STARTING A SMALL BUSINESS? HERE ARE 5 TIPS FOR YOU

Home and small businesses are a $427 billion-a-year industry, and if you've been planning to launch your own venture, now may seem like the right time to do it. But before you go into business, try to convince yourself why you shouldn't, says Paul Stappas, founder of Bookkeeping Administration Management, a service provider to small businesses. That approach will help you minimize the risks associated with impulse-driven decisions and insufficient research prior to starting your business. According to Stappas, it can also function as a litmus test: "If all the analysis is positive, then you know you have an objective, rather than emotional, reason for going into business." Here are his top five tips for starting a successful small business:

1. Determine if there is a market for your product or service. Just thinking you have something of interest doesn't make it a product people would want to buy. Test the market to see if there will be demand for your product or service: go to trade shows and network with other professionals in your line of business, subscribe to trade publications, set up an informal focus group (even if that means only your friends and family) to gather opinions. Census figures can also help you learn about your demographic. Analyze your findings to determine whether your idea is viable, then make adjustments, including the toughest one -- letting go of your concept and finding another one, if necessary. Remember that it takes on average six months to a year to do proper market research.
   
   
2. Analyze the competition. For an informal competitor analysis, look in the Yellow Pages and on the Internet. That will give you an idea of how many businesses in your area offer services or products similar to yours, how established these firms are and how many people they reach. For a more precise analysis, gather competitive intelligence from public sources, such as competitor sales literature, press clippings and annual reports.
   
   
3. Develop a five-year business plan. That lets you know what kind of capital you need to get started and succeed. A good plan encompasses overhead expenses (including the owner's potential salary), cash flow (the frequency with which a client is going to pay you) and start-up capital. "Never go in with less money than you should," says Stappas. "Partial funding can easily slip into a black hole, and then you'll need even more money than you initially did to offset the loss and continue setting up your business."
   
   
4. Get your books in order. Having your bookkeeping done accurately and on time tells you whether you're making a profit. That, and not sales, should be your focus, according to Stappas, who says the majority of small-business owners mistakenly focus on the latter. For example, sales alone won't tell you if your vendor has increased its prices, and you might not realize it in time to pass along the markup to your customers.
   
   
5. Incorporate your business to separate your financial and personal assets. Incorporating protects you from personal liability and from exposing your personal assets. What this means is that if your business goes bankrupt, or if an employee gets into a car accident while on company business, you won't have to forfeit your house or car to cover litigation and losses. In addition, incorporation provides certain tax benefits, such as long-term-care insurance, which if bought by your corporation would be 100 percent deductible.
   

Source : http://www.orlandosentinel.com/