Do you know how your brand rates online?

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There is increasing pressure for SMBs to have an onlinepresence. After all, Facebook alone claims consumers spend 700 billion minutesper month on the site, and Twitter has reported 190 million tweets per a day.But what does that really mean for SMBs? How can you tell if being online ishelping or hurting your brand?
While people worldwide use the Internet daily to get informationand interact, there is no one right way for businesses to approach their onlinepresence. One thing you can do as a small business owner is understand what’sbeing said about your businesses online. From controlled information that youapprove and publish, to user-generated information including customer reviewsthat can be true or untrue, it’s imperative that companies know how theirbrands are represented and perceived, digitally. Yet many small businessesavoid monitoring their online presence because it can be a time consuming,expensive and overwhelming endeavor.
Making it quick, easy and affordable (it’s free!) for smallbusinesses to understand and manage their online presence is the promise of anexciting, new tool, Brandify.
§  It’sfree. Brandify is so user friendly that small businesses won’t spendvaluable time using and managing the tool. Brandify also will shed some lighton new opportunities for your company to promote or enhance your onlinepresence which could increase leads and sales.
§  It’squick.  It only takes a few momentsfor Brandify to scour the Internet – pulling from more than 80 differentsources – and provide your company’s online strengths, weaknesses, andopportunities. It also checks competitors’ presence and recommends actions youcan take to help improve your online presence.
§  It’s easy. Registration is simple as you log in through anexisting Windows Live, Facebook or LinkedIn account and claim your company’swebsite. The assessment also offers clear recommendations for how to enhanceyour online presence; just review them and decide which opportunities seem likethe best fit for you. You also can use Brandify for ongoing management, checkingin routinely on your online presence status.
Part of running a successful business is making sure you are covering all yourbases, as well as finding the right tools to help you get things done. Afterall, you simply can’t do it by yourself. If your core business is not networkingsocially, or specialized in managing online brands, Brandify can help yourbusiness today. Seeing is believing. Take a few minutes to try Brandify and see for yourselfhow it can help your company.



For more tips and information on how technology can supportyou and your business, follow me on Twitter (@Cindy_Bates) or follow MicrosoftSMB on Twitter (@MicrosoftSMB)and Facebook (MicrosoftSMB).

Military Family Leave for Veterans’ Families Can Cause Staffing Dilemmas

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If you’re a small business owner subject to the Family and Medical Leave Act (FMLA), you may be affected by the expansion of military family leave to include family caregivers of veterans.

In 2008, the FMLA was expanded to provide job-protected military family leave. Part of this required leave directed employers with 50 or more employees to allow up to 26 weeks of leave during a 12-month period for the spouse, child, parent, or next of kin to care for an active service member in the National Guard, Reserves, or Armed Forces who incurred a serious injury or illness in the line of duty. The FY 2010 National Defense Authorization Act expanded the military personnel whose family would be eligible for caregiver leave to include veterans, and rules recently proposed by the Department of Labor are implementing these changes. Caregiver Leave Rules

• If you are subject to the caregiver leave rules, your obligation to allow time-off includes families of veterans who need care for serious injuries or illnesses. 
• You should also be aware of the following provisions: 
• An employee’s eligibility for leave covers serious injuries and illness for up to five years after the veteran leaves the military. 
• Conditions that arise after a veteran leaves military service are included in the conditions that require you to grant leave to a family member. 
• The definition of serious injury or illness includes those incurred in the line of duty resulting from pre-existing conditions. 

The Effect on Your Business
It’s not difficult to picture how the expansion of the military family leave law to include veterans, coupled with the fact that employees’ leave eligibility can continue for up to five years after the veteran’s military service is completed, can create a staffing issue for small businesses.

While recognizing and appreciating the service of veterans and the need for family to provide care for serious health matters—not to mention complying with the law—you’re trying to run a business. And while you can’t predict the future, you can prepare for it, particularly if you learn enough about your employees to know that they have family members currently serving in the military or who are recent veterans.

Here are a couple of steps you can take now to avoid staffing snafus:

• Train employees to cover more than one position: Then after training, allow these employees to spend some actual work time in those new positions. In the long run, your business may discover employees’ hidden talents while employee motivation—and, in turn, productivity—increases. 
• Think about lining up some short-term labor sources: Maybe you already have a go-to source for labor during your busy season or independent contractors you use for certain tasks. If you don’t, now is the time to act. When using a temp agency, an intern or even a family member as your staffing solution, if possible, try out him or her before you need the help. That way, if one solution doesn’t work for your business, you still have time to try an alternative without the pressure of having to fill a spot. 
• By anticipating your staffing needs, not only can you comply with the law and respect the needs of those who have served their country, but also solve potential workforce issues and perhaps even increase worker morale and productivity. 

About Business Owner’s Toolkit
With an emphasis on problem-solving dating back to 1995, Business Owner’s Toolkit™ (www.toolkit.com) offers more than 5,000 pages of free cost-cutting tips, step-by-step checklists, real-life case studies, startup advice, and business templates to small business owners and entrepreneurs. The site also offers a monthly newsletter, up-to-date news topics, and Ask Alice!, a column that closely follows industry trends and provides trusted advice to inquiring site visitors.

Export Compliance Introduction

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Who is the U.S. Principle Party in Interest (USPPI)? What is a shipment and when you must file in the Automated Export System (AES)? For more information, please visit our website: http://www.census.gov/foreign-trade/

The Census Bureau serves as the leading source of quality data about the nation's people and economy. We honor privacy, protect confidentiality, share our expertise globally, and conduct our work openly. We are guided on this mission by our strong and capable workforce, our readiness to innovate, and our abiding commitment to our customers.

Finding Start Up Money

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I wish I had a magic answer for this one, but I don’t.

Starting a business can be expensive depending on the type of business. A traditional old school manufacturing business can be very expensive and yet with an outsourced model in today’s world it can actually be affordable.

A non-traditional information product business or a consulting business can actually be extremely cost effective to start. In my opinion this is really the best type of business for a Veteran Entrepreneur to start.

An information marketing business is really just a consulting business that takes the Veterans knowledge and experience form the military and turns him into an expert on any number of topics from leadership, human resources, process management and improvement, facility management and logistics. The list could go on forever. Veterans get trained in so many transferable skills that can be taught to corporate America.

The startup costs, as I mentioned, are minimal for this type of business.

Here’s some places to start:

• Family and friends
• Savings accounts
• Borrowing against retirement accounts
• Bank Loans
• Credit Cards
• Second Mortgage
• finally, the ever popular but non-existent angel investor

I know the thought of borrowing money is unpleasant to many but the reality is if you don’t have it and you need it, then borrow it.

The SBA has programs but they don’t actually lend money. They will point to banks that cater to Veterans.

Money is out there, you just have to find it.

Blue Pen Success is an Entrepreneur training program based on the tried and true My Own Business Inc. (MOBI) training. MOBI allows certified graduates to teach the course. I decided to "teach it by creating an online video series of the courses for FREE!!www.bluepensuccess.com

Doing Our Parts to Help Veterans Find Work

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There are many ways that we can all help veterans find and maintain employment. Sure, there are plenty of government services in place that assist veterans in this area but this is only half the battle and besides there's always room for improvement. If we're ever going to lower overall veteran unemployment rates it will require a collaborative effort from all of us.

