Category Archives: Business

Should Know About 4 Signs It’s Ready for the Next Level

As a business owner it can be easy to think it is time to grow to the next level when you are overworked, running out of space and sales keep coming in. However these are not signs your business is actually ready to grow. The real signs that your business is ready for the next level has more to do with ensuring everything is in place for that growth to be sustainable.

When the seeds for growth are planted without the right foundations in place, future problems can impact profitability, culture and possibly even cause business failure. The following four issues are the real signs your business is ready to move to the next level without complication.

Corporate Structure & Financial Management
Having the right legal and financial structure in place is important to ensure that you and your business are protected while at the same time giving you the financial data to make smart decisions.

An example of legal issues to consider would be if you started out as a sole proprietor and grew the company to the point where you needed to add employees. At that point it may be prudent to consider the framework of your organization and create a Limited Liability Corporation (LLC) or Corporation. Or perhaps you are an LLC and are nearing the point where you are considering going public. If this is the case you may want to convert to a corporation. The structure you select will impact what types of capital you have access to, how you run your financials and how much personal financial protection you have.
Financial management required a keen understanding of your accounting. If you have never paid much attention and look at the accounting as more of a requirement than a helpful task, it is time to change your opinion. The bigger you get the more you need to understand your own accounting. It is hard to allocate capital and resources effectively without knowing how those investments will impact your profit. For example if you don’t understand what it costs to bring on and keep one customer you can quickly run up marketing costs that have garnered little to no payoff.

Revenue Model Mastered
Figuring out what your revenue model should be for maximizing profit can be a blend of art and science. While this does continually evolve over the life of the business, you want your current revenue model to be performing for your business today. If you are still trying to figure out how to maximize revenue at your current level, it would be wise to figure out how to maximize revenue before growing further.

For example if you are currently billing customers by bidding projects that are a flat rate but you never estimate your hours correctly, growing will only add more hours you don’t bill. More staff will only create more of a gap in your project profitability because you have more employees doing more work that you are not billing. The more you can’t or don’t bill, the lower your margin goes. Slowly you will lose profitability even with more business revenue because you have not mastered the model you are charging under.

Good Systems in Place
Without good IT and other systems in place a company that starts to expand will have problems with their quality of service or product. Additionally a lack of good systems can cause problems within your corporate culture. Staff can become frustrated. They may not know what to do or have the tools to do their job the right way, leaving the atmosphere stressed and defeated.

As if that were not bad enough, a lack of systems also makes it extremely hard to sell the company if you ever want to. Instead of having a documented process for how the company operates you have everything in your head. Unless you are staying on at the company you can’t sell a business that is 100% reliant upon you. Systems can include everything for the process your sales teams use to close a deal, onboarding new hires or how a product is created.

Have a Growth Plan
Before you grow you need a strategy for the growth. You may end up pivoting away from your original plan as you grow, but a lack of any plan will prevent you from building your business in a direction that you actually want to go. It can be tempting when you are over run with work to go out and hire someone, but if you don’t hire someone for things you need to delegate, you are making more work for yourself without removing some of your responsibilities. A growth plan should include how you are going to allocate your capital to grow, what your staffing plans are and how you are going to manage the growth on a day-to-day basis

Best 5 Incentives For Student Startups

So, you’ve been bitten by the entrepreneurial bug in college and you think that you’ve got the next big business idea? Then it’s time to stop making excuses and start making money! When you get right down to it, the benefits of starting a business while you’re still in college far outweigh the detractors. Need more convincing? Here are five reasons why starting early can work for you.

1. Because You Can Now!
The examples are all around us – Facebook, BustedTees, Google – businesses that were started by college students are hitting the big time. Now, more than ever, technology has made it possible for people to start a business with very little capital if they are willing to invest the time.

In addition, many colleges and universities offer programs and incubators that can help fledgling campus companies grow. The Collegiate Entrepreneurs’ Organization is just such a program, which provides things like networking and leadership training to thousands of students worldwide.

Student entrepreneurs can also get business input by participating in business plan competitions; they take place at many schools and often offer seed money and guidance to students with the winning business plan. To find out whether your school offers a business plan competition, check with your career services department.

2. What Do You Have to Lose?
As a college student, you’re probably used to living on the cheap. One of the biggest obstacles in the way of starting a new business a few years down the road is the question of “who’s going to pay the bills?” It’s a whole lot easier to get into a new venture when you don’t have extra bills to pay or mouths to feed, so why not take advantage of it now?

