General Business and Finance Blog

Running small business may not be a cake walk for all. It requires a different outlook towards life, a different way of goal setting, if you really want to succeed in it. People who are happy to work for others and be content to pocket their monthly salaries religiously are of one class and those who can’t fit themselves to this comfort zone are of a different class. The second class of people seems to have better chances of becoming entrepreneurs.

If you feel you want to have your own small business and love to manage it all yourself, ask yourself some of these basic questions to ascertain whether you have the entrepreneurship blood running in you to succeed in your wish:

(1) Do you have a dream to realize? Have you a pet idea that you believe will work? Are you willing to pump in every breath in bringing life to your dream? Are you least concerned about position, status, respectability etc in the early stages of working to realize your dreams? Is being the chief of your own little county is more covetable to you than being one of the ministers of a huge empire?

(2) Are you ready and willing to take huge risks if your inner voice keeps saying “you can do it”?

(3) Are you flexible enough to be prepared to live with unsteady and unpredictable income? Do you have wherewithal to guard yourself against financial ups and downs? Is your spouse or parents willing to financially support you till you establish yourself and stand on your own legs? Do you have good savings? Or, are you really capable of jumping into the river and then try to swim against all odds?

(4) Do you take pride in calling your own shots? Do you grasp the fact that you are ultimately answerable to your customers and other stakeholders? Do you understand that, unlike a corporate set up where you might have worked earlier, there will not be a boss above you to take risks nor subordinates below you to blame for the mistakes you committed?

If your answer is yes to most of the above queries, then you have the right entrepreneurial spirit to start your own small business.

Next comes grasping some of the essentials of running a small business:

(1) Do Not Dream Of Making Millions Straight Away

Small business will mostly be with less investment, be less risky and with less “plinth area” and consequently with less scope for making any big money. Not every body can start a venture in the unused Garage and become the owner of a billion dollar enterprise like Steve Jobs. Your goals should be correlated to your line of activity, your investment base and the potential customer base.

(2) Do Not Plan To Have A Large Capital Base

It might be wonderful if you could have the latest computers and gadgets, the best possible machinery and equipment to run your business and a fleet of vehicles to do your deliveries all done from your owned factory building. But until you earn really enough to invest on these on your own, you will be better off with cheaper and less glamorous alternatives, by sub-contracting support services and hire-purchasing the shed, equipment and machinery.

(3) Be Minimal On Hired Man-Power

Until you make reasonable money and afford to have additional hands, be prepared to do mantle many roles the production manager, the marketing manager and the accountant all yourself. If you are the bossy type who thinks all managerial work is to be done only by others and you will only give policy guidelines, then better watch out. A small business is not like a corporate conglomerate.

(6) Be Prepared For A Low-Profile, Less Glamorous Life Initially

Small business is mostly a low profile, adventure-less, glamor-less way of life till you establish well. Until you are stabilized, you can not afford costly parties at 5-star beach resorts to your customers, huge advertisements in Newspapers etc. If you are the type who worked in a corporate business house where you had seen extravaganza and you want to imitate them in your small business, you will soon run out of money.

(7) Have Some Rudimentary Knowledge About Accounting And Taxes

In a small business, you must have some basic capacity to plan and manage cash flow, credits, debits and bank transactions. But one area where it is better to pay money and use specialist services/ consultancy is in the area of Taxes. It may not be worth if you waste your time and effort on this slippery area. At least make use of the services of Tax consultants to get the necessary preliminary registrations done at the appropriate Government Departments, get the necessary forms filled and submitted, and get clear-cut guidelines on the types of taxes you have to pay, the exemptions you are eligible for specific to the type of business you are doing etc.

    A lot of hard work must precede tasting success in small business. People without entrepreneurial spirit, particularly those who are used to hi-fi corporate life, may find it extremely difficult to run a small business successfully. No success is possible without the right spirit, perseverance and focused effort.

The early process of reviewing business financing alternatives is likely to be confusing for investors most familiar with residential financing requirements. The outcome should be less stressful and more successful by analyzing this article as well as related commercial mortgage and business opportunity financing articles.

There are many critical differences between residential real estate investing and commercial real estate investing. There are over 25 business financing differences, and they will not all be addressed in this business finance article.

With the increasingly chaotic investment climate for residential financing in the United States, more residential real estate investors are exploring commercial real estate and business finance opportunities. It is important for prospective commercial property owners, business owners and business investors to educate themselves about options for the business loan and commercial mortgage environment they will be facing.

Personal Guarantors for Business Opportunity Financing and Commercial Loan -

Even though a business is held under corporate ownership, a personal guarantee from the principal owners is routinely required for a commercial mortgage or business loan. This also means that credit scores of the individual business owners will be used as one of the factors to qualify for a commercial loan. Typically a personal guarantee for a commercial loan is required for owners with over a 20% ownership interest.

Down Payment Requirements for Business Financing -

To purchase a business will typically require a business loan down payment varying from 10% to 25% (more in some cases). The type of business, credit scores and business experience will have an impact on the amount required for a down payment.

Stated Income Business Finance Possibilities -

Stated income business loan options will eliminate the need for a borrower to provide personal tax returns. However the stated income business finance approach will not eliminate the need to document income for the business being purchased or refinanced. Unlike residential financing, no documentation (no doc) loans are not available for a commercial mortgage.

