Free Business Startup Advise

How to Business Plan Pt 1 of 10 - The Audience

2009-06-15T08:55:00.000-07:00

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Introduction

It is essential to have a realistic, working business plan when you're starting up a
business.

A business plan is a written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts. It has many functions, from securing external funding to measuring success within your business.

This guide will show you how to prepare a high-quality plan using a number of easy-to-follow steps.

The audience for your business plan

Many people think of a business plan as a document used to secure external
funding. This is important because potential investors, including banks, may
invest in your idea, work with you or lend you money as a result of the strength of
your plan.

There are many other benefits to creating and managing a realistic business plan
- even if you just use it in-house. It can:
• help you spot potential pitfalls before they happen
• structure the financial side of your business efficiently
• focus your development efforts
• work as a measure of your success

The following people or institutions may request to see your business plan at
some stage:
• banks
• external investors - whether this is a friend, a venture capitalist firm or a
business angel
• grant providers
• anyone interested in buying your business
• potential partners

You should also bear in mind that a business plan is a living document that will
need updating and changing as your business grows. Regardless of whether you
intend to use your plan internally, or as a document for external people, it should
still take an objective and honest look at your business. Failing to do this could
mean that you and others have unrealistic expectations of what can be achieved
and when.

What the plan should include

Your business plan is a statement of intent. It should provide details of how you
are going to develop your business, when you are going to do it, who's going to
play a part and how you will manage the money.
Clarity on these issues is particularly important if you're looking for finance or
investment. The process of building your plan will also focus your mind on how
your new business will need to operate to give it the best chance of success.

Your plan should include:
• An executive summary - this is an overview of the business you want to
start. It's vital. Many lenders and investors make judgments about your
business based on this section of the plan alone.
A short description of the business opportunity - who you are, what
you plan to sell or offer, why and to whom.

Your marketing and sales strategy - why you think people will buy what
you want to sell and how you plan to sell to them.
Your management team and personnel - your credentials and the
people you plan to recruit to work with you.
Your operations - your premises, production facilities, your management
information systems and IT.

• Financial forecasts - this section translates everything you have said in
the previous sections into numbers.

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How to Business Plan Pt 2 of 10 - The Executive Summary

2009-06-15T08:54:00.000-07:00

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The executive summary

The executive summary is often the most important part of your business plan.
Positioned at the front of the document, it is the first part to be read. However, as
a summary it makes sense to write it last.

It may be the only part that will be read. Faced with a large pile of funding
requests, venture capitalists and banks have been known to separate business
plans into "worth considering" and "discard" piles based on this section alone.

What is it?

The executive summary is a synopsis of the key points of your entire plan. It
should include highlights from each section of the rest of the document - from the
key features of the business opportunity through to the elements of the financial
forecasts.

Its purpose is to explain the basics of your business in a way that both informs
and interests the reader. If, after reading the executive summary, an investor or
manager understands what the business is about and is keen to know more, it
has done its job.

It should be concise - no longer than two pages at most - and interesting. It's
advisable to write this section of your plan after you've completed the rest.

What is it not?

• A brief description of the business and its products. It's a synopsis of the
entire plan.

• An extended table of contents. This makes for very dull reading. You
should ensure it shows the highlights of the plan, rather than restating the
details the plan contains.

• Hype. While the executive summary should excite the reader enough to
read the entire plan, an experienced investor or businessperson will
recognise hype and this will undermine the plan's credibility.

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How to Business Plan Pt 3 of 10 - Your business, its products and services

2009-06-15T08:53:00.001-07:00

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Your business, its products and services

If you want other people to invest in your business or if you're writing your plan to
focus your existing business activities, you must be able to clearly convey what
your business does.
This part of the plan sets out your vision for your new business and includes
who you are, what you do, what you have to offer and the market you want to
address.

Start with an overview of your business:

• when you started or intend to start trading and the progress you have
made to date

• the type of business and the sector it is in
• any relevant history - for example, if you acquired the business, who
owned it originally and what they achieved with it
• the current legal structure
• your vision for the future

Then describe your products or services as simply as possible, defining:
• what makes it different
• what benefits it offers
• why customers would buy it
• how you plan to develop your products or services
• whether you hold any patents, trademarks or design rights
• the key features of your industry or sector

Remember that the person reading the plan may not understand your business
and its products, services or processes as well as you do, so try to avoid jargon.
It's a good idea to get someone who isn't involved in the business - a friend or
family member perhaps - to read this section of your plan and make sure they
can understand it.

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How to Business Plan Pt 4 of 10 - Your markets and competitors

2009-06-15T08:52:00.000-07:00

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Your markets and competitors

In this section you should define your market, your position in it and outline who
your competitors are. In order to do this you should refer to any market research
you have carried out. You need to demonstrate that you're fully aware of the
marketplace you're planning to operate in and that you understand any important
trends and drivers.

You should also be able to show that your business will be able to attract
customers in a growing market despite the competition.

Key areas to cover include:
• your market - its size, historical data about its development and key
current issues
• your target customer base - who they are and how you know they will be
interested in your products or services
• your competitors - who they are, how they work and the share of the
market they hold
• the future - anticipated changes in the market and how you expect your
business and your competitors to react to them.

