The most commonly used credit score is the FICO, developed by Fair Isaac Corporation. FICO scores range from a low of 300 to a high of 850 and may be obtained (for a fee) at myfico.com. The score is considered a predictor: the higher the score, the more creditworthy the consumer. Not so long ago, a score that just nudged the 700 mark would bring lenders to the table with their lowest interest rates. Over the last few years, however, higher scores are often required to get premium rates.

About 35% of the FICO score is derived from your payment history, and another 15% comes from the length of that history. Ten percent of the score is based on the types of credit you use—credit cards, retail accounts, and other types of loans. Another 30% takes into account the amounts you owe as a fraction of your available credit. These numbers and others are fed into the FICO calculator to determine your overall score.

To raise that score, focus on the numbers that matter most:

Avoid late payments.

If you must juggle payments because of cash flow problems, try to limit the number of past-due accounts. A history of late payments on several accounts will hurt your score more than delinquencies on a single account.

Mix it up.

Spread your debt over several types of accounts: installment loans, credit cards, and accounts with retail merchants.

Curb spending.

Keep your outstanding balances to less than 50% of your available credit.

Check your credit report regularly.

By law, you’re entitled to a free annual credit report from the three main credit-reporting agencies. Check the report for errors, and follow up to ensure that problems get fixed. One vendor’s erroneous reporting can tank your score.

Good credit is a valuable commodity. Guard it carefully.

That’s in an ideal world. In the real world you may have to live with the situation, at least short-term. But there are steps you can take to understand your risk and, over time, to change it.

Measure the problem. Work with your managers and accountant to quantify how your sales break out by customer. You only need to do this for the top five or ten customers to see whether you have an over-reliance problem. If you’re a manufacturer or retailer, take a similar look at your principal suppliers. Quantify how dependent you are on the top few.

Understand the risks. List the factors that could jeopardize your business with your chief customer or supplier. These will vary with your specific circumstances. They might include a natural disaster that interrupts your customer’s business or that prevents you from shipping or receiving goods. It could be a change in the marketplace or a new technology that cuts demand for your product. It could be actions by your competitors. It might even be problems in your own operation, such as a drop in quality, delays in shipping, or poor inventory control. The list may be daunting, but until you understand the risks, you can’t develop solutions.

Look for ways to minimize your risks. Brainstorm with your managers on long-term steps to reduce each risk. It might be to enter new markets or to tweak your product design. Think through contingency plans to address possible disasters or find alternative suppliers. Discuss how you would respond to changes in the marketplace. Try to set measurable goals for change and clearly assign responsibility.

Never have to say sorry: to your spouse

Your spouse has probably provided a considerable input to the success of your business, either as business partner or as family mainstay and emotional supporter. What plans do you have in mind to reward them, and yourself, come retirement time? Will you be able to fund your dreams?

As a business owner, the first act of your retirement planning should be to open an individual retirement account. A good scheme will offer safety, a good rate of interest, compounding (interest reinvestment to generate further earnings) and tax concessions. In the right circumstances a spousal retirement savings plan, one owned by your partner but to which you make the contributions, allows you to split your income after retirement and reduce taxes by paying on two relatively low rates instead of one high one. To reap the optimum benefit from a retirement saving plan start contributing early and make regular payments. It’s fine to lead an affluent lifestyle while you are working but it’s also necessary to consider the retirement years. Build the contributions into your regular expenses by arranging an automatic withdrawal each month so you don’t find yourself short of income in retirement, or having to work on and on into your later years.

Never have to say sorry: to your heirs

OK, you won’t be around to actually apologize when the will is read, but probably one of the things you are working for is to achieve some financial security for your heirs. You don’t want to disappoint them even if you aren’t there to say “Sorry, I didn’t plan that too well”. Proper estate planning is the key to controlling your assets and not leaving your heirs in a financial quandary, but to be effective it requires your lifetime participation. The money saving and tax minimization opportunities that can be utilized for your heirs’ benefit will be limited unless you have laid the groundwork planning from earlier on in your lifetime so as to achieve the outcome you want.

A carefully thought-out estate plan will ensure you pass on your wealth to whomever you want to receive it in a way that avoids delay and minimizes asset shrinkage due to probate costs and estate tax.

Never have to say sorry: to your business

Another critical aspect of financial planning and your small business is using various types of insurance to protect it. The variety is exhaustive, and funding insurance for every contingency is probably prohibitive, but some may be more relevant to a particular business than others. Among the more common types are: liability insurance; property insurance; business interruption insurance (to cover lost income and overhead expenses when a business must temporarily close its doors due to a covered disaster); life and disability insurance; and key person insurance (to minimize the financial disruptions in the event of the death or incapacitation of someone who is critical to your business).

Boiled down to the essentials, financial planning is about two things – accumulating wealth and protecting it. Doing it properly may mean seeking advice from specialists in a variety of different fields, but a good starting point is someone with an overall understanding of the big picture, such as your accountant. As a small business owner it’s important for your long term personal financial success to take advantage of the variety of financial planning instruments that apply in the small to medium business context.

