How the SBDC Can Help with COVID-19 Response

Now that we are several months into the economic crisis associated with COVID-19, many small business owners feel at a loss for how to make informed decisions about whether the business needs economic disaster recovery assistance – or further assistance! – and how to cover expenses moving into the future. Many have also discovered that the bookkeeping practices or systems that they had in place prior to the crisis were not adequate to help the owner understand costs, pricing, future cash flow, and profitability. Thinking through these matters is something with which Business Consultants at America’s SBDC Iowa can help. Our Business Consultants are knowledgeable about core elements of business management, educated about recovery assistance programs, understand what small businesses are experiencing and want to help.

Here is an example of how the financial part of a conversation with an SBDC Consultant would
start during COVID-19 response and recovery:

 How are doing right now? Do you have enough cash to cover your current expenses?
Are you worried about current or future ability to cover your business expenses?
 What are your normal monthly fixed operating costs such as rent, utilities, insurance,
software subscriptions, and fixed (not variable) payroll expenses?
 What are your normal variable costs such as variable (not fixed) payroll, freight,
materials, and costs associated with sales?
 How do you pay yourself (salary, owner’s draw, distributions)?
 How much in sales do you need in order to cover your cost of goods sold plus your
operating expenses? In other words, what is the level at which you break even? If you
do not know, think about what was the last month your profit was $0 or close to it. That
should be close to your break-even number.
 How much profit do you need to be able to make in a normal year?
 In a normal year, what are monthly sales at this time of year?
 What percentage are your sales of this year compared to last?
 For what assistance (e.g., EIDL, PPP), if any, have you already applied? Have you
received any funds? Are you expecting to receive any funds?
 What will those funds cover? For how long? Do they need to be repaid?
 What other expenses need to be covered? Over what time period?
 When do you think that sales (and other activities affecting cash flow) will return to
something like normal?

A Business Consultant with America’s SBDC Iowa can also assist with putting together monthly cash flow projections based on educated assumptions about recovery. If there is a financial gap, the conversation would then move into discussion about the assistance programs, qualifications, allowable uses of funds and how to assign expenses needing to be covered to various expense buckets in order to find the right programs. If there is still a gap, the Consultant would try to figure out any other options for bringing in capital as well as strategies for reducing or deferring expenses. In the conversation, the two of you might also consider the projected impact of these options on your balance sheet. Moreover, Consultants at the SBDC can advise on how to start or improve a bookkeeping system. It is important for business owners to know how to use their system to access information pertinent to making sound financial decisions.

The team at America’s SBDC Iowa is a resource partner of the U.S. SBA and stays informed about the latest federal, state and local programs for assisting small businesses during COVID- 19 response and recovery. An appointment for confidential, no-cost business advising at one of our 15 regional centers across the state of Iowa can be requested on our website: http://iowasbdc.org To prepare for a meeting with an SBDC Business Consultant, it would be helpful to gather together recent income tax returns, payroll reports, an itemization of other expenses, and documentation of monthly sales records for this year and for last and any other information that you have that you think is relevant to understanding your financial situation moving forward.

In the meantime, for management and financial management tips during the disaster response, please see our Back2Biz Guidebook:
• http://iowasbdc.org/wp-content/uploads/2020/05/BacktoBiz-guidebook-final.pdf

We look forward to working with you!

 

About The SBDC and the Author
The Iowa SBDC provides no cost technical service and advice for Iowa Small Businesses and individuals looking to start a business. The 15 centers throughout Iowa are run by small business experts and counselors who have the experience and expertise to confidently help on a number of topics

Scott Swenson is the Regional Director of the SBDC at Kirkwood Community College in Cedar Rapids. He has been with the organization since October of 2013. He has experience in business disaster recovery as well as marketing, sales, and entrepreneurship.

Dr. Laurie Pieper is America’s SBDC Iowa Tech Director. She leads the Rural Iowa Development Initiative and works with clients and resource partners around the state to develop opportunities for the successful commercialization of business technologies, products, and services.

