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Becoming an entrepreneur is an exciting venture that can often be the fulfillment of a life-long dream. But business owners also face a variety of challenges, and POC business owners face additional and unique challenges. New entrepreneurs wading into unchartered territory can often learn from the advice—and mistakes—of others. We asked a handful of POC business owners for their best advice to help fellow POC entrepreneurs entering the small business world.

1. Get a Minority-Owned Certification

As soon as you can, Mary Angela Munez, owner of GoLucky Studios, recommends working toward getting certified as a minority-owned business. “This makes you visible and able to accept government contracts that are set aside to provide opportunities to minority business owners,” she explains. “Right now, 5% of all federal money has been allocated to businesses that hold this designation.” State and city-level certifications can also provide access to bids on local contracts.

2. Plan for Success

You probably want to hit the ground running, but Elisabeth Jackson, a small business owner of 3 years with over 8 years of experience in the small business world, warns against rushing the process and says you should instead focus on getting your systems right. “Black women are the fastest-growing entrepreneurs but are significantly absent when it comes to long-term profitable businesses,” she notes.

“Document everything you do, and create procedures and systems that can replace your workload for you as you grow,” Jackson says. “Also, I recommend having a strong product suite that increases your client retention so you aren't relying on one product to make all your money.” In addition to not relying on one product, she advises against relying on one person—namely, yourself.  “Don't get caught up trying to do everything because that’s not sustainable in the long run.”

3. Hire Well

And since you can’t do everything yourself, Nerissa Zhang, CEO of The Bright App, recommends you hire help as soon as you can. However, she says it’s important to hire good people, and it’s equally as important to let those people go when it becomes clear that they’re not a good fit. “The reality is that there are many people in this world who will not respect the leadership of people of color, particularly if you’re also a woman,” Zhang explains. “As soon as you see any signs of disrespect from someone you’re paying, do not hesitate for a second—fire them immediately.”

4. Put Your Business Online

COVID-19 has severely hampered brick-and-mortar businesses. But even in a post-pandemic world, Ray Blakney, CEO and cofounder of LiveLingua.com, recommends putting your business online.  "In addition to the standard benefits of online business—such as lower startup costs and overhead, global reach, etc.—there are some unique benefits for POC.” 

For example, he says that since there aren’t a lot of online businesses run by POC (comparatively speaking), this is an opportunity to stand out.  “Not only can the unique point of view be shown on the website itself—it can also be used in marketing, as many journalists, podcast hosts, and websites are looking to include more voices from people of color, and they have a hard time finding people who can speak to this,” Blakney explains.

5. Be Yourself—and Be Sharp

To Tasha Booth, CEO and founder of The Launch Guild, being an entrepreneur is an opportunity to be your “authentic” self.  “Especially as a person of color, you will always be ‘too much,’ ‘too loud,’ or ‘too something’ for someone in whatever industry you’re in, and that’s okay.” But the beauty of being a small business owner is that you get to make the decisions and run the operation as you see fit. “Don’t think you have to fit a specific mold or cater to certain people to succeed and feel good about the business you’re building,” Booth says.   

Michelle Diamond, CEO and founder of Elevate Diamond Strategy, agrees. “Understand the value and uniqueness you bring as a POC,” she says. “But at the same time, unless your small business is focused on your ethnicity or heritage, lead with your skill sets and the value of your products and services only.”

6. Embrace Those Who Embrace You

You may have a target audience, but Booth recommends embracing the community that embraces you.  “When I first started running Facebook ads for my business 2.5 years ago, I noticed that the women responding to the ads and signing up for my services were primarily Black women.”

Initially, she says she was bothered that non-POC were not responding and believed it was only because she was a Black woman.  “But now, I celebrate the fact that other Black women see my success and see what the possibility can be for them,” Booth says. “Rather than thinking of it as a detriment, I see it as one of my superpowers and something that sets me apart from all other entrepreneurs in the online business/virtual support industries, so embrace the people who are embracing you.”

7. Invest in Your Professional Development

Learning is a lifelong process – especially when you’re a small business owner. And according to LaKesha Womack, a leadership development specialist, it’s important to invest in your professional education. “No, I don't mean getting another graduate degree: however, working with a business coach or consultant to help you develop a plan for your business and to hold you accountable will be one of the best decisions that you can make.”

