How NOT to be a Small Business Failure Statistic

Word Count:
818

Summary:
This is a short article discussing small business failures and reasons for them.

Keywords:
small business failure, small business statistics, reasons for small business failure, why small businesses fail, marketing, business plan

Article Body:
There were about 146,000 business startups a year, and an average of 12,000 business bankruptcies per year from 1994 to 2004 in Canada. A 2004 Statistics Canada study on small business failure rates ?Key Small Business Statistics ? January 2005: How Long Do Small Businesses Survive?? found that the first few years were critical. While almost three quarters of small business startups survive the first year, less than one third of micro companies (less than five employees) were in business after five years.

These statistics by themselves may be of little value to you directly. We know how many small businesses survive and for how long, but it?s far more important to know why some survive and others do not. There are a lot of studies on small business failure. Searching ?reasons for small business failure? with quotations on Google will give you almost 700 results (about 38 million without!). ?Why small businesses fail? will give you almost a thousand.

The 1997 study by Statistics Canada ?Failing Concerns: Business Bankruptcies in Canada found major internal factors of small business failure was management deficiency, financial management problems and poor marketing.

The Small Business Administration study ?Financial Difficulties of Small Businesses and Reasons for Their Failure? in 1998 found several causes of small business bankruptcy: outside business conditions (38.5%), financing (28%), inside business conditions (27.1%), taxes (20%), disputes (18.8%), personal calamities and other (32.9%).

There is a wealth of information on this subject, but what are the common factors? There are four basic areas:

External factors

External factors include new competition, your major client moving out of town, poor weather if you?re a seasonal business, or economic downturns. They?re often largely out of our control, and may be unique to your particular company, but there are often ways to mitigate them. For example, if you have a seasonal business, such as a landscaping company (at least up here in the cold north it?s seasonal) you could buy a bobcat to provide income during your off-season with snow removal. The bottom line is, have a contingency plan for external factors that could have a negative impact on your small business success.

Lack of management

Big companies have the luxury of being able to hire several people to get all the jobs done that need to be done, but chances are you?re going to have to do it all yourself, at least for awhile. That means you?re not only going to have to develop your product or service, you?re also going to have to make financial, accounting, legal, marketing, human resources, and purchasing decisions.

You may do some of these tasks very well, but it?s unlikely that you do all these tasks well, and even if you do, you might want to contact a lawyer and an accountant at the very least. And, research, research, and research some more, and when you?re done researching, find an expert or two bounce ideas off and give you solid advice.

Lack of planning

Small businesses often fail because of lack of planning. Let me make a bold statement: the single-most vital part of your business success is your business plan. Why? Simply put, your business plan specifically and concretely lists your goals for the next few years. It spells out, step by step, how you?re going to meet those goals, and gives you something to measure your performance against at the end of your business year. Finally, a complete business plan helps you get financing and includes a marketing plan.

I have one more thing to say about business plans. It does very little good to write a business plan, put it in a drawer and never look at it again. That same 1997 Statistics Canada study we talked about earlier found that successful small business owners refer to and revise their business plans often.

Lack of marketing

Most small businesses seem to think it takes a lot of money to market their product or service effectively. That?s simply not true. There are many ways to market inexpensively. You could use direct mail marketing which is as cheap as a stamp, or email marketing, which costs nothing. The point is, you need to get your product or service ?out there? somehow. You may have the best product or service out there, something completely unique from anything else, but what good does that do if nobody knows about it?

So there you have it?my thoughts on the main reasons why small businesses fail, and how you can avoid becoming a small business failure statistic by developing a contingency plan, consulting with experts, and developing and using a business and marketing plan.

If you are thinking of starting a small business, trust me, I?m not trying to discourage you. I sincerely believe being in business for yourself may possibly be the most rewarding career there is, but a little knowledge can go a long way towards arming you against small business failure.

How Much Are You Worth: Consulting Fees

Word Count:
868

Summary:
How much is your time and expertise worth? Its the age old challenge for consultants: how much do I bill my clients? Sadly, there is no set in stone answer, however, here are some tips that will help you establish your rates.

