2017
SMALL BUSINESS
RESOURCE
GUIDE
THE ULTIMATE GUIDE FOR SMALL BUSINESS OWNERS
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Welcome to the 2017 Small Business Resource Guide Becoming the owner of a small business can be one of the most rewarding and inspiring experiences of your life. It provides a chance to be your own boss, take control of your financial destiny, and become a meaningful contributor to your local economy. At Anchor Bank we’ve been serving Northwest communities for over 100 years. That means we’re here, sleeves rolled up, ready to work for you because when local businesses succeed, so does our community. It’s bigger than banking at Anchor Bank. It’s about helping our customers, our neighbors, and local businesses thrive. It’s why we invest time and energy into providing the best solutions for
your banking needs. And it’s why we are committed to making the communities we serve better places to live. Anchor Bank is proud to sponsor this “Small Business Resource Guide” edition for 2017 and hope you will find inspiration and ideas on the pages of this booklet. Whether you’re a professional seeking to open a new clinic or office, a builder/tradesperson with a flair for creating exciting new living spaces, a real estate facilitator or a chef harboring a great idea for the next trendy eatery – we want to help you succeed and wish you all the best. Let’s continue building our community and future together.
TABLE OF CONTENTS Sponsor message from Anchor Bank................1
Getting Started
Resources to help open your doors (and keep them open)...........................................2
Planning
Your blueprint to success: Drafting a business plan........................................... 4 Which legal structure works best for your business.................................................5
Financing
Borrowing to grow: Loans available to business By Patrick Holm, Anchor Bank..........................................7 The SBA can help: Guaranteed loans in a nutshell...........................8
SBA loans from a banker’s perspective.............9 By Paul Long, Timberland Bank
Advising
Consultant, advisor, mentor or licensed professional? Which is right? By John Rodenberg........................................................10
Benefits
Employee benefits: Know what you want, get what you want
By Thomas Showater, ConnectHR & Jennifer Bundy Cobb, Wilson Albers & Company..............................................11
Sales and Marketing You can’t manage what you can’t control by Chris Lee, Sandler Training.........................................13 I hate selling (but I want business)....................14 Building your brand
by Shaun Carson, Heritage Bank.....................................16
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GETTING STARTED Resources to help open your doors (and keep them open) No one ever said entrepreneurship was easy. It’s true that starting a business can be done quicker and cheaper in the United States than anywhere else, but that isn’t even half the battle. Keeping the doors open is the hard part — while 70 percent of new businesses are still in business two years later, only 50 percent of businesses are in business after five years. Fortunately, there is a lively local community of organizations in the South Sound that are dedicated to helping the area’s entrepreneurs not only afloat, but thriving. Several of them have contributed wisdom to the pages of this guide, and all are merely a phone call, an email, or office visit away. Whether your target market is just your neighborhood or you’ve got dreams of someday going global, there are resource partners nearby that can help you turn your entrepreneurial visions into an affordable, profitable reality.
SCORE SCORE is a nonprofit organization of more than 12,000 volunteers who provide free, confidential business mentoring and training workshops to small business owners. Some 20 Tacoma SCORE chapter members and others in Olympia offer free one-on-one counseling for starting and growing successful small businesses. SCORE mentors are there for the life of a small business, from creating and evaluating business plans to purchasing equipment, leasing real estate, franchising, even selling and exiting. For more information, check the organization’s website at www.SCORE.org, or the local site at www.Tacoma.Score.org.
Economic Development Pierce County and Thurston County both have organizations dedicated to furthering economic development within their borders. Economic Development Board for Tacoma-Pierce County has worked since 1978
to grow the economy of the South Sound. Its website (www.edb tacomapierce.org) includes a directory of resources to aid entrepreneurs and startup owners, including links to more incubators, advisors and sources of financial and technical assistance. Thurston Economic Development Council likewise has worked to strengthen the local economy since its founding in 1982. As the state-designated lead economic development organization in Thurston County, the EDC maintains the health of local businesses by offering a complete slate of resources and present market opportunities to Thurston County employers. You can find them online at www.thurstonedc.com.
SBDC Washington Small Business Development Center will connect you with a certified business advisor who can help take your business to the next level. See page 12 for more about SBDC services.
Small Business Administration Its website says it best: The U.S. Small Business Administration “helps Americans start, build and grow businesses through an extensive network of field offices and partnerships with public and private organizations.” That vast network starts with a rich collection of articles, blogs, checklists and other documents available on its district website, www.sba.gov/wa. There you can, among other things, find a template for your business plan, get in touch with an SBA lender to help finance the growth of your small business, find a microlender or alternative lender, or myriad other steps to help your small business succeed.
