Smart Small Business Risk Management Can Help You Sidestep ‘Big Traps’

As a small business owner, you know that running a small business is, well, risky business.

But Bob Gellman, managing director at the business consulting firm CBIZ Inc. who’s been giving business owners advice since the 1980s, says there are ways to minimize risks by taking a “long-term view.”

As a small business owner, you have a long list of potential risks to think about.

You worry about legal liability if ever there’s an accident at your place of business and about your books being in order in case the taxman comes knocking on your door. You worry about having enough insurance in case of a natural disaster or a theft or some other unexpected event.

A single mistake related to a legal, insurance or financial accounting issue could be costly and lead to a serious setback.

“A business owner spends a lot of time creating wealth,” Gellman tells NerdWallet. “They should have a system in place which they can rely on to protect the value they have created.  The mantra is grow and protect.”

And you can protect what you’ve built if you keep in mind these three tips, which Gellman says are all about avoiding “big traps.”

1. Don’t get stuck with the wrong set of advisers

Bob Gellman

Your small business will surely use the services of these key professionals: an attorney, an accountant and an insurance broker.  Whether you hire them as staff or use contractors, your choices are critical, Gellman says.  That’s because the realm of “what you think is possible and not possible will be ruled” by the people you choose to take on those important responsibilities, he says.

Hiring for these positions means being sensitive to conflicts of interest, Gellman says.

“It’s all about conflicts of interest,” he says. “An independent advisor should have the client’s best interest at heart, which would include referring them to someone who may be more competent in a particular area. Asking an insurance salesperson to provide a financial plan is the classic example” of a potentially bad move.

When hiring an attorney, an accountant or an insurer, Gellman urges small business owners to “understand their competency and how they get paid.” “It helps to know that your advisor works with a team of other advisors who they can readily refer in to assist in plan development and execution,” he says.

2. Make sure your lawyer, accountant and insurer are in sync

So you’ve hired a lawyer, an accountant and an insurer. You meet or consult with each one of them regularly. But what if they don’t know what each is doing for your small business? They probably don’t even know one another.

That’s another common risk-management mistake, Gellman says. He recommends meeting with all three at least once a year, essentially to say, “Let’s get the issues out on the table and talk about them.”

This is a particularly serious problem for fast-growing companies with 50 to 100 employees, Gellman says. These small businesses usually have the money to pay for quality services, but they have “grown to the point that there’s so much going on.”

So they’re not able to leverage the professionals who are supposed to be working for them. Companies like these, he says, “are usually riding a rocket” but “have lots of issues all the time.”

3. Have a comprehensive plan, including an exit strategy

“Begin with the end in mind,” is one point Gellman stresses to small businesses. That means having an idea of the road ahead for your small business, including the role you plan to play in your company.

Are you in it for the long haul as the owner and as the boss? Or do you plan to unload some of the burden by bringing in a partner or other investors? Or do you plan to make an exit when your small business reaches a certain point, say, revenue of over $1 million?

Your game plan and objectives could change, of course. But having a “long-term view” will help you define your strategy and tactics in running the company.

And remember that your plan should take into account business cycles and trends in both the market where you’re competing and the economy in general. Gellman cites the example of a Los Angeles couple who found their plan to sell their housing construction firm and retire derailed by the housing crisis that started to hit in 2006.

They learned from that lesson as they continued running the business, while preparing for “their next window of opportunity,” Gellman says. To do this, these business owners “prepare a quarterly economic dashboard that portrays national, regional and local trends as well as internal business metrics.”

Bottom line, Gellman says, small business owners should always ask: “You want make you money and you want to keep it. What are the risks of you losing it?”

For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Benjamin Pimentel is a staff writer covering small business for NerdWallet. Follow him on Twitter @benpimentel, on Google+ and on LinkedIn.

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Protein for Pets Partners With CircleUp to Fund Hypergrowth

Protein for Pets co-founders Marco and Berenice Giannini are changing the way people shop for pet food. Their strategy is simple: Offer high-quality products at a good price, and provide an easier way for consumers to shop by organizing pet food according to protein and product type, instead of by brand.

So far, the strategy is working. Protein for Pets opened its first location in March 2014, and the company has already opened an additional nine retail stores throughout Southern California.

“We have a small-store format with low overhead, which is not only easier for the consumer to shop, but it also provides a fast return to the investment community,” says Marco Giannini, Pets for Protein’s CEO. Prior to starting Protein for Pets, Giannini founded a dog food and treat company called Dogswell in 2003. He sold Dogswell in 2008 but continued as CEO until leaving the company in 2013.

Giannini says that if Protein for Pets really wants to take hold of the competition, it will have to expand at an even faster pace. By the time the seventh store was built, he says he and Berenice, who is the company’s chief operating officer, had started to think about getting outside funding, which can be a time-consuming process.

After considering several other potential sources of financing, they chose CircleUp, an online platform that focuses on helping entrepreneurs raise capital from a network of accredited, or wealthy, investors.

“We went to CircleUp because it’s the next generation of funding — it’s like Facebook for funding,” Giannini says.

Marco Giannini, CEO of Protein for Pets, in one of the company’s 10 stores (so far).

An equity crowdfunding platform

CircleUp partners with early-stage consumer product and retail companies in such fields as personal care, apparel, retail chains and restaurants.

“We partner with those companies, and they join our community and our platform, to connect with and hopefully raise capital from a community of angel and private equity investors,” says Pat Robinson, business development manager at CircleUp.

The average company on CircleUp has a little over $1 million in annual revenue, and all have at least $500,000 in annual revenue, so they are a little bit later-stage than a start-up.

“They generally have a product on the shelves — or in Protein for Pets’ case, they have stores that are built and they’re selling products,” Robinson says. “So they want to raise more capital to produce and sell more products.”

Robinson says CircleUp’s application process can be completed online in less than five minutes. The company asks for “high-level” information, such as revenue in the past year, growth rates and gross margins.

From there, the company reviews each application and gives feedback within a day or two. Not every company gets accepted — in fact, CircleUp accepts only about 5% of all applicants, Robinson says. That’s why he says it’s important to really make your company stand out from others.

“Our best advice would be to have a product and a brand that really solves a problem and that is out there in the marketplace, and it’s differentiated,” Robinson says. “If you have something that’s sort of new and innovative that’s solving a problem for consumers…that’s going to translate into a growing business with growing sales and distribution opportunities.”

More potential investors, less time searching

The advantages of raising money at CircleUp include tapping into a wider network of potential investors who have experience in your business sector, Giannini says.

“It’s obviously very difficult if you’ve got your 10 wealthiest friends, and five of them say yes and the rest say maybe or no… where do you go from there?” says Giannini.

CircleUp “allows you get a lot more people and a lot more prospective investors in,” says Giannini. “I’m speaking with someone next week who’s from Cincinnati. Last week I had a conversation with someone from New York. I’ve had conversations with people from all over the place.”

CircleUp’s community of investors is also well versed in brands and consumer products and can offer strategic guidance and support, Robinson says.

“These are folks that want to be brand ambassadors and be supportive, ‘value-add’ investors along the way,” Robinson says. “We only focus on (consumer-oriented businesses), so the investors in our community come to us knowing that we’re only going to show them high-quality consumer investment opportunities that they can be excited about.”

Protein for Pets is still in the process of raising equity from CircleUp, and the company is trying to raise up to $3 million in equity or 30% of the company, Giannini says.

The funds will be used to open new stores (which only cost $50,000 to $60,000 each to build, as the company uses “really simply recycled materials”, according to Giannini), to build out the management team and support staff, and for marketing. The company plans on growing very fast, as it aims to open 10 stores a year for the next two to three years, and within five years, have 100 locations in total, Giannini says.

Tips for other entrepreneurs

Robinson says his best advice for businesses hoping to get accepted on CircleUp is to offer a product and a brand that really solve a problem and are already out there in the marketplace.

“If you have something that’s sort of new and innovative that’s solving a problem for consumers, most likely that’s going to translate into a growing business with growing sales and distribution opportunities,” he says.

Once accepted on the platform, Robinson says, it’s important to prove to investors not only that your product is great, but also that you’re offering a good investment opportunity.

“We always encourage entrepreneurs to engage and be proactive with investors, in the same way with selling their own product,” says Robinson.

Small-business owners and entrepreneurs seeking financing at any stage should have already proven their concept and have sales coming in the door, Giannini says.

