New York City is one of the BEST cities for Small Business

New York Best Business

Yes, that’s right, high-tax, high minimum wage, worker-friendly, widely diverse, New York City, is #2 best city for small business according to Small Business Trends (SBT).  In their article, “Best Cities for Small Business”, SBT explains why New York City is the second best city for small businesses.

“[I]t’s easy to think of New York City as huge and focused on big businesses. But this city is also big for small businesses.  A total of 411,323 small business owners live and work in the metro area, making up 2.03% of the total population.  Leading industries are professional, scientific, and technical services.

Small Business Trends

While it may seem large and intimidating to some in other parts of the country, local entrepreneurs tout the support system for small businesses. 

“You’ve got the NYC Department of Small Business Services all the way to an SBA office, a SCORE office, and a huge menu of entrepreneur and small business organizations” ready to help small businesses succeed.

Small Business Trends

SBT stated that

“the rankings reflect the percentage of small businesses to the overall population in metropolitan areas of the United States with over 50,000 people.  We also identify factors such as industry clusters, lifestyle, infrastructure, costs, workforce availability, and a thriving entrepreneurial community nearby”.

Small Business Trends

Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Why is ProStrategix Proud to be in, and to serve New York City Small Business?

New York City has the largest concentration of small businesses in the country.  In fact, there are nearly 600,000 small businesses in the New York City Metro Area. 400,000 of which are in the 5 boroughs. Despite all the negative hype to the contrary, New York City has a thriving and successful small business community.  So, it begs the question why?

New York City has one of the most educated populations – both by percentage and by sheer number

Importantly, 16.2% of New Yorker’s over the age of 25 have post-graduate degree.  That’s over 2.2 Million people.  As a result, that’s larger than the total populations of some mid-size cities like Cincinnati, Pittsburgh, and St. Louis.  In addition, many of these professionals are entrepreneurs, or provide professional, scientific, and technical services. More importantly, they tend to lead most New York City start-ups and small businesses.

New York City has one of the most diverse small business communities

In contrast to most major cities, only 68% of New York City businesses are owned by whites.  The remainder are nearly evenly split between Asians, African-Americans, and Hispanics.   This still doesn’t reflect the racial mix of the city. However, it is much more diverse than most any other city in the country. In fact, this diversity enables New York City small businesses to meld influences from across the globe. Thus, this fusion of cultures often leads to unexpected and creative ideas.

New York City has one of the highest numbers of foreign born citizens

In fact, 29% of New Yorker’s were born outside of the US.  That’s over 5.5 million people.  Importantly, that’s more than the total population of large cities like Boston, Phoenix, and San Francisco. 

Why is that an advantage?  Most importantly, it’s a steady stream of skilled and unskilled labor. Most successful New York City small businesses capitalize on this source talent. 

Some people see immigration in a negative light.  But, to leave your own home and come to a strange and unfamiliar place takes courage and a willingness to take risk.  Both characteristics are highly valued by entrepreneurs. Risk taking is what drives the majority of successful New York City small businesses and start-ups.

Is It Hard to be Successful Small Business in New York City?  You bet.

New York City is a fast-paced, highly-competitive place, with high operating costs due to rent, labor, and taxes.  But, there are smart things all successful New York City small businesses can do:

First, have a rock-solid business model

There’s not a lot of room for error.  Costs are high.  Therefore, you need to make sure the revenue will be there, how it’s generated, and how things are spent.

Second, have strong financial controls & a solid business plan

Again, the margin of error is small.  Thus, not having enough control over your revenues and costs can get you into trouble quickly.

Third, have a solid marketing plan

There’s a lot of noise.  Therefore, you need to make sure you can cut through it.

Finally, get help

There are a number of free, like SCORE, and paid sources, like ProStrategix, that can help you.  With margins of error so tight, there’s not a lot of room for trial and error.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Small Business Lending is Booming – Are you Ready?

small-business-lending-is-booming

“The small business lending market is booming, and it’s not the traditional banks that are benefiting.”, Donna Fuscaldo from Fintech wrote in her article “PayPal’s Latest Milestone: $10 Billion In Small Business Loans” published in Forbes this month.  It’s not just PayPal® that’s booming: Stripe®, YapStone®, Braintree®, Adyen®, Lending Club®, and Kabbage® are all jumping in.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Are you ready for this small business lending boom?

Remember the housing boom and financial crash of 2008?  It’s not that bad, but it is buyer beware. These are great companies, but with all this competition, these small business lenders may be willing to provide loans to business who really aren’t ready for them.

