Small Business SOLUTIONS - Daily Record

A supplement to

Small BusinessSOLUTIONS

May 2008

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CONTENTS | 3MAY 2008 | THE DAILY RECORD

Greeting from the Maryland Small Business Development Center..................4

How your business can benefit from the SBDC ....6

SSUURRVVIIVVIINNGG

Facing the competition ............................................8

Charming your current and potential clientele ....10

Tough times call for tough measures ..................12

Rethink financing for your business ....................14

GGRROOWWIINNGG

Make your mark by building a brand ..................16

Empowered staff key to continued success ......18

Local legislators ready to work for you ..............20

Legal expertise can protect you, your business ....24

CCHHAANNGGIINNGG

Maryland legislation changes and what they mean for you......................................26

The cost and reward of “going green” ................28

Harnessing the power of web technology ..........30

Accounting technology eliminates paperwork ........................................34

EEXXPPEERRTTSS’’ CCOORRNNEERR

Column: Choosing a retirement plan that works for everyone ....................................36

Column: Buy-sell agreements keep your business afloat ............................................39

Column: Turning taxes to your advantage ....................................................40

Resources ................................................................41

Small Business Solutions is published as asupplement to The Daily Record.

How to reach usSubscriptions: 1-800-451-9998

News: 410-752-3849Advertising: 410-752-1717

Reprints: 410-752-3849

Christopher A. Eddings..................................................................................................Publisher and PresidentSuzanne E. Fischer-Huettner ..........................................................Associate Publisher,Vice President SalesRebecca Snyder ..............................................................................................General Manager,Vice PresidentTracy Bumba ......................................................................................................Circulation/Marketing ManagerTom Linthicum ..................................................................................................Executive Editor,Vice PresidentEmily J.Arnold ............................................................................................................Special Publications EditorFrancis Smith ..................................................................................................................................Assistant EditorDoug Puller ....................................................................................................................................Design Director

Erin V. Alexander..........................................................................................................Senior Graphic Designer Eric Stocklin ..........................................................................................................................................Photo Editor Maximilian Franz ......................................................................................................................Staff PhotographerRich Dennison ..............................................................................................................................Photo TechnicianErin Young ..............................................................................................................................Advertising DirectorGail Clough........................................................................................................Director of Sales DevelopmentEmily Koziol ........................................................................................Advertising and Graphics CoordinatorAlexandra Druhan, Greg Poehlman ..................................................................................Account Managers

Contents

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Greetings!

Anniversaries provide an excellent opportunity for reflection — on accomplishments and challenges

that shape relationships. For 20 years, the Maryland Small Business Development Center, or SBDC,

has enjoyed a rewarding relationship with small businesses throughout the state. We’ve helped home

based businesses become multimillion dollar companies and self employed individuals build viable

small businesses that created jobs for others. As the state’s premier provider of assistance to

Maryland’s small businesses, the SBDC has helped tens of thousands of entrepreneurs turn their

dreams into reality, thereby contributing to economic growth throughout the state.

Our services are made possible because of support from federal, state and local resource partners.

The Network receives its funding from the US Small Business Administration, the state of Maryland,

The University of Maryland, and the Maryland Department of Business and Economic Development

(DBED). Our six regional offices are sponsored by local colleges and universities, and receive support

from local government and private sector organizations. The SBDC gratefully acknowledges the con-

tinued support of our resource partners.

Over the last eight years, we’ve expanded our basic services to include programs designed to meet the

unique needs of retail, restaurant and technology firms. The Strategic Assistance Consulting Fund

(SACF), funded by DBED, was designed to complement business services offered by the SBDC. Lastly,

with the addition of our Procurement Technical Assistance Program (PTAP), we are able to help firms

obtain contracts from federal, state and local governments. The PTAP is funded by the Defense

Logistics Agency, the Department of Defense, DBED and the University of Maryland.

As we move forward, the SBDC will continue to make small business success our priority. The

changing economic times present unique challenges and opportunities. BRAC presents opportuni-

ties for business growth while the decline in consumer spending and tightening credit standards

threaten their survival. The SBDC remains committed to using every available resource to help our

clients succeed.

We sincerely appreciate The Daily Record for providing a platform to highlight our services and deliver

relevant content to support small business growth. We are also pleased to highlight the accomplish-

ments of a few of our many clients.

Sincerely,

Renée C. Sprow

State Director

4 | FROM THE SBDC SMALL BUSINESS SOLUTIONS | MAY 2008

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6 | FROM THE SBDC SMALL BUSINESS SOLUTIONS | MAY 2008

The Maryland Small Business Development Center Network

GLENNA CUSH

Training & Marketing Manager, Maryland Small

Business Development Center Network

Small business is the engine ofeconomic growth. There are current-ly over 22 million small businesses inAmerica. According to theAssociation of Small BusinessDevelopment Centers (ASBDC), thatnumber is growing rapidly, with over800,000 started lastyear alone. Smallbusiness accounts for99 percent of all U.S.businesses, employs53 percent of the pri-vate work force andcontributes over halfof the nation’s privategross domestic prod-uct.

Each year, theMaryland SmallBusiness Development Center Network(SBDC) assists more than 10,000 smallbusinesses with comprehensive servic-es that include training, resource devel-opment and individualized consulting.The network, a partnership between theU.S. Small Business Administration, thestate of Maryland and the University ofMaryland College Park, links privateenterprise, government, higher educa-tion and local economic developmentorganizations to provide management,training and technical assistance toMaryland’s small businesses.

Spectrum of services

The SBDC was established in 1988to provide statewide coverage deliv-

ered through six regional offices andmore than 19 locations where clientsare serviced. Confidential businessservices help refine business plans,identify sources of capital, and devel-op strategies to support growth andprofitability. Service is provided bycounselors who have owned or man-aged successful businesses, haveadvanced degrees and worked for

Fortune 500 companies before bring-ing their expertise to the SBDC.Professional development opportuni-ties help counselors stay abreast ofeconomic trends, industry and mar-ket conditions, and financialresources.

“Our challenge is to provide assis-tance that specifically meets theneeds of each business, regardless oftheir stage in the business life cycle,”says Renée C. Sprow, SBDC statedirector.

To address this challenge, the net-work has created specialty programsin retail, restaurant, technology andgovernment contracting. Managed byexperts in their respective fields,

these programs provide hands-onexpertise in very specific areas.“Retailers face very unique chal-lenges, but this last year has beenespecially difficult,” says Lester“Casey” Willson, manager of theRetail & Restaurant Program.

In addition to providing cus-tomized retail and restaurant counsel-ing, Willson covers the state with his

“Sunrise Seminar”series. These hands-ontraining sessions allowhim to work with localeconomic develop-ment agencies to meetthe needs specific tothat community.

Afterward, he meetswith shop owners tohelp develop a cus-tomized plan ofaction. “The SBDC’s

Sunrise Seminars provide us with anexcellent opportunity to reach out toour business owners [to provide]training, information and advice theycan put to work immediately toimprove their operations,” saysDanita Boonchaisri, Marketing &Communications specialist in theCalvert County Department ofEconomic Development.

Similarly, Ralph Blakeney, theSBDC Technology Programs manag-er, focuses on assisting high-techbusinesses. In addition to customizedcounseling, his “Mind to Market”series teaches potential businesseshow to take their idea from concep-tion to launch. “Often these are

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Renée SprowSBDC State Director ””

““

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MAY 2008 | THE DAILY RECORD

researchers or college professors whohave the technology acumen,” saysBlakeney, “but lack the fundamentalunderstanding of what it actually meansto start and manage a business.” With hisguidance, many companies have appliedfor, and won, Small BusinessInnovation Research Grants(SBIR) which are then used tofurther their research anddevelopment efforts.

The SBDC also man-ages the ProcurementTechnical AssistanceProgram (PTAP) which pro-vides assistance to entrepreneursseeking to do business with the fed-eral and state government. “Our goal is tobring clarity to the confusion that oftenexists when businesses try to understandthe procurement process,” says Mary LeeKolich, PTAP director. PTAP assistanceincludes individualized government mar-keting strategies, access to experiencedgovernment contracting and procurementspecialists, automated bid matching andtraining.

Profiles of success

Each year, the SBDC contributes tothe success of many businessesthroughout the state and is proud of aportfolio of clients that have beennationally recognized. “We couldn’thave done it without the SBDC,” saysNancy Lilly, president and CEO ofJem Engineering, a radio antennamanufacturing firm located inLaurel. “Our counselor made usaware of opportunities we didn’teven know existed,” she adds. Lastyear, Jem received national recog-nition as they accepted theRoland Tibbetts Award forExcellence in Small BusinessInnovative Research (SBIR)achievement.

When Lilly arrived at theSBDC, they had just twoemployees. They’ve since

grown to over 40 employees, havereceived $3.9 million in government con-tract awards, and have a list of clientsthat includes the U.S. Navy and NASA.

In 2008, the Small BusinessAdministration (SBA) selected Karen

Barbour, president of The BarbourGroup, as Maryland’s Small BusinessPerson of the Year. Barbour, whose firmprovides surety bonds, business insur-ance and risk analysis for commercial

enterprises, is the first surety profession-al to win the SBA award in Maryland.Barbour is also a long-term client of theSBDC and regularly lends her expertiseto other small businesses in HarfordCounty.

“Each business is specialbecause it represents thedream of many entrepre-neurs in Maryland,” saysSprow. “That dream is toown a successful business.As we celebrate the net-work’s 20th anniversary, wecan look back in prideknowing that the MarylandSBDC has played an impor-

tant part in helping so many entrepre-neurs make that dream a reality.”

To find out more about the SBDC, orto find the nearest location, visit the net-work Web site at www.mdsbdc.umd.edu.

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Dana PetranMid-Atlantic RF Systems Inc.

When Dana Petran and three other partners found-

ed Mid-Atlantic RF Systems Inc. in 1991, they had a lot

of technical knowledge about their radio communica-

tion systems, but not much business experience.

Their main mistake was neglecting to connect

with potential customers through marketing and net-

working, Petran recalled. “We always looked at mar-

keting as something for dumb-dumbs,” she said.

Now, said Petran, company officials regularly

meet with potential clients, particularly ones moving

to the area through Base Realignment and Closure

(BRAC). “BRAC is a big thing for us,” she said. “We are

meeting with those people every month. That is really

helpingus.”

— Karen Nitkin

Maryland Small Business Development Center

FROM THE SBDC | 7

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SMALL BUSINESS SOLUTIONS | MAY 20088 | SURVIVING

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SURVIVING | 9MAY 2008 | THE DAILY RECORD

CARRIE OLEYNIK

Special to The Daily Record

Knowing the competition has its advantages.From developing a value proposition to differentiat-ing a small business so it continues to grow, TheDaily Record asked two representatives of area advi-sory organizations to provide tips on how to copewith competition in finding a niche in the market-place.

