Summary: Obama may have won the 2008 election, but what does that mean for small business? Check out some of the buzz about upcoming entrepreneurial expectations, fears, and hopes, and then weigh in and discuss how you think your business will be affected by an Obama presidency.

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I think enough time has gone by now that plenty of folks have weighed in on President-Elect Obama and the potential impact a Democratically-led federal government may have on small businesses nationwide. Today I’d simply like to direct you to some of those thoughts, giving you some things to think about, whether you’re hopeful about or dreading the next four years:

• Obama’s Impact on Small Business – BusinessWeek
• What’s the Economic Climate for Small Business? – The Wall Street Journal
• Taxes, NAFTA Among Concerns of Entrepreneurs – El Paso Times
• Business Reacts to Obama Win – Birmingham Business Journal
• A Small Business Agenda for President Obama – AllBusiness.com
• Reaction: Pittsburgh’s Business Community Weighs in on Obama’s Victory – Pittsburgh Business Times
• Minority Business Leaders Euphoric Over Obama Win – Portland Business Journal

How do you think an Obama presidency and democratic Congress will affect your small business or freelance career?

Summary: Do you take your online business seriously, or are you setting yourself up for failure? Find out why you need to treat your online business as a real business venture and not a casual hobby (such as blogging for profit) if you want to reap the most rewards and keep it all legal.

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I know there are plenty of “serious” online ventures. At the same time I think there are infinitely more webpreneurs, webmasters, bloggers, etc. who are essentially running online businesses but not taking them seriously as such (and of course I’m only talking about the ones blatantly trying to make money here – a blogger on a personal journal-style blog doesn’t count). Why is this?

I think the biggest problem is that it’s extremely easy to set up an online business, and there’s little to no startup capital required for many of them. Therefore it really is possible for “anyone” to start an online business these days.

However, being easy doesn’t make it any less of a business, and there are a few benefits to taking your online business seriously from the start:

• Avoid legal and tax problems down the road
• The more serious to treat your project, the more likely you’ll stick with it in the long run (and more likely you’ll earn a significant income)
• Others can tell when you don’t take your work seriously, and it can hurt your credibility

Here are a few basic things you should consider doing to take your online business more seriously:

• Register it as a formal business if appropriate
• Keep thorough financial and administrative records
• Invest time and / or money into adequate marketing tactics
• Take the time to do market research on your audience and their behaviors before getting into your online business to begin with

What else do you think people can do to take their businesses more seriously, and what other benefits do you see in doing so?

Summary: Maybe your business has grown, or maybe you just realize you could use some specialized help (such as in keeping the books). No matter the reason, you’ve decided that it’s time to hire some help. Should you hire an employee or an independent contractor? Let’s look at some pros and cons of each.

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When deciding whether to hire an employee or an independent contractor (such as an independent consultant or freelancer), you need to keep in mind that there are legal and administrative issues tied to each option. Here are some of the things you should consider when making the employee vs independent contractor decision when hiring help for your small business:

Employees (Pros)

• When you hire employees (full-time or part-time), you can exercise greater control over them and how they work. For example, you can require that they work on-site during specific hours, and directly under your supervision (or the supervision of someone else).
• You know that the work is being done directly by the person you hired rather than subcontractors.
• You can have someone there full-time dedicated solely to your business if you need that.
• Employees can become more invested in your company and wanting to see it succeed.

Employees (Cons)

• Hiring employees costs more. You have to pay benefits, a portion of the Medicare and Social Security taxes, workers’ compensation coverage, etc.
• You’ll need to spend more time training and supervising an employee.
• There are administration issues to consider – you have to deal with tax withholdings for example.

Independent Contractors (Pros)

• You can hire contractors for short periods of time when you need specialized expertise, or you’re not confident that the business growth will yet support a full-time employee.
• Because they’re specialized professionals who work independently, you don’t need to devote a lot of time to managing and supervising them (as a matter of fact, you really can’t for them to legally be classified as an independent contractor).
• Contractors are less expensive to hire than employees – for example, they pay most of their day-to-day business expenses.
• They can work from their own place of business, so you don’t have to have space available for them.

Independent Contractors (Cons)

• You can’t legally control them like an employee – such as where, when, and how they actually get the job done, as long as the job gets done. For example, if you hire a freelance writer, they can choose to do your writing in the dead of night or on weekends if they prefer – you can’t tell them that they have to write for you during certain time frames. Their responsibility is to meet deadlines.
• They’re free to work for other clients in addition to you – that may very well include competitors or related businesses. For example, if you run a pet store and you hire a freelance copywriting to write the marketing copy for your website, you can’t stop them from writing marketing copy for other pet stores down the line.
• You can’t “fire” a contractor the way you can with an employee – you’ve entered into a contract, and are tied to that contract unless they breach it in some way.

Before deciding to hire an employee or independent contractor for your small business needs, find out about the legal differences where you live (in the US, for example, the IRS classifies your workers as one or the other). If you don’t find out the rules before making the decision, you may find yourself with heavy penalties down the road that far outweigh the benefits you received from hiring contractors (in other words – never hire someone as a “contractor” if you plan to treat them as an employee).

Summary: As an entrepreneur, if someone approached you today and offered you full-time employment with their company with higher pay than you earn through your small business, would you close your business and take the job?

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I stumbled across a Wall Street Journal article today that I want to share with you: Owners Wouldn’t Quit for More Money

Ironically, I was just having a conversation with a friend about this very subject a few days back.

According to the article, 55% of surveyed entrepreneurs wouldn’t give up their business if they were offered full-time employment elsewhere paying more money. Only 30% said they definitely would quit their business for the stable and increased income.

What about you? How much would someone have to offer you for you to willingly close your small, online, or home-based business?

