Earth Class Mail

Avoid The Top Small Business Financing Mistake

We've written a bit before on the best options for small business financing sources. This time we're going to focus on clearing that first hurdle for a small business loan.

At some point your business financing needs will outgrow the most common sources, namely cash. Whether that's coming from personal savings, friends, or family - that well will run dry.

Let's Review A Bit, Equity vs. Debt

Equity financing is a great option for a growth focused company, especially those with valuable intellectual property or favorable market dynamics. You can get the capital you need and avoid the overhead that comes with servicing debt.

Globally, venture capital activity for the Americas exceeded $72 billion in 2016, according to KPMG. The average deal was in excess of $8 million...one more time, the average deal was in excess of $8 million.

Obviously there's a lot of money floating around on the equity side of things, but the average deal size is also a really good indicator of the types of businesses that win these deals. That is, growth companies.

For the most part, your small business is not going to be competitive when it comes to equity financing.

On the other hand, debt financiers absolutely love working with cash flow (aka "lifestyle") businesses.

Your local credit union, or a specialized business lender, is going to care much less about your ability to generate a 100x return when you sell the company and much more about the reliability of your cash flow.

All of that makes debt financing a very common source of small business capital for entrepreneurs. In 2016 alone, the Small Business Administration funded more than $17 billion in small business loans.

The average deal was worth a bit over $370,000, a figure likely to gel with the needs of most SMB owners looking for capital.

Interestingly, over $6 billion of those 2016 SBA loans went to new businesses, which is especially impressive. The average deal there was just under $330,000. Again, a much more likely scenario for the typical small business entrepreneur. 

The true beauty of debt financing is that it's a mature and liquid market. Honestly, how many VC's do you know? What about angel investors? 

Now think about how many banks are in your neighborhood.

The First Test Is The Most Important

With that maturity comes a lot of volume, the SBA alone did nearly 6x more deals than all VC activity in the Americas. As you'll learn, there's a very defined process for securing a business loan.

Nearly all business lenders will follow a similar process, and the first step of that is commonly referred to as "Lender Compliance".

This tends to be automated by the lender's pre-qualification system. It's basically an algorithm programmed to score your business' risk using a pre-determined set of parameters.

If it sounds a lot like a test, it is. It's just not one that you would study for, but rather one that you have to complete before applying for a loan.

The vast majority of rejections happen at this very early stage, during the compliance process. 

There are twenty common lender compliance items to prepare for, we'll focus on eight in this post that are all about legitimizing your business identity - the others will be covered in an upcoming post.

Most lenders will check some of them, but there's no way to know in advance which items they'll look at, so you need to cover all of them before you start.

Legitimize Your Business

1. A real, registered business entity with the state

That means you don't operate as a Sole Proprietorship, but are registered with the Secretary of State as some sort of Corporation, LLC, or the like.

This is a super easy thing to do. You can get it done online in under an hour for most cases, and the cost is generally a few hundred dollars.

There are plenty of providers out there happy to help you, including LegalZoom, USLegal, IncFile, and Incorporate.com just to name a few.

If you don't have this done, you will be automatically rejected.


2. An EIN, or Employer Identification Number

This is basically the tax ID for your business. When a business is registered as some sort of corporation, you assign tax obligations to the business rather then a personal social security number.

You can complete this directly with the IRS, there's no charge.

If you don't have this done, you will be automatically rejected.


3. A bank account

You can't use a personal one, and you'll need to take care of 1. and 2. in order to set this up. The lender wants to see that you're treating this as a real business, keeping the finances separate, and that the bank has cleared you for an account.

The longer your bank account is open, the better. Balance and transactions aside, account age is an important factor. The day you open the account is the day lenders will consider your business started.

For the most part this step is free, although you might need a minimum balance to avoid fees.


4. Business licenses

Everything that is required by the Federal government, state, county, and city will be required for your loan approval. The lender will ask you to detail what you have, along with the address your business is registered to.

Common Federal compliance requirements are liquor and firearms licenses, if you deal with either of those.

For state and local compliance you may have occupational licenses (e.g. financial services), agricultural licenses, pollution permits, weights and measures certifications, and the list goes on.

The SBA website is a great resource for additional information by state. Some of these will cost money, or require approval from an oversight body.

Lenders will confirm with each records-keeping body that all of the licenses and permits are active, and in good standing. If you're missing any, you will be automatically rejected.


5. A real business physical address

The lender will check with the USPS on the type of address your business is registered to. It must come back as a "commercial" delivery point.

80% of business lenders will outright reject an application that is tied to a residential address.

Home based businesses are statistically more likely to fail, and they're much less likely to have the right cash flow for debt servicing.

That also means no PO boxes, and no mailbox store addresses. Earth Class Mail street addresses will work for these purposes.


6. A unique phone number

A phone number that is not registered to your home address, personal SSN, or personal bank account will be required here. 

There are plenty of inexpensive solutions for this, you can cheaply lease a toll-free or local number from services like Grasshopper. Register it under your business name, use your EIN, and setup billing to your business bank account.

It's not guaranteed that this will be a factor, but it's any easy item to check off the list. 


7. Directory listing with 411

Yes, it's still a thing. Lenders move slowly when it comes to changing their requirements for qualification, even though the world long ago moved on from calling into directories.

