$50k/year and no takers: the rural workforce shortage

Rural areas with sparse population, like western Oklahoma and Kansas, are up against a brick wall that is a workforce shortage.

G.L. Hoffman has the story of his cousin Craig, offering $50,000 a year, health care, and home, for farm workers. No takers. Too far out in the country. Too much hard work. Too little urban-style recreation.

Our local health care industry is looking for more ways to grow our own workforce, reaching down to eighth grade to start.

Demographics are not in our favor. Our rural towns are aging out, and quickly.

What might save us? Generation Y. Highly entrepreneurial. Extremely engaged. Make sure you and your community are reaching out to get them engaged with you. Because you don't want to end up with no takers.

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Got a Home Office? How deductible is it?

If you set up your business’s office inside your home, how will you go about deducting the costs of that office?

Since not all of your home expenses are for the business, then some sort of allotment must be made in order to accurately reflect business expenses. A certifiable “home office” that is used “exclusively and regularly as your principal place of business” or “for the storage of inventory or product samples” can be a tough goal to reach. You can check irs.gov/smallbiz and Publication 587 at http://www.irs.gov/publications/p587/ar02.html#d0e239 for further guidance.

Basically, if you can reach the standard, then you calculate the percentage of the home office/storage area to your total house square footage. This percentage is then applied to the various expenses of running your house that would normally be considered by the IRS as personal.

For example, if your home’s total living space (excluding the garage) is 1980 square feet, and, if you have a 12’x15’ “home office” (180sq ft) plus the attached closet of 3’x8’ (24sq ft) that equals a total of 204sq ft for your Home Office. This makes your business percentage 204/1980 or 10.3%. Therefore, 10.3% of household expenses may be business related—i.e., electricity, natural gas, water, sewage, rent or mortgage interest, home repairs, homeowners insurance, real estate taxes, etc.

Now, how can this be tied to your “envelopes of expenses?” Easy: label your envelope “Home Office.” On the outside record your calculation for percentage of office use. Inside put your utility bills after you pay them, your receipts for paid whole house-type repairs/maintenance, your notice of real estate taxes due (after you pay), your bill for your homeowners insurance (after you pay), your annual notice of mortgage interest paid, you get the idea.

If your “Home Office” is actually in a separate building or shed or you completely convert an unattached garage, but your utilities, etc are all inclusive, then you still need to calculate percentage of use. The best part of “shed working” is that there is a much lower standard for calling it your office (see the IRS web site). This is a good thing.

Some seemingly home-office-type items exist. These items may be totally or partially deductible on a different percentage from that allotted to your home-bound office. These items will require some special attention and their own envelopes.

Phone: You cannot, under any circumstances, consider the first land line into your home as a business expense—even if you never had a land line before. The IRS simply will not stand for it and they have never lost a Tax Court case on this issue. However, any long distance charges incurred for business purposes are business expenses. As are any special features you might have for strictly business purposes.

I have caller ID, call forwarding and remote call forwarding as the only special features. I signed up for them because of my business. I consider them business expenses along with their respective taxes each month.

Additionally, a second line to your home-office-shed or into the house for fax or internet connection or as a phone in your home office can be fully deductible.

Cell: If you carry a cell phone that you got for business use, or if you converted your personal cell to business use and you quit text-ing your bff, the associated costs are business expenses. If each month’s cell phone bill itemizes calls, you should mark any that are not business related even if your plan-cost is all-inclusive. Do this each month when the bill arrives. It will be much easier to do the closer to the event you do it. Besides the IRS loves “contemporaneous” records.

Internet/wireless services: If you can honestly say you incur these expenses for your business, then they are deductible.

Cable TV service: Well, this sort of depends on what kind of business you are in. If you are a part time, semi-pro actor/actress who feels that viewing the excellent performances on TCM, HBO, etc., enhances your craft, you could deduct the charges for those, but not the basic cable service. I know a farmer who uses his cable service to access a commodities forecasting “channel,” this “channel” is deductible as ordinary and necessary to his business.

We have been talking about these items being deductible, but where? Since you are a sole-proprietor on the cash basis, deductions go on the Schedule C.

Now, this is a topic that has gone to Tax Court innumerable times. So, I'd be glad to try to answer any questions you have about home office deductions!

[Photo by CC Chapman on Flickr, used under Creative Commons License.]

This article is part of the Small Biz 100, a series of 100 practical hands-on posts for small business people and solo entrepreneurs, whether in a small town, the big city, or in between. If you have questions you'd like us to address in this series, leave a comment or send us an email at becky@smallbizsurvival.com. This is a community project!

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Share the joy in the Brag Basket

Each Friday, I open the brag basket as a fun place to give someone a pat on the back, brag, or promote yourself and your projects.

Tony Katz explained why this matters:

It's ok to have success, it's ok to have great things happen in your life and it is ok to talk about those things. Embrace the good things that happen and the work that it took to get the good things to happen. Then, focus on more good things, and make them happen. The vision is only achieved through the action.

Last week, I bragged first! JoeC rightfully bragged on a speaking invitation. Gloria bragged on some terrific friends with a terrific cause. Marco dropped by with encouragement; thanks, Marco! Sheila reported in, under orders, to talk about her upcoming event. Kay is doing a book! Todd's excited about our group advisory board. Tony is happy he made a good decision and a good move. Karen is happy about her move, too, from Blogger to WordPress. I love the Brag Basket!

