What's the SCORE?!

Turn Your Web Site into a Selling Site

2008-03-07T08:09:00.000-08:00

Most small businesses have a Web site of some kind and many are relying more and more on the Internet to help their marketing and sales efforts and contribute to profits. But wanting a Web site that works hard for the business and actually getting one that does so are two different things.

There are dozens of ways a Web site can go wrong. Even if you have a crackerjack designer, they may know little or nothing about building a site that actually produces sales or leads. An eye-pleasing site by itself won’t necessarily get the job done.

This is one area, however, where a great deal of help is available to the small business owner. As small business gains experience with the Web, some clear steps have emerged that you can take to improve your odds of online success. For example, while appearance is important, the usability of a Web site from the customer’s perspective is even more vital.

How easy is it to get around your Web site? Can customers find what they want fast? Your goal is to have a site that appears professional and credible to customers as well as being easy to navigate. For a prospect intent on buying, there is nothing more frustrating than having to deal with a clumsy or cluttered site. Categories should be clear and logical.

And while the Web’s almost unlimited space gives you the choice of drowning customers with product
details, you may want to exercise some restraint. Give visitors the option of clicking to more information if they wish, but don’t force it on them. Coax customers by stages. Filling out forms is often necessary, but keep them simple and break them into bite-sized parts.

And by all means make the photos or other graphics on your site compelling—not the same old generic stock photos you see everywhere. Use graphics of real people and places to add personality to your site and reinforce the notion that your business exists in the real world, too.

Every inch of your site should address your customers’ goals and needs, not just the needs of your business. Make the checkout process on your Web site fast and simple. Don’t bombard buyers with last-second choices or pop-up ads. And if your site requires a registration process, don’t force buyers to answer endless questions designed to fill your need for marketing demographics.

To learn more about technology and Internet issues facing your small business, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call the Macon Chamber of Commerce at 621-2000 to make an appointment for free counseling.

Make Your Business More Web Wise

2008-02-23T08:08:00.000-08:00

Most small businesses use the Internet in some fashion, be it a Web site, e-mail, search engines or e-commerce. But even if you’re using the Web, there are many ways you can likely be using it more extensively, more fruitfully or more efficiently.

If your Web site was created several years ago, for example, it could be time for a makeover. What seemed sophisticated back then might now look simplistic—or worse, downright hokey—compared to other sites. In short, the Web is becoming an ever more vital part of small business operations with every passing day, and business owners are finding new and better ways to leverage the power of the Internet to help them build profits, save money and operate more efficiently.

Making your Web site more interactive is one way to spur action. Try adding surveys, guest books, auto responders, downloadable documents and an e-newsletter. Your current Web host may offer some of these capabilities. And why not take orders online with a simple shopping cart feature, if you don’t already? Resources include PrestoCart.com, MyCart.net, PayButton.com and EarthStores.com.

Animated art, professionally designed buttons, bars and banners can help supercharge your site. You can acquire them quickly and inexpensively with software and online delivery from providers such as NetStudio.com and ScreamDesign.com. You can add interesting and timely content to your site as well. Consider hiring a freelance writer to produce original news, features and how-to articles for your site that are related to your business. Putting fresh content up monthly could cost as little as a few hundred dollars.

The Web offers tremendous potential for researching your markets and competitors. A few top resources—some free, others fee based—include: Business.com for general business research, KnowX.com for public records research and Hoovers.com for company profiles and contact information.

To learn more about technology issues facing your small business, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call the Macon Chamber of Commerce at 621-2000 to make an appointment.

Where to Locate Your Business

2008-02-09T08:42:00.000-08:00

You’ve heard the old saying, that the three most important factors in selecting real estate are location, location, and location. For some businesses, its probably true that location trumps every other factor affecting the business chance for success.

If your business can be run from your home, location is obviously not important. This works if your customers don’t have to physically come to your place of business to make their purchase. Businesses which can be run from home save the owner serious amounts of fixed expense- no rent to pay every month, and moderate costs for utilities and insurance. Web based businesses, including selling on eBay, are forms of doing business that don’t require a separate office space.

If you do need dedicated space, think carefully about where it should be. To do this, consider where your customers will be coming from, and how important it is to them for your location to be convenient for them to travel to. Consider how much parking you need, and whether a high level of pedestrian traffic passing by your storefront is important. If there is strong competition from others in your field, your location can be a critical factor in your success. (Good information on this subject is available on the web. Try Googling “Retail Store Location Factors”.)

