remains to be whether the Trump administration will be able to deliver on the many policies small business owners are counting on. The health care legislation stalled in March. Tax reform may not be dealt with until the end of the year. It remains to be seen what major regulations will be dismantled.

Balloon Mortgages Q&A

Balloon Mortgages Q&A

Question:
Home sales are brisk in my area and I have decided to buy a home even though I will only be in this location for a few years. My lender recommends a balloon mortgage. I have heard bad things about these loans, but the deal seems good. What do you think?

Answer:
A typical 7-year balloon mortgage can seem very good and, if you will absolutely be selling before the 7-year term is up, it might be good for you. But, it is a risk.
First, let’s talk about the benefits of a balloon mortgage.

Balloon mortgages usually have a much lower interest rate than a conventional mortgage. The overall cost of the loan will be lower and the payments will be lower. That makes it attractive. The assumption is that a buyer makes payments for a set period of time, five to seven years, for example. Then at the end of the period, the entire balance is due. The buyer then refinances at the end of the term or sells. In your case, you want to sell so this is probably why the lender recommended this type of loan.

The reason balloons are risky is that people never know what is going to happen in the future.

Buyers may think they can easily refinance at the end of the term. But this might not be possible. The buyer may lose a job or become an unqualified buyer because of bad credit. Then it might be impossible to refinance.

In the current market, property values are going up. But, if property values go down, you could be stuck with a home that is not worth the balloon payment. No lender will finance under those conditions. In your case, you might not be able to sell at the necessary price.

Finally, interest rates could be much higher in seven years. For someone who wants to refinance, this could make payments dramatically higher.

Some balloon mortgages have a reset option that will automatically recalculate the mortgage at the current interest rates. This might be good protection for most people.
If you know you will sell, a balloon mortgage might be acceptable.

Presentation tips to land a new client

Presentation tips to land a new client
Landing that new account or client can bring feelings of elation.

It’s likely that to land a client you’ll have to make a great presentation. Here are some tips:

First, steady your nerves. This seems like common sense, but ahead of the presentation, you’ll have a few butterflies.

As you start the presentation, make it clear that you are the owner of the business; not an employee.

Understand the client’s needs and what their goals are ahead of time. That way you can address them during your presentation.

Include graphics, images, and facts to make your presentation more memorable, according to Inc.

Consulting Success says you should offer an introductory rate for your fees. However, make it clear that it’s just that. Feel free to let them know your normal rates.

Inc. also says to give your presentation as a story. Let stories illustrate points to help people make an emotional connection to the message.

Work up a sell sheet, states Entrepreneur magazine. This sheet should clearly state how you plan to address the potential client’s problems and challenges. If you are presenting a product, explain its features and benefits and your product’s market. Also, explain the legal status of your invention, such any patents pending, copyright or trademark information.

Watch your time. You don’t want to start droning on and on. That bores people, and at some point they tune out.