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Business Solutions

OVERVIEW:

Establishing and running your own business could be one of the most fulfilling but very challenging endeavors in life. Small businesses are the critical growth engines in the US economy and in most countries, as well as proven wealth creators. Some statistics estimate that 70% of the wealthiest Americans are business owners.

But to succeed in business you must be armed with the necessary tools and support mechanism. The US Department of Commerce estimates that approximately 1 million new businesses are created in the US each year; of those, 40% fail in the first year and 80% fail within five years.

Our duty is to work with both start-up and on-going businesses to deliver the crucial support services necessary for efficient operation and profitability.
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Forms of Business Organizations:

  • Sole Proprietorship -- Having not more than one owner. Suitable for micro and family-owned businesses.
  • Partnership (LLP) -- Usually comprising of a few or more partners. It may or may not have limited liability (as in the case of LLP). Suitable for professional practitioners and Special Purpose Vehicles (SPV).
  • Limited Liability Corporation (LLC) -- Could be formed by one or more persons, whose liabilities are limited to the extent of their ownership stake in the business. Suitable for small or large business entities or a means of protecting family assets.
  • Corporation (C, S or Not-For-Profit Corporation) -- The same features as in a limited liability corporation apply, except that the tax remifications may be different. Suitable for small businesses and private trusts, charities and philantropic organizations. Could also serve as a vehicle for asset protection or estate planning.

    Businesses are registered at the state and local levels, but S Corporation election or tax-exempt status are filed at both federal and state levels. To learn more about tax ramifications of busineses visit Internal Revenue Service (IRS).
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    PROCESS:

    Whenever the need arises, never fail to discuss your business concept or share you vision to explore means of translating such ideas into an actionable business plan and strategy.

    Experience has shown that with the benefit of a qualified professional input, it is possible to effectively fine-tune a project concept and achieve better results; survey in the US has revealed that, Out of 2,5 million business entreprenuers, only one in five developed credible business plans.

    Of the 500,00 business plan developed and pitched to venture capitalists, angel investors, corporate backers and other financiers, not more than 20,000 received funding.

    Experience in modern times has also shown that by outsourcing non-core business operations, such as operational planning, information technology, payroll, accounting and tax reporting, an organization can properly focus on its key objectives and achieve better results.
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    JUST DO IT! ...Follow Your Creative Instincts.

    If you believe the hype, start-ups are an innovative breed that go against the grain of conventional business. But are they? A new study says the vast majority are not, leading one to wonder whether innovation is what it takes to start companies, or if they're really fueled by something else.

    The findings, released this week in the Global Entrepreneurship Monitor, are part of an annual assessment of entrepreneurship as it relates to economic growth in more than 40 countries.

    Developed by Babson College, the London Business School and the Ewing Marion Kauffman Foundation of Kansas City, the survey contains lots of interesting facts -- Who knew Uganda ranked No. 1 in entrepreneurship? -- but those on innovation stand out. The findings reveal that the largest number of start-ups pursued less-than-innovative ideas in highly competitive industries.

    In the highly competitive U.S. market, 27 percent were pursuing an idea that was "not new to any customer." Start-ups considered most innovative -- pursuing an idea "new to all" in a market with "no competitors" -- amounted to only 4 percent of the total.

    Bill Bygrave, co-author of the study and a professor of entrepreneurship at Babson College, Wellesley, Massachusetts, called those innovators "superstars" but added that they were the rare exception.

    "The grass-roots entrepreneurs are companies that take something someone has done before and do it better, or cheaper, or offer better service," he said. "That's the core of the economy." It's also because the landscape of entrepreneurship includes everyone from a fast-food franchise owner to a high-tech innovator.

    The advantage of the former -- no new product, many competitors -- is that the ubiquity of the idea shows it can work. The company will not face the task of having to convince customers to buy it.

    The downside, of course, is that the customer may not choose to buy it from this particular company, since so many others offer a similar product or service. One solution -- innovation -- is risky and costly, but small, incremental innovations can be highly profitable.

    Bygrave said one of his students 17 years ago set up a company specializing in student travel and, after many ups and downs, recently sold it for $40 million.
    "He was not highly innovative but he was a quick adapter," Bygrave said.

    This low level of innovation is not a drag on the economy, for innovation is just one way of producing growth. As the survey points out, competition among established players drives efficiency and productivity.

    Backers Not Bankers

    In line with these findings, venture capital tends to be a poor marker for start-up activity, because so much of the money backing new companies goes to less than earth-shattering ideas.

