The long awaited SBA ARC loan is now available! This program was heralded from the start as a milestone to helping small businesses having problems due to the current recession. These loans are made by a bank, up to $35,000, feature a 100% guarantee by SBA, and are interest free! Eligible businesses must have been in business for at least two years and be able to demonstrate need and repayment ability. The loan would pay loan payments, or other eligible debt, for up to one year, and then repaid over the following five. The SBDC can help with your application; especially with doing the financial projections that are required to show repayment. For more information consult the SBA web site at www.sba.gov or call the SBDC at 928-532-6170 for more information.

As a small business owner, you may benefit from other provisions of the Stimulus Package. Some of the new tax provisions allow additional depreciation to be taken on eligible fixed asset purchases. Another benefit is the expanded loss carryback that can help small businesses reduce tax liabilities today. For more information you can access the IRS site directly at www.irs.gov and go to the Stimulus benefits for small businesses.

For more information about how the Stimulus Package can help you and your small business, please check with tax advisor and/or visit Recovery.gov.

The Kauffman Foundation has just released a new study entitled, "The Coming Entrepreneurship Boom." The study finds that "several facts have emerged in the course of Kauffman Foundation research that indicate the United States might be on the cusp of an entrepreneurship boom - not in spite of an aging population but because of it. These factors include the shifting age distribution of the country, the continued decline of lifetime employment, the experience and tacit knowledge such employees carry with them, and the effects of the 2008-2009 recession on established sectors of the economy." The study also finds that "Contrary to popularly held assumptions, it turns out that over the past decade or so, the highest rate of entrepreneurial activity belongs to the 55-64 age group. The 20-34 age bracket, meanwhile, which is usually identified with swashbuckling and risk-taking youth (think Facebook and Google), has the lowest. Perhaps most surprising, this disparity occurred in the 11 years around the dot-com boom - when the young entrepreneurial upstart became a cultural icon." To access a copy of the Kauffman Foundation report, "The Coming Entrepreneurship Boom,"

With summer and the high costs of cooling just around the corner, EPA is offering advice to help Americans lower energy bills and greenhouse emissions. Rising energy costs, high summer temperatures and humidity can combine to put a strain on an organization's finances. Through its ENERGY STAR program, EPA has a few simple steps that can help curb energy use in commercial buildings, as well as homes. Learn how to become more energy-efficient and fight global warming. See the EPA web site shown below.

Gross sales? Target revenue? Break-even? No, this figure is more important than all those. These days, as we're all looking at ways to cut costs, figuring out where and how to cut is extremely important. Using break-even analysis allows you to go in with a scalpel instead of a hatchet.

If we said there was one number that you (and everyone else in your company) should absolutely know off the top of your head these days to do this analysis, what number would you say? Targeted annual revenue, perhaps? Break-even sales level per month? Total costs?

While all of these are good ones to know, the key number is the amount that's left over from every dollar of sales, after paying your variable costs, to then pay for your fixed costs, and then once those are paid for, to put towards your net profits.

While financial experts call this the contribution margin (CM), the highly technical term we have for it around our company is, "what's left over."

What question can you answer with this number?

1. If you have to cut costs, as most of us are these days, how will it affect the volume of sales you need to break-even? 2. If you want to invest in a new product line or piece of equipment, or hire a new salesperson, what exactly do you need to generate in sales in order to pay for the line, equipment or person? 3. And at the most basic level, for every dollar increase in fixed costs, how much in sales do you need to make to cover it?

To arrive at this number, total your variable costs, i.e. the costs that either rise or fall with sales (i.e. they're proportional to sales). For most stores, the vast majority of variable costs will be found in your cost of goods. Other examples of variable costs would be direct labor, "percentage rent", and royalties. Total these variable costs and then divide them by your total sales to get a percentage. Let's say this percentage for your company is 48%.

Now take 100% - 48% = 52% to arrive at the contribution margin, aka "What's left over." Now take that number, 0.52 and divide it into $1.00. $1/.52=$1.92. What this equation says in words is that for every dollar you increase fixed costs, you need $1.92 in sales to cover the increase.

How can you use this? For example, if it's going to cost you a total of $100,000 to get into a new product line and promote it, you'll need to make at least $192,00 ($100,000 x $1.92) in sales to cover it.

Or conversely, if you are looking at cutting a cost, such as reducing salaries by $10,000 a year, you know your sales can drop by $19,200 and you can still make the same profit you did before.

If your employees knew this number, they would know that if they waste materials worth $1,000, they'd also know that they would need to make it up by selling an additional $1,920. Most of us think if we mess up something that's worth a dollar, all we need to do is sell another $1.00 to make up for it. Fatal flaw. We forget that for each dollar of sales that comes in, we first need to pay for our variable costs before we even start to start paying for our fixed costs. And only after we finish paying for those fixed costs can we take home any profit.