LinkedIn has been on the up-and-up for the last couple of years. What started as a basic job posting and networking site has transformed into one of the world’s most popular social media networks for everything business- and career-related.
Here’s a taste of why the platform is doing so well:
With stats like these, it’s no wonder professionals are looking to build their LinkedIn following with newfound vigor. However, when everyone’s trying to do the same thing, it becomes that much harder—much like a stereotypical trip to Disneyland.
Despite the uphill battle, the struggle is worth it. Just as nobody has ever regretted a family trip to Disneyland (fact), investing time into building your LinkedIn following will always be a worthwhile endeavor.
Whether you’re trying to build a following for your personal profile or your business page, the process is generally the same, albeit with some nuanced differences. Follow these best practices and you’ll be on your way to creating a top-performing LinkedIn account.
16 ways to build a following on LinkedIn.
1. Focus on the right metrics.
First, decide what you’re trying to achieve. Do you want hordes of followers or a small group of hyper-engaged advocates? There’s no right answer here, but it’s important to decide early on what your goals are.
In the end, you don’t want to end up with thousands of followers who don’t interact with your content. You also don’t want followers who just “like” posts but don’t interact, comment, and engage.
If you know what you’re after, go ahead and set some concrete goals. Decide how many followers you want and by when. Don’t worry too much about overshooting or falling short of this goal—any number will help to keep you accountable.
2. Post consistently (not necessarily frequently).
You’ll hear all sorts of LinkedIn gurus say that you need to post daily or twice a day or even 3 times a day. That’s all well and good—and there may be some truth to this advice—but what’s more important than frequency is consistency. You need a posting strategy that you can stick to, which will be different for everyone.
You don’t need to figure it out from the get-go, but evaluate how you spend your time on LinkedIn over the coming weeks. Are you struggling to produce content daily? Is it becoming a chore? If that’s the case, tone it down a notch and maybe post 3-4 times a week instead of every day.
Research shows that businesses who post just once per week see 2x more engagement compared to those who post less frequently. Only post daily on LinkedIn if you have value to contribute—don’t just post for posting’s sake. This leads us to tip #3.
3. Contribute valuable content.
The internet is full of enough so-so content—don’t add to the pile. If you don’t have something valuable to say, don’t say anything at all.
Diversify your content with a mix of text-only posts, images, videos, infographics, and the like. Experiment with posting studies, soliciting advice, and asking questions of your community. Check how each post performs to see what kinds of content resonates best with your audience, and then double down on those pieces in the future.
4. Be proactive with your outreach.
Just because you build it doesn’t mean they’ll come—sometimes, you need to go and find your audience. Build your following by searching for like-minded individuals in your network to connect with. A single targeted connection could be much more valuable than 100 random followers.
“You are the average of the 5 people you spend the most time with,” says Jim Rohn, an entrepreneur, author, and speaker. We’d venture to say that includes who you follow and engage with the most on social media. Follow people who’ll inspire you and influence your posting for the better.
Be willing to engage and privately message your connections—after all, it’s about quality connections over quantity.
5. Complete your profile.
Add as much relevant information to your LinkedIn profile as possible. Here are a few things to make sure you get right:
Headline: Come up with a non-generic, professional headline. There’s a fine balance between being creative and practical. Get too creative with a headline like “Ninja Wordsmith,” and you’ll miss out on all of LinkedIn’s SEO juice—but get too dull with a headline like “Content Associate,” and you’ll bore your community to tears.
Profile Picture: Unless you’re an accountant, a lawyer, or a judge, you really don’t need the stereotypical white-shirt-and-tie or dress-with-a-necklace picture—and even if you are, there’s more wiggle room than you think. Be professional, but don’t be afraid to show some personality, too.
Cover Image: Your cover image is a prime piece of real estate on your LinkedIn page—don’t neglect it. Have fun and add a call to action or display a hobby or passion. But whatever you do, please don’t leave it with LinkedIn’s default background. That’s just wasteful.
About: Your “About” section is one of the first places visitors will look when they visit your profile. Make sure it packs a punch and tells a concise story of who you are.
Experience: Add all your relevant work history and go into detail. Talk about what you did and what results you drove. Touch on your methodology and how you do things differently.
Recommendations: Ask for recommendations from your peers, mentors, and managers. Much like a 5-star review on a product page, a glowing review of your personal character can add a much-needed touch of social proof to your profile.
The same goes for building out your company page. Companies with a complete, up-to-date LinkedIn page see 5x more page views, so it’s worth spending a little bit of time to ensure it’s all in tip-top order.
6. Join relevant groups.
Let’s be real—most LinkedIn groups are nothing but crickets, but a few provide valuable connections and conversations. Join a few (for quality over quantity) and engage with the community. Don’t just spam links to your own content or website—instead, add to conversations, request feedback, and build relationships.
7. Use hashtags strategically.
Hashtags help people discover topics and interesting content. However, keep in mind the difference between hashtags used and hashtags searched. For example, loads of people use hashtags like #entrepreneur, #WorkHard, or #MondayMotivation, but how often do people search for these hashtags?
