Handling the client that wants the goods but doesn't want to cough up a check.

Susan Lewis, Lancaster, Calif.

Can we legally hold a client's paperwork if they haven't paid their bill? We do their bookkeeping and they haven't paid in months. We haven't done any additional work for about two months, and now they are asking for their paperwork back. If we send it to them, we will never get paid.

By Kathleen Ryan O'Connor, CNNMoney.com contributing writer

Sending the paperwork back likely won't make a check materialize, but there are ethical issues to consider with holding it hostage.

Let's start first with trying to get paid.

Sharon Means, a certified public accountant from Cleveland who also owns a bookkeeping business, just dealt with a similar situation.

“I didn’t send it back," she says. "I just kept killing them with kindness. Every week I would send an e-mail. 'Can you pay me some? A payment plan?' If you are going to have any work done in the future, they have to understand that you just can't keep dishing it out with nothing in return. It's the squeaky wheel that gets the oil, so you have to put yourself in front of this person."

Her tactic paid off. "We worked it out so he paid at least half, and then we set a schedule for paying the rest of it," she says.

The recession is making it hard for many people and businesses to stay on top of their bills, she acknowledges "That’s the thing. Everyone is cash-strapped, I understand, but you have to keep up communication.”

But do you have a legal or ethical obligation to return the client's work product, cash or no cash? Being a bookkeeper means you have little regulatory framework for your job — unlike CPAs, who are bound by the American Institute of Certified Public Accountants Professional Standards. Violating those standards can lead to membership termination and disciplinary sanctions against certified accountants.

The relevant section of the Institute's standards code says, in part, that any financial records the client has provided you with should be returned on demand. Records that you've prepared yourself should also be handed over on request unless there are fees due to you for the preparation of those records. Supporting records related to finished work can also be withheld if you're owed fees for that specific work product.

David Bybee is president and CEO of the National Association of Certified Public Bookkeepers, a trade group for the unregulated bookkeeping field. He recommends that you give back any work papers that the client provided to you, such as year-end financial statements. But final reports that you produced do not have to be returned without compensation.

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When to get tough with a deadbeat client

Help, my client won’t pay!

How to avoid deadbeat clients

Not sure if you’re underpaying or overpaying? Third-party salary surveys can help.

Thomas, San Francisco
I have a video production company with five full-time editors. I'm always stressed thinking I'm either overpaying them and I'm going to go broke, or underpaying them and am going to lose them and/or they're going to get resentful. Because of this, I realize I manage them nervously, which is not good management. How does one determine pay parity? I would like to pay them fairly so I can stop worrying and pay and manage them with confidence.

By Rose Fox, CNNMoney.com contributing writer
There are plenty of resources out there for both workers and employers who want to make sure that staffers are getting paid neither more nor less than they're worth.

To start with, look at free sites like Salary.com, PayScale.com, and CareerBuilder's CBSalary.com. You can also check the Bureau of Labor Statistics site at bls.gov. For more in-depth data, consider purchasing reports from survey companies that do research in your field. Salary surveys exist for almost every industry. Amy Kaminski, manager of marketing programs for Compdata Surveys, suggests sticking with surveys that get their data from employers: "This will help ensure the accuracy and reliability of the results."

Look for data that's applicable to the type of business you run as well as the type of employee you want. Ted Turnasella of WageLINK.net offers three helpful rules of thumb:

1) Make sure that the job being reported is a match for the job at your company. A good rule of thumb is for the job summary in the survey to represent at least 75% of the duties being performed by employees in the company.

2) Look at the effective date of the data and adjust it for the passage of time. For example, for data that is several months or years old, factor in an annual wage inflation rate of 3%.

3) If the data you are using is national data, it will need to be adjusted to your local market. Salaries in New York City are much higher than those in Brownsville, Texas.

Once you have all that information, consider how it applies to your company, factoring in regional and personal differences that may not be reflected in the numbers. "If a good editor is difficult to find, you may need to pay above market in order to keep these key employees," Kaminski says. "On the other hand, if you offer valued benefits such as flexible hours or above-average health insurance, you may be able to pay at or below market while still keeping your employees happy."

Jennifer Grasz, a CareerBuilder spokeswoman, agrees that soft benefits can matter as much as cash. "Companies are looking beyond salary and incorporating more flexibility into their packages to stay competitive in their recruitment efforts,” she says. “For example, we see more companies offering telecommuting opportunities, compressed workweeks and other alternative work arrangements."

