How to set up a business|for busness people
Aug
24
Filed Under (Make Money) by
Grover Rutter asked:
Sooner or later you are going to exit your business. The question isn’t whether or not you will be ready. The sixty four thousand dollar question is whether or not your business will be ready. It is estimated that seven out of ten privately held businesses have no succession plan to transfer the business to the next generation of owners. What does that mean to you? It means that if you do not currently have a plan in place to transfer your business to family members, existing partners, management or employees, someday you will think about selling your business.
That day might come sooner than you anticipate. Don’t make the mistake of thinking that just because you are not currently ready to retire that you have plenty of time to prepare your business for sale.
As a business broker, I have been involved in a number of transactions (and potential transactions) where the business owner wanted to sell, or in some instances, was forced to exit the business earlier than expected. In fact, retirement is NOT the number one reason why businesses sell.
Here is a list of the most common reasons why owners sell (or otherwise discontinue) their businesses: Burn-out (the number one reason for selling) Health issues Personal diversification Retirement/semi-retirement Death Divorce/partner disputes Business growing too fast Second generation not up to the task Loss of market share
TAKE GOOD CARE The sad truth is that many business owners do not take good care of their most valuable asset: the business. They don’t groom someone to continue the business in their absence, and do not keep the business in salable shape during the time they operate the business.
Business owners tend to get too bogged down in the day to day business operations to worry about–or plan for an event that they perceive won’t occur until sometime in the distant future; selling the business.
Unfortunately, fate sometimes dictates circumstances beyond your control, and tough decisions must be made. If your business isn’t ready to sell when the time comes, what are your alternatives?
1. Liquidation of business assets—may be a solution, but one that usually returns very little money to the business owner. If the business had been an operating business, the underlying assets (except for real estate) may be outdated and of little use to anyone. At auction, the assets will bring only what the attending bidders are willing to pay. In some instances, underlying assets are sold to liquidators (or scrap) for only pennies on the dollar. Liquidation of a going business often occurs where the owners have become ill or disabled, or need to retire and have not planned adequately for their exit from the business. 2. Closing the business—is even less attractive than liquidation. That is because many who find themselves in this situation have a tendency to “put off” liquidating the underlying assets in hope that maybe someone will come along to buy this business. This almost never happens. BUILD WEALTH NOW BY PLANNING FOR THE SALE OF YOUR BUSINESS Okay, so you think you have enough to do without throwing more onto the pile. Am I right? That is why I have written this article for you. It provides a “down and dirty” overview of things that you ought to begin thinking about and planning for right now. Doing so will provide you with an additional safety net that will help safeguard your valuable business asset.
Here are just a few of the benefits of planning now: A planned sale allows for your goals and objectives on your timetable You may begin to identify potential buyers You may be able to create an attractive acquisition candidate You can begin to understand why a buyer may want to buy You might learn why buyers would not want to buy—and be able to fix the problems You may begin to realize the worth of your business now, and learn how to increase the value as part of your retirement planning
BUSINESS VALUE HOUSEKEEPING CHECKLIST
Record All Sales Business owners often invent remarkable ways to beat the tax collector. But the taxman can be a business owner’s best friend when it comes to selling one’s business. Income taxes are a great investment in the years immediately preceding an anticipated sale of the business.
Paying income tax proves to the buyer AND the banker that your business operations have been profitable. Nobody wants to pay more income tax. But consider this example: Ronald Bunk systematically underreported business income by an average of $20,000 per year. Assuming a combined tax rate of 40%, Mr. Bunk saved $8,000 in taxes per year. But, the underreported income also reduced the company’s earnings base by $20,000 per year. If, for example, the business could be sold for a multiple of 5x the company’s reported earning base—the company would sell for $100,000 less ($20,000 average earning base not reported times the price multiple of 5) than it is really worth!
Without considering the time value of money, it would take in excess of twelve years of (illegal) tax savings to make up for the loss of $100,000 in business value. The lesson: In trying to screw the government, business owners often find themselves on the short end of the stick; often in more ways than one.
Eliminate co-mingling of business and non business assets A common practice among closely held companies is to co-mingle non business assets and expenses with business assets and expenses. I have seen businesses owning motor coaches, boats and airplanes; all reported as business assets. The costs of maintaining and operating the assets were expensed as regular business operating expenses.
It is true that those businesses (not audited by the IRS) are saving a certain amount of income tax, and providing an extra “fringe” benefit for the owners of the company. Wise business owners should endeavor to separate non business assets from the business in the three to five years before a planned sale of the company. Doing so will make it much easier to accurately measure and reflect the true earning power of the business, as it will be unfettered by the capital investment in non business assets and the associated costs. Buyers of your business are generally purchasing future income and benefit streams that will be produced by your business. The leaner and more productive your business is—the more it is worth. It is never too early to begin segregating non business assets from your business, as it may take some planning and time. Do your own due diligence
Some executives of both public and private firms get a physical check-up once a year. Many of these same executives think nothing of having their personal investments reviewed at least once a year, if not more often. Yet, these same prudent executives never consider giving their company an annual physical, unless they are required to by company rules, regulations or some other necessary reason. Anyone interested in purchasing your business will perform “due diligence” procedures on your business before closing on the purchase. All too often, sellers are surprised at the skeletons purchasers can find in the closet. These skeletons can reduce the value of your company, and in some cases, kill any chance at closing a sale. What skeletons are your company’s closets?
Why not give your business a periodic physical? In essence, I am suggesting you would do well to treat your business as if someone else owned it—and you were the potential purchaser. What problems would you discover that could cause you and your advisors to reduce or withdraw your offer?
Spending the time and money to discover and fix your company’s problems now will pay huge dividends in the form of increased company value—which is exactly what you want when it’s time to sell.
Compliance with taxing and regulatory authorities Mountains of regulation often seem to impede a company’s growth and profitability. Some regulations might seem rather easy to “slight” or ignore.
Take for example one of my recent sellers who swore to me that the business had no regulatory violations of any type. I reminded the seller that anything “hidden in the closet” would most likely be discovered in a buyer’s due diligence (investigatory) process. “Nope—no problems of any kind” I was assured. Well, guess what the buyer’s due diligence turned up? Seems the seller had a couple of shipping/storage containers sitting behind the building—which the sellers KNEW were in violation of local zoning ordinances. How did they know? They had received four previous “reminders” from the trustees about the containers, and the need to remove them. “Why didn’t you mention that to me, or disclose that fact on your disclosure statement?” I asked. “Gee, nothing ever happened and the township never did anything—so we just figured it was no big deal.” Was the seller’s reasoning.
