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Your good ideas are the foundation of your business. Protecting those ideas and the products they inspire is an essential part of building a strong company. The Tory Burch Foundation, along with the United States Patent and Trademark Office (USPTO), part of the Department of Commerce, hosted a special edition of our webinar series, focused on trademarks, patents and other kinds of intellectual property. Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the USPTO and Elizabeth Dougherty, USPTO Eastern Regional Office Outreach Director highlighte the opportunities that intellectual property protections offer and some government resources available to entrepreneurs.

Though you may think that intellectual property protections are only for designers and inventors, Vidal urged our community to think more broadly. “Absolutely every business has something protectable,” she said. While women are incredible innovators and are the fastest-growing segment of entrepreneurs, they hold only 12% of the over 11 million patents issued by the USPTO. Here’s why you may consider joining their ranks.

What is intellectual property?

According to the USPTO, intellectual property (IP) “refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.” A business owner or innovator can prevent other entities from creating or using the same “creations of the mind” through the four kinds of intellectual property protections: patents, trademarks, copyrights and trade secrets.

Patents

Patents protect “a new and useful process, machine, manufacturer, or composition of matter, or improvement thereof.” The USPTO offers utility, design and plant patents. Utility patents “protect what we think of as inventions,” explained Dougherty. Think of your smartphone’s components; most are protected with utility patents. This class of patent lasts for 20 years from the filing date.

Design patents protect the “ornamental appearance of an article of manufacture” and last for 15 years from the date of filing. Plant patents go to the person who invents a new kind of plant or discovers and asexually reproduces it. Like utility patents, plant patents also last for 20 years.  

Trademarks

The USPTO registers trademarks to protect “a word, phrase, symbol or design, or combination of words, phrases, symbols or designs that identifies and distinguishes the source of the goods of one party from another.” 

“Trademarks are incredibly valuable in part because of their duration,” explained Dougherty. “They can last forever as long as the mark is registered, continually used in commerce and renewed with the U.S. Patent and Trademark Office in a 10 year period.” Trademarks can cover sounds, colors (think: Tiffany blue) and even scents (Dougherty gave the distinct smell of Play-Doh as an example).

Entrepreneurs can also file for service marks, which protect the particular services they offer the way trademarks protect products. For example, Visa has a registered service mark to identify its credit card services. Service marks have the same long lifespan as trademarks.

It is possible your unregistered intellectual property is protected through a common law trademark. Common law trademarks protect your IP only in the region where it’s currently being used, which is why the Department of Commerce encourages federal registration with the USPTO. Consult an intellectual property lawyer to learn about your common law protections.

Copyrights

Copyrights are “the legal protection for original works of authorship including literary, dramatic, musical, artistic and certain other intellectual works, such as logos, product design, packaging, advertising, promotional materials, instructional materials” and more. Other less obvious works of authorship include software and architecture. Put simply, copyrights protect creative expression stored in a tangible form. It’s important to note that the U.S. Copyright Office registers copyrights, not the USPTO. They typically last for the life of the author, plus 70 years. Generally, it is less costly to register a copyright than a patent.

Trade Secrets

Any company information that is valuable and supposed to remain confidential is considered a trade secret. This kind of intellectual property doesn’t fall under the USPTO but is instead protected through contracts an employer gives to employees and vendors. An example of a trade secret is Google’s search algorithm. While you can use tools like Google business profiles to influence the information about your company that appears in search, no one outside of Google understands the coding and exact criteria for appearing at the top of a search page.

Getting started with intellectual property.

Once you have your big idea, you need to identify what kind of protection you need. The USPTO’s IP Identifier tool helps founders understand what they have to protect and how. It is likely that you will have more than one kind of intellectual property and can build an IP portfolio. Women founders may find the USPTO’s Women’s Entrepreneurship (WE) program helpful in starting an application and speaking to mentors about leveraging their IP.

Though lawyers frequently help entrepreneurs build IP portfolios, you may not need paid legal support right away. Many law clinics and individual lawyers around the country offer free or low-cost IP support, especially to those from under-resourced communities. Additionally, the USPTO manages the Patent and Trademark Resource Centers, a nationwide network of over 80 public, state and academic libraries with staff members who can support you with applications and more. Search by state to get started.

Even if you’re able to save on lawyer fees, a patent may cost you and your business hundreds or thousands of dollars. Vidal recommended that in the idea stage or very early stages founders consider filing a provisional patent, which costs as little as $60 and does not require a lawyer. “That buys you a year to think about whether you want to go into the next stage,” she explained.

Seeking a copyright? You can likely do it yourself, as over 90% of copyrights are filed without the support of an IP lawyer.

Build IP into your strategy.

Your business strategy should include an intellectual property strategy. Patents especially can affect everything from your marketing and sales to your funding. “I will tell you at a high level that if you want to get funding, you need to protect your IP, [and] that IP is also part of the value of your company,” explained Vidal. Sharing your plans for IP protection with potential investors and partners piques their interest and increases your company’s valuation. Protection starts as soon as you begin the trademark process. However, IP experts usually advise founders not to publicly disclose an invention before receiving at least a provisional patent.

Even if you aren’t ready to seek outside funding, your first patent has a major impact on your company’s bottom line. Vidal explained that companies with one patent increase employee growth by 36%. After five years, those companies usually have two times the revenue of businesses without patents.

As you consider expansion, plan for the kind of IP needed to support it. For example, if you are a salon chain, you will need to file for a different class of trademark to be able to use your name and branding on products for sale. And it wouldn’t be premature to start the process before even developing the product. As Vidal emphasized, “People need to know that if you don’t get started right away, you could lose the ability to protect what you have created.”

Just when you thought you had mastered AI, a new set of intelligent tools comes along: agentic AI, which flips the script on everything we thought machines could do. It doesn’t wait for commands; it takes initiative, learns, adapts and executes with intent—and all while you sleep. For founders who catch on early, it can be a turning point.

Expanding on her first primer on AI tech, Omni Business Intelligence Solutions founder and CEO Jacqueline Tangorra founder returned to our webinar series to show our community how agents  can drive growth and optimize customer acquisition. Agentic AI is incredibly powerful,” she said. “It’s like this digital brain that knows your business, knows what it needs to achieve and won’t stop until it gets there.” 

WHAT ARE THE KINDS OF AI?

There are three types of AI: 

Predictive

This is data-centric forecasting, such as Netflix’s recommendation engine, which analyzes your viewing history to suggest shows you’ll enjoy. 

Generative

This generates content text, images and videos. The output is the end point. 

Agentic

This is process-centric. Instead of simply predicting data or expressing it, agentic AI contextualizes information against a broader goal and acts on all the decision points along the way.

On the surface, agentic AI may seem similar to automation, since both perform tasks without constant human supervision. The latter, however, has a narrower scope and follows an “if X, then do Y” script—like delivery tracking notifications or automatic post-purchase emails. Agentic AI builds on that foundation by adding reasoning, learning and problem-solving. 

