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.

The term is escheat, and today it means turning over abandoned property, such as unclaimed security deposits and outstanding accounts receivable credits, to state officials. Your business may be both a holder of unclaimed property and a claimant.

For instance, say you’re holding an uncashed payroll check for a former employee. If the check remains outstanding, as the holder you may have to file a form with the Treasurer of your state reporting the amount of the unclaimed property. You might also have a responsibility for attempting to contact your former employee. Then, after a time period set by state law, you’ll generally be required to turn the funds over to officials or face penalties for failing to do so.

Since escheat applies to banks, insurance companies, utilities, and other businesses, you could also discover your company needs to file a claim to recover property that’s rightfully yours. This could be the case if, for example, you moved your corporate office and neglected to apply for a refund of your utility deposit.

Finding out if you have a claim is free. Just search property databases for various states where your business has operated.

Not sure how escheat laws apply to your business? Let us help.

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.

For businesses

For example, business owners who pay an interpreter to assist the hearing-impaired could qualify for a tax credit. The cost of services, materials, and equipment purchased to assist the visually impaired or those with other disabilities may also qualify for credit. The credit, which reduces the taxes you owe, can be as much as $5,125, and you can carry unused amounts forward to future returns. Your company is eligible if prior-year gross receipts were no more than $1 million or you employed no more than 30 full-time workers. You might also be able to take advantage of the barrier removal deduction when you make your company’s vehicles, walkways, parking lots, and other facilities user-friendly and convenient for the disabled. This deduction lets you claim up to $15,000 per year for certain modifications to business property you own or lease. The benefit: Instead of depreciating the cost of these changes, which spreads the deduction over a longer period, qualified expenses can reduce taxable income in the year you pay for them.

For individuals

On your personal return, if your spouse or dependent has a disability, you might be able to claim a dependent care credit for caregiver and other expenses you pay so you can work. In this situation, the usual under-age-13 rule for dependents does not apply. The credit can be as much as 35% of your expenditures, subject to certain restrictions. Disabled taxpayers can usually deduct some or all of the cost of home improvements made to relieve their disability. This covers items such as access ramps, wider doorways, stair lifts, or even a special air filtering system. Other tax law provisions relating to disabilities include relief from penalties for early withdrawals from retirement accounts, special adoption credit rules for eligible children, and the exclusion from income of certain disability payments.

It’s smart to take the time to identify key records, make copies, and find a secure place to store them. Here are some suggestions to get you started.

• You don’t need to copy every tax and financial record. Your banks, credit card companies, and investment brokerages will have records of your accounts and can probably supply details of recent transactions if needed. Your employer will have current payroll records, and IRA or 401(k) plan trustees will have details of your accounts.
• Keep a master list of all account numbers, with a contact phone number for each. That will make it easier to recover information after a disaster. If you handle transactions online, include your user ID and passwords.
• Keep copies documenting the purchase of your home or investment properties. Also keep records of expenses for remodels or other improvements that change your cost basis in the property.
• Your broker should have details of your original investments in stocks or bonds, but copy details of any investments you purchased independently. That includes numbers of U.S. savings bonds that you own.
• Make sure your will and estate planning documents are stored safely, either at your lawyer’s office or in another secure place.
• Consider keeping copies of your last three years’ tax returns, even if your tax preparer has duplicates. And finally, include a recent backup disk from your home computer.

The best place to store your records depends on a number of factors. A bank safe deposit box should protect against most disasters. Sometimes a fireproof home safe is sufficient. Wherever you decide to keep your records, take the time to prepare now.

1.  Do you know who your competitors are? Do you know where they are and how big they are? Would you be aware if any new competitors entered your market?

2.  Do you regularly monitor your competitors’ advertising and promotions by looking for their advertisements, visiting their premises and looking at their websites?

3.  Do you talk to your suppliers about your competitors and gather information about what they’re buying and what quantities they purchase?

4.  Do you encourage your employees to keep an eye on marketing activity by your competitors and pass any good ideas on to you?

5.  Do you keep up to date with technological developments in your field and will you know if your competitors adopt new technology into their business?

6.  Do you know the statistics of your marketplace – what your share of market is and what market share is held by each of your major competitors?

7.  Have you conducted a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis on your business? Are you prepared to deal with any competitive threats that might be identified?

8.  Do you know what opportunities exist for you to grow your business – either by taking business away from your competitors or by expanding into new market areas?

