Cash for Clunker Businesses

Like cars, many small businesses out there are clunkers—cash guzzling, severely damaged by the recession. Now, the government is looking to bail out these business owners, as it did for car owners. If you have a venture that’s a bit of a stinker, you might benefit from the America’s Recovery Capital program, or ARC, which offers up to $35,000 to save your business.

Just like Cash for Clunkers, which ended this week, ARC a deadline. But don’t sweat it too much. ARC is set to end either September 2010 or when its $235 million budget runs out, “whichever comes first,“ according to the Small Business Administration. But only about 1,000 ARC loans have been approved since mid June, new lending data released this month shows. That’s well below the 10,000 loans the SBA says its budget can support.

To reach that target, the agency will have to get far more lenders on board. Of more than 8,000 FDIC-backed banks out there, only 400 have made loans to small businesses under ARC—mostly in the nation‘s heartland. Just three of the agency’s top 10 small-business lenders, Wells Fargo, PNC Financial and Zions Bank, are administering the $35,000 interest-free loans to “viable” small businesses struggling with debts as a result of the downturn. (By “viable,” the SBA means businesses that were in good shape before the crash.)…

The Recession Will End… When Small Businesses Can Afford Health Care

Says who: 27 million small business owners

“It’s gotten to the point where it’s such a huge expense that I don’t know if we can continue doing 60 percent,” said Dan Verbeten, owner of Gardan Inc., a contract manufacturing company in Hortonville. “It’s the fourth-largest expense item.” (via BizJournals.com)

Why it might be false: Providing health benefits has been a growing expense, even before the recession took hold. According to a study by PricewaterhouseCoopers, health care costs for employers rose 10 percent in 2008 alone. Such costs are behind a disheartening trend: Just 59 percent of small business employers provided health benefits in 2007, down from 68 percent in 2000. But whatever health care’s crimes, it’s on its own track, separate from the forces that brought down the economy…

Time to Buy – Your Way into a Job

If you’re looking for an employer or want to expand your business, now’s a good time to make a move.

Thanks to the recession, there’s never been a better time to buy a small business—provided you’ve got the financial wherewithal. There has been a surge in the number of small businesses going up for sale in the past few months, but only half as many have found buyers compared to the same period last year, according to BizBuySell.com, an online small-business marketplace. That means it’s a buyers’ market, conventional valuations are out the window and there are bargain-basement prices for investors willing to take a risk in a down market.

Among the small businesses that have sold this year, the median sales price has dropped by about 20 percent to $160,000 from $200,000 last year, the site reports.

Typically, brokers and market watchers gauge the value of these deals by dividing the asking price for a business by its annual revenue or cash flow. In the past few months, these figures, known as revenue or cash flow multiples, have dropped dramatically in closing prices, by between 2.5 and 8 percent. Until recently, both multiples were rising steadily…

How to Get Others to Pay Up

It’s old news now that many businesses, feeling the recessionary pinch, have been delaying payments to their suppliers. In boom times that might not create a crisis, but until the downturn ends, cash flow is probably a paramount concern. The following tips should help you get the money you’re owed.

Invoice Early
If you drag your feet on invoicing, you essentially keep cash from coming in. Plus, the longer it takes to get paid, the less likely you are to get paid. Stay on top of your accounts receivable, and send bills out promptly to get paid earlier and show that you are paying attention to outstanding balances.

Invoice Often
If you bill weekly instead of monthly, you won’t be waiting until the end of the month to send out invoices—and can get paid faster. If weekly is too much to handle, try biweekly instead…

Adventures in Babysitting

If you want to find a babysitter in New York, you can go to myJambi.com, enter your specific needs and get an instant list of qualified sitters who match your criteria. You can check out their profiles and read reviews and ratings by other parents. Or, if you want a plumber in Chicago, a landscaper in Portland, or a Web designer in Santa Fe, myJambi can help out with that, too.

But myJambi, a three year old New York-based company, has only its three founders to turn to when a job needs getting done these days.

