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The third annual survey of small business owners indicates a majority are optimistic about 2004 (79.8 percent) and their business future but most are still working without a firm plan.

An analysis of the results revealed that most small business owners not only did not have a defined plan, but had not identified goals they would like to meet, yet they continued to spend time and energy investing in advertising and marketing activities.

Denise O'Berry, President of The Small Business Edge Corp in Tampa, Florida, said she had learned a lot from the results of the survey.

"Through this annual survey of small business owners, I"ve discovered that most of them continue to make the same mistakes as their predecessors," Ms O?Berry said. "Over 50 percent have no action plan, no goals, and no idea how to market their business, yet they expect an increase in revenue."

The good news for the business world is that most small business owners realize the value of having an "in-house" customer list (64.2%) and many have embraced email as an effective tool for their business. A massive 92.5% use email regularly to communicate with their customers compared to 53.4% who use only regular mail.

Ms O'Berry said unsolicited e-mail was one factor deterring small businesses from using e-mail to keep in touch with their clients.

"Unfortunately, because of the proliferation of unsolicited email on the internet, small business email messages may get lost in the crowd if they don?t find a way to leverage their "in-house" list and use it to their advantage,? she said.

A major surprise of the survey findings was that only 29.8% of these owners use the least time consuming and cost efficient method to market their business - a public relations strategy. Instead, they continue on traditional methods such as direct mail and advertising to spread the word about and promote their business. However, research shows that these methods are two of the most expensive if done incorrectly.

Ms O'Berry said those results were an obvious indication that such businesses owners needed a helping hand.
"Clearly, these small business owners need help," she said.

"They deal with tough issues each and every day to maintain the independence they"ve worked so hard to achieve. And they don"t have a lot of time to waste moving in the wrong direction."

Key details from the survey may be downloaded (PDF) at
http://www.whatspossible.com/small_business_owners_survey_stats_2004.pdf

When you run a business with credit customers, then you realize that issuing credit invoices and waiting for 30, 60 or 90 days for your payments to arrive can drain you emotionally as well as financially. In such a case you can turn to accounts receivable financing to free your locked money.

If cash flow is a problem, then you could turn to banks for a loan. But that would require arranging for collateral. You would only get a fixed amount for a fixed term as a loan and you would still be required to pay interest on that loan. A faster and easier way would be to go in for accounts receivable financing. In this arrangement, an accounts receivable financing company will 'buy' all your credit invoices, i.e. your receivables. They will then pay you either 90% to 95% of the invoice value within 1 to 2 days and the balance less their charges, when they receive the payment from your customer on the due date, or they might just pay you the entire amount of the invoices less their charges.

This will depend on the credit rating of your customers as decided by the financing company, the credit period, which you have provided to your customers and the total volume of business that you will provide your financing company. One instant advantage of this system is that your cash flow will improve overnight. You can now use that money to pay off staff salaries, build up inventory and expand your business. You can now also try to get larger orders, which would not have been possible earlier due to cash constraints.

Another major benefit is that these companies will take over collection of payments from your customers. You can now divert your collection staff to some other department. Your mind will also be free from the daily worries of contacting your customers to ask for payments. The accounts receivable financing company will now handle the entire process. However, care should be taken to ensure that the finance company has courteous and tactful staff to deal with your customers, since it is your reputation on the line.

The finance company will be able to provide you with updated reports on the receivables status of your customers and you can now keep an eye on your receivables without getting involved directly in the collection process. You too, can now concentrate on increasing sales rather than getting tied up in running after collections. The biggest advantage in such a system is that the receivables amount grows along with your business. So, the larger the value of your credit invoices, the larger the amount you will receive within a day or two. The finance company will charge 1.5% to 4% per month on your receivables. So, you should first ensure whether these charges could be absorbed without burning a hole in your pocket. If they can, then this system of finance could be ideal to propel your business to greater heights.

So, crosscheck the charges of the finance company and their quality of service before making up your mind to tie up with any one of them. An accounts receivable financing company can become an extension of your business if you get hold of the right finance company.

In his new book, The Grangaard Strategy -- Invest Right During Retirement, author and teacher Paul Grangaard uses the Twelve Principles of 21st-Century Retirement Investing to offer readers an important new way to look at their financial affairs after they stop working.

The first three principles address some of the new realities faced by today's retirees.

