How to set up a business|for busness people
Dec
10
Filed Under (Make Money) by
Willard Michlin asked:
Buying a business in today’s economic climate requires that you, the buyer, be on the ball, with regard to business basics. This economic climate, as far as businesses are concerned, is a sellers market.
With the corporate downsizing, economic downturn and other factors, there are a lot of very knowledgeable buyers out there looking for one of the very few good business to buy. This means that you, as a buyer have a lot of competition. Consequently, you need to be well prepared. Professional business buyers, report that it takes anywhere from 3 months to 3 years to find the right business. So, if anything, what can be done to speed this looking process and at the end finally get a good business?
The decision – the first step is deciding to buy a business. Once you have made this decision and you are definite and firm about the fact that you are definitely buying a business, the process has started.
The second step is to decide what kind of business. This is really really important. What are the criteria for this business you are looking to buy? Do not make a wish list or what would be nice. Make a list of what is important. For example, if your standard of living requires $100,000 income, do not compromise by looking at businesses that make only $50,000.
That is unless you consider yourself a knowledgeable business manager and marketing person who knows that any business they buy will double in income and sales. That kind of buyer can buy a business that makes no profit and probably should.
Other criteria include; is it something you can handle? What kind of work are you willing to do? If you like sales and do not like running a factory, buy a distribution company, or sales organizations, and do not buy a manufacturing firm, unless you have a partner that likes running a production line.
I have people call me to inquire about buying a body shop that have no automotive experience at all. You can buy an auto repair shop, muffler shop, brake shop or lube store, and learn the business, with no experience to start. You probably should not buy a salvage yard body shop, or scrap yard with out being raised in the business. If you are a salesman you can buy almost any business.
All manufacturing, distribution or retail sales require good personal sales skills. If you are poor at communication skills or English is a second language, consider buying a liquor store, gas station or hamburger stand, just a few of the businesses that do not require, personal selling, or do they?
About you – There are some things you need to prepare for the brokers when they start coming to you with possible businesses. You need to make sure that you have your down payment sorted out. Expected down payments are anywhere from 25% to 100% of the selling price. So make sure you know what you want to spend and then make sure you have the down payment easily available.
Then you need to get your financing options determined. You can get yourself pre-qualified for a business loan or an SBA loan if the business you are buying is required by you to show a profit on the books. SBA loans are only available to businesses that have shown a 5-year profit on their tax returns. If you are looking at businesses that are heavily unrecorded income, you must have cash or seller financing.
Being your own broker – You should determine who is going to make your offer. A broker, or yourself? If it is you then you should locate the necessary offer forms and study them carefully. Determine what must be in your offer so that you can put in an offer, the instant you find a business that meet your requirements. This is an important step, as putting in an offer tends to lock out other buyers while you look over the business. Make sure you have contingencies in your offer, which means you have lots of “get out of the deal” clause.
I would like to suggest, for the less experienced buyer to hire as a consultant the sharpest attorney or business broker you can find and pay him for his time to watch your rear end, in negotiations and in reviewing the companies you are considering buying. In real estate we call this a buyers agent, except with businesses the listing agent will not always co-operate in splitting the commission. This means you need to be willing to pay your agent an hourly fee for helping you. Let me give you a real example.
David and his father were looking for a business to buy. They were interested in a Scrap yard that I was selling. I asked their buying agent to bring them over so I could interview them and to explain this business to them. In 3 minutes it was clear that they should not even consider this business. We spent the balance of the meeting talking about the businesses they had looked at and the pros and cons of each. I gave them my honest suggestions about each from their description. They thanked me and left.
Two months later David calls and asked if he could come talk to me. He told me about an FSBO “For Sale by Owner,” who would never pay any agent a commission unless he got his price + the commission. That of course doesn’t make sense to a buyer. David told me about the deal and I gave him my honest opinion about it. David asked what my time was worth and gave me a check for an hour’s time.
Two months again passed and David called and said, “I need to see you today.” He proceeded to tell me about a Car Wash Soap manufacturing company that was suppose to be making $500,000 profit per year. The asking price was $2 Million. David wanted several things from me. He wanted my opinion of the business, he wanted me to help get the price down to a more reasonable amount and he wanted me to verify the income. It took me 30 hours of reviewing the books and talking to the seller to determine that the business was making only $350,000 per year including what was not on the books. The books were made complicated, intentionally so that no one could understand what was going on.
