From the monthly archives: December 2009
The SBA recently made some changes to how small businesses can compete in the federal marketplace, leading to some false beliefs. An examination which clears up some of the false beliefs about the change in Small Business Association guidelines and how it affects businesses trying to do work with the government.
Myth: Small Businesses can’t compete in the federal marketplace because large companies are getting contracts specifically written for smaller businesses.
Reality: Though it is true this has happened in the past, large businesses taking contracts set aside for smaller businesses is not a real factor anymore in the federal contracting arena. A minuscule percentage of contracts get awarded to companies whose size is later challenged – the companies are almost universally on the edge of what is defined as a ‘small business’ rather than the large multi-national corporations. The Small Business Administration (SBA) has adopted regulations which keep such contracts from being considered as small business contracts, helping to make the available figures and statistics more accurately reflect reality.
Myth: Large and multinational corporations are listed in the GSA’s database with small business contracts because they were awarded them.
Reality: There are two explanations for this. The first is that size status is determined at the time a contract is awarded, and is retained for the duration of the contract. In recent times, agencies have increasingly been awarding long-term contracts which can extend for as much as twenty years. During that period it is quite possible that these businesses become larger and no longer fit the small business size standard for their commodities. Small businesses are becoming large businesses during the period of their contracts, making size reporting difficult to implement effectively. Secondly, many large companies have a strategy of purchasing small businesses with long-term contracts, meaning that a contract awarded to a small business may then become owned as a subsidiary of a large business. Until recently, agencies were allowed to count those contracts toward their small business goals despite this fact.
Myth: Nothing has been done to stop such misrepresentation of small business awards, and the SBA has not made it more difficult for larger businesses to attain long-term small business contracts and misrepresent themselves.
Reality: Many steps have been taken to resolve this issue. The SBA implemented a ruling in June that requires companies, large or small, to recertify their size status at the end of the initial contract term (generally five years) and again at every exercising of a contract term extension option, usually between one and five years. Additionally, whenever a small business is bought out by or merges with another business (of any size), it must recertify its size status for all of its contracts, regardless of where they are in the term. Thus, from now on all contracts will be reported as held by large companies if the business holding them has grown past small business size standards or has been acquired by a large company. The SBA has also taken other steps, including increasing its staff working on finding small business contracting opportunities, requiring federal agencies to review any issues or discrepancies with their reported contracting statistics, and starting a “Small Business Procurement Scorecard,” which will monitor and score agencies on their performance on a variety of small business goals.
Myth: This five year recertification allows agencies to report the tens of billions of dollars set aside for small businesses for large businesses until 2012.
Reality: The new SBA policy explicitly prohibits this. It forbids small businesses that merge or are acquired by large businesses from claiming small size status for all future work, even on existing contracts. This means that as soon as a business is no longer legally considered ‘small,’ all of the dollars used must be reported according to the appropriate size standard. It also limits the time that a small business that expands beyond small standards can report as small to no more than five years – and most to within one year. All of the new SBA policies apply to all existing and future contracts of any term length, so that whenever any event that triggers a recertification need occurs – merger, acquisition, end of a contract term, or exercise of a contract option – the business must recertify itself to whatever size standard is appropriate at that time.
Myth: Small business can be forced to compete alongside large businesses because of the new recertification policies.
Reality: A contract that is set aside for small businesses MUST be given to a business that is certifiable as small at the time of bid submission. These new policies actually protect small business owners from having to compete with larger businesses, because there is now no way for them to acquire small businesses in order to certify small business status.
Myth: There is no enforcement and there are no penalties, fines, or consequences for large businesses that get small business contracts.
Reality: If the SBA determines that a businesses has misrepresented itself about the size standard, they have the right to disqualify a bid and deny the contract. If a business is found to have intentionally misrepresented itself regarding size status in order to get a contract, under Section 16(d) of the Small Business Act the owners are subject to fines and imprisonment. Companies that lost out on the bid may challenge the size of the winning companies and also file civil suits under the False Claims Act. Additionally, there is proposed legislation that would delay awarding of any contracts that have size standards attached over a certain dollar amount until the size status of the winning bidder is determined and verified by the SBA.
Myth: The SBA will not release information on small businesses awarded government contracts.
Reality: Information and data relating to federal contract awards is readily available to the public through the Federal Procurement Data System – Next Generation. Any person – small business owner or otherwise – may request information or reports through the database operator, the General Services Administration (GSA), if they have difficult finding data or navigating the site.
Myth: The recertification procedures will change the size standards for small businesses and how they are classified as ‘small,’ much like the 2004 proposal.
Reality: This is simply not the case. Small businesses are still determined to be so by the same regulations. The rules regarding size standards have not changed and are still determined by industry – some are based around maximum number of employees, some are on revenues in recent years, and some are a combination of the two. The 2004 proposal, which did not go into effect, was a broad restructuring agenda that would have made all size standards determined by the number of employees.
Myth: More than a dozen federal investigations in the last six years have reported finding that billions of dollars were diverted from small businesses to Fortune 1000 companies and their subsidiaries across the country.
Reality: There reports almost universally raised issues regarding the accurate reporting of contract dollars that were originally awarded to small businesses – just the sort of thing the new rules were put into place to prevent. This meant that small businesses were the original winners of the contracts, but then were bought up by larger companies. Although there are a very few occasions where large businesses won federal contracts that had been set aside for small businesses, generally this was because of a misunderstanding or of a small business not realizing it had grown beyond the size standard. None of the studies suggested that large, multinational corporations competed against small businesses for contracts. The dollars went to the larger companies because the business that originally won the contract was small. The new rules and guidelines that have been put into effect as of June 30, 2007 should prevent any further such problems of misreporting.
Author: Jason Istvan
Article Source: EzineArticles.com
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By some estimates, over 700 employees are attacked by their fellow workers each business day. Many of these incidents are the result of problems that existed at the time these workers were hired (such as drug abuse). Most states now recognize the potential liability that companies have in these matters. If an employer is held liable for the damaging actions of its employees, that exposure could literally bankrupt a company. In this article, I’ll explain the employers’ potential liability and how companies can avoid negligent hiring lawsuits.
