Step 1. Identify something that people want and will pay for.
One of the most common stumbling blocks for aspiring entrepreneurs is deciding on a product or service to market. The primary consideration is to choose something that people will buy. And the easiest way to do that is to go with something that other people are already selling successfully.
Ideally, that will be something you love and/or know a lot about. For instance, if you’re an accountant, you could create and sell programmes about how people can prepare their taxes, how they can make a household budget, and how they can find hidden tax deductions. Or, if you’ve always loved animals, you could sell pet toys, treats, and accessories.
If you have trouble coming up with a likely product or service based on your own interests and/or expertise, choose a relatively simple service that’s in high demand. A house cleaning service, for example, or bookkeeping, lawn mowing, resume writing, or house painting. The possibilities are almost endless.
Step 2. Find a way to supply it.
This step just requires a bit of business common sense. If you’re selling a service, you would either supply the service yourself or hire someone else to do it (or help you). If, for example, you’ve decided to go into the moving business, you don’t have to be capable of handling furniture yourself. Simply hire a few people who can do heavy lifting and either buy or rent a truck.
If you’re selling a product, you would ideally seek out suppliers that can provide you with merchandise at a low enough price for you to be able to make a profit. But that usually means buying in volume - which may not work for you when you’re just starting out. Let’s say you’d like to sell bookshelves. In this case, it might make more sense for you to get your business going by buying the lumber and building the shelves yourself (or hiring someone to build them for you).
Step 3. Sell it to the people who want it.
I’m a big believer in direct marketing for small start-up businesses. It’s a relatively inexpensive way to get your marketing message to prospective customers via e-mail, regular mail, ads in local papers, or even flyers distributed door to door.
Let’s say you want to start a housekeeping service. You’d identify a few affluent neighbourhoods where the homeowners could, presumably, afford maids. Then you’d target them with either flyers or small mailers.
Or suppose you want to start a business where you take people on charter fishing boat trips. You’ll be marketing primarily to tourists, so you’d work on getting yourself listed in local tourist guides and maybe advertise on a few bus benches in your city’s hotel district. If you decide to go after locals too, you could contact local fishing clubs and see if you can rent their membership lists to do a mailing. You might also make a deal with local bait shops to distribute your flyers.
Obviously, starting and running a successful business requires time, energy, and effort. Still, when you break down the process, it’s just those three simple steps.
Friday, March 28, 2008
Thursday, March 27, 2008
7 reasons why you need to own a Trust.
* To protect your assets from creditors in the event of your insolvency, disability or divorce.
* To legally pay as little tax as possible.
* To make provision for your estate to be passed on to your beneficiaries as smoothly as possible.
* To maximise your overall profits when buying property and significantly reduce your CGT and estate duty bill.
* To avoid all inheritance tax liability.
* To create personal confidentiality.
* To safeguard against financial loss in your own business.
* To protect your assets from creditors in the event of your insolvency, disability or divorce.
* To legally pay as little tax as possible.
* To make provision for your estate to be passed on to your beneficiaries as smoothly as possible.
* To maximise your overall profits when buying property and significantly reduce your CGT and estate duty bill.
* To avoid all inheritance tax liability.
* To create personal confidentiality.
* To safeguard against financial loss in your own business.
Wednesday, March 12, 2008
Cash flow Rules.
Profits aren't cash; they're accounting
And accounting is a lot more creative than you think. You can't pay bills with profits. Actually profits can lull you to sleep. If you pay your bills and your customers don't, it's suddenly business hell. You can make profits without making any money.
Cash flow isn't intuitive.
Don't try to do it in your head. Making the sales doesn't necessarily mean you have the money. Incurring the expense doesn't necessarily mean you paid for it already. Inventory is usually bought and paid for and then stored until it becomes cost of sales.
Growth sucks up cash.
It's paradoxical. The best of times can be hiding the worst of times. One of the toughest years my company had was when we doubled sales and almost went broke. We were building things two months in advance and getting the money from sales six months late. Add growth to that and it can be like a Trojan horse, hiding a problem inside a solution. Yes, of course you want to grow; we all want to grow our businesses. But be careful because growth costs cash. It's a matter of working capital. The faster you grow, the more financing you need.
