10 Worst Business Partners For Your Start Up

Business Partnerships can turn out to be a blessing or a curse. More often than not, performing basic due diligence can keep you from ending up in bad partnerships. So, have you done your homework? Are you ready to trust your financial security on someone elses personality, work ethic and business acumen? Before you drink the partner Kool-Aid, here is a list of the top ten worst business partners for your start-up–along with some tips to help you avoid this cast of characters:

Worst Business Partner 1. Mr. Employee
Mr. Employee is a first-time entrepreneur with a pristine resume and an abundance of references. He enjoys collecting a weekly paycheck, health benefits, and eating dinner with his family nightly at 7 p.m. Unfortunately, Mr. Employee isnt really self-sufficient and doesnt know how to move the business forward without you instructing his every move. Plus if your investment deal doesnt pan out soon he is going to need to find a real job to pay the kids college tuition.

Business Parnetership Tip: Risk-adverse individuals who do not share your priorities will not be productive partners. Pass up individuals who cannot commit equal time, energy and financial resources.

Worst Business Partner 2. Mr. Perfectionist (also known as Mr. Procrastinator)
Mr. Perfectionist needs every i to be dotted and t to be crossed before he schedules an official product launch date. He enjoys researching competitors, building industry case studies and improving his 150-page business plan. Mr. Perfectionist really wanted the new business to be up-and-running by now, but still feels something isnt quite right. He plans on putting together another comprehensive survey to send to all of his colleagues, friends and family in the next few weeks to help flesh out the concept further.

Business Parnetership Tip: A good plan today is always better than a perfect plan tomorrow. Steer clear of excuse-prone procrastinators. Seek out self-starters who run with the ball and make things happen.

Worst Business Partner 3. Mr. College Buddy
Mr. College Buddy had a stroke of genius while out at the bar one night, wrote it on a cocktail napkin and asked you to help him make it happen. He enjoys bragging about his great idea and giving you directions on how to execute (hes not into the heavy lifting thing). The issue: hes moving across country to start med school in the Fall. But fear not, Mr. College Buddy will make himself available by phone when hes not studying, working, in class or on a date. Hell be sure to forward you the address where you can mail his 50% of the profits.

Business Parnetership Tip: Never assume all of the risk in exchange for half the reward. Ideas are worthless without proper execution. Before you bring a co-conceived idea to fruition, make certain that your partner plans to be around for the long-run. Napkins are not legally binding. Always execute an operating agreement.

Worst Business Partner 4. Mr. Inventor
Mr. Inventor thinks hes created the next billion-dollar widget. He enjoys giving two-hour dissertations on Chinese electrical engineering standards to investors and making business decisions based on nice people and gut feelings. Mr. Inventor doesnt really understand the phrase in the black, but feels its imperative to spend all of the companys investment proceeds on research and development.

Business Parnetership Tip: Brilliant academics are not necessarily brilliant businessmen. In lieu of a partnership, first consider licensing deals or strategic partnerships. If you decide to go ahead with a partnership, be sure your agreements clearly distinguish the differences between product control and operational control.

Worst Business Partner 5. Mr. Right
Mr. Right will be the first person to tell you that he is never wrong. His favorite phrase is my way or the highway. He will rarely discuss his decision making process because he views such discussions as a weakness. He enjoys demeaning partners who dont agree with him and making decisions without telling them. Funny thing about Mr. Right: he always seems to blame everyone but himself when his plans dont pan out.

Business Parnetership Tip: Communication is the key to a successful partnership. Find a collaborator, not a dictator. No one is always right.

Worst Business Partner 6. Mr. Dreamer
Youll hear Mr. Dreamer say this line a lot: One day, when were millionaires He loves talking about retiring by 29 and how he intends to spend his hypothetical millions on a gold plated yacht that hell dock off the coast of his private island. One small problem with Mr. Dreamer: he doesnt seem to know how to keep the business above water next month.

Business Parnetership Tip: Big paydays come from years of hard work and persistence, not excessive rambling and daydreaming. While its important your partner be both positive and optimistic, it is equally important that he or she is grounded and focused.

Worst Business Partner 7. Mr. Spender
Mr. Spender cant possibly survive without a six-figure salary, lavish office and an in-house cigar roller. Price is no object when it comes to entertaining a client or flying first class. If youre lucky, Mr. Spender might even invite you to one of the extravagant dinner meetings that he charges on your companys corporate card.

Business Parnetership Tip: There is no such thing as the unlimited checkbook. Partner with fiscally conservative, financially responsible individuals who strive to make every dollar benefit company growth and development–not their personal lifestyles.

Worst Business Partner 8. Mr. CEO
Mr. CEO feels compelled to tell everyone that he is a CEO within 30 seconds of meeting him–even if his company is worth less than the paper on which his business card is printed. He loves cocktail receptions, his name written in fancy fonts, and stacks of luxury car magazines neatly piled on a coffee table in plain sight of customers. The only thing he doesnt seem to like: real work.

Business Parnetership Tip: Successful companies are not built on titles, talking and toys. Keep away from selfish, egotistical individuals who want to talk the talk versus walk the walk.

Worst Business Partner 9. Mr. Vacation
Id tell you more about Mr. Vacation, but I dont know much about him. He never seems to be around.

Business Parnetership Tip: No-shows are dead weight and eat away profits. Make sure that your operating agreement clearly outlines partner responsibilities and vacation days.