Will you put something in the Brag Basket this week?

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the weekend, and I'll open a fresh Brag Basket each Friday.

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Discussion question: getting follow up sales right

I downloaded a free ebook. A week later, the publisher followed up with a 50% off offer for a closely related (more advanced) print book, plus a free gift or two. Limited time offer and a money back guarantee. PS: Get FREE SHIPPING when you add a second book to your order!

I thought it was good follow-up selling. Other people might think it was too much.

What do you think?


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Free upgrade

By Jon Swanson

I rented a car on Hotwire. They gave me Avis as the best price. We got to the airport and the counter person said, "would you like a free upgrade to a convertible?" I was still flying and so I hesitated. "The weather will be much nicer this weekend," she said. I agreed.

We walked out to the designated parking space and saw a silver Mustang convertible. "That's not ours, is it?" said Nancy. Her eyes lit up. It was.

I told my dad. He got excited for us.

We went for a drive with the top down the next morning while waiting for friends, listening to birds, smelling trees, looking at an unfamiliar New England town. We got back to our hotel as they showed up. "A convertible? No way!"

He and I drove on I 495 with the top down. After playing at the park, we took the 6 and 8 year old for a ride.

More friends showed up. "A convertible?"

A couple days later, the three guys, not always known for being macho, climbed in the car to get meat for grilling.

Late that evening, a three-year-old got up. She had been sick all afternoon and hadn't been around for the rides. It was dark, but the car was leaving in the morning. So we went for a ride, she and her dad in the back seat.

"The stars are following us," she said softly.

It was a free upgrade, something that cost Avis nothing, and they already had been the lowest price rental agency. But their free upgrade changed lives.

What do you have, what can you offer a customer, what small thoughtful gesture can you make that will delight a three-year-old in Maine...or your town?


Jon Swanson is your customer, presenting every day perspectives in a new way. He was a regular contributor to the Great Big Small Business Show podcast, as the Entrepreneurial Chicken. Jon is the author of the best small business post ever.

[Photo by Jon on Flickr. Used with permission.]

The easiest accounting system

So, you have decided officially to become a “business.” Now, what? Well, in order to know how well your business is doing, you will have to keep track of income and expenses: just guessing is not enough.

Unless you have specifically chosen otherwise on your tax return, you'll be reporting on a cash basis. This means there is no income until you actually receive the money and you only incur an expense when you pay it by cash, check or credit/debit card.

One of the simplest most straight-forward methods I have been able to think up involves the use of several envelopes. These can be small size or legal size or larger on up to even 9”x12”.

Start by labeling the envelopes. Get a broad-tipped, black permanent marker. Print in block letters big enough to be read easily. This is not the place to get fancy. Keep it simple and plain.

The first and most important one is “Income.” Into this you could put your copies of the invoices you have submitted to customers for which you have been paid. Or if you would rather keep your copies of the invoices somewhere else, you could just simply start listing—using a black fine line permanent marker—the amounts and dates received and maybe the name of your customer: quick to total up; all at hand.

Now, start labeling one envelope for each type of expense you normally have. Maybe “Supplies” and “Advertising” and “Travel” and “Entertainment.” You get the idea. However, there can be a problem with your utilities if you work from your home. More on that in a later post.

OK, you have all your envelopes labeled using a broad-tipped black permanent marker. Now, let’s make the whole thing work. You have your income all listed on the “INCOME” envelope and you have several labeled expense envelopes. Into each expense envelope, put the receipt for each expense once it is paid—remember paying with a credit/debit card is the same as paying by cash or check. On the outside of the envelope use black permanent marker (this one can be fine-line) and record the date and amount.

As you add more and more receipts, keep the outside record lined up one under the other so that adding them up at the end of the period will be easier. If you use a calculator with a tape to total the items, staple the tape to the outside of the envelope or place it inside with the receipts. Write the beginning and ending dates included in the envelope and the total expenses for this envelope’s category. [Quick Tip: It can make the total easier to spot quickly if you underline it with a double line or circle it.]

Now, get an envelope large enough to hold all the other envelopes. On the outside list the dates covered. Then record the total income for that period. List the name and total of each expense envelope that you added-up. One more addition: add all the totals of all the expenses together for a grand total of expenses.

You have just made a very good Profit and Loss Statement. If you go ahead and subtract the grand total of expenses from the total for the income, you now know how much you made for the period covered by your envelopes!

If you break the year into several periods—say, quarters, you can easily add your totals for each quarter. Add the totals for all four quarters and there is the P&L for the year.
Your tax return is now a snap to prepare!

Another benefit is that you can quickly and easily pull together a Profit & Loss to give to your banker or prospective investors.

Start the process all over again.

This article is part of the Small Biz 100, a series of 100 practical hands-on posts for small business people and solo entrepreneurs, whether in a small town, the big city, or in between. If you have questions you'd like us to address in this series, leave a comment or send us an email at becky@smallbizsurvival.com. This is a community project!

