Why there are so many small business companies missing the boat to huge global markets? Primarily because the journey involves a few initial struggles, which discourage a small business entrepreneur. These are:

• Financing is often difficult to find.
• Many entrepreneurs don’t know from where to get started.
• Often businesspeople fail to understand the cultural differences between international markets.
• The bureaucratic paperwork may also discourage an entrepreneur.

Besides the fact that the majority of the market lies beyond the borders of U.S. there are many other compiling reasons behind why a small business should try to go beyond national borders. Believe it or not, there are many advantages for a small business in the international market, than huge corporations. For example, exporting products can absorb excess inventory, soften downturns in the domestic market and extend product lives. It can also spice up dull routine work of a business.

Small businesses have several advantages over large businesses in international trade. They are:

• Overseas buys enjoy dealing with individuals rather than with large corporate bureaucrats.
• Small companies can usually begin shipping much faster as there is no huge queue.
• Small companies provide a wide range of suppliers.
• Small business organizations can give more personal service and more undivided attention, because each international account is a major source of business to them.

These are some of the compelling reasons why you, as a small business entrepreneur should think positively and seriously about taking your span of business abroad. No matter what others say, if you think that you have what it takes to expand, then you should go for it. If you enjoyed this daily dose of work relief, make sure to subscribe to the Workdose Daily Dose Email and/or RSS feed. And did we tell you how much we love it when you give us props via Twitter and Facebook?

Cover Letter
Only one thing is certain when you go for hunting money to start a business. That is you will not be only one hunter out there. You will need to make potential investors want to read your business plan instead of hundreds of others on their desk. Your cover later is supposed to be an interesting and intelligent one so that it captures the attention of the investor. Don’t start the letter with “To whom it may concern” or “Dear Sir”. Try not to be gender biased in the salutation. If you know the name, you can use it to address the investor.

Executive Summary
Begin with two or three page management summary of the proposed venture. It includes a short description of the business and discusses the major goals and objectives.

Company Background
This section will include company operations to date (if any), potential legal considerations and areas of risk and opportunities, past and current balance sheets, income statements, cash flow statements and other relevant financial records. It is wise to include an insurance coverage. Investors want to be assured that death or any mishaps will not pose major threat to the company.

Management Team
This section includes an organization chart, job descriptions of listed persons and detailed resumes of current and proposed executives.

Financial Plan
Provide five year projections for income, expenses and funding sources. This will project your financial plans for the business. Don’t assume the business will grow in a straight line. Adjust your planning to allow for funding at various stages of company growth.

Capital Required
Write how much capital you would need initially to start your business. Include spending per sector to project a clear work plan.

Marketing Plan
Never underestimate the competition. Mention detailed procedures about how you see yourself among all other competitors, how you want to position yourself and how you would capture the attention of your target market. Don’t forget to include which market segment you are aiming for.

Location Analysis
Depending on your business, location analysis can play a vital role. If you are planning to run a retail organization, location analysis is a must. Is you location suitable for your business niche?

Manufacturing Plant
If applicable, describe the minimum plan size, machinery and other related things required.

Appendix
Include all marketing research on the product or service and other information about the product concept or market size. Provide a bibliography for all the reference materials used inside the business plan’s body.

So, these are the basic sections of a formal business plan. Make sure you mention all the necessary parts in the report. This will not only help you to get potential investors’ attention, but also help you to in the long run. If you enjoyed this daily dose of work relief, make sure to subscribe to the Workdose Daily Dose Email and/or RSS feed. And did we tell you how much we love it when you give us props via Twitter and Facebook?

Begin With Planning
One of the main reasons of failure of small business is lack of proper planning when starting the business. It’s amazing how many people are eager to start a small business but have only a vague illusion of what they want to do. But what you should do is, when you KNOW that you want to establish a business organization, you should discuss your idea with professors, friends, and family and in relevant online forums to help you get started. Then you should develop that idea and give it a “business plan” form. A business plan is a detailed written statement that describes the nature of the business, the target market, the advantages the business will have, the disadvantages the business will face, how they will create a market for themselves, how they will compete with the competition etc.

Act to Achieve a Solid Financial Stability
Number 4 mistake on the list of 17 common mistakes of small business entrepreneurs is related to having a weak financial backing. Before starting the business you should have the correct amount of capital on hand, or you should have a proper plan of getting the money in time. Starting a business with too little money on hand, or too much money on hand is bad for you. You should also pay close attention to not buying on credit too much. Many family members, friends, angel investors, venture capitalists, governmental units help out and invest on new businesses.

