Monday, April 13, 2009

The Importance of Accounting For Small Business Start-Ups.

Accounting is a crucial part of running a business. Many people mistakenly believe that if you are starting a small business, you really do not need accounting. However, this is not true. If you want your business to reach its full potential, you have to follow basic accounting practices. You might find accounting boring, but you cannot avoid it.

Importance Of Accounting

When you start up a small business, you need an accounting system in place. This could help you create a record of all the revenue and the expenditure of your business on a daily basis. Maintaining this data is crucial because you will need it when you file for tax returns. You might also need it for legal purposes. If, in the future, you apply for a loan to expand your business, this data can help you get one.

Another important purpose of maintaining an accounting system is that it provides you with a tool to assess your business's performance. An accounting system provides you with information about your business that will help you analyze the weak and the strong points of your business. You will realize what is helping your business and what is not.

Once you realize how important accounting is, you will be more than eager to put in that extra effort. Moreover, accounting is not that hard for small businesses. All you need to do is ensure that your financial records accurately reflect your business's income and expenditure.


Most small businesses maintain their records in a ledger, which is a record of sales receipts and expenditures. You need to transfer all your receipts and expenditures to this ledger. You can do this on a daily, weekly, or a monthly basis. Basically, this will depend on your business.

Three Financial Measures

Accounting for small businesses usually consists of three financial measures: Balance Sheet, Profit and Loss Statement, and Cash Flow Statement.

The Balance Sheet portrays how much your business is worth. This statement will list all your assets (cash, inventories, account receivables, etc) and liabilities (loans, accounts payable, and debts). If done in a proper manner, the Balance Sheet can show you exactly where your business stands. Your ledger will not show accounts payables and receivables; however, your balance sheet will.

The Profit and Loss Statement shows how your business is performing. This statement covers a time period, which could be monthly or quarterly.

The Cash Flow Statement provides an assessment of future cash needs of your business.

So now you understand how important accounting is for your business. If you have been educated in the field of commerce, you might be able to do the accounting yourself. However, if you do not know much about accounting, you can consult an accountant to help you set up your accounting system. Consulting an accountant is cheaper than hiring a bookkeeper.

Another thing you can do is purchase accounting software. It will not only help you keep track of all the receipts and expenditures, but will also help you create quality financial reports.

The bottom line is that as long as you make the commitment to setting some time for your accounting needs and start maintaining your accounting system, you will realize how easy it is.

Mariela Perez-Simons

Sunday, April 12, 2009

How to Market Your Wedding Planning Business?

As a wedding planner it is your job to take some of the stress of the bride. Almost every little girl dreams of their perfect wedding day. A wedding day where they are a princess and all of their family and friends are there to watch them walk down the aisle and into the arms of their Prince Charming, everything is picture perfect and right of the pages of a story book. What these little girls don't think about when they are dreaming up this utopian event is all the work that is involved to getting them to the aisle. This is where you are going to come in, you are going to find a way to let these brides know that they can have their cake and eat it too.

In order to successful market to these brides, you have to be able to think like one. Take the time to sit down and write your vision of your perfect wedding. This will not only helping you understand the right things to say when talking to the bride to be, but it will also give you a little insight on where you need to go to leave flyers and business cards. Most brides to be are so excited about the upcoming wedding, that before the actually planning begins they rush off to the dress shops to look for their fairy tale gown. This is a great opportunity for you to take advantage of. Visit all the shops in your town, and in the radius you are willing to travel. Ask them if it is ok to leave some cards on their counter.

These dress shops are not only the perfect place to catch the bride to be, but they are also a great way to get some free advertising. The second place most woman rush off to is the cake shop. Feel free to do the same with them as you do the wedding dress shops. If you can get your cards into at least half the dress shops and half the bakeries in your town, you are well on your way to a full appointment book. If you are not drumming up enough business with the shops along, move to the newspaper. Not in the putting in an ad regard, but most papers have an engagement section. This is the perfect place to find potential clients. However you choose to market your wedding planning business, just remember to be patient. Nothing happens over night and you have to be willing to work for your dreams.

Most importantly, remember that today's bride to be is shopping online to find wedding and event service professionals. Having a solid online marketing plan is essential to your success as a wedding planner.

Emily Marshall

Saturday, April 11, 2009

Small Business Strategy

Five Key Drivers of Business Profits.