Art Jacoby, a 2006 SmartCEO top advisor who hasrun a business growth agency for the past 20 yearsafter previously running six small businesses, andKeith Scott, president of the Baltimore CountyChamber of Commerce, a member-driven, member-supported organization with more than 700 membersand home to the Small Business Resource Center,shared the following advice.

Invest in market research

In-depth research provides a solid foundation formarketing and can open doors more easily when itcomes time to seek funding. And according toJacoby, investing in research isn’t always horriblyexpensive.

“Don’t skimp on research, not only for yourselfbut so you don’t waste time or money,” he said. “Ifyou really understand the market for your business, abank or investor will buy what you have to offer.”

Research can also shed light on prospective marketsthat don’t seem so obvious. A common mistake thatsmall-business entrepreneurs make is identifying poten-tial markets based on personal perceptions or ideas.

“There might be another market that you didn’texplore. Research helps you see beyond what’s infront of your nose and you may find yourself saying,‘Hey, we should’ve looked over here,’” Jacobyexplained.

View competition as motivation

While differentiating products and services, iden-tifying other businesses that offer similar products or

SEE PAGE 11

In business,know thy enemy … and thy niche

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Keith Scott, far left, of the Baltimore Chamber of Commerce,and Art Jacoby, a business growth consultant, agree thatresearch into your market and any area competition is essen-tial to the success of your business.

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LIZ STOCKLIN


Small-business owners know customer service is vital to theirsurvival, and even if they have been around for several years, theymust retain current clients as well as seek new business.

But what is customer service? Simply put, good customer serv-ice means treating customers fairly and making them feel special.Business owners are also customers to different companies, so themost important thing to consider is what type of service is appreci-ated from the companies for which they are customers.

First and foremost, hire good people. When hiring customerservice representatives, make sure you recruit employees who areenthusiastic, friendly and outgoing. These personality traits usuallyensure their ability to be nice to customers even in the most difficultsituations. It’s also important that new hires be self-starters, intu-itive, empathetic and have good problem-solving skills. If they havethose characteristics, they should have no problem understanding asituation and making the right decisions to keep the customerhappy and satisfied.

Invest in reputable training programs that specialize in customerservice. By providing ongoing training, you are ensuring that youremployees are getting multiple points of view from experts who cangive an outsider’s opinion. Customer service training should includerole-play scenarios, best practices, crisis management, new busi-ness and retention.

Empower your employees. Nothing hurts customer servicemore than an employee who feels unappreciated or un-empowered.If you give your employees the authority to make tough decisions onthe fly, they will feel personally invested in both the company andthe customer’s satisfaction.

That said, it’s important to define customer service guidelines sothey at least have a baseline from which to make their decisions. Abonus/reward system should be in place so when an employee

makes a stellar decision, he or she will have valida-tion of a job well done.

No matter how well things are going, there is always room forimprovement, so be sure to get feedback from your customers. It’sas easy as a quick phone call or lunch to ask them how they’redoing. Customers are usually thrilled to have the opportunity to tellyou what you’re doing right and what would make their experiencemore rewarding. But don’t forget to act on what you hear — youdon’t want to get a reputation for listening to customers but neveracting on their feedback.

A great way to reach out to current customers and target newones is to request customer testimonials. Most small businessesknow that securing customer testimonials is important, but fewtake the time to do it. Reach out to key customers and clients to askthem if they are satisfied with your service. More often than not,you’ll walk away from the conversation with a great customer testi-monial, and possibly some additional business.

Testimonials can also come through other avenues. When a cus-tomer compliments your products, write it down. When a clientsends a letter thanking you for your services, keep it. And don’t for-get to keep a file of the testimonials you collect — you never knowwhen you’ll need them.

It may seem like a given, but try to remember that customerswho are given exceptional customer service are better customersthan those who are given just good customer service. They buymore, they stay on longer as customers, and they are generally morepleasant to deal with. Every so often, surprise your customers bydoing something truly extraordinary. For example, add a bonusproduct in their order with a note thanking them for their business,or take them out to lunch or dinner even when there hasn’t been atransaction between you. You will be surprised and delighted whenyou see the effect this simple technique can have on your business.

It may sound cliché, but the first thing to remember is that thecustomer comes first. It doesn’t matter whether he or she is a mil-lionaire, a celebrity or a regular Joe; there shouldn’t be a line drawnbetween customers — in other words, no class system. This mayseem elementary, but treating everyone like a king or queen plays avital role in delivering great customer service.

In order for small-business owners to take their companies tothe next level, showing gratitude to their current client base is justas important as finding new customers. And remember, the moreyou give, the more you get in return.

The art of providing stellar service … to new and existing clients

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services is essential to finding out what sets companiesapart from others.

Jacoby emphasized that in recognizing your competi-tion, it’s important not to go head-to-head with organiza-tions much larger than your own.

“No matter how hard I try, Microsoft isn’t going to hireme to do their strategic plan because I’m not an expert inglobal conglomerates. I’m an expert in small companieswith a lot of talent that want to become midsized. Whenyou’re a small business, there are people out there thatcan lap you if they’re big enough and have moreresources,” he explained. “As a small company, it’s goodto look at a small area that you can take ownership of soif someone larger and stronger comes along, you canstand up to them.”

Scott added that analyzing competition can also be revi-talizing.

“Competition provides the business person the oppor-tunity to constantly reinvent and reinvigorate to modify thebusiness’ proficiency,” Scott explained. “Competition candrive one to be a strong individual, which can reciprocateinto changing the marketplace.”

“Don’t defy gravity”

Maybe it’s too late to land a sale or someone on theteam isn’t pulling their weight. Being able to face the truthis what Jacoby coins as not “defying gravity.”

“It’s really about being a good listener and being able tosort out what’s important,” he said. “Every day matters, it’snot OK to go for a few weeks and tick off, not getting any-

thing done. If it’s important, then we’re doing it today.”Scott added that it’s important to reflect on your expe-

riences as a customer and think about the aspects youenjoy most about using a product or service when explor-ing the idea of finding your potential niche in the market.

“It’s important to ask yourself, ‘Who do you want to tar-get and what is your emotional appeal,’” Scott said. “We goto certain stores because of customer service and customerrelationships. We use certain products because of our expe-riences and the emotions that go along with them.”

Get to know ‘people in the know’

Regardless of the industry, it’s important to becomeacquainted with “movers and shakers” in the area. Thisincludes attending area networking events, becoming amember of a regional business organization, gettinginvolved with certain niche communities, meeting industryleaders and, overall, befriending others that share the samepassion for a particular industry.

Jacoby said that writers or editors of trade publicationsserve as experts on trends and challenges that people arefacing in the industry. He added that becoming acquaintedwith individuals running trade publications may also pro-vide an advantage as they may be inclined to connect com-panies with other knowledgeable executives within theindustry.

“Don’t push yourself on people, but come a part of thecommunity,” he said. “People at trade associations areknown for helping their members and will generally be veryhelpful to you.”

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12 | SURVIVING SMALL BUSINESS SOLUTIONS | MAY 2008

BY KATHLEEN JOHNSTON JARBOE


For a small business, a bump in the road can become asinkhole, threatening to take your whole enterprise with it.

The owner of a food distribution firm in Federalsburg feltthat way as prices for cheese, oil, flour and even more staplessoared last year due to higher gas and corn prices. Her con-tracts were fixed before prices climbed. She lost $40,000 alonefrom changing cheese prices.

“I was tremendously stressed. I honestly wasn’t sure if Iwould be able to do it,” said Kim Scott, owner of The GreatGourmet Inc. She developed ulcers and her workday stretched

to 15 hours.But Scott began to streamline every aspect of her business.

She cut hours for some employees. She tried to renegotiatecontracts. She went back to investors to secure more financ-ing. Most importantly, she diversified her business, taking onfulfillment orders from the Home Shopping Network.

Her company stayed afloat. Since then, her business hasdoubled.

“Sometimes it doesn’t look rosy. But if you sign your nameto something and you fulfill your contract, there is a light atthe end of the tunnel,” Scott said.

Nothing is more important than attending to cash flow issuesin tight times, business advisors say.

Weather the storm to see your business shine

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“What I try to do is to quickly get thema shot in the arm — something that isgoing to generate some additional salesquickly,” said Rich Loeffler, an advisorwith the SBDC on the Eastern Shore.

Reach out to your satisfied cus-tomers in the past. Call them, contactthem, send them a discount. Removethe obstacles to buying from you —this could mean extending yourhours, offering carry-out or someother new convenience. Put a signout front announcing the changeor offering a special. Take onmore hours and cut staffing,Loeffler suggested.

Look for waste and trim it. Ifyou’re a restaurant, do youthrow out leftovers from thesalad bar? Why not use them asa cooked vegetable the nextday? Put off large equipmentpurchases, lease if necessary.Sell down your inventory.Talk to bankers, accountantsand associates, Loefflersaid.

“Talking to others mightnot give you the exact solution,but it will give you ideas,” he said.

If the business isn’t performing toopoorly yet, Loeffler suggested that allsmall firms consider getting a line ofcredit at the bank. A funding sourcethen is already established when cashflow temporarily dries up.

To survive, often the hardest thing isto reconsider your business model.

“A market shifts or neighborhood changes, and[small businesses] have to change their businessconcept even though they like what they have beendoing,” said Mark Maguire, a SCORE counselor forthe U.S. Small Business Administration inPhiladelphia.

Amy Eastburn-Gallo faced this problem shortlyafter forming her computer-based training businesscalled Professional Network Solutions Inc. in LaPlata in 2001. When the economy dipped after 9/11,companies reeled in training expenses. Gallo hadsecured training space and equipment, but her mar-ket disappeared. She turned to other business own-ers for ideas and decided she needed to shifttoward providing network services instead. She isstill in business.

“The hardest thing to do in making that changewas to accept that was what I needed to do to sur-vive,” Gallo said.

SU

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Pippen Hill Designs

Do your research, advises Elizabeth Gradie

Chinn, who started Pippen Hill Designs in 2003

with Deborah Rivera-Wienhold. “See what the

market is demanding, see what the market will

pay, see if there is a need for your idea,” said

Chinn. The two held focus groups and found a

market for their product, child-sized body pil-

lows combined with stuffed animals that help

youngsters sleep. The duo also recognized that

“they weren’t the ones to take it to the next

level,” and in fall 2007, they signed a licensing

agreement with a manufacturer who will distrib-

ute to a wider market.

