Starting your very own small business can be a very exciting and very stressful time.  Even before the doors open, a massive amount of work needs to be done to ensure the business is successful right out of the gate.  Too many small businesses fail because they’re unprepared with initial costs and one of the ways to ensure any small business is getting the best bang for their buck is by owning a small business credit card.

Most small business credit cards are geared toward two types of rewards programs; travel and cash back.  Here’s a look at the ten top small business credit cards available to business owners today.

The Plum Card® from American Express OPEN

My personal favorite, the Plum Card from American Express OPEN is a charge card which simply means that a small business owner has no pre-set spending limit.  This also means the card has no interest rate so purchases are due in full every month.  As an added bonus, if you pay 10 days early each month, you’ll receive a 1.5% discount, effectively providing you with a 1.5% cash back rate.  There is an annual fee of $185, but it’s waived during the first year.

Ink Cash(SM) Business

The Ink Cash Business offers the biggest up-front incentive on our list, giving new cardholders a $250 cash bonus after they spend $500 in the first three months.  5% cash back is earned on office supply, cellular and cable services, 2% cash back is earned on gasoline and restaurant purchases and 1% cash back is earned on all other purchases.  There is a limit of $25,000 spent annually that triggers the 5% and 2% cash back categories (so once you’ve spent $25,000 in gas and at restaurants, you’ll earn 1% for the remainder of the year) but this card also includes a 0% intro APR on purchases for six months AND does not charge an annual fee.

The New Business Gold Rewards Card® from American Express OPEN

Another one of American Express’s line of charge cards, the new Business Gold Rewards Card from American Express OPEN dishes out rewards points in tier levels.  3x points on travel purchases, 2x points on gas, advertising and shipping purchases and 1x points on everything else makes for a very solid rewards program.  There is a hefty $175 annual fee which is kindly waived during the first year and every small business owner can expect the full line of AMEX perks.

Capital One® SparkSM Cash for Business

A fairly new credit card, the Cap One Spark Cash for Business is a no-nonsense small business card offering 2% cash back on every purchase.  New cardholders will also earn a $100 cash bonus after spending $1,000 in the first three months with another $50 cash bonus coming after an additional employee is added to the account.  The $59 annual fee is waived during the first year and this card includes a very low 13.9% variable APR.

TrueEarnings® Business Card from Costco and American Express

The best card on our list for the local traveler, the TrueEarnings Business Card from Costco and American Express offers 4% cash back on gasoline purchases (up to $6,000 spent annually), 3% cash back at restaurants, 2% cash back on travel and 1% cash back on everything else.  The 1% cash back includes at Costco and there is no annual fee so long as your Costco membership is paid every year.  Cardholders will also find a 0% intro APR on purchases for the first six months.

Bank of America® Cash Rewards for Business MasterCard® Card

Another great cash back business card to fill out our list is the Bank of America Cash Rewards for Business MasterCard Card.  Cardholders will earn 3% cashback at gas stations, office supply stores and for computer network services, 2% cash back at restaurants and 1% cash back on all other purchases.  There is no annual fee to own this credit card and it comes with a 0% intro APR on purchases for the first nine months.

The Business Platinum Card® from American Express OPEN

The most powerful of business credit cards, the Business Platinum Card from American Express OPEN provides its members the best perks any business card can.  Complimentary airport lounge passes, an annual $200 travel reimbursement and 24-hour concierge service are just some of the things every business owner will receive when owning this charge card (remember, payment in full every month). The big downside to having this power and prestige is a $450 annual fee.

Capital One® SparkSM Miles for Business

Similar to the Spark Cash card listed above, the Capital One Spark Miles for Business offers double miles on all purchases.  10,000 bonus miles are provided to businesses that spend at least $1,000 in the first three months of card ownership and another 5,000 miles are awarded when an additional employee is added.  A $59 annual fee accompanies this travel themed small business card but Capital One will not charge it for the first year.

