National Thank You month provides a good opportunity for small business owners to show their customers or clients just how much they are appreciated. Sending simple thank you cards to clients – preferably with personalized, handwritten messages (if time permits) – is one way to show them that they are valued.

Although sending the occasional greeting card is a great way to express gratitude, a long-term customer appreciation strategy will help you build long lasting relationships with your customers.

Listed below are three ways to incorporate customer appreciation into your business’s ongoing communication with customers.

1. Provide accurate and good information

Businesses that share their expertise – free of charge – with customers show that they are invested in their customers’ well-being. It also shows that they are willing to help their customers improve their lives without always receiving compensation. This level of attention can help build brand loyalty amongst your business’s target market and distinguish it from competitors.

Some ways to share valuable information with customers on a structured basis include the following:

• Publish and send a monthly newsletter
• Use social media such as Facebook to provide advice or answer questions
• Maintain a blog that is updated at least once per week
• Provide a comprehensive FAQ section on your business’s web site
• Provide an online form that allows customers to send questions or ask for advice
• Respond to requests for information promptly

2. Ask customers for their feedback

Asking customers for their feedback (e.g., through surveys) about your business gives them a voice and shows them that you care about their needs, opinions, criticisms, and suggestions. Their feedback can provide valuable information about your business’s products and/or services, reputation, and sales and customer service techniques as well as other areas.

It is important to follow through on customers’ feedback to improve products and services. This shows that you take them seriously, value their time, and are committed to fulfilling their needs.

Furthermore, using customers’ feedback to improve products/services and customer service provides them with a better experience, which can strengthen brand loyalty and increase your business’s profit margin.

3. Make regular contributions to the community

Businesses that become involved with charitable causes can build goodwill with their customers. Consider the following examples of community giving:

• A local pizzeria contributes pizzas to the monthly PTA meetings for a school in its community.
• A grocer sponsors a little league baseball team including purchasing uniforms and providing snacks.
• Employees of a beauty salon donate one month of tips to the Make a Wish Foundation. 
• A medical center matches its patient’s donations to the National Heart Association during National Heart Month.

Making contributions to a social or environmental cause – particularly if it touches your customers and target market on a personal level – shows appreciation for them in two important ways. First, since giving makes us feel good, customers will feel good about patronizing businesses that (1) give to others and (2) give to causes that are important to them.

Second, your contributions could help them or someone that they care about. For example, a medical center will have patients who are affected by heart disease. By making a contribution to the American Heart Association, the medical center helps the organization find treatments for heart disease and promote prevention methods, which can save lives.

Giving back to the community should not be an after thought or a sporadic endeavor. It should be a well-organized program that is carried out in a structured and recurring way. Activities might coincide with particular holidays, seasons of the year, or timeframes (e.g., monthly, bi-monthly, or quarterly).

It is also important for businesses to make sure that their customers – in particular – as well as the general public are well aware of their community giving activities because this will improve customer relations and generate positive publicity. For example, Lipton®, the tea company, lists on the flap of each tea bag the following message:

“Your Small Cup Can Make a Big Difference.
Now when you drink a cup of Lipton® tea, you are not only taking care of yourself but you are doing a little bit more to support tea growers & the environment. www.lipton.com.”

Although this message does not go into great detail, the company lets its customers and others know that it is involved with environmental sustainability. They provide more information about their efforts on their web site.

There are many ways to say “thank you” to customers and clients for their business. Making this task a regular part of your communication with your business’s customers and target market can help you (1) maintain your connection with them, (2) build brand loyalty, and (3) acquire new customers.

Lastly, customer appreciation must be sincere and appropriate because no one likes to be deceived.

Reference

Gail Goodman, “Five Ways to Show Customers You Care: Show them love year-round, and they'll return the favor,” February 25, 2010, Entrepreneur, http://www.entrepreneur.com/article/205184.

If you are in need of a credit card for your small business, now is the time to obtain it. According to the Wall Street Journal, lenders are increasing their credit card programs for small businesses. For example, Capital One introduced six new credit cards for small-business in the fourth quarter of last year. American Express and Bank of America also launched new cards over a six-month period in 2011. Furthermore, Chase recently expanded its reward programs for three of its small business credit cards.

Why all of the interest?

According to the National Small Business Association (NSBA), increasing numbers of small business owners are using credit cards to finance their businesses. In fact, the organization’s research revealed that 71% of small business owners who use credit cards as a source of financing carry a balance on those cards from month to month. This translates into big money for credit card providers. The NSBA also reported that for many small business owners the terms of their credit cards are worsening.

Furthermore, small business credit cards do not have the same level of protection as credit cards for personal use. They were not included in the Credit Card Accountability Responsibility Act of 2009 that provided protections for personal credit cards such as eliminating random increases in interest rates. Less protection equals more money for credit card companies.

