By James Pruitt, Senior Staff Writer

Grants and loans for your small business are quite distinct entities.  It is important to understand the differences.  Loans may provide favorable terms and reduced interest rates, as well as better forbearance and deferment policies. Grants should be favored. Grants are yours to keep. A brand-new entrepreneur with a startup is well advised to research grant opportunities first and foremost, before taking out loans as needed.

This article will provide some of the important distinctions.

Small Business Grants

Whence come small business grants for veterans.   Grants generally come from two sources:  They come most of the time from governments and private organizations. Remember, though, that grants generally come with conditions.

Organizations that provide grants rarely bail out startup businesses or businesses deep in debt. Grant money is selectively distributed, and the benefactors choose their funding paths carefully. Nonprofits, minority-owned companies, and medical firms with experimental treatments are examples.

Many grants go to rural small businesses, in order to help maintain economic vibrance in the surrounding area. Organizations that provide the grants usually hope the money will go to the public good.

Veteran-Owned Businesses are yet another example. Many resources online provide information for small-business grants designed for Veteran Business Owners.

The following website is an excellent resource for private organizations that provide small business grants for Veterans: 12 Small Business Grants for Veterans in 2021 (fundera.com). Another good resource is Grants for Veterans Starting a Business – Kabbage Resource Center | Kabbage Resource Center.

The federal government also provides grants to help many types of struggling business owners. Grants.gov is a great resource for government-sourced small business loans for veterans.

Small Business Loans

What about small business loans? Terms vary depending upon conditions of the debtor, creditor, loan administrator, and society in general. Thorough research is key, as loans carry greater risks than grants.

The Small Business Administration is an excellent resource for those who choose this lending route. The relevant website is SBA Business Loan Information for Veterans | The U.S. Small Business Administration | SBA.gov

First steps for considering a good veteran’s SBA loan include the following questions: (1) how much money fits your current business needs, (2) the purpose of the loan, (3) the loan terms, and (4) your own plans and financial circumstances.

Fraud

Dire consequences await those who dishonestly accept small business grants. These grants come from governmental or private institutions with a purpose. Never lie to accept a grant. The same goes for loans. Private institutions can pursue you in civil (and criminal) court.

As for the government, it is never a good idea to lie to a government institution. You will have to pay back the money, and they will find a way to make you do it, even if they had already deposited the money into your bank account by mistake.

Takeaways

Funding resources for veteran owners of small businesses are readily available. Finding various private or public sources of funding may take some detective-work but do your research because there are many options.  You should find the one(s) that are right for your business and your needs.  We hope the resources provided may provide a step-in-the-right-direction and a starting point. honest   Whatever your path, consider your financial resources, personal circumstances, and long-term capacities.  VAMBOA wishes you great success.

VAMBOA hopes that you have enjoyed this article.   We work hard to bring our audience timely and important information.

We do not charge members any dues or fees.  If you are not yet a member of VAMBOA, please join here:   https://vamboa.org/member-registration/

Members may use our seal on their web sites and collateral and will receive special discounts and other important information.

By James Pruitt, Senior Staff Writer

Business owners commonly build and then sell small businesses. Creating and selling businesses might be quite lucrative, depending on your expertise. Aside from being financially necessary, such a venture can be financially healthy in and of itself.

Successful business owners find various reasons to sell parts of their hard-won entrepreneurial ventures. At times, the business owner needs cash flow. At other times, the owner has encountered another entrepreneur with special expertise, who may further develop that portion of the business according to their own interests. The trick is to consider the right circumstances for you.

First, that business (or portion thereof) might have become a liability. Perhaps a home business requires a great deal of heavy moving, and the owner has suffered an injury. Maybe the business has developed in a new direction and the older parts of the company might better serve another organization. Maybe costs have increased, suppliers have left, or labor has become scarce in that region. In each case, a sale might be worthwhile.

Second, perhaps selling the business was the plan from the start. Perhaps a spark of inspiration led to the creation of that widget, but others have better resources to build that concept. In such a case, building the business short-term may be lucrative and productive. Selling the business might provide the end-fruits of the owner’s labor. The new business can carry on the concept with their own expertise and resources.

Third, the owner may simply be doing too much. Sometimes, a business expands too quickly. Skilled labor can be difficult to find even in an employer’s market. A sale may offer the company more value-added than an expensive hiring process. Often, a different organization has the resources to manage the workload for a part of your business.

Fourth, sometimes the market becomes risky for certain endeavors. For example, property management companies do best when real estate sales slump and more people rent. Real estate agencies do best when the market is hot. Sometimes, one business might raise capital selling resources to another when the two businesses are counter-cyclical. The economy frequently shifts so that one company’s resources might better serve another.

Fifth, the sale may pave the way for collaboration with another company. A partial sale is an excellent way to start an ongoing relationship. Suppose you own a computer repair company, and no longer need certain equipment. Another company may buy the equipment, then keep you on-call for service in the future. Additionally, the sale can establish ongoing synergies that may allow access to bargain deals or valuable expertise. Business relationships form over time, and sales of a part of a company may provide a future partner with intimate perspective. With growing familiarity, the partnership may become quite lucrative.

