Choosing the United States

A location decision is, in many respects, a referendum on a nation’s competitiveness. When a company decides, say, to build a factory with good jobs in China or Poland rather than in the United States, it is effectively voting on the question of which country can best enable its success in the global marketplace. Those votes matter: Each location decision translates into jobs, investments, tax revenues, and economic development. Governments, especially those of the most dynamic countries, compete fiercely for each vote.

The question “Where should we locate?” is more prominent in the minds of executives than it has ever been. Over the past three decades, business activities have become increasingly mobile, and more and more countries have become viable contenders for them. As a result, the number and significance of location decisions have exploded. Considerable evidence, including new data we unveil below, suggests that the U.S. is not winning enough of the location decisions that support healthy job growth and rising wages.

U.S.-based companies and America benefit when some activities—for instance, those tied to scarce natural resources or to customers—are placed in other countries. This boosts growth prospects in the United States. But other activities, such as R&D and advanced manufacturing, are essential to America’s competitiveness as a sophisticated economy. High-end activities have been a traditional strength of the country, but today the U.S. is struggling to attract and retain them.

Our research identifies two sets of avoidable causes. First are poor policies. The U.S. government is failing to tackle weaknesses in the business environment that are making the country a less attractive place to invest and are nullifying some of America’s most important competitive strengths. The government has also failed to eliminate distortions in the international trading and investment system that disadvantage the United States.

Second, in the rush to globalize, companies have overlooked the current and latent advantages of a U.S. location. Many factors affect the profitability of operating in a certain locale: wage levels, skills availability, utility rates, taxes, subsidies, shipping costs and reliability, local productivity, supervision costs, and many more. These factors are complex, interrelated, and dynamic. Locating an activity in one country often has ripple effects on activities elsewhere. Because many companies are still learning how to weigh these factors—indeed, processes for making location decisions have lagged behind those for virtually all other major investment decisions—companies can fall prey to biases that work against the U.S.

Is the U.S. Winning?

According to our survey of HBS alumni who made location decisions in the previous year, the majority of decisions …

For one, companies sometimes overlook or underestimate the hidden costs of locating activities outside the United States, as we heard in interviews we conducted with senior executives of multinationals. Many benefits of locating elsewhere, such as low wages or taxes, are visible and immediate, whereas the drawbacks are frequently subtle and apparent only over the long term. Also, companies often mistakenly view circumstances in U.S. locations as fixed, failing to consider how they might upgrade the productivity of existing U.S. sites or find more appropriate sites within America. Companies move out of U.S. locations when they could improve them. The implication is not that U.S.-based companies should always stay home but that they can make location choices better.

If the U.S. can tackle some of its weaknesses as a business location, there are grounds for optimism. Important trends are beginning to favor a U.S. location, such as rapidly rising wages in emerging economies, increasing transportation and logistical costs, and shortening product life cycles, which makes “near-shoring” attractive. Companies are also starting to understand the hidden costs of offshoring and to see and act on their ability to improve business environments in their U.S. communities.

What Is the U.S. Competing For?

A generation ago, most location choices boiled down to the question “Which countries do we want to serve?” Today improvements in information, communication, and logistics technology allow firms to serve many markets from a distance, spread discrete activities around the globe, and coordinate them in a global system. Thus, managers must increasingly decide not only which countries to serve but also where to locate each activity in the value chain.

To understand the kind of location choices that matter most for the U.S., we must distinguish among types of business activities with very different characteristics. Some activities require scarce natural resources and must be located near them. Other activities are tied to customers and markets—for instance, direct sales, on-site customer service, and physical delivery. For instance, if you want to sell cars in Vietnam, you must have showrooms there. When U.S.-based firms place such activities outside America, they are better positioned to tap foreign demand, gain insights into local customers, and adapt products to local markets—all of which boost company revenue, the demand for supporting activities at home, and U.S. competitiveness overall.

Customer-tied activities tend to gravitate to large, growing, and profitable markets. As the largest and often most sophisticated market, the U.S. has been a magnet for such activities. However, the rapid growth of markets such as China is weakening the pull of the U.S., while regulatory delays and other barriers are nullifying American market attractiveness.

Many activities in the value chain, however, are tied neither to customers nor to resources but instead are mobile: They can be placed in any of numerous locations and moved as circumstances change. Research, software development, and production of goods with modest transport costs, for example, can be located almost anywhere. Mobile activities gravitate toward the location that allows them to be performed the most effectively at the lowest total cost.

More activities have become mobile over time. Technological advances make it economical to develop and produce goods and services far from the final consumer and to coordinate activities at a distance. In fact, specialized companies have emerged to help others create and manage globally distributed supply chains; consider Li and Fung in apparel, for instance, or Flextronics in electronics production.

At the same time, the range of location options for mobile activities has expanded dramatically as many countries have stabilized their macroeconomic policies, opened their markets, improved their infrastructure, strengthened their economic institutions, and upgraded the skills of their workforces. Countries that used to attract activities only on the basis of natural resources or cheap labor can now vie for activities that rely on more skill and involve more-complex manufacturing or services.

Some mobile activities are truly footloose and can be relocated easily when conditions change—for example, a low-skill assembly operation with little fixed capital. Others, often those requiring highly skilled staff or sophisticated facilities, can be placed initially in any of several locations, but once located they are hard to move. In addition, one mobile activity in the value chain often pulls others to its location over time. For instance, a company may enter a new market with customer-tied activities, such as direct sales, but then add mobile activities like product development to build a larger presence and penetrate the market further.

Not all mobile activities are the same from the perspective of national prosperity. Those that generate the most value per worker—R&D, sophisticated manufacturing, and skill-intensive traded services, for instance—are the most desirable. They not only support attractive wages but also often lead to follow-on investments as well as technology and skill spillovers to other parts of the local economy. Low-end activities, such as simple assembly (of PCs, for example) or routine remote customer service, provide far lower wages and are more prone to relocation if local costs rise.

Sophisticated, skill-intensive mobile activities are the key battleground for advanced economies such as the United States. An acid test of U.S. competitiveness lies in questions such as: Do managers select America for their high-end mobile activities? Do they tackle their toughest R&D challenges, their most sophisticated manufacturing, and their most challenging managerial functions on U.S. soil or elsewhere?

How Often Is the U.S. Chosen and Why?

Solid answers on how the U.S. is doing at the level of individual location choices are hard to come by. The U.S. government tracks the number of companies that open an establishment in America but does not record whether the activity could have been based elsewhere. Nor are there official statistics that document what other locations, if any, were considered or why one location was chosen over another.

Evidence on location choices by multinationals has been largely anecdotal or based on limited surveys. We know that during the 2000s, hundreds of multinationals, including General Electric, Boeing, and Pfizer, set up R&D centers in China and India. A 2011 Deloitte study reported that 83% of all R&D sites opened by global multinationals from 2004 to 2007 were in China or India. Also during the 2000s, China enjoyed a boom in advanced manufacturing investments, and Eastern Europe saw an influx of labor-intensive scientific and technical activities. Senior executives attributed many of those location decisions not to low costs but to better availability of skilled labor, faster product development, and more government support.

To develop more-comprehensive data on U.S. success in location choices, we surveyed nearly 10,000 Harvard Business School alumni about their experiences with location decisions involving the United States. Of the respondents, 1,767 had been directly involved in such a decision in the prior year. The activities in question were relatively sophisticated: 38% involved some element of research, development, and engineering; 49% were production-related.

Of the respondents, 57% said that the decision at hand was about whether to move existing activities out of the U.S., whereas 34% reported that the decision was about whether to locate new activities in the U.S. or elsewhere. Just 9% said that the decision was about whether to move activities currently located outside the U.S. into the country. In other words, survey participants were six times more likely to have considered moving activities out of rather than into the U.S. (even though U.S. respondents were only twice as numerous as non-U.S. respondents).

Across all types of decisions, the U.S. was chosen as a location just 32% of the time. For decisions about moving existing activities out of the U.S., the U.S. retained those activities in just 16% of cases. We asked respondents to identify the countries that were considered in such decisions and were struck by the diversity. The most commonly considered alternatives were China, India, Brazil, Mexico, and Singapore. But the list included 146 nations, many that are hardly major offshoring hubs (such as Turkmenistan, Suriname, and Senegal). The U.S. is truly competing with the entire world to retain and attract investments.

The most common reason that activities left the U.S. was lower wages elsewhere, which is not surprising. Other reasons were better access to skilled labor and a faster-growing market. (For more survey results, see the exhibit “Rationales for Location Choices.”) More unsettling, however, was evidence of serious weaknesses in the American business environment.

Rationales for Location Choices

In deciding whether to move existing business activities out of the United States, our HBS alumni respondents reported, …

Survey respondents (not just those who made location decisions) expressed considerable concern that business conditions are eroding in the U.S. relative to other countries. As shown in the exhibit “Evaluating the U.S. Business Environment,” respondents pointed to a complex tax code, and ineffective political system, a weak public education system, poor macroeconomic policies, convoluted regulations, deteriorating infrastructure, and lack of skilled labor.

Respondents also identified the greatest impediments to locating and creating jobs in the U.S. (in order): regulations, talent, taxes, macroeconomic conditions, and politics. Respondents framed many of these impediments in terms of uncertainty about the future, not just today’s conditions. For instance, uncertainty about future regulations and taxes was mentioned nearly as often as current regulatory burdens and tax rates.

Evaluating the U.S. Business Environment

How do U.S. locations stack up? Our HBS alumni survey respondents evaluated in which areas the U.S. is falling …

Overall, our findings are sobering. For many business activities, the U.S. was not seriously considered as a location. When the U.S. was a finalist, it won less than a third of the contests. The message was clear: The U.S. is losing business investments and good jobs in no small part because of a failure to address fundamentals of the business environment. To be sure, subsidies and market distortions by other countries play a role in some cases, but according to our survey, those factors were far from the most important.