I personally can’t imagine anyone being able to offer me enough to give up the freedom. There just isn’t a price tag on this head. What about yours? Is it worth it to pursue your own business even if you’re offered more money elsewhere, or does it all come down to the bottom line?

Summary: US small business owners are worried about inflation and the weakening economy. As an entrepreneur, what are your biggest business concerns right now?

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I came across an article from Reuters this morning talking about the small business outlook on the US economy, and how apparently it’s the worst it’s been since 1980. Read the article.As a small business owner in the US, how do you feel about the weak economy? Are you worried? According to the article, inflation is the biggest business concern for small businesses – with the slowing economy not stopping that inflation. Do you agree?

I’ll admit that inflation’s a problem. As I mentioned in a past post though, the thought of a recession really doesn’t bother me – given the type of work I do, it can even be good for my business, because folks are more interested in hiring independent professionals to save on labor costs. So while it’s a problem in my eyes, I wouldn’t necessarily say it’s the biggest.

Are your views more in line with this report? What business problems plague you the most from an economic standpoint as an entrepreneur?

No matter what type of business you’re in, you probably need to use some kind of business forms – anything from invoices and contracts to HR forms for employee management and recruitment. With legal forms, I’d recommend you consider hiring an attorney who knows your local laws. Yet there are many type of business forms that you can find for free on the Web. Here are a few places to find free business forms, templates, and sample business letters that can help you in the day-to-day running of your small business:

• FindLaw
• Creative Business
  
• ‘Lectric Law Library
• Office Depot
• Microsoft Office Templates
• SmartBiz
• Business Nation
• Small Biz Articles
• FreeBusinessForms.com

You can also find several free business templates here on BizAmmo.com including:

• Free Press Release Template
• Media Advisory Template
• One Page Marketing Plan Template

If you’re interested in starting or buying a franchise of an existing company, there are a lot of options to choose from (from restaurants to cleaning services). How do you find solid franchise opportunities that don’t disappoint? First, you need to understand some of the factors that make a good franchise opportunity:

1. The parent company actively participates in the marketing of their franchisee’s stores when appropriate.
2. The franchisee will receive adequate training, and have a company representative available to answer questions while operating the business.
3. There’s a solid history of generating successful income levels for current and past franchisees (and that most of the franchisees are happy).
4. Overall stability of the parent company (you don’t want to buy a franchise with a company that looks like it may go under in the foreseeable future)

Entrepreneur Magazine has become an authority source on franchises over the years, with their annual collection of top franchises. Here are some of those rankings, where you can find the best franchise opportunities in a variety of industries:

• Entrepreneur.com’s Best Franchises
  

If you feel that a franchise opportunity is right for you and your small business startup goals, take the time to research a variety of opportunities before committing yourself (and your finances) to any one company.

Obviously the simple answer is “no,” because others have gone on to run highly successful businesses without a formal education. However, the fact still remains that those people tend to be the exception; not the rule.

Some industries not only highly benefit from formal education, but it can be required for licensing (medical and legal fields for example). Others don’t require a formal education to be an expert in the industry (such as craft-related businesses).

What I hear a lot of people say (usually kids who start businesses at home online, and who haven’t even finished high school yet) is that if so-and-so could do it without college (insert any ridiculously successful dropout entrepreneur here), so can anyone else. What they neglect completely is that the cases they cite are actually extremely rare.

Banking on being the exception to the rule is very likely a large contributing factor to the overwhelming number of small businesses that fail within their first one to three years.

I won’t argue that absolutely every entrepreneur should receive a formal education and work towards a degree. However, I’d say that doing so couldn’t possibly hurt them in any way (whether it’s an education in their niche or industry, or even a general business education to teach them about the day to day running of a successful business).

What are your thoughts on formal education for entrepreneurs?

LLCs are a popular legal business form for small businesses. Discover what LLCs are, and what their advantages and disadvantages as a business model are.
What is an LLC?

LLC stands for “limited liability company.” LLCs have become the legal business structure of choice for many small business owners, because they combine some of the advantages of various other legal business forms.
Pros of LLCs

• Owners of an LLC get the benefit of limited personal liability, just as owners of a corporation do.
• LLC owners can take advantage of pass-through taxation, like sole proprietors and owners in a partnership, instead of double taxation as a corporation.
• LLCs can be less expensive to start, and involves less paperwork, than corporations.
• LLCs can have a single owner or multiple owners, depending on its location.

Cons of Sole Proprietorships

• Some states don’t allow single owners of an LLC.
• LLC income can be subject to self-employment tax.
• LLCs can be more expensive to launch as opposed to sole proprietorships or partnerships.

If you plan to operate your business on your own, a sole proprietorship may be an acceptable and appropriate legal business form for your needs. Find out what sole proprietorships are, and whether or not that legal business form would suit your small business.

What is a Sole Proprietorship?

A sole proprietorship is a business with only one owner, that’s not a corporation of any kind. Many business owners automatically start a business as a sole proprietor when they launch their small business.

Pros of Sole Proprietorships

• Sole proprietorships are easy to set up.
• Sole proprietorships are inexpensive to set up.
• Sole proprietors don’t have to keep as many records for the IRS as corporations do.
• Sole proprietors control their business finances and profits exclusively.
• Taxes are simpler for sole proprietors, as income is declared on their personal income tax forms.

Cons of Sole Proprietorships

• The business owner will be held personally liable for debts of the business.
• It can be harder to raise startup capital and financing for a sole proprietorship as opposed to corporations and other legal business structures.
• It can be easier for the IRS to declare a sole proprietorship is a hobby rather than a business for tax purposes as opposed to other business structures.
• All business losses are on the shoulders of the business owner alone.