Negligent Hiring Lawsuits Make Employers Liable
The basis of negligent hiring lawsuits is that an employer should have known there was a risk in hiring an employee. Further, the employer should have taken reasonable precautions to eliminate a job applicant from the pool of candidates. If an employer fails to properly screen its employees and a worker causes the injury of another employee, it’s possible that the employer can be held responsible.
According to a report released in 2008 from the U.S. Bureau of Labor Statistics, 13% of the 5,840 workplace fatalities that happened in 2006 were the results of assaults and violent acts. A recent article released by HR Management said the average settlement of a negligent hiring lawsuit is nearly $1 million. In the event that employment background checks were not conducted, the employers in these cases could be held legally responsible for the incidents.
How To Avoid Negligent Hiring Lawsuits
First, your company should establish clear pre-employment screening procedures. These procedures should detail the types of information your company will seek from applicants for each position. Second, your human resources executives should follow these procedures consistently. It does little good to approach employee screening arbitrarily.
Third, if you’re hiring people for jobs in which they’ll be operating a company vehicle, heavy machinery, or handling sensitive client information, you should investigate applicants for signs of a criminal past. These are the basic steps that you should be taking to avoid negligent hiring lawsuits.
Finding Evidence Of A Criminal Past
It’s a common misconception that employers can simply access an exhaustive database in which they’ll find record of an applicant’s past criminal misconduct. In truth, such a database doesn’t exist. Instead, employers should review county, state and federal records. Reviewing these records can require an enormous amount of time. Many employers retain the services of an experienced employee screening company to manage the investigation. They’ll conduct employment background checks that will uncover any existing red flags.
Whether you choose to use in-house resources for doing background checks or hire a dependable screening service to do the job for you, it’s important to understand the priority. You can protect your company from negligent hiring lawsuits by establishing a strict employee screening program. This program should include background checks that are completed prior to offering an applicant a position. A small investment in time can literally save millions of dollars in the long run.
Author: Christopher E Miller
Article Source: EzineArticles.com
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Outsourcing has been written about in some management journals as if it was a ‘must do’ process. There has been much hype about the need to focus on core competencies, the drives for cost reduction, the ability to access top quality staff and the latest technology, and therefore gain competitive edge. We refer to these as the myths of outsourcing to highlight the need for a critical stance. Outsourcing can work for some, but not for all. So is outsourcing a case of turning lead into gold, or actually a case of giving away the jewel in your crown?
To assess this we will briefly look at each of the key potential benefits.
1. Cost reduction – there is very mixed evidence regarding cost reduction. There are examples of increased costs, and one study showed 40% of respondents classed cost-savings as ‘mediocre’. The problems with this become clear if you bear in mind that economies of scale are not always possible, systems cannot always be shared, and of course, the supplier has to make money on your contract. It has been suggested that only if your existing activity was very badly managed, and overstaffed, will outsourcing benefit you financially. In most of these cases, getting to grips with the in-house function would offer similar savings.
2. Focus on core competencies – there are problems with this concept because many managers have trouble deciding what a core competence actually is, and furthermore, much of the time saved on managing the activity is re-invested in managing the outsourcing supplier.
3. Access to highly trained staff – although this can happen, there have been complaints that suppliers do not always staff a client function well, and in some cases will actually remove the better client staff from the activity.
4. Performance improvement – some have managed to achieve this, but again there is evidence of difficult or even serious service-level problems.
It could be argued that outsourcing remains popular because of the perception that so many companies are doing it, therefore it must work. There is evidence that companies can be over-optimistic regarding the benefits of outsourcing, or misunderstand the potential of the internal function. Others may outsource for political reasons, it can be a useful way to get rid of an enemy, or a headache. These are often the contracts that fail, although thankfully guidelines are becoming clearer regarding how best to gain benefit from outsourcing. As with many processes, one of the best ways to ensure success is to be aware of potential strengths and weaknesses.
Strengths and Weaknesses
Just considering whether to outsource at all can be an impetus to improve a function and increase your understanding and control of it. If you can control the costs of the function, and have an understanding of where it fits into your business, you can make an informed decision about whether to outsource and are far more likely to achieve cost control and other benefits. There are some good examples where access to high quality management skills, and advanced new technology, can happen, particularly with suppliers who have more experience in your area. Some companies have found an improvement in service quality, especially when the supplier has learnt your business and really understands your specific needs. This can take time and demands a solid relationship between the parties. There are of course situations where economies of scale can be found, and where outsourcing can increase the future flexibility of your enterprise.
Some of the problems surrounding outsourcing are due to the ‘hidden’ costs that occur at each phase of the lifecycle, it takes time and skill to develop benchmarks, negotiate with suppliers and develop a solid contract. The transition can involve a lot of disruption, a slow down in reaction time, prolonged supplier learning, and much time invested in managing relationships. The time and effort spent on supplier relationships can vary – a recent survey showed that some senior managers suggested the relationship was adversarial, with almost continual fighting over objectives and contract interpretation. These costs tend to increase the more suppliers or vendors you have to deal with, but experience in outsourcing can reduce these, and they will be a smaller percentage of larger contracts. There are also issues regarding the level of control you have over the activity, in theory, using the market as you do when outsourcing, can never give as much control as using ‘hierarchy’, when you keep things in-house. Sometimes this is not a problem, but with critical business functions it can be.
The extent to which you will experience strengths or weaknesses of outsourcing depends upon having a clear understanding of what you want to achieve, a good contract, and an awareness of the circumstances that will influence success.
