Annual Report: Does Your Business Need To File One?

Once you’ve formed an LLC or a corporation for your business, your operational and administrative obligations are going to be higher than a sole proprietor’s. While an LLC involves significantly less paperwork and formal administration than a corporation, both business entities generally need to file an annual report with the state.

Here’s what you need to know about this important filing to keep your small business in corporate compliance.

What is an Annual Report?

Also known as a Statement of Information, the annual report is typically required by the state so they can keep up to date with your company’s vital information. For example, you may be asked to submit information about directors and officers, and the registered agent and office address of the company.

In most states, there’s also a small filing fee associated with the report.

All states except Ohio and Alabama require some kind of annual report.

When is the Annual Report due?

Specific due dates vary from state to state. In some cases, the deadline falls on the anniversary of your business’ incorporation/formation date. In other cases, it’s when your annual tax statements are due and in some cases, it’s at the end of the calendar year.

Be sure to know your specific filing deadline by checking with your state’s secretary of state office.

What Kind of Information Do I Need to Include in the Annual Report?

The annual report will generally ask you for basic contact and operational information. The type of details you provided when you first filed to form your corporation or LLC. The specific details will vary by state and business type.

For example, an LLC in California will need to provide the following details in its annual report:

• Business address.
• Member names and addresses.
• Business officers: President, secretary and treasurer.

What is an Initial Report?

In some states, LLCs and Corporations are also required to file an initial report shortly after the LLC/Corporation is formed. Like the annual report, the initial report contains basic information about business activity (registered address, directors, etc.).

At present, the following states require an initial report filing:

• California
• Connecticut
• Georgia
• Louisiana
• Missouri
• Nevada
• New Mexico
• Washington

What Happens if I Don’t Turn in My Annual Report/Initial Report?

These reports may seem like a trivial paperwork, but they’re actually quite important. Missing the deadline can result in late penalties and fees (and there’s no reason your business should pay a dime more than it ought to).

In the worst case scenario (i.e. if you’ve skipped your annual report for multiple years on end), your company can be suspended or dissolved.

In addition, you need to think about keeping an LLC/corporation in good standing in order to maintain its “corporate shield.”  One of the biggest advantages of these formal business structures is that they minimize your personal liability (shields you from the activities of the business). But if your business happens to be sued and the plaintiff can show that you haven’t maintained your LLC/corporation to the letter of the law (i.e. your annual reports aren’t up to date), your corporate shield might be pierced and you can be personally liable.

As a small business owner, I know just how hectic your schedule can be. But be sure to set aside some time to address your business’ administrative obligations. Know your deadlines and get your paperwork in on time.

It’s a relatively easy task and will make sure your business stays in compliance (and you won’t have to pay any hefty fines).

Report Photo via Shutterstock

Sponsored Content

Annual Report: Does Your Business Need To File One?

Once you’ve formed an LLC or a corporation for your business, your operational and administrative obligations are going to be higher than a sole proprietor’s. While an LLC involves significantly less paperwork and formal administration than a corporation, both business entities generally need to file an annual report with the state.

Here’s what you need to know about this important filing to keep your small business in corporate compliance.

What is an Annual Report?

Also known as a Statement of Information, the annual report is typically required by the state so they can keep up to date with your company’s vital information. For example, you may be asked to submit information about directors and officers, and the registered agent and office address of the company.

In most states, there’s also a small filing fee associated with the report.

All states except Ohio and Alabama require some kind of annual report.

When is the Annual Report due?

Specific due dates vary from state to state. In some cases, the deadline falls on the anniversary of your business’ incorporation/formation date. In other cases, it’s when your annual tax statements are due and in some cases, it’s at the end of the calendar year.

Be sure to know your specific filing deadline by checking with your state’s secretary of state office.

What Kind of Information Do I Need to Include in the Annual Report?

The annual report will generally ask you for basic contact and operational information. The type of details you provided when you first filed to form your corporation or LLC. The specific details will vary by state and business type.

For example, an LLC in California will need to provide the following details in its annual report:

• Business address.
• Member names and addresses.
• Business officers: President, secretary and treasurer.

What is an Initial Report?

In some states, LLCs and Corporations are also required to file an initial report shortly after the LLC/Corporation is formed. Like the annual report, the initial report contains basic information about business activity (registered address, directors, etc.).

At present, the following states require an initial report filing:

• California
• Connecticut
• Georgia
• Louisiana
• Missouri
• Nevada
• New Mexico
• Washington

What Happens if I Don’t Turn in My Annual Report/Initial Report?

These reports may seem like a trivial paperwork, but they’re actually quite important. Missing the deadline can result in late penalties and fees (and there’s no reason your business should pay a dime more than it ought to).