It's a lot easier than it used to be though, VOIP numbers and cell phones will work for directory listing. So in this case, take care of 6. and then get your number listed for your business - make sure the listing matches your entity name or DBA.

There's a free service for this, but you can also go directly through Whitepages or some carriers like Verizon.


8. A real website and business email domain

That's right, businesses without websites and those that can't be found easily via search engines are more likely to fail. Lenders will look at whether you have a website, and if your business email address is custom or branded.

Unfortunately, hell0k1tty1980@yahoo is not going to fly. You need something business appropriate, like <first name>@<your website> to pass this check.

There are plenty of inexpensive solutions here. You can easily buy a domain for $10 per year, GoDaddy is a good place to start and there's Google Domains as well, among thousands of other options. Setting up an email on your new domain just takes a few minutes.

On To The Next One

Consider 1-8 table stakes for getting consideration from a business lender. There's really no way around them, you need to throw in some chips just to play.

Fortunately, it's not all that expensive to fill in any gaps you may have. 

In the next post we'll dive into the remaining items, all focused on establishing and building your business credit. Stay tuned!

 

Employee Spotlight: Meet Damarcus, Operations Team Member & Scan Champ

Earth Class Mail is built on the passion and dedication of our employees. In this series we're offering a glimpse at the wizards behind the curtain.

Meet Damarcus Clark, Operations Team Member. Damarcus holds all of our scanning records and has scanned literally millions of pages for our customers in the last 8 years.

Tell us a bit about your history here and the responsibilities you manage each day:

Since I started in 2008 I’ve scanned over 2.3 million pages. I come in every morning to open up the facility, and am usually here alone for the first hour or so.

I get some coffee going, create the work orders for the day, and then get to work. Most of my day is spent at my scanning station, just scanning documents for our customer.

I currently hold the record for most scans in a day, at 853.

But, I’ve also done the most in a week, a month, and a year. The average scanning performance is about 82 pages per hour, but I’ve been timed doing nearly 142 per hour. Last year was my biggest year yet, I did around 130,000 scans.

What do you think is the key to your success?

I really enjoy being the first one here in the morning, it gives me time to focus and get going. I’ve always worked like this at any job. I try to assign little challenges for myself so that I can keep moving, for example: I’ll look at the clock and say, “by this time I need to have done this many scans”.

I'm always trying to think a few steps ahead too, and keeping my station and equipment optimized for efficiency helps a lot with that.

Those half second movements really add up over time.

I’ve worked here so long that I know how to organize the workload to make it the most efficient.

What are you most passionate about here at ECM?

I love what I do. Being able to improve on a process and find little areas to optimize efficiency makes it fun. It’s great to be a valued part of a growing business.

Any good lessons you’ve learned that you can share with us?

Trust the process you’ve created and keep working toward your goal. If you’re persistent, eventually you’ll get there.

Don’t just look at a current process and accept it as it is, but instead understand what works about it and how you can improve it. There’s almost always a way.

What keeps you driven and motivated each day?

My girlfriend, Elaina, and I have been together for ten years this month, and we have two young sons together. They are my main motivation in life.

My goal is to provide them with a better life and more opportunity than I had. I’ve had a good life, but as a father I want to be able to offer them even more.

What do you do in your free time?

Elaina and I recently started an organic beauty supply business and we’ve just started selling inventory. We started setting up at bazaars and now we have customers ordering online from all over the country.

We’re still in the beginning stages, just a couple of months actually, but it’s already starting to take off. It’s pretty exciting.

Elaina has a degree in business and I’m on track to complete my degree this year, so we really hope to put or knowledge to use and grow the company together.

That’s great! Where can we buy your products?

The easiest way is probably to follow us on Facebook or you can check out our online shop

Please do check it out! I use the products myself everyday and I wouldn’t if they didn’t work. I’m pretty picky about stuff like that.

Any parting words or advice for our readers?

Working here at Earth Class Mail has been a great opportunity and has surrounded me with people that have pushed me to move my life in a positive direction.

I’ve learned a ton about growing a business, the goal is to always improve.

More Addresses Than Ever Before & More Coming Soon

If you get our newsletters then you know we've been working on a lot of upgrades to our service. We understand what makes Earth Class Mail valuable to you, and we've heard you loud and clear when it comes to more address options.

In the last month we've added PO box coverage nationally and now have at least one option in all 50 U.S. states, plus D.C.

We also understand that sometimes a PO box just won't do, so we're aggressively adding street addresses this year. In 2017 alone, our street address network coverage has expanded to: Boston, Chicago, Phoenix, North Charleston, Denver, and Salt Lake City.

Bulk Address Pricing

Here's some more great news for those of you looking to scale your address footprint in a cost-effective way.

Bulk pricing tiers on addresses are now available and apply automatically when you add more addresses to your account.*

If you already have multiple addresses on your subscription, you might see your bill go down!

There's a lot more to come, more street addresses, more marquee locations, and more options for your business.

*Learn more about bulk address pricing here.

 

Employee Spotlight: Meet Daniel, Project Manager & Tea Aficionado

Earth Class Mail is built on the passion and dedication of our employees. In this series we're offering a glimpse at the wizards behind the curtain.

Meet Daniel Finkle, Project Manager for the Operations team. On a daily basis Daniel is responsible for our mission-critical vendor relationships with the U.S. Postal Service, FedEx, and UPS. He also oversees our digital mail delivery and check processing teams.