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Apply the Simplified Marketing Plan to Online Tools

With 89,567* online tools for connecting, sharing, networking, etc., how do you ever prioritize and keep online socializing from taking over your work?
[*I made up that number, of course]

Our Friend Glenda Watson Hyatt set me to work on this topic, and explained what she meant via email:

My quandry is: I have all these tools - twitter, facebook, MyBlogLog, YouTube, flickr, ziki, Linkedln, stumble, digg and, of course, my two blogs - some of which I use way more than others. I would like to know how to integrate them effectively so that I am using them efficiently and maximizing benefits. How do I analyze which ones I should keep? Drop? Add?? How much time should I spend on each? Doing what? I mean could spend all day every
day using them, but that doesn't get my actual work done. Where do I draw
the line? And then how do other marketing strategies [ezines, article directories ] fit in?

Believe it or not, I have a plan. It's our Simplified Marketing Plan.

Health Care’s Innovation Lock-Down

By Zane Safrit

Do you stay at your job for the health care benefits? You’re not alone. Lots of American workers are held hostage by their company-sponsored health care benefits.

This employee hostage scenario is more and more common: Your company’s changes have marginalized your contribution, maybe your income, definitely your happiness.

You’d like to leave. You’d like to join that small startup company across town. It’s innovative and smartly run. Everyone who works there raves about the mission, the opportunity to contribute. They arrive early, leave late…and it's because they're inspired to make a difference.

That’s how your current company was when you and your friends started working there 3-4-5 years ago. But, since then it’s grown, it’s changed. The company devotes more resources to an employee manual than to serve your customers. Your day is spent in meetings, upstreaming reports to the next level. The bureaucrats have arrived. And out the door went the life, the passion, the innovation that drove your company’s growth.

And you and your colleagues now arrive on time and leave on time.

Oh, the company’s still thriving. It’s profitable. It’s in the cash-cow phase and the owners are milking it before it’s sold just before it goes to market or your industry reaches the commodity-hell.

But you stay because you need the health insurance coverage for yourself or your family.

All your talent, all your skills, all your knowledge, you as a talent resource, goes underutilized. Wasted. Marginalized. And lost in this process is the productivity that results from the proper use of a company’s most important asset: you.

That lost productivity is measured in lost opportunity costs. Translation: it’s the costs of the opportunities a company can’t exploit because they don’t have you, the talented and skilled and motivated you, and millions like you. Those costs are measured on a national level by rising unemployment numbers, lower GDP numbers, lost innovation that keeps our country competitive in the global economy. It’s measured in the rising brain drain as more talented people choose other destinations, countries, where they can not only contribute to innovative solutions, they won’t be held hostage by arcane business models for providing health care for them as employees or just as a human being.

Let’s drill down one layer.

For small companies this means a near-impossible hurdle to clear. That hurdle is offering health care benefits as an employee benefit. This benefit is critical in recruiting and retaining the most skilled and knowledgeable worker. The one that not only brings enthusiasm at the prospect of once again working for an exciting, motivated, open, innovative company, but one whose skills enable a significant contribution.

Job-lock or hostage-by-health care is a crippling disease for the small business community. And that makes it a crippling disease for our economy. Jobs drive our economy. Small business drives job creation. (Doubt it? When’s the last time you heard a major US corporation was [adding] thousands of jobs? )

But small business can’t drive their vision without the talented human assets. And one of the biggest hurdles to this is their difficulty in creating a company sponsored health care benefit for their employees.

Why’s that? It stems in large part from the business model health insurance companies have created for group health insurance plans. This model treats each group as a standalone profit center. So, individual premiums are priced based on the group revenues they’ll deliver to the provider compared to the expected costs from the members’/employees’ claims. And a small company’s group plan, with its limited number of members and their limited amount of premium revenues creates a limited potential profit easily wiped out with but a single claim from one employee.

It makes sense, financially. You have revenues; you have costs; you have business risks. Big companies love it. It’s easy to administer and it’s a powerful recruiting tool when you can’t offer an exciting, innovative, meaningful workplace. You offer security, peace of mind. There’s no way to compete against that while not putting your family at risk.

The unexpected outcome of this is the insurance industry has walked away from the premium revenues from hundreds of thousands of small businesses with their combined millions of employees. Individual plans are too expensive for many small business employees. And group plans are too expensive for the company to offer.

(As a CEO of a small company I know that premiums were more expensive under a group plan than individual plans. And still they were too expensive for some. So we raised their salaries above average for a company our size, our industry and our community.)

And as a result,

1. Rising costs of health care are passed on through rising premiums to a smaller number of existing customers,

2. Small businesses and their contribution of jobs and innovation and community development continue to struggle to find the talent to drive their growth,

3. Large mature corporations, no longer driving job growth through innovation or change and choosing instead to maximize profits for shareholders, are able to, in effect, hold their talent hostage for their need of affordable health care. And thereby they stifle the development of their most difficult competitive challenge: innovative products from small companies.

4. Consumer choices grow increasingly limited.

5. Solutions for our national challenges are increasingly limited to those that only benefit the corporations who’ve benefited from the creation of the problems they seek to solve.
   
   

It’s a mess. It’s likely going to get worse. There’s too much infrastructure invested in our current system. But it’s not going to get better until more complaints and outrage and solutions and demands for solutions are generated.

I’ve blogged about a few solutions here: Health Care Victories This Week.

Together, we’ll create yet again the best health care system in the world. And besides, looking around the room, I don’t see anyone else but us here to do it.