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How to Business Plan Pt 5 of 10 - Marketing and Sales

2009-06-15T08:51:00.002-07:00

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Marketing and sales

This section should describe the specific activities you intend to use to promote
and sell your products and services. It's often the weak link in business plans so
it's worth spending time on it to make sure it's both realistic and achievable.
A strong sales and marketing section means you have a clear idea of how you
will get your products and services to market.
Your plan will need to provide answers to these questions:
• How do you plan to position your product or service in the market place?
• Who are your customers? Include details of customers who have shown
an interest in your product or service and explain how you plan to go
about attracting new customers.
• What is your pricing policy? How much will you charge for different
customer segments, quantities, etc?
• How will you promote your product or service? Identify your sales
methods, eg direct marketing, advertising, PR, email, e-sales.
• How will you reach your customers? What channels will you use? Which
partners will be needed in your distribution channels?
• How will you do your selling? Do you have a sales plan? For example,
will you sell by phone, via a website, face-to-face or through retail outlets?

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How to Business Plan Pt 6 of 10 - Your Team's Skills

2009-06-15T08:51:00.001-07:00

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Your team's skills

Your business plan needs to set out the structure and key skills of both
your management team and your staff. It should identify the strengths in
your team and your plans to deal with any obvious weaknesses.

The management team

If you're looking for external funding, your management team can be a
decisive factor. Explain who is involved, their role and how it fits into the
organisation. Include a paragraph on each individual, outlining their
background, relevant experience and qualifications. Include any advisors
you might have such as accountants or lawyers.

If you're looking to satisfy your bank manager or other investors, you need
to demonstrate that your management team has the right balance of skills,
drive and experience to enable your business to succeed. Key skills
include sales, marketing and financial management as well as production,
operational and market experience.

Your investors will also want to be convinced that you and your team are
fully committed. Therefore it's a good idea to set out how much time and
money each person will contribute to the business and the salaries and
benefits you plan to draw.

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How to Business Plan Pt 7 of 10 - Your People

2009-06-15T08:50:00.001-07:00

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Your people

Give details of your workforce in terms of total numbers and by
department. Spell out what work you plan to do internally and if you plan
to outsource any work. Other useful figures might be sales or profit per
employee, average salaries, employee retention rates and productivity.

Your plan should also outline any recruitment or training plans, including
timescales and costs.

It's vital to be realistic about the commitment and motivation of your
people and spell out any plans to improve or maintain staff morale.

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How to Business Plan Pt 8 of 10 - Your Operations

2009-06-15T08:48:00.000-07:00

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Your operations

Your business plan also needs to outline your operational capabilities and
any planned improvements. There are certain areas you should focus on.

Location

Do you have any business property?
What are your long-term commitments to the property?
Do you own or rent it?
What are the advantages and disadvantages of your current location?

Production facilities

Do you need your own production facilities or would it be cheaper
to outsource any manufacturing processes?
If you do have your own facilities, how modern are they?
What is the capacity compared with existing and forecasted demand?
Will any investment be needed?

Management-information systems

Have you got established procedures for stock control,
management accounts and quality control?
Can they cope with any proposed expansion?

Information technology (IT)

IT is a key factor in most businesses, so include your strengths and weaknesses in this area.
Outline the reliability and the planned development of your systems.

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How to Business Plan Pt 9 of 10 - Financial forecasts & Financial planning

2009-06-15T08:35:00.000-07:00

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Financial forecasts

As part of your plan you will need to provide a set of financial projections
which translate what you've said about your business into numbers.

You will need to look carefully at:

How much capital you need if you are seeking external funding the security you can offer lenders
How you plan to repay any borrowings
Sources of revenue and income

You may also want to include your personal finances as part of the plan at this stage.

Financial planning

Your forecasts should run for the next three (or even five) years and their
level of sophistication should reflect the sophistication of your business.
However, the first 12 months' forecasts should have the most detail
associated with them.

Include the assumptions behind your projection with your figures, both in
terms of costs and revenues so investors can clearly see the thinking
behind the numbers.

What your forecasts should include

Cash flow statements - your cash balance and monthly cashflow
patterns for at least the first 12 to 18 months. The aim is to show that your
business will have enough working capital to survive so make sure you
have considered the key factors such as the timing of sales and salaries.
Profit and loss forecast - a statement of the trading position of the
business: the level of profit you expect to make, given your projected sales
and the costs of providing goods and services and your overheads.
Sales forecast - the amount of money you expect to raise from sales.

Looking for a free business plan example?
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How to Business Plan Pt 10 of 10 - Tips for presenting your plan

2009-06-15T08:29:00.000-07:00

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Presenting your business plan

To make sure your business plan has maximum impact, there are a
number of points to observe.
Keep the plan short - it's more likely to be read if it's a manageable
length. Think about the presentation and keep it professional - even if
you only intend to use the plan in-house. Remember, a well presented
plan will reinforce the positive impression you want to create of your
business.

Tips for presenting your plan

Include a cover or binding and a contents page with page and section numbering.

Start with the executive summary.

Ensure it's legible - make sure the type is ten point or above.
You may want to email it, so ensure you use email-friendly formatting.
Even if it's for internal use only, write the plan as if it's intended for an external audience.
Edit the plan carefully - get at least two people to read it and check that it makes sense.
Show the plan to expert advisers - such as your accountant - and ask for feedback. Redraft sections they say are difficult to understand.
Avoid jargon and put detailed information - such as market research data or balance sheets - in an appendix at the back.
Make sure your plan is realistic. Once you've prepared your plan, use it. If you update it regularly, it will help you keep track of your business' development.

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visit Bplans and get 500+ Sample Business Plans.

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2009-06-15T08:00:00.000-07:00

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Free Business Start Up Checklist

2009-04-17T05:09:00.000-07:00

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The Essential Check List To Help You With Your Business Start UP

The following tasks are the essential check list items for individuals that wish to start a successful business.

