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SBA Extends Resources to Service-Disabled Veteran Entrepreneurs

By Barbara Carson, SBA Official
Published: November 1, 2016

This year, to support current and future service-disabled veteran entrepreneurs, the U.S. Small Business Administration (SBA) awarded three institutions and one business the Service-Disabled Veteran Entrepreneurship Training Program (SDVETP) grant. 

Offered by the SBA’s Office of Veterans Business Development, this grant assists the grantees in providing entrepreneurial training to service-disabled veterans looking to start or grow a business.  The awardees include:

Despite the challenges they faced, service-disabled veterans have pursued entrepreneurship and established successful companies nationwide.  Veterans like Dr. Ray Jardine, Staci Redmon, and Quiana Gainey--all of whom have used the resources available at Veterans Business Development Centers--have leveraged the skills and experience they gained in the military to accomplish their dreams of small business ownership.

The SBA looks forward to working with these outstanding awardees to create opportunities for service-disabled veterans and their families who want to start or grow a small business.

The SBA celebrates service-disabled veterans, as well as all-era veterans, service members, and military spouses during National Veterans Small Business Week, Oct. 31-Nov. 4. SBA district offices are hosting events nationwide that will connect current and future veteran business owners to entrepreneurship resources, while highlighting the accomplishments of veteran small business owners.

During National Veterans Small Business Week, and going forward, share your veteran small business success story or show your appreciation for veteran entrepreneurs by joining the conversation online using #MyVetBiz.

Celebrate National Veterans Small Business Week by visiting www.sba.gov/myvetbiz to learn more about events, courses and resources built to support your entrepreneurship success.

About the Author:

Barbara Carson
Barbara Carson

SBA Official

Barbara Carson is the Associate Administrator for the U.S. Small Business Administration Office of Veterans Business Development.

Can You Really Start a Business With Just a Smartphone? Yes!

By smallbiztrends, Guest Blogger
Published: September 22, 2016 Updated: September 22, 2016

It might seem a bit surprising it’s absolutely possible to start and run a business from your smartphone. At the very least, you can start a business and run the majority of it from a smartphone and without a computer, from your home.

Imagine for a moment that you don’t have a full-fledged computer, and you can’t afford expensive equipment.  That’s not so far fetched, because many budding entrepreneurs have minimal resources, yet most of us have a smartphone these days. 

Or perhaps you simply love the idea of being a mobile. You want the freedom that comes with running a business from your phone.

With the right idea and the right mobile tools, you can run a business without investing in tons of expensive equipment or tying your business to one specific location. Here are some tips for starting a business from your smartphone.

Start with a “phone friendly” business model

This part is essential. 

Certain types of businesses naturally lend themselves to being run on mobile devices, whereas others may present more challenges.

For instance, you probably cannot start a full-service web design firm with just a smartphone. You’d need a desktop computer and some professional software in order to really get the job done. However, if you want to develop mobile apps, there are tools available for you to do that on a mobile device.

Some other businesses that you could potentially start with just a smartphone include:

●Social media marketing


●Event planning

●mCommerce (mobile commerce)




●Personal shopping

Think also about business professionals who don’t require a computer or a place of business that customers visit, and require only a small amount of supplies and equipment. Types of businesses include handymen, maid service, gutter cleaning, home decorator, seamstress and car detailing to name a few.  These are still low cost businesses to start and run, and it’s not absolutely necessary they have a computer; instead they can rely on a smartphone. You can often get leads through home-services sites, online yellow pages, social media or word of mouth, directly to your phone­– and you can work out of your home or by visiting clients at their residences or places of business. Be sure to check on any licensing and other requirements in your locale.

Get the right apps

A smartphone is made more powerful and versatile by choosing and using the right software apps.

