Jun 07 2009
Hi All,
Just wanted to let you know that I’ve managed to purchase a new, and what I consider, better domain name for this small business/start your own business blog and will be moving things over there over the next few weeks. I have not yet done a 301perminent redirect thingie yet and won’t do so for a while - at least until alll content here is moved over (about three weeks), but you can go there now. The new Site is:
Jun 07 2008
The moment you become interested in purchasing a business, you need to become engaged in practicing due diligence. While many prospective business owners view the practice of due diligence as only conducting a financial review of an existing business that has caught their interest, true due diligence encompasses a much broader spectrum than mere financial considerations.
In its entirely, practicing due diligence means that you will need request copies of all documentation relating to the business in question. This means that you will need to review copies of all contracts and loan agreements as well as leases, inventory records, management reports, sales and facility maintenance records, reports for both accounts receivable and payable, payroll and benefits records, marketing materials, customer records and any records regarding business assets.
You should also take the time to learn about any litigation the business has experienced in the past or may be experiencing at the current time. The same is true regarding any tax audits or insurance disputes.
Additionally, just as due diligence requires that you spend some time thoroughly investigating the financials of the company you are considering for purchase; it’s also an excellent idea to make sure that you investigate facilities. You might even find that it’s wise to retain the services of an experienced inspector in order to determine whether there may be problems in the facility that could create issues later on.
Finally, you should also ensure that you exercise due diligence in uncovering any matters related to marketing and the overall industry of the business you are considering. This type of investigation will include reviewing the size of the market as well as current competition. You also need to spend some time reviewing the primary vendors and supplies in an effort to understand how these factors impact the dynamics of the business.
By taking the time to do your homework, and practice due diligence, you can better protect your future financial investment and make sure that you purchase a successful business instead of acquiring a profit draining lemon.
Jun 07 2008
The idea of beginning a search to look for a business for sale may sound exciting, but in reality it can be much more difficult than you might imagine. While there are certainly plenty of businesses for sale on the market today, one quick look will reveal the fact that the marketed is littered with deals that are questionable and some that are downright ludicrous.
The methods that you use to find a business for sale will primarily depend on whether you have a strong need for confidentiality or not. If you are in a position to look openly for a business for sale, you have far more options available to you. On the other hand, if your search for a business must be more circumspect you will need to be a bit more creative in regards to how you go about it.
As anyone who is experienced in looking for a job will tell you, the best place to start is within your own circle of friends, family members and acquaintances. The same is true when you are looking for a business to purchase. Many times this can be the quickest and easiest way to locate businesses that are on the market. One word of caution; however, this route should only be used if you are willing to be open about your interest in purchasing a business.
The classifieds are a traditional place to browse when looking for a business for sale; however, you must be aware that this type of search is littered with cons, scams and deals that are in general nothing but pure junk. Since there are some genuine gems mixed in with the other not so good deals, you shouldn’t ignore this area all together. Simply be cautious and make sure that you put your investigative skills to good use.
Another area that can prove fruitful of course is trade associations. Since it is in the best interest of the trade associations for the businesses among their membership to succeed and flourish, they will naturally be quite open and willing to help you locate businesses that are looking for new ownership.
The Internet is rife with businesses for sale, but much like classified ads, you must exercise due caution when considering leads for business for sale on the Internet. This doesn’t mean that there aren’t some good deals among them; just don’t allow yourself to get carried away before you fully investigate any offer.
Jun 07 2008
The prospect of owning and operating your own business can be a heady experience; however, the reality of becoming an entrepreneur quickly reveals numerous decisions that must be made before your dreams can become a reality. One of the first decisions you will need to make will be in regards to whether it would be better to buy an existing business or begin an entirely new one. While both avenues have their advantages and disadvantages, there is much to be said for the idea of buying an existing business.
As surprising as it may sound, purchasing an existing business can be less expensive than opening a new business in many regards. Even if you are not constructing a building from the ground-up to house your new enterprise, many times there are costs associated with opening a new business that simply cannot be anticipated from the outset. When you opt to purchase a business already in existence, you do so with the firm knowledge of the amount of money you will need to invest in order to get in on the ground floor. While you can always anticipate additional costs for other expenses, at least you have a firm foundation on which to start for accounting purposes when you purchase a business.
One of the most frightening aspects regarding the start-up of any new business is the fact that you will need to start from scratch in terms of customers, vendors, employees, equipment and systems. This spells additional investments of not only money but time as well. A primary benefit to purchasing a business that has a history is that you will be able to take advantage of an infrastructure that is already in place. Even if the company has not had a glowing success record in the past, you can save tremendous time and money by not being forced to start from the ground up.
