Lately I've been hearing a lot from small business owners who are struggling to make ends meet.

One of the biggest problems, besides escalating costs for everything from fuel to office supplies, is getting customers to come in the door since it seems everyone is on a budget these days.

I recently heard about a great business tactic one established company is trying to help combat tough economic times and also cut employee turnover.

1800mattress.com found ways to increase commissions for its workers.

It's brilliant. Fewer customers are willing to open up their wallets, so you incentivize your work force to bring in more patrons by giving them a chance to make more money.

At 1800mattress.com, sales associates can field sales leads through a new web-based system. Not only can they seal a deal at the company's stores, but they can also head over to a "Live Chat" program online and try to make sales via the Web.
 
"We are constantly evaluating ways to streamline operations and maximize employee efficiency," said John O'Connell, executive vice president of sales and merchandising. "The introduction of this multichannel approach offers a new revenue opportunity by providing a constant flow of sales leads for our employees to succeed. Our employees have embraced this concept, morale is up and online sales have increased 22 percent from last year."
 
Newer and smaller businesses can be creative with their commissions as well.

Take Kitchen Couture, a housewares and kitchen appliance store based in Brooklyn.

Members of the store's decorating staff are able to make more money if they schedule home consultations with potential customers who are planning kitchen remodels. If the client purchases one of the "kitchen makeover" options, the employees get a commission for bringing in a new customer as well as a commission on the products they sell.

"This program has been very successful for us," says Sara Leibowitz, co-founder of Kitchen Couture.

"Our employees are excited about the additional commission as well as the ability to showcase their creativity," she says. "Customers have been overwhelmingly receptive and have referred our consultants to other friends."

It's not rocket science, folks. When you give your workers some extra motivation in the form of cold, hard cash to help boost business, everyone benefits.

Terry Poe Buschkamp figured her town of Waterloo, Iowa, was safe.

The executive director of the Main Street program in downtown Waterloo figured since the water rose to 25.39 feet on June 11 the town would not be flooded given the 27-foot flood wall.

Alas, the water came up from the sewers.

The majority of the 200 downtown businesses sustained water damage, and many lost inventory when the power went out, but the biggest damage has come from the lack of people coming to shop and eat downtown, she says.

FEMA and the SBA have been on hand, and the immediate talk was about how businesses can apply for low-interest loans.

It's a nice gesture, says Buschkamp, "but for most businesses working on minimal margins and already leveraged they don't need another loan on top of loans. They need grants."

There may be some hope. The Iowa Department of Economic Development will be calling a special session to consider some sort of new grant program for small firms, she says.

I don't want to knock the SBA loan program. There are indeed lots of businesses that will use the money, and for them it will be a lifeline.

After Hurricane Katrina, I wrote a story for the New York Times about damage to small businesses, and 14,000 firms had called the SBA inquiring about the loans within weeks after the storm hit.

Unfortunately, piling on debt in this economy might not be the right move for many firms.

The business owners of Waterloo need financial help, but they aren't sitting around waiting, says Buschkamp. They are already doing what they can to keep their heads above water financially.

She thinks most businesses will reopen, but as for the smaller, marginal ones, she says, "I don't know."

But she has hope given the determination she's seen among the small business owners in her town.

"We have a little bead store that was one of the harder hit with no power and flooding on the first floor," she explains. "They've been without power since the previous Friday, so her husband took the battery from the outboard motor on his boat and hooked it up to the cash register. They only made $30, but they're still in business."

You just can't keep a good entrepreneur down.

There are times in my life when I'm conflicted about an issue.

As a career columnist, I often take the side of the employee, writing about initiatives that can help make workers' lives better.

But as a small business writer and blogger, I know how mandated programs to give employees more time off or sick leave can end up costing small firms big money.

So here I sit, fighting with myself.

How do we as a society balance doing what's right for hard-working individuals while ensuring the backbone of the U.S. economy, small business, doesn't get crushed?

Recently, I wrote a career column on paid family leave and how important it was for workers, but I got an earful of e-mails from small business owners.

Some were pretty nasty, but there was one, well thought out e-mail I wanted to  share with you.

