Work-Life Balance Tips for Small Businesses

People involved in small business get a bad rap for their workaholic ways. You know because you either know someone who is involved in small business or you are that person. Let’s look at some facts about small businesses in San Diego and then ways people involved in small business everywhere can a better create work-life balance.

According to the U.S. Small Business Administration, 99.9-percent of the 27.5 million businesses in the United States are considered small firms with fewer than 500 employees*. According to the San Diego Regional Chamber of Commerce, the majority of companies in San Diego County are small businesses with 50 employees or less. One out of every five small businesses in San Diego County are in the business services segment which includes consulting, engineering, accounting, research and management. The additional types of business segments in descending size order are wholesale trade, manufacturing / repair, transportation, consumer services, specialty construction, builders, retail, finance/real estate/insurance and an “other” segment (the unclassified small businesses in the county). In San Diego County, the average number of people employed by a small business is 7.3 people.

Everyone related to small business – the owners, the employees, the people who cater to and support small businesses – here are three tips for more balance in your life:

1. Schedule time off. Small business owners value the importance of sticking to a schedule and deadlines. Decide how much time you can schedule to relax, be social or spend time with family in the next week and also how much time you would ideally like to have for such activities in the future. Then, schedule time away from work. Maybe this upcoming week you can only dedicate one hour away from everything work related; block out that hour on your calendar immediately. Knowing that your ideal amount of time is two full weekdays per month, a small business owner can set aside those specific dates in February now. Once those days are on the schedule, they must be respected as if they are meetings with the most valuable client. Commit to taking the time off for the things that matter most outside of business and protect that scheduled time.

2. Turn off the cell phone. This goes for small business owners and anyone who has ever thought about work outside of the workplace. Especially when spending time with others outside of working hours, turn off the distractions of business. By removing the distractions of phone calls, text messages, instant messages, e-mails and phone alerts for a short time, you can truly relish in your time away from the office.

Do you (or the small business owner you know) feel anxiety rise up inside of you when you merely consider turning off your phone? What if you took up the challenge of turning your phone off for one hour next week? Maybe it’s turning off the phone for the hour you’ve scheduled for yourself and your family. Maybe you turn off your phone before you fall asleep or leave it off while you get ready in the morning. Another suggestion is to shut off your phone during your commute if you drive. Since you shouldn’t be on it if you are driving, turn it off and turn up your favorite tunes. Whenever you decide to turn off your phone, you are claiming that time for yourself, which is a crucial piece of the work-life balance equation.

Once you’ve turned on your phone again and realized that your business or work hasn’t imploded or exploded, your anxiety will be less the next time you cut off this type of communication. And what if your business does start to implode or explode? If you are not the sole person in your business, then someone will get ahold of you through your significant other, neighbor, friend, coworker or someone will show up where you are to tell you. If you are the sole person in your business, find another business owner in the same situation and work out a trade where you ensure each other’s businesses don’t go awry. Which brings us to the next point.

3. Appoint a second-in-command for when you are inaccessible. You will take time off whether it’s an hour next week or a full month next year, and you don’t want to worry about your work during that time. That would eliminate the balance. Select a second-in-command and let the person know in what circumstance they will be in charge and how to reach you if a true emergency arises. (You may want to clarify what you consider an emergency with this person.) Let everyone in your company and important vendors know who is in charge in your absence moving forward. That way if something comes up in the hour you are in a business meeting or at your child’s play or in the month you are on vacation abroad, all employees and important vendors will know who to go to. Your second-in-command acts like the gatekeeper to your time away and assesses when he or she needs to contact you. Finally, when setting up your away messages with the times and dates you will be out of pocket, list your second-in-command’s contact information. Your away message may be on your website, in your social media messages, in an e-mail bounce-back message, on your store’s door, and on the phones in your business. If you’d like that breath of fresh air without the worry, then take the steps needed to prevent work from finding you unnecessarily while you are claiming more life in your work-life balance.

With the majority of businesses in United States and in San Diego County operating as small businesses, work-life balance is necessary to continue and grow. By scheduling time off, turning off the cell phone and choosing a second-in-command, you can protect and freely enjoy your time away from the small business you run, work for or support. Here’s to work-life balance in small businesses everywhere!

* The U.S. Small Business Administration sources data from the Office of Advocacy estimates based on data from the U.S. Dept. of Commerce, Census Bureau, and trends from the U.S. Dept. of Labor, Bureau of Labor Statistics and Business Employment Dynamics.

Angela Martin is the owner of DEFINING SUCCESS COACHING and is a certified career and life coach who uses proven techniques to help creative people see themselves receiving the recognition they deserve, hear about themselves in their industry and finally feel satisfied even though they previously felt stuck. Angela serves on the Board of the San Diego Professional Coaches’ Alliance and is the Work-Life Balance Writer for San Diego’s Examiner.com. She is also a speaker. Angela was previously the Creative Manager at the advertising agency that did Got Milk?

