If you are just starting a company and looking for funding, or looking for additional funding for growth, you will need to develop a traditional business plan. Creating a business plan is a business hurdle that entrepreneurs seem to dread. Do you do it yourself? Do you hire someone to do it? How do you get it done quickly, but without spending too much money on it? Will what you do yourself be adequate to get funding?

In this article I will discuss the pros and cons of do-it-yourself business planning versus having a business planning consultant do it for you or with you.

The Do It Yourself Business Plan

Particularly if you are seeking capital of less than $200,000, consider creating the plan yourself after taking a class or reading some books or getting some coaching for someone who has written successful business plans.

Consider taking a three-hour business planning class through SCORE or the local Small Business Development Center. Even if you decide afterwards not to write your own plan, you will have a much better idea of what you want out of the process and what to expect.

There are some good reasons for an entrepreneur to do the business plan:

• First of all, because you can. If youve read sample business plans and find their accounting jargon intimidating, you are not alone. But as long as you can clearly get your message across and have other people such as you accountant look at the plan before it goes to lenders or others, you can do this work yourself.
• It is in learning the business planning process that you develop analytical thinking skills necessary to run your business with an intimate understanding of your own business model. Going through the planning process is an invaluable business experience.
• You need to know the plan inside and out and really understand the variables involved. You are the one who will be asked the tough questions by potential investors or lenders, such as What will you do if only half your expected revenue comes in? or What will you do if you find out that direct mail is not working for you as your primary marketing tool?

Outsourcing the Business Plan Process

Entrepreneurs are fire fighters. One of the most important jobs of an entrepreneur is to manage time, and do those things that you are best skilled to do. Many entrepreneurs decide to hire someone else to do their business plans, often because they have an urgent need for the funding and cant afford the learning curve to be able to develop a high-quality plan that will meet the needs of lenders or investors.

In addition, if your funding requirements are more than $500,000 my recommendation is to get some professional help with this project, even if you do some of it yourself.

Some reasons to consider hiring a consultant:

• It will get done! Business planning is done much faster with someone who knows the process. Every entrepreneur has good intentions about getting plans completed, but months later they still havent done all the work. Planning should be high priority work, but it is hard to get to when customer calls and employee problems require immediate attention. The sooner the plan is completed, the sooner funding can be attained. And the price of hiring the consultant will be small in comparison with the increases in growth and profitability of the business.
• It will get done in a way financial professionals will respect. Business planning is done better by someone who knows how finance people look at plans and what they will and wont question. Once youve been through the business plan process many times, you know what it takes to get funding – what to emphasize and what to play down.
• The consultants objectivity will allow for non-emotionally-based projections and expectations for the business. A consultant will be much more objective in the process and question your assumptions, making it less likely that the business will have problems after the funding comes in.

No matter what, dont let a business planning consultant talk you into putting any information into your plan that you arent comfortable with. If it doesnt look right to you, it probably isnt. It is your business, and you will be stuck with the plan long after youve paid the consultants bill. Make sure it is the plan that you want, one that matches your goals and objectives, and captures the way you look at business and the spirit of your company.

If you do decide to hire a business planning consultant, here are some of the important questions to ask to make sure you get the greatest value from your investment:

1. How many business plans have you written for my type of business? How many of them were funded?
2. How much time will you need of mine during the planning process?
3. When will the plan be completed, and how many drafts should I expect to see and have the opportunity to comment on?
4. Will you be writing the plan yourself or do you have associates who do the work with you?
5. Will there be an opportunity for you to present the plan or for me to present the plan to my other advisors before the final draft is done?
6. How do you work in collaboration with my partners and advisors so their input is taken into consideration during the writing of the plan?
7. Do you do the market research and the financial spreadsheets, or are those things done separately (and charged for separately)?
8. Does your price include revisions or customization for certain types of funding (to include different information needed by investors versus lenders)?
9. Does your price include coaching to prepare me to talk with lenders or make financing presentations?
10. Will I have an electronic version as well as a hard copy version of the final plan (so I can make changes later if I need to)?

The Optimum Solution: A Blended Approach

At best, the planning process should not be at either end of the spectrum, but squarely in the middle. In my experience, plans that win funding come from a true collaboration between a skilled consultant/facilitator and the entrepreneurs team of employees and advisors.

A business planning consultant can act as a coach, first assessing the job to be done, and then recommending who is best to do it. The business plan should be a compilation of work between the vision and goals of the entrepreneur, the technical understanding and expertise of his or her accountant and other professionals, a consensus of employees or others, and the research and writing abilities of the business planning consultant. The consultant should meet with all parties involved, talk about what is needed for the plan, and use all the resources available to get the work done as quickly and cost effectively as possible. It is the consultants responsibility in the process to take all the pieces and make the final plan into a readable, accessible document that will stand up to investor/lender scrutiny.

My final caveats:

• Dont pay more than a few thousand dollars for a plan unless you are looking for capital of well over $1 million. I have heard more than a few horror stories by people who have hired university professors assuming they are the experts (they arent) and paying tens of thousand of dollars for a poorly written or incomplete plan. Ask your banker for business planning consultant recommendations, or better yet, talk with someone who had a good experience having a business plan written for them. It is reasonable for a consultant to expect you to pay half of the fee up front and the other half at the completion of the plan. And you cant hold the consultant responsible if you dont get funding based on the plan too much is based on your own credit and management skills.
• Dont expect to get a finished plan that is a roadmap of everything you need to do to have a successful business. That isnt the purpose of the business planning process. A traditional business plan is intended only to document your strategies for the business very briefly but well enough to get funding. If you are hoping for something that will tell you how to market or how many people you need to hire, you will have to start with a deep strategic planning process, and probably buy lots of consulting time to get you going.
• Dont expect a great a business plan from a poor business model. If your costs are too high to make your business profitable, the business planning process will help you discover that. Then it will be up to you to make the hard decisions about changing your costs structure to make the business work. The business planning consultant is a skilled professional, not a miracle worker. A good business plan can help you highlight your strengths and minimize your weaknesses, but it cannot make an unworkable business model into a thriving business.

And one final thought: Dont go on to start a business or make changes in your current business if everything in the business planning process tells you it wont work. Things dont get better out in the real world if they dont work on paper. Deal with the weaknesses get more training, consider product redevelopment, or have a home-based business to reduce costs until you can sustain the rent for an office. Businesses fail finally because theyve run out of money. If your plan tells you that you cant make enough money to make the business work for the long run, pay attention to that reality.

Author: Jan B. King
Article Source: EzineArticles.com
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Entrepreneurs often find themselves in high-stakes negotiations with big, savvy players, with significant negotiating power (referred to herein as “Big Boys”) — whether it be a venture capital firm in connection with a financing or a private equity firm in connection with the sale of the entrepreneur’s business; the situation can indeed be daunting. Below are ten tips for entrepreneurs to help them through this process.

1. Retain a Strong Team. In dealmaking as in business, you are only as good as your team. Accordingly, the first step for the entrepreneur is to retain a strong transaction team — and the quarterback of the team should be an experienced corporate lawyer. Indeed, an experienced corporate lawyer will not only add value to the transaction, but also can help the entrepreneur build-out the team and tailor it to the particular deal (e.g., in an acquisition, a strong tax lawyer is imperative to help structure the deal or in a licensing transaction, a strong IP lawyer is often necessary, etc.). The Big Boys are generally represented by large, aggressive law firms, and the entrepreneur must ensure that his/her team is up to the task.

