Volume 1
No. 9
November
2005

It Takes Teamwork

You Need A Solid Support Team To Assist In Business Success

Linda Girard

Linda Girard of Pure Visibility, Inc.

Polly Miller
Polly Miller of Miller & Associates, P.C.


Mayer-Schairer Building
Undergoing Historic Renovation


Mayer-Schairer

Greg Lobdell with partner Jon Carlson of 2Mission Design and Development LLC, overlooking downtown from a balcony on the Mayer-Schairer building.

By Kate Kellogg

Small businesses and start-up companies could do a lot worse than locate in the Ann Arbor area. Few towns of this size can boast as many resources for small business owners and entrepreneurs.

Once the overall strategy is in place, the business owner needs to grapple with the details - securing loans, creating a business entity, establishing employee benefit plans, and insuring the business. Most firms need professional guidance in determining their telecommunications and software needs, which seem to change at the speed of light.

As marketing increasingly flows through the Internet, the savvy business person must know how to leverage the company Web site.

For that type of guidance, one turns to service providers who advise businesses on a daily basis. Whether a startup or ongoing enterprise, all businesses need a crack team of experienced advisors to help them beyond the launch stage and keep them on track. We asked some of top professionals in the area to describe the types of support services they offer to small businesses and what discussions might take place in their offices.

The CPA
In a professional community like Ann Arbor, the sheer numbers of accountants and attorneys can be daunting. For recommendations on accountants, you could check with the area Chambers of Commerce, banks, and local attorneys. Many CPAs are registered with the Better Business Bureau. Some people select accountants and other advisors on the basis of recommendations from friends, colleagues, and acquaintances.

“I get 99 percent of my referrals from happy clients, attorneys, and commercial loan officers,” says Polly Miller, CPA and president of Miller & Associates, P.C. Once you have some leads, she suggests interviewing several. Many, like Miller, are willing to discuss the possibility of a client relationship for a half-hour or so at no charge. Try to determine the accounting firm’s expertise, what it brings to the table, and what differentiates this accountant from others.

In general, smaller firms tend to specialize in smaller clients. However, it’s all relative. “I had a client leave because he said he needed a bigger accounting firm,” Miller says. “He eventually asked if he could come back, saying ‘I am a big client for you, but I’m nothing to them.’”

As the owner of a small accounting firm, Miller is willing to spend some extra time getting to know clients and their business needs. She believes this helps her do her job better. “What you hear from a client while the two of you are out to lunch may be quite different from what they say while you’re charging an hourly rate,” she observes.

If the client is a startup, the first task at hand is usually the formulation of a business plan. The accountant can help entrepreneurs improve and refine the plan before they visit a bank or investor. “Entrepreneurs are optimists by nature,” says Miller. “A person can have a wonderful dream but may not know how to put numbers to it.” The accountant can help the client bring numbers in line with reality and bring credibility to the plan.

There are several areas where legal and accounting services may complement each other. While it makes sense to start with the lawyer in determining the business’s legal entity, a good accountant will point out the tax advantages of certain business structures. For example, business owners with limited liability corporations (LLCs) may report income and losses on their personal income tax returns. This type of “pass through” entity may therefore reduce accounting fees and offer other tax benefits, Miller says.

Accountants address a surprisingly broad range of issues with their small business and startup clients. Miller ticks off just a few: worker compensation rates, whether you may be liable to the state’s single business tax, your sales and payroll tax liabilities, and lease negotiations. She will suggest memberships or contacts that might prove useful to the business. “It’s not all number things with accountants,” she says. They do, of course, offer guidance on all tax matters and help the client keep in mind the tax implications of business decisions---from leasing versus buying vehicles to hiring permanent or temporary employees.

Your accountant could also help you determine if you are getting the best possible deal for worker’s compensation or general liability insurance and what other types of insurance you might need. Miller helps business owners find the most cost-effective benefit plans as well as profit-sharing and retirement plans.

