Business People Weigh Credit Card Options

Small business people who rely on their company’s credit card to purchase big ticket items or finance day-to-day operations won’t see any benefits from this month’s federal credit card reform, unless they put those expenses on a personal card.

The new law, which was passed May 2009 and becomes effective Feb. 22, 2010 protects consumer cards against arbitrary interest rate increases, over-limit fees and clandestine term changes. But the reforms don’t apply to the business cards used by many entrepreneurs, which may tempt some small business owners to give up those cards in favor of a consumer card.

“The problem is that business owners who rely on consumer cards could wind up damaging their personal credit scores”, says Gerri Detweiler, a personal finance advisor for

Ms. Detweiler has long recommended that start-up companies use small business credit cards to separate business and personal expenses for tax and credit-report purposes. “But now this puts business owners in a tough position,” she says. “Do they risk damage to their personal credit or do they stick with small business credit cards and risk having the rate jacked or terms changed midstream?”

Some 41 per cent of business owners use a credit card of some kind to meet capital needs, in part because of the difficulties in securing bank loans or lines of credit, according to the latest year-end survey by the National Small Business Association, a Washington trade group.

The NSBA is concerned that credit card companies might hike rates and fees on business cards to compensate for the revenue they will lose on consumer cards as a result of the legislation, a prediction that credit card issuers repudiate.

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American Small Businesses

Even today, the American economy is by no means dominated by giant corporations. Fully 99 percent of all independent small businesses in the country employ fewer than 500 people. These small enterprises account for 52 percent of all American workers, according to the American Small Business Administration (SBA). Some 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers. By contrast, 47.7 million Americans work for firms with 500 or more employees.

Small businesses are a continuing source of dynamism for the American economy. They produced three-fourths of the economy’s new jobs between 1990 and 1995, an even larger contribution to employment growth than they made in the 1980s. They also represent an entry point into the economy for new groups. Women, for instance, participate heavily in small businesses. The number of female owned businesses climbed by 89 percent, to an estimated 8.1 million, between 1987 and 1997, and women-owned sole proprietorships were expected to reach 35 percent of all such ventures by the year 2000. Small firms also tend to hire a greater number of older workers and people who prefer to work part-time.

A particular strength of small businesses is their ability to respond quickly to changing economic conditions. They often know their customers personally and are especially suited to meet local needs. Small businesses — computer-related ventures in California’s “Silicon Valley” and other high-tech enclaves, for instance — are a source of technical innovation. Many computer-industry innovators began as “tinkerers,” working on hand-assembled machines in their garages, and quickly grew into large, powerful corporations. Small companies that rapidly became major players in the national and international economies include the computer software company Microsoft; the package delivery service Federal Express; sports clothing manufacturer Nike; the computer networking firm America OnLine; and ice cream maker Ben & Jerry’s.

Of course, many small businesses fail. But in the United States, a business failure does not carry the social stigma it does in some countries. Often, failure is seen as a valuable learning experience for the entrepreneur, who may succeed on a later try. Failures demonstrate how market forces work to foster greater efficiency, economists say.

The high regard that people hold for small business translates into considerable lobbying clout for small firms in the American Congress and state legislatures. Small companies have won exemptions from many federal regulations, such as health and safety rules. Congress also created the Small Business Administration in 1953 to provide professional expertise and financial assistance (35 percent of federal dollars award for contracts is set aside for small businesses) to persons wishing to form or run small businesses. In a typical year, the SBA guarantees $10,000 million in loans to small businesses, usually for working capital or the purchase of buildings, machinery, and equipment. SBA-backed small business investment companies invest another $2,000 million as venture capital.

The SBA seeks to support programs for minorities, especially African, Asian, and Hispanic Americans. It runs an aggressive program to identify markets and joint-venture opportunities for small businesses that have export potential. In addition, the agency sponsors a program in which retired entrepreneurs offer management assistance for new or faltering businesses. Working with individual state agencies and universities, the SBA also operates about 900 Small Business Development Centers that provide technical and management assistance.

In addition, the SBA has made over $26,000 million in low-interest loans to homeowners, renters, and businesses of all sizes suffering losses from floods, hurricanes, tornadoes, and other disasters.

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More People Work From Home

More and more people work from home every day. Not only that, more and more people don’t work from their offices, or “where they’re meant to work”. With the Internet, intranet’s and extranet’s, email and unified communications with VoIP and Blackberry devices, it makes life much easier for those with already busy lives.

Having said that, whether you work from home or primarily in the office, either have their ups and downs, and working from home isn’t always cracked up to what people think it is. I thought it’d be interesting to show what it’s like working from home, and whether it beats working in the office.

Mary-Jo, esteemed colleague and friend, some would say the cornerstone of ZDNet with her blog, All About Microsoft, gave me her view on effectively the same job as me.