9.  Do you know what is happening in the legislative environment that might affect your operations such as new laws relating to workplace safety or product standards that could pose a threat to you or mean that you will have to change the way you conduct your business?

10. Do you regularly research your products against those of your competitors? Are you able to respond quickly if you find your product offers fewer features and benefits or needs improvement?

There may be a lot of work involved in finding the answers to these questions and using them to improve your product but, thankfully, yours aren’t the only eyes and ears available to monitor your marketplace. If you work together with your team you’ll be in a much better position to answer the questions and to make gains against your competitors. A business that knows and understands its rivals has a much better chance of being able to withstand competitive onslaughts and to formulate strategies that will take business away from others in its industry.

Hire your kids. If your child is under age 18 and works for your unincorporated business, there are no social security or Medicare taxes on the child’s pay. Wages paid to the child are also deductible. Just make sure the compensation is reasonable for the work actually performed.

Track your business driving. For 2010, the rate for business-related mileage is 50 cents per mile, and you can deduct actual costs for parking fees and tolls in addition to mileage. Keep detailed records to substantiate your deduction.

Deduct equipment purchases. You can expense up to $250,000 of business equipment purchased this year.

Check your benefits. If you offer health benefits to your employees, look into tax-advantaged plans such as health savings accounts, flexible spending accounts, or health reimbursement arrangements. These plans can reduce your taxes and help control your benefit costs. Also, check the new tax credit for health insurance you provide to employees. You must meet certain requirements to qualify.

Establish a retirement plan if you don’t already have one. Examining the choices now gives you time to select the best plan for your business and to get the paperwork completed. Then you’ll be set to make contributions as your cash flow allows — and to take the deduction on your 2010 tax return. Another plus: You may be able to claim a credit on this year’s tax return for the costs of establishing the plan.

Here’s what you need to know:

1.  The extension applies only if you already had a contract in place by April 30, 2010. The new deadline is available for first-time homebuyers and long-time residents.

2.  The maximum credit remains unchanged ($8,000 for first-time homebuyers and $6,500 for long-time residents), as do other rules for qualifying.

3.  You can claim the credit on your 2009 or 2010 federal income tax return. You’ll have to complete Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and attach proof that you meet the requirements.

1.  Select the right person for the job

2.  Give them clear directions and clear systems to direct their work processes

3.  Manage the differences between your team members to get the best out of each person

4.  Don’t ever think that they will put in the same effort that you, as the owner, will

5.  Document clear performance indicators so everyone understands just what’s expected of them

Select the right person for the job

Granted it’s always tough to really be sure in an interview, it’s still the best tool you have. Consider questions such as whether the applicant fits in with your current team; are they the sort of personality you want to work with; do they seem to have a good work ethic; do they have enough experience and if not will they train up easily; do they have a history of useful contribution in their previous workplaces? Also prepare your interview questions carefully – it is quite legal to include technical questions and even practical exercises to assess skill level or capability. Ask questions about what they might do in a situation where a certain kind of problem arises. You’ll be able to assess better whether they’re a fit for your business. Settling for someone you’re not sure about can be costly on your time and money, not to mention on team morale, if they don’t work out.

Give them clear directions, and clear systems to work with

Most people will try to achieve what they think is expected of them. The biggest problem is in making sure your instructions and systems are not open to misinterpretation. Take time to fully induct your new team member in the way you expect things to be done.  Systemize your processes so they run smoothly and try to get them written down in procedure guides so employees can check on the correct way to do things, without wasting your time, if need be.

Manage the differences between your team members

Try to understand how each person ticks, what makes them feel motivated at work, and then deal with them on that basis. Some people are competitive – they want goals and targets and the autonomy to achieve them; others need plenty of close supervision; others thrive on praise and recognition. There are useful tools around that help you understand personality types and help you adjust your management style to get the best out of each person.

Accept that they won’t have your drive

Your team members have a life outside work. For a salary, they are prepared to allot you some of their most precious commodity – their time.  But your business is not theirs and its success won’t have the same impact for them as it does for you.  Don’t expect them to perform as you do. Don’t overburden them or you’ll end up with reduced productivity and high turnover.

Document work related key performance indicators (KPIs)

KPIs have been around for a while now. And that’s because they’ve been shown to work. They work because you set clear activities that are needed to achieve measurable targets, and that makes it easy for you and your team to see what’s working and what isn’t. 

As a manager, give people encouragement and praise, provide them with constructive feedback and you’ll see productivity and profits increase.