Taking the Right First Steps to Business Success
Taking the Right First Steps to Business Success
First time investors need to make the right choice for the type of business to pursue. Mistakes are rampant when an idea has not been researched thoroughly from the onset.
Here are important business tips to consider:
Business owners can expect to be scrutinised and taken through strict financial processes before getting credit approval and loans from lenders. However, when one has knowledge about lending requirements and adopts the appropriate strategies, one can access small business loans with ease.
In a May 26, 2009 Timesfreepress.com article titled: “Small Business Owners Get Help from SBA Loan,” Amy Williams reported the Small Business Administration (SBA) announcing that more businesses will be eligible for SBA-backed financing. The policy took effect from May 1, 2009, will continue till 2010.
The Timesfreepress.com article also reported lenders who deal with the SBA as pointing out that the volume of credit available to undersized companies in the United States has been up more than 25% since March 2009. The SBA’s decision to guarantee more loans and the increase in volume opens a great opportunity for easy access to credit from banks among owners of smaller companies.
Despite the opportunities created, prospective borrowers have to know how to take advantage of the situation to secure credit approval from financial institutions who continue to apply strict lending procedures. The following are some of the basic tips on how to obtain small business financial support.
Good Business Plans for Loans
In order to have a credit application approved, applicants need to provide sound business ideas and be in a position to justify the viability of the projects for which the money is being sought. In an articles published in the New York Times on May 27, 2009, Scott Medinz wrote that to be able to get credit, those who want to apply for a small business loan should be able to show bankers that they have a viable plan on how they would utilize the money.
It is therefore important for prospective borrowers to know how to tailor their business plans to the specific requirements of lending institutions. Medinz pointed out in the NYT article that bankers are emphasizing the need for small business borrowers to know which measures lenders place emphasis on when evaluating applications. Applicants should learn to rationalise and defend projects they are seeking money for.
Building Strong Relations with Banks
To enhance the chances of getting money from creditors, borrowers need to build good relationships with potentential financiers. AllBusiness.com, an online e-commerce company, pointed out in a 2005 article headlined: “Small Business Loan Tips,” that building personal relationships with bankers is a very crucial practice. “A lender who knows and trust you is more likely to take a gamble on your …loan,” the publication emphasized. It is also important that such relationships are built for long-term purposes.
Quick money from Small lenders
Bigger banks may appear to be ideal creditors but a survey conducted in May 2009, by Barlow Research Associates demonstrated that smaller banks tend to give out loans to smaller businesses than larger ones. Furthermore, the study revealed that businesses that had loans from small banks in the preceding year were three times likely to be approved for loans than companies that chose to apply to larger banks. Chances of small company owners getting money from smaller financial institutions could thus be greater than it may be with bigger ones.
Improve Credit History Score
Demonstrable credit worthiness is perhaps the biggest asset a company owner could have. With a good credit score, it will be always easier to obtain the needed amounts for company expansion or setting up new businesses. Though most potential borrowers may often complain about unwillingness of lenders to give out money, the NYT article quoted Sherrill Stockton, senior Vice President of Sonoma Bank as saying, “fact is, a lot of borrowers are just aren’t credit worthy.”
Good business plans, strong relationships with lenders and smaller banks, and improved credit history and score are among the essential requirements for obtaining small business loans.
Searching for a location for your small business may be overwhelming and time consuming. It depends upon what your needs are. Is it a place that your customers will drive to or is location the key due to heavy traffic. Whether location is important depends on what type of business you are? And, getting the best deal is important as well so let’s start the process.
What type of business
Let’s take some examples. A gas station is location driven. It must be on a busy road where cars pass on a regular basis. Another example might be a fast food restaurant. Most people frequent a fast food drive through because it is on the way to work/school/home, for example. A location based business depends on the traffic that passes during the open hours. A small business owner of this type of business would pick a busy shopping mall or a facility at the corner of two busy streets.
A destination small business is a place where people, your customer, are willing to drive to. You may be out of the way but the service you offer is worth the time. An example of this might be a restaurant that has the best steaks in town at a great price. Their customers would come from all over the city and maybe neighboring cities as well. A customer might be willing to drive to an architect’s office to see the design of his future house.
Do you need the space for manufacturing or storage? Is it an office to operate from or a storefront? Ask the question: Do you need heavy pedestrian traffic to succeed or can you bring your clients to your place where ever it is?
Additional Items to consider
– Access to highways, the building for deliveries, the airport, parking, transportation.
– Price is always an issue. Rates depend on the location and size.
– Draw your customers by locating near a complimentary store such as a shoe store next to an apparel store.
– Zoning requirements may not approve your small business so check.
– If a destination, make sure there is plenty of parking before signing the lease.
– Flexibility allows you to negotiate lower rental prices.
– Landlords may help you, in today’s economy negotiation is a practice.
