Small Business Bankruptcy

When small business fails, the owner may file bankruptcy. In most cases this can be handled through a personal bankruptcy filing. Corporations can file bankruptcy, but if it is out of business and valuable corporate assets are likely to be repossessed by secured creditors there is little advantage to going to the expense of a corporate bankruptcy. Many states offer exemptions for small business assets so they can continue to operate during and after personal bankruptcy. However, corporate assets are normally not exempt, hence it may be more difficult to continue operating an incorporated business if the owner files bankruptcy.

Mom & Pop Small Business

In North American English small or micro businesses that are family-owned and family-operated may be termed Mom and Pop businesses. People who speak of mom and pop businesses often refer to the unique perspective offered by patronizing a family business. Some encourage the unknown experience of entering a mom and pop establishment over patronizing franchise businesses, which typically offer comparable stores and similar consumer experiences, regardless of location. For example, mom and pop businesses are often highlighted in travel guides, because patronizing a family-owned and operated business allows a traveler to more fully experience and understand the people of another culture.

Franchise Business

Franchising is a way for small business owners to benefit from the economies of scale of the big corporation (franchisor). McDonald's restaurants, TrueValue hardware stores, and NAPA Auto Parts stores are examples of a franchise. The small business owner can leverage a strong brand name and purchasing power of the larger company while keeping their own investment affordable. However, some franchisees conclude that they suffer the "worst of both worlds" feeling they are too restricted by corporate mandates and lack true independence. However, in some chains, such as the aforementioned TrueValue and NAPA, franchises may have their own name alongside the franchise's name.

Small Business Marketing

Common marketing techniques for small business include networking, word of mouth, customer referrals, yellow pages directories, television, radio, outdoor (roadside billboards), print, email marketing, and internet. Electronic media like TV can be quite expensive and is normally intended to create awareness of a product or service.

Many small business owners find internet marketing more affordable. Google AdWords and Yahoo! Search Marketing are two popular options of getting small business products or services in front of motivated Web searchers. Advertising on niche sites can also be effective, but with the long tail of the internet, it can be time intensive to advertise on enough sites to garner an effective reach.

Small Business

A small business is a business that is independently owned and operated, with a small number of employees and relatively low volume of sales. The legal definition of "small" often varies by country and industry, but is generally under 100 employees in the United States and under 50 employees in the European Union. In comparison, the definition of mid-sized business by the number of employees is generally under 500 in the U.S. and 250 for the European Union. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. In Australia, a small business is defined as 1-19 employees and a medium business as 20-200 employees.

In addition to number of employees, other methods used to classify small companies include annual sales (turnover), value of assets and net profit (balance sheet), alone or in a mixed definition. These criteria are followed by the European Union, for instance (headcount, turnover and balance sheet totals). Small businesses are usually not dominant in their field of operation.

Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing etc.

The smallest businesses, often located in private homes, are called microbusinesses (term used by international organizations such as the World Bank and the International Finance Corporation) or SoHos. The term "mom and pop business" is a common colloquial expression for a single-family operated business with few (or no) employees other than the owners. When judged by the number of employees, the American and the European definitions are the same: under 10 employees.

Small Business Problems

Small businesses often face a variety of problems related to their size. A frequent cause of bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions - it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his anticipated expenses. For example, if the prospective owner thinks that he will generate $100,000 in revenues in the first year with $150,000 in start-up expenses, then he should have no less than $250,000 available. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he end up in bankruptcy court, under the theory of undercapitalization.

In addition to ensuring that the business has enough capital, the small business owner must also be mindful of contribution margin (sales minus variable costs). To break even, the business must be able to reach a level of sales where the contribution margin equals fixed costs. When they first start out, many small business owners underprice their products to a point where even at their maximum capacity, it would be impossible to break even. Cost controls or price increases often resolve this problem.

In the United States, some of the largest concerns of small business owners are insurance costs (such as liability and health), rising energy costs and taxes. In the United Kingdom and Australia, small business owners tend to be more concerned with excessive governmental red tape.
Another problem for many small businesses is termed the 'Entrepreneurial Myth' or E-Myth. The mythic assumption is that an expert in a given technical field will also be expert at running that kind of business. Additional business management skills are needed to keep a business running smoothly.

Advantages of Small Business

A small business can be started at a very low cost and on a part-time basis. Small business is also well suited to internet marketing because it can easily serve specialized niches, something that would have been more difficult prior to the internet revolution which began in the late 1990s. Adapting to change is crucial in business and particularly small business; not being tied to any bureaucratic inertia, it is typically easier to respond to the marketplace quickly. Small business proprietors tend to be intimate with their customers and clients which results in greater accountability and responsiveness.

Independence is another advantage of owning a small business. One survey of small business owners showed that 38% of those who left their jobs at other companies said their main reason for leaving was that they wanted to be their own bosses. Freedom to operate independently is a reward for small business owners. In addition, many people desire to make their own decisions, take their own risks, and reap the rewards of their efforts. Small business owners have the satisfaction of making their own decisions within the constraints imposed by economic and other environmental factors. However, entrepreneurs have to work very long hours and understand that ultimately their customers are their bosses.

Several organizations also provide help for the small business sector, such as the Internal Revenue Service's Small Business and Self-Employed One-Stop Resource.

Business Planning Fundamentals

I'm a baby boomer, born in 1948. I've seen recessions before. I was job hunting during the recession of 1971. My wife and I were deeply in debt and trying to buy a house during the recession of 1982. We sold a house in California and moved to Oregon during the recession of 1992. We had to lay people off--five of 35--during the recession of 2001. And this recession seems like the worst I've seen.

So it's time to go back to fundamentals. That doesn't necessarily mean cutting costs, dropping products or selling off inventory. And it definitely doesn't have to mean cutting people.

The first fundamental is your planning, which essentially means watching things more closely. Track your progress on cash, sales, expenses, new projects, customer satisfaction, internet traffic, ad spending--all of it. And track it more closely.