I actually love working at home. I am way more productive at home than in an office with a lot of interruptions. That said, I think I work too much because there is less separation between being “on” and “off” the clock. The expenses kind of even out: no commuting costs and no $12 tuna sandwiches. I can make what I like and eat what and when I want. That offsets my Internet/electricity/phone, in my mind.

I do more and more of my interviews on email and IM. I like that because it reduces time differences, the need to transcribe and the worry you misunderstood something. So I am happy to do fewer phone calls and more “social networking” kinds of interactions.

We at ZDNet are as transparent as we possibly can be. You’ll notice some of us have full time jobs as executives and directors, CEO’s of organisations and some do this for a living, whereas I’m the only good-for-nothing student, *sigh*. This is my way of showing transparency in my work, but also the future of how we work, as technology can be the key to our work freedom.

So, what happens in my average day as a work from home employee?

0915: I wake up, sun blazing through the window, and my phone’s ringing. It’s not hugely important, but my housemate wants me to nip to the shop and grab some milk for when she comes back to study obligations and contract law.

0930: I’ve grabbed myself a cup of tea, had my waking-up-cigarette and load up a whole batch of favourites. Bink, Neowin, istartedsomething, LiveSide, and check the Beeb to see what’s been going on since I’ve been asleep. Naturally, I check the pages of ZDNet to see if my lovely editor has put me on the front or second pages. Alas today he has not, but losing out to Perlow makes the pain less bearable as his blog keeps me chuckling through the day.

Because of the time difference and I’ve been asleep for five hours, this is a golden opportunity to catch up on the networks whilst I’ve been absent. I check my email, see what the other bloggers are saying, see what university announcements there are and start emailing back. Considering I get around 30 genuine emails by the time I wake up, this can take a good 15-20 minutes.

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Cost-Cutting Strategies for Your Home Business Services

With mounting energy bills eating into everyone’s income and increasing the cost of a home business, it’s a good time to look into cost cutting strategies for your home business services. First we’ll take a look at some ways to keep your energy costs in line, followed by some other ways to cut corners and save.

Cost Cutting Business Strategy #1. Cut Utility Bills
Now is a good time to compare the choices you have for providing heat and electricity in your home office. First, you may find immediate cost savings by switching from a conventional system to an alternative one like cutting down the energy demands on your furnace by heating your home with your wood-burning fireplace. In the summer, reduce air-conditioning costs by scheduling your work around the hottest hours of the day, using attic fans and skylights that open to let out the heat. Often you can do this without decreasing your productivity.

If you use propane or heating oil and have a choice of suppliers, compare prices. Find out if your home based business qualifies for a business discount or business rate. If you can get a business rate, make sure it’s actually cheaper than your residential rate. Some state utility commissions tilt in favor of consumers, but many offer business discounts.

Some utility companies offer free energy evaluations where a certified inspector will come to your home and assess your home and office energy-use. The inspector will show you where you can save resources and money and offer specific suggestions on how to do so. If a free inspection isn’t available, it may be worthwhile to hire an energy auditor. You can locate an energy expert through the Residential Energy Services Network (RESNET).

You can calculate your home’s energy use at Additional information can be found at The American Council for an Energy-Efficient Economy. For a specific weatherization assistance program, try

Cost Cutting Business Strategy #2. Make Your Home Energy-Efficient
Making a home improvement here and there now qualifies for tax incentives provided in the Energy & Transportation Tax Acts of 2005. Beginning January 1, 2006, you can recover up to 30 percent of the cost of solar water heaters and photovoltaic equipment in the form of tax credits. There are also credits for adding insulation or roof materials that’ll reduce heat loss, as well as putting in geothermal heating and central fan systems.

To save on home lighting, use compact fluorescent and halogen bulbs. They use less energy, produce more light, and last longer than ordinary incandescent bulbs. To find out if your existing home office equipment and anything else that uses electricity is being an energy hog, buy a device that enables you to monitor energy usage. One such device is called Kill A Watt from P3 International.

When replacing business equipment, look for office equipment that displays the Energy Star logo. Using such equipment can cut your electric usage by as much as 50 percent over other equipment. Learn more about EPA’s Energy Star program at Replacing home appliances over 10 years old is also something to consider.

Cost Cutting Business Strategy #3. Get a Better Deal on Phone Services
Increasing numbers of people are saving money by using voice over internet protocol (VoIP), such as Skype. While quality of service varies, a friend of ours who lives outside the U.S. reports people hear him better when he’s using using Skype than when he’s on his land line. Other major VoIP providers are iConnectHere, Net2Phone and DialPad.

You may also be able to save money on your cell-phone service. To get customers to switch services, providers are constantly competing with each other by offering lower prices.

Another money-saving option is to combine your phone with your internet service. Check prices carefully, though. For example, we get SBC’s bundling of local and long-distance service, but we’re required to pay for tacked-on services we don’t use. If you want to combine your phone wth your internet service, shop around to make sure you’re actually saving on a bundled package.

