Small Business Start Up Costs: How Deep Are Your Pockets?

One of the challenges of planning and getting a new business off the ground is to establish what your start up costs are going to be. At best, its going to be a stab in the dark or a wild guess, but there are some specific steps you can take to make your costings more realistic.

Why Estimate Your Costs?

But, before we look at where you can get help, we should consider why you need to get your estimate of start up costs to be as close to reality as possible. Firstly, if you are seeking bank finance the dreaded Business Plan is required! The Bank Manager is not going to be impressed by a comment such as, I think my start up costs are going to be around 10,000 but hey, who knows!

Secondly, you need to go into any new venture with your eyes open. You have to be as sure as you can on how much its going to cost to get your new business started. There is nothing worse than getting 90% of the way there, only to fall at the last hurdle because you didnt cater for one major expense.

Lastly, as a start up you are likely to only have a limited pot of money available. You have to prioritise which costs are essential and which can be delayed until the business is more established. You can only do this if you have researched and understand what your costs are going to be.

Where Can You Go For Help?

Its easy to think that you have a good idea of what your start up costs are likely to be, but do you really? Once you think about it, a whole can of worms starts to open! But there are sources of help you can turn to, which will ensure that you dont face oblivion within the first few weeks.

A good starting point is your countrys government support and business advice agency. These are government funded organisations which are there to provide free and impartial advice on all aspects of running a business.

Call and book an appointment to see an advisor. They will have a wide range of material and experience which will give you a good grounding in the costs you will have to cover. The service is usually free, so thats one cost you wont have to worry about!

Chamber of Commerce or Local Business Club/Group

If you have a local arm of the Chamber of Commerce or any formal or informal business group, then they are a good source of knowledge and information. Within the group you will find a wealth of experience and people who have been through it all good times and bad times! You may be lucky enough to attend a meeting when a speaker is there on just the topic you are looking for.

Colleagues and Other Business Owners

If you dont have a club or group you can attend, then seek out business people yourself. Ask all your contacts to tell you about their start up experiences. What costs they budgeted for; what costs they didnt budget for; where they overspent. Genuine business people are usually happy to share their experiences and give you advice. Listen to what they have to say and take note.

If you dont have a circle of business contacts, put the word out to all your personal friends. A few of them will have friends or relatives who are in business on their own. Ask for an introduction or referral. This will warm them up before you ask your searching questions.

Bank Business Guides

Many Banks provide comprehensive brochures on starting up in business. They usually contain a Business Plan template which will include a section on start up costs. Some go further and produce guides for specific industries and sectors. They provide in depth analysis about the business, the market, the competition and estimated start up costs. Call in to your local Bank and ask to see the Small Business Manager/Advisor.

Suppliers

If you are looking to cost your raw materials or partly finished stock for buy in then, as a key part of your financing, call your potential suppliers and ask for quotations. Tell them that you are starting up and they should be more than helpful, after all you could be a potential customer!

Examples of Start Up Costs

If you havent got the time to try any of the above (and theres no reason why you shouldnt find some time!) here are some of the key costs you will have to cover:

Equipment

Fixtures and fittings

Installation

Initial stock

Advertising

Decoration

Legal and other professional fees

Licenses

Specialised computer software

Up front rental payment

Initial cash float

Cash to cover trading for the first month or two until the payments start rolling in

The list is by no means exhaustive but it will provide you with the first step to finding out how much it will cost you to start up.

Who Said It Was Going To Be Easy?

Getting a new business off the ground is difficult enough, even if you fully understand what its going to cost you. Doing it with no idea is not a recipe for success. Devote some time to this exercise and you will be amply rewarded.

Top 5 Reasons Why Your Small Business Needs a Custom Website

Today, in North America, almost 70% of households have access to the Internet. It has evolved to the point where the Internet has become an integral element in the way business is conducted, and is shaping the way business will be conducted in the future. Most consumers these days research a product or service on the Internet before making their purchase. So, in this day and age, it could cost you not to have a website. Listed below are 5 reasons why you should employ an experienced web designer to construct a custom website for your small business.

Credibility & Identity Building
Like it or not, your potential customers are going to judge the quality of your products andor services based on presentation and image. Therefore, an aesthetically pleasing web site will give you and your company more credibility in the eyes of you customers or clients.

