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What Happens If You Can't Repay Your SBA Loan?

Posted: 14 Oct 2019 08:00 AM PDT

Another day, another headline about a possible recession. Whether or not an inverted yield curve or Chinese tariffs ultimately lead to a recession is anyone's guess, but there is no debating that the possibility of a recession has become a real topic of discussion. While none of us has a say in the direction of the overall economy, I see no downside in hoping for the best but preparing for the worst. So, even if your small business's SBA loan payment isn't an issue right now, sometimes life can turn on a dime. Just ask anyone who was in business in 2008.

When the great recession hit in 2008, it left a trail of small business carnage that I'll never forget. I was working for the largest SBA lender in the country as an SBA loan underwriter (for all of a month) when suddenly the company stopped lending. After a few weeks of twiddling my thumbs, I got a tap on the shoulder. The workout department could use a hand. As I'd soon come to find out, they needed more than a hand. They needed hundreds of hands to deal with their crumbling SBA loan portfolio.

In the event that another recession does rear its ugly head and you find your business floundering, there are three important facts every SBA borrower needs to know:

Talk to your bank about your loan payments (not the SBA)

Even though it's called an SBA loan, it's your lender that makes the day-to-day servicing decisions about your small business loan. That means when you have a problem, like struggling to afford your payment, you'll need to plead your case to your banker. 

There are typically two types of assistance that a lender can offer: a modification or a deferment. 

  • A modification most frequently comes in the form of a term extension, meaning the maturity date can be extended. By extending your loan maturity from five years to 10, a permanent reduction in your monthly payment would follow. 
  • A deferment, on the other hand, is more short term in nature. Most often deferments are available for three to six months (occasionally up to twelve). Deferments are intended for short term blips like a water pipe burst that shuts you down for a month or a major order that sucked up all your working capital.

When you do speak with your bank, there are few things to remember:

  • You get more flies with honey than you do with vinegar. In other words, be nice. It helps. While there are certainly times when you should push back on the lender or take an aggressive approach, that shouldn't be the default mode. Be courteous, return calls promptly, get the lender the information it needs on a timely basis. Making your lender's life easier can never hurt. Sure, they may ultimately be a jerk or incompetent, but I always go in hoping for the best. If being kind and responsive doesn't work, you can think about shifting tactics later.
  • Your workout officer doesn't work in a bubble. They likely report to someone who makes the final decision. So when they ask you seemingly pointless questions or for unneeded paperwork, keep in mind that they may not be asking because they want to, but because they have They are the ones who hold the power, so if you have to eat a little crow by running down some pointless information, I say it's better to grin and bear it than pick a fight over that one.

Editor's note: Looking for financing for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

 

The SBA will consider settlements

Modifications and deferments are great for blips and hiccups, but when a business is bleeding cash with no end in sight, a deferment is akin to a band-aid on a broken leg – simply not enough. In many cases, the only way to stop the bleeding is to pull the plug on the business. Never an easy decision, but often the right one.

Once your business closes, ideally that would be the end of it. Unfortunately, it's not. The overwhelming majority of SBA loans require personal guarantees, which means that even if your business is closed, the onus falls on you personally to make good on the debt.

While the bad news is that you're potentially on the hook for a significant sum of cash, the good news is that the government understands that they can't get blood from a stone. That's why the SBA is willing to consider settlements, a process known as "offer in compromise" (OIC).

It's important to note that an OIC is not a right and not everyone is eligible. The list of all the factors that determine whether the SBA will consider some amount of forgiveness is lengthy, but the important thing to know is that a borrower must demonstrate financial hardship and an inability to repay the debt over a reasonable period of time.

Settlements are based on a few broad concepts:

  • A settlement should bear a reasonable relationship to the amount recoverable through enforced collection. Or said in plain English, the SBA compares your offer to the amount they think they could get if they sue you. Can they levy your bank account or garnish your wages? If so, you'd better consider those things when devising your offer. If you don't have assets that can be garnished that helps, but it doesn't mean you are off the hook.
  • Don't lean too much on the point above. You can't simply thumb your nose at the lender because all your assets are sitting in a 401K. In order to qualify for a settlement, you must demonstrate financial hardship and a lack of ability to pay. This means that even though they may not be able to force you to crack open your piggy bank, it may still be required if you hope to settle. It may not feel fair, but it's the reality that I've come to know in 10 years of working on the SBA offer in compromise.

The amount you settle for will be directly tied to your personal financial situation. There is no arbitrary percentage that will make them say yes or no to an offer. The bank and SBA will require full financial disclosure, including a special personal financial statement (SBA Form 770), tax returns and bank statements.

