A budget maps out where your business currently is and where you plan for it to be, like a road map. A budget will also help you cope with the inevitable roadblocks and detours you will encounter on your way to where you want your business to be.
Budgeting is important, estimating and matching expenses to revenue helps small business owners determine whether they have enough money to fund operations, expand the business and generate income for themselves.
Without a budget a business runs the risk of spending more money than it brings in or not spending enough money to grow the business and compete.
The performance and cash flow of your business should never be a surprise, create your budget and update it often, this will help you decide which areas of your business are over performing and which are under performing.
Below you will find some helpful tips in creating the road map for your business, your business budget:
1. Create a short term and long term budget. A new business should have a more detailed budget that is included in your business plan along with a monthly budget forecast for the upcoming year and a 3-5 year estimate of revenue and expenses. Established businesses will find the best forecast for the future is prior performance so follow the same rules as a new business but base your estimates on prior revenue and expenditures.
2. Create expense categories to calculate what you will spend and when you will be spending it. This will help eliminate surprises like the extra expense of having to hire temporary employees for the holidays.
3. Create three versions of your short-term budget. Conservative - your worst-case scenario, expected - what you truly expect to happen and optimistic-your best case scenario. It is important to be realistic by not using too much wishful thinking and therefore losing the benefit of your budget.
4. Calculate the number of employees you will need for your business. Employees are often the biggest expense for most businesses, by determining how many employees you will need to produce goods or services you will be able to estimate what kind of a strain employees will put on your businesses budget.
Budgeting is an easy and essential way for business owners to forecast current and future revenue and expenses. Your goal when creating your budget should be to make sure there is enough money available to keep your business up and running, to grow your business, to compete and to ensure a solid emergency fund.
Tuesday, 10 January 2012
Monday, 19 December 2011
Keys To Success: Preparation For Tomorrow Begins Today
Preparation and success go hand in hand. Rudy Guiliani, the mayor of New York City when 9/11 occurred had this to say: "Your success will be determined by your ability to prepare."
Here you are as possibly a self-employed business owner, entrepreneur, solo professional or an individual seeking greater personal growth and success. What do you do?
Preparation and Success
There are no overnight successes. There is a great deal of preparation that leads to success. Then when the situation presents itself you increase your odds of leading it successfully. You may get recognition, like Guiliani, overnight, but his success and the leadership he displayed were years in the making.
Hopefully, you will never have a September 11 type situation in your life where there is no plan in place. When you are a leader you must take action and rely on whatever preparation has taken place.
In the instance of 9/11 there were emergency drills that the fire and police departments followed. This helped greatly during the crisis. Preparation was key in addressing the crisis and having a pointed and effective response.
Preparation: It's Not In What You Do
When people look at preparation they think of rehearsing procedures, learning new skills, experimenting with potential improvements. All of these are part of preparation. But, even more important in preparation is what you believe.
If you believe that your preparation is good then when the time arrives you will use it. If you don't believe in how you are preparing then you will respond with some other plan. Very often this is where bad things happen.
How often have you seen a situation where the commentary was, "If they had only followed procedures..." Yes, the preparation was there but the leaders and people didn't believe in it. And the results were worse because of it.
Yes, you must believe in how you are preparing.
Preparation Changes Your Attitude
As a business coach, one of the things that I emphasize to my clients it that if you believe your success tomorrow depends on what you do today, then you will treat today differently. When you treat today differently by embracing personal development and personal growth for tomorrow, the results in your business and life are going to be different.
With an attitude of preparation for something better you understand that what you receive tomorrow depends on what you believe today. Believe in preparation.
If you are preparing for today, the chances are, you won't be repairing tomorrow. Preparation is the foundation for growth in your business and life.
When looking at the keys to success, always remember much of success is about continuous preparation.
Here you are as possibly a self-employed business owner, entrepreneur, solo professional or an individual seeking greater personal growth and success. What do you do?
Preparation and Success
There are no overnight successes. There is a great deal of preparation that leads to success. Then when the situation presents itself you increase your odds of leading it successfully. You may get recognition, like Guiliani, overnight, but his success and the leadership he displayed were years in the making.
Hopefully, you will never have a September 11 type situation in your life where there is no plan in place. When you are a leader you must take action and rely on whatever preparation has taken place.
In the instance of 9/11 there were emergency drills that the fire and police departments followed. This helped greatly during the crisis. Preparation was key in addressing the crisis and having a pointed and effective response.
Preparation: It's Not In What You Do
When people look at preparation they think of rehearsing procedures, learning new skills, experimenting with potential improvements. All of these are part of preparation. But, even more important in preparation is what you believe.
If you believe that your preparation is good then when the time arrives you will use it. If you don't believe in how you are preparing then you will respond with some other plan. Very often this is where bad things happen.
