Control Your Cash Flow (Entrepreneur.com)

Control Your Cash Flow

Here are 5 ways to reduce your vulnerability during the credit crunch.

By Elizabeth Wilson | August 14, 2008

URL: http://www.entrepreneur.com/money/moneymanagement/managingcashflow/article196456.html

With a credit crunch and many banks tightening up or eliminating lines of credit, it's important for business owners to maintain a steady cash flow. Here are five ways experts say you can start the process:

1. Diversify your revenue stream. Relying too heavily on one source for a majority of receivables is one of the largest areas of vulnerability for NCG Consulting owner Natalee Greene's clients.
   
   "Even if a small business has a client that's unlikely to go out of business, such as a federal government client, small businesses should ensure they have no more than 25 percent of income generated by one source. You can diversify by industry, department, product sold or other factors, depending on the nature of your business," Greene says.
   
2. Cut back excess spending and protect your cash flow to meet payments. "Stay in touch with statements electronically," says Elena Sisti, founder and chairwoman of Savoy Bank in New York City. "Actively manage the money that's due to you, so you don't have collection problems."
   
3. Cut costs whenever possible. "Really look at your own cash position. Negotiate better terms with vendors and accept credit card payments," Frank Baldassarre, president and CEO of e3bank, says.
   
4. Raise capital in innovative ways other than traditional banking. "If you accept credit cards, there is something called a merchant advance where a third party will come in and review what your revenues have been and advance you capital today that you pay back in anticipation of future credit card receipts," says Deborah Osgood, founder of BUZGate, a business networking site.
   
5. If you have excess cash, you should be leveraging it. "If banks are tightening up their credit, use it to borrow what you need as collateral, and have it in capital investments you need to grow the business. Having it in cash is useless unless you have disbursements on an ongoing basis," Osgood says.

Control Your Cash Flow (Entrepreneur.com)

Control Your Cash Flow

Here are 5 ways to reduce your vulnerability during the credit crunch.

By Elizabeth Wilson | August 14, 2008

URL: http://www.entrepreneur.com/money/moneymanagement/managingcashflow/article196456.html

With a credit crunch and many banks tightening up or eliminating lines of credit, it's important for business owners to maintain a steady cash flow. Here are five ways experts say you can start the process:

1. Diversify your revenue stream. Relying too heavily on one source for a majority of receivables is one of the largest areas of vulnerability for NCG Consulting owner Natalee Greene's clients.
   
   "Even if a small business has a client that's unlikely to go out of business, such as a federal government client, small businesses should ensure they have no more than 25 percent of income generated by one source. You can diversify by industry, department, product sold or other factors, depending on the nature of your business," Greene says.
   
2. Cut back excess spending and protect your cash flow to meet payments. "Stay in touch with statements electronically," says Elena Sisti, founder and chairwoman of Savoy Bank in New York City. "Actively manage the money that's due to you, so you don't have collection problems."
   
3. Cut costs whenever possible. "Really look at your own cash position. Negotiate better terms with vendors and accept credit card payments," Frank Baldassarre, president and CEO of e3bank, says.
   
4. Raise capital in innovative ways other than traditional banking. "If you accept credit cards, there is something called a merchant advance where a third party will come in and review what your revenues have been and advance you capital today that you pay back in anticipation of future credit card receipts," says Deborah Osgood, founder of BUZGate, a business networking site.
   
5. If you have excess cash, you should be leveraging it. "If banks are tightening up their credit, use it to borrow what you need as collateral, and have it in capital investments you need to grow the business. Having it in cash is useless unless you have disbursements on an ongoing basis," Osgood says.

Simple Search Engine Optimization (e-myth)

Here's the link to an article that explains how to simplify Search Engine Optimization.

Need to Learn a New Skill? Try the Web (NYT)

Need to Learn a New Skill? Try the Web

By Marci Alboher

Are you tackling a new work-related task for the first time and don’t know how to get started? In just a few minutes of Googling, you can probably find a YouTube video, blog entry or other online tutorial that will thoroughly explain how to do it.

There are demonstrations to fit every user’s learning style — from text-heavy descriptions like this one on how to conduct a video conference, to Nancy Duarte’s step-by-step guide to planning a Webinar or remote presentation, which has a rather cute image to illustrate her process.

