COVID-19 relief options and additional resources
LEARN MORE Close

Not All Suppliers Report A Company’s Positive Payment History

By Marco Carbajo, Guest Blogger
Published: April 12, 2013

Getting approved for a line of credit with a supplier is simply an opportunity for you to start building your company’s creditworthiness.  The key to establishing positive credit is to make regular purchases using your vendor credit lines, and then paying invoices on or ahead of the due date.

If you do not make regular purchases, then there is no way for you to establish any kind of payment history. So it is vitally important that you carefully select the suppliers with whom you apply for credit. Make sure that your business can use the products and services it offers to develop and grow your company.

This will allow your company to purchase the supplies it needs to operate without having to pay any money up front, enabling you to conserve cash while deferring payments for 30 or 60 days depending on terms.

It’s important to note that a supplier will only report an account once it begins issuing invoices to a company. Your account will show up on your company credit file based on several factors including invoice due date, reporting cycle and day of the month.

There are two key factors to remember:

  1. Not all suppliers report to a business credit reporting agency.
  2. Not every supplier reports on the same day, week, or month for that matter.

Now the good news is you have the ability to add positive trade references to one business credit agency, Dun and Bradstreet—but it does come at a cost. However, the first step is to apply for a DUNS number.

For the suppliers that do report, it’s important to note that each supplier has its own specific day to batch and submit payment data to a business credit reporting agency.

In addition, once payment data is submitted to a credit agency, then there is a short delay before it actually populates on a company’s credit report. So don’t expect to see a first payment showing up on a business credit report one or two days after paying an invoice.

For example, let’s say a company has a $5k line of vendor credit with a supplier that sells electronics with net 30 day terms. The company decides to purchase $1,500 in computer equipment using a credit line on January 11.

The company receives an invoice for $1,500 with a due date of February 10 (net 30 days). The company submits its payment to the supplier and it processes the payment on February 9. The supplier records the transaction, but its reporting date is on the 1st of every month. Since the invoice was paid after the 1st of February, the payment transaction will not be sent to the credit agency until March 1st, which is the next reporting date for that supplier.

So don’t get discouraged if you do not see a positive payment showing up on your company credit report right away. You can always inquire with the supplier, but it is always best to give it some time.

Another thing to remember is to which business credit agency the supplier subscribes. Not all suppliers report to all three agencies. Some suppliers report solely to Dun and Bradstreet, while others may report to Corporate Experian and Small Business Equifax.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.

4 Tips for Getting Large Retailers to Stock Your Products

By Caron_Beesley, Contributor
Published: April 11, 2013 Updated: September 16, 2016

Have you ever wondered how you can get your businesses’ products stocked on the shelves of a large retailer?

It does happen, and it’s refreshing to see. For example, my local supermarket makes a point of stocking locally grown produce front and center as soon as you walk in the store, while other stores make a point of promoting the latest gadgets from small business inventors.

The truth is, retail buyers are always on the lookout for products that will appeal to their customers and complement their brand, but how do you find them and pitch your wares? Here are four tips!

1. Do Your Research – Find out What Retailers Are Looking For

Before you contact a buyer or work on your pitch, do your due diligence and ask yourself a few questions. What’s your niche? What retail stores represent a good fit for your brand (be objective about this one and put the buyer’s hat on for a moment)? Does your product complement the store’s existing product lines and add value to its image? What about your packaging – is it self-explanatory as to what your product is and does, does it stand out?

Certain buyers may be looking to stock merchandise from diverse vendors – local farmers, women- or veteran-owned businesses. Is this something you could take advantage of?

2. Get to Know the Buyers

You can often contact a buyer through a big retailer’s website; alternatively directories such as Chain Store Guide and The Salesman’s Guide include buyer listings across a wide breadth of industries. However, nothing beats making a direct in-person connection in the venues where buyers are on the lookout for new products. Trade shows and conferences (especially those sponsored by your target retailer), are a good place to start. Some larger retailers such as Walmart and Home Depot also host product review events and competitions where manufacturers get to pitch their wares directly to potential buyers.

