Many small businesses are happy to make a profit period, but if your business is coasting along with the same profit margin for a long time, you could be headed for trouble.

Many businesses build to a certain level, hit a plateau and remain there. That stability can turn into stagnation, says small business owner Ivan Widjaya on www.noobpreneur.com.

A stable profit margin can mean you’re not generating new leads. You may be holding on to existing customers, which is great, but what happens if a customer or two cuts back or stops doing business with you altogether?

If you don’t want to find yourself in that precarious position, you should always be looking for leads. You’ve probably heard it before, but it bears repeating: The best place to find new leads is at local small business networking events.

Start by visiting your local Chamber of Commerce to find out when they hold meetings and which other local businesses are involved. Attend those meetings and get to know like-minded business owners in your area so you can share tips, marketing strategies, and build working relationships and friendships. Remember, people will help their friends first.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, in his remarks seemed critical about the current zero percent rate of the Federal Reserve (link to ). He says that it should be hiked from 0% to 1% and then moving to 2% gradually. This is needed or else it will leave a policy that will only result in financial imbalances in future. He is quoted saying “We need to get off the emergency rate of zero, move rates up slowly and deliberately.”

Recently, the Fed has decided to support the economy by maintaining the size of its balance sheet without allowing it to shrink. The Fed will do this by reinvesting into the Treasury, as well as the proceeds of its mortgage holdings. But this is seen as controversial as many believe that the Fed is just trying to show that they are willing to do something to stabilize the uncertain economy.

Hoenig’s dissent is worrisome as he believes that keeping interest rate at zero will limit the Fed’s flexibility. Also maintaining the balance sheet does not justify the economy now. As a Federal Open Market Committee voter, Hoenig, says that this policy would lead to fresh financial imbalances. He clearly advocates raising the Fed’s interest rates. He is quoted saying “I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no short-cut.”

Though the unemployment rate is high and economic conditions unfavorable, there is a modest ‘recovery’ that is proceeding with mixed results. The GDP is also expected to rise by 3% by year end. The policy maker said, “We are experiencing a better pace of recovery this time than at this point in our previous two economic recoveries.”

The leading financial institutions are taking proactive steps to commit themselves to supporting small businesses. Goldman Sachs Group, Citigroup, and Bank of America are the frontrunners in this movement and have announced separate programs to attract SME entrepreneurs. The change comes in response to the Obama administration’s stress on banks to increase their lending to small businesses.

Community development financial institutions, CDFIs are funded largely by banks like Goldman Sachs and Citigroup. Goldman has decided to funnel $300 million and Citi has announced that they will provide $200 million to CDFIs. Citi’s initiative comes at a time when its loans to SMEs have dropped from $10.2 billion to $9.5 billion from last year. But Citigroup’s director commented that ‘this program does not intend to make up for the decline because it targets business owners that are outside the scope of Citi’s traditional lending reach.’ This current program is termed by Citi as ‘Communities at Work Fund’ and it will enable CDFIs to request for five year loans to lend to qualifying business firms. The program under Goldman Sachs is still in its pilot stage, but it is expected to reach out to 10,000 businesses in the next five years. Additionally, Goldman has committed itself to providing $200 million for educational programs and community colleges.

Bank of America has a more aggressive approach to increasing their small business lending. BofA promises to increase its funding to SMEs by $5 billion in 2010. Last year BofA lent $81.4 billion and by May of this year it already loaned out $19.4 billion. The bank will lend more than $22 billion in each of the next three quarters.

If banks weren’t in enough trouble, there’s another threat on the horizon. Wal-Mart is encroaching on the banking industry by providing more financial services to its millions of customers.

The giant retailer has partnered with other companies to offer consumers money transfers, check cashing and bill payment services, and virtual checking accounts in the form of refillable, pre-paid debit cards, said CNN.com.

