SBA Online Course Helps Companies Win Federal Contracts

The federal government offers $400 billion in contracts annually to small business owners and vendors that can meet a specific need. Many small businesses can grow rapidly if they are able to obtain these federal contracts. In fact, many small businesses establish themselves with the goal of providing services uniquely to the federal government. However, getting federal contracts often requires a good bit of effort and knowledge that can take small business owners time to acquire.

To help these small business owners get accurate information about obtaining federal government contracts more effectively, the U.S. Small Business Administration recently launched its latest free online course, Business Opportunities: A Guide to Winning Federal Contracts.

The online course is designed for all small businesses, especially women entrepreneurs and small firms in underserved markets that have historically had difficulty tapping into federal contract markets. The course uses both written script and audio to provide information about the enormous federal market, including information about contract rules, where to find contract opportunities, and how to sell products or services to the government.

How to Use the Course

The instructional, self-paced guide is available on the SBA's Web site. To find this course, follow these steps: from the SBA's training site, click on the menu of free online courses and then select the first course listed under “Government Contracting.”

After completing the 30-minute tutorial, business owners can earn a certificate of completion from the SBA.

By the way, this Business Opportunities online course is one of more than 24 online tutorials offered by the SBA through its virtual campus at the Small Business Training Network.

Factoring Can Help Cash Flow

Managing cash flow is a major consideration for many businesses. Cash flow, in essence, is a balance of money coming into the business and money going out of the business. Money comes into the business when goods or services are sold. Money goes out of a business to pay for things like inventory, payroll, capital expenditures, and more. Cash flow management can be tricky and even well-established businesses can have a hard time managing cash flow from time to time.

Fact: when businesses extend credit (which occurs anytime a business has to send an invoice for products or services), it will have 10 to 20 percent of its annual sales stuck in accounts receivable. That’s a significant amount of money each year!

When a business needs assistance managing their cash flow, the business can turn to a variety of resources, including banks and other lenders. However, many businesses either can’t get funding through a traditional lender, or would prefer to get funding through alternate means. Factoring is an alternate mean that is very appealing for many businesses. Factoring, in essence, is “cash without borrowing.”

Here’s How Factoring Works

A business sells its accounts receivable (outstanding invoices) to an investor (factor) at a discount rate – usually of about four percent). The factor then collects the money from the customer. Because the business sells the accounts receivable at a discount, the investor is able to collect on the discounted margin. That margin is generally based on a percentage of the total cost of the invoice, but may also be based on a flat rate.

Factoring is a very common practice that has been around for thousands of years, according to Vital Force Factoring. It is generally a business-to-business service, but consumers also use factoring systems anytime they make purchases with a credit card. In the case of a credit card arrangement, the credit card company will pay a retailer for goods when a consumer makes a purchase. Therefore, the credit card company, acting as a factoring agent, serves as a middle man and is in charge of managing payment for a product or service. The factoring system works in much the same way as a credit card system in business-to-business transactions.

Benefits of Factoring

Many company, such as Florida-based First Capital, are in business to buy receivables in exchange for immediate cash – as much as 97 percent of the total amount of the invoice. Some businesses use factoring for funding when they are unable to get bank loans or loans from conventional lenders. In a pinch, some businesses even use factoring to pay for inventory, payroll, and other immediate needs.

Factoring can also help businesses to improve their invoice collection rates as factoring companies handle all aspects of accounts receivable for a company. Some businesses enlist the help of factors if they are unable to collect on an invoice. The factoring company will then use its own resources to collect on the invoice, allowing both the business and the factoring company to receive payment.

Many factoring companies will also perform credit checks on new customers in order to determine the risk associated with engaging in a partnership with the new customer. This credit check can also help businesses to assess a credit amount or interest rate for the new customer.

When looking for a factoring company, look for a company that has a high advance rate for invoices, offers fast payment on invoices, has appropriate invoice management tools, and has a good reputation for collecting payment from customers. It may be helpful to review several different factoring companies before selecting the company that’s best for your needs.

You Noodle Can Help You Predict Your Business Outcome

What will your business be worth in three years? The sophisticated You Noodle business valuation model analyzes information about business to help predict their outcomes. If you know a business (or own one) you can try it now for free!

What are the benefits of finding out information about a business?

Many individuals and businesses use You Noodle to determine the projected revenue and value of a business when they are considering investing in a business. For example, if you are considering buying shares of a business, you may be able to predict with a high level of accuracy what those shares are likely to be worth in the future using this predictor tool.

This predictor tool can also help you to determine what the outcome of your own business can be. If you are thinking about starting a new business, buying a business, or changing your business services or products, this predictor tool can give you some insight into whether or not your business will be as successful as you imagine. It may also be fun to use this tool to see where your business ranks amongst similar businesses. Are you on track?

