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How to Use Social Media to Do a Better Job of Customer Service

By Caron_Beesley, Contributor
Published: November 15, 2012 Updated: November 15, 2012

Ever emailed or called a company’s customer service department and got no response or a poor response to your comments? Did you instead post a rant on Twitter or Facebook until you got a response? You’re not alone – more and more customers are expecting brands to step up and respond to these posts.

According to a recent report by Gartner, by 2014, organizations that refuse to communicate with customers by social media will face the same level of wrath as those that ignore today's basic demand that they respond to emails and phone calls. “The dissatisfaction stemming from failure to respond via social channels can lead to up to a 15 percent increase in churn rate for existing customers,” said Carol Rozwell, VP and analyst at Gartner.

The message is clear: You need to use social media not just as a marketing tool but as a systematic part of your customer service model.  Here’s how:

Align Social Media with All Levels of the Organization

For small businesses, customer service is so much more than one person or one team; it reaches across the entire business. From sales to marketing, billing to product development – these are all touch points for your customer, and it’s essential that each of these uses social media to ensure your business is customer-centric and taking care of online reputation management.

Try to involve whoever manages your social media presence in important weekly meetings so they are informed about all elements of the business while they serve as the voice of your social media followers.

Change Your Social Media Paradigm

Social media represents the human face, voice and ears of your business, but the fact is there are more brands that ignore comments on Facebook and Twitter than there are brands that respond. This is why using it as a customer service tool often requires a change in paradigm – and commitment. Here are some things to consider:

  • Recognize that your social media efforts are front and center to your efforts to retain and nurture prospects and customers.
  • Be strategic about social media and how you engage with fans. Don’t treat it as an aside to be taken advantage of when you need to promote your latest sale or event.
  • Monitor social media regularly throughout the day. Very few businesses actually do this.
  • Endeavor to respond to issues the same day, even if you simply thank your customer and inform them that you are looking into the issue. If you don’t, things can quickly snowball in full view of an audience of hundreds or thousands, including potential customers.

Set Rules that Define Your Response to Customer Service Issues

If you haven’t done so already, set some rules: who manages your social media voice and how should they should respond to negative comments?  Lay out a clear path for escalation and resolution.  This will ensure you or your social media leader is prepared to respond promptly when issues arise. This is especially true if you outsource this function or hire a junior level person to manage your social media.

Work out ahead of time a method for categorizing comments and develop a hierarchy for responding. For example, how will you handle a general comment or suggestion from a follower, versus how will you handle a genuine complaint? Does it require an immediate response? Escalation? And don’t forget to monitor some of the more serious posts further.

When to Respond

Being proactive about social media doesn’t mean you have to respond to everything. Just don’t overlook anything! Consider the following:

  • Not all comments are relevant or even solvable – For example, some folks who post public rants on your Facebook page may not actually want anything from you. They just need to get it off their chest. Such comments are often best ignored; you don’t want to add fuel to the fire.
  • Address legitimate complaints – If a customer has a specific and legitimate complaint (say, for example, the quality of a service or product didn’t live up to expectations), you need to address the issue publicly, promptly and in the same media it was made. Try to move the conversation offline, only after you’ve posted your initial response.
  • Look for positives in a negative comment – For example, if someone makes a complaint but also suggests ways you can do things better next time, acknowledge this, let them know you will share the suggestion internally – and follow through on this pledge.

For more tips on how to respond to criticism, including how to apologize, check out my earlier blog: 7 Tips for Dealing With Criticism of Your Business on Social Media.

Learn From Your Interactions

I’ve already mentioned the importance of bringing your social media lead to the business-wide conference table, but it’s also important to keep a record of customer service interactions. Again, this is part of the new paradigm. Think of it as the equivalent of monitoring a call and using it for training purposes. Share these conversations across the organization, and act on the critique and feedback.

 

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

If Your Employees Drive for Your Business, be Aware of Rules about Cell Phone Use

By Caron_Beesley, Contributor
Published: November 14, 2012 Updated: November 14, 2012

Do your employees drive commercial motor vehicles (CMVs) as part of your business operations? If they do, it’s important that you and they know about stringent regulations that went into effect nationwide in early 2012, restricting the use of handheld cellular phones while driving.