3. Prepare Your Pitch

One of the most important considerations when preparing your pitch is not so much what your product is, but how it will complement the store’s existing product lines. You’ll also have to convince buyers that your product will sell (use market trends and your track history of online or smaller scale retail success to back-up your claims). Another important point to consider is the fact that you are a small business.  The buyer will want to know that you can scale to their needs and manage your supply chain.  Stress your qualities such as credibility, agility, or responsiveness. 

If you can, bring samples of your product and have enough on hand so that the buyer can hang onto them after your meeting.

4. Be Relentless and Ready!

It’s unlikely that one meeting will clinch a deal with a buyer, so be relentless in your follow-up. Likewise, be prepared to stand true to your business plan, if you think the retailer is selling your product cheap, step back and review your options. Other retailers may be more willing to give you the margins you need.

Look for ways to earn your buyer’s confidence, you need to demonstrate that you are ready to scale. Are there any areas you need to invest in before you make your pitch or sign on the dotted line. For example, investing in technology that will allow you to accept and process larger orders or better manage your inventory.

Check out these related blogs for more tips:

 

 

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

5 Tips for Writing a Basic (and Un-Daunting) Marketing Plan

By Caron_Beesley, Contributor
Published: April 4, 2013 Updated: September 9, 2016

Have you ever written a marketing plan for your business? Do you keep putting off the task?

Whether you are launching a new product or promoting your latest offer, a marketing plan is worth taking the time to complete. Why?

As a small business owner, it’s likely that you not only own the task of coming up with a strategic plan, but also the act of executing it (writing email copy, hosting events, etc.). If this is you, then a plan can help you direct your day-to-day activities, guide your approach, and ensure you are making the most of the available resources.

The good news is that a marketing plan needn’t be encyclopedic or overly time consuming to prepare. In fact, in my experience, the simpler the plan, the more effective it can be (bog yourself down in too many details and you’ll quickly lose focus). A simple plan also gives you the flexibility to quickly adjust your tactics if you need to.

Here are five tips for developing a basic marketing plan that can be applied to discrete activities such as a product launch or promotional campaigns.

1. Build a Precise Picture of Your Ideal Customer

Identifying your target market is the first step of any marketing plan and it’s essential that you are as precise as possible. If not, you run the risk of a scatter-gun approach that will dilute your message and drain your budget. Instead, think about your target market in terms of specifics – who in your current customer base is the right fit for your product or service? What have they purchased from you before? Do their purchasing patterns suggest they might be a good target? Are they the kind of customer you even enjoy doing business with? What about reaching new customers outside your customer base?

The more specific you can be, the easier it will be to craft the right message and tactics for reaching that audience. 

2. What do you Want to Accomplish?

Again, be specific. Stating that you want to increase brand awareness about your business/product isn’t really specific enough. Think about what actions you want them to take after they are made aware of your campaign or promotional activity. Do you want them to register for an event, take advantage of a special offer, upgrade an existing product, invest in training, or request a quote? There may be multiple actions that you want them to take. For example, a webinar could be positioned as a free training opportunity and your initial action goal would be to get your target market to register for the event. However, once the event is over, you may then want to circle back with attendees and see if they are interested in receiving more information (such as a one-on-one product demo or quote for a product or service).  

These actions will drive your messaging and delivery methods.

3. How Can You Reach your Targets?

Now that you know who you want to reach and what actions you want them to take, you’ll need to identify the best ways to reach them and with what message. To do this, consider the following about your customers and prospects:

  • What associations do they belong to?
  • Are they active on social media?
  • Do they subscribe to your email marketing?
  • What print or online media do they read?
  • What are their pain points (how can you help address these)?
  • What types of messages or call to actions have they responded to in the past?
  • Why should they care about what you have to offer (what’s in it for them / in what ways will they benefit)?

4. Work Out Your Budget

When it comes to planning your budget, either start with a figure that you can afford, or determine your tactics, price them out (my preferred method) and prioritize where necessary.  You can always adjust your budget as you go, so be flexible. For tips on calculating your marketing budget read: How to Set a Marketing Budget that Fits your Business Goals and Provides a High Return on Investment.