How to Succeed in Building an Online Amazon Retail Business

COVID-19 has caused many small businesses to rethink their selling methods. Just because your doors are closed, doesn’t mean you have to stop selling your products. Becoming an Amazon retailer will help you sell your products online. Follow these steps from Todd Rausch, Western Iowa Tech SBDC Regional Director, to learn how to start your Amazon retail business:

  1. Create an Amazon retailers account https://sell.amazon.com/?ld=AZFSSOA&ref_=footer_soa
  2. Use Fulfillment by Amazon (FBA). This is important. It warehouses with Amazon. They get a larger cut, but you don’t have to meet Prime shipping demands because they handle it. Anytime someone searches a product on Amazon, products in their warehouse go to the top of the search results.
  3. Study all of their tutorials. 
  4. Pick a category you like. Pick one that works for you. In the search bar type in “top 100 _ _ _”. Top 100 electronics, for example. This shows the current top 100 selling products in that category.
  5. Pick 7 to 12 products you want for your inventory that you will upload to your sellers account. 
  6. Find suppliers for those products that do not have a minimum buy. In other words, you are going to set up distributor accounts with these suppliers, but you do not want a minimum buy on these as that will be a big demand on your time.
  7. Order the products. They will ship to you. Contact Amazon and they will tell you where they want you to send them to the warehouse.
  8. Upload your inventory to your Amazon store. 
  9. Make your pricing reflect what you need to make on the product. Don’t worry about being the lowest price.

The Goal

Start out with $1,000 – $3,000 worth of product and do inventory turns, hopefully 52 inventory turns a year. Sending inventory to replenish what is in the warehouse each week will yield between $50,000 – $150,000 in sales and around $15,000 – $60,000 in profit a year. Aim to have at least 15% – 30% of revenue come from online sales.

Interesting Statistics

  • 42% of US online retail sales are through Amazon
  • 25% of US adults have an Amazon Prime account
  • Over 2,000,000 people are selling through Amazon

 

About America’s SBDC Iowa SBDC and the Author
Todd Rausch, Regional Director for the Western Iowa Tech SBDC in Sioux City, has been in the position since 2013. He has been an online retailer for 8 years, and 4 years of that as an Amazon retailing merchant. He is a veteran and has a passion for helping small businesses succeed.

America’s SBDC Iowa is an outreach program of Iowa State University’s Ivy College of Business and the Office of Economic Development and Industry Relations. Funded in part through a cooperative agreement with the U.S. Small Business Administration, America’s SBDC Iowa has 15 regional assistance centers located strategically across the state. Since program inception in 1981, the SBDC has helped Iowa businesses and entrepreneurs through no fee, confidential, customized, professional business counseling and practical, affordable training workshops.

For more information on America’s SBDC Iowa programs or services, visit www.iowasbdc.orghttps://www.facebook.com/AmericasSBDCIowa, or @IowaSBDC on Instagram and Twitter.

Engaging Through Remote Work

For many businesses, COVID-19 will bring about a new way of doing business as normal. An increase in employees working from home (or other safe out-of-the-office location) is one example. What was initially a short-term measure to accommodate social distancing for pandemic mitigation will, for many businesses, result in a long-term increase in remote work to keep staff healthy and productive. With this change in workforce structure come potential management challenges but also potential benefits. Businesses that are undergoing a long-term shift toward remote work should adopt strategies for making sure that they have the right people in the right positions, for maintaining important connections with (and for) employees who will no longer go to the office (or customers’ locations) on a regular basis and for fully capturing the potential advantages of remote work; and they should include employee input in the planning processes.

Business owners who had not previously embraced remote work might worry that if the company office, other employees and customers are out of sight long-term, they will be out of mind and that, as a consequence, work ethic, performance, collaboration, dedication to the company or dedication to the company’s clientele will decline. “Out of sight, out of mind” worries, however, can go in both directions; and employers should also be thinking about how they can let their remote employees feel seen and valued without micromanaging them. Other fundamental questions are to what extent job descriptions need to change, whether the right people are still going to be in the right jobs, and how employees can be set up for success rather than failure in the transition. 

