Are you starting a small business? Has the credit crisis got you down? It obviously has. But let’s say you got your financial house in order and are ready to make a go of it. You just bought the local ice-cream parlor from its retiring owner, or the mom-and-pop convenience store down the street. What do you need to do? Would you believe you need to take out the digital camera in the closet and make a commercial?

I’m oftentimes surprised at the marketing programs that many small-business entrepreneurs implement. On an anecdotal basis, at least, I find that most business plans don’t include a comprehensive program for television advertising. Print ads are more common, perhaps, as are coupon initiatives (to some degree), but owners don’t realize that propagating a killer image via a media campaign that tells a story is a key ingredient to differentiating a service/idea or retail business.

Let’s say you indeed have just taken on a convenience store. It isn’t a franchised name; it’s just X’s QuickStop. Well, I’m sure there are many X’s QuickStop’s around the town. They’re a commodity. And each business should, in theory, survive on the adage of location-location-location. But why not roll at least some of your dice on the creation of a local-ad campaign based on placement of self-produced TV spots? You can call up your local Comcast/etc. cable company and ask what it would cost to buy some time on a few of the major cablers. Quotes these days should be pretty reasonable considering the economy.

Jason Diperstein also recently covered the issue of TV advertising and supports this method of marketing so long as a viable ROI is forecast. He’s right; you must be cautious before investing capital in such a plan. However, I believe the best guarantee of success is a campaign that is crafted with as much creativity as possible, one that perhaps makes a cult figure of the business owner. Going back to the convenience store, the owner could put himself in the video ads and then follow the furniture-store-spot model: make the commercials humorous/cheesy enough to be remembered. Come up with goofy jingles. Get the family in the act. Make up some sort of over-the-top mythology. Your goal is to get noticed. It’s a shame that many entrepreneurs don’t take advantage of the relatively cheap desktop technology that’s out there vis a vis videography. For less than $10,000, you could have a nice little studio at your disposal.

Remember, too, that if you don’t want to spend money on local ads, you should at least have some kind of video-information kit that you can put on your website or on YouTube. The bottom line is, don’t be shy, and don’t be intimidated. You can self-produce creative ads to stand out from the pack. The more commodity-based your business/product is, the more brand equity you’ll need to capture those dollars. Local ads can work wonders. What you should do is record a lot of TV and take a look at the ads being placed by community businesses. See how you can be different; then, write a script, grab yourself a camera, and scream “Action!”.

The minute you became involved with your employees’ investments, you became a fiduciary, and legally responsible for other people’s money. That’s a daunting thought - especially during this time of economic uncertainty, questions about retirement, disgruntled employees, and bad investment returns. You need to establish sound practices to help safeguard yourself, and the investments of your employees.

If you believe you have sound investment fiduciary practices in place already, now is the time to revisit those practices.

Use the following steps to help give you a basic understanding of a fiduciary’s responsibilities. Use the help of a financial professional to gain a better understanding of the responsibilities and duties of the fiduciary.

Step One:
Analyze your current position
Relate this step to doing research. You need to understand the rules, regulations, laws, standards and trust provisions before you get in the game.
• Make sure you familiarize yourself with all of the legal responsibilities of being a fiduciary.
• Avoid any conflicts of interest. Your fundamental duty is to manage investment decisions for the exclusive benefit of your employees.
• Put all service agreements and contracts in writing. Please seek help from an outside professional to aid you in this process.
• Document timing and distribution of cash flows and the payment of liabilities
• Safeguard entrusted assets within the jurisdiction of U.S. courts and protect them from theft and embezzlement.