SimplyCash® Business Card from American Express OPEN

The least expensive American Express business card to own; the SimplyCash Business Card from American Express OPEN provides cash back on every purchase.  It’s earned based on purchase categories; 5% cash back on office supplies and wireless services, 3% cash back on auto gasoline and 1% cash back on everything else.  Cardholders can save an additional 3% – 10% on select merchants like FedEx and Hertz and are also offered a 0% intro APR on purchases for 12 months.  This card is annual fee FREE.

Capital One® SparkSM Classic for Business

The last but not least card to make this list is the Capital One Spark Classic for Business.  This is actually the small business card I own, and I chose it because my credit score would be classified as below-average to average.  The card offers 1% cash back on all purchases and does not have an annual fee.  The upside is that it’s perfect for a small business owner with less than excellent credit … the only card on our list which is offered to mid-600 FICO score consumers.

About the Author: Founded in 2004, CompareCards.com is an online resource that provides expert reviews, tips and tools to find and compare credit cards.  Visit CompareCards.com today and review the credit card deals that fit your lifestyle and/or current needs.  

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Every small business dream begins with the simple idea of making money while providing a needed product or service. As businesses evolve, their proprietors quickly learn that the product or service isn’t where all the effort is; tracking, managing, and even getting the money all take their fair share of work as well. While financial management can (ironically) be costly if you don’t have the right tools, there are plenty of free resources to help organize your business’s income, saving time and money. Keep your business on the right track (and out of debt) by taking advantage of these 4 free tools: 

Mint

One of the most popular free finance tools is Mint.com, an online application that allows you to manage all of your financial accounts in one place. The clean, streamlined interface makes it easy to use, giving this tool major brownie points. Mint works automatically, pulling information from your checking, savings, investment, and retirement accounts, and displaying it visually with handy graphs and charts.

Beyond account monitoring, this tool helps you set a budget and financial goals, making it a valuable asset for any small business. The icing on the cake is Mint’s mobile device support and integration, enabling finance tracking on-the-go.

Sage Billing Boss

Who said invoicing had to be complicated (or costly)? This feature-rich invoicing system allows you to organize customers, track payments, and even collect money. You might be expecting a customer limit or an upgrade fee hidden somewhere, but all of Sage Billing Boss’s features—including unlimited invoices and customers—are completely free.

Built especially for small businesses, this tool integrates handy options like recurring invoicing, online payment tracking and quotes. If you’re looking to get organized and save time on small business invoicing, Sage Billing Boss might be all you need!

Google Wallet

Previously Google Checkout, this tool serves as a virtual wallet that securely holds your payment information for faster purchasing and better tracking. Google Wallet helps make light work of online purchases, storing your credit card and billing information for easy access when you pay through a merchant’s Google Checkout button. It offers fraud protection and even helps keep your email address confidential, keeping unwanted emails at bay.

Google Wallet’s latest feature is the ability to make purchases in-store using its mobile app; just tap the phone on participating credit card devices (at the time of this writing it only works with the Nexus S 4G phone).

Moneytrackin’

The key to staying organized is keeping relevant information together in one simplified location. That’s what Moneytrackin’ promises to do with its free online app. Keep tabs on income and expenses on all of your accounts, tagging transactions for easier grouping. If more than one person is involved with your business’s finances, you’ll appreciate the collaborative working capabilities this tool offers, including budget-sharing. This may not be as robust as Mint’s application, but it offers a clean-cut solution to organizing and keep track of your company’s finances.

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About the Author: Chris Turberville-Tully is a marketing strategist for Personal Touch Debt Solutions, a debt management company providing personal security, debt payment plans, expert advice and more.

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Photo Credit: Images_of_Money

Unless you’re willing to take on some extremely high monetary risk, the old adage is almost always true: you have to spend money to make money. No matter what your business involves, there will be some costs associated with it. There’s a reason why the retail industry as a whole spent well over 8 trillion dollars on operational expenses in 2009, according to the U.S. Census Bureau.

If you’re a startup, it’s even worse – you need to be sure that you have plenty of extra money around in order to anticipate any unexpected costs. Add to this the fact that fiscal irresponsibility and lack of financial planning are two of the biggest factors in business failure. Being lackadaisical about monitoring your cash flow can quite literally cost you your business, and spending money on things you didn’t need, or failing to shop around, will sting in retrospect. So, it should be very clear that you need to track every cent that is received and spent by your business. For entrepreneurs, especially online entrepreneurs, you may need to do this tracking yourself.