Keywords:
consulting fees, time, billing, added value billing

Article Body:
How much is your time and expertise worth? Its the age old challenge for consultants: how much do I bill my clients? Sadly, there is no set in stone answer, however, here are some tips that will help you establish your rates.

First, lets look at your client\’s needs. Why are they hiring an outside consultant, when they have employees? There are several reasons why your client is interested in hiring you as a consultant:

a) third party opinion – employees know where their bread is buttered, so they are less inclined to go against the current direction of the company. As an outsider, there is no concern with offering a different opinion. Your independent opinion can provide a much needed, focused perspective your client\’s company needs.

b) you are cheaper – this is what is normally the hardest for new consultants to understand. How can you command $75/hr when your client has reps working for $20/hr. It normally ends up with the consultant charging a lower rates. No more!

The employee:
$20.00 Hourly rate
$ 7.00 Fringe Benefits @ 35%
$10.00 Overhead rate at 50% (computers, office space etc)
$37.00 Total effective pay rate

Hours per year: 2080… Annual salary $76960

The contractor:
$75.00 Hourly rate

Hours per year: 480 (12 weeks, 3 months worth of work)…. Cost of completing the project: $36000

Your client gets the project completed quicker, and you end up saving them over 50%.

c) expertise in a specific area – you clearly can bring something that no other person on their team can. That\’s why they called you. As the expert in your chosen field, you can meet your clients needs with quickness and efficiency.

d) motivated to get job done on time, and likely, on budget – your work becomes your reputation. If you take too long, or go over budget, you wont see any future business from your client. However, provide the customer with what they need, under promise and over deliver, and not only will you retain your client for future business, you will get referrals. That\’s motivation that no employee has.

Now that you know what is motivating your client, you have the groundwork to start to establish your rates. As show in the second reason for hiring a consultant, while your hourly rate may appear to be more than their employees, it actually works out to be less expensive. Any fears or unease that you have in commanding a hire rate than their employees should now be eased. However, how much more can you charge?

Who is your competition?
Establish what their rates are, and then confirm what can they offer. Can you honestly provide more services, better customer service and come under budget or on time? If your competitors can provide more than you, you\’ll find that you may only be able to compete with a lower rate. However, if you can offer more, and have the proven results to back up that claim, you can justify a higher rate.

One key factor to remember is that if you charge a lower rate than your customer, you open yourself up to clients who will demand more of your time (it doesn\’t cost them as much as your competition). This may lead to finishing projects past due and scheduling conflicts with other clients. So while you may be able to charge an extra $40 per hour for example, you may end up losing clients, and worse, having client demands cut into your personal time.

If you bill a higher rate, you may surprisingly find that you get better clients, and more referrals. If you can justify a higher rate, your clients will be very specific with you in terms of what their needs are (saving you time). Clients who are willing to pay a higher rate, will referral other clients who are willing to pay a higher rate.

Your rate will impact the amount of business you receive. One term successful consultants learn very early is to understand the concept of value billing. Instead of billing by the hour (which many of your clients will be leery of), consider billing by the project.

By negotiating an amount the client will pay based on the project, you can establish milestones at which payments will be made, and provide added motivation to get the job done and the client signed off quicker. If the project is going to take you 10 hours, consider negotiating an amount for 1.5 to 2x your normal hourly rate. If you get the job done in 5 hours, you get paid the full amount, not for 5 hours. The client is happy because they know what the cost ceiling is, and most importantly, the project is delivered early.

Another benefit of value billing is that you can set up milestones whereby you can get paid. If you advise your client that the project will be completed in say, 6 weeks, and comprise of 3 phases, you can receive payment from them when each phase is complete. Finish early, you get paid early and your client is happy. Finish behind schedule and your client isnt paying for work that isn\’t complete yet.

This method helps to improve your cash flow. This is key for any self employed consultant.

So, how much are you worth now?

How do I Value my Small Business?

Word Count:
494

Summary:
A guide to finding the value of your small business

Keywords:
Business, Small Business, Buy, Sell

Article Body:
The problem with selling any small business ($500,000 and below) is how can a realistic value be put on the business. If a business is valued too high no one will be interested or worse value it too low prospective buyers will think there is something irregular. Also where it is listed for sale is important, EBay is a tremendous medium for certain things however fraud is common place.

