Getting New Business Ideas

Ironically the opportunities for starting a successful business in a recession are huge. Indeed, famous companies like apple, Microsoft and face book were all started in a recession.

However, before committing to starting your own business you will need to first of all ask yourself whether you will be suited to becoming your own boss. You will need to research what will be involved with running your own business to see if you have got what it takes to cope with… no guaranteed income, lots of hard work at the beginning, no spare time for family and the stress of controlling your own financial destiny and so on.

If you decide that you have what it takes then the following points will help you to succeed:

Write a business plan

Writing a good business plan can make the difference between your business succeeding or failing. Not only will it detail your objectives and goals but it will also help to convince potential lenders to have the confidence in your idea to lend you money on the strength of your proposals.

Many banks, if they feel confident with your business plans, will sometimes also offer what is known as a facility, which is an amount of money reserved for you that can be taken as and when you want. The advantage of this is that you will then only pay interest on the money that you have actually used which can be a massive help financially when you are starting off in business.

Research Your Business Idea

Carry out thorough research on your business idea. Find out what your competitors are offering and think how you can offer better.

Examine who you think your target audience are? Young, old, the lifestyle they have and why will they want to buy from you rather than your competitors?

Keep start up costs down

Try to keep your business start up costs low in order to keep as much spare cash as possible as a cash flow for your business.

For example do you need to go to the expense of having office premises or could you just as easily run a business from home operating from a spare room in your house?

Talk to H M Revenue and Customs who will be able to offer valuable advice about tax issues that may be able to also help you to save money.

Good Bookkeeping

Make sure that you have a good bookkeeping system.Good bookkeeping can keep track of your business progress from the onset. Make sure that you keep all receipts and invoices, even ones from before setting up your business if they relate to your business.

Value of a Business Between Owners

Buyers who are involved with the business will not pay for the “know-how” or “good will” of a business that a buyer outside the business would consider purchasing. Generally, an inside sale (where the market consists of buyers involved with the business) will not have as high a purchase price as an outside sale (where the market consists of buyers not involved with the business). The term “fair value” is used in legislation and court decisions to indicate the value of business interests between owners of a business. The term “fair market value” is used to indicate the value of a business to those purchasing the business and not involved in the business. Fair value, the value between business owners, results in computation of an overall business value that is less than a presumed fair market value. A minority interest in a closely-held business will be highly devalued for lack of control by a market consisting of buyers not involved with the business, while a market consisting of buyers involved with the business might place a premium on an interest that when acquired would merge with an existing interest to become a majority interest.

Owners will have as a goal the increased value of the business, but when it comes to measuring the value of the business and then incorporating the value concepts into an owner’s agreement which contains buy-sell provisions, the concepts often become convoluted. It can get worse because there are more complications, those involving terms of sale and circumstances motivating the sale.

There is an old saying among negotiators: “If you give me my terms, I will give you your price.” Simply put, if all the proceeds of the sale are not paid immediately then the time involved before payment will decrease the present value of the sale. If the purchaser is not going to pay the entire purchase price immediately, the time factor involved in the payment discounts the value of the price. If purchasing owners do not have the funds to buy out another owner, it is still preferable to have a sale with payment of part of the purchase price deferred. (Usually this means that the future success of the business will determine whether the selling owner is paid.)

If the owner selling the business interest is dead, there are circumstances that create the nature of the market which will cause potential buyers to offer less. If the owner selling the business interest is disabled, there are circumstances that create the nature of the market that may cause a discounting of the price a buyer will offer. If the owner is selling because of a dispute with other owners, especially if the departing owner is going to compete with the business, there are circumstances that create the nature of the market which will cause the discounting of the value of the business interest. Note that none of these circumstances potentially affect the essential worth of the business interest over time – they are market causes for a decrease in purchase price for a certain transaction.

Starting Multiple Businesses

A few years ago I was reading through a book called Growing a Business by Paul Hawken. This book was one of the first influences that started me thinking about going into business. It’s a good read, and one concept in particular that has stayed with me has been to start only one business at a time.

Multiple businesses

Entrepreneurs have to find an idea that they can do better than the existing competition. They will often look to existing companies and try to offer something better, or perhaps combine services to offer something unique. As a result, fresh startup ideas often incorporate multiple businesses in their pitch. The entrepreneurs often don’t even realize that that’s what they’re doing, but when it happens the result is very difficult to get off the ground.

The example that Growing a Business used was that of a farmer who wanted to slaughter his animals himself to save money and sell the meat at a stand by the road. This is actually opening three businesses at once: A farm, an abattoir and a retail butcher shop. All of these businesses require very different skills and capabilities and could easily overwhelm the farmer. I’ve seen my own examples too, including:

Authors who self-publish their book
Coffee shops that also sell crafts on consignment
Restaurants that also do catering

Just recently I met someone on the Internet who had programmed a database with details on old computer games. He wanted to make a business that offered access to this database, a portal that allowed people to access multiple online communities to discuss the games, and an auction function like eBay but with a different auction feedback system. Talk about biting off too much at once!

Why is starting multiple businesses a problem?

Running a business is about matching resources and capabilities that a business has to customer needs in the marketplace. When a business starts up, it has zero capabilities and very limited resources. The entrepreneur has to develop everything from scratch and that takes a lot of effort. In addition, having multiple businesses start at one time increases the amount of competition the business faces.

