How to Take Advantage of the Small Business Health Care Tax Credit
As the tax filing deadline approaches, we know that many small business owners are looking for ways to save money as they prepare to file their tax returns. Although the Affordable Care Act does not require that businesses provide health insurance, it does offer tax credits for eligible small businesses that choose to provide insurance to their employees for the first time, or maintain the coverage they already have.
Does My Business Qualify for the Health Care Tax Credit?
Through 2013, to qualify for a small business tax credit of up to 35% (up to 25% for non-profits) of your premium contributions, you must have all of these criteria:
- Fewer than 25 full-time equivalent employees
- Pay average annual wages below $50,000
- Contribute 50% or more toward your employees’ self-only health insurance premiums
Beginning in 2014, this tax credit increases to 50% (35% for non-profits) and will be available to small businesses who meet the criteria listed above and who purchase coverage through the new Small Business Health Options Program (SHOP) Marketplaces (also known as Exchanges). This enhanced credit can be claimed for any two consecutive taxable years beginning in 2014 (or beginning in a later year) through the SHOP.
If you need assistance determining whether your small business or tax exempt organization qualifies for the credit, the IRS offers a helpful step-by-step guide.
Who Will the Small Business Tax Credit Help Most?
While any business meeting the above standards may be eligible to receive a tax credit of up to 35% (25% for non-profits), the Small Business Health Care Tax Credit works on a sliding scale and is specifically targeted for those businesses with low- and moderate-income workers.
For this reason, to qualify for the maximum small business tax credit, you must contribute at least 50% toward your employees’ self-only premium costs and meet the following two standards:
- 10 or fewer full-time employees
- Annual average wages at or below $25,000
How Do I Claim the Tax Credit?
Once you’ve determined that you qualify for the credit, your tax professional and the IRS can help guide you through the necessary steps to claim the credit which include:
- Check with your tax professional; even if you are a small business employer who did not owe tax during the year, you may be able to carry the credit back or forward to other tax years. And if you are a tax-exempt employer, you may be eligible for a refundable credit.
- Use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. It’s also important to know that eligible small employers can still claim a business expense deduction for the remainder of their premium contributions.
- This is a federal tax credit. Check to see if your state has additional health care tax credits available to small employers.
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Buying a Small Business Overseas – 5 Tips for a Smooth Transaction
Interested in buying a business overseas? Whether you’re looking to expand into new markets or are just planning on funding your retirement plans outside the U.S., there are a number of steps you should take to ensure your new venture goes smoothly. Everything from business practices; legal and regulatory requirements; navigating an international sale deal; and language and cultural differences will come into play.
Here are some considerations and issues to bear in mind as you go about buying a business in a foreign country.
If English isn’t the first language in the country where you intend to buy a business, then learning the local language should be your first priority. If you can’t do this, then you will need to think long and hard about your motivation and determination for going the distance in this new territory.
Measure the Risks to Your Capital Investment
No matter how much capital you have, to lessen the risk, be sure to factor in the many variables that come from buying and running a business. Factor in cost overruns, delays getting started and unforeseen expenses. For example, don’t always assume that cheap labor is always going to be quality labor—you get what you pay for. You’ll also incur many of the employment expenses you incur in the U.S. such as benefits, taxes, sick leave, and social security.
Work with an Expert
As with any overseas venture, one of the most important things you can do when buying a business abroad is to consult an expert. Accountants, lawyers, tax attorneys, and real estate brokers, can all help you succeed with your cross-border purchase. To ensure the best representation, work with experts who have experience in the location and industry in which you are buying a business. But you’ll also need to find in-country experts who are familiar with business and regulatory matters in the country you intend to buy a business.
Do Your Research About Cross-Border Deals
It goes without saying that any business venture requires research, so here are some issues you should bear in mind:
- Laws and Regulations – Legal and tax regulations overseas can be even more complicated than in the U.S. for business owners. Licenses and permits, for example, can take several months if not years to be granted. You’ll also need to understand how the country handles expatriation of taxes on profits on foreign business owners. Much of this information can be found online, but for more information, reach out to local in-country small business organizations, business leaders and chambers of commerce.
