How washingtons tax deal affects you, the Small Business owner. Why minimum waging your inventory is crucial to keeping your company alive, and how to get customers to buy after the holidays. Its time to make money coming up next on your business. Small businesses are revitalizing the economy, and American Express open is here to help. Thats why we are proud to present your business on msnbc. Hi there, everyone. Im j. J. Ramberg, and welcome to your business, the show dedicated to giving you tips and advice to help your Small Business grow. For Small Businesses, the uncertainty of last year has carried over into 2013. The good news. The National Federation of independent Business Optimism index was up slightly in december. The bad news. The index is still at recession levels. The index for this month is expected to be impacted by the fiscal cliff tax deal passed by congress. That deal negotiated between Vice President joe biden and Senate Republicans ends the payroll tax holiday, raises taxes on those making over 400,000 a year and increases Capital Gains tax rates. So, how will this impact your Small Business . Barbara wealthman is an attorney and a leading authority on tax law and finance for Small Businesses. She is the writer of the muntari e newsletter big ideas for Small Business and also author of the book j. J. Lassers 1,001 Tax Deductions and great to see both of you. Thanks for joining us. A pleasure. I read some article that said recently frustrated, elated, happy, confused, those are peoples reactions right now to just what happened in washington. Barb, i want to talk with you first and foremost about the payroll tax holiday so theres no uncertainty about that. Your employees are going to be paying more out of their payroll. For their payroll tax is this something youve discussed with your employes . We havent discussed with them yet. I think we were waiting first to see what was going to happen. Our plan is to discuss with them right before they receive their first paychecks that there is going to be a change, that there is a 2 additional tax that is coming out of their pay and were going to, you know, try to work with them if theres going to be any type of problems. Yeah. This is a question that i just had myself is do you talk about this, barbara, or do you just assume that Everybody Knows because chances are people are going to get their first paycheck and think why am i getting less money . I think if they havent been paying attention to whats happening in the news they may be surprised, but they may well be aware of that change. What they have to know is they dont have to do anything. Theres nothing required of employees because of the new law. However, some employees may want to file new w4s with their employers to change their withholding. Right. Thats something you can bring up with them. You can bring it up with them. So some issues have been resolved and many issues are still unresolved. We still have this enormous debt, and how worried are you, barbara, for Small Businesses Going Forward that taxes may go up, taxes we havent even discussed right now, that their expenses may go up sometime in 2013. Well, anything is possible and all possibilities really are on the table. Clearly they could come back and attack various tax breaks or socalled loopholes that are there, but we really dont know. Its likely that nothing will be changed for 2013 and that any changes will take effect the following year, so at least we do have some luxury to plan for this year and budget for this year. And thats the thing. Small businesses actually would say got off easy in this deal, some of the expensing, depreciation, the bonus depreciation, the r d credit that viewers may be using, those all stay but only through 2013. Barb, how do you feel right now . One of the issues you were worried about before the deal was made in washington was that taxes would go up for people making under 400,000, so now thats taken care of for now. What are you worried about, if anything . Well, i think that the first thing is the tax extenders, making sure that at some point they become permanent. We were in a situation where we were very lucky that there was some bipartisan, and we moved from being 200,000 to a 400,000 cap. That helps many Small Business owners. Some will still be affected by it, and, you know, one of the things that is important is having those tax extenders become permanent because then we can plan for the future. And are you worried about some surprising tax break that youre getting right now disappearing . Well, i think that the r d aspect, also with section 179, you know, there are certain things that, yes, we look at and make decisions to spend money and put it back into the economy, and if those tax extenders were to go away, we would have to withhold on making purchases that would be put back into the economy. And just to be clear, section 179 means you can expense stuff in one year. Correct. You can write off the entire cost of a purchase instead of having to depreciate that cost over a number of years. Barbara, as Small Business owners what should we be doing to plan for that uncertainty . Anything we can do, keep cash in the bank, what . The good news is for at least 2013 we know what the rules are and certainly take full advantage of them so clearly as youre getting towards the end of the year, if youre considering making equipment purchases, take advantage of the rules that exist now rather than gambling on what they are going to be in 2014. Barb, barbara, thank you so much. Its certainly been a difficult time to figure all of this out and we appreciate you coming on and recapping what we can expect for the next year. How much do you need and what when do you need it . Those two questions are constantly on the mind of Small Business owners who are selling their products. Of course, getting customers to buy just part of the process. Once the orders