 

Tell us a bit about your history here and the responsibilities you manage each day:

Yeah, I’ve been here for over ten years. It’s pretty crazy to think about. I started in operations as an entry level operator. Then I worked as an Operations and Web-Operations Lead, later as a Training Specialist, then a Procurement Manager, a Quality Assurance Specialist, an Operations Analyst, and now currently as a Project Manager.


Most of my day is spent working with various post offices around the country to set up new services or solve a problem of some sort. I also manage our check deposit process and oversee our digital delivery team - that is the team that makes sure each item we receive goes into the right account.


What made you interested in working for Earth Class Mail?

I could really see the potential of Earth Class Mail. They did a good job of sharing their vision for the future, and I drank the Kool-Aide. The cloud was going to be the wave of the future, and the service offered a huge benefit to customers.

My job now is to do everything I can to make that service better.


What’s the most difficult problem you’ve had to solve?

Honestly, learning how to conform to the various USPS regulations for a Commercial Mail Receiving Agency. Figuring out how to manage PO Boxes in every state has been a challenge. Each post office does things differently.


What is the most important lesson you’ve learned?

To communicate as much as possible, internally and externally. Things so easily get lost in translation, so you have to make sure everyone is on the same page at all times. It’s often easier said than done.


Where do you see yourself in five years?

I just finished my undergraduate work and received a Bachelor's in Business. I would like to use that somehow, maybe I could be the director of a think-tank, or get into R&D. Only time will tell.


How do you spend your personal time?

I’ve been married for almost 8 years to my wife Melanie and we have a baby boy, Elijah. In my free time, which isn’t often, I like to produce electronic music.

Other than that, I love to drink high quality tea. Lots of tea.

What's your favorite workplace story?

A boss of mine, who's no longer here, used to come in before the first Support Team member would show up around 6 AM. He would hide under their desk, wait patiently, and just as they were approaching he would crawl out and say “Found it!” really loud. Then he’d show them a dime in his hand.

That would always start the day off on the right foot.


Thanks so much for taking the time to chat with us today, any parting words or advice for our readers?


Yes! Don’t cut corners. Do things right the first time. That way next time, you can just drink tea.

Return. To. Sender.

By John Horton, Contributor @ Earth Class Mail

A package at your door doesn’t raise many eyebrows these days. Heck, the UPS guy in my neighborhood already knows where I leave my returns and where to drop off my wife’s HauteLook box – a rather frequent occurrence, might I add.

Lest we forget, that wasn’t always the case. Travel back to the 19th century and that package at your door is much less likely to contain a Three Wolf Moon shirt, and much more likely to feature a…kidney?

At least that was the case for George Lusk one evening in October, 1888, when he recieved a package on his London doorstep. Expertly wrapped, I presume, it included half of a human kidney. 

Umm… return to sender please.

Much like your Amazon Prime order, the box included a packing slip. This one was different though, bloodier. It was a letter from Jack the Ripper.

Lusk, a local builder, was the chairman of a group of volunteers known as the Whitechapel Vigilance Committee. 

They patrolled the streets equipped with a police whistle and a stick, leaving no bustle unruffled, searching for the person responsible for murdering London’s ladies of the night. 

The kidney, preserved in wine, was half eaten and apparently “very nise” (sic). The letter, sent “From Hell”, is riddled with spelling and grammatical errors like these.

Despite many pop culture representations, evidence suggests Mr. Ripper was neither highly educated nor a skilled surgeon. 

History and Hollywood don’t always align. Ahem, Alexander.

No, this is the writing of an uneducated lunatic! Or, wait...

Those misspellings seem a little too sophisticated. An uneducated writer probably wouldn’t have included the silent “k” in “knif” or the “h” in “whil,” an indication that perhaps the author was trying to misdirect authorities. 

Investigators had received many letters claiming to be from Mr. Ripper, though most were considered attempts at dark humor. 

What made this letter different, more convincing, was that Catherine Eddowes – London’s most recent victim – had been found down a kidney. Coincidence? 

Well, maybe. It could’ve been a journalist, trying to milk a sensational story – although the source of the Kidney is still disconcerting. 

It could have been medical students playing a prank. To them, yanking out a kidney is just in a day’s work.

Still, many believe this to be the only authentic letter sent by Mr. Ripper. And this isn’t a dead case, either. Amateur and professional sleuths worldwide have devoted countless hours studying and analyzing this case. 

As recently as 2014, DNA evidence had been studied by scientists tracking down historical leads. The world still wants to know.

Or do we? I don’t, really. 

I like the murkiness, the unfinished, trailing tendrils of if’s and therefore’s. It’s exciting to have a pantaloons clad, high tea’ing, kidney snatcher that evaded police and the best efforts of the public. 

I don’t want an actual face for Jack the Ripper. I prefer the face I’ve created myself, a tall, lanky dude with a long face. Kind of Lincolnesque, but with a dash of pig farmer, you know?

I couldn’t think of anything more disappointing than finding out Jack the Ripper was really a stout, pathetic little guy with orange hair and mommy issues.

Then again, truth can often be stranger than fiction. Scarier too, perhaps. 

