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Signs of a Successful Small Business Owner

Successful BusinessWhen starting a new successful business, there are numerous signs that can indicate whether you’re succeeding as an entrepreneur or aren’t. A small business can be risky. This is particularly true if you specialize in a niche that bigger companies already excel in. However, if you display some particular qualities, it’s a sign that you’re doing a good job to stay afloat.

That’s because small business owner who have a positive attitude towards success are the most likely to get a taste of it than his counterparts. Their counterparts focus only on stability and nothing more. While business success has a lot to do with your initial idea and how you build upon that idea, it still depends on your personality and capabilities. Here are the few signs of a successful small business owner that you should develop as part of your personality.

You Like To Form Collaborations

Most successful entrepreneurs display this common trait. They understand the importance of having a well-connected network in the business world. Nevertheless, just like in every other change, collaboration needs to start from within your business. This means you’ll need to start delegating tasks effectively. Another crucial part of this is building good relationships with everyone on your team. This includes your employees and suppliers.

Of course, you also need to establish a position in the network of small businesses. It’s unwise to act alone without any partners. You needn’t form friendly relationships with your competitors. However, at the least, you should be on good terms with other small businesses that complement yours. By obtaining a position in the community of other businesses, you’ll be able to create new opportunities that can benefit others. Moreover, others can do the same for you. What results is a beneficial support system that allows all members to rely on one another.

You Have Your Eyes Set on the Future

You never know what the future holds, especially if it’s for something as volatile as a new startup business. That’s why successful entrepreneurs share a common characteristic of looking towards long-term future goals.

Some struggle to stay afloat amidst a rocky economic climate, and such desperate conditions can lead to business owners not looking farther than the near future. Such thoughts are understandable, but think of it this way; acting upon well-structured long-term goals at the same time as day-to-day tasks can ensure far more than financial stability and simple peace of mind.

Your Leverage the Benefit of Technology

Nowadays, when it comes to operating a small business, it all comes down to incorporating the use of technology, whether in marketing, management, or everything else. Technology and software have made it easier for entrepreneurs and small business owner to meet their goals, and now with services like Google AdWords and personal assistants, functions have become much more streamlined than ever before.

Take websites, for instance, they’re a business’ online identity and that’s where most potential customers will go to check whether your brand is legitimate or not. Then comes social media, which is a useful marketing tactic that produces results without requiring you to spend too much of your ad revenue. Then there are other business-related applications like customer support live chat software, fixed responses for keywords and budgeting tools that boost your productivity so you can focus on product quality.

You Love to Learn

You’re never ready to run a business until you’re prepared to improve yourself by learning from others. You may be determined to make it through with a method involving trial and error, but that costs precious resources; you need to start learning from others’ success and failures. Data is the most powerful weapon that a business can possess because it helps you discover trends and important details.

If you aim to learn about what strategies lead to profitable ideas and which ones are just downright terrible, you’ll be able to devise a solution of your own. The best way to fulfill your curiosity is to read and look into insights regarding management, marketing, customer satisfaction, and product quality. Archives can provide you with numerous researches and surveys conducted by different companies. While it isn’t necessary that the results apply to your business, you’re still bound to learn something.

You Don’t Just Think; You Act

While we’re at it, we might as well establish that being a smart business owner doesn’t mean that you’ll never have to take risks; it’s merely the ability to take risks with confidence. One sign that your business will soon see the light of success is that you don’t just think, you also act when the time is right. This sign is associated with the confident ability to make good decisions, even if they’re risky.

It’s true that before you put any plan into action, you need to examine it carefully all the way through. However, if you become stuck on the evaluating stage, you’ll miss your chance to implement your idea. That’s why you should have some faith in yourself and build confidence in your abilities to make a good decision.

You Seek Fulfillment

There are many small businesses operating in the market, but very few businesses owner seek fulfillment. The rest of them, however, only look at it as a means to make ends meet. Success-oriented entrepreneurs always chase after their goal of doing something fulfilling for a living. Your ability to see value in everything you create is contributory to success because you’ll want to build upon ideas to increase that value.

If you realize these traits in yourself, then congratulations; you have what it takes to turn your small business into a success! However, even if you don’t, do not fear! Owning a small business can change you as a person. But, it depends on you whether you take something positive from the experience. All these above-mentioned aspects will greatly improve not just the quality of business, but your life as well. If you can learn to find a hint of success-oriented personality within yourself, then you’ve hit the jackpot.

 

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Importance of Location for Your Small Business

Location

If you are thinking of starting a business that benefits from walk-in foot traffic, you have to pay attention to the location you choose. Whether it is a retail store, a motel, a restaurant or a spa, the right or wrong location of the business can decide its fate. Yes, some businesses reach the heights of their success at the oddest locations possible, but it is not very wise to keep exceptional cases in mind while starting a business. So, what role does a location play in the success of a business? Here are some important points for your understanding.

The Foot Traffic Matters

Now, the area you choose must have ample foot traffic for you to take advantage of. Of course, you are a business that benefits from the foot traffic, so you need a lot of it. For this purpose, you first have to look for commercial areas where people normally go for shopping. If there is no place available in the commercial area, you want to explore further to look for locations from where a lot of people pass. Think about your marketing as well. If you are going to use billboards, neon signs or vinyl for marketing purposes, you want them in places where people can see them. The more people there are at the location of your business the more they will notice your marketing signs.