And the partner to avoid like the plague is

Worst Business Partner 10. Mr. Personal Issues
Mr. Personal Issues always has a sad story. On the same day as your companys keynote presentation at the big conference, his sons wisdom teeth need to be pulled and his dog died of pneumonia. He would love to attend next weeks investor meeting, but his divorce hearing might tie him up all day. Unfortunately, Mr. Personal Issues cant afford his legal bills, so hell need to pull a little more money out of the company this month to avoid his ex-wife from taking 50% of his equity in the settlement. Thankfully, this will be the last time he needs money

Tip: Youre not in business to be a babysitter or a psychiatrist. Know everything there is to know about a prospective partner before you sign on the dotted line. Discuss everything from business to politics to family life to finances. If a potential partner seems to have a few screws loose, run as fast as you can in the other direction.

Be Sociable, Share!

Small Business Grant Money and Venture Capital

We’ve all seen the headlines: “Millions in free government money for your business.” Late-night infomercials, resource guides and websites promote the availability of grant money to American entrepreneurs for starting and expanding businesses. Sound too good to be true? It is.

The truth is that American federal and state governments do not provide grants for starting and expanding small businesses. However, the U.S. government does offer a wide-variety of low-interest loans and venture capital financing programs to help entrepreneurs start and grow their businesses. In addition, some federal and state agencies award a limited number of grants for very specialized business activities such as scientific research and development.

The following guide provides an explanation of federal and state loan, grant and venture capital financing programs available for your small business.
Small Business Loans
SBA Loans

The American Small Business Administration (SBA) assists small business owners to start and expand their businesses by helping them get loans through private banks and financial institutions. SBA is the largest single financial backer for the nation’s small businesses with a portfolio of business loans, loan guarantees and disaster loans worth more than $45 billion, in addition to a venture capital portfolio of $13 billion.

SBA offers a number of low-interest loan programs for new and expanding small businesses. SBA is not a lender, and does not grant loans directly to businesses. Rather, SBA is a guarantor of loans made by privately owned banks and other financial institutions that agree to follow SBA’s guidelines.

To apply for an SBA loan, you need to visit your local participating bank or lending institution. When you apply for an SBA loan you are actually applying for a commercial loan, structured according to SBA requirements, which receives an SBA guaranty. This guaranty is portion of the loan the SBA will pay back to the lender should you default on your loan payments.

SBA’s Financial Assistance Guide describes SBA loan programs, including eligibility requirements, and how to apply for them.

Remember, that you’ll need to go through a local bank or financial institution to apply for an SBA loan. To get a list of SBA lenders in your area, contact your SBA District Office.

USDA Rural Development Loans
If your business is located in a rural community, you might consider the the U.S. Department of Agriculture (USDA) has a Business and Industry (B&I) Guaranteed Loan Program. B&I loans work in the same manner as SBA loans. The USDA provides guarantees of up to 80 percent of a loan made by a commercial lender. Loan proceeds may be used for working capital, machinery and equipment, buildings and real estate, and certain types of debt refinancing.

The B&I Loan Guarantee Program Fact Sheet provides all you need to know about obtaining one of these loans, including eligibility, loan terms and conditions, equity requirements, and interest rates. Like SBA loans, you need to go through your local bank or financial institution

Other Federal Loan Programs
Depending on your type of business, you may qualify for specialized federal loan programs. For example, if you are small and disadvantaged business engaged in federal transportation contracts, you may qualify the U.S. Department of Transportation’s Short Term Lending Program.

If you are a small trucking company, the Environmental Protection Agency’s (EPA) SmartWay Transport Partnership has partnered with several lenders to make money available to small trucking companies to help pay for technologies that saves fuel while reducing pollution.

To find other federal loan programs serving small business concerns, visit GovLoans.gov, the U.S. government’s central database of government loan programs.

Venture Capital Financing

Small Business Investment Companies (SBIC)

In 1958, Congress created the Small Business Investment Companies (SBIC) program to help small U.S. companies raise capital. SBIC’s are privately owned and managed investment firms that provide venture capital and start-up financing to small businesses. To be eligible for SBIC financing, your business must meet certain SBA size requirements for a small business. Generally, the SBIC Program defines a company as “small” when its net worth is $18.0 million or less and its average after tax net income for the prior two years does not exceed $6.0 million. When you contact an SBIC, you’ll need to present a professional business plan that addresses your company’s operations, management, financial condition and funding requirements.

Active Capital (formerly Angel Capital Electronic Network – ACE-Net)
Active Capital is a nationwide listing service that connects entrepreneurs with angel investors. Potential investors can obtain information on start-ups and expanding small businesses seeking $250,000 to $5,000,000 in venture capital. Active Capital’s main benefit is that it allows entrepreneurs to directly access a nationwide network of investors while complying with federal and state securities regulations.

Small Businesses in Economically Distressed Communities
If your business is located in a low-income geographic area, there are a couple of venture financing options available to you. First, there is a special type of SBIC called Specialized Small Business Investment Companies (SSBIC). SSBIC’s provide assistance solely to small businesses owned by socially or economically disadvantaged persons. Secondly, you may be eligible for New Markets Venture Capital (NMVC) financing. Modeled after the SBIC program, the NMVC program makes equity investments in small businesses located in economically distressed communities in urban and rural areas. NMVC financing is available in limited areas, and available from these venture capital firms.

