I have been wanting to write this post for a very long time. Out of hundreds of business owners—either current or prospective—that I speak to on a regular basis, nearly one-half tell me they are about to commit the mistake I discuss in this post without realizing how it can set back their personal finances. In fact, you might consider this post a public service announcement, because the ease of making this mistake, coupled with its long-term effect on your personal financial well-being, is shocking.

I am talking about using a personal line of credit to fund your business. On paper, this process does not sound catastrophic, dangerous, or worrisome. In fact, it sounds logical and easy.

The typical thought process individuals share with me is as follows: You are passionate about starting a business or maybe buying an existing one, you have a good credit history, and the bank has given you access to a line of credit. It is sitting there waiting to be used and you realize that it’s an easy way to fund your dream of entrepreneurship—be it buying computers, equipment, paying yourself a salary, or depending on how large your line of credit is, even buying a business. You can simply take the money out of your personal line of credit and transfer it to your business. Easy!

In reality, however, this simple transaction can decimate your personal financial well-being, cut off your personal access to credit, suck you into a whirlpool of high interest rates, and leave you with a subpar credit rating for years to come.

A cautionary tale

A few years ago, I met David (name changed) and his wife for coffee. David was interested in buying a ski equipment shop where he worked from its then current owner. Both David and his wife were in their early 30s, did not have kids, but wanted to start a family soon and the dream of buying and running a business was very appealing to them.

In the course of our conversation, I asked David whether he and his wife had any savings, to which he replied, “No.”

As you can imagine, skiing is a highly seasonal sport. In the summer months the business dries up, revenue generation is uneven, creating unbalanced cash flow for the business and its owner. I expressed this concern to David, given his personal financial situation and the fact that his wife was planning on staying home and not working.

The combination of the highly seasonal nature of the store, coupled with David’s limited savings and his wife’s desire to start a family, all led me to recommend to David that he was not ready to purchase the business. I advised him not to buy the store as I was concerned that he may be in way over his head.

About a year later David called me. He mentioned that he had bought the store and needed a business plan that would support his application for a short-term loan to help finance operating expenses and bridge the seasonal cash flow shortfall the business had encountered. When I asked David how he financed the purchase of the store, he told me that he took nearly $50,000 out of his personal line of credit to buy the inventory and was leasing the retail space from the previous owner, who still owned the physical building.

Needless to say, I grew concerned. I asked David what interest rate he was paying on the line of credit. He replied, “9.5%.” At this point, it became clear to me that David committed the mortal sin of blending his personal finances with those of his business. He took out a highly expensive line of credit to purchase a highly seasonal business he could not afford to buy with fixed expenses he could not afford to pay. By maxing out his personal line of credit, David had sunk his credit score to levels that, unfortunately, made him ineligible, as a business owner, for the majority of business loans.

As I was speaking to David and explaining to him my view of the situation, I could feel his heart sink. I advised him to run a credit report to see his own score: it had gone from nearly 740 to below 630. On top of that, he owed the bank $50,000 he borrowed from the line of credit at an annual rate of nearly 10%.

The previous owner of the store had built up cash reserves to provide the business with liquidity during the low season. David did not have such savings. Ultimately, he sold the business, repaying about $35,000 of his personal line of credit in the process, and taking a year to pay off the rest as he pursued a career in restaurant management.

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Why banks offer lines of credit

Lines of credit are a great tool for short-term needs, but should never be used to finance long-term cash shortfall in your personal life. For banks, lines of credit are just another way to earn interest, so naturally they make them available to you and hope you will take advantage of the easy money and don’t repay it any time soon. The longer your line of credit is being used, the more interest income the bank receives.

I fully realize that there comes a time when, for personal reasons, you need to dip into your line of credit, sometimes even for long periods of time. This is what they were designed for; however, you should never fall into the temptation of using the funds from your personal line of credit to support your business—here’s why:

Top reasons why your personal line of credit should be off limits to your business

1. Your personal financial well-being must always come first. Never put your personal finances at jeopardy in order to keep your business going. A successful business will not require you to do this, whereas a failing business should be terminated and you should move on.

2. There are other sources of business funding. If your business requires financial assistance, there are appropriate tools such as loans and investor funding available to you. You can also leverage a business lines of credit, but never use personal lines of credit.

3. What happens if you fail? As in David’s story, you can be on the hook for repaying your personal line of credit if your business fails.

5 things you can do instead

1. Start a business that requires little upfront cost. This can include consulting, marketing, SEO, web design, coaching, teaching, or affiliate marketing. There are tons of options.

2. Start or purchase a business where business assets can be used as collateral. Whether you are buying a dental clinic or starting a food truck (as examples), businesses that have fixed assets (which can be resold if the business goes under) tend to attract better financing options as lenders offer specialized loans for equipment, inventory, etc.

3. Make sure you have personal savings. You must ensure you have a personal financial safety net in case your business venture hits hard times and it is your only source of income.

4. Apply for business loans—not personal loans—to help finance your business operations. There are plenty of options available to small businesses that require operating, equipment, or cash shortfall loans.

5. Save and lend your savings to your business. Your personal line of credit does not belong to you—it’s a loan from a bank to your person; therefore, using it to finance your business is dangerous and unwise. Instead, take time to save some money, and if your business hits a snag, lend it from your person (as an individual) to your business.

RELATED: 22 Mistakes Entrepreneurs Make When Pitching to Investors

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Shelves are empty. Hand sanitizer sold out. Cleaning supplies nowhere to be found. This was the scene across many American towns and cities at the beginning of March 2020. Almost overnight, a global pandemic turned the status quo on its head, and individuals and businesses were left scrambling to adapt and overcome the challenges they faced.

For some businesses, that was a loss in foot traffic or a change in consumer behavior. For others, it was a problem downstream in their supply chain, distribution network, or development pipeline, which reverberated back.

Every business is going through its own set of uncertainties in today’s environment, but those uncertainties provide the opportunity to reflect and to better understand the core of the business, its key profit drivers, and how those drivers can be used to create a path back to a new normal.

The importance of projections

As a small business owner, you got into business to make or sell the products and services you love to the customers you enjoy working with. Business financials are intimidating, and you don’t really see the need for them right now, so you’re happy to put them off for another day.

My business, a coffee company, was in a similar position. We had built some basic financial projections prior to the Covid-19 pandemic as we worked to expand our business and make decisions about where to allocate resources. Recently, though, we found a renewed need and importance for them. As the pandemic raged throughout D.C., our partners, landlords, and more looked to our projected financials not only as a measure of future success and profitability, but also as a measure of our confidence in the business, our team, and the future.

Especially now, as small businesses continue to face new challenges, landlords and banks will want to see updated financial projections before they evaluate your business for a deferral, refinance, or other type of relief. Grantors and government initiatives often look to P&L projections as a measure of how much the pandemic has harmed your business, and so the more accurate they are, the better they will serve you.

Beyond that, you can look at your business financials down the line to analyze key aspects of your business such as the unit economics. For us, that involved understanding how much it costs to produce a tin of coffee and what that cost depended on. From there, we calculated how much we were making per tin, and then how many tins needed to sell in order to cover our overhead.

While coffee tins may be a niche example, this general concept of unit economics really can apply to any business: what are you making, for how much, and how many do you need to sell to cover your costs?

1. Find a good starting point: Setting up the income statement

An income statement is the best place for a small business to start its projections. It’s really the heart of the business at the smaller stage, and will give you visibility into the metrics and drivers you may want to consider down the line. Once you have your income statement, you can use it to build out a balance sheet, and a statement of cash flow if you need to.

The best starting point for setting up your template income statement is a public company’s corporate filings. Public companies are required to file their income statements, balance sheets, and cash flow statements (amongst other things) every quarter, and by finding one or two in your industry, you can get a sense of what the business world at large considers to be the most important information.

Take note of the key line items, such as the various revenue categories, cost of goods sold/cost of services, and operating expense breakdowns. Don’t worry too much about the more complex accounting lines, such as goodwill or noncontrolling interests, unless you know they pertain directly to your business.

2. Projecting revenues

Once you have a baseline for what line items you’re looking for, revenues are a great place to start. You already have a good understanding of how your business makes money. The key here is breaking down your revenue into different “streams” that make the most sense for your business and industry. Maybe you sell items in a brick and mortar store and online. Those would be two different revenue streams.

Alternatively, your revenue streams could be the products you sell and the service revenue that comes along with continued maintenance of those products. For us, we noticed that our industry looks at in-store revenue versus the revenue that comes from selling our coffee wholesale or to grocery stores, so that’s where we started.

What drives each one of those streams? For our cafés, it’s a factor of how many people come in each day and how much money they spend.

The goal here is to take the abstract number of “Café Revenue” and break it down into each of its critical pieces, which are concrete and much easier to conceptualize and project. From there, you multiply them together.

For my company, it looks something like this:

Daily Café Revenue = number of cafés x number of people per day x average cups of coffee per person

Those numbers are much easier to find and track than trying to run trend analyses or looking just at the historical dollar values. You can get more nuanced with them as well—maybe your business has a seasonal tendency, or maybe there’s a weekly cadence to your business flow. As long as you can break it down into its different parts, you’ll be able to make these projections happen!

3. Variable expenses

Variable expenses are those that depend directly on your revenue. You’ll see them on your income statement primarily as cost of goods sold/cost of service, with some as operating expenses.

Let’s look at a cup of coffee. We figured out in our previous example around how many cups we’ll be selling in a day, and now we want to figure out the variable costs: the cup and lid, the coffee itself, the water that goes into brewing, the syrup for flavor, and any milk or other add-ins. Adding those up and multiplying by the number of cups sold per day gives us our variable cost.

Of course, your business will probably be a little more complicated than this. Maybe your products have different sizes and costs, or different services cost different amounts to perform. As long as you can point to those numbers down the line and explain your assumptions, you are good to go!

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4. Projecting fixed costs

Fixed costs are much simpler to project. These are the costs that you will incur, regardless of how much you sell. They generally fall into a few categories, such as salaries, rent expenses, equipment costs, or other such costs that you know you’ll have to pay, regardless of if you sell one item or one million.

For many of these types of costs, they are either the same year-over-year, or grow at a fixed, predictable rate, like a rent increasing 2% each year. You can predict and project those out, and they will generally make up your operating costs, non-operating costs (such as interest on loans, etc.), and potentially a small part of your cost of goods sold.

