Photo credit: Sharat Ganapat

Much of what we learned as kids growing up can be used to run a successful small business if we take the time to reflect back on those simple life lessons. Let’s take a look at one lesson in particular that all of our parents tried to instill in us, and see if we apply it, how each area of our business will be all that much stronger.

The lesson is a simple one – be helpful.

Sales

We’ve all had the experience of dealing with a salesperson who has their own interests ahead of the customer. They are easy to pick out. What would happen to the quality of the sales process and customer satisfaction if your sales team focused solely on helping the customer, regardless of whether or not your business solution was the right one? For lots of salespeople this would be a huge paradigm shift and one that not a lot are wiling to make.

So what is the upside? Happier customers, more repeat business, more referrals and the ability to identify new opportunities by paying attention to the cusomter needs that you can’t currently help with and figuring out how you can be helpful. By focusing completely on your customer’s needs, even if your business can’t currently fulfill that need, you’ll be in a much better position to identify what new products or services you can offer to fill those needs.

Approaching the sales process from this perspective immediately moves you from being perceived as a sales person to a consultant, and the ensuing discussion between your team and the customer will be much more productive from everyone’s perspective.

Customer Service

This business function is tailor made for putting your business in a position to be helpful. Hopefully being helpful is already the mantra for your customer service team. Whether the customer service team is you, or you have a separate department to handle customer issues, focusing on being helpful here will clearly lead to happier customers, more repeat purchases, more referrrals and an opportunity to gain a deeper understanding of your customer.

What if you approached customer service as a marketing investment rather than a fixed expense? Making that weekend service call, paying for the overnight express shipping and waiving that late fee are no longer expenses but rather an opportunity to generate satisfied customers, and better yet raving fans. Investments like these often have immeasurable ROI, especially in a social networked world where a single customer with a large online social sphere can have a real impact to the bottom line, positive or negative.

Marketing

How does your marketing message change if your intent is only to be helpful? You’ll likely:

• Stop talking AT your customers in your advertising and instead find a way to LISTEN and ask them what their business problems are and how they would like to be helped
• Share information that educates them on solutions to their problems, and how your product fits in that solution
• Learn that having to convince a prospect to buy is not as effective and costs more than developing a sales process in which the customer is convincing you why they need your product or service

Product Development

Hopefully you are seeing a theme here. No matter what business function we are discussing, having a focus on how to help the customer will yield you invaluable information on your customer, what they need to succeed, and how you can position your business to be the hero that provides the products and services they crave.

This mindset can’t only apply to your management team. In fact it’s more effective if your front-line employees embrace the “be helpful” attitude so they can identify opportunities while they are interacting with your customers. Be sure that you give your employees the opportunity to do first hand product research with your customers.

What are we missing here? In what other areas of your business do you think following this simple rule wiould benefit your business?

Photo credit: peyri

Since the inception of this blog we have been preaching the mantra “we refuse to participate in the recession”. Just when we thought we could relax and start to enjoy the ongoing recovery, the media, economists and even business owners are talking about a Double Dip recession. Do we need to update the mantra to “we refuse to participate in the double-dip recession”?

Just take a look at some of the recent news:

• National Federation of Independent Businesses small business optimism index dropped to a 3-month low
• Vistage CEO Confidence Index  showed flat hiring plans and reduced growth figures.
• Fed Officials see rising risks, trim growth forecasts
• Retail sales dip indicating a slower recovery

The media plays such a big role in how business owners make decisions and even more importantly how our customers make their buying decisions. So, it’s not all that surprising with news like this floating across the internet that fears of a double-dip recession are out there.

Just like with any challenge we face inside or outside of our business, these events really don’t have any inherent meaning other than how we choose to interpret them and what actions we decide to take as a result. So that begs the question – what action do we take? How do we avoid getting sucked into the double-dip negativity?

Here are just a few actions you can take today to say no to a double-dip:

Invest now

Even though we are technically going through an economic recovery, prices are pretty good for business needs. Whether it is labor, equipment, or real estate, take advantage of the favorable prices and terms while you still can.

Shore up the financials

You can’t lose with this one. If indeed we do go into another recessionary period, you’ll be much better off if you invest in assets that make you money, pay down debt that affects your credit scores and ability to borrow, and trim any unnecessary expenses that aren’t providing the return they should. If we bounce off of a double-dip and continue with the recovery, you’ll be in much better shape by having gone through this exercise.