Take chatbots, for example. The automated version relies on canned replies and fixed flows. An agentic one, by contrast, can handle a natural conversation—adjusting its approach and making decisions on your behalf.

THE NEW ERA OF CUSTOMER ACQUISITION.

Traditionally, marketing followed the funnel, a linear framework guiding a decreasing number of potential customers from awareness to consideration and, finally, purchase and loyalty. No longer. Our digital-first world has fractured that customer journey. People interact with brands across channels and platforms, now that we’re forever scrolling, swiping, searching and streaming. The result is a web of interconnected touchpoints, with no clear beginning or end. 

Agentic AI helps founders easily manage this dynamic hub of activity in real time. It understands a company’s context (i.e. its memory, policies and identity) as it addresses multiple tasks, from finding, qualifying and nurturing customers to either closing the deal or handing it off to someone who does. Tangorra recommended the latter. 

Even across multiple channels and fragmented sources (e.g., paid ads, referrals, and website forms), agentic AI recognizes when, say, two touchpoints belong to the same person and maps everything correctly to your customer relationship management system, or CRM. Plus, it’s self-learning, looping insights back into itself so that every interaction informs the next, even across clients and campaigns. The bottom line: no more potential customers slipping through the cracks. 

DESIGNING YOUR AGENT.

1. Keep It Human

It’s important to sound human because that’s how you will stand out. “AI is a double-edged sword,” Tangorra said. “You don’t want to be written off for using agents for outreach. It’s up to you to make it feel like you.” Founders have to teach their agents style and tone, so that customers feel they’re interacting with a person. 

2. Invest in Context

When prompting, take the time to build what Tangorra called the context spine, which makes sure your AI is equipped with the knowledge it needs to stay on brand and aligned with your values. 

“It’s what governs the AI’s ability to understand all the nuances of your business,” she explained. “Imagine stepping away from your business for six months and training someone to take over. Put that level of intellect and depth into training the AI agent itself.” 

3. Track Performance

“You have to make sure your pipeline is healthy and that agents can support your business objectives,” said Tangorra. Key metrics include customer acquisition cost (how much you spend), conversion rate (how efficiently leads convert), sales velocity (how quickly sales progress), and payback period (how quickly you recoup your spend). Also: lifetime value relative to the customer acquisition cost—or LTV:CAC—which shows if the customers you acquire are profitable over time. 

BUILDING YOUR AGENT.

1. The Tools

Platforms like Zapier, N8N, Relay.app, Relevance AI, and Empire AI let you create custom AI agents using natural-language prompts, with zero to minimal coding. No developers or programming knowledge needed. 

Privacy

Tangorra admits that AI at large is still “a very gray area” regarding what’s collected and how it’s being used. Always review a company’s policy and use encryption or anonymization where possible. Most tools will let you turn off data training, too. “The burden falls on the business owners to protect their brand and data,” she said. “You control what you put in, so be smart about it.” 

For her own business, Tangorra uses Lindy, citing its strong security protections—it’s SOC 2 Type II Certified and both HIPAA and PIPEDA compliant (learn more here).

2. Prompting 101

Effective prompting matters. Tangorra outlines what you need to include:  

• Role: Establish your agent’s function and objective. Don’t forget to include your business type, e.g., hospitality SaaS. 

• Ideal Customer Profile: Who’s your audience? Do you have any exclusions? Be specific.

• Inputs: What information, like CRM data, does your agent need? This where you add the things that make up your context spine, such as brand book, voice guide and compliance rules. 

• Tools: How will it gather information? Via web search, Google Sheets, CRMs, email, or APIs? 

• Guardrails: This is where you set any ethical, legal, and brand boundaries. For instance, no scraping behind paywalls, no mass emailing, or requiring human approval if PR risks are detected. 

• Success Metrics: Don’t forget to include your KPIs to ensure the agent drives results. 

3. Sample Use Cases

Define clear use cases for every agent you deploy. “Don’t build to build,” Tangorra cautioned. “AI is a tool to support your business growth. Stay focused on that. Don’t get hung up on everything that’s out there.” 

Below are six practical plays she recommended—think of them as a digital team, all working in sync to find new customers. 

• Inbound Triage: Acts as your point person for incoming requests through emails, forms, and social channels, then qualifies them and routes them to the right people. They agent can also automatically schedule meetings with qualified leads.

• Outbound Communication: Personalizes multi-channel outreach and automates timely follow-ups at scale. You no longer have to worry about delayed responses or your team getting burnt out. 

• Predictive Lead Scoring: Recognizes and prioritizes the customers most likely to convert. (Tangorra noted this function may already exist in some CRMs, like Zoho or HubSpot.) 

• A/B Testing: Tests different versions of ads and landing pages to refine messaging and improve conversion. The agent then chooses and deploys the winner. 

• Reengagement: Identifies dormant customers and sends targeted win-back campaigns. 

• Meeting Prep: Conducts research on prospects for reps before meetings, using your CRM and available information on the client. The agent can create a one-pager to share with company reps ahead of meetings. “It’s a game-changer,” said Tangorra. “It helps to close those deals.” 

AEO IS THE NEW SEO.

Everything we’ve covered so far involves using agents to reach customers, but there’s another development Tangorra also flagged: optimizing your business for AI discovery. “The world has its own agents that are looking to find you,” she pointed out.

Just as Google transformed marketing with search engine optimization (SEO), the rise of AI has triggered the need for AI engine optimization (AEO). “It was a cultural shift for me when I discovered someone found me through AI,” admitted Tangorra. 

Here, a few tips to get started. 

• Keep your website clean, crawlable, and schema-marked (coded with structured data for agents).

• Boost credibility with verified customer reviews (Google, LinkedIn) and transparent policies (returns, privacy, security) on your website. Agents weigh trust when suggesting businesses.

• Write content in a way that matches how customers ask questions out loud—think who, what, when, and where. 

• Write FAQs as Q&As and maintain consistent formatting for company name, address, and phone across all platforms.

Customers have more options than ever before when it comes to, well, everything. The array of choices available mean new businesses have to do everything they can to stand out. Dorie Clark, a lecturer at Duke University’s Fuqua School of Business and Columbia University Business School, shared strategies for helping you and your businesses break through in a crowded marketplace during one of our small business webinars. This sought-after marketing and strategy thought leader literally wrote the book on competitive differentiation, titled Stand Out: How to Find Your Breakthrough Idea and Build a Following Around It. She shared strategies with our community to help them hone in on how their business is different from the competition. Keep in mind, there’s no need to implement all five at one time. “But the good news is doing any of these things, even just moving the ball a little bit down the field, makes a huge difference in terms of your ability to ultimately be successful,” Clark explained. 

Ask the right questions.

Believing that curiosity is the key to innovation, Clark urged our community to think about a series of key questions whose answers could lead to solutions that help a business stand out. 