From here, you just need to put the income statement all together, fill in any missing lines (taxes, for example), and you’re good to go!

5. Building out the balance sheet and statement of cash flows

These two statements are a bit more accounting heavy. A third party may only need to see the income statement projections, and then will simply ask for the actual balance sheet and cash flow statement as of your last fiscal year or quarter. In that case, you may not even need projections for these two as much as accurate statements from your past few periods of operation.

If you do choose to project out your balance sheet and statement of cash flows, the process is pretty similar. Take a public company or other comparable financial statement from your industry, and start filling in the lines. You should be able to go line by line with your income statement, and build out the statement of cash flows based on how much cash you started with. The bottom line of the cash flow statement is the cash on hand at the end of the period, which flows directly into your balance sheet.

Before you get started …

Building your business financials is no easy task. Projecting them out into the future is even harder. As you take this on, just remember that while it’s not the most exciting or interesting project, it can help you down the line, not only with your partners, but in planning and deciphering what areas of your business are poised for success, and what may need to be fine-tuned.

Keep track of your assumptions so you can explain them, and take the complicated items and break them down so you and your team can better predict and understand the key drivers. Finally, always remember that these are just projections. As useful as they are, they should play only one role in your decision-making process about what’s best for your business.

RELATED: What Advice Are Venture Capitalists Giving to Startups in Light of the Coronavirus Crisis?

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While this latest Interim Final Rule addressing the PPP loans created under the Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) will still require borrowers to provide documentation, such as a payroll provider report, it offers a new, simplified form and a “check the box” process for forgiveness. Borrowers can use new SBA Form 3508S for their application or wait for their lender to update their online application portals.

The new rules also remove the need to show that the borrower did not reduce head count or salaries and, therefore, suffer a reduction in loan forgiveness. Previous regulations outlined that if an employer reduced salaries by over 25%, the amount over 25% would not be forgivable. Borrowers would also have to document that if they did furlough employees, they tried in good faith to rehire them or couldn’t hire similarly qualified individuals, or also be subject to an unforgiven portion of their PPP funds.

How the SBA justifies the $50,000 limit for simplified PPP loan forgiveness

The SBA rationale to remove these requirements for loans of $50,000 or less is that almost all borrowers in this loan amount category are sole proprietors, independent contractors, or employers with one employee. The SBA stated as follows:

“Within this population of potentially affected loans, SBA believes that most borrowers would not be affected by the loan forgiveness reduction requirements because (1) the borrowers did not reduce FTE employees or reduce employee salaries or wages, or (2) the borrowers would qualify for one of the existing exemptions from loan forgiveness amount reductions. Excluding such borrowers, the aggregate dollar amount of PPP funds affected by these exemptions relative to the aggregate dollar amount of all PPP funds is de minimis.”

The SBA issued some data points to further justify its analysis that removing these borrowers from the requirements regarding the need to keep head count and salaries at close to pre-COVID levels in order to receive full forgiveness is de minimus. According to the SBA, there are 3.57 million outstanding PPP loans of $50,000 or less out of the 5.2 million issued, totaling approximately $62 billion of the $525 billion in PPP loans. Approximately 1.7 million PPP loans of $50,000 or less were made to businesses reporting zero employees other than the owner, or one employee.

The SBA made the calculation that owners would obviously not furlough themselves, and employers with just one employee only represented $49 billion or 9% of this loan range. Therefore, even if these borrowers laid off or reduced the salary of that one employee, the impact would be minimal.

This exemption was long sought by lenders and the business community, albeit at a higher level. Initially, these interested parties sought “check the box” forgiveness at $1 million or in the $250,000 to $500,000 range. Those numbers proved too ambitious and the number floated for the potential new stimulus bill was $150,000, a level covering most PPP loans. The SBA likely settled on the $50,000 level so it could make the above argument that the impact on employees would be small, and so the goal of the PPP loans would still be maintained.

While this new Interim Final Rule resolves one issue that resulted in $135 billion in PPP funds being left on the table when the program closed on August 8, 2020, and the reticence of many employers to file for forgiveness without more clarity, many issues are outstanding, giving businesses pause.

This is reflected in the fact that the SBA has received 96,000 forgiveness applications to date and has reviewed none of them. The SBA has stated it will begin reviewing applications “shortly.” This new regulation will certainly reduce the SBA’s administrative burden on loan forgiveness.

IRS rule on deducting expenses remains an issue

The main outstanding issue is the deductibility of expenses used with PPP funds. While the original CARES Act creating the PPP program made clear that once the loan is forgiven and becomes a grant, the funds are NOT income and not taxable as such. However, the Internal Revenue Service then issued guidance (Notice 2020-32) on April 30, 2020, stating that expenses normally deductible for a business CANNOT be taken if used with PPP money. Again, every lender and business advocacy group has been lobbying against this and have been hoping to see a fix in the new stimulus bill.

The main argument against this rule was simply one of fairness: if the intent was a grant, why create a new tax burden on these businesses the government was trying to bail out? The IRS rationale, however, was the businesses should not be allowed to “double dip” by both getting tax-free government money and taking these deductions. Again, the IRS is alone in that assessment.

More important, the rule created a grey area many businesses are now facing. Prior to forgiveness, PPP is a loan and remains one until forgiveness is received. As lenders have 60 days to review forgiveness applications and the SBA 90 days, most borrowers won’t receive a forgiveness decision until Q1 or Q2 of 2021, if then, with the likely backlogs to come. So, the question becomes, do borrowers take the deductions now and amend their tax returns upon full or partial forgiveness, or not take the deduction and receive a refund if all or part of their PPP loan is not forgiven? And, what of any potential penalties and interest?

Should businesses file now for PPP loan forgiveness?

Since the PPP covered period is now 24 weeks, most businesses should easily qualify for full forgiveness. While the rules dictate that 60% of the PPP funds must be used on payroll, and 40% on expenses such as rent, utilities, mortgages, and loan interest, it is advisable and easier to document if all the funds are used on payroll if possible. If borrowers can do so, the conservative approach would be to not take the deductions and assume full forgiveness.

However, if borrowers want to hold onto cash, or have concerns about forgiveness, they can still take the deductions now. This is a business decision borrowers should make in consultation with their accountant, lawyer, and lender. Either way, for most borrowers of smaller loans, especially those with loans of $50,000 or less, applications for forgiveness should be filed sooner rather than later.

Many businesses have held off filing for forgiveness, waiting to see what new legislation would bring, such as more clarity, easing of rules, and a second chance at PPP money. The House version of the stimulus bill offered a second round of PPP funds to those businesses with 2020 revenue down 50% over 2019. In addition, there were set asides for employers with under 300 employees, $25 billion for employers with 10 or fewer employees, and $10 billion for community lenders. The intent was to address complaints that women and minority-owned businesses were largely shut out from the first and second round of PPP loans. The bill also expanded the list of forgivable expenses to include supplier costs, worker protective gear, and operations.

Unfortunately, none of these improvements or additional funds have come to pass. The talk now is of scaled down and targeted bailout money for the airline industry and perhaps restaurants and hospitality. The chances of anything happening prior to the election on November 3rd remain slim to none.

In the meantime, while things may and likely will change with future regulations, at least the 3.57 million borrowers of loans of $50,000 or less have much more clarity on both full forgiveness and the tax deduction issue.

Other Articles From AllBusiness.com:

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• PPP Loan Program Extended; Loan Data Released: What Small Businesses Need to Know 
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• Trump Signs New Law Relaxing PPP Rules: What You Need to Know

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Unlike the more well-known versions of crowdfunding—rewards-based or donation-based—Treefort is using “equity” or “investment” crowdfunding through the platform Wefunder to secure investment funding. 

Investors in Treefort are able to purchase preferred stock, with no dividends or voting rights. According to the investor Q&A section of Treefort’s campaign page, “Until the pandemic came, we were closing in on our best year yet and poised to take the next step of profitability to allow us to have more margin of cash flow for the rainy day fund, pay our team better living wages, and to expand on the business model.”

“We really liked that people get ownership,” says Eric Gilbert, co-founder and festival director. “We’ve always had a level of transparency with our community. This allowed us to up the transparency and involve more of the community.” 

3 reasons to consider Regulation Crowdfunding

Crowdfunding has been a bright spot in an otherwise challenging fundraising and small business lending landscape dominated lately by government loan programs such as Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). 

Even before the coronavirus crisis, many small businesses failed due to lack of access to capital and/or poor cash flow. “COVID has made it insanely difficult to access capital,” says Sherwood Neiss, cofounder of Crowdfund Capital Advisors, and maintains crowdfunding could be one of the best ways to get capital into the hands of small businesses that need it. 

There are several types of crowdfunding. While rewards-based crowdfunding (think Kickstarter) and donation-based crowdfunding (think GoFundMe) often get the most attention, Regulation Crowdfunding isn’t as well known or understood by small business owners. 

Regulation Crowdfunding allows eligible companies to offer and sell securities through SEC-registered intermediaries (a broker-dealer or funding portal). Currently, companies may raise a maximum aggregate amount of $1,070,000 through crowdfunding offerings in a 12-month period. “Regulation Crowdfunding allows startups and small businesses to raise capital by selling securities in their companies to the community” explains Abe Chu, co-founder and CMO of NextSeed. “Those securities could be in the form of equity, debt, convertible notes, and other types.”

Regulation Crowdfunding is gaining momentum. For example, July 2020, an historically low month for crowdfunding, “saw records for the highest number of offerings in a single month, the highest amount of commitments, as well as the highest number of investors,” according to Crowdfund Capital Advisors data. And “80% of (that) capital comes from friends, family, customers, and followers.”

1. Customers become advocates

One of the biggest advantages of Regulation Crowdfunding is the relationship founders build with supporters. 

Winner of MasterChef Season 3, Chef Christine Ha opened her first full restaurant space Xin Chao along with husband John Suh and Chef Tony J. Nguyen. Their campaign on NextSeed raised its targeted $107,000 from 93 investors within the first two hours. The money raised is in the form of a loan which they have started to repay, despite the challenging environment for restaurants.

“We’ve had to rethink what consumers are looking for these days,” Ha explains. The restaurant has a large patio, which helps, and they’re offering more affordable bar bites. “We’ve had to keep adapting and shifting, but our long-term vision is still the same.” 