I related my findings and told David he had to do his own negotiations but I would coach him every step of the way. David paid my fee and I didn’t hear from David for one year. When he called, I asked what happened to the car wash soap business. He filled me in on the story.
He bought the business for more than I suggested because he saw where he could improve the business instantly. The profit turned out not to be $500,000 as the seller guaranteed, but exactly $350,000 as I had determined. David took over sales and marketing and within 1 year had the company profit up to the $500,000 he was promised.
David now had found a related business that had been listed with an agent who did not understand the business he was marketing and could not sell it. David was now talking to the seller directly. The seller wanted $550,000. David wanted me to negotiate, on a consulting fee bases with the seller to get the price down.
I instructed David that I would appraise the business, and convince the seller that my appraisal was accurate, but David had to do the negotiations. The seller would never talk to me about the inside details if he was negotiating with me directly. This time I spent 5 hours with the seller, not the books, to determine the business was worth $350,000. The seller would not take the price, but felt I had done an excellent appraisal. I suggested to David to wait 60 days and open discussions again. I also told him the seller would eventually take the $350,000.
I again didn’t hear from David, this time for 6 months. When David called I asked for his report on what happened. The seller called him after one month and sold the business to him for my appraised amount, just as predicted. What did David want this time? Two guys wanted to buy the business and David wanted me to justify a price of $500,000? I did my updated analysis and got paid. I will not find out what happened until David calls me with my next assignment.
Get the word out – Now that you have got all of your preliminary work done you are ready to go looking for businesses. You are ready to look for businesses for sale. Go on to the Internet and look at sites that have businesses for sale. Look in the classified section of your county newspapers and look at what is for sale. Contact business brokers and tell them what you are looking for in detail. Call on broker listings and FSBO (For Sale by Owners.) When you find something interesting you move through the steps with a broker, accountant or attorney or without a broker, accountant or attorney.
Find out what financial records they have. This will eliminate 75% of the businesses. The records are false because of cash sales and/or cash payroll. A lot of auto repair shops pay their mechanics a base salary on the books and the balance in cash. This is crazy and illegal. They have cash sales, which are illegal, and not reported and then they give this money to the employees illegally. Have fun figuring out the profit on these businesses. Some businesses do not want to give you any financials. They do not even want to lie to you about the numbers; they just do not give them to you. You need financials even to just see what the operating expenses are.
Cash income — The problem with cash income, besides being illegal is it is unconfirmed. Jack bought a body shop doing $60,000 sales on the books. The seller showed Jack records that proved to Jack, an experienced body shop owner that the business was really doing $125,00 month in sales. After escrow closed Jack was given the production records for the last 5 years by the general manager that stayed with the company. The business was doing $60,000. Exactly what was on the books! There was no cash. The seller reported every dime. I hate to say it but if someone were willing to lie to the government and their business broker, why would they tell you the truth?
Find out what the seller wants – the next key step is to ensure that you find out exactly what the seller wants. You have already stated what you wanted when you got the word out. Now, you need to make sure you understand what the seller wants. Make sure you get full information on this from the broker or seller. On this step, you are basically finding out what the seller wants for his or her business exactly. That includes, down payment, seller carry back terms, time he is willing to train you to run the business, and what he is including in the price. Inventory can be included or extra. Leased equipment basically has you as the buyer assuming the debt, where financing on owned equipment is paid off in escrow or the price is lowered because you are assuming the debt. With all of this information, you can begin your negotiations.
Negotiate – Ok, now you know what the seller wants and you know what you want. On this step, the objective is to get the two wants to match up and agree with each other, so that the deal can take place. What you are trying to do at this stage is decide if you are going to go ahead with the deal or if you are going to continue talking with the broker and the seller until what they want is closer to what you want. The key here is keeping the conversation going (negotiate). As long as the conversation is going, it is much more likely to result in the deal taking place. So keep the conversation going!