In the worst case scenario (i.e. if you’ve skipped your annual report for multiple years on end), your company can be suspended or dissolved.

In addition, you need to think about keeping an LLC/corporation in good standing in order to maintain its “corporate shield.”  One of the biggest advantages of these formal business structures is that they minimize your personal liability (shields you from the activities of the business). But if your business happens to be sued and the plaintiff can show that you haven’t maintained your LLC/corporation to the letter of the law (i.e. your annual reports aren’t up to date), your corporate shield might be pierced and you can be personally liable.

As a small business owner, I know just how hectic your schedule can be. But be sure to set aside some time to address your business’ administrative obligations. Know your deadlines and get your paperwork in on time.

It’s a relatively easy task and will make sure your business stays in compliance (and you won’t have to pay any hefty fines).

Report Photo via Shutterstock

Sponsored Content

Four Benefits of Adding a Website Visitor Survey to Your Site

Customer satisfaction is everything in business. But understanding what customer’s want and how they would react to any changes in pricing, product, promotion and packaging (Phillip Kotler’s 4 P’s of marketing), can be unnerving for any new business owner.Traditional survey methodologies like customer-interviews or panel discussions can be time-consuming and expensive. And while social media is a great platform for engaging with customers, it may not give the specific insights needed to make a business decision.

On the other hand, surveys embedded on your website are an affordable, prompt way to collate views from existing and potential customers. Website visitor surveys can be used by growing businesses to:

• Collect information on website usability, content and design.  While website analytics is great for understanding origination of website traffic and on-site visitor preferences, website survey can help you really understand who is visiting, why like your website and what they would like to change.
• Gather customer feedback on new product launches, seasonal promotions and overall customer satisfaction. Although the one disadvantage of using website surveys for broader purposes is that you have a restricted audience (visitors to your website). As you expand your business, you can always supplement website surveys with other collection methods such as emails, telephonic interviews and panel discussions.

A website visitor survey offers the following benefits: 

1. You capture feedback from target customers. People visiting your website are either already buying from you or at least have an inclination to do so. For content driven portals like Small Business Technology, it’s a tool for gathering feedback from readers on what we are doing right and what we need to better.
2. Feedback is gathered real-time. Users are asked to submit their feedback at a point of time when they are actually exploring information on your business. 
3. Website surveys are less time-consuming and more cost-effective. Survey tools like Google Consumer survey are conducted over short duration and provide visually analyzed results, at affordable rates.
4. Since website surveys are easy to design and execute, questions can be easily modified to meet business requirements. 

Tips on Creating an Effective Website Visitor Survey

Website visitor surveys may be perceived as irritants to the surfing experience. This is often due to surveys being enforced or too lengthy and complex. The online audience is unlikely to spare more than a few minutes to give feedback and therefore website visitor surveys are most effective when designed with a singular objective. Here are some tips on designing website visitor surveys :

1. Pick one topic for feedback.  Keeping it simple will help your audience understand the intent in the least possible time. 
2. Word questions in clear, straight forward language.
3. Restrict the number of questions to under 10; don’t be afraid to keep it under 5 if it serves your purpose
4. Restricting access to content on your website conditional to a survey response could be counter-productive.  Give visitors the freedom to respond to the survey if and when they like. A good time to solicit feedback would be a few minutes into the website surfing experience.
5. Promote your survey through social media accounts (and email marketing if you have an ongoing campaign)
6. Use it as an opportunity to show your visitors that their opinion matters. Share the findings and proposed steps basis the feedback received. 

There are a number of tools available to create website surveys. A few include:

• Google Website Satisfaction Survey:  This free service can be used to ask 4 questions from visitors for up to 500 responses over 30 days. The results are analyzed and shared by Google in a downloadable report format with data visualization. You can customize the questionnaire for 1¢ per response or $5.00 for 500 responses.
• Survey Pie: The free plan is suitable for businesses looking for short-term website visitor surveys. For long-term and repeat online surveys the paid plan starts at $ 29.9 per month.

Visitor website surveys offer smaller businesses the unique opportunity to seek out valuable qualitative inputs on the effectiveness of their websites as well as other facets of their business. However these surveys must be implemented without impeding the website-user experience. Also, sharing key takeaways from the survey with the audience can help establish credibility with site visitors.

 

How to Create a Facebook Fan Page

Among social media networks, Facebook is the undisputed king. A whopping 3.2 billion likes and comments are posted on the social media site daily, according to data collected by Media Bistro.

The site now has 1.15 billion active users per month with about 699 million people logging on daily.

Here’s how to leverage these users with a Facebook page that will build fans and customers.