Business-to-business sales suck up your cash.
The simple view is that sales mean money, but when you're a business selling to another business, it's rarely that simple. You deliver the goods or services along with an invoice, and they pay the invoice later. Usually that's months later. And businesses are good customers, so you can't just throw them into collections because then they'll never buy from you again. So you wait. When you sell something to a distributor that sells it to a retailer, you typically get the money four or five months later if you're lucky.
Inventory sucks up cash.
You have to buy your product or build it before you can sell it. Even if you put the product on your shelves and wait to sell it, your suppliers expect to get paid. Here's a simple rule of thumb: Every dollar you have in inventory is a dollar you don't have in cash.
Working capital is your best survival skill.
Technically, working capital is an accounting term for what's left over when you subtract current liabilities from current assets. Practically, it's money in the bank that you use to pay your running costs and expenses and buy inventory while waiting to get paid by your business customers.
"Receivables" is a four-letter word.
(See rule 4.) The money your customers owe you is called "accounts receivable." Here's a shortcut to cash planning: Every dollar in accounts receivable is a dollar less cash.
Bankers hate surprises.
Plan ahead. You get no extra points for spontaneity when dealing with banks. If you see a growth spurt coming, a new product opportunity or a problem with customers paying, thesooner you get to the bank armed with charts and a realistic plan, the better off you'll be.
Watch these three vital metrics: "
Collection days" is a measure of how long you wait to get paid. "Inventory turnover" is a measure of how long your inventory sits on your working capital and clogs your cash flow. "Payment days" is how long you wait to pay your vendors. Always monitor these three vital signs of cash flow. Project them 12 months ahead and compare your plan to what actually happens.
If you're the exception rather than the rule, hooray for you. If all your customers pay you immediately when they buy from you, and you don't buy things before you sell them, then relax. But if you sell to businesses, keep in mind that they usually don't pay immediately.
Profits aren't cash; they're accounting
And accounting is a lot more creative than you think. You can't pay bills with profits. Actually profits can lull you to sleep. If you pay your bills and your customers don't, it's suddenly business hell. You can make profits without making any money.
Cash flow isn't intuitive.
Don't try to do it in your head. Making the sales doesn't necessarily mean you have the money. Incurring the expense doesn't necessarily mean you paid for it already. Inventory is usually bought and paid for and then stored until it becomes cost of sales.
Growth sucks up cash.
It's paradoxical. The best of times can be hiding the worst of times. One of the toughest years my company had was when we doubled sales and almost went broke. We were building things two months in advance and getting the money from sales six months late. Add growth to that and it can be like a Trojan horse, hiding a problem inside a solution. Yes, of course you want to grow; we all want to grow our businesses. But be careful because growth costs cash. It's a matter of working capital. The faster you grow, the more financing you need.
Business-to-business sales suck up your cash.
The simple view is that sales mean money, but when you're a business selling to another business, it's rarely that simple. You deliver the goods or services along with an invoice, and they pay the invoice later. Usually that's months later. And businesses are good customers, so you can't just throw them into collections because then they'll never buy from you again. So you wait. When you sell something to a distributor that sells it to a retailer, you typically get the money four or five months later if you're lucky.
Inventory sucks up cash.
You have to buy your product or build it before you can sell it. Even if you put the product on your shelves and wait to sell it, your suppliers expect to get paid. Here's a simple rule of thumb: Every dollar you have in inventory is a dollar you don't have in cash.
Working capital is your best survival skill.
Technically, working capital is an accounting term for what's left over when you subtract current liabilities from current assets. Practically, it's money in the bank that you use to pay your running costs and expenses and buy inventory while waiting to get paid by your business customers.
"Receivables" is a four-letter word.
(See rule 4.) The money your customers owe you is called "accounts receivable." Here's a shortcut to cash planning: Every dollar in accounts receivable is a dollar less cash.
Bankers hate surprises.
Plan ahead. You get no extra points for spontaneity when dealing with banks. If you see a growth spurt coming, a new product opportunity or a problem with customers paying, thesooner you get to the bank armed with charts and a realistic plan, the better off you'll be.
