Articles Tagged with Business Formation & Planning

Small and mid-size businesses have a lot to consider while forming and operating. Not only do you want to perform the service or work with the products dreamed up, but you’ll also have to think about and make other business decisions. Some of those issues could be employing a staff, business taxes or paying the company bills.

The Statute of Frauds will come into play when your business decides to purchase commercial property. No, it does not relate to fraud in the general sense–that is a common misconception. The statute is directly related to real estate transactions and requires any agreement about real property be in writing. It’s that simple.

Let’s say, for example, you know someone in town who is looking to sell a small building that would be the perfect location and has just the right amount of space for your business. One evening, the two of you discuss the property’s details and you both agree to a purchase price. However, as you are making preparations to take ownership, you realize that it has been sold to someone else.

While it may not be the most enjoyable part of starting a new venture, Texas entrepreneurs can greatly benefit from putting a business plan together. In addition to being a crucial document when seeking outside financing, a business plan is important for internal purposes as well. It turns employees into team members who all work together to make the business a success. It also gives them an idea about how they are contributing to the company, and whether they are winning and meeting the company’s goals or not.

To start a business plan, the owner could simply write several pages clearly outlining the company’s goals, its products or services, it’s strategy for marketing those products or services to target customers, and its projected revenues and profit over the next few years. The plan should also include how the company will obtain external funding to meet possible financial needs, and an exit strategy if it fails.

The reason many business owners lack a business plan is they might think it has to include 50 pages of detailed information. On the contrary, however, a business plan that is concise and no more than 10 pages long shows that the owner fully understands the mechanics of the company. It is also a good idea for the owner to involve the founding team when creating the plan, so different ideas can be gathered. Then, it should be regularly reviewed and updated.

While most Texas entrepreneurs understand that writing business plans is important, many do not really understand how to write one that is effective. A good business plan is more than simply writing down where an owner would like to see the company go along with the steps to get there. It should be more encompassing so that the business plan can translate into success for the venture.

To start, people should begin with thinking about the overarching big goals they have for their businesses. Some may have one big goal while others may have several. Separate plans for achieving those should be written so each goal is supported by its own concrete steps. Large goals should be broken down into smaller short-term ones, each with actionable steps. These steps should be calendared. It is best if each small sub-step is something small that only takes around 30 minutes. This can then translate into success towards achieving both the smaller goal as well as the larger one.

Making a list of all of the different people whose help will be needed in order to accomplish each goal is also very important. Those people should be included in the actual plan. Business owners should be unafraid to freely share the visions they have for their ventures when they are enlisting help. Getting others excited about helping to accomplish the vision can help to make it a reality.

Entrepreneurs in Texas and around the country are generally a committed and focused group. They often spend most of their waking hours thinking of ways to grow their businesses or overcome obstacles that could be holding them back, but this single-minded approach does have its drawbacks. While savvy business owners may work tirelessly and enthusiastically, they also take steps to ensure that they are able to survive financially should they encounter setbacks.

Entrepreneurs generally believe passionately in their commercial ventures, and they may be tempted to plow whatever profits they generate back into their businesses to spur further growth. While reinvesting profits with the intention of generating even higher amounts may be a sound business strategy, failing to balance their business and personal financial matters could leave business owners vulnerable should the economy crash or some sort of disaster strike. The bankruptcy courts frequently deal with petitions from once-thriving businesses that have fallen on hard times, and entrepreneurs who do not diversify could be left with few options should their fortunes turn.

While many business owners have personal estate plans in place, a great many fail to develop succession plans for their companies. These plans could include strategies for funding a change of ownership, a formula for determining the value of the business and details of how assets will be transferred to heirs. Having such a plan in place could provide peace of mind for entrepreneurs and may prevent bitter disputes in the future.

Texas small business owners are usually a highly motivated group of people willing to put a lot of time and energy into their companies. Although they may have the willingness to do what it takes to succeed, most end up failing in just a short time. In fact, approximately 80 percent of small businesses close their doors for good within 18 months of launching.

A person who is about to start a new venture may be able to achieve success by looking into what these new small business owners do wrong. Common pitfalls like poor accounting, the failure to do marketing and a lack of any vision for the future may be avoided with some pre-opening day planning. While developing a solid business plan is crucial, it is also important to adapt to changes in the market. A failure to do so is another mistake that leads to the closure of many new small businesses.