— Karen Nitkin

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14 | GROWING SMALL BUSINESS SOLUTIONS | MAY 2008

Financing finesse will keep business going, growingBY JOSEPH PATRICK BULKO


Starting up a small business can be anuphill battle, even without broaching thetricky subject of financing. Considering how tocover the cost of the venture is an absolutelyvital part of getting your business off theground.

For a small business, the value of takingon debt up to a certain point “accelerates acompany’s growth, increases market shareand increases return on investment — if itdoesn’t unreasonably eatinto profit or create nega-tive cash flow,” explainsAnthony Ruiz, capitalregional director of theMaryland Small BusinessDevelopment Center(SBDC). He acknowledgesthat growth will sometimes“incur negative cash flow.”

Ruiz, who has bothMBA and J.D. degrees, has a wide range ofexperience in business finance, including 10years in international and commercial bank-ing, 10 years of turnaround management and15 years of business management consulting.He draws on his vast knowledge to seek outand utilize financial products for his SBDCclients.

Ruiz says there are two types of financing:bank and non-bank. Banks generate the bestinterest rates, but tend to be limited in thetypes of loans they will provide. They alsotend to put much more emphasis on the appli-cant’s personal credit score.

Many business owners make the mistakeof thinking that the bank is the only option forfinancing. “Banks do not tell [the owner]what’s available in the grocery market offinance,” Ruiz says. An array of possibilities

exists in the non-bank arena of financing:asset lenders, suppliers, contract financing,credit cards and investors.

“We get real creative,” often using ahybrid, or mix, of financing options, Ruizexplains. “The magic of financing is in thestructure and source, only then the interestrate. The structure of financing is key — howcreative it is to fit the business.”

Ruiz advises the owner to “balance allresources budgeted” and maintain a net oper-ating cash flow to debt ratio of at least 2-1. Headds that the loan package should be adjusted

to the company’s business plan.“Asset lenders are more effective than

banks on equipment loans,” he says. “They’rewilling to take more risks than banks.” Theyspecialize in particular areas — for example,restaurant or construction equipment — andthey provide up to 100 percent financing.

Suppliers are an unexpected source offinancing, as their payment terms on orderscan be viewed as short-term loans. “Treat yoursupplier as a banker,” Ruiz advises. “They’relending goods for 30 to 60 days.”

Contract financing is an option that “usescash flows as collateral” for loans, whichcould enable a business owner to “finance hispayroll upfront,” says Ruiz. These loans tendto be highly dependent on the “experience ofthe business owner in his line of business andon the quality of the contract.” A contract for

goods or services with a longstanding, rep-utable firm featuring a very specific paymentschedule would ease the acquisition of thistype of financing.

The use of credit cards for businessexpenses is a method of deferring, or manag-ing, the use of cash flow and provides the com-pany with “interest-free money for up to 30days,” Ruiz says. He suggests paying the cardon time before interest kicks in, with a lower-interest bank line of credit or company cashflow.

Ruiz says there are “high net-worthinvestors who are looking forinvestments that will makemoney.” They are especiallyinterested in commercial realestate and can be quite help-ful when financing the pur-chase of a building as part ofa business expansion.Finding such investorsinvolves “networkingthrough CPAs, commercial

Realtors and others,” according to Ruiz.In general, he advises companies to own

facilities rather than rent them, presuming thequality of their credit qualifies them for financ-ing: “If you can buy the building rather thanrenting, it’s in your best interest to do so.Leasing reduces return on investment.”

For the entrepreneur, “in the beginning it’sabout survival; then it’s time to think strategi-cally.” Ruiz helps clients “put together a five-year strategic plan in five to seven pages. Westart with the destination, and then workbackward to year one. Your business planshould be a one-year installment toward thestrategic plan.”

So, how does the small-business ownerfind sources of financing? “We do our best topublicize ourselves,” Ruiz says. “We are stillthe best-kept secret in town.”

He advises the business owner to seekassistance through services available fromSBDC, the Small Business Administration andorganizations such as SCORE. He says thehigh level of business startup failures — “90percent fail within three years” — can bereduced with careful planning and utilizationof these resources.

“The psyche of the entrepreneur is ready,shoot, aim,” says Ruiz. “This can drive them tosuccess, but can also drive them to disaster.”The entrepreneur typically is a “Type A per-sonality — not a planner but very action-ori-ented and impulsive. They don’t even do mar-ket studies. We Americans are a very impa-tient, hurried culture.”

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Anthony RuizMaryland Small Business Development Center

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BY MARY MEDLAND


You’ve done it — gone into busi-ness for yourself, have a couple of peo-ple on staff and have been operating inthe black for a few years. Now it’s timeto grow, but some advice from moreseasoned professionals would be agreat help.

Enter the Maryland Small BusinessDevelopment Center (SBDC). “We areyour tax dollars at work,” says SoniaStockton, the director of the SBDC’scentral region. “You can call and makean appointment to sit down with anexpert, and while we are generalists,we do have access to specialists.”

Funded by the federal, state andlocal governments, as well as universi-ties and colleges, there are more than19 such centers throughout Maryland,with the central region having fouroffices. All centers are affiliated with acollege or university — in Stockton’scase, the affiliation is with TowsonUniversity. She estimates that about

800 people take advantage of the cen-tral region’s consulting services,another 1,500 attend her workshopsand perhaps another 3,000 phone in foradvice.

“We can help you with researchand marketing, and while we won’twrite your business plan, we will giveyou advice,” notes Stockton.

One of the most important strate-gies for those attempting to grow abusiness is to have a strong “brand.”“Everyone should have a strategy forgetting your company’s name out therein a positive way,” says Stockton.“Branding means having an identifica-tion of your product and knowingwhat the perception of that brand is inyour customer’s mind.

“Branding should focus on havingan image of reliability, service andprice. All of these things create cus-tomer satisfaction, which increasescustomer loyalty.”

And statistically, 80 percent of acompany’s clients are repeat business.Another way to increase loyalty is to

have a store membership. Membersreceive sales coupons in the mail or ifmembers spend more than $100, forexample, they will receive a 5 percentdiscount.

Developing a personality for one’sbusiness is important. For instance,Stockton points to Ben and Jerry’s IceCream. “The owners are known to bequirky and funny … look at theirCherry Garcia ice cream, look at theirWeb site,” she says. “One of the thingsthat is associated with their brand per-sonality is a passion for the company,but also for social responsibility. Asthe company grew, so did its commit-ment to special nonprofit organiza-tions and other social projects, whichincreased people’s awareness of thebusiness.”

While small-business owners maynot have the resources to make vastcontributions to nonprofit organiza-tions, they do have the opportunity tomake contributions in their own com-munities. For instance, an owner of awomen’s dress shop can becomeknown by donating what didn’t sellfrom a previous season to thoseorganizations working with low-income women who are making thetransition into the workplace.Stockton also recommends approach-ing a local school PTA. “Ask the PTAhow you can become involved,whether it is in helping with fundrais-ing or sponsoring an event to benefitthe school,” advises Stockton. “Youdidn’t start your business in a vacuumand helping nonprofits is a very effec-tive way to get the word out aboutyour business.”

To come up with a brand personal-ity, she advises determining whetherone’s brand would be most effective ifit were funny, quirky, charismatic,smart or something else entirely.

Once you have developed the per-sonality, Stockton emphasizes theimportance of knowing one’s cus-tomers. “You have to ask your cus-tomers what they want, how they rateyour service, what they like and didthey get what they expected,” she says.“Use yourself as a starting point …what are the things that you trust in a

Branding your business builds customer loyalty

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GROWING | 17MAY 2008 | THE DAILY RECORD

product or business, what do you likeabout the product or service and, per-haps most importantly, what wouldstop you from continuing to do busi-ness with this vendor?”

When it comes to advertising, espe-cially today with so many mediaoptions, the SBDC is available to help.“Sit down and create a budget and acampaign,” says Stockton. “We’ll helplook at different options, including theprint media, radio, and television and

cable.”Having developed a profile of your

existing customers, she says that it isabsolutely critical that potential adver-tisers have a media kit from a potentialadvertising venue. That media kit will,among other things, provide the demo-graphics of the audience. “One of thethings to understand is that running anadvertisement only once is risky,” saysStockton. “You need to have a consis-tent message that you run frequently.

And you need to track the success ofevery advertising campaign.”

All in all, branding is crucial to thesuccess of any business, but especiallyone that is growing. “Branding helpstake you away from the pack and beseen as a leader,” she says. “A strongbrand should convey an image of relia-bility, good customer service and satis-faction, and a decent price. If all ofthose things are in place, you will havevery loyal customers.”

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Sonia StocktonMaryland Small Business Development Center ””

““Ben and Jerry’s has created a householdbrand, known internationally for both itsclever ice cream names and its sociallyresponsible attitude.

Small_biz_0508.qxp 5/12/2008 6:18 PM


BY KATHLEEN JOHNSTON JARBOE


Expanding a small business can cre-ate a whole new list of dilemmas. Whento expand, who to hire and what to payin salary and benefits are not easy deci-sions.

At Accountable Solutions Inc. in LaPlata, owner Angela Kabala worriedabout hiring new staff before theaccounting firm could support the extracost.

So Kabala first set about growing herbusiness through referrals and network-ing. She joined local business groups andthe chamber of commerce. If she met aperson that still did their books by hand,she would offer to automate them. Sheintroduced herself to competitors andpicked up work that they were too busyto handle.

When the new work was too over-whelming, she doubled her work force tofour.

“Probably the biggest challenge wasmaking that leap from me, myself and Iand another person to now there are abunch of people depending on me,” saidKabala, who has been in business since2002.

When considering an expansion,business owners should ask severalquestions, according to Janet Allon inher book “Turn Your Passion into Profits:How to Start the Business of YourDreams.” How well can the market sup-port the growth? Does the business haveinternal funds to pay for the expansionor could it repay a loan with the new rev-enue? Would the company gaineconomies of scale by growing bigger?

Hiring the right staff for the job canbe tricky, too.

Kabala, the chief accountant in herfirm, answered the phones on a day inMarch when half the workers were out.She said when she hired new account-ants, she looked for people who wouldbe team players, too, and juggle several

roles. She used professors at the localcolleges to help her find employees.

If you’re looking to expand, said RichLoeffler, an advisor with the SBDC onthe Eastern Shore, you should have peo-ple ready to step into roles of higherresponsibility because as the owner, youwill not be able to do everything you didbefore.

Loeffler once counseled a machineshop owner who became harder andharder pressed every time he tried toexpand. The employees caused part ofthe problem. The staff he hired wouldstill run to him with questions on everyjob. Loeffler suggested he hire personnelwith more experience.

