5 Vital Aspects You Must Know for Success in Small Business

Biz 5 Vital things

5 vital aspects you must know for success in small business

  1. Track your return on investment (“ROI”).
  2. Monitor cash flow statement frequently
  3. Leverage with talent human resource
  4. Leverage social media
  5. Develop and have an emergency plan in place

First-time small business owners must master these 5 indispensable aspects because they are vital business factors for every business owners.

Track your return on investment (“ROI”)

Business owner must keep track on:

  • How much you invest?
  • What you invest your money on?
  • What you get in return for every dollar you invest?

This ROI tracking would help the business owner easier to decide where to invest and allocate your money in the future during your annual budget analysis review.

Monitor cash flow statement frequently

Diligently and thoroughly monitor cash flow statement.  Business owner should only spend from the revenue you derive from the sale of your products or services.

Small business must learn how to control and ensure you have sufficient cash to cover operating expenses for at least 90 days.  You have to anticipate and manage the time-lag between completing a project and receive payment.

For your small business, the cash flow statement may be the most important financial statement you organize. It traces the flow of funds (or working capital) into and out of your business during an accounting period.

For a small business, a cash flow statement should probably be prepared as frequently as possible. This means either monthly or quarterly. An annual statement is a must for any business.

In short, a cash flow statement can be used to assess the timing, amount and predictability of future cash flows and it can be used as the basis for budgeting. You can use a cash flow statement to answer the questions, “Where did the money come from?” “Where did it go?”.

Leverage with talent human resource

Small business must know what you look for and what to shun when recruit a new talent human resource.  Please note your human resource is also a key area of ROI.  Hiring an unfit employee can be a catastrophic impact on a small business.  You must follow all required steps and take time to make your recruitment decision.

In other hand, business owner needs to make genuine attempt to correct the unfit employee within a set period of time.  If he can not show any improvement or progress, you need to let him go swiftly and gracefully.

Leverage social media

such as Facebook, Linkedin, Google+, Pinterest and other popular sites.  Social media is where your prospective clients and customers often hangout.  Business owner’s profile must be crafted relevant to your audience and willing to participate in online discussions in your industry related chats.

Emergency Plan in place

Business owner should be prepared for a natural disaster which could either completely discontinue or disrupt your business operation.  Your emergency plan should be include at the very least an alternate lines of communications with clients in order to preserve the integrity of your service.  In addition, you also maintain, upgrade and updated IT equipment.

More effectively, you need to identify your critical business functions— what resources and personnel will you need to restore or reproduce these functions during a recovery? Assign disaster response duties to your employees.  In addition, business owner needs to identify critical suppliers—Identify suppliers, providers, shippers, resources, and other businesses you typically interact with and need to keep your business operating. Develop professional relationships with backup vendors, in case your normal vendor isn’t available due to the emergency.

In short, the more you plan in advance for potential disaster, the quicker you recover and keep your valued and core client intact.

In conclusion, your chance for building a successful small business requires 1) Track your return on investment, 2) Monitor cash flow statement frequently, 3) Leverage with talent human resource, 4) Leverage social media and 5) Develop and have an emergency plan in place.

Resources at Amazon Corner:

  1. The Small Business Bible: Everything You Need to Know to Succeed in Your Small Business
  2. The Big Book of Small Business: You Don’t Have to Run Your Business by the Seat of Your Pants
  3. The Small Business Owner’s Manual: Everything You Need to Know to Start Up and Run Your Business
  4. How to Succeed as a Small Business Owner … and Still Have a Life
  5. The Wall Street Journal Complete Small Business Guidebook

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7 Points to Consider When Seeking Business Financing

Business Finance

Preparation is key to many things in life. Business financing is no different. In order to properly prepare and position yourself for the journey, make sure you are very familiar with the following 7 steps that may determine your ability to get the financing you seek.

DEFINITION of ‘Financing’ the act of providing funds for business activities, making purchases or investing. Financial institutions and banks are in the business of financing as they provide capital to businesses, consumers and investors to help them achieve their goals.