How to Create a Facebook Fan Page

Creating your Facebook fan page is the first step in Facebook marketing. Create a Facebook Fan Page as a way to keep in touch with your customers. Use the channel to build your brand and to gain the ability to respond quickly to customers’ comments, feedback and questions.

Here’s a feature overview (courtesy: Facebook Pages). When completed, your Facebook fan page should look like this:

Your Facebook fan page should be a dynamic and interactive digital hub for your brand. Here’s how to get started.

Step 1: Choose a Category and a Page Name

Choosing the right category and page name helps your fans, customers, and prospects to find you easily. It also lets those who don’t know about you discover instantly who you are and what you do. Picking the right category and page name also helps with SEO (search engine optimization) and allows for extra visibility and traffic from search engines.

Here are the six types of fan pages you can choose from on Facebook:

1. Local Business or Place
2. Company Organization or Institution
3. Brand or Product
4. Artist, Band, or Public Figure
5. Entertainment
6. Cause or Community

Marketing site MarketingGum.com has more on what each type of page means and how to choose the right one. But unless you are an artist, musician, public figure or in the entertainment industry, you will likely be choosing one of the first three.

Important: You can change the name and category of your Facebook fan page later on, but you can’t change the type of page, so choose carefully.

Step 2: Add Logo and Other Images to Your Fan Page

Next, you’ll want to load your logo and some images. Assume you have been marketing your business for some time across multiple channels. You’ll want to keep your logo consistent. Your photos should give visitors an instant understanding of your business and the products or services you provide.

Check out how major brands like Louis Vuitton, Windows and Coca Cola have used logo and photos to build their brands.

Step 3: Fill in the Details. Let the World Know What Your Page is About

Fill in the basic information about your business and add your website URL. Think of Facebook as a social window to your business. What you write here helps create first impressions. So use the right personality and voice to represent your business well.

Step 4: Tweak the URL for a More Memorable Facebook Address

Facebook automatically gives you a dedicated URL for your Facebook fan page. However, the original one (default URL) is a mishmash of numbers, characters, and weird symbols no one would ever remember. Instead, claim your Vanity URL and change the address of your page to be more descriptive of your business. This will make it easier to remember and to promote later on.

Step 5: Work on a Cover Photo

Think of cover photos as flexible billboards. You can change the photo as many times as you like. The standard size for the cover photo is 851 by 315 pixels. And it will be the first impression visitors get of your brand on Facebook. Here are some of the choices you might consider:

• Pictures of people using your product.
• Custom graphics or photos that tell a story about your business or brand.
• Other materials related to your product or service: Album art work for musicians, a menu for restaurants, etc.
• A creative blend of images and graphics, perhaps incorporating both the cover photo and logo image, that tells something interesting about your business or simply attracts attention.

Want more inspiration? Check out these creative examples of Timeline cover photos from Social Media Examiner.

Get to Work on Your Fan Page

Building Your Timeline and Writing Your Posts

The Facebook timeline on your fan page is at the heart of engagement and brand building for your business. This is where it all starts.

Andrea Wahl has a few good examples of how some businesses use timelines effectively. Facebook has added some new features such as the ability to “pin posts” and to showcase larger stories with extra large photos, videos and links to drive more engagement.

You can add a “star” to highlight important stories or you can hide/delete stories if you decide not to display them on your timeline.

You may even set milestones to define your key moments in history: Your startup date, your achievements, new branches, etc. You also have the ability to add specific milestone photos (843 by 403 pixels) as a way to use visuals for image enhancement.

Keep Track of Engagement

As you go about posting information, tips, and updates, photos, and milestones and responding to comments from your new fans, you’ll also want to keep an eye on how your engagement progresses over time. Facebook provides you all the tools you need to study engagement.

To start with, your friend activity snapshot gives you an overall look into how many of your friends like your page. You might choose to invite more people on your network when you think they’ll benefit from it. On your “Friend Activity” feed, you’ll also get to know what others have to say about your business.

Your Facebook fan page admin panel will look like the snapshot below, with notifications, messages, insights at a glance, new “like” or “fan” notification box, and a separate link to view your page insights in detail (discussed below):

Facebook also provides you with a way to manage your posts and content over time. You could manage all your posts (including the ones you choose to hide) from a central location. You can filter stories by year or type, or edit, delete, or star posts. You can also choose to review timestamps and make sure your posts accurately show up under respective milestones.

Promote Your Facebook Fan Page

Once your Facebook fan page is live, it’s time to let the world know. Facebook gives you several ways to promote your fan page. You can “invite friends” or “promote your page” using paid advertisements targeted to other users.

Your Facebook fan page, like any other digital property you own, has value by itself.