A Letter Is Worth 1,000 Songs - The 10 Best

By John Horton, Contributor @ Earth Class Mail

You can say a lot with a letter, and even more when you add a soundtrack to it. These ten just happen to be the ones I think do it best. Some are fun, some satirical, and some are downright emotional. 

10. An Open Letter to NYC (Beastie Boys) 

“Dear New York, this is a love letter,” rappeth Mike D. And a love letter it is.

This track appears on To the 5 Boroughs, their first album post 9/11. In the song, they give love to all five boroughs – Manhattan, the Bronx, Queens, Brooklyn, and Staten Island. 

“Dear New York, I know a lot has changed/ two towers down, but you’re still in the game.”

I know a lot of artists have made songs about staying strong post 9/11, but for me, the Beastie Boys do it best. 

9. Strawberry Letter 23 (The Brothers Johnson)  

Strawberry letters 1-22 are better left as journal entries, but Strawberry Letter 23! The public needs to hear. 

It’s got a plucky disco thing going on, and it’s probably one of those songs you know, but you don’t know where from. That’s because it’s been sampled and covered extensively, and for great reason.

This is a strut down the street song – a head wobbling confidence booster, if you will. I would, if I were you.

8. Christmas Card from a Hooker in Minneapolis (Tom Waits)

Suspiciously hipster though it is, my number 8 slot goes to Tom Waits’ Christmas Card from a Hooker in Minneapolis. It’s a prime example of a song-title’s value, because I don’t remember a damn thing about the song itself. 

But that title! 

It’s really all we need to know. Fishnets. Snow. A lipstick smooched postcard. You get me Hype Williams on the phone, I’ll get you a music video. 

Actually, I am a Tom Waits fanatic. The guy delivers art in a singular way. His style is all his own, yet you hear the jazz, the rock, the gospel, the blues – all of which result in the voice of a uniquely American growler. Always worth a listen. 

7. Please Mr. Postman (The Marvelettes)

Where’s Marty McFly? Where’s the diner? Where’s the Porkpie hat? This jukebox hit is yesteryears version of an unresponsive texter (how could you be so cold).

She’s waiting “so patiently, for just a card, or just a letter” from her booface. She doesn’t know where’s he’s been, so if you have any information, please contact the local authorities.

This is a good starter song on YouTube, if you want some upbeat music to play while you and your kids clean the house, or if you want to scream at them and not have the neighbors hear.

6. Signed, Sealed, Delivered I’m Yours (Stevie Wonder)

The King amongst Kings, Stevie Wonder. This is a cross generational hit that gets played everywhere from bat mitzvahs to Chinese New Year parties.

Stevie Wonder is that rare combination of extremely-talented musician and astounding lyricist. If it was possible to trademark a sound, you could say Stevie is the owner of “yooowwww” and “ahhhhhh.” His music is up tempo and emotional. Easily a top-tenner on many lists.

5. I’m Gonna Sit Right Down and Write Myself a Letter (Fats Waller)

If this song isn’t rolling over the opening credits of a Woody Allen movie somewhere, I’ll be disappointed. This American standard has been recorded by powerhouses like Nat King Cole, Frank Sinatra, and Paul McCartney just to name a few.

I almost feel like I’m at a lemonade stand when listening – like a Penny-farthing is cruising by in the background; like Mrs. Walden is tugging on the ear of her rabble-rousing son Tommy for throwing cherries at passing cars.

Of course, the song is really about a guy writing a letter to himself and pretending it came from someone else. 

4. Stan (Eminem)

Ever catch yourself nodding along to a song, mouthing lyrics about kidnapping and murder? You’ve most likely stumbled into Eminem’s reverie, Stan.

It’s a greasy, grimy toe-tapper that successfully nuzzles itself into its themes of isolation and detachment. The sampling of Dido’s song Thank You is one of the best in hip hop history, adding a powerful but suppressed beauty. 

Little known fact – this song is directly responsible for an uptick in celebrity replies to fan mail. That’s what my uncle told me, anyway.

3. The Letter (The Boxtops)

First of all, watch this live performance of the song so you can see Alex Chilton’s uncomfortable death stare as he sings. The whole band has this restrained groove thing going.

Kind of apropos for the time, I guess. It’s like their manager said, “No matter how poppy the song sounds, I better not see anyone dancing.”

I absolutely love this song. It’s catchy as hell and I dare you to listen without tapping your foot. This is blue-eyed soul at its best. Put this song on in front of your aunt and I guarantee you she’ll start doing the Mashed Potato. 

2. Mailman (Soundgarden)

No list is complete – scratch that – no list should exist without a Soundgarden song. “But John!” you say, notionally, “What about a country music list? Surely Soundgarden couldn’t exist there!”

I refer you to the above song, where, if you’d please, you will hear a clearly yodeling Chris Cornell. But I digress.

Mailman rocks your damn socks off. I was confused at first why it’s called “Mailman”, but then I realized he’s singing “I’m writing you all the way,” and not “riding you all the way.” Kind of makes a difference.

Classic. 

1. Death Letter Blues (Eddie James “Son” House)

This is quintessentially American music, and a damn fine representative if you ask me. Although I first heard this as covered by the White Stripes (also worth a listen), this song comes from the dustiest era the U.S. mail has ever seen, the 1920’s.

Death Letter is the lament of a man who receives news of his estranged love’s death. Son House’s unrestrained vocals and swift strumming guitar betray the sound of a man familiar with pain and suffering.