Small businesses can benefit from this trend.

When used wisely, small business credit cards can help business owners sustain and grow their businesses.

For example, they can replace the need for small business loans that generally require the business owner to put up collateral. Therefore, if the owner defaults on the loan they could lose the personal and business assets – such as a home, personal possessions, or business equipment – that were used to secure the loan. In contrast, credit card debt is unsecured, so business owners will not lose their personal or business assets if they do not repay the debt.

Additionally, many credit card providers offer rewards that can enhance business operations such as cash back or access to free financial tools.

Also, using business credit cards responsibly can help both new and existing businesses create a positive credit history and improve their credit scores. This can increase their chances of obtaining other kinds of financing at cheaper rates.

This economy makes less-than-ideal funding solutions a necessity for some small businesses.

If small businesses were operating in a stronger more opportunity-driven economy, many owners would be able to operate their businesses with less financing. But those are not the times in which we live and operate businesses. So it can make good sense for small business owners to take advantage of lenders’ interest in providing them with credit cards.

The key is to (1) find the cards with the best possible interest rates, (2) carefully manage credit card use, and (3) take full advantage of the rewards.

References

Annamaria Andriotis, “The Return of Small-Business Credit Cards,” January 16, 2012Wall Street Journal, http://online.wsj.com/article/SB10001424052970204542404577159234216235796.html?mod=WSJ_SmallBusiness_LEFTTopStories#articleTabs%3Darticle

National Small Business Association, NSBA Priority Issues: Credit Card Reform, http://www.nsba.biz/ccreform.html

According to the  U.S. Small Business Administration (SBA), more than 50 percent of the businesses in the United States are home based. (I must admit, I find this to be surprising.)

Given the number and importance of home based businesses, it makes sense for the SBA to provide a guide that helps people develop well-structured, successful, and legally sound home based businesses.

The organization’s home based business guide contains information about planning, starting, financing, and marketing home based businesses – among other important topics.

• Planning a Home Based Business

This section contains information as well as links to information that helps people determine if they are ready to own businesses and if owning home based businesses are right for them. For instance, the “Small Business Start Up Assessment Tool” provides a series of questions that helps people gauge their ability to start a business.

• Starting a Home Based Business

For individuals who are ready to start a business, the “Starting a Home Based Business” section provides links to information about (a) the first steps in starting a business, (b) setting up and running a home based business, (c) developing a business plan, and (d) zoning issues.

• Financing a Home Based Business

The SBA points out that federal agencies do not provide grants for home based business start ups. But it provides a “Loans and Grants Search Tool” that helps individuals identify low-interest loan programs.

• Marketing a Home Based Business

This section contains a link to an article that provides suggestions for marketing a home based business such as (a) defining the target market, (b) understanding the competition, (c) identifying a niche, and (d) promoting the benefits of a product/service to the target market.

The guide also provides information about home based business franchises and tax issues related to home based businesses.

Although this resource does not cover every topic related to home based business ownership, it does provide fundamental information about preparing for, running, and operating this kind of business.

Source

SBA, Home Based Business, http://www.sba.gov/content/home-based-business

The IRS provides an online tax center for small businesses and self-employed individuals that contains a wealth of information about tax and business matters.  Resources include forms and publications, a tutorial about employer identification numbers, and online tools and products.

The site also contains a section about starting, operating, and closing businesses. For example, the “Starting a Business” tutorial contains several fact sheets that can help business owners start their business with the structure and knowledge needed to effectively manage tax obligations.

A fact sheet that might be helpful for individuals who have a hobby that they have turned or are thinking about turning into a business is “Business or Hobby? Answer Has Implications for Deductions.” Another important tutorial is the “Checklist for Starting a Business” that contains information about the tasks that business owners should complete to ensure that their businesses comply with laws pertaining to business structures, tax years, and accounting methods – among other things.

The online tax center also contains information for three specific groups: industries/professions, international tax payers, and self-employed individuals. For example, the Self-employed Individuals Tax Center includes FAQs about basic information such as the definition of self-employment, self-employment tax obligations, and types of business structures. It also contains online learning tools including the “Virtual Small Business Tax Workshop,” which is an interactive tutorial that helps new business owners “understand and meet their federal tax obligations.” Furthermore, it contains lessons on several topics including a section about home based businesses. This information center also has a link that allows visitors to subscribe to “e-News for Small Businesses,” a weekly newsletter that provides tax information for small business owners and individuals who are self-employed.

These are just some examples of the abundance of helpful information that the IRS provides for small business owners and self-employed individuals.

Small business owners, entrepreneurs, and self-employed individuals might benefit from establishing their businesses as S corporations. This business entity shares similarities with the C corporation but is taxed under the Subchapter S section of the Internal Revenue Code.

