Angel Investment Gets a Break in Revised Restoring Financial Stability Act

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Author:  Rieva Lesonsky

The Restoring Financial Stability Act of 2010, intended to regulate the banking industry, is sparking all kinds of controversy on Capitol Hill. But it’s also sparked controversy in the small-business community because some proposed changes tucked away within the massive bill would have been very harmful to angel investment, small business finance, working capital loans, merchant cash advance.  

Two aspects of angel investment would have been affected by changes proposed in the bill. First, “accredited investors"—the wealthy individuals who typically become angel investors—would have been redefined. The minimum annual income required to register with the SEC as an accredited investor would have gone from $200,000 to $450,000, and the minimum assets required would have gone from $1 million to $2.3 million.  Some estimates say this would eliminate as much as two-thirds of today’s angel investors.

The second proposal would have effectively canceled out Regulation D by requiring the SEC have 120 days to review a securities offering. This would likely have slowed the angel investment process to unacceptable lengths.

The good news? Thanks to the efforts of the Angel Capital Association and others in the industry, Senator Christopher Dodd, author of the bill, was persuaded to change these proposals.

Dodd amended the bill to keep the definition of "accredited investor" at its old income and asset levels (one small change: an investor’s primary residence can’t be considered an asset). Reg D is maintained, but the SEC is now directed to issue rules for disqualifying securities offerings involving "bad actors"—people who have violated certain federal or state laws. (Find a good explanation of the details on the TechFlash blog.)

The Restoring Financial Stability Act is not yet law, so stay tuned for further developments—but for now, things look positive for the nation’s startups, small businesses and the angel investors whose business capital helps them achieve their dreams.

0 comments - Posted by Tom Markel III at 1:51 PM - Categories: Rieva Lesonsky's Blog

How to Keep Employees Happy

Author - Rieva Lesonsky

Reading the title of this blog post, you might be thinking, “Why do I have to worry about keeping my employees happy? They should be lucky to have a job—and if they don’t like it, they can leave!”

Well, they just might. Several recent polls and surveys have found that employees are less satisfied with their workplace situations than at any time in recent history. Many small-business employees are just biding their time until hiring picks up again; then they’ll jump ship and leave employers who treat them poorly.

Benefits such as health and medical insurance, retirement plans and good pay are some of the things that keep employees happy, of course. But there are plenty of other ways a small-business owner can boost employee morale without spending a bundle.

One of the biggest perks you can give your employees is the ability to work from home. Some research I read while working on an eBook, “Work Without Walls,” for Microsoft, offered fascinating insights into remote working. In one study, 60 percent of small-business employees said they could do their jobs remotely, but just 14 percent of businesses surveyed had work-at-home policies.

If you think working at home is just for big companies, think again. I interviewed one small-business owner who took his 64-person staff entirely virtual. By eliminating an office, he saved more than $1 million annually. On top of that, the change made his employees more productive and motivated. In fact, data from The Telework Coalition show that the average full-time remote worker saves an employer $8,000 per year, that remote work boosts employee productivity by an average of 22 percent, and that it slashes turnover by 50 percent.

Not every business or job is suited to working at home, but if you can enable remote work for your employees, by all means go ahead. This perk makes a huge difference not only in your staff’s quality of life, but also in your business’s productivity and profitability.

Have you implemenetd a remote working policy for your business?  What are some of the tips you would recommend in implementing such a strategy?

0 comments - Posted by Tom Markel III at 10:27 AM - Categories: Rieva Lesonsky's Blog

Health-Care Reform: How Will It Affect Your Business?

Author:  Rieva Lesonsky

After seemingly endless debate, health-care reform finally became law last month. How does it affect the way small businesses handle health and medical insurance?

One immediate change: Qualifying small businesses that offer health and medical insurance to their employees are eligible for a tax credit (retroactive to January 1, 2010). Businesses must have fewer than the equivalent of 25 full-time workers, pay average annual wages lower than $50,000 and cover at least 50 percent of employees’ health and medical insurance costs. Details of the tax credits are available on WhiteHouse.gov  as well as on the IRS Web Site.

Also effective immediately, insurance companies cannot set lifetime limits on coverage or cancel coverage (“recission”) unless fraud is proven.