His twang is what your mind hears when you think Mississippi Delta.

His legacy was nearly lost to the Great Depression, but he was “rediscovered” during the 1960’s American folk music revival, and is deservedly recognized as a blues legend.

Spotlight: Meet Russ Perry and DesignPickle.com

Our customers rock. We love to share their stories, and are thrilled to introduce you to the next customer in our customer spotlight series. Russ Perry is the Founder of Design Pickle, the world's most helpful graphic design company - offering flat-rate, unlimited graphic design help to businesses large & small.

Thanks so much for sharing your story, Russ. Can you tell us a bit about yourself and your company? What does Design Pickle do, and what sets you apart?

Of course! The long & short of it is this: Design Pickle is a flat-rate, unlimited graphic design service. We've got one monthly rate for unlimited requests and unlimited revisions.

No more wondering who's working on your request each time, or worrying about revisions and scope of work driving up the cost of marketing materials!

Design Pickle solves a lot of problems for just about everyone, from the small business who doesn't have an in-house designer to the entrepreneur who shouldn't be spending time trying to put Facebook ads together for hours on end.

Our mission is to be the most helpful design company in the world, and that starts with alleviating the daily stress for our clients. 

How did you get started and why?

After about a decade in the creative agency arena, I found myself needing a change. I switched to individual consulting, but realized I didn't want to be stuck designing business cards instead of getting to use my skills on a bigger level.

So I created a beta system of what would become Design Pickle - helping clients request their day-to-day production graphic designs. It kind of blew up after that!

Do you have an incredible customer success story you can share?

Is it a total cheeseball response if I say I have a million of those? Yes? Ok then.

ONE that really stands out to me, and I just shared this with my team, is from a client who co-founded a great online start-up helping people be the best version of themselves.

Before finding us, she would agonize over blog post images and Facebook ads, trying to do everything herself and losing sight of what she was really working so hard to achieve. Her big-picture wasn't in the picture because of the minutia.

It wasn't until we were at an event here in AZ when her husband (and biz partner) came up to me and thanked me for giving her back her time, and in reality, her life!

She's now able to focus her incredible talent & energy on growing their business and truly enjoy the "why" behind starting the business in the first place - building a community that will impact the world for good.

Bottom line, helping someone with a few simple graphics for marketing collateral can have a much bigger effect than I ever realized. I'm proud of my team for that.

Can you share a tip, trick, hack, tool or service with our readers that makes you better, or makes your days more effective?

I'm totally NOT a micromanager, but need to keep tabs on where my Pickle People sit on both big projects and daily dealings alike.  We use Trello for managing event plans and content strategy, and I Done This for the day-to-day tasks.

We get the satisfaction of checking off the to-do list each day in I Done This, but can keep big-picture plans moving via Trello boards.

What was the situation before you used Earth Class Mail, tell us how EarthClassMail makes you better at your job, or your company better at what it does?

I think we were in a pretty standard situation for location-independent teams. I had my home office, my team had theirs, and we'd convene regularly to calibrate our plans at the local coffee joint.

I didn't want my home address used for mail (read: my wife wasn't thrilled by the idea of our humble abode's location being broadcast to the world). Having a P.O. Box is the simple answer, but no street address lends itself to the "ehhhh, is this a legit business?" from clients & potential partners.

Plus you have to GO to a post office regularly to collect said mail (they don't mess around when you neglect to pick up mail regularly. The disapproving side-eye from the clerk is the stuff of nightmares).

I found ECM and immediately knew it was for us. Secure, consistent, reliable, friendly. It's kept me on top of the important mail and simplified the check deposit scenario for us.

What has Earth Class Mail been worth to your business in terms of $?

Let's see...by my calculations *carry the one*...Can I just say it's been "priceless"? Because seriously, the peace of mind knowing that no Design Pickle team member is spending their time sorting through pre-approved credit card offers and penny-saver ads is especially valuable to me.

What would you say to someone considering Earth Class Mail as a solution?

DO IT! Right now! How you wouldn't see the obvious perks of this service is beyond me. Until everyone on this planet goes green & moves to digital correspondence, this is your ultimate weapon against wasted time.

What feature can we add or improvement can we make that would make you say, "shut the front door, I need that!"?

Would you consider a service that sends thoughtful replies to Aunt Irene's annual family status letter? How about going through my spam folder so I don't miss out on that "Earn_thousands in ur sleep with this 1 $imple Hack" email?

Other than that, I think you've got all my needs covered!

Thanks so much for taking the time to chat with us today, any parting words or advice for our readers?

Thank you for having me! I think my honest advice would be to make sure you're systemizing or automating every task you can... just because it's important enough to do, doesn't mean you have to do it yourself!

Free up your bandwidth to focus on making moves and growing your business!

Also, pickle juice is an amazing option for relieving muscle cramps, so if you’re an active person, make sure you're stocked up...knowing is half the battle.

 

 

11 Mistakes To Avoid When Selling Your Business

Guest post by Greg Elfrink @ Empire Flippers

The majority of entrepreneurs build their businesses to, one day, sell them. You dream of the big exit, that payday that will line your pockets with enough cash to validate all your work.

Since selling a business is a complex process, there are many obvious pitfalls and mistakes that you can make.