- Understand the Buying Process – As you seek advice, be sure to ask about the negotiation and valuation process involved in buying a business. What’s included in the sale? You don’t want to be left with a hollow shell of a business when you thought you were getting furniture and fixtures too.
- Pay Heed to the Competition – As an outsider, it can take a tough skin to make a success of a small business in a foreign location. Be ready for that—look for ways to test the waters of the community before you take the plunge. Also look to the competition to understand your market potential—is there a gap or untapped need that you think your business can serve?
- Determine How You Intend to Manage Your Business – Will you re-locate yourself (that brings with it a raft of immigration factors), or will you manage it from the U.S. with on-site staff? Could you keep the current owner and hire him or her as an employee? Know your options before you hit the negotiation stage, and weigh the benefits of each.
Be Prepared to Connect and be Agile
Last but not least, buying and running a business—let alone an overseas business—requires tenacity, agility, and deep personal connections. So do your research, weigh the pros and cons, have a plan and heed laws and regulations. But above all, be true to your ambition and drive. Some of the best small business owners succeed not because they stick to the rulebook, but because they look for ways to take the initiative and forge a path for themselves.
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How to Move Up and Become Part of the Supply Chain to Larger Companies
Looking for ways to become a supplier to a larger company?
A recent study showed that after a small supplier lands a big purchase order or a contract from a bigger company, the small company’s revenues go up 250 percent and they create about 150 percent more jobs in just two or three years. This is a great opportunity both for small business and for the economy.
But how can a small business go about landing a contract to be part of this lucrative business growth opportunity? Here are some tips, tools and resources that can help you get there.
Do Your Research And Plan Your Strategy
Breaking into a new market or new client base requires planning. This blog offers some tips for finding larger companies that would be a good fit for your business; getting that important first meeting; refining your sales pitch; and alleviating any perceptions about your “small” business status: How to Up the Ante and Start Selling to Larger Companies.
Use Available Resources – #1: “Supplier Connection”
Large U.S. multinational companies also know the value that supply chain networks have for them and their customers and have strengthened their efforts to reach out to small suppliers. For example, several large firms have come together to create a single, standard online application – called the Supplier Connection – that allows small suppliers to market themselves to many large U.S. firms at the same time. These firms include Office Depot, Bank of America, Dell, Facebook, Kelloggs, UPS, Pfizer and more.
The Supplier Connection portal is open (free of charge) to U.S. small businesses that have less than $50 million in revenue, or have less than 500 employees and that provide the following goods or services:
- Facilities support
- Food and beverage manufacturing
- Industrial manufacturing
- Lab supplies and equipment
- Professional, marketing and technical services
- Service parts
The program is part of the Obama Administration’s American Supplier Initiative, which was created to encourage companies to use small businesses as suppliers. Check out the Supplier Connection website for more information. These FAQs are also a useful resource.
Use Available Resources – #2: Your Network and Assistance Programs
Tradeshows and industry conferences are a great way to network and meet potential customers. Even if you don’t have the budget to exhibit yourself, simply attending can provide a great venue to meet the bigger players in your industry or target market. Here are some tips for getting the most out of these events: Got a Trade Show to Go To? Make it Pay Off for Your Small Business.
Other avenues to explore include your local Chamber of Commerce or Small Business Development Center (many host events and networking sessions that showcase larger companies in your region).
If you need one-on-one help or counseling, consider a free mentor from SCORE. These folks have walked in your shoes, whether as business owners or executives, and can help you formulate and execute a growth strategy into new markets.
Don’t Forget the Largest Customer of All - Selling to the U.S. Government
The largest purchaser in the world just happens to be the U.S. federal government, which plays a major role in fostering the growth of supply chains filled with innovative small businesses. You can read more about the ins and outs of this market opportunity from the SBA here, the agency also offers several online courses that can bring you up to speed on how to sell to the U.S. government. Another option is to partner with businesses that already hold or are bidding on government contracts. This process, known as sub-contracting, provides a useful point of entry into this market (which operates quite differently than the private sector).