Rather than focus on WHY it's important to support veterans when it comes to seeking and securing jobs, because the answer to why should go without saying, this article is geared towards HOW we can provide solutions no matter what our age or position.

Help Raise Awareness

To every problem there's a solution and positive change can all begin by raising awareness.

A little support really can go a long way. As a member of your community, whether you're a student, business owner or even someone who is retired there are countless ways you can get involved when it comes to helping veterans in your neighborhood find work.

Perhaps it could be something like starting and/or signing a petition that demands equal workplace opportunities for veterans and non-veterans alike. Help to create a better balance and begin to acknowledge and support the many ways that veterans can also contribute to your community.

Get Active & Involved

Like anyone else, veterans need a steady income and the ability to put food on the table. Don't be afraid to speak up or do your part when it comes to bridging the gap between lack of awareness and exposing the need to create more job opportunities for veterans in your area.

It can be a simple act such as volunteering towards a movement that helps local veterans successfully secure jobs and stability. Start an informal local job or transportation exchange. Ask people in your communityto get involved: "What have you done lately to help a fellow veteran?" You'd be surprised how many people are willing to help but don't always know how or aren't aware of the resources available in their area.

If you're not aware of what volunteer opportunities are available in your area you can always visit sites like http://www.serve.gov/ to find out about existing local opportunities.

Provide Support & Encouragement Let fellow troops or veterans know how much you care and ask them directly what you can do to help. They've risked their lives to ensure our freedom and quality of life so returning the favor with such a selfless act is the least each and every one of us can do. Who knows, it could boil down to something so simple as a disabled veteran needing a ride to a local employment office and that could be the difference between them being unemployed or finding work.

Even the smallest kind gestures can make a world of difference. We've seen a lot of positive results from nationwide initiatives that help veterans find work but we also need to think and act on a smaller and more local community scale if we are ever going to overcome elevated veteran unemployment rates.


Funding Roadmap is an innovative, networked business planning and due diligence reporting system for funding professionals and entrepreneurs alike. It also includes a video pitching platform, a document repository and deal flow marketplace so entrepreneurs will have an online medium to brilliantly communicate all the essential data – along with their personal passion and commitment.

Ruth. E. Hedges is the creator and CEO of Fundingroadmap.com. and Startups Across America. She has been featured in the New York Times, on ABC’s Home Show, and the Financial News Network did a two-part series on her for their show entitled ‘American Entrepreneur’.

For more information please visit http://fundingroadmap.com and http://www.startupsacrossamerica.com/SAA/

NYS SBDC Scientific Innovation Impact Award: Dr. Hanna Wollocko of Oxyvita

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From the Mid-Hudson SBDC, the late Don Dods, advisor.

While working in emergency services and in hospital blood banks, Dr. Hanna Wollocko, Founder, President and CEO of Oxyvita, Inc., recognized the enormous needs and significant problems with blood transfusions. She and a group of professionals from the pharmaceutical and biotechnology fields founded Oxyvita in 2003 to work on developing an innovative blood substitute. The product is a polymeric hemoglobin solution, which is clinically useful as a blood substitute due to its oxygen carrying function, can dramatically reduce the need for blood donated by human donors and significantly reduce the risks associated with blood transfusions. Dr. Wollocko first consulted Business Advisor Don Dods at the Mid-Hudson SBDC in 2004 about financing to continue the research. He has worked intensely with Dr. Wollocko and her team to develop the product into a sustainable business that is ready to market. The business is now significantly advanced in preclinical trials and will be seeking to progress into clinical trials upon FDA approval. Oxyvita Inc. has developed a powder form of its transfusible hemoglobin based oxygen carrier. With its new paradigm in blood technology, the company has been awarded a $4.4 million contract with the US Department of the Navy to enable testing of OxyVita on large animals as a requirement in the last stages of seeking final FDA approval. As you can imagine, OxyVita has the potential to revolutionize trauma care.

More of the Small Business Resource Guide

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Segregated accounts
Establish a segregated bank account for sales taxes. NYS Tax Department encourages all sales tax vendors to voluntarily establish a separate bank account for sales taxes that they collect on behalf of New York State to make it easier to comply with the tax law. To improve sales tax compliance, they can require certain sales tax vendors to deposit sales tax into a separate bank account. This tax law change was effective March 31, 2011.

Sales Tax Filing Responsibilities
A sales tax return is still required to be filed, if a registered vendor, did not collect any tax for the tax period in question. Vendor Collection Credit (currently at 5% of tax payable except monthly filers with a maximum of $200 )
Sales Taxes are trust taxes – A responsible person can be held personally liable for payment of taxes.
If a business ceases doing business, they must file a final sales tax return and return the Certificate of Authority to the Department.
Sales Tax Exemptions
Manufacturer’s exemption – Must be a registered sales tax vendor - Publication 852
Farmer’s Exemption – ST-125
Not for Profit Exemptions – The not for profit agency 501(c)(3) must apply on form ST-119.2

Recordkeeping Requirements for Sales Tax (TB-ST-770)
Recordkeeping rules
What records to be kept
How long to keep records
Point-of-Sale systems
Maintaining records electronically
When records are considered inadequate
Consequences of inadequate records
NEW: Web video explaining record keeping requirements
How long do I keep my records?
You must keep all of your records for a minimum of three years from the due date of the return to which those records relate, or the date the return is filed, if later.
However, the statute of limitation does NOT apply for any period for which an individual failed to file a return or filed a fraudulent return.
You must make the records available to the Tax Department upon request.

New Hire Rule
All employers must report to the New York State Tax Department certain identifying information about newly hired employees working in the state within 20 calendar days of the hiring date.
www.nysnewhire.com
GENERALLY, a worker who performs services for a business is an employee if the business can control what will be done and how it will be done.
NYS follows the federal guidelines (conformity) regarding employer/employee relationships and the definition of an employee, contractor or self employed individual


Sales Tax e-filing Mandate for Businesses
If a business meets all of the following conditions the business is required to E-file and E-pay the sale tax on the
NYS website:
• Prepare their own return;
• Use a computer to prepare, document or calculate any of the sales tax schedules;
• and Have broadband internet access
Must first create an Online Service Account (demos and videos are available)
For more information: http://www.tax.ny.gov/bus/efile/elf_busn_mandate.htm

Voluntary Disclosure & Compliance Program
Under the Tax Department’s new Voluntary Disclosure and Compliance program, eligible taxpayers who owe
back taxes can avoid monetary penalties and possible criminal charges by:
• telling the Department what taxes they owe;
• paying those taxes; and
• entering an agreement to pay all future taxes.
The Voluntary Disclosure and Compliance Program covers ALL taxes administered by the Tax Department.

