Would anyone even think about starting a Small business today

By Laura Raines For the AJC Sunday, January 25, 2009 The economic headlines are all doom and gloom — bank failures, store closings, bankruptcies, unemployment. Would anyone even think about starting a business today?

Yes... And some people should, said Lydia Jones, director of the Kennesaw State University Small Business Development Center. “We’re seeing markets and industries contract. Many small businesses are hurting. Those that aren’t strong enough won’t survive. Others will make it but won’t grow. In times when the economy is booming or tanking, we are covered up with people seeking our advice and assistance,” Jones said.

Despite the negative news, Jones is a firm believer in small business. “I’ve seen small businesses turn on a dime when big business couldn’t or wouldn’t change. Small-business owners are so open to new ideas and ways of doing things — they’re like sponges — and we need them right now.”

For all the belt-tightening and small-business pain, she’s also seeing owners innovating and grabbing for opportunity amid the chaos. “People start businesses in all economies,” Jones said. She’s seeing new enterprises succeed in the bio-tech, green/energy-saving, training and service sectors. So when she sees someone come in “with blinders on,” meaning that the person has such passion for his business idea that he is willing to take huge risks, she encourages him to go forward — with caution.

“I advise entrepreneurs to plan more thoroughly than ever before, because there are more challenges facing them in this economy,” Jones said. “They can’t leave any questions unanswered when lending communities are still so cautious and customers less willing to spend money. You have to have a very strong package to present to lenders or investors.” You also need more contingency plans than usual.

Courses (such as the Entrepreneur Success Series) and counseling available through Georgia’s 17 small-business development centers help people strengthen their business plans. Small-business owners can also find help through local chambers of commerce, city and county economic development departments, SCORE: Counselors to America’s Small Business, the Edge Connection, and many Internet sites.

The Terry College of Business entrepreneurship program at the University of Georgia is hosting a monthly series of seminars called “UGA Startups” for would-be business owners in Atlanta. The first seminar, on franchising, will be at the Terry Executive Education Center in Buckhead on Thursday.

“We’ve been overwhelmed by phone calls from people who have been laid off and wonder what to do next, since jobs aren’t plentiful. We wanted to create a safe atmosphere [no solicitations] where people could bring their concerns and fears and receive coaching about how to start a business or purchase a franchise,” said Chris Hanks, Terry College of Business entrepreneurship program director. Hanks’ program plans to offer participants help beyond lectures and panel discussions; including a network of experts and contacts, opportunities for coaching and mentoring, and even practical advice on financing. “If people are really interested in starting a new venture and will do the things they need to do, I won’t quit until that business is launched,” Hanks said.

“The beauty of a business plan is that you start with a blank sheet of paper and you get to choose what types of things you’ll be doing in the future, the kind of life you want to live. The business is simply the vehicle to get you there.”

In a recession, entrepreneurs face more challenges and have less room for error. “They have to be more creative about financing,” Hanks said. “Venture capitalists are still lending, but they are being a lot more careful.” Home equity and bank credit options are contracting as well.

Hanks has seen a tanning-bed facility get started by pre-selling subscriptions, a restaurant launch through selling VIP memberships, and people trade and barter for services. With baby boomers retiring, there are more opportunities to buy an existing business, and franchising is more attractive in a down economy.

“In 2000-01, we had a recession and then 9/11 happened and things got bad,” said Jim Raubolt, a consultant with Axxiom Franchise Advisors, who has owned franchises in the telecom, automotive and medical sectors. “In the next five years, franchising grew by 18 percent. Buying a franchise makes sense for a vertical worker in a declining industry or an older worker who has been laid off,” Raubolt said.

“You could spend a year trying to replace the high-paying job you lost, or you could buy a franchise and start creating a revenue stream.”

Franchises offer people an opportunity to run their own business with backup. “New business owners often wonder where to turn for direction and guidance. Those systems are built into a franchise,” Raubolt said.

“Now is a good time to buy because franchising companies are bending over backward to cut fees, and as the economy rebounds, so will businesses. Now is a good time to get in.”

Raubolt advises people to do as much due diligence as possible, including visiting and talking with existing franchise-holders or volunteering with a similar company. Funding will be more difficult, but there are legal ways to tap into retirement plans for franchising, he said.

“Atlanta is a remarkable market. More franchising companies are headquartered here than any other city,” Raubolt said. “It’s also a phenomenal city for supporting entrepreneurs. There are great opportunities for networking at all levels.”