Here in Macon one has plenty of choices for locating one’s business. One area where there are some pretty fairly priced alternatives is downtown. If locating downtown makes sense in your business model, I’d suggest you go see Gordon Bennett at NewTown Macon. NewTown’s mission is to revitalize downtown Macon, and Gordon is their VP in charge of business development. He has good information on real estate available to rent or buy in the area. (NewTown’s office is at 479 Cherry Street.)

Downtown rents range from about $500 to $2,000 per month, or if you want to buy the space, there are good choices ranging from 2,000 to 12,000 square feet, priced in the $200,000 to $600,000 range. Some of these buildings require some rehabilitation, which can equal the purchase cost, however if your building is designated as historic, there may be tax credits and property tax abatement savings available. If you want to locate downtown, NewTown can assist you.

The Macon office of SCORE offers free counseling to anyone wanting to start a business and to current business owners having problems, every Wednesday morning by appointment, at the Macon Chamber of Commerce. Call the Chamber at 621-2000 to make an appointment. If you’d like to consider becoming a SCORE volunteer counselor, you can get the facts by email at dprgod@gmail.com

Use Independent Contractors Carefully

2008-01-28T08:33:00.000-08:00

Use Independent Contractors Carefully

Small business owners often try to save money—especially in the early going—by using independent contractors instead of hiring full time employees. Using independent contractors, or “contract workers,” means the business doesn’t have to withhold taxes, pay Social Security or Medicare or meet numerous other employer responsibilities.

Many such arrangements, however, wilt under IRS scrutiny. And the strategy can backfire if someone later claims they should really have been treated, and paid, as an employee.

Deciding who can legitimately work as an independent contractor and who must be given employee status has become a difficult matter for small business owners. You can’t simply choose what’s best for you. The IRS and equivalent state agencies are strict on worker classification issues.

Remember that independent contractors work for themselves. They operate their own business. You are their client, not their employer. You don’t dictate their hours or control how they perform their work. In the eyes of most government agencies, a worker is an employee unless you can prove otherwise.

Contractors control when and where they work. Avoid setting a pattern of daily or weekly work hours dictated by your business. Also, independent contractors do not usually have a permanent or continuing relationship with the business and have time to pursue other clients. Plan to compensate contractors on a per-job basis, not weekly or monthly.

And since contractors are paid to complete a set task, they may bring in others to help, at their discretion and on their payroll. They also should use their own tools and technology and be responsible for their incremental expenses.

Contractors can’t be fired as long as they produce results that meet their contract specifications. Do not include them under any insurance or benefits coverage you have for employees. Independent contractors are subject to making a profit—or suffering a loss—based on their own skills and expertise. Always require an invoice before making payment.

Before you agree to an independent contractor relationship with anyone, make sure you understand what that means and carefully weigh the pros and cons. If you misclassify a worker, you could be liable for back employment taxes plus penalties.

Getting sound advice on management issues such as independent contractor status is vital for your small business. For help, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call 478-474-2615 to make an appointment with the SCORE Macon office

The Franchise Finale!

2008-01-10T12:18:00.000-08:00

We’ve been blogging about franchising for a while, because it’s a way of starting up a small business without having lots of special expertise in the business you want to own. Franchising is hugely popular nationwide and in Macon; probably more than half of all businesses here are franchises.

How much does it cost to get into a franchise business? The range is wide, from very little for an unknown brand offering simple, standardized product or services from your home, to well into seven figures for the most successful, highly profitable, established national branded businesses requiring a retail store. (Many of the latter have all the stores they want already in place, so that one can only acquire a franchise when the current owner decides to sell out. Many of them are also tied up exclusively with multi-store owners, who have exclusive rights to all new stores in his or her defined territory.)