How Managers Choose Locations

Our research reveals another troubling pattern: The very nature of location decisions may lead some companies to move more high-end activities out of the United States, or locate fewer new activities in the U.S., than would maximize firm value. To examine more closely how managers choose locations for their business activities, we interviewed senior executives at more than a dozen multinationals. Like the surveyed HBS alumni, the executives pointed to skills shortages and government policies that make America an expensive, slow, and uncertain place to do business. But they provided an additional insight: Location-decision processes are so complex and dynamic that they are often made on the basis of simple rules of thumb (“we follow our customers” or “we focus on wage rates”), rough estimates (since “the numbers can be made to say anything”), or history (“mergers have left us with five R&D centers spread around the globe rather than two larger ones in the U.S. and Germany”). Although the best-run global firms have developed rigorous processes for location choices, such sophistication is far from universal.

Why? It is important first to realize that most location decisions are not large-scale movements of entire facilities requiring a detailed investment justification. In fact, large-scale relocations make up a tiny fraction of all American job losses. From 2008 to 2010, mass layoffs (50 or more jobs) involving relocations outside the U.S. resulted in the loss of only 27,145 U.S. jobs, government statistics show. In contrast, mass layoffs not involving foreign relocations resulted in nearly 5 million jobs lost.

The reality is that jobs typically leave America a few at a time, and sometimes in subtle ways. Imagine a bucket with a large number of pinpricks: A software maker promotes its American programmers to higher-end product development positions and hires junior programmers in Eastern Europe for lower-end work. Or a U.S. manufacturer gradually outsources portions of its product line to an OEM with production partners in China. Small decisions like these often are made after only incremental analysis, not a full-blown study that takes into account system-wide consequences.

Location decisions also confront limits on data and depend on accounting systems that make economic comparisons difficult. For example, the CEO of a leading consumer products company generously offered to share data with us on how his firm’s costs varied in factories around the world. It took his team two months to extract the data from a variety of databases, some tied to country operations and others to global functions, and from incompatible ERP systems on different continents.

It is perhaps no surprise, then, that we found few companies revisiting old location choices to see if they had lived up to projections. This may reflect the idiosyncratic nature of location choices, in contrast to more-replicable decisions such as acquisitions, where ex-post assessments are relatively common. Yet retrospective analysis is critical because the impact of poor location choices can cascade over time. As we have seen, location choices often build on one another, with an initial decision leading to more investments in the same location.

Finally, dispersing value chains around the world is a relatively new practice for many firms, one that has ramped up rapidly in recent years. The bias a decade ago may have been to do things locally, but the pendulum has swung the other way as awareness of offshoring has spread. Today many companies seem to believe that most activities can be carried out more economically outside the U.S. Indeed, an entire industry has emerged to support offshoring, promising near-term cost savings.

These findings suggest that the geographic configuration of activities in many companies might not be optimal. When a company chooses to move an existing job out of the United States or to create a new job somewhere other than the U.S., this may be bad news not only for America. Such decisions can reduce value for the company itself.

The Hidden Costs of Offshoring

One of the primary reasons that location choices may turn out to be less effective than expected is because managers sometimes overlook the current and future hidden costs associated with operating outside the United States. For instance, a recent report from AMR Research found that 56% of companies moving production offshore experienced an increase in total landed costs, contrary to their expectations of cost savings. According to a 2010 Ernst & Young survey, more than a third of CFOs reported that the overall costs of entering rapid-growth markets like Brazil, India, and China turned out to be higher than expected.

Common savings from offshoring, such as lower wages, benefits, energy costs, or taxes, are visible and immediate. In our interviews, we found that hidden costs are both direct and indirect. Some arise quickly, while others emerge only over time (see the exhibit “The Economics of Offshoring”). Costs are sometimes masked by the subsidy trap—when companies disregard higher direct and indirect costs of doing business in a location because of tax breaks or outright subsidies offered by the country.

The Economics of Offshoring

The economics of moving business activities out of the U.S. to another location can be thought of in terms of a …

Some hidden direct costs are becoming better known. The rush to arbitrage wage rates, for instance, is giving way to a deeper understanding of the need to take into account total wage costs. If lower-wage workers in emerging economies are less productive or less skilled, firms wind up hiring more workers. They also end up using raw material less efficiently or experiencing lower first-pass quality levels and higher scrap rates.

More subtle, and more often overlooked, are the indirect costs of moving an operation out of the United States, including the effect on costs in other parts of the value chain. An offshore location often requires extra supervision and training, more product inspections, more local security, and higher costs of freight (base and expedited) to deliver products to customers in the U.S. or elsewhere. The firm may incur extra capital and obsolescence costs from carrying greater inventory in the supply chain as well as higher packaging, travel, and telecommunication expenses. Higher costs associated with developing distant suppliers are also possible, in addition to increased overtime charges at headquarters because of time-zone differences.

Moreover, companies have found that distant operations—which involve longer delivery lead times—make it difficult and costly to respond rapidly to shifts in customer demand. Offshore makers of fashion apparel, for instance, can find themselves marking down substantial portions of their goods even as they run out of popular items.

Both direct and indirect costs change over time, sometimes radically. Dramatic wage inflation in some emerging economies has shrunk the labor savings that many managers hoped to enjoy. Hourly wages of a typical line production worker in Shanghai, for instance, rose roughly 125% between 2006 and 2011. Middle management salaries in India reportedly surged 13% in 2011 alone. High rates of personnel turnover (often reported in the range of 10% to 20% per year in China) reduce productivity and raise hiring and training costs. In addition, the trade-weighted basket of emerging-economy currencies has appreciated against the dollar since 2006, further raising costs in dollar terms. At the same time, the cost of transporting goods back to U.S. customers has risen with increases in fuel prices.

Intellectual property rights are also significant, and often underestimated, source of long-run costs. Firms operating in countries with weak IP protection can wind up losing their secrets or taking costly measures to protect them. One executive we interviewed described how his firm, fearing the loss of production know-how, has removed units of measure on the gauges in its Chinese factory. Another bemoaned the expense of defending a trademark in India’s byzantine legal system.

Finally, management teams that have moved some functions offshore, but not others, have struggled with costs of coordination across activities. For example, when manufacturing facilities are moved abroad but research and development centers remain in the U.S., innovation can suffer (see Gary P. Pisano and Willy C. Shih’s article “Does America Really Need Manufacturing?”, HBR March 2012). And when managers take on local partners to move offshore—sometimes a precondition for entry into a country—they can find themselves mired in drawn-out, time-consuming negotiations. Such costs can quickly turn what appears to be a worthy investment into a money loser.

Improve, Not Move

As companies have globalized, they have focused less on their home location or any one location. Conventional wisdom has been to migrate from one location to another to capture the greatest near-term benefits. Some athletic-shoe makers, for example, moved production activities to follow low wages—from Japan in the 1960s, to South Korea and Taiwan in the 1970s, and then on to China, Indonesia, and Vietnam. There is certainly logic in this approach, especially for low-end activities in mature product categories where innovation is limited, few skills are required, and input costs are paramount.

When companies shift locations, however, they can overlook two things. First, productivity improvements are often rooted in investments in individuals, innovation teams, and infrastructure as well as in long-term relationships with local suppliers and supporting institutions. It is difficult to cultivate such assets while moving from place to place. Second, the local business environment is not fixed. Acting individually and collectively, firms in a locale can improve the economics of undertaking activities there. So managers have an alternative: Improve rather than move.

Consider Corning, a leading maker of specialty glass and ceramics, including optical fiber and liquid crystal display (LCD) glass. The firm is best known for patient investment in innovation, success in pioneering breakthrough technologies, highly sophisticated production processes, and manufacturing costs among the world’s lowest.

Less well-known is the company’s commitment to Corning, New York, a town of 11,000 located about four hours from New York City. The region is home to five Corning plants as well as the company’s main research center, where employees generate some 250 patents each year. Corning develops new products in its U.S. plants, close to the research center, and then rolls them out globally. The company has a long history of investing in local infrastructure and talent. Some recent grants made by the Corning Foundation include $3.7 million to the Corning school district and $110,000 to a regional science and discovery center. Such investments, sustained over decades, have helped turn a rural town into a prime location for developing world-class technologies.

But Corning does not do everything at home. In 2010, nearly three-quarters of its revenue came from outside the U.S., where it has 60 plants in 14 countries and almost two-thirds of its fixed assets. Internationalization has been particularly far-reaching in product areas such as LCDs, whose customers (consumer electronics makers) are clustered in locations outside the U.S. Interestingly, the company has replicated its pattern of deep local investment in its major international locations, including in communities near LCD plants in Taiwan, Japan, and China. Instead of dispersing activities or migrating from place to place, Corning has concentrated its investments to build a handful of centers of excellence.

Efforts to upgrade a local business environment often are most effective when firms collaborate to make investments in collective assets that no single firm can justify. Since 2004, for instance, chief executives in the Minneapolis-St. Paul region have worked with Minnesota’s governor, local mayors, and university leaders to identify priorities and deploy teams to investigate issues, make recommendations, and “unite public, nonprofit and business interests behind common goals and solutions for faster, better results.” This “employer-led civic alliance,” known as the Itasca Project, has sparked an initiative to give businesses better access to University of Minnesota technology, a summer jobs program for Minneapolis students, and distribution of “Close the Gap” tool kits to help employers reduce socioeconomic disparities within the workforce. (See Bill George’s Harvard Business School case on Minneapolis-St. Paul as well as Rosabeth Moss Kanter’s article, “Enriching the Ecosystem,” HBR March 2012.)

Sophisticated business leaders understand that a company can benefit by building local clusters and upgrading the business environment. In our HBS alumni survey, we asked each respondent whether his or her business would be more, equally, or less successful if it were to undertake more activities to benefit its local community. Twenty-two percent believed that such activities would make the company itself more successful, and 71% said that such activities would be neutral to company success, suggesting that they would pay for themselves. Only 7% thought that additional activities would make a company less successful. Cultivating the business environment in a company’s locations, the survey suggests, is not charity but self-interest.

Making the U.S. More Competitive

America has much work to do to address the fundamental causes of declining competitiveness that are driving location decisions outside the United States. The government must tackle business environment weaknesses and the trade distortions introduced by other countries. At the corporate level, managers must learn to make location decisions better and invest to upgrade their U.S. (and foreign) communities.