We are excited to be offering our clients a way to review their business finances beyond their normal financial statements.  With our newest business consulting and advisory service, Financial Ratio Analysis, we can empower our clients to make better business decisions by helping them review their business performance and suggesting ways they can improve key areas of their business.

Financial Ratio Analysis can help your business by:

*  Understanding your financial situation and see how your business compares to similar businesses

*  Taking action to resolve highlighted danger areas

*  Providing the reports to bank loan providers, prospective buyers and other businesses with whom you transact

 According to SCORE, 82% of businesses that fail do so because managers have a poor understanding of cash flow.

Our new Financial Ratio Analysis can provide Industry Specific Reports which takes into account the performance of similar businesses putting the results achieved into persepective.  We also Analyze Key Areas of Your Business such as: Liquidity, Profits and Profit Margin, Sales, Borrowing, Assets, and Employees.  Lastly, we provide the results in an Easy to Understand Explanation that provides commentary that interprets the numbers in simple graphs and plain-language that you will be able to understand while reviewing your performance variations against your industry.

For one thing, fewer businesses in the marketplace can mean fewer potential competitors. For a start-up company, that can be good news. It’s difficult to enter a market when the economy is booming and competition is stiff.

Also, a down economy can mean cheaper prices for goods and services. As companies close branch offices, they may be willing to sell office equipment, furniture, electronics, and other items at discounted rates. Check eBay and Craigslist for deals. Find local businesses that are closing their doors and see whether they’re selling stuff you need.

Skilled labor is also more readily available in a down economy. It’s perfectly acceptable to contact downsizing businesses to find employees who might be a good fit for your company. With today’s employment outlook, skilled workers may be willing to take lower salaries, at least for now. As your business prospers, you may be able to ramp up salaries and offer other benefits. Over time, some folks who have only worked for large corporations may even find that a small business fits them better. Your newly hired Boeing engineer may be happier designing equipment parts in your small machinist’s shop.

If you’re thinking about starting a small business, here are two time-tested suggestions:

• Start small. You’ll want to test the market for your product or service without risking too many resources. In these days of tight credit, you’ll probably need to pump a good deal of your own money into any start-up venture. Take it slow and let it build.

• Seek advice. Find other small business owners, perhaps in other cities, and pick their brains for suggestions about overcoming obstacles, keeping the business focused, and prospering in hard times.

Have you done a PEST check?

Start by setting some time aside for a bit of PEST analysis (yes, it really is called this, although it’s full official name is PESTLE analysis). This stands for a ‘Political, Economic, Social, Technological, Legal and Environmental’ analysis of the factors that may affect your business – not just in the current climate but also in the future.

More positively, it’s about looking for opportunities in those trends that are going to affect your industry and the way you do business.

Let’s have a look at how you can analyze trends that may impact your business.

1. Be objective

Keep an open mind. It’s sometimes hard to step back when your industry or business has operated in a particular way for a long time but there’s no guarantee that’s going to be the way of the future. Be open to the idea that your industry may change considerably. And it may change soon! This is where a ‘Business Diagnostic And Performance Review’ with your RAN ONE accountant could really help by scanning the wider environment as it relates specifically to your industry.

2. Network with people from other industries

Make opportunities to talk to people who run different types of business. Of course it makes sense to attend industry specific networking events, but then your perspective is only from one side. When you talk to people in other industries you’ll gain an insight into how certain trends affect their specific business – and this could shed light on new ways of looking at your own. Talk with your accountant who has clients across many industries. They might be able to share some information about what they see happening.

3. Analyze your data for patterns

Analyze the data you have collected in the course of running your business and look for patterns. With regard to sales for instance, are they seasonal? Does business boom during the school holiday periods? Is there always a rush between 4pm-5pm? This can help you plan the use of your resources more effectively and also target your marketing campaigns based on certain trends.

4. Check what is going on in other regions

Many a great business idea has been gleaned from cross border markets. A quick way to begin is with internet research, but even questioning friends who’ve travelled recently can offer you insights.  But there’s nothing like visiting another state or region and ‘mystery shopping’ at a business that’s considered to be a leader in your field. A side benefit is that you also get to experience their business from the customer viewpoint, useful knowledge when developing ideas for your own customer service.

Straight price cutting in response to competition is a dangerous strategy, one that can ultimately cut your profits to the point where you might as well sell up. Far better to sit down and work out a pricing strategy that reflects the nature of your products and market, AND makes you money!

Covering costs

The first step in developing a pricing strategy is to work out your overheads. It’s really important to identify absolutely everything that costs you money, including rent, wages, utilities, software, and insurance. Don’t forget to include your own salary in this. Also include the cost of servicing capital assets (loan interest and depreciation charges), including any IT equipment and vehicles that you own.

Market research

Once you have identified the costs associated with running your business you can begin to think about how you want to price your product. To get a feel for the market, it’s a great idea to find out what your competitors charge, though it’s inadvisable to base your prices on this alone because they might be offering a different mix of product and associated services, and their overheads are also likely to be somewhat different.