It came from Nancy Roesner, owner of Copley Feed & Supply in Ohio, acompany that has been around since 1939.

Here's her take:

As a small business owner, I just want you to know how detrimental this family leave will be to small business owners.

So, I will leave you with the other side of the story and how bad it will be if this passes.  We will have to adjust some other areas to compensate for this getting passed.  No more paid holidays, no paid vacation, etc. to offset the cost of this proposal.

Roesner told me when I called her that we should leave it up to the small business owner. She said she has given workers time off when they needed it for their families, and does what she can to accommodate their requests.

But unfortunately, not all business owners are as thoughtful, we all know that. And as the population ages, we will have to face the inevitable overwhelming need on the part of working men and women to have time to care for aging family members.

What are your thoughts on this?

During tough economic times, lots of people start to consider going into the franchise biz.

Maybe your job with a corporation is being downsized, or you always wanted to be an entrepreneur so a severance check may help you buy a franchise. You figure it's easier than starting your own business from the ground up.

Folks, I'm hear to tell you, take this decision seriously. Buying a franchise is not like renting an apartment. You can't just walk away from it.

Some readers have asked me about how they can get out of franchise agreements. Unfortunately, it's not easy.

I decided to ask an expert, Joel Libava, President of Franchise Selection Specialists Inc. who writes the The Franchise King blog, what his take was about pulling out.

Libava said one of the most common questions he gets is: "Joel, is there a way I can get out of my franchise agreement?"

His simple answer – "no!"  

However, he adds, "sometimes a franchise company will let someone 'out' if there was any possible fraud or other illegal activity involved in the transaction itself. An example would be if the franchise salesperson made an earnings claim like, 'Sure, you should have no problem making $50k to $75K in your first year in business' in response to the franchisee asking the 'How much can I expect to make in my first year' question. The wise thing to do in that case would be for the franchisor to let that franchisee out."

But if there wasn't any fraud, you're pretty much stuck unless you're able to unload the franchise to someone else.

"You can sell your franchise at any time during your typical five to ten year franchise agreement," he says. But the one caveat is "the franchisor must approve of the sale. They have to interview the prospective new franchisee, and approve him or her."

See what I mean people. Think long and hard before you sign on the dotted line.

Some small business owners are technology daredevils.

So many of them have no real tech background but they're not adverse to try the latest and greatest gadgets and software. Some even try to write their own code or try to customize systems that help their businesses run better.

Steve Mattie is a perfect example. I met him this week at the National Federation of Independent Business Summit, and he admitted to not being the most tech savvy guy in the room. "My son is my IT guy," he quips.

That's surprising, because Mattie's company Transport Designs Inc., manufacturers of customized trailers and motor homes, actually won a technology innovator award.

During the NFIB event this week, Mattie was handed the Dell/NFIB Small Business Excellence Award.

AP

The judges found that Mattie's company "stays up-to-speed on the latest in design software and hardware tools" and has been able to "share customized digital floor plans and real time construction progress with customers."

Technology, Mattie maintains, has helped boost his business. "Without embracing IT," he says, "our business would still be struggling to grow outside our region of the country much less internationally."

It's clear that small business owners need to embrace technology, and while Mattie was able to learn on the fly and rely on his son for IT backup, there are probably many of you out there that can't or just don't want to become technology gurus.

I don't blame you. You want to focus on your business, not stay on top of the latest IT trends.

Most small firms don't have the money to hire dedicated IT staffers, but there are other options.

I recently wrote a story for BusinessWeek's SmallBiz magazine on third-party tech support firms, and it turns out there's a growing number catering to smaller businesses and offering 24/7 IT services for a flat fee.

Hey, many small business owners already outsource things like payroll functions, why not your IT department?

There are no figures on how big the industry is but Mindy Blodgett, analyst for the Yankee Group, told me anecdotal evidence suggests the segment is growing. What's driving the trend, she surmises, it that small business owners are looking for better quality IT today and they want more advanced technology.

But don't rush out and hire these guys without doing some homework first.

