Evaluating:

Before making any move to actually start the business, you need to spend time evaluating both your abilities and the business ideas. Always begin with yourself. Evaluate your work ethic, your ability to face challenges even when you do not see profits and your mental strength. An entrepreneur must have a strong mind to handle all of the potential downfalls of the first few years.

Once you’ve determined that you are capable of handling the challenging, you must then evaluate your business ideas. This starts with determining if your idea is possible to market and turn into a business. From there, you need to spend time researching similar businesses and find the area you can focus on, or a niche.

Work out all of the details in your own mind before you begin putting the work into starting a business. If the idea is not marketable or you are not able to find a niche of potential clients and customers, it will end up unsuccessful.

Business Plan:

Write up your business plan after working out all of the details. The business plan shows all of the details regarding the business such as the estimated costs, the estimated profits and losses for the first five years, who will work in the business, the information about the business, details from the research performed previously about the market and similar businesses, the plan for marketing the business and any other details you feel is important to include.

A business plan is necessary for funding to start the business. Most banks will require the plan to assess the risks of the business success before offering any loans. It is also important for funding from other potential investors, such as grants or angel investors.

Business Name:

While you want to pick out a business name when you are writing the plan, the name requires more than just picking something, it also needs to register with the state and federal government. Pick out the name and then look into your state’s business registration requirements.

Every state will differ in how it requires a new business to register the business name.

Tax ID or EIN:

Upon selecting and registering the business name, you must file for a tax identification or employer ID number for the state and federal taxation of the business. You will need an SS-4 form from the IRS to complete the process. Fill it out and turn it into the government and state to receive the appropriate number for the business taxes.

Licenses and Permits:

Depending on the business and state, you might need to obtain appropriate licensing or permits to start your business. The appropriate licensing and permits will vary depending on the job and the necessities of the job. For example, setting up a new doctor’s office will obviously require a medical license for all practicing doctors.

Some areas will also require a business license or permit. For example, a construction company must have the appropriate state and local licenses and permits to build in the area.

Conclusion:

Always find out the state, federal and local laws before starting any business. This will ensure the first steps of getting your business started run smoothly

Chad Holmes has successfully sold several successful start-ups, and now coaches people entering the business world at professionalresume.ca.  If you are seeking employment, or looking for your next hire, get in touch with Chad.

Copyright © 2009 Small Business Resource

Business First Steps

The bank financial reports provide with the income and expenditure within the company in the form of four major financial statements like the balance sheet – which is a statement of the assets and liabilities to the company, income statement – that ascertains the amount of money that has come into the company and been spent during a particular time period. There is also the Cash flow statement that shows the cash exchange between the company and the third party. The statement of Shareholder’s equity provides with the details of the interest that the shareholders hold at the given particular time period.

The financial institution data is updated with the help of software developed by Datagy, called FIRE, which simplifies your data. FIRE helps in regular update of data and the final data at the end of the given period is then transferred into a CD and forwarded to the FDIC for their sign-off. The data can be updated as and when required, in quick easy steps. The reports are pre-programmed into financial format allowing you to easily input the data you want to. The reports can also be represented in the form of charts (pie, bar or line). There is live support to FIRE so you need not worry about a system crash at any time. It also consists of links that might be useful to the company like call report forms, Government websites etc. Bringing together the financial institution data helps in financial analysis of the company.

FireontheWeb by Datagy helps in comparison between holding company financials and your own company starting from a common point, and helping analyse performance ratios. It also helps in all income statement investigation, and also comparisons between balance sheets, asset/liabilities and all. It also contains reports from the Bank that help you understand the position of your bank in a better way, especially when your bank has merged with another bank. The evenly balanced group that the company uses can take account of a tactical group using parallel features of the bank in focus.

Datagy provides with the necessary financial services, in the format you better understand, with the help of professional financial specialists.