Most small businesses are built on the same business model and hence have the same profit drivers. When thinking about small business strategy, small businesses all have certain key similarities.
  • Customers
  • Goods/Services
  • Cost of Goods/Services

Before thinking about strategy to attract more customers customers we need to understand the two main drivers which leads to a customer.

  1. How many people know about your business and the good/services that you provide?
  2. How many of them can you attract to become your customers?

Once a small business has acquired a customer, the obvious next step is how much money do we make from this customer. To understand this we need to understand the two drivers of revenue or gross income.

  1. How much does the good/services sell for?
  2. How many good/services does the customer buy?

Another way of seeing this is:

  1. How much value in a basket of good/services?
  2. How many times does the customer purchase in a given period?

In short, to find out how much revenue is generated per customer we need to know how much and how many.

Lastly, once a small business finds out how much revenue each customer is bringing for the business they need to understand their cost of acquiring the customer, goods/services. The driver for this is:

Profit Margin

Obviously the higher the better, but businesses in certain industry group or businesses that sell certain type of goods/services will tend to have different margin. auto-manufacturers have lower margins compared to online business selling ebooks.


The five key drivers to small business profits are:

  1. Leads
  2. Conversion
  3. Revenue per Transaction
  4. Number of Transactions
  5. Profit Margins

Yong Long Lai

Friday, April 10, 2009

How to Start a Home Party Business?

Tips on How to Start a Home Party Business That Makes You Money.

One of the major issues facing women today is how can they find a way to stay home with their kids and make money.

Be it to contribute to the household bills or to simply have some pocket change to splurge on whatever they want to splurge it on. Many are probably seeking to know how to start a home party business.

The good news is that to start a home party business is one of cheapest, easiest, and fastest way of making the dream of making money while staying home with your children a reality. You can become a direct sales consultant for one of the major direct selling companies.

Here are some statistics on home party business reps: Did you know that there are over 43 million direct sales consultants around the world, and approximately 12 million just in the United States alone?

Most of the direct sales reps happen to be women, who eagerly embrace the business in order to work part time, set their own hours, and empower themselves to make as much money as they want or need, according to the number of hours they decide to put into their business.

Does this sound like something you'd be interested in learning more about? Would you like to learn how to start a home party business? If so, there are some things that you will need to be informed of:

There exist a variety of direct sales companies and home party businesses as there are direct sales representatives. You will learn that most sales reps encourage that new representatives pick a company based on their interests and products that they would want to buy themselves.

If you are genuinely passionate about your business, this will go a long way towards your ultimate success as a direct sales rep, in particularly during the times when you're having a hard time getting bookings, recruit other reps, or even marketing your business.

Before starting your research on how to start a home party business, sit down somewhere where you're not going to be disturbed for at least 30 minutes, and give some serious thought as to what you want and need from your business.

What are your long term and short term goals? How much money do you want to make a month? How many hours do you want to work per day? Week? Month?

Don't forget to factor in your personality - if starting a home party business going to be right for you? Do you enjoy meeting and talking to new people? Do you look forward to going out or going to parties?

Are you motivated person? Are you able to stay focused and on task? Do you find yourself procrastinating a lot? Although anyone can learn how to become a successful entrepreneur, it will be quite a challenge for you if you have to learn new habits at the same time you're trying to learn how to start a home party business of your own.

Once you have a crystal clear picture of what you want and need from your business, then it's time to start doing your research about the different companies that are out there.

Make sure to thoroughly research any home party company that you're strongly considering becoming a representative/consultant for. You'll want to make sure that they have a good reputation, that they guarantee their products, and that other reps are satisfied.

The amount of commissions you will be earning, the cost of the initial sales kit, even the rate and schedule of pay should all be taken into account when making your final decision.

The sales literature is not enough to go by - you want to figure out how much money you need or want to make a month. Then look at the amount of money you can make per party, and how many parties and how much in total sales you'll have to make in order to reach that goal.

If reaching your goal is going to require you to work longer hours or more than you're willing or able to commit to, then choose another company.

You'll want to be a little careful of any company that charges a really high amount for a sales kit, or asks you to pay for training.

Furthermore, your commissions ought to be based on the products or services you sell, and not on recruiting more people in under you.

In fact, any time you're told that your largest commissions are based on the number of people you recruit or the memberships you sell, tread slowly. Often times these types of companies turn out to be pyramid schemes or scam companies.

Don't forget to check into the company's return policy. You should be able to return any unused or unsold merchandise with no questions asked.