Look for built-in indicators. It's your business; you know what they are. Think about what drives your sales--or expenses--and how you can get early warning about changes that might affect you. For some, it's as simple as street traffic or floor traffic. For others it's internet traffic or e-mail response rates or deal flow or lead generation. Don't wait for the results to play all the way through your system--look for them early.

One of the first things to do when things get tough is tighten the planning and shorten the planning cycle. Review your progress more often than usual. Think of it as zooming in on the detail--look at things by week instead of by month or by month instead of by quarter.

If ever there were a time for careful planning, it's now. It brings me back to one of my favorite quotes from Dwight D. Eisenhower: "The plan is useless; but planning is essential."

The second fundamental is watching the drivers of cash flow. Keep a very close eye on burn rate vs. revenues. Burn rate, in this context, is a lot like fixed costs, but more. Fixed costs are what you'd pay even if your business closed down. Burn rate is what you pay regularly every month to keep your business running, but without the variable costs of sales or direct costs. That includes probably all of your salaries (unless you have some assembly labor or part-time labor that goes up when sales go up and down when sales go down), your rent, your ongoing marketing expenses, your office expenses and all the rest. If your revenue goes down, you can maintain your burn rate for a while, sacrificing profits; but you can't let revenues stay under the burn rate for very long without losing capital and, if the problem continues, going under.

I know you know that, but I put it here because the vocabulary helps. Revenue vs. burn rate: keep the revenue higher than the burn. And don't forget that if you've got business-to-business sales, business customers are likely to take longer than usual to pay. That involves factoring in collection days--the measure of how fast customers pay what they owe you. If the collection days increase, cash decreases.

The third fundamental is people. Don't make the mistake of laying people off too soon. No matter how carefully you follow your plan, layoffs might be necessary. But don't be too quick because the recession will end. People are hard to find--especially trained people who know your business.

By Tim Berry

Guide To Low Cost Business

If you dream of being an entrepreneur, but lack the big startup bucks required by some new ventures, don't fret. With a little time and not a lot of money, you can still make your business dream a reality. A low-cost business, which requires a minimal investment for supplies and marketing, is perfect for whetting an entrepreneurial appetite if you're:

1. Already employed, but looking to dabble in your own side venture
2. Unemployed and looking to start your first business
3. A stay-at-home parent or student who's looking for extra income
4. A new "retiree" who isn't quite ready to completely retire

Action Steps
The best contacts and resources to help you get it done

Find low-cost business ideas and opportunities online
Coming up with ideas for low-cost businesses is easy with simple Web searches. With just a few clicks on your keyboard, you can find business opportunities that won't break the bank.

I recommend: Find a list of low-investment business startup opportunities at BusinessNation.com and go to Entrepreneur Magazine's SmallBizBooks.com to purchase how-to guides for businesses that take less than $10,000 to launch. Work.com's Guide to Resources for Starting a Business will hook you up with all of the help you need to get going.

Personal services
You already need to run your own errands; why not run other people's, too? With a reliable vehicle and available credit you can easily do other people's shopping — for a fee, of course.

I recommend: Advertise your services at Craigslist, which allows you to post free classified ads that stay online for as long as 45 days, depending on the type of ad and the city in which you live.

eBay sales
You can make a decent living buying antiques and collectibles at garage sales or flea markets, then selling them to hungry buyers online.

I recommend: Sell your stuff online at eBay. You'll need a digital camera with which to photograph your products, which you can buy for under $150 at Best Buy or Circuit City. Or take your items to an eBay drop-off store, such as AuctionItToday, which takes professional photographs of your items, writes copy and posts it for you.

House- and pet-sitting
Give your neighbors peace of mind by taking care of their houses when they're out of town, and their pets while they're at work.

I recommend: Market your services online at HouseCarers.com, which for a small fee will let you post an ad — good for an entire year — to its searchable directory of house-sitters nationwide.

Professional organization
Everyone wants to be organized, but few people have the time. For a fee, you can save people from their own stuff.

I recommend: Join the National Association of Professional Organizers, which will connect you with customers and teach you the tools of the trade.

Clerical work
Many businesses can't afford to hire a full-time secretary. That doesn't stop the paper from piling up on their desks, however. Make a business out of doing data entry, bookkeeping and transcription for your fellow business owners.

I recommend: Microsoft Office Small Business Edition 2003 is all you'll need to do office work for other businesses; it includes all the necessary applications and will be compatible with most any client's existing software.

Tutoring
Were you a good student? If so, consider tutoring. You can help kids of any age in any subject, from young children who need help learning to read to teens who need help studying for the SAT.

I recommend: You'll need to study up on a subject yourself before you can teach it; SparkNotesTutorNation.com. offers free online study guides on a variety of topics within a number of subjects. Obtain tutor certification from

Tips & Tactics
Helpful advice for making the most of this Guide

• A low-cost startup isn't likely to make you any money in its first few months. Stick with it, though, and it may just burgeon into a full-time opportunity.
• Run your business from your home to save money on rent and utilities. Doing so will save on taxes, too, because a portion of your mortgage and bills will be tax-deductible come April.
• If you're new to business, consider being a weekends-only entrepreneur until you learn the ropes of running your own company.

By Matt Alderton

Business Marketing Plan

Every marketing plan has to fit the needs and situation. Even so, there are standard components you just can’t do without. A marketing plan should always have a situation analysis, marketing strategy, sales forecast, and expense budget.

• Situation Analysis: Normally this will include a market analysis, a SWOT analysis (strengths, weaknesses, opportunities, and threats), and a competitive analysis. The market analysis will include a market forecast, segmentation, customer information, and market needs analysis.
• Marketing Strategy: This should include at least a mission statement, objectives, and focused strategy including market segment focus and product positioning.
• Sales Forecast: This would include enough detail to track sales month by month and follow up on plan-vs.-actual analysis. Normally a plan will also include specific sales by product, by region or market segment, by channels, by manager responsibilities, and other elements. The forecast alone is a bare minimum.
• Expense Budget: This ought to include enough detail to track expenses month by month and follow up on plan-vs.-actual analysis. Normally a plan will also include specific sales tactics, programs, management responsibilities, promotion, and other elements. The expense budget is a bare minimum.