New York State Tax Credits for Businesses
• Designed to promote economic development, create jobs, stimulate capital investment, encourage revitalization of
distressed areas.
• Broad range of tax credits underscores the state’s commitment to attract and foster growth in business community
• For more information visit:
for income taxes (includes flow through entities).
for general business corporations.

courtesy Suzanne Reusch
Taxpayer Service Specialist
New York State Department of Taxation and Finance

NYS SBDC Female Entrepreneur of the Year: Melissa Wawrzonek, Clipper Ship Tea Company

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from the Farmingdale SBDC

While sailing aboard oil tankers in the United States Merchant Marines, Melissa
Wawrzonek began planning for a career after she retired from the sea. She decided to
translate her love of tea and passion for traveling into a business. To prepare herself, Melissa studied all she could about tea and visited tea producing countries such as India, Sri Lanka, Taiwan, China and Japan. She completed a 3-year certification course through the Specialty Tea
Institute (STI), which certified her as a Tea Specialist and Tea Educator & Speaker. In 2010, with certifications in hand and start-up funds in the bank, Melissa retired from the Merchant Marines. During the summer of 2010, she consulted the Farmingdale SBDC for assistance in finalizing a business plan and leased a 1200 square foot retail space in Northport Village.
Melissa and her family completed a restoration of the 110 year commercial space, with original tin ceilings and tin walls, a hotel concierge desk from the 1900ʼs, a 150 year old mahogany bar, and turn of the century fixtures. After 3 months of renovations and approximately $100,000 in start-up expenses, the Clipper Ship Tea Company opened as a retail loose leaf shop. The Clipper Ship Tea Company specializes in all things tea and sells premium loose leaf tea, tea ware and tea accoutrements. The store also sells honey and tea infused chocolate. The storefront has been open for one year and is thriving in its downtown pedestrian village. Melissa is in the process of launching the online portion of her tea business and is planning to open more tea retail storefronts in the years to come.

Learn About Your State and Local Tax Obligations

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In addition to business taxes required by the federal government, you will have to pay some state and local taxes. Each state and locality has its own tax laws. The links below provide access to key resources that will help you learn about your state tax obligations. Having knowledge of your state tax requirement can help you avoid problems and your business save money.

Read MORE.

NYS SBDC Procurement of the Year: Oscar Nordstrom of Nordstrom

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From the Rockland SBDC

Oscar Nordstrom, a Service Disabled Veteran, founded Nordstrom Contracting & Consulting, Corp (NCC) in 2004 as a family-owned and operated small business. NCC provides a variety of construction and renovation work for Federal Agencies, including electrical, mechanical, plumbing, interior fit-outs and finish trades. In that time NCC has performed projects totaling more than $10 million and NCC is especially proud that all projects have been completed on or before required completion and within original budget!
NCC’s trademarks are attention to detail, responsiveness, integrity, and genuine pride in its work. Since its inception NCC has grown consistently every year. Mr. Nordstrom says “By aligning the client’s goals with ours, working as a team on each job, we develop and maintain close working relationships with every client. Our past projects, current service contracts and ever-growing portfolio are a testament to the abilities and superior performance of the company.”
Oscar and his family have more than 100 years of combined experience in construction and planning, the result of many projects from high-rise office buildings in New York to custom single family homes in South Carolina. With project experience in the public and private sectors NCC’s company resume includes virtually every major contracting discipline from design to project management to implementation.
Even with his extensive experience, CUNY education and military training Oscar sought the assistance of the Rockland SBDC to help plan the growth and financing of his new business. “An expert knows when to get an expert.” Nordstrom says of his decision to work with Chris Thiesing and Adi Israeli of the Rockland SBDC. Chris and Adi worked with Oscar to fund growth with more than $700,000 in SBA guaranteed financing, assess and review procurement and contracting opportunities resulting in more than $2,000,000 of Federal contracts, provided financial planning assistance to manage and project cash needs supporting rapid growth, and, to assist with identifying supportive programs.

Above: The Nordstroms, from the left Michael, Stephanie, Oscar and Oscar Jr.

Four Steps for Getting Your Marketing Message on YouTube

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Many small business owners hope their YouTube videos will bethe next viral sensations. Even if your video doesn’t achieve such greatheights, YouTube remains a great low-cost way to publicize your business and increase your brand awareness. We’ve identified four steps that can help youachieve YouTube success.
1. Don’t deviate fromyour tried-and-true marketing messaging. Unless your video is the debutpiece of a brand new marketing campaign, stick to marketing that works. Thatdoesn’t mean you can’t experiment with humor, a story, or another device toshow your business in a new light. But you should reinforce how your businesssolves customers’ key pain points with language they’ll encounter in your othermarketing materials.
Fair warning: Tastes in humor vary. What you consider funnymay be boring or offensive to others. When dabbling in comedy, make sure thescript reflects a funny situation rather than relying on esoteric culturalreferences or irony for laughs. The latter two have a tendency to go over manyviewers’ heads.
2. Know yourlimitations with technology.  Ifyou’re comfortable behind the camera, go for it. But if you’ve never even helda camcorder and aren’t tech savvy (or you plan to star in your video), leavethe filming and editing to someone else. If you’d like your video to have alittle pizzazz, check out local video production firms, many of which offervery reasonable rates.
Getting in contact with your local college’s film studentsor the high school’s AV club could cost less with a negligible sacrifice inproduction quality.
 3. Create a YouTube channel for your company or the campaign. YouTubeisn’t just about the video. By following these instructions for creatinga YouTube channel and  uploading a YouTube video, you can include your Website address,branding and contact info where your videos reside. If you plan to create a series of videos, or your videos arepart of a specific marketing campaign, create a channel for the campaign. Forone or two videos that are more associated with your business than a specificcampaign, create a channel for your company.
4. Promote your videovia social media. Considering 48 hours’ worth of video is uploaded toYouTube every minute, odds are your video will get lost in the shuffle. Postingthe link on your personal and business Facebook, Twitter, LinkedIn and othersocial networking sites is a good start, but go a step further. Spend a little time sharing your video link with localmedia, thought leaders, and anyone related to your field or relevant to thecampaign (if, for example, your campaign involves racecars, send a tweet toJeff Gordon). Their retweet could result in hundreds or thousands of views.
You may not notice an immediate bump in sales, website hitsor whichever metric you use to gauge success. Yet the small investment andcumulative marketing effect can lead to larger rewards. 
About Business Owner’s Toolkit
With an emphasis on problem-solving dating back to 1995, Business Owner’s Toolkit™ (www.toolkit.com) offers more than 5,000 pages of free cost-cutting tips, step-by-step checklists, real-life case studies, startup advice, and business templates to small business owners and entrepreneurs. The site also offers a monthly newsletter, up-to-date news topics, and Ask Alice!, a column that closely follows industry trends and provides trusted advice to inquiring site visitors.

To Factor or Not to Factor

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If you’ve heard about invoice factoring and are consideringit for your B to B company, be sure it fits your needs.  Factoring is a type of specialty lendingthat’s not meant to replace bank lines or other commercial loans, but toaugment them when the need for cash flow is greater than a basic line of creditcan provide.  Factoring is helpful foryoung, non-bankable companies with growth opportunities, and for companies thatcan benefit by outsourcing their credit and collections activity.  Full-service factoring companies will providefinance, credit services and guarantees, and accounts receivable management.