Influencing circumstances
There are of course many factors that will influence the potential success or failure on an outsourcing strategy. Large companies can have more bargaining power with the suppliers, but they may be less able to make use of a supplier’s economies of scale. Small enterprises may experience relationship difficulties as they have less to bargain with and are possibly less experienced in relationship management. The function you are considering outsourcing will also influence, for example, there is evidence that IS managers perceive a high success with outsourcing systems operations and telecommunications, but not with outsourcing applications development, end-user support, or management. The environment within which the business operates will also influence results, a more dynamic environment can make planning for the future difficult. Experience in outsourcing, your own and that of your supplier, will increase the potential of success. Outsourcing processes tend to improve as the vendor gains an understanding of your own company.
Increasingly now, the key factors will be how the outsourcing lifecycle is managed, and how effectively your enterprise is organized to negotiate and manage the contracts and relationships. Very different skills are needed of the managers in charge, and a clear understanding of how the organizational structure will look after outsourcing is required (Gartner Group).
Outsourcing is most likely to be beneficial when the function concerned is of low competitive advantage and likely to remain so. Similarly, if your internal capability is weak, and hard to improve outsourcing may be an option. However it will be important to assess and understand why the function is weak to enable you to manage the outsourcing process. Another aspect to consider is how inter-dependent the function is with other aspects of the business, sometimes outsourcing one part of a process can lead to problems because of the complexity of the linkages.
Making a decision regarding whether to outsource or remain in-house is difficult. It has been suggested you should consider whether the Internal capability of the enterprise to perform is weak, moderate or strong, and whether the potential for an activity to yield competitive advantage is weak or strong. Based on that you can make decisions about whether you should outsource, get in a bit of additional capability, partner with someone else or carry on in-house.
(see ‘Linking Outsourcing to Business Strategy’ Richard C. Insinga and Michael J. Werle, Academy of Management Executive, Vol 14-4 November 2000)
There is an increase in more partnership based or collaborative relationships between larger enterprises and outsourcing vendors, and these should be considered where possible.
Management tips – how to increase the chance of success
There are many sources of information now regarding how to improve the chances of an outsourcing contract leading to successful outcomes. These include outsourcing consultancies, practitioner and academic literature, and websites such as The Outsourcing Institute. I will briefly summarise the suggestions.
Consider carefully what you want to achieve and why you are thinking of outsourcing
Do get your own operations in order first, do not outsource a problem or something you don’t understand.
Do invest in a good contract that can minimise risk yet maximise flexibility
Do invest in developing your internal management to ensure they have the skills to manage contracts and supplier relationships.
Set clear benchmarks and realistic expectations
Do not focus on price alone.
Consider the potential advantages and disadvantages of shorter contracts and multiple suppliers.
Plan to manage, set up clear structures and monitor and evaluate performance.
Consider also how you can retain and develop knowledge
Do communicate fully with all staff and ensure the transition is managed with tact and consideration.
More on this in our chapter on outsourcing in the book:
Taplin, Ruth (ed) (2007) Outsourcing and Human Resource Management: An International Survey. Routledge.
Author: Stephanie Morgan
Article Source: EzineArticles.com
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Business startup funding is a concern for most professionals starting their own businesses. Many wonder if they have enough money to begin and when they can quit their other jobs to focus entirely on the new business. The key to launching a business is making sure you’ve studied your business startup funding needs. If you find yourself presented with the opportunity to speed up your launch date, you need to be ready.
Personal Finances
Look at your checkbook and credit card statements and carefully consider personal expenses. This means you will need to uncover the extra money you spend and eliminate it from your budget. Reducing personal expenses is important to getting your business ready to go.
Just because you are taking better care of your business startup funding doesn’t mean you need to get rid of life’s enjoyment. Think about it as a priority for now; you can postpone vacations, fancy dinners and other fun events for just a little while, and this will make a huge difference in your business.
Evaluating Business Expenses
Business startup funding also involves minimum business expenses. Computer consulting is not about capital; you will have business expenses to deal with however, so you will need to add these into your business startup funding plan.
Adding It Up
Add up your personal and business monthly expenses and remember that in order to launch your business, you need to have six months of cash in the bank or else another capital source. If you don’t have this, you shouldn’t quit your day job just yet. However, you can start limiting your job to 15-20 hours a week so you can concentrate on building your business. Teach computer courses at a college or work at an electronics store to bring in reliable cash without straining yourself. This type of plan can help you build a client base.
Finding business startup funding is a challenging aspect of starting a small business, and you want to understand its importance as the root of both business failures and successes.
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Author: Joshua Feinberg
Article Source: EzineArticles.com
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Although making a business plan is a step in the right direction, you will want to make sure that your business plan is everything that you need or want it to be. That is why, when making a business plan, there are a number of important factors that you should take into consideration.
Perhaps, the most important thing to keep in mind, when creating a business plan, is the type of business that you are interested in creating. While a large number of potential business owners create business plans that are considered universal or standard. There are some who make the decision to tailor a plan to fit their business. If you are looking to attract investors or just make the best business plan that you can make, you may want to think about tailoring your business plan to the type of business that you are planning on developing. For instance, if you are planning on developing an internet store, you will find that your business plan headings and content may be a little bit different than if you were interested in developing your own law firm.
It is also important to keep your business plan uses in mind. For example, a large number of business owners create a business plan as a way to obtain financing for their business. Most marketing research financial lenders and investors will not give you money for your business unless they know that it is a sure thing. Since your business has yet to be developed, a business plan is the only way to let them know whether or not it can be a sure thing. If you will be using your business plan to attract financing, you will want to make your business plan is professional as it could be. If you are only using your business plan as a guide for yourself, you are still advised to make it professional, but you can also lax a bit if need be.
In addition to the professionalism of your business plan, what you need to use that plan for may also help to decide how you should make it. For example, most business plans are created on paper. These paper plans are ideal for self organization. In addition to paper plans, business plans are also filed and sent around electronically. If you will be communicating with an investor or a business partner online, an electronic business plan may be the way to go. An electronic business plan is different than a traditional paper plan because the formats are often different. You may also want to create a presentation style business plan. A presentation business plan is ideal if you will be presenting your business to inventors or financial lenders. With a presentation business plan, you will not only need to create a business plan, but outline how you will explain that plan to your audience.