Another concern is that the business won’t succeed and you’ll lose your investment. From an investment standpoint, now is the best time to place a risky bet! When putting your own money on the line, the risks only get bigger as you get older. That’s because the younger you are, the longer you have to earn it back. It’s easy to understand why a 46-year-old with two kids and a retirement to plan for might be a bit squeamish about dropping his or her nest egg on a new business. As a college student with a whole career ahead of you, you may have the best opportunity yet.
3. Professional Experience and Networking
Would you believe that even if your business turns out to be a flop, it could still make you money? Starting a business can lead you to professional contacts that could help you close deals, land jobs and make money in the future. As an entrepreneur, you’ll deal with suppliers, clients, other entrepreneurs and maybe even journalists – people with whom you probably wouldn’t otherwise get the chance to connect.

Starting your own business in college might also land you a job with an employer you’ve never met. When they see that you have a startup on your resume, employers are going to see a candidate who is hard working, ambitious and the all-important “self-starter.” Even if your business doesn’t work out as you’d hoped, it could still be great fodder for an interview. Also, if you gained valuable skills from your business – not many looking for a first job have management experience, for example – you can use to them boost your resume.

4. Perspective
We live in a world where information is more available than ever before. Nevertheless, you might be shocked to find out how much you don’t know about the world. Starting your own business could give you a perspective that four years of college can’t provide. Typical people working typical jobs only see certain facets of the business world, but as an entrepreneur, you’ll be exposed to everything, including finance, marketing, product development and customer service. Yes, this stuff looks good on a resume, but it can also give you a competitive edge in real life, off paper.

5. Marketability
College students have one thing that many Fortune 500 companies would kill for: the ability to get into the heads of the coveted 18- to-24-year-old demographic. That’s right, the fact that you’re young can actually give you a competitive advantage! The trick is to tap into that power.

By the time many people get around to starting a business, they’ve missed the boat on catering to this age group. Because today’s 18- to 24-year-olds have money and know-how, and are ready to “evangelize” about the products they like, these people are a valuable group to get on your customer list. Having a portal into this demographic could be just the thing your campus-born business needs to get off the ground.

That portal extends to your own backyard as well. Recruiting a select group of college peers with the right mix of smarts and curiosity could be just the boost your company needs in order to be successful. College workers will cost less, and many have just as much technical expertise as their “real world” counterparts.

Know More About 5 Expensive Small Business Mistakes

Starting out on your own in a new small business can be exciting and, hopefully, very profitable. Not taking the time to research and prepare for the unexpected, however, could cost you a bundle down the road in legal fees, missed sales or bad publicity. Before you engage in your first business transaction, be sure you’re not at risk for any of these five costly newbie mistakes.
Not Registering Your Business
Since every state and local jurisdiction is different in what kind of businesses are required to have a business registration, your best bet for getting this one right is to check directly with the government agency that handles it in your area. The requirements can range from needing to register for any kind of business to simply needing one if you hire employees, lease tangible personal property, or charge sales tax. Not abiding by local and state ordinances can subject you to heavy fines, legal action or your business being shut down until it has met the requirements.
In addition to the registration of your business, be certain that all professional registrations and licenses are maintained, as well. If you worked for a company that handled the renewals of a professional registration (an investment advisor, for example), don’t assume that everything is current when you start your own freelance planning business. Serious personal fines and lawsuits could arise from practicing without it – regardless of whether you assumed it was handled.

Not Informing Your Day Job
Moonlighting, or the practice of starting out on your own while still working for your employer, is a popular and more increasingly acceptable practice for many professionals. In most situations, letting your boss know that you do some graphic design on the side after hours at your marketing agency, for example, isn’t a major issue. Some companies, however, will not find it acceptable, and pursuing a side business in the same niche as your day profession could land you in legal trouble.
How do you know if it’s ok to do some side work after hours? Just ask! Although your manager may not know the complete terms of your employment contract, the human resources or legal department will. Err on the side of caution, and get the details of any non-compete language before you start your own business.

