Archive for

What Small Business Could Learn From Large Business

Often small businesses do not consider operating in the same mode as large corporations with divisions like accounting, operations, or human resources. Indeed, exactly replicating division may not even be possible due to size constraints. Many small businesses consider such ideas as being top heavy and unnecessary. Yet, they deal in these very categories daily. An entrepreneur may be human resources, accounting, management, operations, and maintenance all in the same day. By beginning to think big, a business can grow larger.

One of the most over-looked categories small businesses miss is operations. Business operations is the what a business does. And the main reason it is over-looked is that it is so obvious. It is taken for granted. An entrepreneur is so often focused on bookkeeping or marketing, some new aspect to their business that they forget about the core business. They do not even think about what they do as a business. Yet, if a small business would continually look at how they do business, there could be cost savings and efficiencies that boost their bottom line. Looking at new suppliers or how they do what they do could mean more net profit to the owners. Something as simple as looking at how someone in the trades makes service calls could help a small business save money by being more efficient. Or it could mean more billable calls in a day and therefore more gross profit.

Another thing a small business could learn from large business is to mimic its divisions. Indeed, when starting out an entrepreneur has to wear many hats, but as he or she matures as a business owner they can begin to delegate. Entrepreneurs should start to outsource as much as possible what could be done by others. Large companies have enough business and revenue to hire entire departments dedicated to those roles. Fortunately, small business have other small businesses that can do much of the same thing. Things like payroll, marketing, bookkeeping, administration, etc. can all be outsourced to other small businesses. This can help a small business owner stay focused on their core business.

When it is time for a small business to grow, one should consider growing its core business. Again as an example, if a business was in the trades, it should hire more tradesmen and buy more trucks to make service calls. This is opposed to hiring more support staff to do the peripheral duties. Those duties can be done by outsourcing. Only when the outsourcing costs far outstrip hiring a full-time person to do them, should one consider bringing them in-house.

There is a big difference how small and large businesses do business. Still, there is much they could learn from each other. And for the small business learning from large business it could translate into growth in size and profits.

Business Marketing Tips – Making Your Business Grow

One important part of making your business grow and make profits is marketing. Of course, you have to market your business, market your products, and get in touch with your target customers. Whether you have a small or a huge business, marketing is never absent as an essential component in making your business succeed.

If you have a small business or you are trying to venture into selling something online as a start, then learning a few business marketing tips will help you have a good start in making your business grow as well.

Here are a few of those business marketing tips that you might find useful in marketing your business offline and online.

1. Take advantage of newspapers of local circulation. Indeed, one of the popular ways to market your business, especially if it is still a small-scale one, is to take advantage of print media. Newspapers readily welcome advertisers, thus you can make use of it especially if your target customers are locals or your business is just small-scale.

2. Create your brochures, flyers, press releases. These are still effective today especially if you want to reach out to people just within your vicinity. This also helps attract customers already in the venue of your business and lead them to your shop. Even for those who are just ‘looking around,’ these advertising leaflets can help them know more about your products and your services.

3. Provide free information to potential customers. This is one of the effective ways to promote your business and encourage people to take a look and know more about your products. You can sponsor free classes and workshops every now and then and provide them with inputs and information that they will find valuable. If your shop is an arts and craft store, then you can provide good training and workshops on card-making or some other interests and hobbies that is related with your business.

4. Network. Create connections and networks with other businesses and networks, from home based business groups to other business people. Of course, connections and networks are good for your business. As all of you are looking for ways to promote your products, you can mutually benefit by promoting each others products, especially if your business complements.

5. Go online. Strive to make your business visible on the internet. These days when people are relying on the internet for information and even for shopping and finding answers to their questions, it is indeed wise to expand your marketing efforts to the online world. Going online also helps expand your business and your target market to a worldwide audience. If your product can be easily shipped anywhere in the world, then you might also find that going online is one of the best ways to expand and grow your business.

These are just five of the many business marketing tips that you can implement and do with your business. It is important that you also learn constantly and update your marketing techniques as well so you won’t left behind my competitors, especially in online marketing where the pace is fast and you need to keep up as well.

Thinking About Buying a Business? 7 Tips to Consider

As more people join the ranks of the unemployed, the desire to own a business that they have more control over becomes very appealing.

The hunt for a business can be daunting and, to assist you, I have compiled these tips.

Tip One:

It may seem an odd tip, but really is an important one. Make sure you are ready to purchase a business. But you say; “Why would I be looking for a business, if I’m not prepared to buy?”

Yes does seem a no brainer. But from my experience, working with hundreds of buyers, some are really ready to buy and others appear to enjoy the process.

