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30 Do’s And 20 Don’ts In Starting A Small Business

Small scale businesses are easier to set up compared to the middle or large scale businesses that require more time, feasibility reports, ad...

Monday, October 29, 2012

Challenges Veterans Have In Becoming Small Business Owners

It depends on the individuals.

First off, many have great advantages. After serving abroad, a little shortage of cash might not scare you as much. Patience may be developed, and the new business owner may have the stamina to put up with things the lifetime civilian is unprepared for.

But, there are disadvantages that can develop in some people.

Some vets get arrogant, and that kills them. They think they've already done it all, and forget how to listen or do research. Confidence is a great thing, and as long as it's under control, it's an advantage.

Others get paranoid, not realizing they are in the civilian world now, and a few pull through this, but it makes things more difficult. If they learn to harness this paranoia, they can use it be to cautious, and it can lead to success.

And then there are the general problems of coping with civilian life (or re-adjusting to anything.) But that's not only a vet's problem, and it's not unique to business either.

I think it's different for Gen X vets as well because they are the minority. At one time, almost everyone was a vet.

I think all in all, it's not a big problem. Just look at some examples and you'll see very successful vets in the world of business.

I suspect that a lack of 'chain of command' might be a problem. In the military you say to your troops "Take the hill guys"...and they say "Yessir!" and rush off to do it. In business you have to be able to persuade your team to do what you believe to be the right thing.

Also while the military does have rules of engagement, these are nowhere near as complicated as the legislation and regulation surounding trading.

Kenneth Larson, a SCORE mentor and vet, had offers this insight .....

"As a veteran who made the transition to which you are referring and as an industry professional who supports veterans in becoming business owners, I found there are two important types of business issue roles to consider. Military men and women do well in Role 1 below. They have the most challenges with Role 2.

ROLE 1. TECHNICAL - such as scientific, engineering, logistics, electronics, design and similar skill sets where direct supervision, team building, corporate policy compliance and human resource planning and utilization are not major factors.


ROLE 2 MANAGEMENT - in a process functional capacity responsible for hiring, evaluation, supervision, compliance with civilian law and department activities involving group dynamics, customer relations and sensitive human factors.

I came out of the military having had a leadership role in engineering, base development planning, and combat support. I served in war zones in South East Asia and on highly classified missions. I was not a manager. I was a military leader in specialized skill sets under Role 1 above.

I knew how to direct people who followed orders without question because the Uniform Code of Military Justice to which they swore an oath said the had to.

I felt uncomfortable in jobs involving Role 2 above because they were foreign to me. I later adjusted, learned the venue and became skilled as a manager in the corporate world. I preferred staff assignments, however for most of my career. The corporate world seemed enormously political and bureaucratic to a former war fighter like me. I was not that tactful, cut to the chase often and did not always take everyone with me when I made a decision.

Once I grew into a Role 2 performer, I found in interviewing, hiring, evaluating and managing young veterans and even seasoned ones who had retired and joined the civilian work force that almost all were better suited for Role 1. It took years and effort on my part to fit them into Role 2 and some never made it.

The principal reason for the logic I have conveyed is that the military environment may seem to be structured in a way that fits Role 2, but the specifics I have conveyed above do not turn out individuals who are suited in the knowledge and experience necessary and they are not very good at it without extensive training and adaptation.

In fairness to veterans and to our hopes for them in the future we must understand these distinctions, build on Role 1, understand the risk in Role 2 and assist wherever possible."

Thursday, October 25, 2012

How To Estimate Start-Up Expenses

To estimate your start-up costs, I suggest that you first evolve demographics for your anticipated customer base that allow you to develop a marketing plan from the customers you wish to reach with your product information. Demographics are generally available at web sites such as the US Census Bureau and resource centers at these links .....

U.S. Census Bureau

Resource Center

Seek information about individuals who are likely to buy your services, such as, location, economic needs, community conditions, and similar information that would allow you to gear a marketing plan toward a population of buyers you wish to impress.