If the company fails to list a clear and open buy-back policy, make a request to get it in writing before committing or signing a contract.

Be careful about falling for the promise of easy money in your quest to learn how to start a home party business. There is no such thing as easy money without serious consequences.

Instead, search for a company whose products will help you to build a real, growing home party business of your own, a company that you'll be proud to be affiliated with, and that will help you to reach your goals.

Jane Boss

Small Business is Worth It.

When you decide that you are tired of working in an office and you are looking for a change, you should look at the fact that small business is worth it. You will find that you will have a plethora of options when it comes to a small business, and this is what is going to make the entire transition exciting and fun. If you already know what it is that you want to do, then you merely have to get it up and going. If you are not sure on what it is that you want to do, then the fun is actually the journey of discovery.

Laying Out The Groundwork

The first thing you are going to do when you decide on what you want to do, is lay out the groundwork for the start of the company. This will bring you to the point where you know what is going to be common practice, and what the purpose of the company really is. Small business is worth it, when you decide that you want to do something that is both challenging and fun at the same time. You will find that starting a small business is something that will give you strength in areas you otherwise did not know you had. This is great for your spirit, and it is great for your wallet if you can manage to succeed. Find what you like and get it running, and then manage to make it work it's that simple.

Invest Your Time

One of the best ways to ensure that the small business that you start is going to be what you want it to be, is to invest your time into it. There are many things that you are going to have to pay attention too, as you are now the boss. This means that basically every aspect of the company is under your control. The fun part is actually making decisions and seeing that they do make sense and they do work. This will give you a sense that small business is worth it, and that you can see success down the road from your endeavor. Good business is prepared for the dips in work, and this is where you will learn to manage your time. This is when you will learn that you need to invest the time to make the company better for the next round of business rush.

Learn From Your Mistakes

It is said that if you do not make mistakes, you do not learn in life. Nothing could be closer to the truth, than with a home business. You will quickly see that small business is worth it, when you actually remind yourself not to do the same thing twice if it failed the first time. This will steer you in a different direction, and this will actually allow you to grow as a business. This could be the most enlightening and fun time of your life, and it is time to take full control.

Roger Barnes writes home business, work from home and related articles for the Home Business Selection website at Small Business Selection

Thursday, April 9, 2009

Small Business Owners - A Rare Breed.

Willingness to Take Risks

You will constantly find yourself having to make decisions about where and how to advertise, which areas to specialise in, when to invest in new equipment, and so on.

Although this constant decision-making can be stressful, it can also be satisfying and enjoyable. Solving problems and making decisions can give you a sense of power and confidence.


Enthusiasm is an essential ingredient of every entrepreneur. If you are half-hearted about your new venture you may have difficulty summoning sufficient determination to overcome problems when they arise.

If you are enthusiastic, on the other hand, you will relish the challenges your business presents. What's more, your enthusiasm will rub off onto customers, employees (if you have them) and other people you have to deal with.

Most of us would far rather work with or buy from someone who is enthusiastic and enjoys their work, rather than someone who is permanently depressed about it.


Most entrepreneurs have a driving ambition to achieve the best they can for themselves and their loved ones; in addition to money, this may include financial security and a better way of life.

With such ambitions they can cope with any setbacks along the way, because in their mind they have a goal or vision which drives them on.

Ambition and determination together can overcome many obstacles. In business, as in most others aspects of life, if you know what you want and are determined to achieve it, the chances are excellent that you will succeed.

Honesty and Willingness to Give Good Service

Every business depends on a circle of satisfied customers for its continuing survival. If people are pleased with the service they have received from you, they are likely to recommend you to others as well as keep coming back themselves.

By contrast, if you give poor service then, even if they do not complain at the time, they will not return; and rather than recommend you to others, they will warn them off. If you have a good reputation this will ensure that more people keep coming to you.

For this reason, successful entrepreneurs go to great lengths to obtain and keep a good name for themselves.

Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solutions - Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.

Wednesday, April 8, 2009

Starting an Independent Contracting Home Based Business.

Major cable and satellite dish companies will outsource what amounts to a majority of their installation and / or service work to large contract companies that in turn employ the services of independent contractors. The work is seemingly endless and the demand for quality work and workers is high.

Starting an independent contracting home based business is relatively easy, offers a good working wage, and allows for certain entitlements afforded every business owner. Anyone interested in becoming an independent contractor needs to be in overall good health in order to handle the physical demands of the job and own a reliable "work" truck, van, or SUV that will accomodate materials and supplies, tools and equipment, and the rigors of everyday use.