How can I serve my customers in a different way?
Shifting your thinking like this will help you choose other channels you can use to reach your customers, for example.

What else can I sell to my current customers? 

“We all probably know from experience that the best customers you have are your existing customers, because they’ve already heard of you,” Clark advised. Consider what other problems you can help them solve. “It’s a great way to increase your overall revenue.”

How can I leverage underutilized resources? 

If you have back stock or leftover materials, for example, you may be sitting on an untapped revenue stream. This creative approach can be a big help during tough times. 

Determine a true measure of success.

A major part of standing out from competition is understanding what your particular definition of success looks like. Clark indicated that social media is an area where new entrepreneurs lose sight of what’s truly important to their company. “Yes, you want to build a following. Yes, you want to build a community. But at least in the beginning, as you’re establishing the viability of your concept, you really need to grow your revenue,” Clark recommended.”[You should be] spending time really understanding, ‘Hey, does the audience want what I have to offer?’” 

In other words, having a lot of followers is great, but followers don’t automatically translate to sales, or even an engaged community. Choose what metrics make the biggest difference to your business. 

Put your passion first–worry about credentials later.

Entrepreneurs may think that they need an advanced degree or additional training to be successful. Continuing education is important, but sometimes your passion is enough to separate you from others with a similar idea. In fact, your lack of the typical credentials may be exactly what helps you differentiate from competitors. 

“Just because we may not have the same credentials as other people in our field, that does not mean that we are not qualified. It just means that we have to tell our story in a different way,” Clark explained. Consider ways you can highlight the skills you do have for your customers’ benefit.

Play the long (content) game.

Instead of focusing on short, made-for-social-media content, Clark recommends that business owners consider investing in longform content, such as blog posts, videos or even podcasts. “Something that takes a little bit of effort,” she went on. “First of all, if it takes more effort, that means fewer people are doing it. So it’s a bit more of an open space for you to distinguish yourself from the competition.” 

It’s also a great way to get customers interested in an expensive product before they open their wallet. “The more you can reassure your customers up front that you know what you’re doing, that you’re legit, that you’re going to serve them? Well, it makes the sales process a heck of a lot easier.”

No need to buy research. 

Don’t sink a ton of money into competitive research when you’re just starting out. Of course you need to understand your industry and to be able to speak about your place in it. Clark recommended a (mostly free) practice that she and her publishers use when she’s preparing a proposal for a new book: finding competitive works. Clark and her editor come up with three or five titles that are similar to her proposed book but explain how hers is different. To apply this to your own business, think of three to five competitors in your space. “Say, ‘Oh, it’s like this. But here’s the difference.’ And if you can summarize that difference in like a sentence or less, that’s perfect.”

This creative approach to competitive research allows you to both understand your positioning in the market and have a succinct way to explain your business to everyone from investors to a family member at a picnic. 

Be the last man standing.

No matter what direction you take for your business, perseverance is essential. It’s what separates many successful entrepreneurs from the not-so successful. Clark used Jordan Harbinger as an example of this principle. Harbinger is the creator and host of the Jordan Harbinger Show, one of the most downloaded podcasts in the world (he’s also featured in Clark’s book Entrepreneurial You). His podcast is able to compete with the major media names that rule the podcasting charts, like NPR and the New York Times in large part because he never gave up after launching in 2006. In fact, the majority of podcasts don’t last past 12 episodes, Clark pointed out. But Harbinger focused on getting better and kept putting his work out there, while podcasters all around him stopped producing shows. “Longevity, actually really calls the field, and it makes success possible that you might have felt was not possible otherwise.” Keep working on your business and your differentiating factor may be your staying power. 

Many growing businesses spend a significant amount of time perfecting their marketing strategy, but when it comes to sales, the structure isn’t as strong. That discrepancy is a question of mindset, and it could be costing you lots of missed revenue. “The number-one problem that we have in business is that we avoid the word ‘sales’,” explained sales strategist, fractional CEO  and The Heart Sell author Dora Rankin. She joined our webinar series to break down building a sales strategy into approachable steps. She also shared ways to engage your customers authentically and her winning formula for unlocking revenue.

UNDERSTANDING MARKETING VS. SALES.

A good way to get the most out of your marketing and sales efforts is to understand how they’re different and how they work together. In simple terms, sales is how you find your customers for your business, while marketing is how your people find you. Rankin highlights the biggest differences lies in being proactive versus reactive. “If you’re only doing marketing, you’re only going to wait for the sales to come in,” she explained. She estimated that a business could wait 12 to 18 months for a marketing message to turn into a purchase if they don’t do other sales activities. 

Instead of a growth strategy that focuses on engaging potential customers through marketing tactics like social media posts and email newsletters, Rankin believes founders should create a flywheel in their businesses where they focus on sales activities that they support with marketing efforts that enhance the sales process. The relationship she described, in which sales activities attract the customers you need to use marketing to communicate with, are represented by a flywheel. She introduced the concept of the 80/20 principle, in which she recommended businesses spend 80% of their time on sales efforts, indicated on the outer ring of the flywheel, and 20% of their time on marketing, indicated as the center.

BUILDING YOUR SALES FLYWHEEL.

Start by identifying the three types of buyers for your business:

• Ideal clients: This is someone who would directly purchase your product or service.
• Partners: This is someone doing something completely different than you, but has the same audience. For example, bankers can view accountants as partners, as they have the same audience, but serve their customers differently. 
• Ecosystem: This is the same as partners, but an organization. For example, a tradeshow might be an ecosystem target for a handbag business. 

List these three buckets on the outside ring of your flywheel. Add marketing in the middle Once you know who falls into these three types of buyers, you can then set yourself the task of working through these lists in the course of a week. These three buyers make up the basis for a potential weekly sales plan that focuses on outbound prospecting and sales calls once a potential client has agreed to a meeting. The marketing activities will become evident once you have a sense of your sales activities. For example, you will know what kind of one-pager to develop once you know the kinds of partners you’re engaging.

Schedule time for outbound prospecting, via email or LinkedIn message, for example. Rankin suggests the following approach: 

• Research: This shouldn’t take more than a few minutes. The key is finding out a few things about your customer so you can personalize your message. If you’ve ever wondered why someone hasn’t responded to you, it’s likely that you made it about you, not them. 
• Introduction: Introduce yourself briefly.
• Commonality: Share a commonality between the two of you. This is something you will find during your research 
• Compliment: This should be an authentic compliment!
• Reason: Be clear in your reason for wanting to meet or talk, but do not make this about your pitch. 
• Call to action: Rankin emphasizes this step. A call to action includes a time to meet and a link to your calendar. You should never let anyone figure out their own calendar. 

