Is an SBA 7(a) Loan the Right Business Financing Option for Right Now? – Blog post from Ryan Collins, a commercial lender with Lincoln Savings Bank

Is an SBA 7(a) Loan the Right Business Financing Option for Right Now?

With the National Federation of Independent Businesses (NFIB) reporting that 92% of small businesses have been negatively impacted by coronavirus pandemic, the Small Business Administration has become an even more critical financial resource.

The SBA’s business relief Payroll Protection Program has captured a great deal of attention recently, but its narrow focus on maintaining payrolls during the pandemic means the funds can only be used for very specific purposes: payroll, rent, mortgage interest, and utilities. For businesses that need longer-term financing for more flexible purposes, the SBA’s flagship 7(a) program offers many benefits.

Though it’s been around for decades, many business owners aren’t familiar with the SBA 7(a) program – which gets its name from section 7(a) of the Small Business Act of 1953 – and may have never considered a 7(a) loan.

Particularly when the economy is uncertain and business cycles are unpredictable, an SBA 7(a) loan can be critically valuable. There are many reasons a business may be a good candidate, including factors such as:

  • Being a start-up business without an established history
  • Experiencing a temporary slowdown in revenue
  • Having seasonal income
  • Not having enough collateral to secure your desired loan amount

Does anything on that list apply to you?

An SBA loan may not have been on your radar screen before, but today’s business climate is like nothing we’ve seen in the past. Now may the right time to give the 7(a) program a fresh (or first) look. Here’s an overview of the key features.

  • Access up to $5 million in capital. If needed, a business can access high amounts of capital with an SBA 7(a) loan. This can be particularly helpful for companies that need to invest in expensive equipment, materials, or technology. Business that don’t have as sizable financial needs will be happy to learn that for loans under $350,000, there is a more streamlined process and faster turnaround time.
  • Obtain a loan with little or no physical collateral. Most conventional commercial loans are fully secured with physical collateral, which mitigates risk for the lender. An SBA loan offsets the lender’s risk when collateral is missing because it is backed by the U.S. government.
  • Longer terms for lower monthly payments. A key benefit of 7(a) loans is the option to extend the terms beyond what conventional business loans offer. This can mean up to 10 years for equipment loans, and 25 years for real estate loans. Business that take advantage of the maximum terms can lower monthly payments and significantly improve cash flow – a particularly attractive benefit while the economy is uncertain.
  • Competitive interest rates. The growth of financial technology in recent years has created a new arena of non bank lenders that companies can turn to for fast capital – but, this often comes at a cost. An SBA 7(a) loan almost always offers better interest rates for long-term financing, saving companies thousands of dollars over the long run.
  • Six months of payment relief. For new 7(a) loans authorized prior to Sept. 27, 2020, the SBA is offering six months of payment relief as part of its coronavirus business aid. This means the SBA will make six months of payments, interest, and associated fees, beginning with your first loan payment. This is not a payment deferral, and you won’t be required to apply for loan forgiveness. You are automatically eligible when your loan is approved by the SBA.

SBA 7(a) loans are here to help small businesses succeed whether the economy is up, down, or somewhere in-between. In any business climate, an experienced SBA lender can be an important partner in supporting the long-term health of your business.

Ryan Collins is a commercial lender with Lincoln Savings Bank, a community bank proudly serving Iowans since 1902. For more information about an SBA loan through LSB or other commercial lending services, please contact  bln@mylsb.com or visit www.mylsb.com.

Ryan Collins’ passion for assisting small business owners began with his time at Lincoln Savings Bank, but his passion for teaming up with individuals can be traced back to pre-professional days as a football player and strength coach at Central College. It is at that time when he started to truly learn the importance of a strong team. That passion/understanding has carried over to his professional career as he implements that teamwork with small business owners. He and Lincoln Savings bank aim to fulfill dreams by providing access to the necessary capital.

The information in this blog post is intended for general educational purposes only. This is not an official endorsement of any bank service or product. 

Online Transactions and Iowa Sales Tax

In today’s business world, more customers are moving to online purchasing as an alternative to in person transactions. Covid-19 has only increased the amount of online shopping consumers are doing. In Iowa, there are laws that both businesses and individuals must be aware of and in compliance with when selling or purchasing online.

