Building a website requires the basics

Dear Karen: I’m building a new website. What pages do I need?

Answer: Cut down on customer frustration and boost your credibility by including a “contact us” page with your address, telephone numbers and e-mail addresses. “It’s wise to offer IM addresses for live chat, Skype and other links,” said Richard Rabins, a co-chairman of Alpha Software. “If you have a company blog, feature it here.”

An “about us” page includes your mission statement and history and gives you a chance to connect with customers. Include names and photos of your top executives, but keep the page brief, factual and hype-free.

Rabins also recommended a “testimonial” page composed of positive customer feedback. “This is critical for new sites because there’s no other information available about them on the Web,” Rabins said.

A “frequently asked questions” page, in Q&A; format, will give visitors quick answers and save you time. Include an “ask us a question” link. You’ll also want a “subscribe” page to collect valuable customer contact information and a “privacy policy” page, Rabins said. “A privacy policy builds trust and creates repeat customers. Also, it’s required by law, and many consumers won’t do business with you without this assurance.”

How to calculate your firm’s worth

Dear Karen: I’m thinking of selling or merging my business. How do I figure out how much it’s worth?

Answer: Start by figuring your company’s “equity”: the assets listed on your balance sheet minus the liabilities. “Your balance sheet may contain items that warrant adjustment, such as uncollectable accounts receivable or a building acquired years ago,” said Glenn Liebman of the business appraisal firm Klein Liebman and Gresen.

Once adjusted, your business equity typically represents its minimum value. Additional value comes from your company’s earnings power, commonly referred to as goodwill.

“To assess goodwill, you’ll need an accurate reflection of your future expected annual cash flow,” Liebman said. “Oftentimes, this is done through an analysis of the recent five-year history of the company’s cash flow, after allowing for a fair and reasonable salary to the owner.” You’ll apply a multiple to the expected future cash flow that’s based on factors that are expected to affect the attainability of future cash flows.

Business valuation is tricky, and setting goodwill multiples is particularly subjective, Liebman said. Hire an experienced business appraiser to determine your company’s true worth.

The fit of defined benefit plan varies

Dear Karen: What kinds of companies use defined benefit pension plans?

Answer: Defined benefit plans are the old-fashioned pensions that pay participants a specific monthly amount at retirement. They also provide the maximum possible retirement contribution and tax deductions.

These plans make sense for high-income entrepreneurs between 45 and 70, said Karen Shapiro, chief executive of Dedicated DB Services.

They’re also practical for people who become entrepreneurs after retiring and for second-income entrepreneurial spouses whose business earnings are not needed to cover their family’s monthly living expenses.

A financial advisor or third-party administrator can set up a defined benefit plan for you. The annual deadline for establishing a plan is Dec. 31, but it can be funded any time before you pay your taxes for that calendar year.

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