Consider creating your own unique hashtag for your personal profile or business. Add it to all your posts so that followers can quickly find your other relevant content.
8. Cross-promote your LinkedIn profile.
Don’t just rely on LinkedIn to build your LinkedIn following. Consider using other channels like email, blog posts, Twitter, Facebook, guest posting, and more. You likely have contacts, connections, and audiences on various platforms—ask them all to also follow you and connect on LinkedIn.
Give them a good reason why, too. For example, you may tell them to follow you on LinkedIn to get behind-the-scenes career advice or insider knowledge on how the sausage gets made. If you’re asking your audience to do something, always give them a reason why.
9. Publish LinkedIn articles.
LinkedIn Articles aren’t quite the same thing as posts. Posts are the general updates you’ll see on your feed, while Articles are blog posts native to LinkedIn.
If you’re already publishing on a blog, consider repurposing that content on LinkedIn. It’ll spread your work to a bigger audience without cannibalizing your content.
Also, LinkedIn posts are limited to 700 characters—not always enough to convey an idea. Instead of cutting your message short, post it in a LinkedIn article instead. Search engines crawl these articles, so there’s even a chance for it to rank on Google, Safari, or Bing.
10. Encourage employees to participate.
Remember that stat about 30% of a company’s engagement on LinkedIn coming from employees? Harness that power and direct it. Don’t just leave it up to chance that your employees will follow your business page and CEO profiles—ask them to. Give them content to share, and tell them how to share it. That’s often all your employees will need to start sharing your content.
However, you can go the extra mile and start an employee advocacy program. This could be formalized with software like GaggleAMP, Hootsuite Amplify, Smarp, or Dynamic Signal—or it could be informal, with regular social advocacy updates in a Slack channel or internal company newsletter. Regardless of how you do it, leverage your employees to boost your social engagement dramatically for a fraction of the time and money.
11. Get involved with influencers.
This could be your CEO, CMO, chief of HR, or customer support agent who happens to be a popular Twitch streamer. Get creative. Ask them to follow and share company updates to boost your reach.
12. Respond to every comment and message.
Whether you’re operating a business page or a personal profile, it’s best practice to respond to every comment and message. Of course, this will become impractical if you scale your following too large (there’s no way Gary Vaynerchuk is responding to all 553 comments he gets every day), but do it for as long as you can.
This not only extends the reach of every post—it also helps you build relationships in your community. Remember, it’s more beneficial to have 10 advocates than 1,000 unengaged “followers.”
13. Analyze your LinkedIn page insights.
Business pages have more insights than personal profiles, but both provide useful data to learn more about your content and audience. On your personal profile page, you can navigate to “Post Views” to see a comprehensive view of your content and engagement.
With a business page, you’ll get more insights into your followers, updates, page visitors, and more. Use this data to learn what kinds of content resonates with your audiences. Look at your posts to see which ones performed the best, then do your best to figure out why.
Did that post cover a unique concept? Was it short and sweet or long and detailed? Did you use a clever GIF or throw in a couple of emojis at the top? It’s hard to know the exact reason without proper A/B testing, but do your best to figure out why certain pieces of content perform better (or worse) than others. Use that knowledge to replicate your successes and avoid your failures.
14. Add a call to action (CTA).
Don’t just throw out information and content into the LinkedIn wild—tell your audience what to do with it. If you’re providing free advice, ask your audience to follow you and connect to stay up on the latest and greatest. If you’re talking about your business’s new product release, make sure you link to the free trial and ask your followers to sign up.
Every post and article you publish should have some sort of CTA—and that goes beyond LinkedIn to include all of your content.
15. Join in the conversations.
Your posts are valuable for feeding your followers content, but a great way to expose yourself to new audiences is by joining other conversations. If you see an interesting post on your feed, don’t just click “like” and move on—add your insights or feedback to the publisher.
This builds your relationship with the author of the post and helps you to engage with their followers. Every single one of their followers who reads that post will now see your comment, too. If it’s insightful, they may be tempted to visit your profile to learn more about you—and if you’ve set up your profile page right, they’ll likely follow your account.
16. Start creating LinkedIn stories.
LinkedIn is the latest platform to jump on the “Stories” bandwagon. LinkedIn Stories operate similar to Instagram, Facebook, and Twitter Stories—except they’re the newest feature to the LinkedIn platform, which means that you still have a chance to get in on the action before it becomes oversaturated. Think of it like buying Amazon stock 10 years ago.
Benefits of building a following on LinkedIn.
You’ve come to this post looking to build a following, but do you know why? What can an engaged LinkedIn following do for your business or your personal profile? Well, let’s look at the data:
40 million people use LinkedIn to search for jobs every week. If you’re looking to hire top-notch talent for your business (or if you’re contemplating your own career change), LinkedIn is the go-to destination. Every minute, 3 people are hired through LinkedIn—that should give you pretty good hiring confidence in the platform.
LinkedIn boasts higher lead conversion rates (3x higher) than any other major platform, including Google Ads. Hubspot research found that traffic from LinkedIn generates the highest visitor-to-lead conversion rate (2.74%), which is 277% higher than Twitter and Facebook.