“If someone needs help in an area outside of my specialties, I can usually connect them with the right people,” she says. Outside of her practice, Miller has long been active in area organizations such as the Ypsilanti Chamber of Commerce and Washtenaw Development Council. While it’s not always possible to find someone with her range of business connections, that’s another quality to keep in mind when searching for the ideal accountant.

The Lawyer
The new business owner may need to see an attorney at several points in the startup process. The existing business owner is wise to consult with a legal expert before taking major steps such as signing new contracts or bringing in new partners.

Rather than flipping through the yellow pages, ask other professionals and associates for recommendations on local attorneys who specialize in small business advising. Tom Dew, resident principal with Berry Moorman Professional Corporation, says he receives most referrals by word of mouth. The Martindale-Hubbell Web site, www.lawyers.com, lists attorneys geographically and by specialties and provides peer rankings.

If the company is still in the formation stage, the owner first needs to confer with a lawyer about setting up a legal entity. The accountant may also be involved in that process for the tax implications. “Depending on your type of business and how it will be financed and operated, you might want the lawyer and accountant to work on this as a team,” says Dew.

Many small enterprises choose to become Limited Liability Corporations (LLCs), Dew says. Slightly more complicated than sole proprietorships or partnerships, these entities offer the owner legal protection from creditors. The owner is not personally liable for business debts or third party claims against the business. “But as a practical matter, many small business owners put most of their personal assets into the business anyway,” Dew says. “And most creditors, like banks will require a personal guarantee from the owner(s).”

LLCs offer some tax advantages in that business losses flow through to the owner’s (or members) personal tax forms. They can deduct their proportional shares of that loss from personal income.

If the company has more than one owner (to whom they’re not related), Dew recommends considering an exit strategy, such as a buy-sell agreement, should one of the partners leave the business.

Lawyers also can help guide decisions on leases, workers’ compensation, and insurance issues. Employment contracts include the possibility of non-competition contracts. Some companies ask their employees to sign contracts by which they agree not to reveal trade secrets or take along customers if they leave the company.

Small companies tend to use a lot of sub-contractors. Dew recommends putting the engagement of subcontractors in writing, such as a letter of agreement that sets forth criteria defining them as truly independent contractors. “If the government deems them your own employees, then they are, in terms of taxes,” he warns. “You might not hear about it until several years down the road, when you’re hit with back tax issues.”

Any company engaged in innovation probably needs help with copywrite and trademark protection. Dew’s firm provides that service but refers clients to patent attorneys if they need help with the patenting process.

Finally, don’t forget to revisit your attorney after visiting the bank. Your lawyer should review commercial loan documents before you sign them, says Dew. “It’s very difficult to negotiate a contract that’s already been signed.”

Web Marketing
Companies of all sizes are finding that Web marketing is quicker, cheaper, and more effective than direct mail and other traditional forms of advertising. The main investments include, of course, computers with Internet connections, Web tools, such as Wordtracker, and some expertise in search engine optimization. The last may come from a consultant, such as Linda Girard, co-owner of Pure Visibility, an Ann Arbor-based search engine marketing company.

Girard’s clients include retail, manufacturing, and financial services firms. She helps companies build Internet marketing campaigns, increase Web site visibility, measure their Web site activity, and calculate returns on investments. Girard’s partner, Catherine Juon, is a Google AdWords-certified professional who helps companies with another critical process: customer relationship management. She is well versed in salesforce.com, an online means of tracking contacts, organizing leads, and automatically following up via e-mails. Create Magazine has described Girard as a “walking encyclopedia of tips and tricks for search engine optimization and paid search techniques.” She describes search engine optimization (SEO) as “the process of optimizing sites for the search engine to come in and take away data they need for their database.”

Search engines such as Google or Yahoo refer to these databases when a user performs a keyword search. To attract the maximum number of visitors to your Web site, you want to rank as high as possible in any search engine’s database. Rank, in this sense, means how high up your Web page appears in a search engine’s listing, once key words are typed in. Placement in the top ten listings on the first page of search results is considered a respectable ranking.