Improvements over the existing way of doing business can also come from a shift toward more remote work. If the right people are in the right jobs and managed well, employees can be more productive (e.g. because they have more ability to focus on critical tasks) and more engaged (e.g., because they are appreciative of having more flexibility with their schedules). Remote work broadens the available labor pool, can be used as a recruitment incentive and creates more potential to hire employees in other time zones which might increase coverage area (e.g., for sales or customer service). It can also help companies cut costs on company offices. Moreover, it might inspire a business to develop new products or offer new services.

 

Tips for Successful Transition

As a company considers shifting long-term toward increased remote work, the business owner/management should evaluate job functions and their suitability to be performed remotely. 

  • What functions remain as is with remote work?
  • What functions go away with remote work? (Are there functions that need to be kept on location?)
  • What new functions can arise with remote work?
  • What are the physical, technological and other needs to support those functions remotely?
  • What metrics are appropriate for evaluating remote job performance?

In converting positions to remote work, it is important to have the right employees performing the right remote job functions. 

  • What skills and personal characteristics does an employee need to possess in order to perform remotely in general and as well as to perform specific functions?
  • Which employees are capable of transitioning to remote work based both on ability to perform the job functions and also capacity to thrive in a remote work environment?
  • Who needs what physical, technological or other support in order to perform well?

It is important to help employees understand what the changes mean to their place in the company.  

  • Utilize employee input in setting goals and objectives.
  • Define any new roles and responsibilities as well as delineate ones that no longer exist.
  • Be clear about why the changes are important and why the employees are still important.
  • Anticipate and help mitigate undesirable challenges employees new to remote work might encounter, e.g., by providing training to assist with new technological needs.
  • Agree upon the benchmarks against which they will be evaluated, time frame for adjustment and resources available to assist them.

Recognize that a change to long-term remote work may also necessitate changes to management style in order to avoid micromanagement and to keep employees connected, engaged and feeling valued. 

  • Figure out what communication channels work best for various purposes ranging from quick questions, to emergency situations, to lengthy discussions, to sharing a funny story about the day.
  • During team meetings – in person or online – create opportunities for participation and allow some unstructured time for team members to interact.
  • Authorize team members to take leadership when appropriate or needed.
  • Put in place professional development and advancement opportunities. Feeling stuck in a position can undermine motivation especially if employees feel disconnected.
  • Don’t treat remote employees like they are invisible. Make a point of seeing and acknowledging their contributions and achievements. 
  • Be aware of the potential for burn-out and find ways to reduce the risk. One of the common characteristics of people who are suited to be remote employees is that they are highly self-motivated. This, in combination with working days that don’t have a set ending time, can result in a habit of working excessively long hours.
  • Take time to get to know new employees and to learn how existing employees are doing in new roles.

After the transition to increased remote work, it will be important for businesses to assess how it is affecting them, learn from experiences, and continue to improve. 

Since the initial increase in remote work was for many businesses a rapidly implemented response to keep their people healthy during the pandemic, it was not thought through as a long-term option. Now that the immediate response has taken place and more is understood about the evolving global situation, businesses should acquire employee input and think through the potential benefits and challenges of the transition to increased remote work. If it is right for them, they can then develop and implement a plan for remote work and be in a position to pursue new opportunities that it can create.

 

 

About America’s SBDC Iowa & the Author

Dr. Laurie Pieper is Amercia’s SBDC Iowa Tech Director. She leads the Rural Iowa Development Initiative and works with clients and resource partners around the state to develop opportunities for the successful commercialization of business technologies, products and services. Originally trained as an analytical philosopher, she has a Ph.D. from UCLA and has held faculty appointments at University of Oregon and Kansas State University.  Dr. Pieper was a business owner for many years and enjoys using her background in education and in entrepreneurship to help small businesses set and reach their goals.