“He paid more on hourly basis. Butwhat he found was that he became, as ashop, more productive,” Loeffler said.“You get good people. Then you let themexpand. That way you, the owner, canconcentrate a little more on what youknow best and concentrate more onexpanding the business.”

Recruiting empowered employees keeps business booming

Small_biz_0508.qxp 5/12/2008 6:19 PM


Salary is critical, according to Kabala. “You have to be able to compete or you don’t

get good people,” she said. “There is no way Icould do what I do without good people.”

But if you can’t pay someone at the level youneed to hire right away, Loeffler suggested hiringsomeone who can grow into the job. And if youneed to relocate someone, make sure that personlikes the area.

He also suggested owners consider bringing insomeone who could become a partner. The splitin the business doesn’t have to be 50-50. But afterthe worker has proved his or herself, you couldlet them buy into a 5 percent share or more. Withtwo people vested in the company, it gives theoriginal owner more free time away from theoffice. And if the partnership is slowly increasedwith time, you have a succession plan when youretire — someone interested in buying the busi-ness and someone who knows its true value.

A partnership, though, should always beaccompanied by a formal operating agreementand a buy/sell agreement — a business attorneywould know how to draw one up and an account-ant could probably help, Loeffler said.

Whether to provide health insurance also is adifficult decision. Just half of businesses with lessthan 10 employees provide the benefit, accordingto the U.S. Small Business Administration. Thatfigure grows to three-fourths for businesses with10 to 24 employees.

“Insurance today is very, very difficult. It israre that [small businesses] can do it,” saidLoeffler.

But lower cost plans are available. UnderHealth Savings Accounts, employers can giveworkers extra money for premiums and otherhealth costs tax-free through their paycheck. Thefunds then grow in the HSA account until they’reneeded. They accrue year to year, if not used, andcan be tapped for non-health needs at retirement.HSA plans do typically have high deductibles,however.

Another option is to consider a partial self-funding program. In these plans, the employerbuys health insurance for employees, for exam-ple, with a high deductible — perhaps $800. Butthe employer insures the workers as if they had a$300 deductible plan by paying any difference incosts the employee might accrue before theyreach the $800 deductible. Under this option, thepremiums for the $800 deductible plan cost theemployer less, and the employer gambles thatenough of his or her employees are healthyenough that they won’t pay the full deductible foreveryone.

Small_biz_0508.qxp 5/12/2008 6:21 PM

BY ALAN DESSOFF


Impacted by taxes, regulations, andother government policies and actions,businesses have found ways to let legisla-tors and executive branch officials knowhow particular issues affect them. They

don’t always succeed in turning matterstheir way, but often they do.

Wayne R. Frazier Sr., president of theMaryland-Washington Minority ContractorsAssociation (MWMCA), cites the successfuloutcome on one small-business issue in thisyear’s session of the state legislature.

It happened when the House of

Delegates Judiciary Committee was con-sidering a bail bond reform bill that wouldhave adversely impacted many companiesin that business. Frazier rallied about 50brokers and agents representing small,minority-owned bail bond companies toattend a hearing on the legislation.Ultimately, the committee rejected the


The small-business lobby:Getting the government on your side

Small_biz_0508.qxp 5/12/2008 6:23 PM

measure.“It worked out that way because small busi-

nesses turned out in large numbers to let it beknown how that bill would affect them. It was anexample of what can happen when small business-es come together under one roof,” Frazier says.

Turning out in large numbers is one way to doit. There is strength in numbers through member-ship in organizations like MWMCA and theMaryland Chamber of Commerce as well as localchambers, trade associations and other businessorganizations. Small businesses that might not beheard otherwise “have a voice” through largerorganizations that speak with one voice for alltheir members, says Frazier.

Numbers count in another way as well.Chambers of commerce, associations and otherorganizations regularly hold fundraisers for legis-

lators and other local and state electedofficials. “When you contribute to them,you’ll get their attention,” Frazier says.

Lobbying is a common way to try toinfluence legislative action. Most cham-bers, associations and other organizationsthat have business before the GeneralAssembly either maintain lobbyists ontheir staffs or hire professional lobbyiststo influence the outcome of the legislativeor regulatory process in their favor.

“Lobbyists can play a very positiverole. They are well versed on the issues,they have created relationships with thepeople who need to be convinced inAnnapolis or Washington, and they haveaccess to those people that the averagecitizen doesn’t always have so that theycan get in and make their points,” saysSuzanne S. Fox, former executive direc-tor of the Maryland Ethics Commission,which regulates and trains lobbyists inthe state.

Individual businesses also hire lobby-ists, but it takes some care to find theright lobbyist. Fox suggests checkingwith the Ethics Commission on whetherlobbyists under consideration filerequired reports of their activities ontime and correctly. Although lobbyistsdon’t have to be lawyers, Fox sayslawyers usually are the best lobbyists


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Wayne Frazier Sr., president of the Maryland-Washington Minority Contractors Association,works hard to make the voices of small busi-ness owners heard in the State House.

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because “they hold themselves to a higher ethicalcode.”

To help businesses become effective activists,the Maryland Chamber of Commerce has issued a“Grassroots Action Guide” on building and main-taining relationships with legislators. First, it says,businesses should know who their representa-tives are. Then they should plan to visit them.

“Make an appointment” and “be prompt andpatient,” the chamber advises. Also:• “Take advantage of any opportunity to dis-cuss the issue with the proper staffer.”• “Be prepared and try to focus on one issue.”• “Organize your thoughts and make notes tokeep you on track.”• “Be direct and ask for their support.”• “Prepare a one-page fact sheet with yourmain points to present them. Legislatorsdeal with many people regarding manyissues (so) it is helpful to leave a writtenreminder.”

After the visit, the chamber suggests,“Thank them for their time and followup with a thank-you note.”

It also helps in building relation-ships, the chamber continues, to“invite your legislators to your place ofbusiness.” That not only will familiarize them with acompany but also will “provide an excellent oppor-tunity to let them know what issues have the mostimpact on your business’s operations.”

All that notwithstanding, “There is nothing moreeffective than a letter from a business person whoseability to do business is being affected by a publicpolicy issue,” the chamber states in its guide. Itoffers these letter-writing tips:• “Be concise: Write about only one issue per letterand try to limit your letter to one page.”• “Be specific: State your purpose for writing in thefirst paragraph. Briefly outline your position on theissue and your arguments in support of your position.”• “Be direct: Urge a specific action. If you want yourlegislator to support or oppose a specific piece oflegislation, say so.”• “Be personal: Explain how the issue affects youand your business.”

Before writing, letter-writers should be sure theyknow what they are writing about by reading back-ground materials. When they do write, “Don’t useabbreviations, acronyms or industry jargon,” thechamber advises. Also, don’t “make promises orthreats” or “be combative.”

However they do it, their efforts should provehelpful. “Elected officials view their constituents asa resource and they want to hear from you,” thechamber says in its guide. Adds Frazier: “Stay on topof the issues that affect your business and hold yourlegislators accountable.”


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RY Pennye Jones-NapierBig Bad Woof

Being an entrepreneur means never having

to compromise your vision, says Pennye Jones-

Napier, who started the Big Bad Woof in 2005

with Julie Paez. Their company, now in the

process of becoming a franchise, sells eco-

friendly pet supplies and food, and hosts adop-

tion clinics for local rescue organizations. “I

remember what it was like to work for some-

body else,” Jones-Napier said. “That was fine,

but I definitelydo love havingmy own businessand being able toset a tone andfollow my ownvalue system.”— Karen Nitkin

Small_biz_0508.qxp 5/12/2008 6:29 PM


BY KAREN NITKIN


Mary Jordan took time away from a store full of customers recent-ly to talk about the steps she followed when starting her MapleLawn business, Bra-La-La, just over a year ago. She spokeabout her idea for a lingerie shop offering high-end productsand excellent customer service, and the process of creating abusiness plan and taking it to various banks.

After much work, she finally had her idea, money to get

started and an excellent location at the newly built Maple Lawnshopping center in Fulton. But she needed something else: alawyer.

Jordan turned to a Howard County law firm for help withseveral critical aspects of starting up a business: forming a lim-ited liability corporation, securing a trademark for the name ofher business and negotiating her lease.

She did the right thing, according to Martin King, a lawyerwith Gorman and Williams who advises business owners andwould-be business owners for the Central Region of the SBDC

Good legal counsel

critical to your company’s protectionMAXIMILIAN FRANZ

Enlisting the help of an attorney wasan important — and profitable — earlystep for Mary Jordan, owner of Bra-La-La in Maple Lawn.

Small_biz_0508.qxp 5/12/2008 6:31 PM


network, an organization that provides programs for small-busi-ness owners and people considering opening a small business.

Too often, King said, fledgling entrepreneurs — feelingstrapped for cash — opt against hiring lawyers and then pay theconsequences later.

King said he gives a half-hour talk every month to would-bebusiness owners in a program sponsored by the SBDC.Accountants and insurance professionals also talk for half-hourblocks.

“Our presentation isgeared toward the entre-preneur who is really atground zero,” he said.“They are coming to theworkshop to find outwhat’s the first step.”

Once a person decidesto make the leap fromhaving an idea to startinga business, a key move isto set up a corporatestructure, King explained. In particular, an LLC, or limited lia-bility company, protects a business owner’s personal assets.Jordan said her lawyer advised her to set up an LLC, and she’sglad she followed that advice.

Most companies, when first starting out, don’t need complexstructures like holding companies, said King. “Focus on grow-ing your business and grow to a more complex structure,” hesaid.

But he said a lawyer is particularly useful if a business hasmore than one owner. Even if the owners arespouses or the best of friends, contracts must bedrawn up to clearly outline the ownership struc-ture and the procedures to follow should one ormore party decide to leave the business, he said.

In fact, lawyers can provide crucial help withany contract related to the business, King said.Employees, for example, might be asked to signnoncompete or nondisclosure forms. Theseshould be strong enough to protect a company’sproprietary ideas, yet not so strong as to bepunitive to an employee. “They have to be rea-sonable as to length of time and the geographiclimitation,” King said.

But so many people starting a business don’tthink they need these kinds of documents, hesaid. “They’re just happy to find good people.”

And a business that rents space should havea lawyer look over the lease agreement. Somelandlords want business owners to sign person-al guarantees. “We let the business owner knowthat once they sign that personal guarantee,they’ve waived their limited liability protec-tion,” King said. That means the individualwould be responsible for paying if the LLC is notable to.

Leases, like so many legal documents, can beintimidating, said King. “Oftentimes, businessowners are presented with a document, and

they see 20 or 30 pages, and they have no idea what to do withit.” A lawyer is trained to find the potential problems, he said,adding, “Oftentimes, it’s fraught with traps.”

