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Hot Tips for Starting A Small Business, Part II

There are thousands of new small businesses created each year in the United States; some are successful, some are not. There is one element that greatly influences whether a new small business will have a successful outcome. The factor is a solid business plan.

The business plan should cover the business basics from goals to management, from marketing to operations. A business plan is a map for success, so don’t go lightly on the details. A good business plan should include the executive summary, a definition of operations, an outline of the marketing strategy, and how the small business will be financially managed.

The Executive Summary

The executive summary should give a overview of the business and should include the following areas:

* A detailed description of the business and its goals

* Identification of the business ownership and the legal structure.

* Discussion of skills and experience the potential owner and partners (if applicable) bring to the business.

* Identification of advantages the business will have over its competitors.

The Business Operation

The business operation section should cover the daily happenings of the potential small business and should include:

* An explanation of how the business will be managed on a day-to-day basis.

* Discussion of hiring and personnel procedures.

* Discussion of insurance, lease or rent agreements, and issues pertinent to the business.

* What equipment will be necessary to produce the products or services.

* An Outline of the production and delivery of products and services.

The Marketing Plan

The correct marketing strategy is important for any small business. Getting the word out and building a customer base is necessary and essential. Therefore, the marketing plan should include:

* A description of the product or service of the business specializes in.

* Identification of the customer demand for products or services.

* Identification of the market, including its size, location and demographics.

* An explanation of how the product or service will be advertised and marketed.

* An explanation of the pricing strategy.

Financial Management

Effective financial management will also help determine how successful a potential small business will be. Therefore, important elements of this to include in the business plan are:

*Explanation of the source and amount of initial equity capital.

* Estimated start-up costs.

* Projected operating expenses.

* Development of a monthly operating budget for the first year.

* Development of an expected return on investment and monthly cash flow for the first year.

* Projected income statements and balance sheets for a two-year period.

* Discussion of a break-even point.

* Explanation the business owner’s personal balance sheet and method of compensation.

* Discussion of who will maintain the accounting records and how the records will be kept.

* A provision of a “what if” statements that address alternative approaches to problems that may develop.

In addition to all of the essential elements of a business plan as outlined above, other important areas to consider when starting a small business are legal requirements as well as registration and accounting requirements.

Legal Requirements

All small businesses must comply with federal, state and local laws and regulations. Small business owners need to know the legal requirements affecting their business. Talking with an attorney can also be very helpful.

Registration Requirements

One can’t just start a business without approval from their state; in other words, practicing without a license can result in all kinds of legal problems and can leave one vulnerable to law suits. It is always important to obtain a license or work certificate, a sales tax number, and to open a separate business account. Once the business grows to the point where employees are needed, then the small business owner is responsible for withholding income and social security taxes as well with complying with state laws covering employee health, safety, and minimum wage.

The U.S. Business Advisor has a site that assists small business owners in meeting the necessary requirements for their particular state.

Lastly, don’t forget about zoning! Be aware of local towns and cities zoning requirements. If they are not followed, a small business can easily be shut down.

Careful planning by way of a business plan and ensuring that all legal requirements are met are important processes for any potential new small business owner. If done correctly, these essential elements can greatly impact the success of a new small business.

Copyright 2005 Monique Hawkins

Secured Business Loans: Before You Take That Big Business Leap

Business loans form a significant part of lending industry. With so many people applying for business loans, you must be wondering how many of them actually get them. The increase in amount of business loan every year shows the swelling in approval rate of business loans. So, what are your chances of getting business loans? I say, attach a security to business loans and your chances are bright. Secured business loans are loans for specific purpose namely business. There is no better terminology for business loans with opportunity.

Before you apply for secured business loans check out you borrowing capacity. Every business is different which means there will be no universal method to know the cost and therefore budgeting is important. This enables you to deduce whether you can afford secured business loan or not.

Tuck in those documents! Generally a secured business loan borrower would require few of the documents for approval. First and foremost is the business profile – discussing the nature of business, annual sales, length and time of business ownership. In case of new business you would require to project the loan plan and how the business would be successful enough to pay back the loan. For secured business loans the loan application will also include a loan request. This will include the type of secured business loan required, the amount and the purpose (how the funds will be used).

Since business loan is secured details about collateral will be integral. The collateral and its details, equity available, equity in the business, borrowed funds and existing cash should be included in details of collateral. Along with collateral you would be required to provide financial statements for yourself and your business. Be ready with personal and business financial statement for three years and current financials statements. With secured business loans you will be asked for owners, partners, officers, stockholders with more than 20% of etc.