Realize that there is no “perfect” business. When you find one that meets most of your standards, make an offer. Be sure to include in the offer to purchase contract that you are granted a due diligence period to examine the books and records of the business. And if the business is not generating the revenue that you were told, you have the right to back out of the contract and your deposit money is returned.

Tip two:

Do some research on the type of business you would enjoy running. When you acquire a business, you are purchasing a job. So it is important to find out what is involved in running a business in that industry. Restaurants, bars and convenience stores involve long hours. Will the business require special skills or licenses that you have to qualify for, or a waiting period to take the test for that license?

Are you willing to invest the time and money to make the business successful? I once sold a business where part of the owner’s job was to market. The business contacts were made visiting existing and acquiring new clients on weekends. The new owner purchased the business and became upset that the clients were not calling him. When asked if he was marketing to the clients, he stated that he wasn’t going to work on weekends.

Tip Three:

Get as much information on the business up front. Request copies of at least three years tax returns and current profit and loss statements and, if you are not comfortable reviewing them, have your CPA look them over. If you don’t have CPA, now is the time to hire one. You will need an accountant or CPA for the new business.

Tip Four:

Ask for an equipment list from the Seller. If you are purchasing the property, ask for a site plan and see if the owner has a recent appraisal of the real estate. If the business is leasing the property, ask for a copy of the lease. Check the terms as to what is covered, the length of the lease. Does it contain options to renew? You don’t want to be forced to relocate the business in the near future because the lease expires. And find out what is prohibited by the landlord. You may think that a large new sign is what the business needs, but the landlord does not want it on the property.

Tip Five:

Check the local ordinances as what activities the business can and cannot engage in. Perhaps you want to buy a restaurant and what to add live music at night. The local laws may contain a noise ordinance that would prohibit having a band.

Tip Six:

Where do you find businesses for sale? You could check the newspaper classifieds, though the businesses for sale column is thinner than it used to be just five years ago, there are still businesses listed there.

Now businesses for sale tend to be listed on the internet, with websites like BizBuySell.com, BusinessNation.com, BusinessesforSale.com, Acquisitions-Unlimited.com and BusinessForSaleFlorida.biz.

Network with people who own businesses in the industry which you are considering. Getting to know other business owners is good idea. They will be a source of information.

Tip Seven:

Your best resource is a professional business broker. In many states a real estate license is required to sell businesses, but a business broker is trained to sell businesses, not homes. Many professional business brokers belong to trade associations, like the International Business Brokers Association and Business Brokers of Florida. These associations provide training in the field of business brokerage and mergers and acquisitions.

Business brokers are in contact with business owners and, because of this, know when the owner is considering selling his business, but does not want to advertise it on the open market.

When working with a broker, he or she will attempt to pre-qualify a buyer by asking a series of questions. These questions will include what kind of business are you looking for and, what type of business would you be interested in operating. Another question is how much money does the business need to generate after expenses (also known as cash flow to owner) for you to live comfortably. This leads to the broker’s the next question.

“How much money would you like to invest in a business?” This is a polite way of asking; “How much money do you have?” The wrong answer is; “As much as it takes.” Or; “It depends on the business.” Unless you are Warren Buffet, it doesn’t depend on the business. If you as rich as Warren Buffet or Bill Gates tell the broker up front, if not state that monetary limit.

The broker will be spending time searching for a business in your chosen industry, within your price range, and with the desired cash flow, but can only efficiently help you if he knows your down payment comfort level.

Brokers prepare business profiles on the businesses that they have listed and, theses profiles include the information listed in tips three, four and five. So you don’t have to search for this information. Let me say, however, that there are cash businesses.

Business brokers have contacts that make the acquisition process smoother than attempting the process solo. These contacts include attorneys that specialize in business closings. Since these attorneys are involved in closings on a daily basis, they have the forms prepared and the staff can quickly prepare the necessary documents. This results in the procedure being done correctly and often with a cost savings.

Business brokers have contacts in the lending industry. I don’t know how many times I have heard a buyer saying; “I’m going to get a loan to purchase the business.” It is very rare that a conventional bank will loan money to purchase a business. And I have heard of only one that loaned on a distribution company. The Small Business Administration (SBA) guarantees loans and some businesses qualify. There are SBA mortgage brokers and the business broker works with these contacts to secure you a loan, if the business qualifies.

Business brokers have the necessary forms to prepare an Asset Purchase Agreement. These forms are created from experience and, oftentimes standardized by the associations to which the broker belongs. The Asset Purchase Agreement is the most important and it incorporates the due diligence issues and other contingencies that protect the buyer.

Owning your business allows you to gain more control of your destiny. Small businesses employ the vast majority of Americans, even more than the large corporations. A business becomes like a child that you grow. I wish you luck in finding that business that may not be perfect now, but through your ingenuity, hard work and brilliant ideas you can create the perfect business.