Tuesday

How being involved in your community can help your business grow

Community involvement is one of the best ways to help a business grow. While most people do not get involved for this reason, there are numerous reasons why this is an effective way to develop new clients. One thing to remember about business ownership is that you do not operate in a vacuum. Local business owners have learned the value of contributing time and money to community organizations for numerous reasons.

Word-of-mouth advertising is one of the most cost effective and reliable forms of advertising. Advertising is one of the key components to business growth and development. However, this is only one of the ways that being involved in your community can help your business grow. Here are some of the others.

Quicker identification

Business owners who are active in their community typically find that they are identified as a reliable provider of services or products by community members. This is a very good way to develop better name recognition. The more visible a company is in the community, the more likely they are to have their name recognized.

Better networking

Many local civic organization and business group members make a habit of doing business with others in the same group. This type of networking can result in an increased client base and also provide additional referrals. In many cases, members not only turn to other members for needed products and services but they may also refer their clients to fellow members.

Source of employees

When a business is thriving in a community, it is helpful to tap into the resources of the community to hire new employees. This type of responsible hiring not only helps the business develop a better relationship with the members of the community but it also allows them to give something back. Small communities in particular provide a sense of family and once a small business owner is accepted into that community, their business is likely to grow.

There are untold benefits of being involved in a community whether you own a business or not. However, for business owners, the benefits of community involvement include business growth. Once a company has made a commitment to settle in a specific community, it is nearly a requirement for them to become more involved in that community.  Being a reliable and good neighbor is a great way to develop relationships in the community and grow your business.

There are several ways for business owners to be involved in their communities. While it may cost time, energy and effort, the long-term rewards are numerous. Business owners who feel that they can be an invisible entity in a community may find that they are invisible to the point of failure.  Being involved in a community makes good solid business sense.

Monday

How to build a business partnership that lasts

Often a small business owner decides they wish to take on one or more partners. This decision is one that has long-lasting implications for the business as well as the involved parties. Entering into a partnership can create a great business environment or it can spell disaster. There are some important things to consider when learning how to build a business partnership that lasts. Here are some of the important things to consider before establishing a partnership.

How much are you giving up?

One danger in taking on a single or multiple partners is giving up too much control of the company. While a 50/50 division may seem like a good idea, it can be problematic if the partners cannot agree on a variety of decisions. The types of decisions that can cause problems include hiring, changing vendors and even what to charge potential customers.  Before taking on a partner (or more than one) carefully consider the proper division of equity.

How good is the communication going to be?

When entering into a partnership there must be a high-level of communication. Decisions that impact the business must be made on a regular basis. Regular communication is important and must be done in a manner that keeps all partners involved. Communication is not limited to face-to-face meetings, it may involve email or other electronic methods of communication. Being able to have honest conversations about various business matters will be crucial. If the communication between partners is not solid, there could be long-term issues.

Do you share common goals and visions?

Generally if someone is going to join a business as a partner it is because they have a similar interest to the current owner. Business partners should have a shared set of goals and a shared vision for the company. Not only will this help foster a great working relationship, it can also help improve the experience of business clients.  Conflicting  goals and visions can be problematic on several levels and can be harmful to the business.

Do you have a good business relationship?

Business relationships rely primarily on two key components of most relationships. These crucial components are trust and respect. Trust and respect must be a two-way street. Engaging a partner that isn't trustworthy is not good business sense. One way to address this is to ask yourself the important question “do I trust this person to make the right decision for the business and for our customers” before agreeing to have them as a partner. Respect is earned and allows people to work well together towards a common goal. There should be mutual respect between partners.

Small business owners may have various reasons for taking on partners. Some of the reasons are to secure financing, to provide much needed manpower or simply to have someone to help with major decisions. Partnerships can be a very positive business structure, but if done without plenty of forethought, they can be very detrimental. Having a shared sense of purpose, being willing to discuss the business on a very professional level and having mutual respect are some of the key ways to build a business partnership that lasts.

Saturday

Top reasons to start an online business

Online business ventures may be risky, but there are some reasons that they make a lot of sense. For some, an online business can result in a future income stream while others may find that their online business replaces income to a degree that they have the freedom to leave their full time job and become an entrepreneur.  Here are some of the top reasons to start an online business.

Freedom from brick and mortar

For many people, starting an online business frees them from the necessity of going to an office every day. Depending on the business model, this may also mean that there is no investment in equipment beyond a computer, keyboard and an Internet connection. This lack of extensive capital outlay is one of the best reasons that many people elect to start an online business.