Set up & register your legal structure
Decide on what type of legal structure suits you best. There are a number to choose from; sole trader, limited company, PLC, etc. Choose a name and register it with Company’s house.

Do the groundwork
Develop your business ideas
Write a business plan
Determine your ability to stay afloat during the early days
Check whether you are ready to start
Choose advisers

Choose your business name
Choose and protect your business name

Raise finance & manage your money
Choose and run a business bank account
Examine your finance options
Work out how much money you'll need when starting
Plan your cash flow
Assess your pension needs

Sort out your tax & record keeping
Understand your obligations regarding National Insurance
Consider other business taxes
Consider allowable business expenses
Check whether you are eligible for tax allowances

Sort out your VAT
Check whether you need to register for VAT

Set up your premises
Choose your business premises
Establish a safe workplace

Set up your operations
Finance your initial equipment, plant and machinery
Set up your suppliers
Set up stock control and inventory procedures
Set up transport for your business

Protect your business
Protect your ideas
Insure your business

Promote & sell your product or service
Choose your target customers
Set the price for your product or service
Plan your marketing strategy
Close and get paid for your first sale
Set up and promote your business online
Stay within the law when selling your product or service

Set up your IT & e-commerce
Set up your IT system
Set yourself up for e -commerce
Check whether you need to notify the Information Commissioner

Understand the special needs of your business sector
Investigate and apply for the licences and permits that your business may need
Review the regulations that may apply to your business

I can help you with this if you like.

My details are below:

Ken Ajoku
Business & Marketing Advisor

Website: TheKajokuGroup.blogspot.com
Mobile: 07956 515 868

Successful Research Strategies for Your Business

2009-04-17T01:53:00.000-07:00

Successful Research Strategies for Your Business

Introduction
All successful businesses need to have a close understanding of potential and existing customers and the marketplace they work in.
This understanding allows you to target customers, sell effectively, compete with
other suppliers and spot new opportunities. Performing market research on potential customers and your competitors will help you to gain this vital knowledge.

You can build a picture of general trends using published market information - from free government statistics and data to paid-for market reports from commercial providers. Your own contacts and sales records can also be a great resource.

You can add to your knowledge by using field research - from surveys and discussions to product tests - to investigate customers' attitudes and examine questions specific to your business.
This guide explains what you need to know about market and customer research, how you can use published information to build your knowledge and how using field research can fill in the gaps.

Customer research: what you need to know
Undertaking customer research on loyalty, satisfaction and service can make a big difference to your business. You'll need to focus your efforts on finding out as much as you can about existing and potential customers. If you can work out how they make their buying decisions, you can adapt your sales methods and techniques to fit your customers' needs.

For business customers, you'll want to know how big their businesses are, what sectors they're in, and who makes the decision to buy your product or service. If you're targeting individual consumers, it may be useful to know such things as their gender, age, occupation, income, lifestyle, attitudes or social class.

For your existing customers, try to find out:
• what they think about your products or services
• why they need your product or service - this may be different from what
you believe
• why they buy from you and not your competitors
• what they think of your prices
• what they expect from you, e.g. reliable delivery
• how they rate your customer service
• how they think you could develop or refine your products or services
For your potential customers, try to find out:
• who your potential customers are and what groups they fall into
• how many potential customers there are
• how much of your kind of product or service they already buy from your competitors
• the criteria on which they make buying decisions
• what it would take to get them to buy from you
• what developments they expect in your product or service
• when and where they prefer to buy
Information on market trends and competitor intelligence

Getting a good understanding of market trends is essential if your business is to make the most of its opportunities and remain competitive. You will need to understand your competitors and keep an eye on what they are doing.

To build competitor intelligence try to get information on:
• Demand for your product or service - is it growing or shrinking?
• General economic and market trends.
• How customer requirements and buying behaviour could change in the future.
• What new products are in your competitor's pipeline - could they make yours look outdated?
• How competitors are changing - what are their plans?
• What competitors offer and the prices they charge.
• How your competitors advertise and promote themselves.
• Any forthcoming legislation which could affect your market.

Using market reports and other data

Once you've identified the information you need, you can start to draw it together.
Initially it's worth looking at information that's already been published, e.g. market reports, official statistics, trade publications, etc.

Some of this information is free, but some you'll have to pay for. You can obtain market reports and other information from a wide range of sources:

• Your local business reference library is a good starting point.
• Your trade association will have information about your market sector and
about any relevant trade publications. Find your local trade association on
the Trade Association Forum website.
• You can read official statistics on the economy, population and social trends at the National Statistics Online website.
• Reports in business magazines and the business pages of national newspapers can be informative.
• Local authorities and Chambers of Commerce can provide local information. Find your local authority through the business link Directory, or find your local Chamber at the Chamber Online website.
• UK Trade & Investment is a useful resource for exporters, with sectoral information for more than 200 countries worldwide. You can read sector overviews on the UK Trade & Investment website.
• The Internet contains a wealth of business data. Search engines such as Google and Ask can aid searching, while directories such as Yahoo make it easy to look for information by sector.
• Commercial publishers of market reports include KeyNote, Euromonitor, Mintel, Datamonitor, The Economist Intelligence Unit (EIU) and Market & Business Development. Reports can often be purchased from the publisher's website.
• Don't neglect your business' own data. Analysing your sales records or levels of enquiries can provide useful insights. Finally, talking to customers and watching how they behave is one of the best methods of market research.

Interpreting market information
Though there's a lot of readily available market information, you need to be
careful how you interpret it.
External data might not be in a useful format to use easily. It may have been
collected for other purposes or be from a range that doesn't tally with your target
market.