When asked about her crowdfunding experience, Ha repeatedly points to the fact that backers want to see the business succeed. “I think the more intrinsic value is having the team of people who invest in your business to really want to help you foster that business and help you get the word out,” she says. 

Treefort’s Gilbert agrees. “These are going to be owners of our company,” he says. “I think this brings a higher level of commitment. They are going to be more apt to care about it deeply into the future.”

2. It’s surprisingly diverse

As these examples have shown, Regulation Crowdfunding isn’t just for unique retail products or sophisticated biotech firms. A wide variety of businesses are raising money this way, too. 

Crowdfund Capital Advisors research found that the top industry groups in 2019 groups were “entertainment, application software, consumer packaged goods, restaurants, alcoholic beverages, real estate, biotechnology, computer hardware, education, utilities, personal services, advertising and marketing services, autos, consulting and banks.” 

That’s a pretty wide swath of businesses, many of which would be unlikely to land angel funding or venture capital. They also could have trouble getting traditional business financing without strong revenues, solid credit scores, and not being in business for at least two years.

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3. It can be cost effective

Raising money through a Regulation Crowdfunding campaign ends up costing, on average, about 5.3% of the amount raised, says Neiss. Costs may include the campaign video, company disclosures, marketing costs, plus legal and accounting fees. Once successful, a platform will take on average a 6% success fee.

In addition, investors will expect some sort of return. Some campaigns offer equity; others make loans or offer convertible notes. The Xin Chao campaign offered investors a gross annualized interest rate of 17% to be paid monthly over four years. 

Still, it can be less expensive than other types of fundraising and you won’t give up as much control as you would with angel funding or venture capital. “If you were to do a comparable offering via Regulation A, you could easily spend $100,000 on the same fees,” explains Neiss. “[Regulation Crowdfunding] scales down to the size of the offering. Other types of fundraising have fixed costs that are much higher.” 

With Regulation Crowdfunding, “Main Street businesses are raising around $100,000,” Neiss adds, and “the average amount across the board is about $250,000.”

Can the U.S. crowdfund the next stimulus?

At the end of August 2020, Yelp reports 163,735 total U.S. businesses on Yelp closed since the beginning of the pandemic (observed as of March 1, 2020), and 60% of those are permanent closures. That’s nearly 100,000 businesses on Yelp alone that have closed and do not plan to reopen. More businesses will likely join their ranks if there is not another round of stimulus. 

Several years ago, Neiss walked the halls of Congress to advocate for Regulation Crowdfunding, which became legal though the JOBS Act in 2012. Now he’s a driving force behind the proposed Main Street Recovery Co-Investment Fund, which would provide a model for the government to match 100% of funds (up to $250,000) raised from communities via these platforms. This approach would replicate a successful program in the U.K., and engages local communities to support businesses they believe in. 

“What is happening on Wall Street is not the same as Main Street,” Neiss warns. “Community businesses are facing the worst economic crisis in decades and are closing their doors. The stimulus programs the government has created for Main Street are failing. The money they allocated is still there. This program would allow the government to deploy capital immediately to businesses that need it to survive using policy and regulation that already exists, technology platforms that are ready to scale, and real-time data feedback that will allow the government to see how the program is working.”

RELATED: Cash-Strapped From the Coronavirus: Should I Dip Into My Retirement Fund for Relief?

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So you’re a freelancer extraordinaire. You have your game down pat, right from sales and marketing to the actual service delivery and customer service. You’ve managed to establish a steady stream of happy, satisfied, paying clients, which also means you’re billing regularly. But something about your finances is causing you sleepless nights, and that’s because you’ve noticed that for a while now you’re always broke. What gives?

When you suffer from a lack of cash, even with a steady stream of paying clients, it’s likely you either lack a budget or fail to follow one that reflects your income realities. This can lead to some serious financial distress, but how exactly do you remedy it? Well, often the solution is as simple as creating and implementing a smart budgeting plan.

Having funds in the bank doesn’t automatically mean you can make any purchase you’d like. Pending bills and other unmet expenditures have to be factored in prior to the next payout.

Your freelance life will become way less stressful when you improve your financial skills, and the good news is you do not need a degree in accounting to practice smart budgeting. So if you’re experiencing difficulties with money management, here are some smart budgeting tips to help get your financial life back on track.

1. Create a transformative budget

A lot of folks don’t budget simply because they find it boring. Plus the thought of going through a process of tracking expenses, doing the math, and ensuring everything tallies up scares the daylights out of them. But if you’re struggling with money, you really have no excuse not to budget. It’s a savior.

Think about it this way: if all it takes to put your financial life back on track is a cumulative couple of hours each month working on your budget, why not do it? Rather than stress yourself out thinking about the painstaking budget creating process, focus instead on the benefits and value it will bring to your life and dive in.

2. Actually use the transformative budget

All your efforts will be useless if you create a budget and sit on it. Budgets are living financial documents that are not meant to gather dust filed away in a cabinet. The magic happens when you use your budget, so refer to it before you make any big spending decisions

Let it be your guide. Ensure you update it as you settle bills and spend on monthly expenses. Staying on top of things will ensure you’re always aware of how much money is available to spend. Say hello to being a well-oiled, carefully measured spending machine.

3. Track your expenditures like a hawk

Small unchecked purchases can easily ruin your budget because they can add up very quickly. The best way to avoid unpleasant surprises is by tracking your spending to uncover places where you might be inadvertently overspending. Always keep your receipts and record purchases in an expense journal with clear labels and categories so that you can easily identify some of the areas where you have difficulty staying within budget.

4. Avoid unnecessary loans

Your credit and income could qualify you for certain loans and credit cards. However, if you don’t really have a need for them, why bother? Unless there’s a genuine expense you can’t afford and you’ve determined that you can service your monthly repayments without affecting your other obligations, then there’s really no need to take on debt.

5. Allow some wiggle room for unbudgeted spending

Your net income, or the money available after deducting your expenses from your earnings, is a very important part of your budget. The money left over after expenses can be used for fun activities and entertainment, but only up to a certain limit. Do not go all crazy with this money. Try to keep some and stretch it out to last the entire month.

Other Articles From AllBusiness.com:

• The Complete 35-Step Guide for Entrepreneurs Starting a Business
• 25 Frequently Asked Questions on Starting a Business
• 50 Questions Angel Investors Will Ask Entrepreneurs
• 17 Key Lessons for Entrepreneurs Starting A Business

6. Save up for major purchases

When you learn to delay gratification, half of your financial woes will go away. Learn to prioritize essentials over impulse buys and take time to evaluate your decisions. Decide if something is necessary after shopping around for discounts and comparing prices.

When you save up money for major purchases rather than using credit, you avoid paying exorbitant interest. Better yet, you’re able to avoid neglecting bills and other obligations. Take it from me—you’re better of not having to deal with the consequences of defaulting.

7. Hunt for the best prices

Make the most of existing price comparison tools when shopping. There are so many easily accessible options, especially when shopping online. Bizrate, Shopping.com, Google Shopping, Shopzilla, and PriceGrabber are just a few I’ve had great experiences with.

Ensure you’re getting the best prices whenever possible for products and services that keep your business chugging along. Hunt for cheaper alternatives to the expensive consumer brands and always be on the lookout for coupons and discounts that can save you a lot of money in the long run.

8. Tame credit card purchases

Not confident of your spending habits? Then avoid paying with a credit card, and use debit or cash instead. Why? Because credit cards can be a bad spender’s enemy number one since it allows for spending without thinking, and before you know it, you’ll be neck-deep in debt. So if it’s an item you don’t really need or can’t afford, resist the urge to reach for your credit card. You’ll be doing yourself a huge favor.

9. Save regularly

If you haven’t done so already, consider opening a business savings account and get into the habit of putting money into it every month. It’s a healthy habit to develop, and nowadays transfers can be easily automated by your bank so funds are moved directly from your checking account into savings.

Unexpected events are always bound to crop up and unanticipated costs are inevitable. A separate savings account will provide you with an added cushion to deal with sudden expenses. Plus, you can earn a little extra money just by keeping cash in the account.

10. Define and understand your risks

Next, acknowledge the fact that every business venture has a certain degree of risk involved, and as a professional freelancer you need to consider your long- and short-term risks to accurately budget and forecast your finances. Common potential risks may include underestimating the market, burglary and theft, loss of reputation or brand value, and product liability. Using your budget as a guide, map out any threats that could affect your business. Once you have a list, you can start implementing emergency planning.

11. Practice makes perfect

Budgeting won’t be easy in the beginning—you will struggle and you will make mistakes. But the important thing is that you keep on practicing so you develop the discipline. Whether it be delaying purchases or getting into the habit of doing regular price comparisons, the more you practice, the more these habits will take root in your life—not to mention, the easier money management will become for you, and the better off you’ll be financially.

RELATED: The Best Ways to Finance Cash Flow Emergencies

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With our combined years of experience in startup law, entrepreneurship, and venture capital, we are often asked the following questions by entrepreneurs who are seeking to start a technology company. Sometimes there isn’t an easy answer to these questions, and as lawyers often like to say, “It depends on the circumstances.” But here are our shorthand answers to the most frequently asked tech startup questions:

1. Should I form my tech company as a C corporation, an S corporation, an LLC, a partnership, or a sole proprietorship?

Start it as a C corporation, unless you can really use the tax deductions that you will get from the losses of the business in an S corporation or LLC. General partnerships and sole proprietorships are to be avoided because of the potential personal liability to the owners of the business. C corporations are the only form of business that can qualify as “qualified small businesses,” which may help you avoid some capital gains down the road. Venture capital investors typically won’t invest in an LLC and usually expect to invest in a C corporation.

2. Where should I incorporate my business?

The standard answer to this is Delaware because of its well-developed corporate law. Venture capitalists have a strong preference for Delaware, in part because they’re familiar and comfortable with the rules of the road for Delaware corporations. You will often save on legal costs with Delaware, because most legal forms for tech companies are set up for Delaware corporations. However, sometimes the right answer is that it should be the state where the business is located, as this will save you some fees and filing complexities.

3. How much should I capitalize my business with at the beginning?

As much as you can reasonably afford, and in an amount that will carry you for at least 6-9 months with no income. What you will likely find is that it always takes you longer to get revenues, and that you will incur more expenses than you anticipated.

