How to Run a Business - Make it Happen!
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According to Patricia Schaefer, it is critical for all businesses to have a business plan. Many small businesses fail because of fundamental shortcomings in their business planning. It must be realistic and based on accurate, current information and educated projections for the future.
This article discusses how to run a business as successfully and as effectively as possible. It discusses the need for good planning and taking money into consideration in regards to opening a bank account, credit and how much you spend on overheads. It also discusses two business forms- the sole proprietorship and the limited liability company and why the former is a better choice for the small business owner, as opposed to the latter.
Setting up and running your own business is not just for those who are rich and incredibly brilliant. Nor it is only for those who have luck and are business savvy. Practically anyone can learn the tools necessary to set up a business and run it properly.
First of all, you do need money to start a business but you do not need bushels of money. In some cases you can start a business on very little money. For example, if you wish to start a freelance writing business all you need is a PC, an Internet connection and lots of determination and drive. Develop patience and persistence because there are no instant rewards when it comes to starting a new business.
Strategic Planning
Running a business requires good planning. You need to formulate a solid plan for what you want to accomplish and then consider all of the ways that your plan could go awry. Once you do that, then you need to test out your ideas in order to figure out which ones are practical and which must go.
Source: Business Know-How (http://www.businessknowhow.com)
Accounting
It is essential that you understand accounting. There are two forms of accounting- tax accounting and admin accounting. The former involves keeping excellent records and then bringing them to your accountant to figure out how much you owe in taxes and how much you will get back. The latter is the kind you take care of yourself on a regular basis. You must keep a detailed record of how much money you are spending on your business and how much you are making from it. If you spend more on your business than you are bringing in then you will never make any money!
Overheads
Make an effort to keep your overheads to a minimum. Overheads are all of the costs that are associated with running any type of business, including property maintenance, insurance, electricity, water, fuel, etc. Figure out how much money your business needs to bring in, in order to calculate what you can and cannot afford in relation to overheads.
Bank Accounts and Your Money Dealings
Open a bank account for your business but do your best to avoid having to pay “business rates” for the account. Instead look for one that is free to open. Money is an extremely important aspect of running a business. Be careful when it comes to credit. Borrowing too much money to get you started can run you into problems in the future if your business is not making enough money to cover the payments. It is also wise to not extend credit to your customers as not all of them will honor their commitments to pay you.
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Columnist Luke Johnson of the Financial Times says, “Do not rely on bank debt. You may have to be creative to secure funding for your business. Try factoring, leasing or stock-based lending. Offer customers discounts to pay cash up front. Get suppliers to provide extended terms.” |
Business Models
There are a variety of types of business forms you can set up for yourself. It is best to avoid partnerships because they can result in turmoil in many respects, especially if you partner up with a family member or friend. If you do decide to go this route, then get everything in writing and make sure each party understands their role in the business. The easiest and least expensive route to take is sole proprietorship. This means that you are a one person business and all of the day-to-day work is done by you. Sole proprietors own all of the assets of the business but also are responsible for all liabilities.
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Currently used by more than 75 percent of all businesses, sole proprietorship is often the suggested way for a new business that does not carry great personal liability threats. The owner simply needs to secure the necessary licenses, tax identification numbers, and certifications in his or her name, and you are now in business. |
While you may be tempted to become a limited liability company (LTD), this business model is often overrated and more confusing to understand. It is more expensive to take this route and it has more to do with formal management and investor insurance than running a business.
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Disclaimer: Ideawala.com does not recommend or endorse the products or services mentioned by the authors. We have not verified authors' credentials. We do not guarantee the accuracy of the information in the article or the earnings claims. Nothing in this article should be construed as business, legal or tax advice. Please consult a professional business advisor, an attorney or an account for specific advice in your situation.
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