Federal and state grants are only available to support non-profit organizations, lending institutions, and state and local government programs that provide technical and financial assistance to small businesses. If your business is one of these organizations, Grants.gov provides grant opportunities available from federal agencies.

Again, federal and state government agencies do not award grants for starting, managing and expanding small businesses. However, state and local government grant opportunities may exist for small businesses engaged in very specialized activities. Many states provide job training grants to new and expanding firms. Other states provide grants to fund scientific research projects, and grants for agricultural development. For example, the New York State Dept. of Agriculture & Markets’ Winery Website Improvement Grant Program provides money to state wineries and vineyards for improving their websites. The California Energy Commission’s Energy Innovations Small Grant Program provides funds to small businesses to conduct research that establishes new, innovative energy concepts. Check with your state or local government to find these sorts of specialized grant opportunities.

Be Sociable, Share!

5 Tips for Branding your Small Business

We all know that a successful branding strategy is an important aspect in the business world, but often it seems like an impossible task. American small businesses ( Palm Beach business ) often feel this more so than large businesses, but in today’s competitive world it is even more crucial to their success.

Branding your South Florida small business lets the world know the benefits, products and services of your business.

In addition, it also gives your business an image that will be effective in the marketing world.

Branding Strategy 1. Often, professional business owners do not think it is necessary to portray a corporate image to their customers.

Even if your business is a one man show and it is run out of your home office, it is important to have a good branding strategy.

It is important to develop a website, business cards, letterhead and other related business tools with a consistent theme. This helps create a level of confidence in your customers, because it portrays you as a professional.

Branding Strategy 2. When you are developing business tools it is important to make yourself appear unique. This will help you stand out among a sea of other palm beach small and large businesses within your same industry.

Hire a Palm Beach logo design business like NEOVIZION&, Inc. to create a logo and slogan that you use consistently on all of your business tools both online and in print.

Doing this allows customers to develop an understanding and recognition of your services.

Branding Strategy 3. When you create your brand it is important that you maintain a solid level of consistency with all of your business tools. This means that your brand should be professional, unique and recognizable.

When you create your brand use the same logo, slogan, colors, statements and overall theme in all ads, websites, e-mail and any other business correspondence. Avoid using free images, cheap clip art and other elements that are used elsewhere for other companies.

This won’t help brand you. In fact, it will make you blend in more than stand out.

Branding Strategy 4. When you have contact with customers and business associates, make sure you leave them with a lasting impression. In many instances, you will only get one opportunity to create a lasting impression.

Make sure you act professionally and represent your business in the right light. Gather contacts if possible and follow-up with all contacts immediately.

A follow-up doesn’t have to be over the top – a simple “It was nice meeting you” will do.

Branding Strategy 5. Knowing your Florida demographic is essential to effectively branding your small business. When you create your brand you will need to know what style of branding is more likely to appeal to your customers.

For example, logos, letterhead and even fonts should be selected with your Palm Beach demographic in mind.

Some demographics are more likely to find fun logos and fonts appealing, while others may be more drawn to something more professional and elegant.

Regardless of your budget, you can create a good branding strategy for your small business. Pulling it all together with consistency and professionalism is key.

Once you have done your research and you know your demographics, you can select business tools that effectively represent your products and services.

Be Sociable, Share!

Before Starting a Home Based Business from home

Starting a Home Based Business can give you the best of both worlds. Like all small business owners, you enjoy the satisfaction of being your own boss and running a business from home.

But if you run your business from home, you also enjoy the benefits of being able to work flexible hours, of not having to commute, and certain tax advantages. In theory, you can run a successful business from home and have the flexibility to be there for your family, spending more time with your children or arranging your work schedule around your family’s needs.

Starting any business requires planning and soul-searching, but there are particular aspects of your business’ operations that need to be considered carefully before you start a home based business. This article assumes that you already know what you want to do and how you’re going to do it; it provides guidelines for deciding whether to run your business from home or not.

Legalities – Like any other business person, you need to set up your business legally. You will have to choose a form of business (such as a sole proprietorship, partnership or corporation), and register your business name, if your business has a name other than your own.

You may also need a business license, depending on the type of business you’re running. And you have to run a business according to provincial and federal laws, which means you may need to register for Workers’ Compensation insurance with your province, or collect GST/HST and/or PST.

But you have to do all of these things no matter where your business is located, so let’s look at factors specific to home-based businesses that you need to consider before you turn a room of your home into an office and start selling your products or services.

One important consideration before you start a home-based business will be your house and your neighbourhood.

You know how important a consideration location is to real estate (both commercial and residential). The location of your home-based business is extremely important, too. You may not even be able to start the home-based business you want to start where you are now, because of issues such as space and zoning. Before you start a home-based business you need to consider the suitability of your neighbourhood and house.

Zoning – Is your neighborhood zoned for home-based businesses? If it’s not, you’re just asking for trouble down the road when the city catches up with you or a neighbour complains. Many municipalities don’t allow home-based businesses at all, and others place severe restrictions upon exactly what kind of business is allowed to operate out of a family dwelling in a residential neighbourhood. Check the zoning bylaws with your municipality.

Neighborhood suitability – How will your proposed home-based business fit into your neighbourhood? Most residential neighbours are not going to be very happy if you have noisy machinery running all day long, large trucks starting up early in the morning, or customers parking their vehicles all over the place. If your proposed home-based business involves manufacturing, or trucks or other vehicles arriving at or leaving your property on a regular basis, you should not be operating in a residential area. Unhappy neighbours can be bad for business in all kinds of ways.