Retailers:

» Businesses located in Iowa or out-of state-retailers with nexus in Iowa and selling to Iowa customers online have an obligation to collect and remit Iowa sales tax depending on where the product is being shipped to. If the merchandise is delivered to an Iowa address, both the sales tax rate of 6% and the additional 1% local option sales tax (LOST), if applicable, must be collected from the customer. LOST has been adopted by voters in most cities and unincorporated areas in Iowa and applies if delivery of the tangible personal property occurs within a local option sales tax jurisdiction.

Sales tax and LOST rates searchable by address can be found at:
https://tax-mapper.iowa.gov/.

A spreadsheet listing all jurisdictions may be found at:
https://tax.iowa.gov/documents/status-all-ia-jurisdictions

» Businesses located in Iowa and selling online to customers with a delivery address outside of Iowa will not collect Iowa sales or LOST. The retailer will want to check the laws in the state where the delivery is being made to determine if that state’s sales tax applies to the transaction.

» For out of state businesses with no physical presence in Iowa, beginning July 1, 2019, Iowa requires sales tax plus applicable LOST to be collected and remitted if the company has $100,000 or more of gross revenue from Iowa.

» Marketplace facilitators must collect and remit Iowa sales tax and LOST if they made or facilitated Iowa sales of tangible personal property, services, or specified digital products into Iowa equal to or exceeding $100,000. A marketplace facilitator generally includes businesses that facilitate retail sales by providing infrastructure (listing the product on the marketplace, communicating offer or acceptance of a retail sale, providing the physical or electronic marketplace) or support (customer service, fulfillment or storage services) for retail sales to occur and collecting the sales price, processing payments, or receiving compensation from the retail sales. Marketplace facilitators include consignment stores, auctions, and online marketplaces.

For further information on marketplace facilitators, visit:
https://tax.iowa.gov/marketplace-facilitators.

Consumers:

» If a customer makes a purchase from an out-of-state supplier not collecting Iowa tax and the product is for use in Iowa, the purchaser must pay Iowa use tax. Consumer’s Use tax applies to both individuals and businesses. If out of state purchases are being regularly made from an out of state source not collecting Iowa tax, the purchaser must obtain a consumer’s use tax permit. See https://tax.iowa.gov/consumers-use for more information.

The information in this blog post is intended for general educational purposes only. Nothing should be construed as legal advice. Any oral or written opinion by Iowa Department of Revenue personnel not pursuant to a Petition for Declaratory Order under 701 IAC 7.24 is not binding upon the Department.

 

About America’s SBDC Iowa and the Author
Lisa Casper, Business Tax Counselor for America’s SBDC Iowa, assists small businesses with questions relating to the Iowa tax code. She provides advice on sales and use tax filings, Iowa tax law that affects small businesses, and general services provided by the Iowa Department of Revenue. She also provides business consulting to help small businesses grow and 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.

 

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®).

 

10 Great Ideas for Getting Your Local Business Ready for the Holidays by Sue Pitts

The good news is that holiday spending is forecasted to increase by 4% for the 2019 holiday season (National Retail Federation). The bad news is that online shopping is becoming more and more popular and is a threat to small local businesses.

Small Business Saturday and shop local campaigns are great and a big help. But in the end, the customer is looking for the perfect gift or a special experience. Here are some tips to help you stand out from the crowd and offer a local experience that customers will not be able to resist:

1.  Decorate, Decorate, Decorate! – whether you are a restaurant, retailer or service business, turn up the volume and offer a festive experience for your customers that reflects your brand.

2.  Categorize your merchandise displays – Display items according to type of gifts your customers are looking for. Have sections for “The Perfect Gift For Dad” , “What Teen’s Want in 2019”, “Gifts for under $20.00”, etc.

3.  Be aware of holiday gifts and decorating trends – Offer these services and products to your customers. In 2019, gnomes are the new red truck. And have you noticed that Advent Calendars are everywhere? How about a 12-days of Christmas hair care package?