“In order to get financing — whether it’s $100,000 or $10 million – you need to prove concept,” he says. “If you can prove the concept, you’ve got to open up your stores if it’s a store format, you’ve got to sell some consumer goods, you’ve got to ‘make a little, sell a little.’”

“If you’re selling a physical asset, it’s got to be something you can touch and feel,” Giannini says. “If you’re selling something that’s online, you’ve got to have the website up or the app up. You’ve got to have something investors can wrap their arms around.”

Giannini hopes to close this round of financing within the next couple of months.

“I think the more enthusiasm we provide and put themselves out there, people will come around and realize that we’re really doing something that can change the paradigm of pet shopping,” Giannini says.

For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Steve Nicastro is a staff writer covering personal finance for NerdWallet. Follow him on Twitter@StevenNicastro and on Google+.

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8(a) Small Business Program May Be a Hassle, but the Payoff? Huge

Sometimes, certain entrepreneurs deserve an edge over the competition. That’s the theory behind a government leg-up program for disadvantaged small-business owners.

Those who may have been subject to racial or ethnic prejudice or cultural bias can get help to compete in the marketplace with the SBA’s 8(a) business development program.

If accepted in the program, an entrepreneur is eligible for government sole-source contracts — meaning there are no other competitive bids — up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing, according to the U.S. Small Business Administration.

Businesses that are 8(a) certified can get help securing SBA-backed loans, join in business-education and guidance programs and partner with other business owners to bid on contracts, according to the administration.

To qualify, a small business must be owned and controlled at least 51% by “socially and economically disadvantaged” citizens, meaning they may have faced cultural bias or prejudice as a result of their race or ethnicity. The business must also “demonstrate the potential for success, and the owners must show good character,” according to the SBA. Here’s a full list of requirements.

NerdWallet recently spoke with three small-business owners who benefited from the SBA’s 8(a) program to get a better idea of what it has to offer, as well as advice for other small-business owners interested in the program.

‘The time will fly by quickly’

Lourdes Martin-Rosa, president of Government Business Solutions and an American Express Open advisor on government contracting

Martin-Rosa applied for the 8(a) program six years ago. Her business, Government Business Solutions, is a program management firm that works with the federal government, providing event management, advertising and marketing services, as well human-capital training. (Human capital, as Investopedia puts its, is the economic value of an employee’s skill set and can be invested in through education and training.)

She found the application process to be a bit time consuming but says the program has helped her business significantly.

“We received our 8(a) certification in January 2010,” Martin-Rosa says, “and the following years, we won three 8(a) sole-source contracts, totaling over $3 million in contract awards.”

Martin-Rosa had been doing business with the federal government for 15 years prior to pursuing the certification. “It helped our visibility,” she says, “but our experience and expertise in the government sector played a large role in these wins.”

There’s help for creating an acceptable submission, she adds. Representatives from Small Business Development Centers and Procurement Technical Assistance Centers are available, but Martin-Rosa says you still have to take the time to complete all the forms and gather all the information you’re required to submit.

“In addition to a variety of corporate documents, personal and business financials, you need to submit several SBA and IRS forms to an SBA 8(a) eligibility office before you are even considered as a program candidate,” she says, and this part of the application process may take up to a year to complete.

“The total timeframe for applications is averaging eight months to a year from the time of the first application submission to receiving the 8(a) SDB certification award letter,” she says.

Martin-Rosa has some advice for other small businesses thinking of pursuing 8(a) certification: “They should have experience in government contracting. Many small businesses make the mistake of obtaining an 8(a) certification to learn how to capture contracts in the government sector.”

Time in the 8(a) program is limited to nine years, she says, unless you are Alaskan or Native American.  “The time will fly by quickly and likely will not be utilized efficiently if you are still learning the basics.”

‘It’s not a magic bullet’

Jeannette King, president and CEO of Strategic Resolution Experts Inc.

Strategic Resolution Experts work with customers to help them solve problems related to human capital, business processes and technology, says King, a Navy veteran who founded the company in 2007 in West Virginia. Over half of the company’s workforce is made up of veterans or spouses of veterans, according to King.

The application itself was lengthy — the first submission was 499 pages, and the supplemental submission was 501 pages along with financials, King says.

The application process is rigorous, according to Nikki Bowmar, public affairs specialist at the SBA, so the agency can perform its due diligence to prevent fraud.

King calls the program “a tool in your toolbox — it’s not a magic bullet, but like everything else worth having, you have to work to make it successful.”

“Having the 8(a) designation provides a foot in the door,” she says, “but you still must be able to back up your capabilities and prove you can perform.”

Strategic Resolution Experts also obtained an SBA-backed line of credit, King says, which allowed the company to bid on larger contracts and show customers and teaming partners that they had the ability to pay employees and vendors.

She says the best advice she can give to other small business owners is not to rush to get the designation.

“It takes a good five years to develop strong relationships and a solid reputation, which can be done by working with large partners, obtaining a General Services Administration schedule, and responding to requests for information and requests from small-business specialists,” King says. “Take that time to develop relationships, establish your corporate infrastructure and branding, and then apply.”

Be ‘ready to immediately pursue 8(a) business opportunities’

Crystal L. Kendrick, president of The Voice of Your Customer

Founded in 2007, The Voice of Your Customer is a marketing firm that assists clients seeking to penetrate niche markets, using surveys, focus groups, secret shopping and media campaigns, according to Kendrick.

The company applied for its 8(a) certification in 2009, and Kendrick says that although the application process was lengthy, she received a lot of support from local procurement and technical assistance centers and SBA offices.

“The staff at these organizations is very well versed in the process,” she says, “and their support is invaluable.”

Participating in the 8(a) program spurred The Voice of Your Customer to develop a sound business plan, identify target markets, set budget and annual operating plans, and establish strategic plans, Kendrick says.

“Once we were certified, we began to receive notices of set-aside contract opportunities that were not presented to us in the past,” she says. “These opportunities were very competitive for the size and scope of our business. In addition, because they were set aside for 8(a)-certified businesses, there were fewer competitors for each opportunity.”

Some final advice from Kendrick for other small-business owners seeking 8(a) certification.

“It is important that any small business that applies for the program is ready to immediately pursue 8(a) business opportunities, since the certification only lasts for nine years and a company can only have one 8(a) certification,” she says. “Firms must be prepared to take advantage of the opportunities, participate in networking activities and complete the required re-certification documents.”

Steve Nicastro is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @StevenNicastro and on Google+.

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Google Allows Restaurant Orders Directly From Search Results

Google a restaurant, place a delivery order. It’s that easy now.

Google announced Friday that users now will be able to place orders directly from search results when they look up a local restaurant.

“When you search for a nearby restaurant on your phone, you’ll see an option to ‘Place an order’ in the search results,” the company wrote in a Google+ post. “Just tap that, choose the delivery service, and you’ll be taken to their website to complete the order.”

The service debuted with six delivery companies: Seamless, Grubhub, Eat24, Delivery.com, BeyondMenu and MyPizza.com. Google says it plans to add others as well.

Placing delivery services front and center is the latest in a slew of Google search updates that aim to predict what users are doing and streamline the process. While clicking to visit a restaurant’s website, then ordering from there (or using an app like Seamless or Grubhub in the first place) may not seem like a particularly onerous task, Google reasons that shaving off a few seconds, or even fractions of seconds, from actions we perform over and over again eventually adds up to significant time saving.

Of course, placing orders via Google also gives the search giant data on the type of restaurants users like, making it easier for the company to target ads.

Doug Gross is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @doug_gross and on Google+.

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Small Business Success Story: Raven + Lily Changes Lives With Able Lending

Kirsten Dickerson knew her company could change lives.

Marginalized women around the world — war and slavery refugees, the formerly homeless, the HIV positive — struggle to find stable income and avoid poverty. In 2011, Dickerson launched Raven + Lily, an ethical fashion and lifestyle brand, to produce beautiful goods and give secure jobs to these at-risk women.

It worked: Her B Corporation now employs over 1,000 at-risk women in eight countries, including Ethiopia, India and Cambodia. What Dickerson didn’t expect was the difficulty of being understood by banks and obtaining loans needed to fulfill her mission.

Dickerson’s team in Austin, Texas, designs clothes, jewelry, bags and other goods. They pay fair wages to the at-risk women, who bring their designs to life using local, eco-friendly materials.