2. Do Your Diligence. Due diligence is often a critical component to any deal. One form of diligence that is often overlooked, however, is an investigation of the guys on the other side of the table. What’s the reputation of the Big Boy — e.g., is this a venture capital or private equity firm that treats its portfolio companies well or is this a firm that squeezes the little guy? What about the particular individuals with whom you are dealing? What are their reputations? Are they good guys with whom to partner or are they jerks? Indeed, the web is a good starting point for the entrepreneur who needs background information on a particular firm/individual. At a minimum, the entrepreneur should track down other entrepreneurs or CEO’s who have done deals with the guys on the other side of the table and make an informed judgment as to whether they are guys with whom the entrepreneur wants to do business.

3. Create a Competitive Environment. There is nothing that will give the entrepreneur more leverage in connection with any negotiation with a Big Boy than a competitive environment (or the perception of same). Indeed, every investment banker worth his salt understands this simple proposition. Accordingly, a start-up seeking a Series A round financing from a venture capital firm, for example, will clearly be more appealing if such firm learns that other venture capital firms are interested in the start-up. Not only does competition validate a firm’s thinking, but also it appeals to the human nature of the individuals involved. Indeed, everyone wants what he doesn’t have and/or what someone else wants. The entrepreneur will have strong leverage with respect to price and other material terms as competitors are played off of each other and will thus strike the best possible deal. One caveat: as discussed below, it is probably best left to a strong corporate lawyer to play this game on behalf of the entrepreneur; indeed, this strategy must be played carefully and is better-handled by someone with experience.

4. Run the Negotiations Through the Lawyers. The entrepreneur should do what he does best — i.e., build companies — and leave the negotiating to a strong corporate lawyer. Entrepreneurs are generally no match for sophisticated venture capitalists or private equity or corporate development guys who do deals for a living. Accordingly, a smart entrepreneur will stay above the fray and let his corporate lawyer run the deal. The Big Boys may try to do an end-run around the entrepreneur’s lawyer (and may even criticize the lawyer and try to turn the entrepreneur against him), but the entrepreneur should remain disciplined and avoid “side-bar” negotiations with the principal(s) on the other side. This approach is particularly important where the entrepreneur will have an ongoing relationship with the other side post-closing; the goal is thus not to poison that relationship with testy, acrimonious negotiations (i.e., let the lawyers fight it out).

5. Develop a Game Plan. Every deal is different — different players, different negotiating leverage, different risks, different timing — and it is thus critical that the entrepreneur sit down with his transaction team and strategize; in short, he must develop a game plan and then attempt to execute the plan. Indeed, doing deals is no different than any other project: the entrepreneur must think through the issues with a smart, experienced team, set reasonable milestones and then monitor the progress. Rigorous analysis throughout this process is paramount.

6. Be Careful with LOI’s. A letter of intent (an “LOI”) — sometimes referred to as a term sheet or memorandum of understanding — is often executed in connection with all types of deals. The entrepreneur must understand that, depending on the deal and the context, there are different LOI strategies and considerations that must be addressed. For example, in the acquisition context, a selling entrepreneur should try to negotiate all of the material terms of the deal in the LOI when the entrepreneur’s leverage is the strongest; on the other hand, a buying entrepreneur’s main goal with respect to the LOI is merely to lock-up the seller and prohibit it from shopping the deal for a reasonable period of time. Another major concern with respect to LOI’s is that they may be deemed enforceable by a court of law (i.e., be deemed a binding agreement) — despite express language in the LOI to the contrary. The lesson here is simple: an LOI should not be executed without the advice of competent counsel.

7. Check Your Emotions at the Door. Big Boys are masters at taking their emotions out of transactions and being extremely disciplined. Indeed, Big Boys will generally walk from a deal if they get out of their comfort zone (e.g., with respect to the risk profile, price, etc.) — regardless of how much time and money they have expended. Entrepreneurs, on the other hand (particularly those who haven’t had much deal experience), often become emotionally wedded to a particular transaction and are unable to maintain their objectivity the further along they get in the process. Too often, an entrepreneur will fall in love with a particular deal — like the first-time home buyer — which will lead to poor decision-making and risky positions. (“I don’t care if it has termites or there is a cesspool problem, I love this house” becomes “I don’t care if I must personally guarantee all of the reps and warranties without a cap on liability, I love this deal.”) It is critical that the entrepreneur understand this dynamic and address it accordingly.

8. Don’t Blink First. There comes a point in time in just about every deal where both sides have dug into certain positions and the question becomes which side will blink first; e.g., in a venture capital financing, perhaps the issue is control of the board or, in an acquisition, perhaps the issue is carve-outs to the cap on liability. Whatever the issue, the lesson for the entrepreneur is clear (albeit difficult to execute): in order to maintain negotiating leverage and credibility, the entrepreneur should try not to blink first. Indeed, if the entrepreneur has flatly stated that “this issue is a dealbreaker”, but then blinks and nevertheless agrees to go forward with the transaction despite not getting what he asked for, he will have completely undermined his credibility and will have his clock cleaned with respect to any other significant issues. Like poker, if your bluff gets called, it will be difficult to bluff again. Which brings us back to the important tip in #4 above: run the negotiations through an experienced corporate lawyer who does this stuff for a living.

9. Watch-out for the “Good-Cop, Bad-Cop” Routine. Big Boys employ all kinds of negotiating games, and one of their favorites is the “good-cop, bad-cop” routine. The Big Boy, of course, plays the good cop and is smooth, friendly and agreeable and makes the entrepreneur feel like all of his important issues are being taken care of. But then the documents arrive — chock full of bells and whistles and boilerplate provisions designed to protect the Big Boy and often with significant gaps on the deal points. When the Big Boy is questioned as to what’s going on here, the answer, of course, is “it’s my lawyer’s fault” (i.e., the “bad cop”). This game will continue throughout the negotiating process as the Big Boy charms the entrepreneur while his lawyers pound away on every significant issue.

10. Hire an Aggressive Corporate Lawyer to Watch Your Back. As a corporate lawyer at two major New York law firms, I have learned first-hand the importance of watching my clients’ back. Indeed, I have worked on billion-dollar deals where, prior to signing, emotions run high (as discussed above), and a few of the significant risks are minimized or pushed-aside by investment bankers and/or business guys in order to get the deals done. My job, probably more important than anything, is to sober the entrepreneur and lay-out all of the significant legal risks — and then push hard to negotiate appropriate protections. If the deal sours and lawsuits are filed, well-drafted documents become like an insurance policy to the entrepreneur — and what entrepreneur doesn’t have insurance?

Author: Scott Edward Walker
Article Source: EzineArticles.com
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Small Business, Big Business Whats the Diff?

Well a lot actually!

I become frustrated and angry at the governments paying lip service to assisting small business. It appears as though all governments, bureaucrats and many accounting advisers do not know what a real small business is.

In Australia the governments definition for a small business is one which has less than 100 employees. Who are they kidding? In my consultancy thats a big business.

They believe that small business is the same as big business on a smaller scale, that big business is small business with more of the same.

Wrong! About 99% of small business employs less than 10 employees and what is beneficial to the 100-employee firm may be downright dangerous for the 10-employee firm. Governments must know that. They cant be so stupid not too can they?

