Wyoming Entrepreneur Blog

How to Create an Effective Budget

This blog post was written by Doran Fluckiger, Wyoming Entrepreneur SBDC, Southwest Wyoming  Regional Director.

A small business owner faces a list of struggles every day just to stay in business. Small businesses find themselves working hard to generate revenue and make a profit. In order to address the financial struggles of small business owners, you must first understand and identify the problem.  Budgets can be an effective way to quickly pinpoint where expenses are high and revenues are low. 

Goals
Small business owners want to know that every aspect of their business is functioning correctly. As a result, some may try to set goals for every aspect of their business. Instead, set one goal to quickly measure the same result.  For example, instead of creating a goal to know if inventory sales increased, and how much the inventory costs increased; combine both goals into how much profit was created from inventory sales. If profits decrease then costs may have increased, and if profits increased sales most likely increased as well. Fewer goals are easier to manage and if done properly can give you the same result as several goals. To be most effective goals must be measurable and obtainable.

Consistent Record Keeping
Measuring success of a small business is dependent on consistent and accurate record keeping.  Bookkeepers must assure that they record transactions the same way for every entry.  If transactions are coded differently from month to month it will change the outcome of your results.  Management cannot implement the correct changes to the company if the data is recorded inconsistently. 

Time Management
Budgets tracking every detail of the company are great.  However, if the budget cannot be updated on a regular basis because it is too large to maintain, it will not help your company. Simple budgets should be created to pinpoint problem areas that may need improvement. This saves time and helps create budgets that quickly and clearly reflect results.  Be sure it is easy to read, allowing business owners to quickly understand if the business goals have been met.   

Implement Changes
The end result of a budget should provide the guidance to make immediate changes that will generate greater profits.  If a budget does not provide information to improve business operations it is useless.  Overall the budget should capture areas of strength and weakness allowing small business owners to implement cost saving changes.

The American Invent Act, First to File, and Provisional Applications

This blog continues the discussion from last week about patents.

The America Invents Act, First to File, and Provisional Applications

Karen Kitchens, Intellectual Property/Documents Librarian, Wyoming State Library, karen.kitchens@wyo.gov

President George Washington signed the first U. S. patent statute in 1790.  Since that time, United States patent law has uthorized the granting of rights to the first to invent a patentable
invention, contingent upon meeting rigorous terms and conditions.  This means that the date the inventor envisioned the invention is the “date of invention” – thus the date of ownership.  Generally, this date preceded the date of filing with the United States Patent and Trademark Office (USPTO).  Soon, this will no longer be the case.

As of March 16, 2013, one of the most debated provisions of the America Invents Act (AIA) will take
effect.  As of this date, the “first-to-invent” system will change to the “first-inventor-to-file” system.  This provision changes the legal ownership of a patent onto the entity that is the first to file with the USPTO, thus bringing the U.S. system closer in line with most of the rest of the world.  The new version of § 102 (35 U.S.C. § 102) declares that a person is entitled to a patent unless the claimed invention was publicly disclosed prior to the effective filing date of the patent application. The exception to this being, (1) the disclosure was made less than one year before the filing of the patent
application (by the inventor themselves) and (2) the disclosure was made by the inventor or someone who derived the inventive subject matter from the inventor. 

Once this provision takes effect, filing patent applications as quickly as possible may
be in the best interest of the inventor.  In order to stay competitive, inventors of all sizes (including small business owners) will need to file patent applications quickly in order to stay ahead of competitors.  Filing a provisional patent application may be one way to quickly get a patent
application on file at the USPTO.  A provisional application allows filing without a formal patent claim, oath or declaration, or any information disclosure (prior art) statement. It provides the means to establish an early effective filing date in a later filed non-provisional patent application.  A provisional application also allows the term “Patent Pending” to be applied in connection with the description of the invention.  Provisional applications have a pendency lasting 12 months from the date the provisional application is filed.  The 12 month pendency period cannot be extended.  This means, once a provisional is filed, you will have 12 months to file a non-provisional.  A provisional patent application may or may not be the path for you.  Provisional patent applications do not mature into a granted patent without further submission.  All provisional applications automatically become abandoned when the pendency period expires by operation of law.  Thus, all potential patent applicants are encouraged to gather as much information as possible on this option.  The USPTO website is the foremost information source on provisional patent applications. 

For further updates on AIA, check out the USPTO AIA Blog. 

A Blog version of this article and an opportunity to post comments is available at http://www.wyomingentrepreneur.typepad.com/blog/.