come in, you have to make sure youve got the inventory you need to fill them. The seed bomb industry went from a Kitchen Table enterprise to a much bigger operation. It really exploded. We always try to project where peoples minds will be at any given point in time and be ready for that. We try our best not to fly by the seat of our pants. The owners of visual lingual in cincinnati, ohio, didnt invent seed bombs, but they package them and turned the concept into a thriving business. A seed bomb is a mixture of seeds, organic fertilizer and a powdered play. You can throw the seed bombs in the ground, and they will break up on impact. What started off as requests from smaller retailers in 2009 has turned into sales at places like Restoration Hardware and anthropology and plenty of custom orders. It just kind of overnight happened like that where we jumped into high gear and started making these massed quantities of it. With so much growth the pair knew they needed to change the way they handled orders for their seed bomb pouches and kits. The old way just wouldnt cut it anymore. We would buy the materials in fivepound increments and make that much and then they would be sending that out pretty much directly. As a result, they came up with a plan for managing their inventory. It was a matter of figuring out how do we scale this up . How do we kind of keep a grasp on all this stuff and stay organized and doing the math and figuring we need we need 100 times the amount of materials that we use for the last orders. Ever since then its been a well coreographed act to have inventory and raw material at the ready. Were going to make a screen so we can print the pouches and well print the screen. Same thing with the seed bombs, its a matter of having the parts that go into the whole on hand or accessible to us. I think its the biggest thing. The goal is to be able to accommodate any and all orders that could come in at any time. I think its the Small Business model of the kind of just in time and we respond to orders if they come and we make a little bit of extra so its there and then its gone and we go through that cycle again. We always hope that those reserves are not too much more than is needed because we do prefer to turn inventory around, you know, fairly quickly. The amount of seed bombs ready to go is based on the popularity of the product. Were always trying to keep about 150 to 300 units of some of our kind of repeat selling products. 300 is two or three batches and 150 is one or two batches. Its just a feeling of, of course, thats a good amount to have. We first started, we were definitely making less than that. Knowing their customers and knowing when they may place their orders are part of the calculated risks they take. The big wholesale orders that we get have enough lead time that we can really kind of plan out. Smaller retailers want their stuff quickly because they dont have to plan ahead and they dont have storage, so they order as needed, and they expect it when they need it. Larger orders definitely require a bit more attention. We all need to stay on a schedule. We have a finite amount of space, a finite amount of strength, and everything is done by hand. But its often those sales that produce the inventory that maya and michael need to respond to smaller orders simultaneously. We can hang on to produced seed bombs and then screen print the pouches and put the product together very quickly so thats a part of the labor that really doesnt have to happen until its needed. Having extra seed bombs is crucial because ideally production takes a few days. We let our seed bombs air dry for a minimum of two days, ideally three days would be how long we want to wait or we need to wait before we will package the product. Finding multiple suppliers who are willing to act fast helps with the work flow. Maya and michael like having options, too. If we do need something overnight we can get it overnight and respond to that as quickly as possible. The pair has found a unique balance between the number of supplies they need and the number of products they can make. Theres kind of a consistent recipe were using with consistent ingredients, but we might add something a little special here and special there just to make Something Different whether its herb seeds or wild flower seeds, changing one of the variables in there gets us to the different product. The overlap allows for some flexibility and production of the nearly two dozen items being sold. That product line can be expanded and contracted based on what the trends are, what the season is or what the holiday is. Of course, the plan doesnt mean there isnt waste. You never want it to happen, it does happen. Managing inventory isnt a perfect science, especially when your product is perishable. We never want to sit on inventory for too long so we dont produce infinite inventory even though we could because it has a finite shelf life. If you make things and they havent sold in time and you get a big order, rather than ship that out and have a customer who is disappointed then you know, okay, its the right business decision to get rid of this product. Michael says the best advice they can offer other entrepreneurs is to not overthink anything. He believes that a little strategy and occasionally maybe even some luck will allow you to manage your inventory the best you can. I think its really about minimizing the number of variables and parts that are at play. If you can do that and get to a point where theres fewer pieces that you really have to think about and guess about and figure out, then the better equipped you are to respond to whatever comes up. Inventory can be a big headache, but i cannot tell you how many Small Businesses have failed because they have either overestimated or underestimated their inventory needs. So now lets turn to two entrepreneurs who know the importance of managing inventory. Divia