Some of these mistakes can cost you a lot, as you’ll read below, but the good news is that the majority of them are pretty easy to avoid with a little advance planning.

What Are the Top Mistakes?

While this list is by no means exhaustive, below are some of the most common mistakes we see at Empire Flippers when people list their businesses for sale. 

#1 Don’t take your foot off the gas

Many entrepreneurs seem to check out once they list their business for sale. They put up the “For Sale” sign and wait around for a big paycheck.

This is one of the worse things you can do.

Unless your business is truly passive, this attitude will result in a revenue slump. You take your foot off the gas and the business starts tanking.

The next month, when you need to update earnings with depressed revenues, be ready for a wakeup call - the value of your business has fallen.

When a potential buyer finds sees the downward revenue trend, they’ll be much less open to paying the asking price. You’ve provided leverage for them to negotiate the price down, or simply deterred them from considering your business in the first place.

The lesson here is simple: Work on your business as if you are not selling it.

It’s common sense, but many entrepreneurs often forget this piece of advice while daydreaming about their big exit.

#2 Don’t wait until the last minute to implement analytics

Every digital, online business should have tracking installed to validate how much and what kind of traffic they are getting.

The two most trusted forms of analytics are Google Analytics (Free) and the third party analytics company Clicky. These are what we use.

The more analytics history you have, the better.

You’ll also want to be diligent about annotating your traffic and accounting for any huge spikes or dips in traffic.

For example, write clear notes if a spike in traffic from three months ago came from a Facebook ad experiment. That way, a potential buyer can understand the history of the business.

You need at least six months’ of analytics history, and the longer your track record the better off you will be.

#3 Don’t skimp on proof of income

Screenshots are great. They are also very easy to photoshop.

Depending on the business, there will be different ways to verify income. A seller should have a way to allow the buyer to see the business’ cash-flow, as well as the expenses tied to the business.

If you have an AdSense or Amazon affiliate site, for example, you could give a potential buyer view-only access permissions to your account.

This is an excellent way to help a potential buyer verify your earnings and build trust between you and the buyer.

Of course, how you show proof of income will vary depending on the monetization strategies you are using. An Amazon FBA business, for instance, would need a detailed P&L (Profit & Loss report).

Whichever monetization strategy you are using, make sure you have some sort of verifiable proof of income.

#4 Don’t list too soon

If your business has only been around for three months, it is unlikely anyone is going to purchase it.

Does it happen? Sure, but not often and the task of selling a business that young is very difficult.

Similarly, asking price and track record have a strong correlation. A business valued at seven figures is going to need a lot more history to attract a buyer than a business priced in the four or five figure range.

At the end of the day, the more history your business has, the better. Not only will it create more buyer confidence, but it can help improve your multiple as well resulting in a higher valuation — which is what we all want.

#5 Don’t overprice

With new sellers especially, selling a business on potential is a super common issue.

There is a lot of emotional investment in the business that doesn’t translate into actual value. It’s easy to overprice your business because of this, and could have an adverse effect on potential buyers.

It is best to sell your business based on what it is doing right now. You can feel free to highlight growth channels that a new buyer can use, but it shouldn’t be the main selling point.

Instead, frame your business so that the right buyer can imagine the potential growth channels themselves.

If you’re hung up on the potential, then don’t sell it yet!

#6 Don’t ignore your business’ shortcomings

One of the best ways to help a buyer realize the growth opportunities for a business is to highlight the flaws.

Many entrepreneurs shy away from this, but a lot of buyers find businesses with flaws extremely attractive - they see opportunity in the untapped potential.

You should be totally transparent with everything about your business, especially the parts where you feel the business is failing.

If you have a SaaS business that has a healthy cash-flow but no marketing whatsoever, then that is a huge opportunity for the right marketer.

If you have a giant content site where the majority of the articles have no internal links pointing towards them, then that is a huge win for an advanced SEO.

More often than not, your business’ flaws can become one of the greatest selling points.

#7 Don’t forget documentation

Running your business, any business really, requires some proprietary knowledge. The clearer the path is for a buyer to take over and get ramped up quickly, the easier it will be for you to sell.

One of the best techniques is to have detailed standard-operating-procedures (SOP) for every position and role in your company — the more detailed, the better.

If you have a team in place that you will be taking to your next project, this is even more important.

#8 Don’t dig your heels in during negotiations

Nothing kills a deal faster than a seller unwilling to work with a buyer.

Selling your business is all about how willing you are to make a deal. Think outside the box, with your end goal in mind. The higher your asking price, the more flexible you need to be with deal terms.

There are other forms of negotiations outside of price. It will come down to what you can get in exchange for the cash you’re asking for upfront. Here’s a short list of considerations in exchange for cash:

  • Equity - you can keep some equity or shares in the business in exchange for less cash.
  • Royalties - you can collect a percentage of every sale in return for a lower upfront price.
  • Monthly payment plan - you can spread out a chunk, or all, of the selling price over a set term.
  • Include less - you can adjust what’s included in the sale price to meet a buyer in the middle.

#9 Don’t neglect qualifying Buyers

You should have some kind of system to minimize “tire-kickers” who aren’t really qualified to buy your business.

You could have a deposit process like we do at Empire Flippers, where every buyer needs to put down a refundable deposit before they’re allowed to look at the intimate details of the business.

