10 Steps to Starting and Managing a Business

Starting a new business is both exciting and daunting! The list of things to do feels endless and endlessly growing. From writing a business plan to registering the name and getting licenses, you’re on the go and in constant motion. And constantly learning!

The SBA.Gov website is a wealth of information for business owners just starting out. Their 10 Steps To Starting A Business article is a fabulous place to begin research.

Not only will you find instruction on how to finance your business and how to pick a location, but the article includes resources for those who want a home-based business, online business, a veteran or woman owned business and more.

As another valuable read, download our How To Extend Business Credit handbook. In it you’ll find sources for credit information, the legalities of investigation, establishing credit terms and how to evaluate the risks of extending credit.

As an added bonus, you’ll find credit application free for your use as well as an internal worksheet checklist to help you cover all your bases on credit applications. It’s free to download and share.

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What NOT To Do If You Want A Return Phone Call

business-441002_640It’s tougher than ever to get through to a live voice on the phone. Caller ID and voice mail make it easy for people to screen calls or ignore them in lieu of a more convenient time. And getting a return call? Don’t hold your breath.

For collectors, that challenge is magnified ten-fold.

Communication specialists recommend all kinds of creative strategies to get a phone call returned. Of course, there’s no sure-fire solution and in fact, one idea we heard recently struck us as simply wrong: Leaving a bogus message that states that you’re returning their call.

Put yourself in the customer’s shoes for a minute. You’re extremely busy. You hear that message and assume that, because you can’t remember, you must have placed a call to this person as the message states. You spend the next 5 or 10 minutes racking your brain and flipping through notes trying to remember this person and why you called them.

When you do finally return the call, you realize you’ve been tricked. So not only have you wasted time trying to remember the initial phone call that never happened, now you’re caught off guard in a clear deception.

As the customer, are you going to feel any desire whatsoever to work with this collector?

Absolutely not. In reality, you’re more likely to put that bill at the bottom of the stack out of sheer anger and frustration.

No one ever says to a collector, “Oh! I’m SO glad you called!” By nature, these calls are adversarial. Therefore, collectors must find a way to overcome the negative stereotypes in order to make headway on the debt. Trickery and deception build walls and make the task far more difficult.

Don’t do it. No matter how many messages you have to leave for a delinquent customer, be truthful.

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Setting Priorities To Get The Job Done

OverworkedWomanMost industries are feeling the squeeze. “Downsizing” is the new buzzword that describes what many face: More work with fewer hands to do it. It’s no wonder so many feel overwhelmed at work.

Working efficiently should be part of our work ethic whether you’re a victim of downsizing or not. But if you are in the throws of a smaller work force, learning to make the most of your time is more critical than ever.

For collection professionals, prioritizing is a must with or without an economic squeeze. Given the enormity of the many details collectors manage, it’s important not to become entangled in the minutia at the risk of losing sight of the big picture.

For that reason, an over simplified snapshot is helpful when prioritizing a day or a week’s worth of work.

The critical tasks come first: collections, credit approvals, cash applications. These are the meat and potatoes that affect operations and/or the bottom line.

It comes down to separating the critical tasks from the non-critical ones. If a task doesn’t impact the bottom line, consider it non-critical. That doesn’t mean it doesn’t get done at all. It just isn’t at the top of the list.

If you’re in a position to delegate, do so. Learning this skill can save your neck if your workload is more than one person can reasonably manage. It’s surprising the number of people in management positions who struggle with delegating responsibilities.

Peace of mind comes with delegating to the right person. Once you’ve placed your trust in someone to take over a task or series of tasks, let it go and let them run with it. Make yourself available to them but keep your hands off.

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Creating Your Corporate Culture

Large or small, every business has its own unique culture. Some businesses create a culture accomplished through careful planning. It’s the kind of intentional effort that starts right from the get-go. Other businesses evolve their culture entirely by accident that often stems directly from the personality of the biggest fish, ie: the owner, president, or COO.

Zurich_swingsGoogle is a great example of a planned corporate culture. A trendy, fun, hip vibe runs through the veins of its workspaces with an objective to draw and retain the freshest, most innovative minds in their field. And it works.

For the company with an unplanned culture, attempts to introduce a new one can backfire if not handled strategically.

I once worked for a company that had created a head-down, clock in/clock out environment of fear. This culture didn’t appear to be intentional; it was simply the attitude of two of the key big figures in the company. It felt natural to them and so, without realizing it, they passed the mindset along.

