Creating a business website is one of the most crucial ways to build a brand and market a product or service. A business website will help spread awareness for your business and give consumers a chance to learn more about what you do. Even if you don’t plan to sell your products or services from your website, its presence will make your company seem more trustworthy and professional. Below, we cover the basics of creating and improving a business website.
Although business websites differ in format and purpose, there are some general aspects that all business websites should cover. We recommend handling these tasks at the beginning of the process to improve efficiency and reduce stress down the line.
Choosing a good domain name will help set up your website for success by providing an experience that is aligned with your brand. A domain name is the name of your website, which is also the address that users navigate to when searching for your website on the Internet. For example, credibly.com is our domain name.
The most important factors when choosing a domain name are simplicity, branding, and availability. You can check the availability and purchase domain names from a variety of providers, including Google Domains.
A website host is an internet service that allows you to make your website accessible on the world wide web. This is the space where the files of your website actually live.
There are two types of website hosts: shared servers and dedicated servers. A shared server is a server that hosts multiple websites simultaneously. While this approach is typically cheaper and often requires fewer technical skills, sharing resources can increase security risk and limit performance. Dedicated servers on the other hand are single servers that are solely utilized by your website. This allows for total utilization of server resources and customization, but it is typically more expensive and requires technical knowledge to configure and maintain. When looking at which type of server you want for your business, you will have to weigh the pros and cons of each and assess your available resources to determine which is the best fit.
A content management system, or CMS, is a software application that can be used to manage the creation and modification of digital content. In short, a CMS allows you to make and design your website without needing to know how to code.
While most content management systems operate similarly, they have slightly different interfaces and features. WordPress is the most popular CMS on the internet due to its customizability and admin capabilities, but it is not the most intuitive platform for first-time webmasters. Squarespace and Wix are two alternatives that have easy learning curves and drag-and-drop page builders, but they are often more expensive, less customizable, and lack advanced features. With that said, Squarespace and Wix also provide domain purchasing and hosting, allowing for a simplified all-in-one package that may be ideal for business owners who do not have the skills or in-house resources to build out a WordPress website.
When designing your website, you should always be conscious of the front-end users who will be navigating your pages. It is critical that you provide an intuitive user experience and relevant information that allows visitors to quickly find what they need, such as product information, contact forms, and clear information architecture. The more user-friendly your website is, the more likely consumers will come back to it. By building a user path that is designed to add value and convert users, you should be able to drive significant business volume.
A simple and often-overlooked tip is to ensure that your website is always up to date with the most current information. Be certain that your website contains accurate contact information, product and service explanations, and relevant content. This ensures that your brand and offerings are communicated clearly and effectively and that no potential customers are turned off by a bad experience.
Once you have a basic website, you will likely have to improve or enhance it as your business grows. Between adding new content, improving user paths, and increasing your visibility on search engines, even the world’s leading companies are constantly striving to optimize their website and digital experience.
E-commerce, or commercial transactions conducted online, can be a great way to expand your business as your target market is not confined to your local community. Everyone has access to the internet and purchasing products online is more common and easier than ever. While e-commerce isn’t a great fit for every business if your business sells a product that is easy to ship directly to consumers this is a great opportunity.
Using analytics can be a great way to track and improve your website’s ability to convert prospects into customers. Google Analytics and Google Search Console are free platforms that allow you to keep tabs on how users interact with your website and how visible your website is on search engines. By understanding how your prospects find and navigate your website, you can implement improvements that increase traffic and conversions to drive more business.
SEO, or search engine optimization, is the process of growing the quantity and quality of website traffic by increasing your website’s visibility on search engines. Increasing your website’s organic search traffic can be a massive growth opportunity as it increases your presence among relevant prospects.
Here are some basic key factors of SEO that can be used to increase website traffic.
Blogging can be a great way to establish subject matter expertise, build authority, and shine a light on industry-relevant news. The continuous addition of new content keeps your website updated, provides new opportunities for keyword rankings, and gives business owners something to share with their audience on social media. By adding value and covering topics that your prospects are researching, you can build serious awareness without having to pay money for online advertising.
Director, Marketing & Strategic Partnerships
As a small business, efficient marketing is critical. Most small businesses do not have comparable budgets to large corporations, despite having to compete with them for the same customers. However, by taking advantage of free marketing solutions you can drive significant demand without fronting a large cost. Below, we highlight 11 of our favorite small business marketing strategies that you can support on a budget.
Even in the absence of formal market research, every business should have a thorough understanding of their target audience. After all, most companies have customers who share very similar needs, attributes, or characteristics that your company’s product or service solves. The better you understand your target audience, the more effectively you can market to them.
Buyer personas are a semi-fictional representation of your ideal customer-created based on market research, customer data, and a few educated assumptions in order to help you better understand and relate to the market segment you are targeting. By analyzing trends, behaviors, similarities, and patterns amongst your relevant audience, you can create a hyper-targeted marketing and sales strategy that is tailored to the persona’s desires, challenges, and pain points.
For example, if you own a business that sells diapers, your buyer persona will likely consist of couples between the ages of 25-40. By extrapolating the persona, you can make inferences about their interests, media consumption, and shopping habits to plan marketing campaigns that focus on reaching only the most relevant prospects, in turn saving you money while boosting sales.
One fatal mistake many business owners make is not coming up with a marketing plan. Without an understanding of where you plan to spend your marketing dollars and why it’s common to see zero return on investment.