  1. Personal credit score. Everything in today’s headlines is about credit and if it’s still available to the small business owner. This affects start-ups (less than 2 years in business) as well as experienced companies. Be familiar with the information stored about you on all three reporting bureaus, TransUnion, Equifax and Experian. Understand the FICO range, 300-850, and know your score. Strong credit is generally considered 720 and above. Many leasing companies will consider applications with minimum scores of 650. Make sure you know what your credit history says about you before applying.
  2. Collateral. Collateral is widely required for many financial products, unless you are specifically seeking an unsecured financial solution. Collateral becomes even more important if your credit is not strong. Lenders are generally credit or collateral based; you must be strong in one area of the other. The $125,000 equipment you are looking to lease may not even qualify as stand-alone collateral for the lease or loan; additional collateral may be required, such as real estate or additional equipment already in your ownership.
  3. Ability to repay debt. It’s great that you’ve determined how much you need, but how will you pay the debt? Businesses often take months before they generate enough revenue to completely cover debts. Lenders know this. They’ll want to analyze your current revolving debt amount from your credit history, your business bank statements, personal financial statements, as well as your most recent profit and loss statements. You should review this information prior to making application to ensure you can make the necessary payments.
  4. Proof of ownership. Be prepared to disclose 100% ownership of your business, although you may only need to provide financial information on anyone who owns 20% or more of the business. IRS documents are normally used to verify business ownership.
  5. Planned use of equipment or cash. It’s simply not good enough to say you want the equipment or that you need the cash for your business. You must be able to show the equipment is essential to your business or how the additional capital will help you purchase inventory to grow your business or consolidate your debt. Be prepared with detailed equipment listings from the vendor, including product specifications, intended location of use and delivery dates.
  6. Understand the terminology. Personal injection is not a self-induced vaccine shot. It often refers to the down payment or investment amount the business owners bring to the financial transaction. To fully understand your lease payment alternatives, you must know the difference between FMV and $1 out option. Do you know the difference between interest rates and a money factor or how to calculate your loan to value (LTV) ratio? Most terms can be easily researched on the Internet, but if you unsure of how a term affects your transaction stop and ask the financial professional you’re working with to explain each unknown term to you.
  7. Finally, remember it is just business, nothing personal. No one will ever be as passionate about your company or business idea as you. If your financial broker or lender doesn’t get the same emotional feeling about your products and services as you do, it’s because they’re not supposed to. Lenders are primarily interested in evaluating transactions as risk factors against the likelihood of them getting fully paid on their investment. A good financial partner may even need to remind you of this to better prepare you for submission of your credit application.

Resources at Amazon Corner

  1. Business Finance
  2. Corporate Finance for Dummies
  3. Entrepreneurial Finance, Third Edition
  4. Finance Basics
  5. Focus on Personal Finance
  6. Multinational Business Finance

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Fair Market Rents – Section 8 Tenants – Update May 2015 – ALL States

HOME HUD

Fair Market Rents are established by HUD each year for the Section 8 Program. For more information about the annual calculation of Fair Market Rents, visit the HUD’s Office of Policy Development and Research.

HOME Rent Limit data are available from FY 1998 to the present.

Per 24 CFR Part 92.252, HUD provides the following maximum HOME rent limits. The maximum HOME rents are the lesser of:

  1. The fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR 888.111; or
  2. A rent that does not exceed 30 percent of the adjusted income of a family whose annual income equals 65 percent of the median income for the area, as determined by HUD, with adjustments for number of bedrooms in the unit. The HOME rent limits provided by HUD will include average occupancy per unit and adjusted income assumptions.

In rental projects with five or more HOME-assisted rental units, twenty (20) percent of the HOME-assisted units must be occupied by very low-income families and meet one of following rent requirements:

  1. The rent does not exceed 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families. HUD provides the HOME rent limits which include average occupancy per unit and adjusted income assumptions. However, if the rent determined under this paragraph is higher than the applicable rent under 24 CFR 92.252(a), then the maximum rent for units under this paragraph is that calculated under 24 CFR 92.252(a).
  2. The rent does not exceed 30 percent of the family’s adjusted income. If the unit receives Federal or State project-based rental subsidy and the very low-income family pays as a contribution toward rent not more than 30 percent of the family’s adjusted income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy program.