Lawyers can also help entrepreneurs protect their intellec-tual property. They can conduct research to make sure a nameand slogan are not infringing on an existing concept, an invest-ment that can pay off down the road. “It gets extremely expen-sive if you’re on the receiving end of a cease and desist letter,”King said.

They can alsohelp a company gettrademark protec-tion. Jordan saidshe paid $4,000 toprotect the name ofher company. “A lotof people told methey really liked thename Bra-La-La andsaid, ‘You bettertrademark it,’” she

said. Though it was expensive, she felt that establishing thetrademark was an important step. “I thought, I have to do it,”she said. “It’s branding.”

A year after she started her business, Jordan said she’s gladshe relied on legal advice when she did. “I was just so fearfulthat we were going to get burned,” she said. “Everybody wascoming to us and telling us what could happen, how we couldget ripped off.”

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Martin KingGorman and Williams ””

““

Small_biz_0508.qxp 5/12/2008 6:32 PM

SMALL BUSINESS SOLUTIONS | MAY 2008

BY ALAN DESSOFF


Small businesses in Maryland facethe same national economic issues asmost small businesses in other states,as well as some that are of particularinterest only in Maryland. Many ofthem involve taxation.

Stepping up the focus on smallbusinesses is one of the principal busi-ness thrusts of Gov. Martin O’Malley’sadministration, according to David W.Edgerley, secretary of the MarylandDepartment of Business and EconomicDevelopment (DBED). To underscoreit, O’Malley last year created a newposition in DBED — assistant secre-tary of small business — and appoint-ed Samuel J. Lloyd, formerly directorof minority business development forBaltimore City, to fill it.

Small, minority- and women-ownedbusinesses are particularly vital to thestate’s economic health. Of the 443,000small businesses in Maryland, 128,000are women-owned and nearly 115,000are minority-owned. Overall, thesmall-business sector of the economyemploys 47 percent of all Marylandworkers, DBED reports.

When the state legislatureapproved about $1.4 billion in annualtax increases in a special session lastfall, the one that raised the most con-cern in the entire Maryland businesscommunity, especially among smallbusinesses, was a sales tax on comput-er services. A move to repeal it, led bythe Maryland Chamber of Commerce,was the most prominent tax issue inthis year’s regular session of the legis-lature.

“It is the largest tax issue affectingsmall business becauseit is a regressive tax,”said Wayne R. FrazierSr., president of theMaryland-WashingtonMinority ContractorsAssociation (MWMCA),as the GeneralAssembly entered thefinal weeks of its ses-sion in late March withthe outcome of theissue still in doubt.

As state policymakersbegan discussing taxoptions last fall to dealwith a $1.5 billionstructural deficit in theMaryland budget, acoalition of Marylandbusiness organizations,spearheaded by theChamber of Commerce,released a study analyz-

ing the economic and fiscal impacts ofthe options being considered. With 840businesses that employ more than422,000 people in the state, the cham-ber is the principal voice for business-es in Maryland, including small busi-nesses. It has urged O’Malley and theGeneral Assembly to be “very cautiousabout what they change in terms of taxpolicy,” said Kathy Snyder, the cham-ber’s president and CEO.

The study, conducted by Ernst &Young’s Quantitative Economics andStatistics Practice, focused on theimpact of a sales tax rate increase,expansion of the sales tax to services,and corporate and personal incometax changes. “Fiscal notes for thesetax increase proposals rarely pinpointthe economic impact of tax increaseson the retention or recruitment of jobsin Maryland,” Snyder said at the time.

A key finding of the study was thatMaryland businesses would pay a sig-nificant share of the increased taxesunder most of the options that wereevaluated, including 40 percent of asales tax rate increase, 79 percent of asales tax expansion to professionalservices, and as high as 33 percent ofadding a 6 percent top individual taxrate bracket.

The study also reported thatchanges to corporate taxation wouldhave the highest cost of all the policyoptions in number of jobs lost per $1million of tax revenue raised. A largershare of jobs would be lost in higher-paying occupations.

Tax increases approved in the spe-cial session last fall included boosts inthe income, sales and corporate taxrates, but the most contentious issueturned out to be expansion of the salestax to services that had been exemptfrom it. As proposed initially by Gov.

Recent legislature takes aim at small-business taxation

Governor Martin O’Malley

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CHANGING | 27MAY 2008 | THE DAILY RECORD

Martin O’Malley, they would have included serviceslike health clubs, tanning salons and property man-agement firms.

But the only one legislators agreed to was computerservices, including consulting, programming, installa-tion of software and maintenance of hardware. At leastnine other states tax computer services, according tolegislative analysts. After a great deal of protest, theGeneral Assembly eventually repealed the computerservices tax.

Snyder says the state chamber’s interest is in preservinggood economic growth “and expanding that over the nextdecade so that we can continue to draw well-paying jobswith good benefits to Maryland.” That, she said, creates “awin-win for the business community and government interms of the tax revenues that are generated.”

But the variety of business tax proposals that the legis-lature was considering last fall raised concern about “put-ting Maryland out of competition with other states,” whichprompted the study the chamber and other business organ-izations commissioned in what the chamber termed “anunprecedented collaborative effort.”

Meanwhile, in this year’s legislative session, MWMCAfocused on issues particularly affecting minority busi-nesses. One measure that MWMCA backed but whichfailed to pass would have attached Minority BusinessEnterprise inclusion goals to grants or loans made bystate agencies to small, private businesses. “I takeresponsibility for that failure because I didn’t do a goodjob in rallying the troops. I am taking that defeat hard,”said Frazier.

Through DBED, the state offers a number of programsaimed at helping small, minority- and women-owned busi-nesses launch themselves, including financing. Programsinclude work force development, strategic assistance con-sulting, marketing and technology development.

Tax increases approved in recent special sessions include boosts in the

income, sales and corporate tax rates,as well as a computer services tax for

small business owners.

MAXIMILIAN FRANZ

Small_biz_0508.qxp 5/12/2008 6:36 PM

28 | CHANGING SMALL BUSINESS SOLUTIONS | MAY 2008

Green your business to blacken your bottom lineBY KAREN NITKIN


Adding a state-of-the-art heating andair conditioning system or buying onlyfrom vendors who care about the envi-ronment may seem like a naïve, expen-sive and clumsy way to do business, but

experts say these measures can pay off— in energy savings, employee satisfac-tion and customer goodwill.

Building or renovating a building sothat it uses less energy is one of themost significant ways a small businesscan improve its environmental foot-print, said David Pratt, a principal with

the Lorax Partnership, a green buildingconsulting company based in Columbia.

As recently as five years ago, “green”construction was something of a novel-ty in the Baltimore region. People resis-ted it because it was considered too

SEE PAGE 30

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expensive, said Peter Garver, who was working for Columbia-based Corporate Offices Properties Trust (COPT) at the time.

But since then, he has worked on 30 environmentally friend-ly projects for COPT, mostly office parks in Maryland, Virginiaand Colorado — and the tide of opinion has shifted. Instead ofresisting green devel-opment, tenants arestarting to demand it,Garver said. And soare the financial insti-tutions that under-write these develop-ments, he added.

“People’s firstreaction to this isoften, ‘Oh, it’s goingto add so much to thecost,’” said Garver,who recently left hisjob as vice presidentof development for COPT to start his own consulting compa-ny, Sustainable Development Partnerships, in Baltimore. “Iconvinced them that’s not the case.”

In fact, COPT has now embraced green development as acore value, he said.

As it happens, many measures that make a building moreenergy efficient and environmentally friendly also help create ahappier, healthier work force and more contented customers,

Garver noted. And for a business owner, that could translate toreduced liability, increased productivity and more sales.

One of the most frequent complaints from office workersis that the environment is either too hot or too cold. By addingmore precise, zoned temperature controls, business owners

can save energy andalso improveemployee and cus-tomer comfort lev-els, said Garver. Choosing carpets,

paints and furniturethat don’t emitvolatile organic com-pounds, known asVOCs, is another wayto improve the envi-ronment while help-ing employees.These compounds

can compromise indoor air quality, creating “sick” buildingsthat can lead to headaches and other illnesses.

Other measures for improving a building’s environmentalfootprint might include adding vegetation to roofs in order toreduce heat and filter water runoff, and installing toilets spe-cially designed to use less water.

But even existing buildings can be made more environ-mentally friendly, Pratt said. The most dramatic reduction to

a business’s environmental footprint can beachieved by locating a business close to workersand customers, or near public transportation.

Of course, that’s not always possible. Easier-to-execute measures include making sure thebusiness has a recycling center; printing on bothsides of a sheet of paper; and conducting busi-ness electronically whenever possible in order tosave paper, Pratt said. Recycled materials can beused during renovations.

Small businesses that lease buildings candemand features like windows that are moreenergy efficient, Pratt said.

A truly environmentally conscious companymight insist on doing business with like-mindedvendors, he said. This creates a financial incen-tive for that company to continue its earth-friend-ly policies.

Restaurants are businesses with terrificpotential for environmental improvement, hesaid. The latest refrigerators, dishwashers andstoves are much more energy efficient than oldermodels, he said. And since restaurants generate alot of heat in their kitchens, an up-to-date HVACsystem can make a huge difference.

Pratt noted that well-constructed, environ-mentally friendly buildings are more expensive atthe outset, but typically recoup those costs over


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David PrattLorax Partnership

””““

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CHANGING | 31MAY 2008 | THE DAILY RECORD

time. “When it comes to buildings themselves,one of the most expensive components is theinvestment in energy efficiency systems. Butthat’s also the area where you’re going toreceive the largest return as well,” he said.

As a bonus, environmentally consciouscompanies can market their efforts, wooinglike-minded customers, Pratt said. “Onceyou start doing things like this, you canpromote them,” he said. “You’re connect-ing to a significant demographic” — peo-ple concerned with maintaining a healthy,sustainable planet.

For example, he said, a restaurantthat takes these measures, while alsofocusing on organic, locally grownfood, will likely attract customers whocare about those things.

Pratt is a former president of theBaltimore Regional Chapter of theU.S. Green Building Council, anational nonprofit organization thathas created a system for measuringthe “greenness” of buildings.

He noted that this system,known as LEED, for Leadership inEnergy and Environmental Design,provides a nice shorthand for navigating theworld of eco-marketing. Many companies claim tobe environmentally friendly or to have environ-mentally friendly products, he said, but judgingthe accuracy of the claims can be difficult.

LEED approval shows that a building has metan objective set of criteria. Buildings can be cer-tified as LEED silver, gold or platinum based ona point system that takes into account suchthings as energy and water conservation, indoorair quality and selection of materials, amongother things.