There aren’t a lot of people at the location that you are considering for your business, you are already at a disadvantage. It shows that people don’t naturally walk in that direction when they are looking to do business. It is the same way on the internet. You bid for keywords that have the highest number of searches. You want to put your banner ads on websites that have a lot of traffic. In short, foot traffic matters.

The Buying Power of the Community

Before you choose the location, you must know the type of audience your business attracts. Are you a fine dining restaurant? Will you be selling low-cost meat burgers? You have to decide your location based on the type of business. If you are opening a fine dining restaurant, you want to open it at someplace where people have the buying power to afford expensive foods. It requires a lot of research for you to be able to find such locations, but the time you spend researching will always pay off in terms of a good return on investment.

Businesses in Proximity

A lot of businesses try to avoid having their competitors located close to them. But believe it or not, it is extremely beneficial for small businesses to be located near other big businesses. By doing this, your business benefits from the traffic of other businesses. It solves a lot of problems that can be detrimental to businesses at locations where there are no other businesses. The first benefit is that you already have foot traffic, so you can already move on to the next step of pulling those potential customers into your premises. Secondly, you don’t have to force people to walk away from their daily routes to come and do business with you.

If you already have a lot of similar businesses located around you, people already come there for that type of business. So, if you are opening a boutique in an area where there are many boutiques already, you can rest assured that people already come to this market for buying clothes.

The Expenses of Operation

This item has to be on your checklist of choosing the right location for your business, otherwise, you are going to regret your decision. Sometimes, you find a place that has high foot traffic volume and lots of other similar businesses in the vicinity, but the operating expenses are through the roof. The businesses that have already established might have adjusted according to those expenses, but things will not be the same for a starting business like yours. You want to keep your operating costs as low as possible. What if the area you are going to has private companies providing electricity?

What if the availability of clean water is a challenge at your desired location? What is the rent of the building if you are considering renting a place for the business? A starting business already has very thin profit margins. Add high operating costs to the equation and even those little profits will be gone.

The History of the Location

The location you have chosen has proven to be ominous for many businesses in the past, you have to dig deeper even if everything sounds right. When a lot of businesses have opened and closed at the same location, it is an indication of something wrong but not visible with a casual survey. You will have to be very careful in finalizing such a location. If nothing, it could be the owner of that building that might be an issue for its renters.

Some landlords are overly interested in their profits and do not care how much damage they are doing to a starting business with their demands.

Many small businesses need some favors and flexibilities from their landlords for them to be in a stable position. Some building owners will even lower your rent to allow you to establish first. If the landlord’s reputation is okay, check to see that the place is not a frequent picnic point for robbers.

Final Word

Many of the things mentioned above might sound basic or understood to you, but you will be surprised to know that many new businesses shut down because they fail to realize the importance of these same points. Believe it or not, you cannot take any of the points given above for granted. And while they might sound very understood and intuitive, lack of time and capital can often push you in a direction that you don’t want to go in. Stay tenacious to this checklist because a compromise at this point will give birth to several compromises in the months to come.

 

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How to Do Valuation of Your Small Business

Valuation

When you are looking forward to starting your own small business, you will have to familiarize yourself with a lot of new ideas. One of the important concepts that every business owner must be aware of is business valuation. So, what is business valuation, what is its importance and how do you do the valuation of a business? Read on to know.

Business Valuation

As the name clearly suggests, business valuation is the act of finding the value of your business in the market. It is just like finding the value of a house when you are about to sell it. You can use multiple methods to find the value of your business. However, it is always in your best interest that you hire a professional valuator to do it for you. They know multiple methods of valuation and will make sure that the final valuation is error-free.

The Importance of Business Valuation

The first thing you should know is that it is imperative to do the valuation of your business not for one but many reasons. The first reason that comes to mind is the selling of a business. When you want to sell your business to someone, you have to set a price for it. Sometimes, the owner of a business would want to plan succession i.e. the transferring of shares to an heir. The buy sell-agreement that they use for transferring the shares to their heirs requires them to know the value of the business.

If you have ever pitched your business to an investor, you must be aware of the fact that they always ask for business valuation. They are trying to assess a few different things based on the valuation you give them. First, they want to know how much their investment is worth. Secondly, they want to know whether or not you are fair with your investment demand if you are offering them equity for their contribution.

The Three Business Valuation Methods

Even though there are other business valuation methods as well, you will be reading about the three most common ones.

1. Valuation Based on Market Value

You also call this method the relative valuation method. It is a fairly straightforward way of knowing how much your business is worth. The valuators have to look at other businesses in the market that are similar to yours. They look at their selling prices and determine the value of your business based on those prices. Now, as simple and plain as this method sounds, it does not always work. For example, you don’t find the records of sole proprietorships that easily. So, when it comes to the valuation of a sole proprietorship business, finding records of similar businesses can pose quite a challenge.

2. Valuation Based on Business Future Earning Potential

This is an ingenious way to know the value of a business and one that helps you a great deal when it comes to obtaining investments from interested investors. This is quite a realistic approach but pitching it to investors can be a daring task.