Chambers of Commerce
A local chamber of commerce can be a good “square one” for resources. Most have a common core competency of providing networking and referrals — an excellent way to start laying down roots in your business community. Many also offer educational and informational assets for small business owners looking to make themselves more knowledgeable in a certain facet of entrepreneurship, from leadership development to social media to business growth and everything in between. Auburn Area Chamber of Commerce 108 S Division St. Suite B, Auburn 98001 auburnareawa.org 253-833-0700 Federal Way Chamber of Commerce 31919 1st Avenue South, Ste 202, Federal Way 98003 federalwaychamber.com 253-838-2605 Fife-Milton-Edgewood Chamber 2018 54th Ave E Fife 98424 fmechamber.org 253-922-9320 Gig Harbor Chamber of Commerce 3125 Judson St, Gig Harbor 98335 gigharborchamber.net 253-851-6865 Kent Chamber of Commerce 524 W Meeker St # 1, Kent 98032 kentchamber.com 253-854-1770 Lacey South Sound Chamber of Commerce 8300 Quinault Dr NE Suite A, Olympia 98516 laceysschamber.com 360-491-4141 Lakewood Chamber of Commerce 6310 Mt Tacoma Dr SW, Tacoma 98499 lakewood-chamber.com 253-582-9400 Puyallup-Sumner Chamber of Commerce 323 N Meridian, Puyallup 98371 puyallupsumnerchamber.com 253-845-6755 Tacoma-Pierce County Chamber of Commerce 950 Pacific Ave #300, Tacoma 98402 tacomachamber.org 253-627-2175 Thurston County Chamber of Commerce 809 Legion Way SE, Olympia, WA 98501 thurstonchamber.com 360-357-3362
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PLANNING Your blueprint to success: Drafting a business plan By SCORE Volunteers
Your business plan is a crucial outline for your company’s success. Everyone’s heard of business plans, but you’d be surprised how many entrepreneurs don’t take the time to prepare one. Fortunately, putting one together isn’t as hard as it may seem; it’s a matter of making an honest assessment of what you plan to do and how you plan to do it. A good business plan will project ahead some three to five years, with careful consideration as to how the company aims to increase revenues.
Why a business plan is important The real value of creating a business plan is in the process of researching and thinking about your business in an organized way. Planning helps you to think things through, research the market, and examine your ideas critically. To start, a business plan template suitable for all types of businesses is available as a Word template at www. SCORE.org. It consists of a narrative and several financial worksheets. The body of the business plan contains questions divided into several sections. It also has tips for fine-tuning your plan to make an effective presentation to investors or bankers. If this is why you’re creating your plan, pay particular attention to your writing style. You will be judged by the quality and appearance of your work, as well as by your ideas. When you are finished writing your first draft, you’ll have a collection of small essays on the various topics of your business plan. It usually takes several weeks to complete a good plan. Most of that time is spent in research and re-thinking your ideas and assumptions. That’s the value of the process, so make time to do the job properly. Those who do never regret the effort. Be sure to keep detailed notes on your sources of information and on the assumptions underlying your financial data.
The components of a business plan Executive summary: This often comes near the beginning of the plan, but it’s suggested that you write it last. Explain the fundamentals of the proposed business: What will your product be? Who will your customers be? Who are the owners? What do you think the future holds for your business and your industry? Make it enthusiastic, professional, complete, and concise. If applying for a loan, state clearly how much you want, precisely how you are going to use it, and how the money will make your business more profitable, thereby ensuring repayment. Company description: What business will you be in? What will you do? If you want to draft a mission statement, this is a good place to put it, followed by your goals, your business philosophy (what’s important to you in business), a description of your important company strengths and competencies, and the structure of the company itself (see “Which legal structure works best for your business?” on page 4). Products and services: Describe in depth your products or services. What factors will give you competitive advantages or disadvantages? Examples include level of quality or unique or pro-
prietary features. What are the pricing or leasing structures of your products or services? Marketing plan: It is very dangerous to assume that you already know about your intended market; you need to do market research to make sure you’re on track. Go into depth about your potential customers. What is the total size of your market? What does demand look like? Who are your competitors? Operational plan and organization: Explain the daily operation of the business, its location, equipment, people, processes, and surrounding environment. Financial plan: For many, this is the hardest part of business plan preparation; often, though, it’s often the most key. It should include 12-month profit and loss projection, a four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a break-even calculation. Be realistic, and if you need to borrow money, detail why it’s needed and when it will be repaid. Together, these items will constitute a reasonable estimate of your company’s financial future. More importantly, though, the process of thinking through the financial plan will improve your insight into the inner financial workings of your company. You’ll be glad to have these insights from the start.
