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How to Avoid Taking Out Large Loans to Fund Your Business

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By Bill Fay

Family, friends and even his college professors told Aidan Augustin he had a business idea worth pursuing, even if meant dropping out of college.

Augustin and his roommate, Neal Ormsbe, designed a smartphone application that would allow anyone attending a business conference to get connected to and stay connected with the speakers and other attendees at the conference.

The two were juniors majoring in engineering at the University of Florida, but everyone said the idea couldn’t wait, so they dropped out of school, gave the business a name, Feathr, and opened shop.

There was just one little obstacle left to overcome.

“Money,” Augustin said, citing the one little obstacle nearly every small business owner must overcome.

Augustin and Ormsbe figured they needed $50,000 to get started. That’s not big money, unless you happen to be 20-year-old college dropouts with meager savings and no assets.

“We knew banks wouldn’t want anything to do with us,” Augustin said.

Getting Started

Fortunately, family, friends and their college professors got them started. Their parents agreed to send the same money they would have sent if the two had stayed in school. Friends agreed to work for what amounted to minimum-wage salaries. Professors put some of their own money in the pot, and a small business was born.

It didn’t take Augustin long to learn why more than half of start-up businesses fail the first year.

“We needed a lot more money than we thought we would,” Augustin said. “We didn’t understand the realities of what it takes to run a business. We underestimated costs on everything.”

That includes the relationship costs when you take loans from people you know, with no guarantee you can pay them back.

“The conversations with our parents and friends got a little awkward because we couldn’t really show clear signs of progress,” Augustin said. “Professional investors know the risks involved so it’s a little easier to deal with them when you’re starting out.”

Making Gains

Augustin let Ormsbe and a couple of part-time employees do the development work the next year and devoted more of his time to fundraising. He started with the crowdfunding site Indiegogo, where he found $21,000 worth of backing.

Then he won a lottery that provided free tickets to a conference in Silicon Valley for software startups called the “Largest Hack-A-Thon In History.” It was sponsored by Barracuda Networks, which offered winners $25,000 and a seemingly endless supply of business contacts.

Augustin’s group beat 130 teams from all over the country and claimed the top prize. That led to a front-page article in his hometown paper, the Orlando Sentinel, and suddenly Feathr had some status.

“That article created a buzz about our company,” Augustin said.

Feathr picked up a $150,000 award from TiE (The Indus Entrepreneurs) and contacts from the Barracuda Networks conference resulted in the first product sales. The 2014 budget is up to $450,000, most of which will go to pay salaries for the 12 full-time employees now working at Feathr’s offices in Gainesville, Fla.

“We don’t having the living expenses they have in Silicon Valley or New York City or places like that, which is a huge advantage for us,” Augustin said. “We can use our money more efficiently to hire more people and pay them actual salaries they can live on.”

The best news is that Feathr, now in its third year of operation, still hasn’t needed a bank loan to stay in business.

“We sort of hopped and skipped from one funding source to another, but we’ve made it so far,” Augustin said. “We’re working to keep it going that way.”

In addition to the crowdfunding, and loans from friends and families that helped jumpstart Augustin’s small business, another option to consider is tapping an annuity. Entrepreneurs who have annuities could use those investments to finance their budding enterprises instead of taking out loans.

The great thing about an annuity is that it’s your money. It’s already there, and you are not borrowing from a lender; however, since the annuity operates as retirement income, there are penalties to taking cash out before retirement.

When you take funds out of your annuity early you can expect the following:

  • A 10 percent penalty on the taxable portion of the annuity is forfeited if you are under the age of 59 ½.
  • The tax deferral benefits are in place to encourage long-term retirement savings, so the fee is similar to what you would pay on an early withdrawal from an IRA.
  • In most cases, if you cash out early, you will have to pay surrender charges. If your annuity carries a surrender fee, you should try to wait until the fee no longer applies. Surrender charges generally start at 7 percent and decrease incrementally, usually by 1 or 2 percentage points each year, until they reach zero.
  • Earnings on annuities are considered ordinary income, so you must pay taxes on any earnings when you cash out your annuity. This is in addition to the 10 percent early withdrawal penalty.
Author’s Bio: Bill Fay is a writer for Annuity.org, focused mainly on news stories about the spending habits of families and government. He spent 21 years in the newspaper business and eight more in television and radio, dealing with college and professional sports, then seven forgettable years writing speeches and marketing materials for a government agency.