Beware of out-of-date market information. This can be misleading, as the market
may have changed significantly since the information was published. It can be
particularly hard to tell how recent any information published on the Internet is.
Some information on the web can be unreliable or biased.
Remember that statistics can sometimes mask the true picture. For example, an
"average" income for the population in your area might conceal a mix of very high
and low earners - meaning fewer people can afford your product than it appears.
The same principle applies to your own sales records - one or two major
customers could distort the picture.

Most of all, don't make up your mind in advance. Finding market information that
simply confirms what you already believe is easy - but only a realistic picture of
your customers and markets will be useful to your business.
The basics of quantitative and qualitative field research
Published market information and your own data can tell you a lot about your
customers and your market - but it's unlikely to tell you everything.
Field research can be quantitative or qualitative:
• quantitative research provides statistical information - for example, how
many potential customers there are and what their average incomes are
• qualitative research examines people's feelings and attitudes towards your
product or service, and what motivates them

You'll probably need to carry out some of your own quantitative and qualitative
field research - talking, observing or carrying out product tests with customers
and potential customers. This can help you to:

• test customers' reactions to a new product, and adapt it if necessary
• investigate attitudes of customers and potential customers
• find information specific to your business or a local market, rather than the
market as a whole

Planning field research
Good planning is essential if you're to get the right results from field research.
First you need to decide how to collect the information you want. Popular
methods include:
• A survey, using a fixed set of questions - the most effective way of
carrying out a survey is typically with face-to-face interviews, but phone
interviews and postal surveys are also possibilities.
• A discussion - discussions are good for qualitative research as they allow
you to explore people's attitudes in more detail. Discussions are often held
in small focus groups.
• Observation - investigate what people do rather than what they say. For
example, look at how shoppers react when they pass a particular point-ofsale
display.
• An experiment - you might, for instance, run a blind taste test of your soft
drink against your competitors' products. Alternatively, you could lend your
new product to a customer and ask for feedback.
Once you've decided how you'll gather the information, you'll need to work out
how to make it happen. Budget how much time and money will be needed - the
time involved will normally be significant.

You'll need to design your research. For example, drawing up a questionnaire or
deciding how you'll run a focus group.
Then there are the logistics. If you want to carry out street interviews, make sure
your researchers have the required local authority licence and identity card. If
you want to run a focus group or conduct face-to-face interviews or product tests,
where will you hold them? Where will you find the participants? And who'll run the
session?

Consider carefully whether you've got the skills in-house to do this. If not, it's
probably a good idea to get a market research agency to do your research for
you.

Tips for successful field research

Ask the right questions
Badly phrased questions produce misleading results. Avoid closed questions
which encourage the answer "yes" or "no". A stationery shop that asks customers
if they intend to buy pens in the next year will find out just that - but they won't
discover what type of pens, eg specially engraved pens or cheap biros.

Talk to the right people
A survey at a railway station, for example, will get answers from commuters, but
if you're targeting people who stay at home with young children, this won't be
representative of your market.

Talk to enough people
A survey, for example, of two people won't get you enough information. Some
market research professionals suggest asking at least 150 people in order to get
a complete picture.

Keep research impartial
It's easy to encourage people to give the answer you want. For example, by
asking leading questions or smiling at the "right" answer. Discussions, where
you're not working from a list of set questions, are particularly easy to distort. And
in a focus group, individuals with strong opinions may influence the views of
others.

Interpret results with care
You need to make sure you draw the right conclusions from your research. Bear
in mind that people may distort answers in the hope of affecting what you do. For
example, they might say they would be interested in a product "if the price was
lower". Qualitative research - where you're investigating feelings and attitudes -
can be particularly difficult to interpret.

Be realistic
It can be tempting to pick out results that confirm what you want to hear, and
ignore the rest. But ignoring negative results could damage your business. Be
prepared to modify your plans if necessary.

market research agency.
Should I use a market research agency?
Though you may be able to do your own field research, it may be better to use
the services of a market research agency.
• It may be more cost-effective to outsource the job to professionals
Market research professionals are likely to get better results. They have
experience in designing survey questionnaires, running focus groups and
asking the right questions.
• Customers may find it easier to be honest with an outsider, particularly if
they have a complaint.
• Customers may worry you're trying to sell them something if you conduct
the research yourself.
• You may find it difficult to be impartial, particularly if people criticise your
business.

For small-scale field research, your best option may be a freelance researcher.
A Market research agency won't usually take on projects with a budget below
£3,000.

As well as recommendations from business contacts, you can search for a
market research agency on the Research Buyers Guide website.
Before taking on a market research agency or a freelance researcher, investigate
their reputation. Ask for a list of previous clients and contact them for feedback.
Check the agency has relevant experience and consider how comfortable you'd
feel working with them. And get a clear idea of fees for the services you want.
Check the agency's researchers fit the image of your business. If they'll be
carrying out street interviews, confirm they'll have the required local authority
license and identity card.

Make sure you provide a thorough and clear brief. This needs to cover areas
such as the business objectives behind the project, the information the research
should uncover and how you intend to use the results.

I can help you with this if you like.

My details are below:

Ken Ajoku
Business & Marketing Advisor

Website: TheKajokuGroup.blogspot.com
Mobile: 07956 515 868

How to Survive Financially Until Your Business Takes Off

2009-04-03T16:22:00.000-07:00

Essential Financial Tips To Help You Survive Until Your Business Takes Off

Introduction

You may need alternative sources of income while your business is growing. Many businesses do not make a profit in their first year but can earn enough to cover their outgoings. If your business does make a profit, you may want to reinvest it to help your business develop.