Rather than coming up with marketing ideas and executing them randomly without measurement, it is more effective to have strategies implemented at specific times, for specific durations with measurable results. By crafting a marketing plan that clearly shows the actions and steps, timing, and cost, your company will be better positioned to meet its sales goals and stay on budget.
Having an online presence is critical, even if your business does not sell products online. It is of the utmost importance that you have a business website, social media platforms, and a Google My Business account to ensure that you establish and grow your digital footprint.
The majority of people who hear about your business will likely start by researching your business online and if they do not know that you exist, you will lose out on many potential customers. Even if you never plan to run digital ads, growing your organic and local presence through your digital assets can help you establish a reputation within your industry and local community.
Everyone who visits your website, social media profiles, or local listings should be able to understand what your business offers and how to contact you if they are interested. Creating social accounts and local listings is free and if you have the ability to create your site in-house, your only costs will be the domain and hosting package.
Cost: Free, except for website domain purchase and hosting
While many businesses choose to spend all of their marketing efforts on new acquisitions, it is typically far easier and far less expensive to upsell an existing customer than it is to acquire a new one.
Providing excellent customer service and engaging existing clients is the key to relationship building. For example, if you own a restaurant it is important to attract new customers, but it is even more important to provide excellent food and service with each visit to ensure you give them a reason to come back. Great restaurants have been known to follow up with their guests days or weeks later to thank them for their visit, which shows the customer they are important and sets a great expectation for the next visit while also helping to remain top-of-mind.
Now more than ever, social media marketing is a key tactic to inexpensive marketing. Smartphones are commonplace and the majority of people use social media daily. With the ability to easily find out information about any business, its product offerings, and what it stands for, consumers are no longer reliant on paid advertising to discover new businesses.
Because each social media platform has different strengths and weaknesses, it’s critical that you understand how to leverage each individual platform. Facebook is great for promoting events and creating groups, Instagram is a great means to show your culture and new products, and YouTube is great for establishing subject matter expertise by offering free tutorials. By properly leveraging each channel, you should be able to build a large organic following of relevant prospects for free.
Co-marketing is a collaborative marketing strategy in which your business partners with another company to co-promote a product or service and share the results. Co-marketing can be mutually beneficial to all parties involved because it allows companies to be more cost-effective by pooling together resources, sharing audiences of similar prospects, and fostering a positive long-term relationship between multiple companies (and sometimes communities).
Co-marketing is typically done between adjacent/complementary businesses, not direct competitors, to ensure that no sales are cannibalized. An example of co-marketing could be a lawn care company teaming up with a home cleaning service to provide a giveaway or bundled pricing. Another interesting real-life example of co-marketing is Uber and Spotify’s campaign in which they collaborated to allow Spotify users to play their favorite playlists on their Uber trip.
Writing blogs can be an effective way to market your business as the upfront costs are low but the potential exposure and subject matter expertise are massive. By providing information that people need, a business can establish itself as an expert in that space and draw in customers who might just be researching potential solutions to their problems and objectives.
For example, a daycare company might have a blog about how to protect children from harmful sun rays at the beach or park, because the audience for that blog post would be the same as a daycare: parents of young children. By adding value and flaunting your expertise in front of new audiences, you should be able to capture new, highly interested prospects.
Cost: Free, if you do it yourself
Products or services that are completely new ideas or expensive often prohibit interested prospects from buying as the purchase has a much higher associated risk. In these circumstances, it may be easier to sell if the customer can “try before they buy”.
If you are confident that your product will be well-received by customers, it can be very effective to offer a free trial or host an event in which the customer can try it out. The idea is that they will enjoy the product so much that they choose to purchase it for themselves, and then refer other customers through word of mouth.
For example, if you are selling a new cosmetic product, it may make sense to produce a trial size that you give away for free or for a reduced cost. That way, you can show customers proof of concept at the first purchase and secure a long-term customer.
It is important to understand which of your marketing strategies are working so that you can allocate all of your marketing efforts and spend to the most effective activities and campaigns. However, if your business does not operate online, you may only have so much customer data. One great way businesses get around this is to ask customers how they found you at the point of sale. Most will be happy to tell you and they may even help you identify new effective marketing channels.
For companies that operate online, Google Analytics is a great way to see where your online traffic and sales are coming from (social media, organic search, etc.). Ideally, you will be able to pair analytics data with customer insight to better understand your customers and marketing effectiveness. As you gather results, you can reallocate resources to optimize your budget and grow your business.
Email marketing is a fantastic means for converting customers, especially if your business specializes in online sales. Email newsletters can help nurture and close customers who aren’t buy-ready at the first interaction but are generally interested in your product offering.
Email marketing is effective because it can be highly personal, highly targeted, and incredibly low cost. And with the onset of smartphones, email marketing also allows your company to reach people while they are on the go.
However, it is critical to measure the impact of email marketing and your audience growth because email marketing platforms are not free. For it to make sense, the benefits must outweigh the costs, so we recommend having a granular understanding of how frequently you plan to engage each audience segment.
Cost: Varies, typically charged monthly
Lastly, learning a little about search engine optimization (SEO) can really help your business thrive. Optimizing a business website for search engines typically pays off better than online advertising in the long run as your presence does not disappear when you stop purchasing ads.
You should familiarize yourself with the basics of SEO, which is essentially the process of increasing website traffic by increasing the visibility of your website on search engine results pages. Through backlinking, keyword targeting, and off-page optimization, you can help your web pages climb the rankings, in turn generating more traffic from the most relevant leads.