Agenda for policy makers

Our findings on U.S. location decisions point to an agenda for American policymakers at federal, state, and local levels.

Address U.S. business environment weaknesses.

American policy makers must tackle the weaknesses in the country’s business environment summarized earlier. Most pressing, in many ways, is the corporate tax code, which is highly visible in location calculations. The code sets a high statutory rate but collects at a low effective rate because of loopholes and subsidies, and is complicated in ways that serve only the interests of accountants, lawyers, and bureaucrats. Lowering the tax rate, while eliminating loopholes and subsidies, could attract investment without reducing government revenue.

Then there’s regulation. Although sound regulation is essential to level the playing field among competitors and protect society’s interests, our research uncovered examples of complex or distortionary rules and administrative procedures that raise the cost of doing business in the U.S. without benefiting society. Whereas state governments get good marks for being responsive to business, the U.S. federal government often does not work collaboratively with businesses to reduce obstacles to investment and growth.

Survey respondents also told us repeatedly how much more time it takes to align government officials across agencies and jurisdictions in the U.S. than in, say, Eastern Europe or China. We do not want to copy China, whose speed comes partly from a political system unacceptable to Americans, but we do welcome recent efforts by the Commerce Department and others that make it easier for would-be job creators to navigate multiple government entities.

Protect core U.S. strengths.

Many of America’s unique strengths center on the creation and commercialization of new ideas. The country enjoys well-endowed universities with close connections to business and strong property rights that encourage people to invest in new ideas and facilities. The U.S. also offers an entrepreneurial system that funnels capital and talent to promising ventures, capital markets that reward success, and social norms that forgive failure. These strengths attract talent from around the world and, with talent, high-end mobile activities such as R&D.

U.S. policymakers must reinforce rather than nullify those strengths. Three threats stood out in our interviews with senior executives. First, immigration restrictions are preventing innovative, highly skilled individuals from entering the U.S. to work or from staying in the U.S. after earning advanced degrees. Second, some regulations hold up innovation without generating offsetting benefits to the country. In medical devices, for example, slow FDA approvals in the U.S. are driving clinical trials, production, and even research to Europe, where regulatory standards are equally stringent but more expeditiously applied. Third, the U.S. system of intellectual property protection is slow to prevent foreign IP infringers from selling in the attractive U.S. market and is vulnerable to abuses such as patent trolling. (See “Reviving Entrepreneurship,” by Josh Lerner and William Sahlman, HBR March 2012.)

Should Companies Undertake More Activities to Benefit Their Local Communities?

Nearly all the respondents in our HBS alumni survey believe that companies can do more to improve their local …

Eliminate trade and investment distortions that unfairly disadvantage the U.S.

At a federal level, U.S. government officials must work, bilaterally and multilaterally, to reduce or eliminate the distortions that some countries introduce into location choices. Countries can bias decisions, for instance, by holding down exchange rates artificially, suppressing wages below market levels, not allowing foreign ownership or control in certain sectors, or denying companies access to the local market unless they locate high-end mobile activities within the country. All of these measures encourage or pressure firms to locate activities in places other than where they can be performed most economically. Companies have little ability to resist such pressure individually; the U.S. government has largely abdicated its leadership in this area and can do much more to level the playing field. (See “Shattering the Myths About U.S. Trade Policy” by Robert Z. Lawrence and Lawrence Edwards, HBR March 2012.)

Avoid the subsidy trap.

When seeking to bring capital, jobs, and expertise into a region, many policymakers resort to large tax breaks and cash incentives. In using subsidies as the primary strategy to attract a company’s activities, policymakers “train” business leaders to think of locations as interchangeable, and they draw to their regions the companies that are least likely to put down deep roots. Local leaders should aim to attract businesses not by outbidding rival locations on tax subsidies but by offering a compelling value proposition, such as access to talent, technological knowledge, supporting institutions, or a local market that fits the firm’s strategy and cannot be matched elsewhere. Incentives should focus on investments in local infrastructure, in workforce training, and in other assets that will be valuable to other firms and citizens even if particular companies relocate.

Work collaboratively to enhance local competitiveness.

Government organizations can take a variety of steps to encourage companies to invest in their local business environments. For instance, they can match corporate funds for skills training, make supporting investments in infrastructure, streamline regulations, realign workforce development, and take any other steps. This support is often best handled at the local or regional level, where government and business have a common agenda, business leaders can provide effective leadership, and the connection with political leaders is greatest.

“If they have to pay you to move to their location…I consider that a danger sign,” one executive told us.

In Charlotte, North Carolina, for example, city and state governments collaborated with local businesses to create an innovative program to reduce energy consumption in the central business district by 20% by 2016. Duke Energy and Cisco covered the initial cost of wiring 65 buildings with digital technology to track energy use, while the state approved an energy efficiency program that added a fraction of a cent per kilowatt-hour to nonresidential customer utility bills—and helped the two companies recover their upfront investments.

Agenda for business leaders

Improving the competitiveness of the U.S. as a business location is often seen as the job of the government. But we cannot expect the government to solve the problem on its own. Businesses must lead the way through initiatives within individual companies and joint actions across companies.

Capitalize on changes in business conditions that favor the U.S.

Some of the economic trends that led many companies to relocate outside the U.S. are shifting, as we have discussed. This is creating new opportunities to reexamine a U.S. location, especially for activities that supply or serve the U.S. or nearby markets.

Near-shore instead of offshore.

In thinking about moving activities out of the U.S., managers have often overlooked the opportunity to “near-shore”—that is, to find another location in the U.S. with economics better suited to the activities involved. This capitalizes on the substantial economic heterogeneity within U.S. borders. A firm looking for inexpensive electricity, for instance, can find it in Idaho, while a company seeking low wages will discover hourly rates in Mississippi and South Dakota that are a third lower than in New York or Massachusetts. There may be locations within the diverse United States that are more attractive for certain activities than offshore locales once hidden costs and the ability to improve local conditions are taken into account, especially for activities serving the North American market. Near-shoring can reduce some hidden costs of distant locations—for instance, by reducing transportation costs, management oversight costs, and the risk of lost intellectual property. Also, executives we interviewed emphasized that some of the benefits of offshoring come not from the foreign location per se but from the opportunity a move brings to reexamine and improve processes—an opportunity that a move within the U.S. might afford.

Avoid the subsidy trap.

Firms should be wary of choosing a location simply because local authorities offer direct subsidies. As one chief executive told us, “If they feel they have to pay you to move to their location, there’s probably a reason. I consider that a danger sign.” Instead, companies should work with policymakers to face tough choices about spending priorities, educational reform, tax overhauls, and other controversial issues that affect the business environment. Business leaders should convey to policymakers that improving the economics of locating in the U.S. is crucial for the nation’s long-term prosperity.

Upgrade U.S. communities.

Business leaders must stop taking their local business environments as given. We have discussed how improving a location, rather than moving, can benefit a company. Of course, investing at home does not mean that firms should stay there exclusively. Globalization has important competitive benefits. But most companies should invest deeply in fewer sites around the globe rather than moving repeatedly, proliferating sites, and spreading local investments thin. For many if not most multinationals, one base should be in the United States, which offers many advantages, including a world-class university system, strong intellectual property protection, sophisticated managerial talent, ready access to capital, and a huge domestic market. Investing in local communities will improve the legitimacy of business and garner more support for government policies that boost competitiveness.

Improve the quality of location decision-making processes.

As managers learn to recognize the hidden costs of offshoring as well as the benefits of making investments to improve U.S. locations, some activities will flow back to the U.S. and others will be retained in the country.The days when every major multinational had a substantial share of its activities in the United States are long gone. U.S. and non-U.S. companies alike must compete globally, and this requires global networks of activities. For America to prosper in a world of truly global firms, the U.S. must address some serious and unnecessary weaknesses in its business environment and tackle distortions to the trading system that are driving investment out of the country.

Nonetheless, we come away from our examination of corporate location choices hopeful about America’s prospects. Sophisticated management teams are reevaluating their rush offshore and, in some instances, are beginning to move high-end mobile activities back to the United States. To a degree, these choices reflect the trends we noted, such as rising wages in emerging economies. But they also reflect conscious efforts by some executives and policy makers to understand better, and to change, the economics of location in a global economy. We are optimistic that with concerted action by government and business, more and more companies will find that for many high-end mobile activities, the right choice is the United States.

Tips For Growing A Successful Business

9 Tips For Growing A Successful Business - Manager's Office

1. Get Organized

To achieve the business success you need to be organized. It will help you complete tasks and stay on top of things to be done. A good way to be organized is to create a to-do list each day. As you complete each item, check it off your list. This will ensure that you’re not forgetting anything and completing all the tasks that are essential to the survival of your business.

2. Keep Detailed Records

All successful businesses keep detailed records. By doing so, you’ll know where the business stands financially and what potential challenges you could be facing. Just knowing this gives you time to create strategies to overcome those challenges.

3. Analyze Your Competition

Competition breeds the best results. To be successful, you can’t be afraid to study and learn from your competitors. After all, they may be doing something right that you can implement in your business to make more money.

4. Understand the Risks and Rewards

The key to being successful is taking calculated risks to help your business grow. A good question to ask is “What’s the downside?” If you can answer this question, then you know what the worst-case scenario is. This knowledge will allow you to take the kinds of calculated risks that can generate tremendous rewards.

Understanding risks and rewards include being smart about the timing of starting your business. For example, did the severe economic dislocation of 2020 provide you with an opportunity (say, manufacturing and selling face masks) or an impediment (opening a new restaurant during a time of social distancing and limited seating allowed)?

5. Be Creative

Always be looking for ways to improve your business and make it stand out from the competition. Recognize that you don’t know everything and be open to new ideas and different approaches to your business. 

6. Stay Focused

The old saying “Rome wasn’t built in a day” applies here. Just because you open a business doesn’t mean you’re going to immediately start making money. It takes time to let people know who you are, so stay focused on achieving your short-term goals.