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PLANNING From business planning to growth planning Regular business plan reviews are essential once your business is up and running. As your company evolves, there will be more influences on it and the customers you serve, as well as new set of unknowns surrounding the directions in which you want to expand. It’s helpful to regularly engage in some strategic planning and define near- and long-term objectives, the strategy and tactics by which you’ll pursue them, and metrics for gauging your progress. The result is a growth plan, which will provide a road map for the future and position you for new opportunities. Start by comparing the current sta-
tus of your business with your original intent. Are you where you intended to be, or have you modified your mission? What are current strengths, and what areas could be improved upon? Any glaring problems or shortcomings should be addressed as quickly as possible. Also, take a comprehensive look at the state of your market and what is shaping it. Your original expectations may be on target, or there may be emerging trends that will radically alter your industry. Needs and issues facing your existing and target customers should also be examined. With that knowledge, project three years out, and set objectives to keep
your business in step with these trends. What resources will be needed? Where can they be found (for example, new staff, training, upgraded equipment and facilities)? What costs are involved? What kind of learning curve may be required? Develop an action plan for each one with milestones to assess your progress. Your growth plan, like your business plan, is a guide to be adapted as conditions change. You may find yourself ahead of schedule, or dealing with unforeseen factors that require a schedule revision or complete overhaul. But your business can only benefit, as there’s no such thing as too much planning.
Which legal structure works best for your business? From U.S. Small Business Administration
There are four basic types of business entities: sole proprietorships, partnerships, corporations and limited liability companies (LLCs). Other types of entities exist — limited partnerships, professional service corporations and professional limited liability companies — though most small businesses in Washington fall under one of those first four categories. So which one is right for your company? Making that decision is an important step, and to do so, it’s crucial to understand the differences between your options. Per the Small Business Administration: A sole proprietorship is a common, simple type of business ownership. If you are in business by yourself and obtain your business license, you are a sole proprietor. It’s an appropriate form of ownership for many small businesses. For federal income tax purposes, the income from the business flows through to the individual, and is reported on the business owner’s Schedule C. A sole proprietorship offers no protection from individual liability, so it’s essential
for sole proprietorships to maintain adequate insurance coverage. A partnership is similar to a sole proprietorship with multiple individuals involved. If you’re in business with at least one other person, and obtain your business license, you have a partnership. The partnership exists regardless of whether the partners have formalized their relationship by executing a partnership agreement.
A partnership agreement sets forth the rights and obligations of each party, and describe what would happen if a partner dies or wants to sell his or her interest in the business. Similar to a sole proprietorship, a partnership results in federal income tax liability flowing from the entity to the individual partners. A partnership See STRUCTURE, page 6
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PLANNING STRUCTURE continued from page 5 tax return is required, but each individual partner pays his or her share of the business taxes instead of the business itself paying the tax. As in a sole proprietorship, a partnership offers no protection from individual liability. A corporation is formed by filing Articles of Incorporation with the Secretary of State’s office. One or more individuals can create a corporation. A key initial decision in forming a corporation is whether it should be a
C-corporation or an S-corporation. A Ccorporation pays federal taxes both on the corporate level, and on the level of individual shareholders. An S-corporation pays taxes only on the shareholder level. Certain qualifications must be met in order to register as an S-corporation. Unlike a sole proprietorship or partnership, a corporation that is properly formed and maintained can offer protections against individual liability by its shareholders and officers. In order to form and maintain a corporation, you need to retain both an accountant and an attorney to comply with complex tax requirements and corporate formalities set forth in state Revised Codes.
A limited liability company, or LLC, is formed by filing a Certificate of Formation with the Secretary of State’s office. One or more individuals can create an LLC. An LLC may be taxed in different ways. Consult with your accountant in order to make an informed decision about how your LLC will be taxed, and file the corresponding documents with the IRS. Similar to a corporation, a properly formed and maintained LLC can offer protections against individual liability. Also, you need to retain both an accountant and an attorney in forming an LLC. An attorney can help you prepare key documents, including the LLC Operating Agreement.
Other logistical factors to consider From U.S. Small Business Administration
Business licenses: Depending on the industry you’re in and where you plan to operate, your business may be required to have various state and/or municipal licenses, certificates or permits. Those licenses and permits are typically administered by a variety of state and local departments, so make sure to consult your state or local government for assistance. Naming your business: If you’re just starting up, search to determine if the name of your proposed business is already in use. If it is not used, register the name to protect your business. Contact the county clerk’s office in the county where your business is based for more information. If you are a corporation, you’ll also need to check with the state. Employer Identification Number: An Employer Identification Number (EIN), also known as a Federal Employer Identification Number (FEIN), is used to identify a business entity. Generally, businesses need an EIN to pay federal withholding tax. You may apply for an EIN in various ways, including online at www.irs.gov/ Businesses/Small-Businesses-&-SelfEmployed/Employer-ID-Numbers-EINs. This is a free service offered by the U.S. Internal Revenue Service.
Health and safety regulations: All businesses with employees are required to comply with state and federal regulations regarding the protection of employees. The Occupational Safety and Health Administration provides information on the specific health and safety standards adopted by the U.S. Department of Labor. Call 1-800-3216742 or visit www.osha.gov. Business insurance: Buying business insurance is among the best ways to prepare for the unexpected. Without proper protection, misfortunes such as the death of a partner or key employee, embezzlement, a lawsuit, or a natural disaster could spell the end of a thriving operation. Ranging from indispensable worker’s compensation insurance to the relatively obscure executive kidnapping coverage, insurance is available for nearly any business risk. Considering the multitude of options, carefully weigh whether the cost of certain premiums will justify the coverage for a given risk. For more indepth discussion of the various types of business insurance (as well as other logistical factors for small businesses, including intellectual property, taxes, franchising and more), check the SBA’s website at www.sba.gov.