The FMRs for unit sizes larger than 4 bedroom are calculated by adding 15 percent to the 4 bedroom FMR for each extra bedroom. For example, the FMR for a 5 bedroom unit is 1.15 times the 4 bedroom FMR, and the FMR for a 6 bedroom unit is 1.30 times the 4 bedroom FMR, and so on…

  • 5 BR = 1.15 x 4 BR FMR
  • 6 BR = 1.30 x 4 BR FMR
  • 7 BR = 1.45 x 4 BR FMR
  • 8 BR = 1.60 x 4 BR FMR
  • 9 BR = 1.75 x 4 BR FMR
  • 10 BR = 1.90 x 4 BR FMR
  • 11 BR = 2.05 x 4 BR FMR
  • 12 BR = 2.20 x 4 BR FMR

These HOME rent limits are effective June 1, 2015, and are applicable to new HOME leases and lease renewals after that date.

Attached is an update for state of California.  For other states, please sign-in and request for a copy for your state.

HOME_Rent Limits_State_CA_2015

Resources at Amazon Corner:

  1. Real Estate Investment
  2. Real Estate Finance for Residential and Commercial
  3. Buying Real Estate Without Cash or Credit
  4. Buying First Home: Tips, First Home Owners Grant & First Mortgage Guide, Home Buying Process

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What is an alternative investment real estate versus vacation home…?

NET LEASE Big Buyers

Mortgages on vacation properties have harder terms—and more expensive to own than a primary residence.

Is your vacation home an investment property?  Homeowner would need to consider and calculate

  • Cost of the mortgage
  • Insurance
  • Taxes
  • Maintenance & Repair

Lender’s requirement are higher down payment and at least 50 basis point on the second home comparing with your primary home.

In addition, lender would calculate your debt-to-income (“DTI”) against the borrower when they apply for another mortgage.  Under current federal laws, a borrower’s DTI must be 43% or lower to qualify for most mortgages.   This DTI percentage measures the borrower’s overall monthly debt payments relative to income—the lower the debt, the better.

In fact, many lender also calculate the vacancy rates, roughly from 25 to 30% of the year.

Borrower may have to research for lender who are non-traditional lenders for the investment-home market who would willing providing 30-year, fixed-rate mortgage specifically developed for landlords who cannot qualify for loans from traditional lenders.

In general these lenders term at higher interest rate and loan-to-value (“LTV”) is approximately 75% the property’s appraised value.  Please note the minimum credit score is 650.

The rental income covers mortgage payments and still enjoy the property for some personal use.

Here are some consideration for using a vacation home for rental:

Documentation & Paperwork. Borrowers hoping to qualify for an investment loan can expect lenders to ask for proof of ongoing occupancy, such as a copy of the lease and evidence that a security deposit was collected

Higher taxes. Non-primary residences aren’t eligible for homestead exemptions on local property taxes. Mortgage interest on investment homes isn’t deductible for federal income tax purposes.

States and local municipalities require vacation-property owners to collect and pay the same lodging taxes as hotels and charge stiff penalties to nonpayers.

Maintenance & Repair.  Maintenance and insurance costs will have higher rates than homeowner’s policies. Vacation rentals also require cleaning and marketing, which can be handled by a real-estate management company—at an additional cost.

DAJKGROUP3

Alternative, net lease commercial real estate (“NNN CRE”) investment is a long term, secured by real estate, low risk, reasonable yield and fixed income.  You may not need to factor a maintenance and repair if you know how to select a right net lease property.

  1. BIG BUYER of NET LEASE REPORT – March 2015
  2. Top 6 Terms You Should Know Before Investing in net lease commercial real estate
  3. Typical net lease commercial real estate
  4. Net Leased Commercial Real Estate (NNN CRE): Step #2
  5. TOP Net Lease CRE Investment Books – April Selection! **Additional 10% discount!

Please subscribe for our monthly selection of NNN CRE USA and investment resources.

Also, please sign up for your free consultation if you need further discussion.

Resources at Amazon Corner

  1. The Little Book of Triple Net Lease Investing: Second Edition
  2. The NNN Triple Net Property Book: For Buyers of Single Tenant NNN…
  3. The Little Book of Triple Net Lease Investing
  4. The Due Diligence Process Plan Handbook for Commercial Real Estate…
  5. Real Estate Mail Box Money: The Passive Investors Guide to…
  6. Investing in Retail Properties a Guide to Structuring Partnerships…
  7. How to Succeed in Commercial Real Estate
  8. How To Win In Commercial Real Estate Investing: Find, Evaluate…
  9. What Every Real Estate Investor Needs to Know About Cash Flow…
  10. The A B C’s of SITE SELECTION: How to Pick Winners and Avoid Losers
  11. Commercial Real Estate Investing For Dummies

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Case Study: Sale-Leaseback Technique of Wendy’s and McDonald

Sale-leaseback

Wendy’s Refranchising 640 Stores

Following a pattern we’re seeing in the wider market, Wendy’s this week announced that they were going to sell as many as 640 stores to their franchisees. This on the heels of McDonald’s announcing they would do the same for 3,500 stores as part of their effort to boost the bottom-line.