So, it makes sense to promote and market your fan page just like you’d promote a website. Justin Wise of Social Media Examiner reveals 20 different ways to promote your fan page. The folks at Under30Ceo.com have another 7 ways to promote your fan page without spending a dime.

Ann Smarty also has some advice to help promote your Facebook fan page and get lots of fans in a post at Search Engine Journal.

Of course, you could go full-steam ahead on promotions (discussed in detail below): Do guest blogger outreach programs, launch webinars, give away free reports or whitepapers, get into conversations on other Facebook fan pages.

You can join groups within and outside of Facebook, “like” other sites in hopes they will come back to “like” your page, and even use offline promotions to get the word out.

Promotion > Exposure > Fans > Reach and engagement > Business.

Super Tips on Facebook Fan Page Promotion

It’s easy to set up a fan page but it’s incredibly hard to grow your fan page to reach a level where you benefit from engagement, conversations, and the community. It’s all about building on the “like” button. Here are a few “super tips” to help promote your fan page. But before you get started, it’s important to realize this:

We live in a trust economy, as Gary Vaynerchuck of VaynerMedia puts it. To earn customers’ trust, you need to give them value first (often for free).

Use Webinars to Boost “Likes” and Engagement

Webinars aren’t for selling. They are for providing information and value. They are to motivate, educate, and train. Use webinars to “wow” your audience with information and value. Then ask them to “like” your Facebook page afterwards.

Cross-Promote

Place social media buttons or links within every email campaign. Print out links for your Facebook fan page on all your offline marketing campaigns. Be sure to include links for Facebook fan pages on your podcasts and videos.

Guest Blog for “Likes”

Marketers have taken to guest blogging as a form of outreach because you can leverage visibility on another popular blog. That often means that guest bloggers get extra traffic, credibility, exposure, and even conversions. Guest blogger outreach programs have been used for promoting blogs, businesses, and websites.

But using a guest blogging opportunity to drive traffic to your Facebook page is another option.

Distribute traffic equally to your fan pages and your website properties to get a better return from your guest blogging campaigns.

Launch Offline Events

Launch events on Eventbrite and start launching events locally on the subject of your expertise. Be sure to promote your Facebook page at the event and encourage those attending to visit and “like” it too.

How to Make Facebook Fan Pages Stick: Adding Bells and Whistles

Another great way to promote your business using Facebook is to use contests, videos and giveaways to drive engagement on your page. You can take a DIY (do-it-yourself) approach or find some special apps to make these events easier to hold and promote.

Below is a list of tools that can help:

North Social

North Social has varying plans with apps including mobile sweepstakes, mobile coupons, and mobile signups (to leverage the fact that Facebook is big on mobile too). The regular apps include Instagram, deal shares, video channels, showcase, “show and sell”, “Twitter feed”, “ sign up page”, pages to make those “first impressions”, and much more.

Note: There’s a workable plan here for just about any fan page. If you have more than one fan page to manage, you’ll have to look at special plans for large companies or agencies.

Heyo

Heyo, once called Lujure, provides an app that helps you launch promotions, deals, and contests. Using a drag-and-drop wizard, you can create fan pages that engage, interact, or maybe even dazzle your fans.

Social Candy

Social Candy has apps for running quizzes and sweepstakes, sharing content and coupons, and holding photo contests.

WildFire

WildFire features interactive campaigns, large-scale analytics, and targeted advertising. Though it works for many kinds of businesses, it is clearly meant for companies and agencies that manage multiple brands.

MarketingGum

Marketing Gum has apps enabling email opt-in, surveys, sweepstakes, photo contests, and many other features to liven up your fan page. With a far more affordable pricing plan, it’s a budget alternative for bloggers and small businesses.

Use Metrics to Measure Success

Facebook provides you with Insights - its built-in metrics tool - to help you check on the progress, engagement, and growth of your fan page. Diana Urban on Ustandout.com provides a helpful post about how to use Facebook insights to measure and analyze your fan page.

Often, you’ll need more than just Facebook insights. A huge suite of free and paid tools are available. They include PageViral, Social Crawlytics, and many others.

Sponsored Content

Four Benefits of Adding a Website Visitor Survey to Your Site

Customer satisfaction is everything in business. But understanding what customer’s want and how they would react to any changes in pricing, product, promotion and packaging (Phillip Kotler’s 4 P’s of marketing), can be unnerving for any new business owner.Traditional survey methodologies like customer-interviews or panel discussions can be time-consuming and expensive. And while social media is a great platform for engaging with customers, it may not give the specific insights needed to make a business decision.

