Wednesday, May 20, 2020

Is a Pandemic the Right Time to Start a Business? It Just Might Be

Written by:  Amy Haimerl

Ngoc Huynh, who is planning to open a Vietnamese food stall at Salt City Market, said its entrepreneurs were helping one another.Credit...Mustafa Hussain for The New York Times

Previous financial crises gave rise to high-profile American companies. The spread of the coronavirus challenges entrepreneurs to meet new needs.

Past downturns produced some high-profile American companies: Airbnb, Disney, General Motors, Hewlett-Packard, Microsoft, Slack, Uber and Venmo, to name a few.

“Downturns or challenging times are seen as good times to start a business for two reasons,” said Rashmi Menon, entrepreneur in residence at the University of Michigan’s Zell Lurie Institute for Entrepreneurial Studies. “One is, there is less competition for resources. The second reason is that whatever changes we face, positive or negative, bring up new customer needs. And customer needs are at the core of any business.”

In March, as small businesses across the country were shutting down amid the spreading coronavirus pandemic, Shanel Fields was about to open one up.

For Ms. Fields, the timing couldn’t have been better. Her company, MD Ally, allows 911 dispatchers and other responders to route nonemergency calls and patients to virtual doctors, to help local governments improve their emergency response systems.

“Something that a lot of people don’t know is that more than half of calls that go to 911 are nonemergency,” said Ms. Fields, whose father’s experiences as a volunteer emergency medical worker sparked the idea. “Those nonemergency calls overcrowd E.R.s and delay ambulances.”

But she also recognizes how crazy it sounds to start a business during an economic collapse. She knows that while she’s hiring, many small businesses are worrying about whether they’ll ever reopen.

She’s not alone: New businesses are forming despite the pandemic, though at a significantly slower rate than before.

There have been more than 500,000 applications for an employer identification number since mid-March, according to the Census Bureau, although that is down nearly 20 percent from a year ago. Between mid-March and mid-April, the Small Business Administration issued nearly 300 start-up loans worth about $153 million, a 36 percent drop from year earlier. Stripe, the credit card processing firm, said it had handled more than $1 billion in sales for businesses that started on the platform during that time.

For Ms. Fields, opening now meant greater access to top talent. She hired her fourth employee and said more than 200 qualified applicants had submitted résumés. And being in the health care sector during a pandemic has raised her profile with funders and governments: MD Ally, which is based in Philadelphia, recently signed its first customer and closed its first round of investment worth $1 million.

For others, the timing can mean low interest rates for borrowing start-up capital, cheaper equipment as businesses sell off inventory or lower lease rates as landlords scramble to fill empty spaces.

“I’m already seeing a huge uptick in requests for kitchen leases and subleases to be used for carryout kitchens or production spaces,” said Jenn Smith, a commercial real estate agent in Detroit.

In the best of times, 20 percent of new businesses don’t survive their first year, according to federal statistics; economic headwinds present greater challenges. A restaurant or bookstore opening on Main Street, however, faces very different risks from those of a new tech firm whose employees can work from home and whose customers don’t need to gather.

“There are going to be industries that are winners, and others that are going to be losers,” said David Brown, who co-founded the start-up accelerator Techstars during the 2008 recession. “I probably wouldn’t want to be in a business right now that caters to business travelers, but I’d love to be in a business that helps enable telemedicine.”

Determining what customers need now, rather than before the pandemic, is crucial. Ms. Menon and Mr. Brown see opportunity in offering solutions to the challenges that people now face: educating their children, working from home, managing supply chains, getting a haircut or the house cleaned, seeing doctors and therapists, entertaining themselves. Even new restaurants might be successful if they consider the future of customer service rather than recreate old systems.

“If you can find innovative ways for people to feed themselves right now, that might make sense,” Ms. Menon said. “You just have to address a need.”

Figuring out how to open the food hall of the future is the task facing Maarten Jacobs, the director of community prosperity at the Allyn Family Foundation, a regional philanthropic organization in Syracuse, N.Y.

That’s not a role Mr. Jacobs expected, considering his background is in community and economic development. He is overseeing the foundation’s investment in a new four-story, 80,000-square-foot building designed to be a community gathering space and incubator for the city’s small food entrepreneurs. A mix of apartments and nonprofit offices is planned for the upper floors, but the heart of the project is Salt City Market, which will feature food stalls run by women and entrepreneurs of color, a coffee shop and a cooperative grocery store.