Watch these three vital metrics: "
Collection days" is a measure of how long you wait to get paid. "Inventory turnover" is a measure of how long your inventory sits on your working capital and clogs your cash flow. "Payment days" is how long you wait to pay your vendors. Always monitor these three vital signs of cash flow. Project them 12 months ahead and compare your plan to what actually happens.
If you're the exception rather than the rule, hooray for you. If all your customers pay you immediately when they buy from you, and you don't buy things before you sell them, then relax. But if you sell to businesses, keep in mind that they usually don't pay immediately.
Friday, March 7, 2008
How Billionaires Do...
After 13 years on top, Bill Gates is no longer the richest man in the world. That honor now belongs to his friend and sometimes bridge partner Warren Buffett.
Riding the surging price of Berkshire Hathaway stock, Buffett has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago. Gates is now worth $58 billion and is ranked third richest in the world.
He is up $2 billion from a year ago, but would have been as rich--or richer--than Buffett, had Microsoft not made an unsolicited bid for Yahoo! at the beginning of February. Mexican telecom mogul Carlos Slim Helú now ranks as the world's second richest person with a net worth of $60 billion.
Buffett, whose fortune is estimated based on his stake in Berkshire Hathaway and assets he holds outside the company, refused to comment on his net worth.
The race for the title of World's Richest Man has been extremely competitive in recent months. Class A shares of Berkshire Hathaway soared 25% between the middle of July and the day we priced our list. The stock hit an all-time high of $150,000 a share in December. At that time, Buffett was worth roughly $65 billion.
Berkshire Hathaway shares closed Warren Buffett is the richest man on the planet.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago. That massive pile of scratch puts him ahead of Microsoft co-founder Bill Gates, who was the richest man in the world for 13 straight years.
Gates is now worth $58 billion and is ranked third in the world. He is up $2 billion from a year ago, but would have been perhaps as rich--or richer--than Buffett had Microsoft not made an unsolicited bid for Yahoo! at the beginning of February.
Microsoft shares fell 15% between Jan. 31, the day before the company announced its bid for the search engine giant, and Feb. 11, the day we locked in stock prices for the 2008 World's Billionaires list. More than half of Gates' fortune is held outside of Microsoft shares.
Mexican telecom tycoon Carlos Slim Helú is the world's second-richest man, with an estimated net worth of $60 billion. His fortune has risen $11 billion since last March.
per share on Tuesday, down 2% since the announcement last Friday that the company's net earnings fell 18% in the fourth quarter of last year.
Gates' fortune also swelled massively last fall. Shares of Microsoft jumped 30% between late October and early November to $37 a share, only to fall after the company announced its intentions to buy Yahoo! for $45 billion on Feb. 1.
Slim's fortune has doubled in the past two years. Stock in his most significant holding, telecom outfit America Movil has risen 120% since the beginning of 2006. Helú also owns stakes in Carso Global Telecom, Grupo Carso and Grupo Financiero Inbursa.
The son of a Nebraska politician, Buffett delivered newspapers as a boy. He filed his first tax return at age 13, claiming a $35 deduction for his bicycle. He moved on to study under value investing guru Benjamin Graham at Columbia University.
Buffett began buying shares in textile firm Berkshire Hathaway in 1962 and purchased a controlling stake in 1965. He began buying insurance companies and astutely investing those companies' cash reserves.
In December, the company purchased a 60% stake in the Pritzker family's manufacturing and services group, Marmon Holdings, for $4.5 billion. The privately held Marmon owns businesses across wire and cable, transportation services and industrial products.
Despite Buffett's meteoric rise, his days as the World's Richest Man are almost certainly numbered. He had long promised to give away his fortune posthumously. But in the summer of 2006 he irrevocably earmarked the majority of his Berkshire shares to charity, most going to the Bill & Melinda Gates Foundation.
At the time, the gift was valued at $31 billion.
However, assuming that Berkshire shares continue to rise, the final amount of the donation will far exceed that sum. Buffett gives 5% of his shares to charity every July.
