Category Archives: Blog

Three Advantages to the new Small Business Bill

My blog is moving to http://www.it-sme.com/blog .  For now I’m “double posting” entries here and there, but over time this blog will go away.  Please bookmark the new location if you like following the blog.

This blog is all about Making Money with Technology — making and saving money by using the right technology at the right time.

This week Congress passed a small business bill that promises three advantages to small business.

  1. Community banks will be able draw down funds from the U.S. Treasury to lend to small business;
  2. an increase in SBA lending at reduced fees and with a government-backed guarantee;
  3. improved depreciation — the rate at which small business can take tax deductions on technology purchased — a whopping 50% bonus depreciation & small business equipment expenses — up from $250,000 to $500,000.

All of these could be fantastic for small businesses who have held back spending due to the uncertainties of the impending tax increase (when the Bush tax cuts expire), the recession with its massive layoffs and then the fact that it has been nearly impossible for small businesses to get loans to grow — or in some cases, to even stay in business.

If this bill is signed by President Obama (and it will be) and if it does what its proponents insist it will, then there is finally some good news for small business.

The stimulus bill did not result in additional funding for small businesses — loans have been nearly impossible for a small business to get — even businesses in a growth state.  The new bill (H.R 5297) guarantees and lower fees on Small Business Administration (SBA) 7(a) loans which will be highly beneficial for small business.

These SBA “loan sweeteners” reduce fees for borrowers and increase the government guarantees.  Government guarantees reduce the risk to banks of non-payment, so if the small business gets qualified the banks are not on the hook if the loan does default.  Bad for taxpayers who would be on the hook — but good for the banks and for the businesses who need the money to grow.

I’m not a proponent of bigger government, but the economy does need incentives for small and medium businesses to get the economy moving again.  It seems the poor are getting poorer, and the rich are getting richer — and the middle class is getting squeezed out of the game.

From a technology point of view the big winner has to be the 50% bonus depreciation & small business equipment expenses — up from $250,000 to $500,000.   Many businesses have held off replacing old computers or upgrading software — the faster depreciation and higher amount allowed may be just the incentive many need to start making money with technology and kick start the economy.

Another benefit under this bill, which doesn’t really have anything to do with technology — but is still worth noting — is the  health insurance aspect. the self employed  are able to take an income tax deduction for the cost of  health insurance.  Be forewarned that  the health insurance premiums are not deductible when you are computing your self employment tax. The Senate bill does change the law allowing you to deduct the health insurance costs for self employment tax purposes. The total amount is dependent on income, the tax rate on your health insurance can range from 2.9 percent to 15.3 percent, so this can be a huge savings for small businesses — well worth noting if though it isn’t technology related.

Tax credits are usually better than tax deductions because they offset tax dollar for dollar. Currently, if you have business tax credits that you cannot use in the current year, you can carry them back one year or carry them forward for twenty years. The new bill allows you to carry back the credits for five years. In addition, the credits can be used to offset alternative minimum tax.

One can only hope.

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Three Ways to Make Money with Web 2.0

I do my best to post every few days, and it has been more than a week since my last blog.   I have a good reason.  I’ve been busily creating a new website for SME, Inc. — Social Media Excellence in Orlando, Florida.    I’ve also moved my blog to the site, and the new address is http://www.it-sme.com/blog .   If you’ve been reading this blog, or my blog in IT Toolbox or Blogger, hopefully this will be the new “permanent” home for the blog.

I’ve been digging deeper and deeper into social media (Facebook, Twitter, and other methods of online conversation) and have found mostly anecdotal assurances that companies can reap much higher new sales revenue with much lower investment by using Web 2.0 tools such as these.

Believe it or not I actually am from Missouri, the “show me state” and it is hard to believe these claims without some sort of proof.   We’re pretty graphic “down home” and an old saying comes to mind:  “With all this manure, there must be a horse in here somewhere.”

McKinsey and Company is considered a top notch consulting company and they recently did some research on the topic of ROI with Web 2.0 efforts.  The results are pretty surprising.