CONCLUSION: Marketing can be very expensive, especially if your strategy is to outspend your competitors’ advertising costs. But by choosing the most relevant low-cost and free options for your situation and executing properly, it is possible to outperform your big business competitors without spending much money at all.
Director, Marketing & Strategic Partnerships
Small business taxes represent the money you pay to the government while running your business. All businesses must pay taxes on an annual basis, but many businesses must also pay quarterly taxes. For example, businesses with employees must file taxes on a quarterly basis with IRS Form 941 and self-employed individuals usually pay estimated taxes on a quarterly basis. Failure to pay these taxes in a timely manner can result in penalties and interest payments, so it’s crucial to understand the obligations for your specific entity type.
Quarterly taxes are periodic, estimated payments to the IRS made by businesses and self-employed individuals to cover income tax, Social Security, and Medicare. Quarterly taxes are based on an estimate of taxable income for each business quarter, so business owners still have to file an annual tax return like salaried employees.
As a self-employed individual, this tax is generally around 15.3% of your income. However, when you’re working for someone else’s company your employer is responsible for splitting the cost of these taxes with you.
If your self-employed business owes income taxes of $1,000 or more or your business expects to owe more than $500 in business taxes for the year, you must pay quarterly taxes. These quarterly taxes are divided into four payment periods across the year for each corresponding business quarter. You can use the following chart to view approximate payment dates for each business quarter.
|For Income Received||Estimated Tax Due Date|
|January 1st – March 31st||April 15th|
|April 1st – May 31st||June 15th|
|June 1st – August 31st||September 15th|
|September 1st – December 31st||January 15th|
In order to pay your quarterly taxes you will need to determine the following information about your business: gross income, taxable income, taxes, deductions, and credits for the year. As a guide, you can use the IRS 1040-ES worksheet for more information on how to calculate your estimated quarterly taxes.
Use the following step-by-step guide to estimate your taxable income for the year.
Assuming all the calculations are done properly, the final number is your estimated income tax.
To calculate your self-employment tax, start by calculating your net earnings for the year, which can be done by subtracting your business expenses from your gross income. In general, 92.35% of your net earnings from self-employment are subject to self-employment tax. Once you’ve determined how much of your net earnings are subject to self-employment tax, apply the 15.3% to calculate your self-employment tax for the given quarter. This tax is a sum of a 12.4% Social Security tax and a 2.9% Medicare tax on net earnings.
To figure out your quarterly payments, you must first figure out your estimated total tax. Do this by adding your estimated income tax from step one with your estimated self-employment tax from step two. After that, simply divide your estimated annual taxes by four. This final number represents the estimated quarterly payments that you must pay prior to each quarterly due date.
There are various ways in which quarterly payments can be sent to the IRS. You can send them through online payments, by phone (the Electronic Federal Tax Payment Service), with the IRS’s mobile app (IRS2Go app), or by cash/check. Remember that an annual tax return still needs to be filed, and estimated taxes can be adjusted per quarter based on business performance. Keep in mind that if you underpay your quarterly taxes, you will be hit with a penalty. For the first quarter of 2020, the interest rates for underpayment by individual taxpayers was 5%, but this number is subject to change each quarter. To avoid this penalty, the general rule is to have paid at least 90% of the tax for the current year, but this number is subject to change as well. For more information on the current rates you can visit the IRS website.
Every business must file an annual income tax return, however, independent contractors and freelancers who expect to owe less than $1,000 in annual federal income taxes and corporations owing less than $500 in annual federal income taxes are exempt. Make sure to do your research and possibly consult a tax professional to determine if you are required to pay quarterly taxes.
Below are a few tips for reducing your taxable income:
There are many ways to effectively reduce your tax payments and maximize deductions, but we highly recommend working with a seasoned professional to maximize the amount of money you keep in your pocket. Different businesses and entity types have different expenses and deductions, so be sure to do your research.
Director, Marketing & Strategic Partnerships at Credibly
Taking a loan for your small business might be the biggest decision you have ever made. It’s important to get your facts together and make the best possible decision. Whether you are borrowing to save, sustain, or grow your business, you need to know these rules.
This article will take you through the following proven 4-step approach to get the most value out of borrowing money:
First, you need to decide which of the three reasons business owners borrow money applies to you.
Your business is successful and you want to keep the momentum going. Below are some scenarios where you would take out a loan to become even more successful:
Maintaining a stable business is one of the hardest things for small business owners. Sometimes, an injection of cash is needed to ensure your business stays ahead of the curve. Some examples of when you would borrow money to maintain your business include:
Your livelihood is on the line and you need cash quick to keep your business from crumbling. Borrowing money to save a struggling business includes some of the following scenarios:
Now that you are sure of why you want to borrow, you need to follow these five rules before your business takes on debt.
Borrowing with no business plan for the next six months is a recipe for failure. Getting help to create and execute a realistic, data-backed business plan is one of the top reasons entrepreneurs seek small business coaching.
Make sure you have a documented plan for each of the following areas of your business:
Your financial projections are especially important. Document how much you expect to spend in each area and exactly how that investment will turn profits.
Some business owners have a vague plan to pay off their debt. “When the profits start rolling in” is not a good enough answer.
In addition to the business plan above, you need a clear plan to pay your loan back.
Map out exactly what date you plan to make your last payment. Having a clear repayment plan will keep you on the right track, no matter how long it takes.
It is tempting to take out a business loan when profits aren’t where they need to be and you have a personal debt to service.
