Archive for February, 2011
Guest post by: Kristen Bailey, Suretybonds.com
As a new small business owner, you probably have some legal hoops to jump through—even if you plan to operate a solo enterprise. Certain government regulations vary by industry, geographic location or even by how much business you do each year.
Unfortunately, one misunderstood regulation that often comes into play is whether or not you need a surety bond for your enterprise. Professionals who manage large companies usually know that they need a surety bond in order to operate legally, but regulations can be confusing for those who run small operations.
Surety Bond Basics
When determining whether or not you need to purchase a bond for your business, you need to understand the basic purpose behind the process. Surety bonds essentially work to ensure that business owners meet licensing stipulations, avoid fraud and follow all applicable industry regulations. Each surety bond acts as a three-party contract issued as a financial guarantee that the bonded entity will perform all duties appropriately.
- The principal is the entity who is required to purchase a bond as a guarantee of their future work. Depending on the language in the regulation that requires the bond, the principal is either the business owner or the business itself.
- The obligee is the entity hopes to prevent potential wrongdoing on the part of the principal by requiring him to purchase a bond. When businesses need a surety bond, it’s usually because a government entity requires one as a part of the licensing process.
- The surety is the entity that issues the bond to the principal, thus providing a financial guarantee of the principal’s performance in the future. Business owners looking for a surety bond for the first time can find a number of surety bond companies online.
Protection for your customers
Be sure to advertise your bonded status, as consumers appreciate doing business with reliable entities that financial institutions have chosen to back financially. Surety bonds ensure consumers that a third party considers the principal as financially stable, as the surety provider would be liable if the principal fails to meet the bond’s terms. Since a wide array of industries require the use of surety bonds for their professionals, there are a number of ways the bond could protect your consumers depending on the nature of your business.
Getting a surety bond
The Small Business Administration’s Office of Surety Guarantees works with surety providers to issue surety bonds for qualified small businesses who need help securing a surety bond. New business owners sometimes have trouble getting approved for a surety bond because they lack a strong credit score or comprehensive financial history. For this reason the office offers two programs: the Prior Approval Program and the Preferred Program. Interested individuals can apply for either program electronically online after establishing a professional relationship with a surety provider.
New small business owners looking to purchase a surety bond for the first time can find a number of surety providers online. Many of these providers offer online applications that can be completed in a matter of minutes. Applicants typically receive a quote back within a few days. Applicants should be prepared to undergo a credit check and financial review that will help determine the premium the provider charges for the surety bond. Once the business owner submits a payment for the bond, the surety provider will execute the bond, and the new business owner will be set until the bond needs to be renewed.
This article was written by Kristen Bradley, principal of SuretyBonds.com, an agency that issues surety bonds for new business owners every day. If you’re an entrepreneur or new business owner looking for additional information on surety bonds,check out the agency’s educational Surety Bond Insider Blog.
1. Keep your agreements with your clients
If you promise delivery on a particular day, make sure to deliver when it was promised. Even something as small as the time you have scheduled an appointment is an agreement. Each time you break an agreement with a client, you break the trust.
2. Create realistic client expectations
Help the client to understand exactly what you will do for him or her. Put boundaries around what is included in your service and what is not. What will create extra charges? How and when will you be billing the client? Living up to the expectations you create helps your clients to take you at your word.
3. Help clients to understand the process
If your client understands how you work, the client can then know what to expect and when to expect it.
4. Explain your plan and strategy
Not only does the client need to understand your procedures but also what the plan and strategy is for his/her particular case. This will help your client to know what to expect and when to expect it. Trust comes when the client feels confident and comfortable with the plan and the strategy behind it.
5. Never over promise
It is tempting to promise whatever the client requests without consulting a schedule or asking if it is doable. Over promising often causes broken agreements and thus broken trust.
6. Carefully explain the client’s role
When a client is clear on what their role is then the client gets clear on what progress can be made without their involvement and what needs their input before moving on. Getting really clear on what the client needs to do to move forward, helps you work as a team and builds trust.
7. Discuss potential pitfalls
Nothing disturbs the trust of a client more than when something unexpected happens. (If it is good of course you can celebrate!) Guard against something negative happening as a surprise by discussing the potential pitfalls with the client.
8. Review the agreement in detail
Any agreements that the client is going to have to make should be discussed in detail. Trust is built over a long period of time but it can be broken easily. A surprise that results from an agreement the client made but is unaware of breaks that trust quickly.
9. Avoid making the client feel devalued
No one likes to feel devalued. If clients feel that you think they are of no value they will no longer entrust you with their ideas or thoughts. Clients who don’t feel valued by the professional may stop trusting that person. It may be an attitude, an inadvertent comment, or a look that gives the client this impression. Be aware of your inner thoughts because they show up without your noticing. Use careful language.
10. Don’t allow interruptions at meetings
If you take interruptions during meetings with clients it makes them feel they are not important to you. Eventually you erode the good will and trust that you had with them.
Would you like to deepen the impact that you have on your clients? Then you’ll want to catch the exclusive, 1-time teleseminar Exquisite Client Support with Melinda Cohan & Kate Steinbacher, Founders of The Coaches Console and myself. It’s this Tuesday, March 1, 2011 at 3pm ET. Find out more and register here.