Business Banking E-Newsletter - February 2012

Tips for Starting a Business in Retirement

Not that long ago, retirement meant long days punctuated by occasional games of golf and bridge. But today, with lengthening life expectancies and dwindling pensions, many Americans are looking to retirement as an opportunity to start a new business.

Common Characteristics

Older entrepreneurs differ from their younger counterparts in several critical ways. For one, seniors are usually in a much better financial position than younger entrepreneurs. Their bigger financial cushion -- retirement packages, nest eggs, or home ownership -- affords them flexibility in the initial stages of a start-up, where funding is often critical. Because they can often rely on other sources for current income, they are in a better position to take entrepreneurial risks.

Creativity and business acumen are also key characteristics of elder entrepreneurs. Having been tested again and again in their lives, they're not afraid of failure or worried about what others will think. Instead of that urgency to "make it," they get their satisfaction from the process of building their companies.

The type of businesses typically started by seniors varies widely. Consultancies, small retail businesses, and bed-and-breakfast establishments are perennial favorites. A growing number of late-life start-ups also involve Internet-based businesses. While most senior start-ups are related to an individual's former career, some break into completely new territory.

Know Your Limitations  

There are several considerations you should bear in mind before taking the leap. Start-ups can be physically and emotionally draining. Are you willing or able to work the long hours that may be required in a fledgling business?

Then there's financial vulnerability. Compared with their younger colleagues, seniors rely much more on personal investments to supply a portion of their income. For this reason, seniors are advised not to sink too great a portion of their investment portfolio into a new business and should avoid pledging as loan collateral personal assets such as a home.

Considerations Before Making the Plunge

  1. Build on already established contacts and expertise, which can give you a competitive advantage in virtually any business.
  2. Start small and gradually work your way into a full-blown business. This will give you time to assess whether you're willing or able to take on another full-time career.
  3. Consider your income needs before investing a portion of your nest egg in a new business and think twice before taking on any personal debt.

© 2011 McGraw-Hill Financial Communications. All rights reserved.


10 Ways to Work Through A Business Slowdown

In running any kind of business, it's inevitable that sometimes business will slow down. This might occur due to an upcoming holiday, seasonal variations, or uncontrollable circumstances. As a small-business owner, you have a choice in terms of how you view the slowdown - it can either be a time of increased stress, frustration, worry - or you can view it as an opportunity to upgrade your business processes or improve the quality of your life.

Here are ten strategies you can use to work through a business slowdown:

  1. Market more concertedly. Statistics suggest that new businesses spend (or should spend) about 40-60% of time in marketing and related activities. If you are experiencing a business slowdown, it's always a good time to create and launch another marketing initiative. It is important to continue to promote your business creatively and cost-effectively. What better way to spend a slow period than in taking actions to attract new business? (Plus, taking action will keep worry or stress from overwhelming you.)
  2. Relax. This strategy works if you are feeling good about your business and your accomplishments. Use this time to catch up on some sleep, read a few good books, in short, take some time off for rest and relaxation. Sometimes, timing time away can help spark creative ideas or profitable insights.
  3. Get ahead. Use slow time to get ahead on weekly or monthly projects. Look ahead to future months and see if there are any steps you can take, today, that would position you more solidly in the future. This can help you feel more in control as the pace picks up again.
  4. Invest in additional training/learning. A business slowdown is a great time to upgrade your knowledge and skills, you have the time and the incentive. Take classes, learn more about your industry, become even more valuable to your customers by adding new products or services based on your new knowledge.
  5. Follow up with old/existing customers. Most small businesses focus more on getting new customers rather than retaining old ones. A business slow down is a great time to get back in touch with your customer base to find out what needs they have, to remind them of your service, or to offer them special discounts for reactivating their accounts. It's always easier to sell to someone who has bought from you before - so make the extra effort to stay in touch.
  1. Offer free samples or giveaways. If your business needs to attract new prospects, use the "slow time" to offer free samples, hold contests, or offer giveaways to bring new energy and potential customers to your door.
  2. Plan. Take time to review your progress so far, checking it against your goals, and making any necessary adjustments. Use "slow time" to plan for how you'll tackle new projects, or expand your business or offerings. This can be really fun.
  3. Relate. Use this time to add a little extra to the "bank account" of your important relationships. Spend more time with your spouse, significant other, child, or friends. Put some extra kindnesses into your close relationships - you'll have more to "withdraw" when you need it.
  4. Network/socialize. Use "slow time" to get out and meet more people to talk about what you offer, learn what they need, help them connect with appropriate resources. Take this time to increase your contact base, and to attend meetings or events you might not usually have time for. An added bonus to this tip is that you might perceive new trends in your industry which can help you guide your business.
  5. Upgrade equipment or processes. During a business "slow down", it's a great time to find easier, more efficient, and better ways of running your business. You might upgrade equipment so you can serve customers more effectively. You might automate parts of your sales process, or invest in additional training for your staff. You might use this time to make sure you are in compliance with all the relevant state laws, or to paint your office space.