In 2005, two business members of the Georgia Coach Association, Debby Stone and Michelle Goss, founded GROWE to provide education, mentoring and support to women entrepreneurs and executives.

“For many people, this could be the best time to start a business, especially if they can do it with the lowest overhead possible. It takes awhile to get one off the ground anyway, so why not start now?” said Goss, owner of the Leader’s Edge.

With sales way down in his company, one sales colleague found he had more free time, so he is using his nights and weekends to craft a strategy to start the business he wants to be in.

Goss suggests that clients and GROWE members first define what success means to them before deciding to be an entrepreneur. It’s not for everyone, and anyone coming from a corporate background will find the challenges very different. “One of the biggest challenges is attitude. There is so much negativity out there in the workplace. Be aware of today’s fear factor and what triggers fear in yourself,” Goss said. “One way to combat fear is to surround yourself with positive people or find a supportive environment where you can bounce ideas off others. A support network can help you plan, point out your blind spots and help you access your own creativity to find solutions for your venture.”

GROWE organizes members in small groups so there can be dynamic and in-depth discussion, facilitated by a professional coach. They meet monthly, and the cross-pollination of ideas from new and experienced business owners creates synergy. “The members help each other,” Goss said. “They often find that new ideas and approaches come from the group to make their jobs easier.”

Hanks believes that there may be more businesses launched because people are seeing fewer opportunities in the jobs market. “This is the time to learn from the success of others. We still have a vibrant entrepreneurial community here,” he said.

The Article Source Is: http://www.ajc.com

Do You Believe That Recession Can Be a chance To Small Business?

The Recession is a general situation now affects all the sectors of business around the world. it affect lots of factors like: Investment, Interest Rates, stock market, and Economic Growth as the hole. Here we will explain how "The Recession" being a chance to the Small Business not to only grow, but also thrive during and after it.

You've probably heard or read some of the nerve-wracking headlines that have been leading the financial news. The gloom and doom includes "Caterpillar, Inc. Joins Other Large Corps Warning of Recession." "Broad Profit Woes Spark Stock Plunge On Recession Fears." "Shares Tumble as Fears of Recession Cap Gloomy Week." "CEOs, Wall Street Warn of Recession." If these were warnings about an impending blizzard, milk and bread would be flying off the shelves.

Is a recession indeed on its way? If so, will it be a mild one as some are predicting, or will it be a doozie as others suggest? In either case, how will it affect your business? When it comes to answering that last question, you have more say than you may think.

Time to get a bigger boat:

Referring to the metaphor about a rising tide lifting all boats, a recession generally lowers all boats. But that doesn't mean that your business is going to sink. In fact, a recession can prove to be an excellent time to work on getting a bigger boat.

Many businesses decide to cease most or all of its marketing activities when times get tough. However, you may discover that, as your competition reins in its marketing, you have the opportunity to take a greater share of your target market. Then, when the economy rebounds and the tide rises, you and your competitors all rise. The difference is that you have a bigger boat than you did before, i.e. a greater market share.

Profitability is more important than ever:

Profitability should always be a concern. But when a recession hits, you have to be extremely aware of your profit margins. When they are too low, you find yourself struggling to a greater degree. But when they are at a healthy level -- even with lower revenue -- you have the means to promote your company in an effective manner. Your competition, however, is forced to market less ... wondering how you continue to push forward.

Start low-cost, high-return marketing now:

There are a number of marketing tactics that cost little more than time, so they are perfect for businesses to employ during the good times and the slow ones ... as long they meet two criteria -- one is that they fit your overall strategy, and the other is that you can implement them consistently.

Several of these tactics are web-based, such as beginning a blog, consistently adding to your current one, and keeping your site fresh by frequently posting news. Another opportunity is adding an autoresponder to your site. Then give visitors something of value in exchange for their names and e-mail addresses. When your visitors submit their information, the autoresponder goes to work behind the scenes, periodically sending valuable information to your visitors. The idea is that the visitors who sign up have identified themselves as prospects. By staying top-of-mind and showing that you offer them value, these prospects are going to contact you when they have the need that you can fill.