 For more information about the services of Wyoming SBDC, MRC or PTAC, or to ask a question, please call 1-800-348-5194, e-mail wsbdc@uwyo.edu or write 1000 East University Avenue, Department 3922, Laramie, WY 82071-3922. Additional help is available on our website www.wyomingentrepreneur.biz.

 

The Wyoming SBDC, MRC and PTAC partnership
program is funded in part through a cooperative agreement with the U.S. Small
Business Administration. Additional support is provided by the Wyoming Business Council and the University of Wyoming.

Customer Retention The Old Fashioned Way – Using New Fangled Tools

One of the things I hear for business clients frequently is that they don’t understand how customers think today.  Actually times haven’t changed that much, but there are new tools that make keeping your customers happy actually work more like things did in my great grandfather’s time.  Back then you purchased from the retailer down the street.  You knew him and he knew you and your family.  There was a relationship, and with that relationship came flexibility.  The old “mom and pop” stores often ran tabs, gave discounts and remembered what their customers liked.   Then came the age of mass marketing where consumers were numbers and entries on a balance sheet, and the personal approach was lost.

 

What’s happening today is a return to the times when merchants and customers had personal relationships.   The difference is that technology has opened a window to enable these relationships to occur between people who are located a great distances from each other.   Karl Wirth, writing on the Marketing Profs website talks about the “7 P’s of Customer Retention”.  These are:

 

1.  People.   To retain customers you need to build a relationship with your customer as a person, not just a customer.  Start by hiring people who show they care about others.  Many companies now have a “chief customer officer” to ensure that the entire company maintains a people focus.
2. Product.   Without the right product, you won’t really be able to accomplish any of the “P’s”.  Make sure that your product provides value quickly, retains value over time and is of high quality.  Commodity items don’t generally have loyal customers, so make sure your product is special.
3. Place.  Location matters when you are locating a physical store, but if you are an online retailer, place still matters.  Your site needs to be easy to find, easy to navigate, and friendly to the customer.  What goes for “bricks and mortar” goes for online merchants as well.
4. Price.  If you have a relationship with your customer as a person, then you take care of each other.   The new expectation is that customers expect retailers to look after them.  This can be by providing deals for returning customers or by adding services or features without charging more.  Turn your employees loose and they will help you find ways to maintain this relationship.
5. Promotion.  You should promote to existing customers differently than you do to potential customers.  Why?  Because you should know them.  Target promotions to your customers based on their likes and needs.
6. Processes.  This is where the new technology comes in.  Where the old corner store owner new his customer by chatting with them when they came in, today’s businesses should use social media, customer surveys and other tools to engage and understand their customers.
7. Positioning.  Wirth says “If you want to retain your customers, you have to know who you are and communicate that clearly and repeatedly to them so they know who you are as well. Foremost, however, is this: Your actions must communicate your positioning. Those actions are showcased in the people you hire, the product you ship or service you deliver, the price you charge and the discounts you provide, the place and promotions you choose, and the processes you put in place.  Combined, your words and actions say "This is who we are and what you can expect of us."”
   
   

Bottom line: If you want to succeed with today’s customers, put on your great grandpa’s store apron, and adopt his attitude of treating his customers like friends and neighbors, rather than number and profit centers.  I think you’ll find your customers respond.  

What are you doing to retain customers in today's world?

 

The Economic Census – Vital Data for Business

During November and December over 4 million US business and around 11 thousand Wyoming businesses will receive 2012 Economic Census forms from the U.S. Census Bureau.    This means that while many businesses will take part in the Census, not all will be asked to participate.

If your business receives a form, you will be asked for basic operating data for your business, data that is tailored to your specific industry and company size.  Information includes number of employees, payroll and value of goods or services produced in 2012.  You will be able to respond either in paper or online.  Responses are due no later than February 12, 2013.  It is important to note that all information is confidential and your compliance is required by law.

The Census is the basis for the economic indicators that are used every day in the US, like the Gross Domestic Product, monthly retail sales and producer price index.  The statistics from the Economic Census are used by businesses, local governments and investors to make smart decisions. 

Without the Economic Census and the data it provides about our US economy, businesses and governments of all sizes would be working in the dark in trying to solve the numerous challenges that our country and economy faces in the years to come.  Filling out the Economic Census form is not only a legal requirement, it’s a smart investment in growing our local, state and national economy.

If you’d like to see the type of information that the Census provides, you can go online to www.census.gov/econ/census/.  This site gives more in-depth information about what the Census is and why it is so important for all Americans.  It also gives you a look at the type of economic statistics that come out of the Census, with ideas on how you can use them in your business or community.