This will help get rid of the “lookie-loos,” and leave you with just the more serious potential buyers.

You can qualify buyers in other ways, of course, such as by having extensive Letters of Intent (LOIs) in place.

The majority of business brokers will take care of the qualification process for you, but if you are selling on your own, you definitely want to make sure you have some kind of process to weed out unqualified buyers.

#10 Don’t ignore professional brokers

Obviously, I’m a bit biased when it comes to using a professional broker. The broker industry can be a shady place, with a lot of fly-by-night brokerage businesses.

Despite this, a good, legitimate broker can make the entire process of selling your business far easier.

Here are just a few benefits worth considering:

  • Buyer reach – most private sellers will not have an email list of tens of thousands of hungry buyers looking for good deals.
  • Negotiation & deal structuring – brokers literally live and breathe the deal making process, which can take a lot of pressure off the seller.
  • Qualifying buyers – remember mistake #9? Pretty much all good brokers have processes in place to make sure only quality prospects are looking at your business.
  • Market valuation – not sure what your business is actually worth? Brokers are some of the few people around that have their pulse on the market and how much a digital business is going to be worth. 
  • Migrations – this is something we’re about to talk about below, so keep reading.

Every case is unique and this should be a decision you think critically on before selling a business — or buying one, for that matter.

#11 Don’t neglect the transition details

One of the most tedious aspects of selling a business is migrating everything over to the new buyer.

Before you sell your business, you should really consider HOW you are going to transfer the business over.

Create a checklist of everything a new buyer is going to need or want to know when it comes to taking over the business.

Outline everything — content, domain, hosting, product inventory, the various services you are currently paying for that will need to be switched over, etc.

You will also want a way to mitigate fraud here, especially in smaller deals where fraudulent activity is likely to be more common.

The last thing you want to do is to push your business’s website domain to the new owner and have him or her fail to pay for the business, while reaping the rewards of owning the domain.

One way you can mitigate this is by using an escrow service. Even then you want to be careful, because many escrow services will not be overly familiar with the online business space and could make some very bad mistakes.

To come back to our previous mistake about sellers not using brokers, most professional business brokerages have a migrations process already in place.

This takes a ton of weight off your shoulders and is definitely worth considering, depending on what kind of business you will be transferring.

Preparation Is Key

As you can see, these 11 mistakes can really make or break the business sale process.

That is one reason we created a totally free valuation tool, which can give you a rough estimate of what your business would be worth.

Have you sold a business before? Are there any mistakes you see other sellers potentially making?

Leave a comment below and share your wisdom with other entrepreneurs looking to make their big exit to a successful payday.

How To Move A Dead Body

By John Horton, Contributor @ Earth Class Mail

More than 50 million tons of cargo are moved across the U.S. every day and at least 200 pounds of that can be attributed to Grandpa Ole, but we’ll get to that in a minute.

Moving things from point A to point B is how the world works, and every imaginable good from a mundane kids toy to radioactive waste ends up on a ship, train, plane, or truck at some point. Even some things that you wouldn’t necessarily consider a “good” can end up as freight.

Have you ever wondered what happens when you croak somewhere far away from home? How do they get your body back to its final resting place?

Now, back to Grandpa Ole. Imagine Old-Gramps kicks the bucket in New Mexico at the World's Largest Pistachio roadside attraction. Not the best place to be for someone with a nut allergy, in retrospect.

Let’s say he was born and raised in Ballard, WA, like so many other Norwegian grandfathers. Obviously you want to get him back to Ballard so he can rest in peace next to his self-reliant wife Lena, who died at 87 while reroofing the house.

You could, hypothetically, prop him up in the passenger seat à la Weekend at Bernie’s and take full advantage of the carpool lanes! Might be awkward at the toll booths though.

I also recall the USPS saying "if it fits, it ships...". Do they make a body-sized flat rate box? You’ll have to look into that on your own time. The easy choice is to cremate him in New Mexico and ship his ashes back to Ballard, which, is totally legal.

Alas, you don't want to cremate Ole because you think he's urned a proper burial. I don't mean to sound uncouth, but it's kind of a pain in the ass to kick the bucket out of state (let alone internationally).

Well, here's an example of how not to do it. We don’t drive fish cross-country, so we probably shouldn’t do it with a decomposing body, either. And definitely don't do this, unless you’re writing a 90’s comedy script.

If someone at the airport has to stop you and ask if your travel companion is still alive, there’s a problem.

Much like the second story, the corpse will need to be shipped via plane. However, it should not be propped up in a wheelchair. In fact, you probably shouldn’t be doing anything to the body at that point. Sicko.

The only people allowed to ship a corpse are those who are considered “Known Shippers.” That is a legal designation given by the U.S. Transportation Security Administration (TSA).

Many funeral homes are considered Known Shippers, and usually they ship the body (via cargo plane) to another Known Shipper who collects it at the airport. However, you can personally escort the corpse on a passenger plane, if you’re in to that.

It will be stored with the cargo. Just make sure the body is embalmed. You don’t want to worry about all the inter-state embalming requirements. The cost of the shipment will be based on weight, so, let’s all keep that in mind during Oktoberfest.

Depending on the state, a funeral home may need to be at the airport to physically receive the body. But, if that isn’t the case, and you want to personally receive and transport the body from there, you can pick-up your “luggage” on the carousel.