For example, if you are thinking about opening a restaurant, this tool can help you to determine whether the start-up costs will be worthwhile – and how long it will take for you to see a return on your investment.

Remember to be logical.

While the You Noodle predictor tool is a fairly reliable way to determine the value of a business, keep in mind that this predictor works by analyzing information from similar businesses and from a business’s own history. While this tool is thought to be rather accurate, it’s important to keep in mind that the success of a business largely depends on the business model, business plan, and leadership team.

Therefore, use common sense if you are evaluating a business for investment purposes – and work hard and smartly if you are trying to realize a certain level of revenue from your own business. The You Noodle predictor is an excellent complement to good old fashion common sense and research!

Women Owned Business Generate $1.9 Trillion In Sales

Since the dawn of the first fur trading businesses in the U.S., the business arena has been dominated by men. However, times – they are a-changing. In fact, women owned businesses are believed to generate nearly $2 trillion in sales annually – and that figure only counts those women owned businesses that are officially classified as such! (Classifying a business as a minority-owned business is always at the discretion of the business owner, and not all business owners go through the process of obtaining a minatory-owned classification).

With more and more women starting businesses and becoming the majority shareholders in already established businesses, it’s important to pay attention to the role that women play in the global business marketplace. Here are a few facts about women owned businesses that may surprise you:

• 10.1 million firms are owned by women.

• Those 10.1 million firms employ more than 13 million people, and generate $1.9 trillion in sales as of 2008.

• Three quarters of all women-owned businesses are majority owned by women (women own 51 percent or more of the shares for the business). This accounts for a total of 7.2 million firms, employing 7.3 million people, and generating $1.1 trillion in sales.

• One in five firms with revenue of $1 million or more is woman-owned.

• Three percent of all women-owned firms have revenues of $1 million or more, compared with 6 percent of men-owned firms.

Banking and Finance

Women business owners' satisfaction with banking relationships has more than doubled since 1992 (35 percent vs. 82 percent).

• More than two-thirds (67 percent) of women business owners choose financial products and services based on their relationship and experience with a lender.

• Women owners of firms with $1 million or more in revenue are more likely to belong to formal business organizations, associations or networks than other women business owners (81 percent vs. 61 percent).

What This Means to You

In order to effectively work with and market your services to women owned businesses, it’s important to understand how the leaders of these businesses work. As noted in the example above, women tend to make decisions based on their relationships and are more likely to belong to business organizations as they increase their revenue.

Ask yourself a few simple questions about how your marketing strategy, services (including customer services), and products appeal to women owned businesses, such as:

• How can this knowledge impact your marketing plan and efforts as you attempt to develop relationships with these businesses?

• How are your services designed to meet the needs of both the business and the business principals?

• Do you have products or services that appeal to women owned businesses?

• How can you improve your efforts to develop relationships with women owned businesses based on this knowledge?

Early Payment Can Help With Cash Flow!

Did you know that paying your bills early might actually save you money? Many businesses offer prompt pay discounts, or “2/10, net-30 discounts,” which allow companies to subtract two percent (and sometimes more) from an invoice amount if the invoice is paid within 10 days if receipt instead (of the more standard net 30 or net 60 day payment period.)

Prompt payment discounts can be offered in any industry and anywhere along the distribution channel, including between suppliers, distributors, customers, service providers, and more. In some cases, the prompt payment offer is called a “trade rate,” which is, essentially, a special rate that is offered periodically based on certain circumstances.

Taking advantage of these early pay discounts can really add up, especially for companies with thin profit margins. The challenge for many companies, however, is managing their cash flow system in a way that enables them to take advantage of these discounts on a regular basis.

Here’s what you’ll need to do in order to take advantage of early pay discounts:

1. Determine if an early pay discount is available from a vendor. Not all vendors offer this opportunity. If the early pay discount is not offered up front, you may want to suggest it to the vendor.

2. Alert your accountant or payment processor. If you work with an in-house accountant, it may be easier to alert the accountant of the early pay discount. However, if you have an out-of-house accountant, you may need to get in touch with the accountant to let him or her know about your interest in the early pay discount option.

3. Follow up with the payment processor for your company to make sure that the payment has gone out within the 10 day period.

4. Follow up with the vendor to make sure they received the early payment and applied the discount.

Why offer prompt payment discounts?

In addition to being able to take advantage of prompt payment discounts, you may also want to offer your own prompt payment discounts to your business associates. Here are a few ways in which a prompt payment discount could benefit your business:

• Boost short-term sales, as customers or vendors act quickly to take advantage of a prompt payment discount.