7. Prepare to Make Sacrifices

5 Tips For Starting A New Business

The lead-up to starting a business is hard work, but after you open your doors, your work has just begun. In many cases, you have to put in more time than you would if you were working for someone else, which may mean spending less time with family and friends to be successful.

8. Provide Great Service

There are many successful businesses that forget that providing great customer service is important. If you provide better service for your customers, they’ll be more inclined to come to you the next time they need something instead of going to your competition.

9. Be Consistent

Consistency is a key component to making money in business. You have to keep doing what is necessary to be successful day in and day out. This will create long-term positive habits that will help you make money in the long run.

The Bottom Line

According to 2019 data from the U.S. Bureau of Labor Statistics, approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.1 If you want to be among that 25%, rigorous attention to these nine tips is the smart way to get there.

Six Reasons When To Drug Test CDL Drivers

Return to Duty Drug Testing - Lobdock Impairment Detection

Do you manage CDL drivers that operate a Commercial Motor Vehicle? If so, you need to know the six official reasons when to drug test your drivers. These will keep you in compliance with the Department of Transportation and help you maintain a drug-free workplace

The Federal Motor Carrier Safety Administration (FMCSA) under the Department of Transportation (DOT) has specific reasons when you should drug test CDL drivers. 

Here are the six reasons when to drug test CDL drivers to comply with the DOT-FMCSA 49 CFR Part 382:

  • Pre-employment
  • Post-accident
  • Random
  • Return-to-duty
  • Follow-up
  • Reasonable Suspicion/Cause

The following are the official DOT-FMCSA drug testing regulations interpreted in our own words. 


Your drivers need to pass a pre-employment drug test before they begin driving. In other words, each driver must have a negative pre-employment drug test on file. This is part of the driver’s qualification process. Pre-employment alcohol testing is optional. If you opt-in for pre-employment alcohol testing, do it consistently. This means, don’t require a pre-employment alcohol test for one driver and not others. 


The FMCSA post-accident drug testing requirements usually need a second look. They’re a little complicated. The regulations separate the criteria between drug and alcohol testing. This is to distinguish between the post-accident time restrictions. For example, you can drug test up to 32 hours after an accident and alcohol test up to 8 hours after an accident. The time limits are in place for a reason. They are the average length of time that it takes for drugs and alcohol to exit a person’s system. So, it’s pointless to test beyond these time limits. 

Type of accident involvedCitation issued to the CMV driverTest must be performed
i. Human fatalityYESNOYESYES
ii. Bodily injury with immediate medical treatment away from the sceneYESNOYES NO
iii. Disabling damage to any motor vehicle requiring tow awayYESNOYES NO


The minimum annual rate for random drug testing is 25%. The minimum annual rate for random alcohol testing is 10%. What does this mean? To clarify, the random rate is the percentage of your covered drivers that were randomly tested for the whole year. For example, let’s say you have 100 drivers. If you randomly drug test 25 drivers in one year then your annual random drug testing rate is 25%. You would be in compliance.

The FMCSA may increase the random testing rates. The FMCSA sends a notice of the random rates before the program year starts. Complete these random tests between January 1st and December 31st. It’s a best practice to spread random tests throughout the year. This prevents random tests from stacking up at the end of the year. Check ODAPC for the most up-to-date random drug testing rates.  


A return-to-duty drug test takes place after a driver has received a violation. Drug and alcohol violations include refusing to take a drug test or receiving a positive test result. This takes place following the Substance Abuse Professional’s (SAP) evaluation, referral, and treatment. This is also part of the driver’s return-to-duty process. The driver may return-to-duty upon completing a negative drug test. In the case of an alcohol test, a return-to-duty test below 0.02. Conduct all return-to-duty urine drug tests under direct observation.


Follow-up drug testing is the second part of the return-to-duty process. This also takes place after a driver has a violation. The SAP will make a follow-up testing plan based on the driver’s assessment. Do not notify the driver of the SAPs follow-up plan. You also can’t substitute other tests for follow-up tests (such as random). Conduct all follow-up urine drug tests under direct observation.

Reasonable Suspicion or For Cause

Getting Drugs and Alcohol Off the Roads

You may have a reasonable cause to believe an employee is under the influence of drugs or alcohol. Base the decision to test on a reasonable and articulable belief that the employee is using a prohibited drug. These observations must be specific, physical, behavioral, or performance indicators of probable drug use. It’s a good idea to use two trained supervisors to help make the decision. 

A well-trained CDL manager should have a good understanding of the six reasons when to drug and alcohol test drivers. Always notify drivers for testing as discreetly as possible with no advanced notice. This helps maintain the element of surprise and prevents them from “cheating”. Never forget the number one goal of the DOT workplace drug testing program: safety.

Have any questions about CDL drug testing? Comment below and we’ll be glad to answer. 

How to Do Market Research for Small Business: 8 Affordable Market Research Techniques

Small business market research is a tough game.

If you Google “how to do market research,” you’ll come across a long list of tactics that are hard to use on a small business budget.

  • Market research surveys
  • Questionnaires
  • Focus groups
  • Competitive intelligence
  • SWOT analysis
  • Structured interviews.

The list goes on.

If you dig even further into market research techniques, you could quickly find yourself reading about the difference between qualitative and quantitative research, or even statistical sampling methods.

All of these market research techniques have their place. But when you’re wondering how to do market research for small business, you aren’t thinking about complicated statistical models or big budgets.

Market research firms sometimes run massive surveys and international focus groups. You might not have a way to reach 100,000 people with a survey, or the resources to set up multiple focus groups. Your market research process might not be able to include a ton of technology or statistics.

But there are still small business market research tools that work. Conducting market research for a new business or a small business can require some creativity.

With the right tactics you can do affordable or even free market research that gets you the insights you need for your business.

How can market research benefit a small business owner?

Right now you’re probably wondering: why do you need market research?

Small businesses already have a lot of day-to-day operations to deal with.
It’s hard to make time to do market research for small business—especially if you also need to learn how to do market research in the first place.

But if you don’t periodically check in with your audience, you could be leaving business and revenue on the table without ever knowing.

There are many benefits of market research for small business, but the top ones include:

  • Helping you create more compelling marketing materials
  • Identifying more targeted niches interested in your company
  • Suggesting ideas for new products or services based on pain points
  • Minimizing the risk of bad positioning that costs you leads without you knowing
  • Giving you early updates on industry trends before they become widespread

Simply put, effective market research helps you get inside your customers’ heads. How cool is that?

When you need to conduct market research on a tight budget, it can be tricky to find the techniques and market research tools that give the best value for the time and cost investment.

Here’s 8 of our favorite affordable market research techniques.

  1. Quora
  2. Reddit
  3. Book reviews
  4. Surveys
  5. Facebook groups
  6. Competitors
  7. Behavior and analytics
  8. Ask your audience

1. Quora: How to use Quora for market research

Quora is a social media platform based on questions and answers. On Quora, users can submit questions on any topic they like, as well as answer questions related to their expertise.Quora users can submit questions about anything. What if you used their questions to understand how to sell to them?TWEET THIS!

Getting started with Quora is easy: the platform guides you through the process and immediately prompts you to select your areas of interest.

Getting started with Quora

Setting up your Quora profile will let you get notified when questions are tagged with the topics you select. That makes it easy to see what burning questions your audience is asking.

And because Quora orders its answers based on voting, you can also see which solutions they think are the most valuable.

For that reason, Quora market research can be a great method of collecting information on customer pain points. In market research for small business, free public questions from your audience is hard to beat.

If it fits into your marketing plan, you can also consider putting some effort into answering Quora questions. Repurposing your blog posts as part of a Quora marketing strategy can increase their reach and visibility.

2. Reddit: How to use Reddit for market research

Reddit bills itself as “the front page of the internet,” and for good reason—Alexa ranks Reddit as the eighth most trafficked website in the world and the fifth most trafficked in the United States.

Reddit contains a wide variety of communities, linked content, original content, and memes. But among cat videos and adorable gifs, there are some surprisingly insightful conversations—discussions that are a gold mine for small business market research.Reddit has so many different communities – can you find one where your audience is talking about what they need?TWEET THIS!

Reddit is organized into “subreddits,” which are communities focused on specific topics. Finding subreddits based on your industry is a good way to mine for pain points—and discover your audience’s candid thoughts.

Anonymity means that redditors are often willing to share things they wouldn’t normally talk about in person. Reading discussion threads or even asking questions yourself can help you get insights from specific niches.

For example, if you run a fitness business and need to know how to do market research, you’ll find that are quite a few opportunities to conduct customer research on reddit.

Subreddits like these will show up:

  • /r/fitness
  • /r/loseit
  • /r/gainit
  • /r/bodybuilding
  • /r/running
  • /r/bodyweightfitness

Each of them serve different communities, and people often share their successes and struggles.

Reddit can also be helpful for tracking down a very narrow segment of a larger population. A subreddit like /r/griptraining is the very definition of niche—but if you run a rock climbing or powerlifting gym it could have valuable insights from your target audience.

Reddit market research

Navigating Reddit can be a little tricky for new users. But once you figure it out, it’s a powerful tool to do market research for small business.

3. Book reviews: How to use Amazon book reviews for market research

This market research technique is a little bit unusual—but it’s all the more powerful because of how few people think of it.The most underrated marketing research channel? Amazon book reviewsTWEET THIS!

When you need to conduct market research on a tight budget, you need to get creative. Book reviews offer a wealth of information, sometimes incredibly detailed and specific, that few people are taking advantage of.

Amazon book review

Amazon reviews are public, and you probably have some idea of the most important or popular books in your field. Even if you don’t, Amazon charts are also freely available—it’s easy to find out what people are reading.

Once you’ve tracked down some popular books, take a look at the reviews. Amazon lets you easily sort reviews by how positive they are and how helpful they are, so you can dive in at whatever point you like.

Joana Wiebe of Copyhackers is a huge review mining advocate to get to know your audience – and rightfully so. You can hear exactly what peoples problems and wishes are in their exact language.