The trick is to include the right key words or phrases in your Web site so that when potential customers type in those words, your Web site will come up high on the search engine. To avoid being buried in the crowd, you need words that aren’t also used on your competitors’ Web sites.

“My job is to help people choose the right words to optimize their site,” says Girard. “Search engine marketing is all about strategic word placement and designing your Web site to attract search engines.” While Girard does not design Web sites, she hosts sites and works with designers and Web copywriters to help them optimize site content and maneuverability. She also can help clients measure and track Web site activity and interpret their sales conversions to calculate returns on investment. She is a wealth of information about Web tools, both free and paid, that customers can use on their own to select key words and track results.

Need an example? Say you’re a pro shop. The free tool www.wordtracker.com can help you target customers through the use of “niche phrases” for your Web site. Rather than relying on guesswork, Wordtracker offers suggestions based on over 300 million keywords and phrases people have used over the previous 130 days. It would show, for example, that “custom putter” has 45 searches every 24 hours and 2,640 competing Web sites. That’s a much better choice than “putter,” which has 36 searches every 24 hours---and 1,690,000 competing Web sites.

Another hot Web marketing trend is Pay-Per-Click advertising. “Pay-Per-Click is for the impatient customer who wants to set up a campaign today,” says Girard who optimizes Pay-Per-Click campaigns for businesses. Those listings you see on the right-hand side of the search engine results pages are Pay-Per-click ads. Advertisers bid for these spots and pay the search engine an amount less than or equal to their bid each time a listing is clicked. When someone clicks on your listing, they are sent to your Web site. Again, success depends on word choice strategy.

“Key words run 5 cents and up. The narrower the term, the lower your cost,” Girard explains. “A broad term like ‘shoes’ would cost about $5 per click. ‘Red shoes’ or a brand of shoes would be cheaper.” She recommends a handy Pay-Per-Click calculator on www.bplans.com that calculates a campaign’s return on investment.

Every Web site should include statistics that tell you if you are achieving your goals, Girard says. “That means knowing what key phases are being converted, what search engines have come to your site, and how many visits have been converted to sales. You need to be able to read and understand those results.”

Girard helps customers navigate the world of Web marketing through individual consultation and hands-on seminars offered both in-house and at her office on Depot Street. Check out the company’s own Web site at www.purevisibility.com.

IT Wizards
Whether your company is you, your phone, and your computer, or a Fortune 500 enterprise, information technology is probably a major budget item. “For more and more companies, the Internet has become as basic a tool as the telephone,” says Carol Shulman, co-owner of Shulman Clark Associates, a full-service IT support company. She and her partner, Mike Clark, help small businesses and individuals gain business leverage through better use of technology.

Shulman approaches IT for her clients as basic business planning. You can’t consider IT independent of the business, she believes. Her first question for new customers is “what role is IT going to play for your business? Both you and your consultant should have a clear idea of what you’re trying to achieve with your investment.”

The consultant should be knowledgeable about resources available for the field you’re interested in. For example the accounting and legal fields have industry-specific software. The advisor should be aware of the strengths and costs of the universe of business technology that is out there. It helps to find one IT company that can do as little or as much as you want at the time. “We are an IT Department in a can,” says Shulman. “You can get everything from us from help with Word and server upgrades to our helping you plan your tech budget for the next five years.”

A small business needs a stable, well-maintained utilitarian IT infrastructure. From there, you can make additional investments that are line with your business’s strategic direction. Companies can both over- and under-invest in IT if they don’t ask some basic questions like “do I need a server?” That depends on how many users and how much data your company has. Some companies find that several workstations are adequate. Others may need servers with remote access to field stations.

On connectivity, Shulman urges companies to at least invest in a high-speed DSL line and routinely assess what other types of Internet access is available in their area. “In some places, you may find nothing under $600 per month, and then suddenly you find new options that give you more bang for your buck.” The same holds for phone carriers. The competitive landscape changes so rapidly that businesses should annually review their local, long-distance and interLATA (local access and transport area) toll services.