First, you have to make sure that you have done proper calculations based on your current and past records to come up with the future earning potential of the business.

Secondly, you have to stand confidently with your decision because investors would often question you and your integrity a lot when they deem that you have valued your business much higher than you should have.

Capitalization of past earning is quite a frequently used approach to do this type of valuation wherein you look into the past financial reports of your business, smooth out any extraordinary earnings or expenses, and find the product of the normalized cash flow with a number referred to as capitalizing factor. It is not the only method used for determining the value of the business under this category. Another frequently used method is based on discounted future earnings.

3. Valuation Based on Assets

It is clear from the name that in this type of valuation you find the worth of the business based on the assets it owns. Once again, there are multiple ways to approach this valuation too. A common way to do this type of valuation takes liquidation of the business into account i.e. calculate how much money you would have if you sold every asset that your business owns and then subtract every liability from that sum. The other way is based on the ongoing status of the business wherein you look at the total value of your assets on the balance sheet and subtract your existing liabilities from them.

Once again, it is the sole proprietorship that poses challenges when it comes to doing the valuation of a business using this approach. Why the valuation of sole proprietorships is difficult using this method is because the owner in this case does not use the assets for business purposes only but personal as well.

You now know from the information given above that it is imperative for you to complete the valuation of your business. Whether it is for legal purposes or to sell your company at the right price, knowing the right value of your business is crucial. In the end, you should prepare your business financial documents regularly to help you find its value with convenience.

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Common Spending Mistakes in Small Businesses

easy way

There is no denying that running a business is not always easy. There are plenty of challenges that reverse growth or halt progress. Precisely, if these challenges have a direct impact on business finances, it may cause several other risks that your business needs to face. In other words, managing finances is pivotal to stay on top. And if you’re a startup, finance management becomes as important as serving existing customers or finding new leads.

But, if you are like business owners who find managing money or bookkeeping a daunting task, you must know your common spending mistakes to stay ahead in the business domain. This is one way you can mitigate not only financial risks but also monitor the cash flow of your business. In other words, by controlling your spending and cash flows, you improve success chances and your profitability also.

We have enumerated a few common spending mistakes to help you steer clear of the financial management of your business.

Common Spending Mistakes in Small Business

1.     Failure in Keeping Personal and Business Expenses Separate

This might sound trivial to you, but many business owners when entering the business world make this mistake. Remember that you are in the early phases of your business, it is vital to keep the expenses separate. Although sometimes you need to rely on the personal finances to support business expenditures, you need to ensure that you h have a separate budget for your business.  Also, relying on the personal expense to fund business may cause problems in the long-term.

Once your business is operational and starts serving the customers, separate finances by making a separate business credit card. Make sure you have a separate bank account for your business. Doing so can be extremely helpful in managing tax problems and avoiding bookkeeping confusion subsequently.   It will also empower you to evaluate potential or existing cash flow issues and overall business finances before they turn into a major problem.

2.     Not Creating a Budget

You might find easy budgeting, but you cannot deny its long-term value that outweighs all initial stress and effort.

Creating a budget means analyzing how much have you earned and how much you can invest. An organized budget helps you make informed decisions about all business matters that include everything from supplies purchasing, staffing, and training to inventory. Conversely, when you work without a budget, all these tasks become challenging and may cause you significant cash flow problems. This particularly affects your business if it works with seasonal shifts, and you need this cash flow to maintain business operations during the slow months.

Fortunately, there is a wide variety of apps such as Scoro, Centage, and Adaptive insights that can help entrepreneurs not only create but also maintain a budget. Not to mention how these budgeting apps keep track of your business expenses and send you a handy report at the end of the month or year. This allows you to do preparations for tax seasons and review performance.

3.     Failure to do Financing at the Right Time

All business owners know that working capital is an essential thing to operate the business and increase its growth. If working capital runs low, your business might face a lot of issues that not easy to resolve it right away, and that may vary from unpaid bills, mounting fees to lower credit scores.  Not only that but making payrolls also become a challenge while tackling such issues. The situation may create problems when it comes to retaining your potential employees. The problems like staff shortage, inventory, and supply management lead to decreased revenues and unsatisfactory customer services.

Ultimately, the failure to meet your business financial obligations can impact different areas of business. That is why it is important not only to identify but also address the cash flow issues and to prevent poor working capital in a easy way. It is better if you seek assistance about taking control of financial matters before they become problematic for your business.

4.     Ignoring Poor Credit Scores

Recognizing the right time to consider alternative financing options like a line of credit or loan is important. However, your due diligence will not benefit you if you fail to qualify as a borrower. That means, it is essential to be vigilant about both your personal and business credit scores.

It is also important because your credit scores impact your ability to use financing solutions with suppliers or vendors. The arrangements often help business owners easy fill the gaps in their cash flow.  Moreover, with a good business score, you can reduce the insurance premium and interest rate on your loan.

Sometimes, your credit scores contribute to secure many affordable financing terms; particularly when you opt for loans, credit cards, and line of credit.  The phenomenon is confusing for many people since they are advised to keep their personal and business financing separate as an ideal practice.  