Seriously.

It will tumble down that little ramp and gently glide around the room, as if on display, until you apprehensively wrench it off the conveyor belt. Fingers-crossed yours is the only one, or expect the uncomfortable exchange of “I think this bag is yours…”

Once you have the corpse secured in your Thule, you are free to do what you’d like, as long as it falls within the bounds of the deceased’s wishes. Personally speaking, toss me in a body farm. Or put me krumkaker-side down, next to Ole and Lena.

Just remember, even though Lena dug the grave and built the coffin, once the body is buried it is considered property of the state. Don’t say we didn’t warn you.

P.S. read more Lena and Ole jokes. They’re hilarious.

5 Ways To Secure Your Small Business From Hackers & Identity Thieves

Guest post by Jennie Lyon, Founder @ jennielyon.com

Russian hackers, Anonymous, internet trolls with a grudge, independent criminals looking for a quick payday – the world is full of not-so-benign threats to your business.

When you get hacked, it hurts. Maybe not $5 Billion hurts, but it hurts nonetheless. It’s a distraction, it’s usually not free to fix, and it keeps you from focusing on your business.

There are a few free or cost-effective ways to mitigate your business’ exposure.

Preventing Fraud & Identity Theft

Not every scam is as obvious as receiving an email from a mysterious “Nigerian Prince”. More and more sophisticated phishing strategies and identity theft scams are being used every day.

Just ask the dozens of call center employees recently arrested for defrauding more than 1,500 people in an IRS scam. 

Be careful about following links from your email. Just check the URL to see if it matches the official website for any given company, it’s a simple step that could save you.

Never give your credit card information to anyone who phones you, and always phone the official bank or company telephone number yourself.

NEVER give your password to anyone, ever!

Password Management

Using weak or default passwords is one of the single biggest security holes in business today.

Trivia: In the 1995 cult-classic Hackers, what is claimed to be the most common administrator password? (answer at the end of the post)

Unfortunately, people choose passwords they can remember. These tend to be shorter, made up of dictionary words, and use only the letters of the alphabet.

They also re-use the same couple of passwords for every account they have, with services that have varying levels of security - and risk of being hacked.

Ideally, you should be using a password manager to generate a unique password for every website you use.

The longer the password, the harder it is to crack using brute force programs. Even harder when you include special characters and numbers in randomized order, avoiding patterns at all costs.

Services like LastPass and Dashlane will keep all your passwords in one place, secured by a master key that only you know.

Password managers add value by generating unique passwords for each service you store credentials for. Many also enable you to share your account access with team members, without revealing the password.

Encryption

Encryption dates back to ancient civilization. Put simply, encryption is the practice of obscuring information behind a method and/or key that will help the recipient make sense of it.

In modern terminology, you can basically think of encryption as a method of protecting electronic communications and data using complex algorithms.

Encryption is built into a lot of the processes and devices we use every day. Everytime you send an iMessage from your iPhone, it’s encrypted and completely indecipherable to hackers, unless they have your pin, password, or thumbprint.

Emails are encrypted when we send them, assuming you’re using a secure email service. You can encrypt and password protect documents such as PDFs or files in a ZIP archive too.

Encryption is a broad and immersive topic, and you should definitely read up on it some more.

The main lesson here is, do your best to use services that encrypt your information. Most of the time it’s just a simple decision to use iMessage instead of an alternate platform, sometimes you might have to pay for it.

A short list of encrypted communication services:

  • Signal (Free)
  • iMessage (Free, iPhone only)
  • WhatsApp (Free)
  • ProtonMail (Freemium)
  • SendInc (Freemium)

Document Destruction

If a document has personal or business contact information, contains signatures, proprietary information, or other sensitive material, you can’t just throw it in the recycling bin.

Unfortunately unscrupulous employees, trash pickers, and identity thieves often go through improperly disposed of documents for anything they can exploit.

This is another reason why digitizing documents is so useful, digital copies can be password protected and encrypted, while the originals can be destroyed.

This cuts down on the number of important documents which need to be stored in hardcopy, and limits exposure to unauthorized copying or outright theft.

It’s important to oversee destruction of documents yourself, or have it taken care of by a trustworthy company. HIPAA compliance is a strong signal that the service you’re using is up to the highest standards.

Multi-way shredding prevents simple piecing together of destroyed documents, and appropriate disposal or destruction measures should always be taken.

 

The Old-Fashioned Approach

For those documents which you need to keep hard copies of, there are always secure office storage and secure off-site storage. A good locking file cabinet would do the trick with contracts and other slightly less sensitive material that you might have in large quantities.

However, those are obviously not thief-proof. If there’s something really valuable inside it’s not hard to get past these limited security measures.

A modern, high security safe is a good step up in protecting your most important documents, like: personal identification, fundamental business records, intellectual property, and the like. Make sure whichever safe you invest in is fireproof and waterproof if possible, and installed correctly.

Whenever you’re looking at partnering with any kind of business services, it’s within your rights to investigate their security measures.

Many business-class services will have a page dedicated to their focus on security. Don’t be afraid to inquire for more information.

If you’re shopping for enterprise solutions, then a security questionnaire is par for the course. Your due diligence can end up saving you a lot of trouble in the end.

 

Trivia Answer: There were actually four - “God”, “Love”, “Sex”, and “Secret”.

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