Not Charging Taxes
Sales tax is an area of business that will vary from location to location. Since all but five states (Alaska, Delaware, New Hampshire, Montana and Oregon) charge sales tax on any number of goods and services, however, chances are good that you’ll be presented with the decision of if, and how, you will collect it in your online or brick-and-mortar business.
If you find yourself offering a product or service subject to taxation, be sure that you offer an easy way for it to be added on to the price of your wares. While it is ultimately the consumer’s responsibility to pay sales tax, the store or business will most likely be on the hook for uncollected amounts, so be certain to consult your attorney for any questions on how to go about doing it right – or you could face the scrutiny and penalties of the IRS.

Not Using a Unique Business Name
Thought you could get by with using a business name that is similar to a competitor’s? Think again. Copyright and trademark laws are vague at times, but one thing should be very clear when choosing a business name for your new endeavor: your business should not be named so that it causes confusion to customers as to what business they are buying from. In addition to complicated lawsuits that cost time and money to resolve, there is that matter of possibly being forced to change your business name to something ore distinctive. It is best to start out on the right foot, with a name that no one else is using.
Not Being Insured
Depending on the exact nature of your business, your insurance needs will vary. To avoid the possibility of litigation bankrupting you, however, it is always best to look into the types of insurance that leaders in your field recommend. Some types of insurance will be unnecessary to purchase, and depend more on the size and scope of your business than the niche. Other kinds of insurance can be obtained simply by increasing the limits of insurance you already have (automobile or home owners, for example). A reputable business insurance agent will have the information you need to prevent expensive liability claims from harming your business.

Tips to Start a Seasonal Business

Do you ever wonder how these small businesses pop up seemingly overnight ahead of any major U.S. holiday? From costume stores capitalizing on Halloween to snow plows making money removing snow, there are endless types of seasonal businesses. Launching one may seem like a capital intense, complicated endeavor, but launching a seasonal small business is an achievable goal.

Make Sure There Is Demand
When it comes to launching a seasonal business, the first thing you have to do is research the market you are thinking of getting into. You want to make sure there is a need to be filled, and there is enough demand to make money. After all nothing can be more demoralizing than starting a business and having zero customers. It’s important to know if people would buy your product or service at your price point and to be aware of the competition. Let’s say you are thinking of launching a summer swimming school out of your backyard pool. Before you can print the business cards and get the website up, you have to see if there are people that want your service. Talking to people in your community can give you a sense of if there is a market or you’ll be wasting your time and worse money.

Create The Right Business Structure
Once you’ve done your market research and you are convinced there is a market for you service, you are going to have to get all the legal paperwork out of the way. That means registering your business’ name, opening up a business checking account and creating your business structure. Many small business owners become a sole proprietor, but if your business has potential risks associated with it a limited liability company could be the better way to go. You also have to figure out what insurance you will need to protect yourself if you or someone else get’s hurt.

Promote Your Seasonal Business
Getting the word out about your new seasonal business is crucial. Promoting is easier to do these days thanks to the Internet and social media. As soon as you have your company name get on Facebook, Twitter, Instagram and any other trending website and tell the world about your business. It’s critical to try to get the word out locally and if you can afford it, create a website. The world is mobile these days, and if you aren’t on the Internet in a mobile friendly way, then you are going to miss out on hundreds of potential customers. That being said, certain seasonal businesses aren’t going to benefit as much from social media or the Internet. In that case, you want to get the word out the old fashion way: handing out flyers, attending events in the community and otherwise spreading the word about your new business through networking. Use multiple platforms to maximize your marketing efforts.

Hire Seasonal Workers
Likely, you are going to have to hire people to help out with your seasonal business; however, because you aren’t looking for full-time workers, finding help may be challenging. Thankfully, the Internet is a great resource for finding potential employees. There are numerous job boards geared toward part-time workers where you can post your job ad. You should also tap your network as well as put a sign in your storefront if you have one. Remember to be upfront about the timing of the job. The goal is to find employees that you can bring back year after year. Your costs will be lower if you don’t have to retrain a staff each season.

Keep Your Inventory Low
One of the quickest ways for a seasonal business owner to get in trouble is by having too much inventory. After all, the more money you spend on supplies and product the more money you can lose if you don’t sell enough. That’s why it’s vital to keep inventory and overhead as low as possible. Seasonal businesses only make money for a fixed period each year, so you want to maximize the amount you earn.

Manage Your Cash Flow Properly
One of the biggest challenges of running a seasonal business is managing your cash flow. Because you make a lot of money over a short period and then nothing for months after you are going to have to make sure you are handling the money correctly. The worst thing you want to do is spend it all right away leaving you with little during off-seasons. Since your cash flow is irregular, you are going to want to plan your expenditures very carefully.