The U.S. Department of Transportation ruling restricts CMV drivers from the following:

  • Making a call while holding a cell phone
  • Dialing a cell phone using more than one button

It would have banned reaching for a cell phone in an unsafe manner, but after pushback from a variety of industry associations, the DOT amended the rule to permit drivers to reach for a compliant mobile telephone (i.e., a hands-free phone), provided the device is within the driver's reach while he or she is in the normal seated position, with the seat belt fastened. 

The rule also bans employers from requiring or allowing a CMV driver to use a handheld cell phone while operating a vehicle. CMV drivers must also be prepared and equipped with hands-free cell phone options before they drive a vehicle. The fine is steep – up to $2,750 for drivers and up to $11,000 for employers.

The ruling is based on research conducted by the DOT that put the odds of being involved in a safety-critical event are three times greater when the driver is reaching for an object than when the driver is not reaching for an object. If the driver is dialing a cell phone, the odds of being involved in a safety-critical event rise to six times greater than when the driver is not dialing a cell phone.

Other potential liabilities employers may face

Clearly, employers who have commercial motor vehicle drivers in their workforce need to be more aware than ever of potential liabilities they face for the actions of their employees behind the wheel. To boost awareness, the National Federation of Independent Business (NFIB) has put together a useful list of rules employers need to remember if they have employees who drive any vehicle for work:

  • Business owners are generally responsible for injuries to third parties that are caused by employees acting within the scope of their employment – whether the employee is driving a company-owned vehicle or a personal vehicle (i.e. if an employer authorized the employee to do it or it was deemed necessary in order for the employee to carry out the job).
  • Employers may be held liable for allowing unlicensed, incompetent or unqualified employees to drive a company car. Incompetency can include driving under the influence of alcohol or reckless driving.

The NFIB goes on to suggest that employers should be aware of federal laws that govern CMV safety and should encourage safe driving habits, including:

  • Ban all employees from texting or talking on the phone while driving for work.
  • Encourage employees to pull over before using a cell phone in a car.
  • Limit or altogether end any work-related driving by employees with poor driving records.
  • Update your company’s policy and any employee handbooks to reflect the most recent regulations in your area regarding distracted driving.

Related Resources

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

6 Things You Need to Know About Your Tax Responsibilities as an LLC

By Caron_Beesley, Contributor
Published: November 13, 2012 Updated: December 29, 2017

Do you operate a single “owner” or member limited liability company (LLC)? Thinking of forming a multi-member LLC? Either way, you’re likely to have questions about how your business is, or will be, taxed.

Here’s what you need to know.

The Basics of Tax Law for LLCs

First, it’s important to understand how an LLC is structured according to tax law. Unlike a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses "pass through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership. The business does not pay federal income taxes, although some states do apply an annual tax to LLCs.

Depending on the number of members in your LLC, the IRS will treat your business like a sole proprietorship or partnership. However, certain LLCs are automatically classified and taxed as corporations by federal tax law. LLCs not automatically classified as corporations can choose their business entity classification. To do so, an LLC must file Form 8832. Refer to this guide from the IRS for guidelines about how to classify an LLC.

Income Taxes for Single Member LLCs

If you operate single member LLC, then the IRS will treat your business as a sole proprietorship (unless you elect to be a corporation) – meaning that the LLC itself does not pay taxes. Instead, you report all profits and losses of the LLC on your personal income tax return on (Schedule C) and file it with your 1040 tax return.

Get forms and read more from the IRS about single member LLC tax responsibilities. This page also explains when you should file using your social security number and when you should use your Employer Identification Number (EIN).

Income Taxes for Multi-Member LLCs

If your business has multiple owners, the IRS will treat your business as a partnership, unless you elect to be taxed as a corporation. Again, the business doesn’t pay taxes, but each owner is taxed on their share of the profits via their personal tax returns (attaching Schedule E). How a multi-member LLC shares profits is defined in the LLC Operating Agreement. Although not required by law in most states, this agreement structures your LLCs financial decisions, including how profits and losses are distributed.

You’ll also need to file Form 1065 (as all partnerships do) with the IRS. This form helps the IRS determine that each member is reporting income correctly. The LLC also must give each partner a Schedule K-1, showing each member’s share of partnership income, credits and deductions. Each member then reports this on their individual Form 1040 and Schedule E. If the LLC is a corporation, it should file Form 1120.