To put this in perspective, imagine a startup magazine that wants to open their own magazine stands to sell directly to customers. The idea is that they don’t have to pay a distributor and can get a higher percentage of the profits. The capabilities required to produce a magazine include:

Stories and journalism
Photography and graphics
Layout and typesetting
Administration
Marketing
Printing
Distribution

But to open retail stands requires very different capabilities including:

Finding locations
Hiring vendors (HR)
Constructing kiosks
Supply chain management
Processing payments

And this list is not exhaustive. This is a mountain of work that would take dump trucks full of money to get going. In addition, now instead of competing with other magazines for sales, the company is also competing with other magazine sellers as well, all of whom are more established than the magazine startup. A venture like this would likely not last very long at all.

Checklist On Starting a Business

Build a business plan

Having no business plan is too risky when putting a startup business or even for existing business establishment. For any start-ups, a business plan allows you to gain a better understanding of your industry structure, competitive landscape, and the capital requirements of starting a small business.. Every business plan should include something about each of this area, Mission/vision, business name, marketing plan, competitive analysis, financial plan and products and services. It can attract potential investors and secure a loan. For investors this will show whether or not your business can make a profit.

Name your business

It is as simple as it can be but naming your business is the hardest part of building a business. Business name should sounds good and at the same time should be unique so that you have an impact against your competitor but not so unique that potential customers won’t know what you’re selling. You may want to consider Mr. Webster as your best friend for this part and play around with name ideas. Once you have a few you’re happy with, test them out with family and friends. Before ordering letterhead, though, there are a few steps you’ll need to take to ensure that you legally can use the name you selected.

Choose a business structure

Four types of business structure that you can decide on; Sole proprietorship, Partnership which has 2 types, Limited and General partnership, Limited Liable Company or LLC and Corporation which has C and S corporation.

Sole Proprietorship, only one owner controls the business. This is the most common business structure available. Common proprietorship includes part-time businesses, direct sellers, new start-ups, contractors, and consultants.

Limited partnershipis limited partnership consists of at least one general partner (controls the business) and at least one limited partner (investor). And General partnership is a business owned by two or more people. Partnerships offer more freedom for business owners with shared business tasks and the potential to earn greater profits.

LLC, this is becoming more popular these days. Limited Liability Company or LLC is a type of business ownership combining several features of corporation and partnership structures Owners of a LLC have the liability protection of a corporation.

Corporationis usually the most complex and most expensive way to organize a business. Records must be kept to document decisions made by the board of directors. There are two types of corporations; C Corporations (incorporate) and S Corporations (small business). Small business is the most common corporation; C Corporation is more complicated than forming a limited liability company or a Sole proprietorship.

Set up and determine your location

Getting a location is also hard as it can be, this where your marketing strategy will fall. A good location can attract a large number of walk-by traffic while a bad location can hide you away from potential customers. It really depends to really what kind of business you will have. There are many steps in office set up including where to locate your office (home or office space), buying the necessary office equipment, designing your work space and getting supplies. Whatever location you choose, make sure you know all of the legal restrictions on your place of business.

A Guide to Getting Your Business

First off, what is a certified minority-owned business? Who is eligible?

A certified minority-owned business is a business that is supported by the government economically and socially. It is designed to aid minority groups in the United States by providing business solutions for those eligible and assist in distinguishing its brand identity. To be eligible, you must be a U.S. citizen, at least 25% Asian-Pacific, Black, Hispanic, or Native American heritage, and have proof of your minority through documentation. In addition, 51% of the company’s stock must also either be owned by its owners, managers, or operators to be considered.

What’s the big fuss, why get certified?

For one, people want to do business with minority owned companies, including the federal government, corporations, and state agencies. The reason being, departments, corporations, and companies must fulfill a certain funding percentage to minorities. Not only must a quo be met, many large companies seek to buy from minority-owned suppliers. By getting certified, you are making your business more marketable.

Secondly, having this business certification will guide you to more public and private sector programs and opportunities. Public and private firms search for minority-owned suppliers. By not getting your business certified, you are limiting your business to fewer marketing and business development resources and opportunities.

Thirdly, these businesses are important to its customers. See if you qualify and build up your support base. Be one of the businesses that contracts with the government and receive tax dollars to help your business thrive.

How can I get my small business certified? Are there more programs and perks?

If your business wants to connect with private-sector buyers, simply contact NMSDC’s (National Minority Supplier Development Council) 37 regional councils. NMSDC will provide you with a standard application process along with requested verified documents. The council has many corporate members, including Marriot and Microsoft, and connects to over 17,000 minority-owned suppliers. If you pass the certification regulations, your business may participate in an advanced training program, the Business Consortium Fund’s Working on Capital Loan Program, and many NMSDC business opportunity fairs.

The Small Business Administration’s (SBA) Business Development Program helps minority-owned businesses win contracts in the public sector. In order to be approved, the business must be at least two years old and demonstrate its potential for succeed through its tax returns for proof of revenue. Simply register with the Central Contractor Registration database, then follow the SBA’s instructions, and you may be eligible for free one-on-one counseling, specialized business training, and marketing assistance through the local district office. The 2008 training even included programs on developing cost proposals, government contract negotiations, and contract law and the legal aspects of owning a firm.