Credit crunch for small businesses may be easing

May 2, 2009, 5:23PM

Q: Is there any help on the way to encourage lending to small businesses including startups and acquisitions?

A: The American Recovery and Reinvestment Act passed by Congress in mid-February has a number of provisions to enhance the Small Business Administration’s loan programs, and three have already been implemented.

The first deals with the SBA’s 7(a) loan program, which guarantees a portion of bank loans to entrepreneurs looking to start, expand or acquire small businesses. The 7(a) serves as a credit enhancement to the lender and provides collateral to the borrower. Most 7(a) loan program guarantees are temporarily raised to 90 percent of the portion of the loan being insured against default through 2009 or until the funds are exhausted.

The increase in guarantee levels will help banks extend credit and make more capital available to small-business owners around the country.

The act also temporarily waives the guarantee fees passed on to borrowers on 7(a) loans.

On Friday, the SBA temporarily increased the 7(a) loan size standard making more businesses eligible for 7(a) loans. Also , the fees paid by borrowers in the SBA’s 504 loan program are temporarily waived.

This program provides SBA financing for long-term fixed assets such as land, buildings (occupied by the borrower) and substantial machinery and equipment.

Through the SBA’s Surety Bond Guarantee program, the SBA guarantees bid, payment and performance bonds that protect a project owner against financial loss if contractors default or fail to perform. The maximum amount for contracts that qualify for SBA surety bonds has been raised to $5 million or $10 million depending on the type of contract.

The Recovery Act also expands the SBA’s Microloan program, which provides loans up to $35,000 through participating microlenders. These are paired with technical assistance to startup or growing small businesses.

The director of the SBA Houston District, Manuel Gonzalez, says, “In our district, we have seen an increase in 7(a) loan volume of approximately 50 percent over the period just prior to passing the Recovery Act.”

Starting a business? Pick one that blooms in recession

March 28, 2009, 2:37AM

Q: I would like to start or buy a small business, but the economic news these days is so depressing that I’m wondering if there are any good opportunities in today’s environment. Do you know of any?

A: There are many small businesses in Houston that are doing quite well despite the economic slowdown we face. Some are types of businesses in markets that are weathering the storm better than most. Others have acted aggressively to stimulate sales, have adjusted their product or service mix in response to changing customer needs, or have increased their efficiency to improve their bottom line.

For example, when the conventional wisdom was to trim down and scrutinize costs, Veronica Millstid-Levine, the owner-manager of Bailey Connor Catering, hired a marketing consultant and additional salesperson to root out more customers.

It paid off with a 21 percent increase in sales in 2008, and the company is on course for a greater increase in 2009.

“Auto repair is an example of a sought-after business in these recessionary times,” said Rose Stabler, Managing Partner of Certified Business Brokers.

“With the car dealerships going out of business and their repair shops along with them, there will be more people looking for private auto repair shops. In addition, more people are keeping their cars instead of buying new ones. Therefore, more repairs!” Stabler said.

One of Stabler’s current listings for sale in Houston boosted its earnings last year by 65 percent by providing superior auto service to its local customers.

Debbie Beal, owner-manager of A2Z Educational Supplies in Humble, worked with SCORE business counselor Bob Galbreath.

She emphasizes quality service to her customers, who are mostly schools and teachers.

Her sales increased by 28 percent last year, despite Ike, and are showing about a 40 percent increase year-over-year in 2009.

Vic Bailey of One Voice, a business communication services company, has maintained his sales volume by “hitting the streets” and paying visits to current clients and potential clients.

Improved telecommunications is one way his clients can increase productivity.

So he proactively gets out there to advise them on those improvements.

Marketing your small business successfully

March 13, 2009, 9:50PM

Q: I work independently, performing services or doing projects for clients. What advice do you have for finding freelance work that keeps the revenue coming in?

 

A: When you’re a freelancer or solo independent contractor, you are your own marketing department. It’s up to you to make the contacts and generate the work that will enable you to expand your business.

