The top issues new businesses often face are obtaining a loan, budgeting and following generally accepted accounting principles.
To help nascent businesses address these issues, Citrin Cooperman”™s White Plains and Norwalk offices hosted a seminar last week at the Westchester Country Club in Harrison that had 130 people in attendance.
With many startups struggling to find loans, JPMorgan Chase and Co. vice presidents Louis Gallo and John Hesson gave tips on how to get a working capital loan.
When businesses seek credit, Gallo and Hesson said a banker”™s reaction is to ask why. It could be that customers won”™t pay for a purchase for another 30 days while the vender needs cash sooner, but Gallo and Hesson said businesses will often seek working capital because they don”™t fully understand their own account receivables and inventory.
The two said when they have asked applicants what they do with their budgets and reports some have said, “”˜We print it out and give it to you.”™” Gallo and Hesson said they”™d rather hear and see that a business is consistently budgeting and planning. That way, they”™re more likely to receive the capital they need.
Michael Tolla, director at Citrin Cooperman”™s Norwalk office, also stressed the importance of budgeting, saying businesses should compare sales with their projections at least once a month and share results with affected employees.
“You want to actually use your budget,” Tolla said.
Using a Strengths, Weaknesses, Opportunities and Threats (SWOT) chart along with a budget can also help with planning ahead and adjusting to changes, Tolla said. For instance, a limo company could use fuel surcharges to offset a loss when accounting for increasing gas prices.
Thomas McDonough, partner at Jackson Lewis L.L.P.”™s White Plains office, discussed the growing number of lawsuits and labor investigations surrounding federal wage and hour laws.
McDonough said the U.S. Department of Labor assumes 70 percent of businesses aren”™t classifying their employees correctly. He said the Labor Department has begun instituting more intensive auditing practices, which, for any business, could be a costly process. McDonough stressed the importance of classifying employees correctly, especially when it comes to independent contractors.
“These are all issues we hear all the time,” William Talmadge, marketing director for Citrin Cooperman”™s White Plains and Norwalk offices, said. “For people starting a business, these are all critical areas.”
Citrin Cooperman will hold a second seminar in September to discuss how to grow a business, while a third, scheduled for December, will focus on how to hand off a mature business.