While many entrepreneurs are great at what they do – she says being a successful business owner entails more than providing a service or product. “Working with a professional who has experience with business operations, human resource management, branding, and marketing can help your business to not only survive, even in turbulent economic environments, but they can also help to prepare you for growth.” Mentors for POC can also provide valuable support and advice to take your business to the next level and perhaps point you toward funding sources for business owners of color. 

8. Focus on the Positives

Being a POC entering the small business world will involve challenges, but that shouldn’t be your focus. “Oftentimes, POC may assume that they will encounter racism or bias, and while that does happen sometimes, the truth is if you have that mindset, you will attract more of the same,” says Diamond. However, she believes that the majority of people care more about your ability to add value to their lives than the color of your skin. “Focus on succeeding and having a great business; there is no limit to the success you can achieve for yourself, family, and community."

How much money are you making?

This is a common and succinct question small business owners often receive, however crass it might seem. The question can feel like a dagger to the heart or a point of pride, depending on how you perceive your business is faring financially.

But how do you know how your business is doing? How do you know if your business is making money or not?

There are 2 main ways to understand the cash coming into your coffers: revenue and profit.

Revenue and profit are 2 systems of defining the money your business is making. Revenue is the top line, and profit is the bottom line.

Let’s explain these concepts, how they interact, and what they mean for your business.

What Is Revenue?

Revenue is the top line because it is all the money your company makes before subtracting any costs.

For many small businesses, especially new ones, revenue is critical. If your revenue is increasing over time, you know there is a demand for your product or services.

However, judging your business’ financial health based on revenue is a bad practice because revenue is too broad of a metric.

For example, suppose an auto dealership decided to severely undercut its competitors by selling new cars for less than it paid for them from the automakers. Revenue would likely skyrocket as consumers discover that its cars are much cheaper than anywhere else. However, the dealership would probably be in deep financial trouble because it would be losing money with every sale.

Still, there are no one-size-fits-all answers about whether revenue or profit should be your focus. In the above example, the dealership might decide the good PR gleaned from the happy customers will be worth more in future sales than the money lost during this price-cutting move.  

What Is Profit?

Revenue is your company’s top line. Then, in your ledger, you subtract various expenses to receive your profit—your bottom line.

Profit usually refers to a positive bottom line. You are then “in the black”—a reference to how accountants commonly color-code their books. If your expenses are greater than your revenues, your profit is negative, although you would probably refer to this figure as a “loss.” Your business would then be “in the red.”

What expenses do you subtract to figure out your profit? There are several methods of computing this number. Gross profit is when you subtract the cost of goods sold (COGS) from your revenue. COGS are the direct expenses associated with each good or service you sell (i.e., the cost of manufacturing or acquiring your goods). This does not include indirect costs, such as rent for your office.

Operating profit subtracts overhead expenses like office rent or marketing from revenue along with COGS. Because of this, it might be a more holistic approach to analyzing your financial situation. There are even more ways to define your profit, like pre-tax profit or net profit.

Your profit margin is how much profit (or loss) you earn (or lose) with each sale; profit margin displays how your profit increases off of your revenue. To determine profit margin, take a version of profit (like gross profit or operating profit) and divide it by your revenue. This will give you the decimal expression of your profit margin percentage.

Is Profit More Important Than Revenue?

“When it comes to investors, there’s a divide,” analyst Andrew Marder of software platform Capterra explains. “In the tech startup world, revenue is often seen as the end-all, be-all of finance. Venture capitalists look for companies that can ramp up revenue regardless of cost, hoping to figure that bit out later on down the line.”

Famously, Amazon, Uber, Zillow, and many other unicorns that define our modern life took decades to turn a profit—some still have yet to be out of the red.

But the circumstances are vastly different between an app startup and a small business in retail, hospitality, or professional services. In most cases, profit is a much more accurate indicator of a company’s financial health.

“In the world of more classic, Warren Buffett-style investing, revenue is almost meaningless,” Marder continued. “These investors—which may also include your business banker—want to see money making it all the way to the bottom of the earnings statement.”

The safest position is to pay continual attention to both revenue and profit—you can’t have any profit without revenue, after all, but you probably want to be spending less money than you are bringing in through sales.

How Do You Gauge Your Business’s Financial Health?

“Looking at your bank account is a bad way to manage your business,” suggests CPA Shabir Ladha. “Many entrepreneurs do it because that’s the only piece of information they have. Having the right bookkeeping or the right information is vital for business health.”

When thinking about your company’s financial wellbeing, you also need to consider expenses, cash flow, and less tangible factors like branding or public perception.

How Do You Increase Profits and Revenue?