Cost Cutting Business Strategy #4. Save on Office Supplies and Equipment
If you need to replace old office equipment or replenish dwindling supplies, there are a number ways to cut costs.

  • Comparison-shop smartly. When buying home business office equipment, use shopping comparison sites, such as,,, and To get the best prices, check out multiple comparison sites for each purchase. Also check out prices on eBay as well as other auction sites like Bidville, ePier, and iOffer. Items on less-used auction sites sometimes fetch lower prices than ones on eBay, or offer alternatives to bidding.
  • Buy in bulk. Chances are you’ll save by buying items you use a great deal of in bulk at warehouse stores like Costco. For supplies you use in your home business that aren’t available at office superstores or warehouse stores, consider joining other home based business owners to buy items directly from a manufacturer.
  • Buy generic store brands. Office superstores offer private label items such as mailing labels, ink cartridges and shipping envelopes at discounts over name brands. Chances are they’re made by the same manufacturers.
  • Don’t waste paper. Save on the amount of paper you use in your home office by using:

      – Personal information management software instead of making notes on paper,

      – The “print preview” feature in your word-processing or desktop publishing software to see what your printed page will look like before printing (this will reduce the number of test copies you’ll need to make),

      – Your computer to send and receive faxed messages without having to produce printed pages,

      – Outdated stationery as notepads instead of throwing it away, and

      – Homemade packing material made from junk mail and other paper you normally discard that has been run through a paper shredder (also save shipping boxes, plastic foam balls, and other plastic packaging materials for reuse).

Cost Cutting Business Strategy #5. Pay Credit Card Bills Soon After They Arrive
Credit card companies will take as many as three days to log your payment, so your best bet is to pay soon after receiving your bill if you have the money in your account and can pay the balance in full. If you miss the closing date, you’ll be charged the larger of a late fee (often $39) or interest on the old and new balance.

There are a number of ways you can cut costs and save money in your home based business. With minimal effort, these five strategies will put a little extra money in your pocket now and add up to big savings for you and your business year after year.

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4 Myths About Home Based Business

There are a ton of misleading information about home based business that adds to the complication of starting a new business. So what are these myths?

Home Based Business Myth #1
You don’t need to pay taxes if you sell online.

This is one of the home based business myths that can get you in trouble. The last time I checked, a business whether online or offline is still part of the economy. So not paying taxes? Definitely will send the men from the IRS after you. Make sure to take advantage of the tax deductions though. Your home office can qualify if it is used “exclusively” and “regularly” for business use and is your principal place for business. Do more research or talk to your accountant about this.

Home Based Business Myth #2
A home based business will make you incredibly rich overnight.

Very few small business owners get incredibly wealthy immediately. However, if you play your cards right, you should be able to live very comfortably. The funny thing is to run a business out of your home really isn’t about the money. Most people just want to be their own boss. Home based business can grow into successful business empires but you have to put in a lot of solid work. Sleeping in until half-past four just won’t cut it.

Home Based Business Myth #3
Home-based businesses have no overhead costs.

Your overhead will definitely be a lot lower when you run a business out of your home but there is no such thing as absolutely no overhead. You need to purchase basic office equipment for your home based business. You may even need to install an extra phone line. Don’t expect to set up your home based business for free. You will be getting your hopes up for nothing.

Home Based Business Myth #4
You won’t be able to separate your personal life.

This is one of those home-based business myths that spurn away aspiring entrepreneurs. In reality, all it really takes is a little discipline. Make sure you have an home office that you will use for that purpose only. Make an effort to limit your business hours. Keep weekends for yourself and your family. Working at home won’t exactly be a walk in the park, but entrepreneurship is about sacrifice and hard work. If you really truly believe in your business and your big idea, not being able to separate your personal life certainly won’t stop you.

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Work at Home Business Tax Help

As would be expected in a struggling economy, more Americans are looking to work from home to supplement family income part-time or, in some cases, on a full-time basis.

As a result, questions are being raised about the true tax-saving benefits that might accompany the home office deduction. Although this special tax write-off is a distinct advantage for many, others will find that the actual tax dollars saved will not justify the effort to make the claim.

Home office tax help – #1. Following are the basic rules:
To qualify: Regardless of the size of your business, you must first be prepared to demonstrate that an area has been set aside in your home exclusively for your business operation. A desk and file cabinet in the sewing room won’t make it.

And, you must be prepared to show that the area is used on a “regular basis” either as: A) your principal place of your business, or B) a place to meet or consult with clients, customers or patients etc. A regular basis doesn’t mean conducting business three or four times a year.

Liberal trends in qualifying for the home office deduction: In recent years, many have found the qualifying rules to be a bit more relaxed, especially for those who use their home office regularly and exclusively for handling the important administrative and management activities of their business.