Rankin recommends spending seven to ten hours a week of outbound prospecting work, including eight to ten sales conversations. “The more authentic you are, in doing any type of outbound, the better,” said Rankin. She teaches that prospecting is not about taking a one-size-fits-all script, but rather it’s about truly identifying who you want to work with and doing your research. Remember that repeatedly testing and talking to your buyers will help you learn and iterate as you go along. You might fail many times before succeeding once. 

Keep records of your outbound efforts with a pipeline management tracker This can simply be a spreadsheet, or a more robust customer relationship management (CRM) tool like Hubspot, Monday.com or Pipedrive.

THE ART OF THE SALES CALL.

When one of your prospecting messages turns into a sales call, it’s time to prepare.It’s important to remember that every conversation should walk your customer down a path to solve a problem they may not know about. 

Start off the meeting with a few comments to build rapport, then share an agenda and proposed outcomes. From there, you can ask what Rankin calls profiling questions to learn about your potential customer. Some good examples would be open-ended questions like “I’d love to know more about your business…” or “What challenges are you facing?” It’s also key to include questions about their urgency like, “Are you ready to invest in solving this problem?” 

After asking these questions, you’ve likely identified their pain point. Now, it’s your turn to briefly introduce yourself and summarize the conversation. Rankin offered this script: “Here are the things we talked about, and based on the things we talked about, here’s how I think I can help you.” Think of this as a very simple sharing of information, not a full pitch. “We don’t tell them the things that we do and that we think that they should work with us, unless we know 100% that we’ve gotten to their pain point and that we really are the right people to work with them or to have our thing sold in their store,” Rankin cautioned. 

SUCCESS IS ROOTED IN BELIEF.

At the end of her presentation, Rankin reiterated her belief that the first step to building a sales strategy is to set ambitious revenue goals for your business, achieved weekly, monthly or yearly. She urged founders to ask themselves, do you really believe in yourself and your business to reach a milestone that’s really big? Starting with this question is important, because without belief, you may actually be stopping yourself from doing the things that are uncomfortable but necessary for major growth. Rankin urges that having unwavering belief in yourself and your business is the first key to success.

You’re making lots of sales, but is it enough to really move your business forward? Time and again, I’ve worked with clients who have lots of cash moving into their business but who didn’t understand the profitability basics that would help them grow. Unfortunately, 82% of businesses go under due to cash flow issues, and I want to change that.

I am a big believer that entrepreneurship can help women close the wealth gap. Understanding the following principles will allow you to generate the profits that will help you achieve both your business goals and lifestyle goals.

THE BASICS OF MONEY MANAGEMENT

The first things a business owner can do for a strong financial foundation are separate their business and personal finances, use accounting software, make sure their financial reports are accurate and investing in a good bookkeeper.

Even with a good bookkeeper and accounting software, business owners still need to develop financial literacy. Knowing the inner financial workings of your business helps you identify areas for improvement, improves decision-making on how to support and grow.

Revenue vs. Profit

Profit is the true power of your business. Profit, which is the money that remains after all expenses (such as salaries, rent, inventory, marketing) have been subtracted from revenue, is what matters most in the end. Revenue is the total income your company makes through sales.

Business owners often make the mistake of assuming that high revenue equals high profits, but that’s not necessarily the case. A company could have an impressive revenue but still struggle to make ends meet because of high expenses.

AVOID THESE COMMON MONEY MISSTEPS. 

I’ve seen so many business owners tripped up by the following money missteps.

Emotions get in the way.

Remember, money is a tool that you work with. It’s not uncommon for people, especially women, to experience fear and embarrassment when looking at their finances because so many of us don’t learn about these things growing up. Work to separate the emotions from the money management. You’ll have the opportunity to interpret data effectively to make profitable decisions.

You think you just need more sales.

Many business coaches will tell you that you need more sales, but in truth, you need to understand how many sales you need to generate to meet your targeted net profit margin. Standard margins vary by industry. For example, restaurants typically see 8 to 12% margins, whereas professional services can see margins as high as 80%. Do an internet search on your industry’s standard margins to get started. You need to understand how your money is being put to work so that when you do increase sales, you will be increasing your profit as well.

You’re not paying yourself regularly.

You went into business to make money, and if you can’t pay yourself from your business regularly, then your business is failing you. You must include your salary in your budget and make paying yourself from your business a priority.

You think your bookkeeper or accountant is taking care of you.

Your bookkeeper is there to input data according to the rules of GAAP (generally accepted accounting principles). They are not there to offer financial advice or interpret the data for you.

Accountants, on the other hand, are trained to give advice. There are two types of accountants: tax accountants and senior accountants. Your tax accountant files your business and personal taxes for you. Entrepreneurs hire a CFO or senior accountant separately to help them navigate their finances throughout the year. Still, you need to be prepared with an understanding of your profit margins and revenue to be able to have a productive conversation with your senior accountant or CFO.

KNOW YOUR FINANCIAL REPORTS

When you understand these three statements, you can make operational decisions alone or with the help of your CFO. Ask your bookkeeper to pull these reports from your accounting software or show you how to do it yourself.

Profit and loss statement

This report is typically the one you’ll use the most, as it allows you to see how your business is performing over time. By analyzing your income statement, you can determine where you’re making money and where you may need to cut costs.

Statement of cash flow

Cash flow, on the other hand, tracks money as it flows in and out of your business. Rather than looking solely at profit and loss, the statement of cash flow shows us exactly where a company’s money is coming from and going.

Balance sheet

This report provides a snapshot of your business’s financial health at a specific point in time. It shows your assets, liabilities, and equity, giving you a clear picture of what you own, what you owe, and what’s left over. Armed with this information, you’ll be able to make informed decisions about your business’s future, whether you’re looking to expand, invest, or simply stay afloat.

CONSIDER THESE CASH MANAGEMENT STRATEGIES.

Cash shortages in a business can be a critical issue, often stemming from insufficient profit margins or excessive debt. When a company’s profits are meager, it struggles to cover operational costs, let alone invest in growth or innovation. Low profits may be due to underpricing, poor sales, or high expenses.

To mitigate the risk of cash shortages, there are common cash management strategies a business can implement.

• Bulk ordering can lead to cost savings. Be careful—it requires a delicate balance to avoid excessive inventory. Look carefully at your sales history to lower that risk.
• Negotiate favorable payment terms with vendors to delay cash outflows without jeopardizing relationships or supply chain integrity.
• Stay on top of accounts receivable so that invoices are converted into cash quickly. Invoice promptly and follow up on payments is vital. Decide on a good system for tracking and reminding customers of outstanding invoices and stick to it. Timely collections can make a significant difference in the financial stability of a business.

MONITOR THESE 3 PROFIT DRIVERS.

Profit drivers are the factors that affect your profits. While there are several to consider, and they vary by industry, price, sales volume and expenses are the three principal profit drivers to play with when trying to increase profits. These all work together, so use your industry knowledge to decide where to start.

