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Financial News

Do You Have A Startup Business Spirit?

This article speaks directly to your personality. I don’t discuss planning and budgeting but you should be aware that you will need to plan, plan, plan but don’t get caught up in “paralysis by analysis” and no matter how good your business plan you will not receive money from “angel investors” or banks unless you’ve already started your business and have a proven track record with a large upside – which you don’t have if you are a business startup.

First, here’s the quick synopsis of opening your own business

Register with your county or state as a business.

Start doing business.

Really? That’s all there is to it? Yes, that’s all there is to it. Unfortunately, its so easy that many businesses fail because they do exactly like what’s above. There are a few skills that complement success and generally you’ll either have those skills or will develop those skills over time. Here’s what you can expect.

You’ll work crazy hours.

You’ll be a salesperson.

You’ll always worry about your business.

You’ll become an expert on many things because you can’t afford to hire experts – especially in the beginning.

What many don’t realize is that you are always a salesperson. If you don’t like sales then having a business of your own is not for you. If you don’t have an outgoing personality you’ll need to develop one quickly. Whether you’re set up a booth at a county fair, open a retail mall location, or work from home you will be a “people-person”. You will network with others, attend events, and more. Sounds like fun? For many it is but remember while you’re somewhere having fun someone has to run the business. Here come the crazy hours.

If you’ve got customers or clients then you’ve got projects that you haven’t been working on while you’re out selling yourself and your company. So now after the fun is over you will begin your day’s work. Remember that while you were out networking you were creating your future (and probably spending money) but now you’ve got the present to think about. How do you pay your bills? What about the customer that is late with the payment? Now the worrying begins.

You’ve got bills to pay and customers to satisfy. You may have a payroll to meet or at least you’ll need to make ends meet. Is there enough cash flow or have you extended credit because you are new and the thought of work, any work was too much to pass up? How do you collect on unpaid invoices without offending and thereby cause other problems? Oh the fun never ends.

Lastly (for this article), you’ll need to learn how to be an expert. There’s nobody to do the day to day accounting but you or hopefully, a significant other so you’ll become a bookkeeper and bill payer. There’s nobody to design graphics for your marketing materials so you’ll learn software programs and design principles for creating brochures, flyers, and business cards because those first few you did were not exactly professional quality.

The list goes on but the point is made. It’s not easy to be a business startup. it’s not easy to stay in business. But along with the pressure comes a rush of excitement that you can’t get working for someone else. That feeling of excitement knowing that you are in control of your own future and nobody can take that away from you. So if you’ve got what it takes then go for it.…

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Small Business Ideas

Common Cents When Financing Your Small Business

“The Best Advice is always free”

Starting a small business requires bucket loads of wisdom. Financial wisdom offered through various media is not always inherently beneficial to the reader and their business.

The foundations for financial excellence are elementary and logical; here is a new perspective on financial insight to starting your small business. Making use of purely scenario planning this illustrated scenario would be a recommendation for all businesses that you intend financing.

The average cost of setting up a franchise and small business in U.S.A. is currently in the $300,000.00 to $ 474 000.00 marks, a sizeable sum taking into consideration the prevailing economic climate and business confidence levels.

Loans or Finance

In order to stimulate the economy, banks are eager to finance new business as this has a long-term stimulus on the economy and contributes to job and wealth creation.

Most individuals do not have the entire capital amount available to finance their new venture and financing becomes the preferred and logical route to market.

Taking into consideration the average price of a new franchise $474 000.00, the average cash portion of financing that particular business would be $ 153 000.00 which includes the initial, cash joining or franchise fee.

This would equate to a financing portion of $321 000.00 or 68% of the initial set-up cost of the business.

From a personal and statistical point of view, the gearing or debt ratio is too high and the minimum recommended debt ratio should never exceed 50%.

Why is gearing so important?

It is nerve-wracking and soul-destroying to build a business for you only to allocate the major share of your income and profits to servicing a loan and the commensurate interest payments. The strain on the cash flow and reserve funds is too great, and the business rapidly becomes a financial risk to the entrepreneur and the banks concerned.