Wal-Mart has tried several times in the past to acquire its own banking license but failed. Now Wal-Mart is seeking regulatory approval to acquire a small Utah-based bank for $15.7 million, according to CNN.com.

Last week the company opened its 1,000th “Money Center” and has plans to open 500 more. Wal-Mart has operated a bank in Mexico since 2007. After receiving a banking license in Canda last month, the company has rolled out a new Wal-Mart credit card.

In addition to making money on banking fees, Wal-Mart encourages customers to shop at the store by offering cash-back incentives and other deals.

The company believes it can provide alternative banking services to at least 25 percent of the U.S. population, noting that 28 million people in the country don’t have a bank account.

“Wal-Mart is going to accelerate the evolution of the banking industry,” Anthony Plath, a finance professor at the University of North Carolina, told CNN.  “They would be a different kind of bank, but the kind of bank the industry may need right now.”

Business services like IT adoption or any other form of application can be accessed on the internet by innovative methods like ‘cloud computing‘. In fact, this is a general term used for any form of hosted services over the internet. The term was coined from the cloud symbol often used to represent the internet.

The cloud computing service is divided into the following three categories:

1) Infrastructure-as-a-Service (IaaS),

2) Software-as-a-Service (SaaS) and

3) Platform-as-a-Service (PaaS).

It is highly recommended that SMEs demand for cloud computing as this will eliminate the need to invest on costly infrastructures.

The IT industry is now becoming largely dependent on cloud computing as it offers services such as e-mail, e-commerce and websites for the fulfillment of its needs.

The three segments into which cloud computing can be divided are:

1) applications,

2) platforms, and

3) infrastructure.

NetSuite, Google, Amazon, and Microsoft have diversified their platform to enable their users to access applications from their centralized server. IT customers can access the provider’s application program interface (API) when needed. Now, anyone can start or stop their virtual servers anytime. It allows an IT company to pay only for the ‘time’ that services are being used. This pay-for-what-you-use model is what SMEs find advantageous and can be a good reason for them to adopt IT business.

A lot of services starting from web portals and software applications make cloud computing very beneficial for the IT industry. There are many applications that are already in use. For example, Microsoft has hosted its Microsoft Office applications in the cloud similar to ‘Google docs’. Then PaaS providers have portals and gateway software installed on their customer’s computer. ‘Force.com’ and ‘GoogleApps’ are such examples. The IaaS such as Amazon Web Services bring virtual servers with unique IP addresses and huge storage options. SaaS is very broad and can range from web-based email, inventory control, and database processing. SMEs are left with huge options to unravel for which they can enjoy the benefits. For them, IT adoption is always going to be a good decision.

Finding and securing business funding has become increasingly difficult in this economy. Banks are hesitant to open or renew credit lines even for prosperous long-standing businesses. Even if bank financing is secured, the terms are frequently onerous and the process itself is riddled with so much red tape, document overload and bureaucracy that it can make any business owner or manager frenzied. This economic climate is forcing businesses to look for alternative means for funding as well as reexamine their credit and collection policies. In addition, cash flow management is playing an increasingly important role as businesses need to find creative ways to survive and prosper in light of these conditions. Tighter collection policies where companies are less lax about the credit terms offered to customers as well as more responsive collection practices are being forced on business owners. All this is of course distracting to an owner or manager who should be focusing on running the core business but is a necessary evil in order to survive.

One solution that companies who need financing or a boost to cash flow should consider that has many added benefits is the sale of their outstanding receivables and invoices to an accounts receivable management firm; this simple process is known as factoring and has been around for many years in select industries but is becoming more mainstream and desirable in current market conditions. In a nutshell, factoring is basically a business selling the factoring company the business’ invoices for the goods or services that the business delivers for a nominal discount. The business receives a significant percentage of the invoice amount up front while the factoring company waits for the business’ customers to pay. This allows the business to use the funds right away for business needs such as payroll, purchase of inventory, expansion, business expenses, etc. Essentially, this is accounts receivables management that can put an end to a company’s cash flow deficits and frees owners and managers to handle more important matters. The factoring company handles the accounts receivable management issues such as collections and often billing.

