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
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
Investors in your business are a dream many entrepreneurs wish for. Added capital from investment allows business growth, invigorated marketing efforts, new employees, new facilities and expansion. What exactly are potential investors looking for in your business?
Investors are looking for a way to make a profit from their money. A way for their money to make more money. In looking at your business as a potential investment vehicles investors are looking for a way to increase your profit, so that they can have a fair share of it as a return on their investment.
In looking at your business they want to see stability. A strong management team with good employees and little or no turnover.
They want to know that key employees will stay for the long haul, and they want to know how future personnel problems will be handled when they arise. An employee handbook, also known as a policies and procedures manual is a great tool to showcase this positive aspect of your business. If your company doesn’t have one, then this is a great investment for you to make in your company’s future.
These potential cash angels also want to know how their investment capital would be used. What would you spend the money on, and how would it benefit the business and make it more profitable. For this it is wise to have a strategic business plan prepared, outlining future growth, and how it would benefit the company.
A part of the strategic business plan should be the marketing plan. The marketing plan is a roadmap to increased profits through marketing communications such as advertising, promotions and public relations, and the ways in which these efforts will increase sales of your company’s products or services.
The investors will also want to know about the big picture. Where does your company fit in the overall market? This can be locally, regionally or nationally, depending on how far our business reaches out to gather customers. This should include anticipated future trends in the marketplace, and your competition.
Emphasis in the plans your strengths, and ways in which you can capture sections of the market that the competition can’t, and that you are not yet reaching.
Investors interested in your business is a sincere complement to you as a business builder, but don’t expect them to understand the business as you do. Take the time and effort to show them, on paper, how you and your business can help them help themselves.
Jun 07 2008
Health insurance is a much talked about aspect of small business today. Employees want it, and need it. Small business owners need it as well, and the prices are high.
The first thing to keep in mind with health insurance is that all policies are not the same, and neither are all health insurance companies. Shop around to get the best rates of course, but don’t assume that the cheapest is naturally the best. When you find a policy that fits your budget, check out the company. Make sure that it has an adequate rating, preferably A plus. Check with your state insurance commission and assure yourself that the company pays claims when they are filed.
Next, decide if you will be best served with a traditional insurance plan, or a PPC or HMO. HMO stands for Health Maintenance Organization. PPO means Preferred Provider Organization. This is a network of healthcare providers who offer services to the members of participating health plans for a lower than usual cost.
Usually these doctors and hospitals are made known to you through a list provided by the PPO. You can see another doctor under a PPO, but it is more expensive to see someone not a part of the network. In that case only a percentage of the claim is paid. With an HMO you are restricted to physicians who are members of the HMO.
After checking out the available options, also consider a high deductible combined with a Medical Savings Account. With a high deductible, usually $5,000, you are considered self-insured for the first $5,000 in medical expenses, but have the insurance available for catastrophe or unusual circumstances. This leads to very low premiums. Combining that with a Medical Savings Account is a good combination for many people.
The Medical Savings Account is much like an IRA for retirement. With this program you put aside tax-free income into the savings account, that can only be used for medical expenses.
When checking these programs out, remember that you have many options.
Don’t be afraid to take the details of a plan one company is offering into another insurance office to let them compare and make a competing offer. Health care is important, and making the right decision now could help you in many ways, including financial, down the road.
For a more in-depth look at health insurance for the self employed visit: http://simplehealthcoverage.com
Jun 07 2008
Buying or leasing a vehicle for your business simply comes down to dollars and cents. Having your accountant run the numbers both ways before a tax year beings will help you determine the wisest course to take.
Many times leasing a vehicle allows a company to take a large deduction, and that can be beneficial since deductions save money. Many leasing companies and car rental agencies have special business plans and can help a small business needing only one or two vehicles to determine a good fit.
If a business is larger then auto manufactures often have fleet leasing representatives who can help the business take advantage of the buying power of needing more automobiles. All of the major manufacturers, be they American or foreign, have fleet programs in place.
While the benefits of leasing are well known, what is not as well known is that businesses often come out ahead through outright purchase due to the tax credit rules that apply, and change from year to year.
If a tax credit is being offered, then the entire cost of a vehicle can be taken right off of taxes rather than depreciating the cost over several years, or taking the deduction as with a lease. Again, it varies from business to business and from year to year as to which option will save the most money. The tax credit saves a lot of money for a company during one year, but saves nothing the following year, and deprecation and deductions both continue from year to year.
Which is best depends entirely on you, your business and the particular tax bracket you are falling into this year. Of course, those who sell leases and those who sell vehicles will always know and if their particular product is the best tax wise for you, they will probably let you know. But the best way to decide is probably through a visit with your tax preparer doing some joint preplanning to get the best deal.
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.