We Aussies are ready to believe anything about our politicians. We have met so many of them and none of them seem any brighter than the fellow next door. (In fact, none of them seem to know as much as I do).

When I decided to go global I was certain that the situation would be different in the USA. I was wrong.

The USA Small Business Authority has set a size standard for most small business enterprises. In the full Table of Small Business Size Standards Matched to SIC Codes published by the Small Business Authority it is annual turnover that limits the size of small business firms.

In my consultancy of restaurants, coffee shops, florists, hairdressers, electrical retailers etc. the turnover limit is $5 million. In Australia there are NO single shop establishments achieving that sort of turnover.

In Australia a hairdressing salon working a 7-day week at an average price of $70 per client would need 30 clients each and every hour on ever day of the year. Impossible in Australia and probably in the USA too.

This does clear up an anomaly I had noticed in the different approach business plans took in Australia as opposed to that taken in America.

When Australian business began to use the Internet almost all the business plan software was from the States. The plans, although meant for small business, were not appropriate for Australian firms because they focused entirely on obtaining venture capital.

There were very few venture capital providers in Australia and of those that were few were interested in providing capital to the majority of our small small business. Business Plans languished in the filing cabinet and were hardly ever seen again.

The Australian consultants began to oversee business plans that focused on their being used as management tools. The planning itself was a vital element in the success of the businessand the plans were used to chart the course of the firm.

Each month the actual results were compared to what had been expected in the business plan. Tactics were formulated to overcome shortcomings or build upon favorable results.

Are you a small business owner who has studied all the books and web information that you can get hold of, and it is still not happening for you?

Perhaps it is because the information was directed to firms much larger than yours – firms with 100 employees or $5 million in sales. You need information more suited to your own business size.

Various organisations publish benchmarks for your industry. Compare your own results with the industry average. This will show where you should be concentrating your efforts for improvement.

You should seek out advisers and information that applies to mini business firms that are your size whatever it is. Perhaps you own accountant can help you find it.

But never be so foolish as to believe that what the government says is good for small business will be necessarily good for you.

Kelvyn Peters CPA and Associates knows profitable business strategies that really work.

And he’s only an e-mail away.

Author: Kelvyn Peters
Article Source: EzineArticles.com
Provided by: Programmable pressure cooker

Outsourcing is not a new concept as basically its a subcontracting of tasks which were prevalent & even prevalent today, & we know that the Rationale for subcontracting is to save cost & time so that the party subcontracting the task may specialize itself in its core competencies without wasting time & intellect in the task that may be subcontracted.
When we talk about outsourcing we say that An organization entering into a contract with another organization to operate and manage one or more of its business processes. We call it as outsourcing of process. Outsourcing originated and became popular as a cost-saving strategy during a recessionary environment. Usually the processes that are outsourced are the support processes and not of extremely high strategic importance, but necessary for doing business. In a nutshell outsourcing deals with the people and processes in and around business.

No doubt about the success of outsourcing which is visible in present context & even a favourable regime for a country like India where human capital is abundant. But Organizations have now begun to recognize the real costs and inherent risks of outsourcing. Instead of simplifying operations, outsourcing often introduces complexity, increased cost, and friction into the value chain, requiring more senior management attention and deeper management skills than anticipated. It is generally said that Outsourcing is an extraordinarily complex process, and the anticipated benefits often fail to materialize.

The outsourcing requires a complex series of tradeoffs: cost savings versus growth, speed versus quality of service delivery, and maintaining organizational cohesion versus knowledge and innovation. Service providers and organizations have inherently conflicting objectives, putting the organizations objective for innovation, cost savings, and quality at risk. Moreover, the service providers structural advantages do not always translate into cheaper, better, or faster services. The worlds largest companies should be able to replicate the service providers structural advantages in-house and rely on the service provider only under specific circumstances, such as fixing deep-seated structural problems or maintaining infrastructure operations.

An unfavorable mix of rising costs and increased demand will drive up the cost of outsourcing for organizations and vendors. Weaknesses in operational management will result in more deal failures, prompting organizations to bring more operations back in-house. In the long run, organizations that continue to outsource will experience a loss of bargaining power to vendors as the supply side consolidates. Those that apply strong skills in deal structuring and risk management and strong management skills to oversee deals from inception to execution will be best positioned to reap the benefits of outsourcing.

In the Real World, Outsourcing Frequently Fails to Deliver Its Promise. To prove this statement Here is a chart which represent that what were the expectations of the companies & what were the resultant of the outsourcing there task.

Outsourcing of jobs were done to increase the efficiency of the Outsourcing company & to increase their core competency as we said earlier but the trade offs are heavy as compared to the benefits which are anticipated.
Lets understand that what may be the various risks which are attached with this process.

Concerns over Data Security

It is an important factor which is bothering the minds of top management of the companies whose core business involves transfer of confidential data, like banks.

Two successive well published cases in the immediate past of Indian BPOs not being able to protect confidential client data bring into sharp focus not just the security issues connected with one of Indias fastest growing areas in the services sector.

The first case involves a fast growing areas listed BPO which has a strong business relationship with Citicorp, the worlds largest financial service group one of the pioneers of outsourcing.

A few employee of the BPO allegedly obtained, through fraudulent means, confidential data including passwords from their clients. All citibanks customers in US & thereafter withdraw money.

The most recent case has arisen out of a sting operation mounted by a British tabloid. One of its undercover reporters managed to buy data of some 1000 account holders of several British banks from a junior employee of a delhi based BPO, to which the banks had outsourced a chunk of their routine business.

Here the tradeoff is clear easiness of work at the cost of Data Security. Is outsourcing really reducing the burden?

Structural Risks

Outsourcing Generates Fundamental Risks and Concerns, More than Half of Which Are Structural and Cannot Be Fully Mitigated. Companies are exposed to fundamental outsourcing risks and are facing go/no-go challenges as new risks emerge. 45 percent of the companies who outsoucing stated that an organization should not outsource processes that it does not fully understand. emphasized that outsourcing without fully understanding the organizations processes and cost structure is extremely risky because the organization will not know what to demand from vendors and how much to pay. In the below given graph are given some structural risks which are faced by the companies.

Limited transparency and an increased lack of control due to vendors subcontracting is again defecting the objectives of outsourcing. Global companies often are unable to find global vendors to provide standardized services across the different regions, driving them to employ multiple vendor relationships or scale back outsourcing objectives.

Loss of Control

Loss of control over outsourced functions poses a substantial threat to ongoing operations. It is viewed that loss of control over outsourced functions is a substantial risk.

Avoid outsourcing lock, stock, and barrel, in order to maintain control (over our value chain). Said by an top management official who is not in favour of outsourcing.

Due to the above cause many companies are bringing outsourced functions back inhouse because they realize they have lost control over critical processes. Too much outsourcing results in lack of control. Companies should not outsource key areas where losing control can be disastrous. Is a statement which shows again a serious tradeoff i.e outsourcing a critical process is to save cost but at the cost of loss of control over that process & finally increased dependency.

Reduction in the Responsiveness to the changing environment

Outsourcing Often Reduces Organizations Responsiveness to Market Changes and Poses

Internal Political, Organizational, and Cultural Challenges. Multi-year contracts result in a loss of flexibility to react to market changes, hurting companies competitiveness. are concerned about the loss of flexibility to react to changes in the market (e.g., competitive, regulatory), as a result of being locked into multi-year deals.