There are several ways to find a contract company and here are a few to get started:
  • Look in the classified ad section of the local or city newspaper.
  • Ask a technician that is already working in the industry for the name and number of their contract company. Look for trucks or vans that have magnetic signs identifying them as independent contractors for a particlular company.
  • Do a search online using appropriate keywords such as independent or subcontractor, jobs or work, and for the closest major city.

Once a contract company is found, make an appointment for an interview with a supervisor. The supervisor will issue a folder and explain the various handouts included which will list necessary paperwork, installation tool and equipment requirements, pay ( billing sheets ) and benefits, and training agenda.

Necessary paperwork is ( and may not be limited to ):

  • Commercial Auto or Business Rated Insurance Certificate listing the contract company as additional insured and certificate holder.
  • General Liability Insurance Certificate listing the contract company as certificate holder. This covers damage to a customers home which may occur during installation.
  • Occupational License
  • Valid Driver's License

In order to insure that all installation and safety requirements are met on the job it is required that each independent contractor be responsible for obtaining and maintaining a minimum complement of tools and equipment. Relatively inexpensive handtools needed include hammers, hand saws, nut drivers, pliers, razor knives, screwdrivers, tape rules, wrenches and job specific tools. Equipment needed includes a cell phone, cordless drills, drill bits, flashlights, ladders, shovels, tool belts, and safety and test equipment. Job specific tools, cell phones, extension ladders, and safety and test equipment can often be issued by the contract company and payroll deducted. Having the "right tools and equipment" ensures the job will be completed safely, relatively quickly and efficiently, and to the customers satisfaction.

Pay is accrued on a per job basis ( with billing sheets - jobs / tasks are assigned a billing code and the amount paid for completion ) that is added daily over a weekly or bi-weekly billing cycle with checks being dispersed the following week. Paychecks are , in turn, a direct reflection of the independent contractors' experience, efficiency, days worked, and total number of jobs completed.

Benefits may or may not be available depending on the contract company. If not offered, health insurance can be obtained at a relatively reasonable rate from a number of reputable companies according to the situational needs of the individual who may or may not have a dependent (s) and need a "family" plan. The supervisor giving the initial interview may have the names of some of these companies to follow up with. Occasionally representatives from different companies may set up a display at the contract company office and offer information and handouts describing the plans available.

Training agendas include two weeks of "riding out" with an independent contractor / trainer during normal working hours and obtaining "on the job" experience watching and performing various tasks and having each one checked ( by the "trainer" ) as completed on the training handout. During this time it is highly recommended to ask questions, take notes, and perform as many tasks as possible. Occasionally, structured classroom training is available to enhance installation and product knowledge. The more that is learned and understood in these first weeks equates to being more efficient and productive in the future and ultimately a higher income.

During the interview, inquire about overall company expectations, days and hours of operation, quality control ( QC ), on-call opportunities, courtesy accounts, filing taxes, and workers' compensation.

Company expectations are normally the same as with any employer and include being on time for scheduled work days, providing good customer service, completing work within scheduled time frames / tables, and working with dispatch, other independent contractors, and supervisors as a team.

Days and hours of operation will vary as many contract companies work a minimum of 6 and sometimes 7 days a week providing appointments to customers for installation and / or repair during all hours of the day from 8 a.m to 8 p.m. Independent contractors are paid on a per job basis so it is not necessary to keep track of hours worked or use a time clock. Work days are agreed upon ( and vary ) when the initial contract is signed. Unpaid time off is available upon request ( usually at least 48 hours in advance ) of the assigned supervisor.

Quality control is maintained for all work and jobs are checked regularly by employees from the cable company or supervisors from the contract company. It is important to remember that any work done is a direct reflection of the independent contractor and contract and cable companies respectively. If jobs are not completed according to specifications or to the customers' satisfaction the independent contractor responsible for the work may have to return ( unpaid ) to complete the job. Worse yet, if the work is completed by another technician, a back-charge may be incurred and pay deducted from the next or subsequent checks. "Doing it right the first time" will ultimately save time and money.

On-call opportunities, for extra pay, may exist at or during many holidays and involves being available to a dispatcher continuously during a designated amount of time and possibly being sent to a customers' home needing repairs of one kind or another. Repairs may be simple and quick or difficult and time consuming. On-call techs may not have any "calls" or may spend the entire day making customer contact and necessary repairs.