This service can be very valuable for a small and growing business in that it would have money much sooner which can be put to use in growing and building the business. Factoring is a very personalized and individualized process in that typically the factoring company endeavors to learn about the business, the company’s history, customers, present day activities and concerns as well as projected growth so that the most beneficial factoring relationship can be recommended. The factoring company looks at various materials which may include budgets, projections as well as the company’s cash flow and working capital requirements, among other things. By thoroughly understanding the business, a factoring company often becomes a strategic partner of the business with a vested interest in the business’ success and is ready to respond quickly to the business’ needs, whether or not foreseen.

Working with a small factoring company that takes the time to understand and meet the business’ needs is important in order to ensure a mutually beneficial relationship. In addition, factoring with a small company that understands the business and its needs offers many additional benefits that should not be overlooked when considering this highly desirable and effective form of financing. For example, the factoring company pre-screens the company’s customers to ensure that the company works only with stellar, legitimate and paying customers; the factoring company frequently provides additional business consulting on collection practices, credit policies, cash flow management, and business strategy, to name a few services, and all without additional cost. Additional advantages of factoring include the fact that factoring is a straight sale of an asset (the receivable) so there is no debt or loan involved; the process is streamlined and much more friendly and efficient than traditional bank financing (with cash available within days rather than months as would be the case in a typical bank loan); frequently there is no long term commitment and the business can choose which invoices to place with the factor depending on the business needs at a given time; and not less important, cash concerns and cash flow management issues are alleviated.

In summary, factoring with a legitimate factor whose staff takes the time to provide individualized and personalized attention is a very effective and powerful way for a business that offers credit to its customers to obtain funding. Factoring can enable a business to succeed and thrive in this very difficult credit market where bank credit is tight or non-existent and cash flow management is a primary concern.

Being a SME has its own share of thrills and challenges. With limited financial resources, SMEs need to do out of box thinking to market and promote their business. So what can SME owner to take the business to the next level?

Having a clear competitive positioning as well as having processes in place to measure the response to every marketing dollar being spent is key.

A lot of time SMEs do not have processes in place as they feel it requires a lot of effort and capital while that is not the case.

My top ten tips for successful marketing of SMBs on a shoe string budget

1. Be accessible: A lot of SMB businesses build web sites with little relevant contact information. In order to contact the management team one has to search through the site to locate the name and email id of the person. One key thing is to have the contact details in the footer of every page. In case the web site has About us section, the email of the senior management team should be mentioned. It shows to potential customers and partners that the business is easily accessible and it increases the confidence of the people. Easy accessibility is also a great marketing tool as people find it easier to get in touch as well as give feedback.

This bring me to the second point

2. Be in Customers shoes: Think and act like a customer to analyze all strenghth and weaknesses of the business. Things like the way phones are answered to the impression your web site/ reception gives is critical.

3. Do a benefit analysis of the company’s products/ services: Like comparative ads run by big companies, SMBs can use the strategy to clearly articulate their benefit vis- a- vis other competitors’ (either big or small companies). And remember, a benefit is something that directly gives the customer something; saves money, saves time, provides emotional satisfaction etc

3. Try out your competitor product/services: The best way to check out competitor service offerings is by trying them out. Buy something from two or three competitors and document the pros and cons of the process. If one can’t do this because these companies know you, get someone else to be the ‘Mystery Shopper’ on your behalf

5. Talk to your customers: Meet the CEOs of five customers on one to one basis, without any of your sales people. Ask them about their business and find ways you can work as partners to help them grow their business(and don’t make this a sales pitch)

6 Look for opportunities where you can work together with your customer at an early stage and give real value add to your customers. This way one can out gun the competition

7. Create unique marketing ‘Hooks’ that will give enquirers a clear ‘Call to Action’. One of things we created at Biz2Credit is to for people to get information about credit products and ability to apply for them instantaneously. Get ideas from the networking events you attend and research what are your competitors are up to. Explore other markets to find transferable ideas

8. Check these different hooks can test through the different marketing channels you use. These might be price, buy one get one free; extended warranty; bundled product offerings as well as value added services at the click of the mouse. Alternatively purchase could be linked with a promotion or competition. Link these ‘Hooks’ with a Social Networking Strategy to build advocates for your organization.