Unfortunately there is no fixed system when it comes to valuing any private business, the IRS, Courts of Law and the Inland Revenue all use there own systems. There are also many wonderful mathematical formulas that can be used; however there is no fixed system. To be honest the whole system is complicated with no fixed rule apart from one. What price is a person is happy to sell a business for and what is the buyer happy to pay?

If you are either buying or selling a small business do not be afraid of negotiation, it is a natural process within business. There are many good negotiation techniques; Maitland Kalton of Kaltons Solicitors London is considered an expert in this field.

The following list is a simple aid to assist people who are interested in finding a value of a business, either for the sale or purchase.

1. Does the business have employees either full time or part time? Prospective buyers should be aware that any business in the UK which employs 5 or more people has specific duties in regards to Health & Safety.
2. Is the business purely an internet business? Be warned it is very easy for an online business to appear to be doing very well, when the truth is completely the opposite. This practice unfortunately is leading to the devaluation of genuine online businesses.
3. Does the business have fixed assets or stock? It is much easier to value a garage where real estate and equipment can easily be valued, where as it is less easy to value a business with no fixed assets i.e. Legal specialists, Solicitors, Health workers etc.
4. Does the business have a full audit trail; it is surprising how many small businesses listed for sale do not.
5. What area is the business in; it goes without saying that businesses located closer to major cities are valued higher than businesses in a rural district.
6. What are the future growth prospects for the business?
7. Will the business require insurance/liability policies?

These are just a few factors that have to be considered, as you can see there is much more to take into account than how much revenue is generated by the business. I hope this short article has been of some assistance to any potential buyer or seller of any small business.

About the author – Peter Arkwright recently retired from the military, he is now the Managing Director of www.bizseller4u.com
A new portal that allows people to list their Business for Sale

This article is free for republishing

How do I sell My Restaurant Franchise?

Question: I am tired of running my restaurant franchise. How do I sell it?

Answer: Many franchisors face this same predicament. Not only are restaurant franchises resold every day, but it is very common to see all types of franchises for sale on the resale market.

The absolute first thing that you must do is to contact your franchisor. Do not be embarrassed! Franchisors expect that a certain percentage of their franchisees will someday want to sell their franchise. It is normal. There are many reasons for a franchisee to want to sell a franchise. Your reason for wanting to sell is probably a legitimate reason, something that the franchisor has probably heard many times before.

But probably the biggest reason that you need to contact your franchisor is that many franchisors will impose restrictions on franchise re-sales. For the most part these restrictions will follow closely with their existing guidelines used for recruiting a new franchisee. They just want the ability to approve any new franchisee.

Are you prepared to sell your franchise? Do you know what your franchise is worth? Will you need to carry financing? Is your financial information up to date? Have you talked with your attorney about the correct from of structure for a sale (asset based vs. stock based)? Are there property lease considerations? Will your landlord allow an assumption of your lease?

You have got to know the answers to these questions. Make sure that you are properly prepared to sell your franchise. You will need to research the marketplace in order to establish a price point. You may wish to talk to a Business Broker or other informed expert for guidance. Check with your accountant. He or she has probably seen a business or two that has been sold over the years. Lean on those around you for good quality advice.

Looking at many franchisor web sites over the last few months, many sites include a section on their web site for franchise re-sales. Consequently, your franchisor may be able to help you market your franchise for sale to others. There are other ways to sell an existing franchise. A good old fashioned newspaper ad can work. A more progressive way is to advertise your franchise for sale online with a web site that is designed to market your franchise. An example would be The Business Market which has a number of existing franchises for sale.

So don’t be embarrassed… be proactive! You can do it!

How do I build a winning business plan?

Restaurant Management Toolkit

Restaurant Management Forms, Restaurant Software, Business Plan Templates, Marketing & Promotions For Restaurants, Cafes And Hotels.

Using sample business plans and their structure, along with studying as many business plan examples as you can, will provide you with the necessary framework to consider your business from every possible angle.

Starting or running your business without a business plan is akin to being a human without a skeleton!

