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What do I do Now?
Local Business Pros Answer your Questions
May, 2009 - Issue #55
FOR SMALL BUSINESSES
Q|
I'm starting a new business in a bad economy. I know I should take all methods of payment, but I'm afraid of the fees and commitments required when it comes to processing credit cards. What's the most cost-effective solution, and what are the startup fees? Adam S., Stevenson Ranch

A| It is critical in today's economy for your business to accept credit cards. Studies show that credit card customers spend two and a half times more than customers who only carry cash. The commitments for credit card processing are typically three years; however, my company - First National Merchant Solutions - has a one-year option available. The most cost-effective solutions depend on the type of business and how those payments are processed, whether it be face-to-face retail, online or through a wireless device. The typical start-up fees for a standard retail location ranges from $50 to $200. The standard credit card terminal ranges from $289 to $700. I have a solution available for businesses that need to reduce the start-up cost to $0 and have rent-to-own credit card terminal solutions starting at $10 a month. And for businesses taking very few transactions, there are no monthly maintenance fees and no monthly minimum processing fees.
Dustin Burekeybile, Santa Clarita representative, First National Merchant Solutions 313-3000

Q| A recent layoff has prompted me to go into business for myself. Thankfully, I'm great at what I do and I see this as an opportunity, not a curse. There is one sticking point, though. The business cards and other materials I made on my computer for my new venture make me look bland and generic - and my business is anything but. I need to "wow" my potential clients, and these one-size-fits-all designs just aren't cutting it. I welcome your ideas! Thom H., Valencia

A| The tools available to create business stationery and websites on your computer are now numerous, but the results are often unprofessional. There is generally no substitute for hiring a skilled graphic designer to create your visual identity. Your graphical representation is often the first point of contact between you and the potential client. No different than your groomed personal appearance and firm handshake, if your peripheral materials are weak, you might be blowing that "first impression" opportunity. Well-designed materials - logos, business cards, letterhead, websites, etc. - will leave a powerful lasting impression, and will likely lead to more business. Good luck with your new endeavor!
Eric Hester, co-owner, Hester Design Group in Valencia 254-2326

Q| I have a small business and opened up accounts at a big-name bank several years ago that recently became a bank failure and now has changed ownership. I'm not thrilled about the change but feel locked into becoming just another casualty, since my business accounts are in that bank. Since everything will change anyway, how difficult would it be to start fresh at a more stable bank? Emma W., Santa Clarita

A| For any business owner, there is nothing more sacred than a business' bank account. Simply, it is the lifeblood of a company's existence. It is understandable how many small business owners would rather stay in a bad banking situation than risk having something go wrong transferring banks. The reality is that changing banks is not difficult at all; it only sounds intimidating. When you're ready to make the switch, carefully evaluate which bank will best meet your needs. Many community banks are relationship-based and will work to make the process seamless. They also take the time to get to know their customers, which helps your business grow.
Kris Hough, vice president and Santa Clarita Valley regional manager, SCVBank 255-9250

Q| I own a company that provides specialty products to local homeowners. My (very) small business goes through tons of printed promotional materials at home-based parties, vendor-based fairs and via special-event mailings. With money so tight, I'm hesitant to give out thick catalogs and service menus that cost a fortune to print. Do you have any suggested alternatives that will save money but still keep my phone ringing? I'm risk-adverse, to say the least, but something has to change. I need to stay competitive! Kathleen N., Santa Clarita

A| Kathleen, it's time to try print on demand with digital technology. Digital is a way of printing items for a fixed cost per copy, irrespective of the size of the order. While the unit price of each physical copy printed is higher than with offset printing, the average cost is lower for very small print runs, because setup costs are much higher for offset printing. POD has other business benefits besides lower costs (for small runs): document set-up is usually quicker than for offset printing; large inventories of a book or print material do not need to be kept in stock - reducing storage, handling costs, and inventory accounting costs; and there is little or no waste from unsold or out-dated products.
Cory Peterson, owner, Peterson Printing 255-2846