On LinkedIn, you can become a thought leader to a relevant audience. Rather than trying to get everyone and their dog (literally, their dog) on Instagram to follow you, grow your following with the big-time decision-makers on LinkedIn. 91% of marketers turn to LinkedIn first for professional content, and 4 out of 5 users are in charge of making strategic business decisions.
Start building your following.
Don’t wait to begin building your LinkedIn following—get started today. Many of the tips we mentioned can be completed in an afternoon, while others will take weeks or months to build significant momentum. With LinkedIn quickly growing month over month and year after year, it’s a good idea to get in on the action as soon as possible.
You don’t need to build a 3-month content calendar to become an active contributor—just start posting once or twice a week. If you’re eager for more, get in the habit of posting and engaging with content for a few minutes every day. It doesn’t have to be a huge investment. A few interactions a day could lead to substantial growth in the long term.
When you file your taxes as a small business owner, you can deduct depreciation from your gross income through Section 179. As your business assets’ value lessens over time through use, so too can your company’s value, meaning you’d recoup less if you were to liquidate or sell your business. The IRS compensates business owners for depreciation through tax deductions at a rate set through MACRS.
The Modified Accelerated Cost Recovery System (MACRS) is a depreciation calculation adopted in 1986 that is primarily used for tax purposes. Through this system, business owners have a set amount they can deduct, unifying the process across all companies and industries.
Through the MACRS system, an item has higher levels of depreciation during the first few years and lower levels of depreciation as its ages. This process allows business owners to recoup the cost of their assets faster by front-loading tax deductions from depreciation.
How to Calculate MACRS Depreciation
Before you can calculate your MACRS depreciation, you will need to pull information relating to your assets and how the IRS classifies them.
Start with the original value of the asset—or what you paid for it if you bought it new.
Determine the item’s class based on its useful life. You can only deduct the item for the number of years during the expected recovery period set out by the IRS. (There will be more on finding your class and the IRS MACRS guidelines later on.)
Choose your depreciation method. You can use the straight-line depreciation method or declining balance method with different rates depending on your asset and MACRS guidelines.
Note your MACRS depreciation convention—or the period when you started to use the asset. This can fall into mid-month, mid-quarter, and half-year conventions for IRS calculations.
Determine what percentage you can deduct using the graphs listed in the IRS MACRS tables.
Pulling this information will take longer as you better understand the limitations of your assets. However, your asset is unlikely to change, meaning once you have the MACRS calculated for 1 year, you can adjust the formula to reflect any changes in future years for accurate depreciation amounts.
To calculate MACRS depreciation, you can use an online calculator to determine how much you can deduct. The right calculator can guide you to make sure your information is accurate by asking specific questions related to your assets.
What Can You Learn From the IRS MACRS Guidelines?
The IRS is specific and detailed when it comes to calculating depreciation for your assets. In its guidelines, the organization explains when you start calculating depreciation and when you end it (it starts when the item is first used and ends when you retire it or recoup the costs fully—whatever happens first).
The IRS also explains what can and cannot be depreciated and how to handle repairs or improvements to the asset. The entire guide is more than 100 pages long, including a glossary of terms and an index of specific topics.
One of the most useful sections of the MACRS guidelines is Table B-1 toward the end, which breaks down the various types of equipment that can be deducted on your taxes, its expected class life, and the recovery period in years.
For example, buses have an expected class life of 9 years and a recovery period for MACRS in 5 years. Meanwhile, sheep and goats for breeding have a class life of 5 years and take 5 years to recover.
Depending on the nature of your business, you can focus on a few key charts set out by the IRS to determine your depreciation amount and guide your MACRS calculations.
Why Should You Use MACRS Depreciation?
Within your industry, you may be legally required to use the MACRS depreciation model to report assets and file for deductions. However, there are added benefits to opting for this calculation.
First, it is easier to prove to the IRS how you reached that deduction amount. You can use their charts and formulas to prove your request is fair and accurate—which will protect you in the event of an audit.
Furthermore, the IRS wants you to recoup the cost of your investment faster. They favor deductions during the first few years so you can get your money back. This can help your company if you invest in expensive equipment that otherwise limits your profits or buying power.
Learn More About Other Depreciation Methods
While the MACRS depreciation method might seem complex, you can better understand your options and tax opportunities if you have a greater understanding of depreciation as a whole. Learn more about depreciation and the additional methods available to you to track it. Some of these methods will be applicable for tax purposes, while others will simply be used to manage your books.
Get to know the resource section offered by Lendio to become better informed about bookkeeping and asset management
All businesses, from self-employed freelancers to Fortune 500 corporations, spend money. You might have to pay rent, buy inventory, pay employees, buy a desk lamp, or purchase heavy machinery—or even a new building. These expenses lower your company’s overall profit margin, so it’s critical to pay close attention to how you’re spending money.
Not all expenses are considered the same in the small business world. Some expenses, like rent and wages, are regular and recurring. Generally, these everyday purchases are considered operating expenses. Others, like the purchase of a vehicle or property, happen once and then last your business a long time. These are known as capital expenses.
The terminology can be misleading—if you drive it every day, isn’t a new car an operating expense? Probably not. Knowing the nuances of operating expenses and capital expenses is important for every small business owner.