About the Author: Zane Safrit’s passion is small business and the operations’ excellence required to deliver a product that creates word-of-mouth, customer referrals and instills pride in those whose passion created it. He blogs about health care issues each Monday at http://zanesafrit.typepad.com. There on the sidebar is a list of blogs and resources to educate yourself on the health care challenges you face, I face, we all face together. He also writes on small business, word of mouth, marketing, branding, innovation, and failure.

He previously served as CEO of Conference Calls Unlimited.

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Shawn Kirsch is changing Elgin, ND, forever

This post is the fourth in a series on social media and social networking tools for small towns.

By Shawn Kirsh

Well I was born in a small town
And I live in a small town
Probly die in a small town
Oh, those small communities

All my friends are so small town
My parents live in the same small town
My job is so small town
Provides little opportunity

John Mellencamp sang the classic rock song, 'Small Town.' The words of that song still ring true throughout America, in ways that are both good, and bad.

I was born in a small town, raised on a farm and in a small town, saw the world (Iraq) after I joined the National Guard, and came back to that small town. I am back in that small town partly because of mistakes I have made, partly because I love it. I have realized that had I not made some of the mistakes I made, had the college I was attending been teaching me anything about computers and the internet that I didn't know in Jr. High, I probably would have been like so many geeks of the midwest, left North Dakota, and be working in Silicon Valley for some high tech company. Instead, I have started writing a syndicated column in small town, weekly newspapers, 'Everyman Tech,' to help small town people get a better grasp on the technology that is helping me to do the things that I do.

I went to a High School with a brilliant administration, who stretched every dollar they were given to it's maximum efficiency. They somehow managed to keep brilliant teachers there, especially in the Math and Science departments, who could've been earning twice as much elsewhere. This allowed me to go to college and be bored out of my mind. I think most small towns have schools like this. Teachers who care, who truly understand how to get through to us. The majority of my classmates were still the kind that take what the book says, and go with it. It helps them to get good grades, but the rest of us, left with a great education, and an ability to think for ourselves, always questioning things, pushing to make everything around us better than it is. We like to think outside the box, we're a creative group that doesn't want to settle for what's there, but to enhance it.

I attended a very strong Church, which is both their greatest trait, and their biggest downfall. I am part of Generation Y, and you don't reach us the same way you reached people 20 years ago. My Church, like many others, hasn't come to terms with that yet. I spent many years of High School, and many hours of my time now, dreaming of how to reach out better.

I am in a community with a strong German heritage, we celebrate Oktoberfest every fall, and German's are stubborn. If you think it's hard to change the mindset of a Church, try to change the mindset of an entire county, who can't see the writing on the wall, who don't realize that we're not getting 'new' business, we're getting 'replacement' business.

I have been quoted on Twitter, which is kind of like instant messaging on crack, saying things like, "I've been tweeting like crazy this month, there's no turning back now, Twitter is the most key part of my day." Basically, I finally started adding some friends on Twitter in mid-December, and kept on adding. 'Bentrem' was instrumental in the things I have done since, continuously pushing me to establish a legit blog, not the quibbles I put up on MySpace and Facebook. Out of this, www.thattalldude.com was born. I have since gone on to write on a variety of topics, sports, religion, technology, TV, random tech news, and most recently; Small Town, USA.

I'm tired of seeing my small town die a slow and painful death, watching good people leave because they can't make enough money, or there aren't enough conveniences. Part of this is an infrastructure problem. Cell phones and internet are now an integral part of a successful business. Huge portions of rural America have either painfully slow 'high speed' internet, spotty wireless coverage, or both. I'm showing some stubborness myself, by not leaving, despite the crappy internet connection I have. With the appearance of new communication methods, such as Twitter, Seesmic, YouTube, blogging, rural America can benefit hugely.

Twitter, blogging, and the comments on my blog, have helped me to realize a broader picture of what's going on in Small Town, USA. This increased knowledge has prompted me to be more vocal around town about things, which has lead to pitching a ground up redesign of a local town's website (www.elginnd.com), and the local paper wanting to establish a digital version of what they print every week. My Church has also shown an interest in getting a web site. I have big ideas to help the Google rankings of all of these places, through the means of YouTube, Flickr, Google Maps, as well as promoting the work I have done on my own blog and LinkedIn.

My activities online have created new opportunities for me, that small town people find hard to believe. I now write for www.projectspurs.com, because the administrator spotted my blog writing about the Spurs, and thought I would make a good addition to the fansite. I write 'Everyman Tech' every monday, because my voracious new consumption online, combined with regular conversation, proved that there is very important things that people should know, and have absolutely no clue about, things as basic as defragmenting your computer, as well as exposing them to online networks their kids use every day, like Facebook. I am also receiving an increase in calls for computer help, as more and more people realize I know a whole lot more about computers than I let on.

If you are running a small business, whether it's struggling or doing quite well; if you care about your small town; if you want your Church to reach out in more effective ways; you need to be networking with people online. If you can find a couple hours a day, Twitter is great. Find some quality blogs to keep up with. Get on LinkedIn, troll through Facebook, and see what recent graduates think about their hometown once they're at college. Better yet, start your own blog, ask some hard questions. Take that question, and the feedback you get, and talk about it with people in your town. You'll be surprised at just how much a small town can be doing, and isn't.