4. How likely will it be that my tech startup can get venture capital financing?

Very unlikely. Develop a viable product, gain some traction in the marketplace, hire a good management team, and then consider pursuing venture financing. Your initial financing will likely need to come from family, friends, or angel investors. Venture investors often want to see meaningful traction in product development, sales, and marketing before they consider investing.

5. Should I require prospective angel or venture capital investors to sign a Non-Disclosure Agreement (NDA) so they don’t steal my idea?

No, don’t waste your time. It will be counterproductive and slow down your fundraising. Most investors will either refuse, or assume that you are unsophisticated for even asking. It’s hard enough to get a meeting with an investor—don’t put another roadblock in the way. For the most part, it’s not the idea that is important; it’s the implementation of the idea, progress in implementing the idea, and the expertise of the entrepreneurs behind it.

6. How much dilution in share ownership of my company should I give up to investors in my business?

Whatever amount gets you funded. Don’t try to over-optimize on ownership. Of course, you should try to minimize dilution to the extent possible, but the important thing is to get cash to grow your business and make your investors happy as well.

7. How big should a stock option pool for employees be?

Typically, it should be 15-20% for early-stage companies. Standard vesting for options is four years, with a one-year “cliff vesting” and monthly vesting after that. “Cliff vesting” in this context means the employee must be employed by the company for a minimum of one year before the employee earns any of the options.

8. How can I get a venture capitalist to pay attention to my tech startup?

Any of the following:

• Get a ton of traction in the marketplace.
• Be able to show meaningful growth in revenues.
• Assemble an experienced management team.
• Develop truly innovative technology with a big market opportunity.
• Get a personal introduction to one of the VC firm partners from a respected colleague.

RELATED: 65 Questions Venture Capitalists Will Ask Startups and A Guide to Venture Capital Financings for Startups

9. How can I come up with a great name for my tech startup?

This can be challenging. First, brainstorm a bunch of different names. Then do a Google search to see what is already taken, which will probably eliminate 95% of your choices. Make the name easy to spell. Make it interesting, but don’t pick a nonsensical name that won’t give people  a clue as to what your company does (with all due respect to Google and Yahoo). Do a trademark/tradename search on the name, then make sure you can get the domain name. Don’t pick a name that could be limiting as your business purpose expands. Lastly, make sure you and your employees will be happy saying the name. For more advice on this topic, see 12 Tips for Naming Your Startup Business.

10. What are some of the challenges to starting a tech company?

• Coming up with a great and differentiated product or service
• Securing sufficient funding and maintaining reasonable cash reserves
• Having a great investor pitch deck
• Sticking to it
• Working harder than you expected
• Getting through the frustrations of being constantly rejected by customers
• Finding and hiring good employees
• Terminating poor-performing employees in a way that doesn’t result in legal liability
• Having to wear so many different hats
• Managing your time efficiently
• Maintaining some kind of work/life balance
• Knowing when to pivot your strategy

11. What are the biggest mistakes made by startup tech entrepreneurs?

• Not starting with enough capital
• Thinking that success will come quickly
• Not keeping an eye on the cash burn of the business
• Not focusing on the quality of the product or service
• Not getting sufficient customer feedback
• Underestimating the importance of sales and marketing
• Not adapting or iterating quickly enough
• Not understanding the competitive landscape
• Ignoring legal and contract matters
• Ignoring intellectual property issues
• Hiring the wrong employees

12. What should tech company founders do to develop a minimally viable product?

Many tech startups take too long to develop a minimally viable product (MVP), which refers to the most basic functional version of your product. The product has to be well designed and something that customers truly want. You need to conduct usability testing and get customer feedback, which will help guide you in refining and improving the product. Determine who your target market is, and tailor the product to that market. That is what is referred to as “product/market fit.” Be prepared to pivot if the MVP isn’t getting traction.

13. What financial metrics should tech founders focus on?

Even if a CEO or founder does not have a financial or accounting background, it is imperative that he or she constantly monitor and analyze the company’s key financial metrics. Failure to do so can have serious negative consequences for the business. Depending on the nature of the business, the following monthly key metrics will be important:

• Cash burn (or monthly positive cash flow)
• Gross revenues (and key components thereof)
• Gross expenses (and key components thereof)
• Gross margin (the difference between revenue and costs of good sold divided by revenue, expressed as a percentage)
• Lifetime value of a customer
• Customer acquisition cost
• EBITDA (earnings before interest, taxes, depreciation, and amortization)
• Customer churn

14. How can I protect my great tech idea?

Ideas are a dime a dozen. It’s the actual implementation of an idea that is more important. If it’s truly unique and patentable, get a patent for it (see www.uspto.gov). If the idea cannot be patented, you may get some protection through copyright, trade secret programs, or NDAs.

15. How can I obtain the domain name I want?

Every good “.com” domain name is already taken, and we usually only recommend that a business use a “.com” name for its website. Ultimately, 99% of domain names are available for purchase—you just have to be prepared to pay for the name you want. Do a “WHOIS Search” at www.networksolutions.com to find out the contact information for the owner of the domain name you are interested in, and offer to buy the name. Don’t be naive and offer $500 for a premium domain name. You will be ignored. Be willing to pay a fair amount for a good name. Be prepared to pay a lot for a common word domain name like “administer.com,” “recuperate.com,” or “resemble.com.”

RELATED: Key Steps in Obtaining a Great Domain Name

16. I have an invention idea for a new tech product. How do I check that someone hasn’t already invented this idea?

Key steps to take:

• Do a Google search on the keywords associated with your invention.
• Do a search online of the U.S. Patent and Trademark Office at uspto.gov.
• If that works and you want to explore getting a patent on the idea, hire a patent lawyer.

17. Do I need a business plan?

Probably not. Our preference is to start with a 15-20 page PowerPoint deck presenting the business. For more information, see How to Create a Great Investor Pitch Deck for Startups Seeking Financing and Don’t Waste Time on a Startup Business Plan—Do These 5 Things Instead.

18. What marketing steps should I undertake for my tech startup?

To succeed in business, you need to be continually attracting, building, and sometimes even educating your target market. Make sure your marketing strategy includes the following:

• Learn the fundamentals of SEO (search engine optimization) so that people searching for your products and services online can find you near the top of search results.
• Use social media to promote your business (LinkedIn, Facebook, Twitter, Instagram, Pinterest, etc.).
• Engage in content marketing by writing guest articles for relevant websites.
• Issue press releases for any significant events.
• Network continually with others in your industry.

19. What do I have to worry about for my customer contracts?

Business contracts are legally binding written agreements between two or more parties. They are an important part of business and need to be created and/or negotiated carefully.

While smaller businesses will often conduct business based on informal handshake agreements or unspoken understandings, the more that is at stake, the more essential it is to have a signed contract. A contract serves as the rules that must be followed by both parties. It presents each party with the opportunity to:

• Describe all obligations they are expected to fulfill.
• Describe all obligations they expect the other party (or parties) to fulfill.
• Limit any liabilities.
• Set parameters, such as a time frame, in which the terms of the contract will be met.
• Establish payment and other terms.
• Clearly establish all of the risks and responsibilities of the parties.

A contract is, in essence, a written meeting of the minds. While it is typically drawn up by one party and favors the needs and requirements of that party, it should initially be thought of as a work in progress that changes and grows as each party contributes to it prior to signing, when it becomes binding on all parties. “Consideration,” whether it is monetary or a promise to do work or provide a service by a specified date, is at the root of a contract.

20. What should I know in seeking angel investors for my tech startup?

In reviewing a prospective investment, angel investors especially care about:

• The quality, passion, commitment, and experience of the founders
• The market opportunity being addressed and the potential for the company to grow to become very big
• Evidence of early business traction
• Interesting intellectual property or technology
• A reasonable valuation for the company
• The likelihood of the company being able to raise additional financing in the future if progress is made

Angel investors will want to initially see the following from a startup:

• A clearly articulated elevator pitch for the business
• An executive summary or investor pitch deck
• Possibly a prototype or working model of the company’s product or service
• Any early adopters, customers, or partners

There are a variety of ways to find angel investors, including:

• AngelList
• Venture capitalists
• Investment bankers
• Lawyers
• Accountants
• Other entrepreneurs
• Crowdfunding sites like Kickstarter and Indiegogo

The best way to find an angel investor is through a personal introduction from a colleague or friend of an angel. Using LinkedIn to ascertain mutual connections can be helpful.

21. What permits, licenses, or registrations do I need for my tech startup?

Depending on the nature of the business, you may need the following permits, licenses, or regulations:

• Permits need for regulated businesses (aviation, agriculture, alcohol, etc.)
• Sales tax license or permit
• City and county business permits or licenses
• Zoning permit
• Federal and State tax/employer IDs

22. What do I need to worry about when hiring an employee?

• Are you making sure the employee isn’t subject to a non-compete agreement from their previous company?
• Have you done a reference check?
• Does the employee have relevant experience for the job?
• Will the employee fit in with the company culture?
• Do you have a good form of employment “at will” letter for the employee to sign (allowing you to terminate the employee for any reason if it doesn’t work out)?
• Are you making sure the employee isn’t bringing over and using confidential information from a prior employer?
• Are you staying away from asking illegal questions in the job interview (such as how old are you, what is your religion, etc.)?

RELATED: 15 Big Legal Mistakes Made by Startups

23. What agreement should I have with my startup co-founders?

If you start your company with co-founders, you should agree early on about the details of your business relationship. Not doing so can cause significant legal problems down the road (a good example of this is the infamous Zuckerberg/Winklevoss Facebook litigation). Think of the founder agreement as a form of “pre-nuptial agreement.” Here are the key deal terms your written founder agreement needs to address:

• How is the equity split among the founders?
• Is the equity ownership subject to vesting based on continued participation in the business?
• What are the roles and responsibilities of the founders?
• If one founder leaves, does the company or the other founder have the right to buy back that founder’s shares? If so, at what price?
• How much time commitment to the business is expected of each founder?
• What salaries (if any) are the founders entitled to? How can that be changed?
• Which founders will become members of the company’s board of directors? (the board will have important powers, including the power to terminate employees, including the CEO)
• Under what circumstances can a founder be removed as an employee of the business? (usually, this would be a Board of Directors decision)
• What assets or cash does each founder contribute or invest into the business?
• How will a sale of the business be decided?
• What is the overall goal and vision for the business?