Furthermore, differentiating between the 2 categories becomes paramount when preparing financial statements and filing yourbusiness taxes.
Operating Expenses
Operating expenses, often abbreviated to OPEX, are expenses incurred during the course of regular business—your operations, as it were. These include general and administrative expenses as well as the cost of goods sold (COGS). On your profit and loss statement, these expenses are recorded in the same time period they were actually incurred.
The list of operating expenses is vast and ever-expanding—office supplies, equipment leases, travel, some types of taxes, utilities, and insurance are all considered operating expenses because you spend the money in order to conduct regular business. Wages are operating expenses, although they might be calculated into your COGS depending on your business.
Capital Expenses
Capital expenses, or CAPEX, are expenses that a business incurs that are expected to remain valuable beyond the current year. You might use collateral or take on debt to make a capital expenditure. The point of spending on CAPEX is that the expense now will help your business toexpand over time—so a CAPEX should be seen as an investment.
Property, equipment, and vehicles are common capital expenses. Expanding or adding value to an existing asset, like through a building expansion, could also be a CAPEX.
Instead of recording capital expenditure on your profit and loss statement, you list CAPEX as assets on your balance sheet.
Importantly, many capital expenses—like vehicles—depreciate in value over the usable lifespan of the asset. This depreciation over a fixed period of time, usually monthly, is recorded as an expense on your profit and loss statement. Overall depreciation is recorded on your balance sheet and subtracted from the value of the asset.
While many CAPEX are tangible entities, like buildings, some intangible purchases can be considered CAPEX, particularly patents.
Why Are OPEX and CAPEX Categorized Differently?
OPEX and CAPEX are considered different in accounting terms because operating expenses are necessary to your business’s day-to-day existence, while capital expenses are big, 1-time expenses that will add value to your company for years.
Sometimes you can choose how you want to categorize an expense. If you buy a car outright, for example, it’s a CAPEX, but a lease for a vehicle is an OPEX.
OPEX vs. CAPEX on Financial Statements
Categorizing OPEX and CAPEX on your financial documentation is a strong reason to have an accountant overseeing your books. Additionally, most CAPEX will require input from other stakeholders in your business because of the size of the expense.
“While OPEX are line items in the expense category on a cash flow statement, CAPEX are typically found under the heading ‘Investment in property, plant, or equipment,’” e-commerce company Shopifyexplains. “CAPEX usually require a sizable financial investment and, for that reason, often need the approval of the company’s board of directors or shareholders.”
Categorizing your various expenses on the proper profit and loss statements and balance sheets is essential for understanding the overall financial health of your company—and will better position you to receive funding.
OPEX vs. CAPEX During Tax Time
Not categorizing your expenses correctly with the Internal Revenue Service can result in penalties or even an audit. Even in less extreme cases, you can end up paying more in taxes if you aren’t separating your expenses as well as calculating the depreciation of your CAPEX.
“Through depreciation you recover the cost of the asset over its useful life,” says Manny Davis ofAllBusiness. “The IRS has strict requirements as to how many years an asset must be depreciated over. Since these assets cannot be expensed 100% in the tax year they are purchased, it will lead to a higher taxable income amount for the company in the given year and therefore higher taxes.”
The IRS allows some CAPEX to be expensed in total and at once throughSection 179. Because of specific situations like this, you should consult with a tax professional about your business taxes—even if you don’t regularly hire an accountant. Utilizing bookkeeping software like Lendio's software also helps.
When we start using words like “unprecedented” to describe everyday life, I turn to my old stand-by for comfort: baked goods.
Baked goods don’t care if you had to wait in line for 45 minutes in freezing cold weather to get into the grocery store. Baked goods don’t care if you wear 2 masks on your afternoon walk in between a million Zoom calls. Baked goods are always there.
With bakeries and high-end restaurants closed in response to the pandemic, pastry chefs have started operating microbakeries out of their tiny apartment kitchens, baking sourdough, croissants, cookies, and more—using their creativity to bring people the exact kind of comfort food we all need right now.
Making dessert the main attraction.
The idea of microbakeries—food businesses started out of your home kitchen—isn’t new. What’s different now is that these microbakeries aren’t amateurs who happen to have a great recipe for chocolate chip cookies or strawberry jam. Out-of-work pastry chefs and alumni of some of America’s finest restaurants and bakeries helm the newest microbakeries.
All this is made possible by so-called “cottage food laws,” state licensing exceptions that allow home bakers to sell certain foods like jams, jellies, and baked goods without needing to undergo the rigorous permitting and health inspection process required in a restaurant setting.
“What we’ve seen in the last year is, obviously there’s a demand for dessert,” pastry chef Kelly Miao—a Dominique Ansel and Bar Boulud alum—told the New York Times. She started Kemi Dessert Bar from her Queens apartment, making home deliveries of verrines, tarts, and custard buns. “I’m not sure why restaurants don’t highlight it more, because there’s so much to offer. Desserts can be extraordinary, but [restaurants] don’t give them the chance to shine.”