Positive reviews will be helpful because they can help you understand what people are benefiting from.

Negative or lukewarm reviews can be even more helpful, because there’s a chance they call out needs or burning pains that the book didn’t answer—which may represent unmet needs your business can take advantage of.

4. Surveys: How to use a survey for market research

When most people think of using a survey to do market research for small business, they think of a massive effort that goes out to thousands and thousands of customers.

No, you probably don’t have thousands and thousands of customers that will respond to a survey. And there are some types of survey research that really do require those kinds of numbers.The best way to understand your audience? Ask them what they want.TWEET THIS!

But there are others that don’t. And those are the kind you can focus on as you learn how to do market research for your small business.

Customer insights are one of your business’ most valuable resources.

Setting up surveys that get sent to customers after a sale can help you get a sense of how satisfied they are and what needs led them to make a purchase.

Similarly, you can set up surveys that go out to people that didn’t make a purchase. What prevented them from buying? What might have caused them to make a different decision?

Even if you only ask those two survey questions, the answers can help you make adjustments for the next time around.

BONUS – this type of small business market research is easy to automate.

Setting up automations that trigger based on purchase or lack of purchase is easy to do with marketing automation software. Set up survey questions once, then focus on other parts of your small business while the results come in.

5. Facebook groups: How to use Facebook for market research

Using Facebook for market research

Facebook has risen up as one of the major community building platforms for business. Type your industry into Facebook search and you’re bound to find a variety of related groups.Hang out in the Facebook groups your audience hangs out in. You’ll be surprised at what you learn.TWEET THIS!

Some Facebook groups will be run by other business owners, others are simply people interested in the same topics. Regardless, reading through the conversations and questions asked in Facebook groups can be a valuable source of market research.

When you’re using Facebook for market research, you have a few options.
Simply reading through existing conversations is a great way to get started.

Even though names on Facebook aren’t private, people are often more willing to share their goals or frustrations within a relatively private group.

Once you’ve observed for a while and understand a group’s tone and social norms, you can start to join the conversation. Becoming a member of a group and engaging in discussions can be a great way to ask questions and go beyond surface level insights.

You can’t do this on another business’s page, and you have to be careful about coming off spammy, but Facebook groups can also help you get participants for a market research survey.

As you get more comfortable with how to do market research on Facebook, sharing a link to a survey can help you gather quantitative market research data.

As a free platform with over two billion monthly active users, Facebook can be a powerful way to do market research for small business.

6. Competitors: How to use competitor analysis for market research

Chances are you’re not the only business in your niche. How are the most popular websites in your industry trying to appeal to your audience?What are your competitors doing that you can learn from?TWEET THIS!

How can you tell which content is the most popular or successful? Use a tool like Buzzsumo to find the most shared content on a particular topic.

Buzzsumo market research

A tool like SEMrush can tell you which content ranks the highest in search engines. Both are good ways to identify potentially high-value topics.

Beyond content, look at the other marketing materials your competitors put out.

  • What kind of messaging are they using on their website?
  • How are they creating cross-sell and upsell opportunities?
  • What does their team look like—who’s actually doing their marketing?

As you grow your business, this kind of information becomes more useful.

There’s no guarantee that your competitors are doing everything the best way—but seeing how they are managing their business can spark ideas to improve your own.

Here’s how you do this kind of research:

  • Collect all of the info your competitors make publicly available
  • Comb through their website and about page, download flyers and brochures, and check out the events they attend.
  • Make absolutely sure you get on their email list, so you can see what kind of messages they like to send.

It’s worth taking competitor research with a grain of salt. Again, there’s no guarantee that competitors have done the level of customer research you’re looking for. Still, looking at competitor messaging is a useful way to infer the features and benefits that matter to your audience.

Competitor research isn’t a substitute for contacting your audience directly, but it can be a good starting point to figure out what kind of content is popular in your niche.

7. Behavior and analytics: How to use data for market research

It’s one thing to know what customers say they want. In any industry, professionals know that customers don’t always know how to solve their problems. Sometimes there’s a better question to ask for market research.

What do they actually do?Surveys tell you what people say they want. Data and behavior tracking tell you what people actually want.TWEET THIS!

Tracking behavior on your website or engagement with your emails and messages is a great way to see which of your marketing efforts are most popular—and can help you adjust your marketing in the future.

Google Analytics is one powerful tool that can show you exactly how people engage with your website.

Google Analytics behavior tracking

What content topics are the most popular? Make more content on those topics. Which pages have the best conversion rates? Direct more traffic to those pages. Your content marketing is also a source of information about your audience.

Combining website tracking with marketing automation can take things to the next level.

Marketing automation software can track email opens, link clicks, behavior on websites, replies/forwarding—and use those insights to automatically follow up with customers on what they care about most.

Of all the affordable small business market research techniques on this list, data is the most actionable. Analytics let you go from insight to action almost instantly—and sometimes automatically.

8. Ask your audience: How to use interviews for market research

Even though people don’t always say quite what they mean, there’s no substitute for direct, one-on-one conversations with your audience.Sit down with a customer for 45 minutes. You’ll learn things about your business that you can’t find anywhere else.TWEET THIS!

A market research interview allows free conversation that leads to deeper insights than survey or written answers. If you can get people to open up, you’ll be rewarded by detailed information about their pain points, struggles, and successes.

The style of the interview is less important than getting interviews done. You can do phone interviews, in-person interviews, even email interviews—and still get actionable insights.

The lessons you learn from talking to even 10 customers can change your business strategy, marketing, or client service. The ability to speak to customers using their own language is like a marketing superpower.

Customer interviews are the way to do it.

Entire businesses can be built on what your customers tell you. When you listen to your audience, you get to the heart of what they care about—and no amount of online market research or survey data can tell you that as precisely as they can.

Conclusion: Use market research to get inside your customers’ heads

If your business grows, you’ll eventually want to consider the focus group, survey, statistical analysis, and market trends approach to market research.

Those methods can reveal insights that are hard to find using more affordable market research techniques.

If you need to understand market saturation, or build a picture of how your pricing compares to the competition, you’ll eventually need to use some of the more traditional forms of market research.

But there’s value to doing market research before you have the budget for standard methods. Getting in touch with your customers’ needs can give you a huge edge as a small business.

Not a lot of people do market research for small business like this. Most prefer to wait until they can hire someone to do it for them (or just ignore it entirely).

Because of that, these types of affordable market research techniques are a huge competitive advantage—one that lets you get inside the heads of your customers and offer them exactly what they want to buy.

How To Start A Business: A Step-By-Step Guide

You’ve dreamed about starting your own business. You want independence and ownership in your work life. You even have an idea for a product or service that you want to sell. All your uncertainty is about the details involved in starting a business.

There is no one-size-fits-all blueprint for how to start a business. But there are best practices and steps you can take for success.

We offer a series of steps to help you get started.

How to Start a Business: Forbes Advisor’s 10 Step Guide

1. Get Your Mind on the Right Track

It takes a certain mindset to start a business from scratch—one that’s not too skittish and not too foolhardy.

Perhaps the greatest challenge for new owners is working longer and harder than they ever expected. The truth is: No one will be more determined to see your business succeed than you. You need to be committed from the get-go.

Another common deterrent for entrepreneurs is timing. There is seldom a perfect time to start a business. If you have a product or service that you think could work, then go for it. You want to plan, yes, but you don’t want to get stuck in a cycle of analysis paralysis. You will never truly know if now is a good time unless you try. The key is to get started. Then you deal with the challenges and opportunities along the way.

You’ll need the fortitude to overcome those challenges and the ability to enjoy the opportunities. Desire and determination are essential to driving a small business to success. Even more essential is a vision of what could be.

Stay motivated by focusing on the rewards of your small business succeeding, independence, and the sense of pride that comes with owning your own business.

2. Focus on Refining Your Idea

If you don’t have a firm idea of what your business will entail, ask yourself the following questions: What do you love to do? What do you hate to do? Can you think of something that would make it easier?

These questions can lead you to an idea for your business. If you already have an idea, they might help you expand it.

Your business idea doesn’t have to be a game-changer. It doesn’t need to be novel, either.

For example, do you love to travel? Consider a business as a travel planner if you are good at finding unique hotels and experiences. Do you have a specific talent, such as cooking? Start a business as a personal chef and deliver home-cooked meals. Are you passionate about animals? Become a dog trainer or sitter—or a combination of both.

You can also look around at what is currently available in the marketplace. Then, imagine spinoffs of those products and services that might exist five years from now—10 years from now. That could be the seed that sprouts into your very own product.

3. Do Your Market Research and Competitor Analysis

Is your idea for a product or service that you want to sell a viable one? You’ll need to conduct some market research to find out. Such research is crucial to understand the level of demand for the product or service you want to offer and can help you determine the tastes of the consumer base within your target market. It’s also a necessary part of your business plan that you will use to obtain funding.

Your product or service may be one not currently offered in the marketplace. If so, that’s a great advantage. If it’s already offered, you must have a way to differentiate it from its competitors. If you understand the economic environment and trends that might affect your consumer base and demand, you will better choose what and how you want to sell.

Here’s an example of product and service differentiation in the restaurant industry. Through market research, you find out that healthy-minded customers aren’t satisfied by the pre-made salad options offered by nearby chain restaurants. With this data, you can ensure that your restaurant caters to that niche and differentiates itself from the chains by offering build-your-own salads and other customizable, healthy dishes.


Your market research can be composed of primary and secondary research.

Primary research is the process of collecting data directly rather than relying on the results of already collected data. Primary research can lead to a higher level of accuracy than relying on previously collected data. It is helpful because you can survey the target market through, for example, questionnaires, surveys, and interviews to determine the tastes of the customers.

When you do secondary research, you use existing sources of information, such as Census data, to gather information. The existing data can be studied, compiled, and analyzed in different ways that suit your needs, but it may not be as granular as primary research.

Also, consider conducting a SWOT analysis at this stage. You will be able to use it in your soon-to-be business plan. A SWOT analysis is a business assessment technique that focuses on the strengths, weaknesses, opportunities, and threats relevant to your business. The SWOT analysis shows the relationships between these variables so you can determine the best path forward.