24. What key legal issues should I be concerned about for my tech startup?

Ignoring key legal issues can sink a startup. CEOs and founders should ensure that the company is taking steps to comply with all applicable laws. Here are a number of the key legal points startup tech companies should focus on:

• Has the company been properly organized?
• Has the company complied with all applicable securities laws when issuing stock or options?
• Are appropriate steps being taken to protect the company’s intellectual property (such as through trademarks, copyrights, patents, non-disclosure agreements, etc.)?
• Is each employee and contractor required to sign a comprehensive Confidentiality and Invention Assignment Agreement (ensuring that any intellectual property developed by the employee or contractor that is related to the business of the company is deemed owned by the company)?
• Is the deal with any co-founders clearly documented, and in the event of a departure is it clear that there won’t be a dispute about the company’s equity ownership?
• Does the company have a good form of customer contract, protecting the company and mitigating liability exposure?
• Has the company obtained all the required documentation from employees (e.g., “at will” employment letters, benefit forms, IRS Form W-4, USCIS Form I-9, etc.)?
• If the company has issued stock subject to vesting, have the stockholders filed 83(b) elections with the IRS?

Related Articles:

• 15 Big Legal Mistakes Made by Startups
• A Guide to Venture Capital Financings for Startups
• 10 Key Lessons for Startup CEOs and Founder
• 12 Key Issues for SaaS Startups Seeking Financing

About the Authors

Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of a 1,500-page book by Bloomberg, Mergers and Acquisitions of Privately Held Companies: Analysis, Forms and Agreements. He was also a corporate and M&A partner at the Orrick law firm, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 250 M&A transactions and 250 startup financings. He can be reached through LinkedIn.

Mike Sullivan is a partner and head of the Corporate Group in the San Francisco office of Orrick, Herrington & Sutcliffe. He focuses on representing emerging companies, entrepreneurs and angels/venture capital funds. Mike has led hundreds of financings and M&A transactions for emerging companies in a wide variety of industries, particularly in the software, satellite/space, mobile, digital media, cleantech and food/wine/spirits sectors. Mike is a contributor to Venture Capital and Public Offering Negotiation (Aspen Law & Business). He can be reached through the www.orrick.com Website.

Copyright © by Richard D. Harroch. All Rights Reserved.

The post 24 Key Issues in Starting a Tech Company appeared first on AllBusiness.com. Click for more information about Richard Harroch. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.

A chargeback is a consumer protection tool that allows users to get their money back for fraudulent, unauthorized, or defective merchandise. When chargebacks work as intended, they serve as an important consumer protection mechanism. But what happens if a customer is abusing the system by filing a false credit card dispute?

Before answering this question, let me illustrate the impact a chargeback can have on your business.

Impact of chargebacks

So what do chargebacks mean for your business? They hit your bottom line. When a customer is disputing a charge, you lose both the product sold and the revenue from that sale. In addition, small businesses can be impacted by:

• Chargeback fees. Each time a consumer files a chargeback, you may be hit with a fee. Even if the consumer later cancels, you, as the merchant, will still have to pay fees and administrative costs associated with the process.
• Excessive fines. If your monthly chargeback rate exceeds a predetermined threshold, you may be charged with excessive fines.
• Termination. If your chargeback rates remain above the acceptable threshold, your acquiring bank could simply terminate your merchant account. Once an account is terminated it can be placed on the MATCH (Member Alert to Control High-Risk) list. This means your business can be labeled as high-risk, which can lead to ramifications when obtaining a new merchant account.

Winning a chargeback does not mean you will regain your chargeback-to-transaction ratio; you will regain profits but will not reduce the risk of a terminated merchant account.

What happens if your customer files a false credit card dispute?

First, don’t just automatically assume that all chargebacks are valid. As a merchant, you do have reasonable rights under the chargeback process that allow you a chance to dispute and win back the funds. You should certainly rebut chargebacks if you are confident the transaction was legitimate, you have compelling evidence against the chargeback, and the amount is large enough to justify the work of submitting evidence.

You must be clear about the procedure and policies you’re obligated to follow after a chargeback. A complete and timely response can go a long way in strengthening your position and can help to reduce the number of chargebacks that ultimately succeed against you.

Pay attention to deadlines. Time is of the essence when it comes to credit card chargeback disputes. If you miss a deadline, you will probably lose your chance to win.

After you submit your rebuttal to the bank, the chargeback dispute will be out of your hands. It is now up to the bank that issues the credit card (like Visa, MasterCard, or American Express) to decide who wins or loses a dispute. But you may now wonder, is the bank’s decision the final decision?

If you dispute a chargeback initially and the issuing bank sides with the cardholder, you’ll likely receive a pre-arbitration or second chargeback notice. This letter will inform you that the bank has initially sided with the cardholder and asks if you’d like to pursue arbitration. You can choose to decline, which will mean that the chargeback is upheld, or you can choose to pursue arbitration, where the credit card company will determine who wins the chargeback.

Arbitration with the credit card company is final. Once it makes a ruling, there are no further appeals. Going for arbitration will usually incur a fee of several hundred dollars

Other Articles From AllBusiness.com:

• The Complete 35-Step Guide for Entrepreneurs Starting a Business
• 25 Frequently Asked Questions on Starting a Business
• 50 Questions Angel Investors Will Ask Entrepreneurs
• 17 Key Lessons for Entrepreneurs Starting A Business

If you lose a chargeback …

I’m often asked, can a business hire a debt-collection agency after losing a chargeback?

To answer this question, let’s look at the background of disputes. The federal government enacted the Fair Credit Billing Act (FCBA), a 1974 amendment to the Truth in Lending Act, to protect consumers from unfair billing practices. The Truth in Lending Act gives consumers the legal right to dispute credit card charges if there is a billing error.

That law spells out the “card issuer’s” responsibilities when cardholders file disputes. But the law is silent on the merchant’s role in this process. How merchants respond to credit card disputes is spelled out instead in the contract agreement between the merchant and the payment processing company. So let’s take a look.

Most payment processing companies do not allow merchants to directly charge a consumer’s card after a chargeback. However, that doesn’t stop merchants from trying to collect payments from consumers directly. As with federal law, a review of several merchant agreements gives little answer on whether a merchant can subsequently try to collect from consumers after losing a dispute.

The bottom line is since both federal law and merchant agreements are silent on whether or not a merchant can go after consumers for payment, non-payment for a chargeback can be viewed as any other liability. This means that as long as you can prove that the debt is owed, you can proceed.

How to reduce chargebacks

Don’t be a victim to credit card fraud. According to ClearSale, stolen credit cards are the No. 1 (30%) cause for chargebacks. When a customer’s credit card is fraudulently used for a transaction, the merchant is held solely responsible. Therefore, it is up to you to ensure that the credit cards consumers use to purchase your goods or services have not been stolen.

• Have a recognizable name. On your merchant account, make sure the name you use is recognizable to your customers. Most customers initiate chargebacks when they see payments to companies that they do not recognize.
• Provide a phone number. To encourage customers to call you with questions before automatically requesting a chargeback, add your phone number to your credit card transactions. When customers see a phone number next to the charge, they will be more likely to call you directly before initiating a dispute.
• Sell quality goods or services. Your customer can initiate a dispute just because a product or service did not meet their expectations. Make sure you provide value for your customers and clearly indicate what they should expect when they make a purchase. Also have a clear refund policy page on your website that indicates when customers can dispute charges for goods or services.
• Provide proof of delivery. To avoid claims of non-receipt, get tracking information from shipping carriers to prove your item was delivered to its destination.

Preventing a chargeback is far easier than battling one. You might have to deal with chargebacks even after taking all the right precautions, but there are measures you can take to reduce your loss.

RELATED: Is Your E-Commerce Business at Risk? How to Prevent Credit-Card Processing Fraud

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What’s your best tip for practicing your pitch to investors ahead of the big meeting? Why is this important?

1. Research investors and their interests

A cookie-cutter pitch is less work, but it’s also less effective. Find out who you’re pitching to, what they have invested in previously, their personality, and their values. Tailor your pitch to the audience. Keep it honest and authentic, but be strategic about the aspects of your business and plan you choose to emphasize. —Corey Northcutt, Northcutt Enterprise SEO

2. Do mock presentations with family and friends

It is important to do mock presentations with family and friends to work out the kinks and improve your confidence. Encourage your family and friends to ask meaningful questions and not hold back on objections or criticism. Another tip is to continue to learn your product inside and out and know your industry, and that will build confidence in your knowledge around your particular product or service. —Kyle Michaud, Experience Expositions

3. Tell a compelling story

Remember that when you’re pitching to investors, telling a story is the most crucial thing. Having been on both sides of the table as both an entrepreneur and investor, the most memorable (and therefore successful) pitches rely far more on telling a compelling story than they do on spreadsheets, forecasts, and projections. Numbers have their place, but focus on telling a meaningful story first. —Matt Diggity, Diggity Marketing

4. Spend enough time rehearsing

Time is essential. Just spend time on the rehearsal. Anyone who feels they can “wing” it usually can’t, or they have had enough translatable life experience. It all comes down to the amount of time and effort spent on preparation. —James Guldan, Vision Tech Team

5. Record yourself practicing

When pitching to investors, it helps to record yourself practicing, and review it afterward. It helps you gauge your body language, eye contact, and overall delivery of your message so you can change it how you see fit. While practicing in front of someone is helpful, too, I prefer recording myself because I’m my own worst critic and I want to ensure it’s done right. —Stephanie Wells, Formidable Forms

6. Trim it to the absolute core

Trim, trim, trim. Based on the feedback received from investors during pitches, once you consider your pitch is ready, take at least three additional passes to trim it down to the absolute core product, core vision, and core market. The most effective pitch is one that is brutally concise and targeted in every possible way. —Mahesh Chaddah, Reservations.com

Other Articles From AllBusiness.com:

• The Complete 35-Step Guide for Entrepreneurs Starting a Business
• 25 Frequently Asked Questions on Starting a Business
• 50 Questions Angel Investors Will Ask Entrepreneurs
• 17 Key Lessons for Entrepreneurs Starting A Business

7. Vary the practice

It is hard to truly know the context of your pitch and, as a result, you need to be prepared for everything. Will you be pitching sitting down, standing up, with PowerPoint, with paper, with no visual aid—who knows? If you vary the practice, you can read the context and still deliver a great pitch no matter what is thrown at you. —Eric Mathews, Start Co.