Are They Enough?
These minimum requirements above are not the ideal, just the minimum. In most cases you’ll begin a marketing plan with an Executive Summary, and you’ll also follow those essentials just described with a review of organizational impact, risks and contingencies, and pending issues.

Include a Specific Action Plan
You should also remember that planning is about the results, not the plan itself. A marketing plan must be measured by the results it produces. The implementation of your plan is much more important than its brilliant ideas or massive market research. You can influence implementation by building a plan full of specific, measurable and concrete plans that can be tracked and followed up. Plan-vs.-actual analysis is critical to the eventual results, and you should build it into your plan.

by Tim Berry

Small Business Funding Tips

Obtaining funding should start with a solid business plan. If you write a convincing business plan, then your chances of obtaining funding are greatly enhanced. Lenders and investors want to see proof that customers want your product or service and are willing to buy it for a price at which you can make a profit. The more tangible evidence you offer of this claim, the better chance you have.

Other factors that improve your chances to get funded are:

• Your plan should show good profit potential in a short period of time.
• The higher the rate of return you can offer investors and the faster you can produce it, the better your chances. Your plan should target a clearly defined market with enough size and purchasing power to produce a profit.
• Investors also prefer large markets with high growth potential. They avoid businesses that attempt to be “everything to everybody.” Your plan should clearly explain the “competitive edge” your product or service has over rivals.
• You should show an ability to control both the delivery and the quality of the product or service. Also, that managers and employees have the skills and the experience to make the company a success.
• Show that you have made a personal investment in this business venture.
• If you don’t believe in your own venture enough to invest at least some of your own money in it, how can you expect others to? “Sweat equity”—unpaid personal time and hard work—can be important, but lenders and investors like to see an entrepreneur with an important financial stake in the business. It’s a tremendous source of motivation.
• Lay out a clear, well-conceived, workable strategy for getting this business up and running. Show realistic financial projections covering most likely, pessimistic, and optimistic scenarios.
• Potential lenders and investors want to be sure that the “dollars and cents” of the deal make sense, and that’s why realistic projections are important. Most entrepreneurs underestimate the amount of money needed for start-up. Don’t get caught short!

by Tim Berry

Right Business For You

If you want to work for yourself, but don’t have a particular business in mind, you’re probably wondering what kind of business you should start. Fortunately, the answer is always the same: start a venture you know intimately.

Know the ins and outs of the business
Don’t fall into the trap of starting a particular business just because someone tells you, “It’s a sure thing.” Potential customers will part with their hard-earned money only if you convince them that they’re getting their money’s worth, so you’ll need to know what you’re doing, no matter what the task.

Choosing a business you know
Starting a business in which you already have experience has many advantages. You can use your knowledge about the industry, your training and skills, and your network of contacts, who might help you find financing, suppliers and customers.

Example
For ten years Steve worked for several different construction companies — first as a journeyman carpenter and then as a project manager. When he got the itch to start his own business, it made perfect sense for him to start a small contracting business specializing in home-improvement. He knew the industry well, including the best places to buy supplies and what he could charge for services, and he had the required skills, such as how to estimate and bid jobs — and it didn’t hurt that he knew how to pound nails as well. The contacts he had developed over the years were glad to talk to him about running a small contracting business, and many customers he had worked with in the past told him they’d be willing to hire him if he were working on his own.

If you’re interested in turning something you know and love into a business, talk to people you’ve worked with about what it takes to run that kind of business. Learn all you can about start-up costs, overhead and expenses and how much revenue you can expect to make. If you have several interests but aren’t sure which would make the best business, consider how you can translate your strengths, education and skills into business opportunities, and research the marketplace to see which types of business are presently needed in your area.

Starting a business in an unfamiliar industry
Unfortunately, the lure of quick profits convinces many people to start businesses in areas they know little or nothing about. This is a sure recipe for failure.

Example
Leo opened an upscale nursery and garden supply outfit at a time when, seemingly, such a business “couldn’t miss.” Leo knew a good deal about running a small business, had a personality well suited for it and could borrow enough money to begin. However, the business never took off, and it cost him two years and $30,000 to get rid of it.

Why? In his hurry to make a profit, Leo overlooked several crucial facts. The most important was that Leo, a self-described “brown thumb,” knew virtually nothing about plants and didn’t really want to learn. Not only was Leo unable to chat with customers about what types of flowers grow well in partial shade or how to get rid of various garden pests, he didn’t even know enough to properly hire and supervise salespeople. In short, Leo made a classic mistake — he started a business in a “hot” field because someone was foolish enough to lend him the money.

If you don’t know much about the business you want to start, but are set on it, be prepared to spend enough time learning it before you begin.

Research and evaluate your business idea
Here’s a step-by-step guide to evaluating whether you and your chosen business are a good fit.

1. Try it out. Before you start a business of your own, get some experience in the industry or profession that interests you — even if you work for free. Learn everything you can about every aspect of the business. For example, if you want to start a pasta shop, but don’t know ravioli from cannelloni, go out and get a job with a pasta maker. After a few months, you should be an expert in every aspect of pasta prep, from mixing eggs and flour to flattening the dough and slicing it into strips.
2. Talk to entrepreneurs in the same field. If you’re not familiar with the business you want to start and you’re unable to find work in the field, talk with others who provide the product or service that interests you. To increase your chances of getting interviews and reliable answers to your questions, it’s best to do this in a different locale from the one in which you plan to locate. Small business owners are often quite willing to share their knowledge once they are sure you will not compete with them.
3. Evaluate whether you enjoy the work and excel at it. If not, find a new venture. It’s a lot harder to make a success of a business you don’t like, and it’s unlikely you’ll like something you’re not good at. If you enjoyed the work and determined you were skilled enough to base your own business on it, go on to the next step.
4. Judge your ability and desire to handle every aspect of the business. If you don’t want to or can’t pitch in wherever and whenever something needs to be done — whether it involves manufacturing a product, dealing with customers or keeping the books — you should think twice about starting that kind of business.
5. Determine whether the business has a solid chance of turning a profit. After working in the field for a few months, you should have a good idea of whether the business is a potential moneymaker. To be sure, you should analyze your market and conduct a break-even analysis, a preliminary financial projection that shows you the amount of revenue you’ll need to bring in to cover your expenses (this amount is called your break-even point). If you’re able to bring in more revenues than your break-even point, you’ll be in the black (that is, you’ll make a profit).
6. Evaluate the risk this particular business requires. Even the best-laid plans can sour if you pick an unusually risky business. For instance, the following businesses have higher than average failure rates:
   • computer stores
   • laundries and dry cleaners
   • florists
   • used car dealerships
   • gas stations
   • trucking firms
   • restaurants
   • infant clothing stores
   • bakeries, and
   • grocery and meat stores.
   by Nolo