1. Principle #1 is Expect to Outlive the Averages. Since almost half of the people reaching age 65 today will live beyond an average life expectancy, it's very dangerous to use averages in your own individual planning
2. Principle #2 is Adjust for Changing Income Needs. Because people are living longer today, it's more important than ever to account for inflation and the possibility of fluctuating lifestyle expenses. It's simply not good enough any more to plan for a fixed amount of income throughout retirement.
3. Principle #3 is Create Dependable Income for the Rest of Your Life, and it's one of the most important concepts in the book. As Grangaard says early on, When you get to retirement, you have to be prepared to replace your paycheck as soon as you stop working.?

 

The next four principles address some of the most important overall financial concepts.

4. Principle #4 is Count on Compounding During Retirement. Of course, compounding is key to accumulating assets for retirement, too -- but when you're living longer during retirement, it's just as important over the last 20 or 30 years of your life.
5. Principle #5 is Invest in the Right Stuff. You need to have the right amount of money set aside in lower-risk assets to replace your paycheck, but you also need to have enough invested in growth-oriented investments to take care of your income later on. As Grignard puts it, you have to know how to thread the financial needle.
6. Principle #6 is Be a Long-Term Investor During Retirement. If you decide to invest some of your assets to go after higher rates of return, you'll need to be able to manage the risk of taking a more aggressive investment posture -- and having a long-term planning horizon can really help.
7. Principle #7 is Know When to Sell. During retirement, most people will be overall sellers of stock market investments, since they'll have to use the proceeds to generate the income they need to live on. In fact, the real value of being a long-term investor in retirement is that you'll have more time to figure out when it's a good time to sell.

 

Principles #8, #9 and #10 address some of the other key issues important to all retirement investors.

8. Principle #8 is Don't Let Dollar-Price-Erosion Catch You Off-Guard. Dollar cost averaging into the stock market is great advice for younger investors, but dollar cost averaging out of the stock market can get you into a lot of trouble in retirement.
9. Principle #9 is Diversify. Diversification is important at every stage of life, and even more so in retirement. Since you will be selling stocks periodically to get more income to live on, having a well-diversified portfolio will make it more likely that you will always have something in a good position to sell whenever you need to.
10. Principle #10 is Keep It Tax-Deferred.? Reducing income taxes is an important part of any investment strategy, and it's particularly important during retirement. You can't afford to pay taxes too soon, because you'll be giving up too much future growth -- and therefore, too much future income as well.

 

The last two principles focus primarily on taking action.

11. Principle #11 is Have a Plan. In fact, the goal of effective retirement planning, says Grignard, is to live better during the day while sleeping better at night. Having a plan, he says, is the key to being able to do that.
12. And finally, Principle #12 is Take Action Now. While Grignard offers a lot of information, theories and strategies, there is also a practical sense of urgency and a plea for action throughout the book. It's never too early and it's never too late to do your retirement planning, he says, and then wraps it all up by suggesting that most people don't plan to fail, they simply fail to plan.

For many people, an important part of their estate planning includes leaving money to a favorite charity. While you don?t have to be wealthy to include charitable giving in your plan, you do need to be sure you make your gift in a way that maximizes the benefits both for the charity and for your estate

The very best place to find money to leave to charity is in a qualified plan or IRA,? says Lawrence Wiener, CLU, ChFC, director of the National Association of Estate Planners and Councils. One reason IRAs and qualified funds are such a good choice is because the money in these funds is subject to estate taxes; however, when it is donated to a charity, it can be donated tax-free.

If you leave money to a charity in your will, that money will be taxed, which means, in effect, the charity will be receiving less money. It is also important to note that money that is donated through a will needs to go through probate, which involves a time delay as well as a cost to the estate. The average probate can go on for months before the beneficiaries get anything and lawyer?s fees and other court costs will be taken out of your assets.

Donating money via an IRA or qualified plan means there is no delay in the charity receiving the funds you have earmarked; and since no court processes are involved, there is no cost to administer the gift.

When making your gift, remember that the Retirement Equity Act of 1984 requires that the spouse receive at least 50 percent of the value of an IRA; if you plan to donate more than 50 percent of your IRA to charity, your spouse will have to sign a waiver agreeing to that distribution.

Also, when the beneficiary of an IRA or qualified plan is a charity, you will want to include a statement in your will to the effect that if there are not sufficient funds in the IRA or qualified plan to carry out your donation wishes that your executor can step in and supplement or make up the difference from the estate.

Leaving money to charity is not difficult, but you need to ensure that your wishes are carried out by setting up the donation in the most efficient way possible. It may all sound overwhelming at first, but there are many professionals trained and qualified to help you make your estate planning effective. Check with your state or local bar association for a local Certified Estate Planning attorney, or try the state CPA association. The National Association of Estate Planners and Councils (NAEPC) offers a list of members who have earned the special designation AEP (Accredited Estate Planner).

Courtesy of ARA Content