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

Business Plans

A plan for your small business is useful if you want to focus yourself and get an overall picture of what you have to do in order to build your enterprise. On top of that, a good business plan is an absolute must if you want to convince institutions or individuals to loan money or invest in your business. One way to organize your business plan is to compose it like an informative news article, explaining the "who," "what," "when," "why, and "how" of your business.

Who are you?
Write about your background and previous experience in your field. Tell about your notable accomplishments, and about your partners and staff. If your company has been in business for some time now, then write about your "track record." Explain what your company has already accomplished and give an idea of how it stands in relation to competitors in your particular field of business.

What are Your Products or Services?
What are you producing or what are you going to produce? What are your products or services? What kind of revenue will these activities be bringing in or what is the expected range of revenue once the products are launched? Answer these questions giving a complete picture of the principal activity that you are engaged in or will be engaged in during the timeline of this business plan.

When Will things Happen?
If you have a new start-up business, this section of the plan will allow you to explain the steps that are needed to set-up your business and make it fully operational. How much time do you need? When will the business be up and running? If you are have an already existing business, it is useful to place somewhere in the plan a list of targets that you want to achieve and give approximate dates as to when these targets can be reached.

Where is Your Business?
Where are you located? Do you work at home or do you have business premises? If you have a business location such as a store or factory, then explain about the size and capacity of this establishment. What is the business climate like in your area? Are there significant competitors and what are your prospects of competing in this market? Answer these questions as best you can and give yourself and would-be investors a clear picture of where your business is situated geographically and with relation to your overall market.

Why are you in Business?
Explain why your particular enterprise, product or service is needed. What can your add to the already existing area of business that your are entering? What need are you going to fill? The answers to these questions are particularly important for investors looking for opportunities in emerging businesses and emerging markets.

How will it all Happen?
Your sales and marketing plan should be outlined in this section. Explain how you intend to establish your product or service and what steps you will take to create or expand your customer base. How will you finance the start-up and/or expansion of your business? Explain the source of your funds whether you have existing loans or liabilities. How much money do you need to raise in order to get realize your overall plan for the launching or expansion of your business? Explain how you are going to translate your business idea into a living reality.

Take a look at your planned business or your existing business from the perspective that has been outlined in this article, and write a concise business plan. It will help to bring clarity to your operations and convince investors and lenders to participate in your enterprise.

By David Bond

Ten Mistake Made in Business Plan

1. Not proving that you have the management expertise to make it happen.
The quality of your people will lend credibility to your ideas and even to your financial projections. If your management team is not as strong as it could be, join forces with a great board of advisors.

2. Not demonstrating where your revenue will come from - what customers pay you and
why they pay you.
Don’t be too aggressive in setting revenue projections or you will undermine your credibility.

3. Not proving that your business model and long term cost structure is good enough to make a real profit.
How will your business make money - what is your margin structure, what are your costs?

4. Not being clear enough in your product description to allow the reader to quickly see the need and the niche for this product.
It may seem obvious to you, but not so to the reader not educated in your business.

5. Not proving that the market opportunity is big enough to get interested in.
How big is your market now and what will it look like in 5 years?

6. Not adequately acknowledging your competition.
Investors know that if there is no perceived competition, there may be no market for what you are offering. The better you can describe your competition, the better you understand your market, and the more likely you will dominate it.

7. Not writing for the target audience.
Although the core is the same, the plan should be written for the perspective of banks, equity investors, and others. Go as far as you can to tailor each plan to the audience’s specific interests to show you’ve done your homework and know to whom you are talking.

8. Starting with a boring, unenthusiastic executive summary.
This is the first section to be read, and if it isn’t exciting the rest may never be seen. Make it fun and be enthusiastic. It should stand alone and generate interest for more. It deserves all the thought you would put into a professionally done promotional piece for your customers.

9. Poor presentation.
If you have typos and grammatical errors in your business plan, the reader will assume the work you do in your business is sloppy too.

10. Saying too much.
Keep the entire plan to a maximum of 30 pages, with an executive summary of 3 pages or less. If investors are interested, they will ask for any other information they need. Amateurs talk in the business plan about unimportant details because they don’t know what they should say and what they shouldn’t. Hire a professional editor to reduce the page count and help you emphasize your strengths.

By Jan B. King

50 Critical Questions Essential to Running a Great Business

There are hundreds of questions essential to running a great business. Of all of the questions, I consider these the 50 most critical. Consider making each of these questions the topic for weekly management meetings. Do we have a vision about where we are going as a company?