Step Two:
Diversify – Allocate Portfolio
Remember, diversification won’t guarantee results, but it is necessary to combat risk.
• Identify risk!!!!
• Identify expectations. You are required as the fiduciary to state the presumptions that are being used to model probable outcomes of a given investment strategy.
• Identify an investment time horizon.
• Select asset classes consistent with identified risk, return, and time horizon.
• Choose an appropriate number of asset classes, consistent with portfolio size

Step Three
Formalize an Investment Policy Statement
An investment policy statement will help you avoid differences of opinion, possible missteps, establish a reasoned basis for measuring compliance and help communicate expectations. The investment policy statement defines the following:
• Duties and responsibilities of all those involved
• Diversification and rebalancing guidelines
• Due diligence criteria for selecting investment options
• Monitoring criteria for investment options and service vendors
• Procedures for controlling and accounting for investment expenses
• Appropriately structured, socially responsible investment strategies (when applicable)

Step Four
Implement
Implementing the Investment Policy.
• Implement the investment strategy in compliance with the required level of prudence.
• Follow applicable “Safe Harbor” provisions
• Make sure the investment vehicles are appropriate for the portfolio size.
• Follow the due diligence process when selecting service providers and custodian.

Step Five
Monitor and Supervise
Here, we’re talking about essential reports and reviews.
• Make sure your periodic reports compare investment performance against the appropriate index, peer group, and investment policy statement objectives.
• Periodically review managers and investment decision-makers.
• Put control procedures in place to periodically review policies.
• Determine if the investment management fees are consistent with agreements, and the law.
• Account for all dollars spent on investment management services.

Also, take the time to educate your employees. Your financial professional should be able to conduct a seminar, provide commentary, send publications, and answer questions.

This list may help give you a better understanding of the types of responsibilities of a fiduciary, and the practices that should take place for your company’s retirement plan. Again, make sure you seek a financial professional to help you through this process.

Small businesses are arguably the driving force of the economy. Entrepreneurs get capital to fund ideas and then bring them to market. This process is key to the capitalist system.

However, when loans written for small business owners dry up, the system’s engine loses one of its most important pistons. Or, at the very least, that piston slows down considerably.

Recently, The Wall Street Journal’s online site reported on the Small Business Administration’s recent tinkering with parameters relating to the loan process for this sector. As author Kelly Spors notes, lenders can use LIBOR as a reference for the borrowings and aggregate loans for later reselling. This should in theory grease the system. And the system needs it. Small businesses always have a need for funds to either get operations started or to keep them going.

But, although this can be taken as good news, I still see a dark lining to it. Basically, what it tells me is that the powers that be in charge of regulating capital are still trying to figure things out as they go. The LIBOR move will make things more attractive for the transaction’s value potential, as this piece indicates. Risk can be better managed as more optimal spreads are exploited.

However, again, the key point I am taking away from this is that the loan markets are still in a mess. As the first link at The Wall Street Journal pointed out, loans for small businesses have been on a severe decline. Hopefully the capital gets into the hands of the allocators who desperately need it. With the economy contracting, small-business owners will need every monetary aid they can get.

Valuations are dropping everywhere. For public companies, private ones, etc., extracting a price from the market that is reflective of intrinsic worth is becoming a tough job. And now, there’s an article from Silicon Valley Insider about the decline in Facebook’s value.

When Microsoft and a few other parties invested in the online social-networking venture — a big competitor of News Corp.’s MySpace domain — the preferred class of Facebook equity was pegged at around $15 billion. The article said that private transactions for the regular equity implies a $4 billion valuation. The author rightly states that it is an apples/oranges comparison vis a vis preferred versus common equity. No matter — we know that, ultimately, Facebook isn’t worth as much today.

For the most part, you can blame the global recession. As consumers cut back spending, companies cut back advertising expenditures. Facebook was supposed to be the grand new advertising model for reaching desirable demographics. In theory, that might be true. But in today’s reality, advertising values at the site are following the macro trend. Revenues are not coming in as expected, so going forward, I would expect that Facebook is going to continue to see a decline in its net worth.