How do you know if you are ready for the small business lending boom?

Before seeking a loan, it is important to know how you will use that loan to get a greater return (grow faster) than the interest rate being charged.  This is where a little planning upfront can save you a lot of pain later.  Luckily, there are a couple of easy tools you can use to lessen your risk and to gauge how ready you are to capitalize on this small business lending boom.

First, Do You Have a Business Plan?

Right now, in a booming small business lending market, lenders might be more willing to allow less rigorous plans.  You might think that’s a good thing, but it’s not. 

Remember, if you can’t grow faster than the interest rate, you’re losing money.  More importantly, defaulting on easy money is just as damaging as defaulting on hard. 

A business plan requires a business model.  Your business model can tell you whether or not you have a good chance to grow at the rate you need to grow in order to beat the interest rate.  Without one, it’s much riskier.

Second, how is your credit?

It’s unlikely that you will qualify for a low interest rate from a small business lender if your personal credit score is less than 700 even in a booming small business lending market. 

For instance, a score of 720 seems to be the magic number.  Above which, your rates start to decrease, and below which, they increase fairly dramatically.  If your score is under 700, you probably should focus on fixing your score, first. Then, you are ready and in a better negotiation position.  If not, then be ready to pay high levels of interest even in a booming small business lending market. 

Why does personal credit matter?  Because, these small business lenders will determine your ability to pay based on your credit worthiness.  If you are over-leveraged, behind, or defaulted with your personal debt, what’s to keep you from doing it with business debt where your personal risk is lower?

Lastly, do you pass the financial tests?

The most important financial test is your debt to capital ratio (DCR). Your what?  This is basically a fancy term which looks at how large of a loan you can afford based on your profits.  Fair warning, there’s a little math ahead, but it’s not too bad.  Plus, it’s important.

You calculate this ratio by dividing your total profits by your total debts. 

Debt to Capital Ratio

If the number you get is less that 1.5, you probably should stop here.  Most banks look for a DCR of 1.2 to 1.25.  They may be willing to go lower in a booming small business lending market. But, expect higher interest rates.

Importantly, these tests exist for a reason. They measure the amount of stress that you are putting on the business. That’s why they are even more important in a booming small business lending market.

If you passed test 1, then how much should you target borrowing?  The equation is below.

But, let’s look at an example: Say you made a profit (net operating income – NOI) of $100,000 last year, and are carrying $15,000 in current debts in credit cards, other loans, accounts receivables, etc, then the amount a small business lender offer would be around $65,000:

If you’ve been in business less than 2 years and/or you lack collateral to offset the debt, the annual total debt will include your personal debt as well.  So, it’s always good to drive down your personal debt if possible before engaging with a small business lender.

Is your head spinning?

If so, you’re not alone.  Unfortunately, this is really important to understand.  The last place anyone wants to be is swimming in debt from a small business lender.  We’ve helped numerous small businesses deal with small business lenders. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Living Paycheck to Paycheck when Running a Successful Small Business?

struggling paycheck to paycheck

There are a lot of questions that you have to ask yourself when you’re running and operating a small business. For example: why am I still living paycheck to paycheck? We here at ProStrategix know how massive a concern that can be for our clients, and we want to help. 

A recent segment on Small Business Radio covered some great material about how to manage your personal finances better.  But, it is missing a few topics. For instance, why isn’t your paycheck bigger? 

Feeling like your business isn’t going the right way? ProStrategix can help. Read some of our other articles below, or feel free to connect with us and get a FREE thirty-minute consulting session. 

Why isn’t your paycheck bigger?

When living paycheck to paycheck, especially if the business is successful, it’s certainly worth asking why isn’t it bigger?  While having bad spending habits should be avoided, for instance, it’s not the only solution. A successful small business owner, most certainly, would not have to live paycheck to paycheck if it were bigger.

First, check your business model

For many of our clients at ProStrategix, the issue usually comes a sub-optimized business model. This happens because of two things: not having the time and/or the experience.

It’s not surprising. After all, the majority of successful small business owners went into business because they love what they do.  It’s that love that keeps a successful small business going, even when living paycheck to paycheck. 

Unfortunately, it’s the mechanics of the business which is the cause for a successful small business to have to live paycheck to paycheck, more often than not.

Next, try to optimize it

Clearly, this isn’t the most exciting part of the business. But, even if you hate it, here are couple of relatively simple hacks to help optimize your business model. Why bother? Because, after some fine tuning, the successful small business owner can usually stop living paycheck to paycheck.

Key steps to increasing your paycheck

Are you spending the most effort serving the right customers?