Almost the final action – after the negotiations and an agreement has been reached, there is one final action that is vital. Your offer is in, but you are not done yet! Due diligence is required. Here you must get documentation on the financial figures you have been given. You want to verify that what you have been told is indeed the case. Get Profit and loss statements, business tax returns and other important documents. If you have been told that a body shop has a contract with the local city to service all their vehicles, or some such story, ask for and see the contract and verify that a valid contract does indeed exist. Part of this final action is ensuring that you have the advise of a competent professional as well.
Escrow – Never buy an asset sale purchase without an escrow. We have already established that the sellers may be lying to you about any number of things, but they may have debts that they do not even know about. The escrow will do a “bulk sale notice” that gives creditors of the business a chance to file their claims, and if they do not the buyer cannot be held liable. The escrow also makes sure that the payroll taxes; sales taxes; federal and state income taxes are paid in full. The IRS has come into companies and assessed for many years of unpaid taxes. As the buyer you would get stuck with this bill, if you didn’t do an escrow.
Conclusion – Following the above steps will see you through most of the pitfalls in buying a business.
Newton
Buying a business in today’s economic climate requires that you, the buyer, be on the ball, with regard to business basics. This economic climate, as far as businesses are concerned, is a sellers market.
With the corporate downsizing, economic downturn and other factors, there are a lot of very knowledgeable buyers out there looking for one of the very few good business to buy. This means that you, as a buyer have a lot of competition. Consequently, you need to be well prepared. Professional business buyers, report that it takes anywhere from 3 months to 3 years to find the right business. So, if anything, what can be done to speed this looking process and at the end finally get a good business?
The decision – the first step is deciding to buy a business. Once you have made this decision and you are definite and firm about the fact that you are definitely buying a business, the process has started.
The second step is to decide what kind of business. This is really really important. What are the criteria for this business you are looking to buy? Do not make a wish list or what would be nice. Make a list of what is important. For example, if your standard of living requires $100,000 income, do not compromise by looking at businesses that make only $50,000.
That is unless you consider yourself a knowledgeable business manager and marketing person who knows that any business they buy will double in income and sales. That kind of buyer can buy a business that makes no profit and probably should.
Other criteria include; is it something you can handle? What kind of work are you willing to do? If you like sales and do not like running a factory, buy a distribution company, or sales organizations, and do not buy a manufacturing firm, unless you have a partner that likes running a production line.
I have people call me to inquire about buying a body shop that have no automotive experience at all. You can buy an auto repair shop, muffler shop, brake shop or lube store, and learn the business, with no experience to start. You probably should not buy a salvage yard body shop, or scrap yard with out being raised in the business. If you are a salesman you can buy almost any business.
All manufacturing, distribution or retail sales require good personal sales skills. If you are poor at communication skills or English is a second language, consider buying a liquor store, gas station or hamburger stand, just a few of the businesses that do not require, personal selling, or do they?
About you – There are some things you need to prepare for the brokers when they start coming to you with possible businesses. You need to make sure that you have your down payment sorted out. Expected down payments are anywhere from 25% to 100% of the selling price. So make sure you know what you want to spend and then make sure you have the down payment easily available.
Then you need to get your financing options determined. You can get yourself pre-qualified for a business loan or an SBA loan if the business you are buying is required by you to show a profit on the books. SBA loans are only available to businesses that have shown a 5-year profit on their tax returns. If you are looking at businesses that are heavily unrecorded income, you must have cash or seller financing.
Being your own broker – You should determine who is going to make your offer. A broker, or yourself? If it is you then you should locate the necessary offer forms and study them carefully. Determine what must be in your offer so that you can put in an offer, the instant you find a business that meet your requirements. This is an important step, as putting in an offer tends to lock out other buyers while you look over the business. Make sure you have contingencies in your offer, which means you have lots of “get out of the deal” clause.
I would like to suggest, for the less experienced buyer to hire as a consultant the sharpest attorney or business broker you can find and pay him for his time to watch your rear end, in negotiations and in reviewing the companies you are considering buying. In real estate we call this a buyers agent, except with businesses the listing agent will not always co-operate in splitting the commission. This means you need to be willing to pay your agent an hourly fee for helping you. Let me give you a real example.