For some businesses you definitely will need add-on apps.  For example, to run an mCommerce business (the term “mCommerce” stands for a mobile based eCommerce business) you will need a commerce application that is mobile friendly, and a fulfillment or drop ship service.  And as a writer, it might be possible to type by hand on your smartphone’s on-screen keyboard, but wouldn’t it be so much better to use a voice transcription app of some kind?

Also, you will need basic apps necessary to run a business today.  For example, you might need a note taking app to keep track of information and organize tasks. You probably will need some kind of expense tracking, invoicing and/or accounting software app to keep your books straight and get paid.  And many businesses could use a cloud project management app, especially for businesses like event planning where organization skills are central to daily execution.

Master mobile communication

Communication with team members, customers or potential clients is an essential part of running any business, whether you have tons of expensive equipment or just a smartphone to work with.

You’re going to have to work around the limitations of a small keyboard.

Email is one of the most popular communication methods for mobile professionals. While a quick response with some abbreviations or spelling errors might be okay if you’re sending a quick message to your business partner, that’s unlikely to go over well with clients or customers. So if you’re communicating with clients or anyone who might expect a detailed response, you need to take the time to communicate in a way that’s satisfactory. And if you use a voice app to dictate responses, be sure to review the communications for accuracy before hitting “send.”

Consider storing canned responses so you don’t have to always fully type out long emails. 

You can also shore up your mobile communication strategy with apps like Google Hangouts, Skype or Apple FaceTime that let you communicate with others on other devices through voice, video or text chat. 

Get social

Being active on social media is an essential activity for a lot of businesses, regardless of whether or not they’re run on smartphones. But luckily for mobile business owners, most popular social platforms have comprehensive mobile apps to make this function fairly straightforward.

In fact, some social apps like Instagram and Snapchat are only really available for full use on mobile devices. So if you’re running a business on your smartphone, take full advantage of those social platforms by using them to showcase your social media strategy, branding and marketing from anywhere.

Back up important data

While smartphones can be great business tools, many aren’t known for having enough storage space. And what space you have may be eaten up by adding multiple apps.  If you’re running a business, you’re going to need a place to store all of your important documents, images, videos and other files.

For ample storage, add a large data card, but one flexible and secure option is to expand your data storage to a secure Cloud storage app.  That way, even if your smartphone drops into the river or is lost, your important business files will still be available and protected.

Some smartphone companies, including Apple and Samsung, have some cloud storage options that you can use for certain items. But you might also explore apps like Dropbox, OneDrive or Google Drive to store some of your important items in the cloud. With these services, you can also potentially share items with team members using other mobile devices. 

About the Author:

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.

8 Tips for Building Your Business Support Network

Published: August 31, 2016 Updated: September 8, 2016

Whether you are just branching out or gearing up for your umpteenth year in business, it never hurts to have a supportive network around you. Owning a business can not only be stressful but lonely. Not every family member or friend will understand or emphasize with your entrepreneurial journey. The key is to surround yourself with like-minded individuals who can offer advice, share opportunities and listen to your big ideas. Go beyond your typical inner circle and broaden your network of support.   

Consider the following strategies in either engaging with people you hope to connect with or need to re-engage to strengthen the support around you as well as to look for new business opportunities.

1. Alumni: Reconnect with college and/or high school staff and classmates by letting them what you are doing now and what you have accomplished or plan to accomplish in your business. There might be opportunities to collaborate with university or community college by speaking at the school, hiring seasonal workers or bidding on a project. 

If you have children or are engaged in your local community, this strategy applies to reaching out to the parents and teachers association (PTA) or a similar group within the school.

2. Chamber of Commerce: Join a local or state chapter and meet and support business leaders. Becoming an active member can expose you to other industries, opportunities and like-minded contacts.

3. SCORE: Supported by the SBA, SCORE is a nonprofit that helps entrepreneurs launch and grow their business. There are SCORE locations throughout the U.S. Between workshops and mentorship business owners can access professional support year-round.

4. Faith-based community: Your spiritual relationship with the members at your place of worship can have a positive effect on your personal life and business goals. Lean on faith-based organizations and activities that promote a healthy, productive lifestyle.