Finally, if it becomes clear that a current employee's salary needs to be renegotiated, don't be shy about showing them the numbers that helped you to reach that decision. "Salary market data moves any pay discussion onto a less confrontational footing," says Dr. Al Lee, director of quantitative analysis for PayScale.com. "Yes, your employees may still look for work elsewhere, but it won't be higher pay that draws them away."

Give us your advice: Check out recent “Ask & Answer” questions.

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How to stand out in a crowded field without spending loads of money on advertising.

Jenny, Deer Park, N.Y.
I own a small beauty shop in a mid-sized town on Long Island, New York. The problem for me is the competition: In the past five years, three more beauty shops opened around the five-mile area, and my business started to sink two years ago. How do I stand out from a crowded field without spending tons of money on advertising?

By Lenora Chu, CNNMoney.com contributor
Start off by giving some serious thought to what really differentiates you from the competition.

Develop an “elevator speech,” says Willis Turner of the Richmond, Va.-based marketing consulting firm Huntsinger & Jeffer. That’s a 30-second answer to the question, “Why should I come to your shop instead of your competitors?”

Do you have highly trained stylists with more experience? Do you specialize in certain types of service? Are you better on service details like remembering names and birthdays?

Once you’ve identified a few key points, Turner says, focus on them again and again with your customers.

“Repetition is the key to success,” Turner says. “Remember, just when you start to get tired of your message, that’s when your customers and prospects are really beginning to notice it.”

The goal is to jumpstart a word-of-mouth campaign. No form of advertising is more effective, so make sure every client leaves your shop with a reason to tell her friends how great you are, Turner says.

Then give your customers an incentive to keep coming back — and to refer their friends.

For example, you could offer a referral program and print special discount cards for clients to give to acquaintances. Both the new customer and the referring client would be eligible for the discount.
You could also borrow tried-and-true methods of inspiring customer loyalty from other service industries, suggests Steve Winston, a South Florida marketing and communications consultant.

Start a frequent-visitor rewards system, much like the airlines’ frequent flyer programs, suggests Winston. Customers can earn a set number of points for each treatment, then win free services when they reach a certain threshold.

Like restaurants, you could post daily or weekly specials on a blackboard in the window to draw in traffic.

Or you could distribute discount coupons in your local area, like many home furnishings stores or take-out restaurants do. Try hand-delivering coupons to a targeted group of people, Winston says, such as teachers at a nearby school.

Lastly, make sure you have a brochure that lists your services and your strong points relative to your competitors.

It may cost a little money to produce, Winston says, but if done right, it will stand as a record of what makes you different in a crowded field.

Give us your advice: Check out recent “Ask & Answer” questions.

‘I started a biz – and now it’s failing’

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Finding the best customers for your business

How much should you pay your company directors? First, take a hard look at what skills they'll need to guide your business.

Paul Dzera, MGBD, New York City
What would you recommend for determining board of directors' fee levels (annual retainer, board meeting fees, committee meeting fees, etc.), both in cash and stock options? I have a small public company with revenues of about $30 million. To date, I have reviewed the Director Compensation Report available through the National Association of Corporate Directors, but their "smaller" company information is for companies with revenues ranging from $50 million to $500 million.

By Emily Maltby, CNNMoney.com staff writer

Before you think about compensation, consider what skill sets you need represented in your board members.

"Twenty years ago, it was all the CEO's friends. So the qualifiers were, 'What's your golf handicap and how fast will you nod when I propose something?'" says Suzanne Hopgood, director of Board Advisory Services of the National Association of Corporate Directors (NACD). "This meltdown in particular has focused people on skill level. That will help define compensation. If you do rocket-science stuff, then you need highly educated, specialized people."

Also think about what you'll be expecting from your board. Startups that still require a lot of heavy lifting should pay their directors more than companies that are already chugging along at a steady pace.

One way to think about both skills and compensation is to imagine the board as a team of outside advisors, recommends Tom Juenemann, executive director of the Institute for Family Owned Business in Portland, Maine, which will be holding a conference in June on this topic.

"What would a good consultant cost you?" he says. "The answer will vary by industry and experience."

As you read this, board fees are in a state of flux. As the recession drags on, businesses are reducing the pay of senior executives and board members to keep costs down.