Copyright © 2009 Small Business Resource

Need for financial analysis

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Small businesses often find it hard to improve their cash flow, with some business owners even tempted to use their own savings to raise finance. Banks are often wary of lending money to small businesses or start-ups, preferring larger companies with a proven track record. In reality, many small businesses would be more profitable if they could improve their cash flow, or afford to expand at critical times. Invoice factoring, also known as invoice financing, is the perfect solution if an ordinary bank loan is not suitable.

What is factoring?

Factoring is the process whereby cash is raised against your invoices. If you raise an invoice, instead of waiting 30 or even 60 days for your customer to pay, you can receive up to 90% of its value from a factoring company in as little as 24 hours. This is a form of loan, but instead of you paying it back, the factoring company receives payment of the invoice from your customer.

The fee that you pay for this service is a certain percentage of the invoice value. Again you don’t actually pay this fee; it is deducted from the invoice before payment is passed over to you. Factoring companies generally don’t like to deal with businesses that have lots of very small invoices. As you can imagine, the fee would either be too small to be worth their while or so large a percentage of the invoice value that you wouldn’t receive much cash!
Factors prefer to deal with companies that are seen as “low risk”. This means having a customer base who tend to pay their invoices on time and in full. It also means spreading your business amongst several customers, and not relying on just one or two accounts. The lower risk your business, the more attractive you are to any potential lenders.

Advantages of factoring

Not only is factoring a great way to improve your cash flow in a very short time period, working with a factoring company brings other benefits too. For example, the factor usually takes over management of your sales ledger and payment collection. This means that you don’t have to, so you have more time for other things – perfect for small business owners. Factors are also business experts and can provide lots of help and advice. It’s in their interests for your business to succeed, so partnering with a factoring company can put a wealth of knowledge on the end of the phone.

This is a guest post by Kedisha from Touch Financial, the invoice factoring specialist.

Copyright © 2009 Small Business Resource

How factoring can raise cash for your business

First, no matter how tightfisted you are, do not play down the expenditures. In other words, employ as many of your cost saving skills in actual business dealings as you can, but don’t give too much weight to these skills while budgeting. For the reason that it will make your business look a lot more profitable then what it will turn out to be. Therefore, don’t be too positive when making estimates for expenditures and profits. The toughest part of budgeting is to make estimation for future sales, no matter how much research you’ve carried out, you can never predict sales with accuracy. If you’ve got some sales or marketing staff, you must discuss and ask them to make sales predictions based on their experience.

You can get lots of small business budgeting templates at internet for free, where you just need to put values and you’ll get the total amount for sales, revenues and profit/loss. These templates are designed by professionals, and they will prompt some expenditure that you’d have forgotten to include. Coming to the second part, which is review and correction. Don’t worry if you found the actual expenditures or profits are different from the budgeted amount (it was supposed to happen because a budget is after all an estimation). Another thing to remember is that your small business budget is not some commandment that must be followed and not be changed. You must keep an eye on the actual expenditures and keep reviewing your budget on regular basis, especially if the budget extends over one year period.

Future Africa Recommends Strategic Planning for Business Africa and Consulting Change Management Consultants Africa

Author: William King is the director of UK Wholesale Suppliers and Marketing and Branding Directory. He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.
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Copyright © 2009 Small Business Resource

Budgeting Tips For Small Business Start Ups

First, no matter how tightfisted you are, do not play down the expenditures. In other words, employ as many of your cost saving skills in actual business dealings as you can, but don’t give too much weight to these skills while budgeting. For the reason that it will make your business look a lot more profitable then what it will turn out to be. Therefore, don’t be too positive when making estimates for expenditures and profits. The toughest part of budgeting is to make estimation for future sales, no matter how much research you’ve carried out, you can never predict sales with accuracy. If you’ve got some sales or marketing staff, you must discuss and ask them to make sales predictions based on their experience.

You can get lots of small business budgeting templates at internet for free, where you just need to put values and you’ll get the total amount for sales, revenues and profit/loss. These templates are designed by professionals, and they will prompt some expenditure that you’d have forgotten to include. Coming to the second part, which is review and correction. Don’t worry if you found the actual expenditures or profits are different from the budgeted amount (it was supposed to happen because a budget is after all an estimation). Another thing to remember is that your small business budget is not some commandment that must be followed and not be changed. You must keep an eye on the actual expenditures and keep reviewing your budget on regular basis, especially if the budget extends over one year period.