5. Extracurricular groups: It’s easy to forget that we form bonds with people we meet through leisure activities like sports leagues, volunteer and travel groups. When not working on or in your business, it’s essential to have a release.  

6. Former co-workers: If you’ve shared ideas or worked well with previous coworkers and staff, re-engage them to share your current business venture. Their skillset might be useful in your next idea or they can provide insight or contacts that you may have not consider.

7. Professional organizations or conferences: Depending on the nature of your work and business, there might be an established network of professionals who meet annually. Conferences and professional groups are instant support systems because they bring together small and large crowds of people who are similar. You can get a lot of inspiration and information by not only attending events but potentially sponsoring or speaking at one.

8. Online groups via forums, private Facebook groups or Slack communities: Thanks to the internet and social networking, interfacing with other business owners across the world is reality. Building connections that go beyond day-to-day business matters, can provide new ideas and a different perspective. 

About the Author:

Ijeoma S. Nwatu
Ijeoma S. Nwatu
Ijeoma S. Nwatu is a digital strategy and communications consultant. She is the Communications Manager for ColorComm, an organization that aims to uplift women of color in the communications field. When not working with clients, Ijeoma can be found speaking about career transitioning and social media marketing. Follow her on Twitter: @ijeomasnwatu.

How to Organize Your Small Business Startup Costs

Published: August 30, 2016

Launching or transitioning your side job into a full-time venture is stressful, demanding and exciting. One of the first steps is to consider your startup costs, or expenses in the beginning phases of entrepreneurship.

Startup costs will vary from industry to industry and may fluctuate during different seasons within any given year, but particularly the first few years of operation. Think about some of these questions:

Do I have enough capital or other resources to maintain a living? Do you have marketing materials? Should I invest in training programs or professional conferences? Is a lawyer necessary? What are my liabilities? Are my contracts protecting my business and assets? Should I hire staff or do all the work myself?

These type of questions and this line of thinking is good to establish early on to avoid messy financial situations. To keep yourself accountable and organized, place startup costs in categories included but not limited to the following list:

Legal/Paperwork– lawyer meetings and fees, business certificates and related documents

Taxes and any documents related to business-generated income as well as 1099 or similar forms from contracted workers and employees

Professional Development & Education like conferences, trainings, certificate programs

Transportation costs like traveling via train, plane, or cab as well as parking fees.

Equipment like office furniture, trucks, vans, real estate, phones, etc.

Marketing materials such as business cards, website(s), social media management, etc.

Miscellaneous items like business clothing, paying for lunch or dinner meetings, etc.

By listing groups of related business activities and then categorizing them, you can begin to shape the areas in which you need to prioritize your finances, save for a rainy day or completely eliminate or postpone costly expenditures.

For example, if your business focuses on providing creative services like web development, you will need to strategize on what resources you need upfront to complete the job as well as how to minimize expenses to keep more money in your pocket. Unforeseen situations like website or server crashes or hiring additional staff can hurt your income projections but preparing in advance with either a business savings account or itemizing potential expenses, that includes unexpected issues, can alleviate stress and help create efficient systems.

Instead of waiting to cover costs later or jumping into projects without thinking through the financial implications. Entrepreneurship is an ongoing learning experience and journey that involves successes and failures from the very start.“If you fail to plan, you are planning to fail”, a quote attributed to Benjamin Franklin that still rings particularly true for small business owners.

About the Author:

Ijeoma S. Nwatu
Ijeoma S. Nwatu
Ijeoma S. Nwatu is a digital strategy and communications consultant. She is the Communications Manager for ColorComm, an organization that aims to uplift women of color in the communications field. When not working with clients, Ijeoma can be found speaking about career transitioning and social media marketing. Follow her on Twitter: @ijeomasnwatu.

