Business and Finance Info

So you are considering starting your own business? Well, not alone. Last year thousands of people in the United States decided to exercise their freedom and create their own business. The American entrepreneurial dream is to take a business idea from its earliest stages of design, research and planning, the day that opens the door or throw its website.

Whether your potential market is worldwide or just your neighborhood, Federal Agency for the Development of Small Enterprises [SBA stands for Small Business English Admnistration] has valuable information to help you turn your entrepreneurial dream into a new and thriving business. New entrepreneurs have the same concerns as new parents. Will I succeed? Who has done this before me that mepueda advise? Where will I get financed? What help is available and how much will it cost? It appears that those concerns assail him at the same time. Most people who succeed in starting a business have been well planned every stage of their success. Thomas Edison, the great American inventor, once said, “The genius is one percent inspiration and ninety-nine percent perspiration.” That same philosophy applies to success in business. To improve your chances of success, you must first generate a bit of effort to eliminate the most common mistakes new entrepreneurs make. According to experts, most beginners should invest a lot of time researching the potential of their business and the market. Also the development of a good business plan can help you overcome the roadblocks to success. SBA resources can help with free or low cost to help you plan, finance and manage your small business.

These resources are available to anyone with a computer and Internet access at the SBA Web site in English and http://www.sba. Small business potential to review the SBA Web site are free courses that guide you through the process of starting a business, including writing a business plan and access to capital. Another section of the website detailing the programs sponsored by the SBA loan provides finance software programs for your business that can be downloaded from the Internet. Other sections of the website address of the SBA special services for veterans, women and minorities. The SBA also offers free advice via email, through the Corps of Retired Executives [SCORE by its English acronym for Service Corps of Retired Executives ] http://www.score.org on its website. Other virtual (online) includes sections on federal and state agencies and links to other resources ranging from funding institutions to trade schools.

If you have no computer can access almost all the information and resources available in electronic form an SBA office located near you. Can not go to the office of the SBA? Then you can call the information office of the SBA at 1-800-827-5722. Use these resources to prepare a complete business plan. But before we begin drafting the plan, carefully research and answer the following questions: What business niche or void will fill my business? What products and services I sell? Is my idea practical and will satisfy a need? What is my business advantage over others that already exist? ¿I can offer a better service? ¿I can create a demand for my business? Once you have determined that your business idea is feasible, answer the following questions: ¿ What legal structure will give my business? How can I keep my company files? What kind of insurance I need? What equipment and supplies will I need? How am I going to compensate (pay)? What resources story? What financing will I need? Where will I locate my business? What name am I going to put my business? Your answers to these questions will help you create a business plan that well supported and focused will serve as a map or a guide.

This plan should detail how it will operate, manage and capitalize the business. Research Sources Some of the questions can be answered easily. Others will need a thorough investigation. There are many resources available to help you find the answers and make decisions based on good information.

The business information centers of the SBA [BICs by its acronym in English Business Information Centers], located in various parts of the country, offer the latest and most advanced technology in equipment, computer and telecommunications programs to help in your research. The BIC offers electronic bulletin boards, computer databases, electronic information exchange, periodicals and brochures, counseling, videotapes, reference materials, texts, guides to starting a business, computer application programs, guides and other interactive computer.

You can also get individual counseling sessions by SCORE members affiliated to the SBA. Other resources include: Studies done by professional associations, journal articles and information on trade shows, trends in growth studies made ​​by regional planning organizations; Information banks, realtors and insurance companies, and customer surveys in your market area, you can do yourself or existing ones. The Business Plan The business plan should cover the fundamentals, from objectives to its management and marketing operations. The business plan is the map that will guide you to success, so to spare no detail. A good business plan should cover the following areas: Executive Summary describes in detail the business and its goals. Identifies business owners and legal structures.

Discuss the skills and experience you and your partners bring to the business. Identify advantages you and your business have over competitors. Registration Requirements and Accounting is likely to need the following: Work certificate or license issued by the state (you may need to also register its name with the state). Number of tax sales, and separate business bank account. If your business has employees, you are responsible – Retain income tax and social security, and comply with laws covering health, safety and minimum wages of its employees. The Business Advisory ["U.S. Business Advisor"] is a web site whose address is www.business.gov, and that can help you identify and comply with federal regulations, and links to the Internal Revenue Service ( IRS), the Social Security Administration, Agency for Health and Occupational Safety and many other federal agencies. You can also get federal tax information by calling the IRS at 1-800-829-3676. A business operated from your home is subject to many of the same laws and regulations affecting other businesses, as well as additional ones. Zoning: Investigate your city regulations on zoning. If you violate any of these regulations can be fined or you can close the deal.