Dumb Little Man, a blog that consistently delivers a potpourri of useful things, has a post called “15 Awesome Tutorial Web Sites You Probably Don’t Know About,” which is a great place to start the next time you’re trying to figure out how to do something.

In matters of technology, Lifehacker (whose lead blogger I recently interviewed) does a terrific job of providing easy-to-follow, illustrated instructions. And then of course there is The Times’s own David Pogue (whose blog and videos I’ll be consulting next week when I hope to familiarize myself with my new iPhone).

If there’s nothing stumping you at work, but you’re looking for some do-it-yourself demonstrations for home repairs, read this amusing post from my fellow New York Times blogger Virginia Heffernan about Ron Hazelton’s HouseCalls series.

Readers, where do you turn when you are trying to learn something new online?

Amazon vs. eBay: a 7-Point Comparison (Entrepreneur.com)

Amazon vs. eBay: a 7-Point Comparison

Knowing the pros and cons of each can help you maximize your online profits.

By Chris Malta | August 13, 2008

URL: http://www.entrepreneur.com/ebusiness/dropshippingcolumnists/article196426.html

Recent changes by eBay have caused many online sellers to re-examine their single-platform sales models. One of the easiest ways a small e-tailer can minimize the impact of changes by a single e-commerce platform is by selling on multiple platforms. It's the old cliché: Don't put all your eggs in one basket. Or in this case: Don't rely on a single marketplace for your entire livelihood.

Neither eBay nor Amazon can claim to be the premiere online marketplace these days. But they're certainly the largest, and both have pros and cons.

To help sellers understand the specific advantages each platform offers, we've chosen seven areas of comparison to cover with e-commerce consultant Steve Lindhorst, former national eBay University instructor and author of the bestselling e-book Selling on ‘The River' - The eBay Seller's Guide to Amazon.com.

Fees
Unlike Amazon, eBay charges a listing fee whether or not an item sells, as well as any applicable PayPal fees. But its commission is also much lower than Amazon's (8 percent on items under $25, compared with 15 percent).

Explains Lindhorst: "While Amazon remains higher in hard fees, their listings last longer and require substantially less interaction between sellers and buyers."

Format
eBay popularized the auction format listing. Amazon concentrates solely on fixed-price listings. Which is best?

For antiques and collectibles, auctions are easily the best way to get top dollar. On the other hand, businesses dealing in practical, commodity items (the sort that people use in daily life) tend to do better in fixed-price format.

Through Amazon is the fixed-price king, eBay is moving in that direction by downplaying auctions and encouraging fixed-price listings. In fact, this year is the first time that the GMV of its fixed-price sales has surpassed that of their auction-style listings.

So who has the fixed-price advantage? In this case, the advantage lies in the buyer: Amazon's buyers are typically more affluent than eBay's and pay higher average prices for products.

Taxes
Marketplace sellers are responsible for the sales tax on any items sold on Amazon. They can add this cost into their product prices, but doing so is a hassle.

In its Sell-Your-Item form, eBay provides a mechanism enabling sellers to collect applicable taxes in addition to the sale price. This is a major advantage because it ensures that miscalculated taxes don't eat into a seller's profits.

Average Sale Price
eBay, by its nature, is competitive and draws buyers looking for the lowest possible prices. Amazon buyers tend to focus more on product condition than price, which may explain why Amazon sellers report higher average selling prices than eBay sellers for the same items.

For sellers, the clear advantage is with the buyers who are willing to spend more.

Payment Methods
To accept payment, Amazon sellers must use Amazon Payments. Amazon collects the payment and deposits it into the seller's bank account twice per month, with no fees added.

The benefit is that sellers don't have to send invoices or payment reminders, or track unpaid items. If Amazon can't collect the payment, the seller doesn't have a sale, and the item remains listed.

The downside is although Amazon buyers have multiple payment options, they're unable to use PayPal, which many buyers prefer for security and convenience.

eBay sellers can accept PayPal, money orders, cashier's checks or cash (in person). However, they're responsible for managing collections, which means investing more time and labor into each transaction.