Try to Know Your Customers
One of the most important elements for succeeding in business is to know the market. In business, market consists of people who are/will be interested in your service or product. Once you have identified your market and its needs and demands, you can start acting according to it. The way to meet your customer’s needs is to provide goods and services which offer superior value than your competitors. Maybe you can offer less price, or add one or two new features to your product to create a position for your business in the market.

Manage Your Employees
As a business grows, you won’t be able to monitor each and every part of your business effectively. Even if you give 60 hours a week to your business, you won’t be able to manage accounting, HRM, marketing and all other essential parts of a business. That’s why you will need employees who will help you out. It’s not easy to find good and qualified help when you offer less money and benefits. But it’s more important to keep the best employees once you have hired them. But believe it or not, its easier to keep an qualified employee to a small business than to a large business. Because in a small business the employee will find that they are doing a more challenging job and their ideas are being granted.

Keep Accurate Records
A business can fall into trouble very fast, if they don’t keep accurate and timely records. That’s why accounting in business is so important. A businessperson who will set up an effective accounting system early will save much grief later.

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1. Plunging in without first testing the waters on a small scale.

2. Under pricing or overpricing the goods or services.

3. Underestimating how much time it will take to build a market.

4. Starting with too little capital.

5. Starting with too much capital and being careless about how to spend it.

6. Going into the business with too little or no knowledge about it or without learning anything about the industry or the market.

7. Borrowing money without planning just how and when to pay it back.

8. Attempting do too much business with too little capital.

9. Not allowing for setbacks and unexpected expenses.

10. Buying too much on credit.

11. Extending credit too freely.

12. Expanding credit too rapidly.

13. Falling to keep complete, accurate records, so that the owners drift into trouble rapidly.

14. Carrying habits of personal extravagance into business.

15. Not understanding business cycles.

16. Forgetting about taxes, insurance, and other costs of doing business.

17. Mistaking the freedom of being in business for oneself for the liberty to work or not, according to whim.

What did you think about this post? Do you want to add some personal experiences to this? Make sure that you avoid these common mistakes as much as possible.

SWOT analysis is a planning tool used to analyze an organizations strengths, weaknesses, opportunities and threats. Actually the word SWOT is the first letter of the above mentioned four things. It helps to project what is the situation of the business/market now? What is the state of the economy and other business environmental factors? What opportunities exist to capture a profitable share of the current market? What products and customers are most profitable? And many other questions like these. The following image will explain SWOT analysis further.

I will demonstrate how to do SWOT analysis of the current market, by pretending that I’m going to launch a file sharing website (web-based business). But first let’s just point one 4 key areas of SWOT analysis.

• S or Strengths represent the strengths of your company. It is not related to any other companies in your niche. Strength depends on only you and how you lay out your company.
• W or Weaknesses represent the weaknesses of your company. This is the opposite of Strengths.
• O or Opportunities represent the areas or gaps created by your competitors, which you can utilize to make profits for your company. It doesn’t depend on how you plan or layout your company. It depends on how bad your opponents are.
• T or Threats are measured by how good your opponents are. It’s the opposite of Opportunities.

Example: SWOT Analysis Roadmap of a File-Sharing Website

1. Strengths: Is your new file sharing website something which will have the ability to attract new customers? Do you have superior speed, navigational facilities, and better looking design than your competitors? What makes you superior than your competitors?

2. Weaknesses: Is your new file sharing website lacking some features which would have been useful and appealing to your potential customers?

3. Opportunities: What can you do to make a good use of your competitors’ mistakes? For example, Rapidshare has a bug in its system. It can’t differentiate computers from the same IP range. So what happens is even if you aren’t downloading, sometimes it says that “You are downloading”. 4Shared triggers automatic downloads whenever you click on a download link which is really annoying. These are your opportunities to be careful about these mistakes and make a better file sharing system.

4. Threats: What are opponents doing which is better than you?

I hope this post was helpful to you. SWOT analysis is a very important tool for businesses growth. You should do this analysis not only before starting your business, but also every now and then to find out what’s your current status on the market.

• Personal Savings
• Relatives
• Former Employers
• Banks
• Finance Companies
• Venture Capitalists
• Government Agencies (Small Business Administration, Farmers Home Administration, Economic Development Authority, Minority Business Development Agency etc)

An estimated 90 percent of all start-ups receive money from friends and family. As it’s the most common form of financing method for small businesses, I’m not going to discuss about it further.

