Is it time to start your own business
It is a simple fact that it does not matter very much what you sell, but how you sell it.
So now could be the time to start a small business, perhaps part time, so if it does fail it will not matter too much, and then as we emerge from the recession you could be ready to grow your way to a good living.
Read the information below to see if you have what it takes.
The book takes you through the process of starting a business, step by step including what pitfalls to look out for.
Check your local area and look for what is missing and could you provide it.
This wil almost certainly be the biggest decision you have ever made in your life, and you are going to need some help to make your decision sensibly, through evaluation and by knowing all the facts beforehand.
Firstly, we will take you step by step through the minefield of setting up your own business successfully and professionally. Remember if you dabble at it you will probably fail and lose your money, so if you are going to start your own business, do it right.
Then we will show you having set up your business, how to make it work, profitably.
Chapter 1
“DO I HAVE WHAT IT TAKES ?”
This is a feasibility check list for you to evaluate yourself and to evaluate your new business to see if you really have what it takes to start and run your own business and to see if your projected business has a chance of surviving in this competitive world.
Answer them truthfully especially the ones you had never even thought of and after you have completed this check list it is time for you and your partner/wife/husband to sit down and work out exactly what will be expected of you in time and effort, what it is going to cost you (there are probably many costs you had not thought of)
Many new businessmen are not adequately prepared to go into business. Whilst they possess a burning desire, motivation and talent, many have not taken time to properly investigate and research the business they are interested in starting.
The first question you should be asking yourself before you go any further is;
"Should I go into this business?"
Answering this question involves first a preliminary assessment of both personal and project considerations. The first seven questions ask you to do a little introspection. Are your personality characteristics such that you can both adapt to and enjoy small business ownership/management?
We then go on to your “ Specific Personal Considerations ” before moving on to your intended business in “ General Project Description ” and then “ Requirements for Success ” meets the basic requirements for a successful new project, you must be able to answer at least one of the questions with a “yes.” But in “ Major Flaws ” a “yes” response to on of the questions would indicate that the idea has little chance for success.
The next sub heading is “ Desired Income ” and this set of questions should remind you that you must seek both a return on your investment in your own business, as well as a reasonable salary for the time you spend in operating that business.
Then how to assess your “ Competition ”, and look at “ Sales ” and “ Supply ” what will be your “ Expenses ” then after “ Miscellaneous ” we conclude this chapter with “ Venture Feasibility ”.
If after checking your and your businesses feasibility, you are convinced you are ready to start your new business, we move on to
Chapter 2
PLANNING...A VERY IMPORTANT INGREDIENT
Planning is the essence of building your business from an idea to full fruition. Planning gives you a path to follow, it makes your future what you want it to be.
Unless you know how to get where you are going, you will end up somewhere else....Think about that!
Suppose you lived in New York and decided to drive to L.A., would you use a map? of course you would. But what if you didn't? It would be a very long trip and if you didn't know your geography, you probably would not make to California, never mind L.A. .
Starting or running or business without proper planning is like driving from New York to L.A. without a map. Planning will show you your destination and the best road to get you there.
We take you through “ Why Planning is Critical ” and although planning is critical to your success, it is often overlooked in favour of intuition or "gut feeling." we also show other obstacles that hinder planning in “ Planning Can Be Difficult ”
Your business will not succeed just because you want it to succeed. Determining if there is a market for your products or services is the most critical item of planning. Once you decide on your product or service, you must analyse your market -- a process involving interviewing competitors, suppliers and new customers.
In “ Understanding your market ” before you begin researching your market, you should take a brief, but close, look at your product or service from an objective standpoint. In terms of a checklist, you should remind yourself of certain questions. “ Market Research ” is important because many businessmen fail to complete this critical section of their business plan. Collecting research data can be frustrating unless you have defined your goals and organised the collection and analysis process.