No big deal, except when the purchaser turned up the non compliance issue, it threw a few extra wrinkles into the mix. In that case, the issue was easily resolved (yet, much to the additional cost and chagrin of the sellers). But, sometimes known violations are not so easily remedied. In those instances, a seller runs the risk of blowing a good deal.
What’s the bottom line?
Clean up any tax, industry, OSHA, EPA or zoning issues with which your company does not comply.
Organize and keep records available. One never knows when opportunity might knock. If and when it does knock, will you be ready to strike while the iron is hot? How many times have you heard someone say something like, “I’d sell anything, including my business for the right price?”
Maybe you have even said it yourself. But would you know what paperwork and documents a serious buyer will immediately need in order to pursue the purchase? When a qualified buyer is ready to begin serious due diligence, they will need a variety of company documents.
Following is a partial list of things a buyer will ask for: • Three to five years income tax returns • Copies of one to three years quarterly payroll reports • Three to five years CPA prepared financial statements • Current year to date financial statements • Detailed depreciation schedules listing each fixed asset owned by your company • Corporate Minute Book with updated minutes • Recent aged accounts receivable trial balance • Recent aged accounts payable trial balance • Company organization chart • Copy of the Summary of Insurance Coverage (provided by your carrier) • Information about Employee Benefits provided by the company • Information about Employee Retirement Plans • Copies of labor contracts • Copies of other contracts to which the company is a party • Copies of licenses, registrations for patents, copyrights, trademarks, etc.
The foregoing list is an example of the types of records your company should have up to date and on hand at all times. These records are extremely important to speed the sales process along. Though this advice sounds basic, I often encounter companies whose records are not complete and up to date. This situation can dramatically affect a potential sale.
I suggest using a three ring binder to keep the basic updated records available at all times. This also makes other business needs for the documents much more manageable.
CONCLUSION
You can increase your wealth by knowing a few simple ground rules for successfully selling your business. Just like other owners of closely-held businesses, you know how to operate your business on a day to day, month to month and year to year basis. But your experience in running the business has not prepared you to know how to sell your business.
While the information I provided in this article is not all inclusive, it should help you get started in preparing your business for a successful sale—no mater when the business might be sold.
York
Sooner or later you are going to exit your business. The question isn’t whether or not you will be ready. The sixty four thousand dollar question is whether or not your business will be ready. It is estimated that seven out of ten privately held businesses have no succession plan to transfer the business to the next generation of owners. What does that mean to you? It means that if you do not currently have a plan in place to transfer your business to family members, existing partners, management or employees, someday you will think about selling your business.
That day might come sooner than you anticipate. Don’t make the mistake of thinking that just because you are not currently ready to retire that you have plenty of time to prepare your business for sale.
As a business broker, I have been involved in a number of transactions (and potential transactions) where the business owner wanted to sell, or in some instances, was forced to exit the business earlier than expected. In fact, retirement is NOT the number one reason why businesses sell.
Here is a list of the most common reasons why owners sell (or otherwise discontinue) their businesses: Burn-out (the number one reason for selling) Health issues Personal diversification Retirement/semi-retirement Death Divorce/partner disputes Business growing too fast Second generation not up to the task Loss of market share
TAKE GOOD CARE The sad truth is that many business owners do not take good care of their most valuable asset: the business. They don’t groom someone to continue the business in their absence, and do not keep the business in salable shape during the time they operate the business.
Business owners tend to get too bogged down in the day to day business operations to worry about–or plan for an event that they perceive won’t occur until sometime in the distant future; selling the business.
Unfortunately, fate sometimes dictates circumstances beyond your control, and tough decisions must be made. If your business isn’t ready to sell when the time comes, what are your alternatives?
1. Liquidation of business assets—may be a solution, but one that usually returns very little money to the business owner. If the business had been an operating business, the underlying assets (except for real estate) may be outdated and of little use to anyone. At auction, the assets will bring only what the attending bidders are willing to pay. In some instances, underlying assets are sold to liquidators (or scrap) for only pennies on the dollar. Liquidation of a going business often occurs where the owners have become ill or disabled, or need to retire and have not planned adequately for their exit from the business. 2. Closing the business—is even less attractive than liquidation. That is because many who find themselves in this situation have a tendency to “put off” liquidating the underlying assets in hope that maybe someone will come along to buy this business. This almost never happens. BUILD WEALTH NOW BY PLANNING FOR THE SALE OF YOUR BUSINESS Okay, so you think you have enough to do without throwing more onto the pile. Am I right? That is why I have written this article for you. It provides a “down and dirty” overview of things that you ought to begin thinking about and planning for right now. Doing so will provide you with an additional safety net that will help safeguard your valuable business asset.
Here are just a few of the benefits of planning now: A planned sale allows for your goals and objectives on your timetable You may begin to identify potential buyers You may be able to create an attractive acquisition candidate You can begin to understand why a buyer may want to buy You might learn why buyers would not want to buy—and be able to fix the problems You may begin to realize the worth of your business now, and learn how to increase the value as part of your retirement planning
BUSINESS VALUE HOUSEKEEPING CHECKLIST
Record All Sales Business owners often invent remarkable ways to beat the tax collector. But the taxman can be a business owner’s best friend when it comes to selling one’s business. Income taxes are a great investment in the years immediately preceding an anticipated sale of the business.
Paying income tax proves to the buyer AND the banker that your business operations have been profitable. Nobody wants to pay more income tax. But consider this example: Ronald Bunk systematically underreported business income by an average of $20,000 per year. Assuming a combined tax rate of 40%, Mr. Bunk saved $8,000 in taxes per year. But, the underreported income also reduced the company’s earnings base by $20,000 per year. If, for example, the business could be sold for a multiple of 5x the company’s reported earning base—the company would sell for $100,000 less ($20,000 average earning base not reported times the price multiple of 5) than it is really worth!
Without considering the time value of money, it would take in excess of twelve years of (illegal) tax savings to make up for the loss of $100,000 in business value. The lesson: In trying to screw the government, business owners often find themselves on the short end of the stick; often in more ways than one.
Eliminate co-mingling of business and non business assets A common practice among closely held companies is to co-mingle non business assets and expenses with business assets and expenses. I have seen businesses owning motor coaches, boats and airplanes; all reported as business assets. The costs of maintaining and operating the assets were expensed as regular business operating expenses.