Taking this into account, Juenemann believes a good ballpark figure for a private business with about $30 million in revenues is $10,000 to $15,000 per board member, per year. Part of that should be paid as a base retainer, with the rest made up of attendance fees paid only when the board member turns up at board and committee meetings.

Another way to get sense of what you should be paying is to look at your competitors, suggests Hopgood. "Pick five public companies that are in your competitive range, go to public filings and see what they're paying," she says. "Then pick five that are in your revenue range, regardless of industry, and compare data points."

CEO salary is another commonly used benchmark. Juenemann says you can take your CEO's salary, divide it by the number of working days in the year, and come up with a reference point for a daily salary that you can pay your board chairman for each day that the board is working. Other board members typically command a salary about 80% of the chairman's.

Public companies like yours have other considerations: Do you want to pay part of your directors' compensation in stock or options? Fifty percent of public companies do so, Juenemann says; the rest pay only in cash.

As you figure all this into the equation, keep in mind that the economy right now has lots of supply and slow demand for seasoned business executives.

"Right now, people are looking to get board seats. Plus, there are more who are interested in smaller businesses than larger ones. The result is that you don't need to pay premium dollars," says Juenemann.

However, in this environment, it's imperative that you do extra vetting to ensure that your board members are skilled executives who are genuinely interested in helping your company succeed. You don't want a board member who is only in it for the salary.

If you need help finding candidates, try contacting NACD. They maintain a director registry that can help match qualified people with your needs.

Give us your advice: Check out recent “Ask & Answer” questions.

Free advice? Priceless

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If you're going to use copyrighted work within your own, be prepared for legal headaches.

Cynthia Lamb, President of Rhino Entertainment, Bright, Ind.
I own a consulting firm and plan to self-publish a book detailing lessons I've learned. In my book, I quote song lyrics. The U.S. Copyright Office says I must get permission from the songs' copyright holders before using the lyrics, and I've started to do so. But my research suggests the fair use doctrine would let me reprint a percentage of the lyrics without this hassle. Can you help me understand the law in this area?

By Adriana Gardella, Fortune Small Business senior editor

When it comes to fair use, which is a defense to a copyright infringement claim, there are no bright-line rules or percentage calculations that will shield you from potential liability.

"The law is deliberately vague," says Emmett McAuliffe, an entertainment lawyer with Spencer Fane Britt & Browne in St. Louis. McAuliffe explains that this fuzziness isn't designed to confuse laypeople, but rather to strike a delicate balance that will not unfairly favor one side. It is for the courts to decide on a case-by-case basis whether the fair use doctrine protects an alleged infringer.

"In some situations, a small percentage of lifting can get you in trouble, and in others a large percentage can be okay," says McAuliffe, who notes that the size of a quote is just one of four factors that courts weigh when ruling on fair use. The others are the purpose and character of your use, the nature of the copyrighted work and the effect of the use on the potential market. Only a lawyer who is fully familiar with the facts of your case should attempt to assess these issues.

If you are tempted to enter this gray area without professional guidance, McAuliffe suggests you ask yourself this question: "Can I afford to go through an expensive trial to defend my fair use rights?" If you're at all litigation-averse (and really, who isn't?), McAuliffe advises either hiring a law firm to do a prepublication review or dropping the lyrics altogether. Why not find a way to make your point using your own words?

If you must use the lyrics, it's important to have a qualified attorney analyze the ownership status of each song, secure permissions, and ensure that all clearances are in the proper form.

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.

Give us your advice: Check out recent “Ask & Answer” questions.

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]]> http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/24/what-fair-use-protects-and-doesnt/feed/ 0 scowley http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/18/write-offs-for-work-travel/ http://smallbusiness.blogs.cnnmoney.cnn.com/2009/02/18/write-offs-for-work-travel/#comments Wed, 18 Feb 2009 15:09:02 +0000 emilymaltby http://askfsb.blogs.fsb.cnn.com/?p=928 ]]>

Want to write off the cost of meals while you're traveling? Here's a rundown on what to deduct, and how.

Donna, Rome, N.Y.
My boss is an electrician and is working 4 hours away from his office. Can all his meals be deducted while away from his home office?

By Lenora Chu, CNNMoney.com contributing writer

The IRS allows you to deduct travel expenses, including meals, if you are working away from your “tax home,” or your principal place of business.

Generally, four hours away from your normal place of business would qualify as “away,” says tax attorney Brian Whitlock of Blackman Kallick, based in Chicago.

