The Wealth Spa

Ep #63 Best Way to Finance Your Business Even in Down Time

Posted on 22. Oct, 2008 by Elizabeth Potts Weinstein in Finance, Radio Show

Elizabeth invites Babs Ryan, Big-Business Escapee and Author of the new business book “America’s Corporate Brain Drain” to share how financing a business has changed recently, loan misconceptions and 3 reasons for business failure.

Elizabeth then shares her recommendations and puts her spin on using credit cards to finance your business and how dangerous that can be; she also shares her Entrepreneur’s Success Tip of the Week: The Art of Sharing, Fourth in the Series The Art of Social Networking.

For more information on Babs’ book and to learn more about her work, visit Brain Drain.

Click Here to Download This Week’s Show.

Transcript: Welcome everyone.  This is Elizabeth Potts Weinstein your host for the Wealth Spa Radio Show and this is episode 63 for any of you who are keeping track or who are listening to recording and don’t want to get out of order.  What we’re talking about today, we got a couple different things going on. 

Some of which is very relevant to what’s going in the crazy economy right now.  Before I get into though I just want to warn you that I have the tail end of a cold so I can actually feel a cough coming on right now, excuse me, so I apologize if I have any coughing or sneezing.  I’m almost completely better but I still have that little cough that’s like left over for weeks.  Alright so today’s content first our guest is Babs Ryan, the author of America’s Corporate Brain Drain.  We’re going to be talking about the best way to finance your business in tough time.  Second, I’ll be answering the question for this week and this is actually repeating some concept that I’ve talked about earlier probably a year ago or so in the show which is the danger of using a personal credit card for financing your business and what are the pluses and minuses, and how you can really manage those if that’s what you’re stuck in your particular situation.  And then as we get close to the top of hour, I’ll share the Entrepreneur’s Success Tip for the Week and this week is the fourth in our series on the Art of Social Networking and so this topic is about the Art of Sharing when you’re doing your social networking.  So before we get into today’s content for the show, I just want to remind you that if you’re going to miss any part of the show, if you want to just listen to past shows, you want to listen to transcripts or if you want the show deliver to you automatically by email, by rss feed or via iTunes, you can always go to thewealthspa.com, that’s the theswealthspa.com.  It’s a great place to go also if we talked about like an html website link on the show and you didn’t get it down, go to that website and we’ll have the dot link up there so the shows typically go up on the site this afternoon or maybe tomorrow morning if you’re listening to the show live.  And also it’s a great place to do if you don’t want to have to remember when and where to listen if you’re going to miss a show, the show always get posted up there between 12 and 24 hours after when the show goes live.  Alright so that’s thewealthspa.com.  Alright, let me go ahead and introduce today’s guest who’ll be on for the first part of the show.  And who is Babs Ryan, we’re going to be talking about the best way to finance your finance venture in tough times.  She is a big business escapee probably like a lot of us who worked at a corporation or in my case I worked in a gigantic law firm.  She successfully boomerang from senior leadership roles in a Fortune 100 companies to a small business owner and has clients in more than 200 countries.  She travels to 78 countries.  She has an international product development firm and as I said before she is the author of the new business book “America’s Corporate Brain Drain” which predicted the collapsed of big banks and big business due to the exodus of top talent.  So, thank you for being on the show today Babs.

Babs:              Hey, good day Elizabeth.

Elizabeth:      Great.  It’s interesting doing show now on financing and stuff because stuff has gotten to be very crazy.  Even in the last couple of weeks, even much more of a crunch than has been over this year.  I mean those things have changed a lot this year.  So talking about financing for the people who listen to the show, a lot of the people are not looking for looking, you know, venture capital or aid or funding or any of this stuff.  We’re financing typically either with a lump sum of money that maybe we saved up or debt of some kind.  So has it changed a lot now from a year or two years ago when you want to get a loan or use a credit card to finance the business?

Babs:              Well what you’re hearing on the news is that small business loans are going to dry up, they’re going to dry up, they’re going to dry up and everybody is afraid if they go to get a loan they’re going to be refused.  But the fact is there is still money for people who already have businesses and want to grow them and they’re doing well and they have a good business plan that is written out with a monthly budget that shows income versus expenses and those people can still get money from their banks if they have a relationship with that bank on the personal side.  The other side of the equation is that about half of the people that have small businesses or entrepreneurs are already using credit cards to fund their businesses.

Elizabeth:      Well, and you know talking about the loans, I see this a lot where people, they wont’ even go try to get the loan, you know.