The reason this never works is bad financial habits cannot be fixed by more money. Taking out more debt to pay down debt creates an endless spiral that you will never recover from
One of the first things some small business owners do when they get a line of credit goes out and buy things they want, but not what their business needs. It’s often things like remodeling their house, getting a new car, or buying the boat they always wanted that eats up their funding.
The worst thing you can do is take your foot off the gas because your immediate money needs are solved. You’ve been working hard and you need a break, but keep it going for just a bit longer and this might be the last time you have to borrow!
You want to do the exact opposite. Right after securing a loan is when you want to work harder than you have ever worked. Paying yourself is the expense you can control the most.
Don’t take more profit because you are working more hours. Think long-term and turn the effort you are putting in now into more profit you could ever dream of six months down the line.
Your profits are low and you have no idea how you can pay your expenses without a loan. Answer the following four questions to make sure borrowing money is the right decision.
If you don’t identify the root cause of the problems that got you here in the first place, borrowing money will only be a short-term fix.
Then, you will eventually end up in an even bigger mess. If this weakness still exists in your business, it is only a matter of time before this new injection of cash vanishes.
Getting your head above water is urgent, but stop and solve whatever you can without money.
In some cases there is no way to solve an issue without a loan, so create a strict written plan for exactly how you will solve it as soon as you have the money.
You probably feel exhausted by all of the stresses of having a struggling business. You want to just be able to enjoy some time off, but now is the time to dig in and work harder than you ever have!
Don’t lose hope. Think of how great time off will feel once you pulled your business out of the gutter.
Taking out a small business loan has to be your absolute last resort if you are struggling. Triple check your financials to make sure it is the only way to save your business.
Are you sure you have cut every single expense possible? Did you try every possible thing you could do to increase sales?
Maintaining a stable business can get costly. Make sure to answer these three questions before taking out a loan.
Making improvements to your business feels great, but they have to factor into your profitability if you need a loan to make them happen.
If you are upgrading your IT equipment, for example, it has to be because you have to do it to make more money – not simply because you wanted new equipment.
Can you try running a promotion for the next 90 days? Make a big marketing push and incentivize your team to produce more.
Think outside of the box and see if you can come up with a way to boost sales and get the cash you need.
Think about the last time your business was in trouble. Remember how easy it was to make major cuts?
Maybe you can cut some of the same expenses temporarily. Consider eliminating non-essential roles and pausing monthly services that you don’t really need to succeed.
We have all heard the saying “Grow, Grow, Gone”, so be careful that you don’t take on unnecessary risk by answering these three questions.
You are profitable now, but do you have the systems in place to be profitable for years to come?
Building for long-term profitability requires you to have a systems-dependent business rather than a people-dependent business.
Even if a business is great now, you still need to think about future threats to your business.
Is the economy unstable and heading towards another recession? Is there some risk threatening your industry that could cause a business to slow down?
Make sure these changes aren’t around the corner to keep yourself from getting blindsided.
When you do opt for a business loan, you have to know for a fact that you have enough profit to service your debt and interest. This requires you to have a strong understanding of your financials. Ideally, you have been doing a full financial analysis every month.
Create a growth plan and document how much funding each part of it will take to execute.
Taking a loan is a big decision and this article is designed to help you make that decision, but consider talking with an expert small business coach before you sign that dotted line. Someone with real-world business experience who has been right where you are now can give you insights that you may not be able to get on your own.
The digital agency landscape is changing at a rapid pace. Having laser-focused technical skills, like website coding or second language skills, might not serve you as well as they would have in the past. That’s because soft skills, like interpersonal skills and time management, are now also needed to ensure the success of a business, client, brand, or individual.
In fact, a 2017 study by Boston College, Harvard University, and the University of Michigan found that dedicated soft skills training boosted productivity by 12% and provided a 256% ROI.
So what soft skills are absolute must-haves in order to run a successful agency?
Brands are built and broken on communication. The ability to write a proper email or proposal goes a long, long way. And it doesn’t stop there. Communication means being able to manage people, and connect with colleagues on a personal and professional level. It means being able to deliver constructive feedback with empathy and understanding. It means being able to put your thoughts into words, having a careful eye for detail, and understanding how to read a room.
Social media posts rely on communication. Influencer marketing relies on communication. Even just summarizing complex data for your clients means having the ability to distill data down to its essence, to turn it into something understandable and relatable that makes sense. Without adequate communication skills, your project is doomed to failure before it’s begun.
If you’re running an agency already then you know that leadership skills are vital. Leadership means more than showing up and giving orders, though. It means being a team player, navigating conflict resolution, providing motivation and encouragement, and the appropriate delegation of tasks. For example, you wouldn’t give a team member who is creatively-minded the task of complex data analysis. You’d be setting your team up to fail.
Leadership is considered an important soft skill because it’s more than just sitting in a big office. Leadership is about knowing your team well and using them according to their individual strengths and weaknesses.
Every company, brand name, pitch, and product begins with one thing: creativity. Brainstorming ideas, thinking outside the box, experimentation, chasing trends and inventing your own. Every industry could benefit from injecting a bit of creativity into their day-to-day operations, but nimble digital agencies, in particular, thrive on this soft skill. Creativity is going to get you clients (what can YOU offer than other agencies can’t?) and get your clients results (how do you make potential buyers pay attention to YOU in saturated marketplaces?).