The project is scheduled to open in November, so Mr. Jacobs is focused on finding the safest way to open a 24,000-square-foot market even as the world is questioning when — and how — people will want to gather again.

“It keeps me up at night, that’s for sure,” Mr. Jacobs said.

He’s looking at global trends on how restaurants are opening and the safety precautions being put in place to see what he might do in Syracuse this fall. He’s considering foot-operated doors, mobile sanitation stations and a new furniture concept.

“In the past, we just wanted to make sure furniture looked cool; now it has to look cool and be built like a tank and stand up to robust cleaning,” he said.

But his biggest worry is the entrepreneurs. He doesn’t want to set them up for failure.

The foundation supported Salt City Market as a way to foster entrepreneurs who might not have the resources to open their own restaurant. It hosted a community competition to identify eight small food businesses for the market. The winners received months of technical training on everything from marketing to inventory management, as well as the promise of a commercial kitchen stall with all the equipment they need. Chefs are responsible for their own signage and small goods, like plates and napkins, as well as a start-up investment of $30,000.

“We wanted a loan that if everything goes sideways, they aren’t crippled,” Mr. Jacobs said.

But everything has gone sideways. So Mr. Jacobs wants to open in a way that ensures they can succeed. “We don’t want to jeopardize them,” he said.

So far, all eight chefs plan to move forward. But several face the hard choice of leaving their day jobs to pursue their dreams, which may have seemed romantic in normal times but is terrifying in a severe downturn.

Chef Ngoc Huynh said she was scared but still excited to open her Vietnamese kitchen in the market.
“I like to be optimistic and hope for the best,” Ms. Huynh said.

She knows the challenges of restaurant life from watching her mother and aunt run a small food and catering business while working other full-time jobs. But Ms. Huynh is reassured by the fact that she’s not doing this alone. She and the other chefs are receiving technical support from the foundation and collaborating on ways to open a restaurant in a socially distant world. The group is considering new menus and hiring delivery drivers to serve all the stalls.

“We’re thinking about this together,” Ms. Huynh said. “That’s the beauty of it. We’re all competitors, but there is a network of support.”

  • You want to start a business now? Ms. Menon suggests you ask yourself these five questions first.
  • Have I identified a new need that customers have as a result of the current crisis?
  • Can I serve this need in a way that is substantially better than the current alternatives?
  • Am I qualified to solve this customer problem?
  • If I don’t have the experience, can I hire others or find a co-founder to help me?
  • Do I have access to funding that can tide me over until my business is profitable?

Tuesday, May 5, 2020

5 keys to building a scalable business. What is scalability in business? 5 keys for success + 3 business organization tools.


Written by: Jeanette LeBlanc

Tips on scaling a business:
  1. build a solid foundation
  2. focus on scalable business solutions
  3. embrace strategic planning
  4. focus on your core strengths
  5. be patient
If you are like most small business owners, you started really, really small. Probably just you, your laptop, and an idea.

Now growth is on your mind. Maybe you’re impatient and chomping at the bit to get to the next step, or maybe you’re scared and holding back. Either way, most small business owners have dreams that are bigger than their current reality.

The problem is, when the day to day of small business ownership can be so overwhelming, it’s tough to know what you should be doing now to ready your business for a successful future. What is scalability in business and what are your limitations? An understanding is fundamental to your success.

“We all feel some level of impatience that our businesses are not growing fast enough. Every time I look at the latest iteration of my DIY website or the stack of big ideas still in the to-do bin, I think ‘man, I’m so not where I want to be yet!’ But the beautiful thing about being in business for yourself is that you get to direct your own evolution. And allowing that evolution, however organic or stunted it may feel in the moment, is a stellar strategy in itself. Like a conductor with a symphony, you learn the rhythms and movements over time. You’ve got to grow at your own pace and feel out the bumps along the way.”
Amy Birks, The Strategy Ninja

So, how do you build a scalable business? Follow these five keys for business scalability success:

5 keys to building a scalable business

True scalability in business allows for expansion and revenue growth while minimizing increases in operational costs. Even if you’re not ready to grow right now, there are things you can do to set yourself up for scalable growth and success.

1. Build a solid foundation

Right now—while your business is small—is the perfect time to invest your time and energy in foundational systems that will allow your small business to grow into a much larger entity. These systems and processes can help you avoid the painful (and expensive) growing pains that can hit when you’re not prepared.