The government also offers programs that help specific business groups such as veteran-owned businesses, women-owned businesses, and others, gain access to the federal marketplace.
These blogs also offer insight into the business of selling to the government:
- Selling to the Government – Get Started With These 5 Steps
- Selling to the Government: Five Tips for Becoming a Subcontractor and Getting Your Foot in the Door
- Women Business Owners – How to Win your Share of Government Business
- 10 Tips for Veteran-Owned Businesses Seeking to Sell to the U.S. Federal Government
- Selling to the Government – 4 Tips for Meeting and Building Relationships with the Right People
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What’s a Small Business for Tax Rules?
The SBA uses a number of definitions for “small business,” depending on the industry. So, too, does the tax law, which has various definitions of “small business” for different tax breaks. These definitions are based on employees, revenues, expenditures and assets. Confusing? You bet! Here’s a list to help you.
- DbK retirement plan. This type of qualified retirement plan, which has yet to be utilized because of lack of IRS guidance, combines a pension with a contributory element (like a 401(k) plan). It is limited to companies with 500 or fewer employees.
- Disabled access credit. A tax credit of 50% of costs between $250 and $10,250 (maximum credit of $5,000) can be claimed for the cost of making a company more accessible to the disabled. The company can have no more than 30 full-time employees during the preceding year; there is also a gross receipts (revenue) test explained later.
- Employer wage differential credit for activated reservists. Employers with fewer than 50 employees can claim a tax credit for continuing to pay wages to employees called to active duty.
- Retirement plan start-up credit. A tax credit of up to $500 for the administrative costs of starting a qualified retirement plan can be claimed by a company with no more than 100 employees who have compensation over $5,000 in the preceding year.
- Savings incentive match plans for employees (SIMPLE) plans. These are retirement plans to which employees and employers both contribute. SIMPLE plans can be used by a business with 100 or fewer employees who received compensation over $5,000 in the preceding year.
- Simple cafeteria plans. Cafeteria plans are used to offer a menu of fringe benefits to employees. A simple version, which avoids the need for testing for discrimination, can be used for a company with 100 or fewer employees on business days during either of the two preceding years.
- Small employer health insurance credit. A credit of up to 35% of premiums paid in 2013 by employers can be claimed by a company with no more than 25 full-time equivalent employees (FTEs) with average wages of less than $50,000. The full credit applies for up to 10 FTEs; a reduced credit is allowed for 11 to 25 FTEs.
- Accrual method exception for small inventory-based businesses. While, most firms with inventory must use the accrual method of accounting to report their income and expenses, “small” firms can use the cash method. Small firms are those with average annual gross receipts of no more than $10 million in the three prior years (fewer years if the company hasn’t been in business for three years).
- Bad debts deduction. Small businesses performing services in certain fields (e.g., law, accounting) can write off bad debts on the non-accrual experience method, which means they don’t accrue service-related income expected to be uncollectible. This accounting rule applies only to companies with average annual gross receipts for the three prior years of no more than $5 million.
- Corporate AMT exemption. Small C corporations are exempt from the alternative minimum tax. This exemption applies only to those with average annual gross receipts of no more than $7 million ($5 million for the first three-year period).
- Disabled access credit. The credit described earlier can be claimed by a company with gross receipts of no more than $1 million in the preceding year (see the employee definition above).
- Late filing penalties for certain information returns. Businesses must report certain payments to the IRS by set dates. Reduced penalties for the failure to meet this obligation apply to companies with average annual gross receipts of no more than $5 million for a three-year period.
- UNICAP rules. These rules impact when expenses can be deducted. There is a small reseller exception for property acquired for resale; the exception applies to companies with average annual gross receipts of no more than $10 million for a three-year period. There is a simplified dollar value last-in, first out (LIFO) method for applying the UNICAP rules; the method applies only to companies with average annual gross receipts of no more than $5 million for a three-year period.