We assist you with “ Questions To Ask ” but knowing your market not only requires an understanding of your product, but also an understanding of your customers' socio-economic conditions. “ Market Data ” is a help in finding more market information for your market data. Once you have obtained and analysed the information, it will become the foundation of your business plan. Research data is important because it supports the basic assumptions in your financial projection - your reason for going into business.
To be successful, a small business owner must know the market. Market research is simply an orderly, objective way of learning about people - the people who will buy from you !
Chapter 3
THE BUSINESS PLAN
(medium to large businesses)
Having done your feasibility and planning check, the next step is by far the most important, your BUSINESS PLAN with which you hope to persuade your bank manager or similar to lend you a lot of their money, knowing as he/she does that more than half of new businesses will go under within two years.
So this has to be the best letter you have ever written.
What goes in a business plan? This is an excellent question, and it is one that many new and potential small business owners should ask, but oftentimes don't ask. The body of the business plan can be divided into four distinct sections:
1) the description of the business,
2) the marketing plan,
3) the financial management plan and
4) the management plan.
This Business Plan is far too immense to itemise in total, it is enough to say it covers every aspect of creating a comprehensive plan to put before your bank manager. It is about 24 pages long and covers any queries he could think of.
Just a few of the sub divisions included in the 4 sections above include; Product or Service Analysis, Marketing Strategies, Marketing Tips, Tricks & Traps, Income Projection Statement, Balance Sheet, Assets, Liabilities, Monthly Cash Flow Projection and many, many more.
Chapter 4
BUSINESS PLAN
For smaller businesses
Similar to the one previous but to a much lesser degree, it is a far simpler business plan for people starting a smaller and simpler type of business.
Of course you can make your own business plan up, by taking what you need from both the large and small business plans.
Your business plan should be complete, clear, neat and accurate. It will be an extension of you and your business.
The length of a good plan will vary from a few pages to several dozen pages. The plan should provide a sound "blueprint" for your business and entice any reader to want to know more.
Chapter 5
WORKING FROM HOME
Almost everyone needs or wants more money coming in, and with this desire most would like to start some sort of extra income-producing project. The trouble is, not many of these people seem able to fit "a second job" into their time schedules.
It's true that most people are busy, but extra time for some sort of home-based extra income-producing project can almost always be found. It may mean giving up or changing a few of your favourite pastimes - such as having a couple of beers with the lads or watching TV - but if you score big with your extra income project, you will have all the time you want, for doing whatever you want.
The cottage industry, an old-fashioned enterprise, is enjoying a revival so strong that it's difficult to find out just how many people are now working at home. Because women now enter business at a rate five times faster than men, the trend of operating from home is growing. A natural starting place for many businesses seems to be the kitchen or spare room.
The list of services that have been successfully operated from home is endless: chimney sweeping, maid services, messenger services, wake-up and answering services, home nursing, mail order businesses, party planning, dog grooming, kitchen planning and organising, and others too numerous to mention. As you explore the question, "Home Entrepreneurship: Is It For You," let your thoughts run freely through the possibilities until you can target exactly the right type of business for your skills, your home space, your market, and your part of the country.
Home Entrepreneurship: Is It For You? The first step in deciding whether to start a business is to ask yourself this important question: "Do I have what it takes to be an entrepreneur?" Studying the characteristics of successful business owners will help you to tell whether your personality traits, experiences, and values are similar to those who have succeeded. And assessing your experience, skills, and life goals will also help you decide if you want to invest the energy, time, and resources that successful entrepreneurship requires.
Who is the "Typical" Entrepreneur? What makes an entrepreneur successful is a hotly debated and vigorously researched subject. An expert on entrepreneurial problems, has developed a questionnaire to help you determine your "Entrepreneurial Quotient." Write your answers on a blank page, then read on to discover what is believed characterises the typical entrepreneur. (A very interesting set of questions)
Are You Ready, Willing, and Able? Having studied the characteristics of others who have succeeded, survey your reasons from our questions for wanting a home-based business. Answering these questions will provide reality testing for ideas that can sound incredibly glamorous when chatting with friends or seductively attractive when you are irritated or bored by your present job. Have you underestimated your abilities? Overestimated them? Evaluation by a friend is often more useful than a self-evaluation.