Neighborhood location – Will your neighbourhood’s location work for or against your home-based business? If you’re delivering a product or service, it probably won’t matter if you’re located 15 km out of town down an obscure country road (except for the extra travel cost you incur). But if your home-based business involves people coming to you, then they need to be able to find it and get there easily. In many cases, you won’t be able to put up any signage for your home-based business, although in others you will be able to have a small, unobtrusive sign by or on your door.

Your property’s location and appearance – You don’t have to live in a manor with a manicured landscape fit for a magazine to run a home-based business, but your property does have to be attractive enough that it won’t scare off prospective customers or clients. Old cars cluttering the yard, knee-high grass, and dilapidated buildings with peeling paint are all turn-offs that can lose you business. A poorly maintained house and property gives people the impression you don’t look after things – so why would you look after them? If you’re going to run a business from home, your home has to look neat and respectable – at all times!

Your house’s suitability – I’m always amazed at the number of people who try to run their home-based businesses out of their kitchens. If the only space in your home you can devote to your business is the kitchen or a corner of your basement, don’t, unless your business is virtual and no one is ever, ever going to see your premises. People who visit your home-based business will expect it to look (and operate) like a “real” business. They expect to be able to do things such as sit down and sign papers in a business-like environment. Any home-based business will need to have an entire room set aside as an office space.

Some home-based businesses will need even more space. For instance, if you consult with clients, you’ll need an actual consulting room separate from your office. If your home-based business involves creating arts or crafts, or manufacturing, you’ll need a suitable studio or shop. If you’re in this position, and you don’t have these already, it may be easier and cheaper to find suitable quarters for your home-based business elsewhere then try to renovate your home to accommodate your business plans.

One of the main differences between operating a home-based business and a business “off-site” is that you lose that automatic separation between your business and your home life. Before you start a home-based business, you need to think about how well your work style and your family will fit into your home-based business plans.

You also need to consider if your family and your work style will support operating a home based business. Working from home can be idyllic if your family is prepared to support your plans to start a home based business and if you’re prepared to deal with the potential problems of actually working from home. Before you start a home-based business, think about:

Your family – You’re not the only one involved if you start a home-based business; your whole family will be involved in the enterprise, for good or ill. You need to consider how running a business from home will affect your family.

While many people start a home-based business thinking that they’ll be able to spend more time with their family than they would otherwise, the lack of separation between your business and personal life can seriously interfere with family activities. How will you keep your family life and your work life separate and how much time can you realistically devote to both?

You also have to consider everyone’s expectations. Will you expect your family members to pitch in and help with your home-based business? How will your family members feel about this? Discuss your home-based business plans and expectations with your family first, and find out whether or not they’re prepared to actively support your business.

Your work style – As much as everyone likes to fantasize about it, working from home isn’t for everyone. Before you start a home-based business, you need to think about your personality and your work preferences. The three main problems of working from home are:

Working from home can increase your feelings of isolation and lack of contact with colleagues. Many people have difficulty coping with working alone for long stretches of time. This is especially difficult for those who are used to working in busy office environments and being surrounded by people.

Working from home can cause increased family stress, because of the difficulty of separating business and home life. I’ve already touched on this, but it’s important. If you thought bringing a new pet into your home was stressful, wait until you start a home-based business!

Working from home calls for self discipline and the ability to plan and manage one’s own time. On the one hand, being your own boss means that no one else is telling you what to do. On the other, if you don’t keep yourself focused and on task, no one else will.

How will you handle these potential problems of working from home? Thinking about your work style and devising strategies to deal with these potential problems of working from home ahead of time can make all the difference when you’re faced with actually doing it.

Last, if you want to start a home-based business you need to consider your own personality. A home-based business is still a business, first and foremost, and not everyone is cut out to be a business person. Are you entrepreneurial?

Number one on my list of the personality traits you need to be a successful entrepreneur is determination. Enthusiasm is a great quality, but you won’t get far with your plans to start a home-based business if you don’t have the determination to put your plans into action.

In fact, there are so many adjectives starting with the letter “D” that are associated with the attitudes shared by successful business people, that I’ve coined the phrase “Type D Personality” to summarize them. Besides determination, you need drive, discipline, and desire to run a successful home based business. You also need to be adaptable and flexible; each day will bring new challenges you may or may not have planned to meet, and often, a multitude of tasks that all seem to need to be done at once!

Test your entrepreneurial potential with these articles and quizzes about being a successful entrepreneur. Or read Thinking of Starting a Small Business to determine if you “have the right stuff” to run a successful home based business.

Feeling daunted? Don’t be. To help you decide whether a home-based business is right for you, I’ve created a Home-Based Business Checklist that summarizes all these considerations. With the Checklist in hand, take a hard look at your neighbourhood, your house, and your personal circumstances and see if you could run your business successfully from home. You might also want to get a second opinion; ask a friend to do an appraisal for you using the Checklist and compare the answers.

Deciding to run a home based business isn’t a snap decision. But if you do decide to locate your business in your home, it can be the most satisfying, exhilarating thing you’ve ever done. And know that you’re not alone. Thousands of others small business people are doing exactly the same thing – and operating successful home based businesses.

Be Sociable, Share!