Babs:              This is true.  There’s a misconception that women are more likely to get rejected for small loans.  This actually is only a little bit true.  The real truth is that women are less likely to go and apply for a loan at a bank to fund their business.  Women are more likely to use credit cards to fund their businesses.

Elizabeth:      So if someone is a business owner who has an established business and they’re looking to grow maybe open up, you know add more employees or they’re opening up a second office or doing something where they need much more financing.  Why should they think about getting a loan versus using credit card or something or a line of credit or something that they already have?

Babs:              Well there’s a very good reason for doing that.  Almost every credit card that is out there on the market has when you sign an agreement you’re also agreeing that they can change the rate whenever they want.  So there was some guy on the news other day he took out a small business card and it’s was 7.999 APR and overnight they switched it to 30% APR even though he had never paid late.  So that’s the reason if you know you’re going to need a chunk of money over a period of time why it’s probably better to go to a bank and compare rate.  See what you can get from the bank so you know if it’s a fixed APR, that’s what you want. You want a fixed interest rate if you’re going to borrow a larger sum of money to fund your business over several months.  If you’re going to be able to pay off your expenses, every month and you’re sure you’re going to be able to do that actually a credit is probably a better alternative because as long as you pay before the bill is due, you get interest free credit for your business.  The only caveat and I know that I think Elizabeth you talked about this in your book “Grow Up! Strategies” is that absolutely positively if you are a small business owner or an entrepreneur you got to use two credit cards.  You must separate those personal expenses from those business expenses.  It has a lot to do with getting sued, liability, or if you go into debt whether people can collect from you.  So must use a different credit card for your personal expenses and your business expenses and the majority of people who are small business owners who are using credit cards are not doing that.  More than half are actually using their personal card for everything, the same personal card.     

Elizabeth:      Right.  Right.  Or they’re switching whichever card has something on it.

Babs:              Right.  That’s what they’re doing and that’s the wrong way to go.  You got to split it out.  So now before things get tighter if you have good credit, even though it will impact your credit ratings very slightly you are better off if you don’t have a backup card to get another one and just put business expenses on that especially [08:13] this is the perfect time to start doing things right from January 1^st.

Elizabeth:      Right.  Right.  And to clean up your bookkeeping cause this is the big issue I think people doing and I did this when I would use especially when you’re a business owner and especially if you’re a sole proprietor, you may have a separate checking account and done that well but you’ll be on a business trip, and so you’ll just use your personal card to pay for the x, y, z thing and you don’t really reimbursed yourself like the way you would if you work for a corporation.

Babs:              That’s right.  And sometimes you know you have one thing on there that’s mixed.  I actually used Quickend and there’s many other programs but every dime I spend with whether its personal or business, I put it in Quickend and if it’s a business expense I also have all the category setup just like if its an LLC I filed scheduled fee on a 1040 and all my category are actually setup as the same category as schedule C, you can set that up for January 1^st.  So next year at the end of the year, you push a button and all those numbers are subtotal and you just fill in the blanks on your 1040 Schedule C and it will take minutes to do it instead of days and days and days you know finding all the receipts just slip the receipt in the folder with those headings and you’re all ready to go.

Elizabeth:      Yeah.  What I do now is I like have like a little expandable files that separated by months and my receipts just go in there.

Babs:              Yeah, you and I are doing the same thing and that’s really the way to do it.   But you got have a different credit card for personal and business.  And the other thing is you got to know when to quit.  And you know we want to be wealthy but we also want to be healthy and there’s no way to make yourself sick from worry and crazy when you’re business is growing and it looks really good and then suddenly you find yourself running out of cash.  You’re not really sure where the cutoff line is.  You never said when I get to this point, I am going to quit and you don’t set that point before you start and say at this point I got to stop putting money into the business because as you know you’re business becomes your ego.  It becomes you and its very personal to you when you’re very passionate about it and you don’t want to give up and even when you’re putting more money into marketing and you know I have a good friend who sell something that’s a discretionary expenses something that goes on gift and people are cutting back on those little extras that go on gifts.  You know they’re just getting the gift bag and throwing the thing in instead of the wrapping paper into this into that.  Well you know as people cut back on discretionary expenses, she’s having trouble selling her product and even though it’s a brilliant product, it just isn’t selling.  And she has decided its time to quit.  I got to quit now and I got to start looking for a job to go back to work for somebody and you have to do that otherwise, you’ll bankrupt yourself, you know, going I can’t give up, I can’t give up, I can’t give up.  You got to set that point at the beginning when you say at this point I’m going use not go with my heart and I’m going to go with my head and I am going to give up.