How often have you seen a situation where the commentary was, "If they had only followed procedures..." Yes, the preparation was there but the leaders and people didn't believe in it. And the results were worse because of it.
Yes, you must believe in how you are preparing.
Preparation Changes Your Attitude
As a business coach, one of the things that I emphasize to my clients it that if you believe your success tomorrow depends on what you do today, then you will treat today differently. When you treat today differently by embracing personal development and personal growth for tomorrow, the results in your business and life are going to be different.
With an attitude of preparation for something better you understand that what you receive tomorrow depends on what you believe today. Believe in preparation.
If you are preparing for today, the chances are, you won't be repairing tomorrow. Preparation is the foundation for growth in your business and life.
When looking at the keys to success, always remember much of success is about continuous preparation.
Thursday, 15 December 2011
5 Simple Tactics to A Successful Online Business
With around 277 million people worldwide connected to the internet, it isn't hard to tell why there are so many internet businesses developing and emerging overnight. Even though there are numerous ideas and services offered online, most businesses just lack simple tactics and business strategies taken to make them successful.
By developing and following tips and guidelines, it is possible to use the internet to develop a strong market, but to also, create higher conversion rates, maximize search engine optimizations, and create loyal customers all with a few simple steps.
Create a Name
One of the most elementary steps of having a successful business is creating a captive domain name. You must create a domain name that is unique, original, and most importantly, memorable. Once the marketing and advertising has created a buzz for your business, be sure to create a website that potential customers can remember and best reflects your product.
Website Layout
Once you have generated a unique and memorable domain name, it's now time to get to work! The layout of your website then determines the staying power of your product. It is possible to have a great product and excellent customer care, but if a website is deemed difficult to understand, or hard to navigate, you can lose potential customers just as fast as you have gained visitors. Be sure to include clear and concise information that has a definitive call to action from your visitors.
Also, make all contact information visible and easily accessible. By having a simple layout, you eliminate any levels of confusion for first time visitors keeping their attention, and possibly turning them into customers. Test the website out with close friends or associates that are willing to give you honest and helpful feedback. One rule of thumb: if your associate needs a help button, then it's back to the drawing boards!
Promote, Promote, Promote
The promotion of your site can be done in multiple effective ways. With today's technology, it seems that the internet is a given to promoting an online business, but why stop there? The key to successful promotion is knowing your target audience and placing carefully selected ads in relevant places. For example, if you have an excellent coffee product that you offer, it would be smart to advertise in herbal stores, and places that sell coffee. Although we know live in a digital age, the power of fliers, word of mouth, and other crafty ideas still provide effective ways of promotion. Giveaways, contests, and cross marketing are all excellent ways to provide a sample of your services to invest in a potential customer as well.
Your Online business and Social Network Sites
Now that you have a unique web address, and easy-to-use web layout, it is time to bring traffic. By using other social networking sites, such as Facebook and twitter, you can not only cross promote your website, but use these platforms as a means to create other pages promoting your business. Linking all of your website information to these sites, can increase traffic and turn visitors into customers. The more promotion done via Facebook groups and fan pages, the higher your chances of spreading your product to a larger audience and possibly increasing future, loyal customers.
Find a Mentor
Although having an effective plan, and implementing groundbreaking ways to promote your product, and advertisement equals a good start, it is always smart to confide in someone who has already walked that path. Find someone who has tried and succeeded in your field of interest. The valuable advice, can go a long way to your success and also, help you avoid pitfalls and common mistakes.
By developing and following tips and guidelines, it is possible to use the internet to develop a strong market, but to also, create higher conversion rates, maximize search engine optimizations, and create loyal customers all with a few simple steps.
Create a Name
One of the most elementary steps of having a successful business is creating a captive domain name. You must create a domain name that is unique, original, and most importantly, memorable. Once the marketing and advertising has created a buzz for your business, be sure to create a website that potential customers can remember and best reflects your product.
Website Layout
Once you have generated a unique and memorable domain name, it's now time to get to work! The layout of your website then determines the staying power of your product. It is possible to have a great product and excellent customer care, but if a website is deemed difficult to understand, or hard to navigate, you can lose potential customers just as fast as you have gained visitors. Be sure to include clear and concise information that has a definitive call to action from your visitors.
Also, make all contact information visible and easily accessible. By having a simple layout, you eliminate any levels of confusion for first time visitors keeping their attention, and possibly turning them into customers. Test the website out with close friends or associates that are willing to give you honest and helpful feedback. One rule of thumb: if your associate needs a help button, then it's back to the drawing boards!
Promote, Promote, Promote
The promotion of your site can be done in multiple effective ways. With today's technology, it seems that the internet is a given to promoting an online business, but why stop there? The key to successful promotion is knowing your target audience and placing carefully selected ads in relevant places. For example, if you have an excellent coffee product that you offer, it would be smart to advertise in herbal stores, and places that sell coffee. Although we know live in a digital age, the power of fliers, word of mouth, and other crafty ideas still provide effective ways of promotion. Giveaways, contests, and cross marketing are all excellent ways to provide a sample of your services to invest in a potential customer as well.
