I remember my years as a physics student in university, we were told about “Thought Experiments” great physicist made - Newton’s Apple, Schrödinger’s Cat or Einstein’s Train. So these guys were sitting in their chairs and really just ask on question: “What If……?”

Entrepreneurs are not unlike the physicists or philosophers, they ask themselves - consciously or unconsciously - the same question:

• What if …. I could make cubic eggs?
• What if …. I could make that cheaper?
• What if …. I could make it easier to use?
• What if, what if, …….

This has got to be the most entrepreneurial question even. Often finding the answer is not the problem, finding the question is.

So, how can you cultivate an environment conducive to “What if….?” questions? Look outside of your box, read books from other business entrepreneurs, try and see how they made a change work for them, read your wife’s Cosmopolitan - your husband’s Mens Health magazine, look at other industries, ask your kids what they like, be interested in anything and ask yourself all the time, what if…..?

Your customer calls to complain about the last order - what if? Your assistant is unhappy with the coffee-machine, what if? What if, applies to all aspects of your small business or startup business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants:

• Customer Care & Support;
• Sales;
• Marketing & PR;
• Accounting & Credit Control
• especially Business Planning, and so on ….

It just does not end, you may not be the next Einstein, but I bet you, you will get some pretty good answers from yourself, if you bother to find the right “What If….?” question.

Some “What If …?” questions get me regularly quite excited, and keep me awake all night with excitement about the possibilities - so go forth an “What if…?” - a little, or a lot for that matter! ST.

With our recent launch of OnlineOffice 4, we have kept our promise to supply our online accounting software to every small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants free of charge forever.

But not only that - lets face it, if you want free accounting software, you could try the open source arena or other suppliers, even Intuit offers a watered down version of their accounting software free of charge - but a whole raft of other benefits can be gained by using our award winning product:

• Free 24/7 live online support - so when you work after 5 pm, we are still here to help and you do not have to pay for it;
• All future software updates are free of charge as well, so you will never have to pay for new or updated accounting software;
• Data backup and security included - while we all know nothing is ever absolutely safe, we back all your data up continuously and our investment in security would be unobtainable for small businesses, because of cost and complexity;
• All the benefits of online software (SaaS) - means you can access your accounting, write invoices and plan your business from anywhere at anytime.
• Online technology is eco-friendly - no shipping, no packaging, no manuals (help text in software) and our ClimateByte Technology.

All you have to do, is sign up for our free 30 day trail of OnlineOffice, or our free LiveNet and you will have free accounting for your small business, forever.

Let’s face it, nobody makes any money doing their bookkeeping. At least with WinWeb you don’t have to spend any money, not to make any money. ST.

This question is hard to answer, because there are no simple answers here and the outcome of this situation could easily be fatal to the business and if you are personally guaranteeing this money - and you probably are - this could potentially be very serious for your personal life too.

The things that you need to do, in my opinion are:

• Find out why? If the reason given are not satisfactory, you will need to get legal advice.
• Try and extent the deadline? If that is possible reduce the overdraft as soon as you can, or negotiate a stepped reduction of the O/D limit, ie. by month or week.
• Try and change bank, ASAP.

People often believe it is somehow always their fault, if the bank changes their attitude towards them, that is not always the case. Banks will always try and make you believe it is, but in reality they my have new internal guidelines for handing out money - banks can get into “cash-flow” problems too. So - don’t automatically assume it is always your fault.

Banks may have the right to recall a loan or overdraft, but I’m not sure if they have the right to damage your business by doing so - especially if the reason for the recall is not your doing. So if it comes to the crunch, get legal advice. This is one of the reasons why I hate these, IMO, often legal but still unreasonable arrangements between banks and clients.

Many years ago someone made the the loan, O/D - umbrella analogy and it goes like this:

When the sun is shining your bank gives you an umbrella;
when it is raining, they need the umbrella themselves.

It is best if you do everything possible to not need banks in the first place, by bootstrapping, outsourcing, planning your business and keeping your fixed costs as low as possible.

Remember sometimes, attack is the best defense even with banks, they may need their money, but they do not need bad publicity either. ST.

Choosing an accountant/CPA is probably one of the most important decisions to get right, because you are unlikely to have an accountant’s grasp of

• taxation
• company law
• dealing with the tax authorities
• wide range of knowledge about small business.

You need to make sure you find an accountant/CPA who concentrates on small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants before you make any appointments.

Another aspect is size, make sure you are not “one among millions” sort of speak, smaller accountants practices are often more in tune with your small business needs, because they are a small business too.

Here are some questions I would be asking when starting out with a new business venture:

• Should I start my business as a sole-trader, partnership or limited liability company?
• Can you help me to find and raise finance? (Read about bootstrapping first!)
• Will you help me with setting up my cash-flow forecast?
• When do I need to register for VAT (UK), GST (Australia) or when do I need to charge sales tax (US)?
• Am I ready to start trading, or should I wait?
• Do I need to choose my financial year and trading year end date?
• Are you going to do my bookkeeping and accounting work?
• Will you work online with me, so we both can be up-to-date with my business progress?
• Will you deal with my employment issues, pensions, annuities and insurances for me?
• Will you help me to understand more and more of these issues myself, and will you be available for advice if and when I need it?