Although new owners may be very confident in their product or service, they can’t forget to consider the competition. Underestimating the competition is another common mistake that a lot of new small business owners make. While evaluating the competition, an owner can develop a marketing plan that makes the business stand apart from the rest.

Companies in Texas and throughout the country have access to more data than ever before. While this data can be a boon to managers and owners, it can also be overwhelming. However, companies can harness business intelligence for their own purposes in developing a solid business plan.

Business intelligence allows managers to access current data instead of the previous year’s numbers for planning purposes. Managers can also use software to test out various scenarios. The best results occur with a combination of business intelligence optimization and human input. Analytics can help cut down the number of options to a manageable size, but it takes the nuance of human intelligence to apply that information to the specific business and its needs and goals.

Another critical thing that businesses must do is ensure that different departments share information and work together. When this does not occur, decisions made in one department may adversely affect another department. Specialization is a strength, but it can also become a weakness when there is no collaboration. Managers and owners need to ensure that business intelligence does not lead to endlessly generating statistics and charts in lieu of taking action. Data should be a means to an end.

Texas residents who are thinking about starting a business of their own are sometimes hesitant to walk away from a steady paycheck. Even the most successful entrepreneurs have been known to struggle during times of economic upheaval, but prudent planning and clearly defined goals may help the owners of fledgling businesses to weather the storm and cope when revenues dip and bills begin to pile up.

Building a loyal and enthusiastic workforce can sometimes be what separates the businesses that are able to withstand a recession or economic downturn from those that are forced to close their doors. Employees who feel that they are a valued members of a team may be prepared to work extra shifts or forgo bonuses that they have worked hard for if doing so will help their employers to survive, but business owners who resort to laying off workers at the first sign of financial trouble rarely foster such commitment.

An important part of business planning is anticipating major expenses and obtaining the necessary financing well in advance. Banks are often more willing to make loans to applicants not in immediate need, and business owners who delay may be compelled to risk their personal credit ratings by providing a personal guarantee. The Small Business Administration has programs in place to assist entrepreneurs who require financing to grow or bolster their commercial ventures.

While there are more than 20 million business start-ups in Texas and throughout the country, building a successful one requires smart planning and strategizing. While most business operators expect to make more money in 2016, many of them will fail because they lacked resources, a strong business plan and knowledge. Here are a few strategies that could help business owners avoid failure and gain success.

Prior to launching a business venture, successful entrepreneurs need to have sufficient funding to cover startup costs, employee wages and overhead expenses. Running out of money is one main reason many businesses close after only several months of operation.

A sound business plan could help business operators achieve success. The business plan is a basic and simple summary of the owner’s goals, vision and mission. It also gives a clear picture of how the business will operate financially, the strategies it will use to sell its product or services, the amount of employees it needs and how it will handle future challenges.

Small business owners can focus on the goals that they set for their companies with a well thought-out plan. However, Texas entrepreneurs might be surprised that only 33 percent of small business owners have a written plan, according to a Wells Fargo survey. There are a few vital elements that a business plan should have.

A successful business plan includes an overview of the company that provides a business description, including its services or products. The overview outlines the industry or professional experience of the business owner and the history of the company. It also lays out the company structure, including staff and management positions and responsibilities. A comprehensive marketing plan is also included.

Financial data is another important element that outlines the revenue and balance sheet projections. Maintaining organized and updated financial details might be challenging for the business owner, but it is essential to manage cash flow, plan for expansion and prepare for unpredictable expenses. Another component is an analysis of prospective customers and industry competitors, including a plan for reaching potential customers of its services or products. The purpose of building data on consumer interest and rival operations helps with fine tuning marketing strategies and maximizing sales.

The early stages of starting a new business in Texas are the most fraught with danger from a statistical standpoint. The reason for this, according to some observers, is the lack of foresight in answering a few questions with enough detail. Instead of envisioning only the end product, companies can be more successful when problems along the way to success are anticipated and planned for upfront. These problems include the need for backup funding sources and the culture shock many new owners feel when realizing the work and dedication required for success.

One of the reasons people dream about going into business for themselves is the ability to have control over their own schedule. The reality of ownership is that hours tend to be longer, especially at the beginning, and dedication is a requirement. The high risk of failure is also a reality for any business start-up.

The inability to secure funding at the time it is most needed is another common problem. Business formation entails a number of common expenses that are routine. Employee salaries, inventory and infrastructure, and business specific services are all ongoing. Lining up potential funding with a solid business plan in hand can mean the difference between folding and having another chance at success.

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