Elizabeth:      And also saying okay here’s how much debt I’m going to go into and here’s where I’m going to look for something else.  And it maybe bring in a business partner and maybe bring in investors, it maybe getting money in some way other shape or form but not your own personal debt.

Babs:              Yeah, the concerns about – I’ll tell you what there’s three things that are found in the book “America’s Corporate Brain Drain” that cause businesses to fail.  The first is cash flow which is an obvious one.  The second one is actually loneliness.  People whose entire social life was their job suddenly find they feel so isolated that they wanted to go back and be with people all day long and the third one has to do a little bit with that when people get a partner.  And the issues with getting a partner is I’ve seen so many people go into business and actually things don’t get bad between them and the partner when the business is doing poorly or struggling.  When things get good, one of them always feels they’re putting in more while the other one is getting, you know, the same kickback and you know this one wants more power and doesn’t like that one’s decision and blames them for making them the wrong decision and I’ve seen more businesses failed because they went into partnership.  If you’re just getting a partner to get money, it is a really really bad idea.  You know Jim Cramer from Mad Money the other day was saying “Hey if you’re to move back in with your parents, do that.  If you have to go after your sister and brother and say can you give me money if they have the money, if you’re your relatives are not willing to fund your business, maybe it isn’t buyable.”  So not really, you know, everybody is going to pat on the back when you started and go, “Yeah, yeah get that book published.  Oh, yeah, yeah go start that business oh yeah.”  You know but when you say, “Listen I’m in the hole, can I borrow $10,000 to pump up my business because I’m on the brink.”  And they say no when you know they have it and they’re not stretch for cash at all and they won’t give it, maybe it not such a great business.  So, you know, that’s a great idea but more business ended up in court and destroyed because a part starts disagreeing and fighting especially when one supplied the money and the other one is supplying the sweat and the ideas.  

Elizabeth:      Okay, so I’m going to interrupt you for a second.  We’re about ready to go to our first break.  So everyone stay in tune and after the break, we’ll talk more about the different ways to finance a business using credit cards and all that stuff.  Just stay in tune for that after the break.

BREAK

Elizabeth:      Welcome back everyone.  It’s Elizabeth Potts Weinstein your host for the Wealth Spa Radio Show and we have on Babs Ryan.  We’ve been talking about financing a business.  And I want to get back to the credit cards.  There are two kinds of traditional credit cards or just a yellow card and you pay interest if you don’t pay it off every month.  And there’s the traditional American Express card where you have to pay it off every month.  Then there are some cards that are combining.  There’s this America Express cards that combined and there’s cards that you can get points and buy stuff and the cards that you can get miles.  When we’re thinking about using cards for our business what do you recommend are the best one or the smartest ways to use that credit?

Babs:              Well if you’re one of the 60% of the small business owners that is going to pay off your expenses every month, you know, a charge card is the best option because it will keep you in control and you will keep paying off every month which is the best thing to do.  But when you’re looking at programs with miles and points and cash back, the best thing to remember is if a card charges an annual fee even if it’s not in the first year, you probably should be looking at something else.  You know, if you count up the number of annual fees you need to get that reward to make up the difference even if its miles, so that if you pay $85 for four years and you get a free ticket is it really worth it paying $85 four years in advance to get a ticket four years later when you might be able to get that ticket for a lot less.  So you know the best thing to do is skip the rewards and actually this is the way America is now going is not rewards to get a card with, no fees and lower interest and really the fee is everything to get the rest of it.  There are some cards like Advanta which is #2 for small business credit card in the country.  Advanta does do like a cash back program that is a no annual fee and there’s others that do it too.  But the cash back isn’t going be very much and that’s okay, you know, as long as you’re not paying big annual fees. 

Elizabeth:      Yeah.  I have a card that you get this points and then you can use them to buy stuff and its really just like I don’t even really think about that, it wasn’t some lower interest card and then we get the points and I’ll get a gift certificate, you know, its totally not, its not really a lot of money.  It seems like it cause you think oh its free money.  It’s like well really it cost me 20,000 points. 

Babs:              Right and also now with a lot of points programs, they’re doing a miles program, now that they’re losing money because people are going bad on them and not paying their bills, they’re trying to make it up by actually charging a fee to redeem.  So some of them are saying now you got to pay 25 or 50 bucks to get, use your reward points.  So what good is the reward if you have to pay to get it it’s not a reward anymore.