It’s not exactly clear how many, but certainly some sizeable percentage of these stores may be candidates for sale-leasebacks by the Franchisees. Sale-Leaseback activity in the franchise space has been brisk this year and a flurry of new inventory of this type is exactly what the market is looking for.

With constrained supply and high demand, these franchisees would likely have no problem doing sale-leasebacks to help them finance the store purchases, particularly if the stores in question have a good sales history and the franchisee is substantial enough.

This refranchising trend has been increasing lately largely as a mechanism of the franchisors to trim corporate overhead costs.  [1]

Why and How?

Commercial real estate owner find ways to generate revenue and increase capital. A sale-leaseback technique unlock the equity a company has in its real estate and to convert that equity into cash. This involves selling the institution’s headquarters or branch offices and simultaneously leasing them back long-term.

In addition, many property-owners are recognizing the tax benefits and other advantages of these transactions. Finance adviser/consultant can advise clients on the benefits and help them find sale lease back providers.

In general by sale-leaseback its property, a property-owners can lower its operating costs and use that money to increase its cash flow.

Six benefits of sale-lease back transactions:

1)  Favorable Impact on Earnings.  A sale-leaseback transaction converts noncurrent fixed assets such as real estate into current liquid assets— i.e. cash.  It can generate a gain on the sale when properties’ market or appraised values are more than the depreciated book value. Property-owners often can improve their earnings by reinvesting the cash at a greater rate, retiring high cost debt funding mergers and acquisitions, expanding operations, or taking advantage of special investment opportunities.

2)  Total Facility Control. Simultaneously with the sale, the company leases back the property for an initial lease term — typically 15 years with renewable five-year options. In effect this gives the company control of its real estate for at least 40 years. This would be identical to ownership of the property’s normal useful life.

3)  Low cost of Money.  A sale-leaseback transaction can be a quick economical way to raise capital compared to the process of originating a new stock issue. Issuing new stock may result in an ownership dilution at unfavorable prices or with unwanted investors.

The leaseback is a low-cost technique that avoids these consequences as a rule, a sale-leaseback transaction should provide capital at an effective cost of 100 to 150 basis points less than that of long-term mortgage financing or the long-term conventional debt market. It should have no restricted covenants and no principal repayment after all lease payments.

4)  Recapture all costs. In a typical sale-leaseback transaction, the company would recapture all costs relating to the property’s current market value, including legal fees, surveys, architectural engineering, title, and any other closing costs or property- related fees. This contrasts to conventional long-tern mortgage financing, which is usually restricted to percent of the current market value.

5)  Regulatory Compliance. The cash a business receives from a sale-leaseback transaction can help it improve its primary and total capital-to-assets ratios The profit on a sale-leaseback transaction from depreciated value to current appraised value can increase a company’s net worth.

6)  Off-balance-sheet Finance. By carefully structuring an operating lease, the transaction would not require capitalization under Financial Accounting Standards Board is criteria.  In turn, this allows off-balance-sheet treatment, which in effect would have a more favorable impact on the company’s earnings and improve its financial ratios.

RESOURCES from Amazon Corner

  1. Principles of Real Estate Syndication: With Entertainment and Oil-Gas Syndication Supplements Included
  2. Maverick Real Estate Financing: The Art of Raising Capital and Owning Properties Like Ross, Sanders and Carey
  3. Real Estate Investment
  4. Real Estate Finance

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[1] Wendy’s Refranchising 640 Stores


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Would you like to reduce your cost of export and import business?

Export_Import

Export and Import Business’ cost can be reduced significant with accessing to a correct and factual information.  Full list of Country Limitation is available for download.

Attention:  Multi-Buyer, Bank Letter of Credit and Repetitive Policy Holders, Insurance Brokers!