Steve Jobs’ infamous slogan for Apple, “Think Different,” emphasizes the need to stand out in a marketplace that relies on tried-and-true and status quo. Creativity, and the willingness to indulge it, will give your agency a boost. Some people are born with a natural mind for creativity and others have to go hunting for inspiration. Either way, creativity is one thing you can never have too much of if you want to run a successful agency.
No matter the planning, the strategy, the preparedness, something will inevitably go wrong. This is true for all industries. Good problem solvers are cool under pressure, adaptable and flexible, and both creative and critical thinkers.
Your company’s reputation is on the line. You must be able to address challenges head-on and stride towards the best case resolution in every circumstance, no matter how unexpected. Your team will be looking to you for guidance when something goes wrong. You have to be prepared to address even minor problems before they become all-consuming black holes.
With the internet at your fingertips, no skill is too far out of your grasp. Most projects won’t require you to pick up, say, an engineering degree on the fly but it always helps to have tools ready to help you navigate new technologies, platforms, and trends. Being able to self teach is an invaluable soft skill because it means that no scenario is out of your grasp. No one expects you to be an expert at everything thrown your way but demonstrating a willingness to learn and grow should be the cornerstone to every professional portfolio.
This doesn’t mean signing up for night classes at your local college, either. Self-teaching is just about absorbing new knowledge every day. Read books related to your industry, interview people in your field, listen to podcasts. Never stop learning. Become a student of your craft and impress the importance of doing so on your whole team.
You really can’t fake organization skills. The state of your workspace gives you away immediately. If you tend to lose documents, miss deadlines, and have an office filled with unnecessary clutter, you are doing yourself and your team a huge disservice. Being organized isn’t just about having your area “look tidy”—it’s a mindset that involves pristine time management skills. This includes calendar organization, staying on top of all the moving parts of your business, and following up with employees and clients.
And if you need a little help in this area, there is absolutely no shame in employing some solid project management software for creative teams to help you stay on top of things. The digital world has a wealth of tools for staying on top of tasks, projects, budgets, and time. For example, if you know planning and scheduling your team and resources is something you struggle with, it’s worth considering investing in some resource management software. This will help you prioritize the projects and clients that provide you the best ROI.
You don’t have to go it alone. Are you more a visual person (try a whiteboard for your notes and ideas) or a data person (organize tasks in a sorted spreadsheet)? Organization comes in many forms so you can easily foster this soft skill by finding what works for you.
Are you reliable, self-motivated, and do you go above and beyond in any project or task? Do you come in early and stay late just because you are passionate about the quality and quantity of work that you do? Do you take initiative when it comes to getting the job done or taking on new responsibilities? These are signs that you have a great work ethic, which is another soft skill that you absolutely need to run a successful team.
Your customers and clients will likely pick up on your work ethic right away. Are you quick or slow to respond to emails? Do you check-in regularly, instead of waiting to be called upon? Just as important: Your teams will also see, and emulate, your work ethic. A strong work ethic makes for a great role model, something both your clients and employees will appreciate.
“Customer service” can mean so many things. You may be great at sales pitches and closing a deal. You may have a keen diversity sensitivity, making you able to handle clients of differing backgrounds with empathy, respect, and ease. You might be great at navigating the inevitable complaint here or there and working towards a mutually satisfying resolution. These are all emblements of customer service, a soft skill which all businesses can use more of.
But customer service doesn’t have to start and end with getting people in and out the proverbial door. It can be about spotting trends, reading body language, and knowing your target market so well that you can help predict what they need before they even know it themselves. Customer service is what keeps people coming back. It turns a simple transaction into a lasting relationship.
It seems so cliched but a bit of infused positivity can lift your team’s spirit, attract new customers, and help build existing relationships. People can tell when you are smiling on the phone or when you are being too curt in emails. It changes the way they react to you and how they go about the rest of their workday. A surefire way to lose trust is to be a Negative Nancy on the job.
Like Willie Nelson said, “Once you replace negative thoughts with positive ones, you’ll start having positive results.” Your employees and clients will appreciate having someone around with a good attitude. Positivity is infectious. It’s also something that can’t be “taught” so you will stand head and shoulders above those who haven’t mastered the skill for themselves.
We’re able to offload more and more of certain hard skills like calculating and forecasting to business intelligence tools that can do the heavy lifting for us. In this environment, soft skills are highlighted as a valuable asset to develop in any team. In the fast-paced landscape of digital innovation, soft skills like creativity and customer service will ensure that you stand out
When it comes to small business funding there are a lot of options to choose from. Luckily, all of your funding options can be boiled down to one of two categories: debt financing or equity financing. This guide covers everything you need to know about debt and equity financing, including the advantages and disadvantages of each.
With debt financing, a borrower receives upfront funding from a lender and is obligated to repay the full amount (the “principal”) plus interest over a period of time, as specified in the agreed-upon terms.
Equity financing is the process of raising capital by selling partial ownership of your company. Instead of paying back the principal of the loan plus interest, business owners trade a percentage of their company in return for funding. Lenders are then paid back with a portion of future profits.
The biggest difference between debt and equity financing is that debt financing doesn’t require you to give up a part of your business ownership. You’re simply borrowing capital from an outside source, just as you would be given outside financing for a mortgage.
While debt financing keeps you safe from other stakeholders influencing your decisions and taking a portion of your future income, it’s riskier in that you will have to pay it back —- even if you default on the loan. For this reason, you’ll often have to put up some form of collateral.
So, what’s better for small business? The best one for your business depends on your goals, your business’s unique needs, and the reasons you’re seeking funding.