However, it is important to understand that when you sign a lending agreement as a primary applicant,  banks use your credits to determine your eligibility, repayment terms, and interest rates.  Customers are sent an annual credit report, and it is good to use it for your advantage.  Although the business credit report is hard to obtain, you can get them through various platforms.

5.     Overspending on Startup

When starting a startup, you are naturally optimistic that your business will produce good revenues if you invest a large amount in it. This optimism sometimes leads to overspending, which is another common spending mistake. To avoid overspending, research carefully about how much inventory or staff you need to take a good start.

Final Thoughts

When running a business, you may face many financial issues, and to plan for all potential scenarios is not easy. However, when it comes to cash flow, various things can be done to avoid cash flow issues. The most important thing is to be proactive in whatever approach you use to manage your business finance.  Besides this, budgeting and healthy credit scores play an important role in keeping business finance issues at bay.

Thus, the given spending mistakes are very common when a business is in establishing phase. However, you can avoid them by planning and evaluating everything in advance.

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7 Tech Trends To Add To Your Small Business Startup To Attract An Angel Investor

Angel Investor

Angel investment is on the rise,and your small business startup needs to capitalize on all the opportunities at hand. Venture capitalists are on the hunt for business startups to invest in that are currently at the cutting edge of technology and taking risks with these advancements’ trends. You find that investors are eager to sink their investment dollars in these technologies so that they can reap the future returns. While the payoff might be big for an angel investor, these tech trends will also help your business startup to attract those funding dollars.

Artificial Intelligence

AI is not new to the scene, but for 2018, it is making a significant headway. By allowing companies to do more with less, AI will turn out to be a fundamental change in the way a company does business today and tomorrow. Startups that integrate AI into the fold will experience a shift in how they are able to perform routine tasks, freeing them up to focus on their customers. Angel investors see this as a win-win as they are able to invest in an advancing technology as well as a startup that is leading the way with its use. Your business startup will do well by having AI as a part of your repertoire and see more funding interest come your way in 2018.

Social Media

The uses of social media to enhance your consumer game is a boon for investors looking to find business startups that are succeeding in their customer engagement. While social media isn’t a newcomer technology, those that have a strong endgame will win big in terms of revenue sales. Social media is proving to be the technology platform that links us all together and gives business startups the recognition they need early on. Venture capitalists are enamored with its use by business startup as they see the power it offers and the benefits a business startup can take advantage of. Using social media to boost your business in 2018 will be key to gaining funding from an investor as they recognize the strengths it offers to your consumers.

Blockchain

Blockchain is another technology on the fringe waiting to bust on to the scene in a fury in 2018. It’s ability to provide a real-time ledger of transactions can give your business startup the transparency it needs to garner the nod of a venture capitalist waiting in the wings. Your business startup will benefit from Blockchain’s ability provide stable and error-free operations while angel investors gain by investing in a technology that has proven its worth. You’ll see funding offers from a series of investors if your business startup utilizes Blockchain to its full advantage within your organization.

Internet of Things

The Internet of Things is advancing at a steady clip for the New Year,and you’ll see IoT virtually everywhere you look. With consumers becoming more connected than ever, IoT offers an opportunity for new products and services that enhance IoT’s capabilities in the home, business,and community. Angel investors are savvy to the draw of IoT and how it is changing the way consumers interact and live their lives. They want to get in with business startups that are using this technology to move their business forward, engage with consumers, and improve their business operations. Count on IoT as a way to entice venture capitalists and secure funding in 2018.

Big Data

Data is everywhere these days,and it will only get bigger this coming year. Business startups such as yours will be able to use big data to understand every aspect, detail,and nuance of your customers, so you can create products and services they desire. With big data changing the way that business startups engage with their clients and provide unique customer experiences, it means plenty of evolution is on the horizon. Angel investors are keen on the possibilities all this available data can provide and know that companies that take advantage of the information can lead their industry in leaps and bounds. Use big data to enhance your business startup operations and stay tuned for venture capitalists to come calling with much interest and fanfare about your company this year.

Cyber-Security

While 2017 was a year that many will remember for its security breaches, this year provides a turn of events as business startup integrate or offer cybersecurity services to better protect their customer data. This cybersecurity will change how companies in all sectors operate and provide the level of security that is needed to protect that confidential information from getting into the wrong hands. Business startups that use cyber-security to protect their company or create products and services for others that help them secure their information will do well in the following year. Angel investors will show interest in these endeavors as the need for secure data protocol is growing without hesitation.

Virtual Reality

Also, on the fringe in 2018 is VR. This technology gives you the ability to engage with your customers in a new and exciting way. Through a more desirable customer experience, VR can help your business startupto increase its customer numbers as well as its revenue as VR improves workflow and access to customers all over your niche. Angel investors want in on AR as an investment opportunity, and your business startup will attract their attention now and into future with this technology at your helm.

Integrating any of these technologies in your business startup shows a strong sense of understanding and initiative to increase your customer base and profits this year and the coming year. Angel investors want to be able to get their hands wet with these new technologies so that they can be where the growth is with these trends. Think about how these technologies can help your business startup succeed in 2018 and secure the funding you need to get off the ground. You’ll be surprised at how much attention you receive by taking the first step with any of these technology trends and reap the rewards of investment into your company by an investor.