Tips to Start a Business While working a Full time Job

So you want to start a business, but between working a full-time job, managing your house and taking care of the kids, you don’t know how in the world you’re going to find the time. Don’t despair, it is possible to start your dream business while working full-time. There are currently more than 28 million small businesses in the U.S. Each year, roughly 10-12% open and another 10-12% close, according to the Small Business Administration.
Step 1: Find your “why”

Why is it that you want to start a business? Do you want to leave your full-time job and work for yourself? Are you craving the freedom that comes with running your own business? Or, do you simply have a great idea and you want to sell it to make some extra money on the side? Determining your “why” will help you stay motivated during the hard and busy times that lie ahead.

Step 2: Set business hours

When you first launch your business, it’s going to seem like you’re working non-stop (most likely because you are). To avoid getting burnt out, set specific business hours outside of your day job. Ideas include waking up two hours early to work on your business, spending one hour of your time each weeknight working, working half a day on Saturdays, and then taking Sunday completely off. As busy as you’ll be, it’s important to still allow yourself some time for rest.

Step 3: Create a business plan

A detailed business plan will help you work toward your goals and be more efficient in what you hope to accomplish. Starting a business is no easy feat—there are so many details that need to be taken care of, including building a website and social media pages for your business, networking, marketing, accounting, managing employees (if you have any), and more. A business plan will help you narrow your focus and keep you on track

Step 4: Keep your priorities straight

Even if your ultimate goal is to quit your full-time job so you can have more time with your family, don’t sacrifice that time now. Starting a business will be time-consuming, but it shouldn’t be your whole life. If you’re neglecting your family, friends and other responsibilities in lieu or work, perhaps you need to re-think what it is you want from your life.

Step 5: Set specific goals

When starting a business while working full-time, you have to set clear, actionable goals each day, week and month in order to see growth and not lose your mind. At first, your goals may be tiny—things such as starting a business Facebook page and writing a description of your product. Overtime, your goals will get larger—perhaps making enough money to replace your day job or saving $5 thousand a month. Either way, specific, continuous goals are a must when starting a business.(For more, read Implementing a Small Business Social Media Strategy).

Tips to Manage Your Time When Working Full-time and Growing a Business
There’s no way around the fact that you’re going to be busy when your business is just starting out, and you’re still punching a clock every day. To maintain your sanity, here are three tips for managing your time to ensure success.

Eliminate distractions

You most likely only have 10-15 hours to devote toward your business each week. If that time is spent checking emails and scrolling through Facebook, your business is never going to get to where you want it to be. When working on your business, eliminate all distractions. Turn your phone off, block social media sites from your computer and ask your family not to disturb you unless it’s an emergency.

Hire out work

You’re on an extremely limited schedule, so instead of trying to handle each and every task on your own, hire out the things that you’re the slowest at or have no interest in doing. Perhaps you want to build a website but don’t know the first thing about how to go about it. Instead of spending countless hours figuring it out, hire someone to do it for you. By focusing on your areas of expertise and hiring people to do the rest, your business will grow at a significantly greater rate than if you tried to tackle it all by yourself.

Take time off

No one can work 24/7 forever. We all have our own breaking points, but instead of waiting for it to happen, take steps now to ensure that it never does. The best way to avoid burn out is to take time off. If you can’t give yourself an entire day off, at least allow yourself some downtime during the week and on the weekends. Schedule in time to spend with your family, your friends and doing your own hobbies. You’ll be a happier, more well-rounded business owner by taking care of yourself first.

Tips To Start A Side Business

There’s a misconception that keeps those with dreams of owning their own business from following their dreams. It’s a misconception that’s not only false but dangerous to the small business community. It’s not true that every entrepreneur sits in a rundown apartment somewhere in Silicon Valley, eats boxes of cheap “mac and cheese” and stays up all night building the next big startup. Most entrepreneurs aren’t living in poverty hoping to someday sign the papers for millions of dollars in funding only to see their dreams become the next worldwide craze.
The real landscape of entrepreneurship is much different and the reality is more mainstream than the model seen in the movies. According a Kauffman Foundation study, entrepreneurs are more likely to be between the ages of 45-54 and of minority descent. They may be starting businesses as second careers, but even those entrepreneurs don’t paint the right picture.