Your Online business and Social Network Sites
Now that you have a unique web address, and easy-to-use web layout, it is time to bring traffic. By using other social networking sites, such as Facebook and twitter, you can not only cross promote your website, but use these platforms as a means to create other pages promoting your business. Linking all of your website information to these sites, can increase traffic and turn visitors into customers. The more promotion done via Facebook groups and fan pages, the higher your chances of spreading your product to a larger audience and possibly increasing future, loyal customers.
Find a Mentor
Although having an effective plan, and implementing groundbreaking ways to promote your product, and advertisement equals a good start, it is always smart to confide in someone who has already walked that path. Find someone who has tried and succeeded in your field of interest. The valuable advice, can go a long way to your success and also, help you avoid pitfalls and common mistakes.
Saturday, 10 December 2011
Cash Is Still King
We've all heard the saying, "cash is king", but do we really believe it? Lately, it seems that fewer of us are true believers, but yes it is true, cash is still king and it probably will always be that way.
I have been working with one client who has a lot of things in the hopper but no cash to make them happen. In fact, my client is at the end of his rope and barely hanging on for dear life. He probably can't pay me right now.
Another client found a great deal on a piece of real estate that houses an automotive shop. He seems to have tied it up at well below "market value" but he does not have the cash to make a sizable enough down payment that would entice a bank to finance the remainder of the purchase price.
How much cash is enough and what is the secret to getting and keeping cash? If I had the all knowing answer to these questions, I would probably win some kind of Noble prize. There are a lot of deals out there, but you can only take advantage of them if you have cash or at least a way to obtain the cash, legally.
Some of the things that can cause cash problems in your business are too few sales, too many sales, buying too much inventory, not charging enough for your products or services; and the list can go on and on.
As we manage our businesses we go through cash cycles where we have loads of cash and then almost no cash. Back and forth, from one to the other, then back again. When we have "lots of cash" we tend to let our guard down and get complacent. This is not the way to manage a business. Managing your company's cash is one of the first lessons you should learn.
But, how do we know how much cash is enough to run our business? You want to keep enough to handle any unforeseen events, but you do not want to have "excess" cash sitting idle in a bank that pays you nothing for its use.
We can figure out how much cash we need by performing a simple cash flow analysis (CFA). There are many canned, fill in the blank forms to help you create a CFA. You accounting software will probably have some kind of report that you can create a CFA from your records. Your accountant will also be able to help you.
Here is a summary of the theory of creating a CFA. First, you need to figure out how much money you have on hand and how much you need to operate the business for a certain period of time, let's say one month. You need to know your costs, both fixed and variable. Then you factor in large cash needs like, loan repayment, capital improvements, equipment purchases, and so forth. At the end of whatever time period you are working with, calculate, with the simple math of adding and subtracting, to figure out how much cash you will have "leftover" or how much you will need to get through that prescribed period of time. If you have excess cash at the end of the period, carry it forward to the next period. If you need cash to get through the first period of time, then you need to figure out how or where to get a cash injection, which will equal the negative number at the end of your calculation. Keep going for 12 months, each month carrying forward the positive or negative cash number from the prior month. This will give you a way to plan your cash needs for the whole year.
It is easier than it sounds. If you cannot do it yourself, get help from your accountant or hire a financial consultant. Having outside eyes looking in, may be a healthy exercise to go through. Either way, you need to know where you cash is at all times because, "cash is king". Good luck.
I have been working with one client who has a lot of things in the hopper but no cash to make them happen. In fact, my client is at the end of his rope and barely hanging on for dear life. He probably can't pay me right now.
Another client found a great deal on a piece of real estate that houses an automotive shop. He seems to have tied it up at well below "market value" but he does not have the cash to make a sizable enough down payment that would entice a bank to finance the remainder of the purchase price.
How much cash is enough and what is the secret to getting and keeping cash? If I had the all knowing answer to these questions, I would probably win some kind of Noble prize. There are a lot of deals out there, but you can only take advantage of them if you have cash or at least a way to obtain the cash, legally.
Some of the things that can cause cash problems in your business are too few sales, too many sales, buying too much inventory, not charging enough for your products or services; and the list can go on and on.
As we manage our businesses we go through cash cycles where we have loads of cash and then almost no cash. Back and forth, from one to the other, then back again. When we have "lots of cash" we tend to let our guard down and get complacent. This is not the way to manage a business. Managing your company's cash is one of the first lessons you should learn.
But, how do we know how much cash is enough to run our business? You want to keep enough to handle any unforeseen events, but you do not want to have "excess" cash sitting idle in a bank that pays you nothing for its use.