When it was brought to their attention that morale was low, they decided to try to fix it starting with a bar-b-cue hosted out in the parking lot. We were instructed to go out, fix a plate, and go back inside to eat at our workstations.

party_hornA few weeks later, they held a gathering in the cafeteria where they awarded plastic All Star trophies to a few chosen employees. And a few weeks after that, they had one of their managers march through the bullpen blowing a party horn and throwing confetti.

Attempts of this nature continued over the course of a few months. I’m sure I don’t have to tell you… it was a bust. And yet those at the highest levels of the company scratched their heads and wondered why this didn’t boost morale around the office and improve the overall culture of the company. After all, who doesn’t love a good party horn?

It’s probably no surprise to the reader that the existing revolving door at that company spun out of control. Clearly it’s easier to establish a corporate culture at the beginning, when you first start a business and while all hires are new. But is it too late for an older company with a culture that has evolved by itself?

The short answer is no, it’s not too late. But it will take patience and determination to bring about change. Culture concepts must be planted and nurtured. And it all starts with the leadership.

There’s much that can be done to build culture. The following 3 tips are merely starting points for a process that is ever ongoing and unique to your business vision.

1. Embrace the team mentality

I once worked for a business owner who referred to her staff as her “worker bees”. This was a mistake as it created a parent/child company culture. A “we’re in this together” mentality would have served her better and would have built a strong sense of teamwork.

A healthy, thriving company is one that operates like a team, working toward common goals with an attitude of camaraderie. Leadership that operates that way is more likely to build a corporate culture that fosters teamwork, and therefore, employee retention, growth and revenue.

2. Know your core values

What’s at your core? What do you believe? If at your core you’re about collaboration, then foster that mentality by soliciting ideas from others and being open to new processes. If your core values include superior customer service concepts, begin practicing those concepts with your staff. If you’re creative, constantly exploring innovative ideas, then you must foster this in others who share that same wiring. Open up dialog to talk about new ideas and implement the ones that you think might work. Let those thinkers run with their ideas and support their efforts toward success.

Know who you are and radiate it. Let those attributes shine a light in all the dark corners of your business.

3. Hire those who fit your culture

A friend presently works for a company with two levels of interview process. The candidate’s first interview is with the person that would serve as their supervisor. That interview is all about skills, education, experience, career goals, and industry knowledge … all the usual stuff.

The candidate that passes that level will go on to the second. A meeting with the big dogs: The owner, the COO and the CFO. In that interview, there’s no talk of school or degrees, experience or skill sets. Instead, they’ll talk about hobbies, great vacation destinations, or their highest level on the latest video game. The point is, the big dogs already know the candidate is qualified for the job or they wouldn’t have made it to the second level. What they want to know is if this candidate has the personality to fit in with the corporate culture.

In the end, a qualified candidate may not get the job if their personality isn’t a fit. That’s how important culture is in that particular company. And they’re thriving.

Fact is, employees who fit with their work place culture tend to be more satisfied and therefore, stay longer than those who do not… even if their skills are superior. This is a terrific return on investment for the business that sinks time and money in to training staff. Start with those three points and build from there to create the culture that suits your business to a T.

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Spot Fraud Fast


Fraudulent orders cost businesses millions every year. Spotting fraud and stopping it in its tracks takes a keen eye and a skeptical outlook.

These following 3 flags serve as a starting place for spotting fraud:

Flag 1. A signed credit application

The starting point for most orders is an email with a request for a quote. Fraudsters like to include the request for 30-day terms along with that. Most of the time, honest customers are cautious about signing anything and that includes a credit app. So when a customer follows up the request for a quote with not only a signed credit app but also a financial statement or a bank reference right off the bat, it’s heads-up time for the credit professional. Something is wrong.

You know this process. Legitimate customers can most certainly be in a hurry, but eager to sign things and provide detailed financials? Not so fast! Fraudsters, on the other hand, rush everything. They’re banking on hasty decisions and fast transactions.

Flag 2. Vetting process

The ‘Same Name Scam’ is when thieves will use legitimate company names to place orders. They will sometimes include the names of the CFO’s or the VP of sales on the orders, which you know, isn’t at all typical as they aren’t the ones who place orders. By adding “.com” or “.net” to the end of the business name, they’re hoping that you recognize the legitimate business name and therefore, process the order with no further thought. That in itself is a red flag as businesses don’t typically use “.com” on their order masthead.

