What are the Most Common Ways to Commit Identity Theft or Fraud

It's the number one source of consumer complaints at the Federal Trade Commission (FTC), and unfortunately, it's one of the simplest crimes to commit. Identity theft involves information from your daily life, from shopping, bill-paying, and even applying for a job. Thieves take advantage of everyday opportunities to discover your personal information, including your Social Security number (SSN), bank or credit card account numbers, income, name, address, or phone number, and use it to commit fraud or other crimes.

How can a stranger get to your information? According to the FTC, identity thieves may pose as legitimate representatives of an organization, as business professionals or agents of the government, conning you into revealing sensitive information. Common scams include impersonating employees from banks, credit card companies, Internet service providers, and utility companies. If someone calls you claiming to represent a legitimate organization, confirm this by calling the customer service number listed on your statement or bill.

Thieves may also use your place of employment to get the information they need. A co-worker may steal information from your employer; someone could hack into your company's computer and copy employee records; or a criminal could resort to the old-fashioned method of bribing someone you work with for your information. Check with your employer to find out the company policy on securing your records and disposing of them when you're gone.

If your employer is authorized to pull credit reports on employees or potential customers, someone could take advantage of this access to retrieve illegal reports. Criminals may also pose as employers, landlords, or collection agents to pull your credit information. It's a good idea to order a copy of your credit report once a year to check for unauthorized entries.

Shredding your documents before you throw them away is also good idea, whether at work or at home. Identity thieves have been known to sift through garbage, in the trash can or at the dump, to find sensitive information.

The most common form of identity theft is credit card fraud. Technology has allowed criminals to begin stealing your credit or debit card numbers as you use the cards, "skimming" them with an information storage device. In addition, thousands of drivers' licenses and credit and debit cards are stolen each year. Keeping your Social Security card in a secure location and safeguarding your purse or wallet while at work are necessary precautions.

Even your mail is a source for identity thieves, who may complete credit card applications in your name and go on a spending spree. After stealing your bank or credit card statements, tax information, or box of replacement checks, criminals are able to access your accounts and spend the funds in your name. They may even change the address on your existing account, diverting the bills to keep you from recognizing the problem until it's too late. Being aware of your billing cycles can help you catch a discrepancy in the arrival of your statements.

Identity thieves have a variety of ways to use your information for their personal gain. They may shop for big-ticket items using your credit or bank account information and then sell the items for cash. With your SSN and date of birth, they can open new bank accounts or apply for lines of credit. In fact, banks have granted loans to criminals using stolen identities for purchases as large as cars.

Telephone or internet service can be set up using your SSN. Thieves can avoid impending eviction or accumulated debt by filing bankruptcy in your name. Perhaps the most emotionally traumatic, police could issue a warrant for you if a criminal was arrested using your name and failed to appear at a court hearing.

The ways that identity thieves have conceived to acquire your personal information are numerous, but your vigilance and heightened awareness can curb their ability to make you a victim. And, if you sustain credit damage, go to http://www.apscreen.com to find out what you can do about it.

What Goes Behind Your Credit Score?

A credit score is primarily based on credit report information, typically from one of the three major credit bureaus, Experian, TransUnion and Equifax. Since lenders or banks lend only against your creditworthiness, it does makes sense for you to know what factors determine your credit score.

What Is A Credit Score?
Based on the snapshots of your credit report, credit score is the number arrived to summarize your credit risk. It ranges from 300 to 850 and helps a lender to determine the risk level. Or we can put it like this, “if I give this person a loan, how likely is it that I will get paid on time?”

There are different methods of calculating credit scores. FICO is one of the most popular credit scores developed by Fair Isaac & Co. The higher is the FICO score the lower is the risk for lender.

What Affects Credit Score?
Your credit reports contains many pieces of information that reveals certain important aspects of your borrowing activities mainly focusing on:

• Late payments
• The amount of time credit has been established
• The amount of credit used versus the amount of credit available
• Length of time at present residence
• Negative credit information such as bankruptcies, charge-offs, collections, etc.

Bad Credit Small Business Loans
Seeking loans with low or bad credit score can drive you up the wall. The mainline lenders may simply reject your loan application while the others from subprime market may charge you extortionate rate of interest on your bad credit small business loan.

In case you are an entrepreneur and need new business loan for growth or expansion, bad credit can put you in pickles. In such a scenario, it’s better to go for cash advance option that is provided irrespective of you credit history. Such cash advance is given against your future credit and debit card sales.

What Is Cash Advance Option?
Cash advance is a small business loan approved against the monthly amount you process through credit card sales. Cash advance lenders do not ask you for your credit rating and can pre-approve your loan within 24 hours. A mutually agreed upon percentage from your daily sales through credit card processing goes to the lender automatically as repayment of the loan.

How To Increase Your Credit Score?
Your credit score cannot be improved in short run but a few steps can help you improving your credit rating over a period of time. Here are a few tips:

• Pay your bills on time. Late payments and collections can have a serious impact on your score.
• Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
• Reduce your credit-card balances. If you are "maxed" out on your credit cards, this will affect your credit score negatively.
• If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.

What Are the 7 Proven Principles of Business Success?

The 7 Proven Principles to Business Success will overcome whatever limitation you have. Think of it as a recipe for success in business. All you have to do is first of all learn what the 7 principles are, and then apply them, in order. When you follow this recipe all of your challenges will fade away.

Why do you own a business? Isn't it because you want a LIFESTYLE? You didn't intend to work long hours, be stressed, have little time off and be hassled with staff and customers did you?

Isn't it time you made some changes for the better? After all, if you want to change some things in your life, you have to change some things in your life. If you're ready for a change here's the magic recipe you need to follow...

Principle 1: Work on yourself to understand people.
Business is all about people isn't it? You have them as customers, you employ them, but few people have realised the absolute key to success is understanding people at a much, much higher level. You sales and marketing skills are determined by what you know about people. Your leadership skills with your staff to get them to perform as well as you do is determined by your knowledge on people.

So what's the best way to learn about other people? Easy, learn about yourself! You're a people and the more you learn about yourself the more you automatically learn about other people.

Principle 2: Learn business success principles.
There are so many principles to business success, but I'll emphasise just a few. One is, you're in business to make a profit, not just turnover. Turnover is a job, whereas profit gives you a LIFESTYLE. Your aim should be to increase your net profit percentage of turnover, as this allows you to grow and pay yourself whatever you desire.