On the other hand, surveys embedded on your website are an affordable, prompt way to collate views from existing and potential customers. Website visitor surveys can be used by growing businesses to:

• Collect information on website usability, content and design.  While website analytics is great for understanding origination of website traffic and on-site visitor preferences, website survey can help you really understand who is visiting, why like your website and what they would like to change.
• Gather customer feedback on new product launches, seasonal promotions and overall customer satisfaction. Although the one disadvantage of using website surveys for broader purposes is that you have a restricted audience (visitors to your website). As you expand your business, you can always supplement website surveys with other collection methods such as emails, telephonic interviews and panel discussions.

A website visitor survey offers the following benefits: 

1. You capture feedback from target customers. People visiting your website are either already buying from you or at least have an inclination to do so. For content driven portals like Small Business Technology, it’s a tool for gathering feedback from readers on what we are doing right and what we need to better.
2. Feedback is gathered real-time. Users are asked to submit their feedback at a point of time when they are actually exploring information on your business. 
3. Website surveys are less time-consuming and more cost-effective. Survey tools like Google Consumer survey are conducted over short duration and provide visually analyzed results, at affordable rates.
4. Since website surveys are easy to design and execute, questions can be easily modified to meet business requirements. 

Tips on Creating an Effective Website Visitor Survey

Website visitor surveys may be perceived as irritants to the surfing experience. This is often due to surveys being enforced or too lengthy and complex. The online audience is unlikely to spare more than a few minutes to give feedback and therefore website visitor surveys are most effective when designed with a singular objective. Here are some tips on designing website visitor surveys :

1. Pick one topic for feedback.  Keeping it simple will help your audience understand the intent in the least possible time. 
2. Word questions in clear, straight forward language.
3. Restrict the number of questions to under 10; don’t be afraid to keep it under 5 if it serves your purpose
4. Restricting access to content on your website conditional to a survey response could be counter-productive.  Give visitors the freedom to respond to the survey if and when they like. A good time to solicit feedback would be a few minutes into the website surfing experience.
5. Promote your survey through social media accounts (and email marketing if you have an ongoing campaign)
6. Use it as an opportunity to show your visitors that their opinion matters. Share the findings and proposed steps basis the feedback received. 

There are a number of tools available to create website surveys. A few include:

• Google Website Satisfaction Survey:  This free service can be used to ask 4 questions from visitors for up to 500 responses over 30 days. The results are analyzed and shared by Google in a downloadable report format with data visualization. You can customize the questionnaire for 1¢ per response or $5.00 for 500 responses.
• Survey Pie: The free plan is suitable for businesses looking for short-term website visitor surveys. For long-term and repeat online surveys the paid plan starts at $ 29.9 per month.

Visitor website surveys offer smaller businesses the unique opportunity to seek out valuable qualitative inputs on the effectiveness of their websites as well as other facets of their business. However these surveys must be implemented without impeding the website-user experience. Also, sharing key takeaways from the survey with the audience can help establish credibility with site visitors.

 

The Crack Down on Online Reviews: The Good, Bad and Ugly Every Small Business Needs To Know

Keeping current customers delighted and finding new ones are inexorably intertwined. Generating favorable word of mouth endorsements - one satisfied customer telling another potential customer about a great experience, service received or purchase made - is the most effective way to finding new customers. Thanks to the prevalence of online reviews and customer ratings, it has become easier and more treacherous to master the many nuances of word of mouth endorsements.

Online reviews are extremely influential. A recent survey by BrightLocal shows “73 percent of customers say positive customer reviews make them trust a business more” and “65 percent of consumers are more likely to use a business which has positive online reviews.” Nielsen, in its 2012 study on the degree of trust consumers place in advertising, seconds this: “Consumers around the world continue to see recommendations from friends and online consumer opinions as by far the most credible. As a result, successful brand advertisers will seek ways to better connect with consumers and leverage their good-will in the form of consumer feedback and experiences.”

Online reviews are not always what they seem. In a recent Wall Street Journal’s Market Watch report, up to 25 percent of reviews on Yelp, a leading customer-driven review site of local businesses, are “’suspicious’ if not fraudulent.” Not only are competitors writing false negative reviews of their competition, a study of deceptive reviews by MIT Sloan School of Business professor Duncan Simister reveals that “many [negative] product reviews are from customers who have not purchased the product they are reviewing.”

Online reviews can hinder as much as they may help. “Negative ratings by influential reviewers adversely affect sales,” concludes the study by Simister. A similar 2011 study by Harvard Business School assistant professor Michael Luca likewise shows that “a one-star increase on Yelp’s five-star review system can raise restaurant sales by 5 to 9 percent.”