Courtesy accounts are sometimes provided by cable companies ( to independent contractors ) through the contract company. If available, courtesy accounts will be set up after 90 days and are for free or discounted cable TV, high-speed internet, and telephone services. Additionally, since a cell phone is required for communication with dispatch, supervisory staff, and other independent contractors and is helpful when dealing with various office personnel and customers, many cell phone companies will often offer a discount to anyone employed directly ( or indirectly ) by a major cable company.

Independent contractors will have to file incorporation papers for their new business. Incorporating is made easy with the help of the contract company and is relatively inexpensive. The registration process involves filing the proper paperwork with the state government and paying an incorporation fee. Once the new business is registered a licensed CPA or reputable accounting firm should be consulted as to when and how often taxes need to be paid and what is tax deductible. There are many "costs of doing business" that are tax deductible and will lower the amount of taxes owed. Work clothes and boots, tools and equipment, cell phone bills, and either gas or mileage are all tax deductible.

Workers' compensation may be accepted or refused depending on the number of employees the business will have. An Independent contractor as the only employee may accept ( resulting in a percentage of pay being deducted weekly or bi-weekly ) or refuse coverage. Workers' compensation is mandatory if the business owner hires any number of employees.

At the end of the initial interview a tour of the facilities will be given. Most contract companies will have general office space, conference and training rooms, a payroll department, a warehouse, and parking areas. General offices include dispatch employees, supervisors, a project manager, owners / partners, and supervisors. Conference and training rooms will have tables and chairs, dry erase boards, and "hands on" training boards and / or displays. The payroll department may or may not be in the same building as the general offices. The warehouse will carry all of the necessary materials and supplies and job specific tools and equipment.

Upon completion of the initial interview, Q&A, and tour, an invitation to return and commence training may be offered and a start date agreed upon. It will take time, a concerted effort, and a willingness to learn, but independent contracting as a home based business can be very rewarding not only professionally but monetarily, may lead to other opportunities, and produce lasting business relationships.

Tom Castro - Webmaster/Author
Visit Home Theater to use home theater design ideas, installation techniques, and product resources and learn DIY home theater with step by step tutorials, detailed examples, and closeup images.

Tuesday, April 7, 2009

Starting and Marketing a Small Business.

Starting A Small Business

A small business can be started either as a sole proprietorship (single owner with full business liablility and responsibility) or as a partnership between two or more people. Registering the business and drawing up a partnership agreement requires a lawyer and legal fees.

Before opening up your small business, a lot of research and planning is required. A good business plan will not only increase the chances of success but will also help you in raising money for your business.

Before starting out on your small business venture, ask yourself questions such as :

  • Why you want to start a small business? (Maybe you want more freedom in the way you spend time and do things. Maybe your own business can help you achieve financial independence and make better use of your skills.)
  • What business will be right for me? (This should preferably be a field where you already have skills or is your hobby or interest).
  • How will I finance my business?
  • How will I market my business? (For example, It is a good idea to create a search engine friendly website. The startup costs for a basic new website is very small. You can also list your products and services, include a reliable payment gateway, such as Paypal and a shopping cart in your website. You can list your website in online classifieds and auction websites for publicity.)
  • Also think about factors such as business location, products or services to be sold, supplies and equipment required.
  • Note that many people start a small business part time which may grow to be a full time business.

Marketing your Small Business

  • A website is a great marketing tool for your small business. If possible you should also operate your business online. A website can be used to market your products and services to a wide range of audience and locations. A website also allows you to track customer preferences and personalise content based on customer profiles.
  • Developing your network is most essential in marketing your small business. Do not ignore the value of referrals in the success of your business. Attend networking events and seminars regularly to increase your network and learn more about networking.
  • Advertise in newspapers and magazines. Radio and television advertising can be also be useful if within your budget.
  • Do remember to measure the results of your advertising campaigns in order to ensure that your marketing efforts are effective.

Monday, April 6, 2009

Why Plan Your Businesss?

The owner of a small sheet-metal fabrication company once told me, "Why plan? It only gets in the way of what would have happened anyway." That's a fatalistic notion often held by managers of small businesses. Too many believe that they're totally at the mercy of larger competitors. In fact, for many, exactly the opposite is true.
Think of the reasons for your company's success. You'll probably come up with a series of traits that are uniquely yours-characteristics that your larger competitors can't begin to duplicate. That's why you're in business.