Vendors push for long-term deals to recoup initial investments and make profits. When pressed to shorten deal length, prices increase. Here we find a There is an explicit trade-off between maintaining flexibility and lowering cost.

We find a clear Shift of Bargaining Power to the Vendors, While Contracts Often Provide

Limited Protection. Handover of control and knowledge to the vendor creates an ongoing dependency on the vendor. This dependency ultimately shifts power to the vendor and weakens the organization. This is slow but sure process, Once an organization has gone through the process of adjusting its retained organization and its skill sets, it no longer holds the capabilities and skill sets to manage these functions in-house, increasing dependency on the vendor.

Long-term contracts and proprietary systems further increase vendors bargaining power. Vendors might lock companies into using proprietary systems, making it difficult to switch vendors in the future.

Organizations are trying to offset this trend by negotiating shorter-term, more flexible contracts and by working with multiple vendors. However, these mitigation strategies provide limited protection. Short-term deals even (less than three years) often create high dependency on vendors, holding organizations captive. Second sourcing (wherein two outsourcers provide services to forestall monopoly pricing power) is difficult with services outsourcing. Multi-vendor models increase the level of complexity, requiring additional resources from the organization. Vendor dependency cannot be fully mitigated because the organization no longer owns the functions, knowledge, people, and systems.

And, organizations then find themselves trapped in deals with higher rates and low-quality delivery.

Illusion of Costs saving

Outsourcing, which originated as a popular cost-saving strategy during a recessionary economic environment, is still dominantly driven by cost-related objectives and the perception that organizations benefit from vendors economies of scale. However, evidence of tailored deals and inhouse economies of scale at large organizations suggests that vendors scale advantages may be illusory. Lack of transparency, bundling of services, and a variety of marketing techniques have created suspicion about the savings from outsourcing. Real-world experiences suggest that the potential for cost savings has been overstated.

Limited transparency to a vendors pricing and cost structure makes it difficult to understand cost savings. Transparency to a vendors costs decreases as outsourcing contracts are bundled with other services. Bundling makes it difficult for organizations to distinguish unit costs and complicates business cases. Bundling allows financial engineering that hides the true economics of the deals. Vendors employ marketing techniques that can create illusory cost savings. Under-market pricing is common due to fierce competition among vendors. Vendors undertake contracts that are not economically viable for them, especially with early mega-deals or strong brand entrants. Which results in poor performance & losing quality.

Conclusions

Organizations have now begun to recognize the real costs and inherent risks of outsourcing. Instead of simplifying operations, outsourcing often introduces complexity, increased cost, and friction into the value chain, requiring more senior management attention and deeper management skills than anticipated. In addition, outsourcing has allowed organizations to transfer financial and operational risk to vendors, but organizations are discovering that their contracts will never fully protect them against customer damage and business losses caused by service disruption. Many have responded by bringing operations back in-house.

Outsourcing will lose holy grail status. In the future, companies will not outsource because it is the latest management fad, and it is the thing to do. Vendors will become more selective in choosing new clients to avoid taking on mess for less. Organizations will outsource less. Organizations will carefully define core, strategic, and thought-leadership functions and will keep those inhouse to retain knowledge, confidentiality, and control over key functions. Some organizations will decide to outsource only short-term using the Transform-Operate-Transfer model. As a result of outsourcing only commodity processes or outsourcing temporarily for a transformation, organizations will outsource a smaller percentage of their operating expenses. Many organizations will also engage in large scale reinsourcing thereby further eroding the outsourcing market. Organizations attempts to manage margins and increase the level of caution when outsourcing will lead to shorter contracts and a squeeze on profit margins of large providers. This situation will prompt Vendors to continue to rationalize services, cost structure, and pricing.

However, Outsourcing Will Remain a Useful Solution Within the Conservative Context of These Five Models.

Centralize-Standardize-Outsource

Initially, organizational processes that have been targeted for outsourcing are centralized and standardized, allowing the company to achieve efficiencies internally and to gain detailed management insights into processes and costs.

Newly-achieved efficiencies allow visibility into potential outsourcing business cases.

Increased management insight into the functions enables clear definition of operational and cost demands from vendors.

These companies will engage in typically lower levels of outsourcing, and will keep most cost savings in-house rather than sharing them with the vendor.

Transform-Operate-Transfer

Organizations employ vendors to transform a function and to run it for a short-term period.

Transformations are often more easily achieved externally than internally; thus, the benefits outweigh short-term outsourcing costs.

This model is relevant especially for companies in volatile/ fast-moving industries, where rapid changes and adjustments are required.
Commodities Outsourcing

Companies will pursue outsourcing of non-core, non strategic, and non-differentiating functions (e.g., Webhosting and mailroom services).

Companies will outsource these types of functions to vendors that specialize in these areas. The vendors economies of expertise suggest the vendor will better manage and run these functions.

Risk Transfer (Insurance)

Outsourcing functions, such as disaster recovery, enables organizations to spread the operational and financial risk for functions that they are less able to perform in-house, providing insurance-like protection.

Shifting Fixed Costs to Variable Costs

In human and financial capital intensive areas, such as legal or infrastructure, vendors offer organizations economies of scale and flexibility, allowing the shift from fixed costs to variable costs.

Author: Arvind Singhatiya
Article Source: EzineArticles.com
Provided by: Smart cooker

As the saying goes ‘it takes money to make money.’ This is especially true when it comes to business funding. Business funding is getting the cash to get your business off the ground, which can often be a challenge. The traditional route for getting business funding is going to your bank. Going to your bank, however won’t get you far as banks do not like lending money to start-up businesses who have no history/assets.

There are several ways in which you can fund your business where you become your own bank, giving you total control over your money, the very control you wanted in the first place:

Part time job

Life insurance policy

Family/friends

Credit cards

By taking a part time job you can use the funds from it for your new business whilst still working your normal job and sorting out your new business venture. You have to ask yourself however if this is realistic; if you have the energy to take on a third job. Could you work a 60-80 hour week? You would be risking burn out and would more than likely end up hurting your health and family relationships due to stress.

You may also be thinking how can a life insurance policy help me while I’m still alive? The answer is simple you can put your life insurance policy to work while your still around as, what most people don’t realise is that you can borrow against the cash value of a life insurance policy and pay it back on a flexible rate, which is on your terms.

Bootstrapping is the term given when you start your business with no outside money. The way this works is you use personal savings and adjust your living allowance so that the start-up costs of your new business are taken care of. The advantage of funding your business in this way is that you are completely independent in how you run your business. The disadvantage however is that your business could end up being under funded as there is nothing to support it. Also when people use their own money to fund their business they tend not to write a business plan. Not having this business plan increases the chance of failure due to the fact the business will not be well researched and analysed and there will be fewer opportunities for feedback.

It is highly important that you find the right funding for your business. You must be selective and smart or your dream business could turn into your worst nightmare, you should think about your long term personal business goals and the type of business you’re planning.

There two main categories of funding; debt and equity.

Debt Funding

You borrow money and must pay it back with interest within a certain timeframe. Debt funding sources can be from banks, finance companies, credit unions, credit card companies and private corporations.

Equity Funding

You raise start-up finance for your business by selling a portion of ownership in your company. Selling equity means taking on investors, many small businesses raise equity by bringing in investors to make their business succeed and to get a return on investment. The two main types of equity funding are business angels and venture capitalists.

