Ask Entrepreneur

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Tim Berry

Is there a formula for calculating hourly payroll expenses per employee?

That includes taking into consideration benefits paid, i.e., dental, medical, vacation, 401(k).
Penny Morey

How can I restructure my spa business to alleviate debt?

I own a spa. I have a large amount of debt from an expansion that failed due to personal problems. I scaled down the business to cut overhead, but I still have the debt. I have since divorced and have no other income. My cash flow has been cut by one-third because of the economy. I am looking at debt management. My business is still showing a profit; I have been open since 2001.
Brad Sugars

With this slow economy I am quickly sinking. Should I look into filing bankruptcy, finding investors or simply selling my new dream bakery?

I have finally opened my dream bakery and don't know where to turn. I truly love what we do as a family and what we provide to our customers. But I feel that I may be jeopardizing our house and even our future. At some point you have to stop pulling money from your household to keep your business afloat. Since July, we have lost an average of $2,000 each month and don't see an end in sight. In this situation, can I even find an investor or a buyer? What should I do?
Brad Sugars

I'm starting a small boutique. Is Sage BusinessWorks my best bet for accounting?

I'm researching accounting software for my retail boutique startup. In terms of cost and scalability, I know there are many options. I plan on using Retail Pro and know that Sage integrates seamlessly. But I don't know if it's too advanced for a startup and how much it costs. I'm open to other suggestions.
Lena West

Which type of bank account do I need as a sole proprietor ?

I have just received my DBA and I'm ready to begin my own business (software consulting), so now I would like to clarify whether I can use (as I would like) my personal bank account for business purposes, too. A friend of mine says so, but on my bank website it looks like I need a business account.

Since it is a type of business entity that legally has no separate existence from the owner I feel I can use my personal account. But I would like to receive a confirmation about that.
Nina Kaufman

I have invented a safety edge for swimming pools that can save kids and little dogs from drowning.

My prototype works fine, but I need backing to produce it. Any advice?
Brad Sugars

Can a partnership use a partner's family term life insurance policy as a business expense, with the intention of using the policy as a way to buy out the spouse's interest in the business?

We are setting up key man policies, and one of the spouses asked whether the business could pay for the family's term life insurance policy as a benefit from the business.
Nina Kaufman

How can we fix our cash-flow problem?

We were a pizza and grill near the university and relocated to a brand-new building across from the campus. While building, we ran into problems as the cost of materials rose and business slowed. We are now short on funds and make huge payments to subcontractors, which kills our cash flow. No bank is willing to help. We have strong sales--$3 million-plus--but not enough to pay everyone. We are short $400,000 on a $3 million project, with sales on the rise. Banks are scared to lend despite a track record that goes back seven years.
Brad Sugars

Should amortization be deducted from sales for the calculation of gross profit?

I want to evaluate profitability by customer. For that I'm looking at gross profit by customer. But I don't know what to do with amortization. Should I take it into account in the GP calculation or after GP?
Tim Berry

Should I continue to grow or should I slow down?

I started a new business on a shoestring budget in my backyard about a year ago. It's grown very fast and I've since moved out of my backyard into a 12,000-square-foot warehouse. I have been investing most of the money back into the company for inventory and labor.

I've raised my prices, and sales have leveled off. My problem is that the overhead needed to keep up with inventory and labor is high, but I can't catch my breath long enough to deal with cash flow. The cash flow isn't large enough to sustain the company unless I keep the volume up. Meanwhile, my credit score has dropped because I placed the company and not my personal bills first (mistake).

Should I try to get a line of credit from the bank or put the money coming in now toward the debt and slow growth?
Tim Berry

How can I get investors involved in a company that reconditions tractors and trailers?

We pressure wash, sand blast, then prime and paint to look as good as new for a lot less than purchasing a new tractor or trailer.
Tim Berry

What do you do when you can't keep up with the demand for services and can't afford to hire an employee?

My future son-in-law started his own small engine repair business two years ago. He immediately learned that the demand for these services was incredible and time-consuming. Even with nonstop work from 6 a.m. to 10 p.m., he can't keep up. Yet he can't afford to hire someone to help. He is about to give up the business because paying bills is becoming increasingly difficult.

I suggested he charge more, but he says that to keep his clients and compete with larger businesses, he needs to keep his prices below his competitors'. Getting a loan is also a problem because his collateral is limilted. What else can he do?
Brad Sugars

I need a bridge loan to meet huge and steady demand, but my credit is a train wreck.

I started the business six years ago from the back of my van with $500. Over the past two years, demand is growing faster than my ability to purchase inventory. I now reinvest 95 percent of everything into growing inventory ($450,000 last year) that sells out months before it is made.

I deal in handmade, blank-page leather journals so there is no way to push a button and have a assembly line make more. Even though the business grew 300 percent during its SLOWEST YEAR, I am unable to attract an angel investor to shore up my inventory needs or to obtain loans. The company products can be found in more than 300 stores.

I have tried loans against credit card receipts, banks and small ads in financial journals. I don't have any rich friends or family who can help, either. My personal credit is awful. How can I get my wholesale/import/design business a six-month bridge loan or a minority angel investor ?
Brad Sugars