Whenever I have the opportunity to take business trips, I’m often stunned at the endless opportunities to rack up expenses.  Tickets.  Meals.  Cab fare.  Hotels.  Entertainment.  Pretty much anything in an airport.  Sure, most of these expenses are tax deductible, but they still eat directly into the bottom line of a small business.

After one particularly painful business trip in 2007, when I found myself spending a shocking amount on food, drink, lodging, and transportation fees, I resolved to never fall into that trap again.  I sat down, took a serious look at my business travel expenses, and found several ways to

Flash forward one year.  In 2008, I took a nearly identical trip and found myself spending almost $400 less than before without reducing the effectiveness or enjoyment of the trip one bit.  That $400 wound up covering some design expenses that helped create a much more attractive public face for one of my businesses and has created lasting traffic.  In your world, $400 might do any number of things – buy advertising space, invest in infrastructure, or reach out to clients.

Here are eight simple rules for practicing effective frugality while traveling on business.

Plan around public transportation.  Before you leave, figure out how to get to your hotel using public transportation in the city, print out the route, and keep it with you.  Do the reverse for the return trip as well.

“Buddy up” at larger meetings and conventions.  If you already know people who are thinking of attending the same meeting you are, consider “buddying up” with them.  You can share hotel rooms and perhaps other transportation costs, plus you have someone to converse with during the travel. read more

Planning for growth in the post meltdown economic climate:

Growth should generally be a key focus for business but the current strained economic conditions mean that for many businesses simply keeping above water is a major challenge. Also, some recent examples of irresponsible behavior by corporate leaders have led to great concern among customers and a desire for signs that businesses are practicing *responsible growth* and long term, *sustainable* corporate architectures.

Responsible practices and long term growth have been great basic business principles for some time, but have become especially valued by your clients, customers, or prospective business associates given the current economic climate. Luckily for the small and medium sized business, responsible rather than reckless spending and adopting a long term rather than short term focus are likely to prove even more valuable now than before.

What kinds of expansion are justifiable?

Flexibility is extremely important when times are tough. It is justifiable to expand your business to be more flexible as you face uncertain challenges. Also, expanding for flexibility may allow you to capture or create new markets for your goods or services, or even develop new goods and services. Even as business in general has stopped the dramatic expansion of the last 10 years, the pace of technological innovations remains very fast. This creates both challenge and opportunity for you and your business.

Generally expenses related to significant quality enhancements and product improvements should prove justifiable even during challenging revenue times because they help protect both short and long term business prospects and help to build the long term reputation that is important to your success.

Another expansion focus can be real estate. In many areas of the USA as well as cities around the world real estate values for some types of properties have fallen dramatically and there may be opportunities to reduce lease costs or buy properties to enhance your businesses viability. A caveat here is that prices of commercial real estate in many areas have not fallen nearly as dramatically as home values, so all other factors equal this is probably not a great time to be buying commercial real estate unless the price is very right for you. It is a great time to renegotiate your leases and other real estate service arrangements. Rent costs in many cases do not reflect current reduced values and you should be asking your landlord to price according to those reduced values and the fact that vacancy rates are higher and rising, making you and other reliable renters even more important to your landlord. read more

Let’s jump right to the question that every woman entrepreneur who’s thinking about starting up a business in today’s economy wants the answer to: “Should I start up now or wait six months?”

On one hand, you might be thinking that starting up your business in this economy would be a risk. On the other, you might be hearing buzz that the U.S. is beginning to come out of the recession, which would mean that starting up now would put you on the leading edge of post-recession confidence.

How do you decide what to do?

Regardless of when you start up your business - in a strong or weak economy - it’s important to be aware of the following 10 economic indicators and their forecast for the next six months.

10 Economic Indicators to Consider When Starting up Your Business

• Personal Income
  Personal income is down from where it was a year ago. However, it seems to be at the bottom and will increase slowly to the end of the year.
• Unemployment
  Unemployment is on the rise and will continue to be a concern, increasing from 9.4% today to nearly 11% by the end of the year.
• Outstanding Consumer Credit
  Credit card debt has been on the rise each month for several years. It reached its peak in January 2009, and then began a gradual decline. It has now reached a plateau and is not expected to alter significantly over the next six months.
• Housing Values
  The value of homes across the nation has, in general, seen a 15% decrease during the last year and a 32% decrease from the high in 2006.
• Inflation Rate
  Some good news is that the inflation rate has been stable and should not impact the economy adversely over the next six months. read more

Some businesses try to encourage early payments from customers by offering what are known as trade terms.  Typical trade terms might be 1/10/30.  Those terms mean that the buyer gets a 1% discount if paying within 10 days, and the balance is due in 30 days from the date of the invoice.

Sounds simple enough, right?

