February 23, 2012

Posts Comments

You are here: Home / Archives for Small business

What Do Financers Look for When Making Loans (or denying loans)

The banker has likely told you to bring in the financial statements of your small business before he helps you get a loan. After talking to the banker you wonder if he even looked at the statements. Chances are, he didn’t . The initial decision of whether a bank will entertain the option to provide you a loan is based more on ratios than on the actual numbers. The ratio of your financial statements will let the banker know if you will be able to pay and if you will pay.
The key to getting that loan is to know how to work the ratios in your favor. A banker wants to know if you can repay the loan. To determine this his finance department will calculate a cash coverage ratio. Find the sum of the net income, the amortization expense and the depreciation expenses. This is the net cash flow of what is left when all of the businesses bills are paid. Divide the sum by the annual payments of the loan you want to take. This is the cash coverage ratio. The banker likes to find a 1.5 or above ratio. To make this ratio work for you simply add your spouses income and any additional income that you have, these can be considered in determining the ratio.

Your credit score will be used to predict if you will pay your future debts, whether short term loans or expensive home mortgages. Your history report will be used to calculate a debt to worth ratio. Divide the shareholders equity by the amount that you owe (your liabilities). This ratio should be less than four times the equity at the most. A lower number will be better. To make this ratio work for you, tell the bank if any of your debtors will allow the bank to collect their loans first. The other loan is then considered equity.

Filed Under: Investors Tagged With: , ,

Marketing for Small Businesses

WASHINGTON - NOVEMBER 18: Treasury Secretary ...

Image by Getty Images via @daylife

Small business owners face a lot of challenges in keeping their business running and also factor in growth in a highly competitive market. They don’t have massive marketing budgets and so need to improvise in order to maximize their reach. Here are some tips on how you can market your business is an effective yet economical manner!

  1. The first rule of marketing is to know who your target audience is. The reason why they are called a ‘Target’ audience is because all your marketing initiatives will be directed at this section of the society. It is important to factor in this sector in a small business’ marketing plans.
  2. Create a database of all your customers and segregate them by how often they make purchases from you. This database will come in handy when you are sending out promotions and mailers too.
  3. Create a survey aimed at finding out what your customers look for and what you can do to make them increase the frequency of their purchases. Try to find out what you can do to boost customer satisfaction.
  4. Provide potential customers with more information about your business. Create a mailer or newsletter focused on how your products are ideal for the customer’s use. Remember to keep the focus on customers!
  5. Make it a habit to send out best wishes mailers on birthdays or anniversaries of customers. Try to include ‘gifts’ like discount coupons and vouchers on your products.
  6. Get into an advertizing partnership with a company whose products compliment yours. This way, you can share the cost of marketing and advertising, drive sales and boost profits too!
Filed Under: Businesses Tagged With: ,

3 Lead Generating Leads to Avoid

When someone has a small business and they are trying to get new leads, there are some mistakes that they make that can be very costly. Here are three of the biggest mistakes that you as a small business owner can make.

• Hiding a Company – One of the things that small business owners often do is that they inadvertently hide their company from everyone online. They don’t do this on purpose.

To avoid doing this, use search engine optimization. This is going to help people to find your website when they are searching for one of your keywords online.
• Going for a Cheap Website – The second thing that people often do is sell themselves short on a good website. There are a lot of websites on the Internet and it’s easy to tell usually when someone goes for the cheap option in a website. With most business being conducted on the Internet, it’s important to make sure that the website looks professional because if you have a professional looking website visitors will see you as more trustworthy.
• Being Unclear – The third thing that people do is they are in the business world is that they offer different items or services instead of concentrating on just one. When someone sees a business owner going all over the place with what they have to offer, they often raise eyebrows and wonder what you really do.

The world of business is expanding and more people are going into business for themselves. But in order to be a success and generate leads, on the Internet especially, it’s important to avoid making these three mistakes. Let people know what it is that you are offering, give them a professional website to look at and search through, and make sure that they can find you on the Internet.

Filed Under: Businesses Tagged With: , ,

6 Suggestions for Planning a Business Effectively

When you have a business idea, one of the things that you have to do is make sure that you are planning your business well. Listed below you are going to find 6 ways that you can plan your business and help it to be a success.

- Define the business idea clearly and make sure that you’re able to articulate it succinctly. Know what your mission is so that you are able to tell others what it is. If you are not sure of what you want to do, how are you going to tell others about it and make it work?

- Look at your motives. Be sure that you first of all are passionate about having a business as well as being passionate about this business. If you are not passionate about the business, where is the motivation for making it work>?

- Make sure you’re willing and ready to commit to the discipline, hours, frustrations, and continuous learning that comes with owning a business. Starting a business is difficult.

-Conduct an analysis that looks at your competition, which will include prices, service, quality, products, promotions, distribution, advertising, and know what outside influences are going to affect your business. In order to be a success, you have to know the enemy.

- Look for help from other vendors, government agencies, professionals, employees, small businesses, trade shows, and trade associations. Make sure that you are alert, that you are asking questions, and that you are looking for help anywhere you can get it. Invest time in your business.

- Provide yourself with the appropriate tools to serve your individual needs. Look into ERP and software options that can help you cut back on staffing and save you money in your first year.

When you are starting a business, the six things that are listed above are what you should do in order to help you to be a success. Without taking these steps, you will discover that you are defeated before you begin. These suggestions will help you succeed in business.

Filed Under: Businesses Tagged With: , ,

5 Business Plan Tips

A business plan is one of the most important things that a business owner can create. But there are some things that you should do with a business plan that will make it even better. These things are going to help you to make sure that you are able to have a successful business plan. Here are some tips that you can follow to make your business plan the best that it can be.

• Make sure that you are taking a long view on your business and do some long-term planning. Take time to map out the places that you want you and your business to be in five years’ time and the plan you have to get yourself there.
• Think of the plan as a document which is alive. Look it over on a regular basis to be sure that you’re staying on track or make adjustments as the market changes.
• Write your plan yourself. You are going to learn more about your business and yourself if you do it. Only you know what you are planning for your business and therefore are going to do the best with the business plan.
• Share your plan with other people who are able to assist you in getting where you wish to go, like key employees, advisors, and lenders.
• Know that it may be possible that you’re going to pay some kind of price in the short term so that you are able to obtain business health and growth in the long term.

These five things are going to help you to make a great business plan and put you on the road to success in the business world. Having a good business plan is something that every business person needs in order to help their business grow and prosper. A good business starts with a good business plan.

Filed Under: Businesses Tagged With: , ,

Tips for Business Start-ups and Negotiating with Investors

Your business idea is the concept of the century but you have generated no revenue and are relying only on the power of the concept. Under the traditional negotiating rules, you don’t stand a chance. However some small business owners choose to find funding and investors from untraditional groups such as investors, suppliers, and even employees. When dealing with employees be very careful to always consider and respect the input and their position. If you are a start-up company it is very likely that you asked some of the employees (and they agreed) to start at a wage below the market value for their skill set. These employees will have varying reasons why they cannot help you in any additional way a this time. The way an employee can invest in your business is to reduce the amount or number of time a raise in pay is provided. When employees come to ask for a raise try to determine why they feel they need the raise. It may be that you can barter something so that you do not have to compensate them in a financially strained manner but can provide what they need at a reduced costs. Never tell an employee they are already getting paid what they deserve. Revisit production and performance with the team of employees and remind them the overall health of the company is dependent on performance. Negotiating with investors it is important to remain calm and confident. This is the number one key in negotiating. Know the terms you need when you enter negotiations and know the minimum that will help your situation. Tell smaller investors that you have set terms that are not negotiable. Though you need the capital, you never want an investor restructuring your terms unless they are going to ensure future ongoing funding.

Enhanced by Zemanta
Filed Under: Businesses, Corporations Tagged With: , ,

Business Tips for Start-ups Negotiating with Suppliers

When your business is just getting started there are tons of details to work out. Most suppliers are willing to work with new businesses because they understand the success of the business will help the suppliers own bottom line. Sometimes the suppliers or their representatives see small businesses as a nuisance and leave their needs until they have to be dealt with.
Try to negotiate with the supplier to reduce costs. Lowering the costs of inventory can help make your balance sheet look more attractive to loan institutions and other potential funders. Even when the supplier sees your business a small potatoes, they may be interested in providing a discount in exchange for a standard monthly order, an automated order, or other time reducing incentives for them. Basically, consider what will be valuable to your supplier that will not cost your small business a monetary amount and offer this to help reduce costs. Negotiate with the supplier with the understanding that your business is here for the long run and you are not a temporary client.
Negotiate the price of the supply but also negotiate other features as well. Your standard order negotiation should have a provision to terminate the contract and order. If your company can guarantee a long term order to the supplier, they are more willing to offer you a lower price. To protect yourself be sure there is a clause to terminate the order if your company goes out of business or has a drastic reduction in sales. You may be able to order a year or four year quantity at one time but have the order delivered in smaller quantities at regular intervals. The invoice will be paid in payments based on the shipment schedule. Many small businesses can use these creative negotiating practices to secure better prices and improve the balance sheet.

Enhanced by Zemanta
Filed Under: Businesses, Investors Tagged With: , ,

5 Tips for Business Efficiency

One of the things that every business owner should have is efficiency. But a lot of business owners don’t know how to be efficient. Here are some of the things that you can do in order to increase efficiency in the business.

- Shop for containers after you look through the books and files to find sizes you need and how many you need. This is going to keep you from buying containers you don’t need. It will also help you to save money.
- Don’t let things pile up. File them, act on them, or toss them. When you get something that comes across your desk, make a decision on what should be done with it. Otherwise you have a lot of stuff cluttering up your desk.
- Use PDA’s, databases, and email to categorize the work that you have done instead of using paper formats of them. This is going to help you keep from having to worry about papers being lost or damaged.
-Choose a calendar system that works best with the style that you are using to organize and keep using it. If it’s on the computer, don’t forget to back it up on a regular basis so you don’t have to worry about losing it.
- Make sure that you’re managing your time in a ruthless manner. After all, it’s one of the biggest things that you’re selling. No matter what else you are selling or offering, your time is going to be involved in it in some way.

These five things are going to help you to be more efficient when you own a business. They are created to help you make the most out of your time at work and your money for your business. Efficiency is something that is most important in the business world – it helps to save both time and money.

Filed Under: Businesses Tagged With: , ,

5 Tips for Developing Relationships With Vendors

Most business owners, no matter what type of business they have, have vendors that they deal with on a regular basis. It’s important that business owners have a good relationship with their vendors so that they are able to get their products and their services on time. So there is generally a set of rules that business owners should follow when they are dealing with their vendors. Here are some of the tips that you can use for dealing with vendors.

-Become familiar with the suppliers. You can use the newer technology for communicating with them, but don’t discount talking on the telephone, since it’s a personal touch.
- Look at your vendors as an important part of the business team and make sure that you are treating them that way. It’s going to make them feel better and make a big difference.
- Be sure that they know what you expect and what you need. This is going to help there be a good understanding between the two of you and make sure that there aren’t any misunderstandings.
-Make sure that you are showing appreciation for when they give you some good service or when they come out with a product that is new and that you know is going to work well for you.
- Make sure that you’re paying your bills on time. If you are unable to pay in a timely manner, let the vendor know and see if you can work out a doable payment plan. This is when knowing them well and treating them well is going to come in handy. Just make sure that you don’t take advantage of it.

Vendors are an important part of any business and that is why using the tips that are listed above is a good idea. It will help you and them to have a good working relationship.

Filed Under: Businesses Tagged With: , ,