Leverage tax savings

Combine the savings that are currently available on equipment you need for your business with the available 2010 Section 179 tax deductions.  Don’t wait until the last week of December to realize that you never took advantage of up to $250,000 in deductions.

Get creative

Virtually all small business owners have heard the phrase “necessity is the mother of invention”. If you plan for a double-dip recession, you can be in a no lose situation no matter what direction the economy moves.

Learn from past experiences

Guess what – you just made it through a recession! What did you learn? Was this the first recession your business has been through? You now have a a fantastic set of experiences to reflect on and learn from. Don’t waste them. Take a thorough look back at what things worked well and didn’t work so well so can you adjust as necessary if things take a turn for the worse.

Let’s hear your lessons learned from the previous recession and what you are doing to take advantage of the opportunities out there today.

Photo credit: Mike Kline

Being a business owner these days can be quite daunting. You need to climb out of a recession. You have new competitors both overseas and from internet businesses being started in the garage next door to your house. Technological advances are coming fast and furious in virtually every aspect of your business. On top of it all, you need to adjust from dealing with customers face to face and on the phone, to learning how to “tweet” and interact on Facebook.

Now, the convergence of two wildly different generations in your employees is adding a whole new level of complexity to the mix. Once one generation is surpassed by the next the characteristics and habits within business atmospheres can change for the good, or for the worse. These changes occur when younger employees become future building blocks of the company. America is currently in the midst of a seeing this happen – “Gen X” is slowly handing the reigns of the business world over to “Gen Y”. Is that a good or a bad thing? It could be either depending on how you view it.  Let’s take a look at both sides:

Reasons to love your Gen Y hire:

The need to create their own path

Every generation forms their own reputation and as of now, Generation Y’s reputation is one of independence and a need to find their own way. This mindset brings with it a willingness to take risks, which if handled well can be a great trait to have in an employee. As this generation matures and combines their willingness to try new things with lessons learned by making mistakes, this powerful combination brings with it great opportunity.

High energy

Success in life can be attributed to maintaining a positive attitude and putting forth the correct amount of effort. In order for this to happen a person’s energy needs to be above high, which is a key characteristic that many Gen Y’s bring. Don’t lose sight of the fact that the majority people within this generation are still very young and have lots of energy.

Technologically savvy

Due to this generation’s formative years occurring during the turn of the century, another name for the baby boomers offspring’s are the Millenials.  It shouldn’t be surprising that this age bracket has an outstanding grasp on technology. This generation has probably never used an audio cassette (and maybe not even a CD!), grew up “online”, and has had a cell phone for 5 or 10 years. Adopting new technology is absolutely vital to your business if you want your company to experience future success. Having employees that are well versed in new technologies and used to adopting new technology will be a huge benefit your business.

Reasons to fire your Gen Y hire:

Don’t fear failure

Many Gen Y’ers haven’t been through much economic failure.  Excluding the last few years things were very good for a long time.  The economic realities of working through a recession may be tough to handle. A family tightening their weekly budget because the father or mother had a bad month, or having to move out of a home because they were laid off. These are the types of challenges that lots of Gen Y’ers haven’t been through and how some employees react may be more than a business owner can manage.

Peter Pan Generation

As everyone knows, Peter Pan is that fictional character that never ages past a certain stage – he never grows up. Is this also the perspective of Gen Y? Of course you can never apply a characteristic to a large group of people but many believe that this generation has relied on their parents more so than previous generations which could limit someone’s drive to step out on their own.

Entitlement

Some believe that Gen Y has a stronger feeling of entitlement than previous generations.  While obviously not the case for every Gen Y’er, someone who believes they should get that raise or promotion without putting in the work or making the contribution is going to be a potentially negative force.

Good and Bad News

The good and bad news is that people of all ages are different. No matter what generation your employees are from, if you provide an energetic and positive work environment that gives people the opportunity to be creative, make real contributions and be fulfilled by their work, you’ll not only have a great team but you’ll enjoy having your own business even more!

Photo credit: papalars

Could the Recession of been good for small businesses in 2010?