Having robust systems—such as a solid CRM or powerful e-commerce software—can help you untangle the web of time-consuming details and free you to focus on the parts of your business that will drive growth and expansion. Automation is the small business owner’s friend.

Review your business to see what aspects are repetitive or monotonous and make it your ultimate goal to automate them as much possible so that your attention remains focused on growth-related activities.

2. Focus on a scalable business model

In the early days it can be tempting to go with the quick (or cheap) fix. Money, time, and expertise can be in short supply, and investing in basic solutions that don’t require a huge financial investment or learning curve can seem like the wisest solution. Resist the temptation to slap together a myriad of inexpensive and inadequate options and think ahead to what will serve your business best in the future. A forward-thinking mindset can help you avoid a common small business trap: a patchwork maze of systems that just aren’t getting the job done.

Think as the owner of a business 10 times larger than your current reality. Choose solutions that will serve what is AND what may come: quality over quantity.

Simran Thadani, the executive director of Letterform Archive, a nonprofit organization that has a library of typography and design elements, has a few tools up her sleeve that helped her achieve scalable growth:

  1. Trello: Imagine digitizing your wall of sticky note to-do lists. That’s basically what you get with Trello. Using the app, you can create note cards that you can put on lists and then move them around by clicking and dragging them. Trello gives you a flexible, interactive, collaborative tool with which you can chart out anything from team roles on a specific project to your company's 18-month road map. You can also use it to simply to track your to-do list.
  2. Gusto (formerly Zen Payroll): This app allows companies to manage payroll and benefits in one solution. Plus, when employees receive their first paychecks, the app says, "Hey, you've just been paid. Isn't today a beautiful day?" with a picture of butterflies and flowers.
  3. Google Ventures Design Sprint: A word of advice from Thadani: “Slow down to scale up.” The sprint begins with quiet time to brainstorm. Employees are told there are no bad ideas, then asked to write everything they think of down on a sticky note and stick it up on a wall
    This helps to eliminate one voice dominating, or dead silence from all.

    People then use stars or tallies to vote on their favorite ideas. Generally, you’ll find that it’s not just one person with all the good ideas. Typically, all parts of the company will be represented, and all employees have ideas worth contributing.

    Next, you talk about validating the idea, asking the team: Why did you choose this idea? Why did this idea have three stars and the next had five? What's the best way to pursue the idea? From there, you can prototype the idea. The exercise brings tremendous validation—not just of the best ideas, but of the people who brought up those ideas.

    The frequency of your sprints depends on how frequently you feel you need to iterate on something new, whether it’s to improve a process or come up with a new idea from scratch. The design sprint works in a range of different situations. Bt you don’t want to rely on it as a crutch, like going back to the drawing board because it didn’t work. Take the time you need, but don’t get stuck in too many meetings. Use the sprint to figure out the path to the next idea. Iterate from where you’re stuck. Be confident in the good ideas you’ve had thus far, and then take things from there.
3. Embrace strategic planning

Strategic planning is the link between a great idea and true success and growth. More a philosophy of operation than a one-time event, it requires ongoing attention to detail and an investment of time. Knowing your business inside and out can prepare you to deal with challenges and prepare you for opportunities to scale.

"When you take the time to define where you’re going, you can develop a plan, stay on course, make adjustments as needed and reach your destination."
—Keap CEO Clate Mask

Develop a series of quarterly and annual priorities, a mission that sets the tone for the next three to five years of operation and a BHAG (Big Hairy Audacious Goal) to keep you reaching for success.

4. Focus on your core strengths

You can’t be everywhere. Focusing on your core strengths and hiring or outsourcing the rest of the tasks associated with running your small business is essential to a scalable business. Concentrate on working on your business instead of in your business; scalable business owners are experts at leveraging outside resources. Build a staff or team of freelancers to do what they do best so you can concentrate on letting your own native genius work its magic.

5. Be patient

Rome wasn’t built in a day. Good things come to those who wait. Patience is a virtue.

Cliché or not, there’s a reason these little gems of wisdom are so pervasive. In your small business, patience is just as important as it is in the rest of life. Take the time along the way to maximize the systems, processes, and people you rely on to make your operation a success so that when opportunities present themselves, your business is ready to grow.

Remember, a path of slow and steady growth is much more sustainable–and scalable–in the long run.