8. Maintain security and confidence

Trust is an essential element, and transmitting confidence to the people you are addressing is indispensable to guarantee security and generate peace of mind among investors. It is important to prepare yourself and know every aspect of the topic you are developing so that you can have the ability to cover every detail within a meeting. —Kevin Leyes, Leyes Media & Team Leyes, by Leyes Enterprises

9. Use a mirror and a timer

Use a mirror and a timer to rehearse, and also attend an acting lesson—seriously. It is so valuable to have a proper speaking manner, manage your intonation, and be able to communicate the best kinds of nonverbal cues. The truth is that 75% of communication is nonverbal so it’s critical to get those things right so you can have the best message come across. —Nicole Munoz, Nicole Munoz Consulting, Inc.

10. Don’t memorize your pitch

While practice is essential to appear polished and professional, do not learn verbatim what you plan to say. This will almost always come across as robotic and lack personality. Speak conversationally and understand the talking points you plan to cover. This creates a consistent voice when you jump from your script to answering questions. —Matthew Podolsky, Florida Law Advisers, P.A.

11. Watch online videos with tips and tricks

When you first start practicing your pitch, it helps to watch videos online to get tips and tricks for how to do it right. YouTube has a plethora of resources you can use to see how others pitch to investors and what gets them great deals. —Jared Atchison, WPForms

12. Go over the pitch with your mentor

I recommend that you sit down with your mentor and go over your pitch before you present it to investors. Your mentor is going to be able to guide you through and help you prepare for some of the tough questions that are going to come your way. In addition, you’ll be able to practice reading your pitch out loud, which will help you sound more confident during the live presentation. —Chris Christoff, MonsterInsights

13. Be prepared for negative questions

If you’ve got time to prepare for the meeting, think about all the negative things that investors could ask and prepare answers for them. They don’t have to be the answers that they are looking for and they don’t have to be 100% right, but if you ready, you’re in for a home run. —Solomon Thimothy, OneIMS

RELATED: The 17 Biggest Mistakes Startups Make With Their Investor Pitch Deck

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“A horse never runs so fast as when he has other horses to catch up and outpace.”—Ovid

In the cacophony of the heated business world, if you are not first, you are last. Rising competition has forced seed stage startups to start walking before they even learning to crawl.

According to leading marketing experts, most Americans are exposed to anywhere between 4,000 to 10,000 advertisements every day. Just take a quick look around. You are leading a life that was implausible for even those born with a silver spoon in the last century. This means that your target consumers have more options today than ever before, and perhaps there is no need to reinvent the wheel.

Serial entrepreneur, billionaire, and Shark Tank judge Mark Cuban rightly believes that business is the most competitive sport. His advice to modern entrepreneurs? “Work like there is someone working twenty-four hours a day to take it all away from you.”

Cutthroat competition drives young entrepreneurs, and this has made America the new breeding ground for competitive and tech-driven business owners. So if you are looking to stand up and stand firm against your rivals, competitor analysis can be the way forward.

The golden question: What is competitor analysis?

When was the last time you decided to pay heed to your existing competitors and new entrants in the market? If your answer takes you back a couple of months, then you need to pull up your socks and seek as much knowledge about your close challengers as possible.

Let’s first start with the definition of competitor analysis. Competitor analysis is defined as a business strategy used to identify existing as well as new competitors in the market. Once identified, this process allows you to research your competitor’s products, services, sales, and marketing strategies.

You need to realize that there is a lot more to building the right competitor analysis framework than simply stalking your rivals on social media or scrolling through their website. The right competitor research can help you identify key parameters like competitors’ market share and dominance, their service standards, product/service differentiation, and more.

Addressing the elephant in the business jungle

An old saying might claim that ignorance is bliss; however, in today’s concrete business jungle, you can’t afford to ignore even the smallest competitor. Perhaps, being alert to your rival’s every possible move is the only way to survive.

Contemporary business owners have a lot on their plates, such as building the next best product, hiring the best talent, and managing plunging finances. However, most entrepreneurs still undermine the sheer potential of their rivals, and most don’t know where to start.

Feeling caught up in the relentless pursuit to overcome your competition? Well, you’re not alone in this journey. The presence of a dominant player in the market does not mean you pack your bags and let them rule. Competition has helped businesses improve and offer better products to the masses. Take the case of Google and Yahoo, for instance.

Google was not a household name if you rewind the clock to the year 2000. It had just a mere 1% share of the market and Yahoo, on the other hand, dominated with 56% of search engine referrals. By the year 2002, Google had significantly improved its algorithm, giving rise to faster and more accurate search results, and the rest is history. According to Statista, Google has a dominant market share of 86% worldwide.

How to do a competitor analysis the right way

Competitor comparison or analysis is not a one-day job but an ongoing process. We have curated a few proven steps that will help you become a research-driven business and rise above any prevailing biases.

1. Identify your top competitors

You can start by creating a small list of six to 10 competitors using Google search results and Alexa rankings. Try including businesses that operate in your location, sell similar or identical products, share the same target audience, etc. You can also float a survey asking your users about similar brands they engage with other than you.

2. Create a competitor analysis template

Creating a template will help you jot down various criteria for comparing your brand to others. The comparison parameters that you certainly need to include are as follows—product range, pricing structure, lead generation sources, marketing channels, and offers/discounts to new customers.

3. Divide competitors into primary and secondary

Primary competitors are your company’s direct competition as they sell similar products/services to a common audience. Secondary competitors, on the other hand, sell identical products but to a different audience.

4. Capture data using the right tools

Once you have compiled the list, it is time to dig into the right data using tools and platforms such as Facebook Audience Insights, Alexa, and BuzzSumo. You can also use a bug tracking software to trace security-related bugs and prevent your rivals from breaking into your business data.

5. Analyze gained data

They say that the devil is in the details. This captured data will help you get a clearer picture of your position in the market. You can also perform a SWOT analysis to identify your top strengths, weaknesses, opportunities, and threats.

Rising above “analysis paralysis”

Analysis can help you add a pinch of clarity to your competitor research soup. However, a little excess, and you can find yourself in a paralyzed process. You need to realize that over evaluating the competition in the market can make you lose track of what makes your brand unique. Devote ample time to exploring your competitive advantage instead of converging all your energies on your rivals.

Also, competition should not be always about playing the wrong tactics or letting others down. You can up your creative game and marketing to seek the attention of your target users. Take this fun, yet creative, burger war, for example.

Fast-food giant McDonald’s came up with a witty and creative billboard to troll one of its all-time rivals, Burger King, in Brussels, Belgium. The big banner read: “Served by a king, or served as a king? Discover our table service at McDonald’s.”

Stop living in denial

In the business world, there is no such thing as free lunch. You need to stop living in denial and accept that competitors are out there, waiting for you to make a mistake.

Conducting research on your competitors will help you gain a bird’s eye perspective of your market so you can spot every rival. After all, nobody motivates you better than those who want to see you fail.

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The COVID-19 pandemic has changed our way of doing business. Companies across the United States have adopted policies and procedures to ensure both continuous operation and employee safety. Most notably, many businesses have moved to a remote working environment. While a remote arrangement has plenty of benefits, small business owners should be aware of compliance considerations.

In particular, small business owners should take this time to review their registered agents in each state. The registered agent is a legally designated point of contact for a business in state record. When courts, process servers, and state agencies want to get in touch with your business, they will almost always contact the registered agent.

In nearly every state, the registered agent must maintain a physical address and be available to receive legal and government notices during regular business hours. Documents, such as service of process, subpoenas, and wage garnishments are delivered to the registered agent in person. They usually require a signature from an individual on-site to confirm receipt. These documents are time sensitive, and typically require a response or action within a few days or weeks.

In light of COVID-19, many businesses may find themselves at risk of noncompliance without even knowing it. Because the registered agent generally only needs a physical address in the state, many business owners simply list their company address in the state record. Under “normal” circumstances, this may be a suitable arrangement. After all, before COVID-19, where else would they be during regular business hours?

Now, with the vast majority of non-essential employees (and business owners) working from home, this creates a clear gap. Physical places of business that were once fully staffed during regular business hours are largely empty. And, with no one available to receive service of process, the chances of a missed delivery increase greatly.

Again, remember that the registered agent doesn’t receive and handle routine mail. Appointing a registered agent that fails in its legal duties can lead to costly consequences for the business. Missing a time-sensitive legal document can result in legal actions against your business without your knowledge. A court may rule a default judgment. The state may dissolve your business following administrative protocol.

Identify and close potential compliance gaps

So, as a business owner, how do you close the gap? Believe it or not, the solution is fairly simple.

The first step is to know who your current registered agents are. Every state has a publicly searchable database where you can look up your business entity and its registered agent. If your business is registered in multiple states, or if you have multiple entities, be sure to repeat the process. If your business maintains any professional licenses, be sure to contact the relevant licensing agencies and boards. You may have been required to appoint a registered agent in order to become licensed.

The results of this due diligence may surprise you. As your business evolved and grew, you may have appointed a combination of registered agents, including individuals, law firms, and service companies. You may notice certain addresses are out-of-date. You may even find individuals and vendors who are no longer associated with your company!

Ensure all paperwork is up-to-date

Once you know who your registered agents are, it’s time to take action. In every state, businesses are required to maintain a current registered agent. This means you may need to file paperwork with the secretary of state to update your business’s registered agent. Don’t forget, during COVID-19, even if your correct business address is listed in the state record, you may need to file a change to help ensure that you still receive critical legal and government notices.

If your business consists of multiple entities, registers in multiple states, or is operating remotely, consider appointing a registered agent service company. Even during these unprecedented times, registered agent companies are staffed and available to receive deliveries on behalf of your business. Choosing a nationwide registered agent provider helps you meet requirements anywhere your business grows. And, using one registered agent for all of your needs simplifies your vendor management and accounts payable.

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If you choose to keep your place of business listed in the state record, ensure that any individuals on-site understand the importance of their role. This may involve implementing training and processes for employees who could come into contact with process servers. Each person should know why these documents are being served at your place of business. They should be able to contact you, your legal counsel, or the appropriate parties at a moment’s notice. And they should have the tools to forward the documents to you.

On an ongoing basis, review your registered agents and other ongoing compliance responsibilities. As your business grows and expands into other states, ensure your registered agent meets the requirements in those places. And, like any other strategy, make adjustments if you find your current approach is too costly or too risky.