Yes, if the pundits are correct, there is going to be a recession. But, by managing the effect a recession has on your business, as opposed to just reacting to it, you give yourself the opportunity to not only survive a recession, but thrive during and after it. The Article Source Is: http://www.streetdirectory.com

Top Secrets to Keep Your Budget on Track In Small Business

Keeping track of our hard earned money is something that a great majority of us have trouble with. It's as if we spend it faster then we make it and by the end of each pay period we are left wondering where it all went. Learning to efficiently manage money is something everyone needs to know, but unfortunately most people are never taught this most valuable of skills.

This is where a budget is most valuable. It gives a starting point in which we can all learn to properly manage our money. Let's look at it this way. Most businesses and corporation have a budget, even the United States government has a "budget" (okay, bad example), but individuals and families seldom follow any sort of budget. In this day of overwhelming debt this is not good.

The first thing you need to do when starting a budget is to set a goal. What do you want your money to do for you? Do you want to get the spending under control? Get out of debt? Save up for a big purchase? Put money into retirement accounts? If you have a specific goal or goals it is much easier to build a budget around that.

Most people who start a budget just want to find out where their money is going. As you list out your expenditures you will begin to see patterns. Some expenses you just have to live with like a mortgage or utility bills. It's when you start looking at all the little expenses and how they add up they don't seem so little anymore.

If you start cutting out some of these smaller daily expenses, like the daily morning coffee for 4$ a pop, you may begin to see that you do indeed have extra money at the end of the month. The point is that it is the small items that add up over time and this is what causes the most financial problems for many people. If you buy that cup of coffee on the way to work everyday that turns out to be $80 a month or $960 a year. Add a few more small regular purchases into that equation and before you know it you are spending thousands of dollars a year on coffee, sodas and other things.

Here's another secret to keeping your budget going. If you are using your budget to help pay off credit card and other debt then list out your debts from smallest to largest. Once you pay all your minimums on all your debts take any extra money that is left over and send it to your smallest debt. Yes, that's right, the smallest one. You'll be amazed at how quickly you pay that one off and it will give you motivation to move to the next one.

Staying motivated is best way to keep using a budget to find that financial freedom you always wanted. After all, it is our behavior with money that causes most of our financial problems in the first place.

The Article Source is: http://www.streetdirectory.com

Eight ways to make a budget work ... If you build it, stay with it

Put another way: If you've put in the work and created a business budget, follow it! If you don't, you'll lose the benefits that you planned for when you built the little monster.

Get started by reminding yourself that your business budget is not a monster. It's nothing more than a set, of guidelines for your spending and saving habits. Below, I've laid out some common problems that pop up with many established budgets, along with some solutions that can help you stay within budgetary guidelines (Article Starting Below):

1. Accept the learning curve:

Living with a budget is an education. Trimming your expenses, knowing how long a paycheck is going to last or how much of a cash reserve to keep around . . . working these skillfully will take some time. But you can learn to adjust a budget as you go, and what was once a shot in the dark gradually will become a more predictable and useful practice.

2. Be prepared to miss your budget estimates and act accordingly:

This was rule No. 1 in setting up a budget: knowing that your budget projections are a best guess and nothing more. Notes Mark Weaver, associate professor of management.

at the University of Alabama: "You're going to miss your estimates. That doesn't make you unintelligent or a bad businessperson. Instead, try to miss them intelligently and in ways you can correct."For example, if you budgeted $200 a month for long-distance phone service and your bill consistently tops $250 — say, for at least three months running — adjust your phone allocation up $50. By the same token, if the bill is only running an average of $150, you can trim your phone share. To keep things in line as much as possible, try to reallocate some other area of your overall budget to account for the adjustment.

3. Work flexibly:

As with setting up a small-business budget, sticking by one often boils down to a willingness to be flexible. For instance, if your revenue doesn't match what you expected, — and there's a good chance that might be the case — trim back your expenses to compensate. By the same token, if you're taking in more than you anticipated, it might be time to invest in better equipment.

4. Watch your cash flow:

If you want to stick to a budget, make sure that your inflow more than compensates for your outflow. Monitor your income closely to make certain that you'll have adequate funds to pay your bills, particularly if your business is prone to long lapses between paychecks. Notes Weaver: "Even if it's just from the left pocket to the right pocket, cash-flow problems are what kill most small businesses. Keep checking to make certain that your revenues match your expenses."

