DECIDING WHETHER TO START A BUSINESS

Setting up your own business can be very rewarding, but there are pressures involved. Its not enough just to have a good viable idea, you also need to have the right skills and temperament to make the opportunity succeed. Starting your own business is also a risky thing to do, so you need to be aware of what problems to look out for as early as possible. This will help you decide if you are willing and able to take those risk, and will also help you apply strategies that will reduce them.

Before you go any further, its important to find out as much as you can about what sort of person you are. Be honest and objective, and discuss the project with friends, colleagues and relatives. Think about how you have dealt with the past challenges, as an indication of your response to difficult new situations. This action will help you decide whether starting a business is the right thing for you to do.

Making it Happen

Assess your Abilities and Resources
Starting your own business is a risky thing to do, so you get to grips with the various risks as early as possible. This will help you decide if you are willing and able to make those risk. It will also help you apply strategies that will reduce the risk.

You need to ask yourself several questions:
a. Do you have the financial resources and can you afford to risk them?
b. Do you have sufficient experience and technical skills to perform the core functions of your new business?
c. Are you familiar enough with the market to be able to asses its needs and adapt to each changes?
d. Do you have the tenacity and discipline to see through hard times will cash will be short and demands will be heavy?

While you might not be able to answer this questions completely, it is really important to find out as much as you can about what sort of person you are and to do that you might be honest and objective. Think about how you have dealt with the past challenges, as an indication of your response to difficult new situations.

Look at your Objectives
Why do you want to start your own business? There are many good reasons but there is often the danger of having unrealistic expectations. Here are some reasons that people often give, and some notes of caution:
a. Independence
b. Greater job satisfaction
c. Achievement and success
d. More money

Assess your skills
Assessing your skills is a useful process as it will help you identify areas in which you need training. These will contribute towards your changes of being successful in business. There are many sources of training avialable in small business, in the local colleges and in universities. The internet is also one of the great source of business informations.

Be pre pared for the pressures
The pressures of being self-employed are inescapable. You may have to work long hours and there will be times when things get on top of you. You may well get into dept in order to finance the enterprise. You will need to maintain your faith in your business, often in the face of other peoples doubt.
There will be some days that you feel depressed, lonely and isolated. If you employ people you will need to be positive and show leadership at all times. There will be some days that you will need to tough and prepared to discipline difficult employess, or make difficult demands on your suppliers. You also need to be polite and helpful even when an awkward customer is giving you a hard time.
Also, you must be sure that your family can accommodate the risks that self-employment can bring, especially in terms of lower income in the initial stages and maybe even the implications of the business failing. Take time to talk to all members of your family who might be affected by your choice to be your own boss.

COMING UP WITH A BUSINESS IDEA

You've decided that you want to go into business, but you dont know what that business is going to be. You're looking for a great idea. The thing is to begin by breaking down the bigger picture into manageable pieces. First, look at your own skills and knowledge. Consider your present job, and wether you could you do your present job working for yourself rather than being employed by someone else. Successfull businesses are frequently started by people with practical experience in the type of work that the new venture is entering. They go into business because they decide that they want more independence in thier working lives.

It may be that you feel that the skills you have are already over supplied. If this is the case, its possible that there is no room in the marketplace for yet another joiner, furniture, restorer, or undertaker. Or it may be that you simply do not want to carry on doing the same thing for youreself that you've done for others in the past. You perhaps then need to think of ways in which you could modify the skills and experience that you've acquired while working for somebody else.

Take a careful look at yourself; it could be that your personality suggest a business idea. If you've persistence, charm, and good communication skill, for example you might be a good salesperson. There are frequent openings for self-employed sales agents to sell other peoples products. If you're good dealing with people, you might be just the person to take up a retail franchise.

Making it Happen

Turn your Hobby into a Business
You may have skills that you acquired as a hobby, but which could form the basis for a business. For example if your good at cooking you could think about starting a catering service for people entertaining at home.

Work from Home
If you are a parent, and consequently at home a lot of the time, you could think about working from home. It might be possible for you to set aside space to sew, knit, or perhaps make soft toys. Another option is to sell products for other people over the phone. There are also an increasing number of opportunities for people to do office work using a computer. This can include anything from word processing letters and keeping accounts up to date, right through to freelance writing and consultancy.

Buy an existing Business
Another option is to consider buying an existing business. However, if you do, make sure you find out why the owner is selling. Even is the seller is retiring, establish exactly why it wasn't worth his or her while to continue with the business. Look carefuly at the business account's, and be sure that you understand them.