Different Types Of Business Plan

Business plans are also called strategic plans, investment plans, expansion plans, operational plans, annual plans, internal plans, growth plans, product plans, feasibility plans, and many other names. These are all business plans.

In all these different varieties of business plan, the plan matches your specific situation. For example, if you’re developing a plan for internal use only, not for sending out to banks or investors, you may not need to include all the background details that you already know. Description of the management team is very important for investors, while financial history is most important for banks.

Some of these specific case differences lead to different types of plans:

• The most standard business plan is a start-up plan, which defines the steps for a new business. It covers standard topics including the company, product or service, market, forecasts, strategy, implementation milestones, management team, and financial analysis. The financial analysis includes projected sales, profit and loss, balance sheet, cash flow, and probably a few other tables. The plan starts with an executive summary and ends with appendices showing monthly projections for the first year.
• Internal plans are not intended for outside investors, banks, or other third parties. They might not include detailed description of company or management team. They may or may not include detailed financial projections that become forecasts and budgets. They may cover main points as bullet points in slides (such as PowerPoint slides) rather than detailed texts.
• An operations plan is normally an internal plan, and it might also be called an internal plan or an annual plan. It would normally be more detailed on specific implementation milestones, dates, deadlines, and responsibilities of teams and managers.
• A strategic plan is usually also an internal plan, but it focuses more on high-level options and setting main priorities than on the detailed dates and specific responsibilities. Like most internal plans, it wouldn’t include descriptions of the company or the management team. It might also leave out some of the detailed financial projections. It might be more bullet points and slides than text.
• A growth plan or expansion plan or new product plan will sometimes focus on a specific area of business, or a subset of the business. These plans could be internal plans or not, depending on whether or not they are being linked to loan applications or new investment. For example, an expansion plan requiring new investment would include full company descriptions and background on the management team, as much as a start-up plan for investors. Loan applications will require this much detail as well. However, an internal plan, used to set the steps for growth or expansion funded internally, might skip these descriptions. It might not include detailed financial projections for the whole company, but it should at least include detailed forecasts of sales and expenses for the new venture.
• A feasibility plan is a very simple start-up plan that includes a summary, mission statement, keys to success, basic market analysis, and preliminary analysis of costs, pricing, and probable expenses. This kind of plan is good for deciding whether or not to proceed with a plan, to tell if there is a business worth pursuing.

by Tim Berry

Business Startup Strategy

I strongly suggest that would-be entrepreneurs do a business plan. As a result of completing the plan you will be much better prepared and know whether or not your business idea is feasible. Try the following article for a short-cut. However, I caution you on following a short-cut unless you have substantial experience or knowledge about your area. Proceed with caution without a business plan!

How is your business unique, and why will your goods or services appeal to customers? What are the primary differences between your company and your competitors? What are the driving factors to choose your business over another?

In other words, what is the underlying reason a customer would do business with your company?

1) Define Your Business and Vision

Defining your vision is important. It will become the driving force of your business. Here are questions that will help you clarify your vision:

• Who is the customer?
• What business are you in?
• What do you sell (product/service)?
• What is your plan for growth?
• What is your primary competitive advantage?

2) Write Down Your Goals

Create a list of goals with a brief description of action items. If your business is a start up, you will want to put more effort into your short-term goals. Often a new business concept must go through a period of research and development before the outcome can be accurately predicted for longer time frames.

Create two sets of goals:

1. Short term: range from six to 12 months.
2. Long term: can be two to five years.

Explain, as specifically as possible, what you want to achieve. Start with your personal goals. Then list your business goals. Answer these questions:

• As the owner of this business, what do you want to achieve?
• How large or small do you want this business to be?
• Do you want to include family in your business?
• Staff: do you desire to provide employment, or perhaps, you have a strong opinion on not wanting to manage people.
• Is there some cause that you want the business to address?
• Describe the quality, quantity and/or service and customer satisfaction levels.
• How would you describe your primary competitive advantage?
• How do you see the business making a difference in the lives of your customers?

3) Understand Your Customer

It is not realistic to expect you can meet the needs of everyone, no business can. Choose your target market carefully. Overlook this area, and I guarantee you will be disappointed with the performance of your business. Get this right and you will be more than pleased with the results.

• Needs: what unmet needs do your prospective customers have? How does your business meet those needs? It is usually something the customer does not have or a need that is not currently being met. Identify those unmet needs.
• Wants: think of this as your customer’s desire or wish. It can also be a deficiency.
• Problems: remember people buy things to solve a specific problem. What problems does your product or service solve?
• Perceptions: what are the negative and positive perceptions that customers have about you, your profession and its products or services? Identify both the negative and positive consequences. You will be able to use what you learn when you start marketing and promoting your business.

4) Learn From Your Competition

You can learn a lot about your business and customers by looking at how your competitors do business. Here are some questions to help you learn from your competition and focus on your customer:

• What do you know about your target market?
• What competitors do you have?
• How are competitors approaching the market?
• What are the competitor’s weaknesses and strengths?
• How can you improve upon the competition’s approach?
• What are the lifestyles, demographics and psychographics of your ideal customer?

5) Financial Matters

How will you make money? What is your break-even point? How much profit potential does your business have? Take the time to invest in preparing financial projections.