You should be aware that if you fail to work out a deal with your lender or the SBA, the treasury will base their settlements on an arbitrary percentage. Also, keep in mind that settlements are based on what you can afford, not simply what will be convenient for you. The SBA will want their pound of flesh, so don't expect it to be easy or cheap. 

Settlements come with strings

While settling your debt is a positive thing – for both your finances and your psyche – it's not all rainbows and unicorns. While most people proceed with an OIC despite the following annoyances, they are worth knowing about:

  • SBA debt forgiveness may be taxable. If a lender forgives a portion of the debt, it may result in you receiving a 1099. There is at least one exception, which the IRS outlines in this document.
  • Your credit may take a hit. The SBA sometimes reports settlements to the credit bureaus. You may be able to dispute it (a few of my customers have done this successfully) on the basis that it was not a consumer debt.
  • You'll land on a government "blacklist." The government maintains a list of borrowers who have defaulted on various obligations called CAIVRS (Credit Alert Verification Reporting System). If you are on this list, you'll likely have trouble landing another SBA loan, an FHA mortgage or federally-subsidized student loans.

Conclusion

While nobody takes out an SBA loan expecting their business to fail, it happens every single day. If a recession hits, you may just find yourself in that very situation. Is it a fun situation to navigate? Decidedly not. But the good news is that if your business begins to struggle and you're contemplating shutting your doors, settling your SBA loan might be an option for you.

How to See ROI on Your Digital Marketing Campaign

Posted: 14 Oct 2019 08:00 AM PDT

Many business professionals think that a digital marketing strategy is a no-brainer. However, it's surprising how many SMBs turn to marketing professionals and pay for a digital campaign without even a thought to what they're trying to accomplish.

Yes, the answer is sales. Businesses pursue digital marketing to accomplish sales. And you're right, that is a goal. However, there are so many more goals out there that digital marketing can accomplish to help you acquire sales.  

The rise of technology has opened the door to make marketing strategies more effective but the competition for sales fiercer. Digital marketing is so much more than getting your brand seen – it has changed the marketing landscape to show why your brand matters. Therefore, it's more important than ever to have a solid digital marketing strategy to make your business's digital marketing truly show a return on investment.

What does a digital marketing strategy look like?

A digital marketing strategy is a game plan to execute and measure your online marketing efforts. It goes beyond creating copy and a target audience. It's how you'll capture the right target audience, how you'll hold their hand along the way throughout their customer journey, and how you'll measure the results.

These are some of the key components you should think about when creating a digital marketing strategy:

  • How you'll stand out from your competitors
  • How you'll convert online traffic to sales
  • Where your target audience is spending time on the web
  • What your current digital marketing foundation looks like
  • How you'll measure your results

These elements are often overlooked in digital marketing strategies, but they can make or break your return on investment.  

Check your digital marketing foundation.

Before even considering implementing a paid digital marketing strategy, take a look at your SMB's current digital marketing foundation. Your foundation is your website, SEO, Google My Business page, social media channels, and other free tools and programs that you use to form an online presence. Make sure these tools and platforms are up to date, accurate, working appropriately and indexed properly.

Double-check that your Google My Business page has accurate information and showcases the pictures you want to represent your company, that your social media pages are being consistently updated, and that your website is being indexed by Google's search engine, operating smoothly, loading at a decent speed and formatted to current technology standards.

This is important because these foundational elements will be the backbone of your paid efforts' success. For example, if you participate in a social media advertisement but your website loads slowly or isn't formatted for mobile devices, then you're going to turn away a lot of potential site visitors. According to 2018 research by Google, 53% of mobile users leave a site that takes longer than three seconds to load. It doesn't make sense to be paying money on an advertisement if over half of your engagement is leaving before the site even loads.

Measure your return on investment.

It's interesting how many businesses launch a digital marketing strategy with very little concept of how they're going to measure the results or even what they're looking for. If this is you, pay attention closely. Digital marketing isn't a linear sales process. The sales cycle for digital marketing, depending on the product or service, can be anywhere from instant to over a month, and even longer if you're in the B2B industry. People like to check their options before committing to a purchase. It's not likely that they'll complete a transaction the first time they see or click on your advertisement.

So how do you measure results on that? The answer is looking at your data and going beyond vanity metrics.

You can see your digital marketing strategy generating data every day. This data tells you how well you're completing your goals. However, don't confuse vanity metrics with the data that really matters. You should always set up conversion tracking with any type of digital marketing campaign, because this will show you how many website visitors are completing the correct transactions to make you money. This isn't all, though; there are so many more data points that can help you gauge your return on investment outside of transaction conversions.