While occasional business slowdowns might be inevitable, these strategies ensure that you're making the best use of the downtime - allowing you to attract and keep your ideal customers.

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5 Painless Ways to Raise Prices this Year

It may sound odd, but small businesses are increasingly handing out pay raises. Unless they're crazy, those business owners probably also plan to either simply sell more units or raise their prices in the coming year to cover that added payroll cost.

Apparently, the pay-raise trend is pretty widespread. A Pepperdine University/Dun & Bradstreet Credibility Corp. study showed 43 percent of small businesses have already hiked worker pay in the past year, and 42 percent said they plan to raise pay this year. Many workers have no doubt gone several years since 2008 without a raise, and we're at the point where loyal employees who've stuck around need to be rewarded to keep them on board.

This may be a critical time to raise prices for many businesses in any case, as prices are rising or remaining high for many basic materials.

With the economy still so uncooperative, how can you sell customers on a price hike? Here are five ideas:

  1. Phase it in. Let customers know prices are going up next month, or next quarter. Drive some extra sales volume now, and then the party's over and the new price goes into effect. Give clients a chance to buy in volume ahead of time to save money. It feels like a deal, but, sooner or later, customers still end up paying the new price. Personally, I like to give notice of a price hike for my writing business about six weeks before it takes effect, so clients have time to adjust to the idea.
  1. Offer valued-customer discounts. Take a page from grocery stores and offer one price for your loyal frequent shoppers, and a higher one for occasional users. That way you can start grossing more without alienating your core customer base. Don't make those customers haul around a loyalty card, either -- keep the information on who gets the good prices on file yourself.
  2. Revamp or repackage old products or services. Add new features, bundle existing products to create a new one or redesign your packaging. Freshen it up, and you've added value -- or at least created the appearance of added value -- and can command a better price for it.
  3. Introduce new products. One of the biggest problems in retail is the lack of unique products. What can you sell that your competitors don't? Add fresh items that can't be easily price compared and you can charge a better markup on them.
  4. Review and retool your product assortment. Do you know which of your products has the lowest margins, and which has the highest? If not, find out. Then drop slower-moving, low-net products and add more high-end ones. Also review competitors' pricing to see whether some products are priced unnecessarily low. Small, strategic increases on a few popular items can add up quickly, while customers may barely notice the difference.

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How to Avoid Layoffs in Your Small Business

Layoffs are hurtful to everyone involved. Dedicated employees lose their jobs and employers have to let go of people they respect.

For a small business layoffs can be tragic, yet it may often seem necessary to keep a realistic budget. “For most small businesses, personnel-related costs are among the most significant, and with sales remaining flat at many businesses, it’s tempting to look to layoffs as a way to cut costs,” according to comments from

With mass layoffs falling in 2010 from the year before, the Bureau of Labor Statistics reports that they were still common throughout every industry. In 2010, there were 7,247 company layoffs. The fourth quarter alone ended in the termination of 295,571 employees.

