Tag Archives | Small companies

Five Tips from the FTC on Avoiding Office Supply Scams

As a small business owner, there are a number of scams you need to be aware of designed to steal your money and harm your company. The Federal Trade Commission is bringing you a series highlighting these scams and what to do to protect your business. We’re kicking off this series with a focus on a scam involving unordered office supplies.

The Federal Trade Commission (FTC) is the nation’s consumer protection agency. The FTC investigates and sues companies and people for unfair or deceptive acts or practices that target individual consumers or small businesses like yours. With its headquarters in Washington, D.C., and eight regional offices, including in Cleveland, the agency is well-positioned throughout the country to learn about scams and deceptive advertising affecting the local community. The FTC also has a database of more than 13 million complaints filed by consumers that it uses to determine trends in scams and which scams are affecting the most consumers. This information helps prioritize who the FTC should be investigating and can then be used to educate consumers on how to avoid the trending scams.

In addition to preventing scams and deceptive advertising, the FTC also works to keep consumers’ data safe. The FTC ensures that companies that collect information from consumers only use the information in ways that consumers expect and that the companies take appropriate precautions to keep consumer information safe from hackers.

The FTC also spearheads National Consumer Protection Week, a time to help people understand their consumer rights and make well-informed decisions about money, which is running now until March 10 this year.

In conjunction with National Consumer Protection Week, staff from the FTC’s East Central Region will discuss, in this and future articles in this series, some of the scams and deceptive practices affecting businesses. Some of these tactics have been around forever but continue to make millions for scammers, while others are cutting-edge and the full impact hasn’t yet been seen. We will also talk about how to keep data secure and what to do in the event of a breach. Stick with us and your customers and your bottom-line will be grateful.

Scam: Unordered Merchandise

The first scam to tackle is what we call the “unordered merchandise” scam.  It typically starts with a schmoozy call to an unsuspecting small business or nonprofit. Sometimes the caller claims to be “confirming” an existing order, “verifying” an address, or offering a “free” catalog or sample. Then comes the supplies surprise—unordered merchandise arriving at the company’s doorstep followed by high-pressure demands to pay up. When business owners refuse to pay, the scammers may claim to have audio recordings that prove the order was placed, but never come forward with the purported “proof.” The scammers may also have the birthdate of one of the employees as “proof” that the employee agreed to the merchandise, when, in reality, the employee was conned into giving their birthdate during the initial call. Sometimes the scammer will insist on payment, but offer a “discount” of less than the invoice amount.

In one recent case, FTC attorneys in Cleveland successfully sued a group of businesses and individuals for sending and billing for unordered merchandise. The defendants’ telemarketers called organizations and used deceptive tactics to get employee names—usually someone in the maintenance department—and delivery addresses. The next step: a seemingly innocuous conversation in which the defendants’ telemarketers offered to send a catalog, a small promotional gift (like a knife or gift card), and sometimes a sample of products. The defendants then shipped light bulbs and cleaning supplies to the business or organization, following up with high-priced invoices for those supplies, listing the employee’s name on the invoice as having ordered them.

If a business or nonprofit paid an invoice, the defendants would send more merchandise and more invoices, often using different company names (although they were all part of the same organization). When challenged, the defendants would try to bluff or trick victims into paying for the goods anyway. For example, they would argue that the fact that an employee had accepted the promotional gift showed that the employee also must have ordered the supplies. The defendants took more than $58 million from businesses and nonprofits just between 2010 and 2014.

Here are five tips for your company or nonprofit group when it comes to protecting yourself against an office supply scam:

Tip No. 1: Keep unordered merchandise but don’t pay for it. If your business receives merchandise no one on your staff ordered, the law says you don’t have to return it and the vendor can’t legally collect on it. You don’t have to pay for it, even if you used the item before you realized it was unordered.