Another misconception is the notion that businesses have to start with a “bang,” which could mean lots of time, quitting your day job, sacrificing family time and taking a big personal and financial risk on a dream that may not succeed and burden you with large amounts of debt.

In fact, many business owners start their businesses as side ventures. They don’t quit their day jobs, but instead use the skills they’ve learned to start a side businesses. They aren’t expecting these businesses to pay the bills, but they don’t limit themselves on growth either. Starting small keeps the startup costs low. If it does fail, they have lost very little. How do you start a side business? Here are a few tips.

Make It Scaleable
So you love to cook? You could start a restaurant that will take a full-time commitment and a lot of money or you could start a weekend catering business or a mobile food truck. A business where you provide small services on your own schedule can grow as much or as little as your time allows. Look for those opportunities while you’re starting out.

Limit the Formal Marketing
You want to gain business, but investing in large marketing efforts could have two negative effects: you could waste a lot of money on a campaign that produced very little business or it could produce so much business that you don’t have the time to handle all of the orders. Instead, focus on word-of-mouth advertising and let the business grow debt free.
If you’re going to keep your day job, try not to mix the two businesses. The job that pays the bills and offers health insurance and a retirement package deserves the bulk of your time and energy, even if you’ve lost some of the passion for that position. Then when you get back home, concentrate on your side business.

Don’t Expect It to Be Easy
Before starting your side business, consider your expectations. If it’s going to be a part-time effort, expecting to rival your full-time competitors in the first few years is unrealistic. You don’t have to be the biggest to find fulfillment. Having the expectation of doing something you enjoy while making a little extra money is a healthy and appropriate goal.

Best Ways To Impress Your Boss

With declining 401(K) accounts, job sharing and cutbacks, there’s a good chance the recession may has ruined your career plans. A recession may be a dicey time to ask for a promotion, but it’s certainly a perfect moment to get positioned for an ascent up the corporate ladder. As the economy continues to heal, here are six tips to allow you to shine in your boss’s eye and be a top candidate for recognition come the year-end review.

Ask What Needs to be Done
It sounds like a no-brainer, but quiz your boss on what is the most important way you can spend your time and then make those tasks a priority, suggests Steve Langerud, director of professional opportunities at DePauw University. By tackling the objectives that your boss holds in high esteem, you’ll naturally be in a better spot to get attention and praise for your work.

Demonstrate Your Value
Forget what your job description says, create an action plan for how you can be doing your job better, says Mary Hladio, founder of Ember Carriers Leadership Group. Consult your boss and other leaders within the organization for their input, and put the ideas in motion.

Be a Team Player
Shaunti Feldhahn, author of “The Male Factor,” says high-level managers of both sexes want to know that their employees are on board with the team, especially at critical moments. “In a demanding period, you want to make sure you are sharing the same pain,” she says. For example, this might mean staying late for a meeting or pitching in on a company-wide initiative.
Brief Your Boss
Even if it’s not part of your job requirements or you haven’t been asked to do it, voluntarily offer your boss reports on your progress, says former Human Resources trainer, Mimi Donaldson. “Bosses are busy,” she says. “You cannot expect them to notice when you do something great.” But a routine email summing up your day-to-day accomplishments and where you stand on major projects is an influential way to keep your boss informed without monopolizing time.
Network Like You’re Unemployed
Langerud also advises reaching out to colleagues in other departments and requesting their feedback on how you can help them be more effective. Around the company, it will only improve your reputation, he says, and it will likely get circulated back to your boss that you are a problem-solver and a dedicated worker.

Be Heard and Seen
It’s not about gossiping around the water cooler every morning, but finding subtle, yet powerful, routes to contribute to your firm. For instance, it may be presenting a strong, thoughtful point in a meeting, or sharing innovative ideas up the ranks about ways to improve your company’s operation. Plus, being seen at company events, such as holiday parties and other social gatherings, volunteer activities and corporate retreats, shows you care about your job.

Simple Steps To Becoming Your Own Boss

Working in your pajamas, setting your own hours, having good coffee at your desk for a change … there are lots of reasons people dream of leaving the normal workplace and launching out to become their own boss. The perks are great, but the work is still hard. If you’re serious about being your own boss and working from home, you can definitely do it; here are the steps you need to take.
Know Your Financial Situation
The essential first step to becoming your own boss is figuring out how you’re going to write your own paycheck. You need to know – to the dollar – how much money your own business will have to make in order to keep operating and keep providing you with a livable wage.
Before you start mentally decorating your new home office, sit down with your financial records and your calculator. You need to not only know your personal finances, but also the projected financial situation for your new business. How much money do you need to get started? How much money do you need to keep operating, week after week? With these numbers in hand, you’ll be able to see if your business is financially viable.

