|Small business owners and nonprofits across Washington can start applying today for low interest loans of up to $150,000 through the newly-launched Small Business Flex Fund. The Fund is a public-private partnership aimed at helping small businesses and nonprofits – particularly those in low-income communities – recover and grow as communities across the state reopen for business.|
Learn more now.
Newly-opened Small Business Flex Fund program offers low-interest loans to small businesses and nonprofits
The Washington State Department of Commerce this week launched a new Small Business Flex Fund. The Fund is a public-private partnership aimed at helping small businesses and nonprofits – particularly those in low-income communities – recover and grow as communities reopen for business. Gov. Jay Inslee in November 2020 approved a foundational investment of $30 million for Commerce to create a recovery loan program. Commerce is partnering with several financial institutions and community-based organizations to lend $100 million or more to small businesses and nonprofits with fewer than 50 employees and annual revenues of less than $3 million.
Qualifying businesses and nonprofits can apply for loans up to $150,000. Loans are available in 60- or 72-month loan terms at interest rates between 3-4.5%. The Fund works with and through local Community Development Financial Institutions (CDFIs), which serve under resourced communities and underbanked businesses the Small Business Flex Fund aims to help. Interested applicants pre-apply on the Flex Fund’s online portal and, if they qualify, will be matched with a lender. Once matched, the participating lender will assist the business owner throughout the application process and provide additional advisory support. If a business doesn’t qualify, they will be connected to a trusted community organization that can assist with finding other resources. For more information and to apply, visit smallbusinessflexfund.org.
Employer tax relief
With a goal of supporting businesses, the state legislature is stopping more than $900 million in employment taxes from being charged in 2021 and another $1.8 billion in the future. Learn more on the Employment Security Department’s employer news and updates page. Also new this year, the legislature set aside $500 million in an unemployment insurance relief account, directing assistance to many of the hardest-hit industries. Employers will see these adjustments on their December tax rate notice. Read more about how the Legislature is helping employers with employment taxes for 2021 and beyond.
Trainings and Webinars
State Department of Commerce launches new round of no-cost ScaleUp Business Trainings
ScaleUp: The Rebuild Edition is focused on helping small businesses restart and rebuild by improving their strategic decision-making, creating new operational efficiencies and strengthening the bottom line. Topics include creating efficient business systems, improving product/service alignment, creating a stronger competitive advantage in the marketplace, understanding financial statements and key business drivers, increasing sales leads and improving the sales funnel. A special “study hall” provides additional opportunities for private mentoring and coaching. The cost of this program valued at $1,599 is provided at no cost to Washington state businesses thanks in part to a grant from the U.S. Economic Development Administration.
Registration information can be found at http://startup.choosewashingtonstate.com/programs/scaleup/. For further questions, contact James Davis at firstname.lastname@example.org or (360) 464-6051.
Grow Your Business – free July 14 webinar
Grow Your Business is a free, one-hour webinar for established businesses that are actively seeking opportunities to grow their business from beyond its current model – new markets, new products, new locations, new staffing, and new financing. Its focus is on government-supported opportunities and assistance and regulatory impacts of growth to factor in your planning. The webinar includes brief presentations from several state agency small business liaisons with dedicated time for questions and answers. The next webinar is scheduled for July 14 at 2 p.m. The webinar includes brief presentations from several state agency small business liaisons with dedicated time for questions and answers. Click here for more information about the SBRR webinars and to register online
Start Your Business – free August 10 webinar
Start Your Business is a free, one-hour webinar for aspiring entrepreneurs or newly-started businesses to gain valuable information about business registration and licensing, other regulatory requirements, and resources for further assistance. The next webinar is scheduled for August 10 at 2 p.m. The webinar includes brief presentations from several state agency small business liaisons with dedicated time for questions and answers. Click here for more information about the SBRR webinars and to register online
Manage Your Expectations
by Kelly Deis of SoundPoint Consulting
Most business owners do not have a realistic idea of what their businesses are worth. Owners almost always think that their business is worth quite a bit more than the market would likely bear. There are several reasons for this.
1. Emotional Ties: Owners are personally and psychologically tied to their business. This is particularly true for long-running family businesses.
An owner has poured their heart and soul into their business. Where others may see a mundane business, owners – like proud parents, see their business as an apple of their eye. This emotional tie may cause a disconnect with the realities of the market.
2. Lack of Analytics: Most small business owners do not have a grounding in the analytics which determine a company’s value.