 

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What Sets a Small Business Apart from a Large Business?

 

Small Business You probably hear terms like small business and ‘large business’ quite commonly whether you are looking for software solutions, investment opportunities or something else. Sometimes, it can be difficult for business owners to figure out if what they own is a small business or a large one. The confusion is valid because you don’t often find clear definitions to help you distinguish one from the other. However, it is essential to know the difference so you can pick the right services. This is because most service providers design their service packages differently for small and large companies. There are also other reasons why you would want to know their differences.

Why Know the Difference

You need to know the size of your company because of the laws that apply to these entities. Large businesses have to follow a different set of rules and regulations than small businesses. In addition to that, several federal programs are available that are different for small businesses and large businesses. As an example, you won’t qualify for certain programs unless you are officially a small business and are entitled to the program. You can get into trouble if you think your business is small but the government deems it otherwise.

Also, keep in mind that when you operate as a small business, but spend like a big one, you can put your venture in trouble. So, what sets the two apart from each other?

The Differences between Large and Small Businesses

The Size

How do you determine the size? How do you know that the size of your business is small or large? The federal government has its ways of determining the size of a business. They will look at either the number of employees you have or your yearly receipts. However, the standards are not uniform across industries.

What this means is that a small business in one industry might not be small in some other industry. In most cases, your average yearly receipts have to be over $7 million for the federal government to treat your business as a large one. The number of your employees should be more than 500 for your business to be considered large.

However, this standard of 500 employees is more applicable to the manufacturing and mining industry. However, keep in mind the varying standards across industries. For instance, in some service industries, your yearly receipts could amount to over $21 million, but the federal government will still not consider your entity as a small business. The agriculture industry’s standards can be quite the opposite of that with the government treating businesses with average yearly receipts of more than $500,000 as large businesses.

The same rule applies to the number of employees as well. For example, if you are a part of the wholesale industry, and you have more than 100 employees, your business could be termed as a large business. On the other hand, if you are in the manufacturing industry, the government will write you down in its books as a small business even if you have 1,500 employees.

Internal Structure and Hierarchy

A large business will often have a more clearly defined structure and hierarchy. Almost every case in question will go through various departments before the company comes to a final decision. On the other hand, the structure is not fully defined or is not as detailed. The employees and the owner are not too far from each other. A complaint from a customer can reach from an agent to the owner pretty conveniently. On the other hand, there are several roles beneath the manager that can handle numerous tasks and take decisions.

Due to the hierarchy that normally exists in large businesses, they often delay their decisions. Contrary to that, small businesses take their decisions very quickly. The hierarchical structure also gives rise to a culture of workers performing their respective tasks only. In a small business, the same person could have multiple roles.

Financing Options

There is a stark difference between the financing options that small business and large business owners choose. Large business owners have good PR, a name in the market and some level of dominance in the industry. Such a position allows them to go for options like investment banks. They can naturally attract well-known investors of the country as well when they are in need of finance.

On the other hand, small business owners try to avoid bank loans because of the hardships they face when it comes to paying back debt. In most cases, small business owners rely more on their savings or funding from someone in their family.

Salaries and Perks

Since large businesses are financially more independent, they can offer their employees attractive packages and benefits. Health insurance, dental insurance, yearly bonuses, provident funds, etc. are just some incentives that employees at large companies enjoy.

On the other hand, people working at a small company do not get such benefits in most cases. They can have attractive salaries, but a small business owner cannot afford medical insurance and comprehensive benefits for employees. It is one of the reasons why most of the people working at a small company often look for opportunities at large companies.

Nowhere does it say that small businesses have less potential for growth and expansion than large businesses. For this reason, small business owners should be confident in their efforts to grow. While large businesses have access to big bank loans and broad markets, even a small mistake in their predictions and estimates can result in huge losses.

On the other hand, small business owners face smaller risks when you consider the volume of their loss. Be sure to identify your business size and take advantage of all the benefits that the federal government has made available for small businesses.

 

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The Right Way to Arrange and Manage Small Business Funds

Managing funds

The sustenance and growth of a business depends on how well it manages the funds available to it. The first step is to arrange the right funding based on a proper business plan. As a business owner, you don’t want to end up getting more funds than you need because you will then overly spend the money and end up with debt that’s hard to pay off.

The second step is to manage the funds properly and invest them for short-term and long-term benefits both. The biggest challenge for most new businessmen and entrepreneurs is capital. They either don’t know how to raise the money and fund their business or mismanage the funds they have available.

Raising Funds for a Small Business

Looking at how easy it has become to arrange funds for businesses today, there aren’t many excuses left for entrepreneurs as to why they were not able to start their business. The first thing you want to keep in mind when raising funds for your business is to avoid accumulating too much debt. Avoid any kind of debt if it is possible. If you have saved some money from the jobs, you have been doing, use that money to fund your business. If your parents or someone in your family is willing to fund your business, do not be hesitant to accept their help.

Among many good options to arrange funds for your small or starting business you have microloans. Microloans, as the name clarifies, are small loans. Since the amount is not that big, it is easy for the borrower to return this money. In most cases, microloans will not be more than $50,000. The good thing about such loans is that they are easy to obtain even if you don’t have the best of credit score. In many cases, you will get the loan amount credited into your bank account within two weeks after applying. However, the biggest drawback of microloans is that they have a huge interest rate associated with them.