USA-Export-Import Bank (“Ex-Im Bank”) cover/support for private sector transactions is typically limited to transactions with a commercial bank as obligor or guarantor.

Ex-Im Bank will consider transactions without a bank undertaking on a case-by-case basis. Regarding the latter, Ex-Im Bank may consider corporate entities that are able to provide detailed financial information sufficient to enable Ex-Im Bank to reach a credit conclusion. Such information should include financial statements audited by an affiliate of an international accounting firm and prepared in accordance with International Financial Reporting Standards (IFRS), and the statements should reflect material bank borrowings.

Full list of Country Limitation is available for download.

Resources at Amazon Corner (Take additional 10% off for first time buyer)

  1. Building an Import / Export Business
  2. Import / Export Kit for Dummies
  3. Start Your Own Import/Export Business
  4. Export/Import Procedures and Documentation
  5. Mastering Import & Export Management
  6. How to Open & Operate a Financially Successful Import Export Business

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A Great business consultant must see a white space around the black dot…

Biz Consultant

A business consultant’s job is to consult. Nothing more, nothing less. It’s that simple. There’s no magic formula or secret that makes one consultant more successful than another one.

But what separates a good business consultant from a great business consultant is a passion, drive for excellence and creativity. And–oh yes–a great business consultant should be knowledgeable about the subject he or she is consulting in. That does make a difference.

Creativity is not only helps a Great business consultant can “see” things surrounding of his client’s issue,  but it also provides right guidance and assists with precise and correct solution.  For illustration, place a small black dot on a blank piece of fresh paper represents your client’s issue. It could be involved human resources, account receivable, account payable, expansion funds, equipment, budgeting, personnel, or even community relations. It is your client’s black dot.

Unfortunately majority of good business consultants will see ONLY the black dot.  Their eyes will focus and become fixated on it.  As a great business consultant, you must see all the white space around the black dot.  Fill the white space with all the positive recommendations and solutions. Start to make notes.  Keep thinking and writing.  A great business consultant is constantly searching for right solutions to solve his client’s issue.

Within no time the white space will fade, and the dot will become unnoticeable. Your client’s issue will become workable. Furthermore, involve team members or partner with your client’s black dot. A fresh set of eyes may be all you need to make the impossible, possible. By taking on your client’s issue in pieces and parts, you can develop strategies to chip away at it. In the end, the seemingly insurmountable black dot no longer exists―you have made progress. As a great business consultant you have found ways to cope with and improve your client’s situation.

biz consultant 8

Top 10 Consulting Businesses Thriving Today

Although you can be a consultant in just about any field these days, the current top 10 consulting businesses include:

  1. Accounting:Accounting is something that every business needs, no matter how large or small. Accounting consultants can help a business with all of its financial needs.
  2. Advertising:This type of consultant is normally hired by a business to develop a good strategic advertising campaign.
  3. Auditing:From consultants who audit utility bills for small businesses to consultants who handle major work for telecommunications firms, auditing consultants are enjoying the fruits of their labor.
  4. Business:Know how to help a business turn a profit? If you have a good business sense, then you’ll do well as a business consultant. After computer consulting, people in this field are the next most sought after.
  5. Business writing:Everyone knows that most businesspeople have trouble when it comes to writing a report–or even a simple memo. Enter the business writing consultant, and everyone is happy!
  6. Career counseling:With more and more people finding themselves victims of a corporate downsizing, career counselors will always be in demand. Career counselors guide their clients into a profession or job that will help them be both happy and productive as an employee.
  7. Communications:Communications consultants specialize in helping employees in both large and small businesses better communicate with each other, which ultimately makes the business more efficient and operate smoothly.
  8. Computer consulting:From software to hardware, and everything in between, if you know computers, your biggest problem will be not having enough hours in the day to meet your clients’ demands!
  9. Editorial services:From producing newsletters to corporate annual reports, consultants who are experts in the editorial field will always be appreciated.
  10. Executive search/headhunter firms:While this is not for everyone, there are people who enjoy finding talent for employers.

You decide which type of business consultant you want to be – I choose to be a GREAT one.

Resources

Amazon Corner’s Books

Publications

  • Consultants News
  • Business Consultants Directory, American Business Directories Inc., 5711 S. 86th Cir., Omaha, NE 68127

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