The other problem is that Facebook, like YouTube, may not ultimately live up to its promise. When attempting to value a franchise, you’ve got to take into account the half-life potential of the brands being sold. Will a product/service be as relevant to society tomorrow as it is today? Besides the challenge of monetizing its online assets, I think Facebook is being hit by that question as well. MySpace and Facebook could be flash in the pans, the whim of kids and college-aged networkers today but the forgotten accounts of grown-up adults tomorrow. And going back to YouTube, many analysts have made cogent arguments that Google overpaid for the right to control the video-clip site with the biggest brand identity. Monetizing that has been a challenge, to issue an understatement.

When starting a small business, or alternatively, when searching for a franchise to bet money on, it’s incumbent to ensure that the entity is based on something that should grow over time and not be dependent on a fad. Calling Facebook a potential fad may be premature, but it nevertheless is illutstrative of the due diligence required when being an entrepreneur. With all the declines in valuations around us, there have to be some cheap assets out there. Just make sure you know what you’re getting with your capital.

The consumer confidence index receives a lot of press. There’s no doubt that it’s an important macro value, as much of the economy is driven by individual spending. However, of equal importance is capturing the perceptions of those who own small businesses. Many of you reading this may in fact be a small-business operator — how do you currently feel? Well, according to this Reuters article, you probably aren’t feeling so hot.

Small-business confidence has dropped in October. It shed over 5 points, moving down to 87.5. Numbers don’t really mean much by themselves without any context, so let me quote the context from Reuters — consider that the third lowest reading so far recorded. The source on that is the National Federation of Independent Business.

I didn’t need to read the rest of the article to know what the implications were. Spending by small-business owners, as well as job creation, isn’t going to be robust. In fact, it most likely will contract at some point. With all the money being printed by the Fed, with interest-rate cuts desperately trying to fix the unwinding of the greed trade, you would think that confidence would find its way into the system. Scratch that, I meant to write you would hope. Trying to “think” rationally about anything these days is akin to a fool’s game. And with the recent GDP reading, the environment seems to be getting worse.

Of course, several quarters from now, things should start to hopefully look up, at least from the viewpoint that the major markets will begin to discount in better times and consider rough data points as lagging indicators. That will hopefully spur consumer interest in spending again, which will then stimulate the small-business community. Bad times won’t last forever. So, the takeaway from these hard times might be that, if possible, a small-business entrepreneur might want to do what he or she can to invest in operations now while prices are presumably cheap. Don’t get me wrong — that suggestion is easier said then done. But, as an example, if you found local advertising, whether via print or radio/TV broadcast inventory, too expensive in recent times, you could check out current prices to see if an integrated marketing campaign might be more economically feasible because of the recession.

There’s not much that the small-business owner can do in terms of making the economy better; that’s the job of others. And it’s understandable that confidence is dropping. But look for investment opportunities where you can. If smart, targeted ones can be made to position operations for growth, then the business should logically benefit down the line.

Who would have ever thought that the little subprime mortgage flu would spread to the big automakers? It really is amazing when you stop and consider how this lousy economic environment progressed. I can recall Ben Stein oh so long ago implying on Fox News Channel that things would turn out to be all right when the whole mortgage mess began. Little did he know that it would eventually culminate with the questionable viability of companies like Ford and General Motors.

Which brings me to this article from Bloomberg. A Deutsche Bank analyst says that, in his belief, GM’s shares most likely are worth nothing. That’s right, nothing at all. It doesn’t take much belief at this point to agree with him. Worthless GM certificates are staring us right in the face. And even if, for some amazing reason, GM’s stock doesn’t become worthless, there’s simply no reason to think otherwise at this point. Thus the call, and thus the recommendation: sell the shares now and take your loss. Or, short the shares if you’re into the risky practice of short-selling, although, admittedly, it’s probably not too risky in this particular situation (please note: I am not advising any reader to do anything, you must make your own decision after much due diligence). In fact, the Bloomberg piece stated that put-buying on GM shares is a pretty popular practice right now. And why not? Car sales have plummeted, and they will most likely get worse. The business is in deterioration mode.