Here are some entry costs for six specific franchises in different fields of business:

Spring Green Lawn Care (lawn care)

Total start up investment: $84,000 to $93,000

Franchise fee: $30,000 to $36,000

Royalty fee: 6 to 9%

Advertising fee: $25,000

Other fees: $11,760

Term: 10 years

Home Instead Senior Care (non-medical home care for senior citizens)

Total start up investment: $39,000 to $52,000

Franchise fee: $27,500

Royalty fee: 5%

Term: 10 years

Two Men and a Truck (movers)

Total start up investment: $112,000 to $407,000

Franchise fee: $32,000

Royalty fee: 6%

Term: 5 years

Tax Centers of America (income tax preparation)

Total start up investment: $35,000 to $46,000

Franchise fee: $20,000

Royalty fee: $17 per tax return

Advertising fee: $3 per tax return

Other fees: 15%

Term: 5 years

Maid Pro (house cleaning)

Total start up investment: $50,000 to $100,000

Franchise fee: $7,900

Royalty fee: 3.5 to 6.5%

Advertising fee: 1%

Term: 10 years

Quiznos (sub shops)

Total Start up investment: $190,000 to $250,000

Franchise fee: $25,000

Royalty fee: 7%

Advertising fee: 4%

In most of the above cases, franchisees are required to have liquid capital ranging from $25,000 to $100,000, and net worth ranging from $100,000 to $300,000.

The U.S. Small business Administration maintains a Franchise Registry, listing hundreds of franchise businesses which have chosen to comply with SBA rules and thus qualify themselves for expedited loan processing by the SBA. To check out the site, go to www.sba.gov, > small business planner, > start your business, >buy a franchise, >franchise registry.

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Franchise Factor, pt. 2

2007-12-28T12:15:00.000-08:00

Last time I discussed the pros and cons of franchising as a way to start your own business. This time I’ll offer up some thoughts on one specific segment of the franchise scene in Macon, that of fast food.

If you look around our fair city you’ll see franchise fast food outlets everywhere. Like a partridge in a pear tree, in Macon there are:

10 Big Macs arching

9 Subways slimming

8 Wendy’s grilling

7 Krystal sliders

and a Hooters doing their own thing.

(Visit Hooters website and you’ll see their motto: “Delightfully Tacky Yet Unrefined”. You’ll also see they currently have openings for new franchises only in countries outside the USA, including such gems as Bulgaria, Uruguay, and Iceland. Give some thought to what a Hooters girl would be wearing at work in Iceland.)

Keep on counting franchise businesses in our city. There are:

6 T. Bells ringing

5 KFCs

4 Pizza Huts

3 Burger Kings

2 Sonic Drive-Ins

and a Huddle House out there all alone.

I counted 83 franchise restaurants in the Macon Yellow Pages, and there are many more out there, with good reason. As we said last time, about 80% of all franchise businesses (of all kinds) are still operating after five years, while the same percentage of independent businesses are gone.

Statistics aside, don’t think that going the franchise route will guarantee your success. The local Backyard Burger store on Riverside Parkway closed recently after a pretty short run. They were competing in the massively saturated fast food burger niche, and were located in an unexceptional location.

So too, there are many examples of successful independent restaurants here. Look at Nu-Way Weiners and Fincher’s Barbecue, locally owned for decades by Macon folks.

Then there are household name franchises that have multiple stores all owned by the same franchisee. Think McDonalds and Waffle House. Newcomers need not apply here. Their owners have exclusive rights to the Macon area. They were smart and got in early.

If you’re thinking that fast food franchising may be for you, there are plenty of opportunities to choose from. Some negative aspects of this franchise niche compared to other, nonfood businesses, include: long working hours, large staffing demands, fairly large initial investment, and market saturation.

the Franchise Factor!

2007-12-15T11:34:00.000-08:00

What do the Macon Ford dealership and all of the Macon McDonalds fast food stores have in common?

They are all franchises. If you’re thinking of starting a new business, you may want to consider going the franchise route. We’ll discuss the pros and cons in this blog.

First some definitions. Franchising is a method of doing business wherein a “franchisor” licenses its proven methods of doing business to a “franchisee”, in exchange for some combination of an upfront payment, fees, and a percentage of sales or profits. The franchisor usually provides support in the form of advertising, training, and possibly site selection, store design, and providing franchisees with consumable supplies at wholesale prices. The franchisor will provide a standard Franchise Agreement to the franchisee, specifying the exact kinds of support to be provided, as well as the level of territorial exclusivity to be granted to the franchisee. Exclusivity is important. Without it the franchisee may find himself in competition with too many other stores with the same brand name and product offerings as his own.

What are the advantages and disadvantages of franchising your business versus going it alone?