Sadly, I have run across several owners who negotiated a purchase price for their businesses with their gut, and ultimately overpaid. Now, they are hoping this is the baseline for the current valuation. Not surprisingly, this is not a criterion for prospective buyers. Most buyers value a business based on its cash flow. The original purchase price rarely – if ever, is a factor.
3. Needs-Based: Some owners reverse engineer the value of their business based on the amount they want/need.
This is a bit like the tail wagging the dog. A knowledgeable buyer certainly won’t over-pay for a business in order to fund your retirement.
4. Unproven Success: Early stage or high -growth companies may not have proven their business model yet.
Remember, in most cases small businesses are bought based on historical performance, not projections. To profit from investments made to grow the business, you should count on three years of sustained performance at the elevated levels.
At the end of the day your business is only worth what a buyer is willing to pay. Absent that, a formal valuation not only helps to set expectations, but also educates the owner on the variables which impact value.
While getting a valuation which is significantly less than one had hoped can be very discouraging. However, recognizing the factors driving value can also be empowering. And, positively influencing those factors can lead to a higher valuation down the road.
Kelly Deis is president of Soundpoint Consulting, based right here in Kitsap County. She earned an MBA at the Wharton School, and offers services as a Certified Valuation Analyst and Certified Exit Planning Analyst. She also helps clients develop a differentiating strategy.
by Kelly Dies, Soundpoint Consulting
A dollar is a dollar. That’s true. And, all revenue is equal. Right? Well no, not in an investor’s or potential buyer’s eye. So what makes some revenue good and other revenue better?
Recurring revenue is highly desirable because is it known and predictable. The best example of this is an auto-renewal fee or service charge periodically charged directly to a customer’s credit card. Once the initial sale is complete there are no more costs to acquire a customer. The revenue stream is much like an annuity. Continue to provide the goods or services as promised and the revenue keeps coming in.
Great examples of this are insurance premiums and streaming fees. Once customers have decided to purchase the product – and assuming they remain content, they are happy to have their credit card billed automatically.
In contrast, consulting and attorney fees are often one-time in nature. Revenue ceases when the project is complete and the engagement ends.
High Switching Costs
Revenue generated from products or services that have high switching costs are more reliable than from those which do not. Switching costs can vary from technical reliance to data lock-up to high start-up costs with a new vendor.
A great example of high switching costs includes services which are outsourced, such as payroll processing. The cost to bring the work in-house is significant as you would have to hire and train a staff of people for this function. Likewise, a bank account with automatic bill pay also has high switching costs, as unwinding those (recurring) transactions is a pain in the neck!
High switching costs in combination with recurring revenue results in some very high quality revenue. Take for example, my relationship with Constant Contact which reliably sends these monthly newsletters to you on my behalf. My credit card is billed monthly. And, it would be a quite an undertaking to transfer my email list to another email provider. Do you think
Constant Contact is at risk of losing my revenue? Absolutely not!
Revenue from a loyal customer base is extremely valuable. Not only does it guarantee repeat business but it potentially means additional business from referrals, thus significantly reducing the overall need for marketing and advertising spend.
Good examples of this are a trusted relationship with your tax preparer or a favorite clothing store. Although switching costs may not be high, loyalty keeps you from looking elsewhere.
Consider two comparable stores with the only difference being the loyalty of the customer base. The store with the more loyal customers has less customer churn and doesn’t have to work as hard for every dollar of revenue. Conversely, the store without the loyal customers has to work hard for every dollar earned. Not surprisingly, the investor/banker/ potential buyer will value the first store more.
What are you doing to earn and keep the loyalty of your customers?
All businesses have revenue streams with different margins. Revenue that generates higher gross margins is more valuable than revenue which generates lower margins. Makes sense. You cannot generate much income from a revenue stream that is saddled with large variable costs.
And, if a revenue stream costs more to produce than the dollars it generates, well that is not good. It’s like giving someone $1 in exchange for 85¢. Do this in too often and you will soon be out of business.
The bottom line – know and manage your unit costs. Try to divert revenue from your lower margin products to those with higher margins.
Just like an investment portfolio, a diversified customer and supplier base is less risky than if you are highly dependent upon a handful of them.
If one of your largest customers were to transfer business to a competitor, how quickly can your business recover? Or, if your largest suppliers were to run into financial difficulties, could you weather the storm?
If your business model is highly dependent upon Google, Amazon or Microsoft, what happens if they change how they do business with companies such as yours? Trust me, you do not have much negotiating power with these guys.
A good rule of thumb is that your top 5 customers should not be responsible for more than 15% of your total revenue. A similar metric should hold for suppliers.