Elizabeth:      And I have never used my frequent flyer miles because there’s so many like issues in using it and typically I’m flying for business where I can’t use a frequent flyer cause I need to have a ticket that can be changed and, you know, is flexible or I’m doing something with my family and its like Christmas time. 

Babs:              Here’s the statistics 50% of points in miles are never used.  So half of us that are out there going oh I’m going to get the points card or the mile card, we’re not using that benefit and we’re probably paying an annual fees.  So get rid of those annual fee card and, you know, or don’t get a new card that has an annual fee.  You don’t need to do it anymore.

Elizabeth:      Right and so debit cards.  I know you have something specific to share about using debit card.  So for our checking accounts typically they automatically gave you a debit card.

Babs:              Right.  What consumers are doing now is you know people are concerned about being in debt so people are saying well I’ll use my debit card and that will keep me in control.  Get rid of your debit card.  If you have a debit card on a business account or personal account, get rid of it.  And here’s why.  There’s two reasons one is that that you have now tied your bank account to a mastercard or visa number.  Anybody in the visa or mastercard network who gets a hold of your number and defraud you, they don’t just put a charge on your credit card balance that you’ll never have to pay anyway, they empty out your bank account.  And here’s number two reason, after they empty out your bank account, guess what, you have no money until it gets sorted out.  If this you know fraudulent charges on your credit card, no big deal.  You know, you just filed a complaint and do all this stuff, you never pay that money.  But when somebody doesn’t on your debit cards and empties out your bank account, it can be months before you get your money back.  In the meantime none of your direct debits get paid, all your bills bounce, you have no checks to use because that account is closed down and you’re debit card doesn’t work anymore so you have no money at all.  Why would you ever put yourself in a position to have no money.  So go to the bank tomorrow and tell them I want an ATM card that is not tied to the visa or mastercard network.  An ATM card to replace my debit card and you must absolutely check and insist that they closed that debit card account down cause a lot of them like what happened to me, they will cut off the debit card that you never asked for and they sent anyway.  They give an ATM card and they never cancelled that account so somebody could still defraud you.   

Elizabeth:      Right.

Babs:              So do not ever use a debit card anywhere anyhow.  And most people don’t know this.  I worked in banks for half my business life at CitiBanks and, you know, GE Capital don’t do this.  I do consulting from banks, get rid of your debit cards, replaced them with ATM card that are not linked to your account.  I mean with an ATM card link to your account but not have a debit card link to any business account or personal account.

Elizabeth:      I had – it was actually a couple of years ago, my card wasn’t stolen.  Someone got a hold somehow of a debit card number for my business checking account and made, I guess they must have made a new card in Russia and was taking money out of my account in some ATM in St. Petersburg and I got called from the bank saying are in Russia.  Like no.

Babs:              It’s really easy to do because a million – how many people do you think work at mastercard and visa and how many people do you think actually have access to those numbers and every time you used the card anywhere they have a copy of what was on the mag stripe that goes through the machine.  They see it, they can do a false imprint, you know, you don’t ever want a card and how long does it take you to sort it out.

Elizabeth:      Well, you know, actually Bank of America did a great job.  They gave me the money in the interim.

Babs:              Okay.

Elizabeth:      That was just what they did you know.

Babs:              Yeah.  Did you have to get a new account?  Do you have to change your account number and everything or -?

Elizabeth:      They didn’t change my checking account number, I mean obviously the debit card number was gone and everything but…

Babs:              You were lucky.

Elizabeth:      So yeah.  I was surprised at how good they were.  They’re just a good person I’d say, I don’t know what happens.

Babs:              Well you got an angel in your shoulder because, you know, you have a bank that actually could limit the fraud and detect the fraud and actually help you out but a lot of banks it will take up to a month to get your money back.  You just don’t want to be in that position where your checkbook dies, your debit card dies and all your direct debits have to be moved someplace else.

Elizabeth:      Oh yeah.  Yeah.

Babs:              Or that they bounce, that all your payments are starting to bounce because your account is depleted.

Elizabeth:      Yeah that’s sometimes what people will find out is that they will find out not because they figured out its stolen because they start getting this horrible $90 for a bounce check thing and they realized that all their money is gone.

Babs:              Yeah.  And it’s embarrassing especially if you’re paying other businesses for, you know, supplies or something else and you’re bouncing checks.  This is not a nice way to do business either.  It makes you look bad even if it wasn’t your fault.

Elizabeth:      Right.  Right.  Yeah.  And it’s a big giant headache for everyone.  Its headache on their side too cause they might have to pay fees.

