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3 Ways You Can Level the Playing Field Against Big Business

To gain ground against well-established rivals, focus on the three Cs: Competition, credit and connections….

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Too many small businesses are stuck at the bottom of the economic mountain, watching in frustration as larger competitors hog the top, snagging resources and reaping the benefits.

Bigger companies can afford to use quantity discounts to undercut prices. Banks are happy to accept small-business deposits but don’t build strong relationships with credit and loans for their smaller customers.

Even programs marketed for small businesses, such as vendor finance programs and dynamic discounting programs, often benefit the large company that takes the discount. Even government help seems to favor the well-connected. Just see what happened with the Small Business Administration’s Paycheck Protection Program.

But there are ways small businesses can level the playing field. We can refer to them as the 3 Cs: Competition, credit and connections.

If the competition feels unfair, change the rules. This may seem daunting at first, but inventive and nimble thinking goes a long way. Consider this real-life example: A woman in Georgia who ran an on-site fueling business for heavy equipment operators found she was consistently undercut by established energy giant competitors. She finally acknowledged she’d never win contracts if she kept bidding for projects under the billing rules set by huge rivals, who could charge less. So she got creative. She offered to extend payment time to 30 days—a change from asking customers to pay every week—and levied a small surcharge.

Within a few weeks, she’d won every contract she’d submitted. Customers were happy to take advantage of the extended payment time because it allowed them to keep cash on their own balance sheets longer, despite the surcharge. This business owner changed the game on her competitors.

Make your bank pay attention or leave it. In our parents’ era, bankers were local members of the community who were truly trying to help the local farmer or the neighborhood shop grow their businesses.

But as the banks have become larger and more consolidated, their online lending platforms don’t know you. They don’t know your business. They don’t care what your business does. They care only about lending you $200,000 because they’re going to make a lot of money from that loan. Demoralizing, right? But remember: those banks are also required by federal law to comply with the Community Reinvestment Act, or CRA, which encourages big financial institutions to help meet the credit needs of the communities with which they do business. That includes low- and moderate-income neighborhoods.

If you have a small business checking account with a big bank, ask a branch officer about CRA compliance — and how your business can help that bank meet CRA requirements via loans and lines of credit. More information here.

You can also visit a local credit union in your area or a CDFI. Both are not-for-profit and both may be able to provide more customized services to you and your business.

Get free advice from experts. Many government programs feel rigged against small business. Consider the recent $660 billion PPP loan program which was supposed to help small businesses squeezed by COVID-19 but instead delivered much money to the rich and politically connected, such as Kanye West, members of Congress, and large restaurant chains like P.F. Chang’s and TGI Fridays.

Yet many small business owners don’t realize the government also has free, valuable tools available and accessible around the country.

There are almost 1,000 Small Business Development Centers, or SBDCs, throughout the United States. These are partnerships between the Small Business Administration and local colleges or universities. Many SBDCs are staffed with retired executive entrepreneurs who have built and run successful companies, people who are happy to help small businesses find resources, build relationships, and figure out which specific capital tools are needed to grow a business.

SBDCs also can help business owners wade through confusing regulations to qualify for government contracts as a women-, minority-, or disadvantaged-business enterprise. More information is here.

If you need advice on taxes, capital, marketing, training, and networking, call or visit your local SBDC.

I’ve started and operated enough businesses to know some will always have an edge. A small business may not have the financial resources to outspend their larger rivals, but they can outsmart, outflank, and outhustle them.

Look for ways to rewrite the rules and keep the 3 Cs in mind.

Competition: Can you outmaneuver them by rethinking billing or other conventional practices?

Credit: Ask a bank officer how your business can help that bank meet Community Reinvestment Act requirements via loans and lines of credit.

Connection: Call or visit your local Small Business Development Center for help with everything from taxes to marketing and networking.

The playing field will likely never be tilted entirely in your favor. But the 3 Cs may help you knock some smug rivals off their perches at the top.

Source: http://feedproxy.google.com/~r/entrepreneur/latest/~3/irnFWk7e6us/359517

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Entrepreneur

Have You Stashed Too Much Money in Your Emergency Fund?

Think you’re totally set with a full year of expenses set aside in an emergency fund? Hold up. You might have too much socked into liquid assets. Read on to learn more about how much is too much for your emergency fund.

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Think you’re totally set with a full year of expenses set aside in an emergency fund? Hold up. You might have too much socked into liquid assets. Read on to learn more about how much is too much for your emergency fund.

Free Book Preview Money-Smart Solopreneur

This book gives you the essential guide for easy-to-follow tips and strategies to create more financial success.

June 10, 2021 6 min read

This story originally appeared on MarketBeat

Last year heralded the case for a robust emergency fund. As people lost jobs left and right due to the COVID-19 pandemic, you probably checked and double-checked your emergency fund (I know I did).

