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CONTROL
IS THE BASIS OF EFFECTIVE MANAGEMENT
If you want run successful
business you should have real financial picture of a business. Accurate,
up-to date records are very important for every aspects of your business.
It's certainly not fun, but without accurate records, you simply cannot
run a successful business. It is much easier to deal with various tax departments
of government or with your banker if your records are complete & comprehensible.
Good records will improve
your control of cost, help you keep track of your own operations and they
will also tell potential lenders or investors about your managerial capabilities.
Your accountant can help
you set up your records and books or you can do that by yourself. Whether
you choose to do, make sure you know what to record.
Managing a small business
or a large corporation, remember, fundamentals are the same: |
 Collect
your money as quickly as possible. |
| Keep
track of all received business documents. |
| Control
your purchases and payments. |
| Keep
track of cash or other payments received from your customers. |
| Store
important business records in a safe place (fire-proof lockable cabinets
or bank safe) |
| Keep
track of all business transactions. |
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SUCCESS
OF YOUR BUSINESS IS DIRECTLY RELATED TO HOW WELL YOU USE YOUR RESOURCES.
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PROJECTED
INCOME STATEMENT
It is document prepared by you
or your accountant, helps to predict expenses and revenues for the first
year. Try to answer:
What
are your predicted sales for first year?
How
much it will cost to produce your product or service?
How
much are your other operating costs?
Which
of your operating expense allow you to be flexible (advertising, salaries,
etc.)
What
profit or loss you expect? |
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Entrepreneurs
Are Made Not Born by Lloyd E. Shefsky
Many Americans want to join
the ranks of the successful entrepreneurs. They'd love to pick the brains
of the self made moguls. Now they can with this treasure chest of how-to
wisdom from 200 magnates and "intrapreneurs" such as Ben Cohen (Ben &
Jerry's), Fred Smith (Federal Express), and Debbi Field (Mrs. Field's Cookies). |
What
No One Ever Tells You About Starting Your Own Business: Real Life Start-Up
Advice from 101 Successful Entrepreneurs by J. Norman
Using more than 100 interviews
with seasoned entrepreneurs, the author guides you through every stage
of business start-up-from planning to marketing - & provides eye-opening
lessons from successful business owners who've learned the hard way. Paper.
DLC: New business enterprises Management. |
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GETTING
STARTED
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| Financial planing is
similar to planing a vocation. You must ask yourself basic questions:
Where are we going?
What will it cost?
How are we going to get there?
How are we going to pay for it?
It is essential to determine
the costs of starting your venture and know how much capital is required
before you begin.
Your financial planing will
serve you better and prove your professionalism when you go out in search
for financing. It is good idea to prepare BEST, WORST, and MOST LIKELY
case scenarios.
The funds you'll require
fall into two main categories:
- INITIAL
COSTS - land, building, fixtures, supplies, equipment, cars, trucks,
licenses and permits, decorating and remodeling, starting inventory,
utility installation fees, promotion for opening and unexpected expenses.
- OPERATING
COSTS - day-to-day costs such as rent, supplies, salaries, taxes,
rising inventories, insurance, advertising, distribution, repayment
of loan and interest car expense or travel, other financial expenses (sales
discounts, bad debts), professional services (lawyers, business consultants,
accountants etc) and many other business costs depends on type of business. |
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CASH
FLOW FORECAST
It is very important to calculate
your cash flow. Take time to anticipate when cash will be short, because
sales and revenues of business are rarely constant. Some businesses are
seasonal, others extend credit to customers etc. Cash flow planning help
you to have enough cash to cover all your business needs. |
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BREAK-EVEN
CALCULATIONS
Try to
calculate the amount of sales needed for your enterprise to find break-even.
Break-even point is the point where your total revenues are equal to your
total costs. When you hit break-even point your business will start to
earn a profit. Break even (BE) depends on many factors:
CALCULATION:
- Fixed costs (FC)
- Variable costs (VC)
- Cost of sa- Price
(P) less (CS)
When you must make predictions,
it's safest to be conservative, because something can go wrong and in business
it's often happened. It's not good if you are too conservative, because
you may find your business without enough capital for your regular growth. |
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Free
Money When You're Unemployed by Laurie Blum
The nation's
top expert on free money directs readers to grant funds available
to help finance everything from grocery bills and the rent
to medical expenses. Listed are over 1,000 sources of assistance,
complete with names, addresses, amounts available, and special requirements
for every grant. Includes information on special programs for
middle aged and older Americans. |
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SOURCES
OF FINANCING
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| Once you have listed
the start-up costs and operating expenses for your business, you need to
look at sources of financing, and then select the source that best suits
your business needs. As an entrepreneur, you will find several sources
you can tap:
YOUR
OWN MONEY - This includes the money you have in bank or other financial
institution, as well as money in the form of bonds, GIC (guaranteed investment
certificates) or RRSP's (Registered Retirement Savings Plans).
LOVE
MONEY - This refers to personal loans from friends, relatives and
or potential employees.
TRADE
CREDIT - This type of credit allows you to buy merchandise from
suppliers on credit, with understanding that you will pay for it in the
near future (usually in 30 or 60 days).
MORTGAGE
LOANS - If you own your home you can take out a mortgage on it.
Remember that you might lose your home if your business fails.
PARTNERS
- You can take on a partner and share the start-up costs and other
costs.
SMALL
BUSINESS ACT LOANS -The Small Business Loans Act guarantees loans
from chartered banks to small businesses. In other words, the government
is responsible for paying the loan back to the bank if the small business
owner cannot. These loans can be taken out to buy equipment, a building,
or land. They must be secured with the purchase. That is, if the owner
cannot repay the loan, he or she may be required to sell the asset bought
with the loan.
VARIOUS
GOVERNMENT LOANS - The government (through the different programs)
offers grants and loans and loan guarantees to businesses that qualify
as exporters or innovators, or businesses that are willing to locate in
areas requiring employment. To qualify for most of the funds available
through the government, the business must provide ongoing employment and
must stimulate economic activity.
BANKS
AND TRUST COMPANIES - Banks are in the business of lending money.
Before granting your business a loan, bank needs to be assured that you
and your enterprise meet specific credit criteria. They are happy to help
entrepreneur who has convinced them of the possible success of a business
idea. If your credit record is poor, you might be considered too great
a risk for a loan.
FEDERAL
BUSINESS DEVELOPMENT BANK (FBDB) - This corporation is a lender
of last resort. It will lend money to a new or existing business if the
business cannot obtain funds anywhere else and if it is convinced that
the the business venture is sound.
SHARES
- Once a business has grown to a certain stage, it can raise money
from the general public by incorporating and selling shares in the business.
These shares has to be issued under the authority of the corporate charter
and the securities regulations. However, during good economic conditions
this can be an excellent source of funds for a business.
VENTURE
CAPITAL - It is usually long-term and risk capital. Companies providing
venture capital take an equity position (often in the 20 to 40 percent
range) and it's doubtful such partners will remain silent, they'll want
to take an active role and consultation on such matters as financial planing
&control, accounting and marketing. Because venture capital takes a
minority position, they prefer firms that have management with proven ability. |
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