Save on Taxes by Making Wise Choices During Open Enrollment at Work

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By Sharita Hutton

When it comes to tax-deferred accounts for health expenses, most taxpayers get it all wrong. A recent Fidelity survey shows that nearly 3 in 4 incorrectly think employer-provided health savings accounts and flexible spending accounts are virtually the same thing. H&R Block (NYSE: HRB) knows this misunderstanding causes many to miss out on a chance to pay less in taxes because contributions to these accounts are not taxed. Before checking off the same boxes they do every year during open enrollment for health benefits at work, taxpayers who have access should consider these accounts.

How much money? A $2,000 annual ($166 monthly) contribution to health savings account or a flexible spending account could save a taxpayer in the 25-percent tax bracket $500 in taxes (contribution × marginal tax rate = tax savings).

The money contributed to either type of account must be spent on qualified medical expenses, which include eyeglasses, contact lenses and prescribed medication. Also, appointments with doctors – for general preventative checkups, appointments with specialists and visits when not feeling well – are among the eligible expenses. All these routine expenses can add up quickly; out-of-pocket costs for a family of four were expected to average $3,600 in 2013, according to the 2013 Milliman Medical Index.

Not going to the doctor when sick could save money, just like wearing outdated prescription glasses and only taking half as much medication as prescribed, but none of these are advisable ways to save on health care expenses. Here is some information taxpayers can use to determine if a health savings account or a flexible spending account could help them save money.

Health savings account gives opportunity for long-term saving

As with other savings accounts, the money in a health savings account can stay in the account indefinitely, allowing the account holder to save for future medical needs. Funds used for qualified expenses can be withdrawn tax-free, and interest earned on the account is tax-exempt. Here are some of the participation rules:

The taxpayer must participate in a high-deductible health plan

  • High-deductible is defined as at least $1,250 deductible for self-only coverage and $2,500 for a family
  • Plan must not pay benefits until deductible is reached

(There are exceptions for preventive care and certain permitted benefits, such as dental expenses)

The maximum contribution for 2014 is $3,300 for self-only coverage and $6,550 for a family

  • An additional $1,000 may be contributed for taxpayers who are at least 55 years old.

Flexible spending account money must be used by deadline or it will be lost.

Unlike with health savings accounts, the money contributed to a flexible spending account must be used by the end of the plan year or grace period, or it will be lost. Up to $2,500 may be withheld from gross income for contributions to flexible spending accounts.

Just like other elections made during open enrollment for benefits, decisions about these accounts cannot be changed before the next annual enrollment period, unless an employee has a qualifying event. Among qualifying events are birth, divorce, marriage, death and loss of benefits from another source (e.g., a spouse losing a job).

Some retirement options selected during open enrollment also have pre-tax benefits

Another option for pre-tax savings that happens as part of open enrollment in the workplace is selecting retirement savings plans. The average retirement span is 18 years and 80 percent of people ages 30-54 don’t think they will have enough money put away for their retirement. A good first step in saving for retirement is to make pre-tax contributions to a 401(k). Because these contributions are made with money that has not been taxed, the amount contributed reduces taxable income and that can potentially reduce the overall tax bill. Also, retirement savings grow tax-free.

For more information about health savings accounts and flexible spending accounts, saving for retirement or advice on other ways to reduce tax liability, contact an H&R Block tax professional. To find the nearest H&R Block office, visit www.hrblock.com or call 800-HRBLOCK.

Promote Your Events with Compelling Copy

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By Jessica Davis

You may have heard the popular phrase “if you build it, they will come.”

This is quite untrue in case of organizing events and meetings. It doesn’t matter how well you have organized an event if you are unable to effectively market it. Lots of organizations and groups fall short in this regard only because they send out simple announcements listing the time, date, speaker, and location of an event.