We’ve written extensively on this blog about the effects of the recession on small businesses in the US. Regular readers know that we refused to participate and encouraged other businesses to do the same.

We are also keenly aware that for many small business owners the recession crippled many companies and make it financially challenging the scores of others. Logic would tell us that  a fair assumption is that starting a business, or expanding your current business, in 2010 would result in financial suicide. Well, to in keeping with our contrarian tendencies we are here to say that  2010 might just be the perfect year for you to go out, use your entrepreneurial knowledge, create a small business of your own or take steps to grow your existing business.

How will this year be any different from next year, or even the year following that? The answer is simple; this is the first year, since 2008, that companies can be confident the next few years will likely be recession free. Let me re-emphasize that one more time – the recession is almost over (and by some accounts ended a few months ago). Of course, after any recession the worry about a double-dip is always present, but if being a business owner was worry free I can assure you a lot more people would call themselves business owners.

However, with the worst of it seemingly behind us, all small business owners now have a few less worries. For a company like Direct Capital that means even more opportunties to put capital into the hands of the small business owner so they can do what they do best.

Here are four areas where a new or existing business can use as a starting point for their march towards greatness in 2010.

President Obama’s current push on a Small-Business Proposal

The main idea behind the President’s proposal is for small businesses to easily obtain credit through banks. This would be made possible with a $30 billion fund, which would hopefully prompt growth in the small business industry – an industry which had to deal with a Mike Tyson size punch from the economic downturn.

Stock market is beginning to stabilize

The Dow Jones Industrial Average, NASDAQ average, and S&P average all were at an extreme lows during the month of February and even in early June. While there has not been a breakout in any of the markets, the markets have also not dropped below their February and June lows. As consumer confidence picks up and if the stock markets don’t drop below their 2010 lows, a rising stock market would go a long way to helping support confidence gains.

Easier transition in green movement

As discussed in an earlier post, the movement towards a green company is essential in this present day. Many companies are finding this out the hard way and the transition to the green movement is not easy to do. These companies are the businesses that already have equipment, supplies, etc. and will end up spending more money converting the already owned assets into green assets. If a company were to start today, there would be a going green philosophy from the beginning of the business.

Cost conscious society

The recession was a big wakeup call to a lot of different people. A call that sounded something like this: “if you don’t absolutely need it, don’t buy it!” Upon first reaction this can be thought of as a con to many companies, but for others, this type of situation is perfect. Cost consciousness will open people up for special deals and incentives with purchases, and will especially have a large influence on the “bargain hunters”. If a small business is focused around this type of philosophy, they could really flourish.  As a bonus, buying equipment and supplies for your small business right now will be more affordable!

What other opportunities do see for your small business in 2010 as a result of the recession?

Photo credit: Ytsejam photography

What would be the effect on the customer financing experience if we can reduce the time it takes to fund a transaction from 5 days to 5 hours? A lofty goal considering the legacy financing processes that exist in the industry. But, as you business owners know, with lofty goals come lofty results when you are willing to think outside the box.

That’s just what we did in launching RapidFund – the only electronic transaction system in the leasing industry.

A common challenge in the equipment leasing industry is speed. In our 15 years helping business owners get the capital and equipment they need, there has always been at least one consistent theme – the business owner wants a straight and unobstructed route from deciding they need the equipment to making the purchase.  Financing however, for the most part, has caused friction during this process.

The Customer

When a small business owner wants to invest in their business by buying a piece of equipment the last thing they want to worry about is how long the financing will take.  Once that decision has been made, as far as the business is concerned, they are losing money for each day they don’t have the equipment.

The Vendor

For vendors that sell equipment that requires financing for most customers, the financing process adds a layer of complexity that can result in delayed delivery times, increased need for coordination, extended sales cycles, and more time for something to come up that could jeopardize the sale.

The Financing Company

Whether it is a bank, leasing company or other financing vehicle, financing equipment has been done essentially the same way for a very long time.  And, in a lot of ways, has gotten much more complicated and time consuming.  The longer it takes a lender to get  their money out into the hands of the borrower, the longer it takes for the lender to begin generating revenue on the lease or loan.

The Lesson

The lesson for all parties involved is something that business owners have known all along – time equals money. The more friction there is in a transaction the less efficient it will be – and inefficiency is costly.

