What business owner doesn’t want to cut expenses? But it is even more important for a young entrepreneur who has limited savings, limited access to capital and overall less options. So we reached out to get ideas from business owners on how they have saved and what they think young entrepreneurs should do to save money. Here are 55 answers from business owners on how young entrepreneurs can cut expenses….

16. The best advice for young business owners is to utilize tax planning when trying to retain more of your revenue and decrease costs. Tax planning is a year-round event if you want to minimize your business’s tax bill and maximize your net income. No matter what type of business you run, taxes will be one of your largest yearly expenses and proper planning is critical in building a successful business. Jeffrey Stewart,creativecapitalgroup.biz

 

In late 2008, Krista Neher was flying high. She’d recently launched Boot Camp Digital, a social media marketing company in Cincinnati, Ohio, and already had an impressive docket of clients. Even so, she wanted more.

“After my first year, I looked at my business model and reevaluated my game plan; I wanted more revenue streams,” she says.

As it stood, the only way for her to grow her business was to hire more people—something Neher didn’t want to do. “I wanted to figure out a scalable way to make more money, because there are only so many billable hours in a day,” she says.

Her solution was genius: to develop products highlighting her expertise. She was already administering one-on-one social media trainings, so why not record a session and sell it 1,000 times?

“We launched our social media DVD program in March; you can now buy training videos on our website,” she says.

Neher also began offering two-day social media boot camps at her office. “We built a training facility and now I will get 30 people for a two-day seminar—the price is much better than a billable hour,” she says.

How can other small business owners develop profit-generating products?

First, look at your business model, Neher suggests. Define your objective: what does success look like to you? “Think of creative ways to create a more scalable business model—how can you change your one-on-one interactions to one-on-100 situations?” she asks. For example, if you are a restaurant owner, offer bartending classes, she suggests.

While inspecting your business model, consider changing the way and location in which you sell. Neher recently came across a coffee shop that started selling at a local farmers market on the weekends. “They found that they were making 80 percent of their revenue from two days at a farmers market and only spending 20 percent of their costs,” she says.

How is this possible? At the farmers market, the coffee shop sustained almost zero overhead and saved what money would have been spent on infrastructure in a shop during off-peak hours. Plus, they were only at the market when it was busiest, she notes.

Back at Boot Camp Digital, Neher also came up with scalable marketing ideas to boost her bottom line. Instead of attending a slew of networking events, she joined her local Chamber of Commerce and posted training classes on its calendar. “It cost us $10 and that listing consistently gives us five new people per class,” she says.

Neher didn’t stop there. She hooked up with as many local calendar listings as she could find. In addition, she built an e-mail list, worked on search engine optimization and perfected her website.

The result? “This year I will double my revenue from last year,” she says.

Over in Santa Monica, California, Jeffrey Stewart is beaming with delight. As co-founder and CEO of Creative Capital Group, a digital agency, his company is up 300 percent in revenue this year over last year.

How is this possible?

First, over the past 12 months, Stewart and his co-founder, Michael Abraham, rounded up a group of senior executives they’d known as mentors and developed a strategic advisory team. Now, they speak to that team on a weekly basis. They discuss challenges facing the company and look to the team for advice.

“Working with these individuals has opened doors to people we would never have had access to, and we’ve been able to form alliances with those companies,” says Stewart.

How can small business owners develop their own strategic advisory firm?

Look into your immediate network, advises Stewart. Also, tap into your localSCORE office, and volunteer with charitable organizations—you never know whom you’ll meet.

Second, Stewart and his team focused on their core clients. “We take the extra time to know their business and try to become more than a vendor—a strategic advisor,” he says.

Success here comes down to time management. “It is all about investing your time where your money is; if you are spending the same amount of time on all of your clients, you are diluting your energy towards your best clients,” he says.

Third, Stewart’s company developed strategic alliances with non-competing businesses. To do this, he suggests entrepreneurs analyze businesses that target like-customers. Approach them and propose an alliance based on reciprocal leads.

“Some of our largest clients have come out of strategic alliances, and as we grow these alliances, we are getting more of the clients we really want,” Stewart says

What does your company do?