This guide gives advice on how to keep your business afloat in the early days of starting up. It will help you work out your profits and financial needs, reduce your spending, re-invest your money and find other funds.

A financial adviser or accountant can help you address these issues in the early days.

Forecast your personal financial needs

When starting your business you will need to make a realistic forecast of your
personal financial needs. A personal budget is a plan detailing your domestic
financial needs for the year. It should try to set limits on the amount you plan to
spend each month on various items like rent, food and housekeeping.
Tracking your personal spending can help you find out how much money you will
need to take from the business.

You should work out how much money you will need each month. If you multiply
the monthly figure by 12, and make adjustments to cover one-off spending such
as holidays or car tax, you will know how much you need to live on during your
first year of trading.

It is important to be realistic. You may need to find other funds or borrow money.
Financial advisers usually say that the equivalent of three months money should
be held on deposit for a rainy day.

Some expenses, such as your rent or mortgage, are likely to be fixed, whilst your
spending on other items may change from month to month. You need to keep a
close eye on the areas where savings can be made - such as leisure or travel.

The first year in business is vital to its success and you may have to accept that
a financial sacrifice of some sort is required to keep on trading.

How much money will your business make?
You need to identify how much money your business is likely to bring in over the
coming year and then how much profit you hope to make.

You can do this by:
• estimating your total income from sales
• estimating your expenses
• working out a figure for salaries and dividends, including tax
• working out the difference between your financial requirements and the amount you are prepared to take out of the business
This will leave you with the amount you potentially need to find from other sources.

Profit and cash flow
It may not be easy to calculate exactly how much your business will make in its
first year, so concentrate on cash. Cash and profit are very different, a fact which
is often misunderstood. A business can survive for a short time without sales or
profits but not without cash.

Profit is the difference between the total amount your business earns and the
costs it must pay out over the trading period - usually a year.

Cash flow is the balance of all the money flowing into, and out of, your business.
It covers actual payments of money, as opposed to what is owed by your debtors
or to your creditors. Cash pays the bills and allows trading to continue. The need
for cash is even greater if your business is growing and extending credit to more
customers.

The main outflow of cash is the money you spend including salaries and
overheads such as stock, raw materials and any other capital spending.
If you sell on credit, your cash inflow is delayed until you are actually paid so
effective credit control is important. A business that buys on credit and is paid in
cash, such as a retailer, is at a great advantage in cashflow terms.
Many businesses rely on bank overdrafts and quickly reach their borrowing limits.

It is therefore important to think carefully about your cashflow and reduce the
need to rely on an overdraft.

Make savings
There are ways you can save money on goods and services, both at home and
in your business.

Making personal savings
You could reduce the amount of money you pay out each month by consolidating your debts.

You can also consider Lowering your energy bills

Making savings in your business
You could implement simple cost control systems across your whole business to
identify scope for savings. You could cut unnecessary or excessive costs, for
example, by not heating your premises at night or finding low price suppliers for
goods or services. Again you can try Lower business utility bills consider leasing goods or buying them second hand.

Also consider whether you can save money by running your business from home.

Other sources of income
You will almost certainly have to find other ways to finance your needs during the
early days of your business.

There are a number of options open to you. You could:
• Use savings - make sure that you have an emergency rainy-day fund
which should add up to three months spending.
• Release equity from an existing asset - for example, trading in your car for
a cheaper one.

Sell unwanted assets to create income - many people have things that
they do not use or want that can be sold at auctions, online or private
sales.

Get a loan from your family and friends. In most cases people who borrow
from family or friends do not pay as much interest on such loans.
However, be aware of ill feeling that may be caused if you are unable to
repay on time.

Get a personal loan - not one of my favourites (investors may be a better option) nevertheless it is still an option.

Borrow against future income by selling your debt to a third party.

Get an overdraft. Remember that the overdraft will have to be repaid, and the interest rate may be high.
Seek investment from external sources in return for a share in your business.

Take on a second or part-time job - this will provide a useful source of income but it is important that it does not distract you from your priority of running your business.

We have a few business opportunities that you may want to consider at our blog site
The Million Pound Ideas blog

Prepare a financial plan
Once you have gathered together all your key financial information such as
estimates, overheads and expenses you can produce a financial plan.
The first step is to draw up a budget - a plan for spending and saving your money. It is important to stick to a budget so you don't risk overspending or running out of money for essentials. The key to budgeting is maintaining simple but good records. You will need to keep track of where your money comes from and where it goes.

You should:
• prepare budgets showing the level of sales and profits you expect to achieve, and the costs involved in doing so• estimate your total sales
• prepare monthly or weekly cash flow forecasts (which should be regularly
updated), looking ahead one year - overheads such as rent can be accurately predicted
• make sure you will have enough money on the day to cover each payment

Find support
Most businesses need assistance at some stage in their development. This is
especially true of businesses in the early days.

There are a number of sources of help, including:
• business consultants
• start-up schemes
• schemes for young starters - eg Shell LiveWIRE, Prince's Trust
• financial advisers
• accountants
Bear in mind that you will almost certainly have to pay for the specialist
knowledge and advice from financial advisers and accountants.

I can help you with this if you like.

My details are below:

Ken Ajoku
Business & Marketing Advisor

Website: TheKajokuGroup.blogspot.com
Mobile: 07956 515 868

8 Reasons Why You Should Start Your Own Business

2009-04-03T15:58:00.000-07:00

8 Reasons Why You Should Start Your Own Business

Every year thousands and thousands of people start a business for numerous
reasons. I am going to give you 8 common reasons.