Author: Helen Cox
Article Source: EzineArticles.com
Provided by: Pressure cooker

It is always said “If you Fail to Plan, you Plan to Fail”

Success in business comes as a result of planning. You have to have a detailed, written plan that shows what the ultimate goal is, the reason for the goal, and each milestone that must be passed in order to reach your goal.

A business plan is written definition of, and operational plan for achieving your goal. You need a complete but success tool in order to define your basic product, income objectives and specific operating procedures. YOU HAVE TO HAVE A BUSINESS PLAN to attract investors, obtain financing and hold onto the confidence of your creditors, particularly in times of cash flow shortages–in this instance, the amount of money you have on hand compared with the expenses that must be met.

Aside from an overall directional policy for the production, sales effort and profit goals of your product–your basic “travel guide” to business success–the most important purpose your business plan will serve, will be the basis or foundation of any financial proposals you submit. Many entrepreneurs are under the mistaken impression that a business plan is the same as a financial proposal, or that a financial proposal constitutes a business plan. This is just a misunderstanding of the uses of these two separate and different business success aids.

The business plan is a long range “map” to guide your business to the goal you’ve set for it. The plan details the what, why, where, how and when, of your business–the success planning of your company.

Your financial proposal is a request for money based upon your business plan–your business history and objectives.

Understand the differences. They are closely related, but they are not interchangeable.

Writing and putting together a “winning” business plan takes study, research and time, so don’t try to do it all in just one or two days.

The easiest way to start with a loose leaf notebook, plenty of paper, pencils, pencil sharpener, and several erasers. Once you get your mind “in gear” and begin thinking about your business plan, “10,000 thoughts and ideas per minute” will begin racing thru your mind…So, it’s a good idea when you aren’t actually working on your business plan, to carry a pocket notebook and jot down those business ideas as they come to you–ideas for sales promotion, recruiting distributors, and any other thoughts on how to operate and/or build your business.

Later, when you’re actually working on your business plan, you can take out this “idea notebook” evaluate your ideas, rework them, refine them, and integrate them into the overall “big picture” of your business plan.

The best business plans for even the smallest businesses run 25 to 30 pages or more, so you’ll need to “title” each page and arrange the different aspects of your business plan into “chapters.” The format should pretty much run as follows:

Title Page Statement of Purpose Table of Contents Business Description Market Analysis Competition Business Location Management Current Financial Records Explanation of Plans For Growth Projected Profit & Loss/Operating Figures Explanation of Financing for Growth Documentation Summary of Business & Outlook for The Future Listing of Business & personal References

This is a logical organization of the information every business plan should cover. I’ll explain each of these chapters titles in greater detail, but first, let me elaborate upon the reasons for proper organization of your business plan.

Having a set of “questions to answer” about your business forces you to take an objective and critical look at your ideas. Putting it all down on paper allows you to change, erase and refine everything to function in the manner of a smoothly oiled machine. You’ll be able to spot weakness and strengthen them before they develop into major problems. Overall, you’ll be developing an operating manual for your business–a valuable tool which will keep your business on track, and guide you in the profitable management of your business.

Because it’s your idea, and your business, it’s very important that YOU do the planning. This is YOUR business plan, so YOU develop it, and put it all down on paper just the way YOU want it to read. Seek out the advice of other people; talk with, listen to, and observe, other people running similar businesses; enlist the advice of your accountant and attorney–but at the bottom line, don’t ever forget it has to be YOUR BUSINESS PLAN!

Remember too, that statistics show the greatest causes of business failure to be poor management and lack of planning–without a plan by which to operate, no one can manage; and without a direction in which to aim its efforts, no business can attain any real success.

On the very first page, which is the title page, put down the name of your business-ABC ACTION–with your business address underneath. Now, skip a couple of lines, and write it all in capital letters: PRINCIPAL OWNER–followed by your name if you’re the principal owner. On your finished report, you would want to center this information on the page, with the words “principal owner” off-set to the left about five spaces.

Examples: ABC ACTION 1234 SW 5th Ave. Anywhere, USA 00000

PRINCIPAL OWNER: Your Name

That’s all you’ll have on this page except the page number -1-

Following your title page is the page for your statement purpose. This should be a simple statement of your primary business function, such as: We are a service business engaged in the business of selling business success manuals and other information by mail.

The title of the page should be in all capital letters across the top of the page, centered on your final draft–skip a few lines and write the statement of purpose. This should be direct, clear and short–never more than (2) sentences in length.

Then you should skip a few lines, and from the left hand margin of the paper, write out a sub-heading in all capital letters, such as: EXPLANATION OF PURPOSE.

From, and within this sub-heading you can briefly explain your statement of purpose, such as: Our surveys have found most entrepreneurs to be “sadly” lacking in basic information that will enable them to achieve success. This market is estimated at more than a 100 million persons, with at least half of these people actively “searching” for sources that provide the kind of information they want, and need.

With our business, advertising and publishing experience, it is our goal to capture at least half of this market of information seekers, with our publication. MONEY MAKING MAGIC! Our market research indicates we can achieve this goal and realize a profit of $1,000,000 per year within the next 5 years…

The above example is generally the way you should write your “explanation of purpose,” and in subtle definition, why you need an explanation. Point to remember: Keep it short. Very few business purpose explanations justify more than a half page long.

Next comes your table of contents page. Don’t really worry about this until you’ve got the entire plan completed and ready for final typing. It’s a good idea though, to list the subject (chapter titles) as I have, and then check off each one as you complete that part of your plan.

By having a list of the points you want to cover, you’ll also be able to skip around and work on each phase of your business plan as an idea or the interest in organizing that particular phase, stimulates you. In other words, you won’t have to make your thinking or your planning conform to the chronological order of the “chapters” of your business plan–another reason for the loose leaf notebook.

In describing your business, it’s best to begin where your statement purpose leaves off. Describe your product, the production process, who has responsibility for what, and most importantly, what makes your product or service unique–what gives it an edge in your market. You can briefly summarize your business beginnings, present position and potential for future success, as well.

Next, describe the buyers you’re trying to reach–why they need and want or will buy your product–and the results of any tests or surveys you may have conducted. Once you’ve defined your market, go on to explain how you intend to reach that market–how you’ll these prospects to your product or service and induce them to buy. You might want to break this chapter down into sections such as..publicity and promotions, advertising plans, direct sales force, and dealer/distributor programs. Each section would then be an outline of your plans and policies.

Moving into the next chapter on competition, identify who your competitors are–their weakness and strong points–explain how you intend to capitalize on those weaknesses and match or better the strong points. Talk to as many of your “indirect” competitors as possible–those operating in different cities and states.

One of the easiest ways of gathering a lot of useful information about your competitors is by developing a series of survey questions and sending these questionnaires out to each of them. Later on, you might want to compile the answers to these questionnaires into some form of directory or report on this type of business.

It’s also advisable to contact the trade associations and publications serving your proposed type of business. For information on trade associations and specific trade publications, visit your public library, and after explaining what you want ask for the librarian’s help.

The chapter on management should be an elaboration on the people operating the business. Those people that actually run the business, their job, titles, duties, responsibilities and background resume’s. It’s important that you “paint” a strong picture of your top management people because the people coming to work for you or investing in your business, will be “investing in these people” as much as your product ideas. Individual tenacity, mature judgement under fire, and innovative problem-solving have “won over” more people than all the AAA Credit Ratings and astronomical sales figures put together.

