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5 Steps to Starting a Small Business in the US in 2009

1. Business Plan

In your business plan you are going to determine everything from who is going to be involved in running the business, how to find suppliers/salespeople, financing, marketing, locations, product resources. It is basically a blueprint about what systems you are going to put in place and what differentiates your business from others. A good resource for learning how to create a small business plan can be found on the sba.gov website.

2. Registration

It is important to register your business name with the US government, requirements will vary by state. An important resource online that provides name registration requirements is below.
Check out the business.gov website and search for registration guidelines.

3. Marketing Plan

Once you have a decided business in place and have analyzed the industry and determined what services/products you are going to provide and how you are going to develop those services/product and what resources you are needed you should devise a marketing plan. How are you going to sell those needed product/services? Who is going to buy them? Where are they going to buy them? How are you going to distribute them? Why are people going to buy them from you?

4. Financing

Once you have a solid business plan and marketing plan in place it is a good time to look at financing options. Determine your cash flow needs on a monthly, annual and 2-5 year plan if possible. How many products/services are you going to have to sell to make a profit. Are you going to finance the business yourself, through alternative lending sources or through your local bank or credit union. Determine the different financing options that are available for your specific business model and which one is best suited for your business. It may require upfront capital or ongoing capital or very little capital but may need capital when ready to expand. There are a variety of sites to find information on small business financing. One good one is businessfinance.com that identifies needs if you are already in business, starting or business or plan on buying a business. Check out the businessfianance website.

5. Finding your 1st customer

This is the most important thing you will need to do. Having your first customer and contract will do many things for you. It will determine how much current demand their is for your product/service. It will also determine what price the market is willing to offer for your product/service. You will also learn why people decide to choose your product over others or not.

For help from experts with financing, marketing, SEO, small business service and products check out our website. It will help get you started.

The 10 Key Sources of Small Business Finance

Many owners of failed businesses will tell you that finding the right funding at the right time can be a critical factor in business survival, and ultimately success. It’s a process that is fraught with problems, is never easy, and has only gotten worse since the global credit crunch, but is the wrong type of finance worse than no finance at all?

Many developing businesses go through several different stages of funding as the business grows, and may who’ve been through the process are firm believers in the old adage “you need to kiss a few frogs to find your prince”.

We know from the statistics that many small businesses fail with the first few years of trading, but we also know that sometimes the initial owner’s investment, of perhaps just a few pounds to kick start an idea will eventually lead to a stock exchange listing.

From personal experience I know that a large proportion of businesses can suffer through having the ‘wrong’ type of finance at the wrong time, or poor advice, so here’s a quick guide to help you through the maze and to see what type of funds might be right for your aspirations. (At least you won’t face humiliation with an audience of millions!)

Owner’s funds: Easily accessible, used at start-up and during early expansion.

Friends and associates: Beware of mixing family/friends and business, consider all possible outcomes and what impact that may have on your personal life. Ideal for start-up, early stage/pre-trading and expansion.

Clearing banks: Overdraft and short/medium term loans, mostly to finance short term acquisitions such as office equipment and support irregular trading patterns and cash flow shortfalls. All the news may be about the banks not lending to business, but if you don’t ask you don’t get!

Factoring/invoice discounting: Alternative cash flow management tools, consider the potential impact on your relationship with your clients, there are potential positives and negatives associated with having a third party involved in the accounts receivable process.

Leasing/HP: Further support for short term capital acquisitions, a good potential source of leverage but consider all the taxation implications of each form of leasing/HP finance.

Merchant banks: Medium/long term loans – usually for larger sums, and often more a case of who you know…

Grants and other government support: Usually restricted geographically, by time or for specific industries or purposes, another potential case of who you know not what you know, and likely to exponentially diminish with government cut-backs.

Corporate venturing: Backers will be looking for a return and this may impact upon your commercial decisions, again this can have both positive and negative implications but go into it with your eyes open, you may end up feeling like your working for someone else again!

Most business owners will be all too familiar with many of the common forms of funding and will be comfortable with approaching the recognised sources for support when it’s needed. It’s the next two that set the pulse racing, sometimes seen as the holy grail of SME funding – visible to all, but impossible to reach.

Business Angels: Usually (but not exclusively) for start-up or early stage funding in relatively small amounts, but relatively small amounts of the right type of finance can have a huge impact on the fortunes of a small business, never underestimate the potential positive influence that an experienced angel could have (apart from the purely financial impact).

Private equity/venture capital: Development funding provided for a share of the equity and usually requiring significant growth within 3-5 years, can produce serious amounts of money, but can again be a case of who you know – so get networking in the right circles!

Depending on whose view you believe, angel funding and venture capital are generally seen as:

  • Requiring a ridiculous rate of return
  • Demanding a majority shareholding or
  • Not interested in deals below £5m

By the nature of the investment, more successful investors will often be looking for larger opportunities as they experience a law of diminishing returns, Warren Buffet for example is constantly on the lookout for potential opportunities to invest in family run businesses but it’s not worth his while unless they’re $1 billion+ opportunities.

In my experience, however, although growth is a prerequisite to enable everyone concerned to benefit from a good return on effort and capital employed, generally funds are available if you have a credible plan, a presentable team and a skip load of enthusiasm.

It’s also true that angels and private equity firms see hundreds of business plans and are only able to invest in a few, but funding is usually available for dynamic businesses with genuinely well prepared plans. Consequently, approaching those who are actually interested in your product, service or sector and presenting your proposal in an acceptable manner does help your chances of success – as does having the right advisers. Do not underestimate the power of investing in some good “direct response” style copywriting to give your presentation the best chance of standing out. Those poor people dragged through the Dragon’s Den on television would all have fared far better with a little help and preparation from experienced corporate consultants, and a little bit of that magic salesmanship.

Small Business Needs – Tips on How to Tackle Them

Every small business has specific needs to be able to run effectively. Without this, they would have no proper order of running things and the business could even fail. Some of them help in the day-to-day operations of the business while others make it easier to hold the business together. One of the most fundamental needs for a small business is a reliable and well established accounting system.

Your accounts should always be in proper order and it should always be a priority for your business. Since you may not have the time or the proper know how it may be wise to acquire the service of a qualified accountant. They are extremely useful especially when it comes to your tax issues. This is because it is easy to have incorrect figures when handling small business finances. When you have an independent unit to look after your finances they may be able to detect a problem better than you would and correct it.

Trustworthy and dependable employees are another important small business need. They are the glue that holds the business together. Employees are the part of the business that usually rubs shoulders with the customers. They are the representatives and faces of the business. That is why it is necessary that they are qualified and respectful to the customers.

For your small business to succeed and run smoothly, you also require a solid marketing strategy. With this you will research what your customers need, what is missing in an already existing market and how to expand to accommodate the ever changing needs of the customers. It is essential that you market your products or services because this is where you will get your income from. You need to find the most effective way to advertise your business without spending too much money while at the same time ensuring the message has reached your customers.