• Sell older merchandise or merchandise that is becoming out-of-date.

• Reward special or long-term customers.

• Increase productivity.

• Increase cash flow and efficiency of the accounting department.

To determine whether a trade rate or prompt payment discount is right for your business, you may want to conduct a survey amongst your customers, vendors, distributors, and other key business partners. In this survey, find out if the program would be beneficial to your associates and what terms of such a program would be best.

Why Should All Business Get a D-U-N-S®® Number?

With more than 100 million businesses in the marketplace worldwide, it’s important to establish a D-U-N-S® Number in order to identify and differentiate your business. A D-U-N-S® Number is a unique nine-digit reference number assigned to a business, similar to the way a social security number is assigned to an American citizen. However, unlike social security numbers, D-U-N-S® Numbers are public, so anyone can research a business based on its D-U-N-S® Number.

D&B links the D&B D-U-N-S® Numbers of parents, subsidiaries, headquarters and branches on more than 70 million corporate family members around the world. Used by the world's most influential standards-setting organizations, it is recognized, recommended and/or required by more than 50 global, industry and trade associations, including the United Nations, the U.S. Federal Government, the Australian Government and the European Commission.

In today's global economy, the D&B D-U-N-S® Number has become the standard for keeping track of the world's businesses.

A History of D-U-N-S®

D-U-N-S® stands for Data Universal Numbering System and is copyrighted by Dunn & Bradstreet (D&B) as a method of identifying businesses. The D-U-N-S® system was put into place in 1962.

Both commercial and federal organizations have been using D-U-N-S® Numbers since 1994 as a standardized method of identifying a business. In 1998, D-U-N-S® Numbers were incorporated into the Federal Acquisition Act (FAR) as the official contractor identification code for Federal Government procurement-related activities.

How D-U-N-S® Helps Businesses

In addition to allowing a business to go after federal government contracts, having a D-U-N-S® Number enhances the credibility of a business and enables other businesses to learn more about it. Information that is accessible by researching a D-U-N-S® Number includes:

• Business name

• Business physical and mailing addresses

• Doing Business As “DBA” affiliations

• Names of principals

• Financial information, including payment experiences

• Industry classifications (including SICs and NAICS)

• Government data about the business

• Social-economic status of the business

What You Need to Do

If you are a small business, ensure that your company is listed in D&B's database – even if you don’t plan to go after any government contracts in the near future. Establishing your D-U-N-S® Number now will help to build your history and credibility. Once you sign up, you should receive your D-U-N-S® Number within 30 business days.

You can also use the D-U-N-S® for another business as a credit reference for that business, just as another business can use your number as a credit reference for your business.

By the way, you can easily update your record anytime with the eUpdate service offered by D&B.

Please note that getting a D-U-N-S® Number alone will not establish a D&B credit file for your company. If you are requesting a D-U-N-S® Number because you need to show others that your business is creditworthy, you will probably need to establish a credit file.

Using References for Vendor Selection

Whenever you need to select a new vendor for a product or service, it is important to feel confident in your final selection. For every service or product you require, chances are good that there are many vendors to choose from. So how do you select the bes t vendor for your needs? You can start by checking references.

Using references should be a critical piece of picking a vendor. If a simple review of a vendor’s catalog or services can provide you with information about a vendor’s products or services, a reference check can provide you with information about how well those products or services are provided…and how well they hold up. References can give you an idea of how well a vendor meets a deadline, responds to queries, and provides support.

But how can you be sure that the reference you are getting is accurate and useful? In many cases, references avoid saying anything negative about a vendor for two reasons:

1. There is a legal liability associated with giving references. Giving a bad reference may constitute slander or libel, which can result in legal action taken against the reference on part of the vendor.

2. Many references are coached by a vendor in terms of what information they can and should share with a new business.

How to Perform a Reliable Reference Check

While obtaining an unbiased reference may be difficult, it is not impossible. One way to find unbiased referenced is to find companies that have use the vendor’s services – but that are not specifically listed as references by the vendor. How can you find such companies? Here are a few ideas:

• Take a look at the vendor’s press releases for information about business partnerships and relationships.

• Perform a simple search engine search

• Browse a vendor’s LinkedIn profile.

• Go to industry trade events to meet companies that work with a business (this is especially useful if a business is large or well-known).

Also, ask the references to rate the vendor on dimensions that are most relevant to business services such as timeliness, reputation, expertise, reliability, communication,and availability.

Finally, keep in mind that not all business relationships are the same. The relationship that a vendor has with a business in one industry may differ greatly from the relationship that a vendor has with a business in another industry. Therefore, find references that seem similar to your business in terms of type, size and/or location.