The Advantages of Home-Based Business Why have millions of people chosen to work and live in the same place? Why are cottage industries sprouting faster than we can count them? Some home-based businesses start by accident rather than by conscious design. Secretarial services, day-care centres, craft ventures, and the like may start out as weekend activities in the spare room. After a while their owners are surprised to see how profitable or enjoyable the venture has become. The glimpse of a healthy market lures them into a full-time venture. This low-risk, low-overhead, gradual kind of start-up is very attractive to new business people.
Many home-based business people cite decreased commuting time and other lessened business expenses as advantages for working at home. If your place of work is just 30 minutes away, that's five hours a week in commuting time, many pounds in petrol and car maintenance or bus / train fares, and untold stress fighting traffic. Getting out of the high-fashion rat race is a plus for many who dislike having to dress up and continually buy new clothes to feel comfortable in settings outside the home.
From here on, the rest of the chapter deals with “The Disadvantages of a Home-Based Business ” including; If you were hard at work in an office in town, it is unlikely that three children would come storming in to ask for snacks or that you would end up using the ironing board for a bookshelf or have to think twice about hiring others because they might resent working at your kitchen table. These are just a few of the problems that make the glamour of working at home fade fast.
Continuing with “Your Professional Image” then “ Your Next Steps ” followed by “ Others Have Succeeded--Why Not You?” two people tell there stories of how they developed their little part time jobs into very successful businesses.
We then take you through all the procedures of setting up your business from your home, including a formula for setting a fair price.
Promotions, Business structure, Taxes, Record keeping (including the 5 basic journals), Planning and Licensing Permits, The two people who are invaluable to you, Understanding the financial side and much, much more, finishing with “ Managing Time and Stress ”
Chapter 6
STARTING A FRANCHISE
This chapter is not intended to convince anyone to acquire a franchise. It is presented as an aid to those who have decided to invest in, or who are seriously interested in investigating, one of the many franchise opportunities available today. The material presented is an guide of basic information a person should have about a particular franchise to enable him to make a valid determination as to whether or not a specific franchise is the right one for him and whether or not the chances for returns both in terms of money and future are there.
The section, in a questionnaire format, should be used to profile and evaluate the franchises you are investigating.
Although most franchises are managed by reputable businessmen, you should keep in mind that some may be poorly managed and financially weak. Also, as in all industries, there are those of questionable practices and those who have controls and restrictions that are so one sided (in their favour) that they are unreasonable. This chapter is intended to guide your franchise investigation in such a way that you can avoid involvement with those who are not reputable.
Before getting into a thorough evaluation of any franchise, we have a quick test that can save you much time, money and aggravation.
This chapter is very long and detailed because franchising is probably the number 1 small business start ups in the country at the moment. It covers such things as what you need to know from the very first enquiries, if satisfied with the initial response from the franchiser, we then research much deeper to check the profitability of the franchise in your area.
Having satisfied yourself of the franchise potential, we continue on to the “ Financial and Legal” how to work out the “ Total Franchise Cost ” and the “ Forecast of Income and Expenses ”. It covers the “ Legal Structure ” for your business and what to look for in your “ Franchise Contract ”
We then look into “ Training ”, “ Marketing ”, “ Advertising ”, “ Support ”
We now have a step by step check list for you to use on any and every franchise you enquire about. By the time you have completed the check list you will know for sure whether or not that particular franchise is for you and whether you can make a good profit or not.
As you read through the questions, you will notice that some of them will require you to do a little homework before you can effectively evaluate a franchise. For example, you must know what your personal living expenses are before you can determine if the forecast of profits is sufficient. Depending on how much you know about the business of the franchise, you will have to think about what you will need in a training program. You might also think about and make decisions about how much capital you have and what financing you will need.