People becoming involved with any new venture want to know that the person in charge–the guy running the business knows what he’s doing, will not lose his cool when problems arise, and has what it takes to make money for all of them> After showing the “muscle” of this person, go on to outline the other key positions within your business; who the persons are you’ve selected to handle those jobs and the sources as well as availability of any help you might need.

If you’ve been in business of any kind scale, the next chapter is a picture of your financial status–a review of your operating costs and income from the business to date. Generally, this is a listing of your profit & loss statements for the six months, plus copies of your business income tax records for each of the previous three years the business has been an entity.

The chapter on the explanation of your plans for the future growth of your business is just that–an explanation of how you plan to keep your business growing–a detailed guide of what you’re going to do, and how you’re going to increase your profits. These plans should show your goals for the coming year, two years, and three years. By breaking your objectives down into annual milestones, your plan will be accepted as more realistic and be more understandable as a part of your ultimate success.

Following this explanation, you’ll need to itemize the projected cost and income figures of your three year plan. I’ll take a lot of research, an undoubtedly a good deal of erasing, but it’s very important that you list these figures based upon thorough investigation. You may have to adjust some of your plans downward, but once you’ve got these two chapters on paper, your whole business plan will fall into line and begin to make sense. You’ll have a precise “map” of where you’re headed, how much it’s going to cost, when you can expect to start making money, and how much.

Now that you know where you’re going, how much it’s going to cost and how long it’s going to be before you begin to recoup your investment, you’re ready to talk about how and where you’re going to get the money to finance your journey. Unless you’re independently wealthy, you’ll want to use this chapter to list the possibilities and alternatives. Make a list of friends you can approach, and perhaps induce to put up some money as silent partners. Make a list of those people you might be able to sell as stockholders in your company–in many cases you can sell up to $300,000 worth of stock on a “private issue” basis without filing papers with the Securities and Exchange Commission. Check with a corporate or tax attorney in your area for more details. Make a list of relatives and friends that might help you with an outright loan to furnish money for the development of your business.

Then search out and make a list of venture capital organizations. Visit the Small Business Administration office in your area–pick up the loan application papers they have–read them, study them, and even fill them out on a preliminary basis–and finally, check the costs, determine which business publications would be best to advertise in, if you were to advertise for a partner or investor, and write an ad you’d want to use if you did decide to advertise for monetary help.

With listing of all the options available to your needs, all that’s left is the arranging of these options in the order you would want to use them when the time come to ask for money. When you’re researching these money sources, you’ll save time by noting the “contact” deal with when you want money, and whenever possible, by developing a working relationship with these people.

If your documentation section, you should have a credit report on yourself. Use the Yellow Pages or check at the credit department in your bank for the nearest credit reporting office. When you get your credit report, look it over and take whatever steps are necessary to eliminate any negative comments. Once these have been taken care of, ask for a revised copy of your report and include a copy of that in your business plan.

If you own any patents or copyrights, include copies of these. Any licenses to use someone else’s patent or copyright should also be included. If you own the distribution, wholesale or exclusive sales rights to a product, include copies of this documentation. You should also include copies of any leases, special agreements or other legal papers that might be pertinent to your business.

In conclusion, write out a brief, overall summary of your business- when the business was started, the purpose of the business, what makes your business different, how you’re going to gain a profitable share of the market, and your expected success during the coming 5 years..

The last page of your business plan is a “courtesy page” listing the names, addresses and phone numbers of personal and business references–persons who have known you closely for the past five years or longer–and companies or firms you’ve had business or credit dealings with during the past five years.

And, that’s it–your complete business plan. Before you send it out for formal typing, read it over once a day for a week or ten days. Take care of any changes or corrections, and then have it reviewed by an attorney and then, an accountant. It would also be a good idea to have it reviewed by a business consultant serving the business community to which your business will be related. After these reviews, and any last-minute changes you want to make, I’ll be ready for formal typing.

Type and print the entire plan on ordinary white bond paper. Make sure you proof-read it against the original. Check for any corrections and typographical errors–then one more time–read it through for clarity and the perfection you want of it.

Now you’re ready to have it printed and published for whatever use you have planned for it–distribution amongst your partners or stockholders as the business plan for putting together a winning financial proposal, or as a business operating manual.

Take it to a quality printer in your area, and have three copies printed. Don’t settle for photo-copying..Have it printed!

Photo-copying leaves a slight film on the paper, and will detract from the overall professionalism of your business plan, when presented to someone you’re trying to impress. So, after going to all this work to put together properly, go all the way and have it duplicated properly.

Next, stop by a stationery store, variety store or even a dime store, and pick up an ordinary, inexpensive bind-in theme cover for each copy of your business plan. Have the holes punched in the pages of your business report to fit these binders and then slip each copy into a binder of its own.

Now, you can relax, take a break and feel good about yourself..You have a complete and detailed business plan with which to operate a successful business of your own. A plan you can use as a basis for any financing proposal you may want to submit..And a precise road-map for the attainment of real success…

You just complete one of the important steps to fulfill of all your dreams of success.

Author: Julia Tang
Article Source: EzineArticles.com
Provided by: Wordpress plugin Guest Blogger

So you want to learn the internet business marketing secrets to make money by starting an internet business? Do you feel like an internet business entrepreneur that is just waiting for the best opportunity to strike it rich with? You know that the internet is a hot money market and you want to get your share! If theres money to be made, youll find a way to make it! The only things you need are an income source, and the resources to market it. Once you have them, its all downhill from there!!

Right?

Well, lets take a brutally honest approach to analyzing your hopes of being an internet business entrepreneur. There are thousands of other entrepreneurs out there just like you who are just waiting for the chance to start their own internet business and make an insane income from the internet. Thats alright though, because any good internet business entrepreneur knows that there is always a way to make money out there.

The beginnings of any entrepreneurs business are what ultimately what define their long term success. This not only applies to any successful internet business entrepreneur, but to any entrepreneur in history. Thats right! Im not even speaking specifically about our modern culture! Throughout human history, entrepreneurship has been always centered on one basic, broad concept. We hear all too often today, but rarely give it a second thought. Here is the golden rule for any entrepreneur, whether an internet business entrepreneur, a small business owner, or perhaps even an entrepreneur who is looking for the chance to start a business.

Entrepreneurship comes down to the ability of finding a need of the people and filling it.

We all know this is common knowledge. However, what happens all too often with internet business entrepreneurs is that they get caught up in the hype of a last chance offer or internet business opportunity, and forget to question if it fits the definition of entrepreneurship. Now, Im not saying you cant be successful with these things. The problem is that entrepreneurs get hyped up in thinking theyre all set for wealth because they have the best internet business program out there. They know that all they need to do is execute the pre-written plan they were given to achieve success. They may very well make money with any given internet business opportunity. Then, after a little success, they tend to convince themselves that they have become a true internet business entrepreneur and have accomplished exactly what they set out to do originally.

Well, if they were successful, whats wrong with thinking that?

The problem is that they have diluted the idea of being an internet business entrepreneur so far that it would be unfair to even consider them an entrepreneur. They may have had some success, but were they really an entrepreneur? This is where the men separate from the boys.

They are not entrepreneurs they better fit the definition of an Opportunist.

So what? They were successful right? Whats the difference anyway?

The difference is this: Entrepreneurs find the need and fill it. Opportunists fill the need, but werent the ones to find it. Now, when someone hears the word opportunist, it usually carries a bad connotation. This is not the case. Opportunists are simply different than entrepreneurs. No one ever said they were less successful than entrepreneurs.