What to Avoid

Not giving it enough Time
Dont expect an idea to come to you in a flash, sometimes ideas takes time to develop. You also need to spend time in planning, more time bigger chances to come up with a better ideas.

Not doing enough Research
If you fail to do any market research, you'll have far less chance of success. Research will definitely save you a great deal of time and money in the long run.

10 TIPS FOR SUCCESSFUL BUSINESS NETWORKING

Effective business networking is the linking together of individuals who, through trust and relationship building, become walking, talking advertisements for one another.

1. Keep in mind that networking is about being genuine and authentic, building trust and relationships, and seeing how you can help others.

2. Ask yourself what your goals are in participating in networking meetings so that you will pick groups that will help you get what you are looking for. Some meetings are based more on learning, making contacts, and/or volunteering rather than on strictly making business connections.

3. Visit as many groups as possible that spark your interest. Notice the tone and attitude of the group. Do the people sound supportive of one another? Does the leadership appear competent? Many groups will allow you to visit two times before joining.

4. Hold volunteer positions in organizations. This is a great way to stay visible and give back to groups that have helped you.

5. Ask open-ended questions in networking conversations. This means questions that ask who, what, where, when, and how as opposed to those that can be answered with a simple yes or no. This form of questioning opens up the discussion and shows listeners that you are interested in them.

6. Become known as a powerful resource for others. When you are known as a strong resource, people remember to turn to you for suggestions, ideas, names of other people, etc. This keeps you visible to them.

7. Have a clear understanding of what you do and why, for whom, and what makes your doing it special or different from others doing the same thing. In order to get referrals, you must first have a clear understanding of what you do that you can easily articulate to others.

8. Be able to articulate what you are looking for and how others may help you. Too often people in conversations ask, "How may I help you?" and no immediate answer comes to mind.

9. Follow through quickly and efficiently on referrals you are given. When people give you referrals, your actions are a reflection on them. Respect and honor that and your referrals will grow.

10. Call those you meet who may benefit from what you do and vice versa. Express that you enjoyed meeting them, and ask if you could get together and share ideas.


By: Stephanie Speisman

PROOF OF PURCHASE

It's always a good business practice to issue receipts. Here's why.

The Reformed Value Added Tax Law (Republic Act 9337) requires all VAT-registered sellers to issue receipts even when the customers are not asking for them. Under the law, receipts must be issued for every sale of goods or services regardless of the amount.

The Bureau of Internal Revenue has the authority to suspend the operations of businesses found violating the law. The temporary closure, the shortest of which is for five days, may be lifted only upon compliance of the requirements in the closure order.

The issuance of receipts protects the interest of both the seller and the consumer, and promotes transparency as all purchases are officially documented. This documentation is the sellers' evidence when applying for input tax credits against output taxes.

Another advantage to issuing receipts is the speed with which complaints can be addressed because there is proof of purchase. Receipts also come in handy when a defective item needs to be repaired, replaced, or refunded.

To consumers who are being charged for the taxes, the official receipt shows them how much of the transaction goes to taxes. This is why in addition to the total amount of purchase, the RVAT Law also requires retailers to show the amount of tax as a separate item in the receipt and to clearly label VAT-exempt and zero-rated items.

The best way to illustrate this is in the grocery list, which typically includes both VAT-able items like canned goods and VAT-exempt ones such as fresh vegetables and eggs. Proper receipts classify VAT-able and VAT-exempt items, and clarify how much tax is being paid. Note too that the VAT is not added on top of the purchase price but incorporated in it. So if the purchase price of VAT-able items is P500, the official receipt breakdown should show that the base price is P446.43 and the VAT is P53.57.

Receipts show consumers if the amount in the price tag is the same as what they paid for. When there is a discrepancy between the price tag and the encoding in the cash register, the Price Tag Law says the consumer should always pay for the lower price.


By Roselynn Jane Villa

BUYING A BUSINESS

Here are a few important things to consider before you buy an existing business that you want to set up yourself

Many successful entrepreneurs are described as people who started their business from nothing and grew it to what it is now. Indeed, it takes time—normally several years as the entrepreneur struggles to survive trials—before a business can get truly established in the market. Still, this is not always the route to get into a business. There is a shorter way: buying an existing one.

One obvious advantage in buying an existing business is that someone else had already done the hard work of putting up the company for you. There is already a functioning organizational structure, and you only need to evaluate its operations and procedures carefully to make them even more efficient.

But buying a controlling interest in an existing company is not a surefire guarantee to success. There are pros and cons you need to consider before making the purchase.