Lower Your Expenses
Why spend thousands of pounds on static traditional media such as brochures? If there was ever a change in your business, such as an expansion or additional productsservices, it would require printing all new corporate brochures. A web site is dynamic and can be changed or updated in a very cost effective manner. Best of all, your clients can access this information from anywhere in the world, without the delay of snail-mail. A properly constructed web site can also reduce the time that you and your employees spend answering redundant customer questions.

Complement Your Existing Marketing Efforts
Most people think of a web site as advertising. Unfortunately, they would be wrong – A web site is a medium which complements and enhances your existing marketing efforts. Your potential customers or clients can easily gain access to information that isn’t suitable to include in other traditional advertising mediums. In less than a decade, a web site will be just as common as having a listing in the Yellow Pages. What would your potential customers or clients think of your business if you didn’t have a web site?

Customer Service
A web site allows potential customers or clients to get to know more about your company, increasing the personal side of doing business. Your business will be open 24hrs per day, 365 days per year, and if someone has a question concerning your product or service, an answer is only an e-mail away. Some people may feel uncomfortable on the phone or in your office store, and, to these people, e-mail is their preferred method of communication.

Get a Jump on the Competition
A professionally designed web site will make your business appear larger than it actually is, and therefore challenge larger competitors. When it comes to getting listed in the search engines (Google, Yahoo, MSN, etc.), the longer your web site has been active, the higher ranking you will receive, and therefore more traffic will be directed to your web site. It is for this reason that you can’t afford delay this important decision any longer.

Small businesses have many challenges to stay afloat. Many budding entrepreneurs think that all they need is an idea or product, a name for their small business, and a bit of work and the product will sell itself and money will come rolling in. If you have ever run a small business – even a home based business – you will know there’s much more to it than that!

The first thing you, as a potential small business owner must always do, is research your market. Then research your competition, then the available supply for your product or service, and find your unique selling position. This alone can take weeks often months.

Once you are satisfied that there is a market for your product or service then you need to sort out your business plan and cash flow projections.

Small businesses may appear low cost but many suck up substantial capital before they turn a profit so now, unless you are very fortunate, you must sort out how to finance your small business. Do you remortgage your house? look for investment partners? borrow from friends or family? or approach the bank? Whichever you choose you need to convince others that your small business will be profitable and they will get a return on their money.

Once finances are in place the hard work starts. You may have premises to arrange, suppliers to sort out, staff to recruit and mangage, accounts to keep, products to design or source, lawyers to consult, accountants to hire and we must not forget in all of this market and get the all important customers to look at and purchase your products.

To do that you have to advertise your small business, but where and at what cost? Don’t forget you have to provide customer support and accept returns. Then there’s waste disposal … and on and on.

Who’s paying for all of this – in simple terms you, and your friends, investors andor your bank are paying, until you are selling sufficient product or service to cover the costs – usually many months or even years away.

New small businesses rarely return a profit in the first year and frequently not for two or three years. Make sure you can finance it properly.

Is it worth doing it? That’s your decision but every year tens of thousands of people do start their own business and many are succesful and reap the rewards of all that hard work. But many also fail, and all too often it’s due to lack of preparation

If you’re about to set off on your new business venture prepare well and Good Luck. With good planning, persistence and a lot of hard work you too can build a profitable small business.

There are three basic ways of earning money which include trading time for money, trading money for money and trading expertisevalue for money.

Society and the formal education system promote the first method of earning money which involves trading time for money. In other words, you work for someone else for a specific amount of time and then they pay you. Working for someone else drains your energy and you dont make much money.

The second way to earn money is utilized by a small portion of the population and involves trading money for money. In other words, you are earning money through investing. Investing can be risky because if you lack additional funds then how can you invest any money in the first place? Therefore, many people cant even try this option because they only have enough money to pay their bills.

The third way to earn money is the best option. This entrepreneurial option involves trading expertisevalue for money. This is the strategy of entrepreneurial experts. You have a flexible schedule, work less, and earn more. You can make thousands of pounds a day in this option.

In order to earn money through trading expertisevalue for money you need to first figure out who you are and what you can give to others. What information do you know that could help others? You can find value from previous work experience or even from your hobbies. From this you can create your intellectual property.