Price

Pricing your products or services is not just a financial decision, it’s a strategic one. Proper pricing affects not only profitability but also brand positioning, market entry, and customer perception. You must find that sweet spot where you can generate revenue and remain competitive in your market. Remember, setting your prices too high can turn off potential customers and send them running to your competitors, while setting them too low can make you appear cheap and undervalued.

Approach your prices by researching your target audience, analyzing your competitors’ pricing strategies, and factoring in your own costs (such as labor and materials) and profit margins. Factor in your competitors’ pricing but aim to distinguish your offering based on the unique value it delivers rather than engaging in a price war. You should review your pricing once a year at minimum.

Sales volume

Consider driving up sales volume through targeted marketing, improving customer experience, or expanding your product range.

However, it isn’t enough to sell more units of any product in your assortment or get more clients. Again, profit is more important than revenue. Make sure you understand your breakeven point and to determine the kind of volume you need to drive and how it affects your business. Your break-even point is the number of units you must sell for the revenue to equal business costs. That’s represented by the formula:

Breakeven point = fixed costs/ (unit selling price – variable costs)

Be intentional about increasing your sales volume by focusing on the products with the highest profit margins. If you have a product or service that produces higher profit margins than others, consider putting marketing behind it.

Expenses

While increasing revenue is important, controlling expenses is equally crucial to maximizing profits and reaching your business milestones. The ability to manage expenses well can make a significant impact on your bottom line, not just in the short-term but also in the long-term.

Conduct a thorough review of your expenses and reduce or eliminate those that fail to provide a return on investment. The key is to identify and prioritize the expenses that contribute to growth and eliminate or minimize those that are draining your resources. Again, you might consider negotiating lower prices with your vendors or making bulk purchases to capitalize on volume discounts.

Lastly, address operational inefficiencies. Streamline your processes to cut costs and improve customer satisfaction by shortening delivery times and increasing service quality. Those improvements can keep customers coming back, which is key. It is more expensive to acquire a new customer than it is to keep an existing one happy.

By focusing on these three critical areas, you’ll be on your way to driving revenue and profits in no time.

You may have the branding and the buzz, but none of it matters if you can’t get the product made and made right.

Consumer packaged goods (CPG) expert and startup advisor Jessica Jaffe, brought her nearly 20 years of experience bringing products to market to a session of our webinar series focused on small business manufacturing. She built her career at Target, Safeway, and HelloFresh, among others and she’s seen what works—and what doesn’t. Jaffe shared her roadmap for navigating the process, from assessing manufacturers to setting up partnerships for long-term success.

Here’s everything you need to know, whether you want to have more product for your own store or you’re scaling to fill retail orders. 

THE DIFFERENT TYPES OF MANUFACTURERS.

Full Service

A turnkey solution, this supplier handles everything for you: formulation, ingredient sourcing, manufacturing, packaging, labeling, and compliance. 

Pros: Ideal for small companies lacking the infrastructure or time to manage every step themselves.

Cons: Less control over ingredient sourcing and customization.

Custom Formulation

The niche manufacturer—perfect for those with a unique or proprietary formula or specialized ingredients, like organic snacks or medical-grade beauty.

Pros: Full control, plus flexibility for smaller batches and test market launches. Manufacturers can also help you secure certifications—third-party approvals that verify your product meets certain industry standards, e.g. USDA organic.

Cons: Expensive, and will require more time for testing and approvals.  

Toll Processing or Co-Packing 

They provide a specific service, like packaging, for a “toll” or fee. You’re responsible for the rest, including raw materials and supply chain management. For example, after finalizing a recipe in a test kitchen and sourcing the bulk ingredients, you hand them off to a co-packer to get things packaged and retail-ready. But before you share anything, make sure your contract clearly states you own the recipe and include a mutual NDA to protect your intellectual property.

Pros: Great for smaller runs and keeping costs in check. You outsource only what you need.

Cons: Time- and labor-intensive. Your company must have a strong logistics team.

COST CONSIDERATIONS.

When setting your suggested retail price, Jaffe emphasizes relying on the total cost of ownership model, something many founders overlook. “We don’t always think about all the other touchpoints along the supply chain that will erode your margin,” she explained.

Cost of Goods

Minimum order quantities (MOQs) can lower per-unit costs—just bear in mind that more inventory means higher storage and shipping fees. Other factors that will impact cost: add-on charges for customization and material price fluctuations due to tariffs or market changes, both for ingredients and packaging.

Not sure where to begin with pricing? Even if your product is a new category, there’s always going to be some sort of benchmark that you can use as a guide. “If this didn’t exist,” Jaffe asks, “what is the alternate? What are people using instead?” Try using Investopedia’s Total Cost of Ownership explanation and example.

Warehousing and Fulfillment

Should your warehouse be near the manufacturer, a main retail partner, or your office? (Some manufacturers also offer warehousing, which can help cut costs.) What is the fee structure like—per pallet or per cubic foot per month?

For direct-to-consumer sales, your partner should be able to handle both bulk and individual units, with the appropriate software on the back end.

Work in perishables? Choose a place that offers temperature and humidity control. A first-in, first-out inventory system (a.k.a. FIFO) is critical, too—it prevents spoilage and reduces waste.

Distribution and Freight

How you ship—air, sea, or ground—will impact the cost and transit time. Watch out for added fees for fuel, insurance, duties, or special handling (e.g. fragile or temperature-controlled goods). If your partner has a preferred carrier, see if you can take advantage of the negotiated rate.

Most importantly, clarify who’s paying what (a.k.a. freight on board or FOB). An international manufacturer might cover shipping to the U.S., for example, but then you’re responsible for moving the product the rest of the way to its destination.

Tariffs

Jaffe recommends working with a lawyer or customs broker—and getting familiar with harmonization codes, the internationally recognized product-classification system. Get the code wrong and you could end up overpaying.

Retail

Landing a major retailer is exciting, but it comes with hidden costs—from slotting fees for securing shelf space to markdowns and chargebacks for damaged or expired goods.

OPERATIONAL CONSIDERATIONS.

Geographical Preference

Do you want a domestic or international manufacturer? The latter can offer lower production costs and greater scalability while the former allows for easier communication, faster lead times, and lower shipping costs. Domestic will also be closer to your warehouse, distribution partners, and customers not to mention you, which can help with quality control.

Volume Requirements and Scalability

Not all manufacturers can accommodate low-volume startups or scale quickly as your brand grows, so it’s important to determine both your initial production run and future scaling needs.

For instance, if you get a spike in demand, will they have the materials ready? Are they investing in new equipment or technology? How quickly can they support innovation, if you add a new SKU?

Certifications and Traceability

These matter for both the brand and its retailers. Certifications include Fair Trade Certified, gluten-free, kosher, Good Manufacturing Practices (GMP), Leaping Bunny, and cruelty-free. Traceability, meanwhile, refers to tracking every step of a product’s journey—including individual components—through the supply chain. Always request audit histories to ensure the manufacturer meets the standards.