Here are the Top 10 reasons to consider and NOT to considerfactoring for your business:
TOP 10 REASONS TO CONSIDER A FACTORING COMPANY (OR NOT)
10.  Your B2B companyneeds a line of credit to support growth, but isn’t bankable yet.9.  Your customersdemand credit but your suppliers demand cash.8.       Your customers love to keep you guessing.7.      Youjust don’t have time to manage receivables.6.      Yourgrowth is outstripping your cash flow.5.      Yourcustomers worry when you make those desperate calls for payment.4.      Youworry every time you extend credit to a new customer.3.      You’repassing up new business waiting for old bills to be paid.2.      Yourbank is getting out of the commercial finance business.1.      Youlove the thought of outsourcing credit, collection and A/R management so youcan concentrate on growing your business.
Or NOT:
 10. Your company isgrowing, but your gross margin is under 10%. 9. Your cash isshrinking because your business is shrinking. 8. Bad management iseating up all your cash flow. 7. You want toreplace your bank line and get a lower interest rate. 6. You want cheapmoney. 5. You’re tired ofusing the IRS to finance your business. 4. You want to sellsome old, uncollectable receivables. 3. You’re looking fora collection agency to strong-arm your delinquent customers. 2. You need somequick cash to pay off your angry suppliers. 1. You need somequick cash so you can close your business and leave town.

Tom Smith is Vice President, Marketing for Riviera Finance,a nationwide commercial finance company and sponsor of the ASBDC.  Prior to Riviera, he worked as an independentfinancial consultant and held various positions in finance and marketing forXerox Corporation.  He is married withtwo sons, and resides in the Tampa Bay area. Tom holds an MBA in Finance from The Wharton School, University ofPennsylvania.
With offices nationwide, Riviera Finance (www.rivierafinance.com)provides early-stage accounts receivable financing to small companies in needof cash flow. Riviera's non-recourse factoring program includes full protectionagainst bad debt, and complete receivables management services. Since 1969,Riviera Finance has funded over 20,000 small companies.

Small Business Week: The Passion and Tools to Make Your Business Great

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This year’s Small Business Week, May 20-26, is filled with helpful workshops, inspirational success stories and glimpses into the technology that will power small companies into the future. With this exciting week on the horizon, I encourage you to dedicate some time to strategizing on how you can take your business to the next level.

Part of great business success comes from having the passion, planning and drive to achieve it; the other part comes from incorporating the right tools. Below are three key technologies, along with resources providing information on how to leverage them to take your small business from good to great.

· Cloud. Cloud computing has completely transformed the ways in which we work and play. Cloud technologies like Microsoft Office 365 save businesses money, streamline their technology needs and operations, boost collaboration and provide considerable return on investment. When employees and business owners are freed from the tasks of IT maintenance and management, they can put their focus and investments back into their core business. I encourage you to explore this free cloud computing guide, developed in partnership with American Express OPEN, to help you navigate the cloud computing landscape.

· Mobile. By creating a strategy for mobile devices—mobile phones, smartphones, laptops and tablets— you can improve your business, extend your marketing strategy’s impact and become more accessible to customers. To make the most of mobile, business owners need to understand the full potential of the technology. For instance, today’s smartphone has the capability of being a computer, camera, communications system, presentation device, payment service and GPS. However, nearly half of the decision-makers in small and midsized businesses recently surveyed by Microsoft said they don’t use a smartphone—and among those who do, eight in 10 use it only for checking email. To learn more about harnessing the power of mobile, read this case study on how one small company transitioned to mobile and completely transformed its business.

· Online Presence. With consumers so highly connected with each other through smartphones, tablets and laptops, their conversations about your business can rapidly make you or break you. So, what are your customers saying about you? And, more important, how should you respond? Through sponsorship from Microsoft, the founders of MyWebCareer created Brandify, a tool that tells you about your online presence, and offers tips on what you can do about it. If you’re wondering how to get started in building an online presence or getting your online brand back on track, this free tool can help.

While these tips and tools will help you get started on the journey toward transforming your small business, I hope the energy and excitement of Small Business Week will spark your passion and drive to achieve greatness. Learn more here about Small Business Week and ways you can get involved.





For more tips and information on how technology can support you and your business, follow me on Twitter(@Cindy_Bates) or follow Microsoft SMB on Twitter (@MicrosoftSMB) and Facebook (Microsoft SMB).

   

Tips for Your Export Marketing

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There’s good reason to believe what sells in America can sell elsewhere. But assuming you can market it in the same manner in a foreign country produces disappointing sales for many exporters. 
Even if you’re marketing your product in an English-speaking country, buying patterns change by borders. Don’t give up on the use of your product or service abroad, but be prepared that it might not take off as quickly it did stateside. As you prepare to enter foreign markets, consider these pointers for your export marketing plan.

1. Don’t neglect the market research. Just like rolling out a product into any new market, the market research indicates a couple important factors:

· if your product or service is likely to succeed in the market

· what selling points and purchasing habits resonate with the market

As we mentioned in a previous exporting post, you have numerous secondary market research information available. And if you have the time and money for primary market research (conducting research for your specific product), you’ll have an even greater understanding of customer needs.

You may be surprised to find that, while you have little competition stateside, your new market has a similar product or service. That doesn’t necessarily mean you need to withdraw from the market, but you’ll have to research your chief competitors.

2. Develop your export marketing strategy. Most entrepreneurs fall into two camps: They love the strategy work and extensive planning, or they want to roll up their sleeves and execute marketing campaigns immediately. For the good of your business, even if you want to start marketing in a new country immediately, you’re almost certainly better off developing your strategy.

Through the federal government’s International Business Plan Workbook , you can create a detailed strategy. Before you begin, prepare to answer hard questions about your international marketing ambitions, such as:

· How will international trade help you reach your long-term goals?

· Why is your business successful in the domestic market?

· What is the projected growth in these international markets over the next five years?

While the workbook provides some guidance, completing it is a very-time consuming exercise that will require significant resources.

3. Capitalize on government-sponsored advertising opportunities. In many instances, you can find fairly low-priced advertising platforms through various federal government agencies tasked with fostering exporting.

The U.S. Commerce Department, for example, produces the bi-monthly Commercial News USA, its official export promotion magazine distributed freely to worldwide U.S. embassies and consulates. If you prefer online advertising to print—or you use an integrated marketing campaign—you may want to investigate FUSE, a directory on international U.S. Commercial Service websites.

Of course, all of these items represent just several of the key export marketing components your business will need in order to compete. To learn more about recommendations for everything exporting-related, export.gov is a great one-stop shop.


About Business Owner’s Toolkit
With an emphasis on problem-solving dating back to 1995, Business Owner’s Toolkit™ (www.toolkit.com) offers more than 5,000 pages of free cost-cutting tips, step-by-step checklists, real-life case studies, startup advice, and business templates to small business owners and entrepreneurs. The site also offers a monthly newsletter, up-to-date news topics, and Ask Alice!, a column that closely follows industry trends and provides trusted advice to inquiring site visitors.

Organization

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How do I build an organization?

What does that organization look like?