To begin with, when a business you want to buy is stable and is generating good cash flow, the selling price will normally be high; you will most likely pay a premium to acquire it. In contrast, you may find a better buying opportunity in a business with market potential that is losing financially due to mismanagement. This type of business may have some intangible assets such as a promising product or a good brand, but since it has been incurring financial losses, you may be able to acquire it at a very good bargain. In this kind of transaction, however, you need to have a good strategic plan for turning the business around after acquiring it.

When you purchase a going concern, you enjoy instant market share and immediate access to an existing customer base. This is particularly strategic if you are already in a similar business; acquiring your competitor expands your market share immediately and enables you to cross-sell to a new customer list that you have not been serving previously. It could also happen that the business you acquired has a location that is strategic for your future expansion. This is particularly true if almost—if not all—of the other good locations in the area are already taken.

Then, for cost-cutting purposes, you will need to evaluate the personnel in an existing business. There will be some you will need to lay off due to redundancy or incompetence, but there will be others you will need to retain because they have the right skills and experience for the business. As the new boss of the company, of course, you will have the authority to promote or reassign the best people for particular positions.

The company you acquired is likely to already have the necessary licenses and contracts for doing the business, so you need not go through the application process all over again. The licenses can be in the form of copyrights or trademarks that you can expand or sell, and the contracts can be in the form of franchises or vendor agreements. It would be advantageous to you if the existing relationship allows you to enjoy vendor accommodation with regard to credit terms; this is especially true if the existing vendors already understand the business. However, you have to be careful with existing contracts that go with the business you have purchased. Some of them may be outright disadvantageous, so you will need to find a way to terminate them to reduce your risk.

With an existing organizational structure, you can assume that control systems are also in place for accounting, inventory, and personnel. Although you may not find those systems in a documented manual, particularly in the case of small businesses, there will usually be some internal policies that are verbally or informally agreed upon by company personnel. You may want to review these policies and improve them with the help of a financial consultant.

Now, after looking at all the positive aspects of buying an existing business, let us now explore the downside. To begin with, it is possible that the existing business has a terrible public image because of poor service or poor product quality. It is also possible that its existing contracts are so restrictive as to prevent you from closing down certain product lines or certain stores that are losing. You may also inherit the bad relationship of the previous owners with their banks, thus making it difficult for you to negotiate on friendlier terms.

Also, when buying an existing business, you face the risk of misrepresentation; indeed, you normally would not know the defects of the business until after the purchase. To minimize this risk, it is advisable to conduct due diligence on all aspects of the business before buying it. In particular, you should be on the lookout for contractual obligations that may not have been disclosed by the seller, and for undeclared external factors that may affect the business, such as the entry of new competitors, the weakening demand for the product due to the influx of cheap goods or the advent of new technology, or any new regulations enacted by the government that is unfavorable to the business. Indeed, to know whatever potential problems the business you are buying may have, you will need to familiarize yourself with the industry where it belongs.

Before even thinking of buying an existing business, of course, you will need to analyze your personal criteria, qualifications, skills, and abilities. Ask yourself the following questions: How much are you willing to pay for a business? Do you have the needed skills and experience to run it? How much risk are you willing to take? After answering all of these questions, you can start looking for a suitable business to buy. Your best sources of leads will be your banker, lawyer, and accountants. They can refer you to likely prospects, but don’t expect immediate results. It may take time before you can find the right business to buy. Be patient and wait until the time is just right.


By Henry C. Ong

MIND YOUR SPENDING

To keep your business from falling into the overspending trap, follow these 6 useful tips on cutting down on expenses and minimizing cash outflows

Putting up a new business can be so demanding and stressful that even rational people can sometimes fall into the overspending trap.

In your enthusiasm to make your business succeed, you yourself may fall into this trap and face the following undesirable situations:

High rental cost. By getting office space that's much too big for your startup business, you can get strapped for cash due to your high rental cost. This mistake would be all the more painful if your business doesn't pick up soon enough contrary to your expectations.
High depreciation cost. It's not advisable to buy top-of-the-line office equipment and furniture when they are not essential to the success of your business. They not only will be a big drain to your initial capital investment but also result in high depreciation expense.
Too many employees. In your desire to make everything in your business move smoothly, you may end up hiring more employees than you really need. To avoid bloating your payroll, see first if you or your manager could handle the functions of the positions you want to create.
Overstocking of inventory. Because you want to take advantage of a supplier's volume discount, you might order initial inventory that's way above your normal operating requirements. This can prove to be a bad deal when the cost to maintain the excess inventory proves to be higher than the supplier's volume discount.
Credit line abuse. You can end up acquiring unnecessary debt when you take on your bank's offer of a very high credit line. You can then be tempted to treat your credit line as capital infusion, enticing you to go on an expansion binge that invests heavily on capital expenditures. Because you used short-term financing for the long-term investment, however, you soon begin experiencing cash flow problems and abnormally high interest costs.

