Blog Posts by Mary Ellen Biery

Sales Tax

Privately held retailers are operating with relatively thin profit margins nearly four years after the end of the recession, according to recent data from Sageworks, a financial information company.

And some analysts say costs could go up and pinch margins even more if Congress approves the latest effort to get more retailers to collect taxes on their online sales.

Under the “Marketplace Fairness Act” approved by the Senate, states can require sellers generating more than $1 million in “remote” sales, including those via the Internet, to collect and remit to various states and local governments the jurisdictions’ taxes on those sales. Under current law, businesses must collect applicable state and local sales tax from customers only in states where the firm has a physical presence, such as a store, office or warehouse.

While the House must pass its own version of the bill and both sides would need to work out any differences, much of the debate surrounding the move has focused on the

Business Debt

Debt Service Coverage

One of the most basic measures of a company’s creditworthiness is the Debt Service Coverage ratio, which shows a firm’s ongoing ability to keep in control both debt and interest. The Debt Service Coverage Ratio, defined as EBITDA divided by a firm’s current portion of long-term debt and interest expense, is an extremely important metric for predicting default. More than half of the banks and asset-based lenders in the Pepperdine Capital Markets survey said this statistic was important or very important in their lending decisions.

Given its role in lending decisions, an improvement to the Debt Service Coverage Ratio can be beneficial, and it can be accomplished in a variety of ways. Cutting expenses may boost the firm’s EBITDA, even if debt and interest payments stay the same.

But a business can also improve this ratio by focusing on debt and interest expense. Short of extending the term of a loan or refinancing to lower interest expense, one effective way of tackling

Transparency, one of the biggest buzzwords in business right now, is about conducting business in an open and forthright way, and it is driven by recent trends in technology, society and financial markets.

The last 15 years have brought scandals, bailouts, accidents and financial crises that have shaken Americans’ trust in businesses. Enron. Adelphia. Lehman Brothers. AIG. Bernie Madoff. The BP oil spill.

But the newest trend in business is transparency, and it’s helping companies rebuild and maintain trust with customers and partners.

Internal transparency to track progress

Some businesses find that increasing financial transparency within the company can improve the bottom line. For example, Eric Holtzclaw, CEO and founder of marketing and product-strategy firm Laddering Works, began sharing specific dollar amounts for budgets to many employees within his organization, even though he was originally reluctant to do so.

“I had to learn through trial and error,” Holtzclaw says in a

Business Loan: Approved

Applying for a business loan can be intimidating and stressful, and it can be confusing to have an application rejected with little explanation. There are steps company executives can take to avoid some of the possible confusion and to develop a more positive experience while applying for a business loan. Two of these steps are described below, and should be completed prior to approaching a financial institution about a loan.

1) Research Lender Options

Like any business operator, financial institutions want to make money in their business. While they want to lend money, they don’t want to approve credit that will ultimately result in loss. Further, regulatory requirements often influence the types of loans that can be approved. As a result, a major concern of any institution considering approving a business loan is whether the owner and the business are good risks.

“Good risks,” however, can mean different things to different lenders, which is why it is a good idea to do some basic