Startup vs. Small Business: What’s the Real Difference?

Written by: Emily Kate Pope

Startup vs. Small Business: The Main Difference

While the difference between a startup and a small business is subjective, it often comes down to the company’s growth goals and revenue forecast. Startups focus on disrupting markets and driving top-line revenue at a fast pace. Small businesses, on the other hand, often set their goals on long-term, stable growth in an existing market.

If you work in the tech industry, you’ve probably heard the term “startup” thrown around a lot. Especially if you live in a tech hub like Silicon Valley, Hong Kong, or New York. You probably even know a few people building their own startup—if you’re not building one yourself!

Despite the fact that hundreds of thousands of new startups are established every year in the US alone, many people still don’t understand the difference between a startup vs small business—and trust me, the two are very different. To distinguish these two organizational entities, let’s take a deeper dive into the definition of a startup.

What Is a Startup?

For years, investors treated startups as smaller versions of large companies; this was problematic because there is a vast ideological (and organizational) difference between a startup, small business, and large corporation, which necessitates different funding strategies and KPIs.

According to serial entrepreneur and Silicon Valley legend Steve Blank, a startup is a “temporary organization designed to search for a repeatable and scalable business model.” A startup, which he argues in the context of the tech industry (and this conversation) should be short for “scalable startup,” is searching to not only prove their business model but to do so quickly, in a way that will have a significant impact on the current market. Which brings us to our first major difference between a startup vs small business.

A “Scalable” Startup Has The Intent To Become A Large Company

The first real difference between a startup vs small business is really the growth intent behind the business.

As Blank describes it, a scalable startup founder doesn’t just want to be her own boss; she wants to take over the universe. From day one her intent is to grow her startup into a large, disruptive company. She believes that she has come across the next “big idea,” one that will truly shake up the industry, take customers from existing companies or even create a new market.

This stance is in stark contrast with the definition of a small business, which the U.S. Small Business Administration (SBA) describes as “independently owned and operated, organized for profit, and not dominant in its field.”

A small business owner might be starting a business that they believe solves a gap or provides a service within an existing market—one that will provide steady, long-term revenue.

Therefore, the driving force behind the two business models is different: The intent of the startup founder is to disrupt the market with a scalable and impactful business model; whereas the intent of the small business owner is to be her own boss and secure a place in the local market.

To be sure, the latter is the prevailing model of entrepreneurship in the United States: grocery stores, delis, hair salons, plumbers, electricians, etc. and their contribution to the local economy cannot be overstated. Small businesses (those businesses with fewer than 500 employees) employ over 40 million workers.

However, for better or for worse, the ultimate motivation behind a small business is fundamentally different from that of scalable startup.

A Startup Is Temporary

Another major difference between a startup and a small business? How long it plans to exist.

The organizational function of the startup is to search for a repeatable and scalable business model. According to Blank, this means that a startup founder has three main functions:

  1. To provide a vision of a product with a set of features.
  2. To create a series of hypotheses about all the pieces of the business model: Who are the customers? What are the distributions channels? How do we build and finance the company, etc.
  3. To quickly validate whether the model is correct by seeing if customers behave as your model predicts (which he admits they rarely do).

Given this definition, it stands that once a business model has been proven the function of the organization must shift to produce outcomes and execute said model; in many cases removing the agility and innovation that once existed in the early days of the business.

A Startup Is Funded Differently

While both a startup and small business will likely start with funding from the founder’s savings, friends and family, or a bank loan; if a startup is successful, it will receive additional series of startup funding from angel investors, venture capitalist, and (if it’s lucky) with an initial public offering (IPO). With each series of funding, the startup founder gives up a piece of her company–this is called equity, and everyone who has it becomes a co-owner of the company.

Eventually, a startup may cease to exist as an independent entity via a merger or business acquisition. To a small business owner, relinquishing control would defeat the purpose of running their own business; however, for the startup it may be necessary to sustain seemingly infinite growth.

Although a startup vs small business are still run by entrepreneurs (small business owners or not); the intent, primary function, and funding of their respective business model’s are radically different. Watch Steve Blank describe the difference further in the video below.

A Startup Assumes a Lot of Risk

A startup is trying to see if their vision of a product or service does indeed disrupt a market. Though lots of research and time go into the pre-launch of a startup, entrepreneurs are essentially making an educated bet that their idea is going to have traction in the market. Oftentimes, it doesn’t. Investing your time and money into a startup is a huge risk.

