Increasing Home Businesses

American Home based businesses are growing and so is the number of those businesses turning to software-as-a-service (SaaS (News – Alert)) solutions. In fact, the number of home based businesses using such solutions nearly doubled in 2008, growing 92 percent to 2.3 million Home Based Businesses.

These figures are according to Access Markets International (AMI) Partners in its latest report, “2008-09: American Home Based Business Market Overview – Impact of Economy: Changing Dynamics, Opportunities & Challenges.”

When considering gross spending, Home Based Businesses contributed 16 percent of the total SaaS expenditures by American small and mid-market enterprises for the period. The AMI survey explored how American Home Based Businesss are moving to adopt a variety of SaaS applications, including accounting/finance, contact management, data storage/back-up and other application sets.

“Today’s economic reality is driving businesses of all sizes to seek the most cost-effective and easy ways to use and manage IT solutions,” said Sau Lam in a Monday statement. Lam is a Senior Analyst with AMI-Partners

“This is especially true for Home Based Businesses that have bare-bones or no IT support. SaaS offerings fit the bill as Home Based Businesses look for solutions that are both appropriate to their needs and do not require significant upfront financial investment,” said Lam. “Cost reduction is cited by American Home Based Businesses as the number one driver for using SaaS followed by ease of installation and management.”

SaaS vendors seeking to capitalize on opportunities in the marketplace will find a receptive market among younger Home Based Businesses. Those that have been in existence less than five years are more likely to turn to a SaaS solution.

In fact, 30 percent of Home Based Businesses between two and five years old and 13 percent of Home Based Businesses less than two years old are more likely to adopt SaaS than their more mature peers.

The research completed by AMI-Partners contributed to the overall report that highlights major trends in the context of current and planned IT, Internet and communications usage and spending. Products and services covered in this research include established and emerging hardware, software, applications and business process solutions.

The firm tracked a broad spectrum of issues that pertain to budgets, purchasing behaviors, decision influencers, channel preferences, outsourcing, service and support. The study also covered detailed firmographics and critically important technology attitudes and strategic planning priorities.

For those vendors operating in the SaaS space, close attention to the results of this study can help in designing strategies for growth. Even with our current economic woes, companies can still drive revenues and profits if they properly align their solutions where the need is greatest.

Be Sociable, Share!

5 Business Plan Mistakes

If you are preparing to raise capital from either an investor or a bank, you’re probably going to be writing a business plan. Here are five of the most common mistakes:
Submitting the Business Plan to the Wrong People
Some entrepreneurs don’t know who to send the business plan to. They have sent their business plan to hundreds of people but with no results.

You should first determine that your prospective investor or lender has an interest in your industry and your business. Do this by making a call or sending an introductory letter or e-mail. If you can receive a referral from an accountant, attorney, or banker, that is all the better.

Never send an unsolicited business plan. These will be put at the bottom of the pile, and they will not be given serious consideration. If you determine that your investor has an interest, send the executive summary over for review, unless otherwise requested.

Incomplete Executive Summary
The first thing that all prospective investors and lenders will want to read is your executive summary. This section should be no more than two pages, but three is the absolute maximum. When you write a business plan, the executive summary should be prepared last. (After all, how can you summarize something that has not yet been written?)

The summary in the business plan should be broken down into five sections. These five sections are:

The Opportunity: Describe the need that is currently unfilled in the marketplace; if the need is being filled, discuss how it is not being adequately met.

The Solution: Describe your business solution to the problem, and why it is better plan than what is currently available.

Management: Describe why you and your management team are qualified to deliver the solution that you have proposed.

Market Size and Share Expectations: Describe how large the market is for your business solution, and discuss how much of that market you intend to capture.

Financing Need and Exit Strategy: Describe how much money you need for your business and what it will be used for, but close with how you intend to provide the investor with an exit strategy.

Weak Business Management
One of the sections that all investors will read first is the discussion on business management. If you do not have direct, significant experience in the industry in which you’re trying to start a business, add someone to the management team who makes up for your weakness.

Either agree to hire full-time executives or bring skilled directors onto the board. If you are searching for funding from angel investors, you might offer executive management positions to those investors who have significant experience in the industry. Venture capitalists, on the other hand, are not likely to invest until the business management team is complete.

Unreasonable Financial Projections
All lenders and investors are accustomed to seeing business financial projections that are way to high!

While every business owner and entrepreneur has the best of intentions when preparing a forecast for the next five years, it is unrealistic to assume that sales will grow by 50-100% each and every year.

Also it is not likely that gross and operating profit margins will improve forever.

Your assumptions with respect to working capital turnover, earnings retention, debt/equity mix, and return on invested capital must all be reasonable. If you forecast that your business will return 100% or more on its invested capital during each of the next five years, you are going to have some explaining to do. That does not mean that it is not possible, just that it’s not probable.