“Our collections we sell are exclusive designs we design in-house in Austin, and they reflect the beauty and the culture of the women who make them, but they’re still modern and fashion forward,” Dickerson says.

After enjoying national success from her retail website and landing items in over 300 boutiques, she opened a flagship storefront in Austin. Last year, Dickerson took Raven + Lily through a small round of series A fundraising to gain investors without giving away significant ownership.

The next step for her was to get a loan while she proved that Raven + Lily could grow fast enough to meet the demand she knew was out there. Doing that would pave the way for a series B round at a higher valuation.

“I wanted to buy some time to prove how we were doing, and I needed additional income to help us meet growth needs and demands,” she says.

But she struggled to get approved for a loan from traditional banks — even local banks. “I found that local banks were moved by my story, but had too much red tape to support a company that was still at an early stage and functioning outside of the norm,” she says.

Banks didn’t fully understand her business model as a B Corporation or her fair-trade buying and ordering cycles.

A new loan option using crowdfunding

That’s when a mentor pointed Dickerson to Able Lending, an Austin-based business that began making loans to small businesses around six months ago. It was founded by Will Davis and Evan Baehr, who noticed that a lot of local small businesses that needed capital to grow were being turned down by traditional lenders.

“We have great friends that built apparel companies, restaurants, jewelry companies and services firms,” Baehr says. “They’re awesome businesses, and we’d be at dinner conversations with them — here we are talking about how we’re raising millions of dollars for our company, and they can’t get $100,000 to build out their new store or buy inventory.”

Baehr found that consolidation of the financial industry and a slow recovery from the recession made it difficult for many entrepreneurs to access loans. “We needed a company that built a different way to lend money to the people the banks deemed not creditworthy,” he says.

Raven + Lily’s storefront in Austin.

 

Baehr was inspired by the microfinance model and wanted to try something similar to Kiva, but for U.S. businesses and on a larger scale. They launched Able, and so far have funded $5 million of business.

Able provides loans between $25,000 and $250,000 to incorporated, cash-flow-positive businesses — currently only in Austin, but soon statewide and later nationwide. Borrowers apply online and must pass a credit check and financial review. If approved, Able makes an offer covering 75% of the total borrowed amount. Terms range from one to three years, and interest rates never top 16% and are negotiable.

Here’s where crowdfunding comes in: Borrowers recruit three to five “backers,” who pitch in the remaining 25% (they don’t have to split it evenly). Backers can charge the same interest rate as Able, or they can reduce it to as little as half of Able’s rate. Borrowers repay Able monthly, and they handle repaying the backers with interest.

Why require backers? Baehr says in microfinancing, business owners often come together for loans. Because they know and trust each other, they’re willing to share each other’s risks. “We can offer significantly lower interest rates by involving people that really know the business and business owner,” Baehr says.

Able originally thought most backers would be family, but they only make up 20%, he says. Many are customers wanting to invest in businesses they’re passionate about and engage with them in a different and important way. He says not a single borrower has failed to recruit their backers yet, and backers are usually in the same cities as the borrowers.

Able helps small businesses facing an all-too-common struggle, says Karlene Sinclair-Robinson, author of the best-selling book “Spank the Bank” and alternative financing expert for small businesses. She says banks offer some of the best rates, but there’s still a credit crunch causing them to turn away small businesses, even with excellent credit. “If they don’t have credit, collateral and cash flow — you need all three — they won’t get a bank loan,” she says.

She says alternative financing, such as crowdfunding and microlending, is helping fund the nation’s growing number of entrepreneurs. “You’ll continue to see more companies like Able come out, because when there’s a need that’s not being filled, we’ll come up with solutions,” she says.

Solving a business problem

Once Dickerson discovered Able, she says they took an immediate interest in Raven + Lily and became a true partner. “Our priority is so much employing these women that I want to be as profitable as possible. I didn’t have to explain myself until I was blue with Able; they got it,” she says.

A model wearing Raven + Lily’s clothing.

Able was inspired by Dickerson’s vision and saw opportunity. “Whereas the bankers saw risks, we saw thousands of customers that just love her company and what it’s achieving in the world, and those are exactly the kinds of companies we want to be able to support,” Baehr says.

Dickerson was approved for a $200,000 loan. Without it, she would have had to turn down orders. “Because I was able to get that loan, I was able to respond to the demand and prove the growth we were having,” she says.

A local advocate who served as an advisor for Raven + Lily since the beginning stepped up as the first backer and recruited the others herself.

Dickerson says the loan was the missing link to her success, and her business grew 189% from Q1 of 2014 to Q1 of 2015. “My valuation is so much higher right now than it was six months ago,” she says. “The loan really enabled me to wait this long instead of having to jump right into series B at the end of 2014. I’m now in my series B seeking to raise $1 million for this round.”

Is your company ideal for Able?

Baehr says most companies Able funds have been turned away by banks for loans. Others explored other online lenders first, but were turned off by high rates (one competitor’s average interest rate is 56%, whereas Able’s is just over 12%).

He says types of companies popular on social media, such as retailers, restaurants, food trucks and consumer packaged goods, often do well with Able since it’s easier to find backers (Able helped beloved Austin food truck Chi’Lantro go brick-and-mortar). The average business Able funds is 4 years old and makes over half a million dollars a year.

Able is ideal for companies that don’t plan to raise equity capital. “Our option is faster and less dilutive as a debt product versus selling equity,” Baehr says.

Since Able offers straightforward term loans for growth capital (as opposed to startup capital), Baehr says it’s ideal for anything from hiring new employees to building a second location to purchasing equipment and inventory. Able plans to offer more products in the future.

For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Emily Starbuck Crone is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @emstarbuck and on Google+.

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Young Small Business Travelers Spend More Than Older Counterparts, Study Finds

In the Hollywood movie “Up in the Air,” actor George Clooney is a jet-setting businessman who sees his fast-paced, itinerant lifestyle threatened by the rise of videoconferencing.

Well, no need to worry about any such threat, even if you work for a small business with a less impressive travel budget than the corporation featured in the critically acclaimed 2009 film.

For small businesses, travel remains an important way of finding and closing deals as well as reaching clients and customers, according to new study from the online travel site Expedia.

If you’re a millennial or someone older working for, or maybe running, a small business, the report offers insights into generational differences in viewing the perks and costs of business travel.

Here are five key findings from the study released Thursday:

Small business travelers are traveling more.

More than half, or 51%, of small business travelers say their business travel has increased during the last five years, the report says. Most small business travelers take an average of eight business trips a year and spend an estimated 17 nights total in a hotel.

Small business travelers prefer face-to-face meetings.

When given a choice, 58% of small business travelers say they would rather hold a face-to-face meeting than one by videoconference. For business people older than 55,  75% would rather hold in-person meetings than talk to a client or a co-worker through a screen.

Younger business travelers are less-budget conscious.

There’s also a generational divide when it comes to travel spending. If you’re a young business traveler, you probably turn in heaps of travel expense reports with pricey items. Small business travelers between 18 and 34 years old “spend more on flight, hotel and car rental than older counterparts,” the report says. Three-fourths of millennials are also more likely to “extend a business trip into a holiday” compared with a little over 40% for business travelers 55 years and older. And young business travelers are the most likely to splurge on such items as “room service, transportation, alcohol, entertainment, first class airline seats and advanced seat selection,” the study says.

Travel budgets are up for nearly half of small businesses.

The good news for business travelers with expensive tastes is nearly half of small business travelers say their company travel budgets have risen in the past year. This is particularly true for those in finance, information technology, and construction and trades. The average amount a small business traveler spends on a round trip flight is $987, according to the report. Small business travelers spend an average of $288 a night on hotels, and $214 on car rentals.

Small business travelers are more concerned with convenience than price.

Having bigger travel budgets also makes it easier for most small business travelers who, according to the report, “prioritize convenience over price for a business trip.” In fact, the most important thing small business travelers think about when booking accommodations is the hotel’s location, according to the report. Would they do the same when reserving a room for a personal trip? Well, no. When the trip being planned is personal, “price is ranked as most important,” the report says.

Benjamin Pimentel is a staff writer covering small business for NerdWallet. Follow him on Twitter @benpimentel, on Google+ and on LinkedIn.

