Time to Fire Your IT Provider?

I recently heard about a small business that spent over $20,000 to upgrade its technology. The deliverables: New products and the installation of those new products. Did the client get their money's worth!?

A rule of thumb: Don't spend more than half of your IT budget on maintaining the status quo (e.g. keeping up the phone system, network, hardware, software etc.). Spend your budget on projects that move the needle.

Due to the rapid evolution of technology, your in-house IT director or your outsourced IT provider may be putting your business at a competitive disadvantage. How do you know if you should be seeking a better IT solution?

There is a not-so-subtle difference, with HUGE implications for your business: An IT Custodian "maintains" and "upgrades" your existing technology. An IT Leader reviews your business goals and produces a platform that drives those goals. An IT Leader executes solutions to improve collaboration between business partners and better serve customer needs. In terms of traditional IT services, businesses can't afford to ignore the potential of cloud computing (42% of medium-sized businesses have already done so... Read Article Here). But the real opportunities lie in web and mobile applications.

Your customers expect you to make doing business easy, which includes: Making relevant information available to them, offering secure online ordering and payment and being transparent about your products, services and customer service failures. I know transparency sounds a bit Kumbaya, but I suggest you get on board. The old days of mean-spirited corporations shoving products into customer shopping carts are over. Today's consumer has more clout, more information and higher expectations than ever before. Your business can achieve these expectations by developing the right tools.

Tools

A customer relationship management system allows streamlined data collection. One primary application of this data is for customer segmentation, which is the process of splitting your customers into categories based on their preferences for more targeted marketing.

Inexpensive data analytics allow you to monitor various customer satisfaction metrics: Do customers respond to your marketing calls to action? Are you wasting the time of prospective customers by proving non-relevant info?

Scheduling appointments, completing applications and subscribing for information are tasks that both you and the customer dislike. A web developer can make these tasks painless for everybody. And speaking of time wasting, your employees will appreciate their increased productivity resulting from business info at their fingertips.

Do the world a favor and stop the "push" marketing. Due to a lack of technology, many companies resort to direct mailing, telemarketing and email spamming, which are ineffective and risk alienating customers. By utilizing a broader technology platform for marketing you can allow narrow subsets of the market to approach you, whereupon you offer them appropriate info. Developing an interactive customer/prospect experience is the crossroads between marketing and technology.

Sometimes it's not necessary to fire the IT provider. After all, you have top accountability for driving business growth and profitability. First, make it your priority that IT solutions are innovative and drive business value. If IT continues producing commodities (e.g. network support) you know it's time to hire an IT Leader who will champion your technological competitive advantage.

Euro Crisis Drying Up Small Business Credit? Give Your Business Every Advantage in Applying for Credit.

Big banks are back in the spotlight. The Fed's new "stress testing" focus includes evaluating bank exposure to Euro debt. As banks limp along, getting a small business loan is increasingly difficult. However, small banks approved 44% of small business loans in 2011, compared to big bank's abysmal rate of only 10%! Read the article.

You should have every advantage available when applying for and negotiating favorable loan terms for your small business. Knowing what your loan officer is thinking, allows you to gain negotiating power.

Time is money. The last thing your loan officer wants to do is go 50% of the way to loan closing and then fail to close the loan. If you have a credible loan request it goes to the top of the priority list. Start with an in-depth conversation about your business.

Credibility Stems From:

A) Being organized - Your loan documents can't be prepared without a copy of your organizational documents (articles) and financial statements - have copies readily available.

B) Understand the parties involved - Do you have other creditors? Do you plan to obtain additional financing from other creditors at a future date? What collateral is available? Are there third parties who will need to sign pledge agreements or authorize the financing? Banks don't ever want to end up in court and they don't like to be surprised. And usually when they are surprised they have an out. It's buried in those pages of documents. I know what you're thinking...But I have an attorney to review documents! (read on).

C) There are two types of banks: those with standard documents (no negotiating of loan documents allowed) and those utilizing the services of outside counsel (this will cost you). You should know which type of documents your banker is proposing. Typically, standard documents will save time and money and will work for most financing transactions unless you have unique business circumstances.

Once you have established credibility with your banker, the balance of power shifts to you. Your banker is trying to get your loan request approved with the credit authority. Ideally, minimal new questions turn up at this point. Lots of new questions signal you and your banker haven't covered all the bases, which means you don't have an empowered advocate inside the bank. As your credit request moves forward loan terms will become the primary discussion point.

Obtain Favorable Loan Terms:

A) Get it in writing. When your banker puts an interest rate or loan terms in writing it becomes a commitment. Written offers to lend are not subject to the whims of internal bank staff. A written offer usually = legally binding offer.

B) Consider loan covenants and loan terms and ask how the bank arrived at these conclusions. Are they realistic for your business? The last thing you need is a default letter 12 months down the road as a result of unreasonable expectations.

C) Offer information and seek to understand how the bank's risk position can be improved. Can you offer guarantor support? Are you bringing deposit accounts to the bank? Pledging liquid assets and providing a control agreement makes any loan look better to the bank.

Give yourself every advantage. Know your business's financial strengths. If there are weaknesses, anticipate the bank's potential concern and try to offer risk mitigating factors. And know when to get in writing. The closing table is long way off, but at a certain point your prospective banker should issue a written commitment that you can rely on for business decision making. Like any other business transaction, a certain amount of transparency and ability to recognize the counter-party's perspective paves the way to obtaining bank financing.

Getting an approval for new loan funds will not be easier in 2012. But at least you now know what your banker is thinking.

Can Your Small Business Afford Any More Credit Card Losses

The easiest way to improve your bottom line: Prevent losses due to credit card fraud.

Credit card fraud has been a growing economic concern for years. However, it becomes a crisis for small business owners when the rightful card holder discovers the fraud and the card issuer cancels the transaction (a charge back). In some cases, the merchant (that's you) absorbs the charge back.

The basics of a chargeback include: 1) The theft of a credit card; 2) The thief pays for a product with the stolen card (typically the product is re-sold for cash); 3) The card issuer, the card-holder or the merchant absorbs the loss.

For those business owners operating a bricks and mortar shop, minimizing credit card losses is straight forward - Check ID!

For online retailers it's not so straight-forward. If you ship products paid for with a stolen card, there will be a charge back and you will suffer the loss.

Start by contacting your merchant services provider and ask them what process you should be following to prevent fraud. Then implement a basic policy and publish it on your website. For the small, start-up business the surefire method of preventing credit card fraud requires basic vigilance: If the transaction seems unusual, verify the buyer's identity. A slightly more robust process includes a comparison of the billing address and the shipping address. They should match.

In a small business, decisions such as dealing with credit card fraud will be applicable depending on your specific business. Take a practical approach. Perhaps screen only high dollar transactions. But remember, at some point a credible business has a policy for fraud prevention. The worst case scenarios? Losing money. Or your merchant provider canceling your processing services.

I suppose you could return to the gold standard. But in this case, following the rules may offer the easiest path.