It is true that those businesses (not audited by the IRS) are saving a certain amount of income tax, and providing an extra “fringe” benefit for the owners of the company. Wise business owners should endeavor to separate non business assets from the business in the three to five years before a planned sale of the company. Doing so will make it much easier to accurately measure and reflect the true earning power of the business, as it will be unfettered by the capital investment in non business assets and the associated costs. Buyers of your business are generally purchasing future income and benefit streams that will be produced by your business. The leaner and more productive your business is—the more it is worth. It is never too early to begin segregating non business assets from your business, as it may take some planning and time. Do your own due diligence
Some executives of both public and private firms get a physical check-up once a year. Many of these same executives think nothing of having their personal investments reviewed at least once a year, if not more often. Yet, these same prudent executives never consider giving their company an annual physical, unless they are required to by company rules, regulations or some other necessary reason. Anyone interested in purchasing your business will perform “due diligence” procedures on your business before closing on the purchase. All too often, sellers are surprised at the skeletons purchasers can find in the closet. These skeletons can reduce the value of your company, and in some cases, kill any chance at closing a sale. What skeletons are your company’s closets?
Why not give your business a periodic physical? In essence, I am suggesting you would do well to treat your business as if someone else owned it—and you were the potential purchaser. What problems would you discover that could cause you and your advisors to reduce or withdraw your offer?
Spending the time and money to discover and fix your company’s problems now will pay huge dividends in the form of increased company value—which is exactly what you want when it’s time to sell.
Compliance with taxing and regulatory authorities Mountains of regulation often seem to impede a company’s growth and profitability. Some regulations might seem rather easy to “slight” or ignore.
Take for example one of my recent sellers who swore to me that the business had no regulatory violations of any type. I reminded the seller that anything “hidden in the closet” would most likely be discovered in a buyer’s due diligence (investigatory) process. “Nope—no problems of any kind” I was assured. Well, guess what the buyer’s due diligence turned up? Seems the seller had a couple of shipping/storage containers sitting behind the building—which the sellers KNEW were in violation of local zoning ordinances. How did they know? They had received four previous “reminders” from the trustees about the containers, and the need to remove them. “Why didn’t you mention that to me, or disclose that fact on your disclosure statement?” I asked. “Gee, nothing ever happened and the township never did anything—so we just figured it was no big deal.” Was the seller’s reasoning.
No big deal, except when the purchaser turned up the non compliance issue, it threw a few extra wrinkles into the mix. In that case, the issue was easily resolved (yet, much to the additional cost and chagrin of the sellers). But, sometimes known violations are not so easily remedied. In those instances, a seller runs the risk of blowing a good deal.
What’s the bottom line?
Clean up any tax, industry, OSHA, EPA or zoning issues with which your company does not comply.
Organize and keep records available. One never knows when opportunity might knock. If and when it does knock, will you be ready to strike while the iron is hot? How many times have you heard someone say something like, “I’d sell anything, including my business for the right price?”
Maybe you have even said it yourself. But would you know what paperwork and documents a serious buyer will immediately need in order to pursue the purchase? When a qualified buyer is ready to begin serious due diligence, they will need a variety of company documents.
Following is a partial list of things a buyer will ask for: • Three to five years income tax returns • Copies of one to three years quarterly payroll reports • Three to five years CPA prepared financial statements • Current year to date financial statements • Detailed depreciation schedules listing each fixed asset owned by your company • Corporate Minute Book with updated minutes • Recent aged accounts receivable trial balance • Recent aged accounts payable trial balance • Company organization chart • Copy of the Summary of Insurance Coverage (provided by your carrier) • Information about Employee Benefits provided by the company • Information about Employee Retirement Plans • Copies of labor contracts • Copies of other contracts to which the company is a party • Copies of licenses, registrations for patents, copyrights, trademarks, etc.
The foregoing list is an example of the types of records your company should have up to date and on hand at all times. These records are extremely important to speed the sales process along. Though this advice sounds basic, I often encounter companies whose records are not complete and up to date. This situation can dramatically affect a potential sale.
I suggest using a three ring binder to keep the basic updated records available at all times. This also makes other business needs for the documents much more manageable.
CONCLUSION
You can increase your wealth by knowing a few simple ground rules for successfully selling your business. Just like other owners of closely-held businesses, you know how to operate your business on a day to day, month to month and year to year basis. But your experience in running the business has not prepared you to know how to sell your business.
While the information I provided in this article is not all inclusive, it should help you get started in preparing your business for a successful sale—no mater when the business might be sold.
York
Comments Off
Aug
20
Filed Under (Make Money) by
Simon Mangundu asked:
Economies all over the world are experiencing a decline, businesses are laying off many people in order to cut costs and stay profitable. Those who retain their jobs are faced with rocketing food and gas prices.
When you are an owner of a small business, the challenges are even greater, under the circumstances, you are more likely to experience a decline in traffic to your store, raising costs of supplies, employees demanding (understandably) higher wages, higher fees in marketing your business using mainstream media, higher costs in renting business space and insurance costs. If you are an accountant you might have probably figured that under this circumstances, unless you are selling magic items, you would see higher expenses than income. Business is not about how much money you make, but it is more about how much of the money you make actually stays in the business. A business that makes a million a year and spends a million is the same as the business that does not do business at all, except in the earlier case, the owner is actually at a loss because they are putting in more effort than they are making.
So how do you survive that? That was exactly the same question I asked myself a few months ago. Here I have compiled some notes that some in the same situation as I was might find helpful.
1 Constant Evaluation and process streamlining.
Constant evaluation is the blood and soul of every business. As the saying goes “What got you to where you are may not be able to get you where you want to be”. To be honest, I have never met any business person, whether it is in the formal or informal sector who wanted their business to stay the same for a long period of time, no matter how well they were doing. Being on top of your class does not stop your competitors from doing what it takes to beat you. We see a lot of big businesses laying people off, going through mergers and acquisition. This is process streamlining on a large scale. They evaluate their positions, get rid of inefficient processes, redundant positions and so on. Don’t feel guilty if you have to do it for your small business… If you find yourself with more employees than you need or using a process that is costing you more than it brings in, cut it off and replace it with something that works better.
I will tell you a secret. A few years ago, I read an article about how one could make a lot of money on FOREX, if you do not know what it is, basically the business is about speculating on whether a certain currency’s value would get stronger or weaker and then you would either buy or sell a specific currency in exchange for another currency.
I thought that was a pretty easy thing to do and got a lot of books telling me that it is a lucrative business. I am not disputing that, but there are also a lot of people that loose money this way. I also got a few articles somewhere that warned me about what happens on FOREX, but at the same time I was getting drawn to it, not by the money but by the fact that I could learn a lot about financial discipline.