A lender looking at your Secured business loans application will search for repayment. A borrower can provide a brief repayment statement which includes sources, cash inflow and other information to support it. With secured business loan you are providing collateral which will mean an additional form of security for the lender. This the lender will certainly like! He will have additional repayment to fall back on when you don’t have required funds to payback the loan. Both personal and business assets can act as collateral for secured business loans. If the business loan borrower does not have collateral he should have co-signer who should have collateral to pledge. In a secured business loans application, collateral will be the second most identifiable source of loan repayment after business cash inflow.

A lender will inquire whether your personal or business credit is good or not. Get your latest credit report and make sure it carries accurate information. As you have applied for secured option it means that you would have better choices. However, credit score will modify the interest rates you get for secured business loans. With bad credit score you will be paying higher interest rates as compared to ones with perfect credit.

While preparing to get money it is important to see your financing options. There is both a financial and emotional component while borrowing secured business loans; your property is at stake. Make sure you are ready for it. Then do some market research. Take it as a test where you have to get the best grade. You would probably not start a business without researching the market; make sure you follow this rule while settling on secured business loan. Yet do remember that time is money. And don’t waste too much time in settling on the option.

Every big business starts out small. Secured business loans are in fact the first thing that comes to the mind and provide fundamental opportunity when one is raising money for business and can provide to those who are to those who are looking for funds for business purposes. Secured business loans are what you need when you are looking for business loans with security.

14 Essential Tips For Small Business Startup

Starting and owning your own business can be a very gratifying experience if done correctly. If done incorrectly and without the proper preparation, it can be a nightmare. Since competition in most businesses is fierce, you must become an expert at your business and develop a niche in your market.

Listed below are a few of the most important tips potential business owners need to consider before starting a business. Your preparation should be long and thorough. The more extensive your preparation is, prior to starting your business, the greater your chance of success.

Consider the following to start:

1– Make absolutely sure there is a market for your product or service, research the need for your product or service through your local chamber of commerce or library. Librarians are helpful with finding research information.

2– Use online business guides, for top business links.

3– Interview several veteran business owners in your prospective field, listen to both the positive and the negative aspects of owning and operating the type of business you are interested in. It is only AFTER many business owners start a business that they find the negatives far out way the positives. Be willing to listen to the negative aspects of your prospective business, so you will not fall into an “I wish I had known,” trap.

4– Take business classes in your prospective field. Many community colleges or small business incubators at major colleges offer small business colleges. Consultants also offer classes, many can be found online.

5– Obtain a business lawyer for advice. You can sign contracts after you talk with a lawyer or before. An experienced business owner will tell you to speak with a business attorney before you sign a contract. Speaking to an attorney after you sign a contract, is usually too late.

6– If you have to sign a lease for your business operation, make absolutely sure you consult with a business lawyer before you sign.. Business leases have many hidden clauses that are unfavorable to small businesses. This includes leases for equipment as well as occupation of real estate property.

7– Obtain a Certified Public Account (C.P.A.) for advice in setting up a financial records system required taxes to pay, and other business advice. There are many inexpensive and easy-to-use accounting software programs on the market.

8– Before hiring an attorney or C.P.A., interview several or ask reputable business owners in your field for a recommendation.

9– Consider an L.L.C. (a Limited Liability Company), to limit your personal liability. An L.L.C. is an inexpensive and relatively easy form to fill out. Contact your state department of corporations for instructions on how to sign up for an L.L.C. (contact information can usually be found on your states website), obtain a form book from the library or office supply store for instructions on how to add the articles of organization, this is a guide you will use to organize your business. Keep this for your records. Consult with an attorney if you do not understand the articles of organization or you need to include partners.

10– Set up your business as cost-effective as possible. That is, be very careful not to overspend, especially at the beginning. It takes time for most businesses to become profitable; so don’t quit your day job. In most cases that is a few years away.

11–If you are not funding your business with your own funds, do thorough research to find various forms of funding available for your type of business.

12– Consider a mentor to guide you through the process before starting your business and during your business life. A mentor is someone who is a veteran in your field, is not your competition, and has the desire to help someone do the great things he/she has done in your field. You can usually find a mentor in an organization or association affiliated with your business. Attend meetings in your business field and get to know the people at the top.

13– After you have done through research and spoken to several business owners in your field, write a Business Plan. This should be a well-researched, well-thought-out, business plan. This will be your guide throughout the life of your business.

14– Visit your local city offices and chamber of commerce for all of the required permits and licenses to operate a business in your city.