America’s SBDC Iowa is an outreach program of Iowa State University’s Ivy College of Business and the Office of Economic Development and Industry Relations. Funded in part through a cooperative agreement with the U.S. Small Business Administration, America’s SBDC Iowa has 15 regional assistance centers located strategically across the state. Since program inception in 1981, the SBDC has helped Iowa businesses and entrepreneurs through no fee, confidential, customized, professional business counseling and practical, affordable training workshops.

For more information on America’s SBDC Iowa programs or services, call (515) 294-2030 or visit www.iowasbdc.orghttps://www.facebook.com/AmericasSBDCIowa, or @IowaSBDC on Instagram and Twitter.

 

Reinventing Your Small Business to Survive COVID-19 — Blog Post from Iowa Western SBDC Director, Sue Pitts

There is a video of Simon Sinek and his team on YouTube where he talks to his team about pivoting their roles in his business. He talks about how COVID-19 is NOT unprecedented. That although very sudden and devastating, Covid-19 is not the first-time businesses have been challenged.

The Internet changed the way we shop, and when retailers didn’t respond, they closed.

Streaming services changed the way we watch movies, and when video stores didn’t respond, they closed.

Uber and Lift changed the way we get around town, and when cab and taxi companies didn’t respond, they suffered.

The businesses that did survive during those times, and many others, were businesses that were ready to respond and reinvent themselves. Uber didn’t kill taxi companies. Taxi companies did because they were unwilling to do business a different way.

This message is very relevant to our small businesses in Iowa. Businesses that start asking the question, “How are we going to change to get through this” instead of “how are we going to get through this “, are the businesses that will not only survive but will thrive and grow.

Since the middle of March our Iowa businesses have been in survival mode. They are applying for grants and frantically pulling financial information together.

It is time to start transitioning into reinvention mode and pivot your business to survive changes that are going to happen. We have seen many Iowa businesses already doing this. Restaurants are offering Family Meal options for pickup and delivery. Event planners are helping families plan online birthday parties and celebrations complete with drive by waves and present drop-offs. There are many other very creative ways businesses are reinventing themselves and thriving.

We are not certain what the future brings, but I think we can be certain that there is going to be a new normal and the path to that normal is not going to be fast. I think we also need to realize that this is not an unprecedented event that will not happen again. This or something else will happen again and we need to use this event as a lesson learned.

What should you be doing now? First and foremost, get your bookkeeping and financials up to date and devise a system to keep regular track of your bookkeeping. Software programs like QuickBooks Online (30% discount through SBDC) and Wavapps.com are great solutions.

Secondly, as a small business you need to be ready to pivot at each stage of this crisis. What are the problems that you as a business can solve now? What new markets have emerged that you can serve now. A regular analysis of your business model using tools like Canvas Business Model is essential to your resilience in any disaster or crisis.

Our America’s SBDC Iowa state director, Lisa Shimkat, is leading our state SBDC to pivot to better serve our businesses and their reinvention. We are developing new programs and resources as we speak to serve our businesses in what will become our new normal.

The Iowa SBDC has 15 centers throughout the state, and we are working one-on-one with clients helping through various programs and also helping businesses re-strategize. You can reach out to the center serving your area here.

Pivoting Today for Opportunities Tomorrow Advice for Small Businesses during COVID-19

As locally, nationally and globally, people are utilizing practices such as physical distancing and staying in place, many small businesses are being disrupted. Whether it be because of industry shutdowns, employee inability to work, lack of access to customers, cancelled events and travel restrictions, supply chain interruptions, cash flow shortages or a variety of other factors, the way that small businesses do business has already undergone rapid changes and changes are certain to continue. For many, this means short-term or long-term pivoting in their business model to survive and to thrive moving into the future.