5. Plan Your Tactics

Your tactics are the actions you need to take to help you reach your target market and accomplish your goals. These include specifics such as direct mail, email marketing, print/radio/online advertising, blogs, social media, case studies, webinars, events, sponsorships and so on.

Never rely on one tactic alone. An integrated approach that delivers a consistent message across multiple, targeted platforms is the best way to ensure you reach your target market and get the most out of your budget. Refer back to who it is you are trying to reach, where they are, and what you want them to do.

Above all, be flexible. Track results and adjust your tactics and messaging as you go. I’ve seen many campaigns start out with one message and close out with a completely different one. Try out new email subject lines, test social media messages, and keep a close eye on what works and what doesn’t.

Don’t forget a call to action – whether it’s taking advantage of a coupon, downloading a white paper, or attending an event. Use a unique code for each medium so that you can track where your leads are coming from. This blog offers some tips: 8 Ways to Strengthen Your Email Marketing Offers and Calls to Action.

Lastly, don’t forget to include internal elements to our plan such as sales trainings or briefings about your campaign or new product offering.

Good luck! For more help, contact your local Small Business Development Center. They offer training, counseling and support for business owners in all areas of business planning and operation.

Additional Resources

For more marketing tips, check out SBA’s extensive archive of marketing-related blogs.

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Include Family In Your Franchise Decision

By FranchiseKing, Guest Blogger
Published: April 3, 2013

If you’re going to do a serious search for a franchise this year, please don’t make the mistake of not involving family members. Would you like to know why? Read on.

 

A Big Decision

The decision to become the owner of a franchise business is a big one. It’s not to be taken lightly.

And, while there are several ways for you to lower your financial risk,* franchise ownership doesn’t come with any guarantees. (Neither does a job!)

Your family members really need to understand what you’re thinking about doing.

That’s because if you do end up finding a franchise that you feel you can be successful in, you’re going to want to be supported in your decision.

Does that make sense?

 

Get Them Involved Early

The best way to insure that you’ll get the support you want and need is to get family members involved in the franchise exploration process at the beginning of it. Trust me, you’re not going to want to “surprise” any of them with an announcement like, “I just found a great franchise opportunity, and I really want to buy it!” (Especially if they had no idea that you were even looking at franchises.)

Now, you don’t have to have them involved in every little detail while you’re doing your search for a franchise, but you should definitely set a few goals together, including your budget. (Especially when it comes to your spouse, partner, or significant other.) You need to decide how much you’re willing to invest in a franchise-together. You should also discuss small business loan options.

 

The Decision-Maker?

Do you consider yourself to be the boss of your household?

In other words, are you the one that’s in charge of all things financial in your house? Are you typically the one who makes the final decision with regards to The Money?

If so, the suggestions that I’ve made so far may be a bit troubling to you. 

In my role as a franchise advisor, my clients have included high-powered ex-CEO’s, and ex-Wall Street executives—people who are used to being in charge and getting their own way. Some of them, after hearing my “involve members of your family-especially spouses or significant others early” suggestion, have told me in no uncertain terms the following:

 “I don’t need to talk to them about this. I’m the one who makes the decisions in my house.”

Really? Not in my experience. Nine times out of ten, in these situations, a family member appears on the scene—seemingly out of nowhere.

And the questions start: “Why didn’t you consult me on this?” is one of the most popular ones. It’s usually followed by, “How much is this going to cost us?” Coming in third on the hit parade is, “Are you kidding me? I thought that you were looking for a job!”

The bottom line: Major decisions are usually family decisions.

If you involve them in your decision to become the owner of a franchise (and early on), you’ll be in a better position to make a yes or no decision on the franchise of your dreams.

You’ve been warned.

*Non US Government link 

 

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.

US Global Business Solutions: US Government Solutions for Small Business Exporters

Published: April 2, 2013 Updated: April 2, 2013

When the President challenged the nation to double exports in five years, U.S. government agencies started working more closely together to make it easier for businesses to access foreign market opportunities and for lenders to provide the financing that exporters need.