Of course, you may already believe in the idea. However, you may have to sell it to the others in your company. This ammunition may come in handy.

Recognizing Uses of the Plan

For many of us who left corporate America in favor of a smaller work environment, the idea of drafting a business plan may seem offensive. After all, isn't frustration with all that busywork one of the reasons we left in the first place?

We all have an aversion to doing anything on our job that doesn't immediately help the situation we're now experiencing. However, isn't it also true that a little foresight and action before the fact can help eliminate many of the problems we face each day. Wouldn't it be nice to anticipate something like a price cut by your major competitor or a rise in the interest rate on your credit line? Of course it would. And with that anticipation comes an organized and effective response. That's what planning does. Additionally, we prepare a workable business plan to
  • Determine where the company needs to go

  • Forewarn of possible roadblocks along the way

  • Formulate responses to contingencies

  • Keep the business on track to reach its planned goals

Planning for Promotion of the Company

Many people associate a business plan with start-up companies. Often our first exposure to a business plan is for the purpose of convincing investors and lenders that we have a viable idea at which they should throw money. That's not what we're developing here.

Though the techniques may be similar, the purposes are entirely different. So are the results. Promotional plans are often untested, pie-in-the-sky theories of what someone thinks will work. The goals, objectives, and numbers are usually unproven. Detailed departmental plans for hitting targets are frequently hazy-if they exist at all. Promoters don't want to burden their investors with the mechanics of execution. That comes later, after the money is in the bank.

Think of a start-up's promotional plan as concept-driven. It's more general in nature. The presentation leaves many questions of practical execution unanswered. These plans are fine for their purpose. However, most aren't intended as a blueprint for running the company.

Planning for Operational Purposes

We're not creating a promotional plan for a new start-up company. Instead, by using this book, you create a practical realistic planning tool for your business. The emphasis is on integrating the details of what each department within the company does to help the firm reach its overall goals. We want to tell each person in the company the single most important thing they need to do-must accomplish-to contribute to the overall success of the business. Certainly this results-oriented attention to detail can (and probably should) be used for a start-up venture. However, the promoters are right-it would confuse outsiders not familiar with the inner workings of the company.

Our focus is on practical solutions to everyday business objectives. We design these to work in concert with one another. When they do, the company moves from where it is today to where its owners, investors and managers want it to be.

Establishing Goals

Why establish goals? I've heard from colleagues who run other small businesses that they always seem to fall short of any goals they set for the company. There's almost a feeling of helplessness. Their companies are small and lack the resources needed to turn goals into reality. Some wonder why they should spend time developing a business plan that might help the company make money over the next year or two-especially when they could be working on something else that's guaranteed to make money today. That's hard logic to refute, especially in a tight economy. Many small-business owners and entrepreneurs go after the quick buck. Those are the ones that don't last. Companies that lack a definite direction and the ability to stay on course eventually sink. It's the firms with vision and a plan to exploit that vision that become the stars. If you don't set goals and then try to reach them, it's guaranteed that your firm will stay right where it is today. With changing technology, changing customer demands, and increasing sophistication, marching in place is business suicide. During the 1990s and as we approach the next century, no company has the luxury of conducting business as usual. If you stay where you are today, the rest of us will leave you in the dust.

Company Goals

These are the targets for change and transition that your firm must reach over the planning horizon-for our purposes, the next twelve months. Company goals cover such major issues as

Products offered

  • Customers targeted

  • Company image

  • Competition

  • Levels of service

  • Product quality

Companywide goals established in the business plan move the company into the position where it needs to be.

Department Goals

At very small companies, often that's for one person. No matter. Design department goals to connect with specific requirements of both the overall company goals and the goals of other departments in terms of product and timing. We make department goals in order to

  • Assist other departments that depend on those specific results
  • Achieve the overall company goals

A good example would be in the area of finance. Say the firm needs additional funds to buy the machinery needed to expand its manufacturing operation. This will generate the sales revenue needed to meet overall profit targets. Here are examples of specific department goals:

  • Get additional funds.

  • Purchase and take delivery of new machinery.

  • Expand manufacturing.

  • Generate added sales.

  • Help attain the overall profit objectives.

Failure to reach of any one of these department goals could jeopardize reaching the overall company's target. Additionally, within every department, it's easy to identify exactly what that department must do to further the company's cause.