    The survey found informal capital -- raised from families, friends and private investors -- amounted to $108 billion in the United States. Venture capital amounted to $21 billion. The survey noted that this informal capital went to the full spectrum of entrepreneurs, whereas venture capital invested in just 2,514 companies in 2002.

    "Without venture capital, there would still be innovation -- but it would occur at a slower pace," Bygrave said. "Venture capital is an accelerator." "But without informal capital, entrepreneurship would wither and die out," he added.

    That's especially true now, as venture capitalists avoid early stage companies. The total amount invested by venture capitalists to seed new companies in 2002 was $304 million, the lowest since 1980. "If that continued for another two or three years, I would be very worried," Bygrave said, "for that has long-term implications for national competitiveness."

    Given this reality, Bygrave tells students to just do it -- get started in business, rather than spend a lot of time creating the ultimate concept that will very likely fail to win the attention of venture capitalists.

    All of which points to the conclusion one might glean from this study: Highly innovative ideas are rare, whereas modest ideas backed by friendly capital might very well be the root of a successful business, if not the economy.

    Samuel Fromartz writes about entrepreneurs and emerging companies from Washington, D.C., and welcomes stories about young companies. He can be reached at Fromartz.com.com. Any opinions here are his own.
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    A GUIDE TO START-UP PITFALLS

    There is a school of thought that says entrepreneurship cannot be taught, that it is the innate skill of a plucky few.

    Passion, tenacity and shrewd business sense are all very well. But the practicalities of measured judgement and well-timed decisions and deals can, they argue, be learnt and well cultivated. Persistence is a vital quality of any entrepreneur. "Never be in a hurry. Once you've got the formula right, then scale up. You must take risks, but grow slowly."

    A checklist for aspiring entrepreneurs includes:

  • Do it For Passion Not Money: Things don't happen overnight, so do something you feel passionate about. Do not start something with an exit and a fortune in mind. You'll probably fail. This was commonplace during the dot-com era where people came up with ludicrous business ideas to be delivered by inexperienced teams.

  • Do Something You Know About: Philip Green, the retail entrepreneur, gave this advice. He and his family only invest in retail businesses, because that's what they understand. If you go into something you know little or nothing about, you have made things much harder from the start.

  • Don't Give Up Too Early: Successful businesses are usually very different from those described in their original business plan. Try something and if it isn't working, try it a different way. The key is not to give up too early. Persistence is a vital quality of any entrepreneur.

  • Have A Mentor: The hard work is up to you and your team. Having a mentor can be a huge support and can help you see the wood from the trees. First-time entrepreneurs often fail because they don't have a more experienced mentor from whom they can learn and turn to for ad hoc advice. Everyone needs a sounding board.

  • Funding: Businesses often spend too much time and money chasing the wrong form of funding from the wrong people with inappropriate terms and then raise too little. Sales always take longer to close and working capital requirements can fluctuate far more than you might expect, so don't go overboard but do get enough cash. Otherwise you'll spend all your time raising money and not growing the business, and no-one will thank you for that.

  • Cash Management: Cash is king. Manage it well. Ensure you have appropriate forecasts and monitor against expectations. You will not need a full-time finance director but do not think a bookkeeper will suffice. You need both skills from the start.

  • Build Sales Before Anything Else: A lot of people spend too much time getting things such as a nice design and the website sorted, instead of getting out there and closing a sale. You can always adapt designs but you need a reference client to build sales from - even if you initially offer them a reduced rate, a free product or service. Get out there and sell from day one.

  • Don't Try To Rush: There are very few propositions that mean you must get ahead of the competition. Winning clients takes time - sell, tweak your offering, then sell again. Nothing can replace experience and you don't want to alienate potential clients by getting it wrong.

  • Be Wary of Bad Advice Or Suppliers: When cash is tight, you don't want to get locked in with the wrong suppliers or taking bad advice. Asking a friend can be fatal at times. Do your homework before you pay for advice, ask for references from their previous clients, for example. Look for pointers from someone who's been involved in your kind of business before.

  • Keep Things At A Variable Cost:. In the early stages, particularly when you are a small business, you don't want to get locked into anything you can't get out of easily. Don't be afraid to use a probationary period for staff. Be wary of recruitment fees but similarly know when to pay a bit more for quality staff. Your model will change so the more flexibility you build in, the more you will be able to change and adapt. Fixed costs may bring higher margins in the long term, so it's all about knowing when to convert to a fixed model.
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