Like the C corporation, the S corporation is a separate legal entity from its shareholders/owners. Therefore, it provides limited liability so owners’ personal assets are typically protected from the business’s debts and responsibilities. The S corporation also has an unlimited life that is not dependent upon the life spans or financial circumstances of the shareholders/owners of the business.

In contrast to the C corporation, the S corporation protects the business from “double taxation.” For instance, if a C corporation makes a profit, then it must pay federal corporate income taxes on its profit. If the corporation also pays a dividend to its shareholders, they must report these earnings as personal income and pay additional taxes.

In contrast, the IRS does not require an S corporation to pay corporate income taxes on profits. All business income or losses are reported on shareholders’ personal income tax returns only. So corporate income is only taxed once.

Although this business structure has great advantages, it also has some disadvantages. For instance, the IRS says the following: “When computing compensation for employees and shareholders, S corporations may run into a variety of issues.” The agency goes on to say that S corporations are required by law to compensate a shareholder-employee for services rendered to the corporation “before non-wage distributions may be made to the shareholder-employee.”

Listed below are important requirements that businesses must meet to qualify for S corporation status.

1. Must be a domestic corporation
2. Can only include allowable shareholders such as individuals, certain types of trusts, and estates
3. Cannot consist of partnerships, corporations, or non-resident alien shareholders
4. May not have more than 100 shareholders
5. Can issue only one class of stock
6. Must be an eligible corporation (certain financial institutions, insurance companies, and domestic international sales corporations are ineligible)

As with any business structure, the S corporation has both positive aspects and limitations. One great advantage, however, is that it provides shareholders/owners with limited liability protection. This is not the case for owners of sole proprietorships and general partnerships.

References

Active Filings, “Business Entities: Types of corporations,” http://www.activefilings.com/information/entities/

Entrepreneur, “Incorporating Your Business
Is incorporation right for you? Find out with this comprehensive article on the ins and outs of forming a corporation,” http://www.entrepreneur.com/article/77730#

IRS, “S Corporation Compensation and Medical Insurance Issues,”
http://www.irs.gov/businesses/small/article/0,,id=203100,00.html

Wikipedia, “S corporation,” http://en.wikipedia.org/wiki/S_corporation

Customer service, customer care, customer relations, or whatever a business might call it is absolutely essential for success. It is also an integral component of building an outstanding business reputation. It may be true that some businesses are successful even though they do not have the best customer service track records. But in this competitive and volatile economy, it pays to treat customers with the utmost care.

Listed below are some mistakes that business owners make in dealing with their customers.

1. Never doing more for the customer than what they paid for: The cost of “freebies” must be weighed against the benefits, but truly giving the customer more than what they paid for makes a good impression. For example, (1) providing free delivery, (2) offering a free product, or (3) providing personalized advice at no additional cost are ways to build relationships with customers.

2. Failing to thank customers for their business: I cannot count the number of times that I have bought things from retail outlets and the cashier did not say “thank you.” Thanking customers for their business is one of the simplest, yet most important, customer service techniques. A simple “thank you” goes a long way. Providing small gifts; sending thank you cards, notes, or e-mails; or giving a discount are also great ways to show customers how much they are appreciated.

3. Charging customers for every little thing: Of course, we should be fairly compensated for our products and services. But I firmly believe that it is not good business practice to charge customers for every little thing that we do for them.

For instance, I once worked temporarily at a law firm. I was surprised to see that they charged clients for sending faxes on their behalf. Perhaps this is a common and accepted practice in this field. But I could not imagine billing a client 0.1 hour at $225 per hour to send a fax. It seems to me that there is a better way to factor certain costs into a fee structure. Also, there are many things that we do for customers such as answering questions or quickly responding to their e-mails about one thing or another that we take care of as they arise. Can we really take the time to note all those little things and charge them for it?

4. Acting out anger towards customers: There are times when we are truly justified in being angry with customers for their actions, behaviors, attitudes, and the list goes on and on. But it will benefit all who are involved if we remain calm and work on finding solutions to whatever is going wrong in the relationship – even if it is not our fault.  As business owners, we want and need to provide great products and services and receive compensation for our good work. Playing into a customer’s negative, obnoxious, or unhealthy behavior will make it more difficult to meet these goals.

Of course, we should not take abuse from customers. And, unfortunately, there are times when legal intervention is necessary. No matter the situation, it is best for our mental health and businesses to not engage customers in emotional battles and find healthy outlets for our anger.

5. Failing to properly communicate with customers: Clear, accurate, and timely communication with clients demonstrate that a business operates with integrity and values its customers. This is why it is so important to answer phone calls when possible as well as return voice mail, e-mail, and text messages promptly. If customers are being ignored or feel that they are being ignored, they might take their business elsewhere.