4.  Work with other local business to host a shopping event, contest, etc.

5.  Invite local makers into your service business – Imagine getting the perfect holiday hair cut and being able to find unique gifts made locally at the same time.

6.  Offer convenience – Online stores, major retailers, and restaurants are equipped to offer undeniable convenience. There is no reason a local business cannot compete with this. Offer online purchases from your website or an app with local store pick up, or as a restaurant, join food delivery services to offer home delivery.

7.  Up your content and social media game – Online “window shopping” is a thing. Post your gift guides and gift categories along with tips for the holidays on your blog, Facebook, and Instagram. When your customers search for these things online they will be able to find you.

8.  Consider special hours for the holidays – Big box stores always extend hours and Amazon is open 24/7. What can you reasonably do to add a bit more convenience for your customers? Maybe one evening opened later will suffice?

9.  Take advantage of community holiday festivities – Consider participating in some way. Maybe extending hours to be open during the event or participating with a pop up shop at the actual event.

10.  Collect customer information – This is valuable information to have for future promotions and next year’s holiday season. If you already have this information, check in with them and email them your latest blog posts, gift guides, and tips.

 

 

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 through out Iowa are run by small business experts and counselors who have the experience and expertise to confidently help on a number of topics

Sue Pitts, Regional Director for the Iowa Western SBDC in Council Bluffs has been in the position since 2004. Sue has become the state expert in Digital Marketing and Website Content. She teaches small businesses on these topics on the local level as well as at regional, state, and national conferences.

Summer for Small Business

This summer has been hot.  With many days climbing into the upper 80’s and 90’s, it’s hard to find motivation to accomplish any amount of work.  All you want to do is hop in the pool, or sit on your couch with a fan.  It can even be hard to run a business in this heat.  Customers may not want to walk or drive to your store to avoid the heat.  Your employees may lose productivity as they take vacations or simply daydream about being outside in the fresh air.

However, you can still improve your business in the summer months.  Here are four ideas to help you keep your business running smoothly when even the air conditioning is struggling.

  1. Take advantage of “rainy days”.

I know many people still use the adage “I’ll save it for a rainy day.”  Generally this means they’re saving some money for when it’s tight, but it also means sometime when a job can be accomplished.  Luckily for us, this summer has brought many rainy days to accomplish tasks.  However, you don’t need to watch the sky to know if it’s a rainy day.  A rainy day can be any time that you can accomplish a task.  Is your business often quiet before 10 am?  Then schedule some time in the morning to work on that bookwork that’s been piling up.  Do five people call on Tuesdays compared to 20 the rest of the week?  If so, start using that day to update your client profiles.  “Rainy days” can happen at any time.

  1. Make sure all your systems are running smoothly.

This one is especially true if your business involves a lot of outside work or has many pieces of equipment.  The summer months are the best time to fix anything that may be broken on your office building or within your machinery.  Take this one from me as I have had to set fence posts into the cold ground on Christmas Day and also demolish a building in mid-May.  I would much rather demolish buildings all summer then set one fence post in December.  Your employees will thank you if you accomplish outside tasks during the warm summer months.

  1. Plan an employee or customer appreciation night.

This one can help you express your gratitude to loyal employees and customers.  Rent a park, picnic shelter, or even just offer up your house one night (assuming it can hold all your employees).  Your customers will appreciate the gesture, and it can help build comradery between your employees.  It can also be cheap, especially if it’s an outdoor employee potluck or barbeque.

  1. Take a class

This is a page right out of your college handbook.  If you get behind on your degree, take summer courses.  Running a business is no different.  If you’ve been running your business for a long time, taking a class that is focused on your business can give you new perspective on how to attract customers, create marketing schemes, or simply get you up to date with new rules and regulations.  There are many classes for business owners offered in the summer months.  If you are interested in this, check out www.iowasbdc.org/workshop-calendar/ for different classes, workshops, and seminars offered around the state of Iowa.

Studying vs. Learning in Entrepreneurship

Students.  The children, teens, and young adults out there in the world trying to learn as much as they can in order to succeed in life.  As I am currently one of these, I can say that studying and learning is my job.  As I write this post, I am well aware of the fact that I have three to four hours of homework waiting for me at home, and I can’t say I’m excited about that fact.  Some business owners may understand my pain as you have piles of bookwork stashed away to be tackled when you have time.