Under a new, multi-agency initiative, several federal agencies are collaborating to combine their trade financing programs and export marketing services into a one-stop platform:  U.S. Global Business Solutions, a new approach for assessing and meeting the business needs of small business exporters.  US-GBS will be launched at the 6th Annual SBA Export Lenders’ Roundtable, April 3, in Washington, D.C. 

This new initiative will:

  • Reduce complexity for both exporters and lenders by packaging trade financing and marketing options that seamlessly meet exporter needs;
  • Simplify marketing materials, while increasing lender training to meet the needs of financial institutions; and,
  • Streamline access to international experts, financial products, and business services for exporters.

As businesses of all sizes increasingly recognize the opportunities for selling products and services abroad, lenders will be remain a critical partner in their expansion plans.   Now is a great time to learn how to continue to support your customers as they expand their sales into global markets, while mitigating some of the real, and perceived, risk with US government guarantees and insurance.

 If you are unable to attend the SBA’s Export Lenders Roundtable, please contact the SBA representative in your local U.S. Export Assistance Center.  For a directory, go to:  http://www.sba.gov/content/us-exports-assistance-centers. This program is open to lenders only.  Please send inquires and RSVPs to: Danielle.Wilsey@sba.gov.

Date: Wednesday, April 3, 2013

Time: 8:30-1:00 p.m.

Location: Ronald Reagan Building and International Trade Center

13th St. and Pennsylvania Ave., NW

Washington, D.C.

(Federal Triangle Metro Station)

About the Author:

What Home-Office Deductions Can Your Small Business Claim and How?

By Caron_Beesley, Contributor
Published: April 1, 2013 Updated: August 25, 2016

More than half of all U.S. businesses are based out of an owner’s home, and with this year’s tax season deadlines fast approaching, you may be wondering if your business qualifies for the deduction.

To help business owners understand more about this important deduction, SBA sat down with IRS tax expert, Phyllis Grimes, about what is and what isn’t deductible. This interview is part of a series of short online videos hosted on SBA’s Small Business Learning Center, which offer tips and facts about all aspects of business financing.

Here’s what you need to know.

Evidence That Your Home is Your Principal Place of Business

In order to be eligible to claim the home office deduction, your home must be your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients or customers in your home in the normal course of your business—even though you also carry on business at another location—you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients or customers.

Distinguish Between Personal Home Expenses and Home-Based Business Expenses

To claim the home office deduction, an area of your home must also be used exclusively and regularly for business use. This is an important distinction, because both conditions must apply. For example, consider this scenario – a home-based attorney uses the den of his or her home to write legal briefs or prepare clients tax returns but the family also uses the den for recreation. So the den is not used exclusively in the attorney’s profession so he or she can’t claim a business deduction for its use.

If, however, you have a separate room or blocked off area that is identifiable as being used solely for business purposes, such as an office space or work area (and you use it “regularly”), then this would qualify you for the deduction.

(Note that if you regularly operate an in-home day care, the “exclusive” rule does not apply. Find more details on this exception here.)

What Expenses Can You Deduct?

If you meet all the criteria to claim the home-based business deduction, you’ll next need to understand how the IRS permits eligible business owners to claim ordinary and necessary expenses related to the business. Essentially, an ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business (in the case of a home business, an ordinary expense could be an installation fee for a business telephone line). A necessary expense is one that is appropriate for the business (such as the cost of your email marketing software). Deductible expenses might also include the business portion of real estate taxes, mortgage interest, rent, utility, insurance, depreciation, utilities, painting and repairs. Refer to IRS Form 8829 for a complete list.

How Much Can You Deduct?

Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities. To calculate this amount, you’ll need to calculate the total square footage of your home and then the total square footage of the space you use for your business. IRS Form 8829 also helps you figure out this calculation.

A common error is to deduct expenses for a portion of the home that is not regularly used or exclusively used for business. For example, the telephone service charge, including taxes, for the first phone line into a home is a nondeductible personal expense. However, charges for business long-distance phone calls on that line—and the cost of a second line used exclusively for business—are deductible business expenses.

How to File Your Home Office Deduction Claim

Use Schedule C Form 1040 to report income and expenses and the deductible amount for the business use of your home (which you calculate using Form 8829).