Your skills or experience in creating business plans should also be taken into consideration, especially if your business plan will be viewed by others. Although there is a good chance that you could create your own professional business plan, you may want to rely on assistance from others. That assistance may come from a professional business plan developer or writer. If you do make the decision to develop your own business plan, it may be a good idea to have someone that you trust review your plan for you and make suggestions. You do not have to take those suggestions, but you are encouraged to keep them in mind.
The above mentioned points are just a few of the many that you should keep in mind. In fact, if you have never created a business plan before, it may be a good idea to take the time to research business plans and how they should be developed. You can easily do this online or by searching for printed resources at one of your local book stores or libraries.
This article was authored by Ryan Bessling. This 32 year old, Internet marketer was able to quit his 9-5 “job” because of his The Business Plan Guide. He now wants to help others and show you how he made it in Internet Marketing from creating a great business plan!
Author: Ryan Bessling
Article Source: EzineArticles.com
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5 Characteristics of an Entrepreneur
What is an entrepreneur? According to Wikipedia, an entrepreneur is a person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome. To translate it into simple terms, an entrepreneur owns a business of which the entrepreneur is responsible for the risks and outcomes. To be an entrepreneur, one has to possess defined characteristics of an entrepreneur.
What are the characteristics of an entrepreneur? Are these characteristics vital? It’s a no-brainer actually, of course it’s important! Your chances of business success is significantly lower if you do not possess these characteristics. The characteristics of an entrepreneur consists of:
1. Good leadership
Leadership is a rare characteristic. It is very hard to find individuals with good leadership qualities. This is because not many people dare to take responsibility, or take the lead. Alan Keith of Genetech once said, “Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen.” Precise and right to the point.
To be a good entrepreneur, you must be a leader. You must be able to guide, direct, influence and affect people. This way, all your business problems can be overcomed with ease.
2. Risk taker
All businesses involve risks. There is not a single business in the known world right now that is 100% risk-free. You can’t make money if you are not willing to take risks. If you are not willing to take risks, then you are bound to fail in the business world.
But, a successful entrepreneur does not take all the risks he faces. All risks must be evaluated first, before taking the dive. You wouldn’t want to dive into some unknown waters, would you?
3. Honest and Trustworthy
This is an undeniable characteristic that all entrepreneurs MUST have. Let’s face it, would you give your money to some stranger that guarantees you to make 1000% profit on the street? No you would not. Maybe if that stranger asked for $10 dollars or he convinced you with hard facts, you would, but that’s out of the case. As the saying goes,”Honesty is the best policy.” Every one likes honest and trustworthy people.
Being honest and trustworthy is considered one of your most important characteristics. It would take years to build your credibility and honesty, but it would take just a few seconds to totally destroy your image should you do something dishonest.
4. Your Passion
Your passion fuels your actions. And your actions make money. Any entrepreneur should be passionate about their business to be able to perform well. You must maintain your enthusiasm and interest in your field. For example, when making money online is your passion, you wouldn’t feel working even if you stick yourself to the monitor 24hours a day.
Your passion makes it easy for you to act. Working no longer means working when you work with your passion. It just means doing something you like. If you like to play games and playing games is your 12-hour job, it certainly wouldn’t feel like working 12 hours a day.
5. Intelligence
No, I don’t mean you need to have exceptionally high IQ to success. But what I mean is that an entrepreneur should be clever and witty in all your business dealings. You have to show that you are concentrated and 100% focused on your job to be able to gain your clients’ respect and trust.
The world is a mean one. Scammers are out there somewhere, preying for a weak target everyday. To resist being scammed or being duped, an entrepreneur should be smart and be alert of who you are dealing with. If not, you would eventually suffer some uncalculated losses.
These are one of the few characteristics of a successful business entrepreneur. These characteristics will, no doubt, help you overcome obstacles you may have to face when you are operating a business. And without these characteristics, your business may eventually fail and you will have to bear the losses.
What if you have the main characteristics of an entrepreneur already? Then study the market, find a solution or make a product, get some capital and you’re ready to make a killing in the ever-changing world of business.
Author: Shaun R Lee
Article Source: EzineArticles.com
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What are the best small business opportunities? I could just throw a list of opportunities at you and tell you that I had thoroughly researched the topic and found that these, the ones I’ve listed for you here, are hands down the best small business opportunities out there. Some of you might say “great, I’ll choose one of these”. The more astute reader would be inclined to say “oh yeah, the best how, or according to who”?
No one opportunity is the best for everyone reading this. We all have our own priorities and preferences to consider. Instead of trying to give you a “top ten list” of the best small business opportunities, I would rather give you a list of criteria to consider when choosing an opportunity. That way I’m teaching you how to compare all of the possibilities you might run into instead of just pushing you in a direction that might work well for me and poorly for you.
So here’s my list of “things to consider before choosing a small business opportunity”:
* How Much Money Can I Make Doing This – We all knew this one had to be here, and it really doesn’t require much of an introduction. I will say that many people never get beyond this one criteria when choosing a business for themselves. Many of those people fail because of one of the other criteria on this list.
* How Long Will It Take To Start Making Money – This is sort of a partner to the first one, but one that is often overlooked by those who are too focused on the “how much” and not enough focused on the rest of this list. If you choose the one that pays the best but you go broke while you’re waiting for the torrent of money to begin, that’s not such a great deal.
* How Much Money Will I Need To Spend To Get It Started – This is another one that takes a surprising number of people by surprise. People who haven’t done it before tend to think of owning a business as a purely income centric thing. Almost all business require some startup money, but the amount varies widely from one business to the next.