Flag 3. Shipping address discrepancy

It’s a clever trick for a Same Name fraudster to follow up a legitimate order from a legitimate company with a fraudulent order from their bogus copy. It often goes down like this: An order from the legitimate company shipped last week without a hitch. A follow up order is placed a week later with what appears to be the same company name. When it’s fraudulent, the shipping addresses won’t match between those two orders and it’s not uncommon for the fraudulent order to be a “rush”. They’re hoping that the combination of the successful delivery of last week’s order and the ‘rush’ nature of the new one, you’ll process the rush order with no further investigation.

Catching the address discrepancy before the order is processed is the key here. When they don’t match, start making phone calls. And in that process, forget about using any information on the original PO or email order. Email requests from a fraudulent source will of course include fraudulent contact information and phone numbers. Your skepticism is an asset! Go directly to the company website. Call the purchasing department to verify the names of those making purchases. And if you confirm that it’s fraudulent activity, provide the victim company with the fraudulent email correspondence and everything the would-be thieves have sent to you.

Many of our blog posts emphasize the importance of fostering a relationship with your customer and this is a good reason to do so. The better you know your customer, the easier it is to spot an order that didn’t originate with him.

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Business Line of Credit: 6 Things To Ask First

Small business owners with experience under their belts know that lean times will come. It’s inevitable. Being prepared in advance can bring a sense of calm to an otherwise unnerving financial drought.

For some, a business line of credit is a good solution.

Those with seasonal businesses are used to the significant changes in cash flow. During the down times, they can fall back on the LOC and then pay it off when the cash flows again during their peak times. And since they only pay interests on the funds they use, it makes it an affordable option.

Answer the following questions to see if a business line of credit is a good choice for you.

  1. What’s your business credit score?

In order to qualify, a lender will ask for the usual information; Annual revenue, how long you’ve been in business, collateral. Top of the list will be your business credit score.

Your personal credit score will be used if you don’t have a business credit score. And if it’s not-so-great, don’t assume you’re out of the game.

A Bad Credit Business Loan is still an option, though not without its downside: A lower credit limit, higher APR and stringent payment terms are less than ideal.

  1. What is your collateral?

A business line of credit can be secured with either business or personal assets. You may have machinery or equipment that could be liquidated in the event of a default. Real estate, business or personal, qualifies as collateral, too, however, for any personal assets like your home or land, your spouse must be a part of the legal paperwork.

  1. How much money will you need?

If the worst of the worst happened, how much would get you by? Smaller loans are easier to get, as not as much background documentation is needed to secure one. However, if a small loan won’t save you in a crisis, then maybe it’s not worth the time and expense to secure it.

A large credit limit is likely to require P&L statements, business tax returns and income statements and will be tougher for young businesses to obtain, as they’ve not had the time to set a track record.

For some less disciplined business owners, the temptation to use the money even when not truly needed may be too much for them to handle. Anyone falling into that category would have to set strict personal guidelines for usage.

  1. Are you comfortable with the APR and other fees?

The APR for your business line of credit will be determined by the age of your business, your annual revenue and your credit score. In the end, it could range anywhere from 6% to 35% or even higher.

There are usually up front fees to consider and transaction fees in the event that you use the funds. If yours is a variable interest rate, you’ll want to know from your lender how much the market rates will affect your payments.

  1. Will monthly payments be a struggle?

This may depend on your customers. If the majority of customers pay on time, you may not find your monthly Line of Credit payment to be difficult. But if you routinely deal with late paying customers, or have a customer that owes you a significant amount of money, monthly payments could become a financial stress.

  1. Is the LOC interest-only or maturity date?

For maturity date lines of credit, the balance is required by an assigned date or you can refinance. If you’re paying interest only, you’ll need to be prepared to repay the principal if you reach your credit limit so that you can borrow again.

How you handle your line of credit account can impact your credit score.

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Is the U.S. Headed Into a Recession?

A recent survey of economists concluded the chances of the U.S. experiencing a recession are at 18%. In December, it was half that.

While economists vary in opinion on what is driving us toward a recession, Brett Ryan chief economist at Deutsche Bank claims, “The manufacturing sector is already in recession.”

The plunge in oil prices have caused smaller energy companies to go out of business and are inducing stress in the credit markets tied to oil and oil contracts. Consumers may get a tax break and significant pleasure at the pump but the joy isn’t felt globally, as Stock Markets experience drops as a direct result.

According this report by CNN Money, “Citigroup predicted a 65% chance of a U.S. recession…”

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Japan Implements Negative Interest Rates


Bloomberg Business recently reported that the Bank of Japan has adopted negative interest rates saying, “Bank of Japan Governor Haruhiko Kuroda sprung another surprise on investors Friday, adopting a negative interest-rate strategy to spur banks to lend in the face of a weakening economy.”