Insurance for your Home Based Business

It wasn’t until a valued customer called, freaked out by a rogue bumble bee she found resting dead in her loose leaf tea, that running a home based business without insurance was a risk.

By then, Jahshan and his wife Tonia had been operating their tea party consultancy, Steeped Tea, out of the converted basement and two-car garage of their Hamilton home for a full year.

Though he also runs a fast-food restaurant, Jahshan knew zilch about protecting his home based business.

He thought he didn’t even have to worry about business insurance when you start your home business. As a business person, He likes to hang out with business people, and nobody has insurance.

Facing added premiums can be daunting for the small business owner, but insurance shouldn’t be a dirty word, say the experts. No matter whether you’re running a full-scale taxidermy outfit or typing data into a single laptop, protection is integral to a savvy business plan.

“A policy will cover anything pertaining to running your business.”

As soon as doing business from home enters your mind, set up a meeting with your insurance broker, agent, or the company that insures your home, he said.

In many cases, the company providing your home or “property” insurance can add an extension to your homeowner’s policy, protecting you against common business risks.

Standard property insurance rarely protects anything business-related. Should fire rip through your home, compensation won’t be offered to replace computers, printers, fax machines, samples and paper records. And it won’t protect you from a lawsuit.

Generally, “home based business” or “home business” insurance provides three areas of coverage: business property; business interruption; and legal liability.

The first protects property kept on or off the home premises, including inventory, samples, supplies, tools, filing cabinets, computer equipment and software.

If disaster strikes the home, rendering office space unfit for use, business interruption coverage pays the cost of your temporary office relocation, thus insuring your products and services are delivered to customers.

Legal liability coverage – usually set at $1- or $2-million – becomes a lifesaver if your company’s products or services cause harm to a customer. If Steeped Tea’s frazzled caller had alleged trauma or an allergic reaction to the pesky bee (which likely slipped into the mix when the tea was being dried in India’s fields before export) this coverage would have paid for legal defence or compensation ordered by the courts.

A classic example of legal liability involves a delivery person who slips on a piece of ice while carrying a package up your front steps; falls and breaks a leg; then sues.

“The liability portion of your home insurance doesn’t protect you, because the activity was directly related to your business,” Warner said.

Insurance providers calculate premiums based on exposure to risks – the possibility of loss – receipts and how much income you’re making with your business from home. The lower both are, the lower the premium. Knitting sweaters and selling them online is likely to be considered less risky than running a massage clinic that brings clients into the home.

Premiums are likely to run several hundred dollars a year – usually not more than $500, according to the Insurance Brokers Association of Ontario. But if your business liability is higher than that for your property policy, it will probably be boosted to the same level, potentially costing you more.

Most insurers keep lists spelling out what is or isn’t likely to fall under their home business insurance. The tricky part of the equation arises with vastly increased exposure. The line blurs between where home business insurance ends and commercial insurance begins.

To assess whether obtaining a heftier policy might be wise, look at how often clients, or consumers, visit your home and also, whether you run the risk of “professional” exposure. The latter occurs when a business person provides advice or expertise to a client who later might theoretically allege it caused them financial or other harm – for instance, an accountant.

There are no hard and fast rules when it comes to navigating home based insurance coverage. When in doubt, call a broker – who represents multiple insurers rather than a single provider – suggests Bryan Yetman, IBAO president-elect.

“Shop around,” agreed Catherine Swift, chair of advocacy organization Canadian Federation of Independent Business, adding the biggest complaint mounted by members is around insurance costs and short notice of cost increases.

Every business presents risks, but someone who buries his head in the sand could be making the riskiest move of all, the experts agreed.

Be Sociable, Share!

Experts Offer Ideas to Home Based Business Owners

Building a business

Question: I’m always trying to get additional customers to my business. Do you have any recommendations?

Answer: In business, customers are key. Happy customers can get you new customers and grow your business for you. You can show customers you value them and increase their loyalty by doing several things.

First, know them well. Recognizing someone and calling your customer by name makes them feel valued. Keeping connected with customers and knowing their business history with you is vital. Also, send birthday cards or write notes to your customers periodically.

Second, go above and beyond. Each customer is an individual and has different needs. If a customer makes a request, do everything you can to make it happen. Even if you can’t, they’ll have greater loyalty if you tried.

Third, remember the customer is always right. Proving why they’re wrong isn’t worth losing a customer.

Finally, be open to feedback. Seek customer input and consider all suggestions.

Turning out the lights

Q: I’m close to retirement and don’t know what to do with my business. What do I need to do to wind it up?

Answer: Business owners typically spend much of their planning time to grow a business. However, for those nearing retirement or wanting to try something new, planning an exit is also important.

For some businesses, discontinuing is similar to quitting a job. For others, getting out can take from months to years and require coordination among many advisers. Either way, your goal is normally to maximize the value of the company or your business assets and convert them to cash.

Determine when you want to exit and what you want to do with your business or its assets. You’ll need to pay all your debts and taxes, satisfy customers, and eliminate any inventory. There will then be forms to file with the local, state and federal governments.

At a minimum, you should consult a lawyer, an accountant, and a tax expert to coordinate the effort. You might also need a business broker or an auctioneer to sell the business or its assets.

Write-offs on home based businesses

Q: I started a home based business this summer. What expenses may I deduct?