More specifically, two conditions must be met for you to be eligible to take a meal deduction, says Michael Beauchemin of the Charlotte, N.C.-based Carolina Accounting and Tax Service. Your duties must require you to be away for substantially longer than an ordinary day’s work, and you must need sleep or rest to meet the demands of your work while away from home.

An example might be the electrician who must travel to a job site, perform the work, and then stay in a hotel room to rest before the return trip home. In this case, meals would be eligible for deduction, says Beauchemin. However, should the electrician travel to a work site, take an hour off for a meal, and then return home in the same day, the meal deduction would not be allowed.

Note that should the “away” work extend beyond several months, the IRS may deny the deduction on the grounds that the tax home has shifted to the location of the work, Whitlock says.

How much can you write off for qualifying meals? Generally, you can deduct 50% of the actual cost of the meal, or you can take the IRS's standard meal allowance, says Beauchemin. That's $39 per day in most cities.

Give us your advice: Check out recent “Ask & Answer” questions.

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Offering a product too cheaply can devalue it for customers. Here's how to zoom in on the right price point.

Emil G., Santa Monica
Is making a service free more counterproductive then selling the same service at a low cost? We recently put together a highly defined service in which we analyze the conversion rates of Web sites and make strategic suggestions – which we were already doing, it just wasn't separated out into its own service like it is now. Our plan was to begin offering it for free initially while we worked out the kinks, but since dropping the price to zero, it seems we've stripped the value in our clients' eyes. I expected the opposite. Any suggestions?

By Kathleen Ryan O’Connor, CNNMoney.com contributing writer

The concept of "no free lunch" is so ingrained in the business culture, you can’t really blame customers for looking askance at a free service. After all, if it’s so great, why aren’t you charging for it?

“Pricing is a part art and part science, and how you price a service will have a massive influence over what people perceive the value of your service to be,” says Mike McDerment, CEO and founder of FreshBooks, an online invoicing service that uses a “freemium” business model. FreshBooks' basic products are offered for free, but customers are charged for advanced or premium features.

“From the start, you need to set your clients’ expectations that the service is in fact worth paying for,” McDerment says. “If they have used it for free or with limited capabilities, then they should understand the value of the service and therefore be willing to pay. If they are not willing to pay after trying the service, then they never would have paid.”

He suggests that your first step going forward should be to tell your clients that you will soon start charging for the service. You can set expectations: Tell them the new rates will take effect in 30 or 60 days, or will kick in after they cross a designated usage threshold. “Step two, start charging them," McDerment says.

The pricing issue isn’t unique to the Web, says Mary Wolfinbarger, a professor of marketing at California State University Long Beach.

“When consumers don’t know how to value a product, price becomes a signal for the value of the product,” she says. “Digital products are in a class of products that consumers may find difficult to determine the value for.”

Haroon Mokhtarzada, CEO of the social media and Web hosting company Webs.com, has firsthand experience with the value of perceived premiums. Like FreshBooks, Webs.com uses a "freemium" model, but it recently changed its name from Freewebs.

For your service, conversion-rate analysis could be part of what you offer for free, but given its importance these days, you should make the service's value clear by holding back some of your insights. For instance, you could offer just one or two suggestions from a battery of 10, and let customers try out your tips to see the results, Mokhtarzada suggests.

“The whole game on the Internet is to improve those flows and that’s what every company is looking to do,” he says.

So is any damage permanent?

Nope, our experts say. Peter Boritz, president of Real Data Management, a New York City technology and consulting firm, recommends recasting your free offering as a limited beta test, open to clients you trust to help you incubate your ideas.

“Consider them to be part of a pilot,” he says. “Get feedback and testimonials.”

“Most of their potential clients haven’t heard of them yet," Mokhtarzada says. "That’s the great advantage of the Internet. You have a new release, a new push. With the Internet, you just change it the next day and it’s different.”

Give us your advice: Check out recent “Ask & Answer” questions.

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Debbie, Harland Clarke, Blaine, Minn.
Is it possible to up the insurance premius for smoker employees in some divisions of the company and not others?

What do you recommend? Leave a comment below with your answer.