What is Intellectual property? How big is the market for Intellectual property? Is there room for you in the Intellectual property market? These may be a few of the questions you have when you are investigating the information marketing business. First of all, anyone can create intellectual property. You dont need to be a Rocket Scientist. You just need to have an area or expertise, or access to an expert, and a drive to succeed.

Intellectual property combines e-commerce and book publishing. For example, you can write and sell an eBook. Recent research has found that approximately 6 out of every 10 American adults surf the Internet on a daily basis seeking out entertainment, education, and to shop for products. People are more comfortable buying online then in the past. The market through the Internet is global and encompasses millions of people. Therefore, the information marketing business has room for everyone!

When you market on the Internet, you market to your niche. Therefore, you dont have to worry whether or not your neighbor will want to buy your product. The Internet opens the niche market for you.

If creating and selling intellectual property on the Internet is so simple, why isnt everyone doing this? The formal educational system and previous societal beliefs are to blame. In school, we are taught to finish school and then become an employee at a company. The entrepreneurial spirit is not promoted; in fact it is almost shunned.

Dont let societal beliefs stop you. The intellectual property market is wide, diverse, and ready to fill your pocket book with cash.

Many people who want to start a home business look for home business tips that can make their lives much easier by learning from others. Many small business owners will happily share their business tips with you in order to get your business off the ground. Most of the time home business tips are practical, but depending on what type of business you are going into will determine what kind of tips are useful.

Many times common sense and plain old practical information is the key. The most common home business tip is to learn as much about your business as possible, particularly from others who are successful now. Knowledge truly is power. You need to understand your market, the customers, your competitors and your business inside and out to truly succeed. Dont expect any short cuts; starting a business requires hard work and lots of thought and preparation before you begin.

Learning from your competitor is another great way to absorb knowledge. Your competitor has probably been through the same pitfalls as you and somehow succeeded. Look at how your competitor does business and try to follow his strengths. If you see a flaw in your competitor, try to capitalize on it.

Talk to other small business owners. Many small business owners are in the same boat as you and are always looking for people to talk to about how to get their business off the grown and be profitable, use the many home business forums and resources such as magazines and books. If you are looking for great home business tips, check out the above resources. Another way to get information is to look for SBA sites in your area. They dispense information that will help you write a business plan and obtain funding if you are eligible. Do your due diligence before your open the doors.

Disaster Preparedness For Your Small Business: How To “Weather” Any Storm

In the event of a potential disaster, do you have a business continuity plan for your employees and your business? Are you backing up files on a routine basis, and could you recover them in an emergency?

On average, nearly 60 percent of businesses damaged in a disaster close after a year, according to the Association of Small Business Development Centers.

Last year’s devastating hurricanes heightened awareness of the importance of disaster planning for businesses, large and small. But destruction of your company’s infrastructure is not limited to natural disasters-it can happen anytime. Daily misfortunes like computer crashes, network breakdowns, and power outages threaten your business each and every day.

Having weathered four major hurricanes last year alone at its corporate headquarters in South Florida and across nearly 100 stores in the Gulf region, Office Depot has real-world experience in disaster planning and recovery. To help businesses be more prepared, the retailer has compiled “Disaster Preparedness: Advice You Can Depend on to Weather Any Storm.”

“A sound contingency plan can enable your small business to respond effectively to a crisis, and prevent that crisis from becoming a full-fledged disaster,” said Tom Serio, Director of Business Continuity Management for Office Depot.

According to Serio, the overarching principle in disaster planning and recovery is to protect your most valuable and irreplaceable assets: your people and your data. Among the guide’s other recommendations:

• Keep contact information for employees and local emergency services, as well as key vendor and supplier information, updated and easily accessible. Establish a clear process for communications and plan how you will contact one another in different scenarios.

• Protect your business from faltering after a disaster by backing up key data at least once a week. Copy data to removable media, including DVD-R or CD-R discs, or to removable drives such as the Ativa McAfee Flash Memory Drive with anti-virus software.

• Move back-up software to a secure off-site location. Store copies and documents you use in day-to-day operations in a secure and fire-proof location like the Sentry Fire-Safe Electronic safe.

• Periodically review the data being stored on any back-up systems to ensure that the right data is being copied and that it can be restored.

Most of us know what a business plan is. We know that it includes product information, marketing strategies, financing, facilities and a customer profile. Yet how many of us know that the comprehensive report is just a piece of paper without the commitment of the owner? Thats right it is garbage without strong psychological traits that help to adhere to the plan. A business plan changes depending on the personality strengths of the owner.