Net Profit percentage comes from improving everything you do, not just doing more of what you already do. How you answer the phone, how you greet people face to face, how you write your ads, improving your communication and leadership with your staff. All of these are areas to improve.

Another principle of business success is cash flow. Cash flow means having the cash in your bank account that should be in your bank account. If customers cost you money before you get any back, that's negative cash flow, if you get cash before you incur a cost that's positive cash flow. The better you get at getting money up front with deposits and getting people to pay on time the better your cash flow.

Principle 3: Set goals and have a plan to achieve them. Until you set a goal you don't have a reason WHY you will improve your business, therefore the HOW doesn't matter. People have to know why, before how. You'll want to know how to grow your business once you have set a written goal.

When you have a goal its time to look at the relevant strategies for your business. I know of over 300 strategies, but most people can only think of about a dozen. Strategies are like tools. If you go to build a house with just a hammer, a saw and nails you will be building it for a long time. Business is the same. When people don't know what strategies are available or suitable to them how can they effectively grow their business?

A Business Growth Plan is simply the order of implementation of those strategies beginning with the highest priority strategy. When you have documented goals for 3, 6, 9, 12 and 24 months with a list of strategies in order you have a Business Growth Plan that makes growing your business EASY!

Principle 4: Turn your staff into a TEAM.
Unfortunately business owners are trying to do it all on their own. They often don't train their team regularly with team meetings or one on one allocated time every week. I believe you have one role as a business owner, to be a great teacher! Your aim should be to teach everyone in your business how to do everything you currently do, better than you do! And what does that then make you? Obselete! When business owners think no one can do my job as good as me, they are digging a big hole for themselves they will never get out of. Then they wonder why they are stressed, tired, work long hours and this happens more and more as the business grows. TEAM stands for Training Everyone Achieves More!

Principle 5: Build foundations for growth.
If you want to build your business to provide a great lifestyle you need to put foundations in, just like building any building. If you don't intend to really increase your profits then you don't need foundations. If you want to seriously increase your net profit percentage (even without increasing turnover) you must have strong foundations. When they build a skyscraper they don't build up, they dig a big hole down.

The foundations in business are 2 things. First, having documented systems. A system is just a best way of doing something that everyone knows and uses that has been identified and written down. It helps consistency and efficiency and as you grow people are accountable to the systems, not to you the owner. That means you save time checking on everyone. Systems only work when you have worked with your staff to turn them into a TEAM.

Secondly, measuring everything is part of building foundations. If you haven't measured your Key Performance Indicators how will you improve on them? Increasing Net Profit percentage of turnover comes from improving everything you currently do, remember?

One could write a book on measuring, it’s so important, I can't emphasise it enough. When you've measured all your KPI's you're ready for...

Principle 6: Implement EFFECTIVE Sales and Marketing.
Everyone in business is already doing sales and marketing but how effective is it? You know when you have effective sales and marketing, here's how: you won't get so many price shoppers as your marketing already has "sold" them on buying from you. Your marketing is so effective you only have to run it a third as much because you can't handle the increase in customers it brings you. And you'll know your sales and marketing is effective because you put your prices up 20% and also increase your conversion with the price rise!

People in business don't take responsibility for their sales and marketing and as a result they don't get the results they desire. If you learn sales and marketing by paying a professional for a few months it will be the best investment you ever make. Once you learn the principles of success you can then add to them yourself, but often you need an expert to get you started.

Principles 7: Manage the business.
Unfortunately businesses aren't managed at all well. You can tell by these examples... decisions aren't based on numbers, there aren't documented systems, regular weekly team meetings aren't happening nor is weekly one on one team training.

Management is all of the above; it's making decisions on numbers. e.g. you measure how many customers you serve in a week for each team member and measure the number of new customers each week and then work out your team can service 5 customers each per week. That means if your marketing can produce 5 new customers and if you're at maximum service capacity you need to be thinking about getting a new team member very soon.

This is what management is, training your team weekly, documenting systems, measuring numbers, making decisions on numbers, setting goals and helping your team to achieve their own.

When you dedicate time to learn and then follow all 7 Principles, in the order above anything is possible. I've had clients increase their monthly turnover by 1,000% in just 5 months when the business wasn't growing at all and the owners did it with ease and grace, no stress at all!

What's your growth potential? Are you realizing it yet? If you're not growing at 50%-100% a year you're possibly not growing as fast as you could!

Incorporating Tips – Capitalization

Capitalizing a new business entity is a critical step of the formation process. Failing to take the step can lead to serious legal problems if the entity is ever sued. So, what is capitalization and what steps must be taken?

Capitalizing Your Corporation

“Capitalization” essentially refers to funding your corporation. In essence, you are providing substance to the entity in the form of money or property. Typically, the funding process works in two ways.

Corporate Stock

You must own stock in a corporation to be considered a shareholder. You are already familiar with this concept if you trade on the stock market. For instance, assume you bought stock in Sirius Radio in anticipation of Howard Stern moving to the station. You purchased stock through a brokerage or retirement vehicle by exchanging money for shares. Technically, you are a shareholder in the corporation. Your own corporation is no different.

The fact that you paid money to have a corporation formed does not make you a shareholder. You must exchange property, cash or services to obtain stock from the entity. Only then are you a shareholder in the entity. This is more easily explained with an example.

Assume I start a corporation for the purpose of providing consulting services to other businesses. The corporation is formed with 10,000 shares and I am going to be the sole shareholder. I have cash and certain assets that I am going to use as part of the business. I decide to exchange $3,000, a copier, fax machine and computer equipment for stock in the entity. This exchange should be reduced to writing, but will constitute the capitalization of the corporation.

Corporate Loan

You can also loan money to a corporate entity for start-up costs. There is no prohibition against a shareholder providing money to a corporation. The loan process should not completely replace the purchase of stock. From a tax perspective, however, dividing your initial capitalization into a partial loan can have distinct advantages.

Inadequate Capitalization

State laws govern the formation of a corporation. Inevitably, these laws set forth amounts or formulas for determining the minimum capitalization amount required for a corporation. You must review the laws in your state to determine the amount and make sure you meet the contribution minimums.

Failure to properly capitalize your corporation can result in disaster if the entity is ever sued. Simply put, the suing party may argue that the lack of capitalization means the corporation was never a viable entity because it had insufficient funds to back debt obligations. The argument gets complicated, but suffice to say you are in serious trouble if a court agrees with the argument. Typically, the court will “set aside” the corporate entity, exposing each shareholder, director and officer to the risk of personal liability. Obviously, such a scenario would be a disaster.