People need to step up and make a change, will you be one who steps up? My newfound focus on my small town has prompted a desire to tour America, visit hundreds of small towns, talk with the people there, and blog about it. This will help not only me, but could help thousands of people across the country network with each other, and share the strategies their town is using, what works, what doesn't. The internet is a big place, with plenty of tools to connect, Twitter is my personal favorite.

Don't waste any more time, start connecting now. Visit www.thattalldude.com, I have a list of places you can find me on the right side, don't hesitate to connect.

Photo by Shawn Kirsh, on Flickr. Used with permission.



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Four Small Town Game Changers

Social media tools can be a great field leveler for small town professionals. I explained why we bother spending time on social networking at Liz Strauss' Successful Blog, and then offered some practical ways to get started at Chris Brogan's blog. Now, let's do a little show and tell. Here are four people living in small towns and making great use of social media tools.

Ted Demopoulos

Ted Demop is the ultimate in effective internet presence from a small town. He lives in a rural area of Durham, New Hampshire, about 25 minutes drive from Maine, Massachusetts, and the ocean.

Go ahead. Google his name. But take a snack, because he is super-present online, from his books, his consulting, his speaking, and everything else. When he started blogging in 2004, he had concrete measurable results in less than 24 hours. His web site traffic quadrupled in less than a month because of his blogging. He was able to leverage it to sell speeches, training and consulting.

Ted says he would add that social media offers a huge benefit in learning from and networking with other similar small businesses in small towns that you'd never encounter otherwise.

"Amazing what a meat packer in central Saskatchewan can learn from an organic food store in Eastern Washington," Ted said, "and a practical joke/magic shop owner in upstate New York can learn from a car wash entrepreneur in Karamea New Zealand! (examples made up -- there are no car washes in Karamea!)"

Cody Heitschmidt

Cody Heitschmidt is based in Hutchinson, Kansas. Besides using blogging for his business, he's finding other important benefits to social media.

"I just like meeting people and seeing whats going on in there lives and broadening my mind through them," Cody said. "Not directly business related but valuable to my mental state."

He also uses Twitter to keep up with what is going on in the world, tech, business, and sports. Facebook is helping him to reconnect with friends from the past. To keep up with Twitter and Facebook and three email accounts, he coordinates through Digsby.

While the actual business or career networking is a smaller part, it has led to some business for him. But it's also enjoyable.

"Crap, it's just fun isn't it?" Cody said.

Britt Raybould

Britt Raybould is from a small town in Idaho. She works social media a little differently. Rather than trying to put herself out there with social media, she more often uses other people's social media to connect with them.

She finds potential partners and also friends. Living in a rural area means having a limited peer group locally, but Twitter helps her to maintain contacts with like-minded people in other places. She has also turned it into a way to learn new business skills, experimenting with WordPress, PHP, FTP, hosting, etc. Now she can offer those skills to her clients.

"I've had a few jobs come from Twitter and my blog, but in my case, I view it as a way to have conversations I wouldn't otherwise have," Britt said. "For all the business chatter about social media, I sometimes think we overlook that, at it's most basic, it's comparable to two neighbors chatting together over a fence."

Shawn Kirsch

Shawn Kirsch is going to change Elgin, North Dakota, forever. He's starting by using social media.

His online interaction from blogging and from Twitter have motivated him to take action in his town. He pitched a complete redesign to his local town's website, and now his local paper is wanting to establish a digital version of what they print every week. His church is also showing an interest in having a website. Now he's writing a column called "Everyman Tech" for the local paper. By writing about the Spurs on his blog, he got noticed by the administrator and picked up by www.projectspurs.com.

"I've had more unique ideas, that are both feasible and potentially life altering, than I ever would have had without Twitter, and I owe it all to the inspiration my Twitterbuds give me throughout the day," Shawn said on Twitter.

Shawn has lots more to say, in a guest post by him to complete this series of four articles.

You

What's your story? I'd love to hear about it in the comments.

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What could I possibly put in the Brag Basket

Each Friday, I open the brag basket as a fun place to give someone a pat on the back, brag, or promote yourself and your projects.

Tony Katz explained why this matters:

It's ok to have success, it's ok to have great things happen in your life and it is ok to talk about those things. Embrace the good things that happen and the work that it took to get the good things to happen. Then, focus on more good things, and make them happen. The vision is only achieved through the action.

Last week, I opened the brag basket early, and you all jumped right in! Barbara Ling bragged on getting back into something she loves. Meg gave a big pat on the back to her friend Susan on the release of her book. Zane and Marco both bragged on their wives. Sweet! PokerPlasm was happy with his report building skills this week. 1379kids dropped in to announce their new website. Robbin has some great weight loss to brag about, and Rob told us a great story about the nonprofit he heads up. I love the Brag Basket!

Will you put something in the Brag Basket this week?

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the weekend, and I'll open a fresh Brag Basket each Friday.

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4 part series on Social Media from a Small Town

What could a small business in a small town gain from spending time on social media tools like blogs, Twitter, and FaceBook? And how can they get started? And is anyone doing this right now? Those are the questions around our 4 part series on social media for small town small businesses.