5. Err on the side of conservative:

When setting up your budget, it's a good idea to overstate your expenses and low ball your expected revenue. That approach is also a solid strategy when making sure your cash flow is going to hold up. Look into budget savers such as telephone calling plans, less expensive office furniture and other ways to lessen the burden on your income. "People always feel they have to have the best computer," says Weaver, "but money you don't spend is money you don't have to earn."

6. Nurture a cash cushion:

The uncertainty of budgeting — both in terms of income as well as expenses — stands as one of the biggest threats to the survival and success of any small business. While trimming expenses to the absolute bone is always a good idea, it's also prudent to set aside income whenever possible. If you can afford it, earmark a portion of every paycheck you get and sock those funds away in a money market account. Not only can that money come in handy for predictable expenses such as year-end taxes, it also can prove an absolute lifesaver should an unexpectedly high bill suddenly crop up.By contrast, if you're thinking about starting a business sometime in the future, start saving — the money you set aside now ultimately may bail you out in ways you can hardly imagine.

7. Check your budget every month:

This is a point that I cannot stress enough. Go over your budget every month and examine your cash flow to make certain your available funds are sufficient to meet your liabilities. If you're following point No. 2, above, and adjusting your budget as you go, you'll have some sort of emergency fund to take care of monthly overruns. Use it when things cost more than you thought and put money into the contingency fund if you come in under your expected numbers.

8. Use your budget as a form of restraint, not constraint!:

Setting up and sticking to a solid budget is the most effective teacher of fiscal discipline there is. But don't be shy about busting your budget on occasion should something truly warrant it. It's often impossible to budget for a valuable last-minute seminar or a trip to a trade show to make valuable contacts. If you are too rigid with your budget, you'll refuse to spend when you really should.

"Don't be afraid to go beyond your budget to spend money that's a valuable investment in your business," Weaver says. "A good budget is great, but don't let it dictate your business."

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Jeff Wuorio is a veteran freelance writer and author based in southern Maine. He writes about small-business management, marketing and technology issues. Send Jeff an e-mail .

By Jeff Wuorio ------------

The Article Source Is :http://www.microsoft.com/smallbusiness

Building a Small Business Budget from the Bottom To The Top - Part 4

Here is the final part of How To Building The Budget, Remember that we already discussed the Budget elements like: budgeting cost of sales, Budgeting revenues, and Budget Types at Part1, part2, part3.

7- Start-up Requirements:

Budgets are not all the same, and there is no standard format. Different types of budgets can be prepared for different purposes. One way to start, especially for a new business, is to prepare two separate budgets – one for start-up costs and capital expenditures, and another for the initial operating phase.

8- Organization costs:

Part of a small business's start-up costs are organization costs to get the business set up. Organization costs may include legal fees and expenses, notary fees, licenses and registrations, tax consulting and others. These costs will depend on the legal structure you select for your business, and your line of business. For example, setting up a sole proprietorship will probably not involve significant legal costs, since it is not necessary to set up a separate legal entity. But legal costs may be more significant for a partnership, and even more so if the business is set up as a corporation. Attorneys should be able to estimate the cost of setting up a partnership or corporation.

If your business requires a commercial license or other type of operating permit, information about the cost should be available from the municipality or other legal jurisdiction in which the business will operate.

9- Capital expenditures:

In preparing a budget for capital expenditures, you may want to start by making a list of all the property, plant and equipment you will need to get the business started. These items could include real property, machinery, equipment, vehicles, furniture, fixtures, and installations. Once you identify the items you need to acquire, you can start putting together cost information from catalogs, price lists, auctions, want ads, quotes, bids, offers, and appraisals. If the business involves building or remodeling a facility, a budget for the work could be prepared based on bids for the job.

The documentation you collect in putting together a capital expenditures budget will serve as good, solid support, and you may want to keep it together with your budget and business plan to present to potential lenders and investors, and for your own reference purposes.

The Article Source Is: http://www.googobits.com

Building a Small Business Budget from the Bottom To The Top - Part 3

Again, we continue our subject about How To Building The Budget by the 3rd part as the following:

4- 2- Services:

If you are in the service business, your inventory is your time. The building blocks for budgeting rervenue in this case are the number of billable hours available, and the rate to be charged per hour. Hours and rates should be broken down by person, if the business involves different persons performing different functions.

