I’m not an Economics Major! What do I need to know about Small Business Finance?

No, you don’t need to be an economics major, but you do need to understand the basics of small business finance and good financial management. And if you are an economics major, Great! You have a big head start.

Do you need a bunch of spreadsheets? Not today, but as you plan your business and it begins to grow, you’ll know how to use these! When you’re starting out, there are five basics areas where you need to learn as much as you can:

Bookkeeping:

In very simple terms you need to keep track of the money that comes in and the money that goes out. It may sound a simple, and it might be in the beginning, but you’re not starting this business to run for a month. Hopefully you’re starting this business to last for a long time.

It’s a very good idea to put a smart small business finance accounting system into place from the beginning, and get it set up to grow with your business. You will find a resource page below with some very good basic accounting systems that are affordable and easy to use for small business finance.

Credit and Collections:

You need to make sure you get paid for your product or service. How this happens can vary greatly based on the type of business you run. If you’re just starting out, you will probably not offer your customers credit terms, more likely it will be cash on delivery.

For this you need a payment tool that your customers trust (always look at your customer’s point of view first) and one that will allow you immediate access to your cash. There are many online payment tools and gateways, like PayPal.

One important note, it is an extremely smart idea to use a payment tool or gateway that also offers you the ability to download transaction details into your accounting package. This saves you loads of time manually entering information into your small business finance software package, and has many additional upside advantages.

Cash Flow:

This is where most people have problems with small business finance, and the largest reason for business failures. Let me explain it this way.

Can a profitable business fail? YES, and many do! Cash is KING!

You must have enough cash coming in to pay your expenses. In the beginning this will be from your own pocket or from your small business finance loan or credit facilities. But eventually, and in most cases sooner rather than later, the start-up funding will run out. You need to be focusing on cash flow from Day ZERO, and eventually when the business is running on its own income you can focus more and more on profitability.

Purchasing:

You will need to buy things for your business. In the beginning it’s important to focus on how you pay for these items. If you’re using your credit card, no problem, but watch the finance charges. Try and keep the outstanding balance on your card down to a minimum.

If your making most of your purchases online, then find a good payment tool or gateway that you can use to pay for purchases while at the same time collecting money from your customers.

Financial Analysis:

Don’t worry, this is not a huge issue in the beginning, because if you’re like most new businesses there will be very little to analyze.

But keep in mind; this will become more and more important as your business begins to grow and you have less and less time to dedicate to finance. You will need to again select an accounting package that can grow and expand with your business giving you easy reports to understand.

In the beginning you really just need the ability to watch your finances and do short range forecasts of your cash flow. Most accounting packages have this as a basic part of the package, if not; keep looking for a system that offers this from the beginning.

Get the Small Business Finance Basics right, and the rest will follow with much greater ease. Ignore the basics, or do them wrong, and you’re asking for problems later on that will distract you from your main function as a business owner which is finding and keeping customers!

Kathy, a skilled massage therapist, called me to discuss what she needed to know to start her own massage therapy clinic. She had been in the industry for over ten years, and was very skilled at working with her clients.

 

Economies all over the world are experiencing a decline, businesses are laying off many people in order to cut costs and stay profitable. Those who retain their jobs are faced with rocketing food and gas prices.

One thing I have found in my years of entrepreneurship is that smart marketing is the key to success. I have worked with many different types of small business owners, entrepreneurs, coaches and consultants from all kinds of industries. No matter what their business is I have found that if the person does not know how to market it, and they do not get help to do so, the business will not survive.

The following 10 items are what I consider a good small business start up checklist. If you are in business or thinking about getting into business, you will want to ensure you have or are working on all of these things constantly. The right mix of these items works well to maximize your exposure, credibility, expert status as well as to build your database and help you make informed marketing decisions.

1. Realistically Defined Target Market – Most small business owners actually have too large of a target market to be realistic and to be able market to them all with their limited time and budget. Most likely, you will want to narrow your market or define your niche even further with specific demographics and psychographics. In doing so, you will begin to see unique opportunities surface in that market. Do not forget about all your referral sources. Remember, they are your target market too!

2. Marketing Plan – This plan should outline everything you could possibly do in your marketing, based upon who your target market (ideal client) is and the best ways to reach them, including various guerilla marketing techniques, ideas, promotions, and co-promotions. You will need to stick to your well-researched plan and not be tempted to steer away by random advertising opportunities. This should also include a Publicity Plan. The Publicity Plan should include pertinent media contacts, press releases, article submissions and event listings for ongoing exposure. If you are not submitting press releases regularly to the local media and/or local organizations you belong to, you are missing FREE opportunities to get additional exposure for your business.

3. Database – Input all clients, prospective clients, referral sources, and contacts you will need in one place. Be sure to include everyone you have ever known or done business with so that it is easily mail merged for one. In addition, format the database so that you can sort them by hot, warm or cold prospect or referral source. Next, stay in regular contact with your database through effective Database Marketing and Follow Up. This will allow you to be on the top of their minds when the topic of your service and/or product arises in conversation. This process can include letter and email templates, a system for following up with ‘hot’, ‘warm’ or ‘cold’ prospects and ongoing database marketing. Remember, if you do not do a quick follow up after you meet someone, you are missing opportunities and they might forget about you. You want to follow up with everyone you meet within 48 hours of your meeting. In addition, you will want to ensure you continuously follow up. You need to make this system automatic, systematic and practical so that it will get done. Delegate the process it if you have to.

4. Company Web site – Including domain name(s), hosting, reciprocal links, and Internet submission. You are missing sales if you do not have a Web site. However, a professional Web site is a must, not a home-made, amateur site as it will harm your credibility. It does not have to cost a fortune to be professional. The goal is to design it so it will inform, entice and capture your audience.

5. Email Marketing – Distribution lists, program for email marketing, newsletters, promotions – email marketing is the cheapest form of marketing that anyone can do. However, these days there are spam laws that a business must follow as well as email etiquette that you should strive to follow so that you are portrayed as a professional business. There are programs that you can use to truly make your emails pop, but remember you must send people information that your audience wants to read, not just what you want them to read.

6. Effective Ads & Advertising Plan – Including Timeline & Budget – More than likely you are not spending enough money on advertising. If it you advertise in the right places, places that reach your target market, with a good message or headline and for a reasonable length of time you should see good results. If you only try it once, go too small, or have no idea how to design your ad effectively, you will not get results. Learn about all the advertising mediums in your target area, who they reach, their demographics, what kind of circulation they have based on their cost, etc.

7. Professional Marketing Materials – Business Cards, letterhead, envelopes, brochure, sales packet, flyer, and postcard – whatever is necessary to reach your target market. The materials must be professionally designed, printed and presented.

8. Branding – Includes signage like nametags, shirts with logo, vehicle signs, banner, promotional products and giveaways – the more your name is in front of people, the better. You will want people to recognize your brand on everything you do.

9. Networking Plan – Includes any pertinent organizations, associations, chambers or other professional group that brings in referrals or is an effective venue for prospecting or business development. Pick some organizations (between 2 – 5) you believe are the best at either promoting or building your business. Join them and become as active as you possibly can so you become the well-known expert in your field. Volunteer your time generously and most of all put their events on your calendar before any other client meeting or job because these are advertising dollars that you are not spending.

10. Good, Reliable Vendors – Includes industry vendors as well as those for your business development such as printers, mailing houses, delivery services, rental companies. You would be surprised to know that you are probably spending too much money in one or more of these areas right now. Find reliable, inexpensive sources.

If you are thinking that there is absolutely no way you can get all this done yourself, or you just do not know how to do something on this list then, I would suggest that you find an expert in that field to help you. Delegate that task to someone who knows best how to accomplish it and can do it much more efficiently than you can.

Remember, the cost of outsourcing such tasks far outweighs the valuable time you spent trying to figure it out. Your marketing is the most important thing you will ever do in running your own business. If you do not believe me, save this article in a safe place. When you go out of business in 2-5 years, find it and read it again.

Setting up a small business involves a number of formalities and steps to be followed. Prior to setting a business, you need to have a business idea followed by a marketing plan to execute that idea. These both aspects lay the foundation of a small business. A business idea should be selected on the basis of the specialization area of the owner as well as on the degree of investment into the business.

Essentials for Setting up a Small Business

There are certain resources that are essential while setting up a small business. These include-

Planning:

The base of any small business is a well-crafted plan. A good plan helps you in well executing the other functions such as management, organizing, and controlling. The promotion and advertisement of the products should be well planned and then implemented.

Arranging Funds:

Small businesses require low investment than big scale business. A big share for the funds for a small-scale business is usually gathered from personal savings. Many banks and financial institutions also give loans on a certain amount of interest and collateral security as a back up.

Naming the Business:

Naming your small business is very important. The name gives recognition to the business and makes it stand unique in the market that is full of other such businesses. Moreover, the name also represents the type of services offered by the franchise.

Registration:

Registration to a small business gives a formal entity to a business. It requires some paper work and procedures. The Secretary of State formally recognizes your business as corporation or a limited liability company. You also need to have an employer identification number while setting up a business.

Accounting and Book Keeping:

It is always recommended to have a separate banking account for the business. This will help you in keeping the track of the income and expenses. You can also use accounting system or software that also helps in maintaining the record books.

Licensing:

To acquire a license for your small business, you need to consult the local authority where the business will be set up. Licensing procedure requires certain fees and rules to be followed.

Tax Implications:

The tax implications depend on the entity of the small business. A sole proprietorship business needs to pay quarterly payment at the end of a quarter year. In case the small business is S-Corp, C-Corp, or LLC, you need to contact the attorney for your tax implications.

Client Contract for Service:

While setting up the business, a client contract for the services should be made. This helps in making a mutual agreement and understanding a plan to work together.

Setting up a small business requires certain essential aspects as mentioned above. These aspects help you in well setting up the business in the market. Aftermath, its your responsibility to its take it further. A good businessman always looks out for more options and resources to expand his business. Always seek advice and suggestions from your experienced and senior businessmen to attain success with your small business.

As a small business owner, you’re certainly feeling the pain of the current economic climate. Whether you call our current situation a recession, a depression, or something else altogether, it’s clear that marketing our businesses to those customers who are still spending money is going to be a key to our business survival. And whether we like it or not, Internet marketing is going to have to be at the heart of any effective new marketing effort.

Thinking about starting a business in this economy does seem quite daunting. You are probably asking yourself, what banks are going to offer me a Small Business Loan or am I still able to get a Business Credit Line in this downturn economy? The answer lies in where you ask for a loan. If you ask a struggling bank for a small business loan, you may be on hold for awhile of not indefinitely, but if you reach out to other financial resources, like small business investors, you will find that there are several offers available to you.

You Can’t Get Something For Nothing However
Do you have a business model ready? Have you already started your business with your own savings? Can you prove to venture capitalists that you have a complete game plan? If you are able to prove everything in detail on how you are going to use their money to create a profitable business, it’s likely that you will be able to get the funding you need, verses the entrepreneur with just a big idea.

Take a Look Back on History
Microsoft, Disney and Johnson and Johnson were all started in recessed economies. They likely didn’t have banks that were completely frozen with cash, but they did have stable business plans and hard working people working for them. Investors back then, like now are looking for safe investments and bargain investments. The statistics show, that if you can self-fund your business in the beginning, you are likely to get financial help later on, once you are more established with a customer base and can prove a need.

Rome wasn’t built in a day of course, and it wasn’t done by one person. You will need patience to build a great business and you will need great help. Right now, there are a ton of people out there looking for jobs, a lot of really intelligent, hardworking people that can help you turn your small business into a profitable and successful dream job. Plus, in this competitive market, you can hire them today for a lot less than yesterday.

Instead of using personal credit cards to start your business and launch yourself into debt faster than you need to, think about venture capitalists, small business financing corporations or better yet- ask a well to do family member to throw you a bone.
Think about it, the business is out there, people will continue to buy things everyday- but the trick is how you get a slice of that pie? If you have the drive, vision and will to start up your business, why wait for the optimum timing? It’s likely that the optimum timing won’t come around any time soon and someone else runs with your idea instead. The money is out there somewhere- it’s all about how you go and get it.

The first rule of online business development is to remember when you are searching for a business idea to pick the one that works personally for you. Even if you have already a business and you are consider to adding an online presence to it.

A small business is an invention; whether one wants to market a service or invent a product. One should have an idea first. Actualising the idea one needs financial assistance. Lacking of the monetary can be an obstacle at times. Coming up with a small business loan UK the real stumbling block has abided by and opened way for the business aspirers.

J. K. Rowling is the English writer who has authored all seven beloved and widely read Harry Potter novels. At age 41, her rise to fame and fortune is inspiring. She has sold over 325 million books. The final book in the series, Harry Potter and the Deathly Hallows, was the fastest-selling book of all time.