David and his father were looking for a business to buy. They were interested in a Scrap yard that I was selling. I asked their buying agent to bring them over so I could interview them and to explain this business to them. In 3 minutes it was clear that they should not even consider this business. We spent the balance of the meeting talking about the businesses they had looked at and the pros and cons of each. I gave them my honest suggestions about each from their description. They thanked me and left.
Two months later David calls and asked if he could come talk to me. He told me about an FSBO “For Sale by Owner,” who would never pay any agent a commission unless he got his price + the commission. That of course doesn’t make sense to a buyer. David told me about the deal and I gave him my honest opinion about it. David asked what my time was worth and gave me a check for an hour’s time.
Two months again passed and David called and said, “I need to see you today.” He proceeded to tell me about a Car Wash Soap manufacturing company that was suppose to be making $500,000 profit per year. The asking price was $2 Million. David wanted several things from me. He wanted my opinion of the business, he wanted me to help get the price down to a more reasonable amount and he wanted me to verify the income. It took me 30 hours of reviewing the books and talking to the seller to determine that the business was making only $350,000 per year including what was not on the books. The books were made complicated, intentionally so that no one could understand what was going on.
I related my findings and told David he had to do his own negotiations but I would coach him every step of the way. David paid my fee and I didn’t hear from David for one year. When he called, I asked what happened to the car wash soap business. He filled me in on the story.
He bought the business for more than I suggested because he saw where he could improve the business instantly. The profit turned out not to be $500,000 as the seller guaranteed, but exactly $350,000 as I had determined. David took over sales and marketing and within 1 year had the company profit up to the $500,000 he was promised.
David now had found a related business that had been listed with an agent who did not understand the business he was marketing and could not sell it. David was now talking to the seller directly. The seller wanted $550,000. David wanted me to negotiate, on a consulting fee bases with the seller to get the price down.
I instructed David that I would appraise the business, and convince the seller that my appraisal was accurate, but David had to do the negotiations. The seller would never talk to me about the inside details if he was negotiating with me directly. This time I spent 5 hours with the seller, not the books, to determine the business was worth $350,000. The seller would not take the price, but felt I had done an excellent appraisal. I suggested to David to wait 60 days and open discussions again. I also told him the seller would eventually take the $350,000.
I again didn’t hear from David, this time for 6 months. When David called I asked for his report on what happened. The seller called him after one month and sold the business to him for my appraised amount, just as predicted. What did David want this time? Two guys wanted to buy the business and David wanted me to justify a price of $500,000? I did my updated analysis and got paid. I will not find out what happened until David calls me with my next assignment.
Get the word out – Now that you have got all of your preliminary work done you are ready to go looking for businesses. You are ready to look for businesses for sale. Go on to the Internet and look at sites that have businesses for sale. Look in the classified section of your county newspapers and look at what is for sale. Contact business brokers and tell them what you are looking for in detail. Call on broker listings and FSBO (For Sale by Owners.) When you find something interesting you move through the steps with a broker, accountant or attorney or without a broker, accountant or attorney.
Find out what financial records they have. This will eliminate 75% of the businesses. The records are false because of cash sales and/or cash payroll. A lot of auto repair shops pay their mechanics a base salary on the books and the balance in cash. This is crazy and illegal. They have cash sales, which are illegal, and not reported and then they give this money to the employees illegally. Have fun figuring out the profit on these businesses. Some businesses do not want to give you any financials. They do not even want to lie to you about the numbers; they just do not give them to you. You need financials even to just see what the operating expenses are.
Cash income — The problem with cash income, besides being illegal is it is unconfirmed. Jack bought a body shop doing $60,000 sales on the books. The seller showed Jack records that proved to Jack, an experienced body shop owner that the business was really doing $125,00 month in sales. After escrow closed Jack was given the production records for the last 5 years by the general manager that stayed with the company. The business was doing $60,000. Exactly what was on the books! There was no cash. The seller reported every dime. I hate to say it but if someone were willing to lie to the government and their business broker, why would they tell you the truth?