Finally; if you decide to go with the route of purchasing a franchise you may well find that the presence of a support team that is already in place can be invaluable. Starting a brand new business is unfamiliar territory for many people, but the option of purchasing a franchise gives you the benefit of the knowledge and experience of the franchise team standing behind you. Because it is their name on your business, they are invested from the very beginning in your success.
Jun 07 2008
Creating a financial statement for a small business isn’t difficult, but it does require accuracy and a flair for numbers. What is a financial statement? It is a document that accurately details all financial data of your business. This includes all income from all sources. Also all expenses, all assets and all liabilities. It is a reflection of your financial house, with the result being a method of keeping your house in order.
The financial statement will include all assets. This means all cash on hand, cash in the bank checking account, savings, account, petty cash drawer, etc. Also investments such as the value of equity stocks, bonds, treasury notes, mutual funds, insurance policies, gold and precious metals, and any other investments you might have. This will even include estimated value of collectibles. Then add in assets like cars trucks and other vehicles, real estate, furniture, fixtures, jewelry, and any other physical item of value. Also include loans – money that people owe you.
In the second column you have your liabilities. Here you list money owed, including salaries of employees, outstanding loans, unpaid bills, the mortgage on the real estate, credit card balances, and any other type of liability you may have.
Naturally your hope is that the left-hand column of assets will, when added up, be greater than the right hand column of liabilities. This is the simplest form of financial statement, and one you can create yourself. This will also serve as a basis for discussion with a CPA if he is creating a more detailed financial statement for you. In other words, a place to start.
There are many good books available on creating financial statements, and a business owner can create one himself, but most prefer to leave this in the hands of a knowledgeable professional and turn the chore over to a CPA.
Jun 07 2008
One of the best ways to evaluate a new business idea is to see if it has been done anywhere else in the world, and if so, was it done with success. There is an old saying that there is no such thing as a new idea, only recycled ideas in new packages.
Some people evaluate a business idea by telling their friends and relatives. The problem with this approach is that your friends and relatives may not be in business. And they may not want to offend you by telling you our idea is a bad idea if they think it is. So try something impartial.
Step one is to discover the existence of a similar business is an internet search using all of the major search engines, and using variations on your particular business.
As an example, let’s say you have an idea for a variation on speed dating, but you want it to be oriented towards business people and not couples looking for dates. Business people are always looking for contacts, and are always networking, meeting new people.
An Internet search under headings like speed meeting people, speed business meeting, speed networking, speed contacts, speed business contacts, quick business contacts, fast networking, quick networking, and other combinations will show you if something is available.
In this case, the idea of adapting speed dating to business contacts does exist in some cities, often with great success and is most commonly called speed networking. This tells you that your idea works some places.
Next, take an informal survey. Call several business people out of the blue. Find their names in the Chamber of Commerce membership guide, or your business journal Book of Lists. Ask them for a minute of time and explain the concept. See if a majority have an interest. If at least half say they do have an interest, you’ve got a winner.
Jun 07 2008
Methods of conducting market research are varied. What is the best way, frankly, is usually determined by the budget a business has to work with.
Direct mail research for instance is considered to be highly effective, but it is a very expensive method. The same is true with telephone surveys. Several telephone operators are required, in addition to telephones, equipment, an office space, and a database of people to call. Add to that the frustration factor of people confusing market researchers with telephone sales people and hanging up on them and it can be a chilling experience for the ego and the budget.
Many companies have discovered that the most effective way for them to conduct market research is by posting researchers in areas with large numbers of consumers. Some do it at trade shows and exhibit halls at county fairs. Others use the larger shopping malls. Some even use busy grocery stores and discount stores. They will set up a table, have a display of the free giveaway items to encourage people to engage in the research, and the product they are sampling. They will also have a supply of forms.
Many times with research in foods they will have a blind taste test, comparing two different types of snack foods or two types of soft drinks in this manner is popular. In addition to getting willing subjects at a low price – only the cost of the giveaway item – the market research doubles as an advertising and promotional vehicle for the company. If a banner with a company name or logo is prominently display, participating in the research can become the “in” thing to do that day at the mall or in the supermarket.
Another bonus is that the table can also have a sign up sheet for more information on the product if it becomes available, creating an instant mailing list for the new product.
Jun 07 2008
Working for yourself is the American dream. Most employees have dreamed of being their own boss, and it has many benefits, but there are a few disadvantages to it as well.