Materials and Packaging

Are you sourcing the materials, or will the manufacturer? Does it have contracted relationships with suppliers? Otherwise, volatility in the supply chain can result in increased costs for you. The same questions apply to packaging—everything from the labels and tags to secondary packaging, especially for beauty brands.

HOW TO FIND MANUFACTURERS.

Start with online platforms and directories: Keychain, Thomas, Maker’s Row, Alibaba, and Global Sources.

Head to the trade shows, such as Natural Products Expo West, Newtopia Now, Pack Expo Las Vegas, Cosmoprof, and those hosted by the Private Label Manufacturers Association. They’re a great way to see the competition and touch and feel the products in person. Jaffe cautions against using brokers, however, at least in the early stages: “They’re expensive and you represent your brand the best.”

And, of course, there’s networking. “Connect with people in a similar industry,” Jaffe said. “They can provide referrals, alumni groups, chambers of commerce…. Get out there and have the conversations.”

HOW TO VET MANUFACTURERS.

Find out about their manufacturing, packaging, and research and development capabilities.

What are their sourcing strategies, and how are they hedging for future fluctuations?

Know their MOQs, tiered pricing, and lead times. “You want to make sure that, as you’re diminishing your inventory, you can reorder and get product in time for any retail opportunities,” Jaffe explained.

Ask for referrals, production samples, and if they’ve worked with brands of your size.

Visit the facility, or see a few and compare. “This is the best way to understand their capabilities, processes, quality control, and safety measures,” said Jaffe. “If you have the opportunity, do it.”

HOW TO NEGOTIATE TERMS.

Nail down the cost structure and any associated fees. Make sure there’s no ambiguity, and document the MOQs and tiered pricing. Also, get the manufacturer to commit to a lead time—it will help you manage your supply chain and respond to fluctuations in demand—and to payment terms “for as long as you can possibly get,” said Jaffe.

Protect your intellectual property. For example, if you’re commercializing your mother’s recipe, make sure you own it and the manufacturer can’t sell it to a different brand or private label. “Get that in place in the contract as soon as you start sharing any information about your business,” she continued, adding that a mutual NDA—to protect the integrity of both parties—is essential, too.

Just as important: have outside counsel review any agreements—they can flag issues around liability, insurance, and other potential risks. In fact, when asked who should be on your speed dial during this process, Jaffe put legal at the top, followed by an accountant and a trusted advisor who’s gone through it before.

YOU’VE SIGNED WITH A MANUFACTURER. NOW WHAT?

Schedule a trial run. If possible, Jaffe emphasized being on site for a first-run approval. “You only get one shot with the customer and the retailer,” she said, noting that on-site visits ensure open communication. “I’ve been in situations where I’ve had to reject a full run of product, $40,000 worth, because it didn’t meet the specification.”

Next, map out your demand and forecasting. Think about how much inventory you want to hold at any given time—remember, that’s cash you could otherwise be spending on marketing or other initiatives. Then secure those warehouse and fulfillment partners and finalize your distribution plan.

Last but not least, have a backup plan to mitigate risk. “Make sure you have a short list of alternate suppliers you’ve vetted in case you need to switch to a different manufacturer,” Jaffe advised.

For founders, payment processing is usually an afterthought, dismissed as a mundane back-office function. It’s actually so much more. 

“A purposeful payment framework doesn’t just keep operations running, but drives real impact,” said Jessica Karamoutsos, SVP of Merchant Services at Bank of America. It’s a proven lever for scalability, essential to your business’ health and long-term success. As part of our webinar series, Karamoutsos explained how you can optimize your payment strategy and supercharge your company.  Editor’s note: Bank of America sponsors our Business Webinar series.

WHY IS PAYMENT STRATEGY IMPORTANT?

An effective payment system is crucial to managing cash flow, “the lifeblood of your business,” as Karamoutsos put it. You get paid faster, ensuring you have the funds you need now—e.g., for payroll—and later, to invest in growth. 

Healthy cash flow means operational efficiency: less fees and manual work, more time and money saved. Plus, your payment history can serve as a pulse check. It reveals seasonal patterns, challenges and opportunities, giving you a clear picture of where you are today and where you can go. 

CREATING A SMART PAYMENT STRATEGY.

To build a successful framework, focus on three fundamentals: your growth goals, your receivables and your customers. 

1. Align your payment strategy with your goals. 

Define short- and long-term goals, determine your target customers and map out the steps to achieve these objectives. Use forecasting tools, like Bank of America’s CashPro, QuickBooks Cash Flow Planner, Fathom and Float, to anticipate revenue and expenses, so you can make informed decisions. Don’t forget to review regularly to adjust as market conditions evolve. 

“Set measurable goals you can take incremental steps towards,” Karamoutsos advised. Her case in point: If you aim to cut processing time by 20%, you could begin by upgrading software or switching providers. 

2. Streamline your accounts receivable (AR). 

Establish clear payment terms—and enforce them. Follow up promptly to keep AR moving. “Don’t let overdue invoices linger,” Karamoutsos stressed. Leverage digital invoicing and payment options, and take advantage of AI tools, like Bank of America’s Intelligent Receivables, which has AI-powered invoice matching that can flag any discrepancies instantly. 

Be strategic about your outgoing cash while collecting incoming payments faster. The better the balance, the more control you have. Struggling with a partner that doesn’t pay on time? Karamoutsos recommended switching to a recurring payment model for steady revenue.

Understand your overall financial health by tracking your net cash flow—and know your break-even point . “AR isn’t just about collecting payments,” she reminded us. “It’s about creating predictability and freeing up resources for growth.” 

Companies with different lines of business (e.g. wholesale and direct-to-consumer, or who sell in-person and online) should stop juggling multiple payment systems. Consolidate under one platform to simplify day-to-day operations. Options include Shopify, Square and Stripe. In specialized sectors, research industry-specific software that can integrate with your existing systems—say, DrChrono for healthcare. And always schedule an annual audit of your entire financial system—from payroll to AR and point-of-sale (POS)—to avoid unnecessary layering as the business expands. 

3. Meet your customers where they are.  

For starters, you must embrace digital. “The benefits go beyond convenience,” Karamoutsos explained. “It allows for faster transactions, improved cash flow and an overall better customer experience.” It’s no longer a nice-to-have—it’s expected. 

The data you collect through digital payments also provides valuable insights into customer habits and buying trends, so you can make calculated decisions and plan ahead with intention. A smart POS system can even sync with your inventory, accounting and CRM (customer relationship management) systems to give you real-time visibility. 

According to Karamoutsos, the metrics that matter most here are those that drive loyalty. “What could you put in place to establish a connection—a promotion? Ten percent off on their birthday?” she asked. “If you’re a salon owner, maybe there’s an opportunity in offering exclusive services to brides?”