1. Social Networking and a Small Town Business - Why Bother? at Liz Strauss's Successful Blog explains four different ways you can benefit from these tools, besides just looking for customers. (honestly, she proposed the title and topic!)

2. Social Media Starter Moves for Small Town Small Business just fit right in with Chris Brogan's series of social media starter moves. So that will give you four different strategies and how to use them.

3. Four Small Town Game Changers profiles people who are using these tools right now to improve their business from small towns.

4. That Tall Dude is Changing Elgin, ND will give you a more in depth look, with a guest post by Shawn Kirsch.

Hmmmm.... maybe we need to pull those together into an easy to download e-book...


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Local stores worth 3 times more than chains

Need ammo for your shop local campaign? Use this fact: local merchants are worth three times as much to your local economy as the chain stores.

From Civic Economics:

The analysis demonstrated that locally owned merchants generate more than three times the local economic activity of their competitor chain stores on equal revenue.

Found in The Full Value of Main Street, at Preserving Small Towns. Pointed out by Small Towns.

We know why. The local merchants spend much more of their money locally. The chains ship profits out of town. The local merchants are more involved in the community. The chains feel no ownership in your town, and their local managers are limited by corporate policies.

Thought you might be able to use that in your local Chamber of Commerce shop local campaign.

UPDATE:

We've written a step by step guide to starting a shop local campaign in a small town.

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What about the economy?

Every day we're hit with conflicting economic news. For my first guest post at the Small Biz Pod (UK), What About the Economy?, I offered some thoughts about what it means to be a small business owner during troubled economic times.

Rather ambitiously, Alex Bellinger gave my guest posts the title of Small Business Letter From America. Now there's a legacy to live up to. Watch for more letters from me monthly at Small Biz Pod.

Several other sites have allowed me to submit guest posts, so watch for more links to those great resources. (Hint: another announcement will be out on Thursday!)

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To understand your customers look in the mirror

By Jon Swanson

You wonder about your customers, whey they don't come back, why they choose others. But look at how you function... as a customer.

Not for your business, but for your personal life (and I know, small business owners have no personal life. But just pretend with me for a moment).

When you need gas, how do you choose?
When someone ignores you at a store, how do you feel?
When you walk into a store, do you want help or do you want to find it yourself?

Now that you are thinking about how you are, remember that there are a billion people NOT like you. If you have tailored the shopping experience in your business to match your preferences, there may be some of those 1 billion people who will feel very uncomfortable and will not want to come back.

So as you think through the shopping experience in your business, think about people like you... and people who are the opposite.

Jon Swanson is your customer, presenting every day perspectives in a new way. He was a regular contributor to the Great Big Small Business Show podcast, as the Entrepreneurial Chicken. Jon is the author of the best small business post ever.

Brag Basket opens early and stays late

Each Friday, I open the brag basket as a fun place to give someone a pat on the back, brag, or promote yourself and your projects.

Tony Katz explained why this matters:

It's ok to have success, it's ok to have great things happen in your life and it is ok to talk about those things. Embrace the good things that happen and the work that it took to get the good things to happen. Then, focus on more good things, and make them happen. The vision is only achieved through the action.

Last week, PokerPlasm was the very first to ask for a future brag! Jon actually bragged on himself a little. (Don't miss Jon's new About page, newly renovated, and an excellent example.) Kevin gave a big pat on the back to a couple of friends. Communicatrix offered the lamest brag ever, or so she said, and Bob announced that he is officially in business, though sooner than he wanted. (Bob, give us your link!)

Will you put something in the Brag Basket this week?

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the weekend, and I'll open a fresh Brag Basket each Friday.

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Book II

For the second time, I'm going to be featured in a book. First was Ted Demopoulos, who interviewed me for What No One Ever Tells You About Blogging and Podcasting. Now I'm joining several of my friends, like 275 of them) in contributing to The Age of Conversation II: Why Don't People Get It?

Following the lead of Jon Swanson, here's a little of what I contributed:

I have a blog, but I've been meaning to set up an email newsletter, to do better at posting to my store's blog, and to find the right way to do text messages to customers. But I have a dozen other pressing projects that I know will improve my business and affect my bottom line. I need to get a new sign, reevaluate my pricing model, change the air filter in the air conditioner, and finish an important contract. It's going to take a lot to make me be interested in anything...

Want more? The whole book, with all 200+ contributions, will be out later in the year.

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What to do when your business is being squeezed out of existence

Here's some insight into a business being squeezed out of existence. Professional photography: portraits, weddings, and studios.

If everyone has an awesome digital camera, who needs a professional photographer?
How long can a professional keep charging $55 for an 8x10 print, when I can get one printed online for under $5?
Can enough customers afford a $4,000 base wedding package to sustain a business?

Authors and pro photographers Shawn, Pamela & Gavin Richter have written a fine justification of their expertise and cost at Why are Professional Photographers so expensive? The problem is that a justification like this, no matter how well received by your professional peers, is not a solution to a fundamental shift that undermines your business.

Let's brainstorm. You're smart. How can you help the professional portrait photographer survive as a business? Anything is fair game, from minor tinkering with pricing to a complete re-engineering. The comments are yours.


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Small Town Business Tips Newsletter

To help you continue the conversations we start here, I've introduced a newsletter. It features bonus material that doesn't appear on our site. My hope is that it will be exactly the kind of thing that you might pass along to others in the small town small business arena, to share our conversations.