You may want to consider borrowing money from a potential supplier to your future business. The future supplier may be interested in funding your business if he/she thinks that you will be a big client in the future. But you have to remember that, its not a good idea to ask such an investor for money initially. Begin by asking for advice; if the supplier likes your plan, he/she might be willing to fund your business.

Other than personal savings, individual investors are primary sources of capital for many small business entrepreneurs. These individual investors, popularly known as Angel Investors, are private individuals who invest in potentially hot new companies before they go public. Financehub.com and garage.com are some of the websites who bring entrepreneurs and angel investors together.

Investors known as Venture Capitalists may also finance your business, but for a price. They might ask for a huge stake (as much as 60 percent) in return they will give you the money needed to start your business. If the stake is too high, you might lose control over your business. So always be careful about this sort of financing. If you are going to set up a relatively small business firm, better choice would be Angel Investors rather than Venture Capitalists. If your business needs millions of dollars to start, experts recommend that you talk to at least 5 different investment firms and their clients to find out the right venture capitalist for you.

Many US Government Agencies also help small businesses to start operating. For example Small Business Administration (SBA) advises and assists small businesses by providing management training and financial advice and loans. SBA provides loans and micro loans of different scale to new businesses. But the amount of the loan will depend on how solid your business plan is.

What do you think is the best way for financing your future small business? Whatever that may be, be sure that you have a reasonably full-proof business plan.

Best wishes.

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Pros of Home-Based Business: Why They Will Grow

• New tax laws have loosened the restrictions on home based businesses. That’s why we are noticing a significant increase in the numbers of home-based businesses nationwide.

• Balance between work and family is one of the many reasons for the increase in number of home based business over the years. Starting a big business requires a lot more time, energy and dedication than small home-based business. And it can seriously hamper one entrepreneur’s personal life. That’s why many people chose to run a small business which will be both profitable and ensure a steady family life.

• Now a days, thanks to the information technology, home-based business can also compete in a level playing field. Computers, high speed internet, PDAs allow small businesses to do many tasks like big corporations. These technologies are so affordable that setting up a business takes much smaller initial investment than it used to in the past.

• Because of the economic recession, corporate downsizing has made people aware of the fact that there’s nothing called job security anymore. This realization has influenced many people to venture out on their own. For the current economy it’s a wise decision to try to set up a small business, after doing the necessary market research. While big companies are making less profit, it’s time for the smaller ones to look for gaps to make profit for themselves.

• Social attitudes have also changed about small and home-based businesses. Previously, the owners of the home-based businesses were asked, when they were going to get a “real job”. But now, they are being treated with respect, which they deserve. This is also another reason behind why there has been a growth in overall home-based business of United States.

Cons of Home-Based Businesses: Challenges to be Faced

• Getting new customers is always going to be a challenge for home-based businesses. As the span of this sorts of business is narrow, the number of customers is also less. Getting the word out can be a difficult task for a home-based business, as you won’t have signs or storefronts.

• Though you save time by not commuting, if you are not self-disciplined and self directed enough, you can have serious trouble managing time.

• Keeping work and family life separate can be another challenge for home-based business. You need to leave family distractions to a minimum level while you work, if you want to manage your business properly.

• You have to pay close attention to city ordinance. Based on how much traffic and pollution a home-based business can attract to a neighborhood, city ordinance can restrict the business.

• Risk management is a big challenge for the business owners of home-based businesses. As home-based businesses are sole-proprietorships or partnerships, when a loss occurs, the owners have to pay the debts from personal assets. This can be overcome by careful planning and market research before jumping into the business.

So, these were the pros and cons of a home-based business. If you enjoyed this daily dose of work relief, make sure to subscribe to the Workdose Daily Dose Email and/or RSS feed. And did we tell you how much we love it when you give us props via Twitter and Facebook?

More Financial Resources
Financing the business is often the most thought of topic when forming a new business. Generally people have to start their business with their personal assets and small loans from banks. But if two or more persons join hands in forming a new business, it gets much easier to raise sufficient fund and it takes off huge amount of burden from one person’s personal assets. That’s why monetary benefit is the biggest reason behind forming a partnership rather than sole proprietorship. Another good thing about partnership (like sole proprietorship) is that the profit of the business is taxed only ones, as personal assets. It means that, even if you are getting more help from the partner in form of shared activities and monetary benefits, you are still being taxed like a sole proprietorship, which denotes superior value for your business.

Sharing of Management, Skills & Knowledge
It is simply much easier to manage the day-to-day activities of a business with carefully chosen partners. Partners give each other free time and provide different valuable skills and perspectives. Suppose someone wants to set-up a small computer servicing center. He has all the technical skills needed for this job. But he lacks accounting and management skills. In that case, it’s better to find a suitable partner for this job, rather than hiring an accountant. Because he can manage all the “desk activities” of the farm for free plus work hard than an employee.