Babs:              Yep.

Elizabeth:      So before we finished up a lot of people will ask me, you now, well I’m incorporated, I’m a S corporation or I’m an LLC so, you know, is something bad happens and the business goes under, you know, I’m not liable for this stuff.  Is that enough?  Should everyone be incorporated or what do you recommend. 

Babs:              If you were mingling your personal and business expenses like going personal on a personal credit card.  You definitely are at risk and you know this from the legal standpoint with your background Elizabeth that you are not safe if you’re an LLC, you are not safe from being sued personally for business errors even if you’re an LLC and often if you’re a C corp.  So you should never just think because your files, papers incorporating your business that it means you’re safe and clear.  The other thing is that often if you sign for loan or the credit card you’re using says you are responsible not your business.

Elizabeth:      Right.

Babs:              But even if it’s a business card it actually usually says that you are personally responsible on the agreement.  The bank loan is going to be secured on something you owned or against you personally.  So almost always unless you have a well-established business so you just aren’t safe.  So the best thing is if you take out the money, make sure you got to be able to pay it back because you are responsible for it whether it’s going towards your business or toward your vacation in Hawaii.

Elizabeth:      So we’re again close to the end of you being on the show.  So we only got two minutes left so let us know what’s the name of your book and where people can find it and where people can find more information from you.

Babs:              Well my new business book that came out in August actually predicted the collapsed of these big banks and big businesses and it’s because the best people have left big companies and that would be your listeners.  And the named of the book is America’s Corporate Brain Drain.  And America’s Corporate Brain Drain says why the best people have left and whether we should go back to big business or small businesses and what’s going to happen in the future regarding small business versus big business.  And its actually quite witty believe it or not, you get a business book that will make you chuckle I promised you that.  You can look up information on it at www.braindrain.biz B-I-Z so that’s www.braindrain.biz and it’s available at Amazon and bookstore as well.

Elizabeth:      Okay great.  So everyone that is braindrain.biz that website will also be up on thewealthspa.com so if you missed it, you click there, it didn’t work, you can always go there.  So thank you so much for being on the show today Babs. 

Babs:              Thank you so much Elizabeth.

Elizabeth:      Great so everyone who is listening and after this I’m going go through my tip for using credit cards especially personal credit card, what’s the danger and then what you should be doing, so a lot of it is very much what we’ve been talking about and adding my spin of things.  And as we get close to the top of the hour, we’ll do the Art of Sharing which is our fourth in the social networking tip.  So stay in tune for all of that after the break.

BREAK

Elizabeth:      Welcome back everyone.  This is Elizabeth Potts Weinstein your host for the Wealth Spa Radio Show.  Before the break, we were talking about financing and we have Babs Ryan on.  And again her website is braindrain.biz so B-R-A-I-N-D-R-A-I-N dot B-I-Z and it will also be up on thewealthspa.com if you missed out on that.

So let’s get into the question of the week this is a repeat of something that has been talked about on thewealthspa.com magazine as well as on the radio show in the past about the dangers of financing your business with a personal credit card.  So I see this typically happening in a couple of different places.  One, someone starting a brand new business, the very beginning, very beginning of the startup phase and something that’s like a home business that’s not going to take, you know, a hundred grand or something to start up but its something that’s going to take a certain number of a couple thousand bucks buy a computer, get their supplies, get the information they need to get going, maybe start a website.  So the fastest way for them to get credit, to get money to start this business is to use a personal credit card or maybe a home equity line of credit cause now of days those are kind of hard to get.  So a personal credit card is what most people.  Then a lot of business owners will be in business and we’ll have kind of fluctuating expenses for instance maybe you’re going to go to a conference and you’re paying for the hotel and you’re paying for the food and all that kind of stuff and you use your credit card because how else are you going to pay for it while you’re there for logistical purposes really.  But maybe you can’t pay it off that month, reimburse yourself in the same way you would if you were working in a big corporation.  A lot of thing people do is they’ll need something new for their business, they’ll be expanding, they new computers, they need to buy more inventory and they’ll use a credit card for that expansion.  And why we do that cause its really is the fastest way.  You may intellectually know that you should go add up everything that you need and go get a small business loan.  You may have taught of bringing in, you know, Aunt Myrtle as an investor but the credit cards are right there, super fast, super easy.  And also a lot of people don’t use a traditional business credit card in the name of the business because the interest rates are much higher.  So for example, we talked about early on the show having a business credit card that started out at, you know, 7.9% introductory rate and then shot up to 30% or 35%.  The thing is as a business credit cards they’re under different rule.  So typically in most states, not all states, there’s a cap on what interest rate can be charged on a credit card.  That cap maybe 25%, it maybe 30%.  It’s something like that.  Those caps don’t apply to business credit card.  They can charge to 35% or some other ridiculous percent.  So a lot of people use a personal credit card just cause the interest rate is so low, you know, you may even be able to get 0% to the next six month etc.  There are a lot of issues that you should watch out for and some of these we eluded to earlier in the show.

