Credit makes the world goes round.  Or is it money?  In either case, with today’s economy many small businesses are faced with numerous challenges, especially due to the lack of available credit. 

Varying Credit Needs

Some businesses need credit lines just to stay afloat (to cover overhead costs, pay their employees, etc.) while others need credit to fulfill numerous orders for products that are selling well. Without availability of credit lines for the latter scenario, these businesses are not able to keep inventories in stock for all the products that are essentially being sold; therefore, they are not able to reach their full potential for income, which further affects the economy.

So, with the varying needs of small businesses in America, how does the outcome of the election affect the already tight credit crunch for small businesses?

With the Election of Barack Obama

What exactly does Obama’s election mean to the small businesses of this country?  Obama has publicly claimed that he plans to offer small businesses a tax credit as long as they provide insurance for their workers.  Although he has yet to specify what this tax credit will entail, it will surely increase the amount of small businesses that choose to provide medical insurance for their employees. 

In an attempt to boost our struggling economy as well as stop the hemorrhaging of U.S. jobs to overseas companies, Obama has promised that businesses will also receive a tax credit for every new hire they make here in the U.S.  This is intended to inspire employers to discontinue shipping jobs overseas and consequently, lower our unemployment rate.  

Lastly, Barack has made it a point to increase the amount of lending available to small businesses by requesting that the Small Business Administration put an indefinite halt on all fees charged to small businesses to obtain an emergency loan.  He is also requesting an expansion of the loan guarantee programs that currently exist in order to provide more financial security for small businesses.

An essential part of starting a new business is preparing a small business plan. This effectively summarizes all of the operations and goals of your new organization in a clear, concise manner. Lenders, potential partners, and even the occasional client will want to see your business plan. It’s important to have a well-written business plan on file.

There are seven main parts to an effective business plan.

1. Executive Summary – a one to two page summary of your business plan. 
2. Company Description – this is where you would put your mission statement and a basic description of what your company is and does.
3. Product or Service – describe any products and services you will provide and how you intend to do so.
4. Market Analysis – show why there is a need for your company in the relevant market.
5. Strategy and Implementation – how will you run your business? Explain how you will secure customers, resources and skilled labor. Then explain how you will implement your company’s goals.
6. Management Team – who will be in charge? Who will be held responsible? How will accountability and the assignment and completion of duties be managed?
7. Financial Plan – show and explain all anticipated income sources. How will you generate income and how will you manage expenses. Your financial plan is the most important part of your business plan. Will you be purchasing small business insurance? If yes, what type of business insurance will you need? What other expenses do you anticipate incurring?

For more information on how to develop an effective business plan, or for help starting your new business, visit the Small Business Association Website.

With all of the problems in the economy right now, major financial institutions are in the news on a daily basis.  Insurance companies are facing difficulties as well, and are being pressured to overextend themselves in an unstable market. In an economy such as this one, you want to be confident that you and your money are safe. It is important to select your banks, lenders and insurers with care so that you don't end up in trouble later.

Safeguard Your Company and Your Employees

This is especially true for independent contractors or small businesses that don't necessarily have the reserves that a large corporation would. You depend on these institutions for your business and livelihood and should look for a bank or insurance company's ratings to guarantee that they are a safe, stable and secure place to take your business. If a time came when you needed your employer's liability insurance or workman's comp insurance to pay for a claim, and your lenders and insurance companies were going out of business, you would be stuck paying out of pocket.

Dont Compromise on Quality

Companies like TechInsurance are great because they do the digging for you, and only do business with A+ rated insurance companies. That way you can rest assured you won't be out of luck should something happen and you need to collect on your policy, such as if you have a small business insurance plan and there’s a problem on a consulting contract.