Preparation is key

No business owner wants to deal with a lawsuit. If and when it happens, proper preparation is key, and it all starts with the business’s registered agent. Overall, the process of researching your business’s registered agents and filing to update public records may take only a few hours, and the upside is tremendous.

By going through this process, you identify and close potential compliance gaps. Even more, you may find some peace of mind knowing that you have a network of responsible vendors and individuals as your company’s registered agent. And, during COVID-19, peace of mind is something we could all use right now.

RELATED: Life After Coronavirus: Why We Should Never Go Back to Business as Usual

Disclaimer: Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.

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The Americans with Disabilities Act, also known as the ADA, has been around since 1990. However, it’s only in recent years that digital agencies are learning just how important it is to have a thorough understanding of all the requirements. The financial and reputational risks of non-compliance are huge. It is detrimental for a company to ignore this law.

The ADA is a civil rights law that was passed to protect the rights of disabled Americans. It ensures that people with disabilities have equal access to the products and services offered by a company. This law gave us things like handicapped parking spots and wheelchair ramps, but it also applies to web access.

As commerce continues to move further and further into the online realm, ensuring total compliance with the ADA is easier said than done. Digital agencies must quickly build websites to keep up with online demand. Ensuring total accessibility for those with disabilities, while building those websites is a slow process.

In 2018, 2,285 ADA website lawsuits were filed in the United States. This number was 181% higher than the number filed in 2017. In 2019, the number of lawsuits set an all-time record with over 11,000 cases filed.

For agencies with clients based in California, Florida, or New York, the need for vigilance in protecting against lawsuits is especially high. Eighty-four percent of all ADA lawsuits are filed in these three states. These cases continue to grow each year, and businesses must take care in protect themselves and their clients against this threat.

Compliance is complicated

Total compliance with the Americans with Disabilities Act is much more complex than most business owners realize. accessiBe, a company working to make web accessibility doable with a single line of JavaScript code, recently performed an analysis of 10 million web pages. Nearly all of them failed to be 100% compliant.

During this analysis, accessiBe checked for accessibility compliance among things like pop-ups, images, links, and other important web features; 89% of sites failed to meet requirements for pop-ups, even among those sites using accessibility plugins or services. Similarly, over half of the web pages had non-compliant images, around 75% had non-compliant web forms, and 83% contained non-compliant buttons.

The good news is that web page links performed fairly well in the compliance tests. Seventy-eight percent of the analyzed pages passed the compliance test. This is most likely due to browser settings, which often are automatically compliant. Despite the default browser settings, though, nearly 25% of pages failed to be fully compliant with their links.

Many organizations don’t realize just how likely it is that they are currently failing to meet ADA standards in at least one area. The requirements are strict and they must apply to every part of your site. A failure to meet any of these requirements can lead to a lawsuit.

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Lawsuits are incentivized

In many areas of the law, suing someone can potentially cost you as much in legal fees as you win from the case. That’s not the case with ADA lawsuits. If a disabled person files a lawsuit and wins, all legal fees are covered. This creates a greater incentive to initiate lawsuits because the risk is lower than in other circumstances.

Following a 2009 amendment to the Americans with Disabilities Act, a greater number of individuals qualify as disabled. Additionally, an increasing amount of shoppers prefer online shopping to visiting a brick-and-mortar location.

With a high number of individuals who qualify as disabled, combined with an increase of people being online, the chances are much higher that a disabled customer will uncover a non-compliance issue on a website.

The combination of all these circumstances puts not only your clients, but also your own agency in a very vulnerable position. It doesn’t take many lawsuits to ruin an agency’s reputation. If you want your name to be associated with high levels of professionalism, it’s important to pay attention to these risks.

These costs are dangerously high

The cost of an ADA lawsuit can reach up to $1 million. The reason the price tag for a lost ADA lawsuit is so high is that there are so many different costs to think about. Depending on the skill of your lawyer, the hourly rate could range anywhere from $175 an hour all the way to $600 an hour. Additionally, if the plaintiff wins the case, the defendant will need to pay the plaintiff’s lawyer fees. There’s also the money lost in the actual lawsuit, as well as mediation costs.

Digital agencies might be tempted to think these costs will only affect their clients, but in reality, in many circumstances some of the blame for non-compliance can be passed on to the agency that worked with the non-compliant business. The legal fees could end up being the responsibility of the agency or there could be other lawsuits filed. Either way, it’s much better to avoid the financial damage entirely.

Once you add up the numbers, it’s apparent that ADA lawsuits are one of the biggest threats facing non-compliant digital agencies. Without meeting all accessibility requirements, you’ll quickly gain a reputation of non-professionalism. Clients won’t want to work with an agency with a track record of leading businesses into costly lawsuits. It’s important to make the necessary updates if you hope to build a strong brand and achieve long-term success for your company.

RELATED: 15 Major Legal Mistakes Made by Startups

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Marriage is a beautiful thing. It is two committed people building their lives together. But when you said “I do,” you likely never imagined you’d be living through a global pandemic causing severe financial stress for millions, and money worries would come between you and your spouse.

Financial problems and financial stress can impact your marriage in many different ways. Your health, emotional and physical intimacy, and home can all be negatively affected by money matters. That’s why it’s so important to learn how to make marriage and finance work together.

Don’t let your finances put unnecessary stress on your relationship or cause unhappiness in your marriage. Here are five ways financial problems can negatively affect a marriage, and what you can do to strengthen your relationship so you can solve your difficulties together.

How financial problems can harm your marriage

1. Increases stress

Your marriage should not be something that makes you feel worse about yourself; it should be your sanctuary. But somehow, when you mix marriage and finance, it’s a recipe for stress. And research shows that couples who are in a low-income situation are more likely to be affected by stress and mental health problems.

Stress doesn’t just raise your irritation levels. Experts find that stress can hurt a marriage and one’s physical and mental health. Having an abundance of stress in your life can lead to:

• Headaches
• Fatigue
• Upset stomach
• Lack of patience
• Angry outbursts
• Changes in eating
• Restlessness
• A change in sex drive/lower libido, limiting important intimacy that promotes bonding in a marriage
• Depression
• Difficulty sleeping
• Higher blood pressure
• Anxiety

This is a short list compared to all of the emotional and physical problems stress can have on your health and in your marriage.

2. Builds resentment

Fighting about money is not a new phenomenon for couples. In a study of over 740 instances of marital conflict between 100 couples, money was found to be the most common and recurring topic couples argue about.

If you and your spouse continually talk about the same financial topics without resolving any issues, it could lead to resentment in your relationship. You may start to feel like your spouse isn’t listening to you or that they don’t care about your feelings.

3. Damages communication and trust

In a survey about money, 68% of couples admitted they would rather reveal how much they weigh than share how much money is in their savings account. These findings highlight just how difficult it is for couples to speak openly about their finances.

When financial problems crops up in your marriage, it can hurt your communication skills and damage trust between you and your partner.

4. Turns couples against each other

Can money really turn happy couples against one another? Without a doubt, the answer is yes. Financial problems within a marriage can lead to one spouse overspending, being stingy with finances, or feeling like they know better than their spouse on how to handle the monthly bills.

Couples must come to an understanding of how household finances are to be spent, saved, and shared if they want their marriage to survive over time.

5. Reduces opportunities

Experts agree that financial hardships can reduce opportunities for your future as a couple. Losing your job, bringing a significant amount of debt into the marriage, or having poor credit can severely limit the financial options you have as a married couple. A lack of income can prevent you from buying a house, buying a car, traveling, saving for retirement, and even starting a family.

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4 ways to solve financial problems together

1. Talk openly

Communication is the cornerstone of a successful marriage. Studies show that couples who communicate with one another in a positive manner experience higher levels of marital satisfaction and less negativity in the relationship. Partners must learn how to communicate effectively if they want to work together to tackle and resolve financial problems.

Great communication involves listening to your partner without interruption or distractions. They should feel that they have your undivided attention. If you want to communicate well, you must validate your spouse’s feelings, be honest, and be kind and respectful during disagreements. Being approachable in this way will help your partner feel more comfortable coming to you with money matters.

2. Start prioritizing

Budgeting and prioritizing is a big part of making your finances work in marriage. While in between jobs or dealing with a reduced household income, couples must learn to budget their money.

Prioritize what is important. For example, if your spouse has decided to stay home for the next year to raise your child before going back to work, you may remove excessive spending from your yearly budget, perhaps forgoing vacations, restaurant meals, or any unnecessary purchases during this time.

3. Accept help

Don’t be too proud to accept help from friends, family, or your spouse during times of trouble. If you are deep in debt and it is causing stress, and slowly eating away at your happiness and possibly your ability to keep your home, it would be unwise to turn away any help.

Similarly, if you have accumulated personal debt before getting married, do not deny your spouse the opportunity to help you pay it off.

4. Set goals

One way you can find joy when assessing your marriage and finances is to set small, achievable goals. For example, make it a goal to save $50 to $100 a month. This is money you can eventually put toward travel, renovating your home, going out on monthly date nights, or even squirreling away in case of emergency.

And when you achieve your goals, be sure to celebrate them. Studies show that couples who validate one another’s feelings with positivity experience a closer emotional connection than couples who do not celebrate one another.

Take control of your financial future

Even with the best budgeting, financial problems can still happen. Don’t let it take away the happiness in your relationship. Talk openly, prioritize your spending, set goals, and accept help. This will help you blend marriage and finances in a way that does not leave you wishing for a divorce.

RELATED: Cash-Strapped From the Coronavirus: Should I Dip Into My Retirement Fund for Relief?

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According to the CNBC | SurveyMonkey Small Business Survey, the Confidence Index Score for small businesses was 49 in Q2 of 2020; it has since risen to 53 for Q3. This uptick, however slight it may be, signifies small businesses still have a difficult road ahead in recovering from the COVID-19 pandemic.

One positive note from the survey is that 36% of businesses state that current operating conditions are “good” in Q3. This is a significant rise from Q2, which was at 18%, and a sign that there is a light at the end of the tunnel for existing and new businesses alike.

What if you are starting a business during this time? As entrepreneurs incorporate and form LLCs, they will be coming up with unique names, phrases, symbols, logos, and designs for their startups. They will need protections, also known as trademarks, for their businesses. Registering trademarks helps set up a business for success.