Advantages of working for yourself are that you are responsible to yourself. Your destiny is in your own hands, as well as your financial future. You determine how much work you do, when you go to work, when you quit for the day, when you take a vacation, how long the lunch break will be, and if you really want to put up with a grouchy customer. The business is in your hands and you decide. Instead of griping about the bad advertising campaign that corporate came up with, you decide on an advertising campaign yourself.
Disadvantages of working for yourself are really the same as the advantages. You decide when you go to work, when you quit for the day, when you take a vacation, and how much you will make. All the while knowing, if you are a small business, that if you are gone the business is either not open, or if you have employees, that they are not being supervised by the person who cares the most about the business—you.
You have to make all of the decisions regarding health insurance, benefits, marketing, bookkeeping, management, and customer service. Owning and operating a business is a tremendous responsibility and not everyone is ready for or capable of handing the stress or the commitment.
Still, if you are one of those unique individuals with the spirit of an entrepreneur, then being in business for yourself is the only way to live. Many people in fact simply can’t imagine another way to live. Some people in this world are sheep, following others blindly.
Others are shepherds, preferring to lead. Pathfinders who make their own way. If you are an entrepreneur, you are one of the shepherds and will only be happy in business for yourself.
Jun 07 2008
Frequent watchers of late night television often think that simply applying for a government grant will give them the necessary capital to start a business. While there are a lucky few who get their money that way, they are very few, and very far between.
To receive a grant to start a business it is necessary to be a part of the group for which the grant money is intended and to meet other criteria. While some people do receive grants, and some people do win the lottery, there are more practical and more likely methods.
One of those methods is offered by the SBA, the Small Business Administration While the SBA does offer loans, it offers very few loans directly and prefers to guarantee loans made by banks. The guarantee is valuable because banks are more willing to make a loan knowing that if the loan is defaulted the SBA will make the payments, and knowing that after SBA qualification the rate of default is very low.
Another way to get government help with a small business start up is to locate your business in en Enterprise Zone. These zones are also called Empowerment Zones, and are designed to create economic growth in certain areas that are in need of economic assistance.
In an Empowerment Zone or Enterprise Zone taxes, many times local, state and federal, are waived for a business to encourage the business to come into an area and create jobs. These zones are sometimes located in rural areas that have lost indigenous industry. Others are located in urban areas that have become rundown and need to be built up.
Members of some groups or communities who have suffered a particular hardship, such as the victims of Hurricane Rita and Hurricane Katrina are often given preferential status for business loans to encourage them to start up in areas that were damaged economically.
One of the most overlooked areas of government assistance in business start up is in the area of education, perhaps the most valuable commodity a new entrepreneur can have. Pell Grants and federal student loans make it possible for many people to go to college or technical school. A budding entrepreneur can use a Pell Grant to cover books and tuition to acquire a degree in business and gain the knowledge necessary for success, and increase the chances of creating a successful business.
Jun 07 2008
What investors are looking for is a very simple question, with a very simple answer. Investors want a return on their investment. In other words, they want to be assured that if they invest money in an enterprise, that they have a better than average chance of that investment of money making more money for them. They want to see profit.
Getting a little more specific, investors want an assurance that there is a need for the product or service that a company is marketing. For instance, there would be very little market for pork sandwiches in a predominantly Muslim country because the people there don’t eat pork. On the other hand, a gourmet coffee bar in a college town would have a built in demand for the product offered, gourmet coffee.
After this assurance, investors want to know that the management team and key players involved in the business are competent, that they know what they are doing and are capable of running the business and making a profit. That is the reason that most business plans include resumes for the managers and key personnel.
After key personnel are scrutinized, investors will look closely at a marketing plan to see how the company plans to make a profit. Marketing is a misunderstood work. Because telemarketers are so common, many people think marketing just means selling. Actually selling is a part of marketing. So is advertising, which is paid for and publicity, which is hoped and prayed for. And that is the difference between the two.
Publicity is acquired when a newspaper writes about your company, or a TV station features it on a news program. Advertising is what a company pays to have appear in various media. Other parts of marketing are promotional efforts like trade show. Investors usually like to see an integrated marketing plan, with a specific goal of selling more of the product or service offered.
The IMC, or integrated marketing communications approach, holds to the idea than a coordinated and consistent plan across all levels of marketing will yield better results, and investors love to see this type of plan.
In the end however the answer is still very simple. Investors want to make a profit, and if they invest in your company they want to know how you will go about making that profit.