6. Responding poorly to negative feedback from customers: Sometimes angry or difficult customers will level harsh criticisms at us that may or may not have validity. Other customers may have constructive criticism or legitimate complaints. It is good business practice to listen to customers’ feedback – no matter how it is delivered – and properly address it.

Having confidence and a “thick skin” can really help us deal with difficult clients and negative feedback. After all, legitimate criticism can help us improve our businesses and ourselves.

7. Not admitting to mistakes: Customers do not like it when businesses make mistakes, but they like it even less when businesses lie and try to cover up mistakes. In my view, it is better to immediately address mistakes, correct them, and do “damage control.” How many businesses have avoided huge and costly legal problems – and possibly saved their reputations – by just being up front about mistakes, apologizing for them, and correcting them?

8. Being insincere with customers: Customer service involves being helpful, sincere, knowledgeable, and friendly. Being charming and enthusiastic does not hurt either. But businesses that are artificial and dishonest with customers or potential customers will drive them away. People do not like to be lied to or made to look or feel foolish. Insincere businesses put their needs above their customers’ needs, and that is a recipe for failure. Customer service is about trust, and insincerity is the opposite of trustworthiness.

I once visited a shoe store to buy a pair of shoes. I asked for a specific type of shoe. The salesman bombarded me with a lot of flattery and unsolicited – even intrusive – advice. He showed me a lot of great shoes and used a lot of pseudo expert “mumbo jumbo” to try to convince me that they were right for my needs. But, when I noticed the kind of shoe that I was looking for on display and asked about it, he told me that he did not have it in stock. His need to sell the shoes that he had in stock outweighed my need for the pair of shoes that would work best for me. Maybe his sales technique works with people who have a particular personality or emotional need, but I was not buying it. I saw right through his insincerity and game. I did not buy any of those shoes, and I will never step foot in that store again.

9. Not keeping good customer records: Good record keeping is essential to providing good customer service. We never know when a customer might need a copy of something related to the product or service that we sold them. Also, having historical knowledge about repeat customers helps us to better serve them. Besides, good record keeping can help us resolve customer complaints or avoid legal trouble.

Despite our best efforts, we cannot please every customer or client because – quite frankly – some customers have unrealistic and unachievable expectations. I like so many other business owners have dealt with rude, hostile, misinformed, pompous, and seemingly delusional clients, and it is no fun. And sometimes we make mistakes in dealing with our customers that we must address and try to make amends for.

Regardless of the situation, it is in our best interests to do all that we can to satisfy even the most difficult customers because our businesses’ reputations and overall success can suffer if we do not.

One of the first questions that must be answered when starting a business is: “What legal structure will work best for my business?”

One legal structure that has many advantages for even the smallest businesses is the LLC (Limited Liability Company). An LLC is a type of association in which the owners are called members. Members can be individuals as well as organizations such as corporations, other LLCs, and foreign entities. An LLC can have any number of members including just one.

Like corporations, an LLC is a separate entity from its stakeholders. Therefore, the owners of LLCs have limited personal liability for business debts and actions. Yet, it is less formal than the corporation because it does not require business stakeholders to have regular meetings, take formal meeting minutes, or record resolutions. It also does not require a board of directors or officers.

Additionally, the LLC is similar to a partnership because it has pass-through taxation. This allows owners to avoid double taxation, which involves paying both corporate and individual taxes.

Furthermore, the federal government does not recognize the LLC for federal tax purposes. Therefore, owners of LLCs can choose to file taxes under the legal structure (e.g., sole proprietorship, partnership, S corporation, or C corporation) that works best for their businesses. This provides even greater flexibility.

Despite its advantages, the LLC also has disadvantages including the following:

• Profits from an LLC are subject to self-employment taxes, which may include Social Security and Medicare taxes.

• The cost of filing and other fees may be more expensive than those of sole proprietorships and partnerships.

• The owners of an LLC can be held liable for debts if they agree to personally guarantee the debts. They may also be held responsible for legal actions against the LLC if they are found to be personally liable for events that damage others.

Choosing a legal structure for a business is a very serious matter because the type of structure has a myriad of legal, tax, financial, and management implications for the business and its owners. Therefore, it pays to (1) conduct thorough research on the various legal structures; (2) seek help from experts; and (3) take care of all of the necessary filings, fees, and licenses before starting business operations.

References

Howell, Rod, Disadvantages of an LLC, Demand Media, http://smallbusiness.chron.com/disadvantages-llc-3633.html

IRS, Limited Liability Company, http://www.irs.gov/businesses/small/article/0,,id=98277,00.html

Wikipedia, Limited Liability Company, http://en.wikipedia.org/wiki/Limited_liability_company

Zahorsky, Darrell, Limited Liability Company 101, About.com: Small Business Information, http://sbinformation.about.com/cs/ownership1/a/LLC.htm