Find out what the seller wants – the next key step is to ensure that you find out exactly what the seller wants. You have already stated what you wanted when you got the word out. Now, you need to make sure you understand what the seller wants. Make sure you get full information on this from the broker or seller. On this step, you are basically finding out what the seller wants for his or her business exactly. That includes, down payment, seller carry back terms, time he is willing to train you to run the business, and what he is including in the price. Inventory can be included or extra. Leased equipment basically has you as the buyer assuming the debt, where financing on owned equipment is paid off in escrow or the price is lowered because you are assuming the debt. With all of this information, you can begin your negotiations.
Negotiate – Ok, now you know what the seller wants and you know what you want. On this step, the objective is to get the two wants to match up and agree with each other, so that the deal can take place. What you are trying to do at this stage is decide if you are going to go ahead with the deal or if you are going to continue talking with the broker and the seller until what they want is closer to what you want. The key here is keeping the conversation going (negotiate). As long as the conversation is going, it is much more likely to result in the deal taking place. So keep the conversation going!
Almost the final action – after the negotiations and an agreement has been reached, there is one final action that is vital. Your offer is in, but you are not done yet! Due diligence is required. Here you must get documentation on the financial figures you have been given. You want to verify that what you have been told is indeed the case. Get Profit and loss statements, business tax returns and other important documents. If you have been told that a body shop has a contract with the local city to service all their vehicles, or some such story, ask for and see the contract and verify that a valid contract does indeed exist. Part of this final action is ensuring that you have the advise of a competent professional as well.
Escrow – Never buy an asset sale purchase without an escrow. We have already established that the sellers may be lying to you about any number of things, but they may have debts that they do not even know about. The escrow will do a “bulk sale notice” that gives creditors of the business a chance to file their claims, and if they do not the buyer cannot be held liable. The escrow also makes sure that the payroll taxes; sales taxes; federal and state income taxes are paid in full. The IRS has come into companies and assessed for many years of unpaid taxes. As the buyer you would get stuck with this bill, if you didn’t do an escrow.
Conclusion – Following the above steps will see you through most of the pitfalls in buying a business.
Newton
Comments Off
Nov
27
Filed Under (Make Money) by
asked:
How is freight brokerage business? Is it a good business to start? I have no experience but willing to get training. Is it a good business?
Dorian
How is freight brokerage business? Is it a good business to start? I have no experience but willing to get training. Is it a good business?
Dorian
Sep
25
watercoloursfmr asked:
I am trying to get a business up and running from home that makes me some quick cash.
I started a tutoring business and it has a few students , but it does not make alot of money. I thought cleaning apts for people would be cash and no responsibility except to do a good job in three hours and go on to the next house . I need to get some cash flow going as I lost my job 5 months ago and need to replenish my funds that I am using from my savings. I posted a few ads on the free websites on the Internet and now I will post a few in grocery stores. What would be a good place to get more ads seen by local people in Canada. I am located in Toronto Canada.
Is it a good business to do apt cleaning??? When mornings? Evenings??? For Adults or Seniors????
Don
I am trying to get a business up and running from home that makes me some quick cash.
I started a tutoring business and it has a few students , but it does not make alot of money. I thought cleaning apts for people would be cash and no responsibility except to do a good job in three hours and go on to the next house . I need to get some cash flow going as I lost my job 5 months ago and need to replenish my funds that I am using from my savings. I posted a few ads on the free websites on the Internet and now I will post a few in grocery stores. What would be a good place to get more ads seen by local people in Canada. I am located in Toronto Canada.
Is it a good business to do apt cleaning??? When mornings? Evenings??? For Adults or Seniors????
Don
Sep
04
lucy lu asked:
My husband is stuck in a terrible job (like half the country!) and he’s always wanted to own his own business, but he’s not sure of what he wants to do… I was wondering if anyone has ever had their own business, and if so, what do you do? Also, has anyone been successful w/ a business from home? Thanks!
Bret
My husband is stuck in a terrible job (like half the country!) and he’s always wanted to own his own business, but he’s not sure of what he wants to do… I was wondering if anyone has ever had their own business, and if so, what do you do? Also, has anyone been successful w/ a business from home? Thanks!