* What Sort Of Red Tape Is Involved – Another one that catches many a novice entrepreneur by surprise. We live in a very heavily regulated society. Gone are the days when good intentions are the only requirement for permission. The government regulates almost everything, and business is certainly no exception. These regulations are seldom intended to be for the greater public good. Most of it is the result of corrupt politicians making life better for their business partners and the rest is primarily invented as yet another means of taxing the public. Some of the best business opportunities are ruined by excessive regulation.
* Will I Be Swamped With Paperwork – Many small business persons fall victim to this problem. They develop a business that more or less requires several forms of record keeping and billing and bill collection and payroll and taxes of every variety. It is easy for the small business person to get swamped by all of this “busy work” and have very little time to devote to further developing their business.
* Will I Have To Deal With Employees – Talk about red tape and paperwork! It is almost true that a small business person can never hire just one employee, because that one employee will require a whole other person just to deal with all of the overhead that having employees brings with it. Add to that things like employee turn-over and training, personnel problems like drug use and no-shows, employee theft. Many small business owners work themselves to death just to avoid all this.
* Does It Have Unrealistic Time Requirements – If you’re a late sleeper or somebody looking to improve their free time situation by starting a small business of your own, you need to thoroughly research your choices on this one. Maybe you’re thinking “day trading”, but you live on the West Coast. The markets open at 6:30am, and you need to be bright eyed and bushy tailed before they open. Maybe the business you were thinking of requires your presence to deal with customer orders. Will you ever allow yourself the luxury of being away from the business and missing orders?
* Does It Require Me To Be Always In One Place – Whether your idea involves raising animals that need to be fed every day, or the use of machinery that is too large to take with you, you need to consider what kind of a toll it will take on you to be always anchored to one spot and unable to take a few days off and go somewhere.
* Can I Get Out Of The Business Easily – People change and their interests change. What seems like a fascinating area to work in today may seem like pure torture after you do it 60 hours a week for a few years. Is this a business that has some sale potential once established? Many small businesses are so dependent upon the skills of the owner that they are difficult or impossible to sell. After you put so much effort into building a business, it is hard to just walk away from it without some compensation.
* Will The Income It Generates Always Be Tied To How Much Time I Spend Doing It – Few people would immediately think of song writing or writing books as a business. Usually you first think of such things as artistic _expression rather than a business. But, those two activities do earn money, and they have an interesting property that would be very welcome in a small business. Residuals, or getting money for the same bit of work over and over again. Residual income is one of the main things you should aspire to get from a small business. Without that, it tends to be just another job, but with a lot more risk and a lot more stress. You want to build yourself a perpetual money machine, that keeps on spinning after you stop turning the crank.
Well, there you have it, ten criteria you can use to compare any small business opportunity you come across with others you have considered. This list will go a long way towards narrowing down the field when you are choosing a small business opportunity. In fact, some people complain that there is nothing left after they apply this list to the ideas they’ve been working on.
One reason that the Internet has created such a big boom in the small business world is that many of the best small business opportunities (according to an analysis against my list) are among the most common types of Internet businesses.
Take a website business for example: Huge income potential if you do it right, almost no startup costs, no regulation (except for fraudulent activities), no paperwork or employees required, work whenever you want, grab your laptop and go, good sale of business potential, and among the best businesses there are for residual income.
About the only one of the criteria above that this one fails on is the startup time. It will often take several months to a year to get a new website up to speed and generating lots of traffic and income. Some of the other Internet businesses don’t suffer from this downside, but do have other transgressions against my criteria. All in all though, as a class of businesses, you just can’t do any better than an internet business when using the criteria I’ve set forth above.
Author: Scott Patterson
Article Source: EzineArticles.com
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I have heard franchise attorneys say that prospective franchisees need the disclosure documents early on so they can make a business plan to see if the franchised outlet is feasible and I debated with them over this point of contention. Potential franchise buyers have also told me they wanted to put together a business plan for their evaluation process and therefore they need all the disclosure documents. They ask for these documents before they fill out the confidential questionnaire. We of course do not send out a UFOC without a completed questionnaire, which has been verified and we know the applicant meets our general approval and then check credit sources to see if they can actually afford it.
We have had potential buyers fill out the questionnaire and leave information out, because they did not feel comfortable with problems associated with identity theft and still want the documents. So that consumer puts us at a standstill. They want to put a business plan together to estimate the worthiness of the business, but need to know all the costs associated with it before they give us their information. Yet that information is readily available on most franchising web sites already. Of course we need to determine if they can even afford it (if they cannot we cannot spend the time on the sales process) or determine if they are one of the huge percentage of all inquiries that are competitors before we give away information contained in the UFOC. To top it off, we cannot assist them with earnings because we do not give earnings claims because we do not collect the data. This is because under the current rules we cannot substantiate or choose not to go to the expense to audit that data even though we know the answers after being in the industry for 27 years. They can call franchisees once they get the documents if they wish. But we cannot give them the disclosure documents pre-maturely. Now the FTC wants us to offer a UFOC because a potential buyer wants it or has asked for it and we have discussed our opportunity with them. The potential franchise applicant wants to make a business plan of our business model, that we do not wish to offer to them or even sell them at such early stages in the sales process?
A potential buyer wants to put together a business plan to get funding to buy a business for which he/she does not have the cash to buy. In order to get a loan, they will need a business plan. But any business plan they put together will be in contradiction to the absolute franchise business model that the franchisor will reveal after the actual purchase, we cannot reveal it sooner otherwise it will be copied and used against our team. I have heard FTC people say that they believe the potential buyer has a right to the information necessary to put together some close representation of a business plan of the franchise they wish to buy to determine if they should buy the business. Whereas this seems like a good idea on the surface the FTC has put into place rules making it impossible. They believe that this type of added disclosure sooner in the buying process will help. Yes it could, but a franchisor cannot provide the information unless first he can substantiate it and second unless the potential franchise buyer can prove he is a real buyer and can afford the franchise. We believe the answer to this concern lies on the back of the potential buyer to fill out a questionnaire truthfully and correctly and for the franchisor to verify data on that application before disseminating any additional information. At that point our company provides for the potential franchisee to go work with an actual franchise for one day and bring a calculator. We can provide a blank spreadsheet with typical expense categories on it but no numbers. The potential buyer in our franchise can visit a current franchisee and bring his/her calculator. And of course the disclosure documents will be provided once the proof of financial capability has been satisfied somewhere in the application process time frame.