“The Free Advice”

Total Cost

When using the above figures as our reference and benchmark, if the inclusive cost of the business is $474 000.00.

It would be prudent to assume that if shares were offered at $1.00 per share then the business would have 474 000 shares on offer.

Share Distribution

Taking my advice of a 50% gearing or financing ratio, the business when financed by the entrepreneur would allocate to the entrepreneur, 50%(237 000 shares) of the shares currently on offer (The portion he/she has paid cash for)

The remaining 50% of shares on offer would be the right and technical ownership of the banks or financing institution.

The Thinking Motivating This Strategy

As the entrepreneur pays off the loan, their ownership or share-holding increases exponentially.

Goals are easy to set, time and financing permitting the entrepreneur sees his/her goal of 100% ownership as achievable and desirable.

When the bank is essentially a partner in your business the relationship changes, the entrepreneur can take the banks perspective into consideration as they are a valuable share-holder, the logic of having a “you” and “me” approach becomes a “we” approach to the business.

Any extra funds available will inherently go toward servicing the loan on the business.

The Ultimate Lesson

That our thinking and approach has changed, it is a recommendation that one ignore financing by financial institutions and approach friends, acquaintances, and family to finance your business using this share-holding approach. The entrepreneur develops a fiscal policy that is easy to equate and calculate, profit distribution is just as equitable, and the entrepreneur has a clearer indication of the status of the business free of financing and interest costs and charges.…

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Business News Articles

How to Develop Your Ability to Synthesize Information – A Key Entrepreneurial Skill

Successful business ownership is all about gathering information, picking through it to decide what makes sense, and making sound decisions based on all available data. Synthesizing information in this way can be a difficult task to master, but a little time and practice can make you an expert in no time.
Synthesis is the final step in critical thinking — after you analyze, evaluate, and organize information from different sources, this step requires you to put it all together. Many people struggle with this step, but really all you are trying to do is select the best answer, or combination of answers, from a wide range of data. In fact, the odds are that you do this on a regular basis anyway, whether you are aware of it or not.
As you may have noticed, the internet is flooded with all sorts of conflicting information on just about any subject. Trying to find the best answer by surfing the web requires that you consider the merit of a variety of sources and choose for yourself which idea makes the most sense to you. You might find yourself coming up with an entirely different answer than those you read is synthesizing.
Essentially what is happening is that by examining and evaluating a number of sources, you are identifying consistencies and relationships between and among the data. With these connections, you are better able to create a new idea that can be supported by the various knowledge you have picked up along the way. Not everyone will come up with the same solution, and your own solution may not always turn out to be right, but by starting with a wealth of data you improve the odds of missing something important.
In the context of entrepreneurship, synthesis is a critical skill for every step, from planning your business idea to growing your company. Most first-time entrepreneurs do not have a complete toolshed of basic business knowledge, much less the details of their own product, market, and competition. Gaining this knowledge is essential, but very little of it has clear right and wrong answers. In any type of business, there are hundreds of small decisions to make along the way, each of which has the potential to make or break the entire venture.
For example, a critical portion of business planning is developing your marketing plan. In order to create an effective marketing plan, it is essential to study the basic tenets of marketing, the various routes for getting your message out, and the best ways to convince your target market that your product or service is the way to go. Search for “Marketing Plan” on the internet, and you will get hundreds of results, millions of ideas and opinions, and several dozen sales messages telling you that they hold the “secret” to effectively marketing your product. The reality is that there is no right answer for every business, so you must review and analyze a multitude of information, then come up with a plan that incorporates the best of these ideas that will be most effective for your business.
The key to effective synthesis is to collect enough data to understand the fundamental concepts. Use a variety of sources and mediums to develop your knowledge base — read articles and books, talk about your ideas with those in the know, watch what happens around you. Look for opinions that differ from your own to ensure you have considered all different perspectives. The more information you have to draw from, the easier it will be to make informed, justifiable decisions to keep your startup on track and on the road to success.…