For many chefs, it’s about recreating what people miss the most from pre-pandemic life. “Well, why do we do it?” Shuna Lydon, who owns Seabird Bakery out of her apartment in Brooklyn, asked the New York Times. She serves up baked goods, French toast, cinnamon rolls, and more brunch staples. “Because brunch is a thing that is very high up there on people’s list of things they miss the most.”
With start-up costs relatively low—what self-respecting pastry chef doesn’t have an oven or stand mixer in their home?—there’s a window of opportunity that many bakers feel gives them more creativity and ownership over what they make.
What you need to start your own microbakery.
Space will be the biggest factor in what and how much you choose to sell. “Space really determines our menu. We have to be really creative not only in terms of the items but also the logistics. We have a regular fridge; you can’t fit 20 kilos of dough in that,” Miro Uskokovic, who runs Extra Helpings out of his Queens apartment with his wife (and fellow pastry chef) Shilpa, told Food and Wine. “Every corner of our home is turning into kitchen storage. We turned our second bedroom into a large pantry, where we keep several metro racks with ingredients and molds.”
You may also need to level up your equipment, as consumer-grade mixers, fridges, and work tables may not cut it. “My home mixer can make a batch of 50 cookies at a time, and on average I’m selling 600 to 1000 cookies per week,” LA-based Kirstyn Shaw of the Very Best Cookie microbakery told Food and Wine. Shaw rents space at a ghost kitchen once a week just to keep up with demand.
A rigorous cleaning protocol—and ways to communicate that with customers—is next. Depending on what state you reside in, you may face stricter regulations on what you can and cannot sell. But taking precautions—like wearing a mask and gloves while handling baked goods and maintaining a regular cleaning schedule—matters.
Finally, even if you have the best cakes or pies in the world, it won’t matter if no one finds out. The most successful microbakeries attribute their growth to social media channels like Instagram. Online-only Kora, a Filipino doughnut shop started by Eleven Madison Park alum Kimberly Camara, already has a waitlist of 800 customers. She adds an order form to her Instagram bio every Monday at 3:00pm for the donut flavor of the week—and they usually sell out within a minute.
A strong social media presence gives bakers the freedom to avoid third-party delivery services, which cut into already thin profit margins. It also helps with scheduling pickups or deliveries or expanding to nationwide shipping—you’ll need to decide how to get your baked goods to the masses.
Will microbakeries last?
When bakeries and restaurants open again, will microbakeries last? That depends. Some chefs plan on turning their efforts into sit-down pastry shops, tasting rooms, or brick-and-mortar neighborhood bakeries. “Many people dream of having a business of their own,” Uskokovic told Food and Wine. “We are taking things one step at a time with the hopes that it will turn into something bigger—something permanent.”
“It’s really cool and interesting to have a whole class of restaurants, basically, where the barrier to entry is much lower than we’re used to,” Marissa Sanders, who delivers savory pastries through Wrightwood & Sawyer out of her Brooklyn apartment, told the New York Times. “I hope it’s something we can hang onto. There’s a real sense of hustle, which is very encouraging and creative as people flourish in this terrible, uncontrollable situation.”
Trade credit, sometimes called trade finance or supplier financing, is an extremely common form of exchange between businesses. Famously, Walmart relies heavily on trade credit. But it isn’t only large corporations that utilize this form of agreement between suppliers and buyers—trade credits are extremely common for small businesses, as well.
In fact, according to the World Trade Organization (WTO), an astounding80% to 90% of all global trade relies on trade finance.
Therefore, trade credits will likely be involved in some way regarding your small business, and you should understand how this system works.
What is trade credit?
A trade credit is a business-to-business exchange where one business provides goods on credit to another, i.e. no cash is paid up front. In turn, the recipient of the goods promises to pay for the goods on a predetermined time frame.
Trade credits operate on the same basic idea asrunning up a tab at a bar or grocery store over time, which was common in years gone by. Importantly, though, a trade credit is a very formalized agreement between businesses, not a business and a customer.
In essence, trade credits are like financing with 0% interest—the buyer’s assets increase without the initial expenditure of capital. Depending on the size of your operation and your suppliers, a trade credit agreement might look a lot like a financing application from a bank, but they are often more informal. Typically, trade credit repayments take the form of invoices.
Trade credit definition.
A trade credit is the loan of goods or services from a supplier business to a buyer business. The buyer agrees to pay for the goods or services at a later date.
Trade credits in the international supply chain.
Trade credits are essential forbusinesses across the globe. Even if your business doesn’t have trade credit agreements, some organizations in your supply chain most likely do.
“International supply chain arrangements have globalized trade finance along with production,” the WTO notes. “Sophisticated supply-chain financing operations—including for small- and medium-size companies—have become crucial to trade.”
What is a trade credit example?
Trade credits have been hyped as one of the secrets to the success of Walmart, which continues to vie with Amazon for the title of world’s biggest retailer. Many of the products available on the shelves of your local Walmart store are procured without money up front.
“Walmart is no different from other large retailers,” points out financing expertMarco Terry. “Most large retailers are known for paying invoices in 30 to 90 days. Large companies operate this way during the course of their normal business.”
