Archive for June, 2009
The Entrepreneur’s Banking Crisis
June 22nd, 2009 | 05:24 pm | No Comments
Banking has always been tough before for Entrepreneurs, but in this economy you need to be alert and take extra precautions. Here are some new rules to follow to help your business keep flowing.
1. Get more credit cards. Yes, I know some people are advising against this because it could have an adverse affect on your credit score. I can argue about how that theory is wrong, but your credit score isn’t the important point today, credit is. The problem is that banks are raising rates on credit cards on any excuse they can find. Additionally, they are also freezing cap amounts and no longer extending credit. As you pay down the credit card, your cap automatically lowers. This gives you no more credit and makes that card worthless to you. You need to get more credit cards when you can so you have options if problems with your others occur. New cards often have low teaser interest rates for 6 to 12 months. We all know this can work against you when you hit the time deadline but in the meantime you can transfer balances on cards you are having rate spikes with today. Deal with today’s problems and then work on cures for the future.
2. Watch your merchant accounts carefully. Banks have the right at any time to pull out money for a reserve if they feel they need to. If you are counting on that money for operations, and all of a sudden it gets frozen, you can be in big trouble. The best recourse against this is to build a relationship with someone at the bank who works in merchant services, and the higher up you can go the better. The relationship isn’t a guarantee something won’t happen – because most of the banks are tied in with card processors and don’t do the work themselves. Nevertheless, you are better off with a bank advocate pleading your case then you are talking to the 800 number recording.
3. Establish more than one merchant account. Banks always want all your business but today you simply cannot afford to do that, or you may wind up with an account you can’t use – and it will take more than 30 days to get a new one. In the mean time, you can’t take new charges on your old merchant account so you lose lots of cash flow. Having a back up is an answer, and use both of the accounts for some of the processing each month so you always know they are working. Even then, alarms will go off when the account all of a sudden has more money running through it then the bank’s computers think is normal – but at least you should be able to explain that you are now using them for all of your processing, so that’s the reason for the spike.
4. Consider lining up one or more investors who are prepared to step in should you have a crisis. If your merchant account does get a reserve requirement slapped against it, you will eventually get the money so you could use that reserve for a private loan. I am not saying this is easy, but thinking about this and other resources before a problem occurs, gives you more time to act – because you know what you need to do and who you might call to help.
Check Your Credit Report For Free
June 21st, 2009 | 08:23 am | No Comments
Just a reminder that all of us are allowed to check our credit report for free once every 12 months, from each of the three major credit bureaus: Equifax, Experian, and TransUnion.
It is a good idea because there are frequently mistakes in them that lower your credit score and as we all know, credit is tightening. Go to the web site I have listed, and you can order free from one, or all three at the same time. If you order one now, you can then order from the other two over the course of 12 months so you can view your credit more often. Order all three at once and you’re done for 12 months, which I don’t think is as good.
http://www.annualcreditreport.com
Beware of Bad Laws and Bad Names for Laws.
June 10th, 2009 | 02:12 pm | No Comments
Congress is notorious for giving wonderful sounding names to new bills they want to pass just to fool the public who don’t read them. They are about to do it again.
Senator Kennedy and Rep. Rosa DeLauro are pushing the “Healthy Families Act”. Who could object to a wonderful name like that?
The bill requires any firm who has 15 employees to provide a minimum of 7 days of paid sick leave. I have no problem with that and have always had sick leave days in my companies. My preference is that you don’t come in when you are sick and spread whatever you have to everyone else. The problem with this law comes in the form of detail. The bill allows you to take the leave anytime and in the smallest increment the employer tracks payroll, and no notice is required. This kind of language would allow an employee to show up consistently late with no advanced notice, ultimately causing all sorts of problems with real staffing issues, especially in shift positions. An employer would have no retribution for such tardiness and disruption to everyone else.
There are other new bills coming down the pipeline, which impact our business. I encourage you to look beyond their names and see what the real affect they will have on your business. If you like them, great – but if you don’t, let your Congressman or Senator know they need to make some changes. To do nothing is a mistake.
Price Can Have an Appeal
June 03rd, 2009 | 03:43 pm | No Comments
Cheap is not my favorite word when selling, but it is a marketing position and should always be considered for a loss leader or name capture if nothing else.
During this recession and economic pullback, price can have an appeal and if you can compete on that level than you should point it out loudly and even make it a competitive advantage.
A couple of interesting examples and how value can be successfully marketed is Validas (www.myvalidas.com) and InchWorm Shoes (www.inchwormshoes.com).
Validas offers to shave an average of 22% off your mobile phone bill by letting them analyze what you are currently paying and making some suggested changes. You can upload your bill and pay $5 for a report that shows a breakdown of usage, compares carriers, and makes other suggestions for saving money.
InchWorm Shoes is a clever example of problem solving. We all know the cost of shoes and for kids how fast they outgrow them. Inchworm Shoes has a special technology that allows you to increase the size of your child’s shoe by pushing a button and pulling on the toe. Shoes can grow in half size increments and can expand up to three sizes… now if they could just do that for men’s pants I’d save a ton.
Keep thinking about the benefits your products and services have and remember …price can be a successful one.