Answer: In addition to deducting the ordinary and necessary expenses incurred in your business, if you use a portion of your home for business you might be able to take a home office deduction. The deductible expenses can include real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting, and repairs. Generally, the deduction depends on the percentage of your home used for business and cannot exceed your gross income.

This deduction is claimed on Form 8829 and requires that you use the area regularly and exclusively as your principal place of business, as a place to meet with clients or customers in the normal course of business, or in connection with your trade or business if you have a separate business location. “Exclusive use” means it is used only for trade or business and not for any personal or hobby purpose. If you can qualify your home can be a nice way to cut your taxes. If you can qualify, your home can be a nice way to cut your taxes!

Be Sociable, Share!

How to Choose a Home Based Business

People are flocking to home based business as a means of supplementing their income, and even replacing it.

Hundreds of thousands of people are starting their own business from home in an effort to increase income as well as improve quality of life. In spite of recent economic challenges in this country, individuals and families continue to look for a means to relieve their financial pressures through the additional income of a home business.

It is all too easy to spend thousands of dollars buying into programs, launching those programs, and marketing those programs. Precious personal time along with the financial output is invested in launching and hopefully sustaining those home businesses.

However, there is hope for people looking for their home based business opportunity. How can a person know if home based business is right for them? How can a person leverage their talents so that they choose the business which is right for them? How can an individual avoid scams and get rich quick schemes? How can a person research potential business opportunities, products and services?

Is entry into the business affordable? Will it provide a positive ROI, Return On Investment? That is for you to research before you consider what kind of home business is right for you. Don’t just jump into the first business opportunity you see. Take the time to research that business.

Be Sociable, Share!

4 Important Franchise Business Questions to ask Before Investing

These are the 4 most important questions to ask before you invest in a franchise :

Franchise Question 1. Will the consumer of today ( and tomorrow ) buy what you’re selling?
This may seem like an obvious question, but it’s critical to avoid getting caught up in the latest fad. There are various listings put out each year of the hottest new franchise ideas, but while the allure of getting into a fast-growing or innovative business may be strong, consider whether it has the staying power to survive the next 10 years — or even the first one or two. Make sure your concept will hold consumer value for at least the duration of your franchise agreement. Research pending technological advances that threaten to make your product or service obsolete. If you are looking at a new concept, evaluate emerging “copycats” that can potentially undercut your price or market share.

Franchise Question 2. Do the company leaders have what it takes to survive the challenges ahead and make great strides in prosperous times?
There were many business leaders who predicted the recession. But the fact is that you didn’t have to foresee the timing and severity of the downturn in order to have a clear plan of how to survive an economic crisis. So, did the franchise system you’re considering have a marketing plan in place to keep driving sales in a recession? If not, you will have to evaluate the new processes, programs, services and products that were put in place in order to help the company offset the negative impact of the downturn. Furthermore, you need to examine the company’s strategies for taking advantage of the economic uptick.

Reviewing the franchisor’s FDD this year will give you great insight into their average unit revenues, overall expenses relative to revenues and their budget — all of which will help you to determine whether they can live-up to their promises and your expectations. If a system is sustaining itself primarily through revenue from franchise fees, you can surmise that it will have difficulty staying the course against competitors operating off the organic growth of their system. It’s not that investing in a franchise from a new system that may not have built up royalty or system sales is necessarily a bad decision. However, the tight credit market and delayed openings will strain a franchisor that does not have the financial cushion to retain key support programs and staff.

Franchise Question 3. How do existing franchisees feel about the franchisor’s response to the recession?
In researching a franchise opportunity, take note of the accessibility of the senior leadership. Ask franchisees how often they saw the corporate staff in their market. Did executives attend meetings and hold conferences where they brought value and showed their ability to make tough decisions with a long term and strategic solution in mind? Was there an open flow of communication, idea sharing and troubleshooting when the waters got rough, and was everyone paddling in the same direction?

After 17 years in the franchise industry — on both the franchisee and the franchisor sides of the table — I’ve heard my share of horror stories about lack of communication and collaboration between the home office and the franchise system. When times are tough, this communication is critical.

Franchisees must feel comfortable in expressing their ideas and their concerns, and when their expectations aren’t being met by the home office, they need to trust that something will be done to help. I’ve had to make many tough decisions to better both of our franchise systems. Many times, the impetus behind new policies or programs were concerns expressed by franchisees. This is not by chance. Evaluating how the franchisor responded to franchisees’ struggles and the support they provided their system over the last 14 months speaks volumes to the support you can expect to receive going forward.

Franchise Question 4. What are the wildcards? Are there incentives being offered that will help offset your startup costs and increase your profits?
Many franchise systems have adjusted to economic conditions by offering a variety of financial incentives to buyers. Some offer reduced franchise fees or reduced royalties for a specific time-frame, while others offer enhanced training or other discounts. For example, TSS Photography offered a “Stimulus Package” in 2009 that deferred a portion of the franchise fees. This year, TSS and Young Masters are each giving a 50 percent rebate on product purchases. We’re expecting to give back between $10,000 and $50,000 to each franchisee that joins our system in 2010.

These types of incentives are intended to help offset the credit crunch and allow the system to grow in this economy and push past struggling competitors. So, as a prospective franchisee, it’s important to examine what the franchisor is offering to help you becomemore productive and profitable in your startup phase. However, it is even more critical to evaluate whether or not the system is in a position to sustain healthy growth despite collecting less revenues from new franchisees. Financial incentives should not come at the expense of support or innovation from the home office.