The Economic Census isn’t new, in fact the concept dates back to the 1810 Census, when questions were asked about manufacturing along with questions about population.  The Economic Census provides detailed statistics that are important for industries and communities.  Trade associations, chambers of commerce, and businesses rely on this information for economic development, business decisions, and strategic planning.

As the manager of the Wyoming Market Research Center, every single day I use information that is based on the Economic Census to help Wyoming businesses find out about their industry, their community and their markets.   Accurate and believable data from the Census is vital to creating sensible business plans, loan applications and for simply running day-to-day business.

 

Your retail store CAN create an amazing holiday marketing campaign!

The holidays are just around the corner, but you still have time to plan and deliver an amazing marketing and sales strategy for the busy season ahead. Small town shops CAN compete with big box and online stores! That power comes from greeting your clients personally, giving them a positive, memorable shopping experience and helping them find other stores in the neighborhood that share your “hometown experience” philosophy.

Revisit the principles of retailing and remember why you have chosen to share your products in the public marketplace. Present your retail space in the best possible light by appropriate merchandising. Merchandising is an art that communicates the image, lifestyle or value system for your products. Examine your store from the perspective of a customer. Is the window inviting? Is the glass sparkling clean? Is the interior of your store clean and organized? Are decorations tasteful and music appropriate? Is lighting pleasant and targeted, especially as the wintery days get shorter? Lighting is the key to creating drama and proper lighting has been shown to increase sales by 25%!

Ensure that your employees are prepared for the busy days of greeting customers, offering assistance in providing the kindest, most helpful, and most professional service to enhance your brand and reputation long after the holidays. A couple of tips… When engaging customers, greet them in the front third of the store. Make eye contact and smile…offer to answer questions and then allow the customer to browse. Whenever possible, it is best for sales people to face the entrance, allowing them to acknowledge new shoppers, even if they are engaged with another customer at the moment. If you are offering sales or specials, make sure your employees are aware of the specifics. Also be clear and consistent on return, refund and warranty policies.

Now is the time to develop relationships with other stores in your shopping neighborhood that offer products that complement your merchandise. For example, if your store sells evening gowns, mention that the store across the street carries tuxedos and the shoe store next door may have the perfect pair of dressy heels to complete the ensemble. Customers appreciate recommendations that validate their purchases… and appropriate recommendations will help them save time, money and resources. The business relationships that are forged can be the best line of defense as you promote the value of shopping locally. Each business will be looking out for their neighbor, differentiating your neighborhood as a positive shopping experience for their customers.

Finally, engage your customers with a carefully designed follow-up campaign after the holidays. Holiday sales present an opportunity to gather email addresses and collect a fan base that will allow you to inspire your customers to remain connected with their community and local retailers all year long.

Wishing you and your retail store a wonderful holiday season!

10 Tips for Family Business Success

I recently read an article from Nation’s Business regarding this topic.  The article, written by Sharon Nelton, was several years old, but had some interesting insight into family business from David Bork, a consultant who has been advising family businesses since the late 60’s.  Here are some of the qualities he feels are essential for families in business together.

1)       Shared values – Your family should share similar values concerning people, work, and money.  This way you can have a shared vision for the future of the business.

2)      Shared power – Not the same as “equal” power.  It refers to mutual respect for each other.  Respect of their talents and abilities among generations, spouses and siblings.  Decisions should be deferred to the person with expertise in that area of business.

3)      Traditions – The family should foster new and renew old traditions that bond the family together and sets them apart from other families.

4)      Willingness to learn and grow – The family should be open to new ideas and new approaches to solving problems within the business.  Problems are only new opportunities to learn and grow together, even when you might have differing opinions.

5)      Build relationships – Take time away from the family business to have fun together. The enjoyable times can help you survive the hard times and will help sustain family relationships.

6)      Genuine Caring – You should express your feelings of concern for family members openly, to let them know that you do care about them.  Sometimes it’s the little things you do that will say that you “really” care about another family member.

7)      Mutual respect – You must have respect for one-another to be able to do business together.  Knowing that your family can depend on you and that you can depend on others builds trust and mutual respect.

8)      Support for each other – Even if a family member is having struggles, family members should assist and support one another.  During times of grief, pain or even shame, you should be supportive of family members.

9)      Respect privacy – When you are in business with family members there is a lot of togetherness.  Be respectful of one another’s individual privacy and that of each family unit within the extended family.  Don’t step over the line.

10)  Interpersonal boundaries – A common family business related problem is conflict between two family members.  Resist getting caught in the middle of a conflict that really needs to be resolved between the two family members.

According the Bork, understanding which of these traits you have, or need to work on, will help strengthen your family bonds and the success of your family business. What do you think?