In the past, you could only qualify for the special deduction when your home office was used to carry on regular day-to-day business operations – the so-called “focal point” test. With the newer guidelines, you can qualify if the home office is used regularly to handle the important paperwork of your business as long as there is no other fixed location available to do so.

This liberal provision could even work for employees who do administrative work at home – if it is “for the convenience of the employer.” This, of course, could be difficult for most employees who generally have other office or work space available to carry on such administrative duties.

Other bonus benefits for those who qualify: If you qualify for the home office deduction, you will be eligible to write off auto and transportation costs for travel between your residence and other work locations. In addition, computers and certain equipment that you use will be allowed greater flexibility for depreciation options, like “first-year expensing.”

Home office tax help – #2. Crunch the numbers first:

Before you decide to take the deduction, run a calculation to determine the amount of the write-off available and see if it is worth going through the exercise.

For example, let’s say that you plan to set aside for home office use 180 square feet of room space, which accounts for about 6 percent of the square footage of the entire home. In very general terms, this means that your yearly tax write-off will be 6 percent of the amount that you pay for: utilities, insurance, repairs and depreciation on your home.

If this total isn’t enough to generate a reasonably attractive tax deduction, why waste your time? (NOTE: Depreciation is calculated by applying a 39-year life against the cost basis in your home after removing the cost of the land. That is, 1/39th of the adjusted building cost each year.)

Finally, evaluate the tax consequences if you decide to sell your home: For years, many entrepreneurs have been leery about claiming the valued home office deduction out of fear that it might adversely compromise the “home-sale” exclusion when the home is eventually sold.

Remember, the $250,000 exclusion – $500,000 if you’re married – is only available when you sell a home that has been used as your “principal residence” for two out of the last five years prior to the sale.

Good news on the definition of principal residence: Recent interpretations by the IRS have made it clear that, at the time of sale, the area that you designate as home office space does not have to be set apart from the personal residence by definition, as long as the office space and the residence are within the same dwelling unit.

Hence, at the time of sale, many will be pleased to observe that most of the gain will be excludable, including the gain attributable to the area used in the business. The only thing that will have to be accounted for will be the depreciation that is allowed with the home office; and some would argue that this “recaptured depreciation” is a small cost to pay especially with tax dollars being paid at a later date.

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Federal Grants From The American Government

If you are an american citizen, you may qualify to receive American government business grant money. In an effort to help Americans, GFC is giving away 2009-edition Grant Kits to check out for FREE… Supplies are limited. Over 4,000 government money programs are available. Almost all American citizens qualify for at least some money. Find out today which grants you qualify for, and discover how surprisingly simple it can be to apply for and receive this money. See below if you qualify to receive a remaining kit.

There are a large number of mothers who wish to go back to school but can’t afford to do so. Unfortunately this problem is very prevalent in the United States, and this is why Obama and private companies are helping all women go back-to-school. Does this sound like you? Unfortunately this problem is very prevalent in the United States, and this is why Obama and private companies are helping all women go back-to-school. Not having enough money to achieve what you want can be a source of great frustration for many people. Obama is aware of the fact that the time and money spent on children can possible take you away from achieving your dreams. American grants for moms devised by Present Obama and private scholarships will now give mothers the chance to select any school where they have the opportunity to study and earn any degree they desire. Fact: You odds of getting financial aid improves if you are a woman. Fact: $10,000 in a scholarship is now available to all women will apply. Grants and scholarships for mothers will not need to be returned to the government at a later date.

Individuals interested in finding and applying for American government home grants for real estate have an opportunity to receive thousands of dollars in free cash grants that never have to be paid back. This is money provided by local and state government agencies to assist with housing, purchasing property, down payment assistance and even home repairs. American government home grants are often thought of as low-income housing programs, but there are many real estate grant programs for individuals and investors of all income classes and credit. Depending on what your specific goal is, there is good chance that free government money is available to help you reach your goals. *First Time Home Buyer Grants *Home Improvement Grants *Down Payment Assistance *Rental Grants These funds, and others, are typically provided by your local government to help improve and develop the community. By searching an up-to-date grant directory, you can find these funds and find out exactly how to submit your application to request your share. Because these grant programs are provided with American tax payer dollars, individuals can partner with the government to put this money to good use – even if it is for your own personal use. And because grants are not loan, there is generally no credit check, no down payment, and you never have to pay the money back. By submitting your application to receive free government home grants, you could have cash in hand in as little as 7 days. The first step is to find these available funds by accessing an online database, and then submitting your request.