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For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

 

 

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Small Business Success Story: Art Gallery Startup Revamps Site With Bond Street Loan

Tze Chun found success as a small-business owner after launching an online art gallery that made buying and collecting high-quality, original art easier and affordable for young professionals.

But then she ran into a problem: The website for her gallery, called Uprise Art, just wasn’t as sophisticated as the paintings she was selling, and she needed quick access to funds for a much-needed overhaul.

Enter Bond Street, another startup that, like Uprise Art, was also focused on “customer experience” — not of art collectors, but of entrepreneurs like Chun.

She has just taken out a $75,000 loan with the small-business lender to pursue her dream of making art affordable to professionals who are just getting started with their careers and who, she says, typically view collecting art as an expensive hobby, something they should get into later in their lives.

“They put it off until they make partner or their next promotion,” she tells NerdWallet.

Chun’s original small-business plan for Uprise Art was based on a simple premise: “If you could pay $50 a month to have an original work of art in your home, you’re more likely to collect art in the future.”

The plan worked. Uprise Art’s revenue has soared eightfold in two years to half a million dollars. But the website just wasn’t capturing all the business coming her way.

It was time for a revamp. But how to pay for it?

In a way, Chun’s experience underscores a typical small-business dilemma. You’re a new entrepreneur at the helm of a small business that’s suddenly growing fast. You need money to keep up with that growth, so what do you do?

Look for a small-business loan, maybe one backed by the U.S. Small Business Administration from a traditional bank? Or maybe shoot for venture capital funding?

Chun considered those options and came to the conclusion that they would take too long.

“Bond Street was the easiest option, and less ‘expensive’ than equity since the website overhaul is really a capital improvement that we’re confident will be a profitable investment,” she says.

Tze Chun (left) with artist Diana Delgado. Photo via Leon S. Belt.

 

Surely, she could have gotten a better deal from a regular bank. Chun says her three-year-loan from Bond Street has a 16% APR, plus Bond Street usually charges a 3% fee upon successful funding, says Chief Executive and co-founder David Haber. But the company waived it for Uprise Art .

Despite the loan’s high rate, Chun says, “We feel that it’s very inexpensive money.”

The main reason is the speed and ease with which she got the loan. That allowed her to move ahead with the website revamp project quickly and without disrupting the company’s business momentum.

“The application took about 15 minutes,” she says.

The process included giving Bond Street access to the company’s bank and QuickBooks accounts, and then having a brief conversation with the lender’s chief credit officer, Jerry Weiss, who previously served as chief risk officer at Citibank.

Chun says Uprise Art “would have lost a lot of time applying for bank loans.” That was also a key motivation for Haber to launch Bond Street. He was working for a venture capital firm two-and-a-half years ago when he started coming across companies that were “profitable, growing but struggling to raise financing.”

“They kept telling me how painful the process was,” he tells NerdWallet.

Much of that pain sprang from the fallout from the 2008 financial crash, although a lot of it was also based on a trend Haber says small businesses have been wrestling with over the past 20 years: Banks have become reluctant to lend them money.

Bond Street Chief Executive and co-founder David Haber.

Small-business loans have simply become less attractive to banks, because they’re not that lucrative compared to corporate loans, and because of tighter regulations, he says.

That situation created an opening for many alternative small-business lenders, which have benefitted from growing demand for short-term small-business loans and from new technologies that make it easier and more cost-effective to assess the credit risks of borrowers.

To be sure, the loans offered by alternative small-business lenders are expensive. For example, a small-business loan backed by the U.S. Small Business Administration typically charges 5.5% to 6% interest rate.

An average Bond Street loan, depending on the risk profile of the borrower, would typically charge a rate of 10% to 11%, Haber says. The highest rate Bond Street has charged is 18%, and the lowest is 6%, he adds. Each loan includes a flat 3% fee “successful funding,” he says.

Still, Jeffrey Robinson, academic director of the Center of Urban Entrepreneurship and Economic Development at the Rutgers Business School, says, “The rates are not bad if you think of them in the period that they are being repaid.”

And they can work for some small businesses looking for quick access to cash for a specific business need. “You can’t use it for everything, but it’s certainly something that can close the access to capital gap,” he tells NerdWallet.

That’s certainly true for Uprise Art, which is getting ready to roll out a revamped site in August. The online gallery is required to make a bi-monthly payment of $1,314 for three years, Chun says. But she says business is so good, she expects to pay that off sooner than that.

“We expect it will pay for itself in the next twelve months,” she says.

Benjamin Pimentel is a staff writer covering small business for NerdWallet. Follow him on Twitter @benpimentel, on Google+ and on LinkedIn.

For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

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Xero Executive Talks Cloud Accounting for Entrepreneurs

As a small business owner, you’re an expert in your chosen field.  But if you’re like many other entrepreneurs, you may not have a lot of time and money to master complicated, expensive accounting software.   A better alternative for many small business owners is to sign up for cloud-based accounting, says Dennis Najjar, a CPA and co-founder of AccountingDepartment.com.

“Online accounting software packages are intended to deliver convenience along with a basic accounting product,” he says.  “They work especially well for starter businesses, those with up to a couple hundred thousand dollars in revenue.”

One major player in the cloud-based accounting software field is Xero (pronounced “zero”), a New Zealand-based company that has been selling in the U.S. market for a few years, Najjar says.

NerdWallet recently had a conversation with Russ Fujioka, U.S. president at Xero, on how entrepreneurs can benefit from cloud-based accounting.

How does Xero meet the accounting needs of small businesses?

We offer an accounting platform that has inventory, payroll, invoicing and other standard functions.  You get everything you need to start and run your small business up to a certain scale.  The platform is cloud-based, so you can look at your financial information from any connected device and be able to quickly see the strengths and weaknesses within your business.

Russ Fujioka, U.S. president, Xero

Describe a typical Xero user.

The customers that really embrace Xero are usually at the 100 employee count and below, and range from small businesses to microbusinesses. They are in a variety of industries.  We’re committed to small business owners, and we don’t have any future plans to move our resources to enterprise clients. We want to stay in this environment.

How can cloud-based accounting software make financial tasks easier for entrepreneurs?

Our strength is in the ability to take things like inventory, quoting and reporting, integrate them and make them collaborative.  Suppose you have a freelance editing business and you send a quote for book editing to a potential client.  At some point that client is likely to ask you questions about the quote.  Instead of going back and forth with emails and voicemail messages, you can manage this collaboration within the app and have all the details you need in one place.

Or say you’re working with your accountant and you need to fill out a form, but you put the wrong piece of information on the form. Your accountant might realize that there’s an error, but he or she still has to dig through a lot of receipts or ledger entries to resolve the problem. When you collaborate online with Xero, your accountant can simply ping you from the app and ask you to put the right piece of information on the form. It saves a lot of time and effort.

What do you offer small businesses that are in specialized verticals, such as retail?

We provide the core accounting system, but we’ve opened up Xero’s application programming interface (API) to other software developers.  We have over 400 add-on partners that help small businesses that have specialized needs.  Examples include integration with point-of-sale systems for retailers, employee timesheets and expense reporting.

Xero competes with QuickBooks Online and other cloud accounting packages.  What should small business owners look for when choosing an accounting solution?

Look for a program that you believe you’ll use regularly.  In order to have a clear view of your business, you have to be willing to go “all in” and put all your financials in one place.  Once your information is in the program, you can look at the accounting dashboard and quickly see where your business stands. This is especially important if you need to gather documentation to apply for a small business loan.

You should also look for software that’s backed by an active customer support team.  When you’re busy running your business, you need to be confident that if you have a question about the accounting program, someone in customer support will quickly respond to you.

The biggest piece of advice I have is that you should always be connected to a financial advisor, no matter what financial accounting system you use.  When you’re working with a good accountant or financial advisor, and you have a strong cloud accounting software program, you’ll be putting in place the building blocks for small business financial success.  We have many advisors that subscribe to our product.  They can invite a small business owner into our portal online and collaborate with them in the cloud.

How much does Xero cost?

Xero has starter packages that are $9 a month (for businesses with few monthly transactions) and standard packages that start at $30 a month.

The Xero Ecosystem

Xero works with over 400 add-on partners to customize the cloud-based accounting software for client needs.  Niall McGinnity is managing director of Nuvem9, an accounting software consulting company in Belfast, Northern Ireland, that in his words, is part of this Xero “ecosystem.”