When researching on web sites I recommend that you change your search key words. Here is a list of preface words that you should consider followed by words identifying your product when searching on Google or like sites:

** Financial Forecast
**Anticipated Revenue
** Future Market
**Sales and Revenue
**Market Coverage
**Industry Forecast
**Market Trends
**Market Data
**Forecast Data
**Others you may think of implying data and information in the past, present or future.

Sometimes the information doesn't jump right out of the page at you. You have to give some thought to how you are going to use the data and be willing to look at it at face value and think about potential underlying support it may be providing to your premises. You may have to change your focus from a technical one to a business one and elevate your view of information, then interpolate downward.

Consider downloading the following articles from the second, vertical, Box Net "References" cube in the left margin of the link below:

"How to Develop a Marketing Plan"

"Gathering Market Research"

Small To Feds

Tuesday, October 23, 2012

Don’t’ Forget Your 401(k) as You Plan for the Year End

With just a couple of months remaining in 2012, it’s a great time to make sure you are getting the most out of your 401(k) plan. Maxing out a 401(k) or other employer-sponsored retirement plan has long been a staple of tax planning. Unlike IRAs, contributions to a 401(k) or 403(b) plan generally must be made by the end of the calendar year.

For 2012, the maximum you may designate to your 401(k), not including any matching contribution from your company, is $17,000. If you are age 50 and older, you can contribute an additional $5,500. The total contribution limit, including employer contributions, is $50,000.

Even if you don't max out your retirement plan to take advantage of the tax savings, you may want to review your retirement plan's asset allocation, investment options, and your contribution levels just to be sure that the plan fits in with your overall savings strategy. If you have employees, this is also an excellent time to remind them of the tax advantages associated with having a retirement plan.

Don’t have a 401(k)?
Consider starting a retirement plan before the end of the year. It will help your employees save for the future, help you attract and retain qualified workers and even gain significant tax advantages for your business and for those participating in the retirement savings plan. It’s relatively inexpensive to start a plan, and there are significant tax credits to offset the costs of establishing a workplace savings plan. A plan can be put in place in less than a week and will only require about an hour a month of on-line maintenance. And imagine how good you will feel knowing you wrapped up 2012 by taking a significant step toward ensuring you’ll have a secure retirement!

Monday, October 22, 2012

Federal Dollars For Small Business Shrank In 2011

"Small businesses received $6.4 billion fewer contracting dollars from federal agencies in fiscal 2011 than in the previous year, leading one lawmaker to call the numbers “abysmal.”

Small businesses received $91.5 billion in prime contracts last year, or 21.65 percent of federal contracting dollars. By contrast in fiscal 2010 they received $97.9 billion, or 22.7 percent of government dollars.

The annual government wide goal is 23 percent.

The Small Business Administration gave the government an overall grade of B, or 96.16 percent, for its efforts last year. A grade of A is for exceeding the set goal. A B is for achieving 90 percent to 99 percent.

Of the government’s four small-business segments, agencies failed to meet the goals for three:

Women-owned small companies received $16.8 billion last year, or 3.98 percent. In fiscal 2010, they received 4.04 percent. The goal is 5 percent.

Companies in economically depressed regions, known as Historically Underutilized Business Zones (HUBZones), received $9.9 billion, or 2.35 percent, of federal dollars. In fiscal 2010, they received 2.77 percent. The goal is 3 percent.

Service-disabled veteran-owned small businesses received $11.2 billion, or 2.65 percent, of federal dollars. This was an increase in the amount of money awarded. In fiscal 2010, they received $10.8 billion, or 2.50 percent. Nevertheless, agencies failed to reach the 3-percent goal.

Agencies exceeded one goal – 5 percent for small, disadvantaged businesses, despite less money awarded overall. Small, disadvantaged businesses received $32.4 billion, or 7.67 percent of federal contracting dollars. In fiscal 2010, they received 7.95 percent of dollars.