Vice Chairman of Berkshire Hathaway Charlie Munger was quoted by Forbes saying, “I was flabbergasted when they went low; when they went negative in Europe – I’m really flabbergasted.”

According to CNN Money, “In theory, negative rates encourage banks to lend more and consumers to spend rather than save. They can also weaken a country’s currency, helping exporters.”

Japan isn’t the first to do this. The European Central Bank has already made this move with odd results. There have been reported cases where the bank ends up paying customers who borrow from them.

The idea of negative interest rates has been introduced to the U.S. but thus far, it’s not been seriously considered.

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Customer In Need of Help?

When a customer is up to their credit limit, they may be in need of help.

Quite often, when one of your customers is up to his knees in financial trouble, he’s also up to his chin in embarrassment. As a businessperson, the pressure is tremendous financially and emotionally.

For that reason, many won’t reach out to you in advance of the trouble they see coming. They’re uncomfortable. Embarrassed. And probably hopeful that they can turn things around before the inevitable happens.

Some customers don’t realize that just because they can’t pay the whole amount, doesn’t mean there aren’t alternatives. Hiding seems easier. But you know differently. You know they’re wrong about all of this.

You can show them as a credit professional that there are alternatives and that working on it before it becomes a bigger problem is a great business move!

Set your goals:

  1. Identifying the source of the problem.

Is it a temporary cash-flow problem or is it more serious? When you talk with your customer, you have to get down to the bones of the matter. Exactly what is the issue? If they’re facing bankruptcy, they may have no desire at all to move forward to fix the problem. They may be too far down the road of defeat leaving you little option but to place that customer on permanent C.O.D. or some other severe limitation. But you really won’t know until you listen to their story.

  1. Open the doors of dialog.

When you view the customer as the customer and the problem as the problem, you’re establishing yourself as an ally in working this thing out.

There is light at the end of the tunnel. Your job is to help your customer see that. Once they do, you’ll be helping to offer relief by outlining the options for payment. Remember, they want this debt paid as much as you do.

  1. Offer alternatives.

Circumstances change from customer to customer. Once you’ve established the problem, and that you’re both on the same side trying to solve it, you can then come up with the right options to make it all happen.

For the customer that makes daily purchases, perhaps a daily C.O.D. term will meet the need for a set period of time. A monthly payment plan may be a better fit for the more infrequent customer. Can it be paid off in 6 months? 8? Set that limit and put it in writing.

If the balance is large, it may not be doable to pay it off in 6 months and therefore, a longer payment plan that includes interest rate might be the right gesture. The point is, there are options that are fair to you both. Explore them together to come up with the right plan.

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Your Winning Staff: How To Keep Them Moving Forward

Business teamYour team means everything to your bottom line. Therefore, keeping them motivated, challenged, and positive should be a priority.

There are a few very simple habits you can form that will help to create the work environment that promotes your staff toward success.

  1. Be the go-to resource.

Establishing yourself as a reliable and available resource can bring a sense of safety to the work environment. When a staff member feels that she can come to you, even if she’s found herself in over her head, together you can solve problems before they rage out of control.

  1. Have your team’s back.

If a staff member ends up in the cross hairs of an angry customer and need to turn to you for support, be the back up they need. It’s not unusual for a customer to change their tone when referred to the manager who is in full support of his or her team.

  1. Make expectations clear.

Typically, people who know what is expected will meet those expectations. When the waters are murky, there’s hesitation. Spell it out – set the bar – communicate with clarity.

  1. Be reasonably flexible.

We often coach our clients to be flexible when attempting to collect a debt. It’s necessary to hear the customer’s story and then determine what level of flexibility is reasonable in that instance. The same is true with staff. Yes, being consistently on time for work is a must, for instance. But extenuating circumstances do happen.

  1. Offer growth opportunities.

People are certainly unique. Most of us want to grow … but depending on which generation you’re dealing with, not everyone defines “growth” as “climbing the ladder”. In fact, a lot of people these days don’t find ladder-climbing in the least bit appealing.

The key is to talk to your staff individually to find out what forward momentum in your company looks like to them. In all likelihood, what they are attracted to will also be what they’re good at. Provide opportunities for them to move in their desired direction.

Having a team in place that is well trained and equipped is an investment of time and money for you. Keeping them motivated and challenged, with opportunity for growth. This will build a sense of loyalty to you.

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