Note: I will never sell or distribute your contact information to any 3rd party. If it gets to be too much, every newsletter will have instructions on how to opt out.

Fill in as much detail as you like. It helps me to know more about you. But the email address and a first name are required.

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How to convert freebies into paying clients

Every small service business gets them: people fishing for free help, or asking twenty questions so they can go off and do it on their own. If you don't have an established way to help them easily and convert them into paying clients, you are missing out on business and going crazy, I'll bet.

Cody Heitschmidt (@codyks) mentioned to me that he gets three or more calls a week from people wanting his free advice so they can do their own websites. What can he do to convert these people to potentially paying clients, without driving himself to distraction and bankruptcy with giving free help?

Educate them on your terms

The basic answer is to offer them the help they need, but in a way that respects your valuable time. Here are two ideas of how to educate people on your own terms.

Create a standard booklet you give to people that want to do it themselves. Invest a few hours in creating a simple how-to booklet, and recoup those hours you would normally spend trying to assist the freebie-seekers. You probably have all the info you need on your blog.

Why not do workshops? Charge a modest fee. Then Do-It-Yourself-ers can be encouraged to take the class. This lets you group up the learners, help them all a certain amount, get paid for it, and allow some of them to see that they really do want professional help. Then the next time you get hit up for more free advice, you can hand out a flyer for your workshop.

The goal is to give them some help, but do it in the least time-intensive way possible. And to make them as likely as possible to come back when they graduate to wanting professional help. The more you give away, the more you get, if you are smart about how you do it.

Cody already teaches classes, and he has plenty of clients. But we all need ways to give good customer service, even before the person becomes a paying customer.

This article is part of the Small Biz 100, a series of 100 practical hands-on posts for small business people and solo entrepreneurs, whether in a small town, the big city, or in between. If you have questions you'd like us to address in this series, leave a comment or send us an email at becky@smallbizsurvival.com. This is a community project!

Get the whole series by subscribing to Small Biz Survival. New here? Take the Guided Tour.

Small business ideas for small towns ebook

Need ideas for a small town small business? We have a new ebook for you.

20 Small Business Ideas for Small Towns is a short ebook detailing 20 different ways you can make a successful business in a small town. It also covers seven ways to generate your own ideas, so you can dream up the small biz idea that best fits you.

This booklet is brought to you by Network Solutions, thanks to their Social Media Swami Shashi Bellamkonda.

And here's the link to download 20 Small Business Ideas for Small Towns. Enjoy!


If you want to purchase paper copies in bulk, just send me an email.

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A fresh Brag Basket is ready!

Each Friday, I open the brag basket as a fun place to give someone a pat on the back, brag, or promote yourself and your projects.

Tony Katz explained why this matters:

It's ok to have success, it's ok to have great things happen in your life and it is ok to talk about those things. Embrace the good things that happen and the work that it took to get the good things to happen. Then, focus on more good things, and make them happen. The vision is only achieved through the action.

Last week, our old friend Sandra was joined by new friends Carolyn and John. Will you put something in the Brag Basket this week?

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the weekend, and I'll open a fresh Brag Basket each Friday.

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The role of marketing

If you are doing wonderful, exciting things that will help other people, then you owe it to your potential customers to learn marketing and selling skills so you can connect more people to your benefits.

If you are learning marketing and selling skills because your only focus is on generating more money for you, well, then ...

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When NOT to be a Sole Proprietorship: Forming an LLC or S Corp

Sole proprietorship is the simplest form of business, but it also has some disadvantages. So for this installment of the Small Biz 100, I'll talk about some of the situations where you don't want to be a sole proprietorship and what types of business you might want to form.
Note: All of this discussion is specific to small businesses in the USA.
Note 2: More info on when TO be a sole proprietorship is in the Checklists for starting your first business post.

When not to be a sole proprietorship

If any of these factors apply, then it's time to look at other forms of business:

Ownership - if you want to bring in a partner
Liability - if you have the type of business where you are more likely to be the target of a lawsuit
Taxes - if you are going to do so well financially that taxes are going to be an issue
Investment - if you want to be able to bring in other people in an ownership position
Selling - if you want to sell the business and make it easy to transfer to new owners

Other business structures

If any of those qualifiers applied, or you have other reasons, you can start your business with a different form. If you've already started your business, you can convert to another form at any time.

Above sole proprietorships, the two most reasonable forms are LLC or S Corp. These two share some benefits:

• Both offer some liability protection for owners (if the company is sued, you are not personally liable, usually).
• Both types can have multiple owners.
• Neither type requires a separate tax return.
• Both allow income to pass through to owners before taxation.
  

What does that "pass through" business mean? It means that the LLC or S Corp doesn't file its own tax return and pay taxes. Instead, the income is passed through the company to the owners. Then the owners declare this income on their own tax returns. Of course, no matter what form of business you create, you are responsible for paying taxes on the income of the business. Sorry! No getting around it. You may be able to reduce your overall tax burden by allowing the new business to hire you as an employee. But if you are getting to that point, you have also gotten a tax advisor, right?

The requirements to form both an LLC and an S Corp are fairly similar.