Walmart, which would have no problem getting financing in any form, must see a lot of intrinsic value in trade credits—the corporation uses up to4 times more in trade credits than any short-term external financing.
What are the advantages and disadvantages of trade credit?
Walmart probably sees a lot of benefit in trade credits because trade credits heavily advantage the buyer. This favorable condition exists because trade credits basically function as an interest-free loan. Walmart (or any other retailer chain) can start selling products before it has to pay for them.
Small businesses can take advantage of this, too. If you can work out a trade agreement with a supplier, you can begin making sales before spending money on inventory.
A disadvantage of trade credit is the risk involved—even though you don’t have to pay upfront, your business will still have to pay the supplier at some point. If you don’t have the money when the invoice is due, your company could face a dangerous cash crunch. If you don’t pay, you risk ruining your supplier relationship; not paying off trade credits can also damage your business’ credit score.
If you are on the supplier side of a trade credit, an advantage is that trade credits encourage repeat business. Trade credits allow you to do business with companies that might not have the up-front capital to buy from you before making sales.
If you offer trade credit, you basically become a lender, which involves inherent risks. This is why the supplier is at less of an advantage in a trade credit agreement than a buyer.
Make an educated assessment of the situation before offering trade credits. For example, is it worth waiting 30 days for payment if it means your product is placed on the shelves of a popular retailer?
What are the types of trade credit?
The different types of trade credits are defined by invoice periods. On your invoice, it will typically say “net,” followed by the number of days when payment is due after the invoice date. The most common trade credit type is “net 30,” meaning repayment is due 30 days after the invoice date.
Trade agreements also occur with 45-day, 60-day, 90-day, and even 120-day payment periods. You should typically expect to repay in 30 to 45 days, though.
What is bank credit and trade credit?
Bank credit and trade credit are different ways to understand financing available to your business. Bank credit is the total amount of money a business or individual can borrow from a bank. Bank credit includes credit cards, mortgages, and business lines of credit.
The value of trade credit, on the other hand, is connected to the value of goods or services being offered from a supplier to a buyer. Additionally, trade credit is available from suppliers instead of a bank.
Seller credit
A seller credit, or owner financing, is related tothe sale of a business. The seller of a business can opt to sell all or some of a business like a trade credit—the new owner of the business can get started immediately and then repay the credit back over time. For the seller, it can allow you to get an overall better price for your business, but you assume the risk of the buyer defaulting. Seller credits are also common in home sales and function similarly to seller credits in the sale of a business.
When opening a business, you have a lot of choices to make—including the structure of your business or the business entity. One of the most common types of businesses is known as an LLC, or limited liability company. In addition to being one of the easiest entities to form and maintain, it also offers legal and financial protection to its owners.
Keep reading to understand LLCs and why they are so popular.
What Does an LLC Mean?
A limited liability company works to protect business owners who want to separate their personal and professional assets. For example, if a sole proprietor gets sued, the lawsuit could cover that person’s income, home, car, and other personal assets.
However, an LLC limits the liability to just the business assets. These assets include company profits, equipment, and inventory but do not extend to any personal assets outside the business.
An LLC is often used by business owners to protect themselves personally when they go into business.
How Can You Start an LLC?
To start an LLC, look up your state Chamber of Commerce and find the appropriate paperwork to complete an application. You will need to register your company under a name that is not currently used in that state. The application can be completed online in many districts and requires an application fee.
What Does an LLC Cost?
The cost to form an LLC varies by state. Some states have affordable fees (Colorado charges $50 to get started), while others are more expensive (Massachusetts charges $500).
Along with a startup fee, you will need to pay an annual fee to maintain the designation. These fees also vary widely depending on where you live. In Missouri, there is no annual fee, though business owners still need to submit annual reports. In Maryland, business owners need to pay $300 annually.
Look up your filing fees before you decide to become an LLC so you can budget for the costs.
What Is an Annual Report?
Most states require LLC owners to file annual reports that detail the operations of the business over the course of the year. The annual report covers information like the names and addresses of owners, the purpose of your business, and the number of shares of stock.
These annual reports are typically due around the anniversary date of formation. You can often find annual report templates online.
When Should You Form an LLC?
While you can form an LLC at any time throughout the year, you may want to file at the start of the new year in January for easy tax purposes. That way, all of your future income is covered by the LLC.
You don’t have to file your paperwork in January to form your LLC. Some states offer a “delayed effective date” up to 90 days out. This means you can work through your paperwork in October or November for an LLC launch date of January 1.
One of the key traits of an LLC is the separation between professional and personal accounts. If you plan to start a company, make sure you have a foundation of good bookkeeping to easily report your income and expenses. Use an app like Lendio's software, which offers free tools for small business owners. This can make establishing a business easier.
What makes a lending marketplace different from applying through a bank or a single lender? Excellent question. There’s a lot to love about lending marketplaces and the way they’re changing the borrowing experience. Here are 5 things every business owner should know about a business lending marketplace.
1. You Can Compare Options
You would never book a flight by visiting one airline’s website and saying, “I guess this must be the going rate to Orlando.” Comparing options is a vital part of the process and ensures that you can find a flight that matches the price you want to pay and your scheduling needs.