Appraising Your Current Position

The question here, however, is why do this? After all, most managers of small businesses are close enough to their everyday operation to know where they are, aren't they? Not necessarily. At least few take the time to think about where they are, then write it down so that others can judge its accuracy. We're talking about things like:

  • Market position

  • Company strengths and weaknesses

  • Reputation

  • Industry viability

  • Technology

  • Product line

  • Adequacy of capital

  • Capability and sufficiency of employees

  • Sufficiency of plant, machinery, and equipment (the infrastructure)

Often the hardest part of starting a business plan is honestly determining your current position today. It's not always so obvious. Take the case of Domino's Pizza Corporation. What business is it in? Of course, it sells pizza. So does every one of its competitors. The Domino's planners decided that differentiating Domino's product based on higher quality was too hard a sell. Besides, it wasn't necessary. So what business is Domino's really in? The convenience industry. Its pizza isn't any better or worse than most of the competition. However, the niche Domino's chose for itself in its plan was the business of selling convenience. For a while it had that entire market to itself. Another example is that of a payroll processing service. Its current position is that of providing financial convenience to its clients. The company performs a task that other companies would rather not do. While assessing the current position, someone came up with the bright idea of expanding the services offered. After all, financial convenience extends beyond simply doing the payroll. Why not add bookkeeping, tracking and collecting receivables, and personnel consulting? See how the planning process not only answers a lot of questions you may not have thought about for some time, but prompts questions that may turn into opportunities? That's the kind of penetrating thought that goes into assessing your firm's current position.

For more related article check out:
All in One Business Planner

Is Entrepreneurship For You?

In business, there are no guarantees. There is simply no way to eliminate all the risks associated with starting a small business - but you can improve your chances of success with good planning, preparation, and insight. Start by evaluating your strengths and weaknesses as a potential owner and manager of a small business. Carefully consider each of the following questions:

Are you a self-starter? It will be entirely up to you to develop projects, organize your time, and follow through on details.

How well do you get along with different personalities? Business owners need to develop working relationships with a variety of people including customers, vendors, staff, bankers, and professionals such as lawyers, accountants, or consultants. Can you deal with a demanding client, an unreliable vendor, or a cranky receptionist if your business interests demand it?

How good are you at making decisions? Small business owners are required to make decisions constantly - often quickly, independently, and under pressure.

Do you have the physical and emotional stamina to run a business? Business ownership can be exciting, but it's also a lot of work. Can you face six or seven 12-­hour workdays every week?

How well do you plan and organize? Research indicates that poor planning is responsible for most business failures. Good organization ­ of financials, inventory, schedules, and production ­can help you avoid many pitfalls.

Is your drive strong enough? Running a business can wear you down emotionally. Some business owners burn out quickly from having to carry all the responsibility for the success of their business on their own shoulders. Strong motivation will help you survive slowdowns and periods of burnout.

How will the business affect your family? The first few years of business start­up can be hard on family life. It's important for family members to know what to expect and for you to be able to trust that they will support you during this time. There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk in the short-term.

Why Small Businesses Fail

Success in business is never automatic. It isn't strictly based on luck - although a little never hurts. It depends primarily on the owner's foresight and organization. Even then, of course, there are no guarantees.

Starting a small business is always risky, and the chance of success is slim. According to the U.S. Small Business Administration, roughly 50% of small businesses fail within the first five years.

In his book Small Business Management, Michael Ames gives the following reasons for small business failure:
  • Lack of experience
  • Insufficient capital (money)
  • Poor location
  • Poor inventory management
  • Over-investment in fixed assets
  • Poor credit arrangements
  • Personal use of business funds
  • Unexpected growth

Gustav Berle adds two more reasons in The Do It Yourself Business Book:

  • Competition
  • Low sales

More Reasons Why Small Businesses Fail

These figures aren't meant to scare you, but to prepare you for the rocky path ahead. Underestimating the difficulty of starting a business is one of the biggest obstacles entrepreneurs face. However, success can be yours if you are patient, willing to work hard, and take all the necessary steps.

On the Upside

It's true that there are many reasons not to start your own business. But for the right person, the advantages of business ownership far outweigh the risks.

You will be your own boss.
Hard work and long hours directly benefit you, rather than increasing profits for someone else.
Earning and growth potential are far greater.
A new venture is as exciting as it is risky.
Running a business provides endless challenge and opportunities for learning.

For more related information, check out:
Small Business Planner