Organizing Your Expenses

The first step involved in smart money tracking is categorizing your business expenses. Creating a balance sheet is perhaps the most comprehensive way to examine what you’re spending money on.

A balance sheet contains both assets and liabilities. In very simple terms, assets represent the money that you have, while liabilities represent where you’re money is going. There are two types of liabilities: current and non-current. Current liabilities include:

Accounts Payable – These expenses represent money owed to trade suppliers that have provided goods as inventory or other services essential to running your business.

Accrued Expenses – These costs involve money that is owed but not billed, such as payroll taxes and wages.

Notes Payable – These involve obligations such as promissory notes that mature within one year.

Current Portion of Long-Term Debt – This figure represents the amount of long-term debt that must be paid within the next year. An example of this would be a large loan that was used to purchase a business space.

Non-current liabilities include:

Notes Payable to Officers, Shareholder or Owners – This is exactly what it sounds like. If you’re a small, startup Internet business, you might not have to worry about these costs for a while.

Non-current Portion of Long Term Debt – This involves term loan expenses that are due after one year.

Contingent Liabilities – This category accounts for things that may become liabilities, such as lawsuits.

These categories are standard for any business. In simpler terms, a balance sheet forces you to think about common expense categories such as:

• Taxes
• Utilities
• Employees (wages, benefits)
• Office supplies
• Vendors
• Loans
• Insurance
• Licenses and permits
• Rent/mortgage
• Advertising/marketing
• Leasing equipment

Costs associated more specifically with Internet businesses include:

• Domain name
• Internet service
• Hosting
• Software

Tools For Tracking

It’s simple to create a balance sheet using a spreadsheet editor such as Microsoft Excel or a free alternative such as Google Docs spreadsheet (the latter allows you to easily share the document with co-workers). Microsoft also offers a free balance sheet template for Excel users. Several other programs exist for managing business expenses, including:

• Quickbooks
• Sage Peachtree
• Quicken
• Texthog
• Outright

These products vary in cost and features. For example, Outright is free, while Quicken starts at around $20. Some of these programs also allow you to focus on your personal expenses. Also, it’s important to have a filing cabinet that has folders for each of your categories. Keeping receipts, bills, check stubs, invoices and other paper documents in order is essential for staying organized. If you receive many of these notifications through email, consider using an email client such as Thunderbird to easily create folders and manage these types files.

Staying Smart

There are some specific practices that should be considered in order to most effectively track your expenses. They include:

Personal vs. Business – Always pay for business expenses from a dedicated account. Not only is it ethically justifiable, but it makes tracking much easier. Keep all business files apart from personal files, and get a dedicated business credit or debit card.

Adapt – The whole purpose of tracking your expenses is to avoid spending money needlessly. If there’s anything in your files that you could be paying less for, always investigate your options. For example, it’s imperative for an online business to compare Internet providers instead of paying an unnecessarily high rate.

Do the Work Immediately – Effective tracking involves processing invoices and purchases right away. Getting behind can lead to lost files and inaccurate expense reports.

Hire Out – If your business gets big enough, it’s very wise to hire a CFO or pay for an accounting consultant’s help. It’s better to spend the money getting it done right rather than doing a rushed, incomplete job yourself.

Don’t Forget About Deductions – As you track your expenses, it’s beneficial to make note of the things that you can deduct from your taxes. Check out the IRS page on deducting business expenses to learn more.

About the Author: Mitch O’Conner is an online marketer and writer. When he’s not busy testing sites, generating traffic or writing content, he enjoys spending time with his wife and kids, watching TV, playing games or going camping.

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In a down economy, it’s difficult for entrepreneurs to access the capital needed to build their venture from the ground up. Luckily, projects can now be funded by a powerful combination of the social Internet and generous networks of friends, colleagues, and communities. This model is called “crowdfunding” and is sweeping the startup nation by storm. It seem s to be an entrepreneurs dream,. bit are there problems in the way?