“We’re primarily a consulting business that focuses on start-up companies.  When you’re a new company and you’re looking for funding, and you’re looking to prove yourself, it’s critical to be able get financial information quickly, and make sure it’s error-free.  We’re using Xero as the building block for these companies,” he says.

Nuvem9 also uses Xero APIs to offer specialized solutions, such as foreign exchange payment integration and invoice processing.  “Our clients don’t have the time or the budget to pay for a large desktop system, and this is a good solution for them,” McGinnity says.

Margarette Burnette is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @margarette and on Google+.

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Limited Time Offer: United MileagePlus® Explorer Card by Chase Offers Signup Bonus of 50K Miles

Travel credit cards are a favorite for so many reasons. They typically have higher-than-average rewards, awesome redemption options and lucrative signup bonuses worth hundreds of dollars. The United MileagePlus® Explorer Card by Chase just upped the ante by offering — for a limited time — an additional 20,000 bonus miles. Instead of earning 30,000 bonus miles after spending $3,000 in the first three months, you can now earn 50,000 bonus miles. Here’s what you should know about the United MileagePlus® Explorer Card.

Why would I want the United MileagePlus® Explorer Card?

United MileagePlus® Explorer Card is great for people who fly United and check bags. Your first checked bag is free (and so is your companion’s first checked bag), you’ll get priority boarding, and you’ll also get two United Club passes per year. Of course, if you typically fly with another airline, you won’t enjoy all the benefits that come with this card. To reap the best rewards with the United MileagePlus® Explorer Card, you should be a loyal United flier.

The perks of the United MileagePlus® Explorer Card

Besides the United-specific perks, the MileagePlus Explorer Card has other great benefits. On top of the limited-time, 50,000-mile signup bonus, you can also earn 10,000 miles for spending $25,000 in net purchases on your card each year and 5,000 miles for adding an authorized user and making a purchase in the first three months. You’ll earn 2 miles for each dollar spent on United flights and 1 mile for each dollar spent on everything else.

The United MileagePlus® Explorer Card has no foreign transaction fees and a $0 intro annual fee for the first year, then $95. It recently added an EMV chip, so your transactions will be more secure both in the United States and abroad. The card offers purchase protection and auto rental collision damage waiver. It can also get you free room upgrades, early check-in/late checkout, and complimentary breakfast when staying in hotels.

The downside of the United MileagePlus Explorer Card

The MileagePlus Explorer Card isn’t for everyone, of course. Those who tend to fly on other airlines would benefit more from a flexible redemption travel card or another airline-specific card. It also has a high annual fee, which may not be worth the cost for infrequent fliers.

Bottom line: If United is your airline of choice, and you enjoy the luxuries of priority boarding, first bags checked free, and two United Club passes per year, the MileagePlus Explorer card is a good option. There isn’t currently an end date on this offer, but the limited-time signup bonus of 50,000 miles won’t be around forever. Make sure to earn these miles by spending $3,000 in the first three months, and add an authorized user for an additional 5,000 miles.

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Business Owners, Take Note of These Tax Deadlines

Whether your company is a sole proprietorship, partnership or corporation, one of the most important things to do as a small-business owner is to meet all your tax deadlines. We’re now past the April 15 due date for individual tax returns, but businesses have many more tax dates they should mark on their calendars, says Johanna Fox Turner, CPA and owner of Milestones Financial Planning in Mayfield, Kentucky.

It could be costly to let those dates pass with no action. “Meeting these deadlines is about as important as being on time for your wedding,” Turner says.

If you can’t meet your deadlines, the taxes are just the minimum you’ll end up paying, says Brian Devers, a CPA with Lovelace, Norvelle and Mathews, PC, a Virginia-based accounting firm. “You’ll have penalties and interest that will add up pretty quickly, and those situations can get real messy real fast,” he says.

To help make sure your business stays out of tax trouble, know these major deadlines. (If a date falls on a weekend or holiday, the deadline is the next business day.)

Sole proprietors (and single-member LLCs)

• Jan. 15: Previous year’s fourth-quarter estimated tax payments due.
• Jan. 31: Deadline to send 1099 information returns. (If you paid an independent contractor more than $600 last year, you must send a 1099 to that vendor.)
• Jan. 31: Deadline for W-2 forms to be sent to employees.
• Jan. 31: Quarterly payroll tax return (Form 941) due for the fourth quarter of the previous calendar year. The actual taxes should have already been withheld from workers’ paychecks, Turner says.
• Feb. 28: Deadline for 1099 statements to be sent to the IRS (the same 1099s that were due to vendors a month earlier).
• April 15: Individual tax filing deadline for the previous year. File Schedule C as part of your 1040 tax return to report business income.
• April 15: First-quarter estimated tax payment due for sole proprietorships.
• April 15: Last day to file for an automatic extension of your tax return (Form 4858, which pushes the deadline back to Oct. 15).
• April 30: Quarterly payroll tax return due (Form 941).
• June 15: Second-quarter estimated tax payment due.
• July 31: Quarterly payroll tax return due (Form 941).
• Sept. 15: Third-quarter estimated tax payment due.
• Oct. 15: Individual tax return due if an extension was granted earlier in the year (on or before April 15).
• Oct. 31: Quarterly payroll tax return due (Form 941).

Partnerships (and LLCs taxed as partnerships)

Generally the same as above, except:

• April 15: Partnership tax return due. Partnerships file using Form 1065.

Traditional corporations

• March 15 (calendar year corporations): “Your tax returns are due on the 15th day of the third month at the end of the calendar year,” Devers says.  That means that if your business operates on a calendar year and ends on Dec. 31, the tax return would be due March 15. Corporations file tax returns on Form 1120.
• Major due dates for information returns (1099, W-2) are the same as above.

Federal extension

In most cases, you can file for an extension before your normal tax return deadline and receive an automatic deferment of several months, says Diane Aksten, a CPA in Southfield, Michigan. But that’s only an extension to file, not an extension to pay. “You are still responsible to the IRS to pay what you think you’re going to owe,” she says. If you don’t pay what’s owed in time, you may be subject to late payment penalties.

Other important deadlines

If you have employees, you must also deposit payroll taxes either semiweekly or monthly, depending on your company’s reporting requirements, Turner says. If you’re not sure whether your company should be a semiweekly or monthly payer, read up on IRS Tax Topic 758 or talk to a CPA for help.

“Payroll is probably the most important deadline that you don’t want to miss as a business owner, because you’re submitting other people’s money when you’re submitting tax deposits to the IRS and the state,” Turner says.

State taxes

Check with your state’s department of revenue for state-specific tax dates, including renewals for LLCs. Many state taxes are due around the same time as federal taxes, but the exact dates may vary, Devers says.

Filing early

If at all possible, try to file tax returns well before the deadline, especially if you’re a sole proprietor, Aksten says. “We’re seeing higher numbers of identity theft. Some people are filing fraudulent returns using the Social Security numbers of taxpayers who are late filers,” she says. Once these taxpayers do get around to sending in their returns, it creates a red flag for the IRS and presents problems for the legitimate filers.

“The sooner that you can get your return filed, the less likely it is that somebody else will try to file a return under your Social Security number,” Askten says.

When to call in a pro

If you have cash flow problems, a professional can help you manage them in a way that’s OK with the IRS, Turner says. “There are different strategies that an accountant can help you with, that the average do-it-yourselfer may not be aware of, which could help with cash flow,” she says.

A lot of people hear “CPA” and think hiring one costs a thousand dollars or more, but that’s not necessarily the case,” she says.  “However, it could literally cost you two or three times that amount if you forget to pay the IRS,” she says.

Another sign that it may be time to get help is if you get to the point where you feel uncomfortable putting together your tax paperwork, Devers says. “It’s the same as home remodeling. I may be able to do it myself when it comes to replacing light bulbs, but when it comes to electrical wiring, I need a licensed contractor. With accounting, you can start out doing the best that you can, but sometimes you may need someone with expertise to help,” he says. Working with a CPA can help you make sure your small business never misses a tax deadline, he says.

Margarette Burnette is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @margarette and on Google+.

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Freeze Your Discover Card: No Ice Required

If you’ve had the unpleasant experience of canceling a lost credit card and then finding it between your couch cushions the next day, the Nerds feel for you. And so does Discover: The issuer recently released a new card perk that allows you to freeze your lost credit card temporarily, instead of canceling it.