Some business owners, frustrated by negative reviews (or an inability to generate positive reviews organically), have foolishly responded by writing their own reviews. Worse, some have listened to bad advice by unscrupulous reputation and search engine marketing firms, offering them the seeming panacea of “paid positive reviews.” There are many obvious reasons why such an approach is not only unethical but may seriously damage your business like a well-intentioned, but badly thrown boomerang.

Writing (or hiring someone to write) reviews for your own company blows your credibility. Not only is a business’ integrity at stake with potential and current customers, but the reason word of mouth works is based on trust. Gaming that system takes trust out of the equation and backfires.

Websites with ratings are publicly outing companies behind false reviews. With increasing pressure on business directories and online storefronts to weed out false reviews, many have taken a tough stance on offending businesses. Yelp, as an example, will alert consumers publicly and flag your business if it is discovered to be generating false reviews. It’s most definitely not something you want associated with your business listing online. Some may even go as far as suing culprits that create fraudulent reviews for damages.

Not just unethical, it is often illegal. Legislators are getting in on the action to prevent prevalent “astroturfing,” a term coined to describe generating false positive reviews of one’s own company. Last week, New York State Attorney General Eric D. Schneiderman announced the conclusion of a yearlong investigation into false advertising and deceptive business practices that focused on companies writing or hiring others to write false positive reviews. The investigation resulted in a settlement with 19 companies, most of them small businesses, who agreed to pay a combined $350,000 and cease writing false positive reviews.

In this vacuum - between consumers seeking to discover new enjoyable and reliable businesses, and businesses that want to grow their business by sharing positive experiences of current customers - a number of review-focused matchmaking services have sprung up. In addition to Yelp, there is the well-known Angie’s List; paid subscription based, it carefully vets and audits reviews from other regional customers. San Francisco based Thumbtack offers multiple referrals to local service providers; they are vetted through a combined process of civil and criminal background checks, license verification and verified community reviews from actual customers. The newest entrant is iTrueReview, which solicits immediate and verified customer reviews, requiring the customer to do so onsite using a tablet or smartphone provided by the business being reviewed.

Customer reviews are an emerging landscape with many great opportunities but also a few pitfalls. Keep these tips in mind to minimize the harmful effect of negative reviews and maximize the benefit of positive ones when managing your small business reputation online:

1. Get to know the terms and conditions of key review sites. Knowing the terms and conditions of those review sites where most of your customers talk about your business is crucial to keep you out of trouble when handling positive and negative reviews. Not only do they often tell you what, as a business, can (and cannot) do to legally and ethically enhance your positive reputation, they should also tell you how you might properly address false negative reviews.
2. Everyone gets criticized some of the time. It’s impossible to please all customers, all the time. If a site offers business a chance to respond to negative customer reviews, use that tool wisely. Stay factual, genuinely listen and try to do what you can to turn a negative experience into a positive for the customer. Most appreciate an acknowledgement of their complaint and a genuine apology for a bad experience. Not only does this give you a second chance to turn a disgruntled customer into a satisfied one (or at least away from being a very vocal critic), it also shows potential customers reading the reviews how you might treat them if something doesn’t go perfectly in their interactions with you.
3. Ask for referrals and positive reviews. If you consistently provide excellent service and ask your best customers to write honest reviews about your company in a few key forums that matter to you, the genuine positive reviews will easily outweigh any negative ones. Keep in mind, however, that a majority of customers still do not write reviews, positive or negative. Likewise, while some 83 percent of small business customers state they would gladly refer a company, less than 30 percent actually do so. With affordable tools like Referlia available, don’t hesitate to ask your current delighted customers to refer you directly, while making it hassle free to do so.

Managing your business’ online reputation in an ethical, and now legal, manner is extremely important. By taking note of the rules and soliciting valid, positive reviews from your customers, you should have no issues and, if you provide a solid customer experience, your online reputation should shine.

Pinterest Contemplates Sponsored Pins

If you have a business with an online presence, you may already use Pinterest to market your brand. The social site lets users “pin” images of their favorite things, but it could soon include Pinterest sponsored content too.

This is probably not surprising to anyone who’s watched the development of other significant social media properties over the years.

Facebook, Twitter and most recently LinkedIn have all moved to sponsored or promoted content models as at least one potential way to ultimately monetize their operations. But Pinterest seems especially cautious about its monetizing strategy.

In a recent post on the official Pinterest blog, company CEO and co-founder Ben Silbermann tried to reassure users:

I know some of you may be thinking, ‘Oh great…here come the banner ads.’ But we’re determined to not let that happen.

The video below explains how Pinterest works:

Pinterest Sponsored Pins: Tasteful, Transparent, Relevant

Instead, Silbermann promised users of the site any advertising would be tasteful, transparent and relevant. He also said Pinterest would take users’ feedback into account to improve the promoted pins over time.