There are many more issues to consider and they depend on your business, that is where your accountant will help you too. If you find the accountant is dealing with other businesses like yours you are in good hands, they can give you better and more realistic planning guidelines about your business venture.

The most important question is the one you need to ask yourself, “do I trust this person and can I work with him/her long term?” If you feel intimidated, or misunderstood, get up and walk. An accountant should be your advisor, he/she should never be your boss, what I mean is you need to make the final decisions, not your accountant. No matter what advice you get anywhere, you are always responsible.

Most of all your accountant should be a trusted advisor, trust me you will need his/her advice on a regular basis! ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

This question was emailed the other day, and I must say, in my mind this is only half the question - but first things first. Sooner or later you will think about doing a little more business, protecting yourself more, and that will bring you to the question of changing business and trading environment All small business, micro business, sole traders, freelancers and home businesses can be run in the form of limited liability companies.

A limited liability company - LLC in the US, Ltd. in the UK - is a legal entity, like a different person, so you, the business owner is not direct liable for any debt. The company is to be conducted by laws governing limited liability companies, and providing you do, your company has “limited” liability.

The protection a limited company offers is that when the business fails, and you have to close it down, the company is only liable with it’s assets, i.e any positive bank balance, inventory and other assets.

What does a limited company not protect you from? That is the second part of the question you need to know about.

Answer: Any loans or other arrangements you have made, and signed a personal guarantee for, i.e. a bank loan, or over-draft.

Which brings me back to my favorite topics of planning, credit-control and bootstrapping. If you do not sign any personal guarantees for your limited company, you personally can be shielded from any fall-out in the business - apart from loosing the business of cause.

Think twice before signing a personal guarantee and losing your limited liability. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

Well, two things come to mind:

Often the term “staff turnover” is used in connection with fluctuation in staff levels, which means staff leaves the company - for whichever reason. How large or small staff turnover in a company typically is I do not know, but large staff fluctuations are not good for any business. It usually indicates problems during the hiring process or management problems within the company.

The other use of the term “staff turnover” could be in relation to the monetary turnover for a business a staff member will generate, versus the turnover generated by the business owner. This is assuming this staff member is employed in a sales capacity. Here it would be desirable to have a large turnover, of cause.

In both cases it is true to say, it does not matter what kind of small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, you run. It may be more related to things like:

• Market segment;
• Management environment;
• Staff experience, to name but a few.

You can always speak with some other small business owners or get some market segment data from information agencies, maybe they can give you a better idea of where you should be with numbers, comparing yourself to your peers is always a good idea.

I like the question, it makes for some interesting planning exercises for bootstrappers. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

Again I had several questions regarding “crisis planning“, “disaster planning“, “data-security” and “data-backup“, so I will cover all of them in this post.

When I started thinking about WinWeb’s Small Business Infrastructure, we always knew we had to do something about data-security and data-backup. The truth of the matter is that most small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, do not have a coherent data-security and back-up strategy. To be perfectly blunt about the subject, it is not made easier by confusing technology and more to the point terminology, that even we have difficulty understanding some time. So I believe:

We should not expect business start-ups and small business in general to be accountants, bookkeepers, IT specialist, lawyers, marketing & PR gurus and so on. We should provide small business with an infrastructure in which it can concentrate on core business tasks, while at the same time enabling the business owner to stay informed of all relevant business facts like cash flow, sales, HR issues, tax position and more. This will enable him / her to make informed decisions, maybe with the help of an external advisor.

I formulated at the beginning that one of the benefits of using WinWeb’s OnlineOffice would be:

No security problems. No business interruption problem.
Your data is continuously backed up onto multiple RAID-5 data servers in multiple physically and network secure data centres - if that is not enough you can make a copy of your data anytime onto your PC or a CD. Should your computer crash or get stolen - no problem, just log on to another computer and keep working - can your competition do that?

So that takes care of the data security and back-up problem. To give you a little example, one of our clients is a web-designer for a niche market, he lives in an area which was flooded earlier in the year. His computer equipment gone, but all his data, addresses, email and work was safely stored in our OnlineOffice. He moved to his parents for a time and was back working within a few hours - not everybody was that lucky.

A burglary or fire would do the same - and can be dealt with quiet easily. This is not so easy when you have a business that manufactures goods, even when you do it from the kitchen table, you will incur “business interruption“. You will need a plan for that too - insurance may be the first step.

