Saturday, October 18, 2008

You are ‘America’s Economic Solution’, But What to Do in the Meantime?

score_tjpg_mcculloch This article was written by Ben McCulloch, Chairman, SCORE Orange County.

As I write this, the House is considering the Senate’s version of the financial ‘rescue’ package. Maybe by the time I finish – and hopefully by the time you read this – we’ll know whether the bill passes. If so, some of the historic uncertainty in the marketplace should be lessened. ‘Should be lessened’: the problem is complex and one bill won’t remove the uncertainty plaguing the markets.

Of course you’re following these events closely, too. As citizens, business owners, and entrepreneurs, you are the ‘Main Street’ that so much of the deliberation has focused on helping. On that, there is no dispute: small business is the core driver of our economy. A report released just yesterday by the Kaufman Foundation underscores the public’s view notion that you are ‘the answer to the current financial crisis’ (

That may be gratifying, and it’s definitely the philosophy that underpins our mission at SCORE. But, until we get beyond the crisis, you have some realities: how do you make the lease payment, make payroll, and keep the shelves stocked? You’re not alone. Take a look at this California business owner (found at Donny Deutch’s ‘The Big Idea Blog’) as she puts a face on the problems being experienced by so many of you.*blog*&par=RSS

Though we don’t have money to lend, your SCORE counselors are here to ‘lend’ you something else of value: experience running businesses during previous, difficult economic times. We do not claim to have your solution, but we can give you ideas on managing AP and AR, preparing for meetings with your bankers, other options (and risks) for accessing temporary cash, and – as with the business owner in the video – preparing for your expansion when the cash and credit markets begin to recover. And they will!

In the meantime … what are your concerns and the problems you’re facing? Please comment below and share with us any solutions that have worked for you. We look forward to helping you until we – together – get past this crisis.

Employing Your Children is a Potential Tax Savings.

score_tjpg_Ginnaty This article was written by Dick Ginnaty, CPA.

Employing children can save taxes. The key notion here is that the first $5,000 of earned income by any aged person is tax free because anyone who earns money gets the a standard deduction up to $5,000 regardless of whether they are claimed as a dependent on another (i.e. parent’s) tax return or not. For example, if a 16 year old earns $5,000 wages from his/her sole proprietor parent, then they will be no income tax paid on the $5,000 by the child, and the parent will get the $5,000 deduction against the sole proprietorship income. This is also true for partnerships or LLC’s or any unincorporated entity.

To go even further, the child could earn $9,000, put $4,000 into an IRA and again, no income tax will be paid by the child. As an additional bonus, for an employed child of a sole proprietor or partnership, under the age of 18, the wages are NOT subject to social security taxes either.

One can get fancier (i.e. higher non taxable income to the child) if a “simple” pension plan is invoked by the business. Up to $15,500 can be earned (and deducted) and the child will not pay ANY income tax.

Warning: In incorporated entities, the wages ARE subject to social security taxes (totaling 15.3%) so the advantages have to be weighed more carefully, but for corporations (like a Sub S) enjoying significant earnings, it can still be worthwhile.

Last caution: the wages have to be for actual work performed and have to reasonable for the nature of the work.

Good luck and here’s hoping it “all adds up” for you.

(If there is any area in accounting or tax that you think needs to be addressed in this newsletter please e-mail Dick at and if it is of general interest, he will address it in future articles)

Women in Business Breakfast Series on Friday, November 7, 2008, Learn About Customer Feedback

This article was written by Martha Ryan, SCORE Orange County Management Counselor.

score_tjpg_hanson The Orange County SCORE Women in Business Breakfast series has planned another great event for November 7, 2008 at the Center Club in Costa Mesa, featuring Felena Hanson, Principal, Perspective Marketing (

If you want to NETWORK and share ideas, experiences and advice with other women in a variety of service and product businesses, DISCOVER the variety of available of services and resources provided by SCORE and their partners to enhance or help you start your business and SHARE your knowledge and experience through the opportunity of exhibiting at the breakfast…join us!

Felena Hanson is not only a marketing expert but also a marketing professor at CSU Dominquez Hills and the Fashion Institute of Design & Merchandising San Diego, author and international speaker. She will share “The 10 Rules of Customer Feedback” in an interactive seminar that will provide concrete steps to implement and use customer feedback to improve your bottom line. You will learn:

  • Which forms of communication are most effective
  • How to develop a customer feedback survey
  • Which online sources are best for collecting information
  • How to inexpensively solicit feedback
  • What to do with the information once it’s collected

The Women in Business breakfast will be held on Friday, November 7, 2008, from 7:30AM to 10:00AM (registration starts at 7:00AM) at the Center Club, 650 Town Center Drive, Costa Mesa (free valet parking located just past the ticket office for the OC Performing Arts). The cost for the breakfast is $30.00 advanced registration, $35.00 at the door. Add an additional $35.00 to reserve an exhibit table. Sign up on the SCORE website to reserve your space as seating is limited.