We can figure out how much cash we need by performing a simple cash flow analysis (CFA). There are many canned, fill in the blank forms to help you create a CFA. You accounting software will probably have some kind of report that you can create a CFA from your records. Your accountant will also be able to help you.
Here is a summary of the theory of creating a CFA. First, you need to figure out how much money you have on hand and how much you need to operate the business for a certain period of time, let's say one month. You need to know your costs, both fixed and variable. Then you factor in large cash needs like, loan repayment, capital improvements, equipment purchases, and so forth. At the end of whatever time period you are working with, calculate, with the simple math of adding and subtracting, to figure out how much cash you will have "leftover" or how much you will need to get through that prescribed period of time. If you have excess cash at the end of the period, carry it forward to the next period. If you need cash to get through the first period of time, then you need to figure out how or where to get a cash injection, which will equal the negative number at the end of your calculation. Keep going for 12 months, each month carrying forward the positive or negative cash number from the prior month. This will give you a way to plan your cash needs for the whole year.
It is easier than it sounds. If you cannot do it yourself, get help from your accountant or hire a financial consultant. Having outside eyes looking in, may be a healthy exercise to go through. Either way, you need to know where you cash is at all times because, "cash is king". Good luck.
Monday, 28 November 2011
Four Strategies For Small Business Growth
If you are a small business owner, it is very easy to lose focus of your primary vision, mission and objective, and invest your precious time in worthless ideas. As an entrepreneur, executive, or leader, focusing on small business growth opportunities can be quite challenging when you're dealing with imminent crises that distract you away from strategic business planning.
It is crucial therefore that you spend quality time to develop business strategies for navigating your company, setting clear goals and objectives, and achieving your desired results.
In 2011, a blueprint of the biggest problems small businesses are facing was released by the Institute of Directors. The report clearly identified the key problems challenging small business growth and how they are impacting their survival. The purpose of this article is to help you understand how to turn those problems around to grow your business and increase profitability.
1. Lack of clearly defined plan
Did you know that many small business owners run their businesses without a business plan? Obviously, there is not business that operates without a plan that grows.
If you want your business to grow faster, make sure you invest quality time regularly in business planning activities. If you already have one, it is important also to revise it and update with current trends.
2. Ineffective leadership
Many times you discover that almost 85% of small business owners and executives are saddled with the responsibilities for almost everything in their business. You constantly find yourself in the habit of switching from your primary leadership functions to managing thereby losing the concentration you need to grow your business.
Every time you lose focus of your primary leadership roles and responsibilities, you invariably position your business to fail. You must always focus on your core priority functions to maintain your effectiveness.
3. Lack of execution
Lack of execution is probably the major problem business owners face.
Did you know that leaders and executives spend less than one hour a month to develop business strategies? Worse still, they do not execute the strategies they developed and their employees are never aware of them either.
It doesn't matter how realistic your business strategies look on paper, if you are not committed to take enough action to implement them, the business will suffer. Make sure to break your strategies down into small actionable steps you can achieve daily. Begin with the smallest part first.
4. Marketing and sales effectiveness
No matter what your business is established for, if you are not making enough sales to cover your cost and make profit; your business will probably not grow. Marketing and sales are the key elements of business survival and should be properly planned.
Planning your marketing and sales entails that you must understand the values your products or services are meant to deliver to your customer and develop business strategies to actually create them. You see, you must learn to approach your prospect from the point of view of providing solution to their problems. Succeeding at this means that you must list the cures, values and benefits your products/services offer your target market.
It is crucial therefore that you spend quality time to develop business strategies for navigating your company, setting clear goals and objectives, and achieving your desired results.
In 2011, a blueprint of the biggest problems small businesses are facing was released by the Institute of Directors. The report clearly identified the key problems challenging small business growth and how they are impacting their survival. The purpose of this article is to help you understand how to turn those problems around to grow your business and increase profitability.
1. Lack of clearly defined plan
Did you know that many small business owners run their businesses without a business plan? Obviously, there is not business that operates without a plan that grows.
If you want your business to grow faster, make sure you invest quality time regularly in business planning activities. If you already have one, it is important also to revise it and update with current trends.
2. Ineffective leadership
Many times you discover that almost 85% of small business owners and executives are saddled with the responsibilities for almost everything in their business. You constantly find yourself in the habit of switching from your primary leadership functions to managing thereby losing the concentration you need to grow your business.
Every time you lose focus of your primary leadership roles and responsibilities, you invariably position your business to fail. You must always focus on your core priority functions to maintain your effectiveness.
3. Lack of execution
Lack of execution is probably the major problem business owners face.
Did you know that leaders and executives spend less than one hour a month to develop business strategies? Worse still, they do not execute the strategies they developed and their employees are never aware of them either.