Reason Number 1
A good business idea

A good business idea could be an invention, a new product or service, or an
original idea or solution to an everyday problem. It might also be:
• a gap in the market that you can fill
• a business related to the work you do already
• an interest or hobby that you can turn into a business

Whatever your idea is, you need to be sure that it fits with your needs as an
individual, as well as being a viable business proposition.

Reason Number 2
Tried and tested business models

Some self-starters choose a well-trodden path - such as buying an existing
business or rights to a franchise - which can carry fewer risks than going it alone.

Advantages
It is usually easier to get finance.
A market for the product or service will have already been demonstrated.
A business plan and marketing method will be in place.
You should have valuable experience to draw on.
Many of the problems will already have been discovered and solved.
A franchise comes with financial support too.

Disadvantages
Some businesses that are up for sale may be experiencing difficulties. Make sure
you fully understand the reasons for selling, as you may need to invest quite a bit
more on top of the purchase price to give it the best chance of success.
The rights to a franchise or to sell particular products or services may be
expensive.
With a franchise, there may be a particular way to run the business that you have
to stick with.

Reason Number 3
Specific business opportunities

Sometimes the possibility of owning your own business can come as a complete
surprise. Perhaps you are offered the opportunity to buy out your employer, or
take on a family business.

Opportunities like these are like any other business start-ups. You still need lots
of personal commitment and you may need to put your own money on the line.
You also need to carefully assess the business to make sure it is viable.

Advantages
Development, planning and market testing should already be in place.
There may be established customers, a reliable income, a reputation to capitalise
and build on, and a network of useful contacts.
You probably already have expertise in the product or service and a good
understanding of the business you're taking on.

Disadvantages
You may be taking on someone else's problems when you take on the business.
Ask yourself if there are problems with the business, and if so, can you solve
them?

If you are buying out your employer, you may lose support services that you take
for granted now. You won't just be responsible for your core role, but for
everything else as well, such as accounting, staff management and payroll.

Reason Number 4
The business has social aims
You may want to start a business that isn't just for profit but also has a social
purpose. For example, you might want to provide a service for a disadvantaged
group in your local community, or help improve the local environment.
Although any business can have social objectives, you might want to consider
setting up a specific type of business known as a social enterprise. Although a
social enterprise is run as a business, and often operates under the same
financial and profit-driven pressures, it also aims to provide a clear social benefit.
The profits are mostly reinvested, or used to support its social aims, rather than
being paid to the owners of the business.

Advantages
You earn a living doing something you feel is worthwhile.
As your business grows and matures, your community or beneficiary will also
benefit.

Customers may be more willing to buy from a business that supports a good
cause. It may be easier to attract and motivate employees (or even volunteers) to
work in a social enterprise.
You may also qualify for a grant, or be able to raise finance from people or
organisations sharing your social aims.

Disadvantages
Making profits and achieving your social aims can sometimes conflict with each
other. You may have to make difficult choices.
Although you can earn a reasonable income working for a social enterprise, you
will not make your fortune - most of the surplus profits are put back into the
business or go to support its aims.

Reason Number 5
A change in your circumstances

A major life change can often enable you - or push you - to set up your own
business. Maybe a dramatic personal event kick-starts you into action or your job
situation means that now is the time to take the plunge. Such changes might
include:
Unemployment
Redundancy
A change of family circumstances
Coming into money

Advantage
A change in your circumstances might be an opportunity to start again or do
something you've always wanted to do.
Redundancy payments or receiving a lump sum of money can provide an
opportunity to invest in a business.
At its best, being your own boss can give you the flexibility to work around family
commitments.

Disadvantages
Major life-changing events can be very stressful. It may be unwise to make
further big decisions at times of personal upheaval.
Starting your own business is unlikely to provide a speedy return on your
investment and you should be prepared for a long haul.
In the early stages especially, running your own business can mean putting in
long hours and making sacrifices elsewhere in your personal life.

Reason Number 6
To Change your lifestyle

For many people, the biggest attraction of setting up a business is the
independence provided by being your own boss and the chance to have the
lifestyle you want.

Advantages
Starting a business can offer a career with built-in independence and flexibility.
Being your own boss can give you the choice to work more convenient hours -
such as working around your children's school hours and holidays.
You will be able to choose to do some professional development or training.
You will be the one in the driving seat, making the decisions that enable you to
lead your chosen lifestyle.
If your business takes off, the payoff in financial and lifestyle terms can be huge.

Disadvantages
You may find that you have to work longer hours.
You may find it difficult to separate work and home life, especially if you run the
business from home, and this can put extra demands on your family.
Some business owners suffer stress when things are not going so well.
You should be prepared for the loss of perks such as pension schemes, holiday
pay and sick leave.

It's quite common to have financial difficulties, especially when you're starting up.

Reason Number 7
You may want to go into business full time

The kind of business you've chosen - or your individual circumstances - may
mean that you want to take the plunge and jump straight in full time.

Advantages
You can devote all your time and enthusiasm to your business.
You can react to new developments as they arise.
If your business depends on a gap in the market or a new idea, time will be of the
essence.

Disadvantages
You will have to manage without an income while your business gets off the
ground.

If you decide to go into business full time you have a few options to help you over
the early days:
Live off your spouse or partner's income - however, it can be hard to live off
one salary if you've been running the household on two.
Use your savings - if you've been putting money aside for a rainy day, this could
be it. Ask yourself if you have enough to cover your living expenses and fund
your business? For how long? Will you have anything to fall back on if your
business fails?

Get a loan - banks will often help new businesses with a loan. However, they
can be inflexible. You may have to pay back the loan immediately if your
business fails, and there will be expensive penalties if you don't make agreed
repayments.