But this blog isn’t for the people who already have a business started.  It’s for all of the people who are reading this, hoping to gain more information on how to be a business owner so they can become one too.  You’re doing your homework, so to speak.  Reading entrepreneurship articles for hours, trying to understand as many concepts as you can to ensure that your vision can come to fruition.

I realize that I’m still a student with very little “real world experience”, but I can say that I understand homework and studying.  It’s tedious, your hand cramps as you write yet another research essay, and you can’t cram any more accounting information into your head.  Studying is legal torture, and you cannot convince me otherwise.

I’ve also heard that you never stop learning.  But I’m beginning to realize that we have confused studying and learning.  Many students study for hours to simply regurgitate what they memorized onto a test, and then forget it immediately after.  They haven’t really learned anything, just passed the test.  Most of you are probably wondering what this has to do with business, but I’m not just talking about formal education here.  Many people have goals and visions for a future company.  They spend hours researching on sites like Forbes, Entrepreneur, and The Wall Street Journal hoping to eventually figure out exactly how they should put this idea into action.  They study, and while this isn’t bad, it’s not learning.

Growing up on a farm, I never studied how to check cattle.  There was never a website that I logged onto to figure out how to unlatch a gate, or read a magazine article on how to carry a hay bale.  But I learned a lot.  It was informal, and often painful as I would get kicked or stepped on, but I learned a lot about how to properly handle an animal and farm work that I couldn’t have learned through a book.

One Entrepreneur article says that many people have the knowledge to become business owners, they have studied so much that they have “information overload” and don’t know where to go.  They haven’t turned their hours of studying into learning.  The article goes on to encourage aspiring business owners to take action, and start the business.  You can’t fail if you never start, but you can’t succeed either.

I doubt that most of you will have to worry about stampeding cows if you open your business, but there are other things that will be difficult.  You may struggle finding loans, creating a customer base, or marketing your product.  However, I would have never learned how to jump over a fence if I never had the cattle in the first place.  Maybe it’s time for you stop studying entrepreneurship, and start learning about entrepreneurship.

If you’re ready to take the next step but are still uncertain on exactly where to go, the Iowa SBDC is here to help.  Visit http://iowasbdc.org/ to schedule your free and confidential advising appointment.

 

Springtime for Small Business

The time around the changing of the year is commonly used for reflection and revitalization. We make promises of things that we will change about ourselves, or we set goals for the year, tough goals, that we may or may not reach. Today, I want to focus on something much more practical. With the longer days and warmer weather, you will probably be preparing to rid your house of the clutter that has accumulated over the past year. This is a great opportunity to do the same for your small business. Small business owners should take some time to perform some spring cleaning on their businesses.

What do I mean by that? Spring cleaning is all about getting rid of clutter. “Clutter” is anything that is inhibiting you from creating value for your customers.  For your business, “clutter” may be the Britannica-sized stack of papers on your desk. It may be the product line that isn’t selling. It may even be the employee who shows up late, drags their feet, is rude with customers, and adds about as much value to your business as the pen you’re fiddling with while you read this. Whatever it may be, it is disrupting processes and decreasing revenue. Spring cleaning is all about eliminating these things.

Why do I believe this is a good activity for your business? Because I’ve seen your desk. Not your desk specifically, but the desk of a small business owner. It is a desk that bears less resemblance to a desk than it does the Amazon rainforest. As a small business owner, you have a plethora of responsibilities, and when these overwhelm you it can lead to disorganization and waste. Spring cleaning gives you a great opportunity to ask yourself questions like “how much time am I wasting on everyday tasks?” and “what can I do to change that?” You don’t need to find drastic pivots to make to your business model or philosophy. Save that nonsense for New Years. The goal is to look for simple improvements to make to your business and your daily routine.