Read more from the IRS about an LLC filing as a corporation or partnership.

If your LLC splits profits and losses in a manner that doesn’t match each member’s percentage interests, you’ll need to request a “special allocation” from the IRS – something you ought to consult about with an accountant or tax lawyer.

Paying Estimated Taxes

LLC owners and members are self-employed and therefore aren’t subject to tax withholding, so each member must pay estimated taxes and self-employment taxes (Medicare and Social Security) quarterly to the IRS and their state tax office. 

If you have a multi-member LLC with an owner not actively involved in the LLC (i.e. they invested in the business but don’t participate either through providing services or making management decisions), then that owner may be exempt from paying self-employment taxes. Your accountant or tax lawyer can tell you if your business meets the specific requirements of this exemption.

Sales Tax

Sales tax is a point-of-purchase tax imposed by state and local governments. The purchaser pays it and, as a small business owner, you assess it, collect it and pass it on to the appropriate authorities within the prescribed time. Rates and laws vary from state to state, which often leads to confusion, especially if you sell to customers in more than one state. 

State Taxes

If you operate an LLC, you’ll typically pay taxes to your state in the same way you do to the IRS – through your individual returns. Some states charge an LLC tax on income earned by that LLC, on top of the members’ income tax paid. Other states charge an annual LLC fee, unrelated to income, also known as a franchise tax, registration fee, or renewal fee. It’s a good idea to check the tax and business law in your state before you form an LLC.

Useful Resources

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

SBA Learning Center

Schedule C Profit or Loss from Business

Learn from IRS experts about what is a Schedule C, Profit or Loss from Business, and who needs to file it.

The 5 Biggest Myths About Social Media in Marketing

By smallbiztrends, Guest Blogger
Published: November 8, 2012

 

Social media, as with anything new, is sometimes misunderstood.  People either overinflate or underestimate the value and importance of it. And that’s not the only things they get wrong.  Often they misunderstand what it takes to incorporate social media into your marketing. Here are 5 of the biggest social media myths about using social media in marketing:

Myth #1 - Social Media is Not Real Marketing

If you’re still thinking that social media is a fad and will eventually fade away, I have news for you: I hope you aren’t holding your breath.

It’s true that social media sites come and go. At one time, MySpace was the hot darling, as was Friendster, Orkut and others whose names are slowly becoming mere memories or are struggling to try to reinvent themselves. The big social sites today for small businesses include LinkedIn, Facebook, Twitter and one day soon, Google+.

But even if the social media sites we are using today die, the behavior of using social media is not going away.

The 2012 Local Search Study found that the number of people using social media to look for local business information has increased 67 percent. There are now 15% using social media to find information about local businesses. That may not sound like a lot, but if there are 100,000 potential buyers within a 50-mile radius of your business, and 15% are turning to Twitter or Facebook, that’s 15,000. Not a meaningless number.

Myth #2 – Social Media Is Fine for Teenagers, but Not My Serious Business Customers

According to a February 2012 Pew Internet study, 66% of online adults are using social media sites. As of August:

  • 12% of online adults use Pinterest
  • 12% of online adults use Instagram
  • 66% use Facebook
  • 20% use LinkedIn
  • 16% use Twitter

Facebook now has one billion users.

So unless your customers are holed up in the backwoods somewhere without access to the Internet, chances are those percentages are reflected in your target market.

We have seen the consumerization of technology, and that includes how we use the Web. People increasingly start using technology (such as smartphones) and websites for their personal lives.  Then once it becomes a comfortable habit, it bleeds over into their work lives. Social media is just one more example of this.

Myth # 3: The Best Person to Run a Social Media Campaign is a Teenager or Young Person

The news is replete with stories of big brands that run into social media trouble because someone makes a post on social media using poor judgment – either unprofessional sounding, or insulting someone or some group. Or it can be a simple mistake, such as posting a tweet using a company Twitter handle instead of a personal handle, because of having both accounts in a central tweeting tool such as Hootsuite. It’s all too easy to make a mistake like that. 

Not only that, just because someone is “young” doesn’t mean he or she knows anything about marketing. And if you’re using social media as part of your marketing mix, wouldn’t you want someone who understands marketing at the helm of that effort? Wouldn’t you want them to have a grasp on marketing strategy, understand something about executing marketing campaigns, know how to use and interpret analytical data to measure the effectiveness of various efforts, know how to deal with customer complaints, and so on?