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FINANCING Borrowing to grow: Loans available to small business
By Patrick Holm VP, Business Banking Officer Anchor Bank
At certain stages, growing a business requires additional capital. In order to increase revenue, a company may need to invest in property, equipment, supplies, inventory, staffing or something else, but may not have the financial resources to do so. At these times, taking out a loan is often the key to unlocking future growth. Businesses facing these situations have a number of loan options to choose from. Here’s a brief look at the different types of loans businesses can use to help manage growth.
Private loans from non-traditional lenders The easiest loans to get are from nontraditional lenders. Because these lenders don’t have to hold borrowers to the same
requirements as banks do, they’re able to offer faster approval times and underwrite loans to businesses that aren’t able to qualify for other loans. Loans from non-traditional lenders come with a serious drawback, though. They typically have high interest rates. In some cases, the rates can be double or triple those of loans offered by banks, or even higher. Businesses that only qualify for these loans may want to reconsider borrowing capital. While investing in growth is tempting, companies that can’t qualify for other loans are deemed high-risk prospects and are likely not in a position to take on more risk--even if that risk promises a potential reward.
SBA-guaranteed loans from banks and community lenders The Small Business Administration (SBA) doesn’t underwrite loans, but it guarantees several types of small business loans and provides funding for microloans. In general, small businesses in the United States qualify for these programs. (There are a few specific requirements. For example, businesses
can’t be delinquent on any debt owed to the federal government.) For more on SBA loans, see page 11.
Other loans from banks In addition to the SBA-guaranteed loans, banks also offer a variety of non-guaranteed loans. Some examples of these loans banks offer include: Commercial real estate loans, which can be used to purchase or renovate a commercial owner occupied or non-owner occupied building • Equipment loans, which can be used to pay for purchases of equipment • Unsecured loans, which have few restrictions on how funds are used and can provide financing while preserving business working capital • Lines of credit, which can provide a flexible financing option to utilize as needed. The business owner can decide how much to borrow and how quickly to pay off the balance. For help finding a loan, business owners should sit down with a knowledgeable banker. A banker can explain all of these programs in greater detail and help with selecting the best option.
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FINANCING The SBA can help: Guaranteed loans in a nutshell From U.S. Small Business Administration If you’re planning to start a business or expand an existing business, you might need financing help. SBA participates in a number of loan programs designed for business owners who may have trouble qualifying for a traditional bank loan. To start the process, you should visit a local bank or lending institution that participates in SBA programs. SBA loan applications are structured to meet SBA requirements, so that the loan is eligible for an SBA guarantee. This guarantee represents the portion of the loan that SBA will repay to the lender if you default on your loan payments. The SBA Loan Application Checklist provides a listing of forms and documents you and your lender will need to create a loan package to submit to SBA. That checklist is available online at www.sba.gov.
Loans for starting and expanding businesses Basic 7(a) Loan Program – This type of loan is the most basic and the most used within SBA’s business loan programs. Borrowers must apply through a participating lender institution. Certified Development Company (CDC) 504 Loan Program – Provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. Microloan Program – Offers very small loans to startup, newly established or growing small businesses. SBA makes funds available to nonprofit community-based lenders which, in turn, make loans to eligible borrowers in amounts up to a maximum of $50,000. Applications are submitted to the local intermediary and all credit decisions are made on the local level.
Export Assistance Loans Export Express – Provides exporters and lenders with a streamlined method of obtaining financing for loans and lines of credit up to $500,000. Lenders use their own credit decision process and loan documentation; exporters get access to their funds faster. SBA provides an expedited eligibility review with a response in less than 24 hours. Export Working Capital – Offers loans targeted at businesses that are able to generate export sales but need additional working capital to support these opportunities. International Trade Loans – Gives term loans that are designed for businesses that plan to start/continue exporting or those that that have been adversely affected by competition from imports. The proceeds of the loan must enable the borrower to be in a better position to compete. CAPLines – Help small businesses meet their short-term and cyclical working-capital needs through the SBA umbrella program called CAPLines.
What a lender looks for in an SBA loan request Established Business 1) Current business financial information: Prepare a current balance sheet and an income (profit and loss) statement for current year up to the date of the balance sheet. 2) Historical business financial information: Prepare income statements and balance sheets for the past three full years. Do not include personal items on the statements. Reconcile the equity balances between each year. 3) Prepare a month-by-month projection of revenues, expenses and profits for the next twelve months. Also do a companion cash flow projection for the same period. Explain your major assumptions in an accompanying narrative.
4) Prepare a current personal financial statement for each owner, partner, or stockholder owning at least 20% of the business. 5) List the collateral to be offered as security for the loan, with estimates of the market value of each item. 6) State the amount and intended uses of the loan. 7) Take this material to your banker.