Easier said than done! But that is the task of running a small business. With planning and research, you can best chart a path to thrive financially. 

UPDATE: The PPP loan application period ended May 31, 2021. Apply for the Employee Retention Credit today through Lendio.

Lendio strives to provide you with the most current information as it relates to the Paycheck Protection Program, related SBA programs, and relevant regulations. The rules and regulations governing these programs are being regularly clarified by the SBA, and other agencies. In some cases, the provided guidance may directly conflict with other competing guidance, laws, rules, or regulations. Due to these changes, Lendio cannot guarantee that the information contained in this page reflects new changes or updates.

Lendio advises you to review the SBA guidelines and regulations on your own and determine your Company’s best approach to receiving SBA loans. Lendio urges you to consult your own attorneys, lawyers, and consultants to make the best decision possible. The information contained herein should not be construed as legal or tax advice, and should not be relied upon as such.

Many solo entrepreneurs and freelancers keep their personal and professional finances combined when they first start out. Any paycheck goes right into their personal bank accounts, and any expenses are charged to their personal credit cards. 

In the beginning, this is understandable. You might not know if your business is going to succeed—or you might start your business as a side hustle, so you don’t think you need a lot of infrastructure. 

However, as soon as your business is established, it’s important to separate your business and professional accounts. Here are a few reasons why—and how to do it. 

You Can File Your Taxes More Easily

Your business can deduct a variety of expenses throughout the year, but you need to keep track of these costs and ensure that they’re separate from your personal accounts. An easy way to do this: open a dedicated business account. You can charge expenses to a business credit card or write out checks that pull from your professional funds.

Once tax season comes along, you won’t have to remember what professional expenses you had. You can simply download your transactions from this account and determine which costs are tax-deductible. This simplifies and speeds up the process. 

You Can Create a Cushion to Keep Paying Yourself

Many freelancers or sole proprietors use their business bank accounts to stabilize their income throughout the year. They deposit all of their income into the business bank account and then withdraw a flat salary each month. 

For example, a contractor might make $7,000 in January and $3,000 in February. By pulling a flat salary, he can afford to pay himself $5,000 monthly (or $4,500 monthly with a cushion saved for later). 

Some people enjoy the stability of knowing they’ll get paid the same amount no matter what they earn. If the business account starts to get too big, these freelancers can award themselves end-of-quarter or end-of-year bonuses and enjoy the extra cash. 

You Can Budget Better

Not only can you enjoy a flat salary with separate personal and professional accounts, but you can also budget your expenses. You can easily see which charges are related to your business and plan for fluctuations throughout the year. 

A common example of these kinds of expenses is professional software subscriptions. A business owner might use a software tool as part of their workflow and pay an annual fee to license it. If the cost of this service is charged each February, the business owner can budget for it and ensure they have enough funds in the bank to prevent overdraft fees. 

You Can Develop Business Credit

If your business begins to do well, you’ll likely want to scale—which will probably require additional funding. To secure this working capital, especially from a lender, you’ll want to have established business credit.

When your personal and business finances are intertwined, you make it difficult to identify your business income and expenses, which are used to assess your business credit. By separating the 2, you can paint a clear picture of the financial health of your business—making it easier to determine your likelihood of defaulting on a loan.

3 Steps to Separate Your Business and Personal Finances

There are multiple ways to prove that your personal and professional finances are separate from each other. Many of these steps are free or affordable for small business owners. 

1. Establish a limited liability corporation (LLC), S-corp, or C-corp. This will give you an employer identification number (EIN) from the IRS to separate your personal and professional business dealings. Most states charge application fees to operate LLCs and require annual reports and payments to stay in operation. Learn what your state charges and budget for it. 
2. Open a business checking account. Once you have your corporation established and EIN generated, you can visit your bank or credit union to open a business checking account. If you already have an existing relationship with the bank, they may be able to waive any opening fees or monthly charges to operate the account. Some banks, however, set limits for how much you need to keep in the account to stay active and above the fee limit.  
3. Take out a business credit card. While you’re at the bank, ask about opening a business credit card attached to the account—some banks offer this as a perk for opening an account with them. You’ll only use this card for business purposes in order to keep your professional and personal costs completely separate. As an alternative for getting your bank’s credit card, look into business cards that offer competitive rewards systems, like cash back or airline miles.  

Once you have your business credit card, you can start to build up your business credit score. This shows that your business can stick to a budget and repay its liabilities in a timely manner.