Within the business plan it is beneficial to map out the financial budget for a certain length of time. In most businesses this plan includes all major expenses for the year. Adhering to a year plan may be difficult because they are not able to do that in their personal lives. For example, if one has a hard time saving 10% of their income how are they going to adhere to a budget that requires them to put money away for future development in their small business. The plan may include a year improvement plan but should be broken down into monthly or weekly goals so that the owner can follow it closely. Lets say an owner wants to build additional fresh fruit space and it is going to cost himher about 8,000 pounds. The owner hasnt been able to put this money away for the past couple of years due to inability to stay committed. Then have them take 200 out of their earnings each week by writing a check and placing it in a box. At the end of the year they can count up the
checks, rip them up and write one big one for their expansion project.

The same applies to marketing. If an owner wants to market to everyone in his neighborhood who has children it doesnt make sense to just state this fact and then not break it down into steps. For a small owner it may appear as though the task is too big himher to handle. Break it down so that this month they will purchase the demographics list of homeowners with children, then the next week develop the sales letter, the third week turn it into the printer, so on and so forth.

By breaking down larger business plans into small steps small managers are more able to keep focus on building and developing their long-term goals. Both the yearly and the monthlyweekly goals complement each other. The overall business plan acts as the ultimate improvement while the monthlyweekly goals acts like the road map. It is important to remember that the ultimate achievement of goals depends on the actually personality and traits of the owner. Writing out strategies that dont follow the normal way they work and look at life is likely to be unfulfilled.

One of the keys to running a successful small business or home office is learning to control costs. Even the smallest expenses can quickly add up and cut into profits, leaving you with a business that won’t move forward.

Many small-business owners know where their money comes from, but are not as clear on where it goes. This can have a significant impact on their businesses’ cash flow.

It’s important to review your expenses regularly – every quarter if possible – so you can accurately manage your outgoing expenditures and look for ways to save.

Demos Parneros, president of U.S. stores at Staples Inc., provides the following suggestions to save your business money.

* Buy last year’s model. Furniture, computers, PDAs – there is always something new. This also means that there is always something old. If you wait until the end of the year or for sales throughout the year, you can save on your office needs.

* Buy in bulk and buy ahead. By buying commonly used items in large quantities, you can save a lot. Replenish your supplies before you run out. Thinking ahead, and thus buying ahead, gives you a chance to comparison shop and take advantage of sales.

* Buy products that save money. Consider quality alternatives to national brands. Staples ink and toner products, for example, offer consumers quality products at a 15 percent to 20 percent cost-savings per cartridge.

* Take advantage of discounts. Professional and trade associations often offer their members discounts on insurance, travel, shipping and other common expenses. Similarly, some credit cards, like the American Express Corporate Card for Small Business, may get you discounts as well.

* Save on mail costs. Mail costs for your business can add up fast. To save money, use postcards or consolidate shipping. You also can buy or lease a postage meter or get a mail scale to eliminate overpaying.

Best Small Business Idea – Overwhelm – Get It Out of Your Head

If you are like most businesses owners, youve experienced overwhelm in your business at one time or another. Maybe you experience it regularly and for good reason. Hundreds of things are pulling at you at one time. Youve got marketing going, production to oversee, calls to return, employees that need your advice. Its never ending right? How do you possibly handle it all?

Most of the small business owners that I talk to keep almost all of these things in their head. I ask them where their business plan is. Its in their head. I ask where their employee training manual is. Its in their head. About the only thing thats written down is their calendar of appointments. Even a lot of their to-dos are in their head. Heres one simple and powerful way to get out of overwhelmwrite it all down.

Your overwhelm is in your head because most of how you run your business is in your head. Start writing it down and you will start having less overwhelm. Start taking a little time each day to document your business processes. Make a list today of the processes that you havent recorded. Cover marketing, production, training, accounting, etc.

Then take one of these areas and document it in detail this week. Each week, for the next few weeks document another area. Within a fairly short period of time, you should have at least the basics of marketing procedures, production procedures, client follow up procedures, and employee training procedures in place. In other words, youve now got business processes. Processes that you can rely on. Processes you dont have to think about. Processes that you will use to grow your business without all that overwhelm now that its not all in your head.