The SWOT framework allows you to consider your competition as well. You can do this by isolating the strategic actions of your competitors. Then, you can analyze their strengths and weaknesses in order to search for a new competitive strategy.

4. Develop a Business Plan

A business plan is a living document that serves as a roadmap to guide the development of a new business. A business plan is constructed in order easy for potential investors, financial institutions, and management of the business to read and digest. Even if you expect to self-fund, a business plan can be a helpful tool.

Business plans typically offer some form of SWOT analysis. Financial institutions and venture capitalists find a SWOT analysis to be a concise source of information about the new business and its competitive strategy. You’ll be ahead of the curve if you already conducted a SWOT analysis during your market research.

A typical business plan is organized something like this:

  • Executive summary: The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the business and the methods that will be used to achieve them.
  • Mission and goals: This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there.
  • Background summary: This portion of the business plan is the most time-consuming to write. Compile and summarize any data, articles and research studies on trends that could positively and negatively affect your business or industry.
  • Organizational structure: In this section, write about the type of business organization you expect, what risk management strategies you propose and who’s going to staff the management team.
  • Marketing plan: The marketing plan identifies the characteristics of your product or service, summarizes the SWOT analysis and analyzes competitors.
  • Financial plan: The financial plan is perhaps the core of the business plan because, without money, the business will not move forward. A proposed budget should be included along with projected financial statements, such as an income statement, a balance sheet and a statement of cash flows. Usually, five years of projected financial statements are acceptable. The funding request is also in this section.
  • Summary: The funding request should be summarized along with the main points concerning why the business is viable.

It is important that the business plan looks as professional as possible, particularly if you plan to use it outside the business. Consider using a business plan template.

5. Choose Your Business Structure

When choosing the legal structure of your business, consider one that serves the interests of the company, you, and any other owners. One of the first issues you should address is that of limited liability.

If you are starting a very small business with few employees, you might consider sole proprietorship. The business and the owner are, for legal and tax purposes, considered the same. The business owner assumes liability for the business. This means that if the business fails, the owner is personally and financially responsible for all debts of the business.

To limit your personal liability, you could register as a limited liability company (LLC). LLCs can be owned by one person or several. Such owners are referred to as members. Other companies can be considered members as well.  If you want to start a specialized business as an accountant or an attorney and have one or more partners, you can register as a limited liability partnership (LLP) for the same reasons.

If your company will be larger and have several employees, consider using the S corporation form of an organization if you don’t mind limiting the number of shareholders to 100 and don’t need to obtain venture capital (as many VC firms aren’t eligible to become S corporation shareholders).

For a high-growth start-up, the C corporation might be most appropriate if you are interested in venture capital since you can issue more than one class of stock. Both types of corporations give you the protection of limited liability but differ in their treatment of income taxes and other financial considerations.

There are several legal issues to address when starting a business after choosing the business structure.

Here’s what you should do:

  • Choose and register your business name. Make it memorable but not too difficult. Choose the same domain name, if available, to establish your internet presence.
  • Apply for an Employer Identification Number. Make your application to the Internal Revenue Service. This process may take up to four weeks.
  • Apply for the licenses and permits you need. What you need is determined by your industry and location. Most businesses need a mixture of state and federal licenses to operate. Check with your local government office for licensing information tailored to your area.
  • Open a business bank account. You want to keep your business and personal finances separate. Here’s how to choose a business checking account—and why separate business accounts are important.
  • Apply for business insurance. You should consider general liability insurance for your business in case of property damage, lawsuits or other problems. You may also want to invest in product liability insurance and commercial property insurance. In most states, workers’ compensation insurance is required by law if you have employees.

7. Obtain Capital for Your Business

It takes money to launch a small business. Since a new business has no financial track record, obtaining initial financing can be difficult. There is the option of internal financing, and here are some of the methods:

  • Owner’s own funds: The business owner may finance the initial launch of the business from personal wealth.
  • Credit cards: Personal or business credit cards can be used for initial funding.
  • Family and friends: The owner may be able to get a loan from family or friends. There is also the possibility that a family member or friend will want to buy a stake in the business.

Some downsides to internal financing include draining your personal wealth on a business that may or may not succeed. If you finance the business with your own funds or with credit cards, you have to pay the debt on the credit cards and you’ve lost a chunk of your personal wealth if the business fails. By allowing members of your family or friends to invest in your business, you are risking hard feelings and strained relationships if the business goes under.

To avoid these downsides, you can try these external financing sources:

  • Small business loans: The best option may be to apply to one of the many loan programs through the Small Business Administration. Learn which SBA loan is right for your business.
  • Small business grants: There are grants available through the Small Business Administration for specific types of businesses and business owners. Federal grants opportunities are also available through
  • Angel investors: These are high net worth individuals who invest a small portion of their portfolios in early-stage new businesses. They are looking for a return, but they are not as predatory in their lending as some other options.
  • Venture capitalists: These individuals are looking to fund high-growth, high-potential start-ups. They provide financing during the various growth stages and then may try to arrange for a sale of the company.
  • Crowdfunding: Using one of the myriad crowdfunding platforms on the internet, such as Kickstarter, Indiegogo and Patreon, business owners can try to raise funds from generous strangers and friends alike.

One of the biggest mistakes new businesses make is under-capitalization so a new small business may have to use a combination of funding sources.

8. Set Up Accounting and Bookkeeping Systems

At the very least, most small businesses need software with a full accounting package that allows ledger and journal entries and the development of the necessary financial statements. Depending on the subscription tier you need, you can expect to pay between $15 and $150 per month.

The company also needs to be able to use its accounting system for two special functions, which don’t come with every software package. First, if you sell a product, you need an inventory function to manage and track inventory. Second, if your business intends to do its own payroll, a payroll function needs to be included. If you expect to have many employees, outsourcing payroll is often a good idea due to the tax implications.

The accounting system should have the capability to have tax information ready at the appropriate intervals.

9. Hire a Team of Employees


Before you start hiring employees, the following should be in place:

  • An Employee Identification Number (EIN) for your business
  • Job descriptions for each position complete with salary range
  • Comprehensive employee application form including references
  • An employment offer letter or agreement
  • Confidentiality and disclosure agreements
  • Appropriate IRS forms including the I-9 and W-4

You should also be prepared to talk with the potential employees’ previous supervisors.

10. Market the Business Aggressively

New small businesses are often operating with a limited initial investment. They need to market aggressively but with a limited budget. In many cases, the business with the best online presence will win. Creating or commissioning a website is a crucial first step.

Some techniques to drive customers to your website are:

  • Search engine optimization: If you optimize your website and content so that the search engines can find and index it, in turn, customers will be able to find you much easier. This is a long-term and ongoing strategy that can have a big impact on your digital presence.
  • Content marketing: Providing quality digital content can drive customers to your business. Videos, customer testimonials, blog posts and demos are only a few of the content marketing techniques businesses use to draw in customers, generate leads and establish themselves as a trustworthy brand.
  • Social media: Your social media presence can drive traffic and sales. Facebook advertising, for example, is probably one of the cheapest forms of advertising and can help you reach new customers. Facebook and Instagram both have e-commerce features that allow you to make sales directly from your social media page as well. At the very least, create free business pages on Facebook, Instagram or Twitter that all use the same URL or handle to make it easy for customers to find you.

Digital marketing techniques can be supplemented with traditional marketing techniques including direct mail, discounts, coupons and print advertising.

How Entrepreneurs Can Build Their Business With Today’s Freelance Platforms

If you’re a business owner, chances are you have too much on your plate. One of the biggest challenges of starting a company from scratch is having too much to do in too little time — not to mention a lack of specific skill sets and expertise. In fact, 45% of entrepreneurs report being really stressed out. Those factors used to make it extra hard to begin a business, but times are changing. 

The past year and a half have taught us a lot, and the modern workplace has changed.  Entrepreneurs can take advantage of this new landscape to get more of their initiatives over the goal line. Savvy business leaders are well acquainted with freelancers and the ways that they can help them to accomplish quick-turn projects. Freelance platforms provide a one-stop-shop for finding the necessary talent to fill gaps in skill sets or experience — without going through the effort and expense of hiring full-time resources. 

What is a freelance platform?

Freelance platforms are online marketplaces where skilled professionals from anywhere in the world can find work and get paid. They have grown tremendously over the past few years, which makes sense since it’s been predicted that freelancers will make up 80% of the workforce by 2030. Freelancing used to be considered “gig work” or side jobs but now offers major employment opportunities. 

In a highly connected and globalized world, typical 9-to-5 jobs are less desirable to people that want to feel consistently engaged and challenged. Instead, many individuals would rather operate as independent contractors and offer their particular skill set on a project or temporary basis. Companies of all sizes have found advantages through working with freelancers and consultants of all types. In the old days, larger businesses would hire pricey consulting firms to help them achieve strategic initiatives. Now, even brand new organizations can use freelance or consulting platforms to achieve cost savings, faster project timelines, and standardized processes. 

Simply put, there’s a lot to accomplish when you start a business—and freelance platforms can help you get those things done faster. 

How to effectively leverage a freelance platform

Hiring freelancers on a platform offers convenience and profitability. That being said, freelance platforms are certainly not all created equal — nor are the professionals that you’ll find on them. Make sure to follow these steps if you’re using a freelance platform to supplement your team. 

1. Research your options

There are many freelance platforms out there — in fact, over 170. However, most freelance platforms specialize in a certain geographic area, specialty, or price range. Your best bet is to narrow down your search based on the most reputable companies.  

2. Understand your real needs 

Before you begin a search on a freelance platform, you should have a comprehensive list of tasks prepared. Even more important, you should be able to tie those tasks to the larger goal of generating revenue (or other key drivers like reducing costs). Many people waste time and money on hiring consultants because of scope creep and moving the goalposts on projects after they’ve begun. 

For example, you may understand that you need to advertise your new business, so you begin looking for paid advertising specialists. But is that really where you should begin? Or do you need someone to put together a more robust and well-researched promotional strategy, that happens to include online advertising? As you know, there’s a big difference between strategy development and tactical execution.