Critique Your Stability and Personal Discipline
Money isn’t the only factor when it comes to being your own boss. You need to have stability in several areas of your life:
Your own emotional state: Are you easily upset or panicked? Do you freak out in times of crisis? How do you respond to pressure?

Your personal support system: Do you have support from your family or close friends? Do you have at least one business-minded, trustworthy person to talk to about decisions and options?

Your time management skills: Do you overload yourself constantly? Do you meet deadlines? Can you make yourself stay organized? Being your own boss means keeping track of your own time, money and projects.

Figure out Your Work
If you’re going to be your own boss, you’ve also got to be the employee; so what’s the work going to be? Hopefully the answer is based not only on your professional skills but also your personal passions.
If you can find something you love to do, you do it well, and you can make money doing it as your own boss, you’ve found the sweet spot. Get specific with exactly what you mean; don’t just decide you’ll be a business consultant. Decide what kind of consulting you’ll do and who your ideal clients are.

Start Part-Time
Unless there is an ethical or legal reason for not doing so, take several months to start being your own boss on a part-time basis. Set aside an evening or two a week and a day out of the weekend to start building up your business.
Why do this instead of jump right into it? Well, the simple truth is that it takes time to build up a client base big enough and regular enough to provide you with the income you need to live on. In the first several months of building up your own business, you may find that you don’t have enough work to take up all the time you now have. So start part-time, hang on to that stable income and squeeze your “extra” work in on nights and weekends. Yes, it means you will be busy. That won’t change once you quit your job and go at it full-time, so this will simply help you hone those time management skills. (We provide six tips for creating a winning business in a losing economy. See Starting A Small Business In Tough Economic Times.)

Figure out the Transition
As you build up your client base, you’ll start feeling the call of the home office stronger and stronger. At this point, you need to figure out how you’ll transition from your office job to your be-your-own-boss job.
If it’s an option, talk to your boss about cutting down to half-time or part-time at your current job. You can ease that financial switch by extending your income, saving up whatever is extra and take off some of the pressure. If there’s no part-time option at your job, then figure out a time frame for quitting and where you need to be in terms of clients and money at that time.

Set up Shop
Once you’ve got a time frame in place, you need to get serious about becoming a legal business entity, keeping tax records and financial documents organized, and having adequate space in which to work from home. If you haven’t already, look into the options for legal business structures; you can choose anything from sticking with a simple sole proprietorship to forming a C Corporation. All have different benefits, drawbacks, requirements and, of course, taxes. Get professional help if you’re uncertain about any of the options, because this is one thing that needs to be done right.
Along with your legal structure, you’ll also want to take some of that transitional time to make sure your home office is set up for productive work. If you’re having problems getting quiet time, private space or regular hours to work at home, you’ll want to start figuring those problems out now and working on a solution.

Don’t Burn Your Bridges
When the time comes to say goodbye to your old job, do it graciously – even if you hated everything about it. Chances are your old work somehow relates to your new work and you’ll run across some of the same people. There’s no need to tell people off or leave everyone with an unprofessional memory in their minds. So be courteous in your leaving, stay in contact with the people important in your new work, and don’t slam the door on your way out. (Incorporating these steps will help your business thrive. Check out In Small Business, Success Is Spelled With 5 “C”s.)

Keep the Work Coming
The main secret to success in running your own show is to keep the work flowing in. Make it a priority to spend a regular amount of time cultivating new work even when you’re already swamped. Even if you’re booked solid, don’t assume the work will come in automatically. Work tends to ebb and flow; if you don’t hustle before the ebb, you’ll be living on rice and beans until the flow comes back in. It’s up to you to keep the flow going; make it a regular part of your schedule every week, and you’ll find that you’re actually a good boss to work for.

Tips To Starting A Small Business In Tough Economic Times

a small business is hard work. In a tough economy, it can be even harder. This is partly because when credit markets are tight, it can be tough to get startup financing. That’s why it’s crucial for small business owners to hone their business plans. In other words, if you want a slice of the financing pie, you had better work your cash projections really hard and know your bottom line down to the penny – how much money you need to put into the business, how much you will need to charge to meet your operating costs and, hopefully, what you need to do to realize a profit. If you’re thinking about making the leap into entrepreneurship, consider the following tips to successfully build your business in a difficult economy.