Bret
Jan
04
Filed Under (Make Money) by
Jimi Adeboyejo asked:
Starting a business is an exciting venture but it is easy to get overwhelmed with all the various tasks needed for the initial launch of the business. Underestimating the difficulty of starting a business is one of the biggest barriers faced by entrepreneurs.
Many people think that starting a business is easy. I know for a fact that it is far from easy.
Before starting out it is important to list your reasons for wanting to go into business. Having a mentor to help guide you through the steps to starting a business is invaluable. Every little bit of advice helps when you’re starting a business – provided it’s good advice.
Before you start your business you need to ask yourself some serious questions:
(1) Can I handle the difficulties and challenges that come with starting a business?
(2) Who is my audience/or business aimed at?
(3) Where is my business to be located?
(4) Am I starting full-time or part-time?
Starting a business requires determination, motivation, and knowledge. Starting a business can be a complicated and daunting experience. Not everyone has what it takes to be successful in business. A lot of people fail because they jumped into business without honestly appraising their lifestyle to know if it fits in with running a business. It could also be possible that they underestimated the amount of effort involved in starting or running a business.
It is very important to discuss your intention of starting a business with your close family (and friends). Many a relationship has been broken because the ‘other half’ could not understand why all the attention seemed to switch from them to starting and nurturing a new business. In my opinion close friends and family need to be put in the picture regarding what to expect when you’re starting a new business
Have you got a good business idea? You would think this an obvious question anyone thinking of starting a business will ask themselves this question. Many people seemingly run with the first business idea that comes to their mind. They seldom pause to investigate the viability of their business idea. A good business idea is one that meets a customer’s need, fills an empty niche, solves someone’s problem or answers someone’s question(s).
A good way to generate good business ideas is to look inwards. What do you enjoy doing? What hobby or hobbies do you regularly indulge in? This may hold the key to your business idea. Unless you are a serial entrepreneur with a proven track record you may struggle badly if you venture into a business you do not have background knowledge of or one without any bearings to your previous experience(s) in life.
Location, location, location. Except when setting up an online business, the location is of great importance for your new business. You need to think very carefully about the location of your business. The over-riding factor in deciding the location for your business should be customers. After all the whole point of starting a business is to serve customers (and also make money, of course). As such the business should be located where the customers are located. You also need to think about the amenities available in the area such as bus, tube, train etc.
Not everyone has the confidence to go full hog into business. You may decide to continue with your day job while building your business part-time. Although this may mean taking more time to build your business to its full potential it nevertheless reduces the risk of loss of income if you were to pack in your day job to concentrate solely on building your business.
Once you’ve answered the pertinent questions enumerated above you then need to add the necessary ingredient of a successful business namely: A Business Plan. Many people often skip this very important step, thinking they are saving time. In the long run it costs them time if not money as well. This, I believe, is because working through a business plan will tell you whether or not your idea for starting a business is viable. A business plan may also be necessary for securing funding. A business plan explains your business concept, highlights the details of your business and generally helps you focus the direction of your business, amongst other things. Not giving these factors proper consideration may cost you time and or money in the future.
A well prepared business plan can help you secure funding for your business. In that wise money/funding is not as important as putting together a good business plan for your proposed business.
If you are not experienced in writing a business plan you can get someone else to write it for you. A good place to look is elance website. You can also try ebay website. Another good source of help is friends and family. Inform your friends and family about your intention of starting a business and ask if they can or know anyone who can be of help in putting together a business plan.
Now you’ve decided on a business idea and you’ve put a business plan together, what next? You need to source the funding for your business. The following, not an exhaustive list by any means, are sources of funding you may consider:
(1) personal savings
(2) loans from friends and family
(3) loan from a bank/building society/other financial institution
Running your own business is one of the most rewarding but challenging things you can do.
Starting a business is an exciting and sometimes confusing endeavour. The toughest part of starting a business is, in fact, making a start – going from your passion to the reality of running a business that fulfils your hopes and aspirations. Starting a business is incredibly hard work. Starting a business is a big step and it takes planning.
If you are thinking of starting a business my advice to you is to go for it – it’s very rewarding to create something from nothing.
Remember: “The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing. He may avoid suffering and sorrow, but he simply cannot learn and feel and change and grow and love and live.” – Anon.
