If you’re running a small business today and aren’t thinking about how to tighten your belt, you are surely in rarefied company. But if you’re like the rest of us, you’re scrambling to cover expenses, pay bills and make payroll.

We asked Wharton lecturer and small business expert Robert Chalfin, about cost-saving strategies for small- to mid-size businesses. Chalfin is quick to point out that while there are no single solutions, there are numerous steps entrepreneurs can take to cut costs during the current recession.

“Think through the ongoing monthly expenses.” says Chalfin. “You could have a service contract you don’t need or can be reduced. You might have insured your computer equipment years ago when a PC cost $4,000 or sold some of the property that you continue to cover.“

Chalfin recommends reviewing your property and casualty insurance policies annually. Is your business properly classified?  Your business may have changed its focus since you purchased the original policy“ Invite, and insist, that your agent visits and tours the premises once a year,” he says. “Review your policies. Consider your deductibles and overall values. Do they represent today’s prices? Do you need business interruption insurance?”

Some other expense-saving strategies, according to Chalfin, include the following:

• Consider the utility of all employees as well as overtime payments. As a result of the slowdown in business certain positions and overtime payments may no longer be necessary or even needed.
• Review your health plan. “Do a little homework. Obtain competing bids every year, and don’t tell the insurance companies what you currently pay. Look at your deductibles. You may want to increase them. It may be worth it.”
• Ask for rent abatement. “If you lease your premises, ask your landlord about a rental abatement. Ask for some free months if you extend your lease.” Also consider if you can sublet any of your space or eliminate unneeded facilities when you renew your leases. “If you are responsible for common area charges these items may have declined. Inquire about these items as your lease may allow you to audit the landlord’s expenses.”

Chalfin is author of Selling Your IT Business: Valuation, Finding the Right Buyer, and Negotiating the Deal (Wiley & Sons, Inc.)

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For more information on cash flow management, see OPEN Forum’s “Managing Cash Flow through Trade Terms.”

In tough times, one of the classic business school cliches is to “focus on your core competencies” which tends to lead to all sorts of snooze-inducing meetings where companies try to figure out just what their “core competencies” are. Of course, it’s not a bad idea to focus on your core competencies, but I’d argue that if you’re thinking about core competencies, you’re already focusing on something too boring.

In reality, the idea should be to focus on what gets you fired up in the morning. Running a small business is tough, and we all have days where it’s tough to face the day at all. But none of us would be running a small business if there weren’t some fire burning inside of us. The focus should be on what makes that fire burn brightest.

So don’t just sit around and whiteboard out what your core competencies are. Take a step back, look deep into your soul, and figure out what it is inside of you that burns the brightest. What is it about the business you’re running that gets you fired up the most? That gets you eager to start the day, and loathe to finish it because there’s just that much more that you can and want to do?

For me, personally, I love getting into fascinating discussions over important issues and trends. I’m one of those people who will discuss things into the wee hours of the morning and love getting out of bed to get into intellectually stimulating discussions that make me think. Of course, lots of people like that, but we’ve continually focused the business of Floor64/Techdirt on ways to leverage building more such interesting conversations. What more fun could we have?

Back in April, I went to the Mesh Conference in Toronto, and one of the great speakers was Jessica Jackley, from Kiva. She talked about her overall mission in terms of helping those who need microfunding — a truly amazing and compelling story. At one point, she made a comment that immediately resonated throughout the crowd:

“I’m not wealthy, but I feel I could retire on happiness.”

Find that element, and don’t worry about defining “core competencies.” You’ve already found them.

By Marcy Shinder, VP Brand Management, American Express OPEN

Over the past few months, I’ve been inviting business owners to share their stories of optimism and resilience in this economy.  Recently, an entrepreneur contacted me to tell me how her company has not only been able to build their customer base and sales, but has been doing it by helping other small businesses grow, too.

Jennifer Wily is the President of Vizad, a Utah-based company she co-founded with her husband Preston in 2006.  Vizad is a digital marketing company that specializes in search engine optimization and pay-per-click management for its clients.  Jennifer and Preston started the company while working at other full-time jobs.  The company grew so quickly (doubling revenue from 2007 to 2008) that Jennifer soon left her other job to dedicate herself to Vizad.

With the recession, though, their growth has slowed, as many of their larger clients are no longer spending as much money on online marketing.  To help maintain their sales momentum, Jennifer said they looked to areas where they could optimize existing business – and they found a way to both launch a new product and tap a new market at the same time.

“We had always wanted to sell to small businesses but with our full-service model, we just couldn’t make money on their lower budgets,” Jennifer told me.  “At the same time, internally we developed our own software for managing client campaigns.  We realized we could package that software as a do-it-yourself SEO marketing tool – and sell it at a price point that would fit those lower budgets.”

Launched in September 2008, their “LotusJump” is licensed to customers for a monthly fee and already has several hundred customers across the country and overseas. “Companies still need to do marketing, but many – especially small businesses – can’t afford it.  We make it more affordable for them.”