If you pursue your destination in an organized fashion and evaluate each property thoroughly, the small business owner will find the perfect location for their purpose. Try to keep emotion out of it, although excitement is necessary, logic is needed for the best deal.
Staff motivation remains a challenge for employers. In Maslow’s hierarchy of needs principle and Herzberg’s theory of motivation-dissatisfiers have always been a part of business lessons. What creates a motivated employee? How does a business system or an employer recognize and reward their staff for jobs well done, at the same time making them fulfilled to stay on being loyal and motivated to the company?
Understanding employee motivation should be important from a management perspective. Motivation is a complex concept. It is not just about remuneration and recognition. To motivate employees, there should be communication within the workplace. Management should look into how working under pressure, having a competitive environment, and other factors motivate employees.
Giving Employee Task Control. These are issues such as objectives, planning, responsibility, quality, competition, challenge and accountability. Initially, objectives should be set for tasks that provide a challenge, for example, reduce cost or increase quality. Motivation may be increased when a staff member is given greater control over tasks. Managers should also provide for task variety, within the capabilities of the staff.
Employee Recognition and Rewards. These include status, praise, recognition, freedom in decision making, fun at work and corporate social contact. Any action related to ego boosters should be visible to others for it to be effective.
Money as Motivator. A major motivator is the employee salary. Aside from cash, it includes cash, bonuses, fringe benefits, etc. In general, this is out of direct control of the manager. In any case, the performance management report should be used to the fullest. The staff should be advised that remuneration is directly related to performance.
Staff Career Development. This is an important motivator that includes areas as a career path, job security, training, personal development, sense of belonging and actual promotion. Among others, the staff should be advised of job movements within the organization so that they are aware of opportunities. The manager should perform some strategic staff planning. Results may not be provided to the staff but they should be aware that it exists, along with implications.
The responsibilities of employees to their employer begin once they become a part of the company, and vice-versa, for employers to ensure that employees are motivated for the mutual benefit of both. One way or another, the motivation of employees also matters whether they want to be motivated or not. Managers have the ‘buy in’ from their employees, a kind of “what is in it for them to be skilled up and experienced.” They should clearly explain what is required, and how that skill or experience will get them to the next point of their goals, whether in micro steps or giant leaps.
As the manager supports the employee to set up an individual career development program, be it short, medium or long-term plan, the skills and experiences of the staff need to be included in the equation in order to fulfill the business goal along with the employee’s career objectives. Managers’ awareness of staff motivators and knowing the proper ways of handling them will achieve a win-win situation for both employee and the business.
How does one start a home-based business? And more, a successful one? Before venturing into any business set-up, it is important to work through the entire business selection process. Otherwise, the potential business runs the risk of investing time, energy and money in a losing business venture.
Here are basic requirements of the process that a potential business owner need to consider to start a home-based business that has a potential for success.
Acknowledge Intent for a Home-Based Business Idea
You are on your own. A decision between you and family has been made that you will work in the comforts of your home away from the stresses of annoying traffic. Whatever reasons made, this will motivate you to forge your business plan and ensure that the right thing is done.
Assess Talents as a Business Owner
What are your inherent gifts? Identify your unique traits and what makes you stand out. For example, you have a gift for communicating and ear for listening. These are talents that will assist your business venture.
Analyze Skills Set as a Business Owner
Talent and skill are two different aspects. You also need to identify your skills to be utilized in your home business venture. Talents, aside from being inherent are often passive, but skills can be developed over time. For example, a creative person may have excellent skills in design or writing, while a person with a talent in details may have strong organizational skills.
Consolidate Talents and Skills to Generate Business Ideas
Write down your talents and skills, and brainstorm your input honestly. Don’t censor yourself but rather, list all your ideas at this point. Ask yourself, “With my talents and skills, are they enough to proceed with my business ideas in mind?” You may want to consult with a professional friend to help you brainstorm further. If you are bent in pursuing a particular small or home-based business, and realize that your talents and skills are insufficient, train or educate yourself with those skills you need and don’t have.
Run a Test of the Home-Based Business Ideas
Once you have gone through the initial phase of your business plan, it is important that a test run of your ideas is done. Not all business ideas will work out. By running a test, ideas that will not work can be crossed out. Review your list thoroughly and eliminate any ideas that will not work.
Consider the Profit Component of the Home-Based Business Idea
For this matter, the financial aspect should always be looked into. You need to understand and factor out how much customers will pay for your services, and just as critical, if your income will be sufficient to justify the business.
Formulate a Business Plan to Assess the Viability of the Home-Based Business Idea
The Internet is a great source of information how a business plan can be prepared. Some people think that a business plan is only to secure a business loan. It is not. A business plan is able to tell if a business has a chance of becoming successful.
Planning the business is crucial. There is no point in going after a business venture, home-based or not, if the planned venture is not profitable. If the business plan shows that the idea for a home-based business is not viable, the project should be postponed. Another home-based business idea can be considered. The required process will have to be done again until a viable or workable home-based business turns up.
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