As mentioned above, most lenders look at business credit when issuing loans, so you may qualify for more favorable terms if you take the time to build up your credit when just starting out. If you lack business credit, then lenders might look at your personal credit scores as well to determine how risky it is to loan money to you. 

Like personal credit, it takes time to build up business credit, so the earlier you start, the better.  

Take Steps to Separate Your Personal and Professional Finances

Even if your business is brand-new, there are steps you can take to keep your personal and professional accounts separate. Start with good documentation and budgeting and then establish a specific bank account and credit process for your business. 

Finally, look into bookkeeping software to invoice customers and record income as it comes in. At Lendio, we offer a free self-service tool for small business owners. This is a great place to set up your ledgers and prepare your business for growth.

The IRS distinguishes different business entities (or statuses) for companies of various sizes and types. The smallest of these entities is the sole proprietorship or a company that is only run by a single person. Learn more about sole proprietorship by reading below.

What Constitutes a Sole Proprietorship? 

A sole proprietorship refers to a person who earns money throughout the year that doesn’t come from investments or income from working at a traditional company. Sole proprietors can also call themselves solopreneurs, self-employed individuals, contractors, and freelancers. 

Do You Have to Fill Out Paperwork to Become a Sole Proprietor?

No. Anyone can start a business as a sole proprietor without registering with the state they live in. However, this does not exempt them from other licensing and education requirements to operate the business. For example, a hairstylist could work as a sole proprietor but would still need a license to cut hair in the state. 

How Do Sole Proprietors Pay Taxes?  

Traditional employers take out a portion of your income to cover federal taxes like Medicare and Social Security. The employee pays half of the required amount, and the employer covers the second half. However, sole proprietors need to pay their taxes on their own. They can directly pay the IRS through quarterly estimated taxes by writing a check or paying online. 

Sole proprietors are responsible for paying both the employer and employee side of federal taxes. However, they can then deduct this income from their taxes when they file each year. 

What Are the Risks of Sole Proprietorship?

There are a few risks with opting for a sole proprietorship over an LLC (limited liability company). The main risk is that your personal and professional accounts can be linked. 

This means if a customer or vendor sues you, they can go after your personal assets like your home and car. An LLC can protect you, but you need to apply for the status and pay annual fees to your state.  

What Are the Benefits of a Sole Proprietorship?

Sole proprietorships are one of the most flexible business entity options out there. You do not have to file paperwork to become an LLC, and you don’t have to answer to shareholders and other owners like a corporation or partnership. Furthermore, all of the profits are yours. 

However, all of the risks and decisions also fall on you. You will need to secure funding, acquire clients, and do the work (except for outside contractors that you work with). If this burden seems too much, consider forming a partnership with another person instead. 

Start Your Business With Organized Books

If you have an exciting business idea, consider becoming a sole proprietor where you can take on a few customers and grow your brand over time. Starting as a sole proprietor can help you decide how to develop your career. 

In the meantime, check out the free tools offered by Lendio to better organize your invoices, expenses, and other ledger items for good bookkeeping within your business.

To have a business, you’ve got to have paying customers. But every small business owner knows that attracting new customers takes effort. Customer engagement doesn’t happen magically—it has to be encouraged. So what are some of the ways you can find new clients and get them to engage to help grow your small business?

1. Plan Your Marketing Strategy

You need a marketing strategy and budget. Everything else you do to gain a new client or create customer engagement ultimately falls under “marketing.”

To create your marketing budget, decide:

• How much should you spend on marketing?
• What should you spend those dollars on?

According to the US Small Business Association (SBA), the answer to “how much” depends on a variety of factors:

• What’s your industry?
• Are you a business-to-consumer or business-to-business company?
• Do you sell products or services?
• What’s the growth stage of your company?

Roughly speaking, the SBA suggests allocating 7–8% of revenue to a marketing budget (for an established business with $5 million or less in revenue with a 10–12% profit margin). That budget would be used for both brand development (e.g., your logo, website, business cards) and brand promotion (e.g., advertising, events).

Now that you know how much you have to spend on marketing, let’s explore ways to get potential clients to bite your shiny sales hook.

2. Advertise

Advertising seems like an obvious solution to get new customers or repeat business. The tough question is where you should advertise—in print or digital media? Digital advertising tends to cost less than other forms of advertising, but that doesn’t mean it’s always the correct choice.