is the coowner of send the trend, a website dedicated to Fashion Accessories and beauty and jen is a serial entrepreneur better known for creating butler bags. Good to see you both. Great to be here. Both of whom have a lot of experience with inventory. Both of you, ill start with you, jen. How do you figure it out. When youre bigger, you get it. You have these repeat customers and sort of have a formulas but when youre starting out and youre small, how do you figure it out so that all of your capital is not tied up in inventory and yet you can fulfill the needs . Its actually a really delicate balance, and its an understanding of how will you have your distribution, in this example anthropology concerns or a big pr push so theres traffic to your website which could up set the balance. Its a really hard formula to anyone to truly get. The understanding is really to have your finger on the pulse constantly. I suggest for a lot of Small Businesses, when they have an overflow like they were talking about here, to reach out to the daily deal sites, and this is a newer strategy for Small Business owners to really get rid of their inventory while building their brand and database, and weve used them a lot. For example, people with perishables, do it with company with short leads, for somebody who doesnt have a perishable work with companies with a long lead and every quarter its a way to empty out your inventory while youre building your brand. Business owners will say ill sell it for 50 , 60 and the reality thats what youll sell it to retailers anyway so this allows the traffic to your website and get new customers you can get. What do you do . In the early days and youre a Small Business own as little inventory as possible. You should focus on building your brand, marketing, getting customers, at the same time optimizing inventory, so if you can play the Small Business card and reach out to manufacturers, your supply base and vendors and get them to work with you, help them help you finance your inventory, whether its through payment terms, whether through extended credits, it could be any variety of ways, and for us primarily its on the trend when we first start out is consigning inventory. We dont have money to buy this, but let us put it up on the website, you put it to your facility. When we sell, it right away well be ready to take it away. Is that easy to find someone who will do that . Depends on the industry and the market. For us we found lots of willing players who believed in our vision. Youre an entrepreneur, sell your vision to somebody, get them to believe in your business and you leverage that. Say, hey, listen, were this tiny company and months from then were ordering tens of thousands of units. The reality is let them grow with you, and if they see the upside of the promise of that they will want to take the ride. A Perfect Panel to talk about this. Thanks, guys. Billing clients and tracking hours and expenses can be incredibly easy and streamlined or incredibly disorganized and a time sink. So here now are five ways to master the art of invoicing, courtesy of startupnation. Com. One, use a contract. Set expectations from day one. This can help avoid any misunderstanding down the road. Two, invoice early and often. The sooner you get the invoice to your clients, the sooner they will pay it. Number three, itemize your invoices. Be as clear and specific as possible so theres no confusion over what they are being billed for. If a client doesnt understand the charges, they are less likely to sign off on the invoice promptly. Four, know who pays you. Find out who actually signs the checks and processes the payments. This information will come in handy if you need to address any outstanding invoices in the future. And number five, follow up on outstanding payments. Send a reminder to your client on the due date and then once per week until the payment is received. When we come back, well have some suggestions on how minority Business Owners can receive certification, plus some ideas for getting customers back into your stores after the Holiday Shopping are you. Weve all had those moments. When you lost the thing you cant believe you lost. When what you just bought, just broke. Or when you have a little trouble a long way from home. As an American Express cardmember you can expect some help. But what you might not expect, is you can get all this with a prepaid card. Spends like cash. Feels like membership. Last week we profiled a Company Using gameification to increase their users and learning our own lessons from the piece we tried to incorporate gameification ourselves here at your business so we asked you to submit your entry in our messiest desk contest on our facebook page. The winner is Joyce Finnegan of rome, new york, who sent us this picture of her very messy work space saying all i need is a hammer and chisel. She will get to add to that mess by winning a copy of our bok its your business and our coveted your business coffee mug. Congratulations. Now, this week we want to see who out there has the best business logo. Want to play . Just go to the msnbc your business facebook page, click on the contest tab and enter by posting a picture of your Small Business logo. Our viewers and your business staff will decide which one is the best. The winner will get a bunch of your business goodies and a phone call from me where well talk about your company and try to tackle any challenges youre facing. The shopmovement got a lot of attention around the holidays packing on Small Business saturday. This year were introducing a new segment aimed at maintaining that excitement all year around. And in todays shopping small we have several tips. Tom is the host of open for business a business and consumer talk show. You can find him online at small town marketing. Com or right here with us. Hey, tom, great to see you. Great to see you j. J. Thanks fo