Return Policy
eBay sellers are often leery of Amazon's obligatory return policy. Its A-to-Z Guarantee allows buyers to receive a full refund if an item is “materially different” from that described, for up to 90 days. In a dispute, Amazon typically sides with the buyer.

The eBay seller, on the other hand, is free to negotiate with buyers through eBay's dispute resolution and is generally not required to offer a refund. While the dispute resolution process can be effective, it can also become messy and time-consuming and can result in negative feedback.

Shipping
Some eBay sellers began using inflated shipping charges to cover their eBay fees. To counteract this buyer-unfriendly behavior, eBay now penalizes sellers charging above-average shipping prices and provides breaks to sellers offering free shipping. The downside is this hurts sellers who can't afford to eliminate shipping charges altogether.

Amazon fixes the shipping credit (the amount that sellers can charge for shipping), based on an item's category. The drawback is that this may not always cover the full shipping cost. A seller can't charge more than the set amount and must ship the item even if the credit doesn't cover the expense. However, because the shipping credit is fixed, sellers can factor it in when setting a product's retail price.

When More is More
The bottom line is eBay and Amazon are powerful selling platforms and can both play important roles in your e-commerce business. The important thing to remember is that many online shoppers are extremely loyal to one site or the other, rarely visiting other e-commerce sites.

Says Lindhorst: "Why limit yourself to one platform? By selling in both marketplaces, you're potentially getting millions of new eyeballs onto your products."

Chris Malta is the founder and CEO of Worldwide Brands, the internet's leading authority on product sourcing for e-businesses. Chris was hand-picked by eBay Radio as its exclusive product sourcing editor and has written numerous books on e-businesses and product sourcing, including What to Sell on eBay and Where to Get It and How to Find Real Products You Can Sell Online.

Robin Cowie is the president of Worldwide Brands, as well as a business development and marketing specialist, and TV and film producer. Robin is a regular featured speaker at eBay's live national convention each year and is the co-author of eBay Performance! Selling Success with Market Research & Product Sourcing.

Innovation Helps Franchises Grow (Entrepreneur.com)

Innovation Helps Franchises Grow

Even in a sinking economy, flexibility and creativity keep high-demand franchise concepts spreading.

By Adina M. Genn and Harold Kestenbaum | August 13, 2008

URL: http://www.entrepreneur.com/franchises/franchisezone/article196418.html

In today's volatile economy, growing a franchise system can be tough. But some franchisors see hope in the current business climate. They offer innovative strategies that could benefit any franchisor trying to help existing franchisees succeed and attract future qualified franchisees.

Value and convenience are highly sought-after, and systems providing these attributes arguably see the best results. Yes, systems with relatively low franchise fees and startup costs are more likely to see growth, but the more expensive concepts, those with the higher build-out costs, can still tweak their systems to boost sales. And you don't necessarily need big bucks to tap new opportunities.

Opening Doors, Lowering Costs
Consider, for example, the collapsed real estate market. Lower property values have proven to be a good thing for Jerry Laesser, vice president of marketing and franchise development of Martinizing Dry Cleaning, in Cincinnati, Ohio.

"Rents are softening up all over the country, and that was not so 24 months ago," he says. "That saves our franchisees an additional expense," which over the course of a 10- or 15-year lease can amount to larger savings. And in the spirit of keeping costs down, a reduced plant size lets franchisees operate in 1,600-square-foot units, translating to lower rents and cheaper build-out costs.

Fast casual restaurant chains, too, are reducing the size of their "box," putting in place "express" units that are less expensive to build and require less staffing, thereby offering a less expensive option for prospects.
Another innovative approach? Laesser says his system now uses an environmentally safe cleaning process, which "has opened all sorts of doors," including shopping centers that reject dry-cleaner tenants using solvents. Laesser says since 2003 Martinizing has focused on multi-unit developers, who enjoy economies of scale and find locations more successfully due to greater clout among brokers and landlords.

Hot Leads
Or, take the approach by Geeks On Call. The eight-year-old company went public in February, and as Chief Operating Officer Richard Artese puts it, has "two sets of interested parties to provide value to: our franchise owners and our shareholders."