Always keep the end goal of your staffing in mind – and remember that if you’re using social media for marketing, putting your best marketing foot forward is what you want to have confidence your staff can do.

Myth #4:  People Will Say Negative Things About Us

You know what? If people are going to say bad things about your brand, or your products or services, then they have plenty of places to do that online. They don’t need your Facebook Page to do that – they have their own Facebook Profile with their own followers they can spout off to.

Now, I will say that if you have a Facebook Page or a Google+ Page for your business, there is a chance that disgruntled customers may come over and say something negative on it. But wouldn’t you rather know that immediately and have the opportunity to address it and turn things around? 

Rather than fearing social media and plunging your head into the sand, you’d be better off developing strategies to deal with complaints effectively. And train your employees.

According to the Harris Interactive/Right Now Customer Experience Impact Report, 50% of consumers give companies a week to respond before they decide to stop doing business with them. You have a chance to save an unhappy customer and show others that you are responsive.  Or you can sit back and let unhappy people keep blasting you on their own venues. It’s up to you.

Myth # 5: Nobody Cares What We Think or Write About

One of the big questions by companies is, “What in the world do we write about on Twitter or our Facebook page?” It does take some work to develop a winning strategy. But don’t let a little hard work stop you. 

Don’t think about social media as a place to just send off an endless stream of mini-advertisements for your products and services. Nobody wants to read ads all the time. They want information; they want to connect. And yes, perhaps they want special discounts – but not a steady stream of “buy it now” type of message.

In fact, people do care about what your business and you have to say.

My advice is to step back and ask: how do we add value to our customers? When we’ve provided information in the past, what has resonated with them? What do they ask for when sales and customer service reps talk with them? If you don’t know, ask your sales team and your customer support team, because they will know.

Those are the 5 big myths we hear about.  Hat tip to Lisa Barone, one of the writers on my site, who put together an article on social media myths that I drew inspiration from for this article.  What myths do you see, or what questions do you have?

About the Author:

smallbiztrends
Anita Campbell

Guest Blogger

My name is Anita Campbell. I run online communities and information websites reaching over 6 million small business owners, stakeholders and entrepreneurs annually, including Small Business Trends, a daily publication about small business issues, and BizSugar.com, a small business social media site.

Sponsoring or Hosting an Event this Holiday Season? 6 Ways to Maximize Your Return

By Caron_Beesley, Contributor
Published: November 8, 2012

Autumn and the holidays are the high season for events, from holiday parties and private shopping events to turkey trots and fall festivals. It’s time to consider hosting or sponsoring an event this holiday season as a way to stand out from the crowd during this busy time. But how do you get the best return on your investment? Here are six tips:

1. Sponsor events that matter to your customers

If you sponsor an event this season, pick something that matters to your customers. Who attends the event? What are their interests? If they don’t care about what you’re selling, then you’re wasting your time. For example, my hometown hosted an end-of-summer kids’ fun run. The chief sponsor was a hugely successful local orthodontist business known for its great customer service, commitment to family values and a fun and informal, even jazzy, atmosphere. A kids’ fun run fit perfectly with its brand and aligned the business directly with its target market.

2. Choose events that create an experience that reflects positively on your business

If you are planning on sponsoring an event, whether it’s your local Little League tournament or your town’s annual community health drive, you need to have clear goals and you’ll want to partner with events that reflect positively on your brand. If people are having a good time, then it’s likely that experience will rub off on your business through association. Consider events with a good track record that will attract the kind of customers you’re targeting.

3. Pick events that are well run

This may go without saying, but it can be easily overlooked. If the event is badly run it will reflect directly on your business. Talk to other business owners who’ve participated in the event and target events that have a good track record of participation and success. Remember that quantity isn’t always better than quality – if the event doesn’t play to your brand, no matter how many people attend, your return on investment will suffer.

4. Understand sponsorship levels

Many events offer different levels of sponsorship. While it’s important to know exactly what you’re getting for your investment, be sure to select a sponsorship that plays to your strengths. For example, a gold sponsorship may come with all the frills but if you can’t scale or provide the right resources to take advantage of it, go for a lower sponsorship tier and up your own marketing efforts to raise awareness of your involvement.