After two months, I had almost lost all that I had in my account, but I had also learned a lot of things. One of the important lessons is to cut your losses short and let your profits run. Get me right, this is not the same as giving up too soon. This is giving up soon after knowing that the business is heading no where. This may sound like a greedy game, but it works. To me money not spend is money saved, it is as simple as that.
Why am I telling you this? I am telling you this because A few years later I would start a small business that did not really fit my lifestyle but it had the potential to take off. I would spend most of my starting capital on advertising and rent and then on wages for my staff. Being what it was, the business was not generating enough revenue to cover its expenditure, because the marketing media and approaches we used were not working and were difficult to evaluate whether they were effective or not and given the my lifestyle, I was learning that there is no way I would be able to take the business to the next level using the resources I had. I had a choice to either wait and let it wipe me out of my hard-earned cash or cut my loses short and explore other alternatives.
By talking to other small business owners, I would find out that many were facing the same problem that I was. I then put some time aside and develop a web-based platform to sell my stuff. This was the birth of SME Promotions Portal, the idea was not only simple, but it also helped me cut my business expenses by more than 50%, I got rid of the rented space and let go of my staff who were bringing in much less than I was paying them. I get most consulting assignments through the site and have automated a lot of the processes behind my business dealings to save me time so that I can concentrate on what I do best.
This site is not only for me, other people have started using the site to sell their products for a small fee. Giving them an opportunity to only pay after their products are sold. How does that help? If you are in a situation that I was in, having to pay upfront for everything sucks up all your working capital and spoils your prospects and leaving your business with no cash to work with. This leaves the business with a little bit of money to spend on basic needs.
Sorry if this sounded like bragging, it was not intended to and I urge you to keep reading, you might just be able to find something that works for you here.
2 Break away from conventional marketing practices.
If you started a business the way I did then you would know about what I am about to say. Many people out there think having a business is about having merchandise in store and putting ads everywhere to let people know where to find you; or even worse hoping that people will easily come by your store looking for what you got.
Others spend most of their starting capital on radio and TV commercials like I did, when they know they have no way of measuring where the traffic is coming from, so that they can cut out stuff that is not working. The sad thing is that many advertisers out there do not care whether you get your returns out of your advertising dollar and honestly, they shouldn’t, because they are in business to make money. Otherwise how would you feel if somebody told you that every time you sold a frying pan to a family, you would have to follow them around to make sure they are using it. It is not your business, your business is selling frying pans and you should stick to that.
To make sure your business can survive, you have start talking to people you know and trust or people that trust you, about what you are offering. Do not try to push it on to them, just tell them know about it. Chances are, that next time they hear somebody looking for what you have, they would refer them to you. The idea is that the few that you know are going to tell a few others that they know and the game continues… viral marketing… if you get where I am heading. The best tool for viral marketing is word-of-mouth, you either learn to use it or loose business.
Save your marketing dollar, by cutting out all the stuff that does not work, the world is bombarded with marketing messages every second and many people are beginning to ignore marketers who interrupt them with a sales proposition. Watch your competitors see what they are doing wrong and learn from it.
My nephew Sylvester had just learned a hard lesson from interruptive marketing, we were distributing flyers about our business and most of the time he would get a mean look and be told that people did not have time for what he was trying to sell them. After going through the pile of flyers, we would sit and talk about how people are responding, why they are responding that way? and what we needed to do to overcome that?. Just make sure you do this all the time, otherwise you are going to waste a lot of your resources and not understand what is going on when they do not show up at your store.
If your business is too small, try online merchandising. You look for a cheaper way to sell your products on the internet. This will cut your expenses in terms of rent, expensive advertising and even the commuting time as this will enable to work from home. Besides, you will be able to market to a wider audience and do not have to be awake to take orders. This is not an easy cookie though, you will have to spend some time researching internet marketing and optimizing your website for best results.
3 Help your customers find the help you do not offer.
Customers are very interesting people, one thing is that many of them do not want to be sold something. They want to buy something and hopefully from you. They tend to ask people they trust of their opinion on other businesses or even products.
No matter how much you hate your competitor or how desperate you need their dollar, if you do not have what they are looking for, politely tell them that you can not provide it and they should check with your competitor or some of your non competing partners for that matter. Never delay their purchase out of greed until you have the product to sell to them, leave that to them to decide.
Never bad-mouth a customer, even when you catch them buying the product you have from your competitor when you believe they should be buying from you. I have had someone from my household buy something I was selling from a competitor. I watched them do it and they later thought they should have bought from me. Whether out of guilt or something else, they told five of their friends that I had the product and all five bought from me. Had I reacted differently, the best case would have been that they would return the product to the store and buy from me and never bring anyone. The worst case would be not returning it, not referring anybody to me and decide not to ever talk to me. The funny thing about customers is that the more you help them, the more they get to trust you and they might even bring their friends to your business knowing that they will get help regardless of whether you have what they are looking for or not. Why is this important? People get to you first before they get to somebody else, thus you have a chance to sell them something first before your competitor.
4 Ask non-competing business owners for help and return the favor.
If you are to survive in business, you have to acquire some friends hopefully people that are already in business but are not your direct competitors. You should do this for a few reasons, one is that since you are not competitors, you are more likely to need what they offer and so are they. These people might end up being your biggest customers or they may even refer their customers to your business.
Two, Since they are already in business, it is very likely that you think the same way. This gives you an opportunity to pick their brains on something that you need help with. Remember for the most part, we are defined by who we associate with. If you hang around thieves, you will be considered a thieve; and if you hang around very successful people, you will be considered successful, as long as you work hard enough to think and behave like them, for them not to run away from you.
Three, people around you are watching even when you think they are not. What you say to one about other people may come to haunt you. If you have hanged around somebody that gossips a lot, would it not bother you as to what they say behind your back? Or rather as to what would stop them from saying about you what they say to you about others? The same thing happens in business, when things are not going well, you reach out to others for help. This almost always works as long as you remain accommodating about others reaching out to you. Keep what they tell you in confidence, confidential. This will earn you a good reputation, trust and in many cases new business or referrals.
<h4>5 Be Careful of hyped advertisers trying to take your last pennies.
How often do you see something like this? “Get ranked high on major search engines in 24 hours for a small fee” or rather an interesting one “Make up to $400 a day working at home using our proven system” and at the end of the page, they ask you to pay $300 to get you started.
These are all people wanting to get your money for their own benefit. First of all the web is full of people competing for the top ranking. Even if it was true that they would get you top ranking on Google or Yahoo, how long do you think you will stay there. Besides, these ads go to millions of people who maybe in the same business category that you are in, and just out of curiosity, how many millions would fit into Google or Yahoo’s top 10 ranking?