A lending marketplace works the same way… but for business loans. The idea that you should have to pick a single lender and roll the dice on the terms you qualify for is, quite frankly, a little outdated. And it doesn’t usually work in the borrower’s favor. With a lending marketplace, you can compare multiple loan offers to ensure you’re choosing the right loan option for your needs. Through a lending marketplace, you can compare the interest rates, loan terms, loan size, and speed of capital of different offers to ensure you feel confident when you apply for a specific loan.
2. It Gives You Flexibility
When you have multiple financing options, it can open up new ways to attack a specific problem. If you’re looking for financing to cover a large inventory order, for example, you may want a short term loan that gives you the capital fast so you can quickly repay the loan and move onto the next opportunity. Or you may find that opening a line of credit will allow you to make repeated inventory purchases.
Being able to compare financing opportunities gives you the flexibility to tackle your business challenges in different ways so you can find the strategic path with the highest payoff.
3. It Saves You Time and Effort
With a loan marketplace, you apply via a single application to compare multiple offers. That’s a heck of a lot better than the typical 25-hour bank application that only gives you a shot at… one loan option.
What’s more, loan marketplaces typically prioritize your time and make that application short and sweet. We can only speak for ourselves here, but we’ve edited the process down to a single 15-minute application that can unlock offers from 75+ lenders. If you average that out, it means you spend about 12 seconds/lender on the application.
4. You Can Rely on Expert Guidance
When you apply through Lendio, we pair you with a team of experts to guide your application through the process. These experts can answer your questions, help you understand the pros and cons of different loan types, and be there to guide you through each step— from putting your documents together to submitting them for underwriting.
5. You Can Find Funding That Matches the Speed You Need
For some business owners, their first question is, “How fast can I get a loan?” For others, it’s, “How big of a loan can I get?” The beauty of a lending marketplace is that you can choose the option that best fits what matters to you. Need financing in 24 hours? Yup, there’s an option for that. Don’t mind waiting if it means you can secure a lower interest rate? We have an option for you, too.
A lending marketplace puts you in the driver's seat for your financing experience. Ready for an experience that’s tailored just to you? Apply now.
White glove service refers to high-quality care and a concentrated focus on the needs of your shoppers. The phrase “white-glove service” conjures images of Downton Abbey, scenes from Titanic, and visuals from other movies where butlers and house staff don pristine white gloves to ensure a meal or experience is exceptional.
In the modern era, white-glove service means going above what your customers expect. It means genuinely putting them at the highest priority to meet their needs. You don’t need a large budget or substantial customer service team to offer this service—you just have to know what your customers want.
Track (and improve) your response times.
One of the most tangible ways to provide white-glove service is to respond to customers quickly. The sooner you can address their needs, the better their experience will likely be. According to a SuperOffice survey of 1,000 companies, it takes an average of 12 hours to respond to a customer email.
However, when 3,200 customers were asked how quickly they expect a response from brands, 88% said within 1 hour, and 30% expect a response within 15 minutes or less. Asking a customer to wait 12 hours is 11 hours too long and means you will start off your conversation with a poor experience.
Try to update your customer service policies to respond to customers quickly. This process could mean sending a confirmation email that you received a query so your customers don’t think their messages are stuck in the ether. It could mean investing in a 3rd-party customer care service so you can help customers faster.
Your business doesn’t necessarily need to be on-call with 24/7 service, but you can set a goal for 2023 to significantly improve your call and email response times.
Avoid canned responses.
A common mistake that brands make when setting up their customer service programs is the creation of canned responses for various situations. These pre-written scripts are meant to make training new team members easier while creating a unified tone and response front across the company. Executives never have to worry that customer care team members will say something inappropriate as long as they keep up with the script.
However, these canned responses can infuriate customers who feel like they are speaking with a robot. Placations, canned apologies, and strict customer service processes can frustrate customers before their problem ever gets addressed, leaving them with shorter tempers and a bad experience with the company. Plus, canned responses can wear out your representatives, who can start to mumble through the same phrases each day.
Instead, develop a customer care process focused on listening and active problem-solving. Train your team members on tone and branding, rather than asking them to read directly from a script. This will make their conversations more engaging, and they’ll create personal connections with customers, driving better results.
This doesn’t mean you shouldn’t have some responses written down for new team members or for when your staff needs help, but try to avoid forcing your employees to always “stick to the script.”
Balance automated prompts with human conversation.
Along with canned responses, talking with automated systems and chipper chatbots can also leave your customers frustrated and feeling neglected. Automated prompts are meant to make the customer service process easier. They sort customer problems into different categories and help teams identify certain customers. However, endlessly listening to menus and pressing different buttons can grow weary, as each answer prompts a new question and fresh menu.
“Sometimes it’s super frustrating because you enter in a bunch of information in there, only to have to repeat it again,” Janelle Matthews, senior vice president of Solution Strategy at Genesys, tells Marketplace. “It drives me crazy. So painful and it doesn’t have to happen.”
The customer already told the system what is wrong—they don’t want to go over the issue again with a customer service person. Plus, many people will click through a menu without thinking or just say “representative” until they can speak to a real person about the issue.