Additional Information

For worksheets and additional information on computing the allowable home-office deduction, check out these resources offered by the IRS and refer to Publication 587, Business Use of Your Home for a full explanation of tax deductions.

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Need Exporting Assistance? Small Business Development Centers Can Help

Published: March 29, 2013 Updated: July 6, 2016

 

Have you considered the potential for selling your products or services outside the U.S.?  Your local Small Business Development Center (SBDC), an SBA resource partner, can help you get started.

The many international trade services offered by individual SBDCs vary, but most often include:

  • Product/Service Readiness:  Determine if your products or services are suitable for export, and what product adaptations may be required.
  • Export Readiness: Learn if your company meets the key export readiness factors or, what you need to do to become ready.
  • Market Research: Review possible trade barriers, political and economic risks and competitors, in order to identify and rank the best foreign market opportunities.
  • Documentation/Compliance: Learn how to comply with export regulations, product classification, in-country governmental requirements and the effective use of freight forwarders.
  • Trade Finance: Learn how the trade finance programs of the SBA, the Export-Import Bank of the U.S. and the Overseas Private Investment Corporation may help you.
  •  Partner Identification: Get connected to potential sales with U.S. Commercial Service services such as Gold Key or International Partner Search. SBDCs can also advise you of individual state trade assistance programs and incentives.
  • Specialized Areas: Some SBDCs offer assistance in specialized areas such as product certification (i.e. CE Mark, CCC, etc.).

If you think you have a product or service with foreign trade potential, or are already exporting and want to grow those sales, contact your local SBDC for assistance.

About the Author:

How to Finance Your Export Sales

Published: March 28, 2013 Updated: July 25, 2016

As I covered in my pervious blog,  How to Get Paid for Your Export Sales, each of the four international methods of payments which include cash-in-advance, letter-of-credit, documentary collections and open account can have an impact on your company’s financing needs when filling overseas orders. Those needs can be broken down into either pre-shipment or post-shipment working capital.

Pre-Shipment:  If you receive a purchase order from a foreign buyer, you will have a pre-shipment working capital need (the funds to hire labor, buy supplies and materials, etc., to produce the order):

  • unless you require cash-in-advance before you start production; and/or
  • you receive progress payments throughout the production cycle.

If your payment terms are simply cash-in-advance prior to shipment, or even a letter-of-credit that is payable upon shipment, you will still need to fund the entire pre-shipment production cycle. Will your order be produced in 15 or 30 days, or is it a customized piece of equipment that takes nine months to build? The pre-shipment working capital need could be substantial depending on the size of the order and the production cycle. 

Post-Shipment:  If you don’t get paid upon shipment, you will need to carry accounts receivable on your books. Maybe you have enough working capital to produce a short production cycle order, but you have to offer 90-day terms to the buyer in order to secure the contract.  You will need to keep your business moving during that time, which will require working capital to support the foreign A/R. 

You might be able to factor the accounts receivable, or you could insure them through a private insurance company or the Export-Import Bank of the U.S. which will move the risk from what may be an unknown foreign buyer to the U.S. government or larger insurer, allowing you to borrow against the insured overseas A/R.

How can you finance your pre-shipment and/or post-shipment export working capital needs?  The SBA has three loan programs that may work for you:

  • Export Express has a $500,000 maximum and is ideal for new exporters or those with relatively small orders;
  • Export Working Capital Program has a $5,000,000 maximum which may only be used to finance export transactions—from purchase order to collections; and
  • CAPlines has a $5,000,000 maximum which is a revolving line of credit that can support both domestic A/R and insured foreign A/R. 

Visit www.sba.gov/oit for a list of lenders active in these programs.  You also will find a listing for SBA’s trade finance specialists located in 19 U.S. Export Assistance Centers across the country who can provide additional information on export financing questions.

About the Author:

Spiffing Up Your Place with the Help of Uncle Sam

By BarbaraWeltman, Guest Blogger
Published: March 28, 2013

There is little doubt that customers respond positively to the attractiveness of your workplace. In addition, it’s been *found that being in a good environment helps to motivate employees and adds to productivity. Improvements to your workspace may be modest or substantial, depending on your needs and your pocketbook. Either way, Uncle Sam can help defray the costs with tax write-offs. Here’s what you need to know.