Number one, if you have a business credit card that you’re paying month to month and you haven’t been able to pay it off so, you know, you have two grand setting on it.  You’re not being able to pay it off every month, there’s interest on that credit card.  If you commingle it, if you have commingle and put both business and personal stuff on the credit card, then the interest on it, you can’t really deduct on your tax return, on your business tax return, because its both personal and business.  So if you have a credit card that’s just for business expenses the interest on it maybe deductible as an ordinary necessary expense on your tax return.  Now I’m not going to tell you what’s deductible on your own tax return cause they’re yours and you have to get own tax person but that’s something to think about.  If you have a lot of interest expense, we want to make sure we can deduct that stuff, right?  We want everything on that card to be business so it’s easy to do.  Second, you’re probably going be missing tax deduction because you don’t kept thing separate.  So if you used your personal credit card when you’re on this trip and you don’t keep every receipt from being on that trip for every meal that you eat and all that stuff and make sure that get input into your bookkeeping system, you may forget to put that tax deduction down when tax time come.  And so you forget to deduct that business trip, the hotel expense, the meals that you ate because it wasn’t on this one statement where everything was all together.  So two, you missed tax deduction.  Number three, you’re on the hook.  If you have your own personal credit card that you’re using for your business, you’re personally reliable for it.  Now actually for many of us who are small business owner, we’re also cosigning a business loan for business and we’re cosigning a business credit card so you may not be able to go completely round that but you do want to know that how much that you have that business debt so you know what you’re in for.  Number four, if you commingle, if you put both your personal and business expenses on one credit card, it’s really hard to figure out how much is your business in the whole?  I say this for a business owner who would say, “oh well yeah, you know I’m making a profit on my business and I’m able to spend money on this x, y, z.”  Yet over here they are using a personal credit card to finance stuff in their business.  What does that mean?  Maybe their business is not making a profit.  It’s really hard to tell how much debts have you put into this business.  Is this business even profitable?  How are you predicting your expenses cause you don’t know what they are because they’re all over the place in all this different account.  So how do you deal with this?  Cause you know a lot of you may need to use credit card to finance the startup phase of your business or the growth phase.  You need to buy new equipment or inventory so you’re going to be doing this.  So me saying go and get a small business loan tomorrow isn’t going to happen cause you have an expense this afternoon.  So the simple thing to do is have one credit card that’s just for business stuff and another one that’s for personal as we talked earlier in the show.  Now the card that you used for business stuff could be a personal credit card in a sense that it’s your credit card that has your name on it, it doesn’t have the name of your business.  You may be liable for it either way.  You’re still liable for the debt, you don’t get around this whole, you know, not being liable for the debt problem but if that’s all you have to work with then that is a great place to start.  And that’s what I actually have a credit card that has a very low interest rate that I used to pay for a whole bunch of things involving, my book being produced and PR of my book and marketing of my book.  I have a lot of big startup expense for this radio show that I wasn’t able to pay off the month that it happened so I used a personal credit card but there’s nothing else on it besides those two things.  Radio shows stuff and book stuff and its all business related.  And so I know okay this credit card has this much debt on it.  It’s all business stuff.  I track in the QuickBooks that my bookkeeper puts together just as if it was a business card even though it actually has my own name on it.  Also and this is a little bit of a side note but one of the great things about having a credit that’s just for business expenses is pure logistic of knowing what you’re business expenses are in a month.  This is true for both small business owners as well as for those of you who are either independent contractors for corporation and so you need or sending expense itemized bills to your clients so you need to keep track of your expenses that get bill to your client, that get bill to the company which you’re an independent contractor.  And for those of you who are still employees.  You know if you’re an employee for a big corporation and you used these different credit cards to go on your business trip, then you try to turn in your stuff to get reimbursed, it’s a nightmare to figure out do I have all the right receipt or did I miss anything.  Am I getting reimbursed for everything?  How much did I get reimbursed for?  It can be real logistical problem.  So one thing that we’ve done in our family, my husband, he’s a partner in a law firm so he is an owner of the firm but how they still get reimbursed for expenses and things.  It’s a gigantic law firms, they have hundreds of partners, so it’s kind of corporate you know how it is.  So when he goes in a business trip, he pays for his own hotel and meals and all that kind of stuff but he get reimbursed for it.  But it used to be that he would use a couple different credit cards and then sometimes he’d randomly use the debit card and so there’s all this different stuff.  He said make sure you get all the receipt, turn them in and it was really just logistical problem because I couldn’t tell which his expenses were which.  When I was doing the looking at the finances for our family, you know, I thought that he went out to a dinner, well did he take a friend out or is it a business dinner, are we going to get reimbursed for it, I couldn’t tell, right?  Without going to everything item by item and we got hundreds of [40:55] items every month in our expenses cause we typically used credit cards and debit cards for all expenses and don’t use cash.  So what we have him do is have him one credit card, actually in his case it’s an American Express card that’s just used for business expenses. So I don’t use it, now actually has it for logistical purposes so I can call and talk to them, my name is on the account but he’s the one that has that card and he just uses it for business stuff.  So when we get the statement, I know that everything on there he’s getting reimbursed for.  I know exactly what it’s for.  It’s just business expenses.  And also now when he goes to turn in his receipt, we can make sure he has them all.  So this is true whether you’re going to be sending a bill to your client for all the expenses having one credit card that’s for your business expenses and one credit card that’s for things you’re client are going to reimburse you for.  That’s another great way to make it easier for you logistically to keep track of things.  And then of course as a small business owner having a separate card just for logistical purposes, to know what you pay for just to make bookkeeping that much more simple and hopefully some of you have started hiring a bookkeeper or looking into hiring a bookkeeper, it’s the first outsourcing thing I recommend you bring on to your team if you’re a solo entrepreneur or have a very small business.  Everyone should hire a bookkeeper as one of their first hire.  You can get someone as an independent contractor; you don’t need to hire someone as an employee.  It’s a very very complicated business when you’re much larger.  But its easier doing your own book on paper or using an excel spreadsheet or on QuickBooks, we want to make this easiest for you as possible.  So having one credit card that’s just for business this will really cut down on logistical nightmare that can happen. 