To start, Silbermann says Pinterest will likely try some test pins in the site’s current search results and category feeds. But he stressed these promoted pins will not actually be sponsored by anyone. They will simply be tests to gain some feedback from the community.

Silbermann explained one specific example of how this might work would be promoting, say, a Batman costume under a search for the term “Halloween.”

The Importance of Transparency

Pinterest is probably right to be cautious. Last year, the company’s experiments with Skimlinks, an affiliate linking service, caused a bit of a stir. Enough so that Silbermann took time to clarify the company’s position and add some new disclosure language to the Pinterest site.

The lesson is a good one for all small businesses. Many comments on Silbermann’s most recent post were supportive of the site’s need to eventually advertise.

The important thing is to be transparent with customers about what you’re doing and why.

The prospect of Pinterest sponsored pins also raises important opportunities for businesses already using the site for marketing. It will be important for those businesses to keep watching as Pinterest ventures into the world of paid content.

Image: Pinterest

Sponsored Content

The Crack Down on Online Reviews: The Good, Bad and Ugly Every Small Business Needs To Know

Keeping current customers delighted and finding new ones are inexorably intertwined. Generating favorable word of mouth endorsements - one satisfied customer telling another potential customer about a great experience, service received or purchase made - is the most effective way to finding new customers. Thanks to the prevalence of online reviews and customer ratings, it has become easier and more treacherous to master the many nuances of word of mouth endorsements.

Online reviews are extremely influential. A recent survey by BrightLocal shows “73 percent of customers say positive customer reviews make them trust a business more” and “65 percent of consumers are more likely to use a business which has positive online reviews.” Nielsen, in its 2012 study on the degree of trust consumers place in advertising, seconds this: “Consumers around the world continue to see recommendations from friends and online consumer opinions as by far the most credible. As a result, successful brand advertisers will seek ways to better connect with consumers and leverage their good-will in the form of consumer feedback and experiences.”

Online reviews are not always what they seem. In a recent Wall Street Journal’s Market Watch report, up to 25 percent of reviews on Yelp, a leading customer-driven review site of local businesses, are “’suspicious’ if not fraudulent.” Not only are competitors writing false negative reviews of their competition, a study of deceptive reviews by MIT Sloan School of Business professor Duncan Simister reveals that “many [negative] product reviews are from customers who have not purchased the product they are reviewing.”

Online reviews can hinder as much as they may help. “Negative ratings by influential reviewers adversely affect sales,” concludes the study by Simister. A similar 2011 study by Harvard Business School assistant professor Michael Luca likewise shows that “a one-star increase on Yelp’s five-star review system can raise restaurant sales by 5 to 9 percent.”

Some business owners, frustrated by negative reviews (or an inability to generate positive reviews organically), have foolishly responded by writing their own reviews. Worse, some have listened to bad advice by unscrupulous reputation and search engine marketing firms, offering them the seeming panacea of “paid positive reviews.” There are many obvious reasons why such an approach is not only unethical but may seriously damage your business like a well-intentioned, but badly thrown boomerang.

Writing (or hiring someone to write) reviews for your own company blows your credibility. Not only is a business’ integrity at stake with potential and current customers, but the reason word of mouth works is based on trust. Gaming that system takes trust out of the equation and backfires.

Websites with ratings are publicly outing companies behind false reviews. With increasing pressure on business directories and online storefronts to weed out false reviews, many have taken a tough stance on offending businesses. Yelp, as an example, will alert consumers publicly and flag your business if it is discovered to be generating false reviews. It’s most definitely not something you want associated with your business listing online. Some may even go as far as suing culprits that create fraudulent reviews for damages.

Not just unethical, it is often illegal. Legislators are getting in on the action to prevent prevalent “astroturfing,” a term coined to describe generating false positive reviews of one’s own company. Last week, New York State Attorney General Eric D. Schneiderman announced the conclusion of a yearlong investigation into false advertising and deceptive business practices that focused on companies writing or hiring others to write false positive reviews. The investigation resulted in a settlement with 19 companies, most of them small businesses, who agreed to pay a combined $350,000 and cease writing false positive reviews.

In this vacuum - between consumers seeking to discover new enjoyable and reliable businesses, and businesses that want to grow their business by sharing positive experiences of current customers - a number of review-focused matchmaking services have sprung up. In addition to Yelp, there is the well-known Angie’s List; paid subscription based, it carefully vets and audits reviews from other regional customers. San Francisco based Thumbtack offers multiple referrals to local service providers; they are vetted through a combined process of civil and criminal background checks, license verification and verified community reviews from actual customers. The newest entrant is iTrueReview, which solicits immediate and verified customer reviews, requiring the customer to do so onsite using a tablet or smartphone provided by the business being reviewed.