It also appears from observation that no one really seems to understand the franchising model outside the actual industry practioners, attorneys in franchising and those who own franchises. The FTC certainly does not see the whole picture. I would invite Steve Toporoff and/or the entire FTC Franchise Group to go on a paid sabbatical and work in a franchisors sales department sometime and listen to real franchise buyers ask questions, competitors trying to get information and the obnoxious looky lous. The FTC should also send four or five of its highest-ranking franchise sector employees to do the same. I think if that were done you would begin to understand the ridiculous nature of enacting such a revised disclosure rule and you might ask yourself why we have a franchise rule in the first place.
But the FTC is not the only organization that does not understand franchising. I spoke at the SBDCs Annual Conference in San Diego, CA a few years back. In the workshop on franchising I had about 50 directors from around the country from the SBDC bombard me with questions after giving my talk. I was dumbfounded by the lack of understanding and knowledge on franchising. Almost to the point of frustration and wanting to walk out, I was shocked these were the directors of some of the largest SBDC offices in the country. I carefully worded my answers to make sure they had understood the issues presented to them. Finally we made some headway and many stayed afterwards to continue the conversation because they knew franchising was a major issue with their clients who come in for counseling usually prior to getting an SBA loan or putting together a business plan for a franchised business. I got to thinking about the 550 or so Directors and Executive Management of the SBDC Annual Conference that were in attendance and wondered why werent all the participants in our workshop? Instead many had gone to time slot competing workshops as that is generally how such conferences are set up. But what could be more important than franchising which accounts for 1/3 of every consumer dollar in the country and a huge chuck of the small businesses in the US. What other business model can claim 350,000 outlets would the SBDC; Small Business Development Centers Deal with? After all franchising is the largest sector in small business, not to mention accounts for the most efficient small business models. Executives of the SBDC should have training in franchising as compulsory.
FTC should be helping all potential consumers of a franchise to understand what franchising is, but look at the information put out by the FTC, all they do is call to attention all the possible frauds and tell consumers to watch out, just look at their web site. You would think every franchisor is a crook. We all know crooks do not last long in franchising, it just costs too much to even get started, crooks are looking for easy kills with little work. You will find nothing of the sort in the franchising industry. I think the FTCs tact is a travesty, because some people will lose all their money if they start a small business, franchisors require structure and help people realize their American Dream. You would think that the FTC would applaud such efforts. Instead the FTC purports that the franchisors are fraudulent at every corner, bull! Fact is that the FTC is grandstanding and purporting their own importance to the consumer, offering hundreds of questions that potential buyers should ask of franchisors before purchasing and then making rules prohibiting the answers of the exact questions they recommend to ask through their own rules associated with disclosure. I cannot vouch for the current people of the franchise group but in the Clinton years it was certainly like this. I see a couple of familiar names still associated with the franchise division there, have things really changed? If so shouldnt we be able to tell from the FTC website. In case anyone has not yet got the picture, Franchising Mean Jobs. Jobs are good. Franchising is therefore good and we ought to make a note of it. With giant happy face right smack on the FTC site. Franchising Industry receives award !!! If you need a spokesman, no one believes that more than this kid right here.
The SBDC has hundreds of sample business plans on file to help potential small business owners develop business plans. But none are sample business plans for a franchise. I have in my personal business library, which travels with me ten books on how to write a business plan. None of them have a sample business plan for a franchise business. It is not taught in schools including the curriculum at the Entrepreneurial Studies at USC. I know because I talked with some professors there and then bought all the text books for the classes. Only one or two schools teach the compilation of a franchisee business plan in their entrepreneurial studies courses and then they simply mention it. This is in the whole country, why? Because it is not getting the juice for the most excellent business format and model it is. The FTC should led the field in this regard to alert the public to that fact. Our company has just devised a fill in the blank business plan, which we may use to help qualified franchisee buyers. The franchise buyer can call up existing franchisees and decide what numbers should be put into the plan. These are what the franchise buyer really needs, but of course not until they are qualified.
The early disclosure debate for reasons of making a business plan of a possible franchised business does not hold water. Even once the potential buyer of a franchise has the UFOC there are no sample franchised business plans available in most franchise companies. In any franchise the potential buyer must fill out a form and prove financially capable before such information can be given out. In some registration states this would be considered advertising and be subject for review and once reviewed this would go into public record and therefore it cannot be used at all since it would be pre-signing of agreement. The franchisee does not need a disclosure documents prior to the qualifying, nor should a franchisor be required to give it out. If a franchise buyer makes a business plan or spread sheet for a possible future franchise it will surely be incorrect because the franchise buyer does not know the ins and outs of the franchised business yet. Therefore the franchise buyer maybe leading himself into a falsehood of how he believes the franchised business works and what his new franchised business and new lifestyle might entail. In other words he will be fraudulently inducing himself to buy something on bad information, if the franchise buyer were to show this to a franchisor, the franchisor is not allowed to comment for fear it might be construed as an earnings claim as you probably guessed.