Women who have children have difficulty finding money to return to school and this is a very common problem. Women who are wanting to go back to school can sometimes feel disappointed at the lack of opportunity to fulfill their dreams. It can be extremely frustrating if you don’t have money to achieve your goals. This is something Obama understands and so now, several college scholarships are now available for women so you can now find a school that you want to pursue a degree in. Because you are a mother, or single mother, you will easily find college scholarships for moms. $10,000 is now being issued in a scholarship to help women return back to school. The funds you receive from scholarship for moms are for you to use as you see fit and do not have to be repaid. For women with children, working on a degree at home or on your own schedule is possible with the help of online educational institutes. A grant or scholarship up to $10,000 is attainable through many scholarships or grants for single mothers. So this means that you can use this money to buy your books, computer equipment, you can pay your tuition, or even take a mini vacation to help you relax before you attend college. Single mothers have innumerable opportunities to access to free money with the Obama Administration in place. Every mother who is thinking about returning to school should apply for a $10,000 scholarship so they don’t have to come out of pocket to pay for tuition, books or even a new computer.

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Families Get Free Government Grants

Millions of dollars are earmarked for American families and individuals every year, and with high rates of unemployment and other current economic conditions, many are using funds from American government grants to overcome the recession and even better themselves and their careers. Grants have always been available, and even more funds can be released under the various economic stimulus packages. However, to apply for American government grants, you must follow a certain protocol. Government Grants Truth offers readers information about finding applicable grants and applying correctly.

A government grant is not a loan. When you apply for and receive a government grant, you must meet the terms or conditions of the funds, but you don’t ever have to repay the funds. An American government grant can be free money to start a business, go back to school or just to help cover the basics while you wait for new work opportunities to come along.

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Free Sample Business Plan

Below is a free sample business plan outline Please remember that your plan should be only as big as what you need to start a business. While everybody should have an outline of a business plan, not everyone needs a complete formal business plan unless you are submitting to a potential investoror bank. You can use a less formal plan to outline what your goals to run your business if you don’t need investors to stay in track of your progress. Many business owners get lost after a while, and that my friends is one of the ways how businesses fail.

1.0 Executive

By focusing on its strengths, its key customers, and the underlying values they need, American Management Technology will increase sales to more than $10 million in three years, while also improving the gross margin on sales and cash management and working capital.

This business plan leads the way. It renews our vision and strategic focus: adding value to our target market segments, the small business and high-end home office users, in our local market. It also provides the step-by-step plan for improving our sales, gross margin, and profitability.

This plan includes this summary, and chapters on the company, products and services, market focus, action plans and forecasts, management team, and financial plan.

1.1 Objectives

1. Sales increasing
to more than $10 million by the third year.

2. Bring gross
margin back up to above 25%, and maintain that level.

3. Sell $2
million of service, support, and training by 1998.

4. Improve
inventory turnover to 6 turns next year, 7 in 1996, and 8 in 1997.

1.2 Mission

AMT is built
on the assumption that the management of information technology for business
is like legal advice, accounting, graphic arts, and other bodies of knowledge,
in that it is not inherently a do-it-yourself prospect. Smart business
people who aren’t computer hobbyists need to find quality vendors of reliable
hardware, software, service, and support. They need to use these quality
vendors as they use their other professional service suppliers, as trusted

AMT is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need to run their businesses as well as possible, with maximum efficiency and reliability.

Many of our information applications are mission critical, so we give our clients the assurance that we will be there when they need us.

1.3 Keys to Success

1. Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support — and charging for it.

2. Increase gross margin to more than 25%.

3. Increase our non-hardware sales to 20% of the total sales by the third year.

2.0 Company Summary

AMT is a 10-year-old computer reseller with sales of $7 million per year, declining margins, and market pressure. It has a good reputation, excellent people, and a steady position in the local market, but has been having trouble maintaining healthy financials.

2.1 Company Ownership

AMT is a privately-held C corporation owned in majority by its founder and president, Ralph Jones. There are six part owners, including four investors and two past employees. The largest of these (in percent of ownership) are Frank Dudley, our attorney, and Paul Karots, our public relations consultant. Neither owns more than 15%, but both are active participants in management decisions.

2.2 Company History

AMT has been caught in the vise grip of margin squeezes that have affected computer resellers worldwide. Although the chart titled Past Financial Performance shows that we have had healthy growth in sales it also shows declining gross margin and declining profits.

      The more detailed


      numbers in Table 2.2 include other indicators of some concern


      The gross


      margin % has been declining steadily, as we see in the chart.




    turnover is getting steadily worse.

All of these concerns
are part of the general trend affecting computer resellers. The margin
squeeze is happening throughout the computer industry worldwide.