Direct Capital decided to do something game changing.

We’ve implemented an electronic documentation system – the first of it’s kind in the equipment leasing industry. It used to be common to take 5 days or longer to shuffle documents back and forth between the lender, vendor and customer and get the equipment in the customer hands. Now 5 hours has become common.

Besides drastically decreasing the time it takes to get funds to the vendor and the equipment to the customer, our new electronic documentation system also reduces errors and limits fraud. All of these money and time saving things mean a better customer experience. And at the end of the day, that’s what it’s really all about.

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Did you hear the news? Small businesses’ credit card rates now 13.7% higher – ouch!

The May 2010 article is not reporting that small business credit card rates are now 13.7%, the article reports that small business credit card rates have increased on average 13.7% in the last seven months, while the rates on consumer cards rose an average of only 2.4%.

We wrote about this possibility back in March in our summary of the CARD Act which left business and corporate cards out in the cold. Unfortunately this prediction has become a reality. Hopefully you took the time to get your small business financial house in order at the beginning of 2010, but even if you didn’t here are three things you can do now to help hedge your business against the rising small business credit card interest rate trend.

1. Diversify your debt. You are probably already familiar with the concept of diversification when it comes to your investments. The same principles apply when it comes to your debt. Many small businesses found this out the hard way over the past couple of years. If your Advanta credit card or bank line of credit was your only source access to capital then you likely had a financial struggle in recent years as Advanta closed up shop and the list of banks closures increases weekly. Other options for keeping access to capital open include equipment leasing, business cash advance, non-bank short term loans and even selling unused equipment.
2. See where you stand today. If it’s been more than a few months since you checked your credit, it’s a good idea to see if there have been any changes to your personal and business credit scores. Also, Direct Capital provides a free financial grader that will show you the types of financing your business qualifies for. The prudent thing for any small business owner to do is to always be prepared. You sometimes never know when the need for capital will come up, either for an emergency shortage or to take advantage of an opportunity. Take the steps today to be prepared for the future, which leads us to:
3. Start planning now. Plan out your 2010 purchases and capital needs today so that you have ample time to plan and take advantage of financing programs, tax savings programs, etc. There are plenty of financing programs with fixed payments and even payments that are tied to your revenue. Both of these program types help avoid the risks associated with variable credit card and bank loan rates.  There are also several programs designed to help  small businesses climb out of the recession. Some examples include:

• Extended Section 179 benefits – the $250,000 deduction on equipment purchases has been extended through 2010. Calculate your savings use this free Section 179 tax savings calculator.
• Loss Carryback – Does the IRS owe your small business any money? As part of the HIRE Act, you may be able to recoup business losses from 2009. To find out if you may be eligible, use this free loss carryback calculator.
• New Hire Tax Credit – Also part of the HIRE Act, for any new employees that are with your company for at least a year the business will receive a $1,000 tax credit as long as there isn’t a drop of over 20% in that employees wages from the 1st half of the year to the 2nd half of the year.

How have your credit card rates changed in the past six months? What else are you doing to hedge against increases?

There are no shortage of equipment leasing calculators available on the web today. A Google search on the topic yields over 300,000 results. Our recently released iPhone app even has a calculator for those on the go.

Click to see your financial grade

In looking at how we could go beyond the simple calculator and provide something of value to the small business owner, we backed up to an earlier step in the process. Before you need a calculator, you need to know what kind of financing programs you might qualify for.  Of course the most accurate way to do this is still to speak to a finance manager or fill out a financing application. However, we know that many business owners want an easier way to start the process without contacting someone or making application yet.

The result of this analysis was the development of the Financial Grader.  This is a free tool that allows you to enter in whatever scenario is appropriate for your situation and find out what financing programs you could be eligible for.  If you want to take the next step and get approved, the free application lets you do that also.

So, take the financial grader for a test drive and let us know what you think.

Direct Capital just made accessing working capital, business loans, and equipment financing on the go possible thanks to a revolutionary new, free iPhone application. The application, called BizLease, empowers businesses with access to all their financing needs directly through a simple Smartphone interface.