- First-year expensing. The cost of machinery and equipment can be deducted upfront rather than depreciated over a number of years if total annual investments in these assets do not exceed a dollar limit. For 2013, the full expensing deduction of up to $500,000 can be claimed as long as purchases don’t exceed $2 million. This dollar limit is reduced for excess purchases; no deduction applies once purchases for the year exceed $2.5 million.
- Shifting the burden of proof to the IRS. Whether a worker is an employee or an independent contractor or whether compensation is “reasonable” can be shifted to the IRS for a business with a net worth not in excess of $7 million.
- Small business stock. Gain on the sale of qualified small business stock in certain C corporations acquired after September 27, 2010, and before January 1, 2014, is not taxable if the stock is held more than five years (a partial break applies for stock acquired before or after these dates). The stock is “qualified” only if the corporation’s gross assets do not exceed $50 million when the stock is issued and immediately thereafter.
There are many tax breaks exclusively for small companies. Knowing whether you are eligible for a particular one depends on the tax law’s definition. If you’re unsure, talk with your tax advisor.
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7 Quick Tips for Better Business Communications
It used to be that most of the business world understood that simple, clear business writing was a powerful skill. We needed to communicate, explain and convince people in memos, proposals, plans and reports. Simple sentences worked better. Clear and concise worked better.
Maybe I care more about writing than the next person because I’ve spent so much of my career dealing with business plans: writing them for years, then getting them funded and, more recently, reading them. I read more than 100 business plans a year. They’re shorter than they used to be, for sure; but the qualities that make something readable—including good writing, spelling and grammar, are as important as ever.
But writing has been diluted, for sure, with the forward march of email, websites—and now Facebook and Twitter and text and rushed communications with two thumbs while trying not to bonk the other people sharing the sidewalk. So writing, spelling and grammar seem out of style; but still, some writing comes up all the time. The business plan is just the most obvious example. Beyond that:
- In email
- In blog posts
- In comments to blog posts
- In social media updates
- Plans, memos, reports
- In text or sms messages? I’m not sure about that one. What do you think? The obvious abbreviations are so tempting ... but does that have to spread into the rest of our writing. I forgive “idk” in a text but not in a memo (it stands for I don’t know).
So here are some of my suggestions for minding the writing without ignoring that it’s relegated to many kinds of in-between and compromise contexts, like text and on smartphones. And with business plans too, of course.
- Use short simple sentences. Use periods more often to end sentences. Separate your points into shorter sentences.
- Get to the point fast. Put the headline first—then explain. People skim emails and memos. Don’t bury the main point in a dumpling-like mass of explanations.
- Stop using apostrophes to show plural. Apostrophes are for contraction (don’t) or possession (Ralph’s or Mary’s opinion). Stop putting an apostrophe every time you have a plural noun. It’s balls and bats, not ball’s and bat’s.
- Then and than have different meanings. Then is time and sequence, as in first we do this and then that. Than is comparison, like more than and less than.
- Simple words are better. Avoid jargon and buzzwords. Don’t incentivize people when you can motivate or encourage them instead. Use things; don’t utilize them. The phrase “outside the box” is inside the box. Are we really all engaging all the time?
- Although it does take an extra effort to hold down two fingers at once or add a keystroke to capitalize words, it looks better. Capitalize your words like you learned in second grade.
- Don’t write long emails with multiple topics and points. Make each email have its own topic and subject line. Your recipients will get your point faster and better than way.
While it’s apparently true that we live in a world of video, and books and print media are in a decline, technology has also put writing into almost every obscure corner and extra little piece of time in our lives. Not just for business plans. In all cases, let’s do it well.
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Sole Proprietorship—Is this Popular Business Structure Right for You?
If you’re starting a business, you may be wondering how to legally structure it. Should you incorporate, become an LLC, or operate as a sole proprietor?
Over 70 percent of U.S. businesses are owned and operated by sole proprietors or sole traders.