Here are 10 questions to help small business owners and their support teams think through options for change:

    1. What parts of your business model do you need to let go of for now?  
    2. What parts can you retain by making adjustments or being flexible? 
    3. How do you see your industry changing and what challenges and opportunities do those changes create locally, nationally or globally?
    4. What parts of your business model might you let go of permanently as your industry or your capacity changes?
    5. With what you are able and want to retain, is there new value that you can bring to your customers as their needs and wants are also changing?
    6. Are you able to identify needs and wants that you previously had not considered addressing but that you have – or could develop – the capacity to address?
    7. If you let go of particular parts of your business model, which of your needs go away?
    8. As you pivot your business model, what new needs do you pick up?
    9. Can you partner with other businesses – or take advantage of changes in other industries – to provide services and complete jobs that need to be done within your businesses and for your customers?
    10. What resources are available to assist you, ranging from financial assistance to advisory support to tools and online platforms for you to use?

As a result of the COVID-19 pandemic, nearly every part of the small business community is thinking about what do we do now to get through this, for how long and what does the future hold?  In such times, it is vital to try to be proactive, analyzing and addressing not only challenges but also opportunities, to mitigate risks and to engage in hope for tomorrow’s successes.

For more resources to navigate during COVID-19, visit: www.iowasbdc.org/covid-19

 

About America’s SBDC Iowa & the Author

Dr. Laurie Pieper is Amercia’s SBDC Iowa Tech Director. She leads the Rural Iowa Development Initiative and works with clients and resource partners around the state to develop opportunities for the successful commercialization of business technologies, products and services. Originally trained as an analytical philosopher, she has a Ph.D. from UCLA and has held faculty appointments at University of Oregon and Kansas State University.  Dr. Pieper was a business owner for many years and enjoys using her background in education and in entrepreneurship to help small businesses set and reach their goals.

America’s SBDC Iowa is an outreach program of Iowa State University’s Ivy College of Business and the Office of Economic Development and Industry Relations. Funded in part through a cooperative agreement with the U.S. Small Business Administration, America’s SBDC Iowa has 15 regional assistance centers located strategically across the state. Since program inception in 1981, the SBDC has helped Iowa businesses and entrepreneurs through no fee, confidential, customized, professional business counseling and practical, affordable training workshops. 

For more information on America’s SBDC Iowa programs or services, call (515) 294-2030 or visit www.iowasbdc.org, https://www.facebook.com/AmericasSBDCIowa, or @IowaSBDC on Instagram and Twitter.

 

Top Tips to Improve the Financial Wellness of Your Business by Paul Heath

January is Financial Wellness Month. Have you thought about the financial wellness of your business? I have counseled businesses for more than 30 years, and advise that financial wellness begins with a handle on your business’ accounting so you know where you stand.

Not sure where to start? Here are some helpful tips to help you stay on top of your business finances:

  • Keep personal and business finances separate – maintain a bank account specifically for your business. Don’t be tempted to use your business account for personal expenses. And be sure to reconcile your bank account every month. This will help you detect any fraud, as well as keep close track of the funds you have to use for your business.
  • Keep records of all deposits and track every expense – distinguish between the different types of deposits such as income, owner investments and loan proceeds. Categorize your expenses to take advantage of tax deductions.
  • Retain all source documents – this include invoices, receipts and deposit slips. An electronic system may be a good idea to help you keep organized.
  • Analyze your financial statements – gain an understanding of your businesses financial situation. This will help you identify trends, as well as help you plan for the future of your business.
  • Maintain accurate info on employees – keep your payroll info up-to-date and have all the information necessary to prepare W-2s.
  • Contact your local SBDC to schedule a free and confidential appointment to discuss your finances, cash flow, financial projections, and plan for the future of your business at iowasbdc.org

 

About The SBDC and the Author
The Iowa SBDC provides no-cost technical services and advice for Iowa small businesses and individuals looking to start and grow a business. The 15 centers throughout Iowa are run by small business experts and counselors who have the experience and expertise to confidently help on a number of topics.

Paul Heath, Regional Director for the University of Iowa SBDC has been in the position since 1984. His expertise is in financial analysis for small businesses. He holds an MBA from the University of Iowa, as well as a Certified Management Account (CMA®) designation. He is also a Certified Business Advisor (CBA®).