Pratt said membership in the Baltimore chap-ter of the U.S. Green Building Council has dou-bled since last year to about 300 members.

His own business — founded in 2003 — hasgrown, too, as interest in protecting the planetincreases. At first, he said, most of his businesswas from municipalities that had decided thatbuilding green was “the right thing.” Then, hesaid, customers were incorporating green meas-ures to qualify for tax incentives.

“Now we’ve evolved to the point where we’regetting people who feel they have to build greenfor competitive reasons,” he said. “We hit the tip-ping point in this region in early 2007. It startedto move away from being a small niche to beingan emerging trend.”

For businesses, even small ones, that trend isalso an opportunity.

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Andrew UribeSalsa Aji

Don’t give up. Andrew Uribe has been struggling for more

than three years to put his condiment, salsa aji,

on grocery store shelves. Though it sells well in

specialty stores like Roots and Graul’s, his

income doesn’t yet match the cost of manufac-

turing, he said. He’s taken a side job while he

looks for additional funding, but he’s not quit-

ting. “I would walk away from it, if I saw that it

wasn’t viable,” hesays, “but it keepsselling. I’ve createda little monster. Ihave to continue.” — Karen Nitkin

Small_biz_0508.qxp 5/12/2008 6:41 PM

BY HAAMID ALI


In today’s information-overloadedmarket, finding effective means ofcommunicating with your clients topromote your products can be a daunt-ing task, especially for a small-busi-ness owner with limited resources.

“There is so much to learn andkeep up with in the way of online mar-keting today,” says Amy Kunkoski,president of Girls and the City LLC, aBaltimore-based social organizationthat brings women together whileoffering premium online content andfeatures. “It’s so much, in fact, thatoften I find that I’m drowning in a seaof information.”

But with a little help from localstartup companies and with free Web2.0 tools, this information overloadcan be re-engineered to your advan-tage.

Rather than using the traditionalways of sending brochures andnewsletters to her members, Kunkoskipartnered with MailHarbor.com, aWeb-based e-mail marketing platformthat offers e-mail marketing cam-paigns and then tracks the results.

With MailHarbor, for example,Kunkoski can send HTML and text-onlyversions of e-mails simultaneously.Based on her members’ e-mail settings,the system then determines which ver-sion to display. She also uses metrics totrack view rates and click-through

rates. “This helps me to fine-tune my e-mails and learn how often to send,based on the receptiveness of my orga-nization’s members,” Kunkoski says.

“As a result, I now have a greaterfollowing on the e-mail campaigns Isend, more people are opting in, andmore people are actually awaiting thedelivery of the e-mails on a set sched-ule.”

Small businesses can’t afford tospend money on marketing if theydon’t know how well it’s working, saysMark Zawodny, president and CEO ofMailHarbor. “MailHarbor gives thesemarketers information about theircampaigns so that they know who isreading, clicking or forwarding their e-mails. Information like this is invalu-

Harnessing the power of Web 2.0 tools


Amy Kunkoski, president of Girls and the City LLC,teamed up with MailHarbor.com to help market herWeb site via e-mail and even track the results, giving

her a better sense of her target audience.ERIC STOCKLIN

Small_biz_0508.qxp 5/12/2008 6:44 PM


able to any small business with a limit-ed marketing budget.”

While e-mail marketing is cost-effective, spam filters can make it dif-ficult to get through to the customer,says Mary B. Harms, marketing lectur-er at the University of Maryland’sRobert H. Smith School of Business.

“House-generated lists are the mostefficient way to use e-mail, and thesmall-business person will find moresuccess if they send e-mails onWednesdays — the day of the weekwith the highest percentage of e-mailsbeing opened,” says Harms.

In addition to e-mail marketingcampaigns, Kunkoski uses socialmedia technologies such as MySpace,Facebook, Twitter, Del.icio.us,Technorati and blogging to spread theword.

“I push the Girl Talk content outthrough Feedburner, Bloglines,Technorati and other online tools,” sheexplains. “I also spend quite a bit oftime implementing SEO and PPC todrive relevant site traffic.” Other toolssuch as Mint for financial tracking andBasecamp for project management aregreat ways to simplify tasks, addsZawodny.

Each of these Web 2.0 tools can beharnessed in a specific way with a spe-cific objective in mind. For example,“blogs, viral videos and social networksalong with their own Web sites workbest for building their brand,” saysHarms. “E-mails, search engines, onlineads and video on demand work best fordemand generation, while blogs, pod-casts and webinars are effective forgenerating customer loyalty.”

Compete globally, but partner locally

After seeing the need for a moreuser-friendly and comprehensivecrime information Web site — andthe rising concern for crime in mostneighborhoods in Baltimore City —Colin Drane foundedSpotCrime.com, a site that aggre-gates crime data not only fromBaltimore but also from acrossthe U.S. and displays them on aGoogle map application. Sinceits founding, the Web site hasgrown to one of the largestaccessible repositories of crime

information in the country, says Drane. Being a startup himself, Drane part-

nered with SmartLogic Solutions,another local startup software solu-tions company, to set up the site, veri-fy structure and to develop additionalaccess technologies for his client base.“It’s sometimes helpful to work withother newly minted companiesbecause they understand the stage atwhich we are in,” says Drane.“SmartLogic has been very adaptableto our needs.”

Partnering with local startup entre-preneurs has several advantages overother bigger companies because small-business owners can relate to startupsthrough their shared common experi-ences and special needs. But the mainadvantage is their responsiveness andpersonal customer service. This isbecause startup companies “haven’taccumulated the overhead that makessome bigger companies less respon-

sive,” Drane says.Founded by two Johns Hopkins

University graduates, John Trupianoand Yair Flicker, SmartLogic Solutionsprovides a range of software solutionservices to both small and bigger com-panies.

“We help with the design [and] struc-ture of existing Web sites and developnew Web applications — primarily forbusinesses where the Web site is centralfor their purpose — where they sellproducts [and] services through theWeb or involve their audience throughthe Web,” says Flicker, who is helpingDrane create cutting-edge applicationssuch as an iPhone application, aFacebook application and widgets thatcan be embedded in a blog.

“On the Web, a small business com-petes globally. If your site is structuredand positioned well, no one knowshow small or large you are on theWeb.”

CHANGING | 33

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Hollis ThomasesWebAd.vantage

The art of choosing the best job candidate is

one that Hollis Thomases has honed in the years

since she started WebAd.vantage in 1998. “I wish

I had known better processes to vet potential

job candidates,” she said. “What people claim

they can do is not necessarily what they can do.”

As the online marketing and advertising

company has grown from one person to 13,

Thomases has developed tests and questions

that lead her to employ-ees who will learn andchange to keep up withthe rapidly changingfield, she said. “If theyexpect to be spoon-fed,

forget about it,” she said. — Karen Nitkin

Small_biz_0508.qxp 5/12/2008 6:44 PM


BY JOSEPH PATRICK BULKO


For the small business, computersoftware and the Internet are the twomain tools for the accurate accountingand movement of funds. Whether thetask involves banking, receivables andpayables, billing clients or simply pro-ducing accurate financial statements,technology is the key to small-busi-ness financial operations.

“QuickBooks is the 800-poundgorilla,” said Morris Saks, CPA, ofGorfine, Schiller & Gardyn, about theindustry’s most recognizable brand.“Well over 50 percent of our clientsuse it. Peachtree is number two.”

“Ninety percent of the ones I seeuse QuickBooks,” said SheilaWoodard, CPA, of Woodard &Associates. “It’s very user-friendly, but[clients] don’t always understandaccounting. They need to have knowl-

edge of accounting.”She indicated that entries are

sometimes made that “create prob-lems on the balance sheet. There arenegative numbers on the balancesheet where there shouldn’t be.” Thebusiness discovers the problem, forexample, when it approaches a bankin search of financing and, as a resultof the errors, has a hard time gettingthe needed funds.

Saks emphasized that keeping thecompany’s books accurate is “vitallyimportant. If there are errors, itchanges our job to bookkeeperinstead of accountant and advisor.”

The value of accounting and book-keeping software is apparent as oneconsiders that Peachtree productsprovide high-level functionality ininventory, job costing, time andbilling, fixed assets and Internet tools.

Accounting, banking & billing technologies for the small business

Small_biz_0508.qxp 5/12/2008 6:46 PM

They also provide advanced analysistools to help small businesses makeinformed decisions on a daily basis.

QuickBooks offers a range ofaccounting andbus iness -p lan -ning toolsdesigned to helpsmall businessesorganize theirfinances withease.

Other morespecialized pro-grams includeT i m b e r l i n e ,which produces software for com-mercial and industrial contractors,among others. Even QuickBooks andPeachtree produce specific modulesfor real estate, construction, whole-sale, manufacturing, nonprofits andothers. “These are the same programswith extra hooks that those industriesfind useful,” Saks explained. “They’rereaching into the middle market.”

Accounting firms now prefer to“do remote access to clients’ comput-ers,” Woodard said. “We can workdirectly on their software,” providingmonthly or quarterly oversight tokeep their books accurate. Because ofremote access, Woodard’s firm nolonger needs to buy a new version ofQuickBooks each year.

She added that Quicken offers anonline version of the software thatruns on its own servers, but does notcontain the full functionality of thedesktop version. New businessesmight find this online edition satisfac-tory, but Woodard advises businessesto migrate to the more robust desk-top version.

Another online approachinvolves using the services of anApplication Service Provider (ASP)that provides access to the full ver-sion of either QuickBooks orPeachtree, Saks said. The busi-ness can use the “softwareacross the Internet. There’s noinstallation or upgrading.” TheASP runs the program on itsservers. He says this is anexcellent option for thosebusiness owners who “do notwant to deal with IT. The soft-

ware can be used from remote officesor locations — even in different coun-tries — with an I.D. and password.”

In terms of banking, BB&T Vice

President Mia Pittman said, “Mostonline banking is compatible withQuickBooks and Peachtree, the twomost popular accounting programs.Accounting software interfaces withonline banking, allowing the smallbusiness to download bank informa-tion into the software.” She addedthat small businesses use the same

methods online as individuals, includ-ing the transfer of funds and checkingaccount balances.

Online banking modules are avail-able for compa-nies with morecomplex financialneeds, allowingthem to moveexcess, or idle,funds into inter-e s t - e a r n i n gaccounts. “Smallbusinesses gener-ally don’t havethe luxury of idle

balances,” she noted.“For wiring money nationally or

internationally, businesses can handlewiring funds online as well,” she said.Letters of credit are still handled theold-fashioned way — offline, directlywith the bank — because the bank isessentially “underwriting risk just likea loan.”