Why spring? No particular reason, just tradition. Also, with this being around tax time, you may already be getting ideas for things that need to be cut or changed. More than anything, the end of another long winter often makes for an influx of productivity from Midwesterners, who are weary of hiding in their caves to escape the cold. Now, you can obviously choose a different time to do your spring cleaning, although then it will just be “cleaning,” and no one likes boring ol’ cleaning. Whenever you do your “spring” cleaning, the important thing is that you are setting aside time to identify and eliminate the clutter in your business.

The Amazon…or your desk?

Remember, spring cleaning is not another opportunity to make sweeping resolutions about the direction of your business. You should be looking for small, tangible changes to make that immediately increase productivity or improve business processes. Most importantly, your focus should be on eliminating, not adding. This is a time to get whatever is worthless or inhibiting out of your business. So for Pete’s sake, clean your desk.

Great Coaches, and What They Teach Us

Football. America’s most popular sport. Most of us who will watch the game on Sunday will look for big plays from stars like Rob Gronkowski, Fletcher Cox, and Tom Brady. However, we will pay little attention to the chess match occurring between the men roaming the sidelines. In our star-driven sports leagues, we often miss the valuable lessons that great coaching can teach us. The way a coach runs a team can be a great model for how a small business owner runs their organization. As Super Bowl LII approaches, let’s see what we can learn from three of the greatest masterminds in NFL history.

Vince Lombardi

“Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.”

Lombardi’s Packers dominated the NFL in the 1960s, going 98-30-4 and winning five championships in nine seasons. From day 1, Lombardi made his players commit to excellence. He established a culture of winning in Green Bay, bringing in veterans like Emlen Tunnell to provide the necessary leadership, and jettisoning players who didn’t fit his mold. He brought attention to detail, spending hours watching film to gain an advantage, and expecting his players to do the same. More than anything, he communicated to his team that he expected hard work, dedication, and discipline from them, and embodied all of those qualities himself. The success of his strategy is plain to see.

Lombardi’s success was built on a culture of hard work, determination, and “individual commitment to a group effort.” Your small business should be, too. There was nothing innovative about Vince Lombardi’s offense. It relied on a power run game and efficient passing, just like most offenses of that era. Your coffee shop relies on great coffee and a warm atmosphere, just like most coffee shops of today. So what will make you successful? Communicating your vision to your employees in a clear way. Being the type of worker you expect your employees to be. Creating buy-in by rewarding exceptional performance. In short, a winning culture.

Before becoming Green Bay’s head coach, Vince Lombardi was the offensive coordinator for the highly successful New York Giants. He won two championships with New York in four seasons. At his first team meeting as Packer’s head coach, Lombardi famously looked around at his players and told them “I have never been on a losing team, gentlemen, and I do not intend to start now.” Sure enough, the Packers would never have a losing season under Lombardi.

Chuck Noll

“Champions are not champions because they do anything extraordinary but because they do the ordinary things better than anyone else.”

In 1969, Chuck Noll became head coach of the Pittsburgh Steelers, a franchise that had been around for 36 seasons, and only had a winning record in eight of them. They had never won a championship. They had never even won a playoff game. However, over the course of four seasons, Noll turned the Steelers from losers into winners. He accomplished this by emphasizing fundamentals. He spent time in practice focusing on things like footwork, stances, and proper tackling, things you wouldn’t expect professional football players to need much brushing up on. He was famous for emphasizing that football is about blocking and tackling, and avoiding the media spotlight both during his career and after retirement. He also developed a defensive scheme that built the Steelers into 4-time Super Bowl champs in the 1970s. In all things, Chuck Noll was controlled, intellectual, and understated.

Noll brought a singularity of purpose to the Pittsburgh Steelers that the franchise had never known. In emphasizing the details, he focused his players on one goal: winning. Everything else he tuned out. This is a valuable lesson for small business owners. The best companies aren’t always the ones that are constantly innovating, or continuously pivoting to explore new opportunities. They capitalize on their current opportunities by focusing on fundamentals. Quality products. On-time deliveries. Customer service and retention. Consistency and efficiency. These are the things that make a business successful long-term.

There aren’t many quotes from Chuck Noll on the internet. As a coach, he wasn’t a motivator, and he wasn’t one for long-winded speeches. He didn’t give many interviews with the media. He let his work speak for itself. 23 years, 209 wins, and 4 Super Bowls later, he quietly rode into the sunset as one of the NFL’s all-time greats.