Another way you can avoid burying your business under debt and still receive enough capital to fund the business is by having a partner on board. Rather than starting a sole proprietorship, you should consider making a partner. Making partners is easier when you already have a running business, even if it is a small one. The partner will come with their personal investment and help you fund your business. In fact, you could have a partner on board without offering any investment yourself. You can agree to be the service provider and allocate the partner to fund the business monetarily.

Managing Funds of a Small Business

Once you have arranged the funds for your business, it is time you get a grip on how you will spend that money. The most sensible thing to do here is to ask for investments only after you have created a business plan which clearly states how you will be spending the investment money. You don’t want to spend the invested funds randomly. Here is how you should manage your funds.

  • Separate Business and Personal Account

The first sign of your seriousness with your business is you separating your personal account from your business account. If you have use your personal account for your business as well, you will never know how much money you made from the business, how much you spent back on the business and how much you spent on your personal needs.

  • Be Cost Cutting

You don’t make a business successful by just increasing its revenue. The true art is to reduce the costs of running your business. Work on your B2B connections to partner with entities that can help you reduce the costs of manufacturing and production. Pinpoint the marketing campaigns that produce converting customers and stop spending money on campaigns that only bring in traffic but contribute nothing to conversions. Investors think the money you spend on your operations is money wasted. You want to spend money on productive processes. On the cost cutting side, you should use energy-efficient appliances, all-in-one office equipment, virtual office space, etc.

  • Hire Professionals

Sometimes, you have to spend more to save more. In some areas, it is the professionals who can help you the most. For example, when it comes to tax filing and the calculation of your tax deductions you want to have a professional on your side. Professional accountants can help you reduce your taxable income by working on your business expenses and figuring out any deductions and exemptions that your business qualifies for.

  • Create Cash Reserve

While you are managing your funds and running your business successfully, you want to put some money in cash reserves as well. It will be hard for you to manage a cash reserve amount if you are already making thin profits but the long term benefits of this sacrifice are huge. Your cash reserve saves you from obtaining loans and hence getting buried underneath debt.

Conclusion

Keep in mind that having a lot of money in your bank account does not guarantee a successful business. It does not matter how much money you have, a business owner who does not manage his/her finances properly will end up burning even millions of dollars without making a dime in profits. Use the options you have available today for funding the business. Do not think they will not work for you before you even try them.

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How Marketing Mix Can Help Small Businesses Grow

4P of marketing

If you are doing all you can to grow your small business but nothing is working, you might want to take a step back and reconsider your marketing mix. Doing the right type of marketing at the right place and at the right time requires some brainstorming, research and analytical approach. Take a look at what marketing mix is and how you can use this concept to grow your small business.

Understanding Marketing Mix

In simple words, marketing mix involves the techniques, tactics and strategies you implement to promote your product, service or brand. The marketing mix consists of four Ps: Promotion, Product, Place and Price. If you research the idea a bit more you will find that people are adding more Ps to the mix but their understanding is not as important as the understanding of these four factors. In the new definition of marketing mix, they have also included other Ps like: people, positioning, packaging and politics. Here is a basic understanding of the four essential Ps of the mix.

Product: It could also be a service—anything that you are selling

Price: The value that you want to obtain when you sell the item.

Place: The exact location where you sell the product.

Promotion: The mixture of activities and campaigns that you put in to spread awareness of your product and increase its sales and additional funds to your business.

To expand your business you have to achieve perfection in your marketing mix. You have to attain a balance in all the areas of the mix for a successful strategy. Working on attaining the right balance right from the beginning will help you lay the foundation of a business that faces least amount of struggle when it comes to expansion and growth.

Using Marketing Mix for Small Business’ Growth

To create the right marketing mix, you have to understand your product at its core. When it comes to the product, you have to have a full understanding of it. What is your product? What problem does it solve? Even if your product solves a problem, have you designed to in a way that a potential customer would look at it and know what it is supposed to do? Once you know your product well, you can get to the other Ps of the marketing mix. Here is a little understanding of how marketing mix works.

  • Tying Product with Price

It can be one of the toughest things for most business owners to do. While it is a job for the marketing department, you don’t always have a dedicated marketing department when you are still a startup. When you are about to price your product, you have to consider a lot of factors. First, what type of audience does your product appeal to? What materials have you created the product with? How much competition you have in the market? What is the buying power of the market for which you have designed the product? It is only after taking all of these factors into consideration can you price your product appropriately. Keep in mind that when you are a new business, you cannot charge your customers for your value because there is no value for customers in buying your product at this stage.

  • Tying Price with Place

You cannot be thinking of one individual component of the marketing mix at one time. You might have created the right product but the question is “are you selling it to the right people?” What if your product is more appealing for teenagers but you are targeting people over the age of 35? What if you know your target audience but are placing the product in the wrong places? Maybe your item is more sellable online but you are putting it on retail store shelves. Now that you know the “place” where you need to sell the product, you have price the item aptly too. For example, a product that you have designed for teenagers should be affordable within their pocket money.