It doesn't matter how realistic your business strategies look on paper, if you are not committed to take enough action to implement them, the business will suffer. Make sure to break your strategies down into small actionable steps you can achieve daily. Begin with the smallest part first.
4. Marketing and sales effectiveness
No matter what your business is established for, if you are not making enough sales to cover your cost and make profit; your business will probably not grow. Marketing and sales are the key elements of business survival and should be properly planned.
Planning your marketing and sales entails that you must understand the values your products or services are meant to deliver to your customer and develop business strategies to actually create them. You see, you must learn to approach your prospect from the point of view of providing solution to their problems. Succeeding at this means that you must list the cures, values and benefits your products/services offer your target market.
Sunday, 27 November 2011
Critical Advisers to a Small Business
Many small businessmen overlook the value of key advisers in the establishment and/or operation of their business believing that they can rely on public sources, trusted friends, or their own experience to handle any likely problems that may arise. After all, third-party experts can be expensive and it is sometimes difficult to see the benefit they bring to the table.
If you're a small business owner, I may be "preaching to the choir". If you're currently thinking of starting a small business, please seriously consider my advice because it might save you countless headaches and stress in the future. Having managed companies for more than 40 years, I would recommend, without qualification, that every businessman needs ready access to:
A Certified Public Accountant ("CPA")
Many people confuse a book-keeper with a CPA, but they are not the same. The latter requires a college degree, years of apprenticeship under a practicing CPA, successful completion of a rigorous examination, and licensing requirements in each state in which the CPA will work. A CPA is usually paid an hourly fee for his services.
A good accounting and management reporting system begins with the creation of the Chart of Accounts that is appropriate to each business; the list of accounts being not so complex as to generate reams of useless data, nor so simple that key relationships are missed. Creating and maintaining an appropriate Chart of Accounts is essential in the production of concise, correct, understandable financial statements and management reports. There is nothing more frustrating than working in a turn-around situation with unreliable numbers!
By training and periodically auditing my employees' work, my CPA gave me the comfort that nothing was amiss in the financial records. I enjoyed the best of both worlds - timely, accurate books and reasonable costs. My CPA saved me money in my business as well as on a personal level. For example, Federal, state and local governments often regulate aspects of a business and require regular reports with draconian penalties when filings are late or incorrect. Taxes - employee withholding, FICA, income, property, etc. - are significant costs of every business and require specific treatment to minimize their impact. In addition, the decisions on every day business transactions affecting purchasing, inventory, purchase and sale of machinery, etc. are increasingly complex and obtuse, but directly affect how much profit you will have at the end of the day. A good CPA will help you make better decisions that fit your unique company and circumstance, whether you're just starting out or ready to retire.
A Licensed Attorney at Law
According to Legal Reform Now, an organization dedicated to progressive reform of the legal system, over 15 million lawsuits - one every 2 seconds or one for every 12 adults - was filed in the United States in 2002, the last year for which such information is available. Law Department Management states that there are over one million lawyers in the United States, each of which manages 20 to 40 lawsuits at a time. The likelihood that you as a small business owner will be sued or will sue a third-party is extremely high. For that reason, you should have a close, personal relationship with an attorney and his number on your speed dial.
The primary reason I work with a lawyer when setting up a company and in its subsequent day-to-day operation is simple - I need legal counsel to protect me, my company and my employees from future unknown and unexpected liabilities. The type of business structure of a company, whether a sole proprietorship, a partnership or a simple corporation, can determine whether or not personal assets are at risk, the ability to attract investment capital or loans, and the amounts of any tax which might become due. A lawyer's advice concerning potential patents, trademarks, or copyrights as valuable assets may be critical in protecting value, just as is employment contract language and requirements which can determine who can hired or fired.
Virtually every phase of a business operation has legal implications. Establishing an employee benefit plan, whether a pension or a profit-sharing plan, imposes future actions which can be costly and inconvenient. Adding or buying out a partner often requires compliance with a pre-determined procedure and a pricing mechanism. Contracts with vendors as well as contracts with customers need periodic reviews to ensure continued compliance with trade regulations and laws which can alter, even abrogate, language within specific contracts.
Of course, an attorney is essential in a law suit. Lengthy, complex court papers must be filed within strict timelines to ensure matters progress as expected. The consequences of possible outcomes, good and bad, must be assessed and valued in order to make key decisions whether to negotiate and settle or proceed to trial. Even after a judgement has ben rendered, the process continues as the case can usually be appealed.
My attorney, who has handled my personal and business affairs for more than 30 years, is a key member of my business advisers. He becomes a "Superman" when I'm in the midst of any legal troubles.
A Trusted Coach/Consultant
Owning and running a small business is undoubtedly one of the most difficult, most demanding position in the business world. According to the Small Business Administration, approximately one quarter of new companies remain in business after ten years; more than 25% fail in the first year. Imagine starting a business at age 45, risking all of your savings and depending upon the success of the business to pay your living expenses, only to have to start over again in your mid-50s!