Freelance newcomers and veterans alike need to continually broaden and update their work-finding and marketing skills, not only to sustain their current workloads, but also to stay ahead of the competition.

Two keys to being successful at this are consistency and dedication. The search for work is a constant part of your independent enterprise, so you’ll enjoy it more if you develop a passion for finding the next big project.

The best source of new business is current customers. Doing good work for them will keep them coming back, which is why you also need to be a stickler for client satisfaction. Always stand behind your work and try to exceed client expectations.

It’s also important to stay in touch with your clients, even if you already have a substantial backlog of work. Check in periodically to ask how things are going, what projects or initiatives may be in the works, and remind them that you’re ready to help out if the need arises. They’ll appreciate your proactive interest, and planting that seed may pay off immediately or in several months when things start to slow down on your end.

Also recognize that building your personal brand is important. As a sole operator, your brand is you, so focus on leveraging your special knowledge, style or expertise. But don’t lock yourself in too tightly. The most successful independent contractors try to build new skills and leverage existing ones to higher price levels.

A substantial number of Web sites specialize in matching freelancers with potential clients. Their approaches are as varied as the range of industries they cover. Some work on a bid system where employers post projects and freelancers bid on the work. These sites will likely take a cut of your proceeds.

Then there are job boards, where projects are posted and you respond with a pitch letter and ré sumé directly to the employer. You may need to pay a fee to access these resources, so it’s a good idea to find out whether the amount of work or contacts generated are worth the investment.

Chambers give a range of help to small businesses

Feb. 27, 2009, 11:50PM

Q. I read your recent article on networking and how to interact with potential business contacts. Are chambers of commerce good places to network and worthwhile to join?

A. Chambers offer companies a range of resources to support, develop and grow their businesses as well as the local economy. From regulatory and legislative issues to enhancement of the business environment of your community, the chambers of our region are quite often at the forefront of positive change.

With chamber membership, a small investment in time and dollars can help contribute to your marketing, public relations, networking and team-building efforts.

Chamber membership expands your information and networking resources dramatically. Networking with other businesspeople gives chamber members the opportunity to meet and exchange information with each other.

“Contributing to chamber of commerce community activities brings visibility to your business as a good corporate citizen,” says Ann Hodge, CEO of the Katy Area Chamber of Commerce.

The chambers’ involvement in local charities, community cleanups, crime prevention programs and more give your business an opportunity to participate in positive changes in your community, often at minimal cost.

Powerful endorsements

“Area chambers are proud to recognize and reward this activity,” Hodge said. A company’s efforts are often lauded for months by other businesses, the community and elected officials. These accolades and respect from other local businesses serve as powerful endorsements and publicity for any company.

Are you concerned about the regulatory climate in your area and want to assume a role toward effective change? Your local chamber is the voice of business in a myriad of issues.

The chambers work to influence the agendas of city, state and national elected officials, keeping the interests of our local businesses in front of decision makers.

In addition to numerous networking events and other resources, most chambers offer educational and business counseling services to help their members resolve issues and improve their businesses.

For instance, SCORE provides free and confidential counseling as members of the Katy Area, Houston Northwest and Houston West chambers of commerce.

Get help coping with the recession

Feb. 14, 2009, 12:34AM

Q: The economic slowdown is starting to hurt my small business. How can I get ideas and assistance for coping with the challenges that small businesses face today?

A: Small businesses shouldn’t have to face the recession alone. And in Houston, they don’t have to.

Capital One Bank and SCORE have formed the Small Business Development Alliance. Its aim is to help Houston-area small businesses survive and succeed during the tough times. Small-business owners are invited to attend free seminar and networking events planned throughout the year.

At these events, you will take home coping strategies for tough times, meet with lenders of alternative financing, network with other small businesses and enjoy a free lunch.

“We recognize the important role small businesses play in stimulating our economy and rebuilding our communities and the determination it takes to open your own business,” said Laurie Vignaud, a senior vice president at Capital One bank.

At the events, you’ll have the opportunity to meet one-on-one to discuss your situation with SCORE counselors, Capital One bankers and their strategic partners:

• SCORE SMART squad members will explain how they can work with you at your location to help resolve business issues.