These projections should take into account the collection period for your accounts receivables (outstanding customer accounts) as well as the payment terms for your suppliers. For example, you may pay your bills in 30 days, but have to wait 45-60 days to get paid from your customers.

A cash flow projection will show you how much working capital you will need during those “gaps” in your cash position.

I recommend thinking about these six key areas:

1. Start up Investment
2. Assumptions
3. Running Monthly Overhead
4. Streamlined Sales Forecast
5. Cumulative Cash
6. Break-even

6) Identify Your Marketing Strategy

There are four steps to creating a marketing strategy for your business:

1. Identify All Target Markets: define WHO is your ideal customer or target market. Most companies experience 80% of their business from 20% of their customers. It makes sense then to direct your time and energy toward those customers who are most important.
2. Qualify the Best Target Markets: the purpose of this step is to further qualify and determine which customer profile meets the best odds of success. The strategy is to position your business at the same level as the majority of the buyers you are targeting. It is critical to figure out who your best customers are and how to best position your company in the marketplace.
3. Identify Tools, Strategies and Methods: a market you cannot access is a market you cannot serve. Marketing is the process of finding, communicating and educating your primary market about your products and services. Choose a combination of tools and strategies, that when combined, increase your odds of success.
4. Test Marketing Strategy and Tools: the assumptions we do not verify are typically the ones that have the potential to create business problems. Take the time to test all business assumptions, especially when you are making major expenditures.

by Greg Balanko-Dickson

Scope For Small Business

For many it is a dream to start your own small business, become your own boss with your schedule. There are many things to consider before making that dream become a reality. Before quitting your job, you need to consider if you are ready to make this dream into a full-time commitment.

It begins with an outline of what your business purpose and goals will be and then continues with your own skills, prior experiences and specialized resources. Provide an assessment of the economic environment your business will become, and your marketing plan. Also, include a study of demographic and traffic flow data.

You will need sufficient operating capital in addition to the down payment, depending on the business you select. The source of equity funds should be cash assets and not borrowed money. Now this is your decision and only you can decide whether a business is the right thing for you.

The plan would define and focus your objective using appropriate information and analysis. You would be able to use it as a selling tool in dealing with important relationships as lenders, investors and banks. This would be a good selling tool.

If there are any unknown liabilities, he will also be able to advise you on this situation. If you do not have an attorney, you can use expert help from an accountant, banker, business broker or other business owners. One of these experts can help you determine how much a business is worth and what to offer.

As a buyer, you obtain and examine the seller’s financial statement and records for the past 24-36 months. This will give you a basis for the offer because you have now collected all the information for what your net income will be. It’s also wise to ask for their personal and business tax returns.

The seller of an existing business will often provide some of the financing and will be your best source of financing. This is because businesses are sold by motivated sellers. In many cases, the seller will take cash down and let you pay the rest out of earnings over a period.

Put your plan into a compelling form so that it will give you insights and a valuable tool in dealing with business relationships that will be very important to you. As your business continues to grow leave room to add: capable management, able financial control and consistent business focus. All of these factors will be necessary to show a healthy, stable and growing business.

Advice For Small Business

Setting up a business requires certain formalities and responsibilities on the part of the owner. These include registration, planning, gathering funds, licensing, naming the business, choosing the location, etc. One the business is set up; there is no guarantee of its success or failure. It entirely depends on the owner to achieve the goals or lying back.

What Needs To Be Done?

A person who have started a small business is generally inexperienced and lacks knowledge about the know how of the market. In such condition, they can always seek help from business counselors or their seniors and experienced small business holders. The advice given by such people gives them the proper understanding of the business working. It also teaches the new businessman to deal with the various business situations.

Advice for Setting up a Small Business

Experienced small business holders and business counselors provide advice on certain aspects that help the new business owners in succeeding. These include-

Make Sure of Your Deals: Always be careful while trusting or making deals with the other company. Deal with stable and steady companies to avoid any future crisis.

Be Responsible: Being the owner of the business, it is your responsibility to have a strong managerial structure. Therefore you need to lead by example by being focused and clear-sighted. Also, it is your responsibility to keep your co-workers motivated and inspired. This can be done by giving them regular incentives.

The Perfect Location: Choose the perfect location for your business that is easily accessible to the resources, clients, and customers. This will prove beneficial in lowering your costs and increasing your sales.

Keeping the Perfect Financial Status: The success or failure of a business is highly affected by its financial status. Perform regular cash flow forecasts that will help the business in forecasting the income and expenses for the future. For a stable financial status, always follow a well-crafted business plan.

Be confident: Setting up a small business, if done in a systematic way, will show fruitful results in a very short period of time. As the business owner, you need to be confident of your success and motivated to perform well.

Interaction: Your business is the reflection of your personality and working. Be positive in your interactions and supervisions with others at work place. Provide proper vision to your employees with the assurance of your support, which will result in attaining success.

Updated Resources: It is advisable to use resources that are updated and high technology based. A proper training to your staff about the new resources will not only increases their productivity but will also benefit your business.

Beneficiary Advices

The various advices given by counselors and professionals are beneficiary and help the small businessman in avoiding the various set backs that a business may face. The suggestions given by professionals are based on their owned faced situations and therefore their experienced advice will only benefit the immature businessmen in avoiding any future problems related to the business.

Budget Your Money Starting Up A New Business

Many people have dreams of eventually starting up their own company one day. The idea of being your own boss for a job of your dreams is one of the reasons why many people decide to follow this path, but what may start out as a dream may turn up being a financial disaster if you don’t budget your money. With every story of success, there are five stories of financial disaster of businesses that didn’t work out. Many of the financial hardships that people experience while starting up their own company can be avoided by using a simple budget when planning on money you will need to spend.