Another IT basic is data backup. “People who believe they are backed up often find there is nothing on the backup tape,” says Shulman. Your volume of data should drive your investment in reliable backup technology, she says. The cheapest backup tool is a CD, but it requires action: someone has to insert that piece of media, make sure the software is running, and periodically test the system. More automated means of backup exist, but the price goes up accordingly.

She also recommends a “disaster planning guide” and data risk profile. What would happen if your server or Internet connection went down? Businesses need to consider IT disaster contingencies, such as cable or DSL modems that automatically switch to dial-up if necessary.

For general computer security, Shulman recommends operating systems, such as Windows XP Professional, that have built-in firewall systems. Multiple firewall systems add extra security but you may need the IT consultant to help you determine which systems are user-friendly and don’t conflict with each other. More sophisticated security systems will protect certain files, such as financial information, from unauthorized users. If you use wireless, ask your consultant about new applications that protect wireless networks, which are particularly vulnerable to intruders.

Once your IT is in place, don’t forget maintenance. “It’s like changing the oil regularly after you buy a new car,” says Shulman. “Most hardware and software needs to be replaced or upgraded in three-to-five-year cycles. With thoughtful planning, you can prevent it from all happening in the same year.”

Just as you consider trust an important issue in selecting a lawyer or accountant, you should find an IT consultant with whom you have a trusting, comfortable relationship. After all, that person may be climbing right into your computer. “We must have access to clients’ property as well as sensitive data in order to perform our services,” Shulman says. “We couldn’t have those kinds of relationships with our clients if we weren’t trustworthy.”

The Banker
Commercial lenders, accountants, and lawyers form a trio of essential advisors for the small business. If you are seeking financing for a new business venture, you should do your homework with the lawyer and accountant before you approach the bank, says Charles Crone, Jr., regional president of Comerica Bank in Ann Arbor.

The CPA, in particular, is a good sounding board for questions about the loan application process. In addition, the CPA can help you include the elements of a business plan that are of particular interest to banks. Lenders want to see detailed financial projections that look as far ahead as possible, Crone says.

When you’re ready to apply for a commercial loan, bring along historic financial statements, tax returns, and, in the case of a startup, business plan. The loan officer may or may not request a personal financial statement and personal income tax return. Although banks don’t always ask business loan applicants for personal guarantees, “be mentally prepared just in case,” advises Crone.

If you’re a new or small business without a track record you may want to ask about Small Business Administration financing. Your CPA also can advise on that score. You’re usually required to cover only 30 percent of the value of the loan as collateral, while the bank guarantees the other 70 percent through the SBA. If you want to apply for an SBA, look for a bank that is an SBA certified preferred lender. Some banks that do not have that status may offer SBA loans but usually take longer to process them.

To find an SBA certified lender, go to the SBA Web site, www.sba.gov, and click on Basic Financing Opportunities and then Small Business Lenders. Certified lenders are listed by state. Business publications periodically publish lists of SBA lenders and your accountant may know of some.

Many banks offer an array of products tailored to the needs of small businesses. “The small business area is a very sought-after market,” says Crone. You should have no trouble finding deposit accounts and free or low-cost checking account suitable for your business. Many banks are able to handle small 401(k) plans “but you should tier the things that are most important to you,” says Crone. “To most small business owners, the first priority is available credit, then basic banking needs, and then pensions. And you don’t necessarily have to get all those things from the same bank.”

A longtime local business leader, Crone offers one other general word of advice for the small business owner: network. That’s the surest path to finding information on people, capital, and other resources you need to launch your business or keep it humming. Ask your attorney, banker, or CPA for contacts. Trade associations, the Ann Arbor IT Zone, and Chamber of Commerce memberships can help you get connected as well. “Find people you’re comfortable talking to and create an informal circle of five to seven owners,” Crone says. “Then just your share experiences with each other.”

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