Print or radio advertising works if your target market fits any of these criteria:

• Doesn’t have access to high-speed internet
• Regularly consumes a channel (e.g., reads a specific newspaper or listens to a type of radio station)
• Is concentrated in one geographic location (e.g., wants local information)

Digital advertising fits if any of these describe your target market:

• Has a specific demographic (e.g., 30–35 male homeowner living in Seattle)
• Is widely-scattered or remote
• Responds to interactive or flashy ads

Most likely, you’ll incorporate a mix of print and digital advertising. At a minimum, you’ll use some print advertising to create brand awareness, even if that is buying pens and magnets with your logo on them. But given that some of your target market uses the internet, you’ll spend some of your budget promoting social media posts or buying digital ads. And that mix will shift regularly based on factors like the needs of your current marketing campaign, social distancing rules, and what your customer behavior metrics tell you.

3. Expand Your Target Market

Perhaps you’ve been in business for a while and your market personas haven’t been updated recently. Take a step back and think outside your current target market. Would a market research project help you find new clients?

If you are a business-to-business company, are there other industries (such as the nonprofit industry) that could benefit from your product or service? If you are a business-to-consumer company, could a new distribution channel or targeting a different demographic net you more clients?

4. Spend Time Networking

Never underestimate good old-fashioned networking as a method for gaining new customers. This includes both opportunistic networking and active networking.

Opportunistic networking means taking advantage of those small, unplanned moments to connect. When you are introduced to a friend’s neighbor, mention your business and see if there are any opportunities. Or while getting your haircut, eavesdrop on the conversation in the next chair to discover new people to pull into your circle.

Active networking means seeking to connect with people or businesses. Small business associations can be a goldmine for finding new contacts. There are associations for all kinds of interests—from industry-specific associations to groups focused on businesses owned by veterans, women, or other niche groups. And nowadays, you don’t even have to leave the comfort of your couch—networking groups have gone virtual.

But whether in-person or virtual, you still have to allocate time for networking, including following-up. Plan for the long-haul as it’s unlikely that every meet-and-greet will garner an instant client.

Treat networking like dating. Don’t make the initial conversation all about you. Instead, find common ground, and then set a real date to get to know each other better. Figure out what you can do for the other person. Can you connect them with potential customers? Suggest a mentor? Recommend a business plumber? Eventually, the relationship may evolve into one that lands you a new customer.

5. Become a Thought Leader

A thought leader is “…someone who, based on their expertise and perspective in an industry, offers unique guidance, inspires innovation and influences others.” It’s not a one-and-done task and isn’t a sales strategy—it falls under the concept of building brand awareness. To become a thought leader, consistently create content—write white papers and blog posts, speak at conferences, share industry research—until you are perceived as an expert in your company’s industry.

Gigi Griffis became a thought leader for location-independent freelancers by routinely sharing her actual monthly budget numbers for living in specific locations abroad. She posts about her experiences in a location without pitching her services. But by consistently publishing content, she has positioned herself as an expert in the field of digital nomads while also generating brand awareness of her writing services.

6. Collaborate With Other Businesses

How about using the power of togetherness to attract new clients?

Think about how you first discovered your favorite food truck. Maybe you saw them at a stoplight and decided to look them up. But more likely, the truck was parked somewhere you already frequented, like at your favorite brewery. That type of collaboration is a win-win. Cross-promotion occurs as both the brewery and the food truck advertise each other on their event calendars and social media posts.

Another collaboration example exists between 2 North Carolina companies—Blue Ridge Biscuit Company and Dynamite Roasting. The biscuit cafe serves coffee brewed from the local roaster’s coffee beans and also sells bags of those beans at checkout. These 2 businesses have cross-pollinated their customer bases and succeeded in encouraging customers to support local businesses.

7. Sponsor Other Organizations

A sponsorship strategy can buy you goodwill and brand awareness. Sponsorship comes in many forms—time, talent, and treasure. Your employees could staff the T-shirt distribution table at a local race. Your business’s logistics experience could help a food bank optimize its pick-up route for food donations. Your company could help purchase a softball team’s jerseys or donate your product as a prize in a silent auction “goodie basket.”

Imagine how that donation could translate into a paying client. Other volunteers, attendees, or staff may need your product or service. Your business, via your sponsorship strategy, is now a familiar and trusted source. Or you could parlay your free service or product into paid business with the organization you sponsored as their needs change.

8. Hold a Contest

Contest marketing is exactly what it sounds like. A business holds a contest to give away something—a product, a service, or an experience. In exchange for a contest entry, hopeful participants share their contact information—and also reshare the company post or tag a friend in the comments of the contest announcement.