Restrictions on certain products: Most states prohibit the home production of fireworks, drugs, poisons, explosives, medical or health products and toys. Some states also prohibit the production of food, drinks or clothing in home businesses. Understanding Your Market Assessment of your market is a critical element that provides the basic data to determine whether you can successfully sell your product or service and what best place to build your business. This process includes defining your goals, study the competition and your customer base and interviewing potential suppliers. This information can help you, if necessary, adapt your product or service to better meet the needs of its customers. Market research can help you: Create sales approaches to primary and alternate a given market, make profit projections based on a more accurate database, organize marketing activities, develop critical objectives of sales in the short and long term and establish the boundaries of the market in terms of profits, and identify what makes your business different from others offering the same product or service.

Questions to Ask Your research should answer the following questions: Who are your customers? Where are you located? What are your resources and needs? Is the product or service you offer essential to the operations or activities of their customers? Do your clients the financial capacity to purchase the product or service you offer? ¿ Where can you create a demand for the product or service being offered? Can you compete effectively in price, quality and delivery? How many businesses will make the competition by offering the same type of product or service? What is the general economy of area in which you offer your product or service? What areas are declining or growing in your market? investigate the competition is extremely important. Visit trade shows to find out what your competition is selling and how they sell their products. Also, stay informed by reading magazines and publications that relate to your industry. Market research is an activity that is performed only once. Once you’ve established your business, you should keep in touch with your customers. You may have to adapt your product or service and change its marketing strategy to stay level with the changing needs of its customers.

The Price of Products and Services There are several strategies to determine the price of your product or service. Choose the approach that your product or service more competitive and help them achieve their profit objectives. Retail Prices A common practice in the world of small businesses is to follow the manufacturers recommendations on price retail products. The suggested retail price retail is easy to use, but does not take into account properly the elements of competition. lower prices than the competition This strategy reduces the profit margin per sale. Requires you to reduce your costs and: Get the best possible prices for raw materials or inventory, Locate your business in an economic area (low rent) Keep a tight control of their inventory, limit their product lines to which sold quickly, Design an advertising strategy that focuses on price discounts, and limit non-essential services. A word of warning: it’s hard to keep prices below the competition because it has to constantly monitor and adapt each cost component. It also exposes you to a price war, and if a rival meet or exceed their prices, can ruin. higher prices than the competition This strategy is possible when the main concern of customers is price. Some important factors for their clients to justify higher prices included.

Considerations of service, satisfaction in handling customer complaints, knowledge of products or services, and staff helpful and friendly, an accessible location or exclusive, and Exclusive Merchandise . Prices in a specific range This strategy targets a precise segment of consumers by offering products within a specific price or level. For example, a store may be only interested in attracting customers willing to pay $ 50 or more per bag. Set a price range has some advantages: It facilitates the selection to customers and reduces inventory and storage costs. Prices Multiple This method involves selling a certain number of units at a fixed price, for example, two units for $ 1.98. This strategy is useful for low-priced products such as toothpaste or shampoo. Many stores find this method attractive for year-end sales and special discounts. Pricing Strategy and Cost Factors Each component of a product or service has a different specific cost. Many small businesses do not analyze each component of the total cost of your product or service and, therefore, do not set prices that give them a good profit margin.

Once you do this analysis, set prices to achieve the highest gain and eliminate any unprofitable service. The cost components include materials, labor and overhead costs. The material includes the cost of all materials that are or integrate the product, such as wood, glue and surfaces in the manufacture of a chair. The labor costs are the labor that goes into making a product . An example would be the wages paid to workers in the production of a product. The direct costs of labor are obtained by multiplying the cost per hour by the number of staff / hours it takes to complete a job. Remember to use not only the wages paid by the hour but also the monetary value of fringe benefits. These include social security, workers’ compensation (when a worker is injured, for example), unemployment compensation, insurance and retirement benefits. The overall costs are not easily identified with a specific product. These costs include indirect materials, such as supplies, electricity and heating, depreciation, taxes, rent, advertising, shipping and insurance. Overhead costs also cover indirect costs and labor, such as office staff salaries, legal and housekeeping. Be sure to include shipping and handling costs, and storage and other cost components. Part of the overhead costs must be billed for each service performed or product produced. The rate of overall cost can be expressed as a percentage or an hourly rate. It is also important to set an annual overall costs. The fees shall be adjusted to reflect inflation and higher profit rates. It is better to adjust the costs semiannually and include executive salaries and other costs. The Operating Cycle The operating cycle is the system by which the cash flows from the purchase of inventory to the collection of debts. In essence, measures the flow of cash. For example, the operating cycle of your business can start with cash and inventory. Typically, you buy more inventory to ensure there is enough stored products and not run out as they are sold. Your sales will consist of cash and credit sales (receivables), usually payable within 30 days from the date of purchase. This applies to the inventory you purchase and the products you sell.