Billable rates may vary, depending on the person’s qualifications and experience. And billable hours may vary depending on the person’s functions. A person dedicated almost entirely to customer service will have a different number of billable hours than a person who primarily performs administrative and support functions. The nonbillable hours may be factored into the billable hours, by incrementing the billing rate to be charged. Or the nonbillable hours may be left out and absorbed as overhead within the operating expenses.

Here again, market dynamics will need to be taken into consideration. But you can reasonably estimate your revenue by determining your billable hours per month times the rate you expect to charge.

5- Jobs or projects:

If your business involves jobs or projects, budgeting will probably include aspects of both product and service revenue budgeting. Based on your line of business, you will know what is involved in completing the job or project. The work may involve materials and supplies, direct and indirect labor, use of equipment, and maybe subcontractors. Budgeting for jobs or projects may go hand-in-hand with submitting job estimates or bids. The terms and conditions of the work will play an important role in how the work is quoted or budgeted. A lump sum contract for a particular job is different from a fixed rate contract, for instance.

Breaking down the job into its component parts will be a key factor in submitting a good quote or bid, and budgeting job costs and revenues. You will want to make sure you have all your bases covered, in the sense that you include all your costs, both direct and indirect, and allow yourself a sufficient margin. You may need to make out a materials list, a job schedule for direct labor, and an allocation calculation to include indirect expenses. If you are going to use subcontractors, you should get bids from them, hopefully before committing yourself to the job.

If your business involves jobs that extend over a longer period of time, first you will want to make sure the amount you are charging for the job is sufficient to cover all your expenses and leave you with a margin that gives you an adequate monthly income during the period you are working on the job. You can budget monthly revenue and cost by spreading the total job over the months of work.

If you are working on several jobs at a time, you can use your timelines for each job, and then allocate the total revenues and costs for all the jobs over the applicable periods in order to come up a monthly budget.

6- Expenses:

xpenses can also be broken down into components such as quantities, prices, and rates. Some expenses are basically incurred as a function of usage, for example materials and supplies. Other expenses are correlated with time periods, such as rent and insurance. The types of expenses your business incurs will depend on your line of business, and the following are just some general examples of how you may be able to budget, by breaking down the expenses into their component parts.

Employee compensation can be budgeted based on the hourly wages or monthly or annual salary contracted with each person. You will need to budget for employer payroll taxes, which can be calculated using the applicable rates for Social Security, Medicare and unemployment taxes. You will also need to provide for any benefit plans you have agreed upon with your employees, such as health insurance, pension plans and others. If you have actual data on the cost of these plans, all the better. If not, you may want to budget based on a payroll burden, which is a percentage of employee base compensation.

You may have other employee-related expenses such as bonuses and awards, that are tied to the completion of objectives or goals. It may be possible to correlate these expenses with a related item in the budget, such as sales.

If you plan to pay sales commissions to either your own employees or outside salespersons, the budgeted commissions expense will be a function of budgeted sales. If you use an advertising agency, you should budget based on the contractual terms. Advertising in telephone guides or on-line services can be budgeted based on their quoted rates, according to the type of ad you want to place.

Rent of property or equipment can be budgeted according to the monthly lease or rental amount. Insurance is generally prepaid, and you can do some accounting to spread the quoted insurance premium month-by-month over the policy period.

If you have a periodic preventive maintenance contract on equipment, you can budget based on the monthly cost of your contract. If you have purchased an extended warranty, you can spread the cost over the expected useful life of the related equipment, or the duration of the contract. Repairs are generally an unforeseen expense and are more difficult to predict and budget, but they should not be overlooked. You should probably estimate repair expenses based on your own knowledge and experience, and based on the age and general working condition of your equipment and facilities.

Utilities, such as electricity and gas, can be calculated as usage times rate, if you have an idea of how much you will use. You may be able to estimate usage based on a reference point, such as a similar business or facility, and multiply by the going rates in your area for electricity and gas.

Budgeted telephone expense can be based on the plan you have for your cell phone, for example. The base monthly rate and installation cost for a new land-based line can be obtained from your local telephone company. The expense for long-distance calls will depend on the nature of your business, and here you will have to estimate based on your judgment and personal experience.

If you use your vehicle in your business, you can estimate the average number of miles or kilometers you expect to drive each day or month. Then take this and multiply by the appropriate factor based on how many miles or kilometers your vehicle gets per gallon or liter, and the expected price of fuel. You may be able to budget travel expenses by estimating how many trips you plan to take to what places, and find out the going airfares and hotel rates.