Other elements of the plan will take more time to go into effect. Beginning as early as next year, states will be able to 2014, states must have Small Business Health Options Programs, or “SHOP Exchanges,” where small businesses can pool to buy health insurance. States will be eligible for federal aid to create SHOP exchanges as early as next year.

Businesses can continue to get tax credits the first two years they buy insurance through SHOP. Starting in 2014, insurers will not be able to base insurance costs on pre-existing conditions. Also beginning in 2014, businesses with over 50 employees must either provide health-insurance coverage or pay an annual fine for each worker (excluding the first 30).

One unfortunate effect of heath-care reform: Scam artists are already taking advantage of confusion about the new law to sell fraudulent insurance policies. If you have questions about insurance, contact your existing insurance provider or an agent you know to be reputable.

Many aspects of health-care reform will take time to iron out. Keep on top of health-care reform updates by regularly visiting WhiteHouse.gov, Health Reform.gov and Kaiser Health News.

Let me know what you think about the healthcare reform.  How do you think it will affect your business?  I would love to hear from you.

0 comments - Posted by Tom Markel III at 10:22 AM - Categories: Rieva Lesonsky's Blog

Using Facebook to Market Your Business

Author:  Rieva Lesonsky

Facebook can be a great way for your small business to connect with hundreds or even thousands of current and potential customers and clients. Creating a business presence on Facebook is simple. Here’s how to jump in:

1. Create a Facebook fan page. If you’ve already got a personal Facebook page, setting up a “fan page” for your small business is similar. Simply follow the directions on Facebook.com and input the requested information, such as your business name and address, phone numbers and Web site URL.

2. Make it attractive. Your fan page’s “Wall” (the first page of your Facebook presence) shows up in search engines, so even people who aren’t part of Facebook can see it. Make your fan page reflect your business image. Uploading pictures, videos or links to other Web sites makes your fan page more engaging so visitors are more likely to become fans of your business.

3. Start a conversation. Post links, photos, videos and more at least once a day. You can post special discounts or deals. On my Facebook fan page, I post links to my blog, items about small-business topics like small-business capital or small-business trends, and links to related sites like iBank.com.

4. Use apps. Apps, or applications, enable you to connect with fans and make your fan page interactive. Visit Facebook’s “Applications Directory” for tons of business-related apps. You can link your blog posts to your fan page, hold contests, survey customers and more.

5. Keep learning. Facebook is constantly evolving, so keep on top of the trends by reading about social media use and taking online webinars—there are tons offered for free. Become a fan of competing companies and learn by watching how they use Facebook.

Leave a comment and let us know if you have had successful experience's with promoting your business on Facebook.

1 comments - Posted by Tom Markel III at 9:20 AM - Categories: Rieva Lesonsky's Blog

Factoring Invoice Business Loan - Can it Help your Bottom Line?

Author:  Rieva Lesonsky

It takes cash to run and grow our businesses. But cash is getting harder and harder to come by. Not only is it tough to get a small business loan, angel investment or VC investment, but you’re probably having trouble even collecting on your receivables. If this describes you, all is not lost. Unpaid receivables can actually be a source of business capital—if you use factoring.

Factors (factoring invoice) are companies that buy your business’s receivables and immediately give you a percentage of their face value. The amount varies depending on how old the receivable is, but in most cases you’ll get about 65 to 75 percent. The factor keeps the remaining percentage in reserve until it obtains payment from your customer, at which point you’ll receive the full amount of the receivable (minus the factor’s fee). Here are some pros and cons to consider:

Cons:
Factoring is more costly than typical bank loans. Factors may charge from 2 to 6 percent over 30 days, and if they don’t get paid by the end of 30 days, they’ll charge an additional daily fee.

Factoring isn’t suitable for all businesses. Because it requires receivables, it’s best for established companies rather than startups.

If your receivables are more than 90 days old, a factor most likely won’t be interested.

It’s not foolproof—if the factor can’t collect on what you’re owed, you may have to pay the factor back in full.

Pros:
Factoring enables you to stop spending time on collections and focus on more productive activities.  Factoring is a good source of working capital. If you get a big order, but don’t have money to fill it, sell those receivables to a factor and get financing in hand.  Factoring is fast. You won’t need all the documentation typically required with other forms of business financing.  You can also find directories of factors here on iBank.com.