No.1: Finding Financing
Before applying for a loan, ask trusted friends or professional advisors to review your plan to make sure you’re not overlooking anything critical or making inaccurate assumptions. You could ask:

a friend who owns his or her own business
a loan officer at the bank where you do business
an accountant (ask for an estimate – preferably a flat-rate fee – for reviewing your plan)
In addition to securing financing for your new enterprise, come up with a financial back-up plan both for your business and your personal finances if you fail to hit your initial revenue projections. You should also build up your own personal cash reserves so that you have enough to live off of for six to 12 months, and budget carefully to make sure you can continue making your most crucial payments (i.e. rent/mortgage, insurance premiums, etc.). Finally, check your gut – and your bank balance – to make sure you’re ready to start your new venture.

No. 2: Market Smartly
Starting a new business when the economy is on the downturn takes creativity and ingenuity. Marketing is vital in getting ahead of the game – and your competitors. Take your business plan and really flesh out the marketing components. What exactly are you going to sell, who are your targeted customers, how will you price your products or services, and what is your plan for promoting your business?

You stand a better chance of succeeding by thinking niche. Slice and dice your original customer base to come up with smaller segments to market more strategically. For example, if you offer a professional service geared toward women, could you narrow it to target women within a specific age range, career type or geographic location?

Or, alternatively, think about ways to alter your products or services to broaden your businesses’ appeal and customer base. For example, if you have invested in opening a “make your own dinner” franchise, could you also offer dinner delivery or premade/prepackaged dinners for customers who want “grab and go”?

Remember to keep a close eye on the competition. Do ongoing competitive analysis and watch what other providers are doing and what marketing techniques they’re using to build their business. Are they tweaking the product? Lowering the price? Using creative promotional tactics? You’ll need to know where your competitors are so you can differentiate yourself and gain market share. For example, think about where your competitors aren’t operating or which potential customers they’re missing – then be the first to capture that segment of your market. (To find out how to attract new clients, read Generational Marketing: Harvest The Whole Family Tree.)

No. 3: Start Small … With an Eye to Expand
Manage your expectations and your expenses by starting as small as possible, with an eye to expand when business takes off. Review your business plan and reconsider what you need to start. For example, could you start in a smaller – and less expensive – location, or stay “virtual” and eschew a physical office completely?

After deciding upon the best, most affordable space for your business, think about your staffing needs. Before hiring full-time employees think about filling needed positions with contractors, temporary workers or part-time staff. If you’re opening a business in an area that has seen local businesses fold, you may be able to pick up some great talent for less compensation than in an “up” market.

Be realistic about what employee benefits you can offer and shop competitively for the best prices. It’s better for your employees to offer fewer benefits up front and then add benefits as your profits increase.

No. 4: Use Technology to Your Advantage
Technology can provide you with numerous ways to save money and increase profits. For example:

Expand your market by selling through multiple online channels.
Do email marketing instead of more expensive electronic or print advertising.
Use websites like,, or to get ideas from fellow entrepreneurs and successful business leaders.
Optimize your website for search engines to keep your site coming up at the top of your customers’ searches.
Produce affordable marketing vehicles like podcasts or webinars through your website.
Create an online customer loyalty program offering advanced notices of sales, discounts, referral bonuses and coupons.
No. 5: Network, Network, Network
Get to know other people in your community who can refer customers and help build your business. Don’t know where to start? Find a local business networking group or contact your chamber of commerce. Look into joining a professional association – either a local one where you can meet people in person or even an online group – to tap into others’ ideas. (For related reading, see The Benefits Of Joining A Professional Association.)

No. 6: Ideas for Lowering Costs
A gloomy economy can actually disguise some great ways to save money. Creative ideas to lower your start-up costs include:

Using the economic situation as leverage when negotiating rents, equipment leasing agreements, etc. Leasers, developers, and vendors need businesses to pay their rent and fulfill their contracts. You may be able to get a lower price if you can demonstrate an ability to pay on time and in full at the lower rate.
Buying supplies from businesses that are closing or need to reduce inventory, particularly for big-ticket items like electronics, office furniture, etc.
Bartering with other business owners. Look for business alliance possibilities and suggest offsetting costs by trading products or services.
Doing your own legal homework. Before shelling out big money to a lawyer for business startup costs like incorporating or obtaining a trademark, use online sources like or, which provide free resources and low-cost services.
Comparison shopping for the best deal on a business credit card. Find the card that offers the best terms, conditions, rates and benefits for your business credit needs on sites like (Learn how to reduce your rate, see Cut Credit Card Bills By Negotiating A Lower APR.)
There are unique benefits and opportunities to starting a business in a tough economy. If you do your homework, think strategically and take advantage of every opportunity to minimize costs while maximizing the value you add for customers, you can build a foundation for long-lasting business success.