Summer Reading for the Business Minded

Published: July 29, 2016 Updated: July 29, 2016

Whether you are on a much needed vacation or in an effort to spur inspiration, the summer months provide an opportunity to reflect and re-engage. From starting a home-based business to handling taxes, these top SBA blog posts will give you options to rethink, reimagine and perhaps recommit yourself to your business needs and goals.

7 Inspiring Home Business Ideas for Stay-at-Home Moms or Dads

Being a parent is a full-time job but if you carve out time and some office space, you can use your parenting skills, network or other professional resources to launch a venture from kitchen.

How to Change Your Business Name – Legal and Regulatory Steps Explained

If you have set up shop for some time but recognize a shift in your business or industry, then perhaps you will need a new business name. Make sure to do it the right way!

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

Establishing a limited liability corporation is a popular choice for small business owners and entrepreneurs. With that in mind, understand the financial and tax implications of an LLC. Consider seeking professional advice to cover your bases.

Three Popular Start-Up Financing Options 

How to Estimate the Cost of Starting a Business from Scratch

Depending on the type of business or industry, starting a new business can be costly. Explore different financing options beforehand as well as determine upfront expenses.

How Do I Find an EIN?

If you have a checklist of items to take care of as you launch your business, securing an EIN should be near the top.

Use the summertime to unwind and catch up on the numerous resources that SBA.gov has to offer new and experienced business owners.


About the Author:

Ijeoma S. Nwatu
Ijeoma S. Nwatu
Ijeoma S. Nwatu is a digital strategy and communications consultant. She is the Communications Manager for ColorComm, an organization that aims to uplift women of color in the communications field. When not working with clients, Ijeoma can be found speaking about career transitioning and social media marketing. Follow her on Twitter: @ijeomasnwatu.

Email Marketing Basics for Small Business

Published: July 14, 2016

Email marketing is just one of many ways to engage customers and ultimately lead them to purchase a product or service. Building and maintaining a healthy email list is important in learning more about your customer base and how they respond to your business, as well as generating potential new business. If your business has not explored nor maximized the possibilities of email marketing, read more about how to leverage your existing and future contacts. If you are a small business owner looking to try a different tactic or introduce something new, why not use a change in season to test new ideas.

Get permission

First and foremost, your email marketing campaign or listserv should have the option to opt-out of emails. Subscribers may have their reason for removal from your list and to capture their explanation, add a comment section before they officially remove themselves. By having permission to be in the electronic inboxes of your customers, you can better target content and offerings to be the people who want to remain on your list. If you want to incentivize your email list or a special campaign, consider adding a discount code, flash sale or customer appreciation message.

Test and then test again

Once you focus on the subscribers who remain on your list, regardless of how many subscribers, there is an opportunity to experiment with different type of sales copy, promotions, visuals, etc. A simple way to test subject lines or a specific merchandise is to A/B test a call-to-action (CTA), time of day, or even the email’s layout. Send two emails to similar groups within your email list but hold a variable for testing. Make sure to have predetermined goals and review the analytics of open and click through rates of hyperlinks, especially those tied to your website.

Incorporate seasonal trends

If weather or the time of year affects your sales or potential new business, tailor email marketing accordingly. For example, if you manage a summer camp for teens, then you may target different groups to include school staff, parents, and community officials to inform them of your offerings, cost and availability. A common example of seasonal emails is small businesses and big brands using holidays like Thanksgiving and Valentine’s Day to generate sales and customer interest about their products and store specials.

Integrate email marketing as part of an entire plan

A small business may not have a lot of marketing resources but to maximize your efforts, it’s important that email marketing and subsequent campaigns are connected to other business goals and marketing objectives. Think about social media, advertising, events, SEO, and other strategies that can work in tandem with your email marketing.

Email marketing can have many layers and may require knowledgeable staff or additional resources. Starting with the basics can help small businesses take advantage being present in their customers’ inboxes. Don’t lose sight of the chance to engage them, delight them and to make a sale.