New Business 1) Describe in detail the type of business to be established. 2) Describe your experience and management credentials. 3) Prepare a detailed estimate of the capital you need to start. State how much you have and how much you
need to borrow. 4) Prepare a current personal financial statement, listing all personal assets and liabilities. 5) Prepare a month-by-month projection of revenues, expenses and profit for the first twelve months. Also do a companion cash flow projection for the same period. Explain your major assumptions in an accompanying narrative. 6) List the collateral to be offered as security for the loan, with estimates of the market value of each item. 7) Take this material to your banker.
Source: Small Business Administration Fact Sheet
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FINANCING SBA loans from a banker’s perspective By Paul Long VP, Business Banking Officer Timberland Bank
As a lender, it’s absolutely humbling to hear stories about how people have sacrificed in order to achieve their dream of entrepreneurship. And as most business owners know, the biggest issue small businesses face is getting access to capital. Fortunately, the SBA works with banks in order to provide a loan guarantee to assist banks in making certain loans to small businesses when they don’t conventionally qualify. For larger loans (like for business ac-
quisitions or expansion), SBA has two popular lending programs: 7(a) and 504. SBA 7(a) —- This program allows small businesses to finance inventory, working capital, vehicle and equipment purchases, business acquisitions and more. An average SBA 7(a) loan term (that doesn’t rely on real estate) are up to a 10 year term with market rates typically in the 4-8 percent range. SBA 7(a) can also be used for real estate with terms up to 25 years. For borrowers who are seeking loans under $350,000, the SBA Small Loan and SBA Express program has increased overall efficiency with less paperwork the borrower needs to fill out and quicker turnaround times. With an average 7(a) loan amount around $350,000, this small loan program can really assist businesses get capital that they need quickly.
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SBA 504 — This program is great for business owners looking to purchase large equipment or owner-occupied commercial real estate. An average SBA 504 Loan allows the borrower to have as low as a 10 percent down payment, which keeps more capital in the business. The SBA lender then provides the funding for 50 percent of the loan and a Certified Development Company (a.k.a. the SBA portion) finances 40 percent. The best part of this program is that the SBA/CDC portion of the loan typically has a 10 or 20 year fixed interest rate. To qualify for either, your company must do the following: • Be an organized, for-profit business. • Be a sole proprietorship, corporation partnership or limited liability company (see page 7). See LOANS, page 10
• BUSINESS EQUIPMENT & VEHICLE TERM LOANS • SBA 504 & 7(a) LOANS • BUSINESS LINE OF CREDIT • COMMERCIAL REAL ESTATE • BUSINESS ACQUISITION FINANCING • BUSINESS CHECKING ACCOUNTS • MERCHANT SERVICES & CASH MANAGEMENT
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ADVISING Consultant, advisor, mentor or licensed professional? Which is right? By John Rodenburg Certified Business Advisor Washington Small Business DevelopmentCenter
It’s a question that can be daunting for any entrepreneur searching for advice. My answer, as a certified business advisor with the Washington Small Business Development Center would be. “At different times, all of the above, and more!” This is based on my experience as a certified business advisor for over 10 years. having worked with over 1,000 clients. See our website, www.wsbdc.org, to arrange a no cost, confidential appointment with an advisor.
Definitions Consultant — an industry or business expert who studies or analyzes your situation, process or environment and provides an authoritative report, usually for a fee. Advisor — a one time or ongoing engagement with a person who has experience and skills in the business world, and access to data, research and other professionals to help you generate alternatives, solve problems and manage your business. A fee may or may not be involved. SBDC does not charge for the advisors’ time. Mentor — Supports a no fee one-on-one relationship over an extended time, to assist
LOANS continued from page 9 • Have a net worth no greater than $15 million and average net profits (after tax) of less than $5 million in the last two fiscal years. When applying for SBA loans, banks still look for the 5 c’s of credit: Character-Having good credit personally and for the business will always be a big deciding factor in getting a loan. It is important to check your personal credit
you with the formation, growth and management of your business. Larger organizations have internal mentors, but as the leader of a small business, you will need to find an external mentor. Licensed Professional — engaged for a fee for a specific purpose, on a retainer, to provide advice and guidance on legal, accounting, insurance or other issues. This article focuses on the advisor function, but all of these are necessary tools. The successful small business owner will learn how/when to reach out to each as needed.
