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Sunday, April 29, 2012

Tips for a Successful Small Business





Today's tips come from a collection of online resources that I have put together. Hope you find them useful and an enjoyable read. Do take a moment and subscribe to the Startup Pro Plus to have the latest posted articles directly in your inbox.

Be clear on why you want to start a business
While the idea of starting a business may be daunting, the fatigue of looking for a job may be even greater. Taking control of your working life by venturing out on your own may be scary, but doing noting can be worse. That said, don't start a business because you've run out of options. If you're truly interested in doing your own thing and you're ready to go for it with gusto, then small business ownership can be the most frustration and the most freeing avenue—with the possibility of the greatest financial security.


Determine your business type
You don't have to reinvent the wheel. The best idea for you may be tried and true with your personal twist. When I started Women For Hire 12 years ago, career fairs were a dime a dozen -- still are. I put my spin on the category by focusing on women and I created a very successful business. Today I'm doing the same thing with my new venture -- Spark & Hustle. I'm putting my twist based on my experiences on helping current and aspiring small business owners to launch and grow their businesses. Take a look around and you'll see no shortage of repeatable ideas: People buy cupcakes, we all get haircuts, everyone likes some kind of jewelry, at some point plenty of homes need plumbers. Competitors can co-exist quite successfully. You just have to execute your version really well. So nail your idea -- and keep in mind that a service business (a service you provide based on your expertise) is much less expensive to launch than a product business where it costs money to create a tangible good. (For basic business advice on the legalities of getting started, click here for a Q&A with Rocket Lawyer.)
Write a business plan, any business plan 
You have a passion, and you'd like to make it your profession. No matter how enthusiastic you are about your small business, though, it won't be successful unless you have a plan in place for how you're going to start and run it.

It doesn't matter how long or detailed your plan is, as long as it covers a few essential points. Most successful small businesses will need to have a break-even analysis, a profit-loss forecast and a cash-flow analysis. A cash-flow analysis is especially important since you could be selling your products like hotcakes, but if you won't be paid for six months, you could still run out of money and have to close your doors. 


A business plan is essential because it allows you to experiment with the strategy for your business on paper, before you start playing for keeps.


Determine how you'll make a profit
Profit is, after all, the ultimate goal of any successful small business. You should examine your business' expenses (rent, materials, employee compensation, etc.) and then figure out how much you will need to sell to cover those costs and start generating a profit. This is known as a break-even analysis.

Start with as much of your own money as possible

Many small business owners cover their start-up costs entirely through loans, with the expectation that they will begin paying back the loans with the profits from their new business. New businesses can take months or years to generate a profit, however, and loan payments can really become a millstone around the neck of a fledgling operation.
If you can save up as much of the start-up capital yourself before you open your doors, you will help ensure that loans won't sink your new business. Remember, also, that there's an outside chance that a lender will call a loan or add unfavorable terms if your business isn't as successful as you initially planned. If you provide as much of the start-up money as possible, it will lessen the odds of a nasty surprise like this hindering your business.


Protect yourself

Most small businesses are sole proprietorships or partnerships. While these types of businesses are nice and easy to form, they also expose their owners to liability for business debts and judgments. Creditors and judgment holders can come after the owners' personal assets, like savings accounts and homes, once the business' money is depleted.
While insurance can reduce this liability somewhat, it's worth it to consider forming a corporation or limited liability corporation (LLC). These business structures will shield owners from personal liability, but there are more rules and requirements associated with them.


Start small

Everyone wants their small business to be successful, with multiple locations, lots of employees and loads of revenue, but you have to learn to walk before you can run. Don't spread yourself too thin or take on too many expenses at the beginning, especially if your income might take a while to catch up to your ambitions.
By starting small, you ensure that you can survive the inevitable hiccups associated with running a small business. Those entrepreneurs who begin with modest operations can recover and learn from their mistakes without taking on a lot of debt. Starting small will help your small business grow into a successful enterprise.


Get it in writing

While, it's nice to do business with a handshake, there's no substitute for a well-written contract. Indeed, many contracts are not valid unless they are in written form. The exact number of this type of contract varies between states, but here are a few common examples:
  • Sales of goods worth more than $500
  • Contracts lasting more than a year
  • A transfer of ownership in copyrights or real estate
While contracts can be valid when orally made, they are much harder to prove and enforce. Make sure you get all agreements in writing -- it will save you headaches down the line, and could even save your business.


Keep your edge

There are many ways to gain a competitive edge over other businesses in your industry: you could have a better product, a more efficient manufacturing or distribution process, a more convenient location, better customer service, or a better understanding of the changing marketplace.
The best way to hold onto your competitive edge is to protect your trade secrets. A trade secret is that information that isn't known to others that gives you a competitive advantage in the market. There are many kinds of trade secrets, and trade secrets receive legal protection as long as their owners take steps to keep them secret. Those steps could be anything from marking confidential documents to requiring partners and employees to sign nondisclosure agreements.
Another way to hold onto your competitive edge is to stay proactive. If you know that your business is going to face challenges or encroachment by a competitor, don't wait to react -- plan ahead and you'll stay ahead.


Hire the right people

Don't just hire the first person to come along with the basic qualifications you need. Look for someone with motivation, creativity and the right kind of personality to make it in your industry and fit in with your business. Then, once you've found that person, treat them well, engage them and make sure that you create the environment that they will thrive and give their all in.


Make sure you create the right kind of employee relationship

Lots of businesses try to save money by hiring people as independent contractors rather than full-time employees. The IRS will impose large penalties on businesses that do not withhold and pay taxes for workers that it considers full-time employees rather than independent contractors. Here are some things the IRS will look at to determine whether a worker is an independent contractor or a full-time employee:
  • The worker performs tasks that are essential for your business
  • The worker only works for your business
  • The worker works 40 hours a week, or nearly 40 hours
  • The worker receives instructions and training from you, and you exercise control over how the worker does their job
Also be sure to create an "at-will" relationship with your employees. Employers can terminate at-will employees for any reason, which is essential if an employee isn't working out. There are many ways to make it clear that the employment relationship is at-will, including in employee handbooks and through offer letters. Don't make any promises to employees about the length or terms of their employment, as these could become binding on you later.


Pay your bills and taxes on time

It should go without saying, but it's important to pay what you owe -- especially when dealing with the IRS. The IRS can impose harsh penalties and even come after a business owner's personal assets if the owner doesn't remit payroll taxes on time.
It's also important to pay your regular debts in a timely fashion. If you get a reputation for stalling on a debt, you could find it difficult to form business relationships in the future. Plus, if you stay current on your debts and pay them as you incur them, it will help you avoid being overwhelmed by cash flow problems if several debts come due simultaneously.

Go Out and Get Customers
This is where the magic happens. Nothing else matters if you don't have customers. The majority of your time and effort must focus on sales. Having a smart marketing plan to attract interested people, and then convert them to customers is your number one priority. Don't get overwhelmed about how to dive in: just start where you are. Create a list of 50 potential prospects that you'll go after and begin making calls one by one. Build a serious social media presence for your business where you can engage directly with your target market.
Dreaming about how fabulous your business can be is good; but doing some to get it there is sensational. It's all about the hustle: the decisions you make and the actions you take each and every day – that'll get you where you want to go.
Source: http://abcnews.go.com/Business/tips-starting-small-business/story?id=14447409#.T50HPLP9N5I
Source: http://smallbusiness.findlaw.com/starting-a-business/tips-for-a-successful-small-business.html






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