In Closing

If you’ve purchased a corporation from online service, you have work to do. Make sure you determine the minimum capitalization requirements in your state and comply with them.

Who Needs a Business Advisor?

The simple answer to the seemingly complex question of “Who needs a business advisor?” is … everyone responsible for operating a business. That’s right. The Fortune 50 CEO to the one-person show needs an advisor.

The CEO of a public company has mentors as well as a board of directors to turn to. They often don’t have a choice of who their advisors are but small business owners do. Unfortunately, with this choice of advisors comes another choice that is often made instead. That choice is to not get any help at all.

Not getting any help at all is very often the cause of the business failure statistics we hear so much about. The small business owner will often claim that they don’t have the time or money for an advisor. Think about that comment. How can you not have the money to get help from someone that can potentially save or make you more money since you obviously are not getting it done on your own? Or how about that time you are lacking? Maybe if that owner sat down for an hour with an advisor, they would be able to see why they don’t have time and do something about it with the help of someone who has already been in those shoes.

A coach or advisor gives to small business owners something most of them don’t have; a sounding board and a board of directors to turn to for advice. These are two great resources to use when trying to avoid “trial and error” decisions and processes.

I’m not knocking trial and error as the way to learn things. I’ve personally used that method and faired well in many cases. But that is a case-by-case basis, not for on-going daily concerns. Don’t forget that this method is also very costly and time consuming. Why not ask someone who has probably already faced the problem?

What many business owners do not realize is that they rarely go through any trials and tribulations that someone else has never dealt with. Not to mention that about 70-75% of their business is the same as every other business including HR, finances, sales, marketing and funding. The other 25-30% is industry specific.

Small to mid sized business owners take away much more from an advisor than big businesses. This, if for no other reason, is the case because the smaller companies have owners that wear a lot of hats. Many of those hats take time away from the things the owner actually needs to make a priority to see their company succeed. Things they should be doing that they don’t have time to get to or things they are taking care of that they have no experience in doing. These situations take away from them doing what they do best. That’s a problem.

The question now is how to find an advisor. There are many types of business advisors out there. Some are purely “coaches” and others are true developers and implementers that will roll up their sleeves with you when asked to. It’s up to you to pick the type of person you want or need. Here are a few things to think about:

- Do they click with your personality? There are many good advisors out there but if they don’t click with you as a “business friend”, don’t bother with them because you will end up fighting them even when you agree on the advice.

- Have they owned a small business before? Gray hair does not equal business ownership knowledge. I promise you that the ex-CEO or Senior manager from a huge company knows very little about successfully operating a small business. These are two significantly different worlds.

- Don’t worry if a potential advisor doesn’t know your specific industry. Remember that a lot of your troubles have nothing to do with your industry. It would help though if the advisor had contacts/resources for you in your industry for when specific problems are addressed.

- Look for flexibility. A potential advisor that pushes for more than 20 hours a month of your time from day one is probably out for money. Until they start working with you, there is no way of knowing that they need that much time per month to meet your goals and timelines. A good advisor will understand that you have made a commitment to get back on track just by the fact that you are talking to them. They shouldn’t need to try and get a ridiculous time/money commitment from you if they want to help.

- Make it a local thing. This suggestion is a two-part issue. First, the advisor should agree that when face time is needed that they come to you. Second, there is absolutely no reason why a small business with locations in one state needs a business advisor that must fly in or travel more than 2 hours to see them. These companies somehow find suckers to take their so-so advice and huge reports full of fluff and also pay for travel costs. There are plenty of advisors local to every company in this country. Yes, even in Hawaii.

Once you made the very intelligent decision of getting help in making your business a success, keep a few things in mind. You should really commit to working with your advisor for a good 6 months. Nothing gets fixed overnight. Also, since you are paying for it, please do yourself a favor and be open to suggestions, bring important things to your advisor for help in making a decision and make the use of your time with the advisor a priority. Don’t forget that an advisor or coach should never make a decision for you. It’s your company, they are there to make suggestions and guide you.

Working with an advisor can be a very enlightening experience. You will start to see the forest from the trees and not feel like you are the only person on the planet going through tough times as a business owner.

All business owners eventually need help. The successful ones put aside their pride and desire to be at the center of all aspects of the company and get the help. Do yourself and your company a favor and be one of the truly successful business owners. Get an advisor and get all you can out of them. If your advisor loves what he/she does for a living as such as you love what you do, you can’t go wrong.

Common Mistakes Small Businesses Make and How to Avoid Them

Unfortunately very few start up businesses make it beyond their 3rd year. Failure is usually down to a number of clearly identifiable mistakes, which if small business owners are aware of, can increase their chances of survival.

Here are the top 10 common mistakes which small businesses tend to make.

Lack of Market Research

When a budding entrepreneur comes up with an idea for a new business he assumes that because he would buy such a product or service then everyone else will. This may be the case for day-to-day necessities but for other items this is usually not so.

It’s important that when you start up you carefully research the market to check that:

• There is demand at a level which would lead to a sustainable business

• People are prepared to pay the price required for you to make a decent profit

Undertaking market research may appear time consuming but the effort will pay off.

Poor Record Keeping

Some business people are not born administrators; they feel more comfortable getting out there and ‘doing the business’. paperwork is too easy to ignore but can never be put off indefinitely.

Sales, purchases and other expenditure must be carefully documented, so you know whether you are making a profit or not. Invoices must be issued on time and chased up promptly if there is a delay in payment. It’s all very well having the sales but poor record keeping can hold you back.

Having your paperwork in order will also save you time when it comes to your accountant doing your year-end books!

Insufficient Capital

When starting off it’s easy to decide what capital is required for fixtures and fittings, machinery and stock. What many new business owners forget about is the cash needed to fund day-to-day requirements, i.e. cash to pay expenses before your customers pay you. This is known as your working capital requirement.

Small businesses can fail because they have insufficient cash to start off to meet these immediate expenses. If you wish to survive make sure you set aside enough cash to meet all your needs for the first few months.

Ineffective Marketing Or None At All

You cannot afford to treat the cost of marketing as an unnecessary expense. A business with no marketing is like waving in the dark – you know you are doing it but no one else does!

There are many ways to promote your business on a small budget; it’s just a case of being inventive and creative. What ever you do, don’t assume that people will quickly know you are in business – they won’t, unless you tell them.

