News Flash: Merchant Banks Seize Small Business Cash

Cash Vanishes from Merchants' Accounts

Citing the increased risk of bankruptcy, credit-card processors are increasingly demanding—or simply seizing—cash reserves from entrepreneurs

If you're a small business owner or CFO that processes credit cards, I recommend that you review the BusinessWeek Online article, then check with your merchant bank and processor to ensure that you don't wind up in a cash flow crunch. To be surprised with an account drain is the last thing you need with tightening credit and slow receiveables.

One thought on how to protect your funds: Use a separate checking account for your merchant account funds, then transfer them to your main account later.

Another option: Use a service like PayPal to handle transactions from a major new initiative that might dramatically increase the volume of your credit card transactions.

The Importance of Connecting for Success

Last week, Phyllis Campbell, the Pacific Northwest chairman of JP Morgan Chase, gave a wonderful presentation at the Puget Sound Business Journal Live breakfast about leadership and personal success in the current economy. Emory Thomas, publisher of the Puget Sound Business Journal, and Campbell discussed the importance of values and integrity in leadership and about the value of diverse networks for business success. She shared that one of the four points that she learned through her years as CEO at US Bank and The Seattle Foundation, and as an active corporate board member is to always "get ready." The "for what?" she stated, wasn't important. It is critical to be prepared for whatever challenges - or opportunities - might present themselves.

During the Q & A session, I asked for her view on how small businesses and emerging leaders can get ready for what's coming next in the economy and in our communities. Her advice: Connect. Don't pull back when times get tough. It is important to reach out, leverage your network and make meaningful connections. Connecting isn't a personal pursuit: it's about working together as a community to leverage opportunities, give back, and grow.

What have you done lately to connect with your community? I want to hear what you're doing, so please post your comments here or send me an email.

New Action Event for Business Owners, CEOs and Executives

Big Thinking for Small Business and Nonprofits

Just because you're a small business or a small nonprofit organization, you can't be thinking big. I love Michael Gerber's The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It. He talks about a woman who bakes wonderful pies and starts a business selling her terrific pies. Unfortunately, she has been sucked in by the Entrepreneurial Myth and doesn't understand the complexities that go into launching a small business.

Like the woman in Michael Gerber's book, you need to understand that though you're a solo-preneur or have just a small team, your organizational chart looks similar to those of the big guys like Microsoft and Boeing. The only difference is instead of having 4,000 people to fill in the organizational chart, your name is filling in each of the slots. Even if you don't have a team member with the title of "Chief Financial Officer," someone is responsible for -- or irresponsible with -- your finances.

If you have launched a new business or are developing a nonprofit organization, I urge you to spend 20% of your time working on your business, not in it. That means, instead of working the register, baking pies, or making introductory phone calls, use that time to step outside of the day-to-day operations and think strategically. Is what you're doing bringing you the best return on your investment? Are you staying on track to fulfill your vision? What new products, services, and outreach can you be doing to increase cash flow, leverage opportunities, and improve efficiencies?

Spending time each week to focus on the strategic side of your business will help you keep the big picture in mind and make better decisions to improve your bottom line. If you lose sight of these and other key strategic questions, you will find yourself off track and missing the mark on the entire reason you started the organization in the first place.

If you need help setting aside time to work on your business instead of in your business, I encourage you to sign up for one of our Strategy String workshops during small business month. If you prefer one-on-one conversations for your business, drop me a line and ask me about ConsulCoaching and Advisory Sessions.

Financing for small business

In my recent Council for Small Business meeting, we took at look at the hottest topics impacting small businesses this month. As usual, the topic of finance came up repeatedly. Banks simply aren't lending like they should. Some banks and organizations like the SBA are leveraging stimulus funds to make it easier to access capital. Venture capitalists and angel investors are also looking for entrepreneurs and startups with solid business plans. This uplifting article tells of how six small businesses owners financed their dreams through various sources.

If your bank isn't lending to you, consider microlending programs, family members, personal credit lines, and grants in addition to venture capitalists and angel investors. A word of advice: don't use your HELOC for any purchases not related to improving or maintaining your home. If you need assistance identifying the right financing sources, your local SBA, SCORE office, or chamber of commerce can provide you with counselors and financial expertise.

I will post the notes from our meeting on the Greater Seattle Chamber of Commerce's LinkedIn group later this month. If you are a chamber member, please join this group to get the details of the discussion and to learn about next month's exciting program and opportunity exchange.

If you need resources for your small business, drop me an email. I can point you to some of the right resources you need to get your business off the ground and keep it moving forward.