1. Do we plan adequately to grow the company?
2. Do we communicate the plan to all who are involved with the company?
3. Do we have good cash management?
4. Are we building cash?
5. Is the overall financial condition of the company improving or deteriorating?
6. Do we have timely and accurate financial data to review?
7. Does the data we have help you make decisions? Do we need more? Do we look at all the
data you receive each month?
8. Do employees understand how their work impacts the company financially?
9. Is our company performing well compared to industry standards?
10. Do we have adequate internal controls to prevent employee theft?
11. Do we meet with employees at least once a month to review variances and trends?
12. Are we losing market share?
13. Have we surveyed or otherwise communicated with our customers for their input in
improvements in service and new products?
14. Are overall customer complaints trending up or down?
15. Do we clearly understand our customers and markets?
16. Do we know where we are positioned in our market?
17. Are our products and services out of date?
18. Is our pricing appropriate and competitive?
19. Are we regularly creating new products and offering them to existing customers?
20. Are we satisfied with our revenue growth?
21. Are all of our product sales profitable?
22. Is our customer base shrinking or increasing?
23. Can we identify customers or groups of customers whose business is not profitable for us?
24. Are we satisfied with our plans to expand via the Internet?
25. Do we spend time with our direct reports, one-to-one?
26. Do we spend time with our top customers, one-to-one?
27. Are our sales and customer service people superstars?
28. Do you celebrate the achievements of the company and its employees?
29. Do we do self-audits on our own records, and the maintenance of equipment?
30. Do we have back up suppliers for most of our manufacturing process needs?
31. Do we have adequate internal quality controls or do customers know first if processes failed?
32. Have we adequately protected our intellectual property?
33. Are our facilities that are adequate for today also adequate for our growth plans?
34. Are we adequately minimizing the threats to our business?
35. Are our facilities and information systems prepared for a natural disaster or other physically
destructive force?
36. Do we have adequate back up procedures for our information systems?
37. Are we making the best use of available new technologies in manufacturing?
38. Have we talked to our suppliers about better prices or terms or other changes to our
relationship to benefit us both?
39. Do we regularly chart and review operational performance?
40. Do we spend enough time to be sure we are hiring for the long run?
41. Do we follow compliance laws and have written policies as required?
42. Are we following procedures that are most likely to keep us out of employee lawsuits?
43. Does our compensation and benefit structure allow us to hire highly talented employees?
44. Are our employees overworked? Do we spend a lot in overtime and temporary help? Is that
number increasing?
45. Do we tolerate gossip or other behavior that undermines employee morale?
46. Do we ask employees to review the company?
47. Do we give enough types of feedback to employees regarding their performance? Do we
review them individually at least annually?
48. Do we insist our employees stay employable?
49. Is the CEO accountable to someone for his or her decisions and actions? Does the Board (if
you have one) communicate their expectations about the company?
50. Is the CEO accountable to someone for his or her decisions and actions? Does the Board (if
you have one) communicate their expectations about the company?

By Jan B. King

business broker

A business broker is a person or firm who/which acts as an intermediary between sellers and buyers of small businesses.

Business brokers, also called business transfer agents, or intermediaries, assist buyers and sellers of privately held small business in the buying and selling process. They typically estimate the value of the business; advertise it for sale with or without disclosing its identity; handle the initial potential buyer interviews, discussions, and negotiations with prospective buyers; facilitate the progress of the due diligence investigation and generally assist with the business sale.

Agency relationships with clients and customers

Traditionally, the broker provides a conventional full-service, commission-based brokerage relationship under a signed agreement with a seller or "buyer representation" agreement with a buyer. In most states this creating under common law an agency relationship with fiduciary obligations. Some states also have statutes which define and control the nature of the representation.

Agency relationships in business ownership transactions involve the representation by a business broker (on behalf of a brokerage company) of the selling principal, whether that person is a buyer or a seller. The principal broker (and his/her agents) then become the agent/s of the principal, who is the broker’s client. The other party in the transaction, who does not have an agency relationship with the broker, is the broker's customer.

Transactions Brokers

In some states of the USA, business brokers act as transactions brokers. A transaction broker represents neither party as an agent, but works to facilitate the transaction and deals with both parties on the same level of trust. Most states that operate business transactions as Transactions Brokers also operate Real Estate transactions as Transaction Brokers.