If you dont agree, think about the very famous, successful man we all know is without a doubt the worlds greatest opportunist. Who would that be? Here are a few hints. He didnt find the need, but he knew two entrepreneurs who found the need. He even worked for the entrepreneurs who filled one of the biggest needs in history. He didnt even invent the product that filled this need, but most people who use this product dont know that. Do you know who it is yet? Here are a couple obvious hints. To this day, his products are inferior to his competitors, but he still leads the industry. He made his wealth through quality marketing, not a quality product. If you still dont know, here is the giveaway: He is the richest man in the world! Bill Gates, of course! Bill Gates is the greatest opportunist in history. But he still wasnt an entrepreneur.

So what? Hes the richest man alive!

Yes, he certainly is. But that doesnt make him an entrepreneur. Steven Jobs and Steven Wozniak are the real entrepreneurs of the Computer Industry. They both are successful, but they were caught off guard by an opportunist with a vision. They could have very well had a virtual monopoly on computers to this day, but an opportunist stole it from them.

AlrightWell whats so good about being an Entrepreneur then?

Well Umm it sounds good to say youre an entrepreneur? No, that cant be it. Uhh Everyone wants to be an entrepreneur? No, thats not it either.

The brutally honest truth is that being an entrepreneur is not all that its played up to be. It involves a high risk of failure, and the bottom line is most people arent going to take that chance. Also, its good to remember that there is absolutely nothing wrong with being an opportunist. Sure, youll have to factor in your own ethics. But, speaking monetarily, there is nothing wrong with being an opportunist.

With almost every entrepreneur we know of, there are opportunists that follow. Michael Dell founded Dell Computers on the idea that people would want computers built to their custom specifications. He was and still is very successful with this. Soon, Hewlett Packard, Compaq, Gateway, and many more adopted his principles into their business models. Many people would label what you now know as opportunists to be entrepreneurs.

Many people who declare themselves internet business entrepreneurs are really internet business opportunists. Many successful network marketers would call themselves entrepreneurs, but they are really network marketing opportunists. The real entrepreneur is individual that came up with the idea of network marketing. He found a need for a business model that would utilize ambitious individuals who had no product to sell on their own, but still sought a way to earn an income through marketing a product.

Entrepreneurship is one of the many subjects of common knowledge that few people think twice about. There are thousands of people out there who say want to be entrepreneurs that dont even know how to define entrepreneur! If that entire group was to eventually find success in internet business or any business at all, the chances of the majority of them becoming a true entrepreneur are very small. I would estimate that about 98% of them, if successful in the long run, are opportunists and not entrepreneurs.

Any given successful entrepreneur knows the concept described in this article all too well. Thats most likely because at some point, they lost some aspect of business to an opportunist who picked up on what need they are filling and how they are doing it. Steven Jobs and Steven Wozniak would be able to describe in detail the shear frustration of this.

So if you really do believe that you want to be an entrepreneur, think about the golden rule. What is the need you will fill and how will you fill it? If you can come up with some answers for those two questions, you very well may be on your way to success. Dont forget to get a patent, trademark, and/or copyright though!

*On a personal note, I will take a shot in the dark and say that youre probably wondering what right I have to speak so bluntly about this subject. Maybe youre wondering what my experience and qualifications are. Perhaps youre ever curious about my own entrepreneurial endeavors. Im not going to come out and spill the details of my entrepreneurial endeavors, but take a good look at this article and the information presented, and how it is presented. Maybe you can figure it out!

Author: Joe Borowy
Article Source: EzineArticles.com
Provided by: Guest blogger

Introduction

Large companies have always had a number of options that they could depend on to raise capital for their businesses. The have always had access to a number of alternatives such as selling stock, issuing bonds, bank loans and accounts receivable financing among others. Looking at the other side of the coin, smaller companies, those that have between $20,000 and $500,000 of yearly revenues, have always had a challenge trying to find capital to operate their businesses.

The lack of access to capital has prevented many small businesses from growing and capitalizing on the many opportunities that are available to them. It is not uncommon for small companies to reject large deals or opportunities because they do not have the necessary capital to obtain the resources to service the account. However, even when small businesses do take on large contracts, they find that they are never paid immediately upon delivery of services. Most contract terms demand that the supplier provide 30 to 60 days for the customer to pay their invoice – in effect, forcing them to extend them with supplier credit. The lack of adequate capital resources, along with the necessity to offer commercial credit to clients, creates a perfect storm that prevents small businesses from growing and that is very difficult to avoid.

A number of these issues could be sidestepped if the company had immediate access to working capital. Working capital could enable the business to add employees and resources to serve new clients and larger contracts. It also enhances a companys ability to extend 30 to 60 day payment terms to their customers.

This paper outlines the most common sources for working capital and provides an evaluation of each source. Each source has also been assigned a score, which summarizes the availability and flexibility of the source.

Scoring System

Each working capital source that has been evaluated has been given a score from 1 to 10. The following features where considered when assigning a score:

A higher score indicates that the source of capital has a positive outlook on a number of these criteria and is available to small businesses. A lower score indicates that a particular source of capital may not be best suited for most small businesses.

Financial Options

Many books and publications tout the benefits of obtaining venture capital to finance a new or ongoing operation. Venture capital is an option for small companies that have a seasoned management team and very aggressive growth plans, however, venture capitalists will rarely invest in small businesses that have no intention of going public. The venture capitalist objective is to invest in a company for a short period of time say 5 years and then cash out of the business while making a significant return on their investment.

An Angel investor is a wealthy individual or group of individuals that typically invest in pre-venture capital companies. That is, companies that dont meet the current requirements of a venture capitalist but that could meet their requirements with a capital and management influx. However, you should not rule out angel investors completely since there are angel investment groups who focus on the growth of certain communities and will invest in small businesses. The best way to find an angel investment group near to you is to search them on the Internet using a search engine such as Google (www.google.com).

Most small businesses owners will first approach their bank to try and obtain a loan or line of working capital. However, unless the business has been in operation for a number of years, has substantial assets and all the appropriate financial records, their chances of obtaining any financing are minimal. Banks, however, can provide lines of credit if the business owner personally guarantees them. This means that the business owner will be personally liable for the repayment of these loans. These lines of credit can provide the business with the needed working capital; however they can be very risky, especially if the business does not produce the expected results and the owner is unable to repay the bank. Business owners should use this method of financing very cautiously.

Much like bank lines of credit, many business owners use their credit cards to fund their businesses. Credit cards offer the ability to make purchases or obtain cash advances and pay them at a later time. It should be noted that credit cards can be a very expensive source of funding. Although most credit cards have reasonably low interest rates for purchases, their cash advance rates can be as high as 17% to 19% due to greater delinquency rates. Furthermore, most credit cards will charge you 2% to 4% of the face value of a cash advance as a “fee”. Much like bank lines of credit, the business owner personally guarantees payment of a credit card. Thus, this method of financing can be very risky if the business does not produce the expected results and the business owner cannot repay the credit card company. Business owners should use this method of financing very cautiously.