CAN-SPAM Act: A Compliance Guide for Busines

About the Author:

Ijeoma S. Nwatu
Ijeoma S. Nwatu
Ijeoma S. Nwatu is a digital strategy and communications consultant. She is the Communications Manager for ColorComm, an organization that aims to uplift women of color in the communications field. When not working with clients, Ijeoma can be found speaking about career transitioning and social media marketing. Follow her on Twitter: @ijeomasnwatu.

Are You Keeping Up with Your Business Cybersecurity Needs?

By bridgetwpollack, Guest Blogger
Published: July 7, 2016 Updated: July 7, 2016

The increased connectivity provided by the internet has vastly changed the way we do business. But while most of the effects are for the better — ease of information exchange, ecommerce capabilities and customer service come to mind — there are still negative aspects small business owners should know about.

Cybercrime is one of the biggest threats businesses of all sizes face. More than 75 percent of data breaches target small and medium-sized businesses which can cause major havoc for your business operations. Sixty percent of small businesses affected by cybercrime will close within six months of the breach, according to a study by McAfee.

Here are a few tips for protecting your business from cybercrime.

Protect Your Business

First and foremost: Create and maintain a secure network for your business operations. A password may seem second nature for log-on, but do you have a firewall? Only twenty percent of small businesses have network security encryption. Contact your internet service provider to check on your security options, and find out where your network protection may be falling short.

Next, talk with your employees about keeping your business safe. They should create strong passwords for work-related accounts, and avoid completing personal tasks on company computers to reduce vulnerability.

Resist the urge to provide your Wi-Fi password to customers or visitors; if you wish to offer Wi-Fi to visitors, create a second network for guest use.

Finally, encourage your staff to backup data regularly, either to a cloud service, to a backup hard drive or both. Consider scheduling a regular backup day each week to get employees in the habit.

Protect Your Customers

Once you’ve taken steps to protect your business from cybercrime, it’s time to extend that protection to your customers. For the most part, your attention to cybersecurity to protect your business will flow over to your customers as well. But even the most web-savvy customers may need reassurance.

Be sure to communicate your online safety policies and measures to your customers especially if you’re offering ecommerce services. Be open with customers who may have questions about the security of their orders or personal information, and welcome discussion.

Don’t Let Your Small Business Get Complacent

One of the toughest parts of avoiding cybercrime is keeping up with the changing landscape of how we do business online. By keeping up with business news, you’ll help yourself stay aware of potential threats to your cybersecurity system.

Not sure if you’re doing enough — or the right things — to protect your small business? Get in touch with a SCORE mentor who can help you review your practices.

About the Author:

Bridget Weston Pollack

Guest Blogger

Bridget Weston Pollack is the Vice President of Marketing and Communications at the SCORE Association. She is responsible for all branding, marketing, PR, and communication efforts. She focuses on implementing marketing plans and strategies to facilitate the growth of SCORE’s mentoring and trainings services. She collaborates with SCORE volunteers and develops SCORE’s online marketing strategy.

What is An EIN and Why Is It Important?

Published: June 15, 2016

One of the key responsibilities for many new businesses or businesses that are restructuring is obtaining an Employer Identification Number, or EIN, from the IRS.

An EIN is a unique nine-digit number that identifies your business for tax purposes. It’s similar to a Social Security number but is meant for business related items only.

As a business owner, you’ll need an EIN to open a business bank account, apply for business licenses and file your tax returns. It’s helpful to apply for one as soon as you start planning your business. This will ensure there are no delays in getting the appropriate licenses or financing that you may need to operate.

Who needs an EIN?

An EIN is needed by any business that retains employees. However, non-employers are also required to obtain one if they operate as a corporation or partnership.

Not sure whether you need an EIN? Review this guide from the IRS. If you answer yes to any of the questions in the list, you need to apply for an EIN.

As your business grows, be sure to visit the IRS website and its resources for a complete list of who needs an EIN.