You probably know what types of insurance coverage your business will need, and you may be able to get quotes on-line. Or you could go to an insurance agent and inquire.

Depreciation expense is based on the cost or basis of your appreciable property and equipment, and the depreciation method you use. This may be straight-line depreciation over the useful life of your property. Or you may elect to use another method, such as the accelerated recovery system used for income tax purposes. Your budgeted depreciation should coincide with the depreciation method you intend to use for book purposes.

Finally, interest expense will depend on the loans your business carries. At the outset, you may not yet know what these will be, since this will depend on the financing you are able to obtain. Your initial budget for interest expense could be based on the amount of financing you need, times the applicable interest rate for each particular type of financing. For example, financing with your credit card will generally carry a higher interest rate than a mortgage loan, secured by real property.

As mentioned above, these are just some examples and ideas, and you will need to adapt them to your own particular circumstances. The important thing is to analyze your expenses, and break them down into pieces of data that can be identified.

to be continuing at part four

The Article Source: http://www.googobits.com

Building a Small Business Budget from the Bottom To The Top - Part Two

Now we will Continue the second part of who to "Build a Small Business Budget from the Bottom To The Top" as shown below:

3-Product recipes for budgeting cost of sales:

If your business involves selling a product, you may start by determining what it will take to make the product, in terms of materials and supplies, labor, and overhead. If you can prepare a"recipe" for a product, and identify the ingredients, you can do some calculations based on quanitities and prices to figure how much it will cost to make each unit of product. The ingredients include direct costs of raw materials, supplies, and labor. If you want to determine an "all-in" cost, you will need to add in the indirect costs or overhead expenses, such as indirect labor (administrative and management, for example), utilities, maintenance, depreciation, insurance, and any other general expenses. Based on availability of time and materials, and your production capacity, you can determine how many units you are able to produce each month. If you know what your average monthly overhead expenses are, you can allocate the overhead over the number of units to determine how much should be added to the cost of each unit. If you are making more than one product, you may want to assign a weighting factor in allocating overhead expenses. For example, products with a higher direct cost would absorb more of the indirect costs.

4- Budgeting revenues

4- 1- Products:

One way to budget revenues is to take the budgeted cost of sales and add a profit margin. The unit cost of each product plus your expected profit margin would give you a budgeted sales price. In this case, you should use the "all-in" cost, to ensure that your selling price is sufficient to cover all your costs and still leave you with a margin. Budgeted revenue would then be the quantity of units times the budgeted selling prices. But there are market forces that should also be taken into consideration, that may affect the price you can reasonably expect to charge in order to be competitive in the marketplace. In preparing the budget for revenue, you may want to collect information on competitors’ prices.

Since you are most likely starting a business in which you already have knowledge and expertise, you may be well aware of these market factors. The important aspect in budgeting is to try to quantify these aspects and incorporate them into budgeted selling prices, and budgeted revenue. If you are introducing a new product, you may be able to budget revenue based on prices for similar products, adding an incremental amount based on the expected added value of your product. If you have done a market study, this information will be valuable in building the budget. ===========

The Article Source Is: http://www.googobits.com

Building a Small Business Budget from the Bottom To The Top - Part One

When you start a small business, preparing a budget, without any history on which to base your estimates, is a daunting task. You may have some idea of what you hope to earn and how much it will cost you to earn it. You can make broad estimates of income and expenses and may get your budget done quickly, but this won’t give you a tool to guage your performance and manage your business. It is better to start at the bottom and build up, The Article continued below:

1- First of all, do I really need a budget?

In short, yes. A well-run household operates on a budget, even though it may not be written down. You are in business to make money - all the more reason to have a budget showing how you will do just that. A budget is an extension of your business plan and strategy, put into practice. It serves to quantify the plan in financial terms, and lends a sense of reality to conceptual ideas, transforming them into a feasible business endeavor. A well-prepared budget will serve as a baseline and an important reference point to guide your business in the right direction by providing an essential framework for the start-up and initial operating stages. In this sense, it is a very important tool in managing the business, provided the budget is based on realistic data that can be used to gauge actual performance. Having a detailed budget will also be a distinct advantage when dealing with potential lenders and investors. It will give them a clear idea of what your business is about; how you intend to carry out the business plan, in concrete, financial terms; what the loan or investment is needed for; and how the money will be spent. A good budget will show a lender how the loan will be repaid, and will show an investor what type of return can be expected on the investment. In both cases, the budget will significantly improve your chances of getting the financing you need for the business. And if you have sufficient depth and detail built into your budget, it will be much more credible to lenders and investors.