Examples of business advising Business advising can cover any of the five functional areas of business: operations, human resources, marketing, financial and legal/organization. As you might expect, what a business owner does in one of these areas affects the others, so it is often important to have an unbiased, or outside, set of eyes and ears to provide feedback and act as sounding board. Also, small business owners often don’t have time or resources to do extensive research. The SBDC has access to many nationwide sources of data, such as Fintel, RMA, Reference USA and IBIS, which are also available at your local library. This structured data helps in decision-making and focus. A couple of examples will give you an idea of how an SBDC advisor can assist you: • Ray is an owner/operator licensed contractor in start-up year one. He sought marketing advice from me initially, and we devel-
each year. Capacity- Be able to show you have a financial plan or historical proof on how you plan to pay back the loan. Having multiple sources of repayment is always a plus. Capital- Lenders will always look to see how much cash or equity you put into the project. There are very few 100% lending programs for businesses available. Collateral- Even though the SBA can be flexible with collateral, having some collateral is still required. Conditions- How you are going to use
oped a plan with a sales goal that is tracked monthly. I also recommended cash basis accounting in QBooks and his outside bookkeeper agreed. In reviewing monthly P&L and AR, we noted a large 90 day receivable of $8K, and collection would be very helpful. I referred this client to three attorneys who specialize in construction disputes and collection. Estimating, bidding and profit planning are other areas we are addressing now. • Eli had worked as a VP for a medium sized supplier of technical talent to major corporations, for years. The owner wished to retire and Eli was offered the opportunity to buy the firm, which he wanted to do. Eli looked for outside advice to help him chart a course with a three year timeline, to be in position to purchase the business. We discussed asset vs. entity purchases, I found reliable reading material on the subject, developed a business plan, discussed equity and debt mix, and when time came to apply for an acquisition loan, three lenders were referred. Eli received attractive options for six figure term loans and he selected the best one.
Selecting an advisor Write down your key needs or “pain points”. Then, note your timeline and budget. Then, ask SBDC for referrals and research providers. Interview each and ask for background and references. Lastly, be prepared to contribute to the process (since you are the expert in your business), Get down to work following the plan you develop, and evaluate progress as you go.
the loan funds is also important. Make sure you have a solid budget and business plan. When you are ready to take the next step seeking capital for your business, make sure to reach out to a local lender – a bank with experience. The SBA has also made it easier to connect borrowers with local SBA lenders with a service called SBA LINC. (www.sba.gov/tools/linc) Borrowers answer a few questions about your business and in as little as two business days, hear from local SBA lenders interested in your request.
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BENEFITS Employee benefits: know what you want, get what you want By Thomas Showater Human Resources Director ConnectHR a subsidiary of Wilson Albers & company
Jennifer Bundy Cobb Health & Welfare Services Director Wilson Albers & company
You’ve got your company set up, your business plan has started to pay off, and you’ve started making some profit. Great! But now, you need to take care of employees, and that means benefits. They’re crucial for you and your workers, and the regulations about them can, approached
with no context, be daunting and overwhelming. Where do you even begin?
Know What You Want Stop. Forget for a moment what the feds are requiring employers to do with benefits. Don’t worry about compliance. Don’t worry about procurement.(Yet.) Instead, ask yourself: what do I want to accomplish with benefits? Do I want them to be a differentiator when competing for talent? Do I want benefits to help attract a certain type of individual? Are benefits part of my strategy for helping employees to focus on customers versus their own financial or health challenges? Or do I want to do the bare minimum to meet compliance requirements and minimize my benefits spend? The answers to these questions will be the foundation of your benefits strategy
and product specifications, and will also, like shopping for a vehicle, help you focus on what to shop for, whose help you need in selecting the vehicle, where to find it, and how to buy it. If you need a rugged vehicle to haul supplies on rough roads, the Porsche Boxster is off the table.
Involve Your Internal Stakeholders and External Resources Involving the right stakeholders and external resources is a big part of both knowing what you want and getting what you want. Internally, you’ll want your management team (they’re the ones leading your workforce), HR (your in-house experts on employment matters) and finance (benefits are a big part of your budget). See PEOPLE, page 12
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BENEFITS PEOPLE continued from page 12
Next, it’s likely you’ll want to consider an advisor. If you are a real DIY person, then working with vendors that primarily interface through the Internet may be your best option. If you are the kind of person that likes to build things yourself, there are lots of self-help benefit and HR solutions embedded into tools that come with payroll and HRIS systems. However, if you’re like a lot of us, you are the expert at what you do and not the expert of employee benefits. Like many other industries employee benefits is getting more complex every day. As an example, Wellness Programs have oversight from six major governmental agencies, as well as a few smaller ones. Keeping track of things like this can be overwhelming and having a professional on hand to help you may be the route to take. An employee benefits advisor these days is different than advisor of yesterday who lined up a few options and brokered a deal with carriers.Today’s advisors should be providing a full gamut of services, ranging from advising you on strategy, helping you navigate shifting and onerous compliance requirements, guiding you on selecting the right benefits designs and providers to execute your strategy, and ensuring that services
are delivered to your employees as you envisioned. A good advisor brings lots of specialized experience and expertise, as well as the support of back office resources and tools that employers don’t have access to on their own. A good advisor acts as a welcome extension of your own team. How do you select the right one to help you? Like developing your benefits strategy, ask yourself a few questions. Do I want an advisor familiar with my local market? Do I need an Advisor familiar with employers of my size? (Yes, size matters – as you cross 20, 50, 100 employees, different regulations kick in and advisors used to dealing with micro or very large accounts may lack experience.) What services and support do I need for compliance? Are employee communications important? Is support in resolving benefits-related issues desired?