This is where freelancers differ from consultants. Do you need a freelancer for project-related jobs, or a consultant to help you drive business outcomes? If you need the latter, you should be looking at a consulting marketplace instead of a freelance platform. 

Freelance jobs most commonly hired by entrepreneurs

There are certain areas that are actually ideal for hiring project-based workers rather than full-time employees. Some of them include:

  • Virtual assistance
  • Graphic design
  • Writing and editing
  • Social media management
  • eCommerce specialties
  • App development
  • Accounting
  • Search Engine Optimization
  • Web Design

There’s a benefit to knowing what common areas of business freelancers occupy. For one, it tells you what other businesses are currently outsourcing. It also means that your pool of potential options is much larger and more competitive. While there’s likely someone out there to serve any type of business need it’s wisest to identify common areas that are easiest to outsource.

Remember, as your business grows and expands you can always look for opportunities to bring this type of work in-house. You may even develop such a good relationship with those you’re outsourcing with that you can even extend an offer for permanent placement down the line.

3. Seek experience — even at a premium 

You’ve probably heard the phrase “You get what you pay for”, and this is especially true when it comes to human capital. In today’s war for talent, workers can be selective about who they work for and what they work on. It’s essential to be willing to go the extra mile for specific expertise. In many cases, the advice and counsel that entrepreneurs rely on is critical to their future success. 

This type of c-level expertise is not likely to be found at an hourly rate. Instead, for best-in-class professionals or executive expertise, entrepreneurs need to be nimble and willing to invest in longer-term contracts, flexible arrangements, and significant rewards for performance. 

Even if you’re looking for non-strategic tasks like copywriting, database management, or design, seek the top-rated professionals on the platform and exclude the lowest-priced people from your shortlist. They tend to have less experience and are keeping prices low to gain new clients. That’s ok — everyone has to start somewhere — but new businesses have less leeway in that regard. 

Pay the rate that will ensure that your work gets done correctly the first time. 

4. Be transparent and supportive

Once you hire a freelancer, you need to do your part. Give them access to whatever they require from you. Be speedy and reliable in your communications. They can be a lot more successful if you don’t become a bottleneck for them. 

Outsource work without sacrificing quality

Beginning a new business is complex, and your work is never done. Leveraging a freelance platform can allow entrepreneurs to outsource some of the task-based items on their list, without worrying that their standards won’t be met. 

However, if the scope of expertise you’re looking for goes beyond simply executing, then you may need to turn to a consultant marketplace. Either way, outsourcing is a convenient and profitable way to have others help you with the day-to-day aspects of running a business, while you focus on what you do best—growing your company.

The Five Stages of Small Business Growth

Categorizing the problems and growth patterns of small businesses in a systematic way that is useful to entrepreneurs seems at first glance a hopeless task. Small businesses vary widely in size and capacity for growth. They are characterized by independence of action, differing organizational structures, and varied management styles.

Yet on closer scrutiny, it becomes apparent that they experience common problems arising at similar stages in their development. These points of similarity can be organized into a framework that increases our understanding of the nature, characteristics, and problems of businesses ranging from a corner dry cleaning establishment with two or three minimum-wage employees to a $20-million-a-year computer software company experiencing a 40% annual rate of growth.

For owners and managers of small businesses, such an understanding can aid in assessing current challenges; for example, the need to upgrade an existing computer system or to hire and train second-level managers to maintain planned growth.

It can help in anticipating the key requirements at various points—e.g., the inordinate time commitment for owners during the start-up period and the need for delegation and changes in their managerial roles when companies become larger and more complex.

The framework also provides a basis for evaluating the impact of present and proposed governmental regulations and policies on one’s business. A case in point is the exclusion of dividends from double taxation, which could be of great help to a profitable, mature, and stable business like a funeral home but of no help at all to a new, rapidly growing high-technology enterprise.

Finally, the framework aids accountants and consultants in diagnosing problems and matching solutions to smaller enterprises. The problems of a 6-month-old, 20-person business are rarely addressed by advice based on a 30-year-old, 100-person manufacturing company. For the former, cash-flow planning is paramount; for the latter, strategic planning and budgeting to achieve coordination and operating control are most important.

Developing a Small Business Framework

Various researchers over the years have developed models for examining businesses (see Exhibit 1). Each uses business size as one dimension and company maturity or the stage of growth as a second dimension. While useful in many respects, these frameworks are inappropriate for small businesses on at least three counts.

Exhibit 1 Growth Phases

First, they assume that a company must grow and pass through all stages of development or die in the attempt. Second, the models fail to capture the important early stages in a company’s origin and growth. Third, these frameworks characterize company size largely in terms of annual sales (although some mention number of employees) and ignore other factors such as value-added, number of locations, the complexity of product line, and rate of change in products or production technology.

To develop a framework relevant to small and growing businesses, we used a combination of experience, a search of the literature, and empirical research. (See the second insert.) The framework that evolved from this effort delineates the five stages of development shown in Exhibit 2. Each stage is characterized by an index of size, diversity, and complexity and is described by five management factors: managerial style, organizational structure, the extent of formal systems, major strategic goals, and the owner’s involvement in the business. We depict each stage in Exhibit 3 and describe each narratively in this article.

How to Decide Which Type of Business Loan Is Right for You

How To Improve Your Business Loan Eligibility | FinSMEs

There are many types of business loans. Here’s how to choose the right one for you.

  • There are many different types of business loans, including working capital loans, SBA loans, and loans from friends and family.
  • Each loan type comes with its own set of terms and conditions.
  • To determine which loan is right for you, carefully consider what your business needs the loan for, what repayment terms you can handle and how much money you need.

Finding the right sources of funding for your business can be difficult. There are many types of funding available – investors, grants, loans, etc. – and each has its own application process and set of rules.

One of the most common options for small business funding is a business loan. Small business funding sounds like it should be easy enough to obtain, but borrowing money is not as straightforward as it seems.

2017 study found that 27% of small businesses have difficulty gaining adequate financing. As a business owner, you need to know your options so that you can tailor your application to the type of loan you need and lay out exactly how you plan to use the funds.

Consider these seven types of business loans to figure out which one is right for you.

Friends and family loan

4 Important Factors to Consider Before Accessing a Business Loan -  Entrepreneur Business Blog

We’re all familiar with this option, but there are specifics as to when and how to do it that surprise you. First, it’s always a good business practice to put the loan in writing, and to state a specific interest rate and repayment plan. Otherwise, you open the door to unfortunate misunderstandings that can chill your relationship. Also, you should have documentation of the loan’s terms in case the IRS decides to audit your business.


Borrowing from loved ones carries risk. We’ve outlined the benefits and drawbacks of borrowing money for your company from your parents, and a lot of these tips hold true for other family members and close friends who may lend to you. The reality is that many people may not have extra money to part with or, if they do, aren’t comfortable parting with such a large sum for something they have no control over. Be sure to “overcommunicate” the value you bring to your customers, and indicate if and how your friends and family will be able to participate in your business.

You should provide a written promissory note that states how much money they can expect you to pay back and at what interest rate. With this note, you’ll also want to specify a repayment schedule in writing.


Money borrowed from friends and family can come with the best low-interest repayment plan you’ll ever get. This is one of the best reasons to borrow money from friends and family instead of banks and commercial lenders. You may also expand your sales force when you borrow money from those you know: When they’re financially invested (in addition to being personally invested as someone who loves you), they may take it upon themselves to help you succeed and reach your business goals.

How to apply

To show you’re serious about requesting funding from relatives, you may want to approach the subject formally, armed with your business plan, projections, outlines of how you’ll use the money, specifications on your friends and family’s involvement in your business financing, and suggested loan terms and repayment terms. [Read related article: The Roadmap to Peer-to-Peer Lending]

Editor’s note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs.

Business line of credit

A business line of credit is a flexible business loan that allows you to only pay interest on the portion of money that you borrow. It works similarly to a credit card in that you may draw and repay funds as you need, so long as you do not exceed your credit limit. This is a great option for businesses looking for an easy way to manage their cash flow, purchase inventory or pay a surprise expense.


A business line of credit works like a credit card, allowing you to take out and repay money on your own terms as long as you stay within your credit limit and make payments on time. Most lenders will allow you to pay off your balance early to keep your interest costs down.

Line of credit limits tend to be lower than business term loan amounts – generally from $1,000 to $250,000 – and are unsecured, so you typically do not need to put up collateral except in the case of a larger line of credit.


Business lines of credit are a flexible option that allow you to manage your business’s cash flow as you see fit, and you can reuse and repay your credit as often as you need.

How to apply

Similarly to business term loans, you can get a business line of credit from either a traditional bank or online lender. Banks will require your business to have strong revenue and one to three years of positive history to qualify, as well as the following documentation:

  • Tax returns (business and personal)
  • Bank account information
  • Business financial statements

Online lenders generally have fewer restrictions and qualifications than banks, but they tend to charge higher interest rates and have lower credit limits.

FYIFYI: To qualify for a business line of credit from an online lender, you’ll need to have been in business for at least six months, make $25,000 or more in annual revenue, and have a credit score of 500 or higher.

Working capital loan

Working capital loans are short-term business loans designed to bring extra cash into the business to use for growth and expansion, and for day-to-day expenses such as advertising, payroll or inventory purchases. You can also use working capital loans to cover emergency costs or pay down debt.


Like personal loans, working capital loans require you – as the business owner – to have a sparkling personal credit history. Applications for this type of funding require a significant amount of paperwork, and processing can take weeks or even a few months.


Working capital loans are effective because they finance the everyday operation of your business and usually have low interest rates. You may be able to secure a rate between 3% and 7% if you have a great credit score.

How to apply

Working capital loans are typically available through large, national banks as well as regional or statewide banks. You might also look into working capital loans available at your local credit union or through a third-party direct lender. For the best chances of securing a working capital loan, approach the bank that you already do business with first. Not only will it have access to a lot of your financial information, but it will be able to review your existing banking and credit habits to assess risk.