Success is never guaranteed since all businesses are vulnerable to threats that cannot be foreseen or controlled - a new competitor, a loss of a critical supplier, the introduction of technology which makes your products or services obsolete, etc. A small business owner certainly earns every good thing that comes his way because he has generally paid a high emotional, social and familial price for any success.
"Change" and our reaction to it is the ultimate cause of stress, according to the psychologists. A small business is particularly impacted by change, lacking the resources to blunt or delay its impact. As a consequence, decisions must be made rapidly, most often without the benefit of complete or reliable information. In effect, the business owner has to fly by the seat of his pants, trusting his experience and intuition that his decisions are more right than wrong. A good friend of mine who owns a local trucking company often says he feels "like he is throwing darts".
The pressure of being the person in charge who is not really "in control" of the outcome can wreak havoc on the strongest personality, causing depression, family problems and/or substance abuse. When I've been under stress, I have found the best course for me is to take a break, get a breath, and talk over the situation with a trusted, experienced counselor.
A coach should understands you and sympathize with your position, hopefully having sat in the same seat as a CEO and small business owner. A good coach will recognize that pouring out your anger and frustrations is a coping mechanism, not a signal that you are giving up or admitting defeat, but a necessary phase in which you can safely engage privately without harming the morale of your employees. When you are ready, the coach will help you logically and dispassionately dissect the problem and examine it from every angle to be sure you understand its causes and effects as much as possible before making a decision on how to correct it.
A coach should rarely brings answers to your discussions, relying instead upon questions and stories of his experiences when facing a similar circumstance. He will encourage and enable you to develop your own solutions, to think critically without the disadvantages of biases, misinformation, and half-truths. By helping you to "listen and trust yourself", he will give you the confidence to take responsibility and make hard decisions. In short, he should make you a better manager and leader, able to cope with everyday change and stress.
Small business owners need the right resources to succeed. Competent accountants, attorneys, and coaches are critical resources and often make the difference between success and failure.
If you're a small business owner, I may be "preaching to the choir". If you're currently thinking of starting a small business, please seriously consider my advice because it might save you countless headaches and stress in the future. Having managed companies for more than 40 years, I would recommend, without qualification, that every businessman needs ready access to:
A Certified Public Accountant ("CPA")
Many people confuse a book-keeper with a CPA, but they are not the same. The latter requires a college degree, years of apprenticeship under a practicing CPA, successful completion of a rigorous examination, and licensing requirements in each state in which the CPA will work. A CPA is usually paid an hourly fee for his services.
A good accounting and management reporting system begins with the creation of the Chart of Accounts that is appropriate to each business; the list of accounts being not so complex as to generate reams of useless data, nor so simple that key relationships are missed. Creating and maintaining an appropriate Chart of Accounts is essential in the production of concise, correct, understandable financial statements and management reports. There is nothing more frustrating than working in a turn-around situation with unreliable numbers!
By training and periodically auditing my employees' work, my CPA gave me the comfort that nothing was amiss in the financial records. I enjoyed the best of both worlds - timely, accurate books and reasonable costs. My CPA saved me money in my business as well as on a personal level. For example, Federal, state and local governments often regulate aspects of a business and require regular reports with draconian penalties when filings are late or incorrect. Taxes - employee withholding, FICA, income, property, etc. - are significant costs of every business and require specific treatment to minimize their impact. In addition, the decisions on every day business transactions affecting purchasing, inventory, purchase and sale of machinery, etc. are increasingly complex and obtuse, but directly affect how much profit you will have at the end of the day. A good CPA will help you make better decisions that fit your unique company and circumstance, whether you're just starting out or ready to retire.
A Licensed Attorney at Law
According to Legal Reform Now, an organization dedicated to progressive reform of the legal system, over 15 million lawsuits - one every 2 seconds or one for every 12 adults - was filed in the United States in 2002, the last year for which such information is available. Law Department Management states that there are over one million lawyers in the United States, each of which manages 20 to 40 lawsuits at a time. The likelihood that you as a small business owner will be sued or will sue a third-party is extremely high. For that reason, you should have a close, personal relationship with an attorney and his number on your speed dial.
The primary reason I work with a lawyer when setting up a company and in its subsequent day-to-day operation is simple - I need legal counsel to protect me, my company and my employees from future unknown and unexpected liabilities. The type of business structure of a company, whether a sole proprietorship, a partnership or a simple corporation, can determine whether or not personal assets are at risk, the ability to attract investment capital or loans, and the amounts of any tax which might become due. A lawyer's advice concerning potential patents, trademarks, or copyrights as valuable assets may be critical in protecting value, just as is employment contract language and requirements which can determine who can hired or fired.