Creative Capital Group is a creative agency focused on empowering entrepreneurs. This includes web design, mobile applications, online and print advertising, social media and digital marketing campaigns.

Was there a specific turning point when you realized your business was moving to the next level?

Once we realized that our clients starting thinking of us as part of their executive team, not just the agency.  We spend so much time just talking strategy and planning their goals and campaigns, that we’ve essentially become an extension of their firm and that’s when we see the real value in our services.

What processes or procedures have you implemented that have helped grow your company?
Technology for efficient management.

Fun work environment with incentive plans for great work or innovative ideas.

Strategic hiring to maximize effectiveness.

What is most rewarding about running your business?
The diversity of challenges faced everyday.  You need to be on your game all day long, as each decision has ramifications across your entire business.  I love it! Its forced me to view business in a whole new light and its enhanced my leadership abilities as well.

What challenges have you faced and how have you overcome them?
Growing too fast is a problem.  With growth comes infrastructure changes, employees/corporate culture, allocation of time etc.  You become less nimble as you grow and its imperative you have the operational side of your business in line before you ramp up.

If you were starting over today, what would you do differently?
I would have started 10 years ago.  Wall street taught me some great lessons, but you cant learn to be an entrepreneur, you just have to go out and learn from experience.

What advice do you have for other business owners?
Choose your partners carefully, its the single most important decision you can make.

Please list any favorite books, tools or resources (software, website, etc.) you would recommend for others:
How to Win Friends and Influence People – always a classic.

What is something that people might be surprised to learn about you?
My father was one of the greatest men that I’ve ever known and he used to tell me that you can always make more money, but its what you give back that truly matters.  My goal is to build a series of companies that give back in different ways, not just making a profit.

Is there anything else you would like to add?
Throughout history, entrepreneurs have always been at the forefront of our economic recoveries and subsequent expansions.  As we continue through a period of stagnant growth, the key to revitalizing our economy is embedded in our entrepreneurs.  I hope we all can come together to help push our economy back on track through the growth of our small businesses.

BusinessName:

Creative Capital Group

Website URL:
www.creativecapitalgroup.biz

Year Founded:

2008

Business Partners:
Michael Abraham

Number of Employees:
7

Photo by Ringo Chiu

Venice’s 1350 AK building on Abbot Kinney.

By Natalie Jarvey

Monday, November 29, 2010

The Abbot Kinney neighborhood in Venice has long been known for its laid-back atmosphere, distinctive shops and antique stores. But a spate of startups has found a home in the area, and now it’s becoming a center of tech and media.

At least five startups have launched there in the past few years, drawn by the neighborhood’s charms – and low rents. The miniboom has created a synergy of sorts: As the number of companies and their workers increase, several restaurants have opened to cater to them. That in turn draws more businesses.

“It’s a relaxed environment with amazing amenities within 100 feet,” said Todd Collins, vice president of sales and marketing of software company First Freight. “The restaurants and coffee shops make it a really dynamic, true community vibe down here that’s really attractive.”

Collins’ company, which provides management software to the freight and logistics industry, found a home in a colorful office at 1350 Abbot Kinney. The four-story white building, which tenants call 1350 AK, is also the site of three other tech startups and two business consulting companies that signed leases in the last year.

Santa Monica may be the center of the L.A. tech world, but the people who run the startups at 1350 AK said they’d rather be in Venice than among corporate high-rises and business parks.

“There’s a type of person who’s going to go to Third Street Promenade and a type of person who’s going to go to Abbot Kinney,” said Mark DiPaola, co-founder and chief executive of CheckPoints, a location-based iPhone app company that has a modern two-floor office at 1350 AK. “I’m more interested in that funky, eccentric person who will like Abbot Kinney. It fosters more creativity.”

But startups in Santa Monica say the area is a popular tech hub for a reason. Its central location makes it easy for employees and customers to access and the close proximity of so many companies fosters a close community of entrepreneurs.

“It’s all about location,” said Jason Nazar, co-founder and chief executive of Internet startup Docstoc. “When you’re looking to hire employees and bring people to the office, Santa Monica’s got prestige.”