How to apply for an EIN

The simplest way to apply for your EIN is online via the IRS EIN Assistant. As soon as your application is complete and validated, you’ll be issued an EIN. There is no charge for this service.

You can also apply by fax or mail. If your business is incorporated outside of the United States, you cannot apply for an EIN but you can call 267-941-1099, 6:00 a.m. to 11:00 p.m. (ET) Monday through Friday. Read more about How to Apply for an EIN and How Long Will it Take to Get an EIN?

Securing an EIN is a necessary step to establishing your business and will ultimately help in keeping your regulatory, legal and financial matters in order. 

About the Author:

Ijeoma S. Nwatu
Ijeoma S. Nwatu
Ijeoma S. Nwatu is a digital strategy and communications consultant. She is the Communications Manager for ColorComm, an organization that aims to uplift women of color in the communications field. When not working with clients, Ijeoma can be found speaking about career transitioning and social media marketing. Follow her on Twitter: @ijeomasnwatu.

5 Ways to Establish Credit for Your Business

By Marco Carbajo, Guest Blogger
Published: June 9, 2016

A creditworthy business is defined as a company that is considered suitable to receive credit because of a positive history of paying money back. For business owners it’s essential to not only maintain a favorable personal credit rating; it’s equally important in building and maintaining a strong business credit rating as well. “Just as your personal credit has a big impact on your financial health, your business credit can help you get competitive business loan rates and terms from potential suppliers,” says Marc Kirshbaum, president of Experian's Business Information Solutions group.

Credit ratings play an important role in our everyday lives. It impacts how much credit or funding we will receive, the rate of interest we’ll pay and what the terms of repayment will be. When it comes to owning a business, a creditworthy company takes on a whole new meaning. To be considered suitable to obtain credit, a company needs to show that it can properly manage its financial obligations by having positive business credit scores. Jeff Stibel, CEO of Dun & Bradstreet Credibility Corp. says, “Today, it takes a very proactive approach to building a strong credit score for your business.”

Lenders, businesses, suppliers and vendors use business credit reports as a risk assessment tool when determining whether or not to extend credit to a business and at what terms. A business without a rating or business credit file may find it difficult to obtain credit. So what can a business owner do to start establishing credit in the company’s name?

Here are five ways to establish credit for your business:

Take advantage of trade credit – Trade credit is the credit extended to your company by suppliers who let you buy now and pay later. Trade credit is given for a short period of time usually 30, 60 or 90 days. It’s a great way to start the process of building credit in your company’s name.

Obtain a business credit cardBusiness credit cards are an invaluable tool for business owners to add to their financial tool box. Statistics show that over 65% of small businesses use credit cards on a frequent basis. The use of a revolving line of credit is paramount to showing that your company can handle various forms of financing.

Use a business fleet fuel card – If you use your car for business on a regular basis why not consider a business fleet fuel card. Fleet fuel cards are mainly used for gasoline and diesel fuel at gas stations. Some fuel cards can also be used to pay for auto maintenance and expenses.

Open a secured business line of credit – To help build or rebuild your company’s credit many lenders and banks are now offering secured financing solutions. Whether your goal is to supplement cash flow, cover unforeseen business expenses, or expand your business this may be a great option to jumpstart the credit building process.

Use your business data to obtain funding – Certain lending platforms allow you to link your business’s online services such as ebay™, PayPal™, Amazon® and business bank accounts to qualify for a line of credit immediately. Although this type of credit provides your company with ongoing access to funds the repayment terms are much shorter than a revolving line of credit; typically six to twelve months.

Remember; pay all your bills and invoices in a timely manner. Although each business credit reporting agency collects and receives its data differently, the trade references your company establishes can be used on future credit applications.

By establishing a creditworthy company, a business is building a powerful financial asset that taps into the power of business credit. The fact is creditworthy businesses have a much greater credit capacity compared to a business owner that relies on personal credit alone. 