Virtually every phase of a business operation has legal implications. Establishing an employee benefit plan, whether a pension or a profit-sharing plan, imposes future actions which can be costly and inconvenient. Adding or buying out a partner often requires compliance with a pre-determined procedure and a pricing mechanism. Contracts with vendors as well as contracts with customers need periodic reviews to ensure continued compliance with trade regulations and laws which can alter, even abrogate, language within specific contracts.
Of course, an attorney is essential in a law suit. Lengthy, complex court papers must be filed within strict timelines to ensure matters progress as expected. The consequences of possible outcomes, good and bad, must be assessed and valued in order to make key decisions whether to negotiate and settle or proceed to trial. Even after a judgement has ben rendered, the process continues as the case can usually be appealed.
My attorney, who has handled my personal and business affairs for more than 30 years, is a key member of my business advisers. He becomes a "Superman" when I'm in the midst of any legal troubles.
A Trusted Coach/Consultant
Owning and running a small business is undoubtedly one of the most difficult, most demanding position in the business world. According to the Small Business Administration, approximately one quarter of new companies remain in business after ten years; more than 25% fail in the first year. Imagine starting a business at age 45, risking all of your savings and depending upon the success of the business to pay your living expenses, only to have to start over again in your mid-50s!
Success is never guaranteed since all businesses are vulnerable to threats that cannot be foreseen or controlled - a new competitor, a loss of a critical supplier, the introduction of technology which makes your products or services obsolete, etc. A small business owner certainly earns every good thing that comes his way because he has generally paid a high emotional, social and familial price for any success.
"Change" and our reaction to it is the ultimate cause of stress, according to the psychologists. A small business is particularly impacted by change, lacking the resources to blunt or delay its impact. As a consequence, decisions must be made rapidly, most often without the benefit of complete or reliable information. In effect, the business owner has to fly by the seat of his pants, trusting his experience and intuition that his decisions are more right than wrong. A good friend of mine who owns a local trucking company often says he feels "like he is throwing darts".
The pressure of being the person in charge who is not really "in control" of the outcome can wreak havoc on the strongest personality, causing depression, family problems and/or substance abuse. When I've been under stress, I have found the best course for me is to take a break, get a breath, and talk over the situation with a trusted, experienced counselor.
A coach should understands you and sympathize with your position, hopefully having sat in the same seat as a CEO and small business owner. A good coach will recognize that pouring out your anger and frustrations is a coping mechanism, not a signal that you are giving up or admitting defeat, but a necessary phase in which you can safely engage privately without harming the morale of your employees. When you are ready, the coach will help you logically and dispassionately dissect the problem and examine it from every angle to be sure you understand its causes and effects as much as possible before making a decision on how to correct it.
A coach should rarely brings answers to your discussions, relying instead upon questions and stories of his experiences when facing a similar circumstance. He will encourage and enable you to develop your own solutions, to think critically without the disadvantages of biases, misinformation, and half-truths. By helping you to "listen and trust yourself", he will give you the confidence to take responsibility and make hard decisions. In short, he should make you a better manager and leader, able to cope with everyday change and stress.
Small business owners need the right resources to succeed. Competent accountants, attorneys, and coaches are critical resources and often make the difference between success and failure.
Friday, 25 November 2011
How To Choose A Business Name
If you're staring a business, whether online or bricks and mortar, a lot of the steps are the same. Here are some ideas for how to choose a business name - one of the first steps you'll need to accomplish.
This information ONLY applies to the U.S. I'm not qualified, nor do I know any rules and laws governing business names in other countries.
Official disclaimer: I am not an attorney. I write this information from my own experiences owning businesses for over 20 years. However, business laws do change. My best advice: consult an attorney or accountant.
CHOOSING A NAME How to choose a business name? The name should be catchy and tell what you do - although I say that with a bit of reservation. Today, it's more important than ever to "brand" your business. If you're faced with the choice of a name that describes what you do, or a name that will come to be known as a brand, choose the latter.
There are many examples:
"Google" vs. "Web Search Inc."
"Gawker" vs. "The Gossip Site Inc."
"LinkedIn" vs. "The Business Entrepreneur Network Inc."
The best choice may be combining a "branding" name with a description. For instance, "Zoozle Puzzles For Children"
Try to pick a name that's easy to remember, the shorter the better, and would make a good website URL address - even if you don't plan on being online. Today, it's imperative that EVERY business be online, even if it's only to offer information on your bricks and mortar location.
NAME AVAILABILITY: Before finalizing the name, make sure it's available. Most states have an online database where you can go to search your name. If it's not available, you'll have to pick something else.
The general question should be asked (and will be asked if you're ever sued for using someone's registered name): "Is my name different enough from another business so customers won't confuse my business with another?" If there could be confusion, choose another name. Better yet, be totally original and avoid the potential for lawsuits.