5. Don’t just show up – engage

Think about ways to become an integral part of the event.  Align your tactics with the event’s goals. If all you can afford is logo placement, it might not be worth participating. Be creative, offer discounts to attendees, offer branded giveaways, get your logo on the event host’s giveaways (for example, branded water bottles) or host a contest or other experience that gets attendees interacting with your business.

Bring your employees along, too. Encourage them to get involved, both as staff and as participants. Whether it’s running in the turkey trot as a mascot for your business or bringing their kids for a photo opportunity with Santa Claus.

6. If you’re hosting a private event, invest in your VIPs

Private events are a great way to make your valued customers feel special. Whether you host a private in-store sale or an invitation-only holiday party for your loyal customers, you’ll get more from your investment with a little research and a plan of action. Here are a few tactics:

  • Offer customers the opportunity to bring a “plus one.” This will make them feel more comfortable and help you reach new buyers.
  • Do some customer research. Use your CRM tools, social media conversations, and email marketing responses to gauge what your VIPs are interested in or have purchased lately. This will arm you with conversation starters.
  • Use the event as an opportunity to refine your mailing lists and outreach efforts. Find out how your VIPs prefer to hear from you, whether it’s email or social media.
  • Send out thank you notes and follow-up with a special offer, just for your VIPs.

Have you hosted or sponsored any events lately? How did you ensure you got the best possible return on your investment? Leave a comment below.

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

Hurricane Sandy Update 2: SBA Standing Ready to Help Businesses, Homeowners and Renters Recover

By James Rivera, SBA Official
Published: November 7, 2012 Updated: August 18, 2015

Many business owners, homeowners, and renters along the East Coast are coming back to find physical damage to their buildings and property as a result of Hurricane Sandy.  In addition, thousands of businesses are dealing with the economic blow caused by power outages, damaged inventory, and lost profits from being closed down.

The Small Business Administration stands ready to help.

How does SBA help businesses, homeowners and renters recover? Three main ways:

1. Businesses and nonprofit organizations of any size can apply for a low-interest disaster loan of up to $2 million to repair or replace damaged real estate or inventory.

2. Small businesses and nonprofit organizations of any size can apply for Economic Injury Disaster Loans, also up to $2 million.  With all of the power outages and evacuations, we know that many small businesses made it through the storm, but they’ve lost significant amounts of business.  In many cases, these businesses will be eligible for EIDL loans to help cover their working capital needs, regardless of whether the business suffered property damage.

3. Finally, homeowners can apply for loans of up to $200,000 to repair damaged real estate.  Homeowners and renters can also apply to borrow up to $40,000 to repair or replace personal property damaged by the storm.  In addition, we can sometimes increase a loan by up to 20 percent to make structural improvements that lessen the risk of property damage by future disasters of the same kind.

Once the disaster declaration is made for your area, there are several ways to apply:

As of last night, more than 292,607 disaster survivors from Connecticut, New York and New Jersey have applied for federal disaster assistance, and more than $277 million in Individual Assistance has been approved. 

If you are a survivor, it’s important to take that the first step is to register with FEMA, by calling 1-800-621-FEMA or going online to www.disasterassistance.gov on your computer or mobile device.

Already, we have disaster recovery personnel conducting damage assessments and many more disaster reservists ready to mobilize.  In addition, business owners can get free help completing applications and creating plans to rebuild at our local Small Business Development Centers. To find the location nearest you, visit www.sba.gov/local-assistance.

Our commitment at SBA and throughout the Administration is that we will be there until we get the job done – and we will get it done right. For more about the government-wide response to Sandy, visit www.usa.gov/sandy.

Related

Superstorm Sandy Update: SBA Coordinating with Our Federal Partners

About the Author:

James Rivera
James Rivera

SBA Official

James Rivera was named Associate Administrator for SBA’s Office of Disaster Assistance in November 2009 after serving for several months as Acting Associate Administrator. In a typical year, his office approves about 20,000 loans totaling about $1 billion. This is the SBA’s sole direct lending program.

How Sweeping Changes to the U.S. Patent System Will Impact Your Small Business

By Caron_Beesley, Contributor
Published: November 7, 2012 Updated: September 21, 2016

If you hold patents, have patents pending or are thinking of filing a patent, then it’s time for you to get to know the details of the most significant reform of the U.S. patent system in more than a century.