Moreover, your product might be appealing for a niche market but you might have priced it too low. As a result, too few people would buy it and your revenue will not cover your expenses. You have to be sure that you cover your costs within the limited number of purchases that occur.

  • Tying Place with Promotion

When looking at place and promotion as a combination, you have to be sure that you are promoting your product in the right place. Is your product more appealing for women than it is for men? If yes then you should consider promoting it on social networking platforms where women are more active e.g. Pinterest. Moreover, your promotional activities should match the place. For example, if you are promoting in an area where there are Oakland Athletics fans, you don’t want to be wearing San Francisco Giants’ t-shirts and gear.

  • Combining All the Ps

Once you have created the right product, priced it perfectly and strategized your promotional campaigns, you have to bring the product in the right place so all the Ps work successfully. Creating the right product, pricing it right and promoting it with passion but in the wrong place will result in disappointing response. Just because you are good with one of the Ps does not mean you will be successful in others as well.

Now that you have a good idea of tying the Ps together, you should have a complete road plan of how you are going to sell your product. It will require a lot of working at initial stages. You cannot know your market unless you do some surveys and spend time collecting data about the market. At the same time, you have to perform a thorough research of the market to know how you will price your product. When it comes to promotion, you will have to come out of the conventional methods and think more digital. You might as well set up a dedicated team for social media marketing and website analytics.

 

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Some Unnecessary Small Business Expenses to Avoid

Business Expenses

When you start a business, you have to be extra careful with how you spend your capital. There are many ways for small business owners to increase their profits. Reducing their costs is one of the simplest and most effective ones. A lot of the times, entrepreneurs would add costs to their budgets that they don’t necessarily have to make. It might appear to them that these are necessary expenses when that’s not the case. They can add many of these expenses once their business has established.

Expenses That Small Businesses Should Avoid

Excessive Advertising

Yes, advertising is quite important for businesses, but excessive advertisement is not. It still makes sense for large businesses to go full-on with advertising because they have the budget to do so. However, when it comes to small businesses, they must do intelligent and selective advertising only. Their first course of action should be to identify the advertising channels that work best for them. Just because you are a restaurant at the corner of a street does not mean you have to use awnings, vinyls, neon signs, and all other types of materials for advertising purposes. Pick the ones that work and skip what doesn’t.

Too Many Work Hours

You don’t necessarily have to follow the trends of your competitors to compete with them. It does not matter how good they are, even the best ones can make mistakes at times. Many business owners choose to keep their premises opened for customers for long hours. They will open the business early in the morning and close it late at night just so they can serve more customers. However, one must do cost calculation before taking such a step? What if you are getting only five customers in the first three hours of the business and five more at the last two hours?

Now imagine the cost of utility, wages of your employees, etc. Are you covering the costs of keeping your business opened for five additional hours with only 10 customers? Even if you want to continue this way, you better test it for a week only. If the response is cold, you should quit this practice as soon as possible.

Pursuing the Best of Everything

The idea sounds great but is not the way to go about doing business when you are in your early stages. You should spend your money on things you need, not the things you want unless you have the budget to do so. If you are renting space for your office, you should look for a place that you can easily afford. Going for the best location in the most commercial area will cost you a lot of money. You can save your money even when it comes to internal equipment. Why buy new couches, seats and brand new computers when you can do with high-quality used equipment?

Why go for a printer with fancy looks and capacity to print hundreds of pages in a minute when you won’t ever need that many printouts at a time? Go with simple and beautiful when it comes to decorating your office. You don’t want to spend your budget on things that are not going to yield any benefits for your business.

Hiring IT Staff

IT is integral to any business today, tech or non-tech. However, it does not mean you have to have an IT team on board. One of the beauties of modern technology is that it allows you to outsource a lot of the business processes. The best thing about outsourcing business processes is that you can save a lot of money by doing so. Managed IT services are a perfect way for you to save IT costs while benefitting from expertise of the best professionals of the industry. Rather than paying thousands of dollars to three or four IT people, it makes more sense for small businesses to outsource their IT processes for a small monthly fee.

The good news is that you can outsource almost anything IT-related. From basic helpdesk to on-demand data officers, IT outsourcing can cover a lot of ground for you.

Unnecessary Debts

Taking loans when starting a business is imperative for your growth and to have enough cash in hand to support your operations. However, there are more ways to fund your business than you might realize. Many small business owners follow venture capitalists and conventional banks when it comes time to fund their businesses. However, crowdfunding has emerged as an amazing funding option for startups and small businesses. The good thing about crowdfunding is that you do not necessarily have to offer equity to the investors in your business. Sometimes, you can just reward them with a sample of your product.

Hiring Only Full-time Employees

If you own a small business, you might want to consider hiring interns. Interns can benefit your business in many ways. First, you do not have to pay them the salary of a full-time employee. Second, you can ask them to do a lot of the mundane tasks that otherwise affect the productivity of your full-time employees negatively. While it might not be the best practice, in some countries of the world they have free internships as well wherein you do not have to pay your interns. However, that’s not the right thing to do, and you should compensate their work to keep them motivated.