Make sure it makes sense for your operation. And of course, check with the Better Business Bureau to make sure the firms are reputable, and talk to as many references as you can.

If you don't want a third party handling your IT functions, or you're looking more for direction when it comes to maximizing the Web for your business, Meg Whitman, the former CEO of eBay, who spoke at the NFIB summit, had a great suggestion.

Head over to your local college and hire a couple of young, techno nerds and let them loose in your company. (Well, she did say you should supervise them.) Give them an understanding of what you do and have them figure out how you can get the most out of the Web.

"They have a feel for the Web. They think about the Web like we thought about the telephone," she said. "Ask the twenty somethings to disrupt your business. Take a leap."

Do an Evel Knievel. You never know where you'll end up.

What's bugging small business owners? Costs, costs, costs, especially health care costs.

This week, I'm attending the National Federation of Independent Business' National Small-Business Summit and what better topic than what's bugging entrepreneurs most?

Yesterday the NFIB released its "Small-Business Problems and Priorities" survey, which it conducts every four years, and small business owners have one big problem – the cost of doing business, in particular health insurance costs, energy costs and inflation.

OK, I know this news probably doesn't take any of you by surprise, but it does not bode well for the economic climate going forward.

According to the report: Half of the top 10 problems worrying small business owners appear in the "costs" cluster, with the cost of health insurance continuing its 20-year reign as the number one problem for small business owners. More than 56 percent say it is a "critical problem."  Other cost issues in the top 10 include the cost of fuels and electricity, supplies, inventories and worker's compensation insurance.

And of course, taxes are up there on the list. Federal taxes on business income, property tax and state taxes on business income. The complexity of the tax code made its debut on the problem list this survey.

"As the economic downturn persists, small business owners are even more challenged by the costs of health insurance and the complexity of taxes," said Rebecca Macieira-Kaufmann, executive vice president and head of the small business segment of Wells Fargo, the sponsors of the survey.

But there's hope you guys are resilient.

"For four years, the economy provided a good, stable foundation for small business owners to do business, but as it started to take a negative turn over the last several months, they felt the effects of rising costs of doing business as reflected by these results," said Bruce D. Phillips, Senior Fellow at the NFIB Research Foundation. "As the economic outcome remains uncertain, small business owners are searching for innovative ways to reduce expenses and increase sales."

Entrpreneurs better start innovating ASAP, because based on what I got from the NFIB meeting yesterday, help with soaring health care prices will not come soon.

There's a bipartisan health care bill that the NFIB is supporting that will provide more choices for small business owners and the ability to buy insurance across state lines. The group's president Todd Stottlemyer is excited about the legislation but even he admited yesterday little will come of it this year.

And it's unclear if it will ever see the light of day.

Former Sen. Bob Kerrey moderated a health care panel during the NFIB event, and he had the gloomiest assessment of health care reform, saying "It's going to be a very hard proposition for the members of the House and Senate to solve."

Let's hope they're up for the challenge.

Ed McMahon is facing foreclosure of his home because he fell and broke his neck more than a year ago and has been unable to work.

OK, how many of you small business owners, independent contractors and sole proprietors out there would end up in the same situation if you were unable to work for 18 months?

You would think Johnny Carson's sidekick would have enough money saved to weather such an economic storm, but he apparently doesn't.

This could be any of us toiling away out there without a large corporation behind us providing a paycheck or disability while we recuperate.

AP

Ed McMahon

An accident or illness can be devastating to your financial health. According to an article in Health Affairs titled "Illness and Injury as Contributors to Bankruptcy", about 350,000 individuals file personal bankruptcy every year because of an illness and injury.

Many of us live paycheck to paycheck and only few of us can bankroll an episode of short-term disability, which is typically three months.

"A disability during your working years can leave you deprived of income and the ability to make major payments," states Kathleen Connell, a professor at Haas Graduate Business School, University of California, Berkeley, in an article in the Christian Science Monitor.

"Without disability support," she writes, "a vicious cycle of financial reversals quickly occur. Except for those with a large amount of savings, people who suddenly become disabled are often unable to pay their mortgage, healthcare premiums, credit-card bills, auto loans, utilities, and any pension or college-savings contributions."