As you prepare your check list, note that the questions become increasingly more specific. An early negative reply to one of the more general questions might carry enough weight to discourage further consideration of that franchise. Be aware of this possibility and you may save considerable time and effort in the information gathering stage of the evaluation. It is suggested that you make a copy of this section for each franchise you intend to evaluate.
By having a similar format for each franchise profile, it will be easier to compare them.
Chapter 7
HOW TO PRICE YOUR PRODUCTS AND SERVICES
The primary goal of business is to make a profit. Many small businesses fail to do so because they do not know how to price their products or services. Pricing is the critical element in achieving a profit and is a factor that all firms can control.
Before setting your prices, you must understand your product's market, distribution costs, and competition. Remember, the marketplace responds rapidly to technological advances and international competition. You must keep abreast of the factors that affect pricing, and be ready to adjust.
In this chapter we cover ....... “Retail cost and pricing” – “Competitive position” – Pricing below the competition” – “Pricing above the competition” – “Price lining” – “Multiple pricing” – “Service costs and pricing” – Service cost components” – “Material costs” – “Labour costs” – “Overhead costs” – “Figuring costs and profit for a consultant service” – “Typical pricing formula”
Your pricing structure and policy are major components of your public image and are crucial to securing and keeping your clientele.
Pricing for service businesses may be more complex than retail pricing. However, the result is the same ....... cost, plus operating expenses, plus desired profit, equals the services price.
The key to success is to have a well-planned strategy. Establish your policies, constantly monitor prices and operating costs to insure profit.
Accuracy increases profits!
Chapter 8
GOOD RECORDKEEPING
IN SMALL BUSINESS
An appropriate record-keeping system can determine the survival or failure of a new business. For those already in business, good record-keeping systems can increase the chances of staying in business and the opportunity to earn larger profits. Complete records will keep you in touch with your business's operations and obligations and help you see problems before they occur. This chapter explains the characteristics of and procedure for establishing a good record-keeping system.
Accounting records furnish substantial information about your volume of business, such as how present and prior volumes compare, the amount of cash versus credit sales and the level and status of accounts receivable. In addition, good accounting records help to accomplish the following tasks ...... “The need for good records” – “Requirements of a good system” – “Methods of accounting” – “The accounting cycle” which includes
“Financial statements” The main types of financial statements are the balance sheet and the income statement, also known as the profit and loss statement. The balance sheet is a report of a business's financial condition (assets, liabilities and capital) at a specific moment in time (an example is shown in detail). The income statement is a summary of profit and loss for a specific period of time, generally a month, quarter or year (an example is shown in detail).
Other statements may be prepared. For example, a cash flow statement identifies the sources and applications of cash. Statements may also be prepared to indicate manufacturing expenses or other special areas that are of interest to you.
“Percentages” are used in financial statements to show the part of each sales pound used by the various expenses. Percentages are especially helpful for comparing current year financial statements with those of prior years to determine business trends. Percentages are also helpful for comparing your figures with those of other firms in the same line of business (an example is shown in detail).
We cover “Analysing payroll expenses” and “Ratios” accountants use various ratios to evaluate financial statements, such as ratios that assess liquidity, solvency and profitability. We will show you all these ratios.
We go through the “ Accounting services” available to you, and finish off with a “Financial check list” of things you should know Daily, Weekly and Monthly.
Chapter 9
CASH FLOW LIFELINE
Owning and managing a small business is one of the most demanding ways of earning a living, but it can also be one of the most rewarding ways.
One of the greatest challenges in operating a small business is the management of cash flow. Difficulties in this area can often be remedied by borrowing money from the bank. But loans are not always readily available and borrowing additional funds may not be the wisest or most economical solution.
We will see how small business people deal with cash flow management and alternatives to conventional bank loans.