Get What You Want (And Don’t Forget About Implementation) Now that you know what you want and have your team assembled, it’s time to go shopping. The good news is, you’ve already done most of the work at
this point. Assuming you made the decision to use an Advisor, your Advisor will seek out the benefits programs and carriers that are the best match and value for what you want. You will have a short list of recommendations from which to choose. Once you’ve made your selection, your Advisor will guide you through finalizing the purchase and move on to the next stage: implementation. You only get one shot at a first impression, and how you implement your new benefits will have an enormous impact on how they’re perceived by your employees. Going back to why you’re offering benefits, its likely recruitment and retention were big factors. There are three big keys to a successful implementation: Good product, great communications, and competent administration. You’ve already covered good product. During implementation, you’ll want to work closely with your internal stakeholders and your advisor to ensure great communications. Usually that’s a combination of electronic (emails, website content) and in-person (staff meetings, enrollment meetings) interactions with your employees. Sometimes it’s a good idea to invite spouses, too – benefits are usually household decisions. And lastly, competent administration. Once employees understand their options and make their elections, providing the right information to carriers and payroll (for deductions) is paramount. Everyone expects to get what they ordered at the price they were presented. Here too, your internal team and advisor will want to cooperate. Your advisor can help ensure carriers are receiving the correct information, and address any issues that may arise before they become bigger problems. Now that you’ve figured out what benefits you want and gotten them, it’s time to reap the rewards. You’ll find it easier to recruit and reward employees who are focused on realizing your vision for your business.
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SALES & MARKETING You can’t manage what you can’t control By Chris Lee President Sandler Training, Olympia
Most managers plan. They set a goal for the year, work out how much revenue they need to achieve it, and then set sales quotas accordingly. Each month they ask their sales people whether they will hit their quota and which sales are going to close. As the month proceeds, they ask whether everything is on track to close and then put on the pressure towards the end of the month to make sure the salespeople are doing everything possible to close the prospects in the pipeline. Here’s the problem. By concentrating on the pipeline, we see our prospects as a rare commodity. There are only seven prospects in the pipeline and we need six sales. We
have to do whatever is necessary to close those deals. Frequently, “everything necessary” includes giving the store away in discounts, extra goodies, expedited delivery – all things that eat away at our profit. Imagine you have a sausage machine. If you wanted to increase the number of sausages it produced, where would you focus? On the nozzle where the sausages come out? I guess you could stand there saying “Come on, come on, you can squeeze out another one.” How would that help? Or would it make more sense to focus on the funnel where the meat goes in? Perhaps you’d even look to the delivery vans that brought the meat or even the team that orders the meat. The same logic applies to sales. You can beat your salespeople with a stick to try to get them to close the few deals that are in the pipeline or you can focus on where those deals came from and apply some science to the problem. It looks like this.
Over the last two years, our 8 salespeople have closed 137 deals between them (significantly less than the 250 deals we planned for). Having done a little research, we found that on average, it took 4 first appointments to get a sale (around 530 first appointments were booked). Between trade shows, inquiries and cold calls, we had a little over 2,000 conversations to get those appointments so we’re averaging around 4 conversations per appointment. Hmmm. So we need something like, on average, 16 conversations per sale. Interesting. Now here’s the sciency part: 125 sales per year means a little more than 10 sales per month. That means, wait a minute, we need to have 40 new conversations per week, or 5 per salesperson. If that was happening, we’d be getting 10 first appointments every week and, on average, 10 sales per month. I can feel my blood pressure dropping already. Let me think about this. Perhaps if we set See MANAGING, page 15
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SALES & MARKETING I hate selling (but I want business) By Chris Lee Sandler Training
There are two kinds of people who sell: those who live to sell and those who sell to live. If you’re in the first group, you probably get paid commission to sell. You can’t wait to get up in the morning and hit the road, embracing the challenge and always hunting for the next close. You love to fail because every failure brings you closer to the next success. Most people, though, are in the second group, including business owners who can’t afford to hire a dedicated sales force and solopreneurs who thought that if they hung up a shingle, people would come. Whether you’re a financial advisor, a realtor, a lawyer, a dentist, an HVAC installer or a plumber, you have to sell whether you like it or not. Maybe nobody told you you’d have to sell when you started out in your profession but by now you’ve come to realize it’s not optional. When I talk to people in that second group and I ask them what it is about selling they don’t like, they typically mention the same few things. “I hate to put pressure on people,” or “I feel a lot of pressure myself when I’m selling,” or “I’m uncomfortable talking about money.” Maybe even “I don’t know how to do it effectively,” or “I hate rejection.” Imagine if you could solve all those problems just by changing your approach — a sales process where the buyer said to you, “I really want this. Please take my money.” I’m going to give you a six-step road map to get there. Buckle up, pay attention and hold on tight. 1. Figure out all you can about your prospect. Are they a quick decision maker, an easy-going type who’ll buy from the person they like best, someone who is concerned about the impact and risk of buying, or someone who wants a-l-l the details before they can move? If you can’t figure that out, they’re probably not going to listen to you for long because you’re not speaking their language. You need to adapt to their style if you want them to open up to you. 2. Establish ground rules for every meeting. (How long do we have? What are you hoping to get out of the meeting? Here’s what I want to get out of it. At the end, these
are the things that can happen (you say no, I say no, we both say yes).) Get agreement so there is no mutual mystification. 3. Ask a lot of questions. People buy emotionally and that means we have to help them get in touch with their feelings. Most buyers hold their cards close to the chest and you will have to be patient and ask emotion-triggering questions in a nurturing, supportive way to get them to open up. Of course whatever they’re telling you, they’re also telling themselves. And that means they’re selling themselves. 4. Once you’ve established they have an emotional reason to buy and they’ve got it front and center, it’s time to ask them how much they would be willing to spend to fix the problem. (Note that this has nothing to do with your price. We’ll get to that later.) This may not be only about money. There are other things people have to invest such as time, resources, inconvenience and, perhaps the toughest, change. Most people don’t have endless buckets of money, so make sure you have a clear understanding of what they’re NOT going to be able to do if they give their money to you. People can love your product and think the price is perfectly fair, but they still won’t buy if it means they won’t be able to go on that vacation. 5. We’re starting to feel good because we have someone who is willing and able to buy.