Whether to sell part of a company may depend on the changing circumstances of the owner, the economy, or the clients. Businesses are interdependent, and their needs often complement each other. Timing and long-term vision determines the best window for the best opportunities.

VAMBOA, the Veterans and Military Business Owners Association hopes that you have found this article on “When and How to Sell a Small Business” to be helpful and that it provides you valuable information.

VAMBOA invites you to become a member.  There are not any dues or fees.  VAMBOA is the “go to” online venue for Veteran and Military Business Owners.   You can also use the VAMBOA seal for your collateral and website.   Below is a link to join and register here:

https://vamboa.org/member-registration/

By James Pruitt, Senior Staff Writer

How and when should a new business welcome a new employee? Is the company a sole proprietorship that finally needs help, or a larger organization with an existing culture? All are relevant questions for a growing company.

• Understand the Employment Relationship, Especially your Needs vs. the Ambitions of the Employee.

Employers’ needs vary. Some businesses only need certain employees on a seasonal basis. Others require workers possessing a comprehensive set of skills relevant to a specific industry. Some companies need workers on-demand or on-call. Others require ongoing monitoring of business processes. Once a business owner realizes the need for help, they should carefully develop the job description.

Any recruits should understand the expectations and needs of the employer. The best employment relationships strike a balance between the needs of the employer and the ambitions of the employee. Finally, the nature of the relationship could mean the difference between a 1099 and a 1040 for tax purposes.

• Consider an Ideal “First Day on the Job.”

Assuming an on-site position with organized training, consider methods to place your new employee at ease and make he or she feel at home. Owners should prepare the new hire’s workstation before they arrive.  An agenda for the job description generally helps the new employee orient themselves. Perhaps even small gifts such as candy, company paraphernalia, or welcome letters might help the new employee orient themselves and feel welcome and more comfortable.   Additionally, a tour of the office and introduction to the team may smooth the transition for both parties. At the end of the day, many companies call the new hire into their office and discuss first needs and impressions.

Of course, not all new businesses have the resources for an elaborate welcoming ceremony. Indeed, most small businesses hire their first employees quite informally. Such employees may be independent contractors, temps, or remote employees. Informal rather than formal onboarding may prevail in these situations. Informal onboarding generally involves learning by doing, on a spectrum with the above formal onboarding, based on each organization’s resources.

• Look to the Future: Consider the Stages of Employee Development

A good resource is the website Peakon.com.  This website describes four phases in an employee’s experience over the course of a job:

The first phase is onboarding. For the smallest companies, the value-added should match the company’s expenditure in this process. Letting an employee go after a drawn-out onboarding process wastes money. An effective relationship can be very informal or even personal. Veteran owners should consider their own interests before spending valuable time and resources on new hires that may not work out.

The second phase is initial development. From the start, businesses should consider their contributions to the future of a new hire. The new employee’s ambitions may not match the employer’s needs. Sometimes, the employer really does only need a few minor tasks. Good business operations require honesty and straightforwardness regarding the scope of the business, the needs of the job, and the employee’s future within the company. Many smaller businesses can only promote their employees to a certain point, if at all. However, they can still provide basic needs such as income and references. Employers should recognize that relationships with employees are always a tradeoff. Ideally, in the best of circumstances, we should all get what we deserve.

The third phase is ongoing development and retention. Industries vary in necessary retraining throughout the employment relationship. Relevant factors include the employer’s plans for the employee over the development of the company, and whether the employee’s role falls within a professional specialty that may have education programs. For the former, the employer should consider the prospects of the company and the plans for expansion.

The fourth phase, finally, is separation. Believe it or not, many a business owner starts their business with plans of ultimately selling it. Sometimes, the planned sale occurs after years of development. Keep in mind, though, separation often sparks trauma in employees. Hence, best practice is honesty from the get-go.

In conclusion, strike a deal. Ensure an understanding. Onboarding a new employee should reach a “meeting of minds.” Each party should understand the other’s needs. At the same time, they should understand that their own needs are being respected.

VAMBOA, the Veterans and Military Business Owners Association hopes that you have found this article on “When and How to Bring in New Talent” to be helpful and that it provides you valuable information.

VAMBOA invites you to become a member.  There are not any dues or fees.  VAMBOA is the “go to” online venue for Veteran and Military Business Owners.   You can also use the VAMBOA seal for your collateral and website.   Below is a link to join and register here:

https://vamboa.org/member-registration/

By James Pruitt, Senior Staff Writer

Cash flow statements are an important accounting tool. Business owners should issue cash flow statements at least quarterly. Most accountants describe two methods: the direct method and the indirect method. Microsoft Excel can provide the relevant tools and templates.  Google Docs also provides templates for both methods. A short description of both the direct and indirect methods are detailed below.

Most businesses use the indirect method, a simple and more efficient approach. The indirect method generally uses a balance sheet approach, an accounting method with a zero-sum view of monetary flow. The indirect method accounts for all activities that affect periodic income, regardless of whether they directly involve cash. Depreciation of a company’s assets is one such example. However, the indirect method lacks the precision of the direct method, which limits itself to direct cash transactions.