Next, diversify your payment methods to broaden your reach by adding payment links, QR codes, text-to-pay, tap-to-pay, digital wallets (Apple Pay) and emailed invoices. Consider all the ways customers shop, too, like websites for a 24/7 “storefront” and mobile or tablet checkouts for pop-ups and deliveries. 

A Word About Fraud

Be prepared: with more digital activity comes greater exposure to fraud. Work with a financial institution to protect both your business and your customers, and make security measures clear at point of sale so customers know their transactions are safe. Bonus: you’ll also build trust and encourage repeat business. 

HOW TO CHOOSE A PAYMENT PROVIDER.

Do your due diligence and speak to  a representative at a potential payment provider. “They’re interviewing you as much as you’re interviewing them,” Karamoutsos said. “If they don’t understand your business, that creates potential cost concerns.” Your vendor needs to understand where and how you do business to recommend the appropriate tools, safeguards against fraud and more. 

Do you sell internationally? Then it gets more complicated with different countries, currencies, guidelines and fees. You’ll likely be working with different providers, so it’s important to ask questions up front. As industry trends change, you don’t want to be surprised by additional costs later. Determine who can provide the most seamless experience. 

TOOLS AND RESOURCES.

For budgeting tools, cash-flow calculators and growth strategies for every business stage, head to Bank of America’s Center of Business Empowerment. There are additional resources on securing capital and risk management, too. 

To benchmark your plans against industry trends, download the annual Business Owner Report, also from Bank of America. “Use it to evaluate your business and identify opportunities for innovation,” said Karamoutsos. 

Whether you have one employee or 50, setting up a payroll system not only streamlines your ability to stay on top of your legal and regulatory responsibilities as an employer, but it can also save you time and help protect you from incurring costly Internal Revenue Service (IRS) penalties.

Here are 10 steps to help you set up a payroll system for your small business.

1. Obtain an Employer Identification Number (EIN)

Before hiring employees, you need to get an employment identification number (EIN) from the IRS. The EIN is often referred to as an Employer Tax ID or as Form SS-4. The EIN is necessary for reporting taxes and other documents to the IRS. In addition, the EIN is necessary when reporting information about your employees to state agencies. You can apply for an EIN online or contact the IRS directly.

2. Check whether you need state/local IDs

Some state/local governments require businesses to obtain ID numbers in order to process taxes.

3. Independent contractor or employee

Know the Difference. Be clear on the distinction between an independent contractor and an employee. In legal terms, the line between the two is not always clear and it affects how you withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes.

4. Take care of employee paperwork

New employees must fill out Federal Income Tax Withholding Form W-4. Your employee must complete the form and return it to you so that you can withhold the correct federal income tax from their pay.

5. Decide on a pay period

You may already have a manual process for this, but setting up a pay-period (whether monthly or bi-monthly) is sometimes determined by state law with most favoring bi-monthly payments. The IRS also requires that you withhold income tax for that time period even if your employee does not work the full period.

6. Carefully document your employee compensation terms

As you set up payroll, you’ll also want to consider how you handle paid time off (not a legal requirement, but offered by most businesses), how you track employee hours, if and how you pay overtime, and other business variables. Don’t forget that other employee compensation and business deductibles such as health plan premiums and retirement contributions will also need to be deducted from employee paychecks and paid to the appropriate organizations.

7. Choosing a payroll system

Payroll administration requires an acute attention to detail and accuracy, so it’s worth doing some research to understand your options. Start by asking fellow business owners which method they use and if they have any tips for setting up and administering payroll. Typically, your options for managing payroll include in-house or outsourced options. However, regardless of the option you choose, you – as the employer – are responsible for the reporting and paying of all payroll taxes.

8. Running payroll

Once you have all your forms and information collated, you can start running payroll. Depending on which payroll system you choose, you’ll either enter it yourself or give the information to your accountant.

9. Get record keeping savvy

Federal and some state laws require that employers keep certain records for specified periods of time. For example, W-4 forms (on which employees indicate their tax withholding status) must be kept on file for all active employees and for three years after an employee is terminated. You also need to keep W-2s, copies of filed tax forms, and dates and amounts of all tax deposits.

10. Report payroll taxes

There are several payroll tax reports that you are required to submit to the appropriate authorities on either a quarterly or annual basis. To get more information, visit the IRS’s Employer’s Tax Guide, which provides clear guidance on all federal tax filing requirements. Visit your state tax agency for specific tax filing requirements for employers.

I was about 13 years old, living in Niger. Temperatures were off the charts, ice water and makeshift fans made out of old newspapers or a piece of cardboard were the hottest items in town.

I woke up one day and asked my mother if she could buy small plastic bags and help me find a salesperson. That night, I filled each plastic bag with filtered water, tied it up and stored it in the freezer. The next day, during the school lunch break, I rushed home to get my newly formed ice bags, loaded them in my mother’s cooler and handed them to the newly hired young man who would sell them to people walking on the hot streets of the city. In less than an hour, he was back with an empty cooler and I still remember the feeling of satisfaction and self-worth that it instilled in me. I doubled my ice bags the next day and from then on experienced steady growth. That turned out to be my very first entrepreneurial venture even though I didn’t know I was an entrepreneur at the time.

Fast-forward 27 years later, I am now a female tech entrepreneur. And here are 3 lessons I have learned along the way.

1. You are not building a product, you are building a company

With my very first company, one of the most frequent questions I heard from investors was, “Is this a product or a company?” I originally wasn’t sure I knew what they meant. But over time it started to make perfect sense. It meant that I was not dreaming big enough and as a result I was missing all the other ingredients that make up a company and a solid business plan.

Building a software product only requires you to write code, make it look pretty and get some initial market validation to prove that it works. Not a small task but nothing that will help you pay the bills. On the other hand, building a company requires that you not only have a product – that works – but that you have clients that are willing to pay for the product, a solid business model with clear goals for profitability and an operational vision. The hard truth is that as a tech entrepreneur, you not only have to write code but you also have to learn how to manage, operate and sell. And if you can’t write code, you need to find someone who’s great at it!

With four start-ups under my belt, I have learned to stick to a 4-step formula for building a company that allows me to focus and set manageable expectations.