But what does being a sole proprietor involve and is it the right structure for your small business? Here’s what you need to know about the advantages and disadvantages of being a sole proprietor.
What is a Sole Proprietor?
A sole proprietorship is basically an unincorporated business owned and run by one individual (no partners are involved), with no distinction between the business and its owner. As a sole proprietor, you are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.
A sole proprietorship is the easiest business structure to form (you only need to get a license or permit and register your business with your local government) (hence its popularity). It is also a simple structure to maintain with few forms and little business administration needed. Many freelancers, consultants and independent contractors operate as sole proprietors for ease and convenience.
SBA’s Sole Proprietor Guide offers more details about the process of starting a business as a sole proprietor and the steps you’ll need to follow.
What Are the Advantages of Being a Sole Proprietor?
As mentioned above, the ease of starting and operating a sole proprietorship is one of the reasons this business structure is hugely popular. Also, sole proprietors are relatively unencumbered by government regulations and can run their business autonomously without the need to report to partners, shareholders and board members. You control all your own decisions and the money you make.
Sole proprietors have the benefit of reporting tax on any income earned through their own personal tax return, rather than filing separately as a business – which can save time and hassle. You also won’t need to prepare a balance sheet for your company.
Sole proprietors also have a lot of flexibility when it comes to their careers. You can easily close your business without too much bureaucracy, or work on a full or part-time basis for another employer without worrying about answering to anyone about your own business affairs (aside from your clients, of course) – another reason this is a popular option for freelancers, many of whom hold down two jobs!
What About the Disadvantages?
One of the reasons many new business owners seek to incorporate instead of being a sole proprietor is the liability issue.
You may not think now that you need protection against liability, but what if a client holds you in breach of contract or threatens to sue you? Can you afford to put your personal assets at risk to satisfy any claims against your business? As a sole proprietor, there is no legal distinction between the owner and the business. This means that you are personally liable for all business losses and debts. Business incorporation can limit your liability as a business owner, essentially putting your personal assets off limits if anyone brings a judgment against you. So sole proprietors are inherently exposed to risk that incorporating as a corporation or limited liability company can help alleviate.
Other disadvantages can potentially impact your bottom line and growth plans. For example, banks typically require that businesses incorporate before they’ll lend them money, leaving you to rely on savings, credit cards and other sources of capital. Then there’s the perception issue – being an incorporated business can give you a more professional appearance to potential clients.
Finally, because you aren’t required to produce financial statements or a balance sheet, your financial controls might not be as sharp as the need to be and this could be detrimental in the long term.
The Bottom Line
If you are starting a business, operating it as a sole proprietor can afford many benefits:
- Ease of start-up (from an administrative perspective)
- Lower start-up costs (incorporation involves forms, fees and sometimes legal advice)
- Quicker and simpler tax preparation
- Autonomy of business decisions and control of profits
Then again, it’s important to consider the downsides.
- Liability – If you run a business that could expose you to risk in the form of debt or lawsuits (e.g., industries such as a child care or a food service business), then operating as a sole proprietor could leave your personal assets vulnerable.
- Raising capital can be hard
- Lack of financial controls
- Lack of professionalism
If you still have questions, there are a number of counseling resources in your community that can help, including Small Business Development Centers. Find them here.
For a complete guide to your available business structure options and how to set them up refer to SBA’s Choosing a Business Structure guide.
If you think incorporation might be right for your small business, check out this recent blog: Top 10 Questions about Small Business Incorporation Answered.
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Calling Small Business Exporters- Tell Us Your Story for a Chance to Win Cash Prizes
Are you a small business exporter? Do you sell bowling balls to Bangladesh? Or dish towels to Delhi? Maybe you send laser technology to Lisbon? If you have a success story to tell about the goods or services you sell around the world and have used a federal government program or assistance to get there, the U.S. Small Business Administration and Visa Inc. (NYSE: V) are cosponsoring the “2013 SBA-Visa Export Video Contest” where your company will have the chance to win up to $10,000 just by sharing your story with other small business exporters on http://exportvideo.challenge.gov/.