One of the most important things to do before starting your own business is to research the market you are interested in getting into. The failure of most new businesses can most commonly be contributed to the owner not doing enough research about the market they are going to enter. You need to carefully analyze the market you are trying to enter and figure out who are the main businesses’ in it and how you will compare. You must use realistic standards when doing this; you can’t expect as a new business owner that you are going to make a profit during your first year. With that you have to take into effect that in reality you may not make a profit your first year, and for most new company’s backup funds are essential to continuing the new business. You also have to ask yourself what you want to get out of your new business, in order to do this you not only have to make short-term goals but also long term goals. Making a budget for short-term and long-term goals will allow you to see your future spending in a big picture.

Besides having backup funds you have to have enough money to get your new business rolling. Many people underestimate the amount of money a new business needs, they do this by overlooking costs they may need. For example if you are purchasing items for a retail store you may forget that you need clothes hangers to hang the clothes in the store. Many people focus their budget on immediate needs such as inventory and forget the smaller things that may become costly. It is imperative that new business owners have money stored somewhere as a backup for unexpected costs. New business owners are also known to spend money on things that are unnecessary. Of course you want your new business area to be georgous, with new desks for employees and a new building, but you have to ask yourself if it is really necessary. Is it absolutely necessary that I am in a new building with new things? If it isn’t you may want to look into different areas to start up, sometimes the best place to start up a new company is in your very own home.

Earning Money From Home

If you wanted to work from home just 10 years ago your options would have been greatly limited to the staggering number of options you have today. And in a few years from now there will be even more. But let's stick with the present and see some of the most popular methods of working from home and earning money using your computer. These methods have stood the test of time and I believe will be around many years from now.

1. Taking Surveys and paid to complete offers. Consumers have always been at the forefront of influencing business decisions.

With the internet it is now easier to get people's opinions and companies are willing to pay you to take surveys regarding their product or even pay you to test out a new product or service. For example, people are able to test out new gamer sites or even help companies decide on a new logo all from the comfort of their home. These jobs don't pay a great deal but they are a fun, stress free way to earning money.

2. Affiliate Marketing. This is still one of the most popular ways for a beginner with no marketing experience to earn money. You make money by selling other people's products.

Just 6 years ago the number of affiliate programs was on a much smaller scale and finding good affiliate programs within your niche was a little more difficult; today however, even your favorite offline company may have an online affiliate program and more niche categories are offered. Thus, finding a product or service you feel comfortable promoting is a lot easier. And with more companies developing their own web presence you'll have even more options in the future.

3. Web writer.

If you can write well, and can promote yourself you can earn money working from home. Web writers are in great demand. From ebooks to blog articles someone has to sit down and create it and this is one task many webmasters outsource.

4. Virtual Assistant

This is a great way to earn money. People who have office service skills can sset up a home office and help companies all around the world doing administrative tasks. Virtual ssistants usually specialize in a particular area but there work can be anything from bookkeeping to customer service all from the comfort of their own home.

5. Web store

If you have a physical product like jewelry or special tea you can set up a web store to sell your products from. This works for downloadable products as well. If you don't want to operate your own website you can use eBay to sell your products from.

6. Create a membership site

Membership sites are really big right now and their only going to get more popular. Webhosting is an example of a membership site. But there are a number of ways to earn money from this method. You can create an online dating site that targets a specific niche, a forum site that provides exclusive information, an advertising site for members to get cheap online ad space, or a special online course. There are many possibilities to make money with this model. And the best part is you earn a residual income.

As people become more interested in earning money from home we will see an influx in work at home jobs and news ways to make money will be thought up. But the above methods will always be around because they already have a strong online market.

Find more Earning Money From Home

Break Even In Doing Home Based Business

A fast-rising niche to date, home-based business has become the word of mouth of those people who want to end their days in the corporate rat race world. In the hope of freeing themselves from the rush of always catching up with office work loads, waking up every day without worrying about getting ready for work, commuting to a dead end job and answering to a boss who needs anger management 101. Apart from all these, to consider the corporate layoffs happening, lack of job opportunities to some, and high commodity prices; it is just necessary for most people to make good money and generate additional income. Thus, a better way to earn the extra bucks while spending quality time with your family is by venturing into a home-based business.

To gain full control of your time, your money and your life is among the benefits you get in doing home-based business. That is why it's not at all that surprising to know that everyday, all sorts of people from all over the world, are opting to quit their jobs to do their very own home-based business. Some would even say that if you do it right, it could become your full time job. So, how about you?

But in as much as you want to, most of you cannot afford to just stop working and face the risks of putting up a home-based business. With the thoughts of uncertainties creeping in, many are quite afraid to lose their regular salaries for a number of reasons – the bills to be paid up before due, the family that needs to feed and clothe, among others. Having said that, most of you, if not all, will just decide to stay in the safer route and accept the security and stability but unsatisfying and routinely salaried job.
But seeing things on a much broader perspective, you have to have the home-based business up and running to generate the income level that you aspire. However, it does not seem necessary to quit the job you have been having. While the regular job takes care of the basic necessities of the home, you can make your home-based business take care of the extra amenities you need. Though this may sound exhausting but this path is the safest way to take for someone planning to do the niche. It is always wise to have a "fall back" just in case the business does not turn out as good as you thought of it, right? And the good thing here too is you get to experience becoming your own boss doing the things you love or do best! All it takes is lots of handwork, creativity, patience and perseverance.
While a number of available options can be overwhelming if you are really planning to start your own home-based business, on the one side, there are many tried and true home-based businesses that may be just what you are looking for. The catch here is to firstly examine your skills and assess your talents, and to enable to know which home-based business suits you best. Likewise, it is recommended to weigh the extra time and the energy to undertake additional workloads associated with the home-based business. Having said that, you need to learn to manage well your time and juggle your responsibilities the right way.

Running a home-based business while doing your regular job in an office may appear as a tough thing to do but it will only feel like it in the onset. Eventually you'll get the hang of it and enjoy the smooth transition of having the best of both earning worlds. Setting a clear boundary and carving out time for your goals in life is the key to having a well-balanced home-based business while not losing the regular job you've been having.