Tip No. 2: Your best defense is a trained staff. Spend five minutes at a staff meeting educating your team about the signs of a supply scam. Caution them about fake friendly callers who worm their way in by claiming to have done business with you before or who say they have an “urgent” need to speak to someone in your maintenance department. If more than one person answers the main phone at your business, post a warning nearby about supply scams. For nonprofits, let volunteers know that fraudsters target charities, churches and community groups, too.

Tip No. 3: Consolidate contacts. Supply scammers try to exploit the fact that small businesses aren’t likely to have purchasing departments. But you can still designate one person to respond to all inquiries about office supplies, “free” offers or “existing” orders. Putting one person in charge—especially a staffer with a well-calibrated baloney detector—can help protect your company from con artists.

Tip No. 4: Investigate every invoice. Don’t pay a penny unless you know the bill is for items you or your staff actually authorized. If someone tries to pressure you into paying for unordered merchandise, complain to the FTC and Ohio’s Attorney General and let the pushy caller know you’re on to them.

Tip No. 5: Bookmark the FTC’s site on protecting small businessesThe FTC’s website features resources to help protect your company. For example, Small Business Scams clues you into typical tactics of business-to-business cons.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. You can file a complaint online at www.ftc.gov/complaint or by telephone at 1-877-FTC-HELP (1-877-382-4357).  

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5 Simple Phone Tactics to Overhaul Your Image

  

Have we gotten too casual on the phone? Are we being lazy when communicating with clients or prospective clients? Don’t just phone it in—or maybe you can! Give your image a facelift by taking these quick and easy actions toward improved phone communication.

But what about the rest of us with similar needs but no deep pockets to pull all that off? Are we doomed to endure the mediocre or amateurish image we’ve created by what we’ve done or not done since we started our businesses?

Not to worry. Here are five simple and easy phone tactics to overhaul your image. So easy you can phone them in. They require no investment—only some creativity and effort. Start small and simple. See how many you can add to your small business tool kit and start using them immediately.

Simple and easy tactic No. 1: Personalize you voice mail greeting

Most small businesses use a voice mail greeting when they can’t answer incoming calls. This message might be the first impression a prospect or new customer gets of the company’s style and values. And it might reinforce those impressions with repeat callers. Listen to your voice mail greeting like a caller would. How do you feel about the business and the people running it? Do you want to do business with them?

What kind of impressions does this recorded message cast?

“Your call is being forwarded to an automated voice messaging system … 475 338-0298 is not available … “

Probably not favorable. More like lazy, dumb and cheap. How simple to invest a few minutes to personalize that greeting?

“Hi, this is Ben Dover with Glitztronics. Please leave a message and I’ll get back to you by the end of the day.”

Job done—concise, courteous and helpful. Now, that wasn’t so hard, was it?

Simple and easy tactic No. 2: Listen to what callers hear

So, what do callers hear when you do answer the phone? What kind of an image does your greeting cast? “Hi …” is a good start, but it needs help: “Hi, this is Ben with Glitztronics …” is better, but “Hi … this is Ben Dover with Glitztronics. How can I help you today?” really works well. Which one casts the best image of Ben? Which is the most like yours?

Simple and easy tactic No. 3: Turn a problem into a pleasure

What do you say when a caller needs help, asks a question or just says, “Thanks”? I do have a problem with responding, “No problem”, which seems to be most everyone’s default response these days. Simply say, “You’re welcome” instead. And even better is, “My pleasure.” While the shift from “problem” to “pleasure” is subtle, it does say something about your attitude.

Simple and easy tactic No. 4: Review how you place out-going calls

When you place an out-going call, what do they hear first after answering?  Consider a concise and courteous statement such as, “Hi … this is Ben Dover from Glitztronics … Is this a good time to discuss next week’s meeting?”

And if the other person says it’s not a good time, no need to apologize. If you knew that, you wouldn’t have called and also, remember, they picked up the phone in the first place.