Don’t be Greedy!
Nothing will ruin a deal faster than greed. If your business is little more than an idea at this point, it is not feasible to value the company at more than a few million dollars. If your business plan is to raise $2 million in exchange for 10% of the business (i.e., a $20 million valuation), you are going to have a tough time attracting the interest of venture capitalists and angel investors.

Spend less time worrying about the valuation today, and instead focus on structuring the transaction so that you can re-acquire a majority ownership interest in the future.

Moreover, don’t be too quick to equate majority ownership with control. You might be able to sell non-voting stock that does not give away control of the business.

Be Sociable, Share!

Should You Incorporate Your American Home-Based Business?

With over 13.8 million American women finding financial freedom with home-based businesses, it’s important to understand the benefits of an American corporation. Incorporating allows you to protect your personal assets such as your 401K or kids’ college funds. It offers tax advantages, and it provides credibility for your home business.

According to Kobelski, there are various types of business structures that can be established including:

1. C-Corporations

2. S-Corporations

3. LLC, Limited Liability Company

4. Limited Partnership

5. Limited Liability Partnership

6. Nonprofit Corporation

Be Sociable, Share!

Good Small Business Practices

Good small business practices require good business etiquette. To succeed in starting a small business, it’s not enough to be the first, the best, or the most competitive. It’s not enough to monitor trends so you know when to make strategic changes that will keep your small business idea alive in any climate. Nor is it enough to develop creative solutions to maximize the bottom line.

Politeness and courtesy never fall out of style. The truth is that customers, clients, suppliers, and other small or large businesses will want to do business with you only if they feel comfortable with you. If they suspect you’re being manipulative or deceitful, they won’t hesitate to go elsewhere. If they feel you’ve treated them curtly or with disrespect, they’re not going to stick around, no matter how good a deal you offer.

Small business ethics is a simple matter of treating others the way you’d want to be treated. Not just customer service, it’s about using good manners with everyone you come into direct or indirect contact – being polite, remembering to thank them, keeping your word. Small business etiquette matters because everybody, without exception, wants to feel special. If you succeed in making customers, business partners, and employees feel important and welcome, you’ve gained very valuable assets – their loyalty and alliance.

Shift Your Attitude
Good small business ethics often starts with an attitude shift. Regardless of the specifics of your business idea, always remember that you’re not dealing with cold, heartless technology. You’re dealing with real, live people. The voice at the other end of the line is a person. The words in your email box were typed by human fingers. So no matter how rushed or stressed you are, take a deep breath (to calm down) and always treat the person at the other end with courtesy – even when that person fails to do the same with you.

“Don’t burn bridges” applies here. Consistently treat everyone with courtesy and respect, and watch what a difference this makes. A belligerent customer can become your most loyal repeat buyer, and a lukewarm vendor may warm up to your manners, deciding it could be a refreshing change to conduct business with someone so well-mannered.

Stay Honest
The easiest way to get a bad reputation is to deceive people. Be honest in your everyday small business dealings. Don’t string a vendor along when you’ve already decided to go with another supplier. Don’t promise a customer next-week delivery when you know the product won’t come in for at least two weeks. Good small business etiquette means telling your customers and business partners the truth regarding matters that affect them.

Give Thanks
It takes but a moment to thank somebody, but what a strong, lasting impression it makes! There are countless ways to express your sincere appreciation, including:

  • Face to face, thank and commend an employee who’s done a great job
  • Send a thank-you note to a supplier or business who helped you out
  • Follow up purchases with a thank-you email or phone call to the customer

Not only is thanking people polite, it also lifts their spirits and helps them remember you in a positive light, increasing the chances that they’ll do business with you again.

Reply To Everyone
No doubt, you get many emails and calls each day, and maybe plenty of snail mail, too. Make sure you or your staff members reply to every message or inquiry that comes in. If you don’t, you run the risk of losing potential customers and small business deals. If you and your staff can’t manage the load in-house, consider hiring an outside service or a college intern to handle incoming inquiries.

Keep A Positive Tone
In every piece of correspondence that leaves your business, whether it’s a carefully written announcement letter or a spur-of-the-moment email reply, be sure to maintain a cordial, positive tone. Read your letter or message again before sending it on its way. As you review your letter, keep in mind the Three P’s: professionalism, politeness, and positive-ness. Your message should embody all three.

Mind The Details
And while you’re at it, double-check the recipient’s name and address. Spelling every name correctly is an important element of small business etiquette. So is getting the person’s gender and title right. When you mind these important details, you’re showing the recipients that you truly care enough to earn their business!

Be Sociable, Share!