I am not completely dismissing the fact that some of them may be good, but if you are going to give somebody your money to use an automated system to put you on these search engines, then you got to think twice, because some search engines may be smart enough to know these tricks. Besides, if Google and/or Yahoo gets their money from online advertising, would you not think that they would watch out for sneaky marketing approaches like this, using their space to make money from you?
Secondly, Have you ever looked for a job and your employer tells you to pay them first before they gave you the job? If they did then, I would question the legality of their business.
What I am saying here is that you do not have to jump at every marketing message you hear, which is very common when you are desperate to see your business idea take off; or even to simply put something on the table. So trade wise, learn a lot by reading a lot and let your business grow. If you are going to succeed with online marketing your keyword research has to be done by you, since you and only you knows what you would like to get out of it and how much you want to pay for it.
6 Combine forces and let your marketing dollar take you a little farther.
My seventh grade teacher once demonstrated to me how powerful you can be by combining forces with other people for greater results. This may have nothing to do with business, but just hear me out.
This guy had noticed that kids in his class were not getting along, so he decides he is going to make the class sing, but everyone singing a different song, then asked three students to stand outside the class, so that after the song, they would come back and report on what they got from the song. After the first song, the three students came back into the class an reported different things about the same song, all of which were not accurate.
Then he decided to get the class to sing one song, with everyone singing to the same song at the same time. While the students were singing, he asked the three students to go a little farther from the classroom. After the second song, he invited the three students back into the class and asked them to report on the song they had just listened to. All three reported accurately.
So, what is the deal here? There are many people out there who think, they can do it on their own, ignoring the fact that their potential customers are getting bombarded with marketing messages from all over the place. The sad thing is that they end up spending a lot of money trying to get the word out, but because they are not in tune with others their messages do not get to the intended recipient. They finally grow tired and quit, even when there is a huge potential for success.
The best survival skill is to learn to play along with others while at the same time acknowledging that there are things that affects us differently from the way they affect others, even those closest to us. Anybody who had done stock trading would tell you “Never fight against the trend, if you plan on winning”. Take some time, listen to what people are saying about certain products, research a little to see if there is real demand for the product or service, determine whether people who are talking about it are real buyers and not just people who would want something of great value for almost nothing.
Why am I saying this? A lot of times, people would tell you about what they want, you get it to them, you realize they want it for much less or even worse, you realize that they are actually among the 80% who wants people to talk to them, but have no interest in buying anything. Watch out for those, if you come across one, politely excuse yourself and move on. Otherwise you will spend 80% of your time and resources selling to non-buyers. Be careful though to distinguish non-buyers from potential buyers who are skeptical about your product.
7 Deliver what is promised on time.
A few months ago, a friend of mine came to me and said “I hear you do computer stuff, My computer is not starting and I would like you to take a look”. I asked him a few questioned and had determined that his problem is likely to be a hardware issue. I told him I would take a look, but at the same time I also told him that I was a software guy and I knew of another guy that did hardware stuff. As soon as I mentioned his name, the guy goes “Nope, I am not going back there, because he takes a long time to get things done”. This had been the second person to say the same about this guy.
Although I was not a customer, It sort of made me hesitant to recommend him to anyone. If they did not get the service they deserved with this guy, it would put my credibility on the line. Now every time somebody asks me where to get their computers fixed, I would say I was not sure or would at least warn them before referring them to him. Who knows how much business he is loosing as a result of this? His former customers might be telling their friends to not go there.
Speedy and high quality service has proven to be the key to small business success. Follow up to make sure they are satisfied. This way you show that you are not only interested in getting rid of your product but also care about how they feel about the product. Just do not go overboard and get into how and whether they use the product, that is their business. Keep focused on delivering the best quality products and/or service and make sure they can come back or bring their friends for more. That is your part, the rest is up to them.
Irene
Economies all over the world are experiencing a decline, businesses are laying off many people in order to cut costs and stay profitable. Those who retain their jobs are faced with rocketing food and gas prices.
When you are an owner of a small business, the challenges are even greater, under the circumstances, you are more likely to experience a decline in traffic to your store, raising costs of supplies, employees demanding (understandably) higher wages, higher fees in marketing your business using mainstream media, higher costs in renting business space and insurance costs. If you are an accountant you might have probably figured that under this circumstances, unless you are selling magic items, you would see higher expenses than income. Business is not about how much money you make, but it is more about how much of the money you make actually stays in the business. A business that makes a million a year and spends a million is the same as the business that does not do business at all, except in the earlier case, the owner is actually at a loss because they are putting in more effort than they are making.
So how do you survive that? That was exactly the same question I asked myself a few months ago. Here I have compiled some notes that some in the same situation as I was might find helpful.
1 Constant Evaluation and process streamlining.
Constant evaluation is the blood and soul of every business. As the saying goes “What got you to where you are may not be able to get you where you want to be”. To be honest, I have never met any business person, whether it is in the formal or informal sector who wanted their business to stay the same for a long period of time, no matter how well they were doing. Being on top of your class does not stop your competitors from doing what it takes to beat you. We see a lot of big businesses laying people off, going through mergers and acquisition. This is process streamlining on a large scale. They evaluate their positions, get rid of inefficient processes, redundant positions and so on. Don’t feel guilty if you have to do it for your small business… If you find yourself with more employees than you need or using a process that is costing you more than it brings in, cut it off and replace it with something that works better.
I will tell you a secret. A few years ago, I read an article about how one could make a lot of money on FOREX, if you do not know what it is, basically the business is about speculating on whether a certain currency’s value would get stronger or weaker and then you would either buy or sell a specific currency in exchange for another currency.
I thought that was a pretty easy thing to do and got a lot of books telling me that it is a lucrative business. I am not disputing that, but there are also a lot of people that loose money this way. I also got a few articles somewhere that warned me about what happens on FOREX, but at the same time I was getting drawn to it, not by the money but by the fact that I could learn a lot about financial discipline.
After two months, I had almost lost all that I had in my account, but I had also learned a lot of things. One of the important lessons is to cut your losses short and let your profits run. Get me right, this is not the same as giving up too soon. This is giving up soon after knowing that the business is heading no where. This may sound like a greedy game, but it works. To me money not spend is money saved, it is as simple as that.
Why am I telling you this? I am telling you this because A few years later I would start a small business that did not really fit my lifestyle but it had the potential to take off. I would spend most of my starting capital on advertising and rent and then on wages for my staff. Being what it was, the business was not generating enough revenue to cover its expenditure, because the marketing media and approaches we used were not working and were difficult to evaluate whether they were effective or not and given the my lifestyle, I was learning that there is no way I would be able to take the business to the next level using the resources I had. I had a choice to either wait and let it wipe me out of my hard-earned cash or cut my loses short and explore other alternatives.