However, have you ever thought about how so much of a good thing can be just that — too much? Your emergency fund could end up way too plump.

Where People Usually Put Their Emergency Funds

Where do most people stash money in order for it to remain truly accessible? Most people put their funds in one of the following categories:

  • High-yield savings accounts: You usually find high-yield savings accounts at online banks, not at brick-and-mortar banking institutions. (They don’t have much overhead due to their status as online banks, so they can offer higher returns.) High-yield savings accounts usually earn around 0.50% annual percentage yield (APY).
  • Money market accounts: A money market account, also called a money market deposit account, offers a deposit account that pays you interest based on current interest rates in the money markets. You can find money market accounts at local banks. Money market accounts often come with a debit card and check-writing capabilities.
  • Checking or savings accounts: You won’t earn much interest with checking or savings accounts at a brick-and-mortar bank. Earnings for both of these types of accounts can range from 0.03% to 0.04%. However, you can access your money at any time, which means that these accounts offer major liquidity.

Any of these options make sense because you can easily get your money out when you need it. However, if you put too much money into any one of these, you could risk a lack of growth and put yourself at a disadvantage, tax-wise.

Before you choose the right vehicle for you, check rates, fees and withdrawal rules.

Too Much of a Good Thing Can Be Too Much

Emergency savings offers so many great things — to a point. Let’s take a look at the downsides to putting an overly large amount in your emergency fund.

Downside 1: Your money may not grow.

Where do people usually park an emergency fund?

Somewhere liquid and highly accessible, like a money market account or a high-yield savings account, right? You want to have access to that money the second your boss says, “Sorry, but I have some bad news…”

Here’s the deal. Let’s say you save $1,000 at 0.01% APY. After a year, you’ll end up with just $1,000.10. If you put the same $1,000 in a retirement account that earns 6%, you would earn $1,062 after a year. See how you could lose out?

Most accounts that offer a safe haven for your money often don’t offer ample returns.

The average stock market return hovers around 7%, three times higher than any high-yield savings account rate offered anywhere today.

Downside 2: You could lose out on the tax front.

When you focus on saving in your emergency fund too much, you may neglect your tax-advantaged retirement accounts, which could include 401(k) plans, IRAs, 457 plans or 403(b) accounts.

Let’s say you have the opportunity to contribute $6,000 into a traditional IRA. Your contributions get deducted from your taxable income. You would only pay taxes on the remaining balance.

Let’s say you make $60,000 per year. Your taxable income automatically gets reduced $6,000 to $54,000 from your traditional IRA tax deduction.

What happens when you save your money in a high-yield savings account instead of a tax-advantaged account? You miss out on that reduced taxed income.

Downside 3: You may not clear out your debt.

You may hear so much about the importance of emergency funds that you ignore the fact that you still need to pay off debt. That begs the question: What kind of debt do you have? Credit card debt? Student loan debt? You may want to pay down those debts first and then tackle your emergency fund. Or you can save $1,000 for emergencies to start out and then tackle any outstanding debt.

Downside 4: You may sacrifice other goals.

When you don’t contribute to your kids’ savings accounts, to your own retirement or maybe even save for a down payment on a house, stop and ask yourself why.

A gargantuan emergency savings might not mean much when you’re stuck putting a vacation on a credit card or forgoing a child’s college savings account altogether.

So… How Much Should Go in Your Emergency Fund?

Obviously, this answer depends on a few factors, including your current income amount. Many financial experts advise saving three to six months’ worth of living expenses.

For example, let’s say you generally spend about $4,000 per month on general expenditures, such as your mortgage payment, utilities, food, health care premiums and other items. You should save between $12,000 and $24,000.

However, you may want to adopt the 3/6/9 rule instead, depending on your job situation. In other words, you may want to:

  • Save three months of expenses if you have a steady paycheck, have no mortgage or dependents.
  • Save six months of expenses if you have a steady paycheck, have a mortgage or dependents.
  • Save nine months of expenses if you have irregular income or if you are the only one in your family who earns money.

How Much Equals Too Much in Your Emergency Fund?

As you can see, it’s easy to have too much in your emergency fund. If you find that you’ve stashed more than six months’ worth of emergency money in your account and have a steady paycheck, no mortgage or dependents, ease up.

Carefully consider whether you have too much in your account based on the stability of your income and the number of people depending on you. You may also consider the level of support you receive from others. (Your parents might love it if your family moved in if it came down to it!)

When you do decide on the right amount, automate transfers so they occur each and every week or month. That way, you don’t have to think about saving — it just happens.

Featured Article: What is an overbought condition?