Advantages of debt financing
Disadvantages of debt financing
Advantages of equity financing
Disadvantages of equity financing
In general, debt financing is a better solution for short-term funding issues that arise during business operations (inventory management, payroll expenses, maintenance, etc.). If your business has been operating for a long time and you would like to maintain ownership, debt financing is the obvious choice. You can acquire the funds to meet your short-term needs without forfeiting future profit to equity holders. And because you’ve been in business long enough to understand your revenue streams, you’ll be able to forecast the impact of your financing and plan for future repayments.
However, you need to be careful with your debt to equity ratio, and your budgeting. When companies are too highly leveraged, making ongoing payments (aka “servicing the debt”) becomes more difficult. It also makes you a “riskier investment” in the eyes of lenders.
Putting your business in such a situation can hinder growth as there is less cash available to seize opportunities when they arise. And because most loans do not allow for varying payments, experiencing high interest during difficult financial periods increases the risk of insolvency.
Luckily, debt financing is easier to plan for, so there shouldn’t be any unwanted future surprises. Make sure you understand your budgeting needs up front, as well as the purpose for the loan. That way, you won’t ask for too much money on unfavorable terms. The last thing you want is to find yourself in a position where you cannot keep up with the payments. Your debt will only become more crippling.
Equity financing tends to be extremely effective during times of economic distress or in the early stages of business (especially pre-revenue). Investors are a great way to get a new business off the ground, especially if they have additional skills or resources to offer. This method carries much less financial risk than debt financing and still gives you the potential to outearn the profits you would have made as the only stakeholder.
Keep in mind that equity can cause issues for your company down the line. Any business owner who seeks equity financing eventually winds up diluting their stake in their company. Be careful with how much equity you plan to give out as other owners can influence your business decisions, even requesting that you surrender your stake in the business if difficulties working together arise.
The more equity you give up, the less control you have over the business. But giving up control can also work in your favor. In the early stages, business owners often wear many hats. It isn’t easy doing everything yourself and having other team members working towards the same goals can be a liberating experience. Just make sure that your investors will be valuable assets to your company, and that you’ll have enough equity left over for yourself and your business as multiple rounds of funding can be necessary during the lifecycle of your business.
There’s no way around it — not all businesses can remain busy year-round.
Maybe you’re a retail outlet whose business booms around the holidays, or maybe you landscape in a state that gets a lot of snowfall (and, as a result, a shorter operating season). Perhaps your business experiences infrequent lump sum payments with long periods of time between incoming payments. Whatever the reason, not every small business flourishes year-round, and this can make the slow weeks and off-seasons a trying time.
But it isn’t just the decrease in incoming cash flows that’s so troublesome. When working capital is stretched thin, business owners often choose to cut costs. Deciding which operations to compromise can be stressful – and it often results in losing market share, ultimately hurting your business.
However, with a little imagination (and courage), you can get by. We’re not saying off-seasons should be just as profitable as your peak times. But there are strategies that can ease the burden when business slows. So, here are a few ideas to keep business moving until things pick up again.
One of the most common reasons that businesses experience a slow season is selling products or services that are only useful during certain times of the year. While expanding your product line isn’t an option for every business, it’s a good way to generate extra revenue.
That landscaping business can probably get some extra customers by offering winter prep, tree and snow removal services, and routine check ups. Retail outlets can try to find more seasonal products to focus on before the hectic winter holiday season. Even food trucks can find a good place to park and offer seasonal menu items during the colder months.
For a lot of businesses, seasonality tends to boil down to the items or services being offered, and changing that up can do a lot to combat seasonal doldrums.
But sometimes it’s easier to extend your operating season than your product offerings.
If you’re a landscaper who doesn’t have the tools and resources to take on snow removal, perhaps restructuring your contracts is the better answer. Instead of charging clients on a per project basis, selling a retainer package can help you generate income even when there isn’t much work to be done. Instead of being “the guy who mows the lawn” you can position yourself as a trusted home-care professional with expertise in landscaping. By checking in every so often, you can earn cash flows year round, despite the majority of the hard work remaining seasonal.
But that’s not the only way to extend your operating season. Getting ahead of the curve and offering your services a little sooner than the competition may be a better idea. If your contracting business tends to get the most jobs over the summer, do more aggressive marketing during the spring and consider offering lower rates for work done earlier in the year. This way, you can lock in clients early, and you don’t have to put as much effort into marketing when you’re busy on the job site.
In essence, pursue your customers before the core operating season and you’re bound to get off to a good start —- every little bit helps with getting through the slower months.
You don’t need us to remind you, but the fact remains that the biggest problem with slow seasons is the lack of incoming money. For that reason, you may want to get in the habit of keeping really tight purse strings, particularly on non-essential business functions.
Staying on top of your finances does not necessarily mean cutting expenses; it means spending smarter. Sure, marketing expenses come with some uncertainty. But forgoing your promotional campaigns often means losing market share. The goal is not to downsize: it’s to maintain business continuity by eliminating unnecessary costs. Skip on the office snacks, not the marketing – your employees will thank you later.
If times get really tough, or if unexpected expenses or opportunities arise, you may need to seek outside small business financing. You’re better off borrowing capital to seize an opportunity than you are compromising your operating expenses to make it happen.It’s also much easier to pay off a lender than it is to rescale your business after downsizing.
Unless you truly cannot operate in the off-season (you’re not going to be selling a lot of Christmas trees in May) it’s important to stay focused and keep working towards your goals.