Investing in Stock

Although I wouldn't call myself a professional stock market investor, I do spend a lot of time following the market and reading about the ups and downs of companies. I've never been interested in mutual funds or index funds very much as I would much rather invest in individual companies. My work allows me plenty of time to indulge in my stock market obsession though, so I understand that not everyone can put in the hours of research required to invest in individual stocks.

Over the years I have made enough mistakes and have had enough successes to learn enough about investing in stocks to have developed my own set of rules. These are general investing tips that can easily be adapted to most styles of investors.

Don't pay any attention to HOT tips
As tempting as the hot stock market tips may sound, don't risk your hard earned dollars on them. Impulsive buys are no different to gambling, so unless you can afford to lose your money, buying just because a friend says they have made a lot of money from a company is no reason to race out and buy it. If the hot stock tip is really worth adding to your portfolio, it will still be worth adding after a couple weeks of research.

Learn as much as you can about the stock before investing in it
Each stock is actually a business, not just a stock ticker symbol that goes up or down each day. You wouldn't buy a business before doing a lot of research into what the company actually sells, what services they provide, what the earnings have been, what earnings are expected to be, and a whole lot more about the business. The famous stock market investor from Omaha, Warren Buffett always refused to invest in businesses that he never understood. He avoided technology stocks as he knew very little about the businesses behind the stocks, which allowed him to miss both the boom and bust of the tech bubble.
Learning about the industry the stock is in can also be as important as learning about the company.

Don't pay too much for a stock
If a stock is getting a lot media attention and everyone from your local butcher to your taxi driver has been buying into it, there's a good chance that the price of the stock is inflated. Compare the company data with similar stocks in the same industry. If they don't compare, move with caution. It may be that the company is a quality stock in a strong, long term uptrend or it could be that a bunch of sheep are simply reacting to media hype. The challenge is to work out which stock is the quality company that demands a premium price and which is the stock that will halve in value.

Admit to your mistakes and don't be afraid to sell a losing stock
No one likes to admit they are wrong, but even the best investors make mistakes. Hoping for your stock to turn around while it keeps losing value month after month, year after year is a no win situation. Some companies will always underperform. Cut your losses and put it into something that has some hope of making you money.

Get Help from a Professional Advisor
Even if you have a lot of spare time to research the market and investing in stocks, it is advisable to see a professional before making any major financial decisions. The tax implications and financial obligations of individual investors may mean that it wiser to pay off debts or invest in other assets. If you are sure that stock market investing is the right thing for you, it is still good to seek professional advice.

With the abundance in financial data online now and online brokers being so easy and affordable to use there has been a massive increase in individual investors entering the markets for the first time. Don't ever feel that you have to buy stocks in haste though. Impatience will burn more people than it will reward. Know the stock, the company, and the industry it is in before even thinking about logging into your internet broker account!

By Michael Dylan

Don't Invest in Mutual Funds

For more than four decades I’ve involved myself in investments, including stocks and bonds, real estate, mortgage lending, and variety of enterprises, some of them hard to describe. However, there is one endeavor that I’ve systematically avoided. It is the mutual fund. At the risk of alienating the investment world, I offer the following observation: Mutual funds are not a particularly profitable way to invest. Let me share with you my biases on this subject.

As with most activities, what we get out generally relates to what we put in. Proficiency on the tennis court requires many hours of wielding a racquet. Mastery of an academic subject necessitates study. Similarly, to place your money for favorable return, you must familiarize yourself with the intricacies of each investment. For those of us who make this an active part of our lives, questions must be asked—and astutely answered. If we fail to do so, bad things happen.

This brings us to reality. The fact is, a majority of persons are unable or unwilling to analyze investments. There is something in the human psyche that tends to discourage methodical scrutiny. The average individual prefers to broad-brush most subjects while accepting pronouncements. Thus, if a banker or a broker assures that an offering is acceptable, it’s accepted without deliberation. As implausible as it may seem, this is how most persons conduct their financial lives.

It’s from this premise that the most powerful and profitable marketing tool of the securities industry developed. Since formation in 1924 of the first open-end investment company in the United States, known as the mutual fund, its acceptance by the public has grown to become universal. Quite simply, a mutual fund controls a pool of money provided by its shareholders that it invests in a portfolio of securities selected by the fund’s managers. In recent years they have proliferated like mushrooms, with over fifteen thousand registered funds in existence, and total assets now exceeding $10 trillion. They exist in near-infinite varieties offering almost every conceivable mix of securities. For the potential investor with both limited expertise and assets, this type of investment vehicle seems to meet two important criteria: astute selection of securities and advantageous portfolio diversification. Whatever else you may say about the mutual fund concept, one thing is undeniable: It truly captures the essence of the average citizen’s disdain for financial involvement. Each participant need only exhibit the astuteness demonstrated by loveable Sergeant Hans Schultz of the 1960s “Hogan’s Heroes” TV series, who regularly declared: “I see nothing! I hear nothing! I know nothing!” And in reality the mutual fund was designed so that only one involvement is required by the investor: contribution of money.

Though in theory the mutual fund meets the intended needs, theory and reality do not always coincide. Before describing my fundamental concerns, let me acknowledge that many mutual funds operate satisfactorily, and that large numbers of investors profited handsomely over recent years. Recognize, however, that these favorable results did not necessarily reflect the skill of the fund managers, but rather the consequence of a period during which the major indices posted their greatest sustained rises in history. There is no particular magic involved. These funds merely rise and fall with the general fortunes of the market.

When comparing the mutual funds against direct purchase of corporate stocks, the latter provides the better return. The reason is obvious. The additional overhead costs of the mutual fund operation must be superimposed on the investment. And don’t imagine that these costs are insignificant. Over the years the industry has devised ways to separate the populace from its money. Most managed funds assess “loads,” which are commissions charged to the buyers that run as high as 8½ percent of the purchase price. Although the conventional recommendation is to avoid the load in preference to the no-load funds, many of the no-load funds incorporate equally objectionable fees. These include redemption fees, often known as "back-end loads," to be paid when the shares are sold. A variation on the redemption fee is a deferred charge when shares are redeemed within a certain number of years, known as a deferred load. Another contrivance approved in 1980 by the Securities and Exchange Commission is known as the 12b-1 plan that permits a fund to confiscate up to 1¼ percent per year of the fund's assets for marketing purposes. At this rate, a participant in such a no-load fund over ten years contributes 12½ percent of the investment in such fees. You may add to the list of undesirables those funds that debit portions of reinvested interest, dividends, and capital gains, known as reinvestment loads, as well as other less than obvious ways some no-load funds separate client from asset.