Bill Belichick

“If you sit back & spend too much time feeling good about what you did in the past, you’re going to come up short next time.”

In case you haven’t heard, the New England Patriots are in the Super Bowl again. This isn’t just the second time in two years. This is the eighth time since 2000, when Bill Belichick became their head coach. This was the 16th time in 18 seasons that the Patriots finished with double-digit wins. This nearly-unparalleled level of success can be attributed the Belichick’s simple, but profound philosophy: “No Days Off.” After winning his fifth title last year, Belichick pointed out that “as great as today is, in all honesty, we’re five weeks behind 30 teams in the league in preparing for the 2017 season.” Belichick wasn’t about to take time reveling in his massive success. He didn’t want to. He was ready to get back to work.

We all need time to rest. However, business owners simply can’t afford as much time as most people. To successfully build a company from the ground up, it takes a type of drive and work ethic that most of your friends might see as crazy. But to you, it may not even seem like work. “I don’t see this as work, this actually beats working,” says Belichick. The old adage goes something like “if you do something you love, you’ll never work a day in your life.” Of course, even the most passionate of entrepreneurs have those days when running a business feels like a grind of epic proportions. But few would trade it for something else.

Belichick is preparing to coach in a Super Bowl for the eleventh time in his career, his eighth as a head coach. Over the course of his storied tenure, he has never taken his foot off the gas pedal. Most coaches would have retired by now, being satisfied with their millions of dollars and notoriety. But some live for the grind, and wouldn’t be happy doing anything else.

 

Owning a business isn’t always as clear-cut as coaching a football team. However, just like movies, sports are often a great metaphor for life. There are valuable lessons to be learned, both from playing, and from watching the great ones. For small business owners especially, many of the traits that win out in sports, win out in life. So as you watch on Sunday, don’t merely be a spectator; be a student. There’s plenty to learn out there.

The Value of Small Business

Where did you spend your time growing up? What are your favorite memories of your hometown? For many of you, the answers to these questions will involve a local business. I was fortunate enough to grow up working in a family coffee shop. I saw firsthand the benefits a small business can provide to a community, and they go far beyond your morning cup of coffee. They give your town personality, provide superior service, and make a greater economic impact than chain stores.

 

Identity

Small businesses are often the defining aspect of your community’s identity. Whether it’s the coffee shop where you and your friends meet every weekend, the bookstore where you buy your kids’ Christmas presents, or the thrift store where you design your wardrobe, local businesses create the environment that is your town. They give the community places to gather, they provide goods and services from trusted sources, and they probably gave you your first job. Almost every town has “their spot,” the place to which you immediately refer visitors to show them what your community is all about, and some lucky towns even have more than one. These businesses give their communities life, and occupy an important place in our hearts.

 

Personalized Service

In a similar vein, there is something special about supporting a business owner that you know. This is even more true when you know you are going to receive personal, sincere service, something that superstores and online outlets just can’t match. The tailor-made service you receive at a local business comes from real relationships forged between the owners and their customers. My parents used to sit down and talk with customers for extended periods of time, showing genuine concern for what was going on in their lives. The relationships they forged with their customers were irreplaceable. While this may violate one of Don Corleone’s most important rules (“It’s not personal. It’s strictly business.”), it ultimately means a better experience and a better product for the people in the community.

 

Local economic development

For every $100 spent at a local business, an average of $68 stay in your community, compared with $43 out of every $100 from non-local businesses. This local spending includes wages, local supplies and services, and community donations. Additionally, small businesses are likely to be the first job for many of the kids in your community. This gives the added benefit of providing work experience in what is likely to be a friendly environment. I remember working with a lot of my friends from high school at my family coffee shop. In addition to economic benefits from supplies and wages, small business owners are more likely to support local booster clubs and events, providing additional value for the community.

 

Small businesses and the people who run them are irreplaceable in a community. That’s why America’s SBDC Iowa’s mission is “to support the collaborative economic development of Iowa by providing entrepreneurs and businesses with individual consultation and educational resources necessary to assist their businesses to succeed.” If you need help growing your business, or have a new idea you want to test, let us know. Consultations are free, and we have 15 centers conveniently located throughout the state. Let us help get you off the ground.