But I wanted to know if trade terms work in the real world, especially from the point of view of the company extending the trade terms.  So I asked John Mariotti, President and CEO of the Enterprise Group, and formerly the CEO of Huffy Bicycles.  He’s had a lot of commerce experience, both as buyer and seller.  Here’s what he had to say:

Question:  Why do sellers offer early payment discounts?

Mariotti: There are five reasons the seller would be willing to offer a discount to encourage early payment:

• Companies want their money.  It sounds simplistic — but isn’t.  Getting paid early is important in business.
• They want their money ahead of other people.  The buyer may not have enough money to go around.
• The longer it takes, the greater the risk that something happens and you don’t ever get your money.  The earlier you get paid, the less risk.
• It helps you from the perspective of working capital.  The more money you have in hand, the less need to find working capital from other sources.
• It lowers your costs of borrowing and can even substitute for loans.  The more money you get in hand, the less you have to borrow. This is important in times when it’s hard to borrow money or interest rates are high.

Question:  Is there ever a downside to offering discounts for early payment?

Mariotti: Yes.  Consider:

(1) Discounts cost you money.  Again, it sounds obvious — but discounts add up. A 1% discount for monthly invoices amounts to 12% interest a year.  A 2% discount, as some companies offer, would amount to 24% interest.

(2) Look out for the “double whammy.”  If you are having trouble getting a buyer to agree to a price increase, you might attempt to negotiate by offsetting the increase with an early payment discount. But the customer may squeeze you over price AND expect the discount — and still pay you later. read more

Most advice to entrepreneurs focuses on what they should do: build a great product, assemble a great team, provide great service. All are “duhisms.” Unfortunately, many entrepreneurs don’t realize that there are things they should specifically avoid doing too. These are also duhisms, but somehow no one ever talks about them. Here is my list of the twelve most important things that entrepreneurs should not do.

1. Don’t worry, be crappy. Perfectionism, first of all, is an illusion. Nothing is perfect. Even worse, perfection stands in the way of revenue and truly learning what customers think because nothing is in their hands yet. When your product is “good enough” (but not “perfect”), ship it, and see what happens.

2. Don’t give out lofty titles. Just because a roommate was there during the drunken weekend when you came up with the idea for your company, doesn’t mean he should be CTO. Someday, you’ll need to hand out titles like director, vice-president, and chief whatever officer, so keep them in reserve. Until then refer to each other as “co-founders” and describe the area of responsibility: for example, “programming.” If your roommates aren’t cool with this, they’re doing you a favor by showing their colors now.

3. Don’t hire your family. The probability that your spouse or relative is the best person you can get for a job is 0%. The probability that people will hate working at company with spouses and relatives is 100%. The probability that one of you will have to go someday is also 100%. Never hire out of expediency. Always hire the best person you can get. This usually means not hiring your family unless you’re Jack or Suzy Welch.

   By the way, if you both hire your family and give them a lofty title, you are truly a bozo.

4. Don’t sweat valuation. This is easy for a venture capitalist to say, but your company is either going to die or make you more money than you imagined. Whether you have 10% or 15% and whether your pre-money valuation is $2 million or $3 million isn’t going to really matter. Do the math: 15% of $0 is $0, so stop negotiating, take the money, and build something that’s worth more than $0. Whatever valuation a venture capitalist offers you, increase it by 20% and counter her offer. This is just enough to show that you’re not a pushover, but not too much that it will prolong or blow up the negotiations.

5. Don’t believe venture capitalists. Having said that you shouldn’t sweat valuation, you shouldn’t believe venture capitalists. It’s not that we’re all liars—we just don’t finish our sentences. Rule of thumb: add “as long as things are going well” to everything a venture capitalist tells you. For example, “I am investing in your team” or “I will be there for you.”

6. Don’t create lofty forecasts that you call “conservative.” You know you’re pulling numbers out of the air. We know you are too. You know we know. We know you know. So why would you forecast the fastest ramp in the history of capitalism? (It’s more likely that I will play in the NHL than you will achieve $2 billion in sales in year four.) Just project $25 million in year four, and we’ll all be in agreement about your lie.

7. Don’t believe that the exception is the rule. This is called the Twitter Effect. It goes like this, “We’re focusing on usage and eyeballs like Twitter. We’re not that concerned about revenue right now. Look how valuable everyone thinks Twitter is. We’ll be just like that.” Twitter is the exception. Facebook is the exception. YouTube is the exception. There, I listed all the exceptions. Everyone else needs revenue asap, or you will #fail.

8. Don’t focus on partnerships. “Partnership, noun, a relationship between two parties that does not increase the profitability of either.” If your partnership doesn’t cause you to edit your Excel spreadsheet, it’s meaningless. Focus on customerships, not partnerships if you want to succeed. When you’re a big, dumb, slow-moving company, then fabricate all the partnerships you want.