The first step to defining an organization is to build yourself a model. You need to have an idea of what you want your organization to look like. Define what departments you think you need. Meaning you need to have a good understanding of what hat are needed in your organization. Then decide which hats you are going to wear and which hats you will have your team wear. In the corporate world that’s known as delegation. The temptation is to think you can do everything yourself and this assumption can get you into trouble. It's critical to understand the hats you’re going to wear and what hats your team will wear.

Delegation is a key leadership skill and building the right team with the right skill sets and then delegating the responsibility appropriately is, like I said, critical to success.

Once you have defined the overall organization the next steps is prioritizing them and determining what are your critical roles that you need filled. The critical roles that you need should correlate with what hats you’re going to wear. The list of typical hats within a small business can get rather long. You’re going to have the owner hat; you’re going to have a sales, or a sales manager. You’re going to have to do marketing. Typically there is a critical need for an administrative person.

You have to inspire people. You have to empathize with people and understand that they all have lives and they’re all people. You have to be the paycheck writer. You don’t necessarily have to write the paychecks yourself, but you are the person that is paying the bills and one of those bills is writing all of these people a paycheck. You also have to be honest and the best communicator. Having honest communication within your business is imperative.

The last hat that you’ll probably wear, or that you will wear, is the decision maker hat. This is critical because as the owner of the business, as the person who is responsible for everything that happens within the business, everyone that works for you is going to come to you looking for answers. They’re going to want you to make decisions and you have to be able to evaluate the situation, make a rational and reasonable decision, and then stick to it. If you make a wrong decision and you get down a path where you determine that this is the wrong path and we need to backtrack and take a different route, you need to be accountable for that. Own up to it. Say “hey guys, I made a decision, it was the wrong decision, we need to backtrack, we need to go this way,” and you will be amazed at the respect that your team gives you simply by being accountable, being an accountable leader, making solid decisions, and then sticking to those decisions.

Blue Pen Success is an Entrepreneur training program based on the tried and true My Own Business Inc. (MOBI) training. MOBI allows certified graduates to teach the course. I decided to "teach it by creating an online video series of the courses for FREE!!www.bluepensuccess.com

Book Review: Found It – A Field Guide For Mom Entrepreneurs (Great Book For Every Newbie Biz Owner)

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I remember staring my first business “Family Computer Consulting Services” over 12 years ago. I had no clue what I was doing and just grew my business, helping clients, by the seat of my pants. I did have Inc Magazine which helped give me insight on how other businesses were growing and the challenges they faced, but that’s about it. I dissolved the business (it was profitable!) and morphed into Smallbiztechnology.com

I wish I had Jill Salzman’s book “Found It. A Filed Guide for Mom Entrepreneurs”.

Her easy to read book, with cute imagery, is focused on moms and their entrepreneurial journey but (shh) it’s really a great field guide for a dad or anyone starting their business.

The book is chock full of short, to the point and very useful information, in fact 51 tips, including a resource section.

Some of the tips include, tip number 20, “Connect Like An Expert”.

Instead of trolling LinkedIn for relatively loosely connected affiliations, why not check out your school alumni pages or your local community for those who you really know. Tell them about your new business, then network with them online.

Practical, right?

Jill Salzman’s book, “Found It. A Filed Guide for Mom Entrepreneurs” is all about practical information and insight to help you. Want to save money hiring help? Read Jill’s tips on hiring interns, virtual assistants and bartering. In many households moms are in charge of what the family is eating – Jill address who to get dinner ready and run your own business too.

Ramon is a journalist, technology evangelist, speaker, editor of Smallbiztechnology.com and author of “Technology Solutions for Growing Businesses” (Amacom) and most recently “Technology Resources for Growing Businesses“. Ramon has written thousands of technology articles and news items for Smallbiztechnology.com and other media including: Open Forum, Inc. Magazine, New York Enterprise Report, Black Enterprise Magazine, CNet, Var Business, TechTarget, Entrepreneur.com, Small Business Resources and others. He has also written for technology vendors including Microsoft, FileMaker, and Everest. He is often quoted in the media, including the New York Times, San Francisco Chronicle, Entrepreneur Magazine, Inc. Magazine, WCBS Radio, Crains New York, National Federal of Independent Business, Small Business Advocate Radio Show, Wells Fargo Small Business Roundup, Tech Talk with Craig Peterson and Smart Money.

Four Ways to Help Your Client Expand Their Business

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Today’s economy presents some unique opportunities for business expansion for those who have a unique set of circumstances. Help your clients act now to expand their business and help position them for success. 
By Mike Handelsman, Group General Manager, BizBuySell.com and Bizquest.com

Growing a business is a constant challenge, and today's economic climate is likely making things more challenging. However, by helping clients to explore expansion options uniquely available during an economic downturn, they may be able to take their business, and business performance, to new heights.

Here are a few fresh ideas, uniquely suited to current market conditions, which might stimulate some new thinking on how to expand a business.

Organic Growth

Organic growth is the most common form of small business expansion, and may be the way your client has grown their business in the past.

In today's economy where consumers are increasingly turning to value over business loyalty, successful organic growth requires introspection. Businesses must examine their relationship with key customers to pinpoint why those customers are, or are not, happy with service levels. Today's economy may change how consumers perceive a product or service, as their needs regarding price, service levels, and other business factors may be influenced by their economic situation. Transforming this analysis into actionable business improvement initiatives involves hard work and forward-thinking business strategies. It's about keeping customers happy, investing in the business, and selling and marketing aggressively.

Strengthening relationships with key customers and enhancing the value of the business's products or services is imperative if a business wants to grow organically.

Location Expansion

If a business has been based in a single location or region, now may be the time to set up shop in a second location or to expand the service area. This could involve opening a business in a nearby neighborhood or city, or making services available to a broader geographic audience.

Creating a second location is much less expensive than starting a business from scratch, yet it exposes a business owner to many new customers. As such, it can be a way to transform existing operations into a much more profitable business. Expansion often enables owners to benefit from economies of scale that were previously unavailable, providing additional profit enhancement.

Acquiring Competitors

It is likely that some of your client’s competitors are struggling in this down economy, to the point where they are ready to pursue an exit opportunity. Rather than have them sell to a new competitor, you may be better off acquiring them and folding their operations into yours.

Knowing the ins and outs of a particular industry, as well as the business, they will be less likely to overpay for it. Your client may also have good ideas on how to improve the competitor's operations, through leveraging their expertise and experience. In addition, there may be economies of scale that can allow them to lower their raw materials costs or other business expenses.

Expanding Into a Related Market

Coach your client to take their strengths of their business and apply them to a related field. For example, a landscaping service might expand their operations to include a nursery business. There are some natural synergies between the two businesses, with each business potentially helping the other business to do well.

When expanding into related markets, they can start the second business from scratch or acquire an existing business. Acquisitions tend to be faster, less expensive and less risky, but there is something to be said for starting a new business with a clean slate.

Expanding in a related market with complementary products or services will increase potential customer base, and can likewise revitalize the sales cycle. The larger, more diverse customer base will also put a business in a more desirable position when they’re looking to sell.

Getting Started With Business Expansion

Imagination and planning are the keys to starting a business expansion initiative and where you can help your client brainstorm.

