Small Business Development Center
At Chemeketa Center for Business & Industry
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Monthly Archives: December 2011

Buying Locally Boosts Community

By Chemeketa SBDC

Are you still shopping for the holidays? What a ridiculous question! Of course you are! And no doubt you have heard the “buy-local” messages that have been so prevalent this year. So, as if you needed them, here are a few reasons to do your shopping with local merchants. Make everyone’s holiday season a little brighter, right here at home!

-Practicality and convenience. First, you usually can see the item before you buy it to make sure it’s perfect. And then consider that your time and car expense can be saved by shopping locally. If you need to return it, you can avoid the hassle of packaging and shipping it to get it back to the store. You save time by not having to drive long distances to exchange or facilitate the return. Need to make a special request? In a small business, the decisions are made locally; no waiting for “management” in some other location to decide if your concern warrants attention.

-Environmental reasons. Not driving all over the place saves fuel and cuts down on air pollution. You also eliminate the wasteful packaging (Styrofoam peanuts, plastic wrap, etc.) that comes with items you order online and have sent to you.

-Community support. I have to admit, this is my favorite reason. It has been reported that a locally owned business returns approximately 80 percent of each dollar spent back to the community, and your dollars spent in locally owned businesses have three times the effect on our community as dollars spent at national chains. Your dollars are kept in your community. This creates more commerce and more jobs here. Likewise, local stores pay taxes and in doing so help support a stronger infrastructure in the area. Many local merchants support your fundraisers and community events, but they need your consumer support in order to continue to do so. Remember that you shouldn’t complain about the schools, the roads, and local services if you don’t support your local businesses.

Think Before Buying a Business

By Chemeketa SBDC

Have you been considering buying a business recently? Perhaps someone you know is selling theirs and you would like to try your hand at running it? There are several important considerations before you jump on the opportunity. Think them through and make an informed decision before proceeding.

First, what is your experience and background in running a small business and in this particular industry? If you have never owned a business before it is very helpful to look for one in your particular field of expertise. And, generally, a bank would never consider loaning you money for a business in which you have no experience.

Next, look at the business itself. Why is it for sale? If it is as great as the seller claims it to be, why sell? Why not hire a manager, keep it in the family, or even lease it out? The reasons are rarely simple. The sale requires more research than just the seller’s explanation. There will be both personal and professional reasons. You job is to understand and to make your risk decisions accordingly.

What are you actually buying? How does the price tag spread across the assets of the business? What is the condition of the equipment? What is the true replacement value of the furniture, fixtures and equipment? What would you need to pay for similar assets on the used market? What assets are not staying with the business? Are any of these departing assets critical to success of the business?

Make certain that you are not (unintentionally) buying the business debt. At times the owner will sell accounts receivables along with the accounts payables. How old are these receivables? Are any actual bad debts that you can never collect? How old are the accounts payables? Has the business not paid their suppliers and therefore are on cash on delivery? Check the amounts and ages of the accounts receivables and payables — even it you are not “buying” them.

Look at the financial statements and summaries for trends in income. Does this business have the ability to keep its current market share and remain competitive? What will keep the customer-base coming back? Can they be easily lured away by your competitors? How many existing customers will the business actually lose with a change in ownership?

How much additional money must be invested in the business in order to make the changes you think are necessary?

This business may be running profitably now and yet still not be able to sustain the debt load (bank loan) if you have to borrow money to purchase and run the business.

The last three to five years of financial statements and tax returns (ask to see both!) can be an indicator of whether the business has been well run.

If you are told that the financial statements don’t really reflect the true value of the business — that, in fact, much of the profit is “hidden” — walk away.

Strive to be Active, Engaging Online

By Chemeketa SBDC

Everyone has a Facebook page for their business, right?

Sure, many business owners have created a page in an attempt to take advantage of the more than 800 million active users on Facebook — and hopefully engage someone from this enormous crowd as customers. The problem is that many business owners don’t do much beyond the creation phase. They expect that once the page is in place, it can be a self-sustaining space that will not require their continued attention and efforts.

This couldn’t be further from what is required in order to have a successful business page on Facebook. It’s hard to blame people for thinking this way considering that marketing schemes before the Internet (and especially before the rise of social media sites) were all linear and required little or no feedback. Whether it was a newspaper ad, poster, TV commercial or billboard, the message came in a top-down fashion from organization to potential customer and was not able to accommodate public discussion on the spot.

The beauty, and the risk, of social media and the Internet is that people can engage with you and your product or services in real-time. Social media appeals to our basic social instincts as humans. Humans arguably are the most communicative, cooperative and culturally-competent species. It is for these reasons that people engage with social media sites like Facebook. It excites people and draws us in because of the potential to connect with, be understood by, develop relationships with and learn more about other people. It is important to keep this in mind when creating and managing your Facebook business page.

Facebook users are engaged and willing to invest significant time on the site but don’t have a clear goal in mind other than to connect. If you aren’t trying to actively engage people with your page, you’re doing it wrong. Ask yourself “Would this information actually benefit someone?” before your next Facebook post. Even better, think of people you know and ask yourself if the information would be beneficial to them. Then frame the information in a personal way as if you were offering advice to a friend who needed it. The people who are interested in your business are people you want to help, anyway.

If you change your mindset from thinking of people as potential customers and instead think of them as people in a community to engage, you probably will notice that people want to engage with you and start to build trust and loyalty in your brand. Create a few simple rules by which to live, such as replying to every single wall or photo comment and posting an interesting link, video or photo every day. Build a community around your business and don’t forget that it isn’t all about you — your customers can help each other with tips and advice and they also can help you! They just need the space that you can provide with your social media sites.

April Simmons is an Americorps VISTA volunteer serving with the Merit Program at Chemeketa’s Small Business Development Center. Questions can be submitted to Visit the SBDC at 626 High Street NE in downtown Salem, or call 503-399-5088.