Customer reviews are an emerging landscape with many great opportunities but also a few pitfalls. Keep these tips in mind to minimize the harmful effect of negative reviews and maximize the benefit of positive ones when managing your small business reputation online:

1. Get to know the terms and conditions of key review sites. Knowing the terms and conditions of those review sites where most of your customers talk about your business is crucial to keep you out of trouble when handling positive and negative reviews. Not only do they often tell you what, as a business, can (and cannot) do to legally and ethically enhance your positive reputation, they should also tell you how you might properly address false negative reviews.
2. Everyone gets criticized some of the time. It’s impossible to please all customers, all the time. If a site offers business a chance to respond to negative customer reviews, use that tool wisely. Stay factual, genuinely listen and try to do what you can to turn a negative experience into a positive for the customer. Most appreciate an acknowledgement of their complaint and a genuine apology for a bad experience. Not only does this give you a second chance to turn a disgruntled customer into a satisfied one (or at least away from being a very vocal critic), it also shows potential customers reading the reviews how you might treat them if something doesn’t go perfectly in their interactions with you.
3. Ask for referrals and positive reviews. If you consistently provide excellent service and ask your best customers to write honest reviews about your company in a few key forums that matter to you, the genuine positive reviews will easily outweigh any negative ones. Keep in mind, however, that a majority of customers still do not write reviews, positive or negative. Likewise, while some 83 percent of small business customers state they would gladly refer a company, less than 30 percent actually do so. With affordable tools like Referlia available, don’t hesitate to ask your current delighted customers to refer you directly, while making it hassle free to do so.

Managing your business’ online reputation in an ethical, and now legal, manner is extremely important. By taking note of the rules and soliciting valid, positive reviews from your customers, you should have no issues and, if you provide a solid customer experience, your online reputation should shine.

Should You Allow Damage Insurance in Place of a Security Deposit?

I own a vacation condo on Lake Erie, just outside the town of Geneva-on-the-Lake, Ohio. Like half of the people who own apartments in the building, we rent out the property on a short-term basis when we are not using it.

If you rent property to someone else, you face the possibility that the person renting will damage it. That means that I, like the many people around the world who now rent properties online through sites like Vacation Rental by Owner (VRBO), Owner Direct and Flip Key, face an important decision about how to protect themselves from losses from renter-caused property damage: require a security deposit or ask renters to purchase damage insurance?

The field of economics has a very clear answer to this question. When you rent property to someone else, there is asymmetric information. Because the owner does not know how well the renter will treat the property, charging a security deposit is a good idea. Renters will have an incentive to take care of the property to recoup their security deposit. If you are renting a condo for the weekend and you have paid a $500 refundable security deposit, you’ll think twice about having a wild party or leaving your kids unsupervised - one broken table could double the cost of your stay.

However, many of the vacation rental websites offer damage insurance as an alternative to a security deposit. For a $49 fee, Homeaway, for example, offers $5,000 worth of damage protection to short term renters of vacation properties.

In my condo building, several of the owners allow renters to purchase damage insurance instead of paying a security deposit. Their reasoning is that the insurance provides more damage protection. If a renter causes $4,500 worth of damage to their condo, they may be able to recoup all of their loss from the insurance company, but if they take a $500 security deposit, they know they can only recoup up to $500 worth of damage from yhose funds. Moreover, because the decision to return the security deposit resides with the homeowner, some potential renters balk at putting up $500 against damage for a stay of similar cost.

As an economist, I am surprised by my neighbors’ approach. With insurance, the owner is giving up the right to decide the validity of damage claims. If you’ve collected a security deposit and someone breaks a television, you can just deduct the cost from the security deposit, which is already in your possession. If you go the route of insurance, however, you run the risk that the insurance company will decide that the renter wasn’t responsible for the damage and won’t pay the claim.

More importantly, the choice of a security deposit or insurance demonstrates a classic moral hazard problem. Moral hazard is the idea that people will take more risks if they don’t bear the costs of their actions. For example, if you have a security deposit you want back, you will be more likely to tell your kids not to use the table in the living room as a piece of gymnastics equipment than if you have paid for insurance that covers damage resulting from their gymnastics show.

Over the years of writing for Small Business Trends, I have learned that many people who read my posts know a lot about the topics I discuss. Therefore, I am sure there are many readers who have a lot of experience with the damage insurance question.

So tell me and the other readers of this column: If you were renting out a vacation condo, would you insist on a security deposit or would you allow renters to purchase damage insurance instead?

Jumping Photo via Shutterstock

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