Ignoring Changes In The Market Place

As a small business owner it’s very easy to get immersed in your business and not see what is happening around you in the market place. Always keep your eyes and ears open to what the competition is doing and what your customers want. Don’t get left behind.

Owner’s Attitude

Attitude is everything in business. Don’t forget that the real boss in your business is the customer. Running a business may make you feel important but don’t let this develop into an ‘I am better than you’ attitude. Do this and you will quickly chase your customers away.

Spending On The Wrong Things

Being in business can be exciting, especially as the cash starts to roll in! However, don’t be tempted to spend it on a new car, a house or just a good time. If you are to own a successful business then you have to keep some cash back to fund future growth. A business cannot grow without cash, so commit to spending business money on the business.

Dependent On A Small Number Of Customers

Don’t fall into the trap of setting up a business just because one person says they will buy from you every week or month. Setting up and running a business, which is dependent on one customer, is not a recipe for success. What happens if, one month after you have spent all your cash to set up your business, that customer says he has changed his mind and has decided to buy elsewhere? Unless you can find other customers very quickly you are faced with closure.

Before embarking on a new venture make sure you have a sufficient number of customers such that if a few go elsewhere you can still continue trading.

Growing Too Quickly

Surprisingly, growing too quickly can be a problem. You have to be disciplined enough to only take on work you can handle. If you are tempted to accept too much you could end up disappointing not only the new client but also your existing ones.

Also, don’t under-estimate the impact rapid growth can have your administrative burden. As I mentioned earlier, getting behind on the paperwork can have an equally damaging effect on your business.

Trying To Do Everything

Finally, the problem most small business owners have is the fact that everything falls on their plate. Inevitably this is how it’s likely to be in the beginning, when the limited budget means that staff are a luxury, but as the business grows be aware that you cannot continue to do all tasks. There will come a point when you become inefficient and not have enough time to complete everything in sufficient detail. Taking on an extra pair of hands will increase your costs but you will be surprised at how much time will be saved, allowing you to do what you do best – getting the business in.

Take a look at each of the mistakes and make sure that you don’t fall into these traps.

Will Your Small Business Have A Happy Ending?

There is no question that as a small business owner you have persevered and worked hard, dedicating your life to the success of your company. That being said, don’t you think a company you put all of your energies into, deserves the chance at having a happy ending? Have you considered the impact your death, disability, retirement, or even divorce could have on your small business?

If you are the owner of a small business it is time for you to stop thinking of only what is happening now, and start focusing on what could happen in the future. Therefore, you need to put your priorities into perspective by protecting yourself and your business with a succession plan. A business succession plan is what you need to ensure that your business has a happy ending by remaining secure, regardless of what may happen in the future.

In particular, a succession plan allows your business the chance to be able to stand up to any challenges that may occur along the way. For instance, certain setbacks that you might experience may be entirely beyond your control such as divorce, disability, departure and death. But with a business succession plan you have the chance, as a small business owner, to ensure that regardless of what may happen to you, your business will be protected.

The following are a few aspects you should to take into consideration when creating a business succession plan for you small business:

How to Begin the Succession Planning - Since you need to make choices before you can really begin achieving your succession planning goal, you must first think about your long term business objectives and ask yourself important questions such as –

• Will I sell my small business?
• Should I set up a plan that allows me to transfer my business to one of my business associates or a family member?
• Does my business have public potential?

Of course, business succession planning begins with much more than simply deciding who you will be giving your business to in the event that you can no longer run your company, or wish to sell it. Additionally, succession planning is about keeping your small business afloat and successful to ensure that your absence will not devastate your company. Therefore, in order to maintain future control of your business, you will need to begin your succession planning by making choices that will concern things such as:

• ownership objectives
• asset protection planning
• taxation and transaction planning
• estate planning

You will want to keep in mind, however, that due to the fact that every action you take with succession planning will result in a reaction, you will require the assistance of experienced experts when developing your plan.

Understand the Dollars and “Sense” of Business Succession Planning – Like any type of business preparation, your business succession plan needs to be orderly and handled carefully if you don’t want to suffer the consequences of financial losses – or worse – the loss of your small business. That being the case, you need to know exactly what you are dealing with, and how you can achieve the most of your planning.

The one mistake you will not want to make is to overlook your business finances. You can help keep your business secure by properly using the following, and more, in your succession planning before problems occur:

• Life insurance
• Disability insurance
• Annuities

Furthermore, you will find that with an orderly succession plan, you will be avoiding the possibility of your business having to be sold to pay off the estate tax, in the event of yours or (if you have one) your partner’s death. It is no secret that estate taxes can claim up to 55% of an estate that is taxable, which is no mystery why so many businesses fall into debt, become bankrupt, or are sold due to the death of the owner or partner.

In addition, another aspect that needs to be considered is that clients are most likely to do business with other businesses after the owner or partner is deceased. However with the proper succession plan, your business should be able to maintain any regular clients - or if not - it will be better equipped to survive the possible drop in assets if a slow period should follow.

Know How to Write Your Happy Ending – Remember, when all is said and done, the outcome of your succession plan depends entirely on the choices you make regarding the future of your small business. It is imperative that you take the time to make the best choices that will allow you to implement a succession plan, which keeps you in control of the outcome that involves the transfer of your company. By knowing how to ensure the prosperity of your business future with a succession plan, is how you will write your happy ending.

Unsecured Start Up Loans For Small Business – Is It A Good Idea?

First-time small business owners usually are chary of unsecured start up loans. This is because the time frame for making a profit is not definite whether or not there is a properly thought out and lucrative business plan in place for the future business.

When profits or revenues do not materialize per plans, as in most cases, there is danger of default on loan repayment. When this happens credit rating of the person involved gets degraded as unsecured loans are granted on the basis of credit and borrowing history of the business owner.

And if there is bad credit history behind, he/she can very well forget that small business loan. Let’s discuss some more aspects of unsecured small business start up loans.

Some Facts

If the credit history of ‘to be’ small business owner is good, unsecured start-up business loans are easier to avail as compared to other business loans. But it is better to go for secured loans against property or equipment affiliated with the business.

Secured loan not only keeps personal credit rating intact but poses lesser risks for the business owners, because they can use the hypothecated equipment to generate a profit for the business. As a result the loan can be paid back on time. Not just that, secured loans are for longer tenure and come with lesser interest rate burden, thereby lowering the cost of loan.

But if you have decided to apply for unsecured small business start-up loans, you should be careful about the requested amount. Remember, the more you owe on the loan (including interest), the more will be the money which you have to repay.