Q| In any other economy, my small business would be thriving. However, making payroll is getting harder and harder. I have a proven business model - I just need some capital to make it through this rough patch. What can I do to increase my chances of getting a loan? People depend on my success. Mario M., Santa Clarita

A| There are a few very important things that every business owner can do to increase their ability to secure financing. The first is easy. Get to know your banker and allow your banker to get to know you and your business. A good banker is eager to learn about you and your company. The second, while not difficult, takes a little more effort. Put your business plan on paper. If you already have a written business plan, review it carefully. Make certain that it is organized and describes your business and product(s) in detail - including your marketing and growth strategies, your customers and your competition. Finally, if you have not already done so, create a well organized financial package; include your personal and business tax returns, a personal balance sheet and a listing of all debt owed. Remember that even in today's tough economy, your community bankers want to lend to qualified businesses. The better prepared you are when requesting financing, the better your odds for success.
Tamara Gurney, president and CEO, Mission Valley Bank 877-394-2306

FOR PERSONAL
Q|
Between running a small business out of my home and keeping up with my family's bills, I'm swamped. I probably pay $300 a year just in late fees on credit cards, etc. because I misplace or forget bills. I'm overwhelmed. I need a cost-effective solution for a small-time operation like mine. Teresa B., Canyon Country

A| It sounds as though you could use an accounting program and a little organization to help you streamline both your business and family finances. Using a program such as QuickBooks allows you to enter your payables and receivables, giving you immediate access to account balances, bill due dates and the capability to print out those bill payments on time. Setting up an organized system will keep you in the know and let you focus on what is most important, your family. A professional bookkeeper can help you achieve your goals. DiFatta & Associates is Santa Clarita's local bookkeeping and business management company with experience and dependability at affordable prices.
Dori DiFatta, owner, DiFatta & Associates 294-6826

Q| My soon-to-be ex-husband was begrudgingly making agreed-upon child support payments regularly until he was laid off two months ago. Now, they've stopped coming - and it's impossible to keep a roof over my kids' heads without that money. I can borrow a little from my parents until he gets back on his feet, but I'll need to pay them back. We're not on good terms, and I'm worried that he'll use this as an excuse to lower our support in the future. Help! Tess C., Saugus

A| In California, child support is calculated using the statewide guideline formula. This formula can be obtained at the California Department of Child Support Services website. Before deciding how to proceed, it is recommended you consider the factors used in the guideline calculation to make a determination as to what the court would order. Don't forget that the other parent should likely be receiving unemployment and that may be considered as current income. Sometimes guideline calculations can be complex and as such I advise you to seek the assistance of an attorney to determine the appropriate course of action. April E. Oliver, Esq., The Reape - Rickett Law Firm 288-1000

Q| My family is over-run with past-due bills that were racked up during a health crisis. If we could just get out from under this mountain of debt, we could still afford our home. However, the way it is now, we'll be in foreclosure sooner rather than later. If my wife and I file for bankruptcy, is there a chance of keeping our home? Any suggestions are welcome. We are sick with worry. James M., Valencia

A| If the amount owing to secured creditors is less than $1,010,000 and unsecured creditors is less than $366,000, and your income and expenses allow for an amount to be paid monthly sufficient to cure the payment default to the mortgage lender, in general, you should be able to qualify for relief under Chapter 13 and keep your home. If the value of your home is less than the amount due on the first (assuming there is a first) through a court procedure, you may be able to seek relief from paying the second (assuming there is a second) on your home during the time you are in bankruptcy. Again, assuming sufficient disposable income, real property taxes and any income taxes can be paid over the three to five years that the Chapter 13 would be pending. You are best advised to consult with a bankruptcy attorney who has the experience and knowledge to assist you through these difficult times. The State Bar of California has certified certain attorneys as Bankruptcy Specialists. A complete list is available at members.calbar.ca.gov.
Louis J. Esbin, Esq. State Bar of California certified Bankruptcy Specialist, 254-5050
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