Because most people have some version of Caller ID installed on their phone, make sure the read out isn’t lame like “unknown caller”, “not available” or blank. Those all signal a robo or spam call. Would you answer a call like that yourself? If I don’t recognize the name or number, I let the call go into voice mail where they hear my concise and courteous message. Most don’t leave a message, which tells me they were robo or spammers.

Simple and easy tactic No. 5: Please leave a (complete) message

When you do leave a voice message, what do they hear? “Hi … This is Ben returning your call” Is a good start, but not enough to really be helpful. “Hi … This is Ben Dover with Glitztronics returning your call. I can meet with you Tuesday at 10 or Thursday at 3. Let me know what works for you at 459-703-3162.’ While longer, it’s a more courteous and complete communication.

Little effort, big results

As you’ve seen, it doesn’t take much time or effort to phone in your image-casting make-over tactics that differentiate your business from the competition who don’t think it matters or have even bothered to try.

Everything your customers and prospects hear over the phone should be on purpose and for a purpose. What kind of an image-casting score would they give your business?

Phil Stella runs Effective Training & Communication, www.communicate-confidently.com, 440-449-0356, and empowers business leaders to communicate confidently. A popular trainer and executive coach on workplace communications and sales presentations, he is also on the Cleveland faculty of the Goldman Sachs 10,000 Small Businesses Initiative.

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What is an Employer Identification Number?

imagesAn employer identification number (EIN), also known as a federal tax identification number (TIN), is used to identify a business entity.  Generally businesses need an EIN.  If you answer yes to any of the following questions, your business must get an EIN:  Do you have any employees?  Do you operate your business as a corporation or partnership?  Do you file an employment, excise or alcohol, tobacco and firearms tax return?  Do you withhold taxes on income, other than wages, paid to a non-resident alien?  Do you have a Keogh plan?  Are you involved with any of the following:  Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns; estates; real estate mortgage investment conduits; non-profit organizations; farmers’ cooperatives; or plan administrators?

It’s important to remember that a business entity is separate and distinct from its owner(s), and as such needs its own identification.  You can apply for an EIN online, for free, and receive your EIN immediately.  The application is fairly straightforward and takes only minutes to complete.

 

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Consultants and Independent Contractors

As a small business, it is not always possible to hire all of the employees you think you may need. But this can be ok. Hiring independent contractors or consultants instead can be beneficial. You will get their special expertise, you will use them only as needed, you will save on tax contributions and benefits, and you will have flexibiity in the relationship.

It is critical, however, to carefully document your agreement with each independent contractor or consultant. Failure to do so could result in serious tax consequences. Also, if the relationship involves the development of a product, software, book, manual or intellectual property, to name a few, your agreement should set forth the rights you expect to retain in the final product.

Having employees is great, but independent contractors and consultants can often fill a specific need.

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The Corporate Minute Book

corporate-minute-bookIt is important to keep your corporate minute book current.  It should include various important documents, such as the company’s articles of incorporation, bylaws, and minutes or written consents of all meetings and actions of the directors, committees and shareholders.

A current corporate minute book is a useful tool in helping you to comply with corporate formalities, which helps prevent shareholder liability.  In addition, in the event you want to raise money or sell your business, attorneys for the other side will likely want to see your minute book.

Problems to avoid include the following:

  • Minutes that the secretary has not signed
  • Written consents without all necessary signatures
  • No minutes for regularly scheduled shareholder or board meetings
  • Written consents authorizing execution of certain documents as attached, but failing to attach the documents
  • Failure to document calls or notices of meetings
  • Notices or calls of meetings that are legally inadequate
  • Shareholder minutes that do not reflect the number of shares present or how they voted
  • Resolutions showing board approval but not shareholder approval where both are necessary
  • Lack of authorization for issuing shares of stock

Keeping an up-to-date corporate minute book is not unduly burdensome, but well worth the time and effort.