And it’s also been a great tool for upselling those customers to the full-service side of the business. “We had been looking at packaging this software for a while, but it wasn’t until the economy really started shifting that we had more of a driver for doing this.  Now it’s a huge area of growth for us.” read more

When you get into business with a partner or partners (be they a friend, family member, or simply a business acquaintance), you do so with the best of intentions. As such, in many cases, the apparent need for a Shareholder’s Agreement goes unnoticed. In fact, you may be embarrassed to bring up the idea since it seems like a complicated legal mess that screams of a business version of a “pre-nup”: something that protects your interests if the business relationship goes belly up for some reason.

But a Shareholder’s Agreement is so much more than just something to deal with the breakdown of a business relationship. Life happens while we are busy making plans, and sometimes life’s happenings can throw us curve balls that will affect not only our relationships, but the business. Disabilities, untimely deaths, marriage breakdown, and simple falling-out between partners can mean disaster if these scenarios (and others) have not been given due consideration.

Also known as a Buy-Sell Agreement, a Shareholder’s Agreement is designed to help you and your business navigate life’s tricky twists and turns. Although the reference to “shares” implies it is limited to corporate ventures, similar partnership agreements can be drawn up for other business structures.

Among other things, a Shareholder’s Agreement will contain terms that come into play when a partner:

1. Wants to sell their share of the business.
2. Becomes disabled.
3. Dies.
4. Has life changes that affect their personal estate plan.

Advantages of having a well-drafted Shareholder’s Agreement include:

1. Having a road map to follow when an unexpected change happens.
2. The value of the business is preserved.
3. Taxes are minimized.
4. Surviving (or remaining) owners are protected, as is the business.
5. Elimination of miscommunications and discord between surviving family members (of a deceased or disabled partner) and the other business partners.

10 common clauses found in a Shareholder’s Agreement
1. Valuation

How will the company be valued in the event of a sale (be it the outright sale of the company, or the sale of a partner’s shares back to the company)? Will you use a professional valuator? Or will you use the adjusted book value of the shares, capitalized earnings, or a combination of these factors? The best valuation method will depend on your business and industry. A conversation with your accountant could shed some light on this matter. read more

Last year,  during the 2008 financial crisis, the FDIC insurance coverage limits were hastily raised from $100,000 to $250,000 per depositor.

At the time, those higher FDIC limits were intended to be temporary, just through December 31, 2009.  The good news for consumers and small business owners alike is, the $250,000 FDIC insurance coverage has been extended through December 31, 2013.

In other words, you do not need to worry about that coverage going away at the end of this year.  Coverage was also extended to $250,000 through December 2013 for federally-insured credit union deposits through the National Credit Union Administration (NCUA).

The increased limit is large enough that with just a little advance planning, there’s no reason whatsoever for middle-class Americans to lose a dime from putting money into FDIC-insured banks or NCUA-insured credit unions.

In fact, by intelligently combining accounts having different types of ownership, you and your family and your business combined can effectively get a lot more than $250,000 in insurance coverage.

But — there are some gotchas that consumers and small business owners should watch out for — because under certain circumstances, you may have LESS coverage than you think you have.  Before I get into those gotchas, let’s take a look at how FDIC insurance works and the critical role it plays.

FDIC Insurance in Practice

From the typical consumer or small business owner perspective, FDIC insurance is pretty simple.  As long as your deposits are under the FDIC insurance limits, there’s zilch chance of losing any money you have in the bank.  The Federal government, which stands behind the Federal Deposit Insurance Corporation (FDIC), will repay your money in the event your bank fails.

read more

There’s a regular meme that makes the rounds every time there’s a dramatic shift in the economy one way or the other, with someone explaining why “now is the best time to start a business.” However, there are still always big concerns, especially during a big downturn like the one we’re currently facing. I can’t even begin to count the number of other startup or small business operators I’ve spoken to, where the opening question is “how’s the economy treating you?” or “how are you holding up in this economy?” And, perhaps it’s a fair question in terms of small talk between business owners, but I’d suggest that the true small business manifesto is that the economy doesn’t matter. It’s always a good time to be a small business. Here’s why:

• As a small business owner, you’re not relying on the entire economy. You’re relying on your customers. If you offer something of value, you should be able to sell it to your customers, regardless of the economy. Sure, some of your customers may be more careful in spending, but that’s just an opportunity for you.
• As a small business, you can be a lot more flexible. Big businesses have all sorts of legacy items that tie them down and make them slow. Smaller businesses shouldn’t have as many entanglements and can change and adapt much faster. If the economy goes south, then a small business can shift its strategy faster.
• A small business is often closer to its customers, so it’s better able to serve customer needs, no matter what the economy. Today, customers are looking for ways to get more for less. If you can figure out how to better provide that, you can run circles around others.
• A small business doesn’t need to bring in as much revenue every quarter to support the business. You’re small: this means your expenses aren’t as big. You just need to figure out how to make sure you’re covering your expenses, and then look for opportunities for growth beyond that.
• As a small business, you have a better sense of when the economy is shifting. Big comapnies may claim they have a broader view, but they’re looking at numbers. You’re talking to customers.

So, as a small business owner, I say, let’s stop asking each other how the economy is impacting us. Let’s impact the economy by focusing on ways to connect with our customers and give them what they need — and the economy will sort itself out. We’ve got businesses to run.