People Take Partnerships More Seriously
Clients or customers prefer a partnership business more than they prefer a one-man-show. They feel that partnerships are more reliable. As far as my opinion goes, I won’t purchase a large quantity of raw materials from a sole-proprietorship business. The reason behind this, I feel that the business might close down quickly and there will be no organization to refund or compensate me if something goes wrong.

Longer Survival
Because of the 3 points mentioned above, a partnership lasts longer than sole proprietorship. A study that examined 2,000 businesses started since 1960 reported that partnerships were four times as likely to succeed as sole proprietorship. It is believed that, a businessman performs better and works in a disciplined way, if he/she is being watched by another partner.

Have you decided about which form of business ownership you want to follow? If it’s a small-medium sized business organization that has regular clients, rather than customers, my suggestion would be to go with partnership.

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Are You Self Directed?

Even though you are your own boss when you are running your own business, you have to be self directed and self disciplined. You have to remember that you are responsible for your success or failure.

Are You Self Nurturing?

A common characteristic of an entrepreneur is to take new calculated steps towards success. Even though no one else is supporting your idea, if you feel that your decision is right, you will have to go with your plan. Do you think you are self nurturing enough?

Are You Action-Oriented?

A great concept of a business will do you little good if you don’t know or aren’t willing to convert it into a visible output. You have to be action oriented to turn your dream into reality. Do you have the burning desire to actualize your plans?

Are You Highly Energetic?

Managing a business is not a child’s play. Setting up a new business is even harder. A new entrepreneur has to work long shifts and work harder than he has ever worked before to create an impact. Setting up a business may require 18 hour shifts, 7 days a week. It’s your business; you should be willing to work for it; otherwise profits won’t come. So, are you energetic enough to convert your plans into money?

Can You Accept Uncertainty?

Successful entrepreneur always take calculated risks. But no matter how calculated the steps are, there is always a fair amount of uncertainty involved in a business. Do you have the heart to accept the uncertainty and work even harder to reduce the effects of the possible uncertainty?

So, do you really have what it needs to become an entrepreneur? Remember, you don’t need to have these attributes by birth. But you should have the willingness to develop these qualities if you are thinking about stepping into this exciting world of entrepreneurship.

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1. Corporate Downsizing
You should think about becoming an entrepreneur and starting your own small business now more than ever because of the recent economic downfall in the United States and throughout the world. Believe it or not, when all the big companies are faced with less revenue, it’s a good decision for you to manage the time to plan about your own business. Because of the current condition of the economy, corporate downsizing has become a very familiar term. To avoid the risk of being downsized and “let go”, many want to accept the entrepreneurial challenge and start their own business, which is definitely a smart choice.

2. Opportunity
Many people, including those who are new to a country or people with disabilities might find that they don’t have the required skills to get a job with desired salary or output in this complex and changing corporate world. Suppose you want to make $X amount of money with the skills that you have. But the organization which is offering you a job agrees to pay you a salary which is less than $X. Why settle for something less when you know that you can do much better if you be your own boss, if you work for YOU? People often find that starting their own business offers more opportunity to them, then working for others. If you have the skills/attributes of becoming an entrepreneur, then don’t hesitate on your opportunity to shine.

3. Possibility of a Greater Profit
Profit is another big reason behind thinking about taking the risk of becoming an entrepreneur and starting your own business. We all know that the richest persons in the world are all entrepreneurs- Sam Walton, Donald Trump, Bill Gates and many others. Work for yourself – work harder – earn more.

4. Freedom of Taking Decisions
Simply put, many of us don’t like to work for others, where a boss will always tell us what to do what to not. Owning a business means that you can take whatever decision you feel is RIGHT, flexible work hours and many other “freedom” factors. For example, many doctors don’t like to work for large private hospitals simply because there is less freedom and more stress. They find it much more convenient to form a new business organization (clinic with few qualified doctors/partners).

5. Challenge
In business, one of the biggest truths is “earning more depends on taking more risk”. You can’t open new doors without taking risks, by avoiding challenges. That’s why many consider entrepreneurs “excitement junkies” who likes to live a challenging life through their own businesses. But we have to remember that, in business blind risks don’t pay. Business is all about taking steps of calculated risks.

Considering that you have the attributes of a future entrepreneur, what do you think is the biggest driving reason for you to set up your own business, to become an entrepreneur? Are you willing to accept the entrepreneurial challenge?