You, as an event organizer, have to realize there is a lot of competition out there, and you need to convince prospective attendees that you are worth their money and time.

Importance of a compelling headline

A compelling headline holds the key to catching the eye of prospective attendees. A simple headline, such as “2013 Annual Conference” fails to grab the attention of any reader. It may describe what your event is about, but cannot really be called a headline. A compelling headline is one that incites the reader to learn more about the event. In terms of marketing, it should typically promise some benefits. For instance – ‘Master the art of social media in three hours;’ or ‘Touch new horizons with your business.’

If the event has only a single speaker, then their program title can be used as the headline, if it satisfies the criteria given above. Multi-speaker events will require you to present the overall benefits for the reader in the headline.

Event details

Location, time, and date

Be sure to make this information easy to locate. In fact, mention it twice at least on the web page or brochure. A map with parking information and driving directions is a nice addition too. If applicable, you should also mention the transportation and hotel information. Other than these, mentioning savings such as discounted rates on group bookings can also help your cause.

Program outline

Give a general idea of the things taking place in the event. You should include the schedule, such as networking time, meals, or other important details for multi-day or all day long meetings.

Attending benefits

This is the essence of the marketing message. This topic explains to the prospective attendees why they should invest their valuable resources in coming to your event. You have to be specific while promising results.

Presenter bios

The biographical information about speakers at the event establishes their credibility. Potential attendees probably won’t care about the bio of the speaker anyway, but not including this section may lead them to doubt the event’s credibility.

Registration information

Be sure to make the registration process painless. If the registration form is too confusing or very exhaustive, chances are potential attendees will simply reject the event due to the formalities involved in filling the registration alone. The registration instructions should be easy to follow, clear, and simple.

Highlight special features and incentives

Apart from the speakers, include other highlights of the event. This can include local tours, autograph session, trade show, banquet, concert or show, live demo, organized activities, and so forth.

Testimonials are other powerful marketing elements that are generally overlooked by event organizers. You should use two different testimonial types: one from speakers, and other from past attendees. These should preferably be result oriented, and the more, the merrier.

Finally, a call to action should conclude the whole sales presentation. Without it, prospective attendees probably won’t take any action apart from reading the whole presentation that you so painstakingly produced. Be clear at the end with lines such as “Register from this link”; “Fill form given below”; “Now!” Today”; or “Fax to this number”.

Author’s Bio: Jessica Davis is a Content Strategy Specialist with Godot Media – a leading content marketing firm. She has years of experience working closely with online businesses, helping them refine their marketing strategy through optimum use of content. Her other interests besides online content strategy, internet marketing and search engine optimization are, technology, sports and fashion.

If You’re Skipping the Smaller Conferences, You’re Missing Out

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Walking the exhibit hall at the Consumer Electronics Show in Las Vegas is an awe-inspiring experience.

Look! There’s CNN’s camera crew. Look over here, there’s a drawing to win a new car! Come over here, there are hovercrafts you can pilot yourself. And Debbie Gibson is performing in this booth…

smaller conferences are better

The exhibits are huge, the keynotes are standing room only, and conference sessions are elbow to elbow. From what I’ve heard, SXSW is heading in the same direction…possibly too big for its own good.

That’s why I like to focus on the smaller, more intimate conferences, like SOBCon (back in 2014), Social Slam, or the upstart ConvergeSouth. There’s still plenty of room for learning new stuff, meeting new people, and forming quality relationships. There’s less swag, and more value for your money.