Who are your best customers?  How might you find more like them?  If it costs you the same to serve everyone, how might you change that?

Are you creating enough value?

Why do your customer’s value you?  What makes you special to them?  How might you enhance that so they might be willing to spend more, or come back more frequently? 

What are all the necessary steps to service your customers?

Can you list them all?  Are there any steps missing?  What does it cost you to complete those steps? Are there any costs you could easily cut?

Know how you are converting sales to cash

Admittedly, this is probably the least interesting of the hacks, but one of the most important. This is where many of our clients turn for help.  If you like spreadsheets, or you want to challenge yourselves, this simple analysis might help.

  1. Is Revenue/Customer (item) > Cost/Customer (item)?  For successful small businesses, this is usually true.
  2. Can you use numbers 1-2 to increase the Revenue/Customer without increasing Cost/Customer?
  3. Can you reduce the number of steps in number 3 to reduce the Cost/Customer?

If this isn’t where your passion lies, we get it.  Luckily, it is ours.  If you are a successful small business, who is living from paycheck to paycheck, Contact us, and we help you stop it.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

3 Things to Know Before Starting a Small Business

Our company, ProStrategix, has helped several small businesses start up and ensure they realized their dream.  That’s what we do. So when we read Daniel B. Kline’s article “3 Things to Know Before Starting a Small Business” for the Motley Fool, we were surprised. Kline highlighted three key things he thought business owners should know: 

    1. The days never end 
    2. You need to sell 
    3. It can be lonely 

While these are true to some extent, it paints a more negative picture than is warranted.  It’s extremely important to know what you are getting into before you leap, for instance. However, to dampen the hopes of the two-thirds of Americans who dream of opening a small business is a bit harsh. Therefore, we would like to offer an alternative to Mr. Kline’s list.   

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a FREE thirty-minute consulting session. 

Thus, the second thing to know before starting your new business is can you make money.

3. Get Help

While it is true that it will be lonely, at times. It may also feel like the days will never end, etc. But, that’s only if you don’t get the help you need.  Help isn’t cheap, but a penny invested wisely in the beginning, will save, earn, or both dollars in the long-run. Finally, the last thing to know before starting your new business is where to turn for help, and more importantly to be smart about adding to your business’s team.

Never be Discouraged from Following a Dream

The truth is that small business makes up ½ of the US economy and ½ of the total US employment.   It’s important to know what you are doing before starting a new business.  While it’s not a walk in the park, running a small business can be a very rewarding experience. Follow our three things to know before starting your small business will only help.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Starting a small business? The 8 things you should know

starting small business

Allana Akhtar’s article 8 things you should know before starting a small business published by the Business Insider is very good, and worth the read.  I agree with a number of tips she highlights, such as:

    1. Figure out how you’re going to finance the company
    2. Have a good team
    3. Find your niche
    4. Figure out your marketing strategy

Some, I think you may have heard before: don’t quit, just go for it, etc. But what’s left?

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

What’s missing from the list of things to know before starting a small business?

There is a big one that she missed. When starting a small business, you need to develop your business plan.  It would be very hard to deliver 1, 3, and 4 without one.  The business plan provides the backup for acquiring capital.   The business plan should clearly spell-out your niche, and a marketing plan devoid of a business plan is like an engine devoid of a car.

Before starting a small business, find an accountant that meets the needs and scale of your business

There is one which I would change, which is “don’t settle for an accountant”.  While I think her points are good, the headline could be read the wrong way.  I agree that having a good accountant before starting a small business is important if you aren’t an expert in the field.  However, there are a lot of pricey accountants that will happily take your money for $200-$400/hr.  I think the key is to find a reasonable accountant, who can give your business the attention it needs.  On this point, we both agree.  Therefore, I would suggest a slightly different headline “Find an accountant that meets the needs and scale of your business”.

Get the Right Help

Starting a small business is hard.  Sometimes it helps to have someone who has been through the process help you.  Having an experienced person or team can help you avoid some of the more rookie mistakes, ultimately saving you time and money. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Infrastructure Would Spur Small Business Growth

infrastructur spur business growth

An article by Bob Dagostino and Tom Sullivan at Business.com highlights how infrastructure investment would help spur small business growth.

Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

  •  

Our Infrastructure is in horrible shape

Therefore, it’s not a surprise. The “latest report card published by the American Society of Civil Engineers gave our infrastructure a D+ rating.”

Top 3 Drivers of Small Business Growth are the Most in-need of Infrastructure Investment

While the antics in Washington may make for good TV, they distract us from more pressing issues.