Use your home as capital - if you have capital in your house, you could use it
as security. However this is risky, your house may drop in value and if you
cannot keep up repayments, you risk losing it.

Borrow money from family or friends - you can save a lot of money if your
friends and family don't charge you interest. But if your business doesn't work
out, it could put a big strain on your relationship with them.

Reason Number 8
You may want to go into business part time
Going into business part time

If your business allows, you could decide to work on it part time, fitting it in with
your current job or other responsibilities. Then, when the business is robust
enough or circumstances change, you can move over to it entirely.

Advantages
You can still earn an income while you're getting your new business off the
ground.

Technology such as answer phones, the Internet and email make it possible to
communicate out of hours when you're not available in person because you're
doing your other job.

It can make it easier for you to juggle your other commitments - such as childcare
- by allowing you to choose when you work.

Disadvantages
It can be difficult to manage the extra hours you need to put in.
Putting in very long hours can be stressful and tiring. There won't be time for
much else.
It could take much longer for your new business to take off.
You'll have to pay tax on both incomes if you continue with your other job.
Many people who set up their own business decide to work on a part-time basis
to enable them to balance their home and working obligations.
Some people decide that the safest option is to continue with their current job
whilst setting up their business. Legally you don't have to tell your employer that
you are setting up a business, although there may be a clause in your contract
preventing you from doing other work.
You might want to ask your employer for more flexible working arrangements.
These could involve reducing or re-arranging your existing working hours.

I can help you with this if you like.

My details are below:

Ken Ajoku
Business & Marketing Advisor

Website: TheKajokuGroup.blogspot.com
Mobile: 07956 515 868

7 Deadly Mistakes People Make When Starting Up A Business And How To Avoid Them

2009-04-03T15:04:00.000-07:00

7 Deadly Mistakes People Make When Starting Up A Business
And How To Avoid Them

Introduction

Launching a small business can be risky and success is not always guaranteed.
Businesses are most vulnerable to failure during the early years of trading, with
20 per cent of new businesses folding within their first year and 50 per cent within
their first three years.

These figures should not scare you off, but should prepare you for some of the
challenges entrepreneurs face when starting a business. With hard work and an
awareness of the issues, a new business can be a great success.

This guide looks 7 Deadly mistakes new business owners make and, more
importantly, how you can avoid them. It also shows you how to improve the
chances of your business idea succeeding.

Deadly mistake number 1

Poor or inadequate market research

Research and planning are vital to ensure that your business idea is viable. A common misconception is that entrepreneurs who fail simply lacked sufficient funding or did not put the right team in place. However, many fail because they have not spent enough time researching their business idea and its viability in the market.

Lack of in-depth market research

Lack of proper market research is one of the key problems for new businesses.
It's easy to get carried away with a business idea and set up a business without
testing its viability.

Accurate market data will help prevent over-optimistic forecasts Keeping your business ideas to yourself

Failing to share your business ideas with people you trust means that you will
miss out on objective feedback.

Brainstorm with other colleagues to give you valuable perspective. Note down
any good ideas you get from brainstorming and use them when developing your
business.

If you want to keep your ideas confidential, consider using a non-disclosure
agreement, also known as a confidentiality agreement. This will allow you to
share your ideas with colleagues without the risk of them divulging the
information.

Not knowing your clients or marketplace

If you do not complete adequate research, you are in danger of selling to the
wrong people or of not understanding your marketplace. To avoid this:
• use information, such as free government data or your own network of
contacts
• carry out field research to explore customers' profiles and discover buying
trends
• swap ideas with people in the same sector

Deadly mistake number 2

Weak financial planning

Financial planning is extremely important for most new businesses. A lack
of capital, lack of a contingency plan and reluctance to seek professional
advice can all bring major problems.

Lack of capital

Having sufficient capital is essential for the survival and prosperity of your
business, and is a primary indicator of your business' health.
the right type and amount of funding that you need to make your business
successful. A business plan can:

be used as a tool to structure the financial side of your business
and can be updated and changed as your business grows
keep your expectations for what can be delivered grounded

Lack of a contingency plan

Without a contingency plan you can leave yourself exposed to the
unexpected.

Situations beyond your control that may impact on your business and cash
flow include interest rate rises, transport strikes and political instability.
While your business can survive periods where there are no sales or
profits, it cannot survive without cash. Building up cash reserves will
ensure that you can trade effectively and develop your business.

A reluctance to seek professional advice

Failing to seek professional advice will make any financial troubles worse.
Few new business owners can claim expertise in all areas of their
business. Using an accountant or financial adviser can help you ensure
you borrow and manage money cost-effectively.

Deadly mistake number 3

Setting sights too high

It is important to make realistic forecasts about your business' potential.
During the start-up phase, it can be easy to make over-optimistic
forecasts, however there can be serious consequences for your business
if your projections are not realistic.

Over-optimistic forecasts about market size

Inaccurate forecasting of market size is a common mistake when starting
up. Cash levels can be quickly depleted if you recruit too many people, buy
unnecessary equipment or spend too much on business premises.
Effective cash flow and income forecasting can help you avoid this.
Inaccurate forecasting is often linked to poor market research, so it is
essential to get your research right.
Focusing on sales volume or size not profit
A common mistake for new businesses is to focus too much on growing
the sales volume or size rather than profit.
Overtrading can occur during the rapid expansion of a new business when
it takes on more orders than can be supported by its working capital or net
current assets. This can have serious repercussions.

Diversifying too soon

There may be a temptation for you to tap into a new market or
geographical area, but keeping a clear focus on your core business is
crucial. Diversifying too quickly can actually increase your business risks
during the vulnerable start-up stage.