Artese and his team had their "a-ha" moment for adding revenue in April at the International Franchise Association Expo. Overlooking the sea of 200-plus franchisors, Artese saw not just peers, but prospects needing computer services.

"I spoke to a dozen franchisors in two hours and asked, 'Who sets up computers for your franchisees?' " he recalls.

There and then Geeks on Call's Endorsed Vendor Partners program was born. Geeks On Call distributes company brochures that explain its offerings to targeted franchisors, who can vet the program and endorse them to prospects.

"We give them a discount code and become their preferred IT provider," Artese says.

Already six systems signed up, with at least five more signing on, and Geeks On Call has assigned a dedicated person to manage the program. Franchisees and prospects like it, Artese says, because "these are hot leads."

Continued Growth
Cruise Planners, an American Express Travel Services Company based in Coral Springs, Florida, has more than 700 franchisees nationwide. Chief executive Michelle Fee says nearly 130 new franchisees joined last year. Despite the poor economic outlook, industry experts say cruising remains strong, expecting sales to match or exceed 2007.

"People have two weeks a year to vacation," Fee says. "It's the last thing they want to give up."

They even save money when booking a cruise to Europe, she adds. "They're buying in U.S. dollars and not paying any kind of markup because of the Euro."

This year, franchise sales are up nearly 10 percent. Fee navigates today's sinking economy by sweetening the deal, offering prospects either an iPhone or free advertising dollars if they come onboard once they have read through the FDD and Franchise Agreement within the 14-day period required by the Federal Trade Commission's Franchise Rule. It's a winning strategy--either way, franchisees get a valuable business-related tool that helps them succeed.

And at a time when people value flexibility, Cruise Planners has geared its message to engage stay-at-home moms who need the extra income but want to work only while their kids are in school and retirees who want to subsidize their income and enjoy some travel perks, too. Flexibility again comes into play for those who run home offices. Fee said many franchisees put in several more hours in the office once they put their children to bed.

It's easiest to help franchisees succeed, of course, if your concept's in high demand, like the education industry. Increased federal and state mandates mean schools expect improved test scores--and students, feeling the pressure, rely more heavily on tutoring.

Just ask Greg Helwig, vice president of franchise development at Baltimore-based Sylvan Learning Centers. With 1,200 centers, Sylvan has served 2 million families, and demand grows 12 to 15 percent annually, Helwig says.

But despite that growth, Sylvan isn't leaving anything to chance. In the past year, the company began marketing to its database of prospects who inquired in the past but never bought in.
"Maybe we didn't have an opportunity that suited their geographic need" at the time, Helwig says.

Sylvan informs prospects when new territories become available to gauge interest. Helwig says his response rate to this direct mail effort is about 2.5 percent above the national average, which experts typically put between 1 and 1.5 percent.

Flexibility and Convenience Matter
Jan Van Blarcum, the founder of Creative Tutors, in Plano, Texas, agrees that the tutoring industry is not slowing down. After 9/11, she feared a downturn but instead found that parents continued to put their resources into their children even as family budgets tightened. It's a message she brings to new prospects as she grows her system from eight owners in Texas and spreads it next year through Colorado and Utah.
Franchise fees begin at $20,000, and the concept is also home based, another plus that appeals to those who may not have deep pockets and need flexibility. And because consumers too want flexibility along with convenience, tutors meet students at their homes or in libraries, day care centers or sports facilities to accommodate busy schedules.

Sylvan is rolling out a home-tutoring service and also offers online, live tutoring, providing additional revenue streams for franchisees, Helwig notes.

Systems that offer that kind of convenience get good play with qualified franchise prospects, notes Tom Scarda, a Long Island, New York, consultant with FranChoice, which matches systems with people. The concepts that offer convenience for consumers and save them gas--such as Aussie Pet Mobile, which grooms pets at their owners' driveways--are, Scarda says, "the ones that are good business."