What it means to ‘freeze’ your credit card

Some cardholders used to freeze their plastic in a block of ice to avoid using it in a nonemergency situation. But there’s no frozen water involved here. In this case, after freezing your card online, on the Discover app or over the phone, the card will no longer authorize new purchases, cash advances or balance transfers until you unfreeze your account. This gives you time to find your lost card and the peace of mind that comes from knowing your card won’t be used to pay for someone else’s purchases.

One of the most annoying things about canceling a card is the need to remember to update all of the accounts you’ve set to be automatically paid from your credit card. With the freeze feature, this isn’t an immediate concern. Certain card activity — like recurring bill payments, returns, rewards redemption and credits — will continue to go through normally while your account is frozen.

Discover also has an option to temporarily deactivate your card, instead of freeze it. This allows you to use your card number for card-not-present transactions — like online or over-the-phone purchases — but your physical card can’t be used. This is a decent option if you’re sure that your card is somewhere in your possession and you need to make an online purchase or two. But it isn’t a good option if your card has potentially been stolen, since someone might rack up a tidy balance on your card via an online shopping spree.

‘Unfreeze’ with ease

Once you find your card, you can unfreeze it within seconds online, through the Discover app or over the phone. Your account number will stay the same, and transactions will go through normally again.

Discover will send you a reminder a week after you freeze, in case you found your card but forgot to unfreeze it. You can freeze and unfreeze your card as often as you’d like.

If you don’t find your card, it may be necessary to cancel it and get a new one. Discover cards come with $0 fraud liability, but it can be a hassle to deal with the aftermath of a stolen credit card even without any monetary expense. If you think your card has been stolen or lost for good, you should cancel and request a new card immediately. And remember, you’ll need to update any payment accounts with your new card information.

Bottom line: If you lose your Discover card, but you’re pretty confident that you’ll find it, you may want to consider freezing, instead of canceling, your card. Your recurring transactions will still go through, so you won’t have to change your automatic payment information on all of your accounts. Once you find your card, unfreeze your account in seconds. Alternatively, if you don’t find your card, cancel it immediately and Discover will ship you a new one.

Erin El Issa is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @Erin_Lindsay17 and on Google+.

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3 Tips for Selling Your Small Business the Right Way

As a small-business owner, you may reach the point when you say, “Time to sell.”

Maybe your small business isn’t doing too well — or maybe it is, and you want to cash out, or you’ve decided that being an entrepreneur just isn’t for you and it’s best to quit while you’re ahead.

If you’re thinking of getting out, though, Chris Wagner has some advice: Watch your step. You can make expensive and painful mistakes if you rush into selling your small business without adequate planning, says Wagner, who has been through the process many times as director of transaction advisory at Strategic Wealth Partners. That firm, based in Ohio, provides financial consulting services to businesses and entrepreneurs.

Small-business owners’ “core competence is in their business,” Wagner tells NerdWallet. But “the sale process is unlike any business process that they’re used to. It’s just very different.”

Selling your business is obviously a tough decision, Wagner says. You probably spent years dreaming of starting your company and even longer planning and executing a strategy. And running that small business probably has consumed your life.

“Sometimes, the personal life and the business are tightly intertwined,” Wagner says. And sometimes a small-business owner decides it’s time to disentangle the two.

Wagner urges owners thinking of getting out to “do a gut check.” Ask yourself: “Do I still love what I’m doing? Do I still want to grow this business?”

“What’s really important is the passion, whether they really love and enjoy what they’re doing,” he says.

There are certainly many reasons for getting out. It could be for health reasons, or it could be triggered by the death of a founder or co-founder. Or as a small-business owner, “you’ve just run out of gas,” Wagner says.

Sometimes, it’s because the small business has become so successful. “The business has grown and becomes too challenging to manage from an operational or even a financial perspective,” Wagner says. “The numbers get bigger, especially when it comes to working capital.”

In other words, you need more money to keep going, which usually means incurring more debt. “They just start getting uncomfortable with the thought: ‘Gosh, I used to have a $200,000 line of credit. Now I have $2 million.’”

Wagner, who typically handles two or three business sale deals a year, offers these tips if you’re thinking of selling your small business.

1. Be clear about why you want to sell

You have to “really think about the motivation to sell,” because that’s an important consideration for how you go about selling, Wagner says.

For instance, if you want out because the financials are starting to get overwhelming, but you actually still have a passion for what you’re doing, you might consider selling just part of the business.

You “may not be happy selling the business and then walking away,” Wagner says. But perhaps you can find an investor to take on some of the financial burden, such as a private equity firm, he says.

In fact, doing so could even make the business grow faster. Small-business owners  sometimes get more conservative as their company and their individual net worth grow. “They become less risk-takers,” Wagner says. Partnering with another investor could fix that, he says.

“When you partner with a private equity firm, you start to use someone else’s money,” he says. “The entrepreneur tends to go back to being more of a risk-taker and being more aggressive in growing the business.”

2. Seek out and rely on expert advice

Selling a business can involve complicated legal and financial issues, Wagner says. The smart move is to consult with experts to deal with those matters.

He says some small-business owners who have decided to sell “just consult with their accountants,” even though those professionals have limited knowledge of and experience with mergers and acquisitions.

A small-business owner “will sell a business just once,” Wagner says. “They should reach out to experts in the field.”

3. Understand what it means for your lifestyle

Wagner says a common mistake small-business owners make is to start the process of selling the company and, six months into that, “realize that, after taxes, the valuation is not enough to walk away.”

Wagner says you must carefully assess how much capital you need to walk away from your company. Part of that, he says, is assessing your own lifestyle.

“They may be living a certain lifestyle today, but they may be living a different lifestyle when they walk away,” he adds. “That needs to sync up with the valuation and what they can get from that business in addition to whatever liquid assets they may have and what they need to retire or walk away.

“The last thing a good entrepreneur wants to do is sell a perfectly good business and then go to work for someone else.”

Of course, after considering these tips, you may not decide to sell at all, and you plan to keep running your small business. In that case, check out NerdWallet’s Small Business Guide for more advice. For free, personalized answers to questions about starting and financing a business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Benjamin Pimentel is a staff writer covering small business for NerdWallet. Follow him on Twitter @benpimentel, on Google+ and on LinkedIn.

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Recent Graduates Are Not Negotiating Salary — Losing Out on Crucial Income

College students and recent graduates are missing out on valuable income early in their careers by not negotiating first job offers, according to a new study by NerdWallet and Looksharp.

We surveyed almost 8,000 new grads who entered the job market between 2012 and 2015, as well as 700 employers. All are members of Looksharp, a leading platform that helps students and grads launch their careers.

Only 38% of survey respondents negotiated with their employers upon receiving a job offer, even though most hiring managers said they expected to discuss salary at that stage. Three-quarters of employers told us they typically had room to increase their first salary offers by 5% to 10% during negotiations.

As college students prepare to walk across the stage on graduation day this spring, being confident and prepared will clearly be key to taking advantage of an important first-negotiation opportunity.

Scroll to the end or click here to see the detailed breakdown of survey responses.

Key trends and takeaways

• 84% of employers said an entry-level candidate would not be putting his or her job offer at risk by attempting to negotiate salary.
• Of the students and graduates who asked for a higher salary, 80% were at least partially successful.
• There’s a significant gender disparity when it comes to negotiation: 29% more male graduates are negotiating job offers than females.
• Employers said sales, marketing and engineering departments within their companies were most willing to negotiate with potential employees.

Check out NerdWallet’s Salary Negotiation Guide, which will walk you through the negotiating process step by step.

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Salary myths debunked

Our findings challenge assumptions that keep some students and recent grads from negotiating. A full 90% of hiring managers said they had never retracted an offer because an entry-level candidate attempted to negotiate. Only 6% responded that they were never willing to negotiate with entry-level candidates. And 76% said entry-level employees who negotiated appeared confident for doing so.

Successfully negotiating a first job offer could mean a major increase in lifetime earnings for new graduates. An employee who successfully asks for a 5% salary bump on a $40,000 job offer when she is 22, for instance, will make an extra $170,000 by the time she retires at 65, based on average annual salary growth of 3%.

The gender gap

Only 34% of female students and recent graduates negotiated, but 44% of men did. Women are not only less likely than men to negotiate first job offers, but they also report being more uneasy about negotiating salary. When it came to asking for more money, 42% of women said they felt anxious — the most common response among the choices “excited,” “confident,” “indifferent,” “anxious” and “unprepared.” Of the men, 53% said they felt confident, the most common choice among male respondents.