Commercial Mortgage and Business Opportunity Financing: Size Limitations -

It is very difficult to obtain a commercial mortgage less than 0,000. A normal maximum for a stated income business loan and SBA loan situations is million. A number of other business finance programs are limited to million.

Appraisals for a Commercial Mortgage or Business Opportunity Financing -

Commercial real estate appraisals are much more expensive and complex than residential appraisals and typically take several weeks to complete. Commercial mortgage and business loan value is based primarily on income rather than comparison with other properties that is so common with residential financing.

Business Financing Interest Rates -

Interest rates for a business loan are generally higher than residential financing and rates up to 13% and even higher are possible. Investors will find both variable and fixed interest rates available from many commercial mortgage sources. Business opportunity financing typically has interest rates 1-3% higher than a comparable commercial real estate loan situation.

Other Important Business Finance Differences -

As noted previously, there are too many differences between residential financing and business finance situations to describe adequately in one article. Some of the critical issues discussed in separate reports are how to avoid common business loan problems, SBA loan financing, balloon and recall provisions for a commercial mortgage, business opportunity financing and special purpose commercial properties.

The early process of reviewing business financing alternatives is likely to be confusing for investors most familiar with residential financing requirements. The outcome should be less stressful and more successful by analyzing this article as well as related commercial mortgage and business opportunity financing articles.

There are many critical differences between residential real estate investing and commercial real estate investing. There are over 25 business financing differences, and they will not all be addressed in this business finance article.

With the increasingly chaotic investment climate for residential financing in the United States, more residential real estate investors are exploring commercial real estate and business finance opportunities. It is important for prospective commercial property owners, business owners and business investors to educate themselves about options for the business loan and commercial mortgage environment they will be facing.

Personal Guarantors for Business Opportunity Financing and Commercial Loan -

Even though a business is held under corporate ownership, a personal guarantee from the principal owners is routinely required for a commercial mortgage or business loan. This also means that credit scores of the individual business owners will be used as one of the factors to qualify for a commercial loan. Typically a personal guarantee for a commercial loan is required for owners with over a 20% ownership interest.

Down Payment Requirements for Business Financing -

To purchase a business will typically require a business loan down payment varying from 10% to 25% (more in some cases). The type of business, credit scores and business experience will have an impact on the amount required for a down payment.

Stated Income Business Finance Possibilities -

Stated income business loan options will eliminate the need for a borrower to provide personal tax returns. However the stated income business finance approach will not eliminate the need to document income for the business being purchased or refinanced. Unlike residential financing, no documentation (no doc) loans are not available for a commercial mortgage.

Commercial Mortgage and Business Opportunity Financing: Size Limitations -

It is very difficult to obtain a commercial mortgage less than $100,000. A normal maximum for a stated income business loan and SBA loan situations is $2 million. A number of other business finance programs are limited to $5 million.

Appraisals for a Commercial Mortgage or Business Opportunity Financing -

Commercial real estate appraisals are much more expensive and complex than residential appraisals and typically take several weeks to complete. Commercial mortgage and business loan value is based primarily on income rather than comparison with other properties that is so common with residential financing.

Business Financing Interest Rates -

Interest rates for a business loan are generally higher than residential financing and rates up to 13% and even higher are possible. Investors will find both variable and fixed interest rates available from many commercial mortgage sources. Business opportunity financing typically has interest rates 1-3% higher than a comparable commercial real estate loan situation.

Other Important Business Finance Differences -

As noted previously, there are too many differences between residential financing and business finance situations to describe adequately in one article. Some of the critical issues discussed in separate reports are how to avoid common business loan problems, SBA loan financing, balloon and recall provisions for a commercial mortgage, business opportunity financing and special purpose commercial properties.

Research what’s selling and what it’s selling for: Check with your country’s embassy in the country where you are hoping to export or import. They should have a good idea about what products are in demand. From here, you can use the available information to help you in the next step, which is:

Locate a reputable supplier: This is perhaps the most important obstacle you will face in setting up shop for a successful export-import business. Having good business partnerships means that you will be in a better position to pass cost savings along to potential customers. Taking this portion of building your own import-export business for granted may spell doom for your company.

Obtain a letter of credit: You will need a form of payment that you can trust. While many business transactions are conducted with reputable payment systems such as Paypal, it is always safer to seek a letter of credit from a financial institution for the transfer of goods and services. A letter of credit is proof that products have been shipped and received in good faith, and that the funds are adequately transferred to the necessary parties.

Look for and show transparency in your business relationship: Transparency, like in a marriage, is a great way to build trust. And while trust is somewhat of an intangible when it comes to any kind of relationship, it is vital to your success. You should both strive to be “see-through” about the way you do business. Back up what you say. Be honest and upfront about every aspect of your business transactions as well as what sells best, and what products to shy away from and you will have a long-term bond of profitability rather than a quick buck that doesn’t last.

Stand by your products: In every export-import business, there comes a time when fulfillment is less than perfect. Whether the product is something tangible, or provided services, make sure you stand behind it. Be willing to put your money where your mouth is and deliver if expectations ever fall short.

An export-import business is one of the best ways to make money in a troubled global economy. Put these essentials to work for you and avoid the doom and gloom!