QQuuiicckkBBooookkss iiss tthhee 880000--ppoouunndd ggoorriill llaa.. WWeellll oovveerr 5500 ppeerrcceenntt ooff oouurr cclliieennttss uussee iitt..

Morris SaksGorfine, Schiller & Gardyn

””““

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Cirdan Group

In the four years since Joanne Vatz founded

the Cirdan Group, an information technology

professional services firm, it has grown from

being a “one-person” shop to one with 10

employees. But that growth spurt has required

cash. That’s why Vatz said a good relationship

with a bank is so important. The SBDC was able

to recommend a bank that “really specialized in

small businesses and emerging businesses,” she

said. “It’s a really important thing.”— Karen Nitkin

CHANGING | 35

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36 | EXPERTS’ CORNER SMALL BUSINESS SOLUTIONS | MAY 2008

Most of us look forward to enjoying thefreedom of a financially secure retirement. Ofcourse, how well you live tomorrow is large-ly determined by how well you plan — andsave — today. It used to be that most workerscould rely on Social Security payments as amajor source of retirement income. However,that is no longer the case as Social Securitywas not designed for the America of today. Aspeople expect to maintain higher incomestreams during longer periods of retirement,Social Security payments simply do not go asfar as they used to.

The secret to retiring successfully can besummed up in one word: planning. Essentially,that means planning early, planning sensiblyand planning knowledgeably. There are a num-ber of effective ways for business owners, pro-fessionals and their employees to save for thefuture — and many retirement plan alternativesfrom which to choose.

A retirement plan can offer importantadvantages to business owners, including:

• Tax-deductible contributions to the planthat may reduce your current tax bill.

• A valuable recruiting tool which may bepositioned as part of the total benefits packageoffered by your business, and which can in turnhelp in retaining valued employees.

Whether you are considering adopting aretirement plan for the first time or evaluatingan existing one, it’s important that you under-stand your options.

What are your options?

In general, there are two types of retirementplans — defined benefit plans and defined con-tribution plans.

With a defined benefit plan, eachparticipant’s retirement benefit isdetermined by the formula set forthin the plan. Employer contributionsvary from year to year and mustmeet certain funding requirements,and the plan sponsor assumes theinvestment risk. Since annual contri-butions are based on the amountrequired to provide the promisedbenefit, the closer your employeesare to retirement, the larger the per-mitted tax-deductible contribution

will tend to be. Therefore, you may be able tocontribute more to a defined benefit planthan to a defined contribution plan, whichhas additional participant-based contribu-tion limits, and therefore you may be able toprovide a greater benefit in a shorter periodof time.

With a defined contribution plan, benefitsdepend upon the level of contributions madeand investment performance. Employees’ ben-efits are based on the amount of assets in theirindividual accounts at retirement. The plan maybe structured so that each plan participantassumes the investment risk of his/her ownaccount. Some of the plans available includesimplified employee pension plans (SEP-IRAs),profit-sharing plans, 401(k) plans and savingsincentive match plans for employees (SIMPLEIRAs).

Let’s take a look at each of these plans.An SEP-IRA is for business owners

seeking a flexible, low-cost retirement planthat is easy to establish and maintain. Withthe SEP-IRA, each eligible employee sets upan individual retirement account, or IRA,into which the employer makes contribu-tions. Since the employees each have theirown individual accounts, they bear theinvestment risk. This plan may be especial-ly suitable for new businesses or companieswith cyclical profit histories since theemployer can vary the amount to be con-tributed from year to year — or evenchoose not to contribute at all in less prof-itable years.

A profit-sharing plan is for business own-ers seeking more flexibility in plan designthan is available in an SEP-IRA. Althoughboth plans can be structured to allow contri-

butions to vary each year, a profit-sharingplan can have additional features such as avesting schedule (to reward longer-termemployees) and a loan program.

For employers who want their employeesto share in the funding of their retirementplan, a 401(k) plan may be a viable choice. A401(k) plan is a form of profit sharing thatallows employees to make salary deferralcontributions. In addition, the employer maychoose to make matching and/or discre-tionary contributions on a tax-deductiblebasis. Before adopting a 401(k) plan, theemployer should first consider the additionaladministrative requirements and costs thatmay be incurred with this type of plan.

A SIMPLE IRA is for businesses thathave 100 or fewer employees and do not cur-rently contribute to a retirement plan. Itenables a business owner to establish a401(k)-type savings plan without all of thetypical costs and complexities associatedwith a traditional 401(k) plan. Employeescan elect to make salary deferral contribu-tions. In addition, the employer is required tomake contributions each year under one oftwo formulas.

Where to get help

Providing sufficient retirement income foryou and your employees at a reasonable cost toyour business requires careful planning andinvesting. Whether you want to establish aretirement plan for the first time or have yourexisting plan evaluated, a financial advisor canconsult with you to help you identify retirementplan and investment alternatives best suited toyour needs and those of your business and youremployees.

UBS Financial Services Inc. does not pro-

vide tax or legal advice. Consult with your

tax and legal advisors regarding your spe-

cific situation.

Jeff Strzelczyk holds the professional creden-

tials of Certified Investment Management

Analyst and Chartered Retirement Plan

Specialist and has more than 20 years of expe-

rience in the financial services industry. Jeff

can be reached at 410-771-3122 or

[email protected].

By Jeff Strzelczyk

Choosing a retirement planthat works: for you, your business and your employees

Small_biz_0508.qxp 5/12/2008 6:47 PM

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Small_biz_0508.qxp 5/12/2008 6:49 PM

EXPERTS’ CORNER | 39MAY 2008 | THE DAILY RECORD

Alex and Brad, both in their mid-40s,had just celebrated the 10th anniversary ofConsulting Inc., their market consultingbusiness. The next morning, before going towork, Brad suffered a heart attack whilejogging. He died later that day. Alex sud-denly lost his longtime business associate.What’s more, after the estate was settled hefound himself with a new co-owner —Brad’s wife.

The result was chaos. Brad’s wife hadlittle interest or experience in running thefirm. She needed cash for living expensesand asked Alex to buy out her interest inthe business. But because most of hisassets were tied up in the business, Alexwas short of cash. Unfortunately, Alexand Brad’s wife were left with littlechoice but to sell the company on shortnotice for just a fraction of what they hadhoped for.

How could this fictional disaster havebeen avoided? A buy-sell agreement andproper funding could have saved their busi-ness while providing needed income forBrad’s family after his death. Buy-sell agree-ments lay out how ownership will changehands and how the transfer will be paid forin case of a co-owner’s death, disability orretirement. Typically, the agreement pro-vides for the purchase of the departingshareholder’s stock by the surviving share-holders or the company itself.

A buy-sell agreement and its properfunding may achieve several goals: avoidliquidation of the business; facilitate anorderly continuation of the business;replace lost business income for a deceasedowner’s heirs; set a purchase price that canfix the estate tax value of the decedent’sstock; and provide evidence to customersand creditors of the firm’s stability.

Using life insurance

Drafting a buy-sell agreement is only thefirst step. It will have limited practical ben-efit unless the purchaser can afford to buythe deceased owner’s shares. Life insuranceis often used as the preferred source ofcash. When a business owner dies, the poli-cy proceeds are used to buy the shares fromthe deceased owner’s estate at a price setforth in the agreement.

There are two basic types of buy-sellarrangements: the “cross-purchase” agree-ment and the “stock redemption” agree-

ment. Life insurance can be usedto fund both.

Cross-purchase agreement

In Alex and Brad’s situation,each of them buys — and is theowner and beneficiary of — a lifeinsurance policy on the other.Upon Brad’s death, Alex receivesthe policy’s death benefit, which heuses to purchase Brad’s sharesfrom Brad’s estate. In turn, thatcash payment gives Brad’s familyneeded income to offset the loss ofBrad’s earnings.

Cross-purchase plans have sev-eral advantages. For example, thesurviving shareholder gets a “stepup” in the income tax basis for the stockbought from the deceased’s estate. Thiscould reduce income taxes if the survivingshareholder later sells the stock.Additionally, with cross-purchase agree-ments, the insurance proceeds are not sub-ject to the corporate alternative minimumtax (AMT), nor to the claims of corporatecreditors. But these plans can be hard toadminister if there are many owners. Sincethe shareholders individually own policieson the lives of their fellow shareholders,absent other planning, 56 separate policieswould be needed if, for instance, there wereeight total shareholders.

Stock redemption agreement

In this case, Consulting Inc. buys andowns insurance policies on the lives of Alexand Brad. When Brad dies, the corporationbuys his stock with the insurance proceeds.

Stock redemption plans may make sensewhen there are multiple owners of the cor-poration, there are large differences in ageand ownership levels among the owners, orthe corporation is in a lower tax bracketthan the owners. Two potential drawbacksto these plans: the death proceeds receivedby the corporation may be subject to thecorporate AMT, and the surviving share-holders do not get the benefit of an increasein the income tax basis of their shares whenthe corporation redeems the stock.

Keeping proper balance

Often, in an effort to make things fair,business owners structure a life insurance-funded buy-sell agreement so that each

owner is treated alike. But that may seem-ingly result in a windfall if the owner hold-ing a minority share of the company out-lives the majority owner.

Suppose the $1 million Consulting Inc.was owned 70 percent by Brad and 30 per-cent by Alex. Under their agreement, eachwas required to buy the other’s stock underidentical terms. And each bought life insur-ance on the other’s life to fund this buyout.When Brad dies, Alex collects the $700,000of insurance proceeds and pays that sum toBrad’s family for the controlling interest inthe company. Alex is also likely to buy backhis own insurance coverage of $300,000 forfull value.

Result? The minority partner, Alex, now has a

100 percent interest in a $1 million compa-ny and a $300,000 policy. Brad’s family losescontrol of the firm, but receives $700,000 incash and the proceeds from the sale of theinsurance on Alex’s life.

Buy-sell agreements can help protectyour business and your family. Seek theguidance of a professional financial advisorwho can identify the various issues andconsiderations that will help determinewhat type of buy-sell agreement makes themost sense for you.

Shawn T. Barberis, Esq., is a licensed

agent with Jefferson-Pilot Life Insurance

Company. He owns Premier Planning

Group Inc. located at 901 Dulaney Valley

Road, Suite 901, Towson, MD 21204. He

can be reached at 443-519-0011 or shawn-

[email protected].

Buy-sell agreements keepyour business afloat

By Shawn T. Barberis, Esq.

Small_biz_0508.qxp 5/12/2008 6:50 PM

40 | EXPERTS’ CORNER SMALL BUSINESS SOLUTIONS | MAY 2008

As we move into a tight-money economywhere costs are rising and small-businessloans are more difficult to acquire, how wellyou manage your cash can determine howyou survive the current economic downturn.One smart move is to assess if you are takingadvantage of all the tax write-offs to whichyou are entitled. Every dollar saved helps yougrow your business and achieve your busi-ness objectives.