Contemplate each of the expansion methods discussed above and think through whether they are appropriate for the business you’re working with.

Turn that contemplation into a list of possibilities. Once you've identified some possible ways to expand, do a little market research to learn more about the expansion opportunity.

For example, in fleshing out geographic expansion, you might suggest that a client travel to the other city and ask potential customers whether they'd be interested in doing business with them if you opened up in their neighborhood. Or, scope out the market for additional competitors that could make your expansion more, or less profitable.

If they are contemplating the acquisition of a competitor or acquiring a complementary business, direct them to business-for-sale listing sites like BizBuySell.com or BizQuest.com to see what's for sale.

In this market, it's important for small business owners to keep eyes and ears open for potential deals that may come down the road. The key is for owners not to rest on their laurels. What they've accomplished to date may be impressive, but with a good expansion strategy in place, rest assured that the best is yet to come for them!


About BizBuySell:
BizBuySell is the Internet's largest and most heavily trafficked business for sale marketplace, with more business for sale listings, more unique users, and more search activity than any other service. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry's leading franchise directories

29 Links to Make You Awesome at Facebook Marketing

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Have you been struggling to gain some traction with your Facebook marketing?

Has it come the point where no matter what you do, you still feel like you’re spinning your wheels?
Well, my friends, here’s a resource you’re really going to “Like.”

Below are 29 links to posts we’ve put together to help you race down the road to Facebook marketing success.

Enjoy!
1. Get Real: How to Set Realistic Goals for Your Facebook Page

2. Facebook Page vs. Profile: The Heavyweight Championship Bout

3. How to Regularly Post to Your Facebook Page (Without Annoying the $#!* Out of Your Fans)

4. Turn that Frown Upside Down: How to Make an Unhappy Fan a Happier Customer

5. Get Your Customers to Say “I Want That!” in Four Easy Steps

6. Why Isn’t Your Facebook Content as Shareable as a Super Bowl Ad?

7. Read this Blog Post to Do Better on Facebook

8. When to Post to Facebook for Maximum Impact

9. Why I Like “Like-Gating” (And Why You Should Too)

10. The Backstage Pass: 3 Ways to Get Facebook Fans to Subscribe to Your Email List

11. Be Stat Savvy: Use Reporting Data to Better Engage Your Facebook Fans

12. Involve Your Fans in the Facebook Content Game

13. Rich Media’s Guide to Getting the Most Engagement on Facebook

14. Show Your Fans Some Love: Say “Thank You” with Your Facebook Page

15. Domo Arigato: No More Mr. Roboto

16. 4 Signs of Complicated Facebook Marketing Syndrome

17. Why You Should Share Instead of Sell on Facebook

18. What Can “Ghostbusters” Teach You About Promoting a Social Campaign?

19. Keep It Positive: Don’t Badmouth the Competition on Facebook

20. How to Survive a Social Media Apocalypse

21. Does Your Content Stand Out in the Facebook Gumbo?

22. Facebook Success in 15 Minutes a Day

23. Lighten Up! Have Some Fun with Your Facebook Fans

24. How to Design for Facebook Like a Pro

25. Why Your Personality Is the Secret to a “Like”-able Brand

26. Listen Up! Your Facebook Fans Have Great Content Ideas

27. How Are You Responding to Feedback from Your Facebook Fans?

28. 25 Things That Make You Look Dumb on Facebook

29. Why Facebook Likes Alone Are Not Enough

Gina Watkins is a leading expert on e-marketing for small business – and has a real passion for helping businesses to succeed. Her ongoing series of dynamic lectures are filled with real-world examples, humor and results-driven wisdom garnered from more than two decades of sales, business development and marketing experience. In addition to owning her own business, she is an award-winning direct marketer, has been featured on WUSA Channel 9's Mind Over Money show, Dr. Gayle Carson’s Women In Business radio show, Morgan State’s Briefcase Radio program, and in numerous other media. In her role as Constant Contact Regional Development Director, she’s presented to more than ten thousand seminar attendees about the keys to success with easy, affordable, highly effective technology tools that grow trusted business relationships.

Desperate Measures from The Legal Edge

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As seen in the SmartCEO Magazine, April 2012

Business is hard, and companies are reaching for results. In the process, some businesses take dangerous shortcuts and risk dire consequences.

Government gold rush: As business has dropped off in the private sector, more and more companies are lured by the prospect of easy money at the government trough. One of the prime targets is work set aside for minority and disadvantaged businesses. The problem is that plenty of companies that don't qualify want to get into the act.

All too often, businesses that don't qualify want to set up new companies with a person - who meets the standards - as a figurehead. These businesses don't really want this person to run the new company. So they ignore the rules or attempt to disguise the real situation.

In other instances, a large business enters into a contract with the government and then subcontracts a portion of the work to a local, small, disadvantaged business to satisfy the requirements of the government contract. But then the large company fails to provide the disadvantaged business with any meaningful work. In essence, the big company is merely creating the appearance that it is satisfying the requirement of appropriately subcontracting with the disadvantaged company.

Too many companies treat the legal requirements for government contracts as if they were speeding on an empty highway. If no one will notice, then it must be OK.

But increasingly, those days are over. Governments at all levels - nationally and locally - are auditing companies for compliance with these legal requirements. And the penalties for violations can be severe. Non-compliant companies face not merely the loss of their contracts but also prohibitions on doing business with the government in the future and even criminal prosecution that can result in fines and imprisonment.

In some cases, all of these sanctions can be avoided with careful planning. Yet there are cases where the government requirements just don't fit your business model. Yes, sometimes you just need to say, "No, that doesn't work for me," despite the lure of what seems like easy money. Don't base your business decisions merely on the likelihood of getting caught violating the law. That's gambling, not planning.

Easy money: Similarly, the private sector presents still other temptations that threaten to break the backs of companies. Consider the vast industry that rushed into existence to take advantage of the foreclosure crisis. Talk about an opportunity gone awry by the failure to follow rules and common sense. As I write this column, half a dozen large financial institutions are entering into a $25 billion settlement because of robo-signing foreclosure documents, submission to courts of improper affidavits to advance the foreclosures and other defects in the determination of who should lose their homes and how. Even with this settlement, these companies are still exposed to lawsuits and criminal prosecution by homeowners and government agencies. Read More…


Jack Garson is the founder of Garson Claxton LLC and leads the firm’s business and real estate practice groups. Jack serves as a legal advisor for numerous local, regional and national companies, focusing on business transactions, commercial real estate, commercial leasing, and construction law. In addition to providing legal counsel, Jack serves as a strategic advisor and negotiator for many clients, providing guidance on issues such as the growth and sale of businesses, liability and risk reduction, the hiring and retention of key personnel, and protecting and enhancing profitability, as well as negotiating the resolution of complex commercial disputes.

Procurement Corner: Capability Statements…….”Setting Yourself Apart”

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I have been writing about building a one-page Capability Statement for your business to optimize your marketing strategy. Personally, I consider it a “best practice” for branding your business and creating solid lasting impressions. 
As mentioned previously, there’s nothing “sacred” about my format or content. Both are merely based on personal preferences from my experience with government/prime contractor procurement. Keep them simple and easy to read. Besides conveying the limited amount of information on a business card, it needs to clearly set you apart from your competition.