Business owners who are also homeowners have the option of tapping into their home equity to finance their ongoing business operations. Home equity loans and lines of credit have many advantages, such as low interest rates and the possibility of having some portion of it deducted from taxes . This method of financing gained a lot of momentum between the years 2000 and 2004 when interest rates where at their lowest point in decades and real estate was appreciating in value. A major disadvantage if this financing method is that it directly places the business owners home at risk. In fact, the business owner is placing a bet – with their home as the potential wager – that the business will succeed and will be able to repay the loan. Much like lines of credit, business owners should use this method of financing very cautiously.

The US Small Business Administration (www.sba.gov) provides a number of very viable options to finance business operations. Although the whole scope of SBA services is beyond the scope of this paper, the SBA provides a Microloan program. The program objective is to stimulate micro-enterprises and provides loans of up to $30,000 to small businesses. These loans are usually provided through a financial institution or a bank. They have higher interest rates than traditional loans, but their requirements are more flexible, making them more accessible to small business owners.

Friends and family are one of the most conventional ways of financing small businesses. Many entrepreneurs have been able to leverage existing relationships and obtain funding, either as a loan or as a capital investment, for their businesses. Although this source of funding can be easier to obtain that others, it does have some inherent problems. First, the business owner runs the risk of placing the relationship in jeopardy if things do not go as expected and the business defaults. Furthermore, these transactions are usually done with little formality and without written agreements, further complicating matters. If you elect to use this funding option, you should consult an attorney and draw some formal documents that describe the intent and responsibilities of each party.

Accounts receivable factoring, also known as invoice factoring, has been a source of working capital for large companies for many decades. It is now becoming mainstream and available to mid-size and small businesses. Factoring enables a company to sell their slow paying accounts receivable to a financial company, who in turn pays for the invoices within a day or two. After the sale, the financial company waits to be paid for the invoices. A key feature of factoring is that the factor will take the credit strength of the business customers, as its main consideration. Until recently, accounts receivable financing was out of the reach of the small business owner. However, enhancements in technology have now turned this method of financing into a viable alternative for small businesses. This means that a small company with little or no credit can leverage a strong roster of clients, sell their invoices and get funding very quickly. Factoring should be considered as an option for businesses that sell products or services to other businesses, rather than to consumers.

Conclusion

Obtaining working capital for their businesses is one of the most important decisions that a business owner can make. Like all important decisions, it should be carefully thought out and deliberately executed. The old adage that the best time to look for capital is when you dont need it is still true. You should spend some time researching the all available options for your business ahead of time, so that you can be ready to tap your war chest when the right opportunity arrives.

DISCLAIMER

This paper is written to provide small business owners with an overview of the financial options that are available for their businesses. However, this paper does not intend to provide financial or legal advice as only qualified professionals can do so. The author and Commercial Capital LLC disclaim all liabilities arising from the use of the information on this paper. Please consult a professional before making an important decision about your personal or business finances.

Author: Marco Terry
Article Source: EzineArticles.com
Provided by: Duty on LCD/Plasma TV

When it comes to writing a new business plan, there is nothing quite as valuable as having a guide to go by, and having a quality business plan sample at hand will make the task of writing a new business plan a lot easier.

While the exact needs of every business will differ, there are a number of elements that must be part of any type of business plan, and having a business plan sample at hand can help any business owner include these essential elements.

Elements You Will Need To Include In Your Business Plan

Some of the most important elements of any business plan sample will be such things as a current a pro forma balance sheet, a current income statement and an up to date analysis of cash flow.

It is important to look for a business plan sample that includes all of these required elements, and just as important to tailor those elements to the needs of your own business.

Seeking Out A Business Plan That Is Similar To The Type Of Business You Plan To Start

When seeking out a business plan sample it is important to plan carefully and to look at several different business plan samples before deciding on a single one to use.

There are many different kinds of business plan examples available, both in books and magazines tailored to the business world and of course on the internet. It is a good idea to look around carefully until you find the business plan sample that best meets your needs.

Using a business plan sample from the same or a similar industry is a good idea, as is seeking out a business plan sample that matches your own style and needs.

Using The Business Plan Sample As A Guide Line

After you have your business plan sample in hand, it is important to use that business plan sample as a guideline and a starting point.

While having a business plan sample available will make the job of writing a quality business plan a lot easier, it will not replace the hard work necessary in the formation of a business plan.

It is best to think of the business plan sample as a template and a guideline, and to use it to create a business plan that is uniquely suited to your own special area of expertise.

Author: Shaunta Pleasant
Article Source: EzineArticles.com
Provided by: Programmable Pressure Cooker

Do you want to be a successful entrepreneur? You probably have an excellent idea and you’re thinking over whether it is doable or not, whether it will bring in revenues, and whether it has the potential to expand into a more profitable business venture. Now that you find yourself with the desire to start your own business, there are still a lot of things you have to consider and think about. First you have to ask yourself if you have what it takes to own and maintain a business. You should know that the world of entrepreneurship is not for everyone. Yes, the opportunities for profit and self-fulfillment are great, but so are the risks involved.

Being an entrepreneur can be a life-changing endeavor, thus, you really have to be prepared for anything that may happen. There are some specific character traits that every entrepreneur must possess or develop. These include perseverance, hard work, independence, self confidence, commitment to quality and success, honesty and many more. If you think you really have what it takes to be an entrepreneur then you are ready to proceed to the next step, and that is to find the type of business you want to establish and own.

Finding the right Entrepreneur Opportunity

As you know by now, there are literally thousands of business opportunities available for the budding entrepreneur. With all these choices, what type of business are you going to pursue? There are actually two approaches to finding the right entrepreneur opportunity for you. There’s the traditional approach and the “follow your passion” approach. The traditional approach to finding the right business opportunity involves a systematic and methodical process. It involves careful planning, thorough research of the market, recognizing a need and creating the product or service to fulfill that need.

First, you have to choose the field of business that you are most interested in. Then, you can now embark on researching the ins and outs of that industry and the different businesses that can be found within it. Afterwards, you can do market research to find out if there is an unmet need in the form of products, services, prices, etc. Then you can proceed to analyzing the competition and checking out how their business models work.

You can now start on making your preliminary business plan. Make sure to do market research to see the market potential for your chosen business. Re-evaluate and re-assess your business plan and determine how much capital you are going to need. Then, you can start seeking out investors and lenders who can help you finance your business. The traditional approach to entrepreneur opportunities is obviously labor-intensive and time-consuming, as well as potentially expensive, but careful planning before actually starting the business will also reduce the risk of failure as time goes by.

Another approach in finding the right entrepreneur opportunity is the “follow your passion” philosophy. This approach involves following and doing what you love and the money will start coming in. This can be an excellent way to start your own business but you should understand that many people have also followed and did what they love and still did not succeed well enough. This approach encourages you to find out what type of business you should pursue through self-discovery and observation. Reflect on what you are truly interested in and passionate about and look for ways to make a business out of it. Observe your surroundings to see If there is an unmet need. You can then create a product or service to fulfill that need.

Inspiration is also an important aspect of this approach to identifying an entrepreneur opportunity. Who knows that idea that simply popped into your mind while driving your kids to school may actually be an excellent business idea that can eventually lead to success? Another aspect of this approach is imitation. You can simply find a tried-and-tested business model and copy it in another market. You can also consider getting a franchise. Franchises are already proven business models, and you also get support from the company to help you start out your business.

These two approaches are both effective in helping you find out what entrepreneur opportunity you must pursue. Although these approaches are not failure-proof, they can really help you increase your chances of success in the highly-competitive world of business.

Author: Nick Stoles
Article Source: EzineArticles.com
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