Dual or limited Agency

Dual agency occurs when the same brokerage represents both the seller and the buyer under written agreements. Individual state laws vary and interpret dual agency rather differently.

• If state law allows for the same agent to represents both the buyer and the seller in a single transaction, the brokerage/agent is typically considered to be a Dual Agent. Special laws/rules often apply to dual agents, especially in negotiating price.
• In some states of the USA (notably Maryland), Dual Agency can be practiced in situations where the same brokerage (but not agent) represent both the buyer and the seller. If one agent from the brokerage has a home listed and another agent from that brokerage has a buyer-brokerage agreement with a buyer who wishes to buy the listed property, Dual Agency occurs by allowing each agent to be designated as “intra-company” agent. Only the principal broker himself/herself is the Dual Agent.
• Some states do allow a broker and one agent to represent both sides of the transaction as dual agents. In those situations, conflict of interest is more likely to occur.

Types of services that a broker can provide

Broker services vary widely depending on the practice and skill set of the broker. The most common services provided by a broker to a client are:

• Assist client in establishing a MPSP Value - Most Probable Selling Price Valuation; the techniques used by individual brokers can vary greatly in this process
  
• Develop a comprehensive Information Memorandum on the company; normally a 15-30 page document outlining the business for potential buyers
  
• Conduct buyer searches
  
• Exposure - Marketing the business to prospective buyers
  
• Screen buyers for ability to complete a purchase
  
• Coordinate negotiations and provide deal structuring advice
  
• Provide overall deal management to guide the client through the entire process
• Help maintain confidentiality of the sale
  
• Hourly Consulting for a fee, based on the client's needs
  

Perhaps one of the biggest services provided by brokers is the ability to allow owners to stay focused on running their business during the sale process which can be take on average 6 months to 12 monthes to complete.

General

The sellers and buyers themselves are the principals in the sale, and business brokers (and the principal broker's agents) are their agents as defined in the law. However, although a business broker commonly fills out the offer to purchase form, agents are typically not given power of attorney to sign the offer to purchase or the closing documents; the principals sign these documents. The respective business brokers may include their brokerages on the contract as the agents for each principal.

The use of a business broker is not a requirement for the sale or conveyance of a business or for obtaining a Small business or SBA loan from a lender. However, once a broker is used, A special escrow attorney sometimes called a settlement attorney (or party handling closing) will ensure that all parties involved be paid. Lenders typically have Special requirements for a business related or SBA loan.

The market served by business brokers generally involves the sale of businesses with transaction values less than $10 M. Larger privately held companies are classified in the Middle Market and will employ firms that specialize in Mergers and Acquisitions, or M&A. However, business brokers do participate in mergers and acquisitions activities when it involves a transaction between two or more smaller companies. Business Brokers and M&A firms do overlap activities in the extremes of their market. These extremes are called the Transitional Market, or TransMarket.

Business brokers and sellers

Services provided to seller as client

Upon signing a listing contract with the seller wishing to sell the business, the brokerage attempts to earn a commission by finding a buyer for the sellers' business for highest possible price on the best terms for the seller. To help accomplish this goal of finding buyers, a business brokerage commonly does the following:

• Ensures Confidentiality--Brokers have established systems in place to protect the confidentiality of a business.
• Appraisals--Most business owners have no idea what their business is worth. Certified Business Brokers are trained in business valuation and can help business owners understand the true value of all their hard work and sacrifice.
• Market Knowledge--Brokers make their living selling businesses. They are in the market on a daily basis conversing with Buyers. A local business broker understands the local market as well as what a business is worth.
• Saves time and stress
• Listing the business for sale to the public, often on a Multiple Listing Service, in addition to any other methods.
• Based on the law in several states, providing the seller with a business condition disclosure form, and other forms which may be needed.
• Preparing necessary papers describing the business for advertising, pamphlets, tours, etc.
• Advertising the business. Advertising is often the biggest outside expense in listing a business.
• Being a contact person available to answer any questions about the business and to schedule showing appointments
• Ensuring buyers are prescreened so that they are financially qualified to buy the business; the more highly financially qualified the buyer is, the more likely the closing will succeed.
• Negotiating price on behalf of the sellers. The seller's agent acts as a fiduciary for the seller. By not being emotionally tied to the transaction, Business Brokers are in a position to more effectively negotiate on a Seller's behalf. This may involve preparing a standard offer to purchase contract by filling in the blanks in the contract form.
• In some cases, holding an earnest payment in escrow from the buyer(s) until the closing. In many states, the closing is the meeting between the buyer and seller where the business ownership is transferred and the businesses name is conveyed.

