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Break Even Analysis: Know When You Can Expect a Profit

Submitted on 13 August 2012

Breakeven analysis is a tool used to determine when a business will be able to cover all its expenses and begin to make a profit. For the startup business, it is extremely important to know your startup costs, which provide you with the information you need to generate enough sales revenue to pay the ongoing expenses related to running your business.

A startup business owner must understand that $5,000 of product sales will not cover $5,000 in monthly overhead expenses. The cost of selling $5,000 in retail goods could easily be $3,000 at the wholesale price, so the $5,000 in sales revenue only provides $2,000 in gross profit. The breakeven point is reached when revenue equals all business costs.

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10 Cost Saving Ideas for Small Business Owners

Submitted on 28 June 2012
With an economy that’s struggling, every small business owner is looking for ways to increase profits, save money and improve efficiency.

The good news is there are plenty of ideas that you can find in books and articles. But rather than cover the obvious ones, in today’s tough economy you need new and creative ways to save.

Consider the following ten cost-saving ideas for your small business:
1. Go paperless
  You can lower storage costs, printing costs and improve overall efficiency by running a paperless office. By scanning documents you can send and share information effortlessly saving your business time and money.
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What to Look For in Your Business Loan Agreement’s Fine Print

Submitted on 27 June 2012

Applying for a business loan and securing its approval can be a lengthy process. The actual approval time varies widely depending on the type of loan, its complexity, and the borrower’s timeliness providing the necessary information. This guide from SBA can help you gather the right paperwork, whether you’re applying for an SBA loan or a regular business loan.

But knowing exactly what you’re signing up for is just as important as rounding up the details and completing the paperwork accurately. If you’ve ever purchased a car and found yourself surprised when extra line items turn up on your monthly billing statement, then you’ll know the feeling. With loan agreements, there are devils in the details. That’s why it’s critical to pay attention to the fine print, often found in the promissory note or security interest section of the agreement.

Here are some tips for what to look for and how to avoid potentially costly mistakes:

Common Details Buried in the Fine Print

Some of the key terms that make up a loan agreement aren’t always as explicit as one might hope. The fine print, for example, can include detailed and complex technicalities, qualifications or restrictions of the agreement, and even vital information about the loan’s terms. Things to look out for include:

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Prepare for Hurricanes, Disasters by Safeguarding Tax Records

Submitted on 27 June 2012

IRS YouTube Videos
Preparing for Disasters: Spanish | ASL

With the early start of this year’s hurricane season, the Internal Revenue Service encourages individuals and businesses to safeguard themselves against natural disasters by taking a few simple steps.

Create a Backup Set of Records Electronically

Taxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set.

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Business Loan Application Checklist

Submitted on 20 June 2012

State and local economic-development agencies – and numerous nonprofit organizations – provide low-interest loans to small business owners who may not qualify for traditional commercial loans.

When it comes to applying for these loans, the good news is that most of these other lenders require the same kinds of information. Of course, each loan program has specific forms you need to fill out. But for the most part, you’ll need to submit the same types of documentation. So it’s a good idea to gather what you’ll need before you even start the application process.

Here are the typical items required for any small business loan application:

Loan Application Form

Forms vary by program and lending institution, but they all ask for the same information. You should be prepared to answer the following questions. It’s a good idea to have this information prepared before you fill out the application:

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Determining Your Financing Needs

Submitted on 20 June 2012

Before you seek financial assistance, you should thoroughly assess your current financial situation. Ask yourself the following questions to determine your business' financing needs:

Do you need more capital or can you manage the existing cash flow?

If you are having trouble paying your obligations on time, you may need an infusion of working capital.

What is the nature of your need?

Do you need money to start or expand your business or as a cushion against risk?

How urgent is your need?

Whenever possible, it's better to anticipate your needs rather than looking for money under pressure. It is harder to gain approval for a loan when your company is already in trouble, so plan ahead and secure financing well in advance of a crisis.

How great are your risks?

All businesses carry risk, and the degree of risk will affect both the cost of your loan and available financing alternatives.

In what state of development is your business?

Needs are generally more critical during transitional stages - start-up and expansion being two of the most urgent and costly.

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SBA Simplifies Online Disaster Loan Application

Submitted on 18 June 2012

Applying for disaster recovery assistance from the U.S. Small Business Administration just got easier thanks to revisions made to its electronic loan application, significantly reducing the number of screens an applicant must read while filling out the form.

“Our goal is to provide support for those rebuilding after a disaster, and we wanted to make the process more user-friendly,” said SBA Administrator Karen G. Mills. “Whether it’s a hurricane, tornado, earthquake or devastating flood, the SBA can step in to help communities get back on their feet by providing access to both home and business recovery disaster loans. To make the loan application process more streamlined and simplified, we have taken a different approach with the online applications. This improvement will make those first steps toward recovery more convenient.”

The new online application is easier to read, and users will spend less time filling out the form.

The original electronic loan application—launched in 2008—guided applicants through a series of 80 screens, based on responses to questions aimed at determining eligibility. Now, applicants for disaster assistance can fill out a form on SBA’s secure website that looks exactly like the paper application, four pages for home loans, and three pages for business loans.

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What You Need to Know about the Small Business Health Care Tax Credit

Submitted on 07 June 2012

How will the credit make a difference for you?

For tax years 2010 through 2013, the maximum credit is 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities. An enhanced version of the credit will be effective beginning Jan. 1, 2014. Additional information about the enhanced version will be added to IRS.gov as it becomes available. In general, on Jan. 1, 2014, the rate will increase to 50 percent and 35 percent, respectively.

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Tips & Tools for Securing an SBA Loan

Submitted on 22 May 2012

Joe McClure, District Director
Montana District Office
U.S. Small Business Administration

Your success is our goal – that’s why this month I’m focusing on dispelling the myths of business loans and giving you tips and tools so you are well prepared when applying for a business loan. The Small Business Administration is here to help and give you a leg up on getting a small business loan.

A common misconception is that SBA loans money directly to small businesses. We do not. We do, however, guaranty loans made through local approved lenders. The SBA guaranty reduces the risk to the financial institution and may provide the lender with more flexibility in credit decisions. Contact your lender directly to apply for an SBA loan or visit our website to find a local SBA lender.

We recommend approaching the financial institution you currently do business with first. They have first-hand knowledge about you, your character and your history. If your bank says no, don’t be discouraged; think of it as an opportunity to shop around! Some lenders do not make certain types of loans, so although you may not qualify for a loan at one institution, you may be approved at another.

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Charting Your Destiny One Account at a Time

Submitted on 16 May 2012

When going on a trip, it doesn’t do much good to review a map if you have no idea where you want to go. You seldom plan a trip without knowing how much time you have to get to your destination and how much money you want to spend to get there. If you are like me, it is also helpful to have a map that shows key locations along the way; the number of miles between certain points; and the type of road you will be traveling on.

The same is true in business. Your record keeping system is the map that tells you how far you are, what key points of interest are currently to be found in your business and helps give you some idea of how far and how long it will take to get where you want to go.

If you’re going to develop an effective map (recordkeeping) system for your business, where do you begin? The best idea is to review those stops along the way that will give you the information you need to make decisions. This is usually done by developing a Chart of Accounts. A Chart of Accounts is no more than a complete listing of all of the accounts; assets, liabilities, equity, revenue and expenses that you have in your business.

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