1994 1995 1996
Sales $3,773,889 $4,661,902 $5,301,059
Gross $1,189,495 $1,269,261 $1,127,568
% (calculated)
31.52% 27.23% 21.27%
$752,083 $902,500 $1,052,917
period (days)
35 40 45
7 6 5

Sheet: 1996

Short-term Assets

Cash $55,432

Accounts receivable $395,107

Inventory $651,012

Other Short-term Assets $25,000

Total Short-term Assets $1,126,551

Long-term Assets

Capital Assets $350,000

Accumulated Depreciation $50,000

Total Long-term Assets $300,000

Total Assets $1,426,551

Debt and Equity

Accounts Payable $223,897

Short-term Notes $90,000

Other ST Liabilities $15,000

Subtotal Short-term Liabilities $328,897

Long-term Liabilities $284,862

Total Liabilities $613,759

Paid in Capital $500,000

Retained Earnings $238,140

Earnings $437,411 $366,761 $74,652

Total Equity $812,792

Total Debt
and Equity $1,426,551

Other Inputs: 1996

Payment days 30

Sales on credit $3,445,688

Receivables turnover 8.72

2.4 Company Locations and Facilities

We have one location– a 7,000 square foot store in a suburban shopping center located conveniently close to the downtown area. It includes a training area, service department, offices, and showroom area.

3.0 Products and Services

AMT sells personal computer technology for small business including personal computer hardware, peripherals, networks, software, support, service, and training.

Ultimately, we are really selling information technology. We sell reliability, and confidence. We sell the assurance to small business people to know that their business will not suffer an information technology disaster.

AMT serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need to run their business as well as possible, with maximum efficiency and reliability. Since many of our information applications are mission critical, we give our clients the confidence that we will be there when they need us.

3.1 Product and Service Description

In personal computers, we support three main lines:

The Super Home is our smallest and least expensive, initially positioned by its manufacturer as a home computer. We use it mainly as a cheap workstation for small business installations. Its specifications include ….

The Power User is our main up-scale line. It is our most important system for high-end home and small business main workstations, because of …. Its key strengths are …. Its specifications include ….

The Business Special is an intermediate system, used to fill the gap in the positioning. Its specifications include …

In peripherals, accessories and other hardware, we carry a complete line of necessary items from cables to forms to mousepads …

In service and support, we offer a range of walk-in or depot service, maintenance contracts and on-site guarantees. We have not had much success selling service contracts. Our networking capabilities …

In software, we sell a complete line of …

In training, we offer …

3.2 Competitive Comparison

The only way we can hope to differentiate well is to define the vision of the company to be an information technology ally to our clients. We will not be able to compete in any effective way with the chains using boxes or products as appliances. We need to offer a real alliance.

The benefits we sell include many intangibles: confidence, reliability, knowing that somebody will be there to answer questions and help at the important times.

These are complex products, products that require serious knowledge and experience to use, and our competitors sell only the products themselves.

Unfortunately, we cannot sell the products at a higher price just because we offer services; the market has shown that it will not support that concept. We have to also sell the service and charge for it separately.

3.3 Sales Literature

Copies of our brochure and advertisements are attached as appendices. Of course one of our first tasks will be to change the message of our literature to make sure we are selling the company, rather than the product.

3.4 Sourcing

Our costs are part of the margin squeeze. As competition on price increases, the squeeze between manufacturer’s price into channels and end-users ultimate buying price continues.

With the hardware lines, our margins are declining steadily. We generally buy at … Our margins are thus being squeezed from the 25% of five years ago to more like 13-15% at present. In the main-line peripherals a similar trend shows, with prices for printers and monitors declining steadily. We are also starting to see that same trend with software ….

In order to hold costs down as much as possible, we concentrate our purchasing with Hauser, which offers 30-day net terms and overnight shipping from the warehouse in Dayton. We need to concentrate on making sure our volume gives us negotiating strength.

In accessories and add-ons we can still get decent margins, 25% to 40%.

For software, margins are …

3.5 Technology

We have for years supported both Windows and Macintosh technology for CPUs, although we’ve switched vendors many times for the Windows (and previously DOS) lines. We are also supporting Novell, Banyon, and Microsoft networking, Xbase database software, and Claris application products.

3.6 Future Products and Services

We must remain on top of the new technologies, because this is our bread and butter. For networking, we need to provide better knowledge of cross platform technologies. Also, we are under pressure to improve our understanding of direct-connect internet and related communications. Finally, although we have a good command of desktop publishing, we are concerned about getting better at the integration of technologies that creates fax, copier, printer, and voice mail as part of the computer system.

4.0 Market Analysis Summary

AMT focuses on local markets, small business and home office, with special focus on the high-end home office and the 5-20 unit small business office.

4.1 Market Segmentation

The segmentation allows some room for estimates and nonspecific definitions. We focus on a small-medium level of small business, and it is hard to find information to make an exact classification. Our target companies are large enough to need the high-quality information technology management we offer, but too small to have a separate computer management staff such as an MIS department. We say that our target market has 10-50 employees, and needs 5-20 workstations tied together in a local area network; the definition is flexible.