• The Small Business Administration will explain the SBA Loan Guarantee programs.
• Acción Texas provides credit to small businesses that do not have access to loans from commercial sources.
• Houston Business Development can provide low-interest-rate loans
and an array of support services and management assistance.
• The Houston Minority Business Council actively involves its members to increase and expand business opportunities and business growth for minority business enterprises.
• The city of Houston One Stop Business Center provides information on city, county, state and federal regulations affecting your business.

The next seminar is at the Church At Bethel’s Family, 14442 Fonmeadow Drive, in Houston next Saturday from 9 a.m. to 3 p.m. and includes a free lunch. Visit www.scorehouston.org to register and see the schedule and locations of the other free seminars.

Network your way to success

Jan. 31, 2009, 12:03AM

Q. I’ve been told that I need to network more in order to expand my small business, but I’m not very good at it. How does one go about networking?

A. Networking is the process of connecting with people so you may help others and they may help you. The interactions established through effective networking build over time and can make a difference in the amount of business your company generates.

Networking doesn’t come naturally to a lot of people. Many are uncomfortable with starting a conversation with someone they don’t know. Others are concerned it won’t be worth their time.

Successful networking is more than simply exchanging introductions and business cards and then waiting for someone to call.

Donna Fisher, a networking author and speaker, says you should focus on people as they are introduced to you, so that you remember who they are.

Also, don’t waste the few precious moments you have with contacts by focusing on yourself. It’s better to spend most of that time asking questions so you can assess whether or how to follow up.

Fisher’s easy-to-read book Power Networking, which she co-authored with Sandy Vilas, identifies 59 secrets to building powerful networks.

Here are a few.

When introducing yourself, you need to make your company sound spectacular in seven to 10 seconds, Fisher says. Your introduction needs to be “clear, concise and personable to attract people’s attention, generate inquiry and be remembered.”

Look professional and always carry your business card. After all, who knows where or when you’ll meet a fantastic contact. “Treat the act of giving someone your card with respect, and the recipient will also treat the card, interaction and follow-up with respect,” Fisher says.

Give referrals whenever possible. The best networkers believe in the “givers gain” philosophy. In other words, If you don’t attempt to help the people you meet, then you are not networking effectively. If you can’t give someone a bona fide referral, try to offer information that might be of interest to them, such as details about an event. Write notes on the backs of business cards you collect to help remember each person.

You can do all of the above religiously, but if you don’t follow up effectively, you will have wasted your time. Call each person you’ve met. Be sure to fulfill promises.

Putting a value on your business can be crucial

Jan. 17, 2009, 2:19AM

A: Too often, business owners brush aside valuations, believing them necessary only if they decide to sell. There are many other reasons to value your business. Perhaps you’re thinking about taking on a partner, or a partner is leaving the business.

Other reasons for business valuations could include applying for an expansion loan, spin-offs, disputing an IRS audit, major strategic planning initiatives, estate or gift planning, and divorce. Or how about this: You might simply want to know how your investment is doing.

Going through the valuation process can help you learn about those things that increase the value of your business.

You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.

You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.

The price range can vary from as little as $15 for the simplest software, to thousands for a detailed analysis performed by certified professionals for midsize businesses. Business brokers, hoping to sell your business, may even do valuations for free.

None of the many valuation procedures is perfect. Most valuations are based on an analysis of forecasted cash flow that produces a present value for the business. Also, there are accepted rules of thumb for all kinds of small businesses, in all types of industries.

Bankers and investors, as well as the IRS, are generally skeptical about rules of thumb. You can expect both groups to require a valuation whenever a company seeks either a significant increase in credit or a new infusion of equity capital.

Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.

Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.

Try to match the person or method you use for a valuation with the reason you are doing it. So, if the valuation is for a loan, look for someone who’s done them for that purpose.

The American Society of Appraisers offers a free service online to help you find a business valuation expert in your area. Look for the Find an Appraisal Expert link at www.appraisers.org.