Future Africa Recommends Business Consultancy Services Africa and Investment in Africa

Author:
William King is the director of UK Wholesale Suppliers and Marketing and Branding Directory. He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.

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Copyright © 2009 Small Business Resource

Budgeting Tips For Small Business Start Ups

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The important consideration is to try to maintain sales, even if some of them yield marginal or no profit (i,e, break even). In other words, so long as you are covering your costs, particularly fixed costs, then there is value in doing so.

However, unless you wish to become the low-cost leader going forward, then this low pricing may create a precedent which customers expect to continue, and it also may devalue the brand.

So pricing strategy must be decided carefully, with all things considered, including unintended consequences. And it may be better to have various incentives rather than simple price cuts in order to sustain sales.

In the article “Pricing in an Inflationary_Downturn”, McKinsey recommends the following actions:

-Watch for sudden shifts in price structure
-Adjust to changing customer needs
-Monitor customer-level profitability
-Update price sensitivity research

Many companies across the nation are on the verge of closing their doors and some have already started liquidating their inventory. This can be a great time to create opportunity for your business. Here are a few items to look at:

Item 1: Renegotiate Your Vendor Pricing:

Go to your current vendors and request price decreases due to the economy. You may be able to receive your inventory at a fraction of your old rates because of the risk of your vendors losing their business. Most agreements can be negotiated when financial conditions are more abundant ….. so this provides the perfect opportunity to turn the financial crises into an opportunity for your company.

Item 2: Create A Customer Loyalty Program:

Many companies started slashing prices to attempt to drive additional business to their company. However in researching the response of the consumers you may find them upset because if those prices were always available why did they not get them before. So you may consider creating a customer loyalty program ….. send a letter and give fliers to every customer saying that you want to retain them as a customer and are now rewarding them with a % off by signing up. What this does is make it look like you are giving an additional perk instead of cutting all your costs.

In any environment, it’s a best practice to price based on your customers’ willingness to pay. To the extent possible, strive to understand if and how your customers’ willingness to pay has changed and also how able you are to meet those customers’ needs relative to your competition. Unless you have a sustainably lower cost business model, you’ll want to avoid competing on price as a price cut is very easy for a competitor to copy but leaving you both with lower margins in the process. The airline industry comes to mind.

Are you in a position of relative strength? If so, that might allow you to innovate, differentiate your offering, and improve your value proposition based on shifting customer needs, thereby taking market share without necessarily changing your price.

If you find that your customers’ willingness to pay doesn’t cover your costs, you’ll have to re-examine your business model.

Keep in mind that there would be different answers for a lot of different situations. First of all strategies may be different in B2B than in B2C. Within each type the following factors will play an important role:

1. Company strategic posture – what you want out of the situation: sail through? Take advantage? Weaken competitors? Portray as socially responsible? Etc.
2. Financial strength/leverage available.
3. Brand positioning
4. Relationships with customers
5. Distribution leverage
6. Product category in terms of price elasticity
7. Cost cutting advantages available.

You should consider the above and more factors before determining how to price during a slowdown.

The only thing I would add is to caution that:

1.Understanding price sensitivity in the current climate is critical – price decreases may not have the expected effect and that’s an expensive mistake.

2. Be aware of potential changes in your value proposition as the market changes. Your product may now be perceived in a different way and the value you deliver will still be the ultimate driver behind what you can charge.

3. Price is a key positioning statement, not just a piece of simple mathematics. Think long and hard about how a price change will be perceived by your customer and the long, as well as short term effects a price change may have.

In the end cutting the customer’s price just for the sake of cutting their costs isn’t the answer. Lower your costs first ….. ensure your product/service maintains “value” …. and focus more on customer loyalty/retention.

Copyright © 2009 Small Business Resource

What Are The Best Pricing Practices For Small Business During An Economic Slowdown?