Different Kinds of Leases

When considering a lease it is important to know the different lease structures that are available. The two most common lease structures utilized are capital leases and true leases.

A capital lease, also known as a finance lease, has a "bargain purchase option" at the end of the term, such as $1.00 or $101.00 depending on the tax laws in your state. A capital lease is best when the intention is to own the equipment at the end of the term. This structure allows the lessee to depreciate the asset and write off the interest. Capital leases often appeal to companies that prefer to own the equipment but want to preserve their working capital and any existing bank lines.

True leases provide the option to return the equipment to the lessor at the end of the term. A true lease is best for companies that need to regularly upgrade their equipment and is commonly used for technology assets that are subject to rapid obsolescence. A true lease can offer lower monthly payments with "off balance sheet" reporting. These structures are typically best for companies that are interested in minimizing their tax liabilities due to the "line item" deduction of the entire lease payment as an operating expense.

Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Short on Capital, but Need New Equipment to Grow?

One of the greatest advantages of leasing is that it offers fairly minimal up front costs. Unlike bank loans that may require a substantial down payment, all that is generally required at the beginning of a lease is two advance payments. With some programs, even less is required. In addition, leasing protects against equipment obsolescence because you set the lease terms according to the useful life of that equipment.

Leasing can also lessen the burden that taxes have on your company's wallet. Depending on how your lease is structured, you may be able to fully deduct lease payments as a business expense. This type of lease structure is known as a True Lease, or FMV-lease. Each monthly lease payment is treated as a "line-item deduction" for tax purposes.

Business owners and executives are facing ever-increasing demands. Growing competition and operational efficiencies can provoke challenges to the bottom line. Leasing new equipment could be your solution for your company. As a Chinese proverb states, "Be not afraid of growing slowly, be afraid only of standing still."

Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

10 Tips for Making a Strong Website

Your website can be a great way to promote your business - if built correctly. I have literally left websites (thus taking my business elsewhere) because of the unprofessional look and feel of the site. You don't need a Bachelors in web design to build a strong website. Try the following to strengthen your site:

1. Organized content - This is always the #1 website rule. If you have ever entered a website that is not organized properly, you feel lost and frustrated very quickly. Spend time in making a chart of the structure of all the pages in your website.
2. Consistent navigation - This is likewise very important. Make sure that your navigation is the same throughout the whole site. This really helps the visitor.
3. Regularly updated, quality content - Your website is to give information to your visitors. Make sure it is doing so. Spend extra time in making your pages have the best information you can give. The second part is to update often. I have heard to update websites once a day. This may seem overwhelming, but try to incorporate something that would be new each day, like a new blog post, video, or product.
4. Make your contact information easy to access - Make sure that it is easy for your customer to be able to contact you. That is, after all, the reason for the website. Add you company name, phone number, and address at the bottom of every page. Also, make sure to have a visible link on every page to a "contact us" page.
5. Add a search box - This can be especially important if you have more than ten pages or an e-commerce site.
6. Strong links - Try to stay away from any "click here's", be more specific like "view our new line of products" or "download our catalog."
7. Relevant keywords in page body - Choose a string of about 25 keywords and try to use them in the page as much as possible. Be sure not to make it overly apparent. No reader will enjoy reading the same word over and over again.
8. Relevant keywords in page titles - This will help search engines to know what the page is about.
9. Meta tags - To help search engines find you, use meta description and keywords on your pages.
10. Professional photos with accurate ALT tags - You don't need a professional photographer to make the photo look professional. Just make sure that the lighting is good and the image is not grainy. If you have a photo editing program, you can enhance the colors and delete any unwanted elements in the picture.

Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Successful Time Management

Time is of the essence. It seems these days that there is simply not enough time in the day to do everything we would like to get done. The key is to be more productive in the time that you have. Sure, you can work twice as long and get much more done. However, the secret to true success is making the time you currently invest in your business twice as productive.

Successful people know how to divide their time well. They know when it's time to focus and be productive and when it's time to replenish and rebuild their strength. It's not uncommon to see people who appear to be highly productive burnout quickly. It is important to take time out for yourself and relax. Spend time with friends and family, exercise, sleep, or do whatever else that may help you regain your thoughts and energy.

Successful people are also strict about what types of interruptions they allow during productive business time. It is easy to let trivial interruptions disrupt our working life. For example, don't take inventory or clean out your desk during prime selling hours. Find ways to eliminate busy work.

Identify the most important thing you should be doing right now. Successful businesspeople always tackle the most important things first. The items of top priority are usually not the easiest. That's why we tend to put them off until later. Getting these heavier items out of the way will relieve stress and increase your productivity tremendously. Over time you'll notice that sales have increased and you're enjoying your work a lot more.

Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

End of the Year - Part 1

It's nearing the end of the year and holiday parties and family vacations are fast approaching. It's also a time we typically look back at this year's numbers and sales and examine strengths and weaknesses. What areas can the business make more money? What areas can we save money? A topic that is usually more important for new businesses, but one that is good to review for established ones, is the entity in which your business operates under. The right entity choice will help you respond to or take the best advantage of changes in law or changes in the nature of your current business. Entity choice greatly affects your legal liability for the entity's debts, liabilities, and other obligations and the extent to which creditors can reach or even go beyond business assets to reach your personal assets.

There are six basic business forms of for-profit businesses in the US: Sole Proprietorship, General Partnership, Limited Partnership, Limited Liability Partnership, Corporation, and Limited Liability Company (LLC). Each carry their own tax rules. Depending on the nature of your company, having your business under the appropriate entity can have a major impact on cash flow come tax time. For some useful knowledge on business legal organizational structures, check out this article: http://entrepreneurs.about.com/od/businessstructure/a/bizstructures.htm

Just as important as having your company under the right entity, is doing all business within that specified entity. Also, file and maintain the appropriate documents with the state your business is located. Late fees and penalties are a waste of resources. For corporations, LLC's, and partnerships, remaining "active" and "in good standing" with the Secretary of State is vital to secure funds from lending institutions. Check on your corporation's Secretary of State filing here: http://entrepreneurs.about.com/od/generalresources/a/secretarystate.htm

Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Act Quickly on Section 179

October is the perfect time of year to look into the Section 179 Deduction, also known as the 179 Expense Election. Small businesses or those who spend less than $800,000 on capital equipment this past year may expense a capital equipment acquisition up to $250,000. If more than $800,000 is spent on capital equipment, the amount of the deduction declines as the amount spent increases.

To qualify, the property must be business equipment used in the business at least 50% of the time. Permanent structures do not qualify, although some single use farm buildings do. The equipment may be new or used and must be acquired during the 2008 tax year, from an entity not controlled by the purchaser.

If you lease or finance the equipment, the deduction may be greater than the investment required to initiate financing. For example, suppose you leased a piece of equipment in December of this year that costs $300,000. You have the ability to write off $250,000 but you have only invested the first and last payment to start the lease. The write off exceeds the investment you made to get that piece of equipment, resulting in a lower tax bill.

As always, talk to a tax professional first because every company's situation is different and there may be tax savings that are more suitable for your particular company.

Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

8 Customer Service Blunders

Every customer values good customer service. Customer service can be a company's greatest asset or its greatest impairment. To keep you company image strong and your customer service top-notch, avoid some of these mistakes:

1. Having an untrained staff. No matter how many employees you have in your company, make sure that every one of them are trained. Customers will not tolerate incorrect information or lies, which can sometimes happen when the employee does not know how to help.
   
2. Trying to win the argument. Keep in mind that the "customer is always right." It is far more difficult to gain one new customer than to keep a current one.
   
3. Standing by your policy. Taking care of the customer is far more important than standing by a policy.
   
4. Not fulfilling your promises. If you make a promise to a customer, make sure that you will fulfill it. If you promise something will be there by Wednesday, you make sure it is there by Wednesday.
   
5. Being inaccessible. Be sure to always be able to be contacted by the customer. Nothing is more frustrating than not being able to reach the person, or even just a person, to talk to. Also be sure to be diligent in calling customers back. Calling a customer back quickly will always win points in their book.
   
6. Having poor record keeping. Make sure your notes on the customers are correct and that you are addressing the right person. Nothing is more frustrating for a customer than having been promised their phone bill would be canceled, then being charged fees for not paying the bill.
   
7. Not listening to the customer. Sometimes customer service representatives do not listen to the customers and answer with non-relevant responses. Make sure to pay close attention to the customer and to their problem.
   
8. Not being polite. "Please" and "thank you" will go a long way. They are so simple but always win points with the customer.

Making sure that your customers are taken care of should be your top priority. They are the reason you were, are, and will be in business.

Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Your Target Audience

When starting a new ad campaigns, product line, or even a different approach, it is vital to know your audience. Each target audience is different. Each group has different likes, dislikes, hobbies, etc. BMW's audience is far different than Walmart's, and both are targeted differently. To best appeal to your customers you must take the time to assess your target audience. Ask yourself these questions:

• What is the target audience's gender?
• What is their age range? Are you trying to appeal to teenagers who like bright, edgy products or middle-aged adults who lean towards neutral colors and solid products?
• What is their level of education?
• What is their yearly income? (Take time to compare how high-end products differ from consumer products. For instance, compare Nordstroms to JC Penny's.)
• What are the target audience's hobbies? Do they prefer golfing or bowling? Do they prefer television or reading novels?
• Are they single or married? Are they parents? Grandparents?
• What qualities are important to them? Do they prefer prestige, quality, or an inexpensive price?
• Why will they like your product? What does your company have to offer?
• If you want to go even farther, compile a bio of individual people that make up the targeted audience. You can even include their photo.