When you pay for inventory, both cash and accounts payable are reduced. Thirty days after the sale of your inventory, you get paid what they had sold on credit, which increases your cash. Now complete your cash flow through the operational cycle and the process is ready to repeat. Assets both cash and inventory that can be converted into cash within a period of 12 months, are called assets. Typical current assets include cash, certificates of warranty, accounts receivable and prepaid expenses. Cash Flow Analysis The analysis of cash flow should show whether your daily business operations generate enough cash to meet or pay obligations, and also related cash outflows used in payments inflows from sales. The result is that you can determine whether the outputs and inputs of cash in your business operations are combined in ways that will produce a positive cash flow or net output. Also reflect any major change occurring over time. A good understanding of this analysis will help you keep better control of your cash flow and margins will give adequate time to plan and prepare business growth. Preferably, you better have enough cash available each month to pay the obligations or next month’s bill requiring cash payments. A monthly projection of cash flow will help to eliminate deficiencies or surpluses of cash and compare current figures with previous months. When you find deficiencies in cash flow, should alter or amend the financial plan so you have more cash available. When the analysis revealed excess cash, may be an indication that you are taking or have too many loans available that could invest idle cash. The aim is to develop a plan that results in a well-balanced cash flow.

Planning a Positive Cash Flow You can increase the cash reserves of its business in several ways. Cobre outstanding accounts: Manage your accounts active and copper outstanding accounts quickly. If your billing policy is not strong, it will result in loss of income. The more you delay in paying customers, the greater the possibility of not being paid in full. Set stiffer requirements for credit: While your requirements are more stringent credit and payment terms, more customers will be forced to pay in cash. This will increase your amount of available cash and reduce costs associated with the collection of arrears. But while establishing more stringent credit requirements may favor short-term, it may be negative in the long term. Less stringent credit requirements allow more customers to buy their products or services. However, you must measure the consequent increase in sales and contrast it with the possible increase in the cost of arrears or product that their customers do not pay. Get short term loans, sometimes going to need to borrow from various institutions to cover financial problems with cash flow in the short term. Some types of credit used in this type of situation are revolving credit and loans secured by property. Increase sales: Increased sales could increase cash flow, but much of the sales made ​​on credit then they are increasing accounts receivable, not cash. Meanwhile, inventory is reduced and must be replaced. But as accounts receivable usually are not charged until 30 days after the sale, a substantial increase in sales can result in rapid and drastic reduction of their cash. Looking for an Accountant If you hire an accountant , look for someone with good knowledge, ability and be discreet. Given the complexity and constantly changing tax laws and the development of accounting methods, it is important to find a counter that keeps pace with educational seminars, professional publications and other opportunities that allow you to continue your education . Professional accountants listed in telephone directories under accountants, public accountants, bookkeepers and tax preparers.

Try to get referrals and recommendations from other local businesses, your bank or your attorney. How to Get Money for a Small Business One of the key to start or expand a small business successfully is that you demonstrate the ability to obtain adequate financing. Getting money is the fundamental activity in a business. There are several sources to consider when seeking funding. Explore all options before making a decision. These options include: Personal savings Friends and Relatives Banks, credit unions, and venture capital firms. Loans To succeed in his efforts to get a loan, they must be prepared and organized. You should know exactly how much money you need, what you need and how you will pay. You should be familiar with the lending policies of banks. Lending institutions usually require that their loans are fully secured (backed by a guarantee) and the borrower commits a reasonable amount of equity investment. Different Types of Business Loans Short term loans: These loans have to be paid in within one year or less. Some types of short-term loans include working capital to cover accounts receivable for revolving credit loans long term: long-term loans generally have repayment term of more than one year but less than seven years. Loans to purchase equipment or real property (real estate) can have payment terms of 25 years. The long-term loans are used to substantial costs such as equipment Furniture and fixtures fixed Vehicles Commercial Leasing and Real Estate. How to Apply for a Loan Approval of your loan application depends largely on how you present your business plan and financial needs to the lender.

The best way to increase your chances of getting a loan is to prepare a proposal serious and professional appearance. The proposal consists of your business plan with some other important elements: The executive summary of the loan raised for the purpose and the exact amount you need. Explain specifically that use of the loan and why you need it. The financial information section includes her personal financial statements and key business owners if a partnership. Also identify the collateral you are willing to compromise to secure the loan. they ask Lenders In many cases the lender will request a copy of your credit report from one credit rating agency. Therefore, you should work with these agencies to help them present an accurate picture of you and your credit. The lender will also review your work history and if you have letters of recommendation. With about your credit report and the information that you provide, the lender will consider the following factors: Do you have a solid credit history? Do you have enough experience and training to operate the business successfully? Did you prepare a business plan and a credit application showing that you understand what it takes to succeed and is determined to do? Financial Assistance Programs of the Federal Agency for the Development of Small Enterprises. The SBA offers a variety of financing options for small businesses. The SBA assistance is usually in the form of guarantees for loans. The SBA guarantees loans made ​​by private banks to small businesses.