On September 16, 2012, the Leahy-Smith America Invents Act (AIA) of 2011 was signed into law, signaling an historic overhaul of the patent system. According to the U.S. Patent and Trademark Office (USPTO), the provisions of the AIA will “spur innovation and economic growth by streamlining the patent application process and introducing new procedures to ensure patent quality.”

So what does this mean for small business owners to whom patents are valuable assets? Here’s what you need to know:

You and Your Competitors Can Now Give Input on Pending Patent Applications

For the first time in the history of U.S. patent law, third parties can now come forward and challenge patent applications. For example, if you know of someone who is trying to file a patent on a product that would interfere with your business, you now have an opportunity to provide information to the patent examiner to help them determine whether the innovation in the application is patentable. 

By introducing third party input into the examination process for the first time since the inception of our nation’s intellectual property system, we’re able to expand the scope of access to prior art in key areas like software patents,” said Undersecretary of Commerce for Intellectual Property and Director of the USPTO David Kappos in this press release.

To support this change, in October 2012 the USPTO launched a crowdsourcing tool – AskPatents – to solicit input on patent applications. If you are concerned about a particular patent, you can post questions and challenge patent applications online. USPTO patent examiners will take these comments into consideration when reviewing applications. Inventors can also check the site to see if their idea is patentable.

Resolving Patent Disputes Just Got a Whole Lot Easier

In the past, if you were to contest a patent or a competitor filed a patent dispute against your business, you could expect the process to involve costly legal fees and drawn-out litigation in district courts. Under the provisions of the AIA, however, the USPTO offers a “timely, cost-effective alternative to district court litigation for challenging the patentability of a claimed invention in an issued patent.” Under this provision, the USPTO handles post-grant reviews (for a fee), resolving disputes more quickly and saving small business owners the hassles of dragging a patent dispute through the courts. 

In a nutshell, these provisions “…establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs,” said USPTO’s David Kappos.

More to Come

Look for additional provisions to come from the AIA in March 2013, when the U.S. patent system moves from a first-to-invent to a first-inventor-to-file system. This will bring the U.S. in line with other nations and make it more important than ever for small businesses to consider filing a provisional patent application and engage a patent lawyer as soon as possible.

Read more about the new and upcoming changes on the USPTO website: Historic Patent Reform Implemented by U.S. Patent and Trademark Office.

Related Resources

 

 

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

Set Goals Before You Start Your Franchise Business Search

By FranchiseKing, Guest Blogger
Published: November 6, 2012 Updated: August 18, 2015

If you’re searching for the right franchise to buy, it’s important to set some goals. One reason that you’re going to want to have some specific goals set up is this: There are over 3,000 franchise opportunities to choose from! With that many choices, it’s way too easy to get lost and flounder around aimlessly, trying to find that perfect opportunity.

My aim is to make the franchise discovery process as seamless as possible. (Actually, it’s my goal.)

Goal #1- Budget

You need to decide how much you’re willing to write a check for. In other words, how much of your own money (before any business loans) are you willing to risk? For example, if you’re looking at a franchise that has a total cost of $200,000, how much of that $200,000 is going to come from the money you have on hand?

If you need help figuring out your finances, the SBA has 10 questions just for you. The goal here is to come up with a budget that you can live with.

Goal #2 - Time

Choosing, researching and buying a franchise can take a while. You need to come up with a time frame; otherwise your search for an opportunity to become your own boss may be never-ending. And before you say “Hold on, Joel; I’ll spend as much time as I need to find a franchise to buy. This is a major decision, and I want to be choosy,” hear me out.

I understand that you want to be careful. That’s what most of the articles I write here are designed to help you do. But if you go into your franchise search with no goals, in this case, no time-frame goal, you may end up in a never-ending circle of “looking.” And, looking…

In other words, having no time frame could mean making no decision. Six months from now, do you still want to be “looking?” Or, do you want to be “doing?”

Goal #3 - Use professionals

Make it your goal to use business professionals before you start searching for a franchise business opportunity. And yes, you’re going to have to invest some of your money to do this. Notice that I used the word “invest” instead of “spend.” That’s because using competent professionals is an investment in your future.