It’s the End of the World as We Know It! Or is It?

score_tjpg_bour This article was written by Norm Bour, SCORE Orange County Management Counselor.

There is no question that the world we live in, including the business world, is changing before our very eyes. Everything we have been experiencing in our entire lives, “business as usual,” is no more, and the old rule book has been discarded. So what does this mean for current business owners? What does it mean for those who wish to become new business owners? It just means you need to read out of the new plan manual and there are some strategic areas that require new methodology.

How you borrow money and from where

Borrowing money has been a way of life for generations and during the past 30 years it has never been easier. There were a few years that were difficult, but for the most part, everyone wanted to lend you money. That is no longer the case. As of this writing, the $700B Bailout Plan is being finalized with one of the specific agendas as being the easing of the credit markets. Banks are reluctant to lend to each other and are hoarding cash. Why would they want to loan money to you? Those Signature Loans and Personal Lines of Credit will never be as easy to obtain as what they have been. The wild card is SBA and government loans. They will be more difficult to get than before, but easier than institutional financing.

Short, medium and long term planning

If you fail to plan you will be planning to fail. That old bromide still remains true, but the Looking Glass will be much more difficult to read. During the prior 18 months we have gone from the failure of the sub-prime market, to the crisis of the mortgage banking industry, which created the banking fiasco, which shut down one of our most consistent partners in the mortgage market: Fannie Mae and Freddie Mac. Shortly thereafter, AIG got an $85B safety net, and just recently Washington Mutual triggered the biggest bank failure in history followed by Wachovia which just over one year ago bought World Savings. What is particularly scary is the speed with which all these events occurred.

The moral to the story is that the future will be harder to predict than ever before. Your short term goals will probably be more accurate than not, but any long term plans beyond a 5 year window is a total guessing game.

Growth and expansion

In the past few years many companies expanded since the economy was booming, money was abundant, and the consumer was willing to spend. Those rules are also gone. How many companies have closed or significant downsized during 2008? In 2007 there were 32,000 business failures, but we doubled that number in just the first quarter of 2008. Starbucks closing 600 stores, Mervyns department stores, plus many others and a list too long to print, make these times some of the most fragile we have seen in decades.

Remember the tortoise and the hare fable and who won at the end.


As these situations change with breakneck speed, the key to your financial future is education. The days of coasting along and having faith in old conventional establishment is over. YOU are in control. Continue your involvement with SCORE, whether as a volunteer or a client. Find financial counselors who can take you into this new quickly changing future. And find like minded support groups and mentors you can all learn from.

So is it “the end of the world as we know it?” The lyrics of that popular song follow with “it’s the end of the world as we know it, and I feel fine.” And you will. This too shall pass and life will go on, just with a different set of rules.

Don’t Waste Time Writing Press Releases

This article was written by Nick Leighton, SCORE Client.

Seem a little strange for a PR professional to be telling you not to write a press release? Well, that’s not how a small business is going to get outstanding publicity. There is a better way and it’s not high cost. Follow the steps below and you will have the best ROI of all your marketing.


You need to find the right media to attract. The more precise and accurate your understanding of the media - the better.

Thanks to the Internet you can find these media simply. Next you need to:

1 – Find the right person at that media outlet that you should be talking to.

2 – Understand the media. If it is a magazine, then get a copy and read it; if it is a radio show, then tune in.

Try with a small list of 5 media to start with. You can always broaden your list later on. With only 5 media on your key target list you don’t need press releases.


Next we need to build what we are going to say to them. The rule is simple – it is not your product or service that is going to sell you but the benefits that you offer your customers.

Fill in the blanks:

I work for ………. (define client base) who struggle with ……… (client problem) and would like to ……… (our benefit). What separates us from ………. (the competition) is that we ……….. (offer/USP) and as a result our clients get …………. (benefit of our services).


Now to produce the tools needed – which are not press releases. You need three things:

1 – A professional photograph of yourself and your product or service in digital format. Note ‘professional’. Spend $400 on a professional and I guarantee it will have a multiple return on investment.

2 – Paragraphs – who you are and what you do, what you used to do and something outside of work that adds interest.

3 – An overview of your business – in simple English. No jargon, no acronyms – just a half page on your company and what you offer your customers.

About the author:

Nick Leighton is the founder and CEO of NettResults Public Relations -