The scorecard reflects the need for federal agencies to find ways to improve their small-business contracting, John Shoraka, associate administrator for government contracting and business development at SBA, wrote July 3 on the SBA blog."

Obama does not improve the above. The agency heads and the large corporations that serve them make it happen. They obviously need to be motivated by more than the POTUS.

from Washington Technology

Thursday, October 18, 2012

Definition Of A Successful Small Business

A successful business has the following characteristics.

It is one that...

-the owner is passionate about

-solves a huge problem for a large enough group of people

-for a good profit

-over a long time

-and most importantly allows the owner to live the lifestyle he/she DESIRES

-in a legal and honest way

And that for me definitely works out.

As Peter F. Drucker put it, the purpose of a business is to create new customers.

As Warren Buffet sees it, a great business is one that has a consumer monopoly, a strong track record of earning, has a healthy return on equity, has the ability to retain earnings, has a low cash to debt ratio, and the ability to increase prices during inflation without risk of losing customers or eroding margins.

Merge both opinions and that is my answer.

Per Ken Larson, A SCORE Mentor, a successful small business is one that ...

1. Does not promise what it cannot deliver

2. Does not overextend its resources and get a reputation for poor performance.

3. Does not tell the customer what he or she wants to hear. Tells them what they need to know and is respected for it.

4. Is prepared to provide information, samples and valuable service gratis as a marketing tool. Introduces itself and then immediately engages the client with presentation tools available to bring expertise to whatever topic interests the customer. Lets the client take them where they want to go with their concerns and their needs. Applies presentation tools and expertise dynamically on the fly in a sincere manner to those concerns and needs and as a result is in demand for follow up business.

5. Quotes and bills what the client can afford and grows with the customer (in content and resources).

6. Is dedicated to working itself out of a job with a specific customer and having the client take over by training him. Is remembered by that client, who recommends the business to 10 others.

7. Remembers that growth is a function of persistence and foresight. Knows where the market is headed and gets their first - then writes and speak about success indirectly by helping others. Demonstrates humility and a satisfaction in helping others succeed, whereupon the client finds ways to give the business credit. Knows there are ways of tooting a horn without making peoples' lights go out.

8. Word of mouth advertising from pleased clients is a sure ticket to success.

Monday, October 15, 2012

Executing A Successful Small Business Strategy

Strategic planning is an absolute necessity as an an innovation tool. Long term strategies are key, as well as agility in changing times, markets and economies.

I often recommend the article, "Are you Prepared to Succeed in Business" by Douglas H. Rogers, Jr., Winfield Akeley, Robert Edelson Content at the Biz Info Library. Here is an extract:

"In today's competitive market, small businesses must deal with new competitors, ever changing markets, price sensitivity, and cash flow issues — flying by the seat of your pants just doesn't work anymore. Do you desire to lead your business to growth and expansion?

Rapidly changing technologies, instantaneous worldwide communications, and strong customer preferences require rethinking of how we manage a business. Technologies that lead to product life cycles of 18 to 36 months, and the necessity to focus on true customer desires affect most businesses either directly or indirectly. In order to meet dynamic changes in business conditions and customer needs, an organization must be agile and responsive to these changes.

The long-term success of a business is dependent on its long-term strategies. It has been said that a company can overcome inefficient use of internal resources if its basic strategy is brilliant, but not likely to get by with the wrong strategies even with excellent production and distribution capabilities.

Past success formulas might not work in the future. Therefore, a company must periodically reexamine its situation as objectively as possible and determine the best course of action for the future in order to meet its goals and objectives."

The article provides further details and case studies in strategic vision and planning by successful firms. It it can be downloaded at no charge from the second, vertical, Box Net "References" cube at the link below.


Thursday, October 11, 2012

Innovative Solutions & Thinking For Small Business

Challenges come up all the time in business. And if not challenges out right crises. One either puts out the fire with a creative solution or goes down in flames and that is not an acceptable option in business.