2- Building blocks

Even though a budget is an estimate, or a projection of future events, it should be based as much as possible on actual data obtained by doing research, getting quotes, and assembling and organizing documentation and information. The idea behind building a budget from the bottom up is to start with what you know, or what you can find out. Starting at the bottom means going to the lowest level of detail, where you have building blocks – concrete pieces of information that can be put together to construct the various different line items such as revenues, cost of sales, advertising, rent, maintenance, utilities, and other overhead expenses. These building blocks are basically quantities, hours, prices and rates. Rather than budgeting total income and expenses as a certain amount per month, for example, you can break these figures down into their component parts.

3- Operating budget:

The operating budget should be structured based on the way the business operates. Revenues and expenses should be budgeted at the same level of detail as they will be recorded for actual operations. This provides you with a tool for managing your business. A sufficiently detailed budget will enable you to compare actual results with budgeted amounts and perform quantity and price variance analysis.

To Be Continuing In Part 2

The Source Is: http://www.googobits.com

Is There Life After Bankruptcy? Sure - Part Two

Today we will continuing with the part two of our Article about the life after bankruptcy, I hope you can find answers for all the questions that I received as the following:

3- Check Your Credit Report:

Just because the bankruptcy court cleared your debts doesn't necessarily mean that they have been expunged from your credit report. According to a recent article in BusinessWeek, in a number of cases some financial institutions failed to report debts that had been discharged by bankruptcy courts to the credit rating firms, even though they are legally required to do so. If the debt is not reported as cancelled by the lending institution, it will remain delinquent on your credit report, potentially sabotaging your efforts to build new credit or obtain life insurance or even employment.

In order to make sure that the bankruptcy court's orders have been accurately carried out, you should examine your credit report on at least an annual basis. You can obtain a copy of your credit report without charge once every twelve months from each of the three nationwide consumer credit reporting firms (TransUnion, Equifax and Experian). Copies of your credit report can also be requested online (at annualcreditreport.com) or by contacting the credit reporting firms directly.

Credit information (late or missed payments, delinquencies, etc.) remains on your credit report for seven years; a bankruptcy will linger there for ten. Note that the three major firms do not always compare information, meaning that the information on one report may differ from that compiled by a different firm. In order to ensure that all the information in your reports is accurate, you should obtain a report from each of the three firms.

Of course, making sure that bankruptcy debts have been discharged isn't the only good reason to look at your credit report. Errors in reporting by financial institutions can lead to inaccurate and potentially damaging inaccuracies that can drag your credit down. Taken with the threat of identity theft, checking your credit report periodically is a good idea, regardless of your credit status.

4- Landing a Loan:

Once, a bankruptcy was a nearly insurmountable obstacle to obtaining a loan. Many banks would not even consider lending money to someone until the bankruptcy had cleared from their credit report a ten year wait. "That's not true anymore," says Jim Shea. "Banks are much more eager to lend money today and more willing to work around difficulties." Also, she notes, bankruptcy simply isn't the damning black mark it once was. "That said, most lenders will want to wait at least a year after the bankruptcy and see some evidence that you've put your financial house in order before they even consider a loan," Shea says. Hence, rebuilding a credit history using secured credit cards will go a long way to helping you get a bank loan.

Even if banks are willing to lend you money after your bankruptcy, those loans will likely come with higher interest rates and fees a reflection of your damaged credit rating. Many banks may request the loan be secured either by collateral a physical asset you own or by a co-signer, someone with good credit who will agree to pay off the loan in the event you default. "Many people find it embarrassing to ask a friend or relative to co-sign a loan for them and it's a big thing to ask anyone to do but for a lot of people who've gone through a bankruptcy, and don't have many assets left it's the only way they are going to get a loan," Shea says.

5- Building On Success:

Once you have begun rebuilding your credit, the best course of action is to stick to it. "It's really pretty simple," says Detweiler. "If you have a couple of credit cards and pay them on time along with all your other bills then your credit will recover in time." Detweiler notes that paying bills early has no effect on credit since only late or missing payments get reported to the credit bureaus. She also recommends keeping purchases small and avoiding carrying balances on the cards while rebuilding credit. "High balances lower your overall credit rating. The goal is to keep the cards active and create a history of on time payment," she advises. "Just make sure the payment arrives by the due date."