Business term loan

A business term loan is a lump sum of capital that you pay back in regular payments at a fixed interest rate for a set period of time – which is where the “term” part comes in. The term is generally one to five years.


The purpose of a business term loan is to allow you to finance a large purchase for your business, such as equipment or new facilities. There are few restrictions to a business term loan, and most businesses that have good credit and generate revenue will qualify.

With a business term loan, you get a predetermined amount of money and a fixed interest rate to be repaid in a set number of years. The loan amount will depend on your business and its needs, but it’s generally within the range of $25,000 to $500,000, with interest rates from 7% to 30%.


A business term loan generally has few restrictions and can help you build your business by introducing new capital for purposes like a new office or equipment. You will also have all of the information and terms regarding your loan from the get-go, but it’s still important to carefully read the contract so nothing will be a surprise down the line as you start making payments. [Read related article: Hidden Gotchas in Your Business Loan Repayment Terms]

Did you know?Did you know? Business term loans are suitable for a wide range of businesses, and they generally offer lower monthly payments and longer payment terms than short-term loans.

How to apply

You have a couple of options when applying for a business term loan. They are traditionally available through banks, though that can be a long and arduous application process. Several banks offer expedited online applications, though. These are some of the documents you’ll need:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Balance sheet
  • Credit score
  • Tax returns (personal and business)
  • Profit and loss statements

Small Business Administration (SBA) loan

SBA loans are government-backed loans that are available to small businesses from private-sector lenders. These are secured loans, meaning you must pledge your company or personal assets as collateral. There are three different SBA loan programs:

  1. The 7(a) Loan Program is the SBA’s main program for providing assistance to small businesses. The terms and conditions vary by loan, and maximum loan amounts range from $350,000 to $5 million.
  2. The Microloan Program provides the smallest loan amounts available from the SBA, ranging from $10,000 to $50,000. Microloans are ideal for small startups, borrowers with limited collateral or companies that just need a small financial boost.
  3. The CDC/504 Loan Program offers loans to small businesses with long-term fixed-rate financing for the purposes of expansion or modernization – such as large equipment or real estate purchases. These are typically larger loans, “generally capped at $5 million.” Terms are 10, 20 or 25 years, depending on the purpose of the loan.


There are multiple conditions under which SBA loans cannot be issued, including if a business is operating as a nonprofit or is not based in the United States. SBA loans cannot be used to repay delinquent state or federal withholding taxes.

Terms vary by the size of the loan, the planned use of the money and your needs as a small business borrower. The maximum term allowed for a microloan is six years. Interest rates are usually between 8% and 13%.


Each SBA loan has its own unique benefits. For instance, a 7(a) loan is extremely versatile and can be used to purchase land or buildings, cover new construction, finance equipment or other supplies, or acquire an existing business.

Microloans may be available to businesses that otherwise wouldn’t qualify for a loan. They can also be used in multiple ways – as working capital; to purchase inventory, supplies, furniture and fixtures; or to buy machinery and equipment.

The 504 Loan Program, which borrowers typically use to buy commercial real estate or heavy equipment, offers both short-term and long-term benefits, including 90% financing, longer loan amortizations, fixed interest rates and overall savings.

How to apply

Each program has specific eligibility criteria and an application process. Visit the SBA website for information on how to apply for an SBA loan and for checklists to ensure you have everything you need for a successful loan application.

Accounts receivable factoring

Accounts receivable factoring is also known as receivable financing. This type of business loan is used to convert sales on credit terms for immediate cash flow. For example, if you provide outsourced marketing services to large enterprise clients, you might sell your existing, uncollected invoices (which you are waiting on payment for) to a third party for an advance payment. This third party, called the factor, provides you with the full or partial amount and then collects on the sale from your customer. This type of financing is generally used to buy your small business some time while you look for more long-term, sustainable sources of financing.


This receivable credit line can be costly, so you should exhaust all other efforts of financing before turning to it. Once you factor in a discount fee, interest rates of 10% to 25%, and other charges, you could end up paying much more over time than you would with other financing options. Also, your financing is determined by the financial strength of your customer, not you as a seller of goods or services. Most invoices over 90 days old will not get financed, and invoices that are paid out quicker will afford you more beneficial terms.


One of the greatest advantages of this type of business loan is that it allows you to cash in immediately on your future receivables; you won’t have the majority of your capital tied up in inventory or unpaid invoices. It may also be beneficial to outsource your accounts receivable management to another company, freeing up your focus for productive work on your business. This funding is also faster than many options, as you don’t have to provide a business plan or tax statements.

How to apply

Most companies that offer accounts receivable financing are commercial lenders, not banks. To apply for accounts receivable financing, you’ll have to fill out an application and hand over your articles of incorporation, your company’s most recent accounts receivable and payable reports, a master customer list, and an example of your typical invoice.

Merchant cash advance

merchant cash advance isn’t technically a loan, but rather a cash advance based on the credit card sales deposited into your merchant account.

Merchant cash advances are quick, often depositing funds 24 hours after approval. Historically, merchant cash advances have been used by businesses that primarily subsist on credit and debit card sales, such as restaurants and retailers, but they have become available to other businesses that do not rely on card payments.


With a merchant cash advance, you receive an upfront sum of cash in exchange for a portion of your future credit and debit card sales or by remitting fixed daily or weekly debits directly from your bank account. 

Merchant loan advances provide you with fast money but carry high annual percentage rates that consist of the total cost of the loan plus all fees. They can run your business into debt quickly if you are not careful.

Your fee amount is determined by your ability to repay the merchant cash advance. The provider will determine a factor rate of 1.2 to 1.5 based on a risk assessment. The higher the factor rate, the higher your fees. Your total repayment amount is the factor rate times the cash advance.


The main draw of merchant cash advances is that they are fast; you could have cash in hand less than a week after submission with little to no paperwork. Merchant cash advances are also unsecured, which means you do not have to put up collateral in case you cannot repay, and repayments will adjust to how well your business is doing.

How to apply

Applying for a merchant cash advance is simple. Start by looking at online business lenders and filling out their online applications. Expect to provide three months’ worth of financial statements.

Five Benefits of DOT Drug Testing

DOT drug testing cutoff levels include expanded opiates

There are many benefits of DOT drug testing. Understanding these makes it easier for you to find a company that will take care of the testing for your drivers. It will allow you to remain compliant, and ensure that you aren’t endangering anyone out on the roads.

You Hire Better Drivers

You have the ability to hire better drivers when there is DOT drug testing being conducted. This way, you can learn more about what they are doing in their spare time. If you have a drug test done prior to extending a position, you can learn whether they are clean or not. If the test comes back positive, it shows you don’t want them on your team.

As such, your company is going to have better drivers on the road. This can minimize accidents and avoid problems with employees calling out or not providing the superior customer service you are known for.

You Maintain Driver Integrity

Drivers are less likely to do drugs when they know that they could be called for a drug test at any time. When you identify that you are a drug free workplace, they should respect this. However, testing is the only way to know for sure and keep everyone honest.

You Sort Out the “Bad Seeds”

Some people don’t care. They don’t care about the rules or about the legal implications of being caught. These are not the types of people you want working for you. With a drug test, you can sort out the bad employees when they test positive for one drug or another.

Employees are Less Likely to Use

You don’t want to deal with any drivers who are under the influence of drugs. This is because you don’t want the risk that they will get into an accident. An accident in a truck can cause serious damage, and result in injuries and potentially deaths. This is not something you want associated with your company and therefore it’s best to deal with everything in a timely fashion.

When you know more about what employees are doing, you keep them honest. When they know that they could be tested at any time, they are less likely to do drugs. If they do want to do drugs, they know not to work for you because you are going to find out if they are using.

It Can Be Done Randomly

Understanding DOT Drug Testing — Datco Services Corporation

By taking advantage of drug testing, you can also have it scheduled randomly. This means that drivers will have no idea as to when they will be tested. It can all be done by a third party, too, so you don’t have to remember when.

When you hire a company that handles all of the drug testing on behalf of your company, you learn more about what’s being done. You don’t have to be the one responsible. This means that you can maintain a “hands-off” approach with it all. When there is a third party taking care of everything, it allows you to remain neutral to all that’s going on.

Contact us for more information.


Urine drug screen: Uses, procedure, detection times, and results


Each year drug and alcohol abuse costs U.S. companies billions of dollars, which includes turnover rates for employees, unexcused absences, lower productivity, accidents, and increased workers’ compensation claims.  According to the National Safety Council, employees who abuse prescription drugs are two to five times more likely to take unexcused absences, be late for work, be injured or violent at work, file workers’ compensation claims, and quit or be fired within one year of employment.

  • The National Council on Alcoholism and Drug Dependency (NCADD) reports 70% of the 14.8 million Americans who abuse drugs are employed.
  • More than 74% of all current illegal drug users are employed and cause up to 40% of industrial fatalities in the US according to the National Drug-Free Workplace Alliance (NDWA).
  • 50% of workplace accidents and up to 40% of employee theft is caused by drug abuse according to the U.S. Department of Justice. 


Testing your current and potential employees can help prevent and detect workplace drug abuse. The most common drugs at the root of the substance abuse issue include marijuana, cocaine, heroin, ecstasy, methamphetamine, and opioids. Employers with a drug-testing program in place report:

  • Reduced employee healthcare costs
  • Improvements in employee morale, productivity, and performance
  • Decreased absenteeism, accidents, downtime, turnover, and theft
  • Compliance with state or federal regulations
  • Being able to identify and refer employees who have drug and/or alcohol problems
  • Providing a safe workplace for employees

Use DISA’s “Cost of Drug Abuse” Calculator to estimate the cost of drug abuse at your company!


There are a variety of employment-related drug and alcohol tests used by employers. For more than 30 years, DISA has worked to make the drug testing process easier and more streamlined for customers. 

Regardless of your industry or unique requirements, DISA has the tools, and best-in-business practices necessary to help you create a drug-testing program that will work for you and your company. Before making a decision, we encourage you to research the benefits of each type to determine what best matches your company’s needs.

Contact us for more information.