Alright so that’s my little share on the dangers of credit card financing with personal credit card and what you can do to make it work for you.  So we’re about ready to go to our next break as we get close to the top of the hour, we’re going to be doing the Entrepreneur’s Success Tip of the Week and this tip is about the Art of Sharing.  So stay in tune for that after the break.  

BREAK

Elizabeth:      Welcome back everyone.  Elizabeth Potts Weinstein, host of the Wealth Spa Radio Show.  And previously in this show the first half of the show we were talking about the best way to finance your business in this tough times with expert Babs Ryan.  Again her website is braindrain.biz.  Then I was speaking with you about the dangers of personal credit cards financing.  Financing your business with personal credit cards and what you can do to get around those dangers.

Now we’re going to be doing the Entrepreneur’s Success Tip of the Week.  This is the fourth in our series on the Art of Social Networking.  So all those social network like Facebook, Twitter, MySpace, LinkedIn really working on those, networking on those has a bit of an art to it.  It’s not just about technology and cause ironically its same skills of networking that apply to in real life face to face kind of networking.  The same things apply online but people tend to forget it cause they’re doing technology so the rules don’t apply or something.  But it really is a lot of the same thing.  We went over the first three in this series was the Art of Conversation, then the Art of the Relationships and  last week we did the Art of being Naked.  So if you’re interested in any of that you can always go to thewealthspa.com to listen to any of those prior shows.