So, this may be a good time to start thinking of what you'll do just in case.

Here are some of Connell's suggestions:

* Own health insurance. This is the foundational block of any personal-finance plan, providing coverage needed for all healthcare.

* Obtain disability insurance. This should rank with life insurance as a secondary financial priority.

* Be rigorous in reviewing potential long-term disability policies. Such contracts have numerous options; so carefully check occupation, income, recovery, and cost-of-living clauses. Access disabilitybenefits101.org for an independent discussion of disability benefits.

* Choose a long-term rather than short-term policy if your budget is limited. Long-term disabilities can create more expensive financial hardships.

* Review the financial strength of the insurance company before signing a short- or long-term policy. Check their ratings at ambest.com.

Most financial experts also suggest have enough money saved to cover your expenses for at least six months, and for small business owners you'll need to figure out who'll run your business when you can't.

I know, it's the last thing you want to be thinking about right now. But what are you going to do? Hope you win the lottery or something. Unfortunately, McMahon wasn't able to keep cashing in on his gig with American Family Publishers sweepstakes.

What plan do you have in place?

Many of you seem to be worried about keeping your businesses afloat during this tough economic cycle.

It may seem like you have no power over what happens to your bottom line right now. So I figured it's a good time for a business coach to slap us all around.

Dan Murphy, president and founder of The Growth Coach, came up with a bunch of small business advice nuggets he calls "MASTERing."  

Here's how you can master your business during recessionary times, according to Murphy, who is also the author of "Becoming a Strategic Business Owner:"

M is for Marketing.  In good times and bad, marketing should be the highest priority for the owner and the business.  Marketing is about attracting, serving and retaining customers.  Work smart to keep what you have.  Sell more to your current customers.  Attract new customers. Marketing is simply on-going education to your customers, prospects and referral sources of why it's in their best interest to do business with you.

A is for Ask Others for Help.  Now is not the time to be the strong, lone-ranger.  Be strong and smart enough to ask for help.  There is strength in numbers and better ideas.  Ask your customers -- "How can we better serve your needs. What additional needs could we serve?"  Ask your franchisor support team for strategies.  Ask your CPA for some expense control strategies.  Ask your internal team for ideas on how to grow revenues, decrease costs, better serve customers, etc.  Ask other entrepreneurs what they are doing in tough times -- adopt and adapt their strategies to your business.  

S is for Slow Down & Plan.  Stop being busy about nothing.  Get strategic.  Slow down, face reality, think about your situation and do some planning.  They need to create a one-year game plan but break it into 90-day action plans and keep everyone accountable for implementing the plan.

T is for Tough Decisions. Wake up! Now is not the time to be everyone's friend or to maintain the status quo.  You are the head coach and have to make some bold calls and even change up the roster.  Your first goal is to survive and be in a position to thrive.  Cut expenses and reallocate for marketing -- dare to invest in sales and marketing.  Cut loose non-performing employees.  Redeploy more people to the front lines -- sales and marketing.  Fire customers that cost you money.  Ask others who benefit from your business & success to share in the tough times with you and reduce their costs -- CPAs, printers, vendors, suppliers, advertising channels, etc.

E is for End Excuses.  Everyone needs to be held accountable for results.  As owner and head coach, do not accept excuses, only results.  You must provide accountability for everyone, including yourself.  Lead by example. Just because the economy is tough, that is no excuse to lay down, to give up, and to allow things to happen.  Now is the time to dig deeper, hustle, and out maneuver others.  Get more creative.  Do not play the role of the victim. Accept the truth that things are a bit rough.  So what?  The rough economy is not the real problem, your not confronting the problem and taking new actions is the problem.

R is for getting Re-Focused.  Like a champion sports team, every one of your team members should have absolute clarity about their role, responsibilities and goals. They should not confuse being busy with accomplishment.  Get them focused. Be honest and frank with your team -- if sales are down, give them the facts.  Everyone, from receptionists to managers, needs to face reality and positively go about improving on that situation.

And, in the words of Vince Lombardi: "Winning isn't everything; it's the only thing"