 

iowasbdc.org

iowasbdc@iastate.edu

515-294-2030

 

Special Thanks: Leah Pitts

3 Affordable Marketing Methods

Everyone knows marketing is essential for businesses, especially small businesses. Without the help of media exposure that larger firms experience, it can be difficult to spread the word about your business and your service. Also, it often seems that the price you pay isn’t worth the benefits you receive. Furthermore, marketing is a constantly evolving sector of the business world, making it hard to keep up with competitors. What every small business needs is an affordable way to stay relevant in their communities. Below, I will outline three ways you can spread the word about your business without breaking the bank.

Social Media

This is an obvious one. As a matter of fact, most if not all of you reading this now probably implement social media as a marketing channel. But aside from the bare minimum of occasional Facebook posts, how can you use social media to market your business?

  1. Ask for feedback: Facebook, Twitter, and Instagram all serve as direct lines of communication between you and your customers. Why not take advantage of that to see what they think? A simple “how are we doing?”-type question on one of these platforms lets customers know you’re interested in their opinions, and want to improve their experience as much as possible.
  2. Utilize hashtags: Hashtags help your posts show up in searches on social media sites and in Google. They are especially useful for Twitter and Instagram. Try to use phrases that are commonly searched. These can also be used to start a conversation about your business, or involving your business.
  3. Content, content, content: Jeffrey Hayzlett, former CMO at Kodak, writes in a 2016 article for Fortune that “Developing quality content should be the rule, not the exception, regardless of industry.” For small businesses, this means pictures and videos of your business, customer testimonials, blogging, and above all a consistent online presence. Being active, active, on social media is the easiest way to reach customers of all types in 2017.

Email

In a 2015 article for Entrepreneur, Kabbage CMO Victoria Treyger advises making email a “heavy hitter.” “Not only is it effective,” she says, “it’s also desired. In study after study, consumers regularly say that email is their preferred channel for brand communications.” Emails can be used to inform customers of upcoming sales, new items in stock, or new plans for the businesses future. All of these things help keep your customers engaged.

When emailing customers, make sure your message is clear and concise. Just because people like email marketing doesn’t mean they want to read an essay. Make sure the design is clean, and add something interactive, such as a website or Facebook link. If you are promoting a deal on your website, something like an “Order Now” button would be appropriate.

Consider utilizing a marketing platform such as Campaigner for this tactic. These services are very affordable, and help you design email templates, automate the process, and maximize the effectiveness of your email campaigns. Considering the already heavy burden on small business owners, services such as these can add a lot of value to your marketing. 

Texting

Texting is a fast and easy way to reach customers, especially those in their teens and early twenties. In some cases, it can be even more effective than email marketing. Texts are easier to open, and take less time to read, making them an ideal marketing channel for young consumers.

A brief note before I can go on: spam texting can cause problems with the FCC. Minda Zetlin, in an article for Inc.com, advises business owners to “make sure customers really do want your texts – and you can prove it.” In other words, make sure you have a record of customers who have opted to receive your marketing texts.

One of the biggest keys to successful text message marketing is to offer something of immediate value. KeySplash Creative CEO Susan Gunelius, in a 2012 article for Entrepreneur, advises that since “text messaging is an instantaneous medium, you should include real-time offers. Whether you’re providing information about a sale or a new product, the message should describe the benefits of acting now.” Gunelius also advises users to identify themselves when communicating with customers, to avoid “the spam treatment.”

Remember, marketing your business doesn’t mean you have to break the bank. There are plenty of ways to affordably communicate with consumers. Oftentimes, these are just as effective, even more effective, than other traditional marketing channels, such as radio or print ads. The tactics outlined above would mean more work for the owner, but would go a long way in freeing up capital to compensate employees, expand your business, or improve your products.

 

For further reading:

Best SMS Marketing Software – fitsmallbusiness.com

 

6 Ways to Market Your Business for Less Than $100 – Entrepreneur

 

101 Small Business Marketing Ideas – The Balance