When you complete your assessment, you will have a stronger foundation for your project.

Brad Harmon is the President at a leading financing company, First Star Capital (http://www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Protect Your Computer

Online threats are becoming more and more sophisticated. Spammers use pop culture and recent events, like the election or the Olympics, to lure the viewer to click on links infested with malware and viruses. You must be very careful with links you click and sites you go to.

Here are some tips about how to protect your computer from such threats:

• Don't click on pop-up messages. Sometimes they say you need anti-virus software to protect your computer, but instead give you a virus.
• To counteract the scenario above, be sure you have a trusted anti-virus software already installed in your computer. You will have no need to click on the link.
• Be very careful when opening any email attachment. Try to find an email provider that scans the attachments before you open them.
• Be very careful with clicking on links in an email. A email from "PayPal" requiring you to sign in may indeed be a scammer trying to steal your PayPal account information. Be sure to login in on any website's official home page.
• Avoid emails from people you don't know or that have odd email addresses/messages.
• Regularly run spyware scans.
• Regularly up-date your software and patches.
• Routinely back-up your files onto an external hard drive or USB drive.
  

Brad Harmon is the President at a leading financing company, First Star Capital (http://www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Your Elevator Pitch

Do you have an elevator pitcher? An elevator pitch is a means of convincing the person you speak to, mainly your investors, networks, and prospects, of your business potential in 60 seconds or less. Basically, can you tell the overview and goals of your business in 150 words or less, in one elevator ride?

Why do you need an elevator pitch, you ask? It helps you, firstly, figure out the true goal or your business. It answers questions such as “Who are you?” “What is your product/service?” “Why does your product/service do for the buyer and what are the benefits?”

Many times investors and venture capitalists are too busy to look through an 80-page business plan. They want to know who you are and what you do in literally one minute.

Firstly, figure out what is your goal for your business? What is unique about what you do? Why are you a cut above the rest?

Be sure to make it exciting and keep it simple. Show your passion for what you do. But keep it clear, concise, and memorable.

If you formulate a strong elevator pitch, you will be prepared to “wow” any investor.

Brad Harmon is the President at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Your Business Plan

Your business is born through your business plan. Make sure that it is as thorough as it can be. The more detailed you can get, the more grounded you will be.

We did a search to find great business plan websites and tools. Here are our results:

• US Small Business Administration – This site is full with articles, resources, and tools. SBA offers many services in addition to help businesses with all types of needs. www.sba.gov
• SCORE – SCORE offers many tools for the business owner. They offer templates for business plans as well as free business mentoring. www.score.org/template_gallery.html
• My Own Business – Non-profit site that offers a business course with 14 lessons on basics to starting your own business. www.myownbusiness.org
• BPlans.com – This is a simple website that offers many business plan examples, articles, tools, and software. www.bplans.com
• Entrepreneur – Offers many articles on how to write a solid business plan. www.entrepreneur.com/businessplan/

Brad Harmon is the President at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Do You Have A Borrowing Checklist? - Part 2

Last month we shared 5 items that will make the borrowing approval process quicker and easier. This month we have some more items to add to that list. You may be already on top of these items, in which case- outstanding! If not, hopefully this will be a useful business guide

Most leases under $75K only require a one-page credit application but often times other issues come up or the equipment you’d like to lease is a higher amount. Knowing pertinent company information or having it easily accessible will save you precious time and let you get back to focusing on what you do best!

Sam Thacker from Allbusiness.com has put together a borrowing checklist. Here are a few more important items that we often trip across at First Star:

1. "Know several important statistical characteristics of your business. Here is a partial list of information that management should always know about their company through the last interim financial statement:
   a) Year to date gross sales
   b) Year to date gross and net profit
   c) Current accounts receivable balance
   d) Current accounts payable balance
   f) Projected annual sales for the current year.

2. Know what lenders / trade vendors have filed financing statements. (UCC’s) against the business. Have copies of them and understand what collateral is secured. Knowing in advance who has a blanket lien on the company is very useful, particularly if you’ve already paid for some or all of the equipment.

3. Keep a one page, smartly worded, easy to understand description of your business. This is particularly important if your business is complex and unique.

4. Write a quick and easy to understand description of the equipment you are looking to acquire and how it fits into your operations. Just like your business may be complex and unique- so too with the equipment. Briefly explaining what the equipment is and how it fits into your operations can help speed up the approval process.

5. If your leasing request is higher than $75K (or in some instances $100K), you’ll need to provide the last 2-3 years of completed business tax returns and financial statements. "

Don’t be overwhelmed. You won’t be asked for all of these items- you may not be asked for any of them. But staying on top of such items will not only help you when it comes time to acquire some new equipment, it just makes good business sense. Our goal at First Star is to help your company grow and succeed. Being a well-informed borrower is key to your success.

Brad Harmon is the President at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.