Reshares tend to make non-customers think highly of a company if a trusted source (Mom, a best friend, an influencer) shared the contest promotion with them. Additionally, people who win tend to give back by buying more items or encouraging others to buy from your business.

9. Host an Event

Hosting an event, in-person or virtually, is another way to attract new clients. Events can be anything from a full-blown conference to a training class to a social gathering.

For example, a winery may host an onsite party to celebrate a customer’s retirement. An art studio could lead a “paint by numbers” class as the in-party entertainment. Party-goers are now part of the potential client base for both businesses.

Virtual events, on the rise before the pandemic and now the new normal, expand your potential audience beyond your geographic location. While they aren’t necessarily less work to put on than in-person events, well-organized virtual events can be cheaper to host than in-person events and can help you build your event organization skills. Thinking about hosting training courses? Start with a free 30-minute limited-attendee “Tips and Tricks” webinar to try out your course material while building your potential client list.

10. Let Others Do the Work For You

We’ve all heard the phrase, “There is no I in team.” Why not let your satisfied customers be part of your team via a referral or affiliate program?

Referral and affiliate programs share a similar goal of getting others to bring you new customers but they operate differently. A referral program usually is a “share with your friends” program where your existing customers get a discount code if their friends make a purchase. An  affiliate programrequires you to have an e-commerce store. People or businesses (hopefully your own happy customers who can vouch for you) recommend your product or service with a unique link that earns them a small commission.

Like any marketing strategy, you’ll have to take some steps to set up your referral or affiliate program. These steps include implementing technology to handle the program, writing the rules for discount codes and commissions, and then marketing the program so folks view it as a viable source of passive income.

11. Create a Customer Loyalty Program

What does a customer loyalty program have to do with finding new customers? Well, it’s easier to keep a customer than it is to gain a new one, and happy customers tend to recommend you to others. And a loyalty program can nudge that one-and-done customer into the repeat business category.

For example, a recently widowed 88-year old senior needed her air-conditioning unit serviced, so she called the company her best friend suggested. The repair person recognized that the woman has no experience with the need for yearly maintenance checks for both the a/c and the heating unit. He explained preventive service to her and then offered her a small discount as a loyal customer if she booked her pre-winter heater checkup with his company. Based on the recommendation from a friend and the loyalty program, the widower has become a repeat customer for that business.

Keep in mind that creating and managing a customer loyalty program means more than creating a punch card to give a free cup of coffee after the purchase of 10 cups. It involves understanding what makes your customers loyal, designing the right customer loyalty program for your business, and then measuring the effectiveness of your program.

12. Leverage Social Media

Social media for small businesses can create customer leads and give your existing customers a chance to engage with you. View it as a place to build an emotional connection with your potential customers—don’t approach it as digital advertising.

Of the gazillion channels out there, which platform is the correct choice for your business? The stock answer—the one you are willing to use. In other words, while you should use the channel where your target market hangs out, you also have to choose a platform you are willing to use consistently. If you hate editing photos, then Instagram probably isn’t the social media platform for your business (unless you delegate photo-editing to a freelancer).

Forget trying to go viral or securing millions of followers. Instead, focus on building a connection with followers relevant to your business. Share stories and include some of “you” in your posts so people want to be connected to your business. Maybe that means a backstory about using your great-aunt’s recipe for a certain dessert or how your product helped a member of the community survive an illness.

Private Facebook groups enable you to build a steadfast group of champions for your business. It also gives you a place to ask questions about what your followers actually need or want from your industry. Members of your group may not be instantaneous customers but evolve over time into some of your most loyal customers. Take, for example, Amanda Kendle’s private Facebook group, “Thoughtful Travellers.” The Facebook group isn’t used to sell anything, but it builds a community of like-minded people who are more apt to listen to sales pitches from Amanda’s website or public Facebook page.

Another option to increase brand awareness and engagement is a watch party like those on Facebook. We’ve all heard that videos capture attention more than still images or words. Take that product release video or 1-hour how-to-guide you already posted and schedule a watch party. Encourage your followers to invite their friends to the watch party. During the watch party, people watch the video together and comment in real-time. Not only have you repurposed content, but you’ve also garnered new customer leads based on who attended the event. With the right call-to-action during the party, you might even get on-the-spot new customers from the event.

Reddit can be used to promote your business as a thought leader or to discover what problems your potential clients need help solving. Neil Patel, a leading digital marketer, offers tips on navigating the Reddit culture to subtly market your product while solving users’ problems or asking for advice on your marketing problems. You could even follow industry-related subreddits to brainstorm content to include on your own website.