We have had many recent potential buyers ask us for the UFOC so they could write a business plan before accurately filling out the application, or before we had a chance to verify what they filled out as being true and correct. This is not a good argument from the potential buyer, FTC or franchisee attorney. First you must qualify and be verified before we give out data for any purpose including writing a business plan for a franchised business. After all you could be a student doing a project and the business plan you write could appear in the next years text book for the publish or perish professor. It could end up on the Internet, which is what happened to one of ours that was written by a prospective franchisee in Little Rock, AR after a counselor of the SBDC felt was her duty thus disclosing proprietary information of our system to all. Thank god it was written by a prospective franchisee and was actually not correct entirely otherwise that would be copyright infringement, which we as franchisors claim on all proprietary information. It does a disservice to the hard work of many franchisees and the franchisor himself to give out such data or make it available to the public in anyway. It also invites competition to the franchisees thus inadvertently gives a competitive advantage to those consumer who have already purchased franchises trying to get a fair and reasonable ROI to feed families, buy soccer shoes and send kids to college. This is another reason why UFOCs and other information should not be allowed to pre-qualified individuals, the information they create as a business plan ends up all over the place. What if the potential buyer builds a business plan based on UFOC data and then starts their own business, deciding not to buy the franchise? The FTC would say that is their right and so it is, however my franchisees would be totally upset that I allowed data to help a future competitor of theirs into their market. I have a responsibility to that consumer too. He is a real consumer, he is a current franchisee and it is franchisors job to see that they are able to achieve up to their ability to follow the system.
Since a business plan is not necessary until you are sure you want a franchise and are qualified and accepted by the franchisor as a qualified franchise buyer, the business plan debate and justification for an early disclosure is invalid. There is sufficient competition in franchising and a potential franchise buyer, who on average I am told by FranchiseOpportunities.com, looks into 15 or more franchises before deciding which one is most suited to their lifestyle, needs for cash flow and amount of financial where with all available. So therefore we can see that until they narrow their selection, there is no need for them to have fifteen UFOCs to make fifteen business plans, which no one would ever do who was not a doctorial student of business, that is not even required for the IFA, Franchise Executive certification program. And alas the doctorial student would not be a real buyer anyway so no franchisor should be obligated to give them such information based on this business plan debate. Now if the potential franchise buyer had accurate and comparable information then of course this business plan point could be valid. Not actually a business plan as much as a T on apiece of legal paper of the pluses and minuses of each franchise being considered. A person not familiar with UFOCs like most all real franchise buyers would have a problem going through all the information trying to find the comparable data. And by then his coffee table next to the couch would buckle from the weight of 15 UFOCs when the house cat sat on it, just ask Robin Glen Day, franchise attorney and cat lover out of California. Check out her cat on her website, how cool is that, not bad for an attorney, google her name you can find the site?
The SBA is another organization that does not understand franchising. You may recall a few years ago the SBA contracted with FranNet to put all UFOCs on the Internet for streamlining SBA loans of their preferred lenders. First thing FranNet did was send a sales letter to all franchisors telling them they could now get other franchisors and competitors UFOCs for a fee. In addition they went through all the UFOCs submitted and did studies you could buy too. This illustrates my point regarding the competitive intelligence and proprietary information being given away due to the lack of understanding of the competition in franchising and different market sectors were the franchisors operate and compete. Obviously FranNet with their coup from the SBA contract would never offer such a service if it were not a desire of the competitive market place to get the information. Yes, I ordered my competitions documents and yes it helps me beat them in the market place. Yes it is unfair, but they are also doing it to me. No, we did not after that point bother dealing with the SBA or FranNet. And yes we turn away most applicants who answer our question of where will you get the money to buy this franchise? on our questionnaire; from a small business or SBA loan. As soon as the franchise buyer submits the documents as part of the loan package there is a possibility of it becoming public record. The UFOCs contain so much information, such a P and L, Balance Sheet, experience, number of projected units, location of existing units, etc, etc that it is in essence the same or better than going through a competitors office files or trash. This over disclosure promotes Machiavellian tendencies from competition and condemns the noblest of franchisors to spend to guard against it. We did a had a preferred SBA lender forward information about our franchise to a friend of his from the Rotary Club who was a strong competitor and owned a carwash in that region. The competitor then contacted us for more information about what we were doing.
Apparently the FTC, SBA, and SBDC do not understand the competitive nature of business in America and freely help competitors under the guise of helping consumers. Whether or not they realize it, I believe they must, as only an idiot would be so blind to the fact. Many times the competitor turns out to be the actual agency or organization. Franchisors must be careful to not give away proprietary information otherwise it is of detriment to their system and could hurt the very franchisees they have enlisted under their wings. These current franchisees and I cannot emphasize this enough are also consumers. They are real consumers, unlike those inquiries, which are un-financially qualified and/or competitors. Think about it.
Author: Lance Winslow
Article Source: EzineArticles.com
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The most important education ANY entrepreneur, be it a starting or seasoned entrepreneur, can receive is how to MARKET and more specifically, how to market ONLINE. If you are an entrepreneur in the home-based MLM industry, then this information will either MAKE or BREAK your business and entrepreneur careers.
Once you join a home-business opportunity, a lot of the information that is handed to you by your uplines is not always the best to follow. In general, the ENTIRE network marketing industry is still training its distributors with methods that can be traced back to the 1050s. That’s the 1950s! When people used to still say “Gee” and “Golly”, when salesmen used to go door to door or visit their friends and family or cold call people in surrounding neighborhoods…. wait. That’s what 98% of all network marketers STILL DO.
It’s no wonder that only 2% of all entrepreneurs and entrepreneur careers in the network marketing industry have achieved their dreams of financial freedom. Only 2% make over six-figures, and the rest of the industry is left to toil away and struggle just to keep their heads above water. WHY? Because the rest of these 98% have not taken it upon themselves to find actual SOLUTIONS that will solve the problems they are facing.
So listen: this is the most important information for your entrepreneur careers that will help you build your business … learn the principles it takes to create a strategy online that will generate you a consistent list of quality leads DAILY and on complete AUTOPILOT! Sound too good to be true? It’s not.
Information for you as an entrepreneur is limited to two categories. Either you will get entrepreneur information about how to tweak your skills in cold calling, posturing in front of friends and family, or approaching strangers, or you will get entrepreneur information about how to market your business opportunity to the MILLIONS of people on the internet EVERY HOUR OF THE DAY. When you go to sleep, the marketing you have done is still there, marketing for you. When you work on something other than marketing for your business, the marketing you have done is still there, marketing for you. Is this NOT the most important skill and information that ANY entrepreneur NEEDS to learn in order to further his/her home-based business and entrepreneur careers?