We saw these attitudes bear out in salary expectations. No matter the industry, women were more likely to expect between $25,000 and $44,999 as a starting salary. Men were more likely to expect a higher range, from $45,000 to more than $75,000.

When women did ask for a higher base salary, they had the same level of success — about 80% — as men. Beyond salary, it’s possible that inherent gender bias discourages women from asking or getting alternative types of compensation. Men reported more success negotiating stock options, bigger bonuses and more time off; women said they were more successful negotiating flexible schedules.

What’s next?

Now that you know most employers are willing to negotiate salary with entry-level applicants, start building the courage to show up at the negotiating table. Here are a few key points to keep in mind:

• Start by researching how much others earn in positions similar to the one you’re applying for. That way, if a hiring manager offers you a salary below the market value of the job, you have the research to back up your request for more.
• Sit down with a friend, mentor or your college career counselor and practice how you’ll respond once an employer makes you an offer. Make sure your approach is respectful, thoughtful and objective, focused on what value you’ll bring to the company.
• If your employer isn’t willing to budge, consider asking for other perks such as stock options or the ability to work from home one day a week. You can also suggest you revisit the conversation in six months, once you’ve proven you’re a great employee.
• Visit our Salary Negotiation Guide for more actionable tips and scripts.

Student survey responses

We asked 7,764 men and women who graduated between 2012 and 2015 a range of questions about negotiating.

Employer survey responses

Our survey includes responses from 708 employers in more than 20 different industries. The most common fields represented were technology (17%), media (11%) and nonprofit (11%).

Survey demographics

Among respondents, 61% of students and recent graduates were female and 39% were male. All were young adults motivated to join Looksharp’s community of internship and job hunters. The employers in the survey use Looksharp to find and engage talent across the country. These employers represent a range of industries including technology, media, consulting and nonprofits.

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What Costs to Expect When Selling Your Home

Just as with buying a home, selling also comes with its share of dues. You need to prepare your home for prospective buyers as well as pay part of the closing costs, which average around 3% of the home price. Here’s a breakdown of the types of costs you can expect.

Home repairs and inspections: Before the sale, you’ll probably want to fix up carpet stains, window cracks or other home features that have suffered minor damage over time. You also might decide to pay for an inspection for termites or other pests to avoid any unpleasant experience for prospective buyers checking the home.

Staging: To impress buyers, hiring a professional home decorator or stager can help you organize and make your home more appealing. You might also get higher bids on the home this way.

Settlement company fees: If you decide to use a third-party settlement company to ensure all documents and procedures between you and the buyer are correct, you pay the company for your portion of the closing costs and potentially an administrative cost. In return, the company will pay off your mortgage and those closing fees to the lender.

Real estate commission: Generally, you have to pay for the real estate fees for both your agent and the buyer’s agent. The cost can be negotiated, but it typically ranges between 5% and 7% of the home price, split between agents. The money goes to the agents’ brokerages, who will then pay them. This commission can be one of your biggest expenses.

Attorney fees: Lawyers can be certified as real property specialists and in some states might be required to help close a home sale.

Property taxes: Ideally, the buyer and seller pay their respective shares of the property taxes for when they lived in the home that year. Depending on when you sell, you might pay all taxes for that year and have the buyer reimburse you for the time he started living there. Additionally, if your home increased in value more than a certain amount, you might have to pay a capital gains tax.

Seller’s concession: If the buyer is having trouble paying for some of the closing costs, the seller can agree to pay a percentage of them. In exchange, that amount can be added into the home price the buyer pays.

Title search: Although the title search is generally the buyer’s responsibility, you might decide to pay for it as part of the deal. The title search involves a professional reviewing public records to confirm you own the property that you’re selling and that no unpaid dues interfere with your title of ownership.

Lien releases: From the title search, you might discover that some debt hasn’t been paid. If you owe any taxes, contractor costs, utilities or other bills on your home, you’ll receive a lien, or a record of any unpaid amount on your home. You must pay it off to clear your title and be able to sell your home.

Owner’s title insurance: If the title search misses something, a lien remains unpaid or the seller doesn’t actually own the property, this insurance protects the buyer from any financial loss. The seller generally pays for this.

Home warranty: As part of the negotiation with the buyer, you might decide to pay for a one-year protection plan on the buyer’s behalf. This will cover certain repair costs if needed.

Knowing the possible costs when selling your home can keep the process straightforward. Despite being potentially expensive and time-consuming, selling at a good price and without complications can save you time and energy.

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Five Free Budgeting Apps for Your Smartphone

Whether you’ve had your eye on a sharp pair of shades at the mall or are in desperate need of a coffee on your way to work, sticking to your budget can be a challenge. That’s why it’s important to  take advantage of all the help you can get.

The following free mobile apps, all of which are available for both iOS and Android, can go a long way in preventing unnecessary dents in your bank account.

Spending Tracker

As its name suggests, this app lets users create and monitor budgets for weekly, monthly, and annual expenses, organizing them in categories like gas, groceries, and clothing. Spending Tracker lets you sort through past purchases by date, name, or amount, which is useful if you want to find out what you splurged on, and when. This app should be especially handy for consumers who want to get a better sense of how they could cut back on their spending.

Level Money

A slick, easy-to-use app, Level Money lets users connect all their bank and credit card accounts to its system and provides automatic updates whenever they buy something with their plastic. This app uses the same security measures as banks and other financial institutions, which means your personal information should be well-protected. Level Money relies on simple but effective pie charts to show consumers how much money is left in their daily, weekly, and monthly budgets in categories like groceries and transportation. These graphics are also updated whenever you make a purchase using your credit or debit card.

GoodBudget

GoodBudget lets partners and family members sync their budgets across multiple devices and the Web, so when money is deducted from a particular category, everyone knows how much has been spent. That makes this app ideal for families as well as for couples who’ve just moved in together. GoodBudget splits your monthly expenses into digital “envelopes” for which you can choose the categories. It shows how much of the allocated money is left in each envelope after users plug in whatever purchases they’ve made throughout the week — which needs to be done manually because bank accounts can’t be linked to the app.

Pocket Expense

In addition to letting you monitor your budget, Pocket Expense gives you the option of tracking your bills, and it even sends alerts when a payment due date is approaching. Its calendar, which closely resembles that of the iPhone, is one of its best features. Users can scroll through it to figure out which days they tend to overspend on, and can therefore identify recurring spending habits that need to be fixed.

Wally

Another simple, user-friendly app, Wally uses a no-frills layout to help users stay on top of their budgets. Its scan feature is an especially nice touch, as it lets users take pictures of receipts before automatically pulling the most pertinent information from them, like the amount spent and the date of the transaction. Wally lets users set savings goals and notifies them when they’ve been achieved.

The bottom line

It may not always be easy, but adhering to your budget is one of the best money moves you can make. The name of the game is staying disciplined and keeping an eye on your expenses to figure out where you might have slipped up. Although it’s ultimately up to you to stay on track, these apps can provide plenty of support along the way.

Tony Armstrong is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @tonystrongarm and on Google+.

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The Benefits of Being a B Corporation

If one of the goals for your small business is to create better jobs and improve the quality of life in your community, then you may want to join the growing number of companies worldwide that have sought B-corporation status.  Becoming certified as a B corporation is a way to let investors, customers and members of your community know that your company uses best practices when it comes to sustainability.

The “B” in B corporation stands for “benefit,” and certified companies agree to benefit their community by being held to a higher standard of transparency, accountability and performance, says Amy George, co-founder of Blue Avocado, a B corporation based in Austin, Texas, that sells fashionable, reusable shopping and lunch bags. “I wanted to start a company that made being green affordable and easy,” she says. Becoming a certified B corporation is a way to show that Blue Avocado is reaching those goals, she says.

Blue Avocado (re)zip bag

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Before co-founding Blue Avocado, George worked as a sustainability consultant for Fortune 500 companies, helping them develop global impact reports, which show investors and customers how those large companies benefit their communities. “For a long time, there wasn’t a template like this for small business,” George says.