Pricing strategies

Reaction pricing – lowering your price because the person up the road just lowered theirs – is not usually a workable long term solution. A price war means no-one makes money. And if you position yourself as the lowest cost option you run the risk of customers leaving you when another, even lower priced alternative, comes along. Keep in mind that if your customers perceive your price to be too low, it will make them just as suspicious as when they perceive your price to be too high.

Conversely, it’s important not to price yourself out of the market. So instead of just checking what price your competitors are selling at, evaluate the services they offer their customers and whether they market on the basis of any unique core differentiators. Then consider what you can offer. If you feel that what you can do is worth more than what your competitors offer, price your services accordingly. This is called a premium pricing strategy. For it to work, you need to be able to demonstrate your value to your customers in a convincing way and to get the message out among them.

Be prepared to negotiate your prices to win business. Negotiation involves a little planning but is a useful business tool when used properly. To ensure you’re still making money, you need to build in a premium to the initial price quoted and also determine a price floor under which you are not prepared to go.

Another pricing strategy that’s worth considering is straight discount-for-volume. Loss leaders are also an option, as are two-part pricing strategies. Peak pricing (when you charge a premium for made to order products or for work done at the last minute) is another pricing alternative you can look at.

Price increases

Take your time to do some homework on your product offering and selling points when determining your pricing strategy, because, once in place, it’s difficult to change without upsetting customers. If you are planning on raising prices, it’s a good idea to do it incrementally rather than wait for years and then slug clients with a massive price hike.

The best way to start considering pricing is to first step back and get some professional advice on how you can differentiate your product, improve your marketing and deliver great customer service. Then you’ll be able to consider a premium pricing strategy that cashes in on the things that make you different, rather than fighting it out on cost alone.

Date: 2010-08-26 Time: 01:00 – 02:00

It may sound a little simplistic, but there are really only 4 fundamental ways to successfully grow your business-in other words, make it more valuable:

This topic looks at some of the key strategies within each of these 4 ways that you can use to make your business more valueable. It also looks at how they should be used synergistically in order to capture the greatest value and not miss out on opportunities to grow the business.

Register now: https://www2.gotomeeting.com/register/807816731

Time: 1PM-2PM ET Price: No-cost

Dates:

2010-08-26| Click to Register

Beware of the following popular scams:

• Work-at-home scams usually require an up-front fee for training, materials, or equipment. Scam artists promise to pay for work, such as stuffing envelopes, processing medical claims, or making toys. Either the work never materializes, or workers are not paid.
• Business opportunity scams also require up-front fees. Con artists sell vending machines, software products, and other equipment that is never delivered or is of such poor quality that it has little or no value.
• Victims of phantom civil service jobs pay for study materials and exams with promises that they’ll land jobs with the Postal Service, airports, or other government agencies. Unfortunately, the jobs never materialize.

To avoid being victimized, consider these suggestions:

• Never pay up-front fees. Legitimate job agencies generally don’t ask for money until after they’ve performed a service.
• Be skeptical of “easy money” ads. If an opportunity sounds too good to be true, it usually is.
• Watch out for ambiguous ads. Legitimate companies provide detailed job descriptions about the positions they are trying to fill.
• Don’t give personal information to strangers. Con artists can use this information to steal your identity and your money.
• Be suspicious of ads with 900 phone numbers. Be aware that 900 numbers are pay-per-call, and the charges will appear on your phone bill.
• Know with whom you’re dealing. Contact the Secretary of State where the business is located. Ask if the business is registered and if complaints have been filed against it.
• Be dubious of postal box numbers. Ask for the business’s physical address, and investigate whether the business is actually located there. The local Chamber of Commerce may be of assistance.

The bottom line: Do your homework before you pay job-related fees.

Here are three general guidelines.

Early withdrawals. You’ll pay regular income tax as well as a 10% penalty on early withdrawals from your traditional IRA unless an exception applies. Early withdrawals are those you take when you’re under age 59½.

Exceptions that let you avoid the penalty include amounts you withdraw to use for the following:

• certain educational or medical expenses

• medical insurance when you’re unemployed

• building, buying or rebuilding your first home

You may also qualify for an exception to the early withdrawal penalty if you’re a military reservist, or when you inherit an IRA, take nontaxable distributions, or roll over eligible amounts within 60 days of the withdrawal.

Required minimum distributions. For 2010, you’re once again required to take distributions from your traditional IRA when you reach age 70½. The penalty for withdrawing less than the required amount is 50% of the shortage.

The required minimum distribution rules also apply when you inherit a traditional or a Roth IRA.

Excess contributions. When you deposit more than the allowable maximum contribution into your IRA, you generally need to withdraw the excess along with any earnings by the due date of your tax return. Otherwise you may owe a 6% penalty, which can be assessed each year for as long as you leave the extra amount in your IRA.

The maximum IRA contribution limit for 2010 is $5,000 (plus an extra $1,000 if you’re over age 50) or your earned income, whichever is less.