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How to Get Financing For Your Small Business

In today’s hostile economic environment, access to capital is the primary differentiating factor between those businesses which have been able to expand and gain market share versus those that have experienced enormous drops in revenue. The reason many small businesses have seen their sales and cash flow drop dramatically, many to the point of closing their doors, while many large U.S. corporations have managed to increase sales, open new retail operations, and grow earnings per share is that a small business almost always relies exclusively on traditional commercial bank financing, such as SBA loans and unsecured lines of credit, while large publicly traded corporations have access to the public markets, such as the stock market or bond market, for access to capital.

Prior to the onset of the financial crises of 2008 and the ensuing Great Recession, many of the largest U.S. commercial banks were engaging in an easy money policy and openly lending to small businesses, whose owners had good credit scores and some industry experience. Many of these business loans consisted of unsecured commercial lines of credit and installment loans that required no collateral. These loans were almost always exclusively backed by a personal guaranty from the business owner. This is why good personal credit was all that was required to virtually guarantee a business loan approval.

During this period, thousands of small business owners used these business loans and lines of credit to access the capital they needed to fund working capital needs that included payroll expenses, equipment purchases, maintenance, repairs, marketing, tax obligations, and expansion opportunities. Easy access to these capital resources allowed many small businesses to flourish and to manage cash flow needs as they arose. Yet, many business owners grew overly optimistic and many made aggressive growth forecasts and took on increasingly risky bets.

As a result, many ambitious business owners began to expand their business operations and borrowed heavily from small business loans and lines of credit, with the anticipation of being able to pay back these heavy debt loads through future growth and increased profits. As long as banks maintained this ‘easy money’ policy, asset values continued to rise, consumers continued to spend, and business owners continued to expand through the use of increased leverage. But, eventually, this party, would come to an abrupt ending.

When the financial crisis of 2008 began with the sudden collapse of Lehman Brothers, one of the oldest and most renowned banking institutions on Wall Street, a financial panic and contagion spread throughout the credit markets. The ensuing freeze of the credit markets caused the gears of the U.S. financial system to come to a grinding halt. Banks stopped lending overnight and the sudden lack of easy money which had caused asset values, especially home prices, to increase in recent years, now cause those very same asset values to plummet. As asset values imploded, commercial bank balance sheets deteriorated and stock prices collapsed. The days of easy money had ended. The party was officially over.

In the aftermath of the financial crisis, the Great Recession that followed created a vacuum in the capital markets. The very same commercial banks that had freely and easily lent money to small businesses and small business owners, now suffered from a lack of capital on their balance sheets – one that threatened their very own existence. Almost overnight, many commercial banks closed off further access to business lines of credit and called due the outstanding balances on business loans. Small businesses, which relied on the working capital from these business lines of credit, could no longer meet their cash flow needs and debt obligations. Unable to cope with a sudden and dramatic drop in sales and revenue, many small businesses failed.

Since many of these same small businesses were responsible for having created millions of jobs, every time one of these enterprises failed the unemployment rate increased. As the financial crisis deepened, commercial banks went into a tailspin that eventually threatened the collapse of the entire financial system. Although Congress and Federal Reserve Bank led a tax payer funded bailout of the entire banking system, the damage had been done. Hundreds of billions of dollars were injected into the banking system to prop up the balance sheets of what were effectively defunct institutions. Yet, during this process, no provision was ever made that required these banks to loan money out to consumers or private businesses.

Instead of using a portion of these taxpayer funds to support small businesses and avert unnecessary business failures and increased unemployment, commercial banks chose to continue to deny access to capital to thousands of small businesses and small business owners. Even after receiving a historic taxpayer funded bailout, the commercial banks embraced an ‘every man for himself’ attitude and continue to cut off access to business lines of credit and commercial loans, regardless of the credit history or timely payments on such lines and loans. Small business bankruptcies skyrocketed and high unemployment persisted.

During this same period, when small businesses were being choked into non-existence, as a result of the lack of capital which was created by commercial banks, large publicly-traded corporations managed to survive and even grow their businesses. They were mainly able to do so by issuing debt, through the bond markets, or raising equity, by issuing shares through the equity markets. While large public companies were raising hundreds of millions of dollars in fresh capital, thousands of small businesses were being put under by banks that closed off existing commercial lines of credit and refused to issue new small business loans.

Even now, in mid 2012, more than four years since the onset of the financial crisis, the vast majority of small businesses have no means of access to capital. Commercial banks continue to refuse to lend on an unsecured basis to almost all small businesses. To even have a minute chance of being approved for a small business loan or business line of credit, a small business must possess tangible collateral that a bank could easily sell for an amount equal to the value of the business loan or line of credit. Any small business without collateral has virtually no chance at attaining a loan approval, even through the SBA, without significant collateral such as equipment or inventory.