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Ray, Capital Management Group, Anaheim Hills, Calif.
I am a management & financial consultant in California, assisting small businesses in the US and internationally. I work with them to improve their business model and organize business capital up to $25 million for them. We focus on manufacturing businesses and real estate projects. Can you suggest how to to market our services in current down turn? Businesses are not enthused to borrow and banks are tightening their standards significantly. We utilize search engine marketing as well as traditional methods like email news letters, marketing associates etc. However, qualified leads are declining with each marketing dollar spent.

What do you recommend? Leave a comment below with your answer.

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Armanath Nanduri, Owner, Shubisoft, Herndon, Va.
I provided software consulting services for a large corporation, which has failed to pay me the $28,000 I am owed. The corporation claims it can't pay me until it receives funds from its client. Our contract includes no term limiting my right to payment in this way. How can I ensure that my invoices are paid without hiring a pricey lawyer?

By Adriana Gardella, Fortune Small Business staff writer
Dear Amarnath: It sounds as though your corporate client is giving you the runaround. "They're forcing you to come and get them," says Robert Villa, a St. Charles, Ill., attorney who handles business disputes. So what to do?

First, create a paper trail. If you haven't already, write to the company objecting to its position on the debt. Follow up with a phone call and memorialize the conversation. Next, send a formal demand letter. Tell the company you will be charging late fees (specify an amount) and that it will be liable for any expenses you incur because of its breach. This tactic will put your slow payer on notice that you are preparing for litigation, says Newark attorney Evans Anyanwu.

And if it comes to that, you need not spend a fortune in legal fees. Villa recommends that you retain a collections law firm. These outfits have minimal overhead and specialize in debt collection. Best of all, they get paid only if you collect. Your local bar association should have a list of collection attorneys (lawyers often use them to collect their own delinquent fees). Typically, says Villa, you'll hand over 25% to 33% of your recovery to such a firm. Another option? Some traditional commercial litigators may be willing to work with you on a contingency basis or to cut their fees if you agree to give them a portion of your recovery.

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Mary Hardenbergh, Northville, Mich.
I run a a temporary staffing company. Clients often want to hire my consultant for the position we are temporarily filling. What is an appropriate "finder's fee" that should be charged to the client, considering they are taking one of my independent contractors?

What do you recommend? Leave a comment below with your answer.

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Scott Everett, Synxe Solutions, Flower Mound, Texas
I have recently started an IT consulting firm in a potentially uncompetetive market. How can I acquire small and medium size business clients? Cold calling just seems too pressure-filled and most clients are immune to those old techniques.

What do you recommend? Leave a comment below with your answer.

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Suresh, Duarte, Calif.
I have an offshore call center in India. I am currently serving four clients with exceptional service. They have been outsourcing their orders and customer-service operations to us for the past three years. I expanded my operation but I don't know how to increase my client base. I purchase potential client leads from different vendor sites, but the leads are not that effective. Any idea on how we can increase our client base?

What do you recommend? Leave a comment below with your answer.

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Tony Manci, Nashville
I run a small, two-year-old consulting business and have the opportunity to place a flyer in each participant’s package at a state annual conference for my industry. There will be about 225 attendees – 85% of whom are potential clients. What should I put on the flyer?

By Kathleen Ryan O’Connor, Fortune Small Business contributor
Dear Tony: Unless your firm does analysis on finding lost dogs, you’ll probably need more than just a flyer to sell your business. So think of the one-page insert as an attention getter, and focus on ways to convert eyeballs into requests for more information.

You’ve already achieved the first goal of any marketing campaign – you’ve found your target audience.  “The attendees will be self-selecting, and many – or most – are viable prospects,” says Andrea Wojnicki, an assistant professor of marketing at the University of Toronto’s school of management.

Woljnicki advises you to do everything in your power to entice these prospects to read your flyer. “Be creative,” she says. Rather than printing a bland description of your company, consider asking a client to write a testimonial, or publish a short case study of your work and pair it with a photograph. Make sure that the flyer’s basic design elements – the logo, font, and color scheme – are consistent with all of your business’ paraphernalia.

You should also use your (relatively few) words to differentiate yourself from your competitors. “Your firm needs to present a very compelling reason to prospective customers for them to make a switch,” Woljnicki says.

To enable attendees to get in touch with you, make sure that the flyer offers different types of contact information. Print your phone number, e-mail address, Website, and showroom location; include the names of company members that will be at the conference.

Kae Groshong, founder of North Star Marketing in Lancaster, Pa., says you shouldn’t put all of your eggs in one basket. “A flyer is just part of a larger effort,” she says. “You have to open up and think of other ways to touch prospects.” Once you’ve distributed the insert, you should find the attendees who have the strongest potential to become clients and introduce yourself. Then, call them to follow up.

