On the surface, the Tax Increase Prevention and Reconciliation Act of 2005 passed by Congress and signed by President Bush this year, looked liked a good thing. After all, it extended the life of reduced tax rates on capital gains and dividends and extended the alternative minimum tax(AMT) tax reduction.  And for small businesses, it provided a two-year extension on Enhanced Section 179 Expensing which deals with depreciable assets.

Unfortunately, tucked away in the small print, and even unbeknownst to some who voted for the bill in Congress, was a little provision which stated that any business that has a contract with government at the local, state or federal level will have 3% of their payments withheld starting in 2011.  And, to add insult to injury, there are even some in Congress who are now trying to push  leglisation to move that implementation date up.

So, if you are a small business contracting with local, state or federal government, the fact that you will be paying for other governmental programs to continue is probably of little solance as you struggle to make ends meet.  Be sure to keep an eye out for efforts to move the implementation date up to even starting in the next couple of years.

Homestead.com compiled a list of what they believe to be the hotest home-based business trends in 2007.  They are:

E-Learning: With advances in new web application tools such as podcasts and video blogs, development costs will decrease.

E-Bay Aftermarket: Helping companies conduct market research, pricing strategies, shipping, and competitive analysis is a great niche business.

Children Arts Education: There is a major market for teachers of right-brained education who are thought to help foster the development of future innovators.

Garage Organizers: Just as organizing closets was the next big thing in the 80’s, the messy garage is the final space to clean up.

Background Checks: Small businesses with limited resources are turning to background check companies to handle investigation and due diligence.

Pet Sitting: An ideal home-based business where you get paid to walk and enjoy the companionship of pets.

Specialized Coaching: The coaching market has boomed in the recent years including specialized areas such as life, spiritual, corporate, relationship and business.

Home-based Debt Collection: Debt has become a way of life for many Americans. Operating a low overhead home-based collection service can serve the niche sections of this market.

Specialized Outsourcing: The small business market has limited resources and a focus on core competencies. Specialized outsourcing from home to small business will have a solid position market position for years to come.

Scrap Booking: In today’s easy to save and store digital age, opportunities abound for the home-based scrapbook artist, workshop teacher, or a direct sales rep.

Subordinate debt, also commonly referred to as mezzanine financing, is a type of loan  similar to debt financing in that the loan does have to be repaid and there is commonly a fixed interest component.  It resembles equity in that repayment is usually based on the company’s cash flow and the lender’s position is subordinated to other lenders.

Why should I be interested in subordinate debt?  Because it offers  businesses a loan option that allows the repayment of principle to be deferred for up to 10 years and does not dilute the equity of the existing shareholders.  Additionally, there is flexibility in the size of the loan. Depending on the lender, loans can be found ranging in size from $1 to $10 million.

Subordinate debt candidates must be able to clearly demonstrate the ability to generate cash flows that will cover repayment of all other debt plus the subordinated debt. Moreover, the lender will need to be confident that your management team is capable and able to make the operation successful.

Candidates should also note that interest costs can be anywhere from 2 to 8 percentage points higher than rates on other traditional loan products. Because subordinated debt usually has little collateral protection, the lender may require stock options to own equity in an amount equal to 1% to 10% of the company’s outstanding stock.

Back in the day, many businesses provided their employees with generous holiday bonuses or presents. Additionally, many gave their employees several paid days off to enjoy the holiday season with their family. However, things are slightly different today.

According to a survey by Kronos Inc. and BNA, more employers will be giving their employees cash bonuses and presents this year. That’s the good news. The bad news is that in regards to time off, more employers may be playing Scrooge instead of Santa. Approximately 43% of employers expect to give their employees three or more days of paid leave. That’s down from 49% in 2000 which is the last time Christmas fell on a Monday.

What, if any, are your company’s plans for its employees this holiday season?

You or your staff’s ability to master customer service skills is an absolute must.  Just as easily as good customer service can be an asset, poor or bad customer service can quickly become a liability any small or mid-size business can not afford to have.  Providing great customer service takes time and effort to develop.  As a business owner, you need to invest time in creating a solid customer service policy that your employees can embrace and follow. And, employees need to be trained in providing it and motivated to continue providing it.

Customer service goes beyond using the phrases “Please,” “thank you,” and “we’re sorry about the inconvenience, ” — though these simple but powerful words can definitely go a long way in creating customer good will.  Customer service is listening to what the customer is telling you and  not responding with an answer that does not match the problem they have because you just don’t want to deal with an irrate customer.
It’s about fulfilling your obligations and promises to the customer.  If you promised a job would be completed by Tuesday.  It should.  If you promised to always have a particular product in stock, then you should.  If you guaranteed delivery by a specific date, then it should be there.  It may sound like common sense, but you would be surprised at how even these basic tenants are often not met when it comes to customer service.

Never take great customer service for granted.  It may seem even harder to do given the demands and stress of the holidays.  Yet, no matter how trite it may sound, without customers you have no business.

If you went to your local bank today and asked for a loan, would you know what criteria they would use to evaluate your application?  You may be surprised to know that your personal credit score — even if you are a corporation — and business credit score may be used by your bank.

A recent survey by the U.S. Small Business Administration found that many lenders use “both owner and business credit scoring as a key metric in the small business loan decision.”

While credit scoring can provide lenders with a quick and easy way to reduce the subjectivity in lending, it does have its drawbacks for the business owner.  For example, the lender’s dependency on credit scoring doesn’t provide the borrower with the chance to explain a one-time credit problem that may be unlikely to occur again.  And, if you have no previous loan payments and credit card usage, you may not even qualify for consideration.

Some lenders do recognize the drawbacks of depending upon credit scoring only and have shied away from strictly using this as a determinant.  If you are shopping for a business loan, check around and ask questions.  Find out exactly what criteria your lender plans to use to evaluate your application.