Deducting repairs

A new coat of paint is a low-cost upgrade for your facilities. Other repairs may be more costly. Fortunately, the cost of paint and other repairs, whatever amount it may be, is fully deductible.

However, the cost of capital improvements has a different tax treatment than the cost of repairs, as you’ll see in a moment. The challenge in some projects is distinguishing between repairs, which are fully deductible now, and capital improvements, which are subject to special write-off rules. As a general rule, repairs to restore or maintain property, in contrast to capital improvements that materially add to the value of property, substantially prolong its life, or adapt it to a new or different use.  (Pending rules discussed later may impact the definition of capital improvements.)

A determination of whether a cost is an ordinary repair or a capital improvement is based on the facts and circumstances. The following chart can help you distinguish repairs from improvements:

Repair

Capital Improvement

Fix a leaky roof

Replace a roof

Fix a dripping faucet

Replace old lead pipe with new copper pipe

Apply a new coat of epoxy sealer to a concrete floor

Install a new concrete floor

Fill a pothole

Repave

As a practical matter, you must make a business decision on whether you need to make a capital improvement or can remedy a situation with a simple repair. Don’t let tax results dictate your business decision.

Writing off capital improvements

Usually, the cost of capital improvements to realty must be treated as if you’d acquired a piece of realty; it is a separate asset. Since buildings have a 39-year recovery period for depreciation, it can take many, many years to write-off the cost of capital improvements. The good news: The write-offs for capital improvements can be claimed whether you pay cash or finance the project.

Special rules for leasehold, restaurant, and retail improvements. If your property fits into any of these categories, you can deduct improvements more rapidly than for improvements to other commercial realty. Leasehold improvements are improvements to the interior of a commercial building that was placed in service at least three years prior to the improvements. The improvements can be made by the lessor or lessee, but they do not include elevators or escalators, the enlargement of the building, the internal framework of the building, or any structural component of a common area. For restaurant improvements, more than half of the square footage of the property must be devoted to the preparation of meals and seating for on-premises food and beverage consumption. Retail improvements mean improvements to the interior of retail space open to the public.

The special tax rules for leasehold, restaurant, and retail improvements are:

  • First-year expensing (Sec. 179 deduction). You can write off up to $250,000 of the cost of improvements in the year the improvements are made. This deduction, however, only applies to improvements completed before January 1, 2014 (unless Congress extends the law).
  • 50% bonus depreciation. You can deduct half the cost of the qualified improvements if you place them in service this year. Like the expensing deduction, bonus depreciation is set to end this year unless Congress extends it.
  • 15-year recovery period. Instead of deducting the cost of improvements over 39 years, you can deduct them over 15 years. Again, the 15-year recovery period will end on December 31, 2013, unless Congress extends it.

These special rules can be combined to permit a write-off of all or most of your costs. For example, if improvements to the space you lease cost $400,000, you can expense $250,000, use 50% bonus depreciation for $75,000, and depreciate the remaining $75,000 of cost over 15 years.

New regulations

Proposed and temporary regulations from the IRS use new terminology (such as “betterment”) for distinguishing repairs from capital improvements. Unfortunately, they do not contain any “bright-line” rules, so you – as well as the IRS – will have to continue relying on facts and circumstances.

In addition to new terminology, the proposed and temporary regulations also adopt a favorable rule that lets you fully deduct the unrecovered costs of certain building components, such as HVAC and roofing, when they are replaced. For example, you own an office building and installed a new air conditioning system eight years ago. You’re still depreciating the cost, but now have to replace the system with a new one. You can deduct the remaining cost of the old one (the portion of the cost you had not yet depreciated), along with depreciation for the new one.

These regulations had been set to be effective starting in 2012, but the effective date has been postponed until January 1, 2014. However, they can be used for 2012 and 2013 returns at a taxpayer’s election. Whether they alter the classification of costs you incur for your facilities is difficult to say; work with a knowledgeable tax advisor for this purpose.