Do I pay sales tax when I buy a business?

By Leonard Holler, CPA, CVA, CGMA – Regional Director in Casper.

“I want to buy a business, but someone told me that I will have to pay sales tax on the purchase of the business.  Is that right?” – Bruce in Wheatland.

Depending on the terms of the business sales transaction, it may be.  If you are purchasing at least 80% of ALL of the assets of the business located in Wyoming and you continue to use the tangible personal property in the operation of the ongoing business in the state, it is excluded from the statutory definition of a “sale” subject to tax.  Therefore, it would not be subject to sales or use tax.  If the sale includes vehicles and you meet that 80% threshold, those vehicles would be exempt from sales tax when you go to license them at the county treasurer’ office.

However, sales tax would be charged on the sales price of the “tangible personal property” if the sale is for less than 80% of ALL assets of the existing business.  By definition, if the sale is for less than 80%
of ALL the assets, it would still exclude accounts receivable, inventory items for resale, goodwill (and other intangibles), and real estate, but could include furniture, fixtures, vehicles and equipment used in the business.  You, as the purchaser or successor of the business, also retain the obligation to pay the tax until the former owner produces proof of the payment (certificate of no tax due) from the Department of Revenue of the sales tax owed.

The seller should file a return within 30 days after discontinuing or selling the business and you, as successor, should probably withhold enough money from the purchase price to pay the taxes until the proof of payment (certificate) is received indicating that there is no further taxes due.

For more questions about the terms of your sales transaction, you can call the Department of Revenue at (307)777-2459 or e-mail them at DOR_taxability@state.wy.us.

Can Your Business Withstand A Disaster?

 

In light of the fires on Casper Mountain this week, and other disasters throughout the summer, I’ve been thinking about what I would do if my business was affected. Can you offer some suggestions to help me position my business to withstand a disaster?

By Candis Lane, Project Coordinator, Wyoming Entrepreneur SBDC

It’s not without reason you are concerned. Statistics show as many as 40 percent of businesses fail following a natural or manmade disaster. You’ve worked hard building your business and creating jobs in your community now take proactive steps to protect your employees and your business by doing preparedness planning and creating a business continuity plan.

Your goal should be to get your business up and running again in the event you aren’t able to perform critical operations. The most challenging part may be just getting started. You’ll need to do some planning and putting pen to paper. Since your business is uniquely your own, you probably won’t find a “fill-in-the-blank” template for the process, however there are many resources available, which I’ll reference later in this article. Once you have a plan, you’ll need to keep it current.

It may help to break the project into the following categories: planning, preparation, responsiveness and operations resumption. If you have employees involve them in the process and stress the importance of planning within their homes and families. You and your staff will not be able to do your best if concerned about loved ones. Incorporate training drills, everyone needs to know how to respond. Include individual responsibilities, notification and communications (including locating family members) and staff accountability. Response procedures should consider evacuation, location of emergency supplies and equipment, equipment and utility shutdown and shelter.

Identify critical services and functions – what do you do? Who’s responsible for what? Who do you serve; think about your clients, how might an interruption of your services impact them? Consider where you serve your customers and how you serve them. What are your staffing needs, suppose you aren’t able to operate with a full staff? What are your equipment needs? How do you store your company information? Could work be performed from another site?

Also consider different types of interruptions, each causing a different degree of break in service time. Scenarios such as a simple service disruption like a power outage; suppose you have a suite of offices and only a portion of the offices are affected; maybe your entire building is destroyed or a large area within your community is affected and people are displaced, and homes and businesses may be uninhabitable for an unknown period of time.

September is National Preparedness month. This is the perfect time to start building emergency preparedness into the culture of your organization. Incorporate procedures into new employee orientation by including an overview of your processes and providing a copy of your plan. Each step you take brings you closer to recovery. Take action today to ensure the safety and well-being of your employees and families and to position your business to continue to thrive.

Those resources I mentioned to help you through the process:
•    Ready.gov/business for information and tools to help you get started with risk assessments, business impact analysis and business continuity resources
•    SBA’s Emergency Preparedness and Disaster Assistance
•    American Red Cross Plan & Prepare
•    Emergency Communications Network CodeRED notification system for Citizens
•    CodeRED Mobile Alert App to receive notifications that affect you wherever you may be.
•    The National Preparedness Coalition and Pledge to Prepare

Intellectual property and small business

WYOMING BUSINESS TIPS

A weekly look at Wyoming
business questions from the Wyoming Entrepreneur Network, a partnership of
business assistance programs at the University
of Wyoming.