Not only will using a sample structure highlight any areas you haven’t fully thought through, but it will also provide you with a good idea of what makes a good business plan, and what doesn’t.

The importance of your business plan as a motivational factor in running or starting your business cannot be underestimated. You will find that your commitment continues to build as you collect information, research and write each section.

Your business plan should always accompany requests for Small Business Loans , and lenders or any kind of angel investor will simply refuse to consider your business proposal without one.

Lenders and investors want to see your plan with the aim of satisfying key questions before they make their decision to grant funding or not.

Once you’ve commenced trading your small business plan will act as a steak in the ground, and help you measure where you expected to be against where you actually are. It will help you take corrective action as necessary.

Sample Business Plan Structure

All plans should include at least the elements listed below, and perhaps additional sections depending on the type of industry.

Executive Summary
Company Background
Products or Service Overview
Unique Selling Proposition and competitive advantages
The Marketplace
Operations
Leadership and management profiles including professional competencies
Professional Support
Risks and Threats assessment
Financial forecasts including key assumptions
Relevant appendices

Collecting the information for all the sections is time consuming and sometimes difficult. The business section of your local library is always a good place to start research. Ask your friendly librarian about how to look up market research reports, and how to investigate competitors.

If you are not familiar with spreadsheet software, constructing the necessary financial forecasts represents a significant hurdle. You have 2 choices:

Pay someone to put part or all of the plan together for you, or a small investment in some business planning software.

The advantage of using a professional is you will receive the benefits of their experience, combined with a professional looking plan.

The disadvantage is that it won’t be easy to make changes, and more importantly, because you will not have been as involved in its preparation, you won’t be as familiar with its contents as you should be. Make sure to learn the contents well.

One final tip though, remember it’s the quality of the information you put into it that determines what comes out.

How Come A Small Business Goes Over Better

Small Business CRM Demo – Manage Accounts, Contacts, and Opportunities

Numerous times folks who are curious in opening their own business make the err of going in direction over their heads and the entire matter easily becomes a huge mistake. If you’ve ever wondered why a small business seems to just go over much better then you are definitely in the right place because in this article I am hoping to provide you with some of the answers to questions such as that. A small business does have some wonderful benefits, there is absolutely no doubt about that and I have seen on many different occasions that someone’s small business always seems to become much more of a success than any of the larger businesses in that same area. Many times when someone does choose to open a small business and it only turns out to be the biggest mistake of their life, it is simply because they chose to jump into something without first giving it a great deal of thought.

Owning and managing a small business is much easier than trying to control every single aspect of any larger type of business and your stress levels will definitely be much lower if you could begin teaching yourself more about what it takes to make any business work. Maintaining a small business is really something that anyone of us could do but if you have not had the proper information given to you or have not spent enough time learning about every aspect of the business, you really are only setting yourself up for a huge financial disaster, which it surely did not have to be. Nobody goes into any type of business venture assuming that it is just all going to fail but most people that go into owning and managing any small business definitely has some little concerns about being able to keep it afloat. A small business can provide you with enough income that you would never need to work a second job for fears of not being able to afford everything. This is only possible however, for those of you who are truly committed to making the small business a huge success.

For anybody out there that is maybe considering delving into some type of small business venture, please make sure that you first speak with other business owners in your area to find out some of the small details that could really make you or break you. Knowing the important key things that could set you up for success is really something very important and if you give others the opportunity to advise you on some of the aspects of your small business, chances are you will not have to stay up all night trying to figure out how in the world you could ever possibly make ends meet. It is up to you to really make this a success because it will not happen overnight, have patience and plenty of drive, with those two things you are more than likely going to be smiling all the way to the bank!

Home based small business – boon or a bane?

How to Start a Home-Based Business
Start a business out of your home. It´s hard work, but you´ll be your own boss, have flexible hours, and finally be able to chase that dream.

If you are serious about the idea of making money through home based business then here are tips which are a beneficial tool for those who want to begin to work at home based business. A simple solution is to start with a business from home focused on the internet arena i.e. where the work is based on Internet.