Small businesses employee nearly 1/2 of the US workforce. Poor infrastructure is its growth. As a result, it also hinders job growth and economic growth. Nearly everyone can agree both job and economic growth are good things. So, why can’t we support a few key infrastructure investments have the best shot at spurring small business growth?

Top 3 Infrastructure Invests that Small Business Owners Say Will Spur Growth.

Most business owners say that investing in 3 key infrastructure projects will spur their small businesses. High-speed internet (64%), local roads and bridges (57%), and cell networks (55%) ranked in the top 3.

Top 3 Infrastructure gaps highlighted by Small Business Owners

Want to guess which infrastructure projects are in the worst shape? You got it. The top 3 which spur small business growth. More the 6 out of every 10 business rate road quality average to poor. In contrast, 57% of small business owners say they very important to their success. Sticks out like a sore thumb, doesn’t it?

The problems are similar for high-speed internet and cell service, but just not as severe.

Investing in technology and basic transportation infrastructure would do much to spur small business growth.

For instance, The Chamber Technology Engagement Center (CTEC) and Amazon studied the problem.

“Small businesses in rural America could experience more than 20% growth with better access to online tools and technology. “

CTEC & Amazon

Furthermore, National Electrical Contractors Association reported that for

“…every $1 billion invested in infrastructure creates 28,500 direct and indirect jobs in our industry.”

NECA

Thus, isn’t it time to put aside the partisan squabbling on policing bedrooms and immigration? Instead, shouldn’t we focus on what can really help spur small business growth in America? 

The good news is that not all parts of the country are in the same state. There are states where infrastructure spending is a priority. Most are in the large urban centers, for instance. Therefore, those small businesses should start to plan on how to capitalize on these infrastructure investments.  Reviewing your business model is a great place to start. 

Knowing how it can impact you, enables you to make smart choices about how to spur your business growth.  If you need help in understanding how to spur your small business growth, ProStrategix can help.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

The Shocking Truth About Small Business Marketing Plans

small business marketing plan

1/2 of Small Businesses don’t have a marketing plan for their small business.

“According to a survey of 350 small and medium business (SMB) owners, 50% do not have a marketing plan for 2019.”  A marketing plan is the engine that drives demand.  Your car wouldn’t get that far without an engine.  The same principle applies to your small business.

Search Engine Journal

Let’s talk about why that is a problem.

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Why is it shocking not to have a marketing plan?

A marketing plan is the engine that drives demand.  Your car wouldn’t get that far without an engine.  The same principle applies to your small business. You may say, “yeah, but I’m doing fine”. Then, I would say, “But, you could be doing better if you had a small business marketing plan”.

Why don’t small businesses have a marketing plan?

For one, small business owners are more stressed about their business.  “62% of small business owners are stressed about their business”, which leads to the marketing plan falling to the wayside:

According to Search Engine Journal:

    •  25% of respondents are unsure of how they plan to grow their businesses in 2019.
    •  55% of small business owners spend less than 5% of annual revenue on marketing.
    •  Over 58% of small business owners spend five hours or fewer on marketing every week.
    • 86% of respondents would rather spend their time on other business activities than spending time on marketing.

This makes sense. Small business owners didn’t start their businesses to be marketers.  They did because the love what they do.

Why having it matters?

However, if you want to grow, the impact of a small business marketing plan is clear.

    • 81% percent of respondents who invested between 5% and 10% of annual revenue in marketing said they experienced revenue growth in 2018.
    • By comparison, only 50% of respondents who invested less than 5% of revenue into marketing experienced revenue growth.

Let’s face it.  A dentist didn’t start his or her practice because they love positioning, value propositions, or writing small business marketing plans.  He or she did it because they wanted to help people keep their mouths healthy.  Many others are the same. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

How to Learn More About Business for Free

learn about business free

Your business is something that needs to be planned and cultivated, but sometimes you don’t have the finances to do so. As Joyce M. Rosenberg highlighted in her article titled “Need to learn more about business? You have many options” in the Washington Post, there are a number of options to learn more about business for free.  But, it’s good to know the pros and cons.

Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

The best ways to learn more about business for free

Small Business Association (SBA)

As Joyce points out, “the Small Business Administration has free 30-minute online courses”.  A lot a basic material is covered and can be useful in providing a foundation.

SCORE – supported by the SBA

SCORE provides free counseling and some online and classroom courses as well.  Sign up at your local chapter, and they will provide you with a list of courses and schedules.

With all this free information, why aren’t all small business owners pros?  There are a couple of simple reasons.