9. Measure Everything: All the marketing channels and strategies should be measured and compared thus helping to gauge the efficacy of each channel. Conversion ratios are key and one needs to discard the less effective marketing channels and strategies quickly.

10. Follow up and be consistent: All of the points mentioned above is part of a continuous cycle that constantly needs updating, so make sure that you allocate the appropriate time on a monthly basis as well as making a senior person responsible.

American Express Co. declared the first-quarter profit that was more than double what it earned a year earlier, as spending on its cards rebounded sharply and loan losses diminished.

The New York company, known for its high end clientele as well as large no. of small and medium business (SMB) clients , said Thursday that it earned $873 million after paying preferred dividends.

Spending on American Express cards in the U.S. rose 11% from the first quarter of 2009, to $108 billion. Worldwide transactions jumped 16% to $161 billion. Average cardholder spending rose 23% to $3,012.

Meanwhile, credit expenses moderated. The company’s quarterly provision for future losses declined 48% to $943 million.

The rate of losses in its U.S. card unit fell for a third consecutive quarter, dropping 30 basis points to 7.2%. Delinquencies also declined, with the percentage of loans 30 days or more past due falling to 3.3% of total loans from 5.1% a year earlier.

These financial results from American Express coupled with better nos. from Capital One clearly point towards a marked recovery in the credit environment for the main street businesses in US.

If you’re like many small business owners who want to take advantage of social networking as a marketing tool, building a Facebook page is a good place to start.

New York Times business columnist Kermit Pattinson offers the following tips for launching a Facebook page and using it to market your business:

1.Start small and hone in on your main objective. Are you trying to build brand awareness? Create an online customer service site? Or maybe you want to focus on direct sales. Ask your friends, family and best customers to sign up as a fan of your page when it launches so it can begin to grow by word-of-mouth. Because there are so many tools available on Facebook, you can quickly get off track. Make sure your content is lively and the page reflects the personality of your business.

2.Don’t think of the page as just a sales tool – use it to interact with customers by asking for information and responding to their complaints. Keep content fresh with status updates and newsfeeds to tell fans about specials, events, contests or anything else of interest. This can take a lot of time but the payoff is often worth it.

3.Facebook allows for better target marketing. Facebook users fill out profiles with information like hometown, employer, religious beliefs, interests, education and more so you can get your message to your target market. When you create an ad, you can add demographic criteria and keywords and see how many Facebook users fall into your target audience and modify it accordingly. Advertisers can choose to pay per impression or per click, set maximum budgets and schedule the ad to run on specific dates. The Facebook ad system also provides instant feedback with metrics like the number of impressions and clicks-through.

What started as a marketing gimmick by a man who owned two Subway franchises in Miami has turned into a national phenomenon and pumped up the restaurant chain’s profits, said an article in Business Week.

Stuart Frankel decided to offer $5 footlong sandwiches on Saturday and Sunday, which was about a dollar less than the regular price. “Plus I like round numbers,” Frankel told Business News. And suddenly, he had lines out the door.

Other franchisers were wary to adopt the promotion because they thought it would drive up food and labor costs, negating any profit. But some individual restaurants created their own $5 footlong campaigns and saw the number of customers, and profits, soar.

The national Subway headquarters finally picked up on the idea, built a catchy ad campaign around the $5 footlong and generated $3.8 billion in sales from that concept alone, proof that the best ideas can come from small places.