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Marketing
- Advertising
Frequently Asked Questions
(FAQ)
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Do I have what it takes to own/manage a business? You will be your own most important employee, so an objective appraisal of your strengths and weaknesses is essential. Some questions to ask yourself are:
What business should I choose? Usually, the best business for you is the one in which you are most skilled and interested. Matching your background with the market will increase your chance of success. But off course your past experience shouldn’t be limiting your dreams. If you like to try a new field and believe that you can be successful, use caution and go for it. What is a business plan and why do I need one? A business plan precisely defines your business, identifies your goals and serves as your firm's resume. Its basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make the right decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals. NOTE: We have an area devoted to helping you with your business plan Why do I need to define my business in detail? It may seem silly to ask yourself, "What business am I really in," but some owner-managers have gone broke because they never answered that question. One “design web site” webmaster realized that most of his time was spent creating custom graphics while most of his money was spent trying to run consulting. He finally decided he was in the custom graphics business and discontinued the consulting operations. His profits improved dramatically. What legal aspects do I need to consider? Licenses required, operating laws and other regulations vary from business to business, from state to state and country to country. Your local Business Association and/or chamber of commerce will provide you with general information, but you will need to consult your attorney for advice specific to your enterprise and area. You also must decide about your form of organization (corporation, partnership or sole proprietorship) or tax status (e.g., should you opt for a Subchapter S status?). What do I need to succeed in a business? There are four basics of success in small business: Sound management practices. Industry experience. Technical support. Planning ability. Few people start a business with all of these bases covered. Honestly assess your own experience and skills; then look for partners or key employees to compensate for your deficiencies. Would a partner(s) make it easier to be successful? A business partner does not guarantee success. If you require additional management skills or start-up capital, engaging a partner may be your best decision. Personality and character, as well as ability to give technical or financial assistance, determine the ultimate success of a partnership. How can I find qualified employees? Choose your employees carefully. Decide before hand what you want them to do. Be specific. You may need flexible employees who can shift from task to task as required. Interview and screen applicants with care. Remember, good questions lead to good answers-the more you learn about each applicant's experience and skills, the better prepared you are to make your decision. Wage levels are calculated using position importance and skill required as criteria. Consult your trade association and accountant to learn the most current practices, cost ratios and profit margins in your business field. While there is a minimum wage set by federal law for most jobs, the actual wage paid is entirely between you and your prospective employee. What other financial responsibilities do I have for employees? (For USA Businesses) You must withhold federal and state income taxes, contribute to unemployment and workers compensation systems, and match Social Security holdings. You may also wish to inquire about key employee life or disability insurance. Because laws on these matters vary from state to state, you probably should consult local information sources. What kind of security measures must I take? Crimes ranging hacking, stealing client lists to embezzlement can destroy even the best businesses. You should install a good physical security system. Just as important, you must establish policies and safeguards to ensure awareness and honesty among your personnel. Because computer systems can be used to defraud as well as keep records, you should check into a computer security program. Consider taking seminars on how to handle cash and merchandise; it is time and money well spent. Finally, careful screening when hiring can be your best ally against crime. Should I hire family members to work for me? Frequently, family members of the owner "help out in the business." For some small business owners it is a rewarding experience; for others it can cause irreparable damage. Carefully consider their loyalty and respect for you as the owner-manager. Can you keep your family and business decisions separate? What about telecommunications? All small businesses share some common functions: sales, purchasing, financing, operations and administration. Depending on your individual business, telecommunications can support your objectives in any or all of these areas. In its basic form, the telephone (the terminal) and the network (local or long distance) make up the basic components of telecommunications. It is an effective tool that can easily change with seasonality and growth. How you use telecommunications can affect how efficiently and profitably your company grows in the future. How much money do I need to get started? Internet business is still one of the best small business to start with. Most internet business can be started with less than $400. You can do it part-time while keeping your full-time job. This gives you the opportunity to test out your business ideas so you can make sure it will make money before quitting your full time job.
If you are planning to start as a full time job than you have to consider following:
Once you have taken care of your equipment & software and designed your web site you also must have enough money on hand to cover operating expenses for at least a year. These expenses include your salary as the owner and money to repay your loans - if any - . One of the leading causes of business failure is insufficient start-up capital. Consequently, you should work closely with your accountant to estimate your cash flow needs. What are the alternatives in financing a business? Committing your own funds is often the first financing step. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. You may want to consider a partner for additional financing. Banks are an obvious source of funds. Other loan sources include commercial finance companies, venture capital firms, local development companies and life insurance companies. Trade credit, selling stock and equipment leasing offer alternatives to borrowing. Leasing, for example, can be an advantage because it does not tie up your cash. What do I have to do to get a loan? Initially, the lender will ask three questions: How will you use the loan? How much do you need to borrow? How will you repay the loan? When you apply for the loan, you must provide projected financial statements and a cohesive, clear business plan which supplies the name of the firm, location, production facilities, legal structure and business goals. A clear description of your experience and management capabilities, as well as the expertise of other key personnel, will also be needed. What should I know about accounting and bookkeeping? The importance of keeping adequate records cannot be stressed too much. Without records, you cannot see how well your business is doing and where it is going. At a minimum, records are needed to substantiate: Your tax returns under Federal and State laws, including income tax and Social Security laws; (for US businesses) Your request for credit from vendors or a loan from a bank; Your claims about the business, should you wish to sell it. But most important, you need them to run your business successfully and to increase your profits.