When checking out a factor, make sure you understand all the terms and conditions. Done right, factoring is a useful business financing tool that helps you not only survive, but thrive even in this challenging economy.

0 comments - Posted by Tom Markel III at 9:41 AM - Categories: Rieva Lesonsky's Blog

7 Tips for Using Twitter to Grow Your Business

Author:  Rieva Lesonsky

There’s been lots of chatter lately about whether Twitter is still important or if it has jumped the shark. Personally I think Twitter still offers a lot of value to small business owners, as long as you focus your efforts. I know that may be easier said than done, so here are some of my best Twitter tips.

1. Sign up. Go to www.twitter.com and sign up for an account. Then you need to start building your network. You can import your email contact list to see if any of them are on Twitter. Or you can search for people you respect or who are in your industry. Not only can you follow them, but you can see who they’re following and see if you want to include those people in your network as well.

2. Use 3rd-party apps. Twitter can be overwhelming to keep pace with if you just follow the “stream.” I recommend you use some of the numerous 3rd party apps that help you better manage the flow of tweets. You can search for “Twitter applications” or go to http://twitter.com/downloads. Personally I use Tweetdeck (www.tweetdeck.com) on my desktop and laptops (they also have an iPhone app) and UberTwitter (www.ubertwitter.com) on my Blackberry. Other popular apps include HootSuite (www.hootsuite.com) and Seesmic (www.seesmic.com).

3. It’s not all about you. Don’t make the all-too-common mistake of using Twitter soley to broadcast information about you and your company. Instead, share links to interesting content from other sources. Focusing on quality (instead of quantity) will help brand you as a trusted resource.

4. Let’s make a deal. Offer your followers discounts, special promotions, deals and advance notice of sales. If you own a restaurant, for instance, tweet the special of the day.

5. Get discovered. Being on Twitter won’t do you any good if people can’t find you. Your Twitter name should be on your business cards, your Web site, blogs, Facebook and LinkedIn pages and be part of your email signature. And make sure you tell everyone you know every chance you get. You can find me on Twitter at www.twitter.com/rieva.

6. Find clients. Last year a major corporation I followed in my stream, tweeted that they were about to redesign their Web site. I reached out to them (on Twitter of course) and landed a 5-figure deal.

7. I spy. I follow my competition to keep track of what they’re planning and doing. Twitter is an easy way to see what your competitors are doing.

Check out another iBank article regarding social media for your business.

0 comments - Posted by Tom Markel III at 8:54 AM - Categories: Rieva Lesonsky's Blog

The State Of Small-Business Lending

Author:  Rieva Lesonsky

Small businesses across America are still struggling to get business loans. Recently, President Obama has announced several proposals that would make it easier for companies to find small-business financing. Here’s a closer look.

In 2009, the SBA received federal stimulus money under the American Recovery and Reinvestment Act (ARRA)to help increase SBA loan guarantee amounts from 75 to 90 percent for 7(a) loans, and to cut or remove fees for 7(a) and 504 loans. The changes made the loans more appealing to banks. When stimulus money to continue the cuts ran out at the end of December, the SBA received $125 million more in stimulus funds.

But those funds—which were expected to last until the end of February—ran out at the beginning of last week. President Obama has endorsed extending the Recovery Act SBA provisions through the end of September, and a provision to do so was originally included in the jobs bill that the Senate passed last week, but was removed before the bill passed.

What will happen now? BizJournals.com reports the SBA is likely to create a waiting list for lenders seeking the higher guarantee and fee reductions for small business loans. When Congress passed its last SBA extension in December, over 1,000 loans were on a waiting list.

Senate Majority Leader Harry Reid (D-NV) has said Democrats are planning to unveil a separate bill to increase small-business loans. Undoubtedly, that bill will have to address the SBA loan issue.

President Obama made a proposal in February to use $30 billion of Troubled Assets Relief Program (TARP) funds to set up a government lending program targeting community banks. The proposed program would give community banks access to low-cost capital, provided they used the funds to increase small business lending. A future bill that targets small-business lending would likely include this type of proposal.

0 comments - Posted by Tom Markel III at 8:28 AM - Categories: Rieva Lesonsky's Blog