Often there are split second decisions that have to be made or in other cases you are given more time. In split second decisions you go with your gut and all the experience you've accumulated in your life. That's inspiration. Longer term decisions give you time to think about more options or do some research and brainstorming.

Fostering innovative thought in your staff is crucial. How can you get there?

Open communication among employees who feel free to share their ideas in a non-heirarchal environment where everyone's job is as important as the next person's, the company is a team and we rely on each of us to do our jobs so that the system runs smoothly.

Giving autonomy to each employee to do their job to the best of their ability in their own way with the knowledge that everyone is dependent of them for their own success.

This fosters team effort without the usual subterfuge that often hinders smooth and successful operations. When someone sees a better way of doing something and has an idea that would help the company they are free to bring it up for discussion and their ideas are taken seriously in informal meetings. If it meets the approval of the majority and makes sense, it is implemented, if there are flaws in the logic or underlying reasons why it can't work, then we understand why it is shelved.

Monday, October 8, 2012

Is Success All About Passion?

After talking with many professionals in all different positions and industries, I realized that they all define success differently. Some measure it through income while others measure success by the time they spend with family.

Passion has a lot to do with why we do something- why we push ourselves out of our comfort zone to get that extra client, sale, meeting.

My recipe for success is:

1. passion- the seed that is planted in our minds and can only grow

2. smarts- not always book smarts but using your mind to dictate logical decisions and your heart to tell you when to walk away or take the leap

3. Drive to get you through the moments that you are struggling to get one sale and the motivation to keep pushing the boundaries of your business

4. networking- who you know and how can they help you get you where you need to be.

How you define success is the question.

Thursday, October 4, 2012

Most Important Principle For Enhancing Productivity In The Digital Age


Communications and expectations are two vital elements in achieving it.

To an extraordinary degree the age in which we live is requiring us to redefine selectivity and the degree to which communication and expectation contribute to it.

Consider simpler times a few years past (say 100). Selectivity was not so necessary in many venues as a means of survival on a day to day basis. We relied on others extensively for our well being from our local store to our banker, from the policeman to the politician. And we knew them all better, we could reach out and touch them and we were not viewing them in sound bites and web sites, nor were we being bombarded with multiple forms of input to digest about them.

Mass marketing and communications has created expectations beyond reality in venues from romance web sites to building wealth. We must come down to earth and become much more sophisticated in the manner with which we view all this input and sift it in a meaningful way. If we do not we run a high risk and that fact is inescapable.

To a very large degree this is a personal responsibility.

Never forget that its all about the people and what we do and how we communicate must be easily differentiable and understood by other people.....its easier to forget than you think.

The minute we do forget and start focusing too much on the tools is when things start to go astray, its that every busier, even more productive - yet results aren't happening trap.

Monday, October 1, 2012

Bank Loans For Small Business

Many small business borrowers have difficulties with banks because they think banks invest in businesses. Banks are lenders, not equity investors. Lending money to a small business is a much different proposition than investing in a small business.

In evaluating a loan request or investment opportunity, lenders and investors, respectively, attempt to identify potential risks and balance those risks against potential reward. The potential reward for a bank is the repayment of the loan plus the interest income earned. The potential reward for an investor is the selling price of their ownership interest. A bank is looking at an interest income potential equal to a fraction of the loan amount. An investor is looking at an investment income potential equal to a multiple of the investment amount.

Debt differs from equity investment in three significant ways:

1. Debt must be repaid; equity does not. A bank loan requires principal and interest payments in a timely and structured fashion.

2. Debt is normally collateralized; equity is not. A bank loan is frequently collateralized with business assets and, in many small business situations, supported with the personal guaranties of the owners and further collateralized with personal assets.

3. Debt holders are cushioned from losses by equity investment holders. Debt holders are paid prior to equity holders in the event of a business liquidation.

Many small business borrowers are looking to banks to be investors in their business. That is not the role they "intentionally" play which causes difficulties.