 

Editor's note: Looking for an online marketing service for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

 

 

Clicks are not an effective measurement of ROI.

Different marketing strategies can offer different results and contribute to a different type of return on investment. Please take note that clicks are usually not an effective way of measuring results. Remember the mobile site loading speed example in the section prior? Let's say that your social media advertisement to a slow site received 100 clicks. If 53% of those clicks didn't even follow through to your actual website, that means only 47% of those clicks actually made it to your site as a legitimate website visitor. Then it's what they do on your website that matters, not just how many people showed up.

The only time when clicks are an effective way of measuring digital marketing success is possibly during an A/B test, in which you're trying to figure out which ad your target audience is more attracted to. Number of clicks was a defining metric in return on investment a few years ago, but now, there is so much more data and information available to show you where your money is going.

What metrics do work for measuring ROI?

Different strategies have different indicators of success. Here are some tactics that will help you understand your return on investment for an SEO strategy:

  • Measure your organic website traffic on Google Analytics.
  • Find your search engine ranking and placement with Google Search Console. 
  • Track your conversions in Google Analytics to measure your sales from organic search.

You can use these metrics to judge your return on investment for a search engine marketing and/or social media strategy:

  • Measure your paid website traffic on Google Analytics to see how many ad clicks are actually turning into legitimate website traffic.
  • Track your conversions in Google Analytics or Google Ads to see how many of these website visitors are taking valuable actions.  
  • Look at your number of impressions and session rates to measure brand awareness.
  • Find your bounce rate and session durations on Google Analytics to see how much of your ad traffic is actually interested in your product or service.

As technology grows, so do the insights we have to verify that our digital marketing strategies are effective. A strong digital marketing foundation should be your first priority; make sure you have one before paying for any advertising. When your foundation is strong, then a paid digital marketing strategy may be able to boost your sales. [Ready to choose an internet marketing service? Check out our best picks and reviews.]

When you launch a paid campaign, though, it's important to measure your results accurately based on your goals. If you take away anything from this article, please let it be how to go beyond vanity metrics and measure the right data to meet your goals and get your money's worth from digital marketing.  

How to Use Customer Reviews to Grow Your Small Business

Posted: 14 Oct 2019 06:00 AM PDT

Positive customer reviews are a vital part of growing a small business. In a recent Vistaprint survey of 1,000 U.S. small businesses owners, 66% said word of mouth was their top method for promoting themselves. In today's digital age, online reviews are the new "word of mouth" that can spread the word about your products and services. Review platforms such as Yelp, Google and Facebook can act as search engines, helping customers in your area find your business. When consumers visit Yelp and search for a local business, your average rating and number of reviews influences your company's rank in the results. 

When customers take the time to write positive reviews, it reassures prospects that you're a reliable company they can trust. That trust matters. Almost half (49%) of 1,000 U.S. consumers in a February 2019 Vistaprint survey said that reputation was a top factor in their decision to spend money with a small business or not. It's smart business to embrace reviews that customers leave for you and to solicit reviews from those who have had a positive experience with you. But how does a small business successfully increase the number of positive reviews it receives?

The art of asking

Sometimes, the obvious answer is best. If you need reviews, why not ask for them? Start with asking your current, regular customers. You'd be surprised at the power of simply asking, "If you enjoyed your time in our store, would you consider writing about it?" There is a reason your regulars keep coming back to you, so if you are uncomfortable getting started, this is the perfect way to practice. 

For some small business owners, asking customers for their feedback is intimidating. It might feel like an imposition, or even an invitation for negative feedback. But Megan Hines and Meagan Barfield, co-owners of St. Louis-based LGBTQ+ baby boutique HelloPride, find that giving their customers a little extra service goes a long way toward encouraging them to leave reviews. HelloPride's handmade baby onesies are a popular gift, so they always include two postcards with each online order – one for the purchaser to give to the gift recipient, and one as a preprinted thank-you note. It's really all about courtesy and how you ask. Giving that little extra postcard for them to personalize, saying, "We really appreciate your business – let us know if you love it," makes the review feel like a natural continuation of the transaction.

Post-sale conversations can be a great opportunity to ensure your customers are satisfied and ask them to show you some love online. It's also a natural time to bring up reviews, because it's such a service-focused moment. If you haven't had a review from your customers in a while, consider sending out a follow-up email to make sure they're happy with their most recent purchases. If they're still feeling warm and fuzzy from their last interaction with you, a quick reminder is all it takes to get the review.