13. Embrace Digital Tools

Digital tools, whether you love them or hate them, are key to securing new customers. 

Customers expect a “real” business to have a professional-looking and easy to navigate website. Following best practices on the website, such as placing your call-to-action in the right spot, can increase customer engagement and online sales.  

And how many times have you asked Google for an “Italian restaurant near me”? Make it easy for local customers to find you by optimizing your website SEO and correctly setting up your local online presence, including Google My Business and Yelp Business pages. These help your business appear in “nearby” searches and also give customers a place to review your business.

Digital tools also allow small businesses to pivot and adapt as needed to shifts in consumer spending. For example, The Spice House used its online store to capture more sales in April and May when customers shifted to cooking at home due to COVID-19 restrictions. Some museums, like the MET, have figured out how to monetize their virtual tours. Even traditionally offline industries like healthcare and memorial services have survived the socially-distanced culture we currently face by embracing digital.

Attracting new customers takes time and money, but every successful business must dedicate itself to the task. While it may not be effortless, using the above tips can help you gain new clients to help grow your business.

Documenting your business’s financial status is a fundamental part of running a business, even if it isn’t the most enjoyable. There are a few documents that nearly all businesses, from a beginning freelancer to a Fortune 500 company, should regularly update and study.

Banks, investors, and other lenders will usually require 3 financial documents in making funding decisions: the profit and loss statement, the balance sheet, and the cash flow statement. These 3 data sets are not only the standard reports for rating a company’s financial health externally—they’re also essential for small business owners to truly understand how your company is faring internally.  

1. The Profit and Loss Statement

The business press and investors always eagerly await P&L statements from publicly traded companies because the information is clear, easy to digest, and hard to spin. Similarly, the quick hit of data provided by a P&L statement is incredibly useful for understanding the financials of your company at the moment.

“Small business owners should look at this report at least monthly,” suggests Eric Rosenberg of Due. “It is also a good idea to look at trends, comparing current results to the same period in the prior year and comparing the most recent month with the last few months. This should tell you what’s working well, what isn’t, and help you to focus on the most profitable parts of the business.”

P&L statements are most useful when you can put them into context—this way, you can see how your business is performing over time.

2. The Balance Sheet

There are 3 main components to a balance sheet: assets, liabilities, and shareholders’ equity, also called owners’ equity.

“It shows what your small business owns, owes, and what shareholders have invested in your small business,” Elizabeth Macauley notes in The Hartford’s Small Biz Ahead blog. “This math serves as the foundation of your balance sheet.”

Your assets should equal your liabilities plus owners’ equity. Assets include cash in your bank account, inventory, and real estate, while liabilities most commonly include debts. The owners’ equity equals assets minus liabilities.

“Every balance sheet should balance,” Macauley continues. “You’ll know your sheet is balanced when your equation shows your total assets as being equal to your total liabilities plus shareholders’ equity. If these are not equal, you will want to go through all your numbers again.”

Your balance equation should always be equal if you are doing the math correctly. If your company’s liabilities overwhelm your assets, your owners’ equity can be negative.

3. The Cash Flow Statement

“Cash flow statements are used to evaluate the financial health of a business as well as to provide a full picture of how it spends and invests the money it already has,” Mona Bushnell explained at Business.com.

This statement helps you to understand your cash flow, which is often the lifeblood of any small business—especially new ones. Cash flow is critical, as it dictates how much money you have on hand to cover expenses. If you’re frequently running out of cash due to customers paying late or financial mismanagement, you could soon face a brutal cash crunch.  

4. Accounts Receivable and Accounts Payable Aging Reports

“An aging report is used to show the outstanding customer invoices and the number of days they’ve been outstanding,” the Corporate Finance Institute notes.

On the opposite end, an accounts payable aging report shows what invoices you need to pay and how much time you have left to pay them. Alongside your cash flow statement, you can see how your expenses should be paid over time. 

UPDATE: The PPP loan application period ended May 31, 2021. Apply for the Employee Retention Credit today through Lendio.

If you’re a 1099 worker (or a small business that employs 1099 workers) seeking a Paycheck Protection Program (PPP) loan, you likely have questions about whether or not you qualify for a PPP loan, what you need to apply, and how potential loan forgiveness will work. We’ve put together some of the most common questions we’ve received surrounding PPP and 1099 workers to give you the information you need. 

How Can 1099 Workers File for a PPP Loan?