Source: http://feedproxy.google.com/~r/entrepreneur/latest/~3/YHuKBmQ-q-o/374198

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How to give good feedback to your collaborators?

The feedback process must be close and continuous.

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The feedback process must be close and continuous.

Free Book Preview: Unstoppable

Get a glimpse of how to overcome the mental and physical fatigue that is standing between you and your full potential.

June 8, 2021 1 min read

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

This story originally appeared on Querido Dinero

Feedback is the analysis of a person from different perspectives to show what they do very well and accelerate their professional career, but also what they need to improve because it slows their growth.

The difference with the evaluation of results is that the feedback process must be close and continuous, and when implemented correctly it generates relationships of trust .

We tell you how to make it a natural practice in your company:

The difference with the evaluation of results is that the feedback process must be close and continuous, and when implemented correctly it generates relationships of trust .

Source: http://feedproxy.google.com/~r/entrepreneur/latest/~3/ZMAaeXpe1Pg/373943

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If You’re Using These Marketing Tactics, You’re Hurting Your Brand’s Credibility

You’ll need good marketing to increase sales in your business, so have a solid strategy.

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You’ll need good marketing to increase sales in your business, so have a solid strategy.

Free Book Preview: Brand Renegades

Discover how two entrepreneurs used unconventional business strategies to turn their startup into a multimillion-dollar company.

June 5, 2021 4 min read

Opinions expressed by Entrepreneur contributors are their own.

Entrepreneurs are always hungry for new clients and growth strategies that work. The online gurus know this, so they use emotional-trigger-based marketing tactics to convince business leaders to buy their courses or services. These questionable marketing tactics tend to lead to refund requests, chargebacks and consumers that won’t do business with them again.

Even if you provide something of value, how you market it will affect your sales depending on your approach. As you build out your marketing strategy, avoid these three commonly used marketing tactics because they tie you to a culture of bro-marketing and online gurus. Consider a different approach before these tactics detail your business growth.

Related: 4 Annoying Online Marketing Tactics to Stop Right Now

1. Displaying revenue screenshots.

These days, it’s common for entrepreneurs to display Stripe or PayPal revenue screenshots on social media, or even on their websites. There’s no doubt that consumers are drawn to seeing sales and big numbers. But it’s a toxic marketing strategy — it may generate sales in the short term, but it repels high-end clients and more potential customers in the long term.

The consumers who buy based on what they see in revenue screenshots tend to be in a challenging financial position and need to generate income quickly. They aren’t in the place to focus on what it takes to do the work that increases revenue, and they end up disappointed when they buy as a result of flashy marketing.

Real wealth and growth don’t self-advertise. Have you ever seen business leaders such as Elon Musk, Jeff Bezos, or Oprah post revenue screenshots? The results that your customers experience are a better way to market your business. Publish solid content and you can nurture cold prospects. Separate yourself from guru marketing by relentlessly focusing on serving your customers.

Related: 6 Outdated Marketing Tactics You Need to Leave in the Past (Where They Belong)

2. Sharing client wins with no attribution.

Have you ever seen an entrepreneur posting about clients getting X results, but they never name or tag the clients? The clients they’re posting about may very well be experiencing wins, but in a guru marketing world, the consumer is skeptical.

Some clients would prefer to remain private and not share their information — that’s understandable. But, more than a few of your clients would welcome a shout-out. You have clients that are comfortable with you sharing their wins. The only way to know for sure is to ask.

The goal is to show what your business offers, and you can do this by sharing your clients’ results and testimonials. Get permission where possible — don’t just share wins that don’t appear real to cold consumers.

Related: 3 Marketing Tactics to Avoid Next Year

3. Marketing results from years ago.

Over your years of building a business, you’ll no doubt experience wins. You’ll get results that consumers and colleagues will want to know more about. In marketing, your goal is to prove that your philosophy does work — mainly through marketing the results you and your clients have experienced.

However, growth-focused entrepreneurs stay at the forefront of their industries. They don’t get a result and market those wins for years without working on getting more results. It’s acceptable to market the results you’ve obtained in the past, but ask yourself if you continue to do the work that helps you grow.

When cold prospects see that your marketing results are old, it will dissuade them from doing business with you. Consumers want to do business with industry leaders, and you become a leader by constantly honing the work you’re putting into your craft. One of the best ways to grow a business is by doing the work that optimizes your personal growth. Commit to becoming the best at what you do.

If you’re going to increase sales in your business, you’ll need good marketing. However, there’s a way to market your business more authentically. Avoid tactics that may work for a little while but will ultimately hurt your brand credibility.

Related: 7 Ways to Correct a Failing Marketing Strategy

Source: http://feedproxy.google.com/~r/entrepreneur/latest/~3/ve_gaxGJS18/370340

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