Defining the high-end home office is even more difficult. We generally know the characteristics of our target market, but we can’t find easy classifications that fit into available demographics. The high-end home office business is a business, not a hobby. It generates enough money to merit the owner’s paying real attention to the quality of information technology management, meaning that there is both budget and concerns that warrant working with our level of quality service and support. We can assume that we aren’t talking about home offices used only part-time by people who work elsewhere during the day, and that our target market home office wants to have powerful technology and a lot of links between computing, telecommunications, and video.

4.2 Industry Analysis

We are part of the computer reselling business, which includes several kinds of businesses:

1. Computer dealers: storefront computer resellers, usually less than 5,000 square feet, often focused on a few main brands of hardware, usually offering only a minimum of software, and variable amounts of service and support. These are usually old-fashioned (1980s-style) computer stores and they usually offer relatively few reasons for buyers to shop with them. Their service and support is not usually very good and their prices are usually higher than the larger stores.

2. Chain stores and computer superstores: these include major chains such as CompUSA, Computer City, Future Shop, etc. They are almost always more than 10,000 square feet of space, usually offer decent walk-in service, and are often warehouse-like locations where people go to find products in boxes with very aggressive pricing, and little support.

3. Mail order: the market is served increasingly by mail order businesses that offer aggressive pricing of boxed product. For the purely price-driven buyer, who buys boxes and expects no service, these are very good options.

4. Others: there are many other channels through which people buy their computers, usually variations of the main three types above.

4.2.1 Industry Participants

1. The national chains are a growing presence: CompUSA, Computer City, Incredible Universe, Babbages, Egghead, and others. They benefit from national advertising, economies of scale, volume buying, and a general trend toward name-brand loyalty for buying in the channels as well as for products.

2. Local computer stores are threatened. These tend to be small businesses, owned by people who started them because they liked computers. They are under-capitalized and under-managed. Margins are squeezed as they compete against the chains, in a competition based on price more than on service and support.

4.2.2 Distribution Patterns

Small business buyers are accustomed to buying from vendors who visit their offices. They expect the copy machine vendors, office products vendors, and office furniture vendors, as well as the local graphic artists, freelance writers, or whomever, to visit their office to make their sales.

There is usually a lot of leakage in ad-hoc purchasing through local chain stores and mail order. Often the administrators try to discourage this, but are only partially successful.

Unfortunately our home office target buyers may not expect to buy from us. Many of them turn immediately to the superstores (office equipment, office supplies, and electronics) and mail order to look for the best price, without realizing that there is a better option for them at only a little bit more.

4.2.3 Competition and Buying Patterns

The small business buyers understand the concept of service and support, and are much more likely to pay for it when the offering is clearly stated.

There is no doubt that we compete much more against all the box pushers than against other service providers. We need to effectively compete against the idea that businesses should buy computers as plug-in appliances that don’t need ongoing service, support, and training.

Our focus group sessions indicated that our target Home Offices think about price but would buy based on quality service if the offering were properly presented. They think about price because that’s all they ever see. We have very good indications that many would rather pay 10-20% more for a relationship with a long-term vendor providing back-up and quality service and support; they end up in the box-pusher channels because they aren’t aware of the alternatives.

Availability is also very important. The home office buyers tend to want immediate, local solutions to problems.

4.2.4 Main Competitors

Chain stores:

We have Store 1 and Store 2 already within the valley, and Store 3 is expected by the end of next year. If our strategy works, we will have differentiated ourselves sufficiently to not have to compete against these stores.

Strengths: national image, high volume, aggressive pricing, economies of scale.

Weaknesses: lack of product, service and support knowledge, lack of personal attention.

Other local computer stores:

Store 4 and Store 5 are both in the downtown area. They are both competing against the chains in an attempt to match prices. When asked, the owners will complain that margins are squeezed by the chains and customers buy on price only. They say they tried offering services and that buyers didn’t care, instead preferring lower prices. We think the problem is also that they didn’t really offer good service, and also that they didn’t differentiate from the chains.

4.3 Market Analysis

The home offices in Tintown are an important growing market segment. Nationally, there are approximately 30 million home offices, and the number is growing at 10% per year. Our estimate in this plan for the home offices in our market service area is based on an analysis published four months ago in the local newspaper.

Home offices include several types. The most important, for our plan’s focus, are the home offices that are the only offices of real businesses, from which people make their primary living. These are likely to be professional services such as graphic artists, writers, and consultants, some accountants and the occasional lawyer, doctor, or dentist. There are also part-time home offices with people who are employed during the day but work at home at night, people who work at home to provide themselves with a part-time income, or people who maintain home offices relating to their hobbies; we will not be focusing on this segment.

Small business within our market includes virtually any business with a retail, office, professional, or industrial location outside of someone’s home, and fewer than 30 employees. We estimate 45,000 such businesses in our market area.

The 30-employee cutoff is arbitrary. We find that the larger companies turn to other vendors, but we can sell to departments of larger companies, and we shouldn’t be giving up leads when we get them.