The most important advantage is that, statistically, you have a much better chance of succeeding if you franchise. Something like 80% of franchisee businesses are still operating after five years, while about 80% of independents have failed.

Other advantages include the buying power of the franchisor, allowing them to buy supplies in bulk and pass the savings to the franchisees, national brand recognition which brings customers to the franchisee’s store, and, often, high profit margins.

Disadvantages include loss of control (you must operate strictly according to the procedures spelled out in the franchisor’s operating manual), ongoing costs, in the form of payments of a percent of sales or profits to the franchisor, and possibly other fees such as contributions to the franchisor’s advertising budget, and potential conflicts in cases where either side is incompetent or fails to act in good faith.

There are hundreds of franchises to choose from with new ones springing up all the time. The amount of the upfront payment, fees and percentage of sales/profits charged varies widely, from a few thousand dollars upfront and modest ongoing payments, to hundreds of thousands of dollars for the bigger, more successful names.

If your personality type requires you to be in control of your business processes yourself, you won’t be happy as a franchisee. If you’re happy to follow the franchisor’s strict rules for operating in return for a better chance of success, consider the franchise route.

Should I start a Non-Profit?

2007-12-01T10:49:00.000-08:00

You’re thinking of starting up your own business. Why not consider organizing it as a nonprofit organization? Then you may be exempt from federal and state income tax. In addition, you can apply for grants and contributions from federal. state and local government, from private foundations, and from individuals. Individuals who contribute to your organization can deduct their contributions from their income taxes.

First let’s clarify the difference between “nonprofit” and “tax exempt”. A nonprofit organization is a concept under state, not federal, law. Being granted nonprofit status under state law does not confer tax exempt status on your organization. To achieve tax exemption, one must apply to the Internal Revenue Service and be granted status as a 501-c-3 organization.

To be granted both federal and Georgia state tax exempt status, you first need to incorporate as a Georgia corporation. Next you must apply to the Internal Revenue Service to become a 501-c-3 organization. (This process may take up to a year.) If approved by the IRS, you then apply for Georgia state tax exempt status to the Office of the Georgia Secretary of State.

Who is eligible for 501-c-3 status?

First, you must be organized as a corporation, trust, or unincorporated association., whose purpose is limited to those allowed by the IRS. Second, your organization must be operated in accordance with IRS regs. Among other things, you can’t be involved in political campaigning or lobbying, you must ensure that the earnings do not inure to the benefit of any private shareholder or individual, and you must not operate for the benefit of private interests, such as the founder, the founder’s family, etc. Lastly, your organization must have an approved exempt purpose, which include charitable, educational, religious, scientific, literary, fostering national or international sports competition, preventing cruelty to children or animals, and testing for public safety.

The most common types of 501-c-3 organizations are charitable (such as relief of the poor, combating juvenile delinquency), educational (such as schools and nonprofit day care centers), and religious (churches, faith based social agencies).

The IRS has a nifty little publication, “Applying for 501-c-3 Tax Exempt Status”. You can view or download it by going to the website, www. irs.gov. You can get a start up packet entitled “Starting a Non Profit in Georgia” by going to the web site of the Georgia Center for Non Profits, www.gcn.org.

Don’t think that achieving 501-c-3 status will ensure that funds from grants and contributions will rain down on your organization. Competition for these funds is massive, and most grant makers limit their giving to those whose mission corresponds closely with their own. Most grants are one time only, meaning that you can’t go back to the same well over and over. Unless your purpose in starting your own business fits in to the boundaries we’ve described, you should organize as a for profit, not a non profit, tax exempt organization.

Getting Grant Money

2007-11-23T10:47:00.000-08:00

You have this brilliant idea for the new business you want to start, and you’ve started writing your business plan to give you the roadmap to success. You come to the part about financing your startup, and realize you will need funding from somewhere other than your friends, your family, or yourself.

You see this book that’s thicker than the Atlanta phone book. Its title suggests there’s grant money raining down on anyone smart enough to buy the book and follow a few simple steps to get your slice of the cash. Grant money is great because, unlike a loan, you don’t ever have to pay the funds back.

Does this sound too good to be true? It is, and here’s why:

First, about 99.9% of all grants, whether from the government or from private foundations, are awarded only to nonprofits that have been designated as a 501-c-3 organization by the Internal Revenue Service.Your for profit business will not qualify.

