Category Archives: Business

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.

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.

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.

The Business School Admission Process: Selection Criteria, Types of Courses and Funding

Management education can propel careers, but thorough knowledge of the admission process is needed to obtain an Master of Business Administration degree.

Applications for management education are on the rise worldwide, as professionals and students realize the importance of an MBA to boost careers. The admission process is fairly long and competitive and candidates need to be aware of the intricacies of the process.

Admission Criteria

The admission requirements generally include a sixteen year educational background. All applicants are required to take the Graduate Management Aptitude Test or the GMAT. Several schools also require TOEFL (Test of English as a Foreign Language) scores. This is mainly for international applicants from countries where the native language is not English. Full time work experience is usually preferred by schools across the world. The actual application requires candidates to write essays clearly mentioning their career aspirations and reasons for applying to the particular school.

Types of Courses

There is a wide range of MBA programs available to suit the needs of candidates. The Evening MBA or Morning MBAs are designed for the benefit of working professionals who can continue their current professions while earning an MBA degree. Full time MBA course duration ranges from 11 to 21 months. Shorter courses usually do not include an internship. Executive MBAs are for working professionals with several years of comprehensive work experience including management or budgeting experience.

Worldwide Schools to Choose From

The choice of doing an MBA from schools in a particular country or location is an important parameter for choosing a business school. More often than not, graduating students end up working in the country from which they completed the course. Many schools across the world also specialize in a particular stream of management like consulting, finance or hospitality or healthcare management. Apart from the schools reputation and brand image, students look at rankings, quality of faculty, size of alumni and class diversity to make their choice.

Funding the MBA

Management education is an expensive affair. There are several options availed by students including federal loans, corporate sponsorship, scholarships and assistantships. For international applicants loans may require co-signers who posses citizenship of the target country. Several organizations or financial institutions offer educational loans which are repayable post the MBA course completion. These loans are sometimes granted against collaterals.

Global MBA Fairs

International applicants are usually unable to make campus visits to know more about the institution and get a feel of the atmosphere of their target schools. MBA tours provide an opportunity for students to interact with alumni or members from the admission committee to clarify queries face to face. Some schools also interview prospective candidates face to face in these tours.

Visas and Work Permits

Regulations for international applicants to work in a foreign country vary widely. The UK for example require students to qualify through an HSMP points based system for granting of work permits post their courses. Some countries like Spain do not allow students to continue to work once the student visa expires.

Business School admissions are fiercely competitive and prospective students need to have strong overall applications to secure admission. Solid international work experience, cross cultural diversity, professional and extra curricular activities demonstrating strong leadership and interpersonal skills are few of the differentiating factors that admission committees look out for. Admission committees carefully evaluate the candidates application holistically to gauge a candidates fit to a particular school at the same time balancing the class diversity.

Management education in top B-schools across the world requires adequate planning and preparation. The end result is very rewarding in most cases with professionals moving up in their careers at an accelerated pace or even switching career tracks and job functions needless to say, with much larger paychecks.