How do I set up the right record keeping system for my business? Your particular operation will influence the kind and quantity of records. When deciding what is and is not necessary, keep in mind the following questions: > How will this record be used? > How important is this information likely to be? > Is the information available elsewhere in an equally accessible form? What financial statements will I need? You should prepare and understand two basic financial statements: the balance sheet, which is a record of assets, liabilities and capital; and the income (profit and-loss) statement, a summary of your earnings and expenses over a given period of time. Marketing is your most important organizing tool. There are four basic aspects of marketing, often called the "four P's": Product: The item or service you sell. Price: The amount you charge for your product or service. Promote: The ways you inform your market as to who, what and where you are. Provide: The channels you use to take the product to the customer. As you can see, marketing encompasses much more than just advertising or selling. For example, a major part of marketing involves researching your customers: What do they want? What can they afford? What do they think? Your understanding and application of the answers to such questions play a major role in the success or failure of your business. The principles of determining market share and market potential are the same for all areas. First determine a customer profile (who) and the size of the market (how many). This is the general market potential. Knowing the number and strength of your competitors (and then estimating the share of business you will take from them) will give you the market potential specific to your enterprise. Your business growth will be influenced by how well you plan and execute an advertising program. Because it is one of the main creators of your business' image, it must be well planned and well-budgeted. The price of a service or item is based on three basic production costs: Direct materials, Labor and Overhead. After these costs are determined, a price is then selected that will be both profitable and competitive. Because pricing can be a complicated process, you may wish to seek help from an expert. Is it better to lease or buy the equipment? This is a good question and needs to be considered carefully. Leasing does not tie up your cash; a disadvantage is that the item then has no resale or salvage value since you do not own it. Careful weighing of alternatives and a cost analysis will help you make the best decision. Can I operate a business from my home? Yes. In fact, experts estimate that as many as 20 –25 percent of new small business enterprises are operated out of the owner's home. And with new generation of Online Businesses these numbers are growing. How do I find out about suppliers/manufacturers/ distributors? Most suppliers want new accounts. A prime source for finding suppliers is the Thomas Register, which lists manufacturers by categories and geographic area. Most libraries have a directory of manufacturers listed by state. If you know the product line manufacturers, a letter or phone call to the companies will get you the local distributor-wholesaler. In some lines, trade shows are good sources of getting suppliers and looking over competing products. You have done your homework: you have a complete business plan; you know where you want to operate; you know how much cash you will need; and you have specific information on employee, vendor and market possibilities. You now may want someone to look over your plans objectively. Contact the business department at a local college for another opinion. Then, when you have made the final decision to go ahead, it is time to call the bank and get going. Good luck! How do I incorporate my business in USA? Once the decision to incorporate your business has been made, the legal process begins with the preparation of a certificate of incorporation. Whereas in the past this was prepared by three or more legally qualified individuals—today, only a single incorporator is needed. The incorporator may or may not be a person who will own stock. The state is likely to have a standard form for incorporating a small business. The three typical pieces of information requested are: corporate name, purpose and corporate life span. The corporate name is usually required to be a business name dissimilar from any other firm incorporated within the state. In addition, the name must not be deceptive or misleading. The state charter office can tell you whether the name you want is available. The purpose of the business must be stated. It is a good practice to use a "specific object" clause that spells out the specific purpose for which the corporation is being formed. While most corporations are formed for an indefinite period, it is possible to set up a specific limited life. Often the reason for creating a corporation is because the life span of the business is unlimited. Incorporation documents will require: the names and address of incorporators; location of the registered corporate office in the state; the maximum amount and type capital stock to be issued at the time of incorporation; a provision for preemptive rights; a provision for regulation of internal affairs of the corporation; names and addresses of corporate directors until the first stockholders’ meeting; and the right to amend or repeal provisions within the certificate of incorporation. The above requirements cover incorporating as either a "C Corporation" or Sub-Chapter S Corporation." However, the sub chapter S Corporation has several additional incorporation requirements such as: it must be an independent group not affiliated with any other; it may have only a single class of stock; no more than 35 stockholders and it may have only individuals or estates as stockholders; and it must be a domestic corporation. Before signing any legally binding documents, consult with your attorney for legal advice. Where do I get a business license? Your state and local government provides business licenses. How do I develop a business plan? We have an online tutorial to walk you through this process. We also offer several outside resources for additional help. Chances are that you will need legal advice right from the inception of your business. There are many ways a lawyer can help in addition to getting your company set up and properly authorized to conduct business.
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