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The Benefits of an Advisory Board

As entrepreneurs, we often keep things close to the vest.  While there are many advisory_boardadvantages to this, there are also disadvantages.  Receiving input from unaffiliated experts is an excellent way to create a competitive advantage and move your business forward.  One way to achieve this objective without feeling too vulnerable is through the use of an advisory board.

An advisory board plays a critical role in helping you move your business to the next levels.  Assembling the right group of advisers allows you to glean from others both their success and horror stories.  Having a group of financial, legal, industry, marketing and operational people to provide you with strategic guidance and feedback helps you make better decisions based on their input and experiences.

The advisory board does not serve merely as a sounding board.  It allows you a trusted audience to discuss your thoughts and ideas regarding your business, and also provides you with insight and perspective of professionals with vast experience from different backgrounds.  Since you will share sensitive information with these people, pick advisers you trust, and whose experience and background you value, and be willing to listen to their ideas and suggestions.  The relationships between you and your advisers, as well as amongst the advisers, will grow and strengthen over time, allowing you additional comfort in sharing the details of your business.  The better your advisers know your business, the better their suggestions will be.

Remember, it is still your business and you are still the decision maker.  Having a group of trusted advisers should enable you to make better decisions faster.

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The Importance of a Business Plan

According to Dun & Bradstreet statistics, poor planning is the number one cause for the failure of a small business.  A business plan is both your company’s resume as well as its growth strategy.  Your business plan, especially for a start-up or early stage company, should outline the plans, strategies and goals for your business.

When writing your business plan, remember that you cannot foresee everything that will happen to your company, so be prepared to revise it as conditions change.  In addition, be realistic with your assumptions, take into consideration the difficulties in growing your business, take your competitors into consideration, and discuss the risks to your business.

Your business plan should be concise and easy to read and comprehend.  It should express the market opportunities for your business, and the strength and depth of your management team.

Keep in mind that youruntitled business plan serves three key functions, namely a planning tool for the growth of your business, a document to convey information to prospective investors, and a base to measure and monitor your company’s performance over time.

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Creating a New Non-Profit

orgThere are a lot of issues to consider when you’re thinking about starting a new non-profit organization to run your community or charitable activities.  One of the first is, are you prepared to run a business?  When you start a new organization, keep in mind there are lots of filing and compliance requirements, both with the IRS and with your state, that will apply no matter how small you are, and that last for the life of the organization.  To avoid trouble, you’ll need to take your new organization seriously, and run it like a small business.

Speaking of small business, also keep in mind that your non-profit status is a tax election.  Successful non-profits are still run like a business.  And they make money, too!  A non-profit organization simply can’t distribute its proceeds to individuals such as shareholders or partners.  All of a non-profit’s proceeds must to be used for its charitable purposes.

The form of your non-profit business organization matters, too.  While the IRS does allow various forms of organizations, such as partnerships or LLC’s, to achieve non-profit status, choosing this type of form will create lots of complications and add lots of time to the process of achieving your tax exempt status with the federal government.  So when you form your organization at the start, choose the basic corporate form in your state.  It will save time and aggravation, and allow you to run and grow your charitable business over time.

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Corporate Basics

Corporate shareholders are the owners of the company, their most important function being to elect the board of directors.  The board has overall responsibility for the company’s business, and elects the company’s officers.  Officers manage the day to day business of the company.

Directors must act in the best interests of the company and its shareholders.  They are fiduciaries, a relationship based on trust and confidence.  The board should not be so large as to be unwieldy, and should preferably be an odd number to avoid deadlocks. The board meets annually, but should meet more frequently to provide advice and guidance to the company.

Certain corporate actions require shareholder approval.  The corporation generally holds an annual shareholder meeting, but can hold special meetings as needed.  In addition, shareholders can approve corporate actions by their unanimous consent without a meeting.

A corporation’s minute book holds important corporate records, and should be kept current.  For instance, the minute book holds the company’s articles of incorporation, bylaws, and minutes and written consents of meetings or other actions of the company’s directors and shareholders.

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