There are many ways to cut down on your expenses and minimize your cash outflows, but the most important are the following:
Develop a budget. You need to draw up a budget for each department of your company, listing all monthly expenses, and then make it a point to monitor and evaluate this budget regularly. Budgets are a reliable benchmark for measuring your actual performance. By sticking to your budgets, you will be able to curb your impulse purchases more effectively.
Promote accountability. Once you have drawn up your budget, you need to authorize only a few specific people including yourself to approve or make purchases on behalf of your company. By coming up with a formal approval system, you will be able to develop greater accountability and stronger control over expenses.Update your bank account regularly. You need to monitor your cash position daily to avoid unexpected cash shortfalls. By knowing your cash position at any time, you will not make the mistake of tapping your bank credit line to finance expenditures for which you have enough cash in the bank in the first place. You will thus be able to avoid unnecessary interest expenses.
Try to barter your services and products. The barter system or "ex-deal" is a good way to reduce your inventories, increase sales, improve cash flow, and use the excess capacity of your business. For example, if you are in the restaurant business and you need to hire a marketing company, you can offer to pay for its services with free meal vouchers instead of cash. This way, you not only reduce your cash outflow but also reduce your inventories and put your restaurant's excess seat capacity to use.
Prioritize your capital expenditures. You should invest in capital assets such as computers, equipment, and transportation only when you absolutely need them. Make sure that they will create a positive return on investment for you in the long term. For example, before purchasing a new computer, you need to first compute the net savings you will get by investing in it as a replacement for your old one, whose slowness could be costing you a substantial sum in overtime pay and delayed sales deliveries. Make the purchase only if the net savings are big enough.
Create an incentive system. You can encourage your employees to cut down on company expenses by developing an incentive system for savings generation. For instance, in a particular department, you can reward the employees a certain percentage, say 10 percent, of the total savings they realize at yearend from their approved budget. In this way, you not only cut down on company expenses but also share with your employees the benefits of the savings generated.

In some rare instances, it may be a good idea to spend heavily on such crucial aspects of the business as marketing and advertising. This may be unavoidable particularly if you are just starting up with a new brand. Still, such expenses should always be carefully budgeted and monitored, and if you are having difficulties justifying them and certain other major expenses, it is always advisable to consult your accountant or a financial advisor.


By Henry Ong

SPEND TO MAKE MONEY

Instead of scrimping for marketing, entrepreneurs are encouraged to spend money wisely based on a clear, well-tailored plan to generate profits

One of the most important things an entrepreneur has to do is to decide on how much money to allocate for marketing and operations. Although the answer can vary widely depending on business and industry size, the most important factor is how much you want to grow the business and how fast—not only in terms of sales revenues but in terms of profitability as well. Indeed, most entrepreneurs underspend for marketing in the belief that this will generate savings for them. They are wrong, of course, for the simple reason that a business has to spend enough money to make money. The trick, though, is to spend your money wisely based on a clear, well-tailored marketing plan that's specifically aimed at fulfilling your business goals.

Jay Conrad Levinson, well-known as the "Father of Guerrilla Marketing," talked about the principles of guerrilla entrepreneur attacks during his recent visit to Manila for the "The Guerrilla Marketing Conference 2007–Jay Conrad Levinson Live!" event last July 27. His advice: "When you don't have a lot of money to spend on your marketing, invest your time, energy, knowledge, and imagination to the business."

He then presented to entrepreneurs various ways of economizing on marketing and operations the guerrilla way:

Show that you care for your customers
Levinson says that you need to clearly recognize that your customers have specific needs and expectations, and that you need to always meet those needs as well as exceed those expectations. It's very easy to say that you care for your customers, he says, "but unless you take steps to show them that you really do care, they might be wooed away by a competitor. Your marketing can say all the right words and tell customers how important they are to you, but you've got to prove your dedication to your customers—and your prospects—by taking concrete steps beyond mere words."

Averell Gaspar, head of marketing and sales of Getz Pharmaceutical Inc., fully agrees with Levinson's approach. He says that delighting your customers is indeed the very first act in winning trust. In his job, therefore, he focuses on customer experience and interaction to fast-track market penetration, giving particularly strong emphasis to the following customer service goals: attention, reliability, promptness, and competence. "From a loyalty standpoint, customers rate their quality of interactions with your company equally important with the quality of your products," he says. "Well-trained and customer-centric employees are therefore the top attribute of companies that consistently provide excellent experiences to the customer."