Participating in the contest is easy and free: Among other requirements, the company must be a small business as determined by SBA’s size standards, have successfully completed at least one export transaction and used at least one federal program or service to support such transaction. In order to participate, contestants must register and create an account with www.challenge.gov, the contest portal that also will serve as repository for the video entries. For information on SBA size standards for small businesses, visit http://www.sba.gov/content/summary-size-standards-industry.
The videos must meet several criteria that include duration no longer than three minutes and a high-resolution format. Content must be educational, not promotional. A panel of judges chosen by SBA will select five videos to be awarded cash prizes directly by Visa, Inc.
The prizes are:
- First place - $10,000
- Second place - $8,000
- Third place - $6,000
- Fourth place - $4,000
- Fifth place - $2,000
The contest is open from Feb. 25 to April 22 to small businesses in the U.S. and its territories, including the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam. Winners will be announced no later than May 31, 2013.
For more information, submission procedures and requirements please visit http://exportvideo.challenge.gov/.
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Former SBA Official
SBA Small Business Learning Center: Training, Tools and Answers via Your Desktop
Starting or growing a business? Owning a small business can be a fulfilling endeavor, but as you probably already know or are just finding out – it requires that you wear many hats. This of course leaves you with little time to take a deep dive into the many aspects of starting and growing a business. Instead, many business owners turn to search engines for answers when questions come up.
But what if you had access to a small business classroom that provided informed, accurate and always-available access to the advice and guidance you need?
Welcome to the SBA Small Business Learning Center.
Online Training and Tools for Small Business Owners
Launched in late 2012, the SBA Small Business Learning Center is an online portal that hosts a variety of self-paced online training courses, quick videos, web chats and more to help small business owners explore and learn about the many aspects of business ownership.
Content is filtered by topic, so no matter the stage of your business, or the kind of insight you need, you can quickly get answers.
For example, if you’re wondering how SBA loan programs work or just need a primer in accounting or small business taxes, check out these self-paced online financing courses and short videos. Or explore tips from the pros in these archived SBA Web Chats.
Other topics covered include starting a business as a young entrepreneur, an introduction to franchising, taking your business global with exporting, marketing 101, selling to the U.S. government, and much more.
Get More Help Offline
And if you can’t find the training or advice that you need, use the “Get Local Assistance” interactive map to find one of many small business counseling, assistance and mentoring organizations in your community.
Browse around, and let us know what you think about the SBA Small Business Learning Center!
A Guide to SBA Loan Programs - Just one of the self-paced online courses available in the new SBA Learning Center
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4 Factors to Consider When Deciding About Financing
If you are looking to make any major improvements in your business, whether it is a second location, new equipment, or an additional product line, you most likely need business financing. But getting financing for your business can be intimidating. Despite this economic downturn, banks are still lending. However, the way banks are lending to small businesses has changed pretty significantly and they are more cautious about where the money is going, especially when considering a loan to new businesses with no track record. As a result, you may need to consider a number of options to get the money you need, whether you are looking to launch a business or need additional financing for an existing enterprise. However, before you look into alternative financing, talk to a SCORE mentor about the various factors that influence which financing option will suit your needs:
According to the U.S. Small Business Administration, factors financing institutions take into consideration include determining the specific uses for which you need the money, whether your business is seasonal or cyclical, and whether you plan to expand. Work with your SCORE mentor to create a written business plan that will help you clarify your financing needs.
Types of Financing
Common types of financing include bank loans, SBA loans, crowdfunding, receiving funds from a venture capitalist (in which you take on investors in exchange for providing them with an ownership stake), or borrowing from friends and family members. If your small business is engaged in scientific research and development (R&D), you may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs. You may need to solicit funds from all of these sources to obtain the amount of money you need. You could also tap into personal savings or even take out a second mortgage on your home.