Tip 1: Use All Your Tax Deductions!

The tax laws allow you to deduct expens-es that are ordinary and necessary for yourbusiness. Necessary can also mean what is“customary” for your business. This may con-sist of expenses, such as office supplies, rent,payroll and advertising costs common tomany businesses. However, there are otherexpenses that may be specific to a particularoccupation. As an example, for those whowork in the performing arts, image is animportant part of the business. They may beable to deduct expenses like cosmetics, haircare products, services and so on becausethese are a critical part of maintaining image.Those type of expenses are considered per-sonal expenses in other types of businessesand not deductible. A tax professional canassist you in identifying expenses that are rel-evant to your business.

Tip 2: Take Credit!

If you think a tax deduction is great … atax credit is even better! A tax credit reducesyour taxable income dollar for dollar. Forexample, if you have a tax liability of $5,000and your business has a tax credit of $3,000,you have just reduced your tax liability to$2,000. You can’t beat that!

Tax credits exist at both the federal and

state levels. One example of a business taxcredit is the Empowerment Zone Tax Credit.This incentive plan provides employmentcredits, low-interest loans, reduced capital-gains tax and other incentives. Businesseslocated in empowerment zones are entitledto federal tax credits of up to $3,000 peremployee per year for employees that bothlive and work in the zone boundaries.

Is your business located in an

Empowerment Zone? You can find that outand more by going to www.hud.gov/cr. Onceagain, take time to inquire about tax creditsthat are available to you.

Tip 3: Get Organized!

Good organization of your financialrecords is an important key to helping yousave money. Do you have a formalized way oftracking your income and expenses? How doyou keep track of your business receipts incase of an audit by the IRS? Are your recordsorderly and complete so that your account-ant can help you pay the lowest tax bill pos-sible? If you can say yes to these questions …you are on the right path. If not, making acommitment to get organized can put you onthe path to reducing your taxes and increas-ing your cash flow.

Tip 4: Tax Planning … the Great Divider!

One of the most common differencesbetween small and larger businesses is in thearea of tax planning. Smaller businesses tendto focus primarily on the preparation aspectsof taxation. Larger businesses are also veryconcerned with taking advantage of taxbreaks that they have been unable to use inthe past. For example, if your company isconsidering a move … you may want toknow where empowerment zones exist andif state and local tax incentives exist for yourbusiness. The tax implications get more com-plex with a multistate strategy or if your busi-ness is considering establishing a physicalpresence in another country.

Important Tax Strategies That Work!

Some strategies you may find useful in cut-ting your tax bill include:

• Hiring your children eligible to work inyour business

• Shifting income and expenses betweentax years to minimize your taxable incomeand lower your tax bracket

• Donating appreciated assets instead ofcash

• Negotiating a total compensation pack-

age with employees that include benefits thatare nontaxable to the employee butdeductible by your business. This is done inlieu of a total cash-based package where theemployee receives only wages and purchasesthe benefits on their own. This saves the busi-ness owner Social Security tax and theemployee both income and Social Securitytaxes.

Finally, a study was conducted by theU.S. Small Business Administration to deter-mine what separated businesses that werevery successful from those that were eithermarginal or failed within the first two to fiveyears. One important difference was that thesuccessful businesses sought professionaladvice early on and throughout the growth oftheir business.

The Maryland SBDC — a partnershipbetween the University of Maryland andthe U.S. Small Business Administration— offers professional advice, counsel-ing and support to small and midsizebusiness owners. No matter what stageof growth you are in, it could meanmoney in your pocket to take advantageof this valuable resource. You also wantto affiliate with a tax accountant thatcan help you navigate your business foroptimal results.

How do you determine the best account-ant for you?

That is a topic for another day!

Sheila Woodard, MBA, CPA, is the founder of

Woodard & Associates Inc., where she spe-

cializes in comprehensive tax and business

services, provides educational workshops

and seminars, and advises business owners

on strategies to building a successful busi-

ness. She may be reached at

[email protected].

Circular 230 Disclosure

To ensure compliance with require-

ments imposed by the United States

Treasury Department, you are hereby

informed that any advice contained in

this communication (including any

attachments) is not intended or written

to be used, and cannot be used for the

purpose of (i) avoiding penalties under

the Internal Revenue Code or (ii) pro-

moting, marketing, or recommending

to another party any transaction or

matter addressed herein. This advice

may not be forwarded without our

express consent.

By Shiela Woodard, MBA, CPA

Turning taxes to your advantage

Small_biz_0508.qxp 5/13/2008 2:55 PM

OONNEE OONN OONNEE CCOOUUNNSSEELLIINNGGA hallmark service of the SBDC is its excellent one-on-one coun-

seling to prospective and existing small-business owners. Many coun-selors are former bankers, accountants or business owners who willwork with you to provide personalized and confidential counseling atno cost to the client.

Counselors can also refer you to local and regional resources forassistance in areas not available for the SBDC. For more informationor to schedule an appointment, call your local SBDC.

GGRROOUUPP CCOOUUNNSSEELLIINNGGThe SBDC offers a number of specialized group counseling

sessions to assist clients in a specific area of need. Each work-shop is designed to bring attendees closer to achieving theirentrepreneurial goals. Offering counseling in a group settingallows participants to benefit from the experiences of otherswhile providing them with an opportunity to network and learnin an open-ended environment.

PPRROOCCUURREEMMEENNTT//CCOONNTTRRAACCTT CCOOUUNNSSEELLIINNGGThe SBDC provides specialized procurement counseling services

through its Procurement Technical Assistance Program. This pro-gram, funded by the Defense Logistics Agency and MarylandDepartment of Business and Economic Development, helps you toidentify, obtain and perform successfully on federal, state and localgovernment contracts. Individual counseling and procurement train-ing are available through your local SBDC office.

HHIIGGHH TTEECCHHNNOOLLOOGGYY CCOOUUNNSSEELLIINNGGIndividual counseling and small -group workshops, conducted by

trained technology counselors, will guide you through the prepara-tion of various types of plans. Management assessments are designedto improve performance and support growth. You will learn how totake advantage of federal and state support programs. Contact yourlocal SBDC to schedule an appointment with a member of the HighTechnology counseling staff.

RREETTAAIILL//RREESSTTAAUURRAANNTT CCOOUUNNSSEELLIINNGGIndividual and small-group counseling is available to assist you

with the unique aspects of starting, managing and maintaining a retailor restaurant operation. Professional staff will help you assess feasi-bility, and assist with store layout, establishing and maintaining goodvendor relationships, marketing, inventory management and more.Contact your local SBDC to set up an appointment or to inquire aboutworkshops and training.

MMAARRKKEETTIINNGG && IINNDDUUSSTTRRYY RREESSEEAARRCCHHThe SBDC offers market and industry research through the JJ Hill,Business Research Library. Considered one of the most comprehen-sive business libraries in the country, it houses a world-class collec-tion of practical business information & resources. Additionally,counselors have access to the Small Business Development CenterNational Information Clearinghouse (SBDCNet) which provides time-ly, relevant research that is used to assist clients in developing busi-ness plans and growth strategies.

CCAAPPIITTAALL RREEGGIIOONN

Serving Montgomery

and Prince George’s counties

7100 Baltimore Avenue, Suite 402College Park, MD 20740Phone: 301-403-0501www.capitalregionsbdc.umd.edu

CCEENNTTRRAALL RREEGGIIOONN

Serving Baltimore County,

Baltimore City, and Howard and

Anne Arundel counties

Towson University7801 York RoadSuite 160Towson, MD 21204Phone: 1-877-421-0830www.towson.edu/sbdc

EEAASSTTEERRNN RREEGGIIOONN

Serving Kent, Queen Anne’s, Caroline,

Talbot, Dorchester, Wicomico, Somerset

and Worcester counties

Salisbury State UniversityPower Professional Bldg., #170Phone: 1-800-999-7232www.salisbury.edu/sbdc

NNOORRTTHHEERRNN RREEGGIIOONN

Serving Carroll, Harford

and Cecil counties

Maryland Small Business DevelopmentCenterHarford Community College205 Edgewood Hall401 Thomas Run RoadBel Air, MD 21015Phone: 410-836-4237www.harford.edu/sbdc

SSOOUUTTHHEERRNN RREEGGIIOONN

Serving Charles, Calvert

and St. Mary’s counties

8730 Mitchell RoadP.O. Box 910LaPlata, MD 20646Phone: 301-934-7583www.sbdchelp.com

WWEESSTTEERRNN RREEGGIIOONN

Serving Garrett, Allegany, Washington

and Frederick counties

14701 National Highway, Suite 1LaVale, MD 21502Phone: 301-687-1080Fax: 301-687-1008www.sbdc-wmd.com

Find an SBDC office near you!

Counseling and workshop offerings of the MDSBDC

RESOURCES | 41MAY 2008 | THE DAILY RECORD

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42 | RESOURCES SMALL BUSINESS SOLUTIONS | MAY 2008

Proven Results

•••

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In FY 2007 SBDC Clients...

...were awarded $160 million in state, federal and local contracts with assistance from PTAP(53% to minorities and 55% to women*)...created 851 New Jobs...trained 6,115 Entrepreneurs...started 136 New Business Ventures...received $54 million in loans & capital infusion, (44% to minorities and 39% to women*)

(* Ethnic Minorities include Women Minorities)

FFY 2007 Impact

Industry & SpecialInterest Programs

• Retail and Restaurant• Technology• Government ProcurementBusiness Assistance Programs

• Minority-owned• Women-owned• BRAC• Veterans• Agribusiness• Main Street Development• Micro-lending

In 2007 the Maryland SBDC assistedmore than 10,000 entrepreneurs

864

2,841

2,336

1,732

1,158

1,212

160 Industry Specialist*

10,303 Total Clients*Retail, Restaurant & Technology

Two or More

Races

2%

Hispanic

5%

Native

Hawaiian

0.06%

American

Indian

0.32%Asian

5%

African-

American

29%White

59%

State of Maryland

Our clients represent the state of Maryland

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Who We Serve

•••

••••••

White

60%

Native

Hawaiian or

Pacific Isle.

0%

Hispanic

7% Asian

4%

Black or

African Amer.

28%

Amer. Indian or

Alaskan Native

1%

SBDC Clients

•••

••••••

Male

44%

Female

47%

Male/Female

9%

Gender

•••

••••••

Maryland Small Business Development Center

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Small Business SOLUTIONS - Daily Record

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