But loosing customers and with that revenue is not something an insurance is going to cover you for. So you need to plan ahead, ask yourself the following questions:

• Is there somewhere else I could work from temporarily? Parents, friends, short term office hire, etc.
• How long until I can get my raw-materials again? Maybe you should require your supplier to get a certain amount in stock for you, make a contract.
• Could you hire machinery until you can replace your own? Find suppliers now.
• Could my staff work from home if necessary? Online technology will help with that.
• Could I outsource some work temporarily? Have a look at virtual assistants in your area.

There are other questions you could ask yourself, just take 30 minutes, get a piece of paper and imagine your business, office, house, kitchen just burned down - trust me - the questions will come, and so will the answers. Oh, just to mention it, a disaster plan in a burned out house is of no value to anyone, keep it online or safe elsewhere.

Answer: YES, a small business needs a disaster plan, just like any other business. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

I’m answering three questions here, emailed to me during last week, so excuse the long headline. I will give examples and will let you fill in the rest for yourself.

What are “Fixed Costs”?

Fixed costs are operating cost that are incurred when providing necessities for doing business and have no relation to the volume of production and sales. Examples are rent, some employee costs, property taxes, telephone, heating and interest/bank expense.

As opposed to “Variable Costs“, they only occur in proportion to activity within the business and hopefully that will lead to sales and revenue.

Why should I keep my “Fixed Costs” as low as possible?

When I talk about outsourcing, I’m talking about changing fixed cost into variable cost. Let me give you an obvious example to make my point.

Let us assume you have hired someone to answer the telephone, this person cost you $1,000 per month, and on average you get about 5 calls per day. Most of these calls are not even from clients, or you could take the calls while you are in the office. This $1,000 is a fixed cost, no matter how many calls you get, or if you are in the office or not.

So you outsource it to a virtual assistant, now you pay $100 per month and that includes 50 calls received, each extra call is $1 per call. The $100 are still fixed cost, but you have lowered your monthly fixed outgoings by $900. And depending how often you are in or out of your office, the 50 inclusive calls are probably enough to cover your needs. Combine this with online technology and you can stay in touch anywhere and anytime.

Should that not be the case, then you have “variable costs” of $1 per call, which means you are out of the office, working or enjoying life while it is quiet, for example during holiday season. You phone is professionally looked after in any case.

Outsourcing, bootstrapping (cutting costs), it all means the same for any small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, more money for you, less distractions, and a more recession proof small business, that is why business planning is so important.

Answer: Keep your “Fixed Costs” down. Stay mean and lean, while enjoying your work and life. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

This interesting question was emailed to me last week, and at first I thought to post a one-liner or just email back and say something like, “higher is always better“. I got thinking about this and decided the answer is not as clean cut as it may seem.

After all we are talking small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants here. So I reconsidered and decided to write about it here.

As I said, generally speaking, a higher cash-flow is desirable because you have more “scope” to develop cash-flow reserves for your small business, by using standard cash-flow planning tools, like renegotiating payment terms with your suppliers and deal with credit control better.

Here is the thing, if you are a micro business, or even a one man/woman home business, more or less cash-flow may not be as important to you as concentrating on credit-control. Let me explain, if you are a service business, you may just want to make enough money for your monthly income, there are limits to the amount of work you can do, before you start running into other problem areas, like employment issues, office rent, etc. You may not want that, you may be very happy the way things are - and contra to popular belief that is perfectly OK. However that means you do not necessarily want a higher cash-flow.

The same applies to small manufacturing businesses, higher cash-flow can also mean much higher risk for your small business, your client could go bankrupt and not pay you, what then? This is something that happened to me in the late eighties - it was a very unpleasant experience.

ANSWER: A qualified “HIGHER”, with a big “BUT” for micro-businesses. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

How long is a string? Let me give you some pointers here, but please remember you can always do more on the cost-cutting front in any small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants.

1. Keep your staffing level low. As much as it may hurt, work longer hours yourself, until extra staff is economically viable.
2. Outsource all non-core business activities. This will reduce your fix-cost structure, make your small business more flexible and you can react faster to an economic down-turn.
3. Buy second hand. Do you really need the brand new van? Or computer, or……
4. Work from home, this will not only cut your cost, but may improve your work-life balance at the same time.
5. Let your staff work from home. No office cost, hire a room if you need to on an hourly basis.
6. Use online technology, so you don’t waste time and get distracted.
7. Focus on your core business and sales. Every distraction costs time and money, sales generates money.
8. Bootstrapping. Think before you spend a penny, could I borrow, hire or do it online, get creative.
9. Analyze your fixed cost every month. You will find things you don’t need - trust me you will.
10. Compare and get new quotes. Even if you need the service or product from your supplier, check others all the time, insurance, telephone, utilities, etc.
11. Get better payment terms. Ask to pay in 60 or 90 days, or get an early payment discount.
12. Check your bank charges - you’ll be surprised. Or have it done on a results basis, doesn’t cost you time and gets you money back.
13. Do credit control - get your money in lower your bank overdraft cost and charges.

This is only a short list of what you can do, but it’s a start. Remember even $100/£50 per month is $1200/£600 a year more in your pocket. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.