By talking to other small business owners, I would find out that many were facing the same problem that I was. I then put some time aside and develop a web-based platform to sell my stuff. This was the birth of SME Promotions Portal, the idea was not only simple, but it also helped me cut my business expenses by more than 50%, I got rid of the rented space and let go of my staff who were bringing in much less than I was paying them. I get most consulting assignments through the site and have automated a lot of the processes behind my business dealings to save me time so that I can concentrate on what I do best.
This site is not only for me, other people have started using the site to sell their products for a small fee. Giving them an opportunity to only pay after their products are sold. How does that help? If you are in a situation that I was in, having to pay upfront for everything sucks up all your working capital and spoils your prospects and leaving your business with no cash to work with. This leaves the business with a little bit of money to spend on basic needs.
Sorry if this sounded like bragging, it was not intended to and I urge you to keep reading, you might just be able to find something that works for you here.
2 Break away from conventional marketing practices.
If you started a business the way I did then you would know about what I am about to say. Many people out there think having a business is about having merchandise in store and putting ads everywhere to let people know where to find you; or even worse hoping that people will easily come by your store looking for what you got.
Others spend most of their starting capital on radio and TV commercials like I did, when they know they have no way of measuring where the traffic is coming from, so that they can cut out stuff that is not working. The sad thing is that many advertisers out there do not care whether you get your returns out of your advertising dollar and honestly, they shouldn’t, because they are in business to make money. Otherwise how would you feel if somebody told you that every time you sold a frying pan to a family, you would have to follow them around to make sure they are using it. It is not your business, your business is selling frying pans and you should stick to that.
To make sure your business can survive, you have start talking to people you know and trust or people that trust you, about what you are offering. Do not try to push it on to them, just tell them know about it. Chances are, that next time they hear somebody looking for what you have, they would refer them to you. The idea is that the few that you know are going to tell a few others that they know and the game continues… viral marketing… if you get where I am heading. The best tool for viral marketing is word-of-mouth, you either learn to use it or loose business.
Save your marketing dollar, by cutting out all the stuff that does not work, the world is bombarded with marketing messages every second and many people are beginning to ignore marketers who interrupt them with a sales proposition. Watch your competitors see what they are doing wrong and learn from it.
My nephew Sylvester had just learned a hard lesson from interruptive marketing, we were distributing flyers about our business and most of the time he would get a mean look and be told that people did not have time for what he was trying to sell them. After going through the pile of flyers, we would sit and talk about how people are responding, why they are responding that way? and what we needed to do to overcome that?. Just make sure you do this all the time, otherwise you are going to waste a lot of your resources and not understand what is going on when they do not show up at your store.
If your business is too small, try online merchandising. You look for a cheaper way to sell your products on the internet. This will cut your expenses in terms of rent, expensive advertising and even the commuting time as this will enable to work from home. Besides, you will be able to market to a wider audience and do not have to be awake to take orders. This is not an easy cookie though, you will have to spend some time researching internet marketing and optimizing your website for best results.
3 Help your customers find the help you do not offer.
Customers are very interesting people, one thing is that many of them do not want to be sold something. They want to buy something and hopefully from you. They tend to ask people they trust of their opinion on other businesses or even products.
No matter how much you hate your competitor or how desperate you need their dollar, if you do not have what they are looking for, politely tell them that you can not provide it and they should check with your competitor or some of your non competing partners for that matter. Never delay their purchase out of greed until you have the product to sell to them, leave that to them to decide.
Never bad-mouth a customer, even when you catch them buying the product you have from your competitor when you believe they should be buying from you. I have had someone from my household buy something I was selling from a competitor. I watched them do it and they later thought they should have bought from me. Whether out of guilt or something else, they told five of their friends that I had the product and all five bought from me. Had I reacted differently, the best case would have been that they would return the product to the store and buy from me and never bring anyone. The worst case would be not returning it, not referring anybody to me and decide not to ever talk to me. The funny thing about customers is that the more you help them, the more they get to trust you and they might even bring their friends to your business knowing that they will get help regardless of whether you have what they are looking for or not. Why is this important? People get to you first before they get to somebody else, thus you have a chance to sell them something first before your competitor.
4 Ask non-competing business owners for help and return the favor.
If you are to survive in business, you have to acquire some friends hopefully people that are already in business but are not your direct competitors. You should do this for a few reasons, one is that since you are not competitors, you are more likely to need what they offer and so are they. These people might end up being your biggest customers or they may even refer their customers to your business.
Two, Since they are already in business, it is very likely that you think the same way. This gives you an opportunity to pick their brains on something that you need help with. Remember for the most part, we are defined by who we associate with. If you hang around thieves, you will be considered a thieve; and if you hang around very successful people, you will be considered successful, as long as you work hard enough to think and behave like them, for them not to run away from you.
Three, people around you are watching even when you think they are not. What you say to one about other people may come to haunt you. If you have hanged around somebody that gossips a lot, would it not bother you as to what they say behind your back? Or rather as to what would stop them from saying about you what they say to you about others? The same thing happens in business, when things are not going well, you reach out to others for help. This almost always works as long as you remain accommodating about others reaching out to you. Keep what they tell you in confidence, confidential. This will earn you a good reputation, trust and in many cases new business or referrals.
<h4>5 Be Careful of hyped advertisers trying to take your last pennies.
How often do you see something like this? “Get ranked high on major search engines in 24 hours for a small fee” or rather an interesting one “Make up to $400 a day working at home using our proven system” and at the end of the page, they ask you to pay $300 to get you started.
These are all people wanting to get your money for their own benefit. First of all the web is full of people competing for the top ranking. Even if it was true that they would get you top ranking on Google or Yahoo, how long do you think you will stay there. Besides, these ads go to millions of people who maybe in the same business category that you are in, and just out of curiosity, how many millions would fit into Google or Yahoo’s top 10 ranking?
I am not completely dismissing the fact that some of them may be good, but if you are going to give somebody your money to use an automated system to put you on these search engines, then you got to think twice, because some search engines may be smart enough to know these tricks. Besides, if Google and/or Yahoo gets their money from online advertising, would you not think that they would watch out for sneaky marketing approaches like this, using their space to make money from you?
Secondly, Have you ever looked for a job and your employer tells you to pay them first before they gave you the job? If they did then, I would question the legality of their business.