Check out the below infographic on how to navigate the new crowdfunding landscape (click image for larger view).

Click for Larger View

infographic source: drawing a crowd

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When the economy is in the current shape it is, it behooves small businesses to make sure they’re collecting on any outstanding customer debts. That being said, what are the best ways to go about doing that?

For too many small businesses, the collections process becomes tiresome and too much of an effort, leading to bills going unpaid. If your small business has found itself in this situation, there is time to turn things around.

It is important for small business owners to keep in mind that not all customers purposely plan on not paying their bills. Some customers run into financial issues, be it a job layoff or major medical illness, therefore putting their bill to you lower on the importance list.

How to Tackle Collection Issues

If your small business is having trouble with a few or more customers when it comes to collecting payments, there are essentially two options to look at – going after them on your own or hiring a collection agency.

For those business owners looking to keep the process in-house, you will save money, but remember, more of your time (staff) will be delegated to going after those individuals who have not yet paid. Do you really have the manpower and the time required to be placing calls, sending out notices etc.?

On the other hand, you can hire a collection agency, which is trained for just such matters. Yes, there will be a fee involved, but you in turn get qualified professionals who will allow you to focus on the business at hand and not running down customers who still owe you.

So, which option is better?

The Collection Agency Approach

If you have the money to spend, working through a collection agency will save you and your staff time and headaches, just be sure to choose the right one. Another important factor before you go down this road is making sure the outstanding amount exceeds a certain dollar figure.

In looking for a collection agency, keep these items in mind:

• Search for a collection agency that is comfortable and knowledgeable in working with a business your size. Experience is obviously very important; you don’t want an agency that is not familiar with your line of work, processes and so on;
• If at all possible, get some references from other small businesses you are familiar with on the debt collection agencies you are considering. The agency you work with should have a good reputation and prove it gets results. If you hire the wrong agency, your money is essentially being tossed out the window;
• In relation to getting references on the different agencies you’re considering, make sure the agency you end up hiring abides with the Fair Debt Collection Practices Act. The last thing your company needs is an agency that is harassing customers into paying both you and the debt collector;
• Make sure the collection agency you work with can prove it has errors and omissions insurance, which protects both you and the collection agency should the debtor want to sue for unwarranted efforts to collect;
• Lastly, shop around and don’t settle on the very first agency you come in contact with. Remember, to check on the company’s past success ratio, along with deciding on a set or contingency fee.

Keeping Collections In-House

In the event your company decides to keep the collection process in-house, there are some rules you should consider following, including:

• Remember that the individual or business you are attempting to collect from is still considered a customer, so treat them with the respect normally given to your customers;
• Train those employees who will be doing debt collection on how to treat customers. The last thing you want is an employee getting in a shouting match with a customer over the phone. This also important in that you do not want to put undue stress on the employee/s doing the debt collection;
• As you start the collection process, begin with a friendly reminder notice in the event the account is 30 days past due. In some instances, customers overlook bills, and/or have others that need their attention first, etc. If nothing is accomplished with the first notice, send another one out within another month’s time. In the event nothing is accomplished after two months, provide the customer with one more warning before considering turning it over to a collection agency.

Debt collection is never a fun process, but it proves a very important one for small businesses, especially when the economy is struggling to say the least.

So, how does your small business handle this tricky process?

About the Author: Dave Thomas writes extensively for www.business.com an online resource destination for businesses of all sizes to research, find, and compare the products and services they need to run their businesses.

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Anyone who is in business is usually trying to stay afloat in this recession and concerned about keeping costs to a minimum.  Running your business income through your personal account may seem like a great idea, however, there are some things you should be aware of.

Income Taxes:

Keeping your business income and expenses separate is a must come tax-time.  Being religious about keeping these separate will make life a lot easier down the road.  If it isn’t a business expense, then you won’t use your business checking. Simple as that.  Business is for business, personal for personal and never shall the two meet.

Figuring your profit and loss, balance sheets and tax returns will be a breeze, especially if you use accounting software such as Quicken to track your business checking account.  Everything is automatically put into the right categories for you so you can examine monthly, where your biggest expenses are, and where you can minimize expenses.