This automated process gets more complex with certain industries, including insurance firms or credit card providers. Oftentimes, customer teams will have to confirm the digitally-entered information for security purposes or will lose the information due to a computer glitch and will have to ask for it again.
In the same way that not all canned responses are bad, there is a time and place for automated prompts in customer service. However, they need to be used in moderation, and the answers need to provide value to your customer care team.
Look into tools to easily pull up customer order history.
When a customer needs help with an order, they don’t want to spend several minutes explaining to your team what the problem is and hunting down confirmation numbers. This process is frustrating to them and can create confusion with your team members. Instead, look into tools and apps that can highlight the customer problem before they even speak to your customer service representatives.
According to the 2017 Global State of Customer Service Survey by Microsoft, 66% of Americans expect a brand representative to know their contact information and product or service information and history. This number is slightly lower than the global average of 72% of respondents, including 77% of consumers ages 18–34.
How can having this information help you offer white-glove service? There are several ways.
If you get disconnected from the customer, you can call them back instead of sending them through your service system again.
Your representatives can quickly report on the status of an order and make adjustments as needed.
You can use their previous buying history to recommend products or offer discounts on items your customers might find valuable.
Multiple customer service apps on the market can pull up buyer history based on their email address, name, or phone number. Look into these tools if calls to your customer care team are increasing.
Listen to customer service complaints.
If you want to improve your customer service experience, then start with your customers. Learn what they consider a weakness in your company and take steps to improve it. For example, if your customers aren’t happy with your slow response times, identify ways you can address problems faster. If your phone system is too robotic, look for ways to make it more personable. These changes will make your improvements more effective as you directly address your customer needs and deliver a white-glove service that will separate you from your competition.
Social media can be a game-changer for small businesses—if you know how to use it. This guide covers everything from choosing the right platforms to creating engaging content and growing your audience. With actionable tips and proven strategies, you’ll learn how to turn likes and follows into real business results.
Email marketing is one of the most powerful tools for small businesses—when done right. This guide covers everything from building your email list to crafting engaging campaigns that drive results. With actionable tips and step-by-step guidance, you’ll learn how to connect with your audience, boost sales, and grow your business through email.
Digital marketing doesn’t have to be overwhelming. This guide simplifies the essentials, from building an online presence to leveraging social media, email, and SEO. Packed with practical tips and step-by-step strategies, it’s designed to help small businesses succeed in the digital world without a big budget or a full marketing team.
Let’s face it. There’s a lot of bad marketing advice out there. Or great advice that’s far too in-depth for a small business owner who isn’t looking to start a full-time career in marketing. We created this guide to cut through the clutter and provide you with principles, direction and the applicable step-by-step how-tos to get the job done.
Your brand is more than just a logo—it’s the heart of your business. This guide walks you through the essentials of small business branding, from defining your identity and crafting your message to building a strong, lasting impression. With clear steps and actionable advice, you’ll create a brand that resonates with customers and sets your business apart.
Hiring for small businesses doesn’t have to be complicated. Your business can achieve success when you understand relevant legal requirements and find the right job candidates for your open positions. This comprehensive guide covers everything from finding the right employees to hire to employee training and development.
Your best customers are your biggest growth opportunity. This guide breaks down customer marketing strategies tailored for small businesses, helping you turn happy customers into loyal advocates. From building relationships to leveraging referrals, discover actionable steps to maximize lifetime value and drive sustainable growth.
From selecting the right franchise opportunity to navigating the financial aspects, this step-by-step resource equips aspiring entrepreneurs with the knowledge and strategies needed to thrive in the world of franchising.
Have a business idea but not sure where to start? Our comprehensive guide to starting a business has everything you need to know. From legal requirements to market research, we’ve got you covered.
Running and growing a business is no easy feat. Our guide to running a business has everything you need to know to keep things running smoothly. From managing employees to marketing your business, we’ve got you covered.
Take your business to the next level with our Accounting Guide. Master the language of numbers, understand financial statements, and make informed decisions based on accurate financial data. Discover the power of sound financial management.
Master the art of cash flow management with our comprehensive guide. Learn strategies to optimize your cash flow, forecast revenue and expenses, and keep your business financially stable. Take control of your finances and achieve long-term success.
Streamline your billing process with our Invoicing Guide. Learn how to create professional invoices, manage client payments, and maintain a healthy cash flow for your business. Get paid faster and efficiently track your revenue.
A great marketing strategy is the foundation of small business success. This guide takes you step-by-step through defining your goals, identifying your audience, and choosing the right channels. With practical tips and clear direction, you’ll build a tailored strategy that drives growth and delivers measurable results.
Navigate the complex world of taxes with our Tax Preparation Guide. From understanding tax obligations to maximizing deductions and filing quarterly taxes, we’ll help you stay compliant and minimize your tax burden. Unlock the secrets of tax success for your business.
Stay on top of your business finances with our Bookkeeping Guide. Learn the art of tracking income and expenses, maintaining financial records, and keeping your books in order. Unlock financial success with our expert tips.
Need help securing funding for your business? Our business loans guide simplifies the financing process, explains key terms, and walks you through your loan options.