Harold Kestenbaum and Adina M. Genn coauthored So You Want to Franchise Your Business, available from Entrepreneur Press. Harold Kestenbaum has specialized in franchise law for over 30 years, working on more than 100 franchise concepts. The former franchise and general counsel to Sbarro Inc. and national franchisor of more than 900 restaurants, he currently serves as counsel to New York City law firm Ruskin Moscou Faltischek and sits on the board of directors of four major franchise companies. Adina M. Genn is an award-winning journalist who has written for The New York Times and the Long Island Business News. She is also the co-author of Everything I Know About Business I Learned at McDonald's: The 7 Leadership Principles That Drive Break-Out Success (McGraw-Hill, November 2008). In 2007, the SBA named her New York's Small Business Journalist of the Year.

With Energy in Focus, Heat Pumps Win Fans (NYT)

With Energy in Focus, Heat Pumps Win Fans

By LIZ GALST

The business for ground-source heat pumps is so hot that when some people driving in and around Seattle see Gerard Maloney’s “EarthHeat” van, with the company’s phone number on the side, they call from their cellphones. “Really, we have people doing this,” Mr. Maloney said.

Like other energy alternatives, ground-source heat pumps have won new admirers as energy costs have skyrocketed.

The pumps, also called geothermal heat pumps, use the relatively constant temperature just below the earth’s surface — six feet below, in many cases — to draw warm air into a building in winter and remove warm air in summer. Advocates say the systems can save building owners 25 percent to 65 percent on energy costs while reducing carbon dioxide emissions.

Around the nation, owners of the small businesses that constitute most of the $2.5 billion ground-source heat pump industry report that demand for their systems and services has surged.

“We started as many jobs by April of 2008 as we had done in all of 2007,” said Bruce Wollaber, president of Comfort Engineered Systems in Nolensville, Tenn., a designer and installer of heat pump systems. Bill Beattie, co-owner of Rockford Geothermal in Rockford, Ill., said, “If we stay on track, we’re probably going to grow by about 40 percent this year.”

All this comes with some growing pains for the industry, which has its sights set on capturing 30 percent of the heating and air conditioning market by 2030. System manufacturers have a backlog of orders, installers say. Trained workers are increasingly difficult to come by. Still, said Jim Bose, executive director of the International Ground Source Heat Pump Association, an industry and advocacy group, “It’s not a pipe dream. It can be done.”

The systems use a network of water-filled pipes laid either horizontally (6 feet under) or vertically (often 200 to 300 feet down), that attach to a heat exchanger.

The technology can be used almost anywhere, on any type of building. “We’ve got them all the way from Texas to the Arctic Circle,” said Mr. Bose, a professor of engineering technology at Oklahoma State University in Stillwater.

And even without financial incentives from the government or energy utilities, says John Shonder of the Department of Energy’s Oak Ridge National Laboratory in Tennessee, “ground-source heat pumps have the lowest life-cycle costs in several cost studies that I’ve done” of heating and air-conditioning systems. (For details on incentives, see www.dsireusa.org.)

The systems pay for themselves in three to eight years, depending on “location and energy prices,” Mr. Shonder said.

In fact, heat pump systems may offer the greatest savings to the owners of commercial buildings, says John W. Lund, director of the Geo-Heat Center at the Oregon Institute of Technology. “For commercial buildings, where you have a fairly large heating and cooling load, the payback period could be two to three years.”

Though no comprehensive survey of the heat pump sector exists, Department of Energy statistics on units shipped tell a striking story. In 2003, system manufacturers shipped 36,439 units. In 2006, the last year for which data is available, manufacturers shipped 63,683 units.

Bridgette Oliver, marketing and communications manager for ClimateMaster in Oklahoma City, the nation’s largest manufacturer of ground-source heat pump equipment, confirmed a rapid rise in sales. “Between 2005 and 2007, our revenue increased by 200 percent,” she said. “Our employees increased by 176 percent.”

Similarly, ClimateMaster’s major rival, WaterFurnace of Indiana, reported double-digit growth recently, and company executives said they were running two shifts at their Fort Wayne manufacturing plant.

“Finding reliable and compliant employees to train” has been one challenge of such rapid growth, Ms. Oliver said. Moreover, system installation is bottlenecked, she says, because “drillers are overwhelmed. Drillers are where we’re really hurting.”