Better Money Management:

Having a business account helps you budget, because if you don’t use it for personal reasons, there tends to be funds left over at the end of the month.  You can transfer from business to personal when needed, and even that is a write-off.  Everything that you run through your business will become a business income or expense and therefore much easier to see where your hard earned cash is going.

Professionalism:

The more you act like an established business, the more you will be perceived as a successful business.  Having a business account will allow your clients to perceive you as a professional.

Having a business account, business cards and a professional answering service will give you a means of business credibility and representation, as well as give you the confidence to land more clients.

Business Account Uses:

When you open a business account, money can be allocated for investments, partnerships and make business payments, keeping your business credit optimum.  If you have employees, paying salaries from a business account is mandatory, especially if you have a corporation, or LLC.

Business Account Benefits:

Business accounts at major banks offer benefits such as special discounts on business products, and special promotions.   And, there are perks such as sub-accounts, direct and free connections to personal accounts, the ability to obtain better rate credit cards and financial rewards.

Type of Business Account:

Each financial institution is different, however, there are many choices that should be considered when opening an account.  How many checks do you write, how much income is run through the account monthly? What is your average balance monthly?  These are things that should determine what type of account you choose.

There are small business accounts, which offer new and smaller businesses a business account with no fees.  Some accounts offer no fees if you keep a specific balance or a specific amount of checks are written, so make certain you look closely at the options.

Risks Involved:

The times when business is slow, finding yourself with insufficient funds can cost you a fortune with a business account.  The fees are escalated, which makes matters worse, and your business associates could lose confidence.

Also, because you have a business, banks tend to see you as credible and offer you business loans, especially if your credit is worthy.  These loans can escalate when times are slow, and end up costing you more than you make just paying them back.

Disadvantages:

Usually, interest-bearing accounts offer less interest on business checking than a savings account.  And, there are fees associated with a business account that are not charged with a personal account or savings.

• Overdraft fees and interest rates are higher for businesses.

• If your credit is iffy, your ability to get a business account may be jeopardized.

• Opening a business account requires a lot of paperwork, and the approval process is sometimes tedious, and time consuming.

Conclusion:

Essentially, the benefits outweigh the disadvantages, and having a business account is sometimes a necessity in keeping your accounting straight, your tax information handy and to allow the clients you work with to see you as much more worthy when writing checks made out to your business, instead of you personally.

Business accounts lend credibility, especially to a new business.
About the Author: Ally is part of the team that manages How To Save Money, a personal finance blog that wrote about How To Save Money On Your Food Indulgences. Before joining BS, she was a Media Planner with McCann Worldgroup Philippines, Inc., with award-winning executions, including the Levi’s 501 “Live Unbuttoned” global campaign.

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When starting a new business it is very easy to forget, during the budgeting stage, one of the most important costs a company will accrue. At the heart of every business, perhaps even more so than the services provided and products sold, are the people who undertake the day to day running of the operation. Without staff in place it would be impossible for a business to operate and as such it is imperative for these people to be kept in high morale. This means paying them correctly and on time, something which is far more difficult than could be initially envisioned particularly for a growing or expanding company.

Payroll Options for the Small Business

A company has a number of options with regards to how it conducts its payroll and payment of its staff. These can be roughly divided into three areas, each with their pros and cons, and can be listed as – hiring a third party provider, in-house manual payroll maintenance or utilizing an in-house software system.

Hiring a Third Party Service

In hiring a third party service provider the company doing so will have to provide an on-going monthly fee for the payroll aspect of their business to be managed. For many a start-up company this is, quite frankly, a long term expenditure which budget may not allow for. Although third party providers are, of course, specialists in their field and thus are likely to ensure high levels of accuracy and obedience towards any legal requirements in their payroll services they also can constitute quite a fiscal drain if a company does not have large amounts of surplus money.

In House Payroll

Maintaining payroll in-house via manual means can also prove somewhat tricky on a couple of levels. Whilst this option would save the monthly fee that a third party provider would necessitate, or the investment fee required for payroll software, there are many obstacles that this option could potentially provide.