Pros and Cons
Each type of financing offers certain benefits and pitfalls. For example, grant money, venture capital funds and your own money do not have to be repaid, so you won't incur additional debt. If you borrow from family and friends, you may receive a low interest rate as well as flexibility in payment terms. If you borrow from a bank, you may have more stability, avoid using your own money, as well as avoiding the potential tough situation of approaching people you know to ask for money.
If you borrow from friends and family, you need to consider what would happen to your relationship if your business fails and you cannot repay them. If you default on a bank loan, you could lose your business and need to file bankruptcy. If you work with venture capitalists, you may need to relinquish some control of your operation.
Whatever method of financing you decide to pursue, your ability to sell your business concept for starting or growing successfully will increase the potential of obtaining financing when asking for money. Factors that will help you sell your idea include a solid business plan, the ability to demonstrate the need for your business in the marketplace, and any successful business experience you had in the past. Talk to your SCORE mentor today to get started with your financing planning needs.
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How to Break Through 5 Common Barriers to Small Business Growth
Trying to grow your business, but thwarted at every turn by problems within your own organization or by external factors such as broken supply chains?
For many businesses, the biggest obstacle to growth isn’t poor sales, financing or tough competition; it’s often the business itself!
So, if you find yourself operationally ill prepared to grow, what can you do about it? Here are some strategies that can help you break through some of the common barriers to growth that many small businesses experience.
1. Watch the indicators for growth
Before you embark on any growth strategy, step back and take a look at some key business indicators to help you decide whether you are actually ready for growth!
Are you successful in a current market and want to open a new location? Are you about to clinch a big sales deal? Is your sales pipeline full? Is product development success opening the door to new opportunities?
These are all important indicators that will drive growth and should be constantly monitored to ensure you are able to effectively prepare for that growth. Study your pipeline, conversion rates and market trends in dashboard form every day.
2. Keep one eye on your competition, but always think big picture
Underpinning any growth strategy should be a deep knowledge of where you stand against your competition. A simple SWOT analysis, reviewed quarterly, can help you determine where you fit in relation to your competitors and areas of opportunity to exploit your strengths and their weaknesses. Likewise, it will give you a good view of any threats to your growth and guide you towards developing a plan to fix or compensate for these.
Then take a look at your market – your potential customers. Do some market analysis to find out how your customers view your business and what they see in the competition that would make them buy from them instead of you.
Look for ways to differentiate yourself – how does your competition position itself in the marketplace relative to your business? How does your business/product/service contrast with theirs? Why would a customer buy from you and not them? The answers to these questions will help you see your strengths, exploit market opportunities, and execute a tactical plan to get ahead in areas that you don’t measure up to the competition.
3. Always be recruiting talent
Setting the stage for growth has to involve superstar employees. Even if you can’t afford to right now – keep looking for talent and bring them on part-time or on a contract or hourly basis. Another option that can help guide your growth is to work with an organization like SCORE. SCORE provides free business mentoring services and can partner you with someone with business management experience to help you steer your business on a path to growth. Whether you need help across the entire business, or are looking for help with functions such as business planning or marketing, SCORE can pair you with a mentor for free.
Get more tips in 6 Options for Staffing your Growing Business.
4. Constantly assess risk
If there’s one thing being a manager or business owner teaches us all, it’s that we must always anticipate and manage risk. Look ahead—what variables could occur that might compromise or damage your growth plans? These could be supply chain issues, hiring and training problems, competitive activity, cash flow, or patent infringements. Include these in your SWOT analysis and develop a plan to prevent or manage any issues.
5. The bottom line
If there’s a common thread here, it’s the importance of being prepared. This, of course, means having a plan. Never embark on a growth strategy without a plan. It doesn’t have to be encyclopedic, but it should contain the key elements discussed above. Break your plan down into chunks – have one strategic plan that contains your market findings and helps inform where you are and where you want to be. Then assemble smaller plans. For example, have a day-to-day operations plan, a hiring plan and a marketing plan, each of which lay out the tactics for using your business resources to accomplish your strategy.
If you don’t have a business plan, check out SBA’s Build your Business Plan Tool. This step-by-step online tool guides you through the process of creating an actionable plan.
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