“There’s been an explosion in the use of mobile communication by our customers,” said James Broom, Chief Executive Officer for Direct Capital. “These are mostly small businesses that are constantly on the move and desire the ability to rapidly secure capital regardless of where they are, what time of day it is, or what technology is accessible. BizLease enables them to take action on business financing at any time or place. This tool will make it easier for them to conveniently conduct business on their schedule.”

The BizLease application provides a wide range of financing services for businesses, including:

• A simple calculator to estimate monthly payments
• A live financing application for businesses in need of fast access to capital
• Answers to frequently asked financing questions
• A tool to calculate potential tax savings on business equipment purchases using the popular IRS Section 179 deduction.

The BizLease app has already been a big success, according to Stephen Lankler, Vice President of Marketing for Direct Capital. “On Day One, we saw a significant number of BizLease downloads and we are already working with businesses that originated through that channel,” Lankler said. “It’s been very popular and it’s our goal to continue delivering mobile platform innovations that meet the needs of business owners.”

For more information on BizLease or to download the app visit the iTunes store. BizLease is a free application.

Photo credit: Bob's Market

Big businesses such as Google, Walmart, and HP are clearly in a competitive race to grow their business green. Does this mean that small business should take a backseat in going green? Absolutely not! In many ways small businesses are better positioned to take advantage of the widespread movement to more environmentally friendly businesses in two important ways – to make money and to save money.

Make Money

Small businesses have the kind of nimble characteristics that can help them jump all over this new and rapidly growing component of the economy that touches virtually all industries. For many industries there is an opportunity to increase revenues as a result of the green movement.

Maybe it’s a very direct opportunity like manufacturing a more environmentally version of your product that your customers would buy more of. Or, get creative and figure out ways that your business could realize indirect benefits.  As you read the next section on saving money, think about how your business could position its products or services to leverage the momentum of businesses and consumers going green.

Save Money

Greening your small business will not only benefit the environment, but can also save your small business money.

“Going Green” may seem like an extraordinary task but is actually incredibly simple. Each of the following tips provides easy money saving ways to save your business money (and maybe make some also if you get creative!)

1. Turn off Equipment at night. Turning off computers, lights and other equipment at night can reduce your small businesses energy use up to 50%. Your small business would be saving energy while saving money. Ford Motor Company estimates they will save $1.2 million just by shutting down computers that aren’t being used!
2. Install Solar Energy Heating/Cooling Systems to reduce energy bill costs. Utilize a green business locator such as Green America’s National Green Pages to search for local green businesses. Small businesses also have more control over the types of energy sources they utilize and solar water heating is an easy beginning step.
3. Get a Free Energy Audit which is offered by many energy alternative providers. One quick visit will get you the most energy and cost saving products tailored for your small business before you buy!
4. Eliminate Coffee Cup Waste from the break room. The morning caffeine fix is a terrific habit to pair with a green practice. Encourage your small business employees to bring personal coffee mugs or eco friendly stainless steel coffee containers. Eliminating buying coffee cups provides your small business with extra funds, and helps reduce global landfill growth. Direct Capital has been doing this for several months with great success.
5. Promote Green Transportation such as bicycles (Bike to Work Week is in May) and scooters. Alternative transportation to work can not only save money, but benefit the environment from reduced automobile gas emission.  Direct Capital will have a contingent riding their bikes to work during Bike to Work Week!
6. Switch to Greener Office Cleaning Products. Green cleaning products promote company health, reduce office airborne allergies, and save your small business money as they are often inexpensive. Switch to natural based cleaning products such as white vinegar and baking soda for windows, floors, and desktops.
7. Buy Green for your small business! Switch from regular to Energy Star light bulbs and compostable trash bags. Consider installing inexpensive bathroom air hand dryers to eliminate paper towel cost. Even buy green building supplies for your small business construction projects.
8. Save Paper by double siding printed documents, encouraging email communication, and buying paper that is 100% compostable or recyclable. Office supply stores sell such paper products, and offer discounts to businesses!
9. Let your employees telecommute once a week, (or more!) when practical. Consider using an online meeting tool such as Microsoft Office Live Meeting or GoToMeeting to schedule an online meeting space for your small business. Communicate with employees and save on transportation energy costs. Your small business’s carbon footprint will be reduced and you will save money at the same time!
10. Apply a Green Marketing Plan. Utilize a computer based marketing system for your small business. For example, e-mail is not only an effective marketing tool; it is also friendly to the environment. Still sending out that paper newsletter? Consider switching to e-mail delivery and/or posting on your website. Online marketing saves money and increases campaign efficiency for your small business.
11. Practice the Three R’s: Reduce, Reuse, and Recycle whenever possible! Recycle office trash, provide recycling bins for business employee, and even consider composting.