Nevertheless, R Blank, chief technical offer at Almer/Blank, an interactive media company, said Venice’s location also helps build customer relations.

“It’s easy to get people out here,” Blank said of his warehouse office just off Abbot Kinney on Venezia Avenue. “We have a lot of clients who want to come to us because they want to visit Venice.”

Cheaper rent has also been a draw for some companies. The average price for office space in the West L.A. market, including Venice, is $3.72 per square foot, compared with $4.21 per square foot in Santa Monica, according to third quarter data compiled by Grubb & Ellis Co.

“Everybody’s thought about locating in Santa Monica, but the prices are so high,” said Collins, who moved into the building on Abbot Kinney about three years ago. “For startups, Venice is the ideal place.”

Restaurant revival

Many of the business owners live in Abbot Kinney and point out that it wasn’t always so attractive. Because of high crime rates in Venice’s rougher areas, there was some wariness attached to the neighborhood.

“When I first moved to Venice, it had a lot of crime and gang issues that were nationally known,” said John Plesnicar, who runs neighborhood blog AbbotKinneyOnline.com and moved to the area in 1989.

As crime concerns eased, entertainment companies began moving to the area, drawn by Venice’s reputation as an artists’ community. Blur Studio, a visual effects and animation company, set up shop on Electric Avenue in 1995 and many other companies followed. Psyop, a digital advertising company with headquarters in New York, opened its L.A. office near Abbot Kinney in 2008.

“In the 1990s, a lot of media companies moved from Hollywood to Santa Monica,” said Colleen O’Mara, chairwoman of the Venice Media District, which promotes the industry’s interests in the area. “But now we’ve seen them move south. They’ve been pushed out of Santa Monica because of the cost of rent and real estate.”

And where businesses go, restaurants follow.

Mediterranean restaurant Gjelina opened on the east end of the street in 2008 and high-concept Tasting Kitchen, which features a new menu every night, arrived in July last year. Chicago-based coffee bar Intelligentsia also opened a location on Abbot Kinney last summer.

Longstanding restaurants have also benefited. Hal’s, which opened in 1987, has become a popular takeout option.

“I joke with them that sometimes at lunchtime it looks like Burger King because they get all these to-go orders for people working in their offices,” said Carol Tantau, chairwoman of the Abbot Kinney Merchants Committee for the Venice Chamber of Commerce and owner of boutique Just Tantau.

Another element of Abbot Kinney’s revival is the arrival of high-end shops such as Jack Spade. The New York menswear designer opened a store in one of the street’s 1960s Craftsman bungalows in May.

DiPaola of CheckPoints said the new restaurants and shops have transformed the once-quiet street. He founded his first startup in 1350 Abbot Kinney in 2003 but outgrew the space in 2007, moved out and sold the company. When he returned to the same office to start CheckPoints, he noticed how much the area had changed.

“It’s gotten a little more fancy,” he said. “Abbot Kinney is starting to get to a critical mass where it can support more restaurants and shops.”

First Fridays

Most shop owners attribute the recent popularity of Abbot Kinney to its monthly event, First Fridays, which started in 2008 with a handful of shops. The first Friday of each month, store owners stay open late and give out wine or hors d’oeuvres to customers.

First Fridays got off to a slow start, but recently grew popular – perhaps too popular. As attendance has grown, so have the crowds. Some businesses are complaining.

“We were trying to bring more business to the street,” Tantau said. “Now it has a reputation as a party night. We’d like it to go back.”

With more visitors to the street, Abbot Kinney has faced a number of other problems, among them parking.

“It’s gotten really bad in the past two years. I have customers who drive around for 20 minutes looking for parking,” said Blank of Almer/Blank.

Area rents have also begun to rise, especially on Abbot Kinney. Blank said the parking problems and rising rents eventually could even drive him to move his company out of Venice.

But for many other companies, Abbot Kinney is just starting to have the growth they’ve been waiting for. With so many technology and media companies moving into the area, they’ve formed their own small startup community.