REGISTERING YOUR NAME: If your name is available, and you're business entity will be a sole proprietorship, you'll just need to register the name with your state as a (DBA - Doing Business As). Although you'll be filing your taxes under your own name, you'll have the business name listed as DBA, then the name of your business.
Once registering your name, no one else will be able to use it and/or register it in your state. However, someone in another state WILL be able to use the same name. Courts have held though, that because the businesses are in different states, the possibility of confusing one business with another is very small. If you want protection everywhere, you'll need to trademark your name (see below).
If you're a sole proprietor, you do NOT need to register the name with the IRS to get an employee identification number unless you will be hiring employees. If you have no employees, your social security number is you EIN. If you start hiring employees, you WILL need to register with the IRS to get an EIN number. Of course this gets even more involved as you'll now be withholding taxes from your employee's paychecks.
If you're forming a LLC or other type of corporation, your business corporation name WILL need to be registered with the IRS as well as your state. Forming a corporation is beyond the scope of this article as there are a lot of rules and regulations governing their registration and actions. It's best to consult an attorney if you're forming any other business entity other than a sole proprietorship.
THE EASIEST METHOD: For the easiest method, form a sole proprietorship with zero employees.
TRADEMARKING: Next you'll have to decide whether to trademark the name or logo.
Most people starting their own business want to start small and don't have a lot of start-up money. Trademarking will cost and because of this most people skip this step. That's OK. Trademarking is not necessary.
The big disadvantage to NOT trademarking your logo is that you're not protected if someone steals it. So, basically, it's a question of how much risk you're willing to take. It's a tradeoff. More risk for no cost. Higher cost, less risk. That's something only you can decide.
Once the steps above are complete, your name is officially ready to do business and you're well on your way to your new life!
This information ONLY applies to the U.S. I'm not qualified, nor do I know any rules and laws governing business names in other countries.
Official disclaimer: I am not an attorney. I write this information from my own experiences owning businesses for over 20 years. However, business laws do change. My best advice: consult an attorney or accountant.
CHOOSING A NAME How to choose a business name? The name should be catchy and tell what you do - although I say that with a bit of reservation. Today, it's more important than ever to "brand" your business. If you're faced with the choice of a name that describes what you do, or a name that will come to be known as a brand, choose the latter.
There are many examples:
"Google" vs. "Web Search Inc."
"Gawker" vs. "The Gossip Site Inc."
"LinkedIn" vs. "The Business Entrepreneur Network Inc."
The best choice may be combining a "branding" name with a description. For instance, "Zoozle Puzzles For Children"
Try to pick a name that's easy to remember, the shorter the better, and would make a good website URL address - even if you don't plan on being online. Today, it's imperative that EVERY business be online, even if it's only to offer information on your bricks and mortar location.
NAME AVAILABILITY: Before finalizing the name, make sure it's available. Most states have an online database where you can go to search your name. If it's not available, you'll have to pick something else.
The general question should be asked (and will be asked if you're ever sued for using someone's registered name): "Is my name different enough from another business so customers won't confuse my business with another?" If there could be confusion, choose another name. Better yet, be totally original and avoid the potential for lawsuits.
REGISTERING YOUR NAME: If your name is available, and you're business entity will be a sole proprietorship, you'll just need to register the name with your state as a (DBA - Doing Business As). Although you'll be filing your taxes under your own name, you'll have the business name listed as DBA, then the name of your business.
Once registering your name, no one else will be able to use it and/or register it in your state. However, someone in another state WILL be able to use the same name. Courts have held though, that because the businesses are in different states, the possibility of confusing one business with another is very small. If you want protection everywhere, you'll need to trademark your name (see below).
If you're a sole proprietor, you do NOT need to register the name with the IRS to get an employee identification number unless you will be hiring employees. If you have no employees, your social security number is you EIN. If you start hiring employees, you WILL need to register with the IRS to get an EIN number. Of course this gets even more involved as you'll now be withholding taxes from your employee's paychecks.
If you're forming a LLC or other type of corporation, your business corporation name WILL need to be registered with the IRS as well as your state. Forming a corporation is beyond the scope of this article as there are a lot of rules and regulations governing their registration and actions. It's best to consult an attorney if you're forming any other business entity other than a sole proprietorship.
THE EASIEST METHOD: For the easiest method, form a sole proprietorship with zero employees.
TRADEMARKING: Next you'll have to decide whether to trademark the name or logo.
Most people starting their own business want to start small and don't have a lot of start-up money. Trademarking will cost and because of this most people skip this step. That's OK. Trademarking is not necessary.
The big disadvantage to NOT trademarking your logo is that you're not protected if someone steals it. So, basically, it's a question of how much risk you're willing to take. It's a tradeoff. More risk for no cost. Higher cost, less risk. That's something only you can decide.
Once the steps above are complete, your name is officially ready to do business and you're well on your way to your new life!
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