Alright this week we’re talking about the Art of Sharing as the fourth in our series.  So what do I mean by Art of Sharing.  If you’re on any of these social networks, one of the things that all of them have is the ability to share information with people.  And a lot of different kinds of information you can share and all of these are really important in having a conversation and developing a relationship and all those networking skills that apply both in real life face to face as well as online.  So one of the things that you share as a business owner is that you’re sharing stuff related to your business.  It could be purely, you know, your website.  It could be information about your products and services but a lot of times people area also writing articles and if you have a blog, you maybe sharing a video that you prepare, if you’re starting to get more into this kind of stuff.  So you’re sharing information both about you so people can decide if they want to go to your website or hire you but also information for them.  So resources, a list of things that people should do, tips, advice that you can give, you know, kind of generalized advice that you can give to people written in articles or in bullet point list or send in a video or audio that you recorded.  That’s one of the first thing people share.  Very important but we want to remember we’re sharing stuff about our business.  It’s not just about us our business, we also want to share things related to our business that’s helpful for the person who is reading it or listening to it or watching it.  The second thing we share which is very important is sharing personal stuff.  So as I talked about last week in the Art of Being Naked, if you’re going to be doing that working either in real life or online it can’t just be about business.  Going back to what we do in real life.  You’re networking with someone in real life, having coffee, having dinner at an event, you just talk business.  You also talk about your kids and your dog and the home improvement project you have going on and what the sports team did last week and what went off the golf game and the new shoes that just came out, you talk about other stuff to develop that relationship, to have an ongoing conversation with somebody. So you want to do the same thing here online when we’re sharing we want to share personal things too.  Now how personal you get really depends upon what you’re comfortable with.  What’s appropriate for your target audience and the brand that your sending out, some of you maybe much more formal, excuse me, in the brand that you have put together for your business and yourself its more reserved, where some of you it maybe all about very much personal related to you.  Now here I recommend sharing what’s going on in your life, sharing pictures of family if you’re comfortable with that, pictures of your dog, pictures of your last vacation, pictures of the home improvement project you have going on.  I don’t know I keep talking about home improvement.  Yeah cause I’m always having home improvement project [50:38] an 80 something year old house.  Sharing videos that you take on your vacation or you know someone I know on Facebook just share this great video of her dog barking at a deer.  When I say that it sounds really boring but its really hilarious cause these two cute little dogs will bark at this deer in their backyard, they don’t have a fence or anything, and the deer will just stand there and look at him like, yeah you two little dogs are really entertaining, I’m not scared of you dogs and then another deer came over as if the deer has called his friend over to look at these idiot dogs that’s barking at him, it was really funny.  Does it have anything to do with her business?  No, but it shares something about her.  We can bond with her because of our love of dogs that we find these two dogs entertaining.  We learned about her dogs.  You may think what does this have to do anything, how is this relevant.  That is how we bond with people.  We don’t bond with them over their books.  We bond with them over their dogs and personal side of things.  So one, sharing your business stuff; two, sharing your personal stuff, and also don’t forget in most social network, probably all of them by now, you can share your status.  Typically they have a status field at the top of your profile page or your homepage where you can put in answer the question what are you doing right now.  And typically you’re sharing either with what you’re doing with your business, what’s going on in your life and that is a great way where you can share personal stuff.  But the third you want to share is sometimes the most important and you want to share other resource that’s not you.  So you want to make recommendations for other products, other services, other business owners, review things.  You want to share free stuff that you’ve found, great website that you think people should know about, you want to share videos that you thought were really hilarious.  You know I just posted up on Twitter yesterday this video on, let’s see, the why do you build me buttercup.  Why do you build me up buttercup, don’t…whatever I’m not going to sing don’t worry.  Very hilarious – cute little videos on Youtube, I sent it around to my people, got tons of responses.  You know the little things that you are seeing online, books that you’re reading, here’s what you’re reading today, here’s a website you just looked at, here’s a product you just bought.  Even just here’s a shoes you just bought, that is another wonderful way not only to promote other people which will come back to you both on a karmic kind of way as well as literal cause people will feel indebted to you and will help bond with the people who you are friends with online.  So as you’re playing around the social networking online, think about what you can you share today.  Do you have a wonderful tip to share, do you have something personal you can share, are you reading a wonderful book you want to tell everyone about, did you just buy something or do business with a business owner or meet someone and you want to tell everyone about that.  So make sure that every time you’re on doing your social networking, you’re on one of these sites that you are sharing something with your friends and contact and the people following you.  So that’s the tip for this week The Art of Sharing.

Alright we’re getting close to the top of the hour and close to the end of this week show.  To remind you if you missed any part of the show, if you need the link, any that kind of stuff, you can always go to thewealthspa.com, that’s thewealthspa.com where you can sign up to get future shows deliver to you by email, rss feeds or iTunes.  You can also listen to prior shows right there on the site, you can read many of the transcript we have right up there as well as on thewealthspa.com it’s an online magazine so you tons of articles, videos, all kinds of other resources for you.  Next week we have Christine McKinley on.  We’re going to be talking about tax tip for business owner specifically for online business owner.  We will be talking about when you need a tax ID number and we’ll also be doing the Entrepreneur’s Success Tip of the Week which next week is the Art of Connecting.  So thank you all for listening to the Wealth Spa Radio Show this week and I look forward to speaking with you again next week.  Bye.

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Tags: babs ryan, elizabeth potts weinstein, Finance, Financing