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’.

Understand the Law Before Dropping or Reducing Employee Benefits

Published: May 25, 2016 Updated: June 9, 2016

Small businesses facing poor or uncertain financial circumstances may be forced to consider drastic employment decisions including layoffs and benefit reductions. If your business faces such decisions, it important to understand your legal rights and obligations concerning employment law.

Layoffs, Furloughs, and Reducing Employee Hours

If your business is considering layoffs, review the Worker Adjustment and Retraining Notification Act (WARN), which requires employers with 100 or more employees (generally not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week) to provide at least 60 calendar days advance written notice of layoffs at single site of employment. Though the federal law may not apply to your small business, many states have enacted similar legislation to apply to businesses with less than 100 employees.

Furloughs and Hour Reductions

The rules on for reducing employee hours or imposing a furlough depend on whether an employee is considered exempt (salaried) or nonexempt (hourly).

As an employer, you are legally allowed to reduce the work schedule of hourly employees or impose a furlough to temporarily stop work. However, if you reduce your employee hours but not their workload, they may not be able to finish their tasks on time. If they need to work extra hours to accomplish their work, you must compensate them for that time.

Reducing the hours of salaried employees (employees who receive the same amount of pay each week is more complicated. Since salaried employees receive the same pay each week, regardless of how many hours they work, cutting hours but maintaining salaries will not save your business money. If you reduce the hours of salaried employees and as a result pay them less, their exempt status could be reconsidered as hourly. If that is the case, then they would now be eligible to receive overtime pay. Many employers choose to avoid this option as it could lead to higher and unexpected labor costs.

A furlough of salaried employees would not jeopardize their exempt status because exempt employees are not entitled to compensation for any week in which no work is performed. If you begin furloughs for extended periods of time, you may be required to comply with federal or state WARN laws.

Pay Cuts

Generally, employers have the right to institute pay cuts for hourly employees, as long as the wage meets minimum wage standards. In some states, you may be required to provide advance written notice to employees. Check with your state department of labor for the laws in your area.

If you cut the pay of an exempt employee to the point where they are receiving less that $455 per week, they could be considered an hourly employee as explained above. However, if you need to cut pay as a result of an economic downturn, you may be exempt from the overtime rules if the cut is maintained each month as the new salary (and does not increase or decrease each week) and if it is in response to your business’ long-term needs. If you choose to go this route, speak with your state department of labor to ensure that you are in compliance.

Another alternative is to reduce exempt employee pay without dictating the hours they work. The downside, of course, is that without a corresponding reduction in schedule, exempt employees may become demoralized by the appearance of working the same amount for less pay.

Changing Benefits:

Unlike mandatory benefits like worker's compensation and social security taxes, employers are not required to provide fringe benefits such as paid time off, severance pay, retirement plans, and holiday pay. Oftentimes, businesses choose to offer these perks as recruitment incentives.

Generally, while employers can change or eliminate paid time off (PTO) policies, they cannot take away PTO hours if they have been accrued. Employees will be entitled to their PTO leave, or you will have to pay them for the unused time. Note that the same rules may not apply to unused sick leave.

If you currently offer retiree health benefits, nothing in federal law prevents you from cutting or eliminating those benefits unless you have made a specific promise to maintain the benefits, according to the Department of Labor.


If you need to change any fringe benefits, wages, or hours, research your state's employment laws to ensure you are in compliance. Remember to apply benefit packages consistently to your employees to prevent discrimination claims. 

For more information, contact an attorney and/or accountant for legal and financial assistance.

About the Author:

Ijeoma S. Nwatu
Ijeoma S. Nwatu
Ijeoma S. Nwatu is a digital strategy and communications consultant. She is the Communications Manager for ColorComm, an organization that aims to uplift women of color in the communications field. When not working with clients, Ijeoma can be found speaking about career transitioning and social media marketing. Follow her on Twitter: @ijeomasnwatu.


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