Groshong advises you to think of the conference as a tripartite marketing plan: “visibility, awareness, then action,” she says. Use different marketing methods to make your business’ name memorable to attendees – even after the fliers get tossed into the trash.

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Wiley Wynn Jr., Mobile, Ala.
My two partners and I own a window cleaning/pressure washing company. Next year we plan to split up and begin business in other locations. Do we need a new tax ID number since we will be in different locations and if so, how do we go about getting it?

What do you recommend? Leave a comment below with your answer.

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Michael Andrews, Integricy.com, Groton, N.Y.
My company is trying to get funding; however, we are still waiting – and have been for six months. We only need about $500K to start, and our projections for years five and six are over $18 million, which we are being told is way too low. Why do I keep getting rejection letters from hundreds of firms that keep saying they only fund $1 million or more?

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Ask FSB's experts advise an inmate looking to launch a business upon his release.

Darren Montville, Collins Correctional Facility, Collins, N.Y.
I, along with my father, would like to open a restaurant and catering company. I was wondering if you could give me as much advice as possible about small businesses, restaurants, catering, etc. I have plenty of great ideas that I believe will bring me investors and customers, but I need information. I don’t want to fail at my business, and I’m eager to do well.

By Annalyn Censky, Fortune Small Business contributor
Dear Darren: Jobs opportunities can be limited if you’ve served time, so entrepreneurship presents an attractive option for an ex-con. Catherine Rohr, the head of the Prison Entrepreneurship Program (PEP) in Houston, encourages you to pursue your dream – but only after you get back on your feet. Rohr, who founded the nonprofit in 2004 to help inmates develop the necessary skills to start their own businesses, says you should spend at least six months in the working world before going out on your own.

“After years of not making decisions, even ordering off a McDonald’s (MCD) menu can be a challenge,” she says. “When PEP participants leave prison, they begin with a starter job and save money to pay their parole fees and child support. They wait until they’re stable and have a track record of success before starting a business.”

That said, it’s never too early to start planning, and a penitentiary can be a surprisingly good place for a budding entrepreneur to develop a business strategy, says Rohr. When you’re incarcerated, you have a unique amount of free time to brainstorm ideas.

Choose your industry

Unless you’re resolute about opening a catering business, you might want to consider a different industry for your first endeavor. Food service companies can be expensive to launch, says Hans Becker, a PEP participant who managed a commercial kitchen for three years between stints in prison. You have to invest in a kitchen, a method of transportation, and a large cooler or refrigerator. “It’s a difficult venture; there are a lot of liabilities and rules,” he says. These include strict health and safety regulations, as well food service permits.

Rohr says she typically encourages inmates to start service companies rather than ones that sell products. Her suggestion: Launch a mobile business so that you won’t have to deal with the costs of opening a storefront. Want to start a barbershop? Offer to cut hair onsite at offices. Interested in creating an automotive detailing service? Bring your equipment to company parking lots and service employees’ cars while they’re at work.

When Becker was released from prison in May, his family gave him $500 to pay for food and clothes. Instead, he bought a chainsaw and tools and started a tree-trimming service. After knocking on doors for a month, he garnered $3,400 in revenue, and nearly doubled that in his second month of business.

Formulate a business strategy

Shortly after he started his company, Becker took the next step and wrote a business plan. You can get ahead of the curve by working on your plan now, says Rohr. But know that it could be difficult. It’s not easy to conduct market research – a necessary component of any business plan – when you’re in prison. Rohr suggests that you ask friends and family members for assistance. Send letters to local churches, asking them to forward your query to businesspeople in their congregations. Becker advises you to write to MBA students or restaurant associations in your area. Once you’ve made contacts outside of the penitentiary, ask them to obtain information about pricing, competition and marketing strategies.

You can also turn to some of your peers for assistance. “Ask someone who is nearing release to send you market research after he gets out,” Rohr says.

For further advice on crafting a business plan, get your hands on a good entrepreneurship textbook. Rohr recommends Steve Mariotti’s How to Start and Operate a Small Business.

Fund your startup costs

Whether you’re asking for $500 or $50,000, securing startup capital is difficult when you have a criminal record. But don’t give up, says Jenny Boister, senior vice president and SBA manager at the Valley Community Bank in San Jose.