Firstly, keeping up to date with all the latest facts, figures and changes to regulations can prove burdensome; inability to correctly complete and return end of year taxes, of which payroll expenditures would constitute a fair amount,  can result in huge fines. By not having a professional on the books mistakes are very easily made and the fines can quickly overtake, on a fiscal level, the amount required to pay for a service provider or software package. This can cause whoever is allocated to look after payroll a great deal of stress particularly if they have other areas of business to get on with. Hiring a full time member of staff solely to look after payroll would also prove far more expensive than either of the other two options available.

Payroll Software

The final option is investing in payroll software. Whilst the initial costs for this programming would indeed be more expensive than manual payroll maintenance the investment could, in time, prove the cheapest. The potential for human errors are widely eliminated through the introduction of software and can prove speedier than manual completion of a payroll form. Similarly, access to details could be achieved quicker through a centralised database that software can create – manual payroll completion requires copious amounts of cumbersome and hard to sift through paperwork and out sourcing payroll means that access to files cannot be achieved with immediacy.

The time that payroll software can save a company completing payroll is vital; in the business world time means money and the quicker the process can be undertaken the longer can be spent on more productive areas in the company. Whilst an essential part of any business is, as established, the payroll this is also an area that will never turn a profit. In utilising software to cut time spent on payroll a company is cutting the time spent on non-profit making areas and will thus help improve its bottom line.

About the Author: Kieron Casey is a BA (Hons) Journalism graduate who blogs regularly on a number of topics including small business advice, payroll and small business software.

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When a company’s running cost comes dangerously close to the amount it earns, it becomes necessary to cut costs, of course. Well, most companies will begin with cutting out unnecessary expenditure. And ultimately, a company might be forced to lay off employees.

Option 1: Market Penetration

But laying off employees isn’t always the best possible option. Of course, when one lays off employees, one tries to lay off the most redundant employees on the company’s payroll, but another possible strategy to deal with expenditure that is dangerously close to levels of income, is enhancing market penetration.

Now, enhancing market penetration means that you sell more to people who already buy from you. Your established customers represent a certain amount of brand loyalty, and it’s quite possible that people who trust your name for one product will trust you for other products as well, thus increasing the depth at which your product penetrate a certain market. Selling more to your existing customers can help keep your company above water without necessarily having to lay off employees.

Option 2: Market Development

A second option, of course, is market development, that is, finding new customers for your company. However, market development usually involves a certain amount of advertising, and therefore a certain amount of expenditure, and while this may give returns in the long run, most companies find that in the short run it only adds to the running cost of the company.

However, if your company is in trouble, then market development is certainly a necessary strategy; and even laying off a few employees, so you can engage the funds released and put them into the market development, could be a crucial factor in ensuring the survival of your company.

Option 3: Product Development

Lastly, there’s product development. If people aren’t buying enough of a product that you’re selling, perhaps it’s time for you to develop and sell a new one. Improving your present products and finding new products to sell that will engage the attention of your customers is perhaps the most important facet of a company’s survivability in the markets of today.

More Investment not Less

Now, virtually all these three areas, that is market penetration, market development and product development, all involve a certain amount of investment. While this investment might be difficult at a time when funds are low, it is in fact crucial to ensuring that a company survives a bad patch.

It’s not that lay-offs of employees are necessarily a bad strategy, it’s that if you lay off the employees to release funds, then you need to ensure that you put those funds into wise investments, into improving your products or your range of customers or both, so that your company is in a better position to get through these bad patches without the need to lay off employees.

If you’re forced to lay off employees, perhaps even valued employees, then you should ensure that you take the necessary steps so that when another bad patch comes around, your company is in a position to get through it without having to lay off employees in future.

About the Author: This article was written by Press 1 aVirtual Phone Number Provider and 0844 Phone Number Provider. For all your Phone System needs.

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If you’re starting a company of your own, what methods would you use to define how much your initial investment should be?

You need to have an accurate estimate of start-up costs in order to reasonably predict your financial performance in the first few quarters. The cost requirements are different for different industries. Use these tips to start the number crunching for your business and come up with an accurate estimation for your start up investment.