Most of the ideas which follow are drawn from a variety of private sector periodicals, guides, management consultants and business scholars. We hope you find a tip or two that may help you manage your cash flow better.
There are a total of 43 different ideas for you to study should the need arise, broken up into sections headed “Accounts payable” – “Accounts receivable” – “Cash management” – “Charge account and cheque management” – “Consider the following precautions against cheque forgery” – “Inventory management” – “Purchasing” – “Sources of debt financing” and “Sources of equity financing”.
Chapter 10
ASSET MANAGEMENT
As the owner of a small business, you are called upon to manage many aspects of your operation--personnel, facilities, equipment, capital, sales, expenses, purchases, etc.
Unlike the owners and chief executive officers of large corporations where many managerial responsibilities can be delegated, you must have an intimate knowledge of virtually every phase of the operation. In this chapter we will concentrate on one particular phase of your managerial responsibility, management of assets.
This managerial responsibility is too often overlooked by small business owners. In the pressure of day-to-day activities, the owner's attention is focused upon building sales, solving production problems, correcting equipment failures, controlling expenses, and dealing with personnel and customer relations. Faced with all these problems, owners find little time to resolve problems that they consider less urgent, such as asset management.
The first time asset management commands serious attention is when a serious problem arises, and without planning and foresight, it almost certainly will. This is as true in growing, profitable businesses as it is in marginal businesses. In fact, the demands of a rapidly growing, profitable operation will often create the most severe problems in asset management.
This chapter is split up into “Assets” – “Liquidity” – “Asset mix” and “Problem detection” with 36 questions along the way to help you understand the definitions and examples with the answers at the end of the chapter.
Chapter 11
DO YOU NEED A COMPUTER
If you are going into retail you will already be getting a computer ….. your till.
The dearer tills of today do a vast array of things for you, many of which you personally will not need, but someone will, so from all the many possibilities you adapt the machine to your own requirements. One of the most useful tools is the ability to do your stock take.
If you are running anything apart from a very small business, you will probably need something more than just your till, you will need a P.C. or Personal Computer.
Some people think that computers can operate without people, but this is not true, just the opposite a computer cannot do anything without a computer specialist telling it what to do, in the program written for it.
We consider “Why should I computerise my business ?” – “What should I do with my computer ?” – “How will a computer save me time or money ?” – “What software do I require ?” – “How do you choose the right software ?” – “Software computer piracy” and finally “What is Software Piracy?
Chapter 12
ADVERTISING
Advertising is an investment in your business, similar to other investments to improve and expand your business. The return you receive depends on the planning and thought that precede the actual commitment and expenditure of advertising pounds. By first developing an effective advertising plan you increase the likelihood of a positive return on your advertising investment, regardless of the amount of money you spend.
The basic premise of an advertising plan requires you to thoroughly analyse the answers to key questions before you can make effective advertising decisions. So we take you through the questions “What do I want my advertising to accomplish” and “Who should my advertising speak to” going on to “What should my advertising say” . In the section titled “Where should I place my advertising” we go through the advantages and the disadvantages of the advertising media of television, radio, newspapers, magazines, direct mail and yellow pages.
Chapter 13
EXPORTING FOR THE SMALL BUSINESS
Exporting is growing in all countries. and small businesses are beginning to realise that the world is their market. Experience shows that small businesses can, and do export successfully. A business does not have to be big to sell in the global marketplace. Finding your niche in the world market is similar to finding it in your home. market. The same qualities that make small business owners successful at home apply to success in world markets: hard work and tenacity.
Many thousands of small firms are already in the global market. Yet small firms still represent the largest pool of potential exporters - companies that could export but do not. Small firms already account for almost a quarter of all exporters, and survey results show substantial export growth potential for this size firm. This should encourage smaller companies to consider the global arena.
Not everyone can become an exporter, most service businesses can't of course, but once you have got your business up and running and you think there is a possibility of you going into the exporting market, then read this chapter carefully.
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