In October, Buffett issued a challenge to members of the Forbes 400 richest Americans list, saying he would donate $1 million to charity if the collective group (or a significant number of them) would admit they pay less taxes, as a percentage of income, than their secretaries.
Days after issuing the challenge, Buffett appeared before Congress to encourage it to keep the estate tax. Armed with a few Forbes 400 issues, he told the hearing that "dynastic wealth, the enemy of a meritocracy, is on the rise."
Riding the surging price of Berkshire Hathaway stock, Buffett has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago. Gates is now worth $58 billion and is ranked third richest in the world.
He is up $2 billion from a year ago, but would have been as rich--or richer--than Buffett, had Microsoft not made an unsolicited bid for Yahoo! at the beginning of February. Mexican telecom mogul Carlos Slim Helú now ranks as the world's second richest person with a net worth of $60 billion.
Buffett, whose fortune is estimated based on his stake in Berkshire Hathaway and assets he holds outside the company, refused to comment on his net worth.
The race for the title of World's Richest Man has been extremely competitive in recent months. Class A shares of Berkshire Hathaway soared 25% between the middle of July and the day we priced our list. The stock hit an all-time high of $150,000 a share in December. At that time, Buffett was worth roughly $65 billion.
Berkshire Hathaway shares closed Warren Buffett is the richest man on the planet.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago. That massive pile of scratch puts him ahead of Microsoft co-founder Bill Gates, who was the richest man in the world for 13 straight years.
Gates is now worth $58 billion and is ranked third in the world. He is up $2 billion from a year ago, but would have been perhaps as rich--or richer--than Buffett had Microsoft not made an unsolicited bid for Yahoo! at the beginning of February.
Microsoft shares fell 15% between Jan. 31, the day before the company announced its bid for the search engine giant, and Feb. 11, the day we locked in stock prices for the 2008 World's Billionaires list. More than half of Gates' fortune is held outside of Microsoft shares.
Mexican telecom tycoon Carlos Slim Helú is the world's second-richest man, with an estimated net worth of $60 billion. His fortune has risen $11 billion since last March.
per share on Tuesday, down 2% since the announcement last Friday that the company's net earnings fell 18% in the fourth quarter of last year.
Gates' fortune also swelled massively last fall. Shares of Microsoft jumped 30% between late October and early November to $37 a share, only to fall after the company announced its intentions to buy Yahoo! for $45 billion on Feb. 1.
Slim's fortune has doubled in the past two years. Stock in his most significant holding, telecom outfit America Movil has risen 120% since the beginning of 2006. Helú also owns stakes in Carso Global Telecom, Grupo Carso and Grupo Financiero Inbursa.
The son of a Nebraska politician, Buffett delivered newspapers as a boy. He filed his first tax return at age 13, claiming a $35 deduction for his bicycle. He moved on to study under value investing guru Benjamin Graham at Columbia University.
Buffett began buying shares in textile firm Berkshire Hathaway in 1962 and purchased a controlling stake in 1965. He began buying insurance companies and astutely investing those companies' cash reserves.
In December, the company purchased a 60% stake in the Pritzker family's manufacturing and services group, Marmon Holdings, for $4.5 billion. The privately held Marmon owns businesses across wire and cable, transportation services and industrial products.
Despite Buffett's meteoric rise, his days as the World's Richest Man are almost certainly numbered. He had long promised to give away his fortune posthumously. But in the summer of 2006 he irrevocably earmarked the majority of his Berkshire shares to charity, most going to the Bill & Melinda Gates Foundation.
At the time, the gift was valued at $31 billion.
However, assuming that Berkshire shares continue to rise, the final amount of the donation will far exceed that sum. Buffett gives 5% of his shares to charity every July.
In October, Buffett issued a challenge to members of the Forbes 400 richest Americans list, saying he would donate $1 million to charity if the collective group (or a significant number of them) would admit they pay less taxes, as a percentage of income, than their secretaries.
Days after issuing the challenge, Buffett appeared before Congress to encourage it to keep the estate tax. Armed with a few Forbes 400 issues, he told the hearing that "dynastic wealth, the enemy of a meritocracy, is on the rise."
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