That’s not to say small business owners don’t assume any risk either. In fact, 20% of small businesses fail in their first year—though small business failure is often a result of cash flow management and funding. But with a small business, there’s less of a risk that the business idea won’t have a fit in the established market.

Testimonial Melly Rocha, Health Home Assistance LLC

Saturday, May 2, 2020

What services are provided by a small business accountant?

Written by: Erasmus Pretorius

One of the questions I get asked most when I am speaking to a new or prospective client, is what additional services do we offer our clients, apart from the traditional accounting services of keeping your books and finances organized

A Good Accounting Team and its Accounting Services

The truth is, a good accounting firm will offer a number of different accounting services that are included in what most people consider traditional accounting. You see, as an accountant, I get to see the core numbers for a business. I get to see where the business is bleeding cash, or missing out on revenue. I get to see which processes are working, and which aren’t. I get to look at businesses at the kind of granular level that most people don’t ever see. And because of that, I, as an accountant or as part of a team of accountants, can provide valuable advice to an owner or to a business’s management team.

What most people understand as additional services are, in fact, the core services for any good accounting team. What I am going to try to do here is give you an overview of what services are offered by an small business accountant.

1. Tax Returns and Strategy

Everybody knows that small business accountants do tax returns. That’s just common sense. But we do much more than that. You see, we do the tax returns for hundreds of businesses so we have to know the tax code, inside and out. We have know what’s changed, what’s in for a certain year and out the next. And, even more than that, we need to know how that affects your business. So if there is any coming change to the tax code, we know about it first and we can help you to plan accordingly.

Oftentimes we get clients that come on board and they’ve never had a proper accountant do their financials for them. And what we see a lot of the time is that they are missing out on valuable information about tax exemptions or tax breaks for their business that can even be the difference between the success and failure of the business. So that’s probably one of the key accounting services that we offer as accountants for small businesses, the ability to create a clear and effective tax strategy for you.

2. Debt Planning and Reduction

Debt planing, credit card management and debt reduction are other key areas where an accounting company can help a small business. One of the biggest challenges today for any small business is obtaining cost effective financing, and then managing that debt. The great advantage we have as accountants is that we have a working knowledge of most of the financing services that are available on the market, and we can help you choose the financing model that works best for your business.

For some clients one of the first things we do is advise them to adopt a debt restructuring strategy that drastically reduces their monthly payments to service their debt, which then frees up their cash flow.

3. Operational Bookkeeping and Payroll Management

We find that one of the biggest challenges for any many businesses today is managing their payroll, especially if the business has only recently started to take on employees. So that’s another key area that we get to provide consulting and advisory accounting services to small business. In fact, it’s probably a good thing to talk to your accountant before making any new hire, first to make sure that your business is in line with current employment legislation, and second, to make sure you take all the associated costs for a new hire into account when you are deciding on salaries and benefits.

4. Management Consulting

Management consulting for small business includes all of the items above, but I think it’s important to mention it here again because it provides an important context for an experience that is common to most small business owners; they often struggle to find somebody to whom they can turn to when they need advice.

I speak personally when I say that one of the main reasons to hire an accountant (or an accounting firm in most cases) is that you have somebody who you can go to when you need advice. Most times when a business owner asks us for advice, we’ve seen a similar situation before at other business and we can provide him or her with relevant and practical advice based on what we’ve seen that works.

5. Business Development and Valuation

One final accounting service that an accounting team can offer that I think is important to mention is in business development and valuation. There comes a time for most business owners when they need to think about selling their business, either because they are reaching retirement, or because it’s part of their business plan and they are ready to move on to the next project.

Again, remember that your business won’t be the first business that we would have offered this service to, so we will know how and were to go to build your business’s value so that when it comes time to sell all or a part of it (maybe you are ready to take on a new partner) you have all the information you need.

In conclusion

In conclusion, along with the core accounting services we offer, accounting firms provide a number of key additional services that you as a business owner should take advantage of to stay financially organized, tax compliant and help your business to grow. You shouldn’t look at your accounting firm as merely an outsourcing cost for bookkeeping, but as a key business partner. It’s what we like best about being accountants here at The Accounting Team. we get to use our knowledge and our experience to help your business grow.

Erasmus Pretorius is a Chartered Accountant and CEO of The Accounting Team. He has been helping small business grow since 2001.