To continuously improve the quality of your service, Gaspar suggests instituting a feedback mechanism that would encourage customers to share their views on how you should conduct your relationship-building with them as well as on how you should fix identified trouble areas.

Market your marketing
Levinson says that you are not really promoting your business unless you are cross-promoting it. "Your trade show booth will be far more valuable to you if you promote it in trade magazines and if you put fliers under the doors of hotels near the trade show," he explains

Due to the changing nature of markets, particularly with increasing competition and the growing availability of both local and global brands, businesses are becoming more and more dependent on several media to motivate a purchase. Simply coming up with an attractive promotion is thus no longer enough; you also need to market your promotion to make it really work. For instance, you need to make a big-bang announcement every time you come up with value offers, sampling, or freebies

"It doesn't mean that you have to come up with an additional budget for your promotional announcements," Gaspar says. "You just have to maximize your existing communication vehicles." He says that when you develop a brochure or flyer, for instance, you need to make sure to include your hotline number and website address for easy access by customers needing to clarify information. You can even use the back of your card as a promotional bulletin board by listing your services or promotions there.

"And never forget your exit strategy," he adds. "Bounce-back coupons, for instance, are an excellent way to encourage customers to keep on coming back. Through these coupons, you can offer them time-limited discounts on the customer's next purchase. You motivate them to come back to you by using precisely the same promotional materials, thus avoiding any extra expense."

Explore fusion marketing
Levinson says: "The guerrilla entrepreneur is dependent upon many people. He knows that the age of the lone wolf entrepreneur, independent and proud of it, has passed; thus, he is now very dependent upon his fusion business partners."

For this reason, he says, the entrepreneur need to identify potential partners for doing fusion marketing or co-marketing promotions. Fusion marketing can take your brand to an entirely new audience by associating it with another brand. It works by strengthening preference or purchase intention for your brand at minimal expense.

Gaspar elaborates on this idea: "Because the customer has too many choices and because there are so many companies providing many similar products or services, you need to spend extra to differentiate your brand from the rest of the field." But he says that companies need not splurge to achieve this. They can actually economize on this extra expense and get better results by sharing it with another brand that targets the same customers, thus combining the effort into just one synergistic move. "You can increase your marketing reach and reduce cost by combining your marketing efforts, concepts, production skills, customer information, and just about anything else," he says.

For instance, he says, such products as Pizza Hut and Pepsi as well as Krispy Kreme and Hershey's often merge their marketing forces to create a single campaign for their brands—a campaign that targets just one segmented audience.

Building your brand, Levinson says, is similar to building a cathedral or making a movie—it takes hundreds of collaborators. Indeed, in fusion marketing, collaboration with your partners is the key. As he advises in very down-to-earth terms, "You scratch my back and I'll scratch yours."

Nurture the ones you already have
According to Levinson, the most common method of economizing—that of marketing to existing customers—is also one of the most overlooked. He points out that customer acquisition will cost you six times more that customer retention. The price of discovering and convincing likely customers, he explains, is astronomical when compared to the price of doing the same with current customers.

A common misconception among most entrepreneurs, he says, is that customer relationship management is expensive. But he explains that all that needs to be done to develop a database marketing capability is simply to update and accurately maintain your customer information bank. When this is done, the information becomes very handy and useful for prospecting purposes, customer segmentation, sales forecasting, and determining who your real customers are and what their buying habits might be. Communicating with them thus becomes more effective, particularly if it is done frequently enough.

But Gaspar says that customer-nurturing programs can't be measured simply on the basis of how your membership cards look or how much in rewards you give to your loyal customers—instead, it is on how well you know your customers on a personal basis. He thus suggests making it a point to remember their names and such important personal milestones as their birthdays and anniversaries. "You can even surprise them by giving them a small token unexpectedly, with no particular occasion in mind," he says.

Gaspar then suggests two other very practical and cost-effective communication vehicles for strengthening your customer relationship-building: e-mail and SMS message blasts. He says this can be done simply by developing a simple HTML catalogue-type e-mail—one without attachments—that can be sent to all of your Internet-using customers. Still another idea, he says, is taking advantage of the unlimited text offers of the major telecommunication companies to broadcast your new products and services at hardly any cost.

Indeed, as Levinson says, the philosophy of frugality and thrift in guerilla marketing is not about cutting and limiting your marketing expenditures. Instead, it is the art of stretching your marketing budget to effectively reach your target market through multiple channels, then delivering your marketing message clearly and forcefully. Very often, he says, a guerrilla entrepreneur's attacks will prosper despite the lack of resources precisely because the situation makes the guerilla entrepreneur more willing to try new and innovative ideas.

By Justine P. Castellon