When a small business cannot demonstrate collateral to provide security for the small business loan, the commercial bank will ask for the small business owner to secure the loan with his or her own personal assets or equity, such as equity in a house or cash in a checking, savings, or retirement account, such as a 401k or IRA. This latter situation places the personal assets of the owner at risk in the event of a small business failure. Additionally, virtually all small business loans will require the business owner to have excellent personal credit and FICO scores, as well as require a personal guaranty. Finally, multiple years of financial statements, including tax returns for the business, demonstrated sustained profitability will be required in just about every small business loan application.

A failure or lack of ability to provide any of these stringent requirements will often result in an immediate denial in the application for almost all small business loans or commercial lines of credit. In many instances, denials for business loans are being issued to applicants which have provided each of these requirements. Therefore, being able to qualify with good personal credit, collateral, and strong financial statements and tax returns still does not guarantee approval of a business loan request in the post financial crisis economic climate. Access to capital for small businesses and small business owners is more difficult than ever.

As a result of this persistent capital vacuum, small businesses and small business owners have begun to seek out alternative sources of business capital and business loans. Many small business owners seeking cash flow for existing business operations or funds to finance expansion have discovered alternative business financing through the use of merchant credit card cash advance loans and small business installment loans offered by private investors. These merchant cash advance loans offer significant advantages to small businesses and small business owners when compared to traditional commercial bank loans.

Merchant cash advance loans, sometimes referred to as factoring loans, are based on the amount of average credit card volume a merchant or retail outlet, processes over a three to six month period. Any merchant or retail operator that accepts credit cards as payment from customers, including Visa, MasterCard, American Express, or Discover, is virtually guaranteed an approval for a merchant credit card advance. The total amount of cash advance that a merchant qualifies for is determined by this three to six month average and the funds are generally deposited in the business checking account of the small business within a seven to ten day period from the time of approval.

A set repayment amount is fixed and the repayment of the cash advance plus interest is predetermined at the time the advance is approved by the lender. For instance, if a merchant or retailer processes approximately $1,000 per day in credit cards from its customers, the monthly average of total credit cards processed equals $30,000. If the merchant qualifies for $30,000 for a cash advance and the factoring rate is 1.20, the total that would need to be repaid is $30,000 – plus 20% of $30,000 which equals $6,000 – for a total repayment amount of $36,000. Therefore, the merchant would receive a lump sum of $30,000 cash, deposited in the business checking account, and a total of $36,000 would need to be repaid.

The repayment is made by automatically deducting a pre-determined amount of each of the merchant’s daily future credit card sales – usually at a rate of 20% of total daily credit cards processed. Thus, the merchant does not have to write checks or send payments. The fixed percent is simply deducted from future credit sales until the total sum due of $36,000 is paid off. The advantage to this type of financing versus a commercial bank loan is that a merchant cash advance is not reported on the personal credit report of the business owner. This effectively separates the personal financial affairs of the small business owner from the financial affairs of the small business entity.

A second advantage to a merchant credit card cash advance is that an approval does not require a personal guaranty from the business owner. If the business is unable to repay the merchant cash advance loan in full, the business owner is not held personally responsible and cannot be forced to post personal collateral as security for the merchant advance. The owner removes the financial consequences that often accompany a commercial bank business loan that requires a personal guaranty and often forces business owners into personal bankruptcy in the even that their business venture fails and cannot repay the outstanding loan balance.

A third, and distinct advantage, is that a merchant credit card cash advance loan does not require any collateral as additional security for the loan. The future credit card receivables are the security for the cash advance repayment, thus no additional collateral requirements exist. Since the majority of small businesses do not have physical equipment or inventory that can be posted as collateral for a traditional bank loan, this type of financing is a phenomenal alternative for thousands of retail businesses, merchants, sole proprietorships, and online stores seeking access to capital. Such businesses would be denied automatically for a traditional business loan simply because of the lack of collateral to serve as added security for the bank or lender.

Finally, a merchant credit card advance loan approval does not depend upon the strong or perfect personal credit of the business owner. In fact, the business owner’s personal credit can be quite poor and have a low FICO score, and this will not disqualify the business from being approved for the cash advance. The business owner’s personal credit is usually checked only for the purpose of helping to determine that factoring rate at which the total loan repayment will be made. However, even a business owner with a recently discharged personal bankruptcy can qualify for a merchant credit card cash advance loan.

Since the cash funds being lent on merchant credit card advances is provided by a network of private investors, these lenders are not regulated or affected by the new capital requirements that have placed a constraint on the commercial banking industry. The merchant cash advance approvals are determined by internal underwriting guidelines developed by the private lenders in the network. Each loan application is reviewed and processed on a case-by-case basis and approvals are issued within 24 to 48 hours from receipt of a complete application, including the previous three to six months of merchant credit statements.

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