Poised for serious growth only a matter of months ago, those plans are now on hold. The company’s five full-time employees were let go. Big plans to expand into numerous service categories are being honed to a handful, with a big emphasis on babysitting. And the number of cities it serves has also been greatly pared back. Meanwhile, the company’s three co-founders, who had graduated to managerial roles, are now back to the grunt work of coding, design work and trafficking ad orders…

Raising Money in Recession

It’s no surprise that it’s been tough to start and run a new business in the downturn, but Julie Brown of Inner Rewards shared her blow-by-blow experiences raising money over the last year with Collective-E. The full post is worth a read, but here are some excerpts. At this point in the piece, she has raised $765,000 from an angel who proves, throughout the tale, to be just that.

July 2008—I set out to hire a team and get started with an aggressive goal of building and launching a beta site by the end of the year. Because my investor wanted to build a company ready to be fully backed, and given an aggressive timeline to build a full blown site with content and videos, we ended up with a very high monthly burn rate (monthly expenses). I immediately set out to raise more money.

September 15th, 2008—Lehman collapses and the market is in turmoil, every single investor runs for the hills. I have now built up a full staff with 7 employees and 40 contractors and need to raise cash quickly or we will run out of money before I can even launch.…

Paying Your (Small Business) Bills

A certain business based in North Carolina is facing tough times like everyone else. Its forklifts, once commanding strong prices in good times, haven’t seen demand decrease — just customers’ ability to pay on time. Its cash-flow strategy? Milk the mom-and-pop customers for what they have, and tighten the trade terms (the period during which the company will extend credit while customers get their own cash-flow situation together).

But, for the most part, small businesses report, suppliers aren’t putting the squeeze on their customers — everyone needs the business they can get. Usually, the vendors are putting the squeeze on the suppliers to come in at a lower price point.

Be that as it may, here’s how to manage a bullying vendor who’s pressuring you to pay now…

iPhone Apps to Manage Cash Woes

You don’t have to ditch your office space like Big Moving Picture did in order to survive the recession. To keep its business intact until conditions improved, the San Diego-based company went into “hibernation,” shutting the office, dismissing some employees and going virtual with the rest of the team.

In the recession, virtual means cost efficient, but you need certain tools to ensure it’s also time- and effort-efficient, too.

If you’re one of the growing number of business users carrying an iPhone, you’ll be happy to know that there are several apps available to help with one key area of business: cash flow management.

Quicken – If you use QuickBooks to manage your cash flow, this app lets you look into your balance, latest transactions, enter transactions from the road and see how it’s all performing against monthly budget levels. ($9.95/month per account)

Calc-12E RPN Financial Calculator – If you don’t already know what the HP-12C is, this probably isn’t for you. Based on the most popular portable financial calculator out there, the 12E is indispensable for business owners who need the accountant’s calculator on hand in meetings with investors, in real estate deals and the like. Enter and edit cash flows, add comparative investment analysis. ($19.99 download)

Spreadsheet – You’ll need the spreadsheet app from Softalk. It doesn’t do much on its own, but it will come in handy when you want to review Excel budgets from the road. ($7.99 download)

Credit Card Terminal – If you want to collect payments on the spot – and why not seize the moment when customers are offering – this app, while not cheap, can keep cash flowing. ($49.99 to download, $25/month subscription, and $.24 per transaction)

Omni Invoice – This app allows you to issue invoices from the road. Speeding up the process of getting paid. ($9.99 to download)

When Credit, Not Cash, is King

It might seem strange, in a downturn pinched by a credit crunch, to suggest thinking about credit. But the lag between delivery and payment – that time when you’re waiting on customers and your suppliers are waiting on you — is nothing new. But in tough times, it can get worse, as the domino effect of cash flow hits your supplier – and then you. No doubt you have some reserves on hand (right?) for rainy days like this. But don’t forget about credit – not just a business credit line, but an ongoing business credit card that you can use in a pinch.

There are advantages to both cash and credit, but don’t forget, use of credit can help keep your credit history in good standing, even if you’d rather keep the debt to a minimum in these times. Here are four tips for using credit to help you manage your cash flow and get back to the work of delivering great products and services…

Plateauing is the New Climbing

Let’s face it. While there are some bright spots in the economy (spam, running shoes, gardening seeds, tanning products), most businesses are focused on just covering costs and keeping their business operational, or at least in a holding pattern until the economy works itself out.

To that end, Beth Schoenfeldt, co-founder and chief encouragement officer of Collective-E, which bills itself as an entrepreneur agency, offers these tips for keeping your business healthy through this bumpy ride. The upshot: use this time to hunker down and refocus: