Get a Quick Start to Small Business Ownership: Generate Profits and Success Faster by Buying an Existing Business

There has been considerable attention paid to the challenges and pitfalls of starting a small business from scratch. It is certainly true that the first few years of a new business can be very challenging and, in most cases, unprofitable. While being able to create a business’ culture and operating systems from the beginning can be a big plus for an entrepreneur, there is a lot to be said for letting someone else handle the start-up headaches.

Buying an Existing Business can be a Smart Alternative

Any entrepreneur wishing to start a small business should consider purchasing an existing one before taking the plunge into the start-up fray. An existing business usually has a client / customer base in place and operating systems that, if not effective, can serve as a foundation for improvement. There are also vendor relationships established and a certain amount of good will in the community that are important considerations.

The key to purchasing an existing small business is to spend the time needed to ensure that it has a reasonably solid financial and operating structure in place and has a decent reputation in the community. Here are four things to consider before purchasing an existing small business.

Purchase the Business Assets, Not the Business

It is always best to purchase a business’ assets and create a new corporation or entity as opposed to buying the business itself. This will create a better tax position because the taxes will be based on the selling amount, not what the seller spent on the business’ resources. Also, purchasing just the assets protects the buyer from responsibility for any liabilities or law suits carried by the seller. With this in mind, it is also important to obtain an indemnity from the seller which further protects the buyer from actions taken by the seller prior to the sale.

Perform Due Diligence to Ensure that the Business is on Reasonably Sound Footing

It is imperative to review the seller’s accounting, operating, and marketing information to determine the business’ viability and potential for expansion. Reviewing accounting spreadsheets such as balance sheets and profit and loss statements can by very useful, and take a close look at staffing, office expenses, and marketing materials to estimate overhead costs. The seller will require the signing of a “nondisclosure” statement to ensure confidentiality of the information, but any buyer should be able to access financial and operational information. If it is refused, beware!

Determine How the Accounts Receivables, Prepaid Expenses, and Office Leasing Will be Handled

Discuss how the accounts receivables will be handled. The seller may want to keep them or they can be included in the sale of the business at a reduced rate to account for any defaults that may occur. It is also important to discuss any prepaid agreements that the seller has made such as insurance or advertising. The arrangements for handling these agreements need to be addressed upfront. Also, find out about the lease arrangements to determine if it is reasonable to assume responsibility for the current lease or negotiate a new one. It may also be more efficient to move the business to a different location.

Develop Letter of Intent

This document can be very useful in spelling out the primary terms of the sale such as purchase price, identification of specific assets being included, and the transition process from seller to buyer. It will also include non-compete language which protects the buyer from the seller opening up a new business and becoming a competitor. The letter of intent helps to create good faith between the seller and buyer and will make the development of the actual contract easier.

Determine if Employees Will Remain with the Business after the Sale

Losing important employees at the point of sale would be very compromising to the buyer. Therefore, negotiate with the seller to meet with employees to determine their interest in remaining with the business, at least for a period of time. This will reduce the likelihood of being caught off-guard by a mass exodus of employees.

Be Methodical in Purchasing an Existing Business

Buying an existing business can be the right thing to do if the priority is to become operable and profitable quickly. However, it will also require larger financial resources upfront or, at least, the ability to borrow money for the purchase. Every entrepreneur’s situation is different, so it is well worth the time to determine if purchasing an existing business is practical or if starting from scratch is the best avenue to take.

What Basically is an Entrepreneur?

There are a lot of things that you use daily but do not know how to make it. For example, Toothbrush, Toothpaste and others just to start with. Thank the entrepreneurs who make these products for you. They are the ones who take care of each and every process before the product reaches you.

The word Entrepreneur has many different meanings. If you really wish to know what it exactly means, keep on reading this article.

An entrepreneur is a person who takes all the risks and responsibilities that are involved in a business before and while undertaking the business. The entrepreneur always wants to make a profit, irrespective of the size, scope, area, risks, etc. of the business.

The entrepreneur takes all the risks and hence, he must be rewarded with the profits. The business decisions relating to the selection of the product to make, the promotion of the product, the making of the product, the marketing of the product, etc. all has to be taken care of by the entrepreneur.

There is no one who can predict whether a business will be a success or a failure. If the business goes in profits, the businessman is the one who will get the maximum reward. But, if the business goes in a loss, he will have to bear all the losses.

Taking all the responsibilities and the risks involved in a business is not a thing that every individual will even like to do, forget taking the risk. The primary objective of an entrepreneur is to make profit irrespective of what the business is related to, irrespective of what is the size of the business, etc.

Huge profits can be earned only with large businesses, while small businesses will help you to earn small profits. To choose between a small and a large business will be the responsibility of the entrepreneur. He will see to it that the business diversifies and increases.

The entrepreneur is the person who decides on the product or service that the company is going to produce, furnish, market and promote. The entrepreneur decides this after making a careful analysis of the demands of the people and by taking a risk in the untouched areas. This will take a long time before the entrepreneur can finally decide which product or service to offer after the research.

Next comes the time to organize all the resources that are required for the making, marketing and advertising of the product or service. Many experts believe that the most important thing that an entrepreneur does is organizing the resources. All other functions can be carried out by many other people, but organizing of the resources is the function that differentiates the entrepreneur from the common man.

The entrepreneur has to invest a lot of capital in the business for the furniture’s, machines, staff, etc. The furniture and the machines will be the assets of the company.

Another important function that comes here is selecting a work force that will be loyal to his business. The success of the business depends on the loyalty of the work force. The labor should work as a unit in order to make the business successful. There should not be disputes between different sections of the company.

The success or the failure of the business solely depends upon the entrepreneur.

Online Entrepreneurs for the New Decade

As online entrepreneur, a lot of friends asked me how to start and generate profits via online business. Where else, than all from blogging glory. There are steps to follow to guarantee blogging success. It’s a surefire, I myself have seen growing online businesses and continuously growing online business growing the same exact process.

Step 1: Find a need of everybody’s demand.
Most mistakes of the marketers are finding a product before they introduced in the market. In these cases, more often customers are actively on the look for your product online, and for sure you’ll never make a big hit. This is a surefire, and remember, the icing of the cake is to find a group of people with a common interest, problems they’re trying to solve and then resolve it for them.

Take some easy steps to explore your market

:• Go online forums and check what majority people inquire so you get to bottom of the issue
.• Conduct keywords to find out what your targeted viewers search within your niche
.• Be active in the community, potential customers are just around the corner, visiting other sites and join forums, take note of what they’re activities to fill their demands.

Step 2: Informative Newsletter.
Newsletter speaks about you and your product. It has to be credible as you are. Write a catchy headline. Convince your reader your matchless effort to resolve their demands, and prove your credibility why you can be trusted to solve the problem. Focus on how your business is unique and exceptional

:• Stimulating headline.
• Express your best to solve the problem.
• Prove your reliability and stand your sincerity.
• Fuel your newsletter with testimonies from people who’ve tried your product.
• Commend your product and speak well about the benefits you offer.
• Ensure a guarantee.• Show the importance of the needs of your product.
• Last, deal your sale.

Step 3: Set up a website.
Next, if you’ve got the sale, and running your own business, it’s time to build your authoritative blog. There are free services for a start like Blogger.com – a Google platform and Yahoo for small businesses. Create a friendly website, simple and clean.

Step 4: Promote your blog.
Get the benefits of the search engines when you can. Make your blog solid keyword research and include these keywords in the titles of your posts. Tag everywhere and try to get a listing on Digg.com, as well as del.icio.us, reddit.com and MySpace.com. More educational articles such as “how to” articles, are very popular.

Step 5: Keep in touch with your visitors.
In this course, you’ll reach new customers. And on a regular basis, in every site that posts your content will link back to your blog, and search engines realized links from related sites and will compensate a reward in the ranking level accordingly.

Whatever online business you choose, if you’re just starting out, it’s a surefire to stick to this process as your quick guide. Do a quick review and you can’t go wrong with the basics.

Author: Erlyn O. Santillan, Online Entrepreneur
Page Title: Online Entrepreneurs for the New Decade
Side Title: Erlyn Santillan, Online Entrepreneurs for the New Decade, Online Entrepreneurs

Owning a Profitable Small Business: What Does It Take to Become a Successful Entrepreneur?

A great deal of attention has been paid in recent years to the incredible opportunities that await new small business owners. Some of the benefits include: 1) being the boss; 2) not having to answer to anyone else; 3) making a fortune off of an innovative idea; 4) and working flexible hours. While becoming a small business entrepreneur can be all of these things, it is essential to examine closely what it will take to succeed before dedicating valuable resources to a new venture.

Successful Entrepreneurship Requires Attitude, Focus, and Perseverance

Small business entrepreneurship is not for the weak of heart or pocketbook. Entrepreneurs can be either gender, any race, pretty much any age, from any area of the country or world, or any socio-economic class. However, two broad characteristics that will identify any entrepreneur is absolute commitment to an idea and considerable confidence that the idea will generate a profitable product or service. Although there are a host of specific characteristics that define a successful entrepreneur, attitude, focus, and perseverance are at the top of the list.

Attitude

Why is attitude so important?

  • Attitude is the foundation from which everything else is generated. An entrepreneur must “know” that their innovative idea will be marketable and profitable and be prepared to do whatever it takes to be successful.
  • Halfhearted commitment to the new business venture will, most likely, spell doom for the entrepreneur. There may be times when a new small business owner is the only person who believes in the new venture with many people attempting to dissuade an entrepreneur from moving forward.
  • This does not suggest that entrepreneurs must be cocky or “hardheaded” about their dream as those characteristics will lead to carelessness and failure. The point here is that less than total commitment to an idea or concept will probably lead to self doubt and ultimately reconsideration, so a strong believe in the success of a new venture is critical.

Focus

Why is focus so important?

  • Attitude is not enough to make an entrepreneur successful. Small business ventures require the ability to focus on the objectives and understand what it will take to reach them. This is why business plans and other documents are so important because they help to keep a small business owner focused on the big picture and all of its pieces.
  • Distraction is the enemy of an entrepreneur. If a small business owner becomes sidetracked by new ideas or priorities that do not relate in a reasonable way to the initial idea that fuels the venture, focus will be lost and the business will fail. It is human nature to become excited about new possibilities or things and a bit bored with those that have been around for awhile. However, if an entrepreneur loses sight of the reason for being in business in the first place, the loss of focus will be devastating.
  • There is a difference between distraction and flexibility. Entrepreneurs must remain flexible to adjust to changing environments and new opportunities. Flexibility allows the small business owner to remain sensitive to emerging challenges and issues while remaining focused on the initial idea or concept. Distraction causes the entrepreneur to react to the seemingly endless list of potential priorities and ideas that will lead to muddled thinking and lack of focus.

Perseverance

Why is perseverance so important?

  • Perseverance is similar to focus but with a long-term perspective. There are those wild, wonderful stories of entrepreneurs becoming successful virtually overnight. While that does occur, any entrepreneur must instead prepare for a long, often arduous journey. A turtle better describes the small business process than a hare because attention must be paid to the process of building a business and then growing it steadily over time.
  • There are many people who will try to distract an entrepreneur from realization of the dream. It is generally true that the only person who really cares about the idea or dream is the person experiencing it. There are so many new and interesting things in the world to focus on; it is often easy to be pulled away from the purpose of the business, especially during difficult times. A successful entrepreneur will have the strength to stick to the dream or idea over a long period of time.

Being a Successful Entrepreneur is a Lifestyle, Not a Job

Small business ownership is hard work and requires a strong and positive attitude, focus, and perseverance. The successful entrepreneur will have all of these characteristics and will also understand that 9-5, Monday-Friday working hours will just not be sufficient to succeed. It is true that incredible opportunities can await an entrepreneur starting a new venture, but only through hard work, planning, and commitment to the dream.

Maximize Your Selling Effectiveness: Professional Selling – Make the Most of Your Time and Effort

The three great time wasters: administrative work, traveling, and waiting can eat into productive time. Although these activities are unavoidable, you can employ strategies to maximize your effectiveness and concentrate your time where it will do the most good.

Maintain Excellent Records

Get organized. Lack of organization is a big time waster. A jumble of papers in your briefcase isn’t a system. Complete records and a regular routine of logging important information will save time by allowing you to input information once but access it many times and in many ways. One concise entry into a contact management program can be used to organize selling strategies, schedule visits, and compile reports.

Learn How to Write Well

Salespeople are often called upon to create their own e-mails and write their own letters. The more comfortable you are with the written word, the more easily you will be able to perform these tasks quickly and well.

The days are long gone when a department secretary would take a scribbled idea and make it into a professional presentation. Struggling for 15 minutes to write a difficult paragraph is a poor use of your time, and the results of your effort will probably be disappointing. Poor writing appears unprofessional and reflects on your entire organization. Seminars and night classes are available that target business writing and offer accelerated methods for learning grammar and usage. You may even be able to arrange for a trainer to visit your business to conduct onsite training.

With better writing skills, some of the tasks that you dread will become less of a chore and you will be able to complete them more quickly and successfully.

Always Schedule Sales Calls Ahead of Time

Scheduling ahead cuts down on waiting time and allows you to group visits to a number of locations into one trip to save on energy costs. Preplanning visits can also give you an opportunity to strategize and prepare materials in advance.

Cut Back on Unnecessary On-Site Visits

Reduce premises visits if you can. Don’t plan a visit to conduct business that you can complete over the phone or via e-mail unless you have a good reason for doing so. If a sales call is necessary, plan your route with trip software in order to find the fastest and most economical way to travel.

Be Prepared and Take Time Where You Find It

When traveling, keep tools on hand that will help you keep up on administrative tasks. Waiting to get back to the office to catch-up can be hard to do without dropping the ball somewhere.

The more current you are with your repetitive tasks, the more latitude you will have in planning the most efficient use of your time. Airplanes, waiting rooms, and hotel rooms are all places that can burn up idle time. With the appropriate tools, many chores can be accomplished during time that would otherwise be wasted.

Put Your Time Where It’s Needed

Existing customers generate the greatest sales volume. Review your customer list to determine the best timeline for dealing with them. If you are in different time zones, consider modifying your schedule to adjust for the time change. Taking the extra initiative to make yourself available on their schedule will make you stand out and give you extra “effective” hours.

 

An effective salesman plans his time. The key to producing maximum return on time invested is to plan with the goal of incorporating efficiency into the mix. Careful planning can reduce the time spent on non-selling tasks and focus selling activities where they will be the most productive: on making the sale.

Five Steps to Cold Call Selling: A Process to Aid Perseverance for Success in Marketing by Phone

Selling over the phone requires repeated calls to uncover each prospect’s needs. A series of statements, a different one for each call, will advance the caller to a sale.

A key to keeping positive and motivated in sales, especially in the face of repeated “no interest” responses to cold calls by telephone, is to adopt the attitude advocated by sales training veteran Zig Ziglar. He writes and teaches that the salesperson should think of himself or herself as being not an adversary of the prospect but a colleague. The sales person should be figuratively sitting not across a desk from the prospect, but on the same side.

Sales Technique

The sales person should see his or her job as helping the prospect achieve an aim or overcome a problem. He or she should believe the product or service will be the solution to the prospect’s needs.

The most powerful sales technique is to educate the prospect, and education takes time and perseverance.

The sales person must take a genuine interest in the prospect and the prospect’s business by asking questions. The sales prospecting job is not to talk about the product or service. Instead, it is to listen to the prospect’s needs to be able to suggest solutions.

There is not much time to do that in a telephone sales call that should last only two minutes. To prevent frustration and discouragement, the sales person should remember he or she does not need to make a sale in one call. The ultimate objective is to make an appointment for a visit. The intermediate goal is to exchange information about the prospect’s business and the selling company.

Cold Call Scripts

This requires a series of calls.

Each call should add to the education of the sales person about the prospect, and of the prospect about the selling company and how its products or services can provide solutions to the prospect’s needs. To do that, the sales person needs a set of unique selling positions (USPs).

Sales trainer Paul S. Goldner, suggests a set of five, which are the five greatest strengths of the corporation or its product or service. The telephone sales person needs to develop a script around each one.

Benefits Statements

Corporate USPs are more powerful than product or service USPs in generating interest with a prospect, in Goldner’s experience. They help to answer the question in every prospect’s mid of he or she should buy from — i.e., trust — the company.

For a product or service, the USPs should describe benefits rather than features of the product or service. References in a script to the experiences of satisfied customers will help illustrate and give real-life evidence of a benefit.

Customer Relationship Management Software

The sales person should find common ground between the need or needs of the prospect to at least one of the USPs, Goldner writes in his book, red hot Cold Call Selling. That is one reason why several USPs are needed. The sales person should call each prospect regularly, introduce a different USP each time and log the response using customer relationship management (CRM) software. That way the sales person learns which USP interests the prospect and is relevant to the prospect’s needs..

Once the sales person has cycled through the USPs, it’s time to start again. If calls are made once every month or two, or at longer intervals, the prospect will probably have forgotten the USP in the first call, so it will sound different rather than irritatingly repetitive the next time.

Enhanced Sales Performance

Repeating the cycle of USP calls has another benefit in terms of enhancing sales performance. Just because a prospect is not interested this month or year doesn’t mean he or she will not be interested later. By making repeated calls, the sales person increases the chances of contacting the prospect when he or she is ready and able to buy.

Quit calling and the chance of that happening is zero.

Persistence pays. USPs are the vehicle to keep the sales person on track for maximum sales performance.

Project Report Format for Project Reporting: Effective Project Reports Tell Project Status and Project Progress

Effective project status reporting is to communicate situation and progress to all key stakeholders. It is a simple way to give out key project messages and information.

Delivering project messages and information is not only via a project report – it must be part of a concerted effort to communicate with stakeholders and positively engage them with the project. However, project reporting is a very effective tool for giving a consistent set of messages and accurate project progress to everyone at the same time.

Project Reporting

There are various guides to project reporting such as those advocated by PMI and PRINCE2. There are also other similar guides to project reporting such as CDC Unified Process Practices Guide: Project Status Reporting and the CDC notes: “Objectives of effective project status reporting include:

  • Improve communication of information within the project and across the organization
  • Simplify the process of gathering and disseminating project information
  • Ensure the stakeholders receive the necessary information
  • Communicate key messages about project progress
  • Improve organizational support for the project”

Project Status and Project Progress

The essence of a project report is to communicate key project status and project progress. An effective project report format is one that ensures the key content is gathered and delivered – regularly, clearly and concisely. Key content [perhaps structured in tables and succinct bullet points] includes:

  1. Summary of project status including whether it is on-track, slipping behind or ahead of schedule
  2. Summary of key risks and issues and any associated action plan
  3. Key project metrics such as progress versus original schedule and cost versus budget
  4. Work just finished, since last report
  5. Work that is still in progress and needs to be finished in this report period
  6. Work that will continue beyond this report period
  7. Work about to be started

Various templates are available for project reports – here is one example.

Project Reporting for Stakeholders

The actual content of the project reporting for stakeholders must be targeted appropriately and at the right level of detail including any sensitivity of some of the information, which means some report content should not be available to everyone. This needs to be determined by the project to ensure that the right information is delivered to the right people. Potential stakeholders include:

  • Senior Management
  • Project Board – key stakeholders identified as the steering team, usually with a vested interest
  • Project Team – including potentially matrix line managers who supply the project resource
  • Managers and business units actively participating in the project
  • Business units impacted by the project but not actively participating

Frequency and Type of Project Reporting

In addition to identifying the stakeholders it is important to define the frequency and type of communication and the most effective way is to combine written content [document, email or presentation] with verbal delivery [telephone conference or if circumstances permit in person]. The power of the verbal delivery is to both reinforce the written communication and offer an opportunity for questions and answers or to clarify any key points.

Project Reporting

Project reporting is a key component of stakeholder management and includes:

  1. Standard report format, using a template – for consistency of presentation, messages and information
  2. Targeted stakeholders for project report, with an identified frequency and type of communication

Time should be taken to do this properly and consequently it should be included within the tasks of project planning. The importance of frequent, clear and concise communication with stakeholders cannot be over-emphasised and because project reporting is an important component of that it is consequently an important component of project risk management.

reating a Risk Management Plan: Deciding What You Need Before Mitigating Risk

Before performing the steps of risk management, increase your chances of success by first planning, which amounts to taking some time to decide and define what you need.

What Tools Will You Use in Managing Risk?

Tools are such things as forms, policies, procedures and software you will use to implement and perform risk management. If your company has a Project Management Office or even a Risk Management Department, you may have access to ready-made tools. If not, decide what you need and what the project needs in regards to tools. Are you new to risk management? Maybe you just need a basic procedure and a few basic forms to get you started. See Rita Mulcahy’s book, Risk Management: Tricks of the Trade for Project Managers for examples of steps, strategies and forms (RMC Publications, Inc).

Who Will be Involved?

Who can help identify bad things and good things that might occur on your project? They are the individuals you want to involve. Mostly they will help during the period when you are identifying the bad and good things that might happen (the threats and opportunities) but they may also help during the period when someone needs to take action because the bad or good thing that you earlier said might happen does in fact happen. If you’re not sure who these people are, typically they are experts on the subject of your project; project team members; end-users; customers. To come up with others, ask yourself, “Who cares about the outcome of this project?” Those people are stakeholders, and they can help identify risk.

How Can You Ensure Participation?

To get people to agree to be involved in your risk management effort, you will need to first get them to agree what you are doing is a good idea. One way to do this is gather those you want to involve and bring in some examples where bad things happened on a project (or good things) and how that affected the project. Giving real-life examples usually convinces people performing risk management is the right thing to do.

What Will Those Involved Do?

Once individuals have agreed risk management is the right thing to do, tell them the role you’d like them to play and how much time it will take. You can estimate this by determining roles and responsibilities of those participating in the risk mitigation effort. Examples of a few roles are Project Manager, Stakeholders and Team Members. What will individuals in those roles do? When will they be expected to do it? How much time will it take? You can create a simple, four-column chart with these headings and fill in the information (i.e., Role, What [Responsibility], When and Task Duration). It is fine to estimate.

How Will You Tailor Risk Management Activities to the Needs of Your Project?

First, ask yourself some questions about your project and your company: What is the priority of the project? Are there certain negative events that your company simply will not tolerate occurring? If the answer to the first question is “low,” then you may decide the time and effort you put toward risk management on this project will be limited. If you come up with several things in answer to the second question, you’ve just identified some top risks that should occupy your risk mitigation efforts once you begin that phase of risk management.

Business Parties and Mixers: How to Leave a Good Impression at Business Networking Events

Business card exchanges and other networking events send a mixed message about appropriate behavior – should you eat the food or be ready to shake hands?

Chambers of commerce frequently host business networking events, as do other business organizations. These events may offer food, beverages, a guest speaker or musical performance, raffles, and other diversions. These amenities may draw larger crowds to the events, but all of them conflict with the art of business networking by rendering one unable to converse or shake hands.