You can’t let yourself get overwhelmed by the idea of business slowing down. You’ll be in much better shape if you continue to show up and work like normal. The slow season is a great time to review finances and troublesome processes, look into options like new suppliers and partners, and get ahead on your marketing and administrative work.
Don’t stress! Use the downtime as an opportunity to maintain and grow your business. Stay positive, active, and focused on the big picture. Of course, you can’t overwork yourself either.
Upon returning home from military service, veterans have a lot of decisions to make regarding their chosen career path. Now more than ever, veterans are hoping to own and operate their own businesses.
It isn’t surprising to see why. Entrepreneurship allows veterans to transfer their leadership skills into a career that allows a great degree of freedom. These individuals tend to prefer occupations that allow them to take charge of their destiny, and owning a business provides the autonomy and purpose that’s so important to post-service life.
Of course, coming up with the money to start or maintain a small business can be an involved process. After all, only 25% of today’s veterans start a venture upon returning home. Compare that to World War 2 where nearly 50% of all veterans started a successful business, and it becomes clear that inaccessible funding is responsible for the decrease in modern veteran entrepreneurs.
If you’re a veteran considering starting your own business, or an existing business owner looking to secure extra capital, read on for our list of funding tips for veteran-owned small business.
It’s true in everything, and goes double when seeking small business funding: You really need to shop around before making a decision. Each option has a different pricing and repayment method, loan term (duration), approval process, and requirements.
Once you find options that best fit your term and pricing needs, you need to ensure that you can meet the application requirements. Spend time researching veteran small business loans – there are many options and organizations that go above and beyond to help veterans grow their business.
Remember to explore private lenders, banks, and federal loans as well. The SBA has been increasing its efforts to fund veteran-owned businesses lately and can be a valuable source of financing.
Establishing business credit takes time. If you’re just starting out, much of your ability to secure funding will hinge on your personal credit and assets.
Unfortunately, veterans often have little time or opportunity to improve their credit while serving. Different funding options require different credit scores, amounts of paperwork, and collateral. It’s critical that you understand your options in relation to your personal finances before striking a deal.
If you’re worried about your credit score or offering collateral, this guide features some options that may be a great fit for you.
Even for lenders that offer specific financing to veterans, lenders will all have strict and varying criteria for what they look for in a potential borrower.
It’s important to earn the lender’s trust, and the most obvious way is by offering a good credit score, assets, or collateral. However, this may not be an option for you.
Be sure to explain how the skills and experience you gained while serving will set you up for success in the world of business. (Think of it like a job application, but you’re still your own boss at the end of it.)
Beyond traditional bank and federal loans, there are many unorthodox funding sources that most veteran business owners aren’t aware of.
Crowdfunding campaigns are an increasingly popular option to secure the last bit of necessary funding. Additionally, some lenders even offer specific veteran funding grants and contests that provide additional capital.
It’s always good to know that you have options besides the more common loan sources to give you the best range of financing for your veteran-owned business.
A lot of veterans you may have met along the way have probably walked the same path as you when it comes to starting a business, and there’s no shame in getting some advice from someone who has been there already.
Specifically, there are a lot of groups out there that offer mentoring programs to veterans looking to start their own business. These groups also provide valuable insight into the various steps and processes that go into entrepreneurship.
Stay patient and follow these steps, and your veteran-owned small business should get the funding needed to get started and maintain success.
No matter what kind of business you own, one thing is always true: If you don’t have a strong cash flow, you’re going to run into a lot of trouble. Without working capital, the money necessary to fund short-term needs and operations, businesses cannot continue to run.
Growing companies often find themselves short on cash as they expand day-to-day operations. It is critical that companies properly manage their cash flows and expenses to ensure there is enough working capital to maintain business continuity.
Working capital can come from a number of sources: daily income, business lines of credit, and even working capital loans. Whatever the source, working capital can quickly become tied up in daily operations, inventory expenses, outstanding bills, and other day-to-day financial needs.
If these situations are creating challenges for your business finances and you need to find a better way to manage your working capital, or if you’re considering taking out a working capital loan and want to know how best to use the available money, here are a few ways to make your working capital work harder:
Working capital is most typically linked with stock and inventory. Slow-selling stock and outstanding customer invoices can impact your company’s working capital by reducing the amount of available cash you have on-hand. With money idling in unsold inventory, growth activities often halt – making it difficult to spend when and where you need it.
This poses a difficult situation. In order to grow, companies need enough inventory to meet demand. But they also need enough working capital to reach new customers while continuing daily operations.
Securing extra working capital can help you manage your stock more effectively, or give you additional cash flows to help you navigate through your inventory issues until you’re able to unload your slower-moving items.
“Overtrading” is a term used to describe companies that engage in more business than can be supported by the market, funding, or resources available. Often times, companies make purchases of new equipment or inventory without the sales and profit needed to pay them off, or they promise customers more than they can deliver financially.
Unfortunately, this can create a ripple effect that impacts nearly every financial requirement the business has. As late payments and invoices begin to stack up, companies tend to find themselves in a position with enormous accounts payable or receivable, and insufficient working capital to finance daily activities. While engaging in more business is typically good for growth, overtrading can run a company into the ground by freezing core activities.
By securing additional working capital through loans, or making better use of your current available cash flow, companies can ensure that money is available for any outstanding business transactions and prevent the negative effects of overtrading.