If you are not exactly sure how well the business will do in the first year and want to keep your credit rating good, it is best to request a small amount for your unsecured start-up business loan. This will make sure that repayment installments are small and if you are punctual in repaying, you can always ask for more, which will be gladly given.

Some Advice

Before you apply for an unsecured business start-up loan, there are several things that you should keep in mind.

First of all, you will need to convince the lender that it is a good decision to issue the loan to you. Since unsecured loans are based on your credit and repayment history, you will have to convince lenders that you can handle your personal finances in an organized fashion. Good credit record will put lenders at ease since they will be able to see your repayment history on your credit report.

Since lenders will be looking at your credit report, you should maintain a positive report as far as possible. If you know that you owe certain lenders, you should try to settle these debts or set up a payment plan with your creditors. This will be visible on your report.

Before you make any final decisions about unsecured start-up loans for business, be sure to speak to an accountant or a representative from your local bank. This will make sure that you are applying for the right loans which would help your business to develop quickly and steadily. You must not take a decision unless you are convinced.

Set Up Your Online Business for Less

Are you starting an online business with a small budget? That's OK. Online businesses are one of the lowest cost businesses to run - if you know what you need to pay for and where to go.

Follow these suggestions for getting your website set up inexpensively while not sacrificing quality. There are some things you need to pay for (and this will tell you how much) and other things you can do just as well for free.

STEP ONE: GETTING A DOMAIN NAME

There's no reason to pay more than $10 - $15 for a domain name, so feel free to shop around. Domains are important because they give you credibility as a business.

Free websites do not enable you to have your own domain name so instead you end up with mybusiness.freespace.com instead of mybusiness.com. See the difference? Your customers expect you to put some money into your business and this is a clear tip off that you are not doing that - and for $10 - $15, why shouldn't you?

STEP TWO: FIND A HOST

Hosting plans vary considerably. Much of what you pay for will be determined by the features your hosting account provides with its service.

Are you setting up a simple, one page site? You could probably use a low cost host for $5 per month. Do you need some extra help with templates and layout or expect a high amount of traffic or downloads? You may have to pay more but it can be well worth the extra expense to have integrated webpages already set up or to ensure your host is providing you with enough bandwidth to handle the traffic on your site.

Never use a free host, unless perhaps you want to start with a blog or similar format while you get your own website up and running. Free hosting usually means you pay in other ways - lack of a domain name or a lack of quality. Many free hosting accounts are for personal use only and do not allow commercial accounts. Try to get recommendations from others when looking for a good host.

STEP THREE: DESIGN

As previously mentioned you can find professional templates on some hosting services. These can give your website a professional polish without the expense of hiring a designer. You are limited, however, on the look you choose depending on the variety of designs available.

Templates are also available to others so your site may have the same appearance as someone else. If you need custom work done consider hiring a freelance web designer from a site like elance.com or ask a local student studying web design. Freelance sites often put you in touch with new designers who will charge less while building on their experience and adding to their portfolio.

Spending money wisely is important when starting any business, but some free services will cost you in reliability or image. On the other hand there are some cheap deals you may not hear about so don't give your hard earned money (or worse - your credit) for a service you can pay less for and get the same results.

Due Diligence – I don’t need it (ya right)

You have been searching for various businesses for sale and now you have found that perfect business to buy. The business is represented by a reputable broker. You are comfortable with the terms, and now you wish to enter into contract and proceed with the due diligence phase. Everything you have been told by the seller and broker sounds good and feels right. So what’s next? How deep do you need to dig?

Deep my friend. Yes, most brokers are very reputable. But remember they only get paid when the deal closes. And remember also that the broker is representing the seller, not you.

So what should you be digging for? Here is a partial list:

1) Negative business trends;

2) Negative industry trends;

3) Expected but undisclosed competition;

4) Any hint of a personal matter that would restrict the seller from selling;

5) Any partner, spouse, shareholder, or related party that would restrict the seller from selling;

6) Existing or past credit problems with banks or suppliers;

7) Any pending litigation against the company;

8) Any claims, liens, or encumbrances against the company or company real estate;

9) Unpaid income, sales, FICA, unemployment insurance, or other taxes;

10) Timely filing of all tax returns;

11) Expected but undisclosed loss of one or more major accounts;

12) A current disaster recovery plan;

13) A current management succession plan;

14) Stale or nonexistent policies and manuals (including personnel manual, training manual, safety manual, and sexual harassment policy)

15) Retention of key employees;

16) Retention of key accounts;

17) Recent bad publicity;

18) Expiring/ renewal of property lease;

19) Leases that are not assignable;

20) Restrictions on business or property expansion;

21) Capital assets that are at or near their expected life;

22) An established reserve for capital improvements;

23) Obsolete equipment and machinery;

24) Overvalued inventory;

25) Product obsolescence;

26) Expiring licenses, patents, franchise agreements, etc.

27) Difficulty in obtaining raw materials, products, or services;

28) Expiring vendor or supplier agreements;

29) Recent increases in all types of insurance rates;

30) Employee awareness regarding the business sale;

31) Customer awareness regarding the business sale;

32) Vendor and supplier awareness regarding the business sale;

33) Non compliance with safety and environmental requirements;

34) Potential labor union or other employee related issues;

35) Any web site related issues.

As you can see there are many issues that really need to be investigated. Many are very technical. You will likely need to enlist the help of other professionals for assistance. An attorney and an accountant are a must.

Just remember, when you are searching businesses for sale, think ahead. Do not trust everything the broker and seller tell you. You are making a huge decision; make sure it’s a good one.

Transportation Costs Drive Small Business Concerns

Taking clients out to lunch, delivering goods and performing service duties are what drive entrepreneurs to success. Microbusiness owners and the self-employed depend on transportation to provide their products and services. However, escalating energy costs are making it more difficult to survive and profit as a microbusiness owner.

An online poll from the National Association for the Self-Employed (NASE) asked members how rising gas prices are affecting their business. Over 70 percent of microbusiness owners agreed that rising gasoline prices are significantly or moderately hurting their businesses. Nearly half (43 percent) of respondents increased prices to compensate for the growing costs of fuel.

"Microbusiness owners often depend on their cars to connect with their consumers or use shipping services to mail products," says NASE president Robert Hughes. "Most people did not account for such increases in their travel or shipping budgets for the year."