Extreme Office Makeover promises one lucky winner a $35,000+ fresh start

TsuluWerks is offering nearly $10,000 worth of services for the Extreme Office Makeover. One lucky small business or organization will win over a total of $35,000 worth of products and services from: Microsoft, JWCS, Dex, BizXchange, FastSigns Seattle, TsuluWerks, X-BAR, Innovatively Organized, ISOutsource, Queen Anne Upholstery, FedEx and more!

The prize includes a Business and Marketing Strategy Session with TsuluWerks. This consultation, valued at $9,950, includes a SWOT analysis, business strategy tools, positioning, and competitive analysis. You will walk away with the tools you need to create a solid brand, start your marketing plan, and drive all areas of your organization.

All qualified organizations that enter will receive a FREE Technology Assessment from a Microsoft Partner. Apply before 5:00 pm Pacific on April 24th at www.seattlechamber.com/makeover. No purchase is necessary, and you do not need to be a Greater Seattle Chamber of Commerce member to win. Complete rules and qualification requirements can be found at the link listed above.

Wall Street versus Main Street: Really?

Over and over, the media reports are comparing the financial industry bailout with the auto industry crisis. Union leaders and media are saying that it's an unfair bias that is belittling blue collar jobs. Is the Federal bailout policy really a smack down between Wall Street and Main Street?

1. The financial industry can survive without the manufacturing sector. Like it or not, the financial industry does not need the manufacturing sector to be a viable industry. Unfortunately, no industry, big business, small business, or consumer can live without a credit-backed monetary system. Money itself is nothing more than a great credit-backed ponzi scheme designed by the federal government (okay, that was a bit harsh, but money is an instrument of debt, where bank notes, or the digital equivalent, are exchanged for a good or service. There's a lot of work that goes into fluffing up the value of those bank notes). Without money, few industries would survive. Niall Ferguson outlines how the financial sector works really nicely in his book, The Ascent of Money: A Financial History of the World.


2. The American auto industry is an important part of the industrial age of America. Unfortunately, we're no longer an industrial economy. Our economy is changing, and it's up to business leaders to see that and encourage the development of industries to match the new global information age that we're in. When the economy shifted from agrarian to industrial in the mid-nineteenth century, the American farmer didn't die out. The agricultural industry became a smaller and smaller part of our economy. We have been going through a similar transition since the 1980's - perhaps even the 1950's, when the number of white collar workers first outnumbered blue collar workers. In the information age, more manufacturing jobs are not the answer. Like the flight of folks from the countryside to industrial centers in the 1800's, we will see a movement of workers from the manufacturing sector to service industries as the information age continues to evolve into the next economic model that is more environmentally and culturally aware. The auto industry will just become a smaller part of our economy.


3. Bankruptcy doesn't mean the end of the American auto industry. I'm not a fan of bankruptcy. Like all systems designed to protect and foster growth, many businesses and individuals abuse it to get out of their obligations. It does, however, provide an opportunity to restructure and protect the most important systems within an organization that would otherwise fail. Former industry leader Delta Airlines emerged from Chapter 11 bankruptcy in 2007 with a stronger balance sheet, revised cost structure, and lower debt. The result was a fresh start from an airline industry giant that did not keep sucking at the federal teat. In the end, Delta is still flying and my dad and his former co-workers are still receiving their pensions. Bankruptcy would force the auto industry to get creative or die.

The decline of the auto industry in American life marks the end of an important era. We cannot cling, however, to lifestyles and dreams of an era that no longer supports the realities of a changing world. The auto industry lagged behind the shifting economy during the past few decades and has lost the brand loyalty and support of an American people with more choices and an eye to a global future. China is the hottest market for all automotive brands right now. Our world is changing. It's time that the auto industry caught up, without constant taxpayer assistance.

New Service for Small and Growing Organizations

I have long been passionate about helping my clients with advisory and business services that they can immediately put into action. Now, those services have a name: ConsulCoaching™.

ConsulCoaching is more revealing than consulting. And unlike coaching, my clients get practical deliverables, like strategic roadmaps and marketing plans, to help them move their businesses forward.

Therese Beale, President of Beale Communications Planning, says that after ten years as an entrepreneur "I'm excited about the new directions that are emerging for my company as a result [of ConsulCoaching]. It's refreshing to fall in love with my business all over again!"

If you've hit a snag with your business growth, want to get your fledgling business off the ground, or just want to fall in love with your business all over again, visit the ConsulCoaching web page to learn more. Or give me a call at 206-782-4040.