Massachusetts contractor Mike Palladino followed this advice. He obtained a secured credit card and convinced his brother to co-sign for several loans. "It wasn't easy and money was really tight for awhile, but within two years, I had my business back up and running," he says.

Morin Bishop is editor -in- chief of Priority magazine ===================================== The Source is: http://smallbusinessonlinecommunity.bankofamerica.com =====================================

5 key tax code changes affecting small businesses

Small Business Tax is an important to know, like Sales Tax form specially when it changed, here in this article we'll see that affect and is it good or bad as it show below:

The tax bill signed into law by President Bush in late October 2004 was widely derided by editorial writers as a special-interest giveaway, an early "corporate" Christmas tree. Indeed, many provisions of this bill apply to larger companies or specific industries. But there's also a lot in this tax bill — formally known. as the American Jobs Creation Act of 2004 — that applies to small businesses. While some of the changes simplify tax issues for small businesses, many of the new rules could complicate tax planning and preparation, even if they cut your tax burden.

Here are five major features that small-business owners should be aware of — and should be ready to consult with their tax advisers about.

1. Of the bad news out upfront: It used to be that you could buy a sport utility vehicle (SUV) with a gross weight of more than 6,000 pounds and write off the full cost of it in one year, unlike the rules for other, smaller passenger vehicles. Let's just say that this tax break didn't hurt sales of larger SUVs any, for business or pleasure. But the loophole has been tightened as of the date the tax bill was signed. You now, under Section 179, can deduct no more than $25,000 of the cost of a large SUV.

2. Section 179 expensing is extended: The closing of the SUV loophole has gotten a lot of attention, but the ability to immediately write off large amounts of equipment is more relevant for most small businesses. The tax bill extends through 2007 your ability to deduct at least $100,000 in qualifying equipment purchases annually. That amount is reduced only if you put into service any one year. The deduction amount is adjusted each year for inflation, making it worth $102,000 for 2004 and likely $104,000 for 2005.

3. A change in leasehold depreciation rules: Any business making qualified leasehold improvements can depreciate those costs over 15 years instead of the previous 39-year standard. This change also applies to qualified restaurant property improvements. The more favorable schedule is good for improvements made through the end of 2005.

4. A significant, but complicated, cut in taxes on manufacturers: There's now going to be a tax deduction for business income for domestic manufacturers. This tax cut will be phased in, starting in 2005 with a 3% exclusion of manufacturing income from taxes. One of the interesting gray areas will be figuring out what qualifies as law, it appears that manufacturers now include at least some businesses involved in filmmaking, architecture, electricity and gas production, computer software, and engineering, among other enterprises. This "corporate" tax break is going to be available to C corporations, but also to S corporations, limited liability companies, and even sole proprietorships. (For information on the differences and pros and cons of forming business entities such as these, see this article.) While excluding a 3% income slice from taxes may not look like a significant amount now, this break is going to increase over time. Eventually, it will be ramped up to a 9% exclusion — that's currently scheduled to happen in 2010. A 9% income exclusion translates roughly to a cut of three percentage points in the tax rate for an individual or business in the 35% tax bracket. This new deduction is businesses and their tax pros. First off, you're going to have to determine whether part of your business actually qualifies as domestic manufacturing. (This isn't as cut-and-dried as it may seem: At one point, fast-food companies were going to be included in this definition; the final bill excludes the retail sale of food or beverages.) Then, you'll have to reduce your payments for domestic production by several items, including applicable costs of goods Sold, allocable expenses and deductions, and other costs. It's possible that businesses will in essence be computing their taxes on two platforms: "manufacturing" income and expenses, and "non-manufacturing" income and expenses. Bookkeeping programs likely will be modified to help companies and individual taxpayers cope with these new complexities; you'll also want to update your software to accommodate these changes. Have to reflect ways of reporting these new changes and complications.

5. Changes in rules governing S corporations: Let's close with something easy: The number of shareholders allowed in a Scarp is increased from 75 to 100, beginning in 2005. Also, the definition of a shareholder is changing, so that all members of a family, including spouses, children, and grandchildren, can be treated as one Shareholder for the purposes of determining the number of shareholders in a Scarp.

================ The article Source: http://www.microsoft.com/smallbusiness ================