This year, the self-employed will need to revise their budgets to accommodate increasing energy costs. In the meantime, several options to stabilize energy costs are supported by the association members who opted into the survey. Tax subsidies for energy companies to develop new energy-efficient technologies, as well as tax credits to drivers who buy cars with fuel-efficient technology, were supported by two-thirds of respondents. Additional drilling in possibly oil-rich areas within and offshore of the U.S. appealed to 67 percent of members who responded to the poll.

The National Association for the Self-Employed is the nation's leading resource for the self-employed and microbusinesses, and brings a broad range of benefits to help entrepreneurs succeed and to drive the continued growth of this vital segment of the American economy.

High-Tech Training For Small Businesses-Available 24/7

There's good news for owners of small-to-mid-sized businesses who want a better understanding of the technology they have come to rely on.

It's no secret that small businesses can gain big benefits by using Internet and computer technology wisely. Fortunately, there are now a number of online resources offered by major tech firms that provide access to information and insight that was once available only from consultants or in a classroom setting.

For example, HP offers business templates and images such as customizable, easy to use brochures, and letterhead, more than 35 how-to guides and over 160 articles that small-business professionals can download from its Web site: www.hp.com/sbso/. Select how-to guides include tips on creating marketing collateral, networking a color printer, and building cost-effective print, copy and fax solutions.

It also has an online learning center at www.hplearningcenter.com that offers free, instructor led classes where small-business owners can expand their knowledge and learn about wireless technology, networking solutions and more.

For those who want additional, on-demand training, the company offers Learning Curve. This service transforms a users' desktop into what's described as a virtual training and support center available 24/7.

Content is delivered via the Web and refreshed frequently, eliminating the need for many expensive on-site training programs.

Microsoft also offers a number of resources, including a Web site dedicated to the needs of small business owners: www.microsoft.com/smallbusiness.

Among the Web site's features is a calendar of free live seminars on small-business technology topics, offered by specialists from the Microsoft Connections team. These events are held in numerous U.S. cities during the year. Small-business owners can also sign up for free Web casts and training on technology issues. Within its Small Business community, small-business owners can participate with their peers in discussion groups, where topics range from how to configure e-mail systems to why some printers use USB cables.

The Web site also provides product information, plus tips and strategies for using Microsoft products such as Office and Small Business Server, and for marketing, management and other issues in running a small business. A major section of the site is dedicated to helping small businesses with computer security; this section includes security checklists, quizzes and interactive videos.

Another feature that small business owners find particularly useful is HP's online chat function for small businesses. It provides a real-time resource, where detailing the types of tech questions small businesses have and the areas in which they are spending their time and resources.

Users can also get instant technical help online with HP's "Ask The Expert." This live technical support is available 24 hours a day, seven days a week.

It makes it possible for users to chat live with HP technicians to help solve their most challenging business application or software issues.

How to Manage Customer Expectations

Do you often have the thought that your business would operate so much better without customers and all their demands? They want this, that and the other – all of which interrupts your day! But customer expectations are what drives your business and keeps them coming back.

Do you know what your customers are expecting of you? If not, how can you find out? What will understanding their expectations do for your business? In this article we are going to look at expectations and how it’s important for you and your business to know what they are.

What Do They Expect?

Not many businesses endeavour to find out what their customers want! Owners assume they know. Big mistake! If you want to grow your business, find out what your customers expect of you. How can you do this? Ask them! Why not have an ‘Expectations Week’. Tell your staff that this week’s goal is to ask customers what they expect of the business. Set a target of approaching a certain number of customers a day and just ask, “If I was to ask you what your top 3 expectations of doing business with us are, what would they be?”

Alternatively you could put out an Expectations Book and ask customers to write down their comments. This way, they will not be embarrassed and perhaps may be more frank!

If you operate your business remotely, why not do an e-mail survey? Consider offering a prize to encourage responses.

Great Expectations

What is your customer likely to come up with as expectations of doing business with you? Here are some possible answers:

- Fast and efficient service

- Competitive price

- Quality products

- Sufficient stock to meet demand

- Trained staff

- Being treated politely and with respect

- The phone being promptly answered

- E-mails responded to within a reasonable timescale

- Promises being kept

- A clear complaints procedure

- Clean and well maintained premises

Depending on your business, the list could go on! But you have the idea. No doubt you could add many more.

Review and Take Action

Armed with your list of expectations, your next step is to review them and see which ones you are currently meeting. Remember, you may think you are meeting a certain expectation but this is an opportunity for a quick reality check to ensure it’s really happening.

The list you’re left with are the expectations which you are not currently delivering on. Looking at each of them in turn, ask yourself whether, even with the best will in the world, you could meet that expectation. You may have an over exuberant customer who just expects too much! If you realistically can’t meet it, delete it.

You will then be left with a number of core expectations, which you could meet with some thought and action. Sit down with a pen and paper and put in place an Action Plan on what needs to be done to achieve what your customer expects of you. Get your staff together and all commit to putting the outcomes into action.

You’ve Listened!

Having gone to the trouble of asking your customers what they expect of you, don’t forget to provide them with some feedback. If you gathered ideas from the shop floor, put up a notice thanking everyone for their participation and listing the expectations you are taking action on. Why not display an Expectations Charter?

If you had responses via e-mail, reply and again outline what you have done. You could even list the expectations on your web site.

Having gone to all this trouble of asking, reviewing and taking action, it’s all too easy to forget what you committed after a few weeks or months. Make sure that at least once a quarter you re-visit the original list and check that you are still delivering what your customers expect of you.

What Can You Expect?

If you have followed through on the steps, what’s in it for you? After all, the customers get what they want; what’s your payback?

- Your customers are likely to return more often

- They are more likely to remain loyal customers

- They will spend more

- They will be an ambassador for you and your business

- They will generate referrals

Some pretty compelling reasons to put an expectations programme in place!

So, review these steps and consider asking your customers what they want of you. If you can manage their expectations, you manage their experience and so manage your profits!

Shift Your Growth into the Fast Lane by Engaging Your Customers

Do you feel like you have the “pedal to the metal,” spending all you can on advertising but still can’t get the growth of your business into the fast lane? The fact is, if your customers aren’t engaged, it may not matter how much you spend on advertising. Just like a car in neutral isn’t going anywhere (no matter how much gas you give it) until the transmission is engaged, your business isn’t going anywhere until your customers are engaged.

What does engage mean? Here are three definitions you might find in a dictionary:

1. To attract someone’s attention
2. To establish a meaningful contact
3. To move into position so as to come into operation

Combine the three of them and it provides a pretty good working definition for engaging your customers:

Attract your customers’ attention with the intent to establish a meaningful relationship and move them into position to help your business grow.