To be certain, the lowest management fees are those assessed by index funds, which are an assembled collection of securities whose composition mimics that of a particular market index, such as the Dow Jones Industrials or the Standard & Poor's 500. As investment analysis and decision-making is not required of the managers, no justification exists for a substantial fee. However, use of the index fund raises a fundamental question: What justification is there for a mix of securities often selected at random? It’s my opinion that the index fund is the logical extension of the know-nothing canon. Not only need the investor disavow knowledge of anything financial, but the same rule pertains to management. An arbitrary set of index funds can then be designed and offered in which there ceases to be any responsibility for performance. Profitability for the fund operators becomes based solely upon the fees that can skimmed from the pot. In this way, the operation of an index fund becomes an exercise in pure marketing.

This gets us to the bottom line. For those of you unwilling to take part in the management of your assets, the mutual fund is your only option—investment by default. For others, who aspire to see their fortunes grow, there is a world of opportunity to be embraced.

By Al Jacobs

Investment by Default

Tune in, if you will, to one of the many sources of financial advice offered to the general public. The investment purveyors seem limitless, all vying for your attention. In addition to a presence on radio and television, in newspapers, and over the internet, many of the authorities are now recognized authors, with their books aggressively advertised and prominently displayed. There is certainly a wide array of information being disseminated. Irrespective of the basic soundness of the investment advisory profession itself, the overwhelming fixation of most practitioners is on corporate securities.

No discussion of securities in the first decade of the twenty-first century may ignore what is now the most powerful and profitable marketing tool of the industry: the open-end investment company known as the mutual fund. Since formation of the first such company in the United States in 1924, acceptance by the public grew to become universal. Quite simply, a mutual fund controls a pool of money provided by its shareholders that it invests in a portfolio of securities selected by the fund's managers. In recent years they have proliferated like mushrooms, with over fifteen thousand registered funds now in existence.. vastly more than the number of companies found on the New York Stock Exchange. They exist in near-infinite varieties offering almost every conceivable mix of securities.

For the potential investor with both limited expertise and assets, this type of investment seems to meet two important criteria: knowledgeable selection of securities and advantageous portfolio diversification. Though in theory the mutual fund meets the intended needs, theory and reality do not always coincide. Irrespective of the basic soundness of the investment advisory profession itself, the overwhelming fixation of most practitioners is on these funds, often dominated by index funds. There is no particular magic involved. These vehicles merely rise and fall with the general fortunes of the market. There are legitimate arguments why this approach makes sense for the advisors, if not always for their clients. A primary reason is that shares in a mutual fund now occupy an anointed status within both the investment and the legal communities. Within most limits, an advisor is held blameless if recommendations on this investment prove less than astute. And, as expected, with their being widely touted, natural client resistance is reduced. What has thus been generated by the industry is investment by default.

Although I have objections to the basic concept of mutual fund investment, I can’t overcome a national obsession. Perhaps the best I can do is inform you of matters you must consider. As a start, familiarize yourself with the details of the mutual fund industry. Recognize terms such as alpha and beta coefficients, yield, distribution, load, and volatility. Understand the concepts of conversion privilege and net asset value, and distinguish between index, sector, and non-diversified funds. In short, do your homework, and garner the information from a source other than the firm through which you purchase your investments. Only after you know what is going on can you evaluate whether an offering merits your approval. A visit to the business section of your library or local bookstore will provide what you need. An excellent publication is Barron's Keys to Investing in Mutual Funds.

Next, recognize that the lowest management fees are those assessed by index funds, which are an assembled collection of securities whose composition mimics that of a particular market index, such as the Dow Jones Industrials or the Standard & Poor's 500. As investment analysis and decision-making is not required of the managers, no justification exists for a substantial fee. From this point, the type and amount of fees and charges become less predictable. A major distinction is made between "load" and "no-load" funds. These "loads" are commissions that run as high as 8½ percent of the purchase price. The conventional recommendation, to avoid the load in preference to the no-load funds, is where the admonition usually stops. By rights this is just the start. Many of the no-load funds, although assessing no up-front sales charges, incorporate other equally objectionable fees. These include redemption fees, often known as "back-end loads," to be paid when the shares are sold. A variation on the redemption fee is a deferred charge when shares are redeemed within a number of years, known as a deferred load.

Another goodie approved in 1980 by the SEC is known as the 12b-1 plan. This permits a fund to confiscate up to 1¼ percent per year of the fund's assets for marketing purposes. At this rate, a participant in such a no-load fund over ten years contributes 12½ percent of the investment in such fees. This may not be a load in the technical sense, but the Greek mythological figure Atlas would certainly recognize it for the load it is. You may add to the list of undesirables those funds that debit portions of reinvested interest, dividends, and capital gains, known as reinvestment loads. Finally, there are other less than obvious ways some no-load funds separate client from asset. You must scrutinize the fine print to know where the bodies are buried.

My discomfiture is with the evolution of an industry in which the placing of investors' money seems, at best, a secondary consideration. The fact that a substantial and growing percentage of the nation's assets is now committed to funds fuels a part of the concern. The rapid growth in the numbers and varieties of funds offered triggers more uneasiness. But it is the synergistic effect, coupled with basic human nature, that could result in unpredictable problems for the economy and the nation.

Let me conclude with a final thought. What the future holds for the mutual fund industry is hard to say, but one thing is certain: The fortunes to be made, legally or otherwise, fuel an insidious attraction. If it’s becoming a self-propelled labyrinth with few realistic controls, in the hands of persons who will systematically loot the assets with no compunction, the nation will surely experience a misfortune of momentous proportion

By Al Jacobs