Independent contractors can submit a PPP loan application through their bank or a lending marketplace. Given that many banks aren’t prioritizing the smallest loans, we’ve stepped up to help independent contractors secure funding. We’ve partnered with multiple PPP lenders to maximize your chances of funding, and we’ve streamlined the application to make it fast and simple. 

PPP applications opened for 1099 employees on April 10, 2020. 1099 employees are now eligible to apply for their own PPP loans through their banks or a loan marketplace.

Can 1099 Workers Receive a Second Draw?

Yes, qualifying independent contractors can receive an additional disbursement of funds by applying for a Second Draw. Just like the First Draw, a borrower can receive up to 2.5 times their monthly payroll costs through a Second Draw. To qualify you must meet the following criteria:

• Have received a First Draw through the PPP program
• Have used all First Draw funds (or plan to use them)
• Have used First Draw funds only for allowed uses
• Experienced a 25%+ reduction in revenue in 2020 compared to 2019

Will You Need to Provide Documentation to Prove a 25%+ Revenue Reduction for Second Draws?

Documentation proving revenue reduction is only required for loans over $150,000. It’s unlikely that most 1099 workers would have a loan more than that amount, given that independent contractors may only claim payroll for themselves (in addition to other payroll-related expenses) as a part of their payroll calculations and the SBA has capped salaries for individual employees at $8,333/month ($100k/year). It is likely that you will be required to certify this revenue reduction instead. 

What Documents Do 1099 Employees Need to Apply for a PPP Loan?

• 1099-MISC
• 2019 Schedule C, which is now required. If you haven’t yet filed a Schedule C, you must complete one and submit it with your 1099-MISC
• Your birth date
• A color copy of your Driver’s License (front and back)
• A voided check for your business bank account
• If you have 941 Quarterly Tax Filings (2019, 2020 Q1) or 944 Annual Tax Filings (2019), they should be submitted

You can visit our complete step-by-step guide to completing an application for full instructions. 

Why is a Voided Check Required in the Lendio Application?

A voided check is required to demonstrate business revenue deposits.

Will a PPP Loan for a 1099 Worker Be Forgivable?

If PPP funds are used for allowed uses during the covered period of the loan (the 24 weeks immediately following disbursement of funds), then a borrower will likely qualify for loan forgiveness. 

The SBA has streamlined the forgiveness with a one-page application for loans under $150,000. Additionally, for loans under $150,000, you will not be required to submit documentation on your forgivable expenses. Instead, you will be asked to certify that funds were used for forgivable expenses. 

Can You Receive Unemployment at the Same Time as Your PPP Loan?

No. PPP loans cannot be used for the same purpose as other government funds at the same time. So you cannot receive unemployment at the same time as you’re using PPP funds to cover lost payroll. 

If you are currently receiving unemployment, you will have to cancel it starting on the date your PPP loan is funded. If you are still suffering from lost wages after PPP funds have been exhausted, you can apply for unemployment through your state agency. 

Can You Choose the Start Date For the Loan?

You cannot choose the start date for the loan. The loan term begins the day you receive funds. 

Can a Small Business Include 1099 Employees in Their Payroll Calculations?

No, 1099 employees should not be included in a small business’s payroll calculations for their PPP loans. 1099 employees are considered their own businesses under the PPP. As of April 10, 2020, 1099 employees are eligible to apply for their own PPP loan. 

Why Does the Application Ask If You Have 1099 Employees If You Can’t Include Them?

Guidance for PPP loans asks if a small business was open as of February 15 and “had employees for whom it paid salaries and payroll taxes or paid independent contractors, as reported on Form(s) 1099-MISC.” 

Treasury guidance regarding 1099 employees pertains to eligibility. You need to either have employees who receive a salary or 1099 employees who you pay in order to qualify for the loan. It does not pertain to loan size calculations. 

Lendio strives to provide you with the most current information as it relates to the Paycheck Protection Program, related SBA programs, and relevant regulations. The rules and regulations governing these programs are being regularly clarified by the SBA, and other agencies. In some cases, the provided guidance may directly conflict with other competing guidance, laws, rules, or regulations. Due to these changes, Lendio cannot guarantee that the information contained in this page reflects new changes or updates.

Lendio advises you to review the SBA guidelines and regulations on your own and determine your Company’s best approach to receiving SBA loans. Lendio urges you to consult your own attorneys, lawyers, and consultants to make the best decision possible. The information contained herein should not be construed as legal or tax advice, and should not be relied upon as such.