69% percent of companies that have made some sort of Web 2.0 investment reported real and substantiated business benefits, including more effective marketing, better collaboration and a reduction in the cost of doing business.

“How companies are benefiting from Web 2.0: McKinsey Global Survey Results.” is the source.  This survey examined 1,700 executives from all over the world.

The top three ways to make (or save) money using social media were:

  1. Faster job completion by improving the speed to access information (68 percent of respondents averaged a  30 percent improvement, which is substantial);
  2. Lower communication costs (54 percent of respondents with an average improvement of 20 percent);
  3. Faster access to internal experts (43 percent of respondents with an average improvement of 35 percent)

20-35% improvement is pretty impressive.

When just asked to look externally, the 1,700 executives reported:

  1. More effective marketing (53 percent; average mprovements ranged from 17 percent for conversions up to 25 percent for awareness activities);
  2. Increasing customer satisfaction (43 percent with an average  improvement of 20 percent);
  3. Reduced cost of marketing (38 percent with an average improvement of 15 percent).

Again, not bad.  #2 is particularly interesting since social media is all about communication and conversations — your customers talk to you and to others, as compared to traditional marketing where they passively view a commercial or read an ad.

All in all an interesting report and the beginnings of something to show your management when arguing for the use of social media.

Making Money with Facebook?

Social media (the latest “techno-buzz term”) simply refers to people having conversations online.  In the far away land known as “Web 1.0” the internet was one-way.   You threw a website online or sent out emails and things were pretty simple.  Customers would check out your website for information, and might call your contact center or send you an email.  Ah, the good old days!

Social media (Facebook, Twitter. . .even YouTube) makes this seem quaint and old fashioned.  In the world of Facebook a short comment is followed by other comments and pretty soon you have a town meeting going on.    The vendor does not control the conversation — in fact no one controls it, not even the person who begins it!     With 500 million users now on Facebook it is larger than the United States of America — and perhaps just as powerful in its own way.

This new phenomena of social media can be a power for good or for evil.    It can help your business, or it can destroy you.   Businesses today must learn to deal with it one way or the other — and to try to find a way to use it as a way to make money.

The first thing to realize is that if you take a used car sales approach to Facebook or its ilk you will fail miserably.  Social media is all about the conversation and nothing turns people off faster than a sales pitch in the middle of a party.     To get fans who “like” you and read what you post you must provide valuable information, hopefully in an interesting way!  Doing this must be consistent — you may well have to hire an employee to manage your social media presence.   My company provides training, consulting and even provides the social media “presence” for companies — but be forewarned that if you outsource to someone like me they still need to learn a lot about your company and stay in close contact with you.    Why?

Because it is all about the conversation — and if there is no meat, no “there” there, you will quickly turn off anyone interested in you — and far from making money, you will soon start losing it to your competitors.

Content is king.  To make money on Facebook, Twitter and the rest you must have content of value and you must provide this in a succinct fashion.  You must post often (2-3 times a day on Twitter, at least daily on Facebook and 3-4 times a week on your corporate blog).   Since this is a conversation, you must encourage “fans” (find them via your email databases and by posting in places your customers visit online).    Respond to comments, good and bad — and do not be defensive.

Remember it is a CONVERSATION.

Some of the keys to success in Social Media are:

  1. Build a large and legitimate following by being informative and interesting;
  2. Respond to comments quickly and with substance
  3. Blog, Tweet and post frequently — but again it must be USEFUL information
  4. Monitor your social media communities — know what is working and what is not working

There are some great tools to help you manage multiple social media efforts, and to analyze how successful they are.  You will most likely not see “over night” results, but over time your base and your sales will increase.

As social media grows (and the largest growth is in women 55-65!), the traditional marketing bases of newspapers, radio and television are losing customers and advertisers.    Social media is a revolution.  There are ways to thrive in the revolution, but it is not by playing the game the way you might have historically with press releases, TV ads and the like.   The new world is all about loss of control and “the conversation.”

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