Conclusion

You should consider avoiding these expenses if you are a small business owner or about to be one. You can always take advice from those who have their own businesses to figure out what’s necessary and what’s not. Keep yourself up-to-date with new technological advancements. Taking advantage of modern software and hardware solutions can help you save a lot of money. Take the example of a printer with duplex printing option. You could cut your paper costs in half by printing on both sides of the paper. In the end, look into your current setup and operations to see what some expenses are that you can easily live without.

Who we are:  Funded.com is a platform that is A+ BBB rated over 10+ years. Access our network of Investors, get instantly matched with a Lender, or get a business plan by visiting us Funded.com

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Aspects that Trigger Your Customers Buying Interest

Customers

Irrespective of how exquisite the product or service is, it might not sustain itself in the market for long if the makers or providers are not aware of the reasons behind the success of their product or service. It’s crucial for any business to understand their customers – thoroughly get into the minds of consumers – to sustain and thrive in this world of stiff competition.

We human beings generally have the same mental forces that drive us to take certain actions. For a business to be successful it is highly recommended that it identifies those driving forces and utilize them as part of their marketing strategies. This is because our minds work in strange ways, leading us to take actions that we ourselves are not even fully aware of.

The three questions that all businesses should ask themselves regularly are; what do we know about our customers? What makes our customer buy a certain thing from us over everything else and everyone else in the market? What impact will your product or service have on the lives of your customers?

What Do We Know about our Customers?

Having knowledge of the very basic things, such as name, age, gender, etc, to having in-depth knowledge of demographic, psycho-graphic, and socio-economic factors provides a multi-dimensional view of your customers’ choices.

It allows businesses to strategically analyze these insights and find patterns to anticipate the current and future needs of their customers.

Whether it’s a B2B, B2C, or any other kind of business, knowing your customers – their  likes and dislikes, interests and disinterest, cravings and distaste -is imperative before striking a deal. It’s actually quite simple, knowing about your customers will make things easy for you as well as them.

Here you’ll implement a crucial cognitive rule; less is more. We do tend to opt for the shortest ways to achieve the fastest results. By using words like: easy, convenient, fast, and systematic in marketing campaigns businesses implicitly, as well as explicitly, gives out a vivid message that they are the simplest solution providers to individuals’ problem.

This ensures success in generating current and well as future sales. Even simple transactions, such as ordering a pizza or buying clothes, if the organization will already have insights about the previous orders that the customer placed, they can easily make customized suggestions to that customer. They can also skip taking the basic details about their home address, phone number, etc, and most importantly they can ensure an optimum level of satisfaction from the customers’ side.

What makes our customers buy a certain thing from us over everything else and everyone else in the market?

Think of this as someone choosing a life partner; what possible reasons they could have to choose you over anyone else, and what possible reasons could they have to break-up with you and move on to your competitor.

Looking on the bright side, businesses can easily find answers to these questions, as compared to individuals. Fortunately, businesses can be divided into multiple characteristics, from service, price, magnitude, and recognition to customers’ experiences, product range, and accessibility – to name a few – to access their current and future progress.

It is worthwhile to find that the reasons behind the choices that your customers make helps you discover your Unique Selling Proposition (USP). Your USP is the gist of this answer; it determines why your customers show a certain level of interest in you over your competitors. Your USP can (and in my view should) change with changing market trends and you can even have different USPs for different customers.

Businesses should always have the big picture in mind that with this one transaction they are making way to many more. One way of achieving this is by providing customized product or service. This will make your customers feel important and you will let them know that you actually care about their needs.

Don’t give them a reason to be back, but make sure that they have a choice that if they do, their query will be the most important duty you have to perform. Furthermore, it is even more fruitful to have your USP constantly in-check because if your competition has adopted your USP, then it is not unique anymore, and your customer can easily switch to your competitors.

Moreover, we as homo-sapiens have a tendency to grow indifferent toward monotonous things. Hence, it is advisable that products, marketing campaigns, packaging, and other elements associated with selling a product or service, are revised after every few months or so.

This creates a sense of novelty and it is scientifically proven that experiencing something new releases dopamine in the human brain that plays a vital role in motivating behavior, thus driving more sales.

What impact will your product or service have on the lives of your customers?

A business’ duty does not end after ensuring successful sales of their product; on the contrary, it starts from there. Businesses would want to ensure that customers have a great experience using their product or services to not only make a long-lasting relationship with that one customer, but also to exponentially increase sales through the referral of all the satisfied customers.

Did you know that consumers are two times more inclined to share their bad customer service experience as compared to a positive one! Moreover, it costs 5 times more to engage a new customer as compared to sustaining an existing one.

We as individuals would know this very well that we tend to love taking advice – whether in business or in our personal matters – consultation has always been that one thing which gives us a sense of assurance and guides us to a specific path or thing. Likewise, that is the power of referrals.

Businesses can ask their customers to refer them and let individuals know that their references are highly appreciated or they can utilize the most powerful cognitive tool to ensure their attention toward the product that is – memory. By associating products or services with top celebrities in a marketing campaign, it not only triggers a memory whenever the consumer spots the product, but subconsciously they are already drawn toward that particular product or service.

 

Who we are:  Funded.com is a platform that is A+ BBB rated over 10+ years. Access our network of Investors, get instantly matched with a Lender, or get a business plan by visiting us Funded.com

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