Your JOB as an entrepreneur is to be at the most cutting-edge and really find the solutions to make your business a success. Do not rely on the traditional ways of building your home-business … the world has evolved. Technology has changed. Take advantage of that.
Author: Chris Chi
Article Source: EzineArticles.com
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2008 will be here before you know it, are you ready with what the market will throw at you in a couple of months. With 2008 just around the corner, now is a good time to start the discussion of what needs to be the focus areas in 2008 for the small business IT professional and small business specialist.
In 2007 we experienced a tremendous amount of innovation in the small business technology world. Innovation included releases of a new desktop operating system, new productivity suites of applications and enhanced methods to share information and communicate with each other. 2008 will be no different! The excitement around new versions of the Windows Server operating system that will scale from the smallest of business requirements right through to the largest of enterprises offerings. Plus we will see new innovation with how business manage, share and secure corporate data and how applications are written that deliver solutions to today’s global economy.
However, I personally do not feel that our focus be totally on the ones and zeros around all of this new technology. Small business owners, managers and users today do not care about what the technology specifications are, they have business needs that must be addressed and they need to be running all the time. Downtime, breakdowns and complicated solutions are not an option in today’s one world market.
Where will today’s IT professional or small business specialist be focusing their efforts for the upcoming year in order to grow their business sustainably in 2008? Here are some ideas to kick start the planning processes for 2008:
Focus on people – Small Business does business with those who they trust and can establish a relationship with. It is not about the speeds and feeds any longer, small business owners don’t care about how fast something runs or how much memory is in a laptop. Meeting business needs is no longer expectable by throwing technology at a problem, it is now about exceed expectations and having their technology investments work. The systems or software most of the time is transparent to the end user.
The importance of data – Having their data accessible and secured is very important to small business. Data has to be managed and controlled and combined with ease of access. Complicated file shares and network systems are no longer acceptable to the end users. Data must be accessible to enhance collaboration and sharing throughout any organization. Small Business IT firms that understand and promote the importance of data, who can offer their clients services like the SharePoint Starter Site and Exchange mail services through their mail clients, mobile telephones and web access will win in the end.
Securing Small Business – As the world shrinks in size when it comes to business, emerging threats continue to show their ugly face and threaten commerce. Securing small business will continue a challenge for the small business specialist. It must be a main focus for many of us in the IT community. Luckily, we haven’t seen a major virus outbreak for a while; however, the threats are still out there. Educating small business against the threats from social engineering, corporate espionage and also the “threat from within” must be a major focal point in 2008. As social networking gains momentum, small business needs to understand the importance of ensuring information flow is secure without jeopardizing productivity. Small Business IT Professionals that offer their clients a managed firewall service that controls SPAM, virus, spyware and other threats will have a competitive advantage of those who offer transactional firewalling solutions.
Business Process – How small business does business will be an important trend for the small business IT professional to understand in 2008. If a small business consulting firm can master how small business does business and how information flows within their clients will end up ahead in 2008. Business Intelligence services that once purely an enterprise play will start to move into the small business space. Those who master this will come out of 2008 with a definite advantage.
IT as a Service – Managed Services is all the buzz in the SMB community it has been for a number of years, however, in 2008 the focus on “as a service” will grow, firms that can offer software or hardware as a service will have a competitive advantage over those who do not, and those that can bundle their complete IT solutions as a service will win in the end. It will no longer matter how it is structured from a billing perspective, (annual, monthly, weekly or hourly) the service component is the important key and this is what small business is after.
The Complete Solution – SMB consultants that can deliver the complete solution will win in 2008. This is nothing new, small business wants a solutions partner that can offer the complete end to end offering. From systems, software, solutions and service, today’s small business client needs to be “under” one umbrella. Partnering will continue to be an advantage in the marketplace. Partnering to extend geographic service, specialty services and complete services must be on the top of your list to achieve in the early part of 2008. Those firms that can extend their service offering to other partners will have a strong advantage over those who just stick to their own small silo.
Marketing - The small business consulting firm that can market all of this effectively will hold the trump card over those that do not see the importance of marketing. There has been a lack of focus on the importance of marketing with small business partners over the past few years, while those that continued to actively market have grown faster and have separated themselves from the masses. Small Business partners must have a resource dedicated to marketing in 2008. This can be outsourced or hired in-house. One word of advice to the owners of small business firms, you are responsible for the strategic marketing direction, never outsource that component. If you are not comfortable with marketing, seek the advice of someone who can help you. There are a number of great marketing coaches and consultants that can assist you.
Strength in Peers – Teaming up with peers will continue its strong momentum in 2008. Once again, no IT firm can know everything nor do everything. This is where having a strong peer group relationship is vital to the success of your business. Information and idea sharing, technical specialties, and relationships are keys to success in the IT business. TechSelect and Heartland Technology Groups offer peer group services to firms that specialize in small business and are open to sharing information, best practices and resources with each other. Our involvement in the Heartland Peer Groups has been a key to the success of my business and offers us a competitive advantage over firms that have not engaged in this business practice.
“I think the marketing continues to present great opportunities for partners who execute, deliver great service, and provide true solutions to clients…and that’s where we’re focusing for 2008,” states Erik Thorsell, President of Minneapolis’ Success Computer Consulting. “Managed services support for network infrastructure is important, but that doesn’t get our business owner-clients excited…solutions do! If we can provide technology that solves business problems, makes work better, faster or cheaper, then we all win!”
2008 will be an exciting year in the small business space across the globe, boundaries will continue to disappear in our global economy, peer relations will strengthen, and collaboration will continue to become more and more important to small business, however, it needs to happen in a secure fashion so that small business can maintain a competitive advantage in the marketplace that they service.
Author: Stuart Crawford
Article Source: EzineArticles.com
Provided by: Digital Camera News
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