Now, B Lab, the nonprofit that certifies B corporations, has created a way for smaller companies to be certified by a third party to highlight their sustainability efforts, she says.  The company, which started in 2006, has certified over 1,000 companies as B corporations, in industries from accounting services to waste management.  While the certification option can be especially helpful for small businesses, it’s worth noting that many larger companies are also B corps, including Patagonia and Ben & Jerry’s.

According to B Lab, member companies must publicly declare that they have a responsibility to benefit the interests of their employees, community and environment, as well as their shareholders.

There is generally no special tax treatment given to B corporations. You would still need to form your company as a sole proprietorship, partnership, or corporation. If your company is a corporation, however, you may need to amend your articles of incorporation to show that your company considers its impact on the community in addition to shareholders.

Even though it’s not separate business structure, about 26 states recognize the legal status of a B corporation, which can help legitimize your articles of incorporation.

Here’s how your company can join the ranks:

1. Take the Quick Assessment

Before you officially apply for status as a B corporation, you can go to the B Lab website and take a Quick Impact Assessment survey to see where your company stands when it comes to best practices.  Ideally, the survey would be completed by a founder, CEO or other company leader, George says.

The quick assessment is roughly 75 to 100 questions, and it can be finished in about 20 minutes, she  says.  Completing the survey will help you determine how close your company may be to qualifying for B-corporation status.

2. Complete a self-audit

Once you are confident that your company would be a candidate for B-corporation certification, the next step is to take a longer self-audit, called the B Impact Assessment.  This assessment typically takes about an hour and half, though it doesn’t have to be done in one sitting, George says. However, she recommends that a company’s leadership block out a day or so to go over the questions in the assessment, because a lot of them will involve companywide policies, which company leaders will need to discuss.  “It’s more than an audit, it’s a strategy conversation,” George says.

You may be asked questions about your wage structure, promotion policies and how many local suppliers you use, says Seth Gross, principal at Bull City Burger and Brewery in Durham, North Carolina. His restaurant was the first one in the state to receive B-corporation status.

“We were asked how many of our ingredients came from local farms, and I’d have to gather proof to show that we are buying local, and that the majority of our ingredients come from local farms,” Gross says.

You’ll also probably be asked to provide supporting documentation and other paperwork.  Gross says he provided payroll records to show that his restaurant pays fair wages, promotes from within and that percentage-wise, management salaries are not excessively higher than other employees’ compensation.  (In many companies, CEO salaries have risen sharply while employee pay has been flat or decreased, and this has had a negative impact on the workforce).

After you turn in the self-audit to B Lab, you can expect to hear from them within a week, George says. Your answers will be examined and checked against those from other companies that also have applied to see if there are any responses that seem unusual or statistically unlikely, she says.  You may be asked to follow up and clarify some of your responses.

“It’s a lot of work, and so the reason for doing it has to be because you really want to,” Gross says. “It’s easy to just say ‘we support local,’ but this is a way to show that you are putting your money where your mouth is.”

3. Sign the B Corp Declaration of Independence and Term Sheet

To be certified, you need to score 80 out of a possible 200 points on your audit. Once B Lab determines that your business meets that standard, you’ll be asked to sign a B Corporation Declaration of Independence and Term Sheet documents.  The term for B-corporation status is two years, and after that you will need to recertify.

The fee for B-corp status is based on annual sales, with a minimum of $500. To keep certification, the company must pay a renewal fee each year and recertify every two years.

4. Spread the word and continue to support your community

You would seek B-corp status because you want to make a positive change in your community, and the work doesn’t stop with the signed declaration, Gross says. He continues his sustainability efforts by supporting organizations such as ShopLocal Raleigh and Sustain-a-Bull, which support locally owned small businesses (Durham’s nickname is “Bull City.”).

“In our community there is a strong grass-roots movement to buying local.  I’d recommend to other business owners look for similar organizations in their communities,” he says.

Once you have a B corporation, your efforts can be combined with these other organizations to have a bigger effect in your community, George says.  “You’re in a different group of likeminded people that deliver more than just economic impact, locally and internationally,” she says.

For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Margarette Burnette is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @margarette and on Google+.

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Top photo, from left, Amy George, Melissa Nathan, and Paige Davis.

All photos courtesy of Blue Avocado.

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How to Get Entry-Level Tech Jobs in San Francisco

San Francisco is one of the hottest cities for new grads who want to work in tech, and for good reason. The number of employees in San Francisco who work in computer and mathematical occupations is more than twice the national average, according to the Bureau of Labor Statistics — plus, they earn an average salary of $103,780 a year.

There are plenty of jobs in San Francisco that will give you the chance to explore the tech scene, whether or not you studied computer science. The trick is breaking in. So what are your options? Let’s take a look at some of the most popular entry-level jobs in tech.

If you’re looking for a software engineering job: Try developer, engineer or programmer roles with “Level I” or “Entry-Level” in the title. If you’ve done internships or taken courses on programs like C++ or Ruby on Rails, focus your search on position descriptions that mention those specific skill sets.

Economics or statistics majors might enjoy analyst roles, says Jaimie Lynn Craig, senior recruiter at Premier Staffing in San Francisco. Employers are especially interested in candidates with advanced data analysis and Excel experience. “They love to see on your resume that you know how to use pivot tables,” she says.

If you’re looking for a non-tech role: “Anything with the title ‘coordinator’ or ‘associate’ that requires one to two years [of experience], that’s your way in,” Craig says. Start out as a marketing coordinator or assistant to a product manager to learn the ropes.

“Go and assist that person and be their apprentice, just like they did in old-school Italy.” — Jaimie Lynn Craig, recruiter

Landing an entry-level tech job in San Francisco is all about getting your name out there and meeting as many people as possible, says Wendy Saccuzzo, director of career development at San Francisco-based nonprofit Women Who Code and a tech recruiter at Riviera Partners. Follow these steps to get your foot in the door at a company you’ll love.

Step 1: Set goals

“Maybe you don’t know what you want to be when you grow up, but set a goal for what you want to be in your first year,” Saccuzzo says.

Decide what you want to accomplish at your first job and create a list of three to five companies that will help you meet that goal, Saccuzzo says. Perhaps you studied communications or marketing in undergrad and you’re interested in helping tech companies build their brands. If you were an art major, maybe you’re thinking about a career in user experience (UX) design. Once you have a few target companies in mind, start making connections one by one.

“Create a game plan for how you would network your way into the company.” — Wendy Saccuzzo, tech recruiter

Step 2: Network

LinkedIn is the best place to up your networking game. Fill out your profile with your job, internship and campus leadership experience. Join alumni groups or search for industry groups that align with the tech job you’re looking for. Go to Interests > Groups at the top of the LinkedIn homepage and click “Find a group” on the next page.

Then start messaging. Contact people in your network who have jobs similar to the ones you want. Reply privately to someone who has published a blog post you like on one of your LinkedIn groups; in that case, you don’t have to be connected to that person directly to reach out, Saccuzzo says.

Pro tip: Search for fellow alumni in the Connections > Find Alumni drop-down menu at the top of your profile. You can message people who also graduated from your college even if they’re not in your first-degree LinkedIn network.

Step 3: Know what you’re getting into

You’ve met for coffee with connections you’ve made, you’ve gotten referrals for a few jobs in San Francisco and you’re ready to interview. But before you commit to working for a tech company, research the CEO and the organization’s track record.

Especially if you’re interested in working for an early-stage startup, get a sense for who the founders are and whether they’ve had experience building successful companies. Search databases like crunchbase.com to see how the company is funded. Every job seeker is comfortable with a different level of riskiness, says Saccuzzo, but it’s always a good idea to ensure you trust the leader’s decision-making before you sign on the dotted line.

“It’s really important to make sure the executive knows what they’re doing and that they’re heading in the right direction,” she says.

What’s next?

Both Saccuzzo and Craig suggest taking stock of what companies and career paths are out there by going to San Francisco-area meetups. “We’re a hotbed for meetups here in the Bay Area,” Saccuzzo says.

Search for San Francisco groups on meetup.com by typing in the tech track or position you’re interested in — “product management,” for instance, or “web developer.” Go to relevant meetups and plan to have at least one meaningful conversation with a fellow attendee. Connect with him or her on LinkedIn the next day and start building your network of contacts in the area. And most importantly, stay positive and willing to work hard. “Attitude trumps experience,” Craig says. “When you don’t have experience, your attitude is going to win.”

Brianna McGurran is a staff writer covering education and life after college for NerdWallet. Follow her on Twitter.

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