If you would like assistance improving the quality of your revenue, please give me a call. I would be happy to help.
The American Rescue Plan Act established the Restaurant Revitalization Fund to provide funding to help restaurants and other eligible businesses keep their doors open.
During this live webinar we will discuss:
- What is the Restaurant Revitalization Fund
- Who is eligible to apply
- How much money you can get
- How funds can be used
- How and when to apply
- Where to get help with your application
Staff from SBA will be answering your questions live throughout the presentation with dedicated Q&A time at the end.
Who should attend: Current small business owners who have experienced pandemic related revenue losses who own a restaurant, bar, and other similar places of business that serve food or drink.
What you should know about
April 9 deadline for Working Washington Grants: Round 4
The application portal is still open! This program is administered by the state Department of Commerce and focuses on brick-and-mortar for-profit small businesses, especially those that were required to close due to public health and safety measures. Grant awards will be up to $25,000. Visit commercegrants.com for information. Materials are available in multiple languages and technical assistance teams are ready to help with questions.
WSDA COVID-19 Relief and Recovery Grants for ag-related sectors
The Washington State Department of Agriculture (WSDA) is offering grants to small agriculture-related businesses in sectors that have suffered economically due to the coronavirus pandemic, but have been left out of earlier relief programs.
The WSDA Relief and Recovery grants, funded through a partnership with the state Department of Commerce, are intended to assist small businesses in four agriculture sectors, which include:
- Shellfish growers
- Farmers market organizations
- Agritourism farms
- Small breweries, cideries, wineries, and distilleries that depend on tap and tasting room sales
The application period for the WSDA grants will be open for two weeks, beginning as soon as Friday, April 9. Visit agr.wa.gov/grants to learn more.
Small Business Administration’s Shuttered Venue Operators Grant program launches this week
The Shuttered Venue Operators Grant (SVOG) program includes over $16 billion in grants to shuttered venues, to be administered by SBA’s Office of Disaster Assistance. The application portal is scheduled to open Thursday, April 8.
Eligible entities include:
- Live venue operators or promoters
- Theatrical producers
- Live performing arts organization operators
- Relevant museum operators, zoos and aquariums who meet specific criteria
- Motion picture theater operators
- Talent representatives
More information about eligibility and the application process are available here.
What you should know about…
COVID-19 vaccine distribution update
The Washington State Department of Health (DOH) continues to make progress with their COVID-19 vaccine distribution and administration efforts.
As of March 29, more than 3,325,998 doses of vaccine have been given across the state, which is 83% of the 4,006,330 doses that have been delivered to Washington state providers and long-term care programs. Washington is currently averaging 55,894 vaccine doses given each day. This information can be found on the DOH data dashboard under the vaccines tab, which is updated three times per week.
Inslee announces vaccine eligibility expansion to all adults April 15
Gov. Jay Inslee recently announced that effective April 15, all Washingtonians age 16 and up will be eligible to receive a COVID-19 vaccination.
Over the past four months since Washington began administering doses of the vaccination, the state has followed a tiered eligibility system, beginning with those most at risk of hospitalization and death.
The governor and the state Department of Health (DOH) have also prioritized equity issues in each phase to ensure vaccine access to populations disproportionately affected by the virus, including communities of color and low-income communities.
The expansion of eligibility comes, in part, in response to a recent uptick in COVID cases in the state.
Find more information on the COVID-19 vaccine here.
Use the Vaccine Locator tool to register for a vaccination appointment here.
For DOH’s COVID-19 Information Hotline, dial 1.800.525.0127, then press #. Language assistance is available.
What you should know about…
Resources for small businesses
Washington Requirements and Resources Webinars
“Start a Business in Washington,” is a free, one hour webinar which includes information about business registration and licensing, other regulatory requirements, and resources for further assistance. The webinar is scheduled for April 14 at 2 p.m. Click here for more information and to register online or call 800-917-0043.
Additionally, the free, 90-minute “COVID-19 Impact Webinar” includes the Governor’s Office of Regulatory Innovation and Assistance and the state departments’ of Employment Security, Labor and Industries, and Revenue. These partners provide an overview of resources, updates, emergency rule changes, and other impacts affecting small businesses to create a new successful path forward. Subject matter experts are available online answering questions throughout the webinar. The webinar is scheduled for April 22 at 2 p.m. Click here for more information and to register online or call 800-917-0043 and the Spanish webinar is at 9:00 a.m. Click here for more information and to register online or call 360-515-6101.