What are your other favorite Green Business practices?

Image courtesy of Wikimedia

I know what you are thinking, “not another article on the credit challenges faced by franchisees!” As a nationwide provider to the franchise industry for nearly 20 years, we are aware of the challenges faced by the industry.

We thought some insight from the people making the decisions on approving franchisees for credit would be helpful. We had a Q&A session with three of the most experienced credit people on the Direct Capital team to ask valuable questions for franchisees and franchisors in this crisis.

Here are answers to some common questions we hear from franchisees and franchisors:

1. Why is the franchise industry faced with such a significant credit crisis?

The franchise industry is not the only industry facing this problem. The credit & liquidity crunch has impacted every sector. Franchise restaurants have felt a larger impact as lenders were less willing to providing financing to this sector even in good times, do to general restaurant industry failure rates. Top that with the fact that previously stable large lenders have exited this market and you have bit of a perfect storm on your hands.

2. How is lending to a franchisee different then lending to a general small business?
   The franchisee has a distinct advantage over the independent business due to:
   • Brand /concept recognition in lending – qualified lenders already have a thorough understanding of the concept
   • Franchisor strength is valuable in making credit decisions
   • Franchisors have a significant pre-screening process in place / specific requirements to qualify
   • The FCC/UFOC provides excellent insight on the performance of the concept, successes, challenges, etc
   • Multi-store owners provide lenders with comfort that there is a more diverse income stream
   • Most concepts provide advertising support that goes well beyond the local level and is regional and/or national in scope
3. What are the 5 biggest factors in selecting franchisee’s for financing?
   • Personal & business credit profile
   • Franchise concept strength
   • Number of units/stores individually owned
   • Current debt levels
   • Franchisee time within concept & concept tenure
4. What is the most common theme for applicants not approved for financing?

Poor personal / business credit is the immediate answer, but that goes well beyond franchise finance alone. Becoming highly leveraged too quickly is a real concern.

5. Exposure seems to be big in determining approvability, especially for multi-unit owners wanting to develop more stores. What’s the issue and how can they overcome the issue?

Expanding too quickly can create concerns for your lender if there is insufficient cash flow to support additional needs. Diversity to capital is key in this market. We speak with many franchisees that have reached exposure limits with their existing lender. That is not a dead end for the franchisee. We are able to provide them with new capital if we do not have any exposure issues ourselves. No business can rely on one lender for all needs; especially if they can only offer one type of financing. Credit monitoring & awareness of your financial approvability also needs to be an on-going focus point.

6. What do franchisors need to do to improve the chances of approvability for their franchisees?

Don’t view your lending partner as a commodity but as a partnership. Supporting your lender and their efforts and doesn’t end with getting approved. Lenders need to feel comfortable that a franchisor is aligned with them to maximize the lender’s offering capabilities. Some requests might include sales/revenue reporting, creative analysis on system needs, and front to back support / transparency.

Decision Making Tools for Franchisors

Franchisors and their associations have been vocal in publicizing the lack of capital available and many have fallen short of accomplishing their development plans as result. The credit crunch has struck new franchise acquisition the hardest and the economy has decreased those willing to put up the investment needed to launch. Franchisors are refocusing their development strategy on currently good operators, and new locations for poor operators.

The initiative requires the franchisor to ask some big questions:

• Which franchisees are best suited for expansion?
• Which franchisees have the best likelihood of getting approved for a loan?
• How well do we really know our Franchisees?

Tracking sales data and a solid track record should mean that particular Franchisees should be able to easily grow and flourish. But, the real solutions often go deeper than numbers. The answers on which franchisees can grow reside in which of your franchisees can get approved and which ones cannot.

To this end Direct Capital provides detailed reports to franchisers that give them a good understanding of the financial viability of franchisees and their ability to access credit. Contact us with questions on the types of reports available or share your questions in the comments below.