While franchise companies continue to deal with the challenges posed by the new economy, there are still many advantages to owning a franchise today. Aside from the many financial incentives that weren’t available just three years ago, every prospective franchisee has the benefit of taking a look at a company’s performance during one of the worst recessions in our nation’s history. Knowing how a system’s franchisees were supported and how the leadership acted in the toughest of times will foreshadow your experience with the system, in good times and bad.

Be Sociable, Share!

Best Ideas – Courier Services Business

A simple home business idea to start is courier services — specializing in envelopes, small packages or large shipments, or combine all package types and sizes to maximize profit potential. The expensive way to get started in the courier industry is to subcontract your services to an established courier company. Meaning that you supply the transportation and yourself to pickup and deliver parcels. But this option also leaves you with the lowest profit potential and ability to grow a business. The best busines option is to start your own courier service outright. Hire other owner / operators on a revenue-sharing basis to make deliveries, while you concentrate on marketing strategies, managing and building the business. In addition to suitable transportation ( depending on the types of parcels you will be delivering ) you will also need to invest in a courier’s license, a two-way radio system and moving dollies. Every municipality has its own regulations for issuing courier’s licenses to both drivers and courier companies. You’ll need to take a trip to city hall or a transportation office to make inquiries about the best way to obtain a license. Courier rates vary by size, weight and parcel destination. Competition in the courier industry is stiff, but providing great customer service and reliability will go a long way toward ensuring long-term success.

Be Sociable, Share!

Types of American Business Incorporation

Types of American business incorporation include publicly-traded corporations, which sell stock to the public to raise capital, and privately-held corporations. American incorporations are legal entities distinct from the individuals who manage their affairs or from the owners of their stock.

American Business Incorporation 1 – Sole Proprietor / Sole Trader
The business is run by a single owner who assumes liability for all the debts and liabilities of his business. Not only is the business owner liable, but the personal assets of the owner and spouse are at risk.

American Business Incorporation 2 – General Partnership
A business run by two or more partners is known as a general partnership. As with a sole proprietor business, the partners are responsible for all debts and liabilities of the company, plus one business partner is liable for the debts incurred by the other partner in the name of the business, therefore a lot of trust is required between the partners. Alternatively the business partnership can be set up a limited liability partnership which protects each partner from the other’s actions.

American Business Incorporation 3 – Limited Partnership
A limited partnership is a combination of both general partners and limited partners. Limited partners are usually sleeping partners who invest in the business, but leave the day to day trading activities to the general partners. With limited status, a limited partner can share in the profits of the business without risking their personal assets, their liabilities are limited to the amount of their invested capital.

American Business Incorporation 4 – Limited Liability Company (LLC)
A limited liability company provides the limited liability status of a corporation and also the favourable tax treatment of a partnership.

The limited liability company (LLC) is a distinct American business entity that combines the corporate advantage of limited liability protection with ” pass-through ” taxation, the method of taxation afforded to both general partnerships and S corporations.

Like corporations, LLCs come into existence after filing with the appropriate state body, typically the Secretary of State, and paying the necessary state filing fees. The LLC formation documents are typically called articles of organization or a certificate of organization.

In terms of taxation, the LLC’s income is not taxed at the entity level as is that of a C corporation. While the LLC does complete a tax return, the income or loss of the LLC as shown on this return is passed through the LLC and is reported on the owners individual tax returns. The LLC’s owners then pay taxes on the LLC’s profits at the individual tax level. An LLC can elect with the Internal Revenue Service (IRS) to be taxed like a C corporation, but this is not overly common.

Other advantages of LLCs include:

  • Members are typically not held personally responsible for the debts and liabilities of the company.
  • Forming an LLC can help establish credibility for a new business with potential customers, employees, vendors, and partners.
  • There are generally no restrictions on the number of members allowed..
  • LLCs have flexibility in structuring the management of the company.
  • LLCs do not require as much annual paperwork or have as many formalities as corporations and S corporations.

Some disadvantages of LLCs include:

  • LLCs are more expensive to form than sole proprietorships and general partnerships.
  • LLCs face more ongoing requirements, such as state annual report filings, than sole proprietorships and general partnerships.
  • Ownership is typically harder to transfer than with a corporation.
  • Because the LLC is a newer business structure, there is not as much case law to rely on for determining precedent.

Regarding the ownership of an LLC, the owners are called “members”. Members are analogous to shareholders in a corporation or partners in a partnership, depending on how the LLC is structured. Members will more closely resemble shareholders if the LLC utilizes a manager or managers because the members will not directly participate in the management of the LLC. If the LLC does not utilize managers, then the members will more closely resemble partners because they will have a direct say in the decision-making of the company. An LLC must specify at the time of formation whether it will be managed by members or managers.

A member’s ownership of an LLC is represented by “membership interest,” just like a partner’s interest in a partnership or a shareholder’s shares of stock in a corporation.

When evaluating whether the LLC is the right business structure for your particular business, it is advisable to first determine the goals of your business, and then to assess the advantages and potential disadvantages of the different business structures in relation to those goals. You may also wish to seek the advice of an attorney or accountant.

American Business Incorporation 5a – C Corporation
A corporation is separate legal entity to that of its owner, it is also a separate tax entity and is therefore taxed separately from owner(s). The IRS refer to a general corporation as a “C-Corporation. A corporation must be registered with the secretary of state and is owned by its shareholders, whilst run by its directors, agents and managers. S-Corporations is a corporation that has filed to become an S Corporation with the IRS. This change of status allows the IRS to treat the corporation like a partnership for taxation purposes…

The standard American business incorporation, (also called a C corporation), is a very common business structure. Corporations are separate legal entities that are owned by shareholders. Conversely, sole proprietorships and partnerships are not separate legal entities. They are considered to be the same as the owner(s). In order to form a corporation, the appropriate formation documents, usually called the articles of incorporation or a certificate of incorporation, must be filed with the state and the state filing fees be paid.

The primary advantage of incorporating a business is the limited liability the corporate entity affords its shareholders. Typically, shareholders are not personally liable for the debts and obligations of the corporation; thus, creditors will not come knocking at the door of a shareholder to pay debts owed by the corporation. In a partnership or “sole proprietorship” the owner’s personal assets may be used to pay debts of the business..

Other advantages of incorporating a business include:

  • American Incorporating may establish credibility for a new business with potential customers, employees, vendors, and partners.
  • The ownership of a corporation is easily transferable through the sale of stock.
  • American Corporations have unlimited life extending beyond the illness or death of owners.
  • Certain expenses, such as insurance, travel, and qualified retirement plans are typically tax-deductible.
  • Additional capital can be easily raised through the sale of stock ( shares ) in a corporation.

The main disadvantage to forming a C corporation is often considered to be the potential for double taxation. C corporations are considered separately taxable entities by the American Internal Revenue Service (IRS), and taxes must be paid on the profits of the corporation. If a corporation then distributes its profits to shareholders in the form of dividends, the dividend income is also taxed as regular income to the shareholders. In this case, the corporation’s profits are taxed twice, first as income to the corporation and second as dividend income to the shareholder, creating the “double-tax.”

However, not all income a shareholder receives from a C corporation is subject to the double tax. Example: if the shareholder is also an employee of the corporation, that shareholder will most likely receive a salary payment from the corporation. As long as the salary paid to the shareholder is considered by the IRS to be reasonable (or similar to the market salary rates for that position), it is treated as a business expense and is deductible to the corporation. This helps reduce the amount of taxable income the corporation has.

In order to eliminate the possibility of double taxation, C corporations can elect to be taxed as an S corporation with the IRS. With S corporations, the profits and losses of the corporation are reported on the individual tax returns of the shareholders, and any necessary tax is paid at the individual level. This taxation method is called “pass-through” taxation, since the profit or loss of the corporation is passed through to the shareholders.

Other aspects of C corporations that can be considered disadvantages include:

  • American Corporations are more expensive to form than sole proprietorships and partnerships.
  • There are more corporate formalities, such as annual paperwork, and more state and federal rules and regulations, than with sole proprietorships and general partnerships.

When evaluating whether the corporate structure is right for your particular business, it is advisable to first determine the goals of your business, and then to assess the advantages and potential disadvantages of the different business structures in relation to those goals. You may also wish to seek the advice of an attorney or accountant.

American Business Incorporation 5b – S Corporation
A subchapter S corporation is a standard corporation that has elected a special tax status with the Internal Revenue Service ( IRS ). S corporations carry the same benefits as C corporations, such protecting the shareholders’ (or owners’) personal assets from the debts and liabilities of the business, unlimited life and tax deductibility of certain business expenses. The primary differences between S corporations and C corporations are the way they are taxed and also the ownership restrictions S corporations face.

When deciding which entity structure is most appropriate for their business, small business owners often view the potential double taxation of profits associated with C corporations as the primary disadvantage to forming a standard corporation. With C corporations, the profits are taxed first at the corporate level, and then taxed again at the individual level if they are distributed to shareholders in the form of dividends. Shareholders must report dividends as personal income and pay taxes on that income.

Double taxation can be eliminated by completing the S corporation election with the IRS. S corporations are taxed as pass – through taxation entities, similar to general partnerships and most limited liability companies. While the profits of an S corporation are reported at the corporate level, taxes are not paid at the corporate level. Instead, the profits are passed-through to the individual tax returns of the shareholders and are taxed at the individual rate. If the S corporation reports a loss, the amount of the loss is also passed-through and reported on tax returns of the shareholders.

Keep in mind, not all C corporations can make the S corporation election with the IRS, as the IRS has placed restrictions on S corporations. Current restrictions include:

  • Shareholders must number fewer than 75, and all shareholders must consent in writing to the S corporation election.
  • Shareholders must be individuals, estates, or certain qualified trusts.
  • Shareholders cannot be non-resident aliens.
  • S corporations can have only one class of stock (disregarding voting rights).

To be classified as an S corporation, a corporation must makea timely filing of Form 2553 with the IRS. IRS instructions indicate that the form must be completed and filed:

  1. At any time before the 16th day of the 3rd month of the tax year if filed during the tax year the election is to take effect, or
  2. At any time during the preceding tax year. An election made no later than 2 months and 15 days after the beginning of a tax year that is less than 2 1/2 months long is treated as timely made for that tax year.

An election made after the 15th day of the 3rd month but before the end of the tax year is effective for the next year. For example, if a calendar tax year corporation makes the election in April 2005, it is effective for the corporation’s 2005 calendar tax year.

For questions on whether the S corporation structure is best for your particular business, it is best to seek the advice of an attorney or accountant.

Be Sociable, Share!