I suggested that using a logo is good, but it’s wise to keep it small to conserve valuable space. Underneath the logo, I added “the usual” general contact information followed by a concise (3-4 sentences) “Capabilities Statement”. This is where you begin branding your business. Always highlight your business type, describe what exactly it is that you “bring to the table”, value-added and, years of experience. How you state it though is critical. You want it to trigger the reader’s interest to keep him/her reading!

Our next section should be entitled: “What sets (your company name) apart from the competition?” Following that, use short bulletized discriminators that not only complement your Capabilities Statement, but take it to the next level. Always avoid repetition, “over-used” words and mundane business clichés (“dependable, reliable, proven, experienced, etc.”). They put readers to sleep! The objective here is (quite literally) “SETTING YOU APART FROM THE COMPETITION”. Make this your branding “AHA”. Our goal should not be trying to level the playing field, but rather to widen the gaps between the players!

And finally, since “best value” is becoming an increasingly more popular methodology for evaluating proposals and contracts, keep that in mind and make your discriminators profound. Be direct about what your best value is. Unique as possible but not “flashy”. What would impress a buyer to choose you? Once again, simple is better - 5 or 6 easy to read but precise bullets. Start with one or two key-words followed by a short but notable description (target < 10 words per bullet). Never shrink font size to increase word count. More is simply not necessarily better! Be creative, be incredibly honest, and never over-embellish.

A couple of generic examples (but you will need to add your own creativity):

· Partnered Solutions – we partner & collaborate with general contractors creating custom solutions

· Gold Standards – revered for our professionalism and industry expertise

· Best Value – awarded ‘2011 Most Successful Newcomer’ to the General Services Administration (GSA)

· Delivery-PLUS – we ensure free on-time delivery to any job site destinations across the globe

· Comprehensive industry experience – subject-matter-experts offering industrial & engineering guidance

· Product variety – “one-stop shop” for FULL LINE of trusted manufacturers & branded products

You get the idea. So set yourself apart / generate your “AHA”.

Remember the music from the movie “JAWS”? 
Great example of a profound discriminator because you immediately think of the movie every time you hear it! 
This is section 3 in our series. Capability Statement section 4 for this series will resume in the August 2012 Blog 
Capability Statement example through this month’s section:

Scott Sealing is a Procurement Consultant with the UH SBDC (TX) and an ASBDC member. He also works closely with the UH PTAC (TX) and is an APTAC member. He specializes in counseling small businesses through the rigorous process of registering with government agencies, and then researching and bidding on government contracts. He also provides SBIR/STTR proposal development support. Scott has over 28 years of procurement and logistics experience working for A&D prime contractors on federal contracts. He supported NASA contracts in NM, TX, FL, AL CA and, DoD contracts in NM and CA. Scott is a certified Supply Chain Management (SCM) Professional (SCOR) and is certified in the Lean Six Sigma Black Belt curriculum. He has authored white papers on SCM and conducted domestic & international presentations for government, industry, and academia on procurement and supporting government contracts and, on the effective application of SCM tools & techniques.

Websites: Seven Deadly Sins a Business Owner Should Avoid.

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You can hardly be in business in this day without a website, but before the website goes live you need to take the appropriate steps to protect the website content and reduce exposure to claims by persons accessing the website.  Below are seven important areas a business should address before the final version of the website becomes available to the public.  Do not commit any of the Seven Deadly Sins of website development as any one of them can create substantial liability or damage to your business.

  1.  Failing to Make Sure You Own What Others Develop.  You need to take proper measures to ensure you own all the underlying intellectual property and other rights relating to the website.  If you are  outsourcing the website development, do not execute an development agreement or accept the services of the developer until a written agreement is in place which gives your business ownership of all of the content, rights and intellectual property associated with the website.  If an employee or consultant is handling the website development, review the employment agreement or consulting agreement to make sure it grants the company ownership of all the rights.  I have reviewed many website development agreements for clients only to find that the agreement does not clearly address the issue, leaving open the possibility that a third person can claim it owns the intellectual property and content of your business website.  Similarly, do not let the developer incorporate any content or intellectual property of a third party without your approval and a proper license/permission to use the content.

2. Not Protecting Your Content.  Take the following steps to protect the website content:

                  a.  Copyright the Website:  Include a proper copyright notice on each page of the website, similar to the following:  Copyright  © 2012 The Berkman Law Firm, PLLC.  All Rights Reserved.

                  b. Trademarks:  If you are using any trademarks you have registered include the registered superscript ® symbol after the mark; and if you are applying for a trademark, include the superscript ™.  You should also determine whether you want to seek registration of any trademarks.

                  c. Patent:  If your site has a unique function or capability, speak to a patent attorney as to whether you have any patentable aspect before you upload the website -- while there are rules allowing you to go public before applying for a patent, there are time limitations and other issues that you should discuss with a patent attorney to ensure you do not jeopardize any of your potential patent claims.

3.  Failing to Include Relevant Terms and Conditions of Use.  Your website should include Terms of Use that are posted in easily accessible manner.  These Terms of Use not only spell out rights of users in accessing the website, but the restrictions, limitations, disclaimers on access and use of the website -- i.e., your business policies.  As I have written in a prior post, do not just cut and paste the terms from another website as the Terms of Use (and the Privacy Policy) should be tailored to your business and your website.  For example, if your website sells a product, it may not be sufficient to have a link to the Terms of Use at the bottom of the home page (referred to as bellow the fold) if the terms contain an important restriction a customer should be advised of prior to placing an order. http://mybizlawyer.blogspot.com/2011/08/website-policies-one-size-does-not-fit_23.html

4. Failing to Include an Appropriate Privacy Policy.  Similar to the Terms of Use, the Privacy Policy should be drafted in accordance with the nature of your business operations and policies.  As an example, there are important restrictions and disclosure required if you are marketing to your customers or wish to store their customer information for future use.  You do not want to violate the privacy rights of customers/users, as the exposure can be devastating to the business.

5. Not Incorporating an End User License Agreement.  If a user is downloading any software or application from the website, as a condition of the download the user should consent to an end user licensing agreement (EULA).  While the terms of a well-drafted EULA are for another discussion, the important point is access to any downloads should be preceded by the user's consent to the EULA.

6. Failing to Make any Necessary Disclosures?  Aside from certain standard information or disclosures you might need to include in the Terms of Use or the Privacy Policy, there may be disclosures you will want to prominently include in the website.  For example, a retail business may want a separate link to its return policy; or if your website recommends goods or services, the fact that you receive a fee for the recommendation must now be disclosed under Federal Trade Commission rules.

7. Oops, Do I Own the Domain Name?  You would think that this  issue would have been discussed as the first topic, but it is meant to illustrate how ridiculous it is that some businesses start developing a website, branding and promoting their products/services before checking if the domain name is available.  It is a simple process to check the availability of a domain name:  check the WHOIS link on the site of any domain registrar, and it will tell you if the domain name is available.  If it isn't, unless you have a case for trademark infringement or cybersquatting, move on and find another available domain before you waste time and money. And, before you choose a domain name, make sure no one else owns a trademark so you do not face an infringement or cybersquatting claim.  After you register a domain name, consider filing for a trademark to protect your rights.