With layoff numbers still lingering at an alarmingly high rate, small businesses have begun to look at various other options.

Although layoffs can bring costs down in the immediate moment, the price of rehiring when the economy inevitably comes back is overseen. The cost to hire and train is, in itself, enough to find a better solution.

Include Employees in Layoff Alternatives

Many small businesses become a family, and companies have been cutting every possible cost before pink slipping a valued employee. The benefit of a smaller business is that there are various ways you can keep layoffs at bay, and still keep invaluable workers:

  • Be honest with your employees. Share with them the reality of the business’s financial burdens. Employees will often work harder when they can see the black and white bottom line.
  • Present your employees with alternatives to layoffs. This is a creative way to keep your important employees and ease nervous tension within the group. SEI Industries faced possible layoffs, but allowed their employees to vote on how to avoid this. As a group, they decided to go down to a four day work week. Everyone was able to keep their job, and cut costs at the same time, according to Avoiding Small Business Layoffs.
  • Involve your employees in brainstorming more creative resolutions to layoffs.  Allowing people that you trust present valid ideas for cutting costs can keep morale high within the office, and bring more solutions to the table.
  • As the CEO of your business, consider asking yourself and upper management to take a pay cut, or forgo bonuses. If only temporarily, this can keep the business afloat for a short period. Small businesses can often make it through the rain with temporary payroll cuts that are reinstated as financials get back on track.

The key to avoiding layoffs within your small business is to think about the future.

Finding ways to keep employees will not only benefit them, but the business as well. Trusting longtime employees to assist in coming up with other solutions will add value to their position, and avoid costly rehires down the line.

Take advantage of being a small business. Your trusted employees are a priceless, untapped resource of ideas and solutions.

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3 Big Lies You Tell Yourself About Your Business

As a business owner, you may find yourself having more than a couple of heart-to-heart conversations with your mirror or dashboard as you work through your day. Hey, it’s lonely at the top–especially if the top, middle and bottom of your organization could all carpool to work in one car.

These self-talks can be really healthy. You work out issues, let off steam and come up with ideas. However, some of these messages do damage when they become fiction.

Here are three of the most common lies that owners tell themselves.

1. My company is the best at what we do.

More likely, you are the best at what you do ... for somebody. Not for everybody. Business owners are proud of what they do for their customers, and that pride translates into brand, quality and reputation. But by focusing on a “best at all for all” standard, you may be putting yourself at risk.

Growing your business is about figuring out customer fit: "Who are we the best for?" By changing the focus of your aspirations from a single standard of superiority (in product, service or solution) to one that also identifies the value, you can set a more attainable goal as well as declare a brand promise.

2. I have the best people.

Wrong again: You may have the best team for achieving your current results, but you don’t have all of the best people.  No one does. Many sports teams have achieved championships because of the combined and complementary contributions of different players, rather than having the best player in each position.

If you don’t like your current results, however, look at the design. You probably don't need to get rid of all your people–but you may have a problem with what they are doing, how they do it, or who is doing what.

Too often, as small business owners, we either blame all of the results on the people or none of the results on the people. Either extreme can be damaging: You either churn through people seeking unattainable perfection, and believe that the next miracle worker will save the day, or you hold onto people who are holding back the company.

Better to focus on having the right people doing the right things the right way.

3. I am my company’s best salesperson.

Actually, there are a number of other people who are probably better than you at parts of the sales process. Let’s start off with the idea that “salesperson” is not a function, but a title. In that position there are many functional requirements. A short list includes:

  • Prospecting
  • Presenting
  • Technical expert
  • Agreements
  • Proposal writer
  • Closer

You are probably the best at one or more of these functions. But if you want to grow, then for each role where you are neither essential nor best, you'll need to get people who are better than you. And they are in fact out there.

Don't stop talking to yourself. Just make certain that you invite the truth police to the conversation.

Source: - Tom Searcy