1. Know How Much Capital Will Be Enough

How much capital will be enough? To know this, determine how much capital you need for one year of business operation. In the first year, keep your initial capital separate from your income. The income of your first year should become the capital of your second year of business. When you do this, the only amounts that you will need to finance are your initial capital and possible growths you want to introduce above and beyond the initial model. Start with this simple model and you won’t go wrong while determining your startup costs.

2. Make A List Of Cost Centers

The first step is to list out all your cost centers. Include things such as professional fees and payments, technology costs, administrative costs, sales and marketing costs and wages and benefits for employees in your cost center list.

Some of the costs you should include in this list are equipment, space, marketing, networking, wardrobe, transportation, business registration and filing, security taxes and so on. Plan for these costs when you’re calculating your initial cash flow requirements, so that you’re not surprised by sudden unplanned costs along the way.

3. Create A Startup Checklist

Create a startup checklist to better gauge how much you’ll need, as follows:

• Decide on a business name and register it
• Create detailed business and marketing plans
• Set up your banking and professional relationships
• Hire a corporate attorney, tax consultant and an accountant
• Obtain permits and licenses
• Set up pricing catalogues for your offerings
• Determine financial requirements and means of obtaining them
• Retain office space and equipment
• Outline risk management and insurance policies
• Hire suitable employees

4. Use Online Startup Calculators To Evaluate Costs

Use one of the many calculators online and calculate your startup costs based on your requirements. These calculators allow you to estimate the costs against each expense category and tell you how much asset you need to have in the bank before you break-even. Here are a few online startup business calculators:

• http://www.businessknowhow.com/startup/startup.htm
• http://www.bplans.com/business_calculators/starting_costs_calculator

5. Predict Business Costs By Networking

Check out other entrepreneurs in your business domain and learn to predict your business’s costs. For example, if you’re opening a cyber café, scan the financial statement of similar companies that have been publicly traded. Even though your revenue numbers will look different, you can get an idea of cost of sales and administrative expenses.
Study trade associations, small business message boards and entrepreneur support groups in related fields to evaluate information for both new and established companies. You could examine statistics or even subscribe to entrepreneur support group magazines, and join entrepreneur forums online to share ideas. Seek out other entrepreneurs who have set up similar businesses, and discuss start-up costs with them, paying special attention to unexpected costs.

6. Project Startup Costs Conservatively

When you calculate start-up costs, you need to allocate a few months of funding to cover expenses before you open for business. Again, once you’re open for business, it takes a little time to get your business to sustain itself. Project your costs conservatively by including a substantial cushion for beginning operations. This will ensure that you will have enough funds to set up an office, hire employees, take orders and cover other related costs.

Be realistic when assuming incoming revenue in the early stages.

Be conservative with cost projections, and see if you can obtain a loan that defers payments during the initial operating period.

7. Distinguish Between One-time And Recurring Costs

Separate one time startup set up costs such as office furniture and fees and recurring costs such as salaries and rent. Establish a budget for the post start-up period using these statistics. Check for every opportunity where you can delay non-vital expenses such as office decorations, until you start seeing revenue.

8. Leverage Tax Advantages

You can deduct an amount of $5,000 during start-up and $5,000 in organizational costs for the first year of your business. However, these rules differ if your costs exceed $50,000 in the first year. You can amortize expenses that are not tax deducted over a 180-month period, beginning after business opens.

Additionally, you can get a tax write off on funds spent on advertising, market research, business-related travel, employee training, legal advising and other costs. You might need to hire a tax professional to advice you, but if you efficiently leverage tax advantages, you can save a great deal of your startup costs.

9. Evaluate Your Cash Flow Needs

While determining startup costs, you need to look a little further down the road and determine the point at which you break even, your cash flow requirements and funding options. These considerations will help you round off your startup costs determinations nicely.

Evaluate the following:

• Funds needed to pay bills till the cash flow starts
• Financial support to survive till cash flow starts
• Continuing outlays for equipment, salaries and inventory
• How many offerings do you need to sell before you break even?

10. Evaluate Funding Options, Sources And Risks

These are some of the questions you need to ask yourself while evaluating funding options. These questions will help you accurately estimate your startup costs.

