So, you've taken the plunge and started your own business. Congratulations! By now you've probably discovered just how complicated-and rewarding-an experience it can be. Unfortunately, unless things are going extraordinarily well, you've probably also run into some unexpected problems, regardless of how well you did your homework. The following sections will discuss a number of important concerns of small business owners and hopefully provide some practical suggestions for their solution.
Effective Cash Flow Management
Maintaining effective cash flow management is one of the most critical skills demanded of any small business owner. Without it, the successful organization and control of your company's finances would be impossible. The use of corporate debit and charge cards can be of tremendous assistance here, since their consolidated monthly and yearly statements provide a convenient method of monitoring your business spending. Some corporate cards also offer delayed debit features that allow your company's available cash to work all the harder for you.
Other cash flow management tools that may be of help to the small business owner include services that automatically place your company's daily available cash into pre-selected investments, electronic tax payment programs and automated funds transfer services.
Meeting Unexpected Funding Needs
From time to time, many small business owners find it necessary to obtain additional capital on a short- or long-term basis. Such funds can play an essential role in helping your company retain the flexibility and competitive edge needed to cope with a fast- changing business environment.
When capital is required for short-term use, commercial lines of credit provide a convenient source of additional funding for many small businesses. The total amount you'll be able to draw against will vary, depending on the size and financial health of your business. Some commercial lines of credit feature such additional advantages as automatic yearly renewals and no principal paydown prior to maturity-both of which can be extremely helpful to the small business owner.
To help meet longer-term capital needs, small business owners frequently rely on term loan agreements. In many cases these are used to maintain a steady cash flow, expand current facilities or modernize outdated equipment. Repayment provisions for term loans can be quite flexible, allowing you to vary the amount and frequency of scheduled repayments according to your company's available cash flow.
Creating a Competitive Employee Benefits Package
Attracting and retaining a talented and enthusiastic workforce should be at the top of every small business owner's agenda. Employee attitudes and behaviors become the "public face" of your company, because it is they-and not you-who have the most contact with your customers and suppliers.
Salary is obviously one major factor that applicants weigh when choosing among prospective employers. Another is the size and scope of their respective benefit plans. Generally speaking, employee benefits packages used to include health and medical insurance, vacation time and a specified number of sick days- nothing more. Today, however, competitive benefits packages often contain 401(k) retirement plans and employee stock option/purchase programs, each of which can impose considerable record keeping and administrative burdens on your company. If you're thinking of offering your workers these types of employee benefit options, hiring an outside plan administrator may be your best solution.
Additional Services for Executives
As essential as a talented and enthusiastic workforce is to long-term business success, of equal (if not greater) importance is an effective and highly-motivated executive team. Since the salaries of small business executives are significantly higher than those of the average employee, their benefits packages are usually more complex.
Among the additional services that small business owners may wish (or be forced by the competition) to offer their executives are personal trust/estate planning and personal financial/investment assistance. Deferred compensation programs have proven to be yet another popular option in executive benefit packages. These allow participating executives to defer taxes and build retirement savings in addition to the company's basic pension and IRA plans by deferring payment of a certain portion of their income until some future date-usually retirement, when typically lower income tax rates may apply.
Contingency Precautions
Although thoughts of a sudden illness or accident are unpleasant, such regrettable events are by no means rare. And, should death or even a temporary disability strike you or key members of your executive team, the operational results could be devastating. Some small business owners choose to take on this risk for themselves, while others elect to purchase additional insurance designed specifically to protect against this type of unfortunate contingency.
Key life insurance coverage also may be available for you and your company's most important personnel. These policies pay death or disability benefits directly to the business-funds that can then be used to help recruit replacement executives or for general business purposes. Finally, business overhead insurance provides payments to cover such routine office expenses as rent, utilities and support staff salaries while your key employees are unable to work.