1. Development. As a tech start-up, one of the first priorities is to have a product that demonstrates how it works, which is called a “Minimum Viable Product” or MVP. In simple words, a working prototype. Your MVP does not need to have all the bells and whistles and doesn’t need to be perfect but it should provide the potential client, partner, employee or investor enough to understand the key features that will drive adoption and highlight the product’s value proposition. Having an MVP in hand while you socialize your vision speaks volumes compared to a static Powerpoint presentation.
2. Validation. Host a pilot program with a potential client willing to try it out and provide feedback. The focus here is not on the size of the client or how much they are paying you for it but rather selecting a client that reflects the type of customer your business success depends on, validating that the product works and arming yourself with key metrics that you can plug into your financial model. Metrics are the most important data points which allow you to extrapolate your revenue projections based on proven assumptions. How fast can you grow? How much will it all cost? What resources will you need and how much can you really charge for it? These are the questions that will be the center of your discussions as you get ready to raise your first round of funding.
3. Fundraising. This is the part, like most tech founders, I dread the most. It is time consuming and completely unpredictable. Ultimately, you will hear “no” from over 100 investors before you get that one “yes” that will change your life forever. And so you need to be prepared with your MVP, key metrics and a list of potential investors in hand. Start at the bottom of the list, get as much feedback as possible from your naysayers and fight the urge to go back and change your product and presentation every time you get a rejection. After 10 presentations, study all the responses and try to identify the “theme”. Fix what seems to be the number one issue or prepare the best answer you can. Keep going until you get a “yes”.
4. Growth. While growing can be scary, it is really the phase when your dreams start becoming reality and when you start having to let go and rely on others being able to go out and sell your vision. Recognize what you are good at, build a team that can complement your shortcomings and that can grow as the company grows. Hire smart, fire fast and learn from every mistake.

2. Set short-term objectives to reach long-term goals

Operate based on the state of the company today. This requires setting short-term objectives, reevaluating where you are on a daily basis and making decisions based on where you are and not where you think you are going to be while keeping the future in mind.

For technology start-ups I recommend applying the Agile methodology, which is a widely used project management process. The method helps teams respond to unpredictability through incremental, iterative work cadences, known as sprints. While each company tends to implement its own version of Agile, the objectives remain the same – primarily teamwork effectiveness, well-tested products and better deliverable management. Some of the most common implementations of Agile include bi-weekly objectives, daily team check-ins, specific task definitions and better resource management. In other words, Agile forces you to cut your project in small manageable pieces, better evaluate what you can deliver based on the resources you have, improve your ability to meet deadlines and gives you the flexibility to adapt to the inevitable challenges you will face.

3. Fail fast, fail often, fail cheap

This is one of the most valuable lessons I learned from a former investor. Why would you want to fail at all if you are trying to be successful? Because a failure is only a failure if you don’t learn from it, and the reality is that as an entrepreneur, you will inevitably make mistakes.

Fail fast means you need to recognize failure soon enough before it’s too late. This means setting short-term objectives and defining success metrics so that you have a way to evaluate results. For example, only sign agreements that give you an out after a trial period, or first test consultants for specific projects before you bring them as full-time employees and make sure you set deadlines for yourself so a project does not become a never-ending exercise. And if all the signs show that it is not working, be ready to move on to the next alternative.

Failing often awards you the ability to try different things and to learn from them all. You need to be flexible enough to change direction based on the feedback you are getting from your partners, your employees and more importantly your customers. And once you find the option that is delivering the best result, you need to commit to it, let go of the others and focus your resources on the next milestone you need to reach. Build your products in phases and only focus on the features that matter.

To keep costs lean commit to effective ways to experiment. Try building your platform in the cloud and only pay for what you use, sign up for as many resources available to start-ups as you can, such as free storage and software with Microsoft for Startups, equity based legal advice or free legal document templates provided by Cooley Go or access to experienced individuals through incubators and entrepreneur development programs like ASTIA. The resources are there; it is your job to find them!

Applying, receiving, and using funds from a business loan is very different than getting financing for a mortgage, a car loan, or any other borrowing most people experience. With a mortgage or car loan, you make the purchase and submit the required payments. With a business loan, however, products or services must be sold in order to generate the funds to make loan payments. This means that customers have to be satisfied with their purchases, and employees must perform their responsibilities. In some businesses, customer payments may be late or not received at all, which may cause a shortage of cash and limit your ability to pay your loan. The dynamics surrounding repaying a business loan involve so much more than the typical consumer loan.

Here are 5 tips for crafting a successful strategy for obtaining and using loan funds for your business:

1. Know your financing needs

We often see entrepreneurs underestimate or have a lack of understanding about their financing needs. This is usually a result of these common mistakes:

Having unrealistic financial projections. The most difficult part of developing financial projections is estimating sales, particularly for a new business. A new business does not have a sales history to rely on in building the case for revenues, and consequently, entrepreneurs project sales based on a variety of financial models (i.e. those of similar businesses, breakeven, best-case/worst- case scenarios, gut feelings, etc.). More often than not, these projections are overly optimistic and paint a financial picture that does not reflect an adequate amount of money required to make the business succeed.

Even in the case of existing business owners who are seeking loans, revenue projections are often inflated to an extent that the financing need is understated. The thing to remember about developing projections is to be conservative in estimating your revenue, and estimate your expenses assuming things will cost more than you might expect.

Being too concerned with requesting an amount that will appeal to the lender. This leads entrepreneurs to craft business plans (including financials) that are focused on anticipating and addressing what will impress the lender, rather than describing what the business actually plans to do. Obtaining a loan under these circumstances is a recipe for disaster because the plan has no real connection to the business, and the entrepreneur has no idea whether the business will produce what is needed to repay the loan.

Receiving a loan for your business is a major obligation and commitment. You have a lot on the line (your credit, collateral, business, etc.). As such, YOU are the first person who needs to be convinced that the business has a realistic chance of producing the results required to meet the debt obligation. Your loan request should be based on what you actually plan to do in your business. Know what your financing need is, understand your financial projections and your plan to attain them, and then execute the plan.

2. Preparing for a loan starts when your business starts

Many entrepreneurs start to prepare a loan application 30-60 days before they need the funds. However, preparation for financing should begin the day your business starts – even if you are not seeking a loan when you start your business.

At some point in the life of your business, more than likely, you will need outside financing. In order for a lender to evaluate your loan request, they will need historical financial records, sales history, tax returns and other evidence that demonstrates the performance of your business.

With this in mind, entrepreneurs should have in place record keeping systems for sales, financials, taxes, etc. as soon as they open for business. The more information you have that is organized and actually depicts what has transpired in your business, the better your chances of securing the financing you need.

3. Make sure loan terms work for you

The terms you agree to (payment amount, number of months, interest rate, etc.) are what you are expected to meet. Make sure that you agree to terms that fit within the capacity and timeframe of your business. Attempt to negotiate terms that meet the needs of your business.

4. Tax returns with no profit limit your borrowing

Lending institutions view your tax returns as a reliable indicator of how your business is performing. If your tax returns show the business is not generating a profit, lenders will likely be concerned about your business’ ability to generate sufficient cash to repay the loan.

The bottom line is that you should minimize your business’ tax liability by utilizing all deductions and credits you are entitled to. However, do not handicap your borrowing capacity by under-reporting income and profit.

5. Communicating with your lender is crucial

The key to maintaining a good relationship with your lender is to communicate. Borrowers tend to avoid communicating with their lender when problems arise. However, lenders are successful when their borrowers are successful, and they want to help you in any way possible. Make your lender aware when important business issues or challenges arise.