9. Don’t build out your infrastructure. Sure, your conservative estimate is for a growth curve that makes Twitter’s look like a blip, so you need customer service, technical support, and racks of servers. I’ve never seen a company achieve even its “conservative” projections—I take that back: I’ve seen plenty of companies reach their overhead projections. The odds are that you’ll run out of money before you’ll run out of infrastructure.

10. Don’t assume you’ll ever raise another round. Most projected timelines should contain a event that’s called “This is where the miracle occurs.” A much better assumption is that no miracle occurs, it takes years of grinding it out to succeed, and you’ll never raise another dime, so you must reach profitability with what you already have. Miracles happen in movies, not startups.

11. Don’t compare your intentions to other employees’ results. Most people compare their intentions to the results of others. In this way, you’re never at fault or a failure. For example, you intended to ship on time, but the sales gal didn’t achieve her expected results. The effect of this is poor morale and chasms between people. You need to face the facts: you probably delivered less than you intended. Maybe others did too, but at least you’ll be more humble.

12. Don’t ask people to do something you wouldn’t do. This is the Golden Rule of business. If you wouldn’t fill out ten fields of information and provide a credit card number for a free password, don’t expect your customers to. If you wouldn’t work on weekends stuffing envelopes, don’t expect your employees to. If you wouldn’t invest in your company, don’t expect venture capitalists to.

Now sign here:

I hold these Don’ts as self-evident and necessary and proper to the creation of our company.
______________________ this first day of July, 2009.

Yes, I realize there are only ten cracked eggs in the picture. I couldn’t find one with a dozen nor reduce the Don’ts by two. And if you’d like to read much more about startups and entrepreneurship, go here.

One of the biggest threats to any small business is a disaster. And as fast as you can say business disaster, your business can go up in smoke. Most small business owners think a business disaster won’t happen to them so they never take the time to plan. But the statistics tell a different story.

According to the Institute for Business and Home Safety (IBHS), about one fourth of all businesses that close because of a disaster never reopen. That is a startling statistic.

Consider what happened a while back to a local family business in my city. A carpet store that had been in business for thirty long years burned to the ground. Gone were thousands of dollars worth of equipment and carpet, plus two smaller businesses that were housed in the same building. Luckily the owners had plenty of business insurance to cover their physical losses. But they lost their most important business asset - customer records - because of failed back up systems. They thought they did the right thing by backing up their computer systems every night. But they forgot to test whether the back up would work. And it didn’t. Rebuilding their customer base will be tough and the long-term revenue impact is hard to measure. But you can bet it will be tough for them.

With disasters like hurricanes, tornados, fires, floods and terrorism, to name a few, it’s critical for small companies like yours to have a disaster plan. read more

If you’re running a small business today and aren’t thinking about how to tighten your belt, you are surely in rarefied company. But if you’re like the rest of us, you’re scrambling to cover expenses, pay bills and make payroll.

We asked Wharton lecturer and small business expert Robert Chalfin, about cost-saving strategies for small- to mid-size businesses. Chalfin is quick to point out that while there are no single solutions, there are numerous steps entrepreneurs can take to cut costs during the current recession.

“Think through the ongoing monthly expenses.” says Chalfin. “You could have a service contract you don’t need or can be reduced. You might have insured your computer equipment years ago when a PC cost $4,000 or sold some of the property that you continue to cover.“

Chalfin recommends reviewing your property and casualty insurance policies annually. Is your business properly classified?  Your business may have changed its focus since you purchased the original policy“ Invite, and insist, that your agent visits and tours the premises once a year,” he says. “Review your policies. Consider your deductibles and overall values. Do they represent today’s prices? Do you need business interruption insurance?”

Some other expense-saving strategies, according to Chalfin, include the following:

• Consider the utility of all employees as well as overtime payments. As a result of the slowdown in business certain positions and overtime payments may no longer be necessary or even needed.
• Review your health plan. “Do a little homework. Obtain competing bids every year, and don’t tell the insurance companies what you currently pay. Look at your deductibles. You may want to increase them. It may be worth it.”
• Ask for rent abatement. “If you lease your premises, ask your landlord about a rental abatement. Ask for some free months if you extend your lease.” Also consider if you can sublet any of your space or eliminate unneeded facilities when you renew your leases. “If you are responsible for common area charges these items may have declined. Inquire about these items as your lease may allow you to audit the landlord’s expenses.”

Chalfin is author of Selling Your IT Business: Valuation, Finding the Right Buyer, and Negotiating the Deal (Wiley & Sons, Inc.)

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For more information on cash flow management, see OPEN Forum’s “Managing Cash Flow through Trade Terms.”