• What are your funding options?
• How much will come from your savings and investments and how much from borrowing?
• Are you the sole proprietor or will you have partners?
• If you have partners then what will be the division of partner investment?
• Would you solicit external investors for your business?

11. Create A Fund Matrix

To accurately estimate your startup costs, it’s good to come up with a funding matrix so you’ll know how much you need and where you’re going to get it from.

Based on the results of a recent study on the fund sourcing choices of several US entrepreneurs, it was found that different entrepreneurs sourced funds from different sources.

Common Funding Sources:

• 72% of entrepreneurs used personal savings
• 45% of entrepreneurs obtained bank loans
• 28% of entrepreneurs approached friends and relatives to invest in their business
• 10% of entrepreneurs approached third party investors
• 7% of entrepreneurs sourced funds from Government sponsored or guaranteed business loans
• 1% of entrepreneurs approached venture capital Firms

12. Evaluate Returns And Risks Down The Line

When you use personal funds, you don’t have to risk anything other than your savings, unless your home equity is tied to your personal funds. When you approach banks for loans, you might find that banks cooperate better when you’ve risked some of your own personal funds. However, in the long run, most businesses will need external funding of some type.
Note that each funding option needs to be evaluated carefully before you opt for it. In the case of venture capitalists, the returns could take the form of dividends, profit sharing and possibly shareholding within the company.

When you borrow from banks, depending on the size of your loan and the scope of your bank, the return conditions and share holding in your business might vary. Evaluate your long-term plans. Know whether your projected plans will allow you to make the cash returns that some sources demand. This is very important for you to determine startup costs.
Evaluate the risks associated with each funding source type and weigh your options.

Ask yourself the following questions:

• Would you be willing to risk all your savings and your home equity to finance your business?
• Have you thought about low-return low-risk government sponsored and guaranteed loans for small businesses?
• Can you obtain a university or government grant for your business, depending on its nature?

Knowing these answers will help you decide your costs and also the scope of your business. Evaluating all your options will help you secure the funds you need and set up a target startup date.

About the Author: Marina Chernyak is co-owner of startup 1001Shops, a purveyor of specialty products like corner etageres, vanity mirrors from all across the world.

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With Wall Street closing its purse strings to even the largest businesses, the effect has trickled down, as community banks have become increasingly stringent in their lending standards.

So, how can small business owners access the credit that they need?

The answer: Get informed.

Federal Small Business Loan Programs

There are a number of federal and state programs available to small business owners which many local bankers are not knowledgeable about.

SBA 504 Loan

The first is the SBA 504 loan program. This program is designed to assist small business owners looking to purchase fixed assets (think buildings, machinery, equipment, etc.). This program offers a 20-year fixed rate and amortization, as well as an owners equity injection of as little as 10%.

Business owners could get a 5.5% rate over 20 years with $20,000 down on a $200,000 building purchase. The one caveat is that the building has to be occupied greater than 51% by the small business seeking funding.

SBA 7a Loan Program

The second program is the SBA 7a program. This program basically does anything not allowed in the 504 program.

Allowable uses include:

• debt refinance
• working capital
• business purchases
• etc

The rate is variable (right now about 6%) but the big incentive with this is to the banks.
A bank actually has to approve the loan even though it is guaranteed by the SBA. However, if the small business owner arrives informed, letting the bank officer know that she would like to use this program, the SBA guarantees 75% of the loan, which is a big incentive for bankers to use the program with small businesses.

Do Your Homework

Reading up on the SBA programs and having your information ready when you approach a local bank can make all the difference.

About the Author: Jim Noone is a partner at iBankr.com. iBankr.com is a business sale marketplace that allows small business owners to follow a checklist method to sell their business. Creating an account and using this ten-step method typically increases the success rate by 5x compared to just listing a site for sale. The site also has a hiring marketplace that allows small business owners to hire professionals for specific tasks like getting financing, marketing the business for sale, finding buyers, or closing the deal or to handle the entire sale process. The site’s most popular feature is the free business value calculator located at Business Value Calculator.

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