“It’s possible for an ex-con to get a loan,” she says, “but you’ll have to jump through hoops.” In order to obtain an SBA 7(a) loan, you’ll need to fill out a criminal history form and provide details about your conviction, parole and probation. You’ll also have to submit fingerprints. The lender will then forward the application to the SBA’s Washington, D.C., headquarters for approval.

Rohr says you shouldn’t bet on receiving financing from banks or other traditional sources such as venture capital firms and grants. Instead, she encourages you to start a business requiring startup capital of $10,000 or less – a reasonable amount of money for you to save or request from an angel investor.

To access investors, try to meet wealthy individuals by networking through local business organizations.

“Find someone who believes in transformation,” Rohr says. “Pursue him or her with all you’ve got.”

When you hand over your business plan, you’ll need to be transparent about your criminal history. Rohr suggests including a section about your childhood. Recount the path you took towards a criminal lifestyle, detail how you’ve changed, and explain why you should be trusted as an entrepreneur.

Finally, practice your pitch before soliciting investors. Rohr says a correctional facility is a great place to hone your selling technique. “The captive audience in prison can service as a focus group,” she says. “Be open to their feedback, as both ‘customers’ and ‘investors.’” She suggests that you brainstorm business names, pricing, and marketing strategies with your fellow inmates.

Practice model behavior

Before you become a great success in business, you first need to be a good citizen. “I don’t care how great your business plan is if you can’t stay away from drugs or gangs,” says Rohr. “Good businessmen don’t sag their pants or curse in formal situations. They don’t break the law or abuse drugs or alcohol.” In order to act the part of a successful businessman, she says, you should start emulating the behavior of a professional now.

To do so, you’ll need to conquer the bad habits that landed you in prison. Prepare yourself to turn away from bad influences upon release. That could mean distancing yourself from old friends, significant others, and even family members, say Rohr.

Becoming an entrepreneur is no easy task, but it offers a unique vehicle for redemption. “Parole may take some of your rights,” Rohr says. “But one privilege that no one can take away from you is the right to start a business.”

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Ricky, Orlando, Fla.
I am looking to buy an out-of-state business. The company currently handles hotels and transportation bookings for airline crews and a few corporations. I would like to open an office in my hometown and focus on the film industry and engineering companies who have extended stays in many cities. How can I expand the category of business? What should I expect with this challenge?

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Scott Zimmer, AAA Labor, Minneapolis, Minn.
I purchased a 52-year-old industrial staffing agency. Where can I find affordable assistance to help structure the company for growth? There is very little help available for staffing agencies.

By Paul Roberts, Fortune Small Business contributor
Dear Scott: The experts we spoke with said that your best bet for finding help is the American Staffing Association (ASA). The ASA was founded in 1966;  its members account for 15,000 offices nationwide and 85% of the total staffing revenues in the US, according to Richard Wahlquist, who is president and CEO of the ASA.

The ASA represents a broad range of staffing companies – from those offering day laborers to firms that place high paid executives. Industrial staffing is one of the largest segments within the ASA's membership.

Your comment about finding someone to help you “structure the company for growth” suggests that you are looking for the help of a management consultant. A good place to start looking is ASA's supplier index. It's a free, online resource that provides contact information and links to service providers catering to many aspects of the staffing industry. Joining a local chapter of the ASA gives you access to more data, including weekly publications, industry trends, and online educational tools, as well as the ASA's annual conference, which provides networking opportunities, Wahlquist said.

More locally, consider the Minnesota Recruiting and Staffing Association, which provides a wealth of information and training opportunities for its members on issues affecting the staffing industry, including contacts with local vendors and updates on legislative initiatives at the state and federal level. Joining one or more of these professional associations should enable you to find the help you need to start building your business.

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Cassie Mariol, New Philadelphia, Ohio
I started a janitorial service, Complete Janitorial Solutions, and my sister joined me as an equal partner. In January, I told her I would like to get out of the business in six months. In February, my sister formed a new enterprise under her own name, contacted all of our clients, and told them I was planning on quitting the cleaning business. She then asked them to terminate any contracts with Complete Janitorial Solutions and sign new ones with her. The only compensation offered for my financial setback was a 2000 Astro van. Am I in any legal position to ask for compensation? What kind of severance am I entitled to? When we became incorporated, we never wrote up any legal documents stating what would happen in this case.

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