A common solution for small business owners facing a cash shortage is to seek outside investment in return for some ownership of the company. However, this can prove to have a bigger hindrance on business operations later on.
When you give up a portion of your company, you’re also surrendering some of your decision-making power. Private investors typically want a certain degree of control over their investment, and this often conflicts with the existing growth strategy and trajectory of the company.
By securing a working capital loan, or managing your current capital flow, you can keep your business self-sufficient to avoid outside influence and spend the money where you see fit.
While working capital is good for solving issues like inventory management, it is ideal for meeting immediate, short-term financing needs. With limited working capital, unexpected issues like sudden building repairs can freeze business operations.
By injecting money into your business when it’s needed most, working capital can help you keep up with changing marketplace demands or any setbacks you encounter along the way. Instead of compromising daily operations to mitigate the unexpected issues, companies can easily navigate the adversity and continue to grow their business.
Proper management of available working capital can help your company stay ahead of financing needs, and keep your business growing. For that reason, working capital loans are often the best decision for businesses who just need a little boost to continue their momentum. Credibly offers various types of small business loans and working capital loans to tailor a lending solution to your business and financial needs.
Whether you want to open a second location for your restaurant, expand your web design firm into a bigger office (new hires included), or just want to serve bigger clients and jobs, growth is the goal of nearly every business. Entrepreneurs have an innate desire to try new things in hopes of expanding their business, but it isn’t an easy process.
Business expansion comes with a lot of risks and challenges. To be effective, owners must balance executing new operations, managing organizational change, and ensuring proper funding of the growth strategy and daily activities. That’s why expanding a business too quickly or in the wrong direction is one of the most common reasons for small business failure in America.
However, it doesn’t have to happen to you! We put together a few common traps, pitfalls, and growing pains for developing small businesses, as well as tips and mitigation strategies to help sustain growth:
As happy as you might be to move into a bigger restaurant or office, your business is going to face far more (and vastly different) problems. Changes in rent, location, customer volume, staffing needs, and supply chain can impact your breakeven point, business goals, and ultimately the way you handle daily operations.
In essence, the effects of scaling up demand a lot of changes in the way you do business, and often in ways you’re unable to predict.
Smaller, iterative growth can be a lot more helpful than jumping straight into the fire; it minimizes financial risk, which eases the transition and allows you to focus on growing organically.
Instead of branching out immediately into a new location, why not try expanding your hours or offering offsite services to test ideas? That way, you minimize the disruption of core business activities while laying the foundation for the next step.
It’s the business equivalent of learning to run before you learn to walk. Rather than taking on a million new clients, try focusing on one big one or a new project to see if your current staff can support the workload. Once everything is clearly manageable, then you can begin to look for new employees and clients. After all, if the endeavor is too challenging for your existing workforce, how can you expect new hires to perform?
Another common growth problem businesses encounter is a myopic focus on sales and profit. Too many entrepreneurs and managers find themselves thinking solely in terms of new acquisitions and revenue growth, which can lead to serious organizational issues.
While sales and revenue are important for generating cash flow, they should be the result, not the goal. Focusing on the end is a dangerous mentality — neglecting day-to-day operations, brand strategy, and organization alignment is a sure-fire way to run a business into the ground.
Business growth spurs a lot of change. When management only communicates revenue goals, there tends to be little guidance in terms of developing organizational structure and meeting smaller milestones. It’s difficult to prioritize tasks and value when you’re focusing on the numbers.
The best leaders are capable of analyzing growth on a human level. By constantly reviewing all of your processes, ideas, touch points, organizational structure, and team dynamic, business owners can ensure that the needs of the customer and workforce are being met. Performing frequent audits to gain a deep understanding of the big picture simplifies task identification and prioritization, making it easier to guide your team through the transformation.
Business growth often causes changes in office culture, team dynamic, and individual performance. When an employee feels as though their company has shifted focus or changed its core principles, they often underperform. Rather than being excited about the growth opportunity, he or she feels threatened, slighted, or disappointed. After all, misguided expansion can turn even the most tight-knit team into a bureaucracy by redirecting the brand’s focus, alienating employees and customers.
If your employees like working with you, it’s the sign of a healthy company culture — the same can be said for customer retention and brand experience. Rather than displeasing your workforce and customers by neglecting company culture during your expansion, talk to them and learn what they value most about the business. Then, stay true to your identity.
At its core, a company is just a group of people working towards the same cause. By preserving what matters most to each individual, you can effectively expand your business while maintaining a high level of intimacy. When communicating the transformation, make sure that your team and customers understand the purpose behind growth — it’s to better serve their interests, not yours. It’s simple: Take care of your team, and it will be reciprocated. Neglect them, and they will leave.
Because business expansion creates new responsibilities and costs, it often depletes the capital used to fund day-to-day expenses. Between investing in new real estate, equipment, and staff members, even the most carefully-budgeted accounts can find themselves in a pinch rather quickly.
When business owners attempt to self-fund, they often under-invest in the endeavor. A lack of working capital often leads to compromised growth activities, improper task prioritization, and additional stress. Even worse, when an owner takes financial matters into his own hands, it often creates a conflict of interest.
Business expansion loans are an easy way to get funding for your small business without draining your own personal resources. Take some time to figure out how much you can afford to pay back and see if getting a loan can help you remove some of the short-term pressure on your business finances — you’ve got enough on your mind as it is.
Growth is an exciting time for any business, and hopefully with some of this advice in mind you can avoid a lot of the frustrations and hurdles other businesses tend to meet when expanding.