Poor planning
Poor planning will increase your chances of making business mistakes
and will reduce the probability of achieving your goals.
Drawing up a high-quality and realistic business plan is essential. A
business plan will help to secure external funding, pre-empt problems and
measure how well your business is doing.

Writing a marketing plan will also ensure that you take into account your
target customers, your marketing objectives and will help you set goals to
address these.

Deadly mistake number 4

Taking your eye off the competition

During the busy start-up phase it can be easy to forget to set aside
enough time to monitor the competition. However, it's essential that you
are ready to respond to competitors in your market place and to new
developments.

Failing to actively monitor the competition

Failing to monitor your rivals will stop you from seeing what competition or
threats to your business exist in your market place.
Competition is not just another business that might take money away from
you. It can be another product or service that's being developed which you
ought to be selling or looking to license before somebody else takes it up.
You can get clues to the existence of competitors from:

advertising
press reports
exhibitions and trade fairs
questionnaires
searching on the web for similar products or services
approaches reported by your customers
flyers and marketing literature that have been sent to you - this is quite common if you're on a bought-in marketing list
planning applications and building work in progress

Failing to act on competitors' information

Failing to use information gathered about your competitors will weaken
your position in the market.

Feed any useful information into your marketing plan. Your marketing plan
and research will help you to set realistic targets and deadlines, and
allocate appropriate resources. You can then decide to focus on building
relationships with your existing clients or attract new customers. Your
marketing can then be turned into sales by deciding on your sales
methods.

Deadly mistake number 5

Poor supplier and customer controls

Failing to choose suppliers carefully and set up satisfactory credit
arrangements are common mistakes for new businesses. Choose
carefully as your business' profitability and reputation could be at stake.

Setting up poor supplier contracts

Finding a reliable and competitively priced supplier can be vital to the
success of your business. This is because you rely on your suppliers to
provide you with the goods and services your business needs to operate.
And getting the best deals can have a significant effect on your business'
profits.

When selecting your suppliers, price is an obvious concern. However,
other factors such as value for money, quality, reliability and service must
also be taken into consideration.
Establish exactly what you are looking for in a supplier. Carry out a credit
check to ensure that the supplier can deliver what you need and is not
about to fold. Once you have identified your chosen supplier, you can
then discuss terms and conditions and draw up a formal contract.

Setting up poor credit arrangements

If you are dealing with a potential new customer, it can be tempting to offer
credit without carrying out checks. But this can leave your business
exposed to delayed or non-payment. You may find that you cannot pay
your suppliers or bank on time. In turn, they may withdraw their supplies or
funds, putting your business at risk.

To avoid potential problems with customer payments, you may want to:

carry out credit checks on new and existing customers
check bank references, trade references and online credit-ratings, from a credit-reference agency
ensure that your customer is aware of your credit terms (eg they must pay within 30 days) and that the payment terms for your debtors is longer than the terms offered to customers
motivate customers to make early payments by offering discounts
investigate legally enforceable ways of encouraging prompt payment

Deadly mistake number 6

Poor stock and asset management

Poor stock control and over-investment in fixed assets can mean your capital is
tied up unnecessarily.

Poor stock control

Efficient stock control (inventory) will mean you have the right amount of
stock in the right place at the right time. It ensures that capital is not tied
up unnecessarily, and protects production when there are problems with
the supply chain.

You need to put systems in place to keep close track of stock levels and
values. Taking control will allow you to free up cash, while also having the
right amount of stock on hand.

There are a number of ways you can approach stock control. You can:

re-order when stock reaches a minimum level
carry out regular reviews of stock
use just in time (JIT) delivery to avoid excessive stock build up

Over-investing in fixed assets

In the early years of your new business, you need to limit drawing on your
cash reserves unnecessarily. Over-investment in fixed assets, such as
office furniture or computer equipment can be a problem. Acquiring fixed
assets outright gives you ownership straightaway, but you have to pay for
the full cost upfront, which drains cash.

The alternatives include:

Leasing assets - at least while your business finds its feet. This allows you to spread payments in regular installments over a fixed period, thus freeing up more cash. You may be able to upgrade equipment without having to buy more up-to-date models.
Hire purchase - you own the asset at the end of the payment process. This is not the case with leasing.
Buying second hand - for office furniture, fittings, etc.

Deadly mistake number 7

Hiring the wrong people

A large part of your new business' success will be determined by the quality of
the people you recruit. Taking on people will always mean some form of
investment for your business and requires careful consideration. Taking this
investment seriously can make it more valuable and improve your chances of success.

Ensuring that you hire high caliber people with the right mix of skills is not an
easy process but one that will pay dividends.
How you go about employing new people will depend on your business needs,
e.g. whether the work is constant, how long it will last and the number of hours
available.

You need to explore all the options available to you. These include:
• recruiting permanent staff on a full or part-time basis
• fixed-term contract employee
• temporary staff
• freelancers
• consultants
• contractors

Employing relatives and friends may appear an easy solution to staffing issues,
but they may not have the right mix of skills that you need. It can also be
more difficult to bring a period of employment to a close when a personal
relationship exists.

Failing to delegate

Being your own boss may be a key motivator to setting up your own business.
However, delegating the right task to the right person is important for both you
and your business. Failing to delegate could mean you take on too much and
increase your stress levels.

A good way to tackle delegation is to identify a few key tasks of your own that are
very valuable to the business and handover the rest to your team.

I can help you with this if you like.

My details are below:

Ken Ajoku
Business & Marketing Advisor

Website: TheKajokuGroup.blogspot.com
Mobile: 07956 515 868