Why Smaller Conferences are a Better Investment

  • You can focus on a conference that dives deeply into your niche. Rather than a huge, generic marketing conference, try one that focuses on content marketing.
  • Have better conversations. When you can actually hear yourself talk, you can have those great hallway discussions that often turn into long-term relationships. With fewer people milling around, you have a better chance of having more than a quick chat.
  • Get access. Some of the smaller conferences pull in heavy hitter speakers, and you can have much easier access to meet them. Especially if you spend the little bit extra for a VIP pass.
  • Enjoy the adventure factor. Sometimes things are just more loose at a smaller conference. You might find yourself in a dive bar at the after-after-after party building memories with people you only knew online. Not that that ever happened. I’m not allowed to say.
  • Anticipate the “let’s put on a show” factor. Smaller conferences often have a hardy band of local volunteers who are shouldering the burden of hosting. It’s a fantastic opportunity to offer your help with the little things. If a speaker flakes out, you could be there when you’re needed to jump in (I’ve seen that happen). If the audio-visual hookups are wonky, you can jump up and troubleshoot. Earn the eternal gratitude of the conference team, and make some friends.
  • Spend less money. The newer, smaller conferences are cheaper, and sometimes even the peripheral expenses are lower since they are held in smaller cities. A hotel room in Greensboro, NC is much more affordable than one in New York City. And do I need to mention food costs? At a small conference in Portland, I had the most amazing grilled cheese sandwich for lunch from a food truck. Cheap and mind-blowingly delicious.

Are you ready to pack your bags? What are your favorite smaller conferences?

Author’s Bio: Rosemary O’Neill is an insightful spirit who works for social strata — a top ten company to work for on the Internet . Check out the Social Strata blog. You can find Rosemary on Google+ and on Twitter as @rhogroupee

5 Tips for Over The Top Customer Service

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By Deb Bixler

In any home business or direct sales business, just providing good customer service is not enough in a very competitive economy.

Customer Service

You need to encourage your team members to take their customer service from bland and average to spectacular.

How do they do that?

5 Tips For Over The Top Customer Service

Here are five things to do that will make your customer service stand out from the pack by turning indifferent customers into raving fans who will return again and again.

1. Create a positive experience from start to finish. Take a look at all aspects of your company to see how customers perceive their experience dealing with your business.

Did their phone calls get answered courteously and promptly?

Were they greeted with a smile and an enthusiastic hello every time you met with them?

Did you or a team member do everything possible to find answers to their questions?

Was every point of contact enthusiastic, energetic and incredible?

It is important to view your business from the other side and then improve any area that appears lacking.

2. Engage your customers and step into their shoes.

Listen to their wants and needs. Learn to empathize with their problems. They want to believe that you care about their desires. The direct sales business is all about customer relationships and sales consultants who can truly make connections will have the inside track on making the sale.

3. Think outside the box.

Doing the same thing over and over again is boring. It is also bad for business. Though customers are sometimes resistant to change, they do enjoy surprises from time to time.

Without making wholesale changes to your way of doing business, you can still offer little surprises that delight both repeat and new customers. Creativity, imagination and ingenuity are essential ingredients for successful entrepreneurs.

4. The customer is always right.

It can be difficult at times to acquiesce to the customer’s demands and requests. However, good customer service demands that you work with your team members to get them to truly understand that the customer is always right. If you offer more service, more empathy and more understanding than your competitor, your customers will notice.

5. A little enthusiasm goes a long way.

If you are not enthused about your business, how can you expect the customer to be enthused about your products or services? Deliver your customer service with enthusiasm and excitement. Make sure that your team members also provide customer service with the same levels of enthusiasm and excitement.

Customer service should impress and inspire.

It should be grounded in the fundamental belief that you have something wonderful to offer your customers and that they are intelligent and well-informed consumers. If customers are impressed and inspired, they will pull out their checkbooks, cash and credit cards to purchase your products and services.

If they feel that your service is bland and boring, you won’t be in the direct sales business for very long.

Author’s Bio:
Deb Bixler retired from the corporate world using the proven business systems that made her a success working for others by incorporating them into her home business. In only 9 months Deb replaced her full time income with the sales and commissions from her home party plan business. Find her on Twitter: @debbixler.

6 Advantages “BYOD” Brings to a Business

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By Miles Young

One major trend in business now is BYOD, or “bring your own device.” This basically means that employees are responsible for buying and choosing their mobile device. It allows businesses to save money, while keeping employees happy at the same time.

There are also several other business advantages, such as fewer headaches for the IT department, more employee choice and freedom in their devices and a better connection with today’s consumers. Businesses that are newly introducing BYOD do face some roadblocks, but it is worth the effort once the transition is complete. Take a closer look at the advantages to BYOD and what it could mean for your business.