Pros of learning more about business for free

The pros of these programs are easy.  They are a way to learn more about business for free, which are good quality and taught by experienced business people. 

Cons of learning more about business for free

The cons can be a bit less obvious, but you’ve probably guessed it.  Nothing is ever free.

Mainly do-it-yourself (DIY) programs

First and foremost, these ways to learn more about business for free are do-it-yourself (DIY) programs.  It’s like taking a tiling class at Home Depot and then going back home to do your whole bathroom in floor-to-ceiling tile.  While the information is very good, the fact is there is a limited amount of information you can get from a 30-minute video, 30-minute counseling session, or a 2-hour class.  You get home or back to your office, staring at the spreadsheet tools they gave you, and thinking, now what?  It can be very overwhelming.

Requires your scarcest resource – time

Second, what small business owner has the time to take all these classes and courses to learn more about business for free or not?  As in the tile example, at some point, you must ask yourself is it more cost effective for me to tile my own bathroom or hire an expert.

What’s the right answer about learning about business for free?

Just as it is with home-improvement, the right answer is different for everyone.  If you have a natural love for it, then using learning about business for free DIY style is perfect for you.  If not, then it’s time to find the right help. 

Let’s face it.  A craft brewer started his or her brewery because they loved beer, not balance sheets.  Many others are the same. 

At ProStrategix, we get that.  We’re designed to help give you the business support you need so you can focus on doing what you love, not learning about business. 

If you’re just interested in learning about business for free, we have some free tools to use. You can also search our blog for more helpful tips. If you would like to learn about how we might be able to help you more directly, please contact us.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

4 Tips for Expanding Your Small Business into New Markets

Figuring out how to expand your small business is a concern for many of our customers, and there are a lot of ways to take a small business to that next level. In Michelle Guilbeau’s article “3 Tips for Expanding Your Small Business Into a New Market” on Radio.com, some of the ways in which you can grow and shape your business for the future are discussed, and we wanted to highlight them even more. 

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a FREE thirty-minute consulting session. 

Expanding your small business via vertical markets

You operate in New York City, and then, you expand into New Jersey, etc. The key is to ensure that your business model is reproducible. If the new location is very different than the old, then it might not make sense to expand. For example, if the New York City business model is driven by a lot of foot traffic, it may not be easily expandable to New Jersey. In New Jersey, foot traffic is

minimal because car are the dominate mode of transportation. Therefore, this business may be better suited to other major cities.

The missing tip – expanding your small business through adjacent markets

An adjacent market would be selling the same product in a market close to the one you are operating now.   For example, if you are selling bulk paper to schools, it’s not a far stretch to sell bulk paper to businesses, etc. Since it generally requires only minimal changes to your value chain, the cost of expansion can be much less.

Build Scale Smartly

However you decide to expand your small business into new markets, it’s important to make sure that your business can manage the additional demand by building scale smartly.  Analyzing your business model is a good place to start, followed by revising your business and marketing plans

accordingly. An ounce of planning can reduce a pound of headaches, and we‘re good at planning.  

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

3 Golden Rules to Nail a Pitch

golder rule nail pitch

It’s amazing how many pitches are wasted. They could have easily been saved by following these three golden rules to nail a pitch.

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

First Golden Rule to Nail a Pitch: Have an elevator pitch that is less than 10 seconds

First, investors are busy.  They hear thousands of pitches every day.  If you can catch their attention in the first 5 seconds, you’ve succeeded at the first golden rule to nail your pitch.  If you can’t communicate the essence of your idea in less than 20, you’re sunk.  For how to write a pitch, see our post “How to Write an Elevator Pitch in less than 10 minutes”.

Have a pitch deck with no more than 10 slides

Second, you have to prove that you’re worth an investors time.  If they are leaning in after the first 2 slides, you’ve nailed the second golden rule to nail your pitch.  If you take more than 15 minutes to get your idea across, say thank you and leave.  Remember this simple fact: The person who does the most talking is losing.

Have a complete business plan ready

Finally, it all goes back to valuing the investor’s time.  He or she doesn’t want to have to work to make sure you have your ducks in a row.  Producing a plan when asked means you’ve just nailed the third golden rule to nail your pitch.  Time is money to you as well, so any lost pitch is money thrown out the window.

Fortunately, you don’t have to do this by yourself.  At ProStrategix, we offer fundraising advice and guidance for those seeking to raise capital.  We also provide some free do it yourself tools. For other free tools and classes, you may want to visit your local chapter of SCORE.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.