What I am saying here is that you do not have to jump at every marketing message you hear, which is very common when you are desperate to see your business idea take off; or even to simply put something on the table. So trade wise, learn a lot by reading a lot and let your business grow. If you are going to succeed with online marketing your keyword research has to be done by you, since you and only you knows what you would like to get out of it and how much you want to pay for it.
6 Combine forces and let your marketing dollar take you a little farther.
My seventh grade teacher once demonstrated to me how powerful you can be by combining forces with other people for greater results. This may have nothing to do with business, but just hear me out.
This guy had noticed that kids in his class were not getting along, so he decides he is going to make the class sing, but everyone singing a different song, then asked three students to stand outside the class, so that after the song, they would come back and report on what they got from the song. After the first song, the three students came back into the class an reported different things about the same song, all of which were not accurate.
Then he decided to get the class to sing one song, with everyone singing to the same song at the same time. While the students were singing, he asked the three students to go a little farther from the classroom. After the second song, he invited the three students back into the class and asked them to report on the song they had just listened to. All three reported accurately.
So, what is the deal here? There are many people out there who think, they can do it on their own, ignoring the fact that their potential customers are getting bombarded with marketing messages from all over the place. The sad thing is that they end up spending a lot of money trying to get the word out, but because they are not in tune with others their messages do not get to the intended recipient. They finally grow tired and quit, even when there is a huge potential for success.
The best survival skill is to learn to play along with others while at the same time acknowledging that there are things that affects us differently from the way they affect others, even those closest to us. Anybody who had done stock trading would tell you “Never fight against the trend, if you plan on winning”. Take some time, listen to what people are saying about certain products, research a little to see if there is real demand for the product or service, determine whether people who are talking about it are real buyers and not just people who would want something of great value for almost nothing.
Why am I saying this? A lot of times, people would tell you about what they want, you get it to them, you realize they want it for much less or even worse, you realize that they are actually among the 80% who wants people to talk to them, but have no interest in buying anything. Watch out for those, if you come across one, politely excuse yourself and move on. Otherwise you will spend 80% of your time and resources selling to non-buyers. Be careful though to distinguish non-buyers from potential buyers who are skeptical about your product.
7 Deliver what is promised on time.
A few months ago, a friend of mine came to me and said “I hear you do computer stuff, My computer is not starting and I would like you to take a look”. I asked him a few questioned and had determined that his problem is likely to be a hardware issue. I told him I would take a look, but at the same time I also told him that I was a software guy and I knew of another guy that did hardware stuff. As soon as I mentioned his name, the guy goes “Nope, I am not going back there, because he takes a long time to get things done”. This had been the second person to say the same about this guy.
Although I was not a customer, It sort of made me hesitant to recommend him to anyone. If they did not get the service they deserved with this guy, it would put my credibility on the line. Now every time somebody asks me where to get their computers fixed, I would say I was not sure or would at least warn them before referring them to him. Who knows how much business he is loosing as a result of this? His former customers might be telling their friends to not go there.
Speedy and high quality service has proven to be the key to small business success. Follow up to make sure they are satisfied. This way you show that you are not only interested in getting rid of your product but also care about how they feel about the product. Just do not go overboard and get into how and whether they use the product, that is their business. Keep focused on delivering the best quality products and/or service and make sure they can come back or bring their friends for more. That is your part, the rest is up to them.
Irene
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Aug
15
Filed Under (Make Money) by
Paul Calhoun asked:
Introduction:
Thinking of starting a business? My hat is off to you, and I hope that this blog can provide resources for you to get started. Since my retirement from industry six years ago, I have been a SCORE volunteer (Service Corps of Retired Executives). Over these years I have met many clients who dream of starting their own business. Their motivation to start a usiness may vary, but their common goal is a desire to be successful and to be their own boss. My experience has imparted to me a good sense of those who will be successful and those who will not be successful. It is those people who are prepared and have a strong urge that are successful. From my training and experiences I have prepared a suggested road map to start your own business. Do take advantage of your local SCORE volunteer while planning for your business. The service is free and the volunteer can be found through your local Chamber of Commerce.
The Business Idea
The idea to start your own business can come from many sources: your hobby, your work experience, your desire or a situation you found where a service was not being met. To confirm that you have a sound plan you have to: – Describe the business in a paragraph or less. – Decide if the product or service is unique… cheaper or faster, etc.? – Decide whether this business meets your personal goals? – Commit to investing many hours to make your business successful? There are many other questions that you will need to answer truthfully to yourself and then discuss them with your spouse and close friends. Once you are comfortable with the answers then you are ready to proceed to the next steps. The Small Business Administration has a full list of questions to help fulfill this part of the journey. http://www.sba.gov Above all, your business has to “solve your client’s problem”. It is this objective that makes a business successful. If this main objective is met, then all your other needs can be fulfilled.
Start Preparing for Your Business Plan:
You need to do some basic work before you prepare your business plan.
Finding a Business Name: You need to derive a business name that represents your dream of a business yet does not infringe on another business. Your State’s Secretary of State can readily tell you if you have a unique name. You will find that this is important as you get deeper into your business plan. Try to derive the most attractive name you can identify.
Finding a Potential Location: Is your business going to be a storefront, web site, home or perhaps out of a van business? Inputs to your business plan will require lease or rental expenses, insurance and other facility expenses. Just as importantly, you will have to determine the traffic past your selected location and how many potential customers your business will attract. The more attractive locations will attract more business but will be more expensive. A local commercial real estate agent is of great value to help you with this decision.
You need a Logo: I believe that all businesses should have a logo. It will be added to checks, business cards, literature and other materials. In my opinion, it brings the business together. The logo will be used on business cards, letter heads, web sites and all other forms of advertisement. Take a look at http://www.logomaker.com/index.html for a very reasonable logo design.
Business Structure: You need to decide on your legal business structure. The options are: Sole Proprietorship C Corporation S Corporation Partnership Limited Liability Corporation (LLC) For the majority of my clients, the Limited Liability Corporation is the best fit. For a reasonable fee you can have a business entity that has limited liability for business debts, which protects your personal properties. You can form the LLC with your State’s Secretary of State. A good Web Site to review the four business structures is: http://www.quickmba.com/law/org/
Employer ID Numbers (EINs): You should get an Employer ID Number (EIN) from the Federal Government. The number is issued by the IRS and it is free. http://www.irs.gov/. At the minimum this will save your using your Social Security Number for identification. The IRS site has lots of good information on small businesses that can be of benefit to you.