Without worrying too much right now about how to engage your customers (we’ll get to that) let me propose multiple levels of possible customer engagement as represented by this pyramid model.

At the base of the pyramid is your total available market. That is, all of the potential customers in the world. They have potential, but at least at this point no level of engagement with you or your company.

The next level derives its name from a term we have all used when asked by a sales man if we need help, “No, just looking.” The fact that we are looking means we are more engaged than the masses, but we’ve yet to make any great commitment.

Just beyond Just Looking is Just Buying. For most companies this is the height of their ambition. Get a sale, book the profit and move on to the next customer.

Above just buying is buying again. This is a level that in general assumes that the customer was pleased enough with their first purchase to be willing to come back and purchase again. I say in general, because it is possible that they have no other options and therefore they have no choice. For you as the business owner, this is a very good level. Serving a repeat customer costs less because you don’t have to pay to acquire them and they are less expensive to serve in most cases because they are already familiar with you and your operation. The more customers you can get to Buying Again , the more profitable you will be.

But there are customer engagement levels even higher than Buying Again. The first is Giving Feedback. This refers to customers that are willing to invest more of themselves in your company than just their money. They do this by making the effort to tell you how you can improve your offerings. In effect, they go beyond the typical definition of customers and become co-producers, helping to ensure that your offering is exactly what the market wants and needs. Two great things happen in the process: 1) As your offering improves so will your sales and, 2) As the customer invests their ideas in your company they will become even more loyal and move to the next level.

At the top of the pyramid is Telling Others. At this level your customers are so pleased with your offerings they can’t be stopped from telling others. They become co-promoters, a very powerful sales force willing to tell perfect strangers and best friends how wonderful your company is. As consumers in general become ever more jaded and less trusting of traditional advertising, the growth of your company will be largely dependent on how many of your customers become promoters.

Having described the model, let me hasten to add that I know it is oversimplified. Not all customers will move through each level. Some will become promoters without ever providing feedback. Some will provide feedback and then go away and never return. Despite its simplicity, I believe the model can be helpful in understanding the concept that customers can become much more valuable to a business than just the value of the purchases that they make. Consider the following:

This chart attempts to show in relative terms how much a business benefits financially from a customer at each level of possible engagement. At the far left, Just Looking, expenses associated with a customer typically exceed income from that customer. For example, you spend money on advertising and attract the attention of a customer willing to take a look. At that point you have paid out (for advertising) more money than you have brought in ($0 purchased by the customer).

For those customers that take the step and buy your offering, chances are you will cross over into positive returns. If the customer returns to buy again and again your profit from that customer will increase. Note that the slope of the line becomes steeper in the buying again phase. That is due to the fact that it is less expensive to sell to returning customers than it is acquire new customers. In fact for most businesses it costs five to ten times more to acquire a new customer than it does to sell more to current customers. The obvious difference is the acquisition cost associated with attracting new customers. The less obvious reason is that a regular customer already knows how your product or service works and doesn’t require as much “hand holding” throughout the process.

As the curve continues into the higher levels of engagement, Giving Feedback and Telling others, its slope becomes even steeper indicating that significantly higher returns are possible. Two reasons for this: 1) The additional costs required to move customers into these levels is relatively small and 2) The potential returns have a built in multiplier effect—that is, one customer’s actions can influence many other customers.

For example, feedback from one customer that helps you improve your offering not only benefits that one customer and brings them back again but benefits all your customers and increases the likelihood that they will return more often. Even more obvious, a customer who begins telling others about your business brings not only her purchases but the purchases of several new customers to your business.

In conclusion, engaged customers will help you improve your offering, they’ll actively promote your product, they will improve your bottom line, and, to a large extent, they will determine how fast your business will grow. As you consider the growth of your business, look not only at how many “Just Looking” customers you can bring in and move to “Just Buying,” but also consider how you can get your “Just Buying” customers fully engaged in your business.

Help Your Small Business Succeed With A Credit Card

One of the many difficulties of starting a small business is gaining access to capital during the startup phase. With the large growth in small specialty businesses across the country, credit card companies are beginning to design special programs to help this new breed of business achieve success. For even those small businesses that have access to capital, the perks and benefits associated with small business credit card programs, can still be useful to help you compete more effectively in the marketplace. Below are just six of the many ways in which a small business credit card can help your business to operate more smoothly and improve your bottom line.

Ease Your Cash Crunch

A small business credit card can ease your business’s cash woes. Through the development and implementation of a sound financial plan that utilizes a credit card you can guarantee that your business will always meet payroll, be able to purchase inventory on an as needed basis, and manage both seasonal and business fluctuations without depleting your cash reservoir. Another added advantage is the cash advance feature, which allows you to withdraw cash from an ATM to cover emergencies and other unanticipated expenses.

Unlike a personal credit card, a business credit card also provides a business size credit line, which is substantially higher.

Keep Track of Business Expenses

Through the use of a credit card, you can, with little to no effort, separate your business expenses from your personal expenses. This allows for easy identification of tax deductions and filing of accurate income tax returns.

Secure Multiple Cards

You can also secure more than one card through small business credit card programs. This allows you to give employees the authority to make purchases while freeing up your schedule for more pressing issues. You can also do this with ease since you are also given the ability to set spending limits for different employees, which will further help you to control your expenses.

Access Free Business Resources

Anything free is good! Some credit card companies also provide clients with a wealth of resources to help manage cash flow and develop good record keeping procedures free of charge. Extensive reporting is conducted on both a monthly and bimonthly basis to help you track your expenses down to the penny. Additionally, free business checks and electronic funds transfers are also available.

In addition to that, you can also access reports, data and advice on developing business and marketing plans, conducting market analysis, and pricing products through a company’s web site. You can also increase your knowledge of other products and services like software programs that can help your day-to-day operations run more efficiently.

Build Credit to Qualify for Larger Loans

Obtaining a credit card and using it wisely can also be a stepping-stone to help your business qualify and secure a loan with a major bank or venture capitalist firm. By establishing a good relationship and credit history with a company that also offers other products and services, it’ll just be a matter of time before other cost-saving services are thrown your way.

Perks and Rewards

Perks and Reward Programs designed especially for small businesses are by far one of the best features of a small business credit card program. Small businesses can earn airline points and cash back rewards just like the big boys. Discounts are also available through select merchants like FedEx and Staples, which can result in huge cost savings for supplies and other operational expenses. Some companies also go an extra mile by providing rental car and lodging benefits.