Intellectual Property and Small Business

Karen Kitchens, Intellectual Property/Documents
Librarian, Wyoming State Library, karen.kitchens@wyo.gov

Knowledge and ideas have always been a powerful force in economic development.  As a small
business owner, Intellectual Property (IP) is a key consideration in your day-to-day business
decisions.  IP is an important component of the United States economy, and the U.S. is an acknowledged global leader in the creation of IP.  According to the Office of the United States Trade Representative, “Americans are the world’s leading innovators, and our ideas and intellectual property are a key ingredient to our competitiveness and prosperity.”[1]

Unfortunately, businesses often fail to protect their valuable IP because IP is not tangible property.  IP has no physical form.  Examples might be a method of doing business, an Internet domain name, or a company’s marketing material.  Often, this intangible property is more valuable than real or personal property. The commercial value of IP comes from the ability of its owner to control and exploit its use.  

The term “Intellectual Property” might sound a bit pompous.  But in reality, it is a very
good description for the proprietary interests of individuals and businesses, protected by the laws of IP.  The United States Patent and Trademark Office defines IP as, “Creations of the mind -
creative works or ideas embodied in a form that can be shared or can enable others to recreate, emulate, or manufacture them.”  Globalization of the world’s economies has significantly increased the need for information about IP.    

There are four ways to protect IP - patents, which pertain to pragmatic innovations; trademarks, which relate to commercial symbols; copyrights, which concerns artistic and literary works; and trade secrets, which consist of valuable business information that is not generally known and is subject to reasonable efforts to preserve confidentiality.  Some IP rights – copyrights and trademark rights are granted automatically upon creation or use of the IP assets without any action needed by the creator.  Other IP rights, such as patents, require action on the part of the creator in addition to considerable expense. 

This series will review the four types of IP rights and how each may affect your business.  For example, developing and protecting your IP assets and rights can give you an edge over the competition by discouraging unscrupulous competitors, developing new revenue sources, and increasing the
value of your company.  IP is a valuable business asset that must be managed and protected like any other asset.

 

For more information about the
services of Wyoming Entrepreneur, or to ask a question, call 1-800-348-5194,
e-mail wsbdc@uwyo.edu or write 1000 East University Avenue, Department 3922,
Laramie, WY 82071-3922. Additional help is available on our website www.wyomingentrepreneur.biz.

 The Wyoming
Entrepreneur partnership program is funded in part through a cooperative
agreement with the U.S.
Small Business Administration. Additional support is provided by the Wyoming Business Council and the University of Wyoming.

---

[1]Special
301 Report Finds Continued Progress But Significant Improvements Needed. 2004.
Office of the United States Trade Representative Archive. 30 May 2012 <http://www.ustr.gov/archive/Document_Library/Press_Releases/2004/May/Special_301_Report_Finds_Continued_Progress_But_Significant_Improvements_Needed.html>.

 

 

 

 

Developing Cash Flow Projections

Have you applied for a business loan and been asked for projections or a cash flow?  Most lenders will want this information but entrepreneurs often don’t know where to start.

If you are an existing business you can use your historical financial information to project out what the next 12 to 24 months will look, including the debt service on the new loan you are applying for, any new sales or revenue that investment will create, and what might go away (for instance rent if you are buying your own building versus leasing). The purpose is to demonstrate that you understand how your income and expenses will flow in and out (cash flow) of the business, and that you can repay the amount borrowed.  Include some margin for error since nobody ever projects perfectly.

If you are just starting a new business, this is a little trickier.  Estimating the expense side is usually easier than the revenue.  You can negotiate rent, find out what utilities cost, price insurance, set a marketing budget, and so on.  Sales are another matter.  How many people will by your product or take advantage of your service depends on what it is, competition, how much marketing you plan to do or can afford to do, and a whole host of other factors.  Since you will have some of your hard-earned money and time invested in the deal as well, you want this estimate to be as accurate as possible so as not to enter into this venture only to have it fail.  Remember to account for how much, if any, money you need to generate from this business to sustain your lifestyle.  If you have personal bills and living expenses that must be paid, that needs to be factored in.

I usually recommend to my clients that they generate projections for at least two years (some lenders will want three).  Wyoming Entrepreneur has a very good template on the web site, www.wyen.biz, under the Start a Business tab.  It includes a loan calculator to assist in determining what that new debt will cost you.  This template generally satisfies the format a lender wants to see.

Remember, it usually takes more money and more time than you think to get the business to the point where it is operating at a profit on a monthly basis.  Be especially careful with highly seasonal businesses and recognize that when you start can make or break the deal.  For assistance in developing these projections contact the Wyoming Small Business Development Center office in your area, or call 1-800-348-5194.