Some Reasons New Businesses Fail

It’s often said that more than half of new businesses fail during the first year. According to the Small Business Association (SBA), this isn’t necessarily true. The SBA states that only 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10. The SBA goes on to state that only 25% make it to 15 years or more. Though the odds are better than the commonly held belief, there are still many businesses that are closing down every year in the United States.

The SBA estimates that over half a million businesses opened in 2009, while 660,000 closed. Out of those 552,600 businesses that started in 2009, we can expect about 165,000 will fail by 2011, and possibly more, given that the economy hasn’t been booming in the past few years.

However, not all of these businesses need to fail. With the right planning, funding and flexibility, businesses have a better chance of succeeding. We’ll go through some of the biggest mistakes that start-ups can make and figure out how to improve your chances of success.

Not Investigating the Market
So you’ve always wanted to open a real estate agency, and you finally have the means to do so, but your desire to open the agency blinds you to the fact that we’re in a down housing market and the area where you want to work is already saturated with agencies, making it very difficult to break in. This is a mistake that will cause you to fail from the beginning. You have to find an opening or unmet need within a market and then fill it rather than try and force your product or service in. It’s a lot easier to satisfy a need rather than create one and convince people that they want to spend money on it.
Business Plan Problems
A solid and realistic business plan is the basis of a successful business. In the plan, you will outline realistic goals for your business, how your business can meet those goals and possible problems and solutions. The plan will figure out if there’s a need for the business through research and surveys; it will figure out the costs and inputs needed for the business; and it will outline strategies and time lines that should be implemented and met.
Once you have the plan, you must follow it. If you start doubling your spending or changing your strategies, you are asking for failure. Unless you have found that your BP is overwhelmingly inaccurate, stick with it. If it is inaccurate, it’s best to find out what’s wrong with it, fix it and follow a new plan rather than change how you do business based on quick observations. The more mistakes you make, the more expensive your business will become and the greater the chance of failure.

Too Little Financing
If you have started a company and things aren’t working out, you’ve got little capital and a struggling business; you’re really not in a good position to ask for another loan. Be realistic at the beginning, and start with enough money that will last you to the point where you’re business is up and running, and cash is actually flowing in. Trying to stretch your finances at the beginning may mean that your business never gets off the ground, and you’ll still have a lot of cash to repay. (To learn more, check out How To Attract Investors For Your Small Business.)
Bad Location, Internet Presence and Marketing
A bad location is self-explanatory if your business relies on location for foot traffic. Just as dangerous, however, is internet presence. These days, your location on the internet and your social media presence can be just as important as your company’s physical presence in a shopping district. Online presence will let people know that they can give you their business, so if the need is already there, the availability and visibility of your business is the next important step.
This is similar to marketing. Not only must you make sure that marketing reaches people, it must reach the right people. So make sure the type of marketing lines up with the audience you want to reach. Big billboards may not be the way to go for an internet company, just as online ads may not be the way to go for a heavy-construction business. If the need is already established, make sure you’re reaching the audience who needs your product or service.

Once you’ve done the planning, established your business and gained a customer base, don’t get complacent. The need that you’re fulfilling may not always be there, monitor the market and know when you may need to alter your business plan. Being on top of key trends will allow you lots of time to adjust your strategy so that you can remain successful. One must only look at the music industry or Blockbuster video to know that successful industries can undergo huge changes.

Expanding Too Fast
Now that your business is established and successful, it’s time to expand, but you must treat the expansion like you’re starting all over again. If you’re expanding the reach of your business, make sure that you understand the areas and markets into which you’ll now be reaching. If you’re expanding the scope and focus of your business, make sure you understand your new products, service and intended consumer as much as you do with your current successful business. When a business expands too fast and doesn’t take the same care with research, strategy and planning, the financial drain of the failing business(es) can sink the whole enterprise.