Cut It Out

Start-up savings, effective invoices.
Magazine Contributor
7 min read

This story appears in the February 1998 issue of . Subscribe »

If you're setting up a homebased on a tight budget, cut out the frills.

Before buying new or equipment, consider making do with what you have. Use an old or a that isn't being used. If that doesn't work, check out used furniture stores or thrift shops, where you can also find filing cabinets, chairs, bookcases, lamps and other office furniture and accessories at bargain prices.

Outside services too expensive? How about -outs instead of pay-outs? When Patti Negri started Premeditated Productions, a murder-mystery dinner theater in , , the company couldn't afford promotional services. But a fledgling public relations agency was willing to help generate publicity in return for complimentary show tickets.

has become popular across the nation--and on grand levels, with individuals and corporations swapping everything from vacations and cars to services and computers. Perhaps you can find an accountant or an office-supply store that needs your service or product and is willing to make a trade.

Other money-saving tips:

  • Track all your expenses closely for a month or two, then examine those records to see where you might be spending excessively or needlessly. Where can you trim?
  • Are you paying too much for office supplies? Check out discounters and wholesale suppliers.
  • How much could you save on telephone calls if you switched long-distance carriers?
  • Do your vendors offer favorable prices? Ask for lower rates and get competitive bids.
  • Are you spending too much on equipment repairs? It may be time for a trade-in.
  • Would leasing equipment help until you're in a stronger cash position?
  • Are you paying bills upon ? What's your rush? Delay payment until the due date.

Paul DeCeglie is a former staff reporter for Journal of and American Banker. He can be reached at

Foreign Exchange

Many smaller businesses get off to healthy starts assisted by moderate loans from family and friends, while larger companies access financial markets to raise millions of dollars in expansion capital. Then there are those who fall between those two extremes: Companies that need more than a few thousand dollars but less than a few million.

"That's where I was two years ago," says Thomas Burnham, "and I'm still there today. The difference now is OFEX, AIM and other new stock markets designed for entrepreneurs like me and other Start-Ups readers."

In February 1995, when Burnham opened his first South Beach Cafe in East Lansing, Michigan, he immediately began thinking about replicating the successful art deco eatery throughout the United States and Europe. His only obstacle was capital. "I needed $600,000, so I turned to friends in Great Britain [in the fall of 1995]," Burnham recalls. "Instead of introducing me to investors, they introduced me to two new stock exchanges for start-up entrepreneurs: OFEX and AIM. Within six months, we took South Beach public on OFEX and raised $600,000."

In early 1997, South Beach did two supplemental OFEX offerings, raising another $750,000, then moved to AIM last May and raised $3 million for more construction and working capital.

The new London exchanges--established in 1995--make going public easier, faster and less expensive (8 percent to 12 percent of what you raise) for companies in any business operating virtually anywhere in the world, according to Burnham. "OFEX is geared to raise up to $2.5 million and AIM is geared to raise from $2 million to $10 million," he says. "U.S. companies are encouraged to participate."

For step-by-step guidelines on where to start, Burnham suggests contacting the Institute for International Entrepreneurship, Graduate School of Management at the University of Dallas.

Payment Due

Invoicing can pose problems and adversely affect cash flow for entrepreneurs when it's not handled properly. Try these tips to make sure you get what's coming to you.

The optimum time to bill customers is as soon as it's practical and convenient for you to do so. If you're in a service , bill your client the day the service is completed--even sooner if you incur substantial expenses along the way. If you ship products to customers, include the invoice with the shipment.

The design of your invoice plays a role in how quickly it's paid. The form should have a professional appearance with the word "invoice" clearly printed near the top. Your name, or the name of your company, your mailing address and your telephone number should be prominent on the form.

Address the invoice to the person responsible for remitting payment. Name or describe the product or service on the invoice; specify the exact charges for each item; clearly state the total of the bill; and identify the person who placed the order.

To speed payment, state: "payment due on . " To further expedite payment, consider offering a discount if paid within 10 days or, conversely, state that you will charge interest or a penalty if the bill is not paid within 15 days.

On large orders or long-term projects, arrange for payment up front or for partial payments as deliveries are made or work progresses. Put payout details in writing and have the agreement signed before you begin.

Direct Connection

Direct answers to your investment questions are now available online, along with investment advice and a host of related features from Standard & Poor's.

Called S&P Personal Wealth (, the new Internet-based service offers investors personalized, objective advice and recommendations on specific stocks, bonds and mutual funds. The recommendations are created, monitored and updated by Standard & Poor's on an ongoing basis.

You may access the information and portfolio tracking options free for 30 days (investment advice is not included). After that, the monthly subscription fee is $9.95.

In addition to investment management features, the S&P Personal Wealth Web site includes original editorial content, market commentary and research and analysis. Customization tools allow users to tailor the site's research and analysis, news, stock information, and company and fund research to meet their individual needs.

"For the first time ever, an investor will be able to fully integrate investment recommendations, research and portfolio evaluations guided by the expertise of Standard & Poor's," says John Fitzgerald, president of the company's consumer markets division.

Designed for individual investors at all levels, the user-friendly service offers long-term, ongoing solutions by recommending specific stocks and mutual funds after analyzing your current financial situation, financial plans and risk tolerance.

Hire Power

Tempted to take on full-time employees? Be sure to consider your alternatives carefully, because you'll also be taking on nagging responsibilities such as withholding and remitting taxes, and preparing tax returns. Then there's the added expense of paying employee benefits, half their Social Security and Medicare taxes, workers' compensation insurance, and unemployment and disability insurance--not to mention all the related paperwork. The good news: There are two great alternatives to hiring full-time employees.

One option is to hire temporary workers. Temp agencies can furnish workers skilled in virtually any discipline--from clerical to sales to management. The temp agency, as the workers' employer of record, is responsible for payroll and all the related paperwork, and you may terminate the worker whenever he or she is no longer needed.

Another possibility is finding interns. If you lack the funds to pay workers but have time to teach them, think interns. Usually students who work without pay in return for learning your --or part of it--interns can be found through local high schools or colleges. Just call and explain your needs (job description, hours, skills required). The school may even offer the students credit for job experience.

Contact Source

South Beach Cafe, 2201 Cantu Ct., Sarasota, FL 34232, (941) 377-7225.


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