Be prepared, however, for less-than-stellar responses. You may find that the reason they haven't left a review is that there was some kind of  issue. This gives you the opportunity to make it right and provide excellent service. 

When asking for reviews, make the process as seamless as possible by including a clear call to action for your customers. That could be a URL to Yelp or Google Reviews, a form field, or just a written invitation to "tell us what you think!" The easier this is for them, the more reviews you will receive.

Getting social with your customers

Contacting your customers via social media channels is sometimes easier than asking them to leave reviews on Yelp, Google or your website. It can also lead to more views online, a larger social media following and ultimately more visits for your business. In Vistaprint's consumer survey, 41% of respondents indicated they are more likely to find out about a small business through social media. There's also a snowball effect with social media reviews: Customers who see others sharing reviews of your business are more likely to do the same. 

For Carla Lyles, founder of Carla Sue Greeting Cards and Gifts in Houston, social media is a key generator for customer engagement. She wants her relationship with customers to be like a conversation where they listen to each other.

How do small business owners successfully start that conversation through social channels? To grow her social following, Lyles incorporates branded signage and postcards in her shop and at popup events that specifically encourage customers to follow her brand on social media. With each order, she includes a thank-you note that invites reviews in a lighthearted way that's perfect for social media: the selfie. 

What to do when you have great reviews

If you've already managed to amass an impressive library of great reviews, congratulations! At this stage, it may be time to consider some unconventional ways to use them and build your customer base.

Online reviews don't have to stay on one medium, like Yelp or even your website. Positive reviews look great in print. When Linda Hill, CEO of boutique publisher Bella Books, sets up her exhibit space at conferences and expos, she pairs each book title with a custom bookmark printed with standout reviews from fans and book critics. It's a small touch, but it gives her products a personal recommendation and helps her customers find their next favorite read. 

For popups and maker markets, HelloPride's co-owners like to merchandize onesies by hanging colorful postcards with customer reviews specific to each item. Authentic reviews from real customers lend the products instant credibility, and shoppers won't need to pull out their phones to fish for reviews.

Another note about packaging – whether you promote in shops, at fairs or online, the presentation of your products speaks volumes about your business. Too often, packaging is treated as merely a necessary way to protect and carry products, but it's a great way to stand out and create a memorable experience with your brand. You can use reviews in decals and stickers to put your customers' words directly onto your product's packaging.

Opportunities to improve

Small business owners can learn a lot from customer reviews, both positive and negative. By asking your customers to provide feedback, your business makes them feel valued. When the customers feel listened to, your brand will have positive connotations for them and direct their good experience back at you. This can lead to more sales in the future.

Embracing feedback helps you understand what your customers love about your business – and what they might not love. Paying attention to reviews can help you expand on the positive and fix what's not working. It's not easy to hear negative feedback from your customers, but it's important to take it seriously and objectively examine what your customer is trying to tell you. Don't be afraid to face your shortcomings head-on; this will only make your business stronger!

With the passion and drive it takes to own a business, there can be pressure to self-promote, and marketing often takes a back seat to more pressing tasks. Luckily, using your customers' positive reviews allows them to do the talking on your behalf. It's one of the most authentic and cost-effective ways for small businesses to promote themselves and build lasting trust with their audience.

5 Ways to Improve Your Email Marketing

Posted: 14 Oct 2019 06:00 AM PDT

Whether you're holding an exciting promotion or want to inform subscribers of a new product launch, email marketing is a great way to spread the message. Growing your email list is important to stay in touch with customers, market content and build your business. 

Email marketing has a high return on investment. Every $1 spent on email marketing, delivers a $43 ROI. With more than 3.8 billion email users worldwide, it's the most prominent marketing channel businesses use to connect with their audience. If you're neglecting this sect of your marketing strategy, you're missing out on expanding your brand and achieving your goals.

You want your email campaign to reach as far and wide as possible so it targets the right users, gets its message across and produces conversions. Without a proper strategy, however, this is quite difficult to do.

Among some of the key ways you can boost your email campaign's performance are by:

  • Grabbing users' attention so they sign up for your email list

  • Optimizing your messages for mobile users

  • Using proper formatting

  • Creating calls to action that stand out

  • Monitoring your campaign's performance

Here are more details on each strategy.

1. Grab users' attention

Before you get tons of eyes on your email campaign, you first need to convince visitors to join your email list. For new visitors especially, this is no easy task. People know what they like, and if your brand can't convince them to hand over their information, then it's back to the drawing board.