Colin
Starting a business is an exciting venture but it is easy to get overwhelmed with all the various tasks needed for the initial launch of the business. Underestimating the difficulty of starting a business is one of the biggest barriers faced by entrepreneurs.
Many people think that starting a business is easy. I know for a fact that it is far from easy.
Before starting out it is important to list your reasons for wanting to go into business. Having a mentor to help guide you through the steps to starting a business is invaluable. Every little bit of advice helps when you’re starting a business – provided it’s good advice.
Before you start your business you need to ask yourself some serious questions:
(1) Can I handle the difficulties and challenges that come with starting a business?
(2) Who is my audience/or business aimed at?
(3) Where is my business to be located?
(4) Am I starting full-time or part-time?
Starting a business requires determination, motivation, and knowledge. Starting a business can be a complicated and daunting experience. Not everyone has what it takes to be successful in business. A lot of people fail because they jumped into business without honestly appraising their lifestyle to know if it fits in with running a business. It could also be possible that they underestimated the amount of effort involved in starting or running a business.
It is very important to discuss your intention of starting a business with your close family (and friends). Many a relationship has been broken because the ‘other half’ could not understand why all the attention seemed to switch from them to starting and nurturing a new business. In my opinion close friends and family need to be put in the picture regarding what to expect when you’re starting a new business
Have you got a good business idea? You would think this an obvious question anyone thinking of starting a business will ask themselves this question. Many people seemingly run with the first business idea that comes to their mind. They seldom pause to investigate the viability of their business idea. A good business idea is one that meets a customer’s need, fills an empty niche, solves someone’s problem or answers someone’s question(s).
A good way to generate good business ideas is to look inwards. What do you enjoy doing? What hobby or hobbies do you regularly indulge in? This may hold the key to your business idea. Unless you are a serial entrepreneur with a proven track record you may struggle badly if you venture into a business you do not have background knowledge of or one without any bearings to your previous experience(s) in life.
Location, location, location. Except when setting up an online business, the location is of great importance for your new business. You need to think very carefully about the location of your business. The over-riding factor in deciding the location for your business should be customers. After all the whole point of starting a business is to serve customers (and also make money, of course). As such the business should be located where the customers are located. You also need to think about the amenities available in the area such as bus, tube, train etc.
Not everyone has the confidence to go full hog into business. You may decide to continue with your day job while building your business part-time. Although this may mean taking more time to build your business to its full potential it nevertheless reduces the risk of loss of income if you were to pack in your day job to concentrate solely on building your business.
Once you’ve answered the pertinent questions enumerated above you then need to add the necessary ingredient of a successful business namely: A Business Plan. Many people often skip this very important step, thinking they are saving time. In the long run it costs them time if not money as well. This, I believe, is because working through a business plan will tell you whether or not your idea for starting a business is viable. A business plan may also be necessary for securing funding. A business plan explains your business concept, highlights the details of your business and generally helps you focus the direction of your business, amongst other things. Not giving these factors proper consideration may cost you time and or money in the future.
A well prepared business plan can help you secure funding for your business. In that wise money/funding is not as important as putting together a good business plan for your proposed business.
If you are not experienced in writing a business plan you can get someone else to write it for you. A good place to look is elance website. You can also try ebay website. Another good source of help is friends and family. Inform your friends and family about your intention of starting a business and ask if they can or know anyone who can be of help in putting together a business plan.
Now you’ve decided on a business idea and you’ve put a business plan together, what next? You need to source the funding for your business. The following, not an exhaustive list by any means, are sources of funding you may consider:
(1) personal savings
(2) loans from friends and family
(3) loan from a bank/building society/other financial institution
Running your own business is one of the most rewarding but challenging things you can do.
Starting a business is an exciting and sometimes confusing endeavour. The toughest part of starting a business is, in fact, making a start – going from your passion to the reality of running a business that fulfils your hopes and aspirations. Starting a business is incredibly hard work. Starting a business is a big step and it takes planning.
If you are thinking of starting a business my advice to you is to go for it – it’s very rewarding to create something from nothing.
Remember: “The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing. He may avoid suffering and sorrow, but he simply cannot learn and feel and change and grow and love and live.” – Anon.
Colin
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