Easier marketing and advertising

Thanks to the advent of social media sites like Twitter, Facebook, LinkedIn and Pinterest, there are several options for free marketing and advertising. An online business can promote their products and services quickly and easily by determining what demographics are using which social networking sites. This allows online business owners to target their audience more easily.
Flexibility may be key reason

Tuesday

Comparing mezzanine financing to venture capital

Mezzanine capital is commonly referred to as "bridge financing" and may be in the form of cash loans in return for equity in a business or to be repaid with a significant interest rate. Typically a business who is searching for bridge financing is considering going public or doing a substantial expansion of their operations. Venture capital on the other hand is generally the financing that is sought by companies who are just getting started. Here are some other significant differences between mezzanine financing and venture capital.

Start-up versus established business

Venture capital financing is one of the methods that is used by new business ventures to launch a business idea. In these cases, an extensive business plan is prepared by the company and may include vision statements, demographics and projected financial information for a  company. In many cases, venture capital is two-fold and offers investors an equity position in the company that sometimes decreases as the financing is repaid.

Mezzanine capital is almost always sought by companies who have an established track record and may need immediate financing for a short period of time. This financing is usually available only to a company that has developed significant equity and can show that equity on their financial statements. Mezzanine capital is usually a form of financing that combines an option to repay the loan and offers the investors and equity position in the company.

Due diligence

Companies that are seeking venture capital financing almost always go through an extensive due diligence process. This means the investors are vetting all of the

Monday

How to differentiate a business plan from a business proposal

Chances are you have heard the terms business plan and business proposal used interchangeably. You might even believe they are interchangeable. However, they are not and in fact if you are trying to learn more about business you need to know the difference between a business plan and a business proposal.  Here is an explanation of both a business plan and a business proposal.

Business plan

In the simplest of terms a business plan is a long term plan that is put together for a company. Two different types of business plans are used. One may be used internally to lay out goals for the company, to restructure a company, or to do strategic planning.  Business plans help lay out a plan for reaching goals (often called an internally focused plan or strategic plan). The second type of business plan is typically called an externally focused plan and it may be used externally in order solicit funding to start a business, maintain or expand a business. In addition, a business plan may provide shareholders with an update on the goals and plans of the business.

A business plan is a critical document for all types of businesses. Even the smallest business should have a business plan in place to help them lay out goals, develop a marketing plan, estimate future investment needs, and so forth.

Business proposal

While a business plan is used to either inform internal or external sources of the condition of a company a business proposal is typically made from an outside company to another company. If this sounds confusing to you that is because you may not understand the function of a business proposal.

Business proposals are offers that are made in writing to a buyer by a seller.
There are basically three variations of a business proposal. These three variations are:


  1. An unsolicited proposal: if you have ever gone to a job fair, a trade show or other type of similar event, you may have received an unsolicited proposal. Remember those brochures you picked up (or those neat giveaways)? Those are a form of a business proposal. In effect the company that provided the material introduced you to their "brand". This was not designed to get you 100% on board (or necessarily sell you their product), it was basically a way to say to you "hey we are out here too". In this case, you were the buyer and the person who provided you their marketing material was the seller.
  2. An informal proposal: an informal proposal is a little more complex. Assume that you have a small business and you are interested in finding out approximately what it might cost for you to completely remodel your office. You know who you would like to have remodel the office. In spite of this, you are not entirely sure exactly what you want to have done. So you call the person you want to remodel (if you decide to eventually do that) and you tell them you are interested in a proposal from them as to what things would be best done if they were going to remodel your office. They would then submit to you a detailed proposal that outlined such things as furniture, carpeting, decor, etc. This would be considered an informal proposal of what they are going to do for you. In this case you are the buyer and the person you asked for the information is the seller.
  3. A formal proposal: Assume you are the CEO of XYZ Company and you have to replace all of your equipment.  This may be because there was a power surge and all of your equipment failed at once. In effect you know you are going to have to spend hundreds and thousands of dollars replacing this equipment.  In spite of this, you want to make sure you not only get the best equipment, you want the best price you can get as well. You put out a proposal for bids and you get back a number of them. 

There are specific components you can anticipate being part of a formal proposal:

  • Table of Contents - where the seller matches your specific requirements up by page number to location of information
  • Summary - details the benefits of dealing with this specific vendor
  • Technical Summary - explains (or shows) how your requirements are to be met
  • Management Summary - explains how the company will implement your requirements
  • Cost Summary - provides full information on cost, implementation and schedule of implementation


Please note: These may vary from provider to provider on the component names
In this case, each person who submits a formal proposal is a seller while you remain the buyer.

As you can see there is a great deal of difference between a business plan and a business proposal. If you do not know the difference between a business plan and a business proposal, chances are that you will find out very quickly if you decide to pursue your career as an entrepreneur.