Second, if you find the remaining one tenth of one percent of grant givers who will consider giving funds to for profit organizations, you will find that a) they award grants only to organizations whose mission is the same as theirs, and b) there are ten, or a hundred, or a thousand organizations competing for these dollars.

OK, so why don’t you just set yourself up as one of those nonprofit 501-c-3 organizations? Then you can apply for grants, and can also take contributions from individuals, and they in turn can take an income tax deduction for the amount of funds they contribute.

Does this also sound too good to be true? Next time we’ll summarize the major issues governing the who, what, when, where and why of setting up a non profit.

What's the Next Step?

2007-11-15T10:46:00.000-08:00

In our first blog we pointed would- be new entrepreneurs to a free website (www.sba.gov.>” Starting A Business”) where they can test their readiness to start and operate their own business.

Let’s say the results of this exercise were positive. What’s the next step?

Its time to start developing your business plan. This is a document that will provide you with a detailed overview of all aspects of your business. It will allow you to think through and write down the pros and cons of your proposed business before you commit yourself to going ahead.

You may have heard the old saying, “If you don’t know where you’re going, any road will lead you there.” Your business plan serves as a road map, laying out a realistic path to get you from where you are today, to where you want to be in the next three to five years. It will save you from the mistake of going down any road and getting hopelessly lost from lack of planning ahead.

Beside serving as your personal road map for meeting your business goals, there’s another compelling reason to do the work of developing a plan. If you need financing for your fledgling enterprise, any bank lending officer you approach about lending you funds will want to review your plan, to convince him/herself that making you a loan is a good decision for the bank, meaning that there is a high probability that you will be able to pay the interest and principal on the loan without fail. (The banker will probably also want to know your personal credit score. If it’s too low, he may not want to do business with you until you improve it. Every bank has its own definition of a minimum credit score, and may consider other factors besides this one factor, but we hear that 650 is often considered as the lowest acceptable score in many cases.)

If you don’t know how to get started on your plan, free counseling is available through SCORE to help. Just call and make an appointment.

The Reality Check

2007-11-10T10:44:00.000-08:00

This new 11^th Hour blog will target those of you who want to start your own business, and those who have done so and are having problems.. The writer is the local team leader for SCORE, a volunteer nonprofit organization that offers free counseling to both of these groups.

Most of the topics we will address in future blogs apply to business startups anywhere, but when possible we will try to spotlight issues unique to the area of Macon and middle Georgia. We’ll also try to respond to specific business related questions from you, our audience.

At one time or another many of us have thought how great it would be to be one’s own boss, to not have to take orders from that kid from the lucky genes club who is a VP because his family name is on the company letterhead, to keep all the profits from your hard work, to control your own destiny, or all the above.

You have this brilliant idea for a new enterprise that will make you rich while doing the things you enjoy, so it won’t even be real work. Think: “I love to eat, so I’ll start my own restaurant.”

Time for your first reality check.

The U.S. Government’s Small Business Administration, of which SCORE is a resource partner, has a simple on line assessment tool which they call the “Small Business Readiness Tool.” It contains 40 yes or no questions that anyone can answer in about five minutes.

The questions will cause you to think about whether you really have the passion, commitment, and the skill sets to be successful, and whether your core business idea can be backed up by good research that indicates there is a real market need for the product or service you plan to offer, and that you know how to fill that need.

When you submit your answers to the exercise, you’ll get an immediate profile of where you stand on the entrepreneurial readiness scale, as well as some suggested next steps to help you fill in the gaps in your readiness. Its quick, its free, and its relevant.

To get to this tool, go to www.sba.gov, and click on “Starting A Business.”

Welcome to our Macon Entrepretneurs!

2007-11-09T10:54:00.000-08:00

In partnership between The 11th Hour and the Macon SCORE office, we bring you what we believe will be a helpful guide to starting your own business. There are a million questions a person has to answer before they can open a business, and we hope to help with some of that. Generally speaking, we're going to post blogs addressing commonly asked questions, but if you have a question, please feel free to shoot us an eMail or, to ask a question in the blog comments.

"What's the SCORE?" is written by Dick Godschalk, the Macon team leader for SCORE. Like most SCORE volunteer counselors nationwide, Dick is an MBA educated, retired business executive. Before retiring he was a senior manager for Charter Medical Corp. responsible for international business development and operations.