Conversation Stoppers

Certain networking activities impede conversation. Networkers cannot engage in active listening to get names right if they are unable to listen. When considering events to attend, weigh the likelihood of each of these conversation stoppers being present:

  • Guest speakers cause a room to grow quieter, so hushed tones are necessary. Speaking usually occurs when everyone is seated, limiting the number of networking contacts possible at the event.
  • Musical performers may or may not go on before a seated audience. Volume of the music may make conversation difficult.
  • Organized activities may enhance or detract from networking. They may range from “business card bingo” games to raffle ticket sales.
  • Food fills up mouths that are needed for speaking, among its other problems for networking.

Food: Networking Disrupter

Food, along with beverages, is a very common element at networking events. Mixers vary from seated luncheons to evening tavern parties; food is a popular draw to these business events. Food, however, gets in the way of networking.

  • As noted above, food in the mouth prevents conversation.
  • Additionally, breath can be affected by food at events. Caterers rarely take this into account.
  • Food in hand means one less hand for shaking, or handing out business cards.
  • Hands may be left greasy by food, which is a big handshake faux pas.
  • Adding in a beverage for the other hand makes networking virtually impossible.

Ready for the Handshake

Shaking hands is an expected part of business networking, and one should attend networking events ready for handshaking. Food and beverages make it difficult to shake hands or distribute business cards. Other hand impediments include:

  • Raffle tickets being sold.
  • Business cards just received.
  • Brochures and larger marketing materials distributed at the event.
  • Menus for food at the event.

One must be ready to keep both hands clean and free of obstructions. Business cards and raffle tickets may be quickly pocketed, but larger papers should be tucked into the jacket or purse – bring one for that purpose, if necessary. Networkers should keep in mind that two ears, one mouth, and two hands are needed for networking, and should be prepared to keep all the parts working together to make a good impression.

The Benefits of Incorporating Your Business: Should Your Company be Incorporated?

Many businesses eventually become corporations. But the timing of such an action is different for each business. Here are some key points to consider about incorporation.

Although incorporating your business is not necessary to running a successful company there are many benefits to be gained by doing so. Incorporating a business can be done at the beginning of the life of the business or later when the business begins to grow larger. Although certain types of businesses can benefit immediately and protect the owners of the business by incorporating.

The Benefits of Incorporating

So what are some of the benefits a business receives by incorporating? For one the owners and officers gain a measure of protection for their personal assets. If the company defaults on a debt or is forced to file for bankruptcy protection the owners and officers cannot be held liable for that debt. But there is one stipulation to that rule. The owners and officers cannot give personal guarantees to secure such debt or financing. If they do they can still be held responsible for those liabilities that they guaranteed.

Your Business Has its Own Identity

Another benefit of being incorporated is that the business is legally a separate entity. Which means it can, over time, build up a credit profile of its own. And just like your personal credit the business will receive a credit rating. It is still up to you to help it develop a solid credit rating by managing the business’ finances correctly though. Just as you can score a high rating you can also destroy that rating too.

Raising Capital

The ability to more easily raise capital is often a benefit of incorporation. Not only do potential investors prefer such a structure but more than likely your bank will as well. These entities want to see that you are serious about your business. Incorporating is a whole different level of commitment to the business from you and they should look more favorably on you because of it.

The Tax Game

Your taxes will be handled in an entirely different manner than if you run a sole proprietorship. Because the business is now a separate legal entity it is responsible for paying taxes on its earnings each year. This will lower your personal tax bill accordingly. And if the business loses money then such loses can be carried forward into the next year to help reduce taxes on any profits you might earn in the future.

It’s about the Long-term Future of Your Company

As you can see there are many benefits to incorporating your business. And these are just some of them. Is it absolutely necessary to do so? Of course not. It really depends on what you want the long-term future of your company to look like. If you are focused on growing the business then at some point in time it might be a wise course of action to consider, but if you intend to remain small it is not going to be absolutely necessary. It’s just a matter of what you feel is best for your business.