Business brokers attract prospective buyers in a variety of ways, including listing limited details of available businesses on their websites and advertising in business newspapers and magazines. Brokers also directly approach prospective buyers and sellers to gauge interest.

The "listing" contract

Although there can be other ways of doing business, a business brokerage usually earns its commission after the business broker and a seller enter into a listing contract and fulfill agreed-upon terms specified within that contract. The seller's business is then listed for sale, often on a Business specific Multiple Listing Service (MLS) in addition to any other ways of advertising or promoting the sale of the property.

In most of North America, a listing agreement or contract between broker and seller must include the following: starting and ending dates of the agreement; the amount of compensation due to the broker.

Brokerage Compensation

There are three forms of Brokers compensation; hourly, retainer, and success fee (commission upon a closing). A Broker may use any one, or combination of these when providing services. The most common form of compensation is a success fee commission where the payment of a commission to the brokerage is contingent upon finding a satisfactory buyer for the business for sale, the successful negotiation of a purchase contract between a satisfactory buyer and seller, or the settlement of the transaction and the exchange of money between buyer and seller. Just as major investment banks normally charge a retainer for services, more business brokers have started to embrace this practice as well. The retainer helps covers the upfront costs incurred by the broker to perform services and shows a commitment on the part of the client (seller or buyer) that they are serious. Certain types of merger and acquisitions transactions involve securities and may require that an intermediary be securities licensed in order to be compensated.

In North America success fee commissions range from 5% to 12%. Usually, the smaller the transaction, the larger the commission. "Main Street" businesses, those with revenues between $100,000 and $1,000,000 can expect commissions to average bewteen 8% - 12%. Commissions are determined between the client (seller or buyer) and their broker and are normally paid at closing.

The standard commission is likely to be lower in the United Kingdom (see Lehman scale). Commissions are negotiable between seller and broker. The commission could also be paid as flat fee or some combination of flat fee and percentage, particularly in the case of lower-priced businesses, businesses in the multi-million dollar price, or other unusual business assets. The details are determined by the listing contract.

Out of the commission received from the seller, the broker will typically pay any expenses incurred to do the work of trying to sell the listed businesses, such as advertisements, etc.

All compensation to a broker paid by a third party must be disclosed to all parties.

Training of business brokers

Several national and state associations offer on-going broker training and professional development programs. The American Business Brokers Association , Broker Service Network (BSN), International Business Brokers Association (IBBA), and The Maxbizvalue Network offer initial broker training to individuals who want to enter the profession.

Licensing of business brokers

In the US, licensing of business brokers varies by state, with some states requiring licenses, some not; and some requiring licenses if the broker is commissioned but not requiring a license if the broker works on an hourly fee basis. State rules also vary about recognizing licensees across state lines, especially for interstate types of businesses like national franchises. Some states, like California, require either a broker license or law license to even advise a business owner on issues of sale, terms of sale, or introduction of a buyer to a seller for a fee. According to an IBBA convention Seminar in 2000, at least 13 states required Business Brokers to have a Real Estate license. The following require a license to practice as a business broker: Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Michigan, Minnesota, Nebraska, Nevada, Oregon, South Dakota, Utah, Wisconsin, and Wyoming.

Certain types of merger and acquisitions transactions involve securities and may require that these "middlemen" be securities licensed in order to be compensated.

Trade Associations

There are several national trade associations of business brokers and intermediaries. These trade associations normally offer networking opportunities and other services for members while providing information to the public about buying and selling a business. The most recognized trade associations are:

Alliance of Merger & Acquisition Advisors (www.ammaonline.com)
American Business Brokers Association (www.americanbusinessbrokers.org)
Association of Professional Merger & Acquisition Advisors (www.apmaa.com)
International Business Broker Association (www.ibba.com)

These national associations all provide some form of designation credentials for members. The designations are normally based on a combination of education and work experience.

Accredited Business Intermediary (ABI) an ABBA designation
Certified Business Intermediary (CBI) an IBBA designation
Accredited Merger & Acquisition Advisors (AMAA) an APMAA designation
Certified Merger & Acquisition Advisor (CM&AA) and AMMA designation

In additional to the national organization, there are numerous state associations such as Texas Association of Business Brokers, Florida Association of Business Brokers, and California Association of Business Brokers.