Though equipment manufacturers say they are able to keep pace with demand, many designers and installers have had slowdowns in supply delivery. “All the equipment is customized,” Mr. Maloney of EarthHeat said. “The suppliers are backlogged and a few of the companies are six to eight weeks out from being able to send us everything. Last year, the high-density polyethylene pipe we use was really hard to come by.”

The industry’s expansion is hampered as well by a lack of trained contractors. “Right now, we don’t have enough installers, and we don’t have enough drillers,” said Jack DiEnna, executive director of the Geothermal National and International Initiative, an industry group in Washington. “I’ve got drillers who are booked out for six months.”

Contractors say there is a similar shortage of trained employees. “We’re bringing in folks who aren’t necessarily career HVAC guys,” Mr. Maloney said. “We’re having to train them ourselves.” He says his 10-person company recruits employees using Craigslist in Seattle. “Even folks who have no skills are interested in learning, because it’s such a growth industry,” he said.

Rockford Geothermal is keeping pace with increasing demand by subcontracting “a lot of sheet metal work and plumbing,” Mr. Beattie said. He anticipates hiring three or four new employees in the next 6 to 12 months.

The industry may find sales and workloads booming even further should Congress pass and the president sign the Renewable Energy and Job Creation Act of 2008. The legislation, sponsored by Representative Charles Rangel, the New York Democrat who is chairman of the House Ways and Means Committee, would extend tax credits of up to $4,000 through the end of 2014 to individuals who install ground source heat pumps. (The bill offers no aid to businesses.) The House approved the bill in May and it now awaits action in the Senate.

To help the industry grow, Mr. DiEnna and others look to models like the work force and contractor training programs now in development at Hudson Valley Community College in New York. The New York State Energy Research and Development Authority, the state’s energy authority, finances the programs.

“What we need to get this industry to its potential of at least 30 percent of the HVAC industry is exactly what’s happening now,” Mr. DiEnna said. “Companies like ClimateMaster are ramping up production. States such as New York are getting involved in work force development and contractor training. And there are increasing incentives from government. With this kind of growth, mom and pop shops can benefit as much as any of the big guys.”

Is Your Money Safe in Your Bank? (Entrepreneur.com)

Is Your Money Safe in Your Bank?

Experts offer tips and advice on how to protect your business accounts even if your bank fails.

By Elizabeth Wilson | August 12, 2008

URL: http://www.entrepreneur.com/money/moneymanagement/article196366.html

After eight bank failures through Aug. 1 this year, business owners are wondering if they can bank on their money being safe. The Federal Deposit Insurance Corporation (FDIC) offers coverage up to $100,000 for deposits per bank, but many business owners have bigger accounts.

"Security for the business owner is the No. 1 priority," says Peter Miralles, president of Atlanta Wealth Consultants. "They don't want to be doing payroll and find out the bank just shut their doors, and they're only insured for $100,000--that may lead them into bankruptcy. Businesses have to be very careful."

According to the FDIC, when it seized IndyMac Bank in July, there was almost $1 billion in uninsured deposits.

"I was shocked to hear how much people actually lost on that. A lot of people don't work with an advisor…but [business owners] don't know it all," Miralles says.

Marilyn Landis, chair of the National Small Business Association (NSBA), says if your cash flow requires more than $100,000 in your account, you should look into the quality of your bank to make sure it's not likely to fail. If it does fail, any funds beyond what's insured could be lost.

But Landis doesn't recommend spreading chunks of $100,000 across several banks as a solution--that creates too much chaos and work in an entrepreneur's life.

Banking experts and financial planning specialists agree on these tips to help you determine if your bank is sound and what to do if it's not:

Know Your Bank

• Check out FDIC, Federal Financial Institutions Examination Council (FFIEC) and your state's banking commission websites to determine your bank's rating, says Deborah Osgood, founder of BUZGate, a business networking site.
• Know what your bank specializes in, such as leasing or real estate.
• Know your bank's delinquency rates.
• Know your per-bank limits. The FDIC has very specific limits on how much of a deposit is insured. It's very important to obtain that information from the FDIC website to understand the amount that is or isn't covered.
• Ask your bank for its Federal CAMEL rating, administered by the National Credit Union Administration and based on five criteria: capital adequacy, asset quality, management, earnings and liquidity. The rating is from one to five, one being the best.
• Read your bank's annual report. "Huge losses and a high ratio of non-performing assets to capital are warning signs," says Rick Bastian, president of Blackhawk Bank.
• Ask your bank if it's a Certificate of Deposit Account Registry Service (CDARS) affiliate. "It's a new program that shares your deposits with other banks by negotiating a contract," says Frank Baldassarre, president and CEO of e3bank. It's free, lets you deal with just one bank and can insure millions of dollars. It works like a certificate of deposit, says Cheri Bliefernich, senior vice president of the banking division at Pulaski Bank in St. Louis. "Anything over $100,000 is invested in the CDARS and laddered out for one, three, six months--the higher the term is, the higher the rate is," Bliefernich says.
• If you're really concerned about your bank, start a dialogue with one or two other banks. "That way you're hedging your bets, before you have a huge need," Baldassarre says.

Don't Panic

• Avoid thinking of your business finances as your personal finances. "When I see small business owners and entrepreneurs, they panic the way a person would panic about their own finances, because they don't have finance gurus telling them what to do," says Landis, chair of the NSBA. If you can, hire someone to manage your business finances, and have your bookkeeper help you keep in touch with your bank.

Know Your Cash Flow

• "If your account is consistently in excess of $100,000, then the more important question is: Are you properly handling your cash management, and where's the best place to invest?" Landis says.
• A safe place to invest your excess cash is in Treasury bills, which can be held only in a brokerage account. The Treasury bill is backed by the U.S. government. If you decide on a 90-day Treasury bill, you know you're going to have that money available in 90 days. "Hold short-term Treasury bills in an account linked to the commercial banking account," Miralles says.

Did You Know?
Beyond what you can do today, there are many actions you can take tomorrow to protect your business' finances. Here are some facts and tips to guide you:

• FDIC insurance doesn't cover annuities, bonds, life insurance policies, mutual funds or stocks.
• For a small fee, Veribank will give a full bank rating and do your homework for you.
• Even if your bank's rating isn't good, keep in mind that it's very rare for a bank to shut down completely without another bank absorbing its deposits.
  "There have been banks that received cease-and-desist orders that don't really go out of business. It takes multiple series of catastrophic events for a bank to go out and not have another bank take over," says Natalee Greene, of NCG Consulting.
• When a bank is acquired, there may be some delay for a business to have access to cash. "For people in excess of the $100,000, they need to have a plan B if they didn't have access to that cash for a few hours," Landis says.
• Some banks awash in bad real estate loans are trying to diversify by expanding their commercial lending activities, according to Bastian. "The banks that are currently experiencing difficulty and showing losses are ones that became over-concentrated in a certain kind of risk, usually mortgage lending or land acquisition and development loans," Bastian says.
• Ask your bank if it has obtained deposit insurance bonds for deposits over the FDIC limit. "The strength of the bonding company or insurer is obviously critical here," Bastian says. This type of insurance is called a surety bond. If the bank fails to return the deposit at maturity, the customer then turns to the bonding company. One such company that provides surety bonds--up to 10 percent of a bank's deposits covering up to $20 million--is Kansas Bankers Surety, a subsidiary of Berkshire Hathaway.
• There's a "right of offset" for borrowers of failed banks that effectively insures deposits when the loan outstanding exceeds the deposit balance in a like-named entity. "If the XYZ company has a $3 million loan and a $300,000 deposit account when the bank fails, the XYZ company may elect the 'right of offset' and owe only $2.7 million to the failed bank," Bastian says.
• It's important to be proactive and communicate with your banker at least once quarterly. Tell them where your business stands, why and where it's headed. Have projections and assumptions. Ask for formalized written loan commitments to accommodate your future needs.

A lot of business owners don't look into their banks' soundness, but it's a vital step to take to ensure money is safe, especially during an economic downturn. However, it's important to remember that this storm has been weathered before, and it's not as bad this time around.

"The banking system today has more capital than at any other point in our history," Baldassarre says. "In 1990, during the savings and loan crisis, the capital-to-asset ratio was 6.45 to 1. Today there's a 60 percent increase from that 1990 ratio. We're better positioned to handle this shock than at any other time."