As a business owner, you do not want to make any of the above seven mistakes when putting up a website because the liability, and/or the cost of rectifying, one mistake can be substantial and even destroy a business.  
       

Disclaimer:  The discussions in this blog do not constitute legal advise nor create any attorney-client relationship.  You are urged to seek the advice of an experienced lawyer who can provide counsel with respect to your corporate/business law matters.
 

Operating Agreements: Ten Important Provisions

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If you are starting a business or have an established business and are bringing in a new partner, you need a written Operating Agreement.  In fact, the New York Limited Liability Company Law (NY LLCL) requires that an LLC have an Operating Agreement, failing which the members of the LLC are subjected to an agreement that is essentially created from the provisions of the NY LLCL. See Limited Liability Company Law 417(a).  Aside from the statutory requirement of a written agreement, you do not want an operating created from the provisions of the New York LLC law because there are discretionary provisions that the members can change, thereby addressing the particular interests of the members.  Below are ten key provisions a business should include or consider including in the Operating Agreement.

1.  Member Managed vs. Manager Managed.  If you do not specifically address whether the LLC is managed by the members or a manager then by default it is deemed managed by the members.  A member managed entity means that each of the members has management rights, and if this is not want the parties desire then it needs to be changed through the Operating Agreement -- indeed, it is unlikely that the majority member wants each member to have control authority.  The simple solution is to state in the Operating Agreement that the entity is manager-managed and then expressly state the name of the manager.

2. Having a Vote on Material Matters.  Even when the LLC is manager managed (by the majority member) the minority member(s) should try to negotiate to retain a right to veto material financial and business decisions.  The manager can still make day-to-day decisions but major issues would require approval of super majority of the members.  Among important (material) issues that typically require super-majority approval are (a) a material change in the business of the company, (b) a merger, sale of the business or significant assets, dissolution, bankruptcy or reorganization (c) transactions in excess of a certain amount, (d) amendments to the Operating Agreement, (e) incurring loans in excess of a defined amount,  (f) entering into transactions with the LLC members or officers, (g) redemption of membership interests, (h) employment or consulting agreements or increases in compensation of employees/consultant in excess of a certain amount, and (i) even admission of new members.  It is not unusual for a minority interest to demand that material issues can only be decided based on approval of a super-majority; therefore, do not assume that because you will own a small (minority) interest you are overreaching in asking for voting rights with respect to material business and financial matters.

3. The Membership Percentage Need Not Dictate Economic and Voting Rights.  If the intention is to allocate profits and losses other than based on the percentage of interests a member owns in the LLC or to create separate classes of voting rights, then define the terms in the operating agreement.  The Operating Agreement can vary the financial rights of members and create different classes of members, giving partners the flexibility to grant interests in the business that are not strictly defined by percentage of ownership. 

4. Tax Provisions.  The members can choose to include (or not to include) several significant tax provisions and elections affecting treatment of contributions of property, capital accounts, allocations and distributions and other tax issues.  These tax provisions should not be overlooked and should be discussed with an accountant as well.

5. Transfer of Membership Interests.  The Operating Agreement should address restrictions on transfer of membership interests, and will often include:

           (a) A right of first refusal giving other members the right to purchase offered interests pro rata based on a member's percentage interest in the LLC.  The right of first refusal prevents a member from selling its shares to a third party without giving the other members an opportunity to purchase the shares.  The right is as much about a chance for members to increase their ownership as it is about excluding the transfer of interests to an undesirable new partner.  If you include a right of first refusal, make sure the operating agreement clearly sets forth the procedure and time periods relating to exercise or waiver of the right.

          (b) Co-sale rights give members the right to sell a percentage of their interests along side a selling member so that a partner cannot liquidate its interests without giving other members an opportunity to sell some of their shares as well.  As with the right of first refusal, be sure to define what is necessary to meet each member's obligations under the co-sale terms.

          (c) An exception for transfers made to related parties since an operating agreement will generally require a member obtain approval of  for any transfer; however, you may not want your partner's son or husband as a partner so before agreeing to such a provision consider if transfer to a related partner is acceptable.

          (d) Although technically not a transfer, a restriction on the pledge or encumbrance of a member's interests.  The restriction prevents an involuntary transfer of a partner's interest to a lender or other lien holder that would otherwise occur if the the member defaults on its obligations to the lien holder.

Note:  The restrictions on transfer of a member's interests in an Operating Agreement boils down to the simple point that you entered into a business relationship with a partner (or partners), and you do not want a partner to hand over its interests to someone you do not know (or worse, do not like).

6.  Buy/Sell Provision.  Business partners can grow apart, their involvement or desire to be involved in the business can change, a partner can fail to meet expectations, or a number of other issues can arise whereby a partner wants to leave the business or the other partners want a partner out of the LLC.  A Buy/Sell provision will avoid the disputes, distractions, and (yes) legal costs that otherwise inevitably will arise during a business divorce.  The Buy/Sell provision should set the terms under which a the LLC or other partner can buyout a partner or a partner can require the LLC to buy its interests.  The structure and mechanisms of a Buy/Sell provision are discussed in prior posts, emphasizing the importance of clear terms as to when the provision can be invoked, how the selling interests to be valued, and the procedure for completing the transaction. See  http://mybizlawyer.blogspot.com/2011/09/joint-venture-have-shotgun-clause.html  

7.  Termination.  Include the grounds for termination/dissolution of the LLC.  Under New York law if you are a minority or equal partner in the LLC a court will not grant an application to dissolve the entity simply because you cannot "get along" with your business partner.  In fact, a dysfunctional partnership that still manages to be a successful business generally will not be dissolved by judicial decree under New York law.  Therefore, the Operating Agreement should delineate the circumstances under which dissolution of the LLC can occur, including (without limitation) a defined time period, the occurrence of a certain event, or a vote of a majority (or super-majority) of interests.  Indeed, if you include a buy/sell provision (as discussed above) and one partner wants to end the business while another does not, then there will be an avenue to address the issue through a buyout.

8. Non-Compete.  You may want to include a non-compete clause, and if so it must comply with New York law in terms of geographic scope, time and scope.

9. Dispute Resolution.  The dispute resolution clause should set forth the body that will decide any dispute (i.e., a court or arbitration), the venue (place) the matter will be tried (including not only the geographic location but, for example, in the case of an arbitration the arbitral institution), and perhaps that the losing party will be responsible for the legal fees of the prevailing party.

10. Flexibility.  The Operating Agreement is an extremely flexible document and is limited only by what is expressly prohibited or required by the NY LLCL.  As such, there are a number of other financial and control terms that can be addressed in the Operating Agreement so be sure to take advantage of this flexibility in structuring the rights and obligations of the members when drafting the Operating Agreement.




Disclaimer:  The discussions in this blog do not constitute legal advise nor create any attorney-client relationship.  You are urged to seek the advice of an experienced lawyer who can provide counsel with respect to your corporate/business law matters.