Does My Small Business Really Need a Press Kit?

When the “experts” tell you you’re going to need a press kit for your small business I’ll bet you’re wondering why on earth you’d need one. At least, I think you’d wonder why if you think a press kit is just for the press. But the term ‘press kit’ is misleading if you ask me because press kits aren’t just what their name implies.

I prefer to call them small business information kits or information packages instead because that’s what they really are. They are meant to inform everyone, not just the press about you and your business.

Once you have a small business information kit, you’ll find you’re often giving them when someone asks for information about your company--who you are, what you do, how you can benefit them. In fact, you’ll probably find you’ll give out almost as many of your information kits as your business cards.

Sometimes it’s more appropriate to simply hand out just your card, but other times, you might like to give someone more information than what’s on your business card.

Say you’re at a party and someone asks what you do. You’d probably just give them your business card. But your business card gives this business contact only the briefest information about your company.

So, you might also ask for their name and address, and send them an information kit the next day. Sending your information kit the next day also works as an important reminder of the evening’s discussion.

On the other hand, if you’re a plumbing company, you might want to contact construction companies in your area to see if they’re interested in subcontracting your company from time to time, or better yet all the time!

Sending them just a business card probably won’t get you very far. Even sending a well-written letter introducing your company together with your business card probably wouldn’t be as effective as a complete information kit.

You could think of your business card as the “who and the where, and a little bit of the what” of the 6 interview questions—who, what, where, when, why and how. Your card probably has your business name, contact information and possibly a slogan, motto or some saying suggesting what you do.

Your information kit on the other hand, answers all the questions. It tells people who and where you are, just like your business card does. But instead of one little line suggesting what you do, your information kit tells people exactly what you do. How well it tells them what you do depends on how good your copywriting is.

And it tells them how to buy, (with your convenient order form for example, or by phone or fax, with cash, check or credit card) and when to buy (today, right now, before the special offer expires).

Your business card doesn’t have the room to tell people why they should buy from you, but your information package does. And not just by telling them you’re the biggest, the best, and of course the most innovative either.

The real secret is convincing people they can’t do without your product or service, remembering that along with a great description of your product or service, to consider your information kit from your clients’ perspective. Everyone wants to know how what you do can benefit them. How you can save them time or how you can save them money, or how you can make their life just a little bit easier.

One last word on presentation of your small business identity package. It’s almost as important as what you say. A professional image can go a long way in assuring potential clients your small business is the one they want to do business with.

You cannot compete with big companies without one, and you’ll be miles ahead of the small businesses that don’t have one. And while we’re talking about professional image, imagine how your small business will be perceived when you have the ultimate in professional image-- a matching corporate identity package, information kit and small business web site.

Disaster Preparedness For Your Small Business: How To "Weather" Any Storm

In the event of a potential disaster, do you have a business continuity plan for your employees and your business? Are you backing up files on a routine basis, and could you recover them in an emergency?

On average, nearly 60 percent of businesses damaged in a disaster close after a year, according to the Association of Small Business Development Centers.

Devastating hurricanes heightened awareness of the importance of disaster planning for businesses, large and small. But destruction of your company's infrastructure is not limited to natural disasters-it can happen anytime. Daily misfortunes like computer crashes, network breakdowns, and power outages threaten your business each and every day.

Having weathered four major hurricanes at its corporate headquarters in South Florida and across nearly 100 stores in the Gulf region, Office Depot has real-world experience in disaster planning and recovery. To help businesses be more prepared, the retailer has compiled "Disaster Preparedness: Advice You Can Depend on to Weather Any Storm."

"A sound contingency plan can enable your small business to respond effectively to a crisis, and prevent that crisis from becoming a full-fledged disaster," said Tom Serio, Director of Business Continuity Management for Office Depot.

According to Serio, the overarching principle in disaster planning and recovery is to protect your most valuable and irreplaceable assets: your people and your data. Among the guide's other recommendations:

• Keep contact information for employees and local emergency services, as well as key vendor and supplier information, updated and easily accessible. Establish a clear process for communications and plan how you will contact one another in different scenarios.

• Protect your business from faltering after a disaster by backing up key data at least once a week. Copy data to removable media, including DVD-R or CD-R discs, or to removable drives such as the Ativa McAfee Flash Memory Drive with anti-virus software.

• Move back-up software to a secure off-site location. Store copies and documents you use in day-to-day operations in a secure and fire-proof location like the Sentry Fire-Safe Electronic safe.

• Periodically review the data being stored on any back-up systems to ensure that the right data is being copied and that it can be restored.

Creating Cash Flow with Old Inventory

There is a comment many business owners use today. It is “I'm not giving away my inventory". It is most common among store owners that business is in bad shape. It is too bad that most retail owners don't understand about inventory. Inventory does two things. It either makes you money or costs you money.

You need to have sufficient inventory to be profitable. However, having too much inventory is a larger problem than too little inventory.

Too much inventory ties up critical cash for your business. It can also result in more damages to your merchandise. The key is to find the right price to move your merchandise. Slow moving items take up space and cash that could be used for more profitable items.

There are times you have to adjust your pricing strategy. For example, let's assume your retail price is double your cost. In this example, you pay $10 and it retails for $20. If it is a slow mover or discontinued item, what should be the new price? I would take 20% off for 1-3 months, 50% off and then 75% off. If you have to sell at 75% off, you will sell below cost. Cost should never be a factored in marking down an item.

I can hear you yelling now. I'm not giving away my inventory. You are looking at your inventory from the wrong perspective. Your product is worth what a customer will pay for it.

Using my example, let's say you sold your product at 75% off. How much did you make on that item? Your answer most likely was a loss of $5.This was based on a $10 cost and $5 retail. That answer is partially correct. The more correct answer is that you made $5.

You took an item that was producing zero and turned it into $5 cash. You can take that cash and space and use it for a profitable item. Many times a business does not have enough cash to buy the needed quantities of the best-selling products. If you take the cash from the poor sellers and use it for good sellers, you will more than make your money- back.

No matter how good a buyer you are, there will be items that don't sell. The key is to realize this and react before it ties up too much cash and profit.

An added benefit of taking care of your problem inventory is increased sales. You will get customers who will shop your store regularly looking for your markdowns. Many of them will buy your high gross items also. If you take care of your problem inventory regularly, your markdowns dollars will be less.

Inventory is critical to your business success. The key is to take action on the slow moving and discontinued. This will make your bottom line better in the long run.