A good way to capture visitors' attention is by using lightbox popups to collect their information. As users browse your website and consume its content, a popup opt-in appears asking for their email address. When they sign up, you now have a new subscriber who's invested in your brand. You are then able to move them down the conversion funnel. Lightbox pop-ups can increase your campaign's conversions by 25%, so they're worth looking into. 

One way to grab the attention of those visiting your website is attention by incentivizing your opt-in form. If you offer them something of value, such as a lead magnet, it piques their interest and encourages them to sign up. This could be ebooks, templates, checklists or whitepapers. Make sure the offer aligns with your target audience so you know it's content they want to have. If not, you won't see a difference in the number of subscribers you have. 

Editor's note: Looking for the right email marketing service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

 

2. Optimize for mobile

Google introduced mobile-first indexing in 2018, and ever since, marketers have put extra importance on optimizing for mobile users. Google ranks content based on its ease of use on non-desktop devices. So, if you aren't creating emails with mobile in mind, you're losing potential traffic.

Research shows that more than half of all online traffic worldwide comes from mobile devices. People choose their smartphones over their desktop computers to perform most online tasks, and that includes checking their email. If you fail to optimize campaigns for mobile users, your email list will shrink and your unsubscribe rate will increase.

When someone opens your email on their phone, it needs to be easy to consume. All text and visual content should properly fit the screen and be easy to navigate. Use a clean, responsive template that works for mobile devices or use formatting that meets subscribers' standards. Keep your copy concise and avoid being too wordy. People on mobile have even less patience than those on desktop, so keep that in mind when creating your emails.

Use a mobile-friendly, responsive contact form that's easy for users to fill out. If you ask for too much information, such as providing an excessive amount of form fields, you could see conversions drop by 81%.

3. Use proper formatting

If your emails don't provide a smooth user experience for its recipients, it'll prove challenging to build your email list and have a successful campaign. We've all had the unfortunate experience of opening a brand's email only for images not to show up properly and text that's difficult to read. 

The more difficult it is for users to digest your email content, the higher your unsubscribe rate will be. You don't want your brand to be part of this bunch.

It's crucial to use email-friendly formatting so your subscribers don't struggle to get through your emails. This type of formatting includes:

  • Splitting up paragraphs of text

  • Including visual content

  • Keeping copy concise and straightforward

  • Easily noticeable calls to actions

  • Plenty of whitespaces 

Pay attention to the subject line. This is the first bit of text your subscribers see before deciding what to do with your email. Around 34% of users say an email's subject line determines whether they'll open it or not. Depending on how you construct it, it could be what sends you to the trash bin or makes you the recipient's favorite. On average, subject lines have around 43 characters total, so make sure to keep it to 60 or less for the best open rates.

4. Create CTAs that pop

The call to action is the star of your email campaign. It tells subscribers what action to take and drives conversions back to your website. You should always assume your visitors don't know what to do next and use CTAs to lead the way. The more they pop, the better chances they have of converting.

For email subscribers, especially those on mobile devices, your CTA needs to be front and center. If it's at all difficult to locate, it needs a redesign, so be sure to keep it above the fold. Studies say different things about what colors to use for CTA buttons and text. However, the main takeaway is that your button should have a stark contrast to its background so it pops and is easy for subscribers to locate. Consider your branding and its color scheme when creating your CTA.

Place CTA buttons near text that talks about the offer. Because we read from left to right and top to bottom, our eyes naturally gravitate towards content at the bottom and righthand side. These are optimal places to put a CTA because they're easy for users to locate.

5. Monitor its progress

One campaign can teach you a lot about the dos and don'ts of email marketing. It's important to pay attention to those signs so you bring in even more conversions and avoid doing all the wrong things for the next campaign.

Pay attention to the following metrics when monitoring your campaign's analytics:

  • Open rate: This is how many subscribers opened your email.

  • Clickthrough rate: This is how many subscribers clicked links within the email.

  • Conversion rate: This is how many subscribers took the action you wanted them to, such as clicking the CTA button

  • Bounce rate: This is how many emails didn't deliver to the recipients' inboxes due to their server or a non-existent email address.

  • ROI: This is the return on investment for your campaign.

  • Unsubscribe rate: This is how many users unsubscribed from your campaign after receiving an email.

Tracking your analytics helps you determine why your emails are successful or why they fail, so it's a must to pay attention to every campaign.

It's crucial to pay special attention to your email marketing so you can boost conversions, grow your email list, generate sales, and more. Email provides direct communication between you and your target audience. If you neglect it, you fail to cater to a huge portion of customers where you can boost your marketing efforts and grow your brand.  
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