The cash crunch that GM is experiencing, and its ultimate need for a government bailout, will yield further consequences for the entire small business community. It’s going to be tough to secure loans and capital for new ideas. With unemployment surely to rise, consumer spending will only be allocated for products for which there is a definable need (or some sort of powerful brand equity backing it). So either be cautious about what product or service you seek funding for, or choose a great, established franchise as an undertaking.

The NY Times recently ran an interview with Google CEO Eric Schmidt which revealed that even the internet giant, legendary for its lavish campus and extensive spending on innovative technologies, has begun reconsidering cost center management.

The issue of cost savings has become a critical one for small business owners following the economic downturn of the past months. Generally, owners can increase a business value through profitability, and profitability is manipulated in three ways: increased revenues, decreased costs, and increased volume.  The first and third options seem unlikely given that consumer spending is down and unemployment is up, so decreased costs is an area that many owners should explore.  With a little thriftiness it is possible to build equity and increase the value of a business, even in a down economy.  Here are some areas where small business owners can reduce, and sometimes eliminate, costs:

Software- Free software is not a new development, but quality, integrated, and highly functional software has been growing by leaps and bounds in the past few years.  Those familiar with the Microsoft Office Suite but unwilling to purchase a copy should take a look at the free and versatile OpenOffice project.  It offers comparable software tools for creating documents, spreadsheets, etc. at no cost to users.  Speaking of Microsoft, their Office Live Small Business internet suite is extremely useful (and FREE).  Users can get a free email address, website, project planning tools, and low-cost e-commerce all in one place.

Google has a number of free web apps that are also quite handy:

1. GMail is a free email service
2. Google Analytics allows users to view website traffic data and reports
3. Blogger allows users to create free blogs
4. Calendar can be used to track appointments, billing dates, and more
5. AdSense allows users to post Google-appointed advertisements on their websites in exchange for click-based revenue

When it comes to finances, Quicken Online and Quickbooks offer comprehensive tools.  Quicken’s offering for small business runs $99.99 and allows users to maintain personal and business accounts in one place.  Quickbooks is a steeper investment at $199.99 for the Pro Edition but is compatible with Quicken and allows for more extensive tracking and management of tasks like payroll and automatic bill-pay functions.

Printing- Printing can be expensive, but VistaPrint will do it for free.  The site provides 40+ business card designs to choose from along with customizable text.  In exchange for the cost of shipping and printing their name on the back of the card, VistaPrint will ship 250 free cards, or 500 for $9.99.  They also offer free letterhead, magnets, brochures, postcards, and more.

Training- When times are tight it’s easy to overlook the importance of training.  The Small Business Administration offers free online training sessions in areas such as: Starting a Business, Business Planning, Marketing, Financing, Retirement, and Taxation.  And you read correctly, these are free training sessions.

These are just some of the free or low-cost offerings available to small business owners.  Exercising smart cost management is not just prudent when times are tough, but it will yield significantly higher cash-flows over time.  When you can’t increase profitability through increased revenues, look for ways to decrease costs.

Below is a list of 15 well-known franchises and some key figures.  Beyond startup costs, it is important to keep track of royalty fees, required advertising, training support, and a host of other factors.  Click the franchisor name for a link to their site.

Franchise List

Of course, beyond all of the infrastructure issues mentioned above, the biggest issue will be profitability. The best way to find out if a business makes money is simply to ask. Walk into a local franchise, tell the owner that you are considering the purchase of a similar establishment, and you’ll be awed by the candidness and honesty you receive in exchange. Remember, many of these owners were in the same position not too long ago.  Chances are they would have benefitted greatly from this type of information and would love to share.  Now you just have to ask.

Here’s an interesting article about how to shift gears when your small business falters.

Inc.com has a number of great articles for small business owners. This one focuses on common mistakes made when writing a business plan. We’ve previously discussed the importance of having a business plan, so pay attention.