Why is it necessary to register a trademark? What is it about trademarks that make these protections so valuable for businesses? Let’s take a closer look at the value of a trademark and what you need to know before you file a trademark application.

Trademarks are a symbol of your identity

Trademarks are a symbol of the identity of your business. The original names, phrases, symbols, logos, and designs that you create for your business help to identify your products and services. Consumers will be able to distinguish your offerings from that of competing businesses largely thanks to memorable trademarks.

If you are new to starting a small business, you may confuse trademarks to be the same concept as copyrights. It is true that both are forms of intellectual property protection. However, copyrights do not protect names, slogans, or logos. Instead, a copyright helps protect an original work of authorship. This applies to literary works like fiction novels, performing arts like music compositions and lyrics, virtual arts like artwork and illustrations, photographs, motion pictures, and architectural works. The creator of these works is considered to be its author and may file for copyright registration.

Trademarks help build the reputations of brands

The visibility of a trademark allows customers to spot and recognize your brand in a crowded marketplace. Consider a trademark like the iconic McDonald’s golden arches logo. When you see it, even at a distance, you instantly know you are not far from delicious cheeseburgers and French fries.

Recognizable trademarks also help to build a brand’s reputation. An effective trademark can influence the buying decisions of consumers and bring to mind positive, powerful messages about your brand. Let’s return to the example of the golden arches. This trademark is associated with the fast food restaurant. The menu at McDonald’s is available to consumers globally. It is so visible that, to date, the company advertises “over 99 billion served” in its messaging.

Trademark registration provides its owners with exclusive rights

Until a trademark has been registered at the federal level, it is possible that a competing business may claim it for their own use. The trouble with an unregistered trademark is twofold. As a business owner, you run the risk of having your original mark infringed upon by another company. There is no way to argue that the mark is yours because, well, it hasn’t been registered.

Additionally, it is entirely possible that the trademark you created may already be in existence. The mark you created and believe is unique may already be registered or pending registration by a different company. You could be accidentally plagiarizing their mark and not realize it!

The best way to nip both these problems in the bud is to register your trademark as soon as possible. Let’s take a look at what you need to do to get started with this process.

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How do I register for a trademark?

Ideally, you should file for trademark registration as soon as possible. However, prior to filing a trademark application, you’ll need to verify that your mark is indeed unique. You can easily do this by completing a name search.

What’s a name search? A name search allows you to search through existing and pending trademark applications. The TESS database that’s available through the United States Patent and Trademark Office (USPTO) is a great place to start. Conducting a thorough search helps determine that your trademark is unique and available to register and use. If the mark is not available, you will need to brainstorm other trademark options and conduct a name search to determine if they are unique.

What if my trademark is available?

What happens if it turns out your trademark is available? It’s time to start the filing process to register the trademark! Once you have conducted a name search, you may fill out a trademark application to protect your trademark. You may file with the help of a third-party trademark filing service or file on your own with the help of your Secretary of State. Remember to pay the filing fee associated with the application.

After submitting your application, you may consider utilizing a trademark watch service. This service, provided by a third-party filing company, helps to monitor the trademark for potential infringement. It also monitors your existing application, allowing you to know first when your trademark has been approved—and you have exclusive rights to the mark as its owner.

RELATED: Take These 7 Steps Right Now to Protect Your Small Business

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Many have turned to their retirement funds to access ready cash. I talked to Kristin Andreski, SVP and General Manager of ADP Retirement Services, about how COVID-19 has impacted the retirement funds of small business owners and their employees.

Rieva Lesonsky: You noticed a growing trend of small business owners dipping into their retirement savings as the pandemic continued to affect us.

Kristin Andreski: Our Service teams did see an increase in inquiries from small business owners to understand their options, for them personally as well as their workforce. Participants are opting for distributions/withdrawals [and not] loans. This may be attributable to participants having concerns that it might be difficult to pay back a loan in the current environment.

In fact, 57% of all in-service withdrawals have been CRDs (coronavirus-related distribution), and 60% of distributions requested were for the maximum amount allowed by the CARES Act.*

Lesonsky: How widespread do you think it is? Is it nationwide or concentrated in a few regions?

Andreski: The CRDs taken align with the regional location of our clients:

• 29% were from the Northeast region
• 28% were from the West region
• 14% were from the Southeast region
• 15% were from the Midwest region
• 12% were from the Southwest region

Lesonsky: Does it seem to be from people who are over 50, or an across-the-board activity?

Andreski: The COVID-19-related distributions by age has been:

• 25 and younger—3%
• 26-35—24%
• 36-45—30%
• 46-55—29%
• 55-65—13%
• 65 and older—1%

Lesonsky: Do we know why this is happening? Is it a “last resort” act?

Andreski: The government took quick action with the CARES Act to provide financial relief to small businesses and their employees who were facing, and continue to face, economic hardships caused by the coronavirus pandemic.

Lesonsky: What advice would you give small business owners or their employees who feel they need to do this?

Andreski: If a small business owner or participant find themselves in a hardship situation due to the coronavirus and need to access their funds, they should do it. That’s the purpose of the legislation—providing relief where needed. It’s always important to consult with a financial, tax, or legal advisor to obtain the guidance relative to the personal situation of the participant or business owner.

However, the CARES Act does allow for withdrawals in advance of employment termination where they may not otherwise have had access to those funds. Plus, the early distribution tax is waived as an additional benefit. And, unlike hardship withdrawals under the current rule, participants can repay the money back to their retirement plans, avoid any income taxes due on repaid amounts and, make up some of the financial ground they may have otherwise lost.

Now more than ever, workplace benefits like retirement plans are critical to protecting workers from further financial stress. Saving for retirement is an investment in one’s future, and repaying the funds withdrawn is a step in the right direction for any financial journey.

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Lesonsky: Are there are tax consequences to withdrawing the money?

Andreski: Coronavirus-related distributions in 2020 do not impose the 20% mandatory withholding and do not incur the 10% early distribution tax that normally applies to withdrawals made prior to age 59-1/2. The income taxes due on the distribution amount are optionally includable over a three-year period. And, the distribution may be repaid to an eligible retirement plan or IRA within three years of taking the distribution.

Lesonsky: When the pandemic ends, is there a way for business owners and their employees to make up for what they took out? Double up on deposits?

Andreski: Repaying the money withdrawn from their retirement plan is the best first step. Not only will that help the business owner and the participants avoid any income taxes due on withdrawn amounts, it will also help them make up some of the financial ground otherwise lost.

Contributing to a retirement plan is an important way to save for the future. Contributing as much as financially possible is a good idea. Working with a financial advisor or financial planner is a great way for participants to determine the best savings strategy for their personal situation.

Withdrawing money from your retirement account may not be the right thing to do for you. Weigh your options carefully, and check with your financial advisor or accountant to review your own situation. And remember, your employees may have questions as well. Make sure you help them get the answers they need.

RELATED: How to Manage a Gap in Your Income During the Coronavirus Crisis

The post Cash-Strapped From the Coronavirus: Should I Dip Into My Retirement Fund for Relief? appeared first on AllBusiness.com. Click for more information about Rieva Lesonsky. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.

To the contrary, planning is a must. When the recovery starts (and it certainly will one day), long-term growth will be a by-product of planning, instead of doing nothing or making haphazard business decisions.

Planning involves many different aspects of a business. Consider these five areas in your planning to help your business survive the pandemic:

1. Strategic approaches

There are a multitude of strategic approaches that a business can take, and each can be equally successful. This is what creates a competitive marketplace. However, if you do not have a clear idea of your strategic approach, then you cannot make decisions that will consistently lead to accomplishing predetermined goals.

Whether it is during good times or bad times, you must know what direction you want to take your company in order to better compete with rival businesses. Examples of different strategic approaches might be:

• Strive to be a low-cost provider.
• Have a higher quality product or service than the competition.
• Focus on a narrow market niche.

If you’re not completely sure of what strategic approach you will be undertaking, now is the time to perfect and market an approach that is most likely to secure business now and in the future.

2. Marketing

Even though revenues are down in most businesses, marketing is essential to keep your company’s name in front of customers and prospects. Although you may need to reduce your marketing budget, it is important to concentrate on those marketing components that have and will produce the best results for the money spent.

As your business starts having an upturn, then your marketing strategy can be updated. Marketing is an integral part of any business and cannot be ignored, even during times of trouble. Having a marketing strategy allows you to connect with current customers, identify potential customers, and then convince everyone that your products and services have intrinsic value to meet their needs.

3. Alliances

Strategic alliances can be a viable growth option for many small businesses. They can be a way to monetize what your business has to offer with little cost or liability. Forming the right alliances can improve market access and allow your company to gain entry into markets that would otherwise not be open to you.

When business is slow, it can be a great time to investigate different types of alliances that would be a good fit and start communicating with potential alliance partners.

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4. Finances

Financing and budgeting are also essential elements of planning. Businesses must plan for the future to ensure sufficient capital is available for operations, asset acquisitions, debt servicing, and possible expansion. Near-term and future cash needs must be anticipated; investigate various governmental assistance programs that are available and apply as soon as possible. Without proper financial planning, your operations could come to a standstill.

5. Employees

Although many businesses (if not most) have had to furlough employees during the pandemic, companies must plan when and how employees will be rehired. Businesses also need to consider if skill sets in the future will differ from the skill sets required today.

The best products or services cannot be sold or provided without quality employees, so if your employees were laid off, you need to consider if those same employees will be available when operations resume at full strength. If you will be hiring new employees, there needs to be proper training in place to facilitate returning to full operation as soon as possible. Employees are the most valuable asset your business has, so employee planning is definitely an important aspect of overall general business planning.

Create a blueprint for the future

Although business survival rather than planning might seem like the activity of the day, small businesses must still plan, if even only for the next quarter or next six months. Proper planning today with forethought for the future allows for implementation with a reasonable timeline. If you choose to wait until “the time is right” before planning and executing action, you may miss out on opportunities.

Planning is the blueprint to building a solid business. It is a road map to guide your company to success. Rarely does a business beat its competition by making spur-of-the-moment decisions. Good planning and good execution are interrelated functions that create positive outcomes.

RELATED: Life After Coronavirus: Why We Should Never Go Back to Business as Usual

The post 5 Essential Planning Tips to Help Your Business Survive the Pandemic appeared first on AllBusiness.com. Click for more information about Richard Weinberger, PhD, CPA. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.