Market Analysis . . . (numbers and percentages)

5.0 Strategy and Implementation Summary

1. Emphasize service and support.

We must differentiate ourselves from the box pushers. We need to establish our business offering as a clear and viable alternative for our target market, to the price-only kind of buying.

2. Build a relationship-oriented business.

Build long-term relationships with clients, not single-transaction deals with customers. Become their computer department, not just a vendor. Make them understand the value of the relationship.

3. Focus on target markets.

We need to focus our offerings on small business as the key market segment we should own. This means the 5-20 unit system, tied together in a local area network, in a company with 5-50 employees. Our values — training, installation, service, support, knowledge — are more cleanly differentiated in this segment.

As a corollary, the high end of the home office market is also appropriate. We do not want to compete for the buyers who go to the chain stores or mail order, but we definitely want to be able to sell individual systems to the smart home office buyers who want a reliable, full-service vendor.

4. Differentiate and fulfill the promise.

We can’t just market and sell service and support, we must actually deliver as well. We need to make sure we have the knowledge-intensive business and service-intensive business we claim to have.

5.1 Marketing Strategy

The marketing strategy is the core of the main strategy:

1. Emphasize service and support

2. Build a relationship business

3. Focus on small business and high-end home office as key target markets

5.1.2 Pricing Strategy

We must charge appropriately for the high-end, high-quality service and support we offer.
Our revenue structure has to match our cost structure, so the salaries
we pay to assure good service and support must be balanced by the revenue
we charge.

We cannot build the service and support revenue into the price of products. The market can’t bear the higher prices and the buyer feels ill-used when they see the same product priced lower at the chains. Despite the logic behind this, the market doesn’t support this concept.

Therefore, we must make sure that we deliver and charge for service and support. Training, service, installation, networking support– all of this must be readily available and priced to sell and deliver revenue.

5.1.3 Promotion Strategy

We depend on newspaper advertising as our main way to reach new buyers. As we change strategies, however, we need to change the way we promote ourselves:

1. Advertising

We’ll be developing our core positioning message: “24 Hour On-Site Service – 365 Days a Year With No Extra Charges” to differentiate our service from the competition. We will be using local newspaper advertising, radio and cable TV to launch the initial campaign.

2. Sales Brochure

Our collaterals have to sell the store, and visiting the store, not the specific book or discount pricing.

3. We must radically improve our direct mail efforts, reaching our established customers with training, support services, upgrades, and seminars.

4. It’s time to work more closely with the local media. We could offer the local radio a regular talk show on technology for small business, as one example.

5.2 Sales Strategy

1. We need to sell the company, not the product. We sell AMT, not Apple, IBM, Hewlett-Packard, or Compaq, or any of our software brand names.

2. We have to sell our service and support. The hardware is like the razor, and the support, service, software services, training, and seminars are the razor blades. We need to serve our customers with what they really need.

The Yearly Total Sales chart summarizes our ambitious sales forecast. We expect sales to increase from $5.3 million last year to more than $7 million next year and to more than $10 million in the last year of this plan.

5.2.1 Sales Forecast

The important elements of the sales forecast are shown in the Total Sales by Month in Year 1 table. The non-hardware sales increase to about $2 million total in the third year.

Sales Forecast . . . (numbers and percentages)

2.2 Startup Summary

93% of startup costs will go to assets.

The building will be purchased with a down payment of $8,000 on a 20-year mortgage. The espresso machine will cost $4,500 (straight-line depreciation, three years).

Start-up costs will be financed through a combination of owner investment, short-term loans, and long-term borrowing. The startup chart shows the distribution of financing.

Other miscellaneous expenses include:

*Marketing/advertising consultancy fees of $1,000 for our company logo and assistance in designing our grand-opening ads and brochures.

*Legal fees for corporate organization filings ($300).

*Retail merchandising/designing consultancy fees of $3,500 for store layout and fixture purchasing.

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Process of an American Incorporation

The process of an American Incorporation starts with the Articles of Incorporation (also called a Charter, Certificate of Incorporation or Letters Patent). They are filed with appropriate state office, listing the purpose of the corporation, its principal place of business and the number and type of shares of stock. A registration fee is due which will usually be between $25 and $1,000, depending on the state.

A corporate name is generally made up of 3 parts: “Distinctive element”, “Descriptive element”, and a legal ending. All corporations must have a distinctive element and (in most filing jurisdictions) a legal ending to their names. Some corporations choose not to have a descriptive element. In the name “Tiger Computers Inc.” the word “Tiger” is the distinctive element; the word “Computers” is the descriptive element; and the “Inc.” is the legal ending. The legal ending indicates that it is in fact a legal corporation and not just a business registration or partnership.

Usually there are also Corporate Bylaws which must be filed with the state. These will outline a number of important corporate housekeeping details such as when annual shareholder meetings will be held, who can vote and the manner in which shareholders will be notified if there is need for an additional “special” meeting.

Source: Wiki

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