Now we have to figure out how that’s going to happen. Who will be involved in the decision? What is the decision process? When and where will the decision be made. Keep asking questions until you have a clear picture of how you get from here to the bank (with the check in hand). 6. You may have noticed that we’ve come all this way and it’s all been about the prospect. She’s already on board but what haven’t we done? Close? On what? We haven’t done a presentation. Now’s the time. Get your dog and pony out and do your song and dance but ONLY where it applies to the emotional needs we talked about back in step 3. Now we can reveal our cost, knowing it is within their budget (see Step 4 above). Now is not the time to tell them about your other products or services. Sell today, educate tomorrow. As you show them how your product or service will address their pain, ask them where they are. Don’t wait for the big close to find out if they’re going to buy. When they tell you they’re ready, don’t ask for the order. That puts way too much pressure on them and you. Just ask them what they’d like you to do now. If you followed the plan up to this point, they’re going to say something like “Well, do I give you a check?” Doesn’t that sound like a less painful selling process than what you’re doing right now? Give it a try on your next sales call.
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SALES & MARKETING MANAGING continued from page 15 our sales people behavior goals, instead of revenue goals, and measured them to make sure they were doing their behavior, we would actually hit our numbers without worrying and without having to sell our first-born to get the orders in when we need them. It’s easy enough to see whether a salesperson is having 5 conversations a week. It’s then equally easy to see if that is turning into 5 appointments a month. We know that, if that is happening, there is a really good chance that, over time, we will average 10 sales a month and hit 125 for the year. Now we may not hit 10+ in any given month, but we know it will average out because the numbers prove it. Which means that we don’t have to jump through hoops and promise the moon to get an order. We should be close enough to our targets that if one or two slip into the next period it won’t be a catastrophe. Think about this. If you know that your people are consistently and effectively prim-
ing the pump, doesn’t that lower your stress level? If you see that one of your people is missing their behavior goals consistently, you know they’re not going to make their num-
bers at the end of the year and you can take action. It’s much harder for a salesperson to say”It’s not my fault I didn’t do my behavior” than “It’s not my fault my sales didn’t close.”
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SALES & MARKETING Building your brand: Message effectively By Shaun Carson Vice President, Marketing Manager Heritage Bank
What is your brand? It’s the identity of your business. It is your values, your unique characteristics and what you do. Here are some things that can help you market your brand to your customers and others:
Think of your brand as a person. To be successful in branding your business, you must think of your brand as a person. When you mention the character of a person, what words do you use? It’s the same with your business. What is its character? Is what you do and say portraying the character of your business?
Be consistent. Your customers count on your brand, so make sure you are consistent in how you display and project it. Always display quality in the look and feel of anything you market. Also, remember to project the tone you desire in everything that touches the media – and in how you and your employees treat customers.
Stay relevant. Your brand must be relevant to the customer. Specifically, your brand must be competitive, credible and current, or you’ll lose the customer’s interest. You can’t just slap a logo on everything you do and think people will come to you for business. You must be out there — selling your brand, giving your customers confidence to look to you in the future. And, when the market changes, you need to find your place in the new market.
Be innovative and bold. Part of the beauty of your brand is its uniqueness in the marketplace. So sell that!
And remain flexible by continually meeting (and exceeding) the needs of your customers. Stay away from doing things as “you’ve always done them.” That may work for a while, but you need to stay fluid in an ever-changing market. Your brand distinguishes you from other businesses in your community and in your industry. Consistently seek feedback from your customers to make sure your brand is doing what it says it will do. Remember that everything you and your employees do should reflect your brand, so pay attention regularly to what you promise, what you do and what your business looks like in the marketplace — and don’t be afraid to adjust when necessary.
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