• Both are treated as separate entities and require a new Employer Identification Number (EIN).
• Both require a written agreement to determine how they will operate.
• Both require filings to create them.
  
• Both require ongoing paperwork, such as official meetings and documentation. (The LLC takes less of this, if you ask me.)
  

LLC - Limited Liability Company
LLC's are regulated by the states, and the rules vary. This means there is not one single guide for creating an LLC. I could tell you all about how I formed mine in Oklahoma, but it wouldn't help you create one in Indiana. The general guideline is to check with your Secretary of State. They usually regulate these filings. You can also check in with your local Small Business Development Center, and they can give you the local scoop.

A few general rules apply nationwide. The owners of an LLC are called members, and the first filing is usually called Articles of Organization. You'll also need to create the governing document, usually called an Operating Agreement. All the members have to agree to those operating rules. Some states allow one person to form an LLC on their own, and some states require a minimum of two people to start up.

LLC's can be more flexible in terms of how they are taxed. An LLC can elect to be taxed like a sole proprietorship (probably best for one person LLC's), a corporation, or a partnership. This is another place where you want to invest in some professional advice, to be sure you select the proper form.


S Corp - Subchapter S Corporation
Because the S Corp is regulated by the federal government, the tax rules do not vary from state to state. So if you plan to do business with locations in several states, go with the S Corp.

Corporations are still created in your individual state, usually with a filing at the Secretary of State's office. Once you've formed the corporation in your state, you need to let the IRS know that you want it to be a Subchapter S Corp, by filing a form 8832 with the IRS. And you need to do that quickly, within 75 days.


General Partnerships and why I don't like them
Few people choose to go into a general partnership anymore. Every partner is responsible for every debt and decision of every other partner. That unlimited liability is enough to scare most people away, especially since more attractive options like LLCs and S Corps can cover partners.

But sometimes people end up in a general partnership by accident. Just like the default form of a single person business is the sole proprietorship, the default form of a multiple person business is a general partnership. If you go into business with a friend, without putting any arrangements on paper, you just formed a general partnership. The good news? You can re-form as an LLC or S Corp at any time.

This article is part of the Small Biz 100, a series of 100 practical hands-on posts for small business people and solo entrepreneurs, whether in a small town, the big city, or in between. If you have questions you'd like us to address in this series, leave a comment or send us an email at becky@smallbizsurvival.com. This is a community project!

Get the whole series by subscribing to Small Biz Survival. New here? Take the Guided Tour.

Embrace good things in the Brag Basket

Each Friday, I open the brag basket as a fun place to give someone a pat on the back, brag, or promote yourself and your projects.

Tony Katz explained why this matters:

It's ok to have success, it's ok to have great things happen in your life and it is ok to talk about those things. Embrace the good things that happen and the work that it took to get the good things to happen. Then, focus on more good things, and make them happen. The vision is only achieved through the action.

Last week, we had a flood of wonderful brags, compliments, and comments, even a few contributions from Twitter! What will you put in the Brag Basket this week?

You can brag on a friend, your own project, yourself, others, anything! You don't need special permission or anything. Just leave a comment right here. There's no deadline, so you can brag anytime during the weekend, and I'll open a fresh Brag Basket each Friday.


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Would you live in a small town?

Our Friend Shawn Kirsch is starting a conversation on living in small towns. His goal is to revitalize his hometown.

I understand completely why people move away, and leave North Dakota completely for that matter. But as much as it may benefit me to move away, and be around more people with the same mindset as me, technology wise, I would rather be the guy who turns things around, and gets people to move here.

Make no mistake. Shawn gets the problem.

The problem I see is the people with money have no vision, and the people with vision have no money. This is compounded by the people that have the clout to do something, don't want to listen to young people with 'radical' ideas like blogging and social networking.

Join the discussion at Shawn's place.

[Photo: My hometown, Alva.]

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The right way to deal with a complaint

We talk enough about small business mistakes and customer service problems, that I'm always happy to share successes, too. Our friend Mike Gunderloy was kind enough to share this story, after mentioning it on Twitter.

We're having our entire yard redone this year - from sprinklers to new patio to replacing every growing thing on the lot (the previous owners' landscaping just didn't agree with us). As part of the deal, the kids are getting a nice new play area, with a giant play structure in the middle. After poking around a bit, I decided to order one of the high end wooden sets made by Gorilla. A little bit further research on the net led me to WillyGoat, who had the exact set I wanted and beat the price that it would cost me to buy from Gorilla directly.

So, I placed the order, gave them my credit card number, and they had 800 pounds of play structure pieces on a truck headed my way the same day. In consideration of my aging back, I paid the extra $60 to get it delivered by a truck with a liftgate. The boxes showed up today, as promised - on a truck with no liftgate. Fortunately, several of our landscapers' helpers were planting things, so I press-ganged them into helping haul the 200-pound boxes off the truck and into my front yard.

Then I called WillyGoat, expecting to run into a barrage of questions and resistance over refunding that extra $60, probably blaming it all on the trucking company. I was completely surprised. The friendly gal on the phone took the order details and promised to get right back to me. Then, 14 minutes later, my phone rang - with the news that the extra charge had been reversed. No questions, no argument, no fuss; they just did the right thing. And if I need more high end play equipment - or anyone else in my neighborhood full of kids does - I know where I'm heading first.

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