Write Your Business Plan: The business plan is the most important document for starting your business. The Small Business Administration has a template that you can use to write the business plan. http://www.sba.gov The business plan document should have the objectives of the business, its structure and it financial road map. This document will always be used to keep all participants on the same roadmap. It is the most laborious yet important document you will derive. This document should be reviewed by your spouse, good friends, and SCORE Counselor. A good web site to find samples of business plans is http://www.bplans.com/. This site shows examples of successful business plans and also has good information for starting a business. Again, I must emphasis that you need to keep the overall objective of “What Problem am I solving for the Client” in front of you. If you fulfill this objective the rest will fill in.
Financing: You have finished the business plan and now will decide if you need financing to start your business. How much do you need? Most of the clients that I see can actually finance their business with a credit card. They need a financial record of 650 or better to get a card and probably can use the card for up to $10, 000.00 financing. Perhaps you can provide money from your savings or take in a financial partner.
If you require more money to finance your business, prepare for battle. The banks are tough and you are competing for time with people who will be doing much larger business with the bank. This is what you will need: A polished business plan A list of start-up costs Past three year personal tax returns. A statement of personal histories Credit reports from Equifax (1-800-658-1111), Experian (1-800-682-7654) and Tran Union(1-316-636-6100)
Be prepared to answer all questions on your finances and needs. Be prepared to show that you are conservative in your plan. Seek out used or rental equipment or other innovative techniques to save money. You should remember that the banker is usually interested in helping start a small business if they have a stong plan and collateral. You have to be prepared because his or her time is limited.
Further Steps for Success: Hopefully, you will make it through these hurdles and be ready to open your business. You are to be congratulated because this is a great accomplishment. You are your own boss and in charge of your future. Do not celebrate too much for now, though, as you still have to hire employees, choose the technology you require for running your business and wade through many other details. May it be rewarding and profitable.
Max
Introduction:
Thinking of starting a business? My hat is off to you, and I hope that this blog can provide resources for you to get started. Since my retirement from industry six years ago, I have been a SCORE volunteer (Service Corps of Retired Executives). Over these years I have met many clients who dream of starting their own business. Their motivation to start a usiness may vary, but their common goal is a desire to be successful and to be their own boss. My experience has imparted to me a good sense of those who will be successful and those who will not be successful. It is those people who are prepared and have a strong urge that are successful. From my training and experiences I have prepared a suggested road map to start your own business. Do take advantage of your local SCORE volunteer while planning for your business. The service is free and the volunteer can be found through your local Chamber of Commerce.
The Business Idea
The idea to start your own business can come from many sources: your hobby, your work experience, your desire or a situation you found where a service was not being met. To confirm that you have a sound plan you have to: – Describe the business in a paragraph or less. – Decide if the product or service is unique… cheaper or faster, etc.? – Decide whether this business meets your personal goals? – Commit to investing many hours to make your business successful? There are many other questions that you will need to answer truthfully to yourself and then discuss them with your spouse and close friends. Once you are comfortable with the answers then you are ready to proceed to the next steps. The Small Business Administration has a full list of questions to help fulfill this part of the journey. http://www.sba.gov Above all, your business has to “solve your client’s problem”. It is this objective that makes a business successful. If this main objective is met, then all your other needs can be fulfilled.
Start Preparing for Your Business Plan:
You need to do some basic work before you prepare your business plan.
Finding a Business Name: You need to derive a business name that represents your dream of a business yet does not infringe on another business. Your State’s Secretary of State can readily tell you if you have a unique name. You will find that this is important as you get deeper into your business plan. Try to derive the most attractive name you can identify.
Finding a Potential Location: Is your business going to be a storefront, web site, home or perhaps out of a van business? Inputs to your business plan will require lease or rental expenses, insurance and other facility expenses. Just as importantly, you will have to determine the traffic past your selected location and how many potential customers your business will attract. The more attractive locations will attract more business but will be more expensive. A local commercial real estate agent is of great value to help you with this decision.
You need a Logo: I believe that all businesses should have a logo. It will be added to checks, business cards, literature and other materials. In my opinion, it brings the business together. The logo will be used on business cards, letter heads, web sites and all other forms of advertisement. Take a look at http://www.logomaker.com/index.html for a very reasonable logo design.
Business Structure: You need to decide on your legal business structure. The options are: Sole Proprietorship C Corporation S Corporation Partnership Limited Liability Corporation (LLC) For the majority of my clients, the Limited Liability Corporation is the best fit. For a reasonable fee you can have a business entity that has limited liability for business debts, which protects your personal properties. You can form the LLC with your State’s Secretary of State. A good Web Site to review the four business structures is: http://www.quickmba.com/law/org/
Employer ID Numbers (EINs): You should get an Employer ID Number (EIN) from the Federal Government. The number is issued by the IRS and it is free. http://www.irs.gov/. At the minimum this will save your using your Social Security Number for identification. The IRS site has lots of good information on small businesses that can be of benefit to you.
Write Your Business Plan: The business plan is the most important document for starting your business. The Small Business Administration has a template that you can use to write the business plan. http://www.sba.gov The business plan document should have the objectives of the business, its structure and it financial road map. This document will always be used to keep all participants on the same roadmap. It is the most laborious yet important document you will derive. This document should be reviewed by your spouse, good friends, and SCORE Counselor. A good web site to find samples of business plans is http://www.bplans.com/. This site shows examples of successful business plans and also has good information for starting a business. Again, I must emphasis that you need to keep the overall objective of “What Problem am I solving for the Client” in front of you. If you fulfill this objective the rest will fill in.
Financing: You have finished the business plan and now will decide if you need financing to start your business. How much do you need? Most of the clients that I see can actually finance their business with a credit card. They need a financial record of 650 or better to get a card and probably can use the card for up to $10, 000.00 financing. Perhaps you can provide money from your savings or take in a financial partner.
If you require more money to finance your business, prepare for battle. The banks are tough and you are competing for time with people who will be doing much larger business with the bank. This is what you will need: A polished business plan A list of start-up costs Past three year personal tax returns. A statement of personal histories Credit reports from Equifax (1-800-658-1111), Experian (1-800-682-7654) and Tran Union(1-316-636-6100)
Be prepared to answer all questions on your finances and needs. Be prepared to show that you are conservative in your plan. Seek out used or rental equipment or other innovative techniques to save money. You should remember that the banker is usually interested in helping start a small business if they have a stong plan and collateral. You have to be prepared because his or her time is limited.
Further Steps for Success: Hopefully, you will make it through these hurdles and be ready to open your business. You are to be congratulated because this is a great accomplishment. You are your own boss and in charge of your future. Do not celebrate too much for now, though, as you still have to hire employees, choose the technology you require for running your business and wade through many other details. May it be rewarding and profitable.
Max
Comments Off