#1: Your Business Saves Money with BYOD

Successful businesses always look for ways to save money. Reducing monthly spend on employee mobile devices is one of the best and easiest ways to do this. In a true BYOD business environment, employees cover the full cost of their devices, including minutes and data usage. This saves businesses thousands of dollars each year. However, most companies offer incentives to employees through discounts or usage stipends, especially at the beginning of the transition.

Only a few short years ago, employees would have complained a lot about BYOD. However, a recent Good Technology State Report shows that 50% of employees are more than happy to cover the costs. This is for several reasons, but the biggest is that it gives them more freedom to choose their own device and upgrade as desired. Many people are dedicated fans to specific platforms, so this allows them to remain loyal to their favorite brand of device. As more businesses turn to BYOD environments for its cost savings, employees will get more used to the idea.

#2: Employees Can Choose the Device They Like

People get very attached to their mobile phones. As a matter of fact, one Mobile Mindset study showed that 73% of mobile phone users admit they would go into a panic if their phone went missing. This obsession is one reason most employees prefer to choose their own mobile device — they have an intimate relationship with it. Everyone has a different preference over the brand of phone they like and what features are must-haves. Businesses can keep their employees happy by allowing them to choose their own mobile device with a BYOD policy.

#3: Businesses Stay on the Cutting-Edge of Technology

Typical smartphone users want to have the latest and greatest technology. This is a major advantage to businesses because employees usually upgrade to the newest phone as soon as they are eligible for an upgrade. This is especially true if you have a younger workforce. Having technology-savvy employees translates to more efficiency for your business, which is why giving your employees more freedom with BYOD is such a good idea.

Additionally, many businesses have spent a lot of money on creating a mobile infrastructure, such as putting business information in the Cloud so it’s easier for employees to get access to. By allowing employees to choose their own mobile device and other gadgets, it encourages them to use the infrastructure your business has spent so much money to create.

#4: Employees Only Have to Manage One Device

With BYOD initiatives, employees no longer have to worry about carrying separate phones for business and personal use. This was a major hassle for employees in the past, and it often meant missed calls because employees only carried their business phones during business hours. With a BYOD environment, your business will have fewer missed calls because your employees will have fewer gadgets to juggle. Plus, the phone will be with them whether they are working or not.

Managing only one device also increases employee productivity, because they only have to get used to one phone. Every mobile phone works a little differently and there is a learning curve, even for technology savvy employees. If your employees are allowed to choose their own device, they will be more motivated to learn how to use it effectively, which has all sorts of advantages to your business. Increased productivity means more profits for your business.

#5: Your IT Department Has Fewer Headaches

If you don’t have a BYOD policy, your IT department probably spends a lot of time fixing mobile phones and plan issues. With BYOD, employees have to seek help about their phones from their cell phone carriers. This means fewer headaches for your IT department and less wasted time. Of course, your IT department still has to find a way to make sure everyone has good security to protect your business information.

All smartphones today have the basic features businesses need, such as access to the Internet and email alerts. So, there’s no reason a business should have to require all of their employees to use the same device, except for security purposes. Your business can make BYOD recommendations about security, such as requiring all employees to use the RIM platform, but there are also other ways to make sure employees have the proper security on their phones. This includes things like requiring two layers of passwords and encrypting all business information. Security is a major issue for IT departments, but policies can be put in place to protect your business.

#6: Employees Care More for Their Device

Another advantage to BYOD is that employees will take better care of their devices if they are responsible for the costs. Your business won’t have to worry about replacing phones or paying for insurance policies related to gadget use and ownership. This saves money and it also means that your business information will be protected with more care.

According to an ARCchart report, 65% of business owners have already transitioned to a BYOD environment or have a plan to transition in the near future, while only 11% have no plans. There are obvious advantages to BYOD if you can successfully get your employees on board with the idea.

Has your business already made the BYOD transition? Do you have any advice for others that want to follow suit? Leave a comment below.

Author’s Bio: Miles Young is a tech geek, business blogger and all around cool person. Follow him on Twitter @mrmilesyoung.