Matthew Burgess, founder of Formation Solutions, which helps startup businesses incorporate and is also housed at 1350 AK, has started a blog to engage this community of entrepreneurs. Through VeniceEntrepreneur.com he organizes dinners and get-togethers for them.

He said he’s excited by the number of startups that have moved to the area in the last two years. He expects that number to grow.

“Santa Monica gets a lot of attention because there’s a lot of great activity going on for startups,” Burgess said. “But I’m starting to see that kind of energy right here in Venice. It’s building momentum. It feels great.”

We are not just talking about the fast-growing “gazelle” companies that expand at double-digit rates — though we could certainly use more of them. Nor is this solely about sparking, say, a green business boom or the creation of more tech companies or a bunch of cool new iPhone apps — though we like all of those, too. Instead, what we are seeking is a kind of rebooting of the entrepreneurial ideal — the notion that starting a company is a viable option for all Americans, regardless of where they come from. This country has long been a haven for entrepreneurs. Ten years into the 21st century, it’s time to rethink exactly what that means.

Given our anemic and largely jobless economic recovery, this is more important than ever. Young companies — those younger than six years old — provide the bulk of new jobs; in 2007, they accounted for 64 percent of them, according to a 2009 survey by the Kauffman Foundation that looked at start-up formation since the 1970s. John Haltiwanger, an economist at the University of Maryland, came to a similar conclusion in a more recent study: His research found that start-ups account for only 3 percent of total U.S. employment but almost 20 percent of gross job creation.

Unfortunately, creating new companies is easier said than done. The rate of business creation has remained stubbornly constant over the years. Since the early 1990s, the number of start-ups has hovered at about 500,000 a year, according to a survey by the Kauffman Foundation. This has been the case during booms and busts, whether taxes were rising or falling, and whether venture capitalists were irrationally exuberant or largely recalcitrant. Clearly, some new thinking is required.

That’s what Inc. aims to provide in the pages that follow. We spent months talking to economists, entrepreneurs, academics, politicians, and policymakers about what can be done to spark a renaissance of American entrepreneurship. What we ended up with was a game plan to help revitalize the American economy.

This is not just a matter for elected officials. Sure, issues such as immigration and tax policy need to be addressed. But we also need action by schools, corporations, nonprofits, investors, and entrepreneurs themselves. The good news is that you don’t have to look too hard to find approaches that work. Indeed, we discovered an entire infrastructure of programs, policies, and ideas designed to stimulate business formation. These programs need to be studied, emulated, fine-tuned, and scaled. And their leaders need to be acknowledged and brought into the national conversation about the economy.

Step 1: Take Entrepreneurship Out of the Business Schools

Arts and humanities and science students need entrepreneurship education every bit as much as b-schoolers. Universities as diverse as MIT and the University of Miami have created model programs for training students in the fundamentals of business formation. More programs like these should be created.

Step 2: Tap the Best and the Brightest Wherever They May Be

Entrepreneurs from all over the world want to start companies in the United States. Our immigration policy should reflect that, by offering short-term visas to would-be entrepreneurs who are in the country on H-1B or student visas. If those visa holders create companies that create jobs, then we should offer them green cards.

Step 3: Our Education System Should Foster Entrepreneurship Among the Young

Putting ideas into action may be the biggest challenge for entrepreneurs. Teaching youngster–especially middle-school students–how to start businesses is one of the best investments we can make. Programs such as the National Foundation for Teaching Entrepreneurship offer a good model; educators should also take small steps such as adding the biographies of great entrepreneurs to the standard curriculum.

Step 4: Speed the Start-up Process

Most start-ups don’t need much money to get started. But that doesn’t mean they don’t need help. That’s where incubators and seed accelerators such as Y Combinator in San Francisco and TechStars in Boulder, Colorado, come into play. Investors, entrepreneurs, and city officials across the country should jump on the bandwagon.

Step 5: Give Manufacturers the Tools They Need to Get Started

Plenty of Americans have the desire to make actual stuff, not just software. What they often lack are the tools to get their ideas off the ground. Shared manufacturing spaces such as TechShop in Menlo Park, California, can provide aspiring manufacturers with access to sophisticated prototyping equipment. We need more of these facilities.