The market is teeming with numerous ideas of home based internet business launched by innumerable companies. Every single day new schemes come into the market under the garb of legitimate home based internet businesses. Sadly, most of these so called top home internet business are pure pyramid scams.

Home based internet businesses can be a good opportunity provided you are serious about it. With increasing unemployment & rising costs, having a steady income has become a critical issue nowadays. This has a direct bearing not only on the security and well-being of their children but also on the security of their retirement days. If you work at home on internet, not only will you be able to earn a steady income but also be with your kids in their growing years. Moreover, the more you earn now, the more secure their future will be. In such circumstances, if you plan to start a home based internet business, it makes perfect sense.

But the problem lies in how to select the right internet home based business opportunity? The different ideas of top home internet business often confuse the mind and stop us from taking a quick and concrete decision regarding the best home businesses. Then there are questions regarding the viability of these top home internet business opportunity. Then, you are also doubtful whether the income generated from the work at home on internet opportunity be able to replace that from a fulltime job?

In addition to the reliability factor there is another question regarding the amount of investment. What would be the costs of starting work at home on internet business initiative? When the monetary return from top home internet businesses is uncertain, then there is no logic in starting one. Hence, selecting the right internet home based business is of critical importance.

One such work at home on internet business opportunity is internet affiliate marketing. There are innumerable companies offering reliable affiliate programs. And in most cases, the affiliate fees are either free or a basic minimum. The benefits of these home based internet businesses are many. There are tensions regarding inventory build up, or issues such as commercial property, licenses and other related chores. You will be able to keep your total focus on how to market the product or business concept on your website.

After selecting the right affiliate program to start your internet based home business, you should go about building your own website which will mark foray into home based small business.

Do not leave your internet home based business midway and change to stable but permanent job. This is the mistake most people in the work at home on internet do. Also don?t expect that you will become successful in your top internet home internet business in a short span of time. So stay put and works hard at your internet home business.

There are various benefits associated with internet based home business. They also require a smaller investment than offline ones. But it requires equal dedication, ethics and hard work to make it successful in this competitive world.

A Few Tips for New Home Business Owners

Want to Start a Home Business? 3 Things You Need
The recent recession, and the current concern over what´s next for the economy have many people wondering how they can make their finances a little more secure. One way to do this is to improve income diversity with the help of a home business.

Owning a home based business can offer a great amount of benefits and advantages. This article outlines the positive aspects of owning your own home business.

Work from home is a newer concept. Apparently, there are fewer experts available in this earning opportunity. If you are new to work from home culture, then home business forum is your best ally. The work from home forum is an absolute must that the home-based entrepreneurs can ill afford to miss. And here’s why?

Operating a business in your own home can be a significant life change. It is common that some people misunderstand this issue

When you start a home business, forum browsing and commenting is perhaps the last thing on your mind. That’s because once you know the basics, you tend to believe that you can easily master the tricks of the trade. But unlike an offline business, to succeed in home-based business, you require certain amount of knowledge about the mechanics of the work you do. You must be aware that the work you are doing has certain benefits for the person who is paying you for the work

And it-s here that work from home forum can be of immense help for the novices as well as experts. Yes! Even experts stand to gain a lot from the home business forum. The work from home forum works just like any other forum that is based on niche business. The modus operandi of any home business forum is similar with minor variations.

Firstly, you need to join a reputable home business forum. These forums act like discussion boards where people of like interests interact with forum postings. When you visit the forum, you?ll find some members already registered with that work from home forum. Now, if that forum allows the free access to the messages on the forum, you can easily make out the worth of the opinions of experts and other members on the board. Even if the forum doesn’t allow you easy access, you can still join them and see for yourself what the other people involved in home business are doing, their experiences (good and bad), their problems, and how other members help the member out of his difficult situation.

All this may seem like an agony aunt kind of a thing. And indeed, the concept is not dissimilar to agony aunt. The only difference is that while offline agony aunt is just one individual, but here you can ask for help from a number of people – experts and amateurs – from around the world at the same time. The insights you can get from home business forum experts are unparalleled and invaluable.

Make it fun and make sure you find something that you are happy doing, have a passion for and can become an expert in. Gaining these first, and the profits will come next.