For example, most franchise agreements (contracts) are 10 years in length. That means that if you buy a franchise, you’re going to own it for 10 years. That’s a long time. And unless you’re an attorney, you’re going to discover that the legal documents that franchisors are required to send you (that you’ll be required to sign) are pretty complex.

There’s no reason to try to figure out the intricacies of these documents all by yourself. Hire a franchise attorney. They’re used to reading, and even writing, franchise documents. An accountant that’s familiar with small business-and small business taxation-should also be on your list of professionals to contact and hire.

Finally, there are several small business resources that are available at no-cost to you. Check out The Small Business Administration’s local resource page

If your goal is to someday become the owner of a franchise, have some goals set up before you start your search.

 

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.

6 Tips to Rein in Spending and Be a Lean Start-Up

By Caron_Beesley, Contributor
Published: November 5, 2012 Updated: September 29, 2016

The average cost of starting a business is $30,000, according to a 2009 study by the Kauffman Foundation. But whether your cash comes from savings or financing, watching how you spend your money is critical to the success of your venture. This means establishing boundaries and habits that ensure you spend your money wisely and operate as a lean start-up.

Here are six ways to rein in spending as you start and grow your business:

Work from Home, Co-Working Spaces or Serviced Office Space

This one may sound obvious, but not all new businesses need to jump into a commercial office lease right away. Setting up a home office is a low-cost alternative (and can save you tax dollars).  If you find you need a more social setting, consider a co-working space. These facilities are available in many cities and offer great opportunities for you to mingle with like-minded entrepreneurs. These workspaces are often also a lot cooler than any space a new start-up could ever afford. Talk to your local Small Business Development Center about co-working spaces in your area or hit up Google.

If you really do need your own office space, consider renting a serviced office or executive suite. Usually located in busy business districts, these premises are fully equipped and managed by a facility management firm. The rental agreements are often more flexible than commercial leases and give you the option of easily scaling up if you need to. Typically, a serviced office broker can help you locate the right space.

Buy Surplus and Barter

Save money by buying used equipment and office supplies. Check Craig’s List or eBay or buy government surplus equipment (a little-known but very cost-effective way to equip your business).

Bartering – exchanging goods and services directly with another party – is also an underutilized business practice among start-ups. Think about ways you could barter to reduce costs. For example, if you run a painting business and you need to purchase a business vehicle, could you barter a discounted price from the dealer in exchange for a new coat of paint in his showroom?  Read more about bartering from SBA guest blogger Barbara Weltman.

Don’t Hire Employees Until You Can Keep Them Busy

Offer interns work experience or hire independent contractors or even friends and family on an hourly or project basis to keep your costs low. If you need them to work alongside you in an office space, introduce a hot-desking policy so that your workers can share a space on a rotating basis without you needing to lease more space. For more tips, read “Chief Everything Officer” No More! – 6 Options for Staffing your Growing Business.

Be a Budget-Conscious Marketer

Invest in marketing and promotion thoughtfully and have a game plan. Think about low-cost tactics (you’ll find some here) and don’t overdo it on the glossy marketing materials – are they really necessary? If you and your staff have a clear elevator pitch and can engage and follow up enthusiastically with targeted prospects, there’s a good chance you’ll get a similar return on investment as the big guys with their glossy slicks and advertising budgets.

To help you stay on track, create a plan for the year or quarter and calendar it out. This way you’re more likely to follow through, stay on-budget and be less burdened by the need to come up with last minute marketing tactics. Don’t forget to monitor ROI to help you make informed decisions about what works and what doesn’t. This can be as simple as asking and tracking how customers heard about you.

Check these blogs for more tips:

Safeguard Your Personal Assets

If you think you are likely to incur debt during your start-up phase, consider forming a limited liability company (LLC) to protect your personal assets – your finances, car and house. Forming an LLC will ensure you are not personally liable for debts or judgments brought against your business as a result of a lawsuit.

Don’t Be Afraid to Negotiate

Whether it’s a contract with a supplier or a new customer, you should master the art of negotiation. Many new business owners skip this important best practice in their early years, but practicing negotiation early will help you establish relationships that save you money now and over the long haul. Just be sure not to nickel-and-dime the fair offers that come your way, and work to build relationships with these vendors through repeat business and referrals. Get more tips in 6 Tips for More Seamless and Fruitful Business Negotiations.

 

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

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