Step 6: Cut College Graduates Some Slack

The rising level of student-loan debt among recent college graduates may well inhibit them from starting businesses, driving grads into stable corporate jobs that will allow them to pay down their loans. The government should find a way to let college graduates who start businesses postpone loan payments for a few years while they get their ventures off the ground.

Step 7: Give Angel Investors a Tax Break

A number of states including Wisconsin, Minnesota, and Ohio, offer angel investors a tax credit for backing early-stage ventures. More states should follow their lead, and so should the federal government. As Stephen Spinelli, co-founder of Jiiffy Lube, observes: “If I get an immediate tax credit, I get an immediate return. I know I would increase my investing if there was a tax credit.”

Step 8: Reward Innovation Through Business-Plan Competitions

A revved-up contest economy will harness the competitive spirit to launch a wave of businesses. Programs such as New York City’s NYCApps and the nonprofit X prize should be expanded and encouraged.

Step 9: Cut the Incorporation Red Tape

In New Zealand, an entrepreneur can register a business with one filing and be legal and legit in one day; in the U.S., it takes about six steps and six days. We need to make it easier for founders to register their start-ups. Hawaii’s approach, which involves an online step-by-step guide to registering a new business, should be adopted across the country.

Step 10: Pass an Energy Bill, Already

Markets–and investors and entrepreneurs–abhor uncertainty. So let’s get serious about the emerging energy economy by creating an actual energy policy. Only then will companies be able to make informed investment decisions.

Step 11: Revamp the SBIR

The Small Business Innovaton Research Program is a good idea that unfortunately supports a small number of companies that seem to excel only at getting SBIR grant money. The government should revamp the agency’s mission so that it provides seed capital and contracting opportunities to younger companies, and not just small companies. While we’re at it, let’s rename it the New Business Innovation Research Program.

Step 12: Grow Local Investment Communities at the State Level

It’s foolish to try to duplicate Silicon Valley, but smart governments can do a lot to lure investors to their states. Since 1993, for example, New Mexico has committed funds to venture-capital firms with the requirement that they open an office in New Mexico and pledge that investments equaling the amount provided by the state were made in state. The results have been encouraging, and suggest that other states should nurture local VCs.

Step 13: Bring Government into the 21st Century

Government entities have more resources–generally in the form of data–than officials realize. They need to follow San Francisco mayor Gavin Newsom’s lead and hand that raw material over to entrepreneurs.

Step 14: Fund Big Science

As a percentage of gross domestic product, funding for scientific research has dropped from 2003 levels. What’s more, the federal contribution to R&D is now below 1 percent of GDP, a commonly accepted minimum goal for economically developed countries. Meanwhile, our global economic competitors are seizing the opportunity. We should reverse course, and fast.

Step 15: Stop Enforcing Noncompetes

Midcareer executives are a rich source of entrepreneurial talent. But studies indicate that in states and in industries where noncompete agreements are commonly enforced, workers are forced to make career detours, finding their next positions outside the industry in which they had expertise. Noncompetes make it hard for people to start companies, and hard for start-ups to attract seasoned talent. Let’s follow California’s lead and stop enforcing noncompetes nationwide.

Step 16: Bank the Unbankable With Microfinancing

Over the past few years, many mainstream banks have beefed up loan requirements or significantly cut back on small-business lending. Nonprofit microfinance lenders have come to play an ever more important role in bridging the funding gap. Cities and states should embrace these kinds of programs. Businesses that seem unbankable are often anything but–if you know what to look for.

It’s difficult, if not impossible, to say how many new companies Inc.’s 16-point plan would help create. We went over our proposals and performed some back-of-the-envelope calculations and estimate that implementing these ideas would spur the formation of at least 300,000 additional start-ups over the next decade or so. The number, we admit, is speculative. But blue-sky thinking is fine with us. The point is that the old models are no longer working. We need bold thinking about how a new wave of entrepreneurship can transform the American economy, spark innovation, and provide new jobs, new vibrancy, and new opportunities.