Resources

Some IRS publications can help you assess whether your expenditures for changing the look or functions of your workplace are repairs or improvements:

Conclusion

Before you begin any project to change your workplace, determine the tax impact of your actions. Upfront deductions can help defray the costs and allow you to expand the scope of your project without a net cost to you.

 

*Denotes a non-government website

About the Author:

BarbaraWeltman
Barbara Weltman

Guest Blogger

Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BigIdeas4SB or at www.BigIdeasforSmallBusiness.com

7 Tips for a Starting a Successful Customer Loyalty Program

By Caron_Beesley, Contributor
Published: March 28, 2013

Got a loyalty card in your wallet?

Small business loyalty programs are a great way of showing customers that they are valued. They encourage return business and help you gather information about your customer demographic. Loyalty programs can also boost your marketing efforts. According to Experian CheetahMail, email campaigns that target loyalty program members are more successful – generating higher open rates, transaction levels and revenue. Even emails that invite prospects to join loyalty programs outperform regular email blasts.

Of course, getting your loyalty program right is critical. Industry experts believe the future of loyalty programs lies in mobile technology. But not everyone has a smartphone or the right app loaded to take advantage of your program. The key is creating a program that is accessible to all and easy to use.

Here are seven tips for starting a small business loyalty program:

The Easy Way to Go – A Loyalty Punch Card

If you’re new to loyalty programs and want a low-tech option, the simple punch card formula is a good place to start. Just design and print out a card and offer a free gift after a certain number of purchases have been made. There are a few obvious drawbacks to this method – you can’t track consumer demographics and the program is 100 percent reliant on customers’ carrying that card around with them in their wallet. That’s if they even remember it’s there!

Start an Opt-In Program

Another easy option is to set-up a simple “sign-up for offers/rewards” program. Ask customers to share their email addresses and add them to an opt-in email list – you can do this online or at the point of sale. This form of email sign-up eases the application process and spares your customer the hassle of having them download an app or share heaps of personal information. In exchange, you’ll promise to send them regular communications and special offers only available to loyalty members. As mentioned above, email campaigns that target loyalty members can be a great source of revenue – and, of course, are trackable.

Consider a Premium Loyalty Program

If you want to reward customers who spend the most, develop a program that limits who may be eligible to qualify. Use your customer relationship management software to track higher value purchases over time and invite customers who meet certain thresholds to join. Alternatively, simply invite high-spending consumers to sign up for your program at the point of sale.

Offer Branded Loyalty Membership Cards

There are a number of commercially available loyalty card services that let you design branded cards, track and manage customer behavior such as number of customer visits to your store, average spend and more. Many also let you send targeted email and text campaigns to members. You can even add on other services such as branded gift cards.

Add a Digital Component

While not all your customers will be digitally savvy, chances are many are and it’s increasingly important that you cater to the growing mobile loyalty trend. There are many apps that small businesses can tap into for free or for a fee. If your business already uses a mobile payment platform, many of these are now integrating loyalty programs into their offerings. Explore your options and look for services that offer social media integration – making it easy for customers to share your awesomeness with their friends and even earn points for likes, shares and online reviews.

Choose Your Incentives Carefully

Reward loyalty with some class. Freebies don’t always appeal to all and they can even de-value your services. For small businesses, customer loyalty is founded first and foremost on great service, a personal greeting, and the tried and tested quality of your products or services. So think of ways you can make your incentives and rewards as unique as your business. Experiential rewards are always popular. For example, a hair salon could offer a monthly workshop that offers free makeover tips to loyal customers. These experiences add value to your customers’ lives, build community, help your business stand out and give customers reason to keep coming back.

Communicate Regularly With Your Members

Treat your loyalty members royally. Segment them out in your email and direct marketing efforts and communicate with them often. Share news of upcoming loyalty incentives or events and don’t forget birthdays – offer something unique to members or opt-in email subscribers during their birthday month.

What loyalty program strategies have worked for your small business? Leave a comment below.

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Pages

Subscribe to The U.S. Small Business Administration | SBA.gov RSS