Despite the widespread use of the indirect method, the Financial Accounting Standards Board prefers the direct method. The indirect method gives information about periodic accrual of income and debt. However, the direct method offers more specific, traceable information.

What is a balance sheet approach to managing cash flow?  A balance sheet approach seeks to match credits and debits. A cash flow statement using this method starts with net income, then subtracts and adds debits and credits. Debits and credits may include receivables, payables, long-term debt, equity assets, and inventories, including shrinkage and other considerations.

A balance sheet approach also considers fixed assets, and other assets. The line items include general categories for income and expenses, rather than specific, day-to-day expenses and credits. While the indirect method may offer a simpler process, the level of detail may be somewhat disappointing.

On the other hand, the direct method does not start with a net income. The direct method works through the amounts paid to employees, vendors, and other creditors. Various templates for each method are available online. Each can be adapted to your business.

The best approach for any business depends upon the size of the business and the relevance of its accounting practices.  For example, the following link provides samples for each method: https://spreadsheetpage.com/cash-flow/statement.

Each individual business chooses accounting practices depending on their own needs. Consider both legal and business considerations.  Due to its efficiency, the vast majority of businesses do use the indirect method.  Some businesses may prefer the direct method due to the relevance of fraud, or the need for accurate record keeping. Resources abound that provide templates for creating such statements. For the purposes of most small business owners, the most efficient method will likely prevail. However, the needs and liabilities of each business dictate the best practices within each industry.

VAMBOA, the Veterans and Military Business Owners Association hopes that you have found this article on “Best Accounting Practices for Cash Flow Statements” to be helpful and that it provides you valuable information.

VAMBOA invites you to become a member.  There are not any dues or fees.  VAMBOA is the “go to” online venue for Veteran and Military Business Owners.   You can also use the VAMBOA seal for your collateral and website.   Below is a link to join and register here: https://vamboa.org/member-registration/

By James Pruitt – Senior Staff Writer

Small businesses certainly need on-hand cash, and lots of it. A new business owner needs at least enough to cover any kinds of emergency costs, or unexpected costs, even on an everyday basis. But what happens when too much of a business’s assets remain as static, inert cash? Money should make money if not working further in other ways towards the business’s goals.

Small businesses can in fact have too much cash on hand. That cash should work for the business rather than lay stagnant in bank accounts. However, the art of cash flow management is very challenging and eludes many business owners.

The concept of return on assets can help a determination of whether standing cash does or does not work for the business. Return on assets simply asks the question of whether a business’s money or resources could better work somewhere else?   If the answer is negative, perhaps the owner should consider a diversification of the company’s portfolio. Business owners should consider and make such a determination once or twice a year.

What alternatives might diversify a company’s portfolio? Perhaps the redeployment of existing monies could better serve the company. Few metrics in business have greater importance than return on assets. Assuming a pool of cash stagnates in a forgotten bank account, what alternatives can revitalize that rotting pond? Many alternatives can diversify these assets. Among these are bonds, healthy stocks, and CDs.

Depending on the nature of your company and the legal considerations, the best option may be removal of funds to your personal retirement account or your kids’ college account. Consider whether legal considerations restrict your company from intermingling personal from business funds (such as partnership or incorporation situations). However, such options should be readily available to small business and home businesses.

Frequently recommended is six months of “operating cash” for your business. “Operating cash” generally means cash necessary for basic expenses such as recurring labor, utilities, rent, and recurring purchases. Assuming such cash in the coffers, owners may benefit in three ways.

First, standing operating cash backs up any outside negotiations. Business decisions should start from a position of strength. The toxic scent of desperation poisons business deals. Vendors, partners, and suppliers often smell this scent before the owners themselves. Owners should always maintain some wiggle room for negotiation. The best deals do not happen when the owner needs something tomorrow. Having six months of cash flow on-hand relieves the urgency of this type of tension.  Decisions under excessive stress rarely provide the absolute best outcomes.

Second, the past ten or fifteen years warns of the inevitable ebb and flow of the economy. Always assume dry spots. Six months of on-hand cash may guide your business through those straits. Just as individuals should keep personal emergency funds, businesses should keep that six months of operating cash for economic emergencies. Small businesses especially will not regret it.   The current pandemic has changed all of the dynamics and rules.

Third, consider the development of your company. Much can happen in six months. Your business plan may change, you may get new ideas, you may discover new opportunities. A six-month supply may allow owners to redirect their business ventures, and see new ideas come to fruition.

On-hand cash flow is important. Businesses should always have emergency funds. However, stagnant cash does small businesses no favors. Options are limitless for secure management of unused cash. Whether through investments, lucrative deals, or new ideas, business owners should stream those monies out of that stagnant pond, assuming the money does not work for the company in situ. As always, balance is the key.

VAMBOA, the Veterans and Military Business Owners Association, hopes that you have enjoyed these articles addressing various aspects of Cash Flow.   We work very hard to bring our audience timely and valuable information.

VAMBOA does not charge members any dues or fees.  If you are not yet a member of VAMBOA, please join here:   https://vamboa.org/member-registration/

Members may use our seal on their web sites and collateral and will receive special discounts and other important information.