Young Business Network

Posts Tagged ‘business’

Do you want to buy a business?

Not sure where to start?

These are 3 very important things to take into account when buying a small business.

• The initial capital (to buy the business),
• The working capital (for running the business),
• Your personal budget (to calculate how much you need to live).

Then you need to arrange finance, find the business to buy, check the businesses assets and liabilities and then ask some smart questions.

The initial capital is what you need to buy the business. The valuation of the business will be based on the net assets plus any goodwill (the business reputation and customer base). A net asset is the value of all the assets such as cars, stock, debtors less the liabilities such as car leases, and property leases. The budget needs to allow for stamp duty.

Work capital is basically the income and expenses of the business, typically this will be income from customers (turnover / sales / revenue) and expenses such as rent, insurance, phones, electricity, wages, stock purchases etc. Be careful to under estimate sales and over estimate expenses, this way you will have a “buffer” for unexpected costs.

Your personal budget is how much you need to live, once you know this you can now calculate how much you need to be paid in wages. For example if you need to take home $2500 per month you will be need to pay yourself $3,333 (and pay tax of $833). Also at the end of the quarter you will need to pay an additional $900 towards your superannuation fund. This means your budget for your pay will be $3633 per month.

Now you have set your budgets you can start researching how to buy and finance the business. Are you going to use a business broker or buy direct? Are you going to borrow money, find an investor or use your savings? Depending on your personal circumstances you will probably need to arrange finance. It is best to get an agreement in principle from your lender before you go looking at businesses. The lender will let you know how much you can borrow which will in turn help you to select the right business for you.

What do you need to look for in the accounts? Always insist on seeing the Financials submitted by the current owners tax accountant to the ATO and do not listen to any stories about “the real accounts” where the owner shows you another set of figures (they will always show a much higher profit).

Analyse the accounts and look at the net assets figure, check the tangible assets in the balance sheet (assets you can touch), and then ensure the assets reflect their true current market value. Next look at the liabilities and ensure they also reflect the current situation, be especially careful of leases to check when they are due to be renewed. You don’t want to buy a business and then find the shop lease runs out in 3 months and the building is going to be redeveloped!

The smart questions to ask are basically finding out the truth about the business without relying solely on the current owners accounts. For example if you are buying a coffee shop take a look at the number of coffee cups in the shop. Suppose he has 40 coffee cups that means he can have 40 customers at once right? No it means he can have about 25 customers at one time, and the remaining cups are being washed or are ready to be used right now. So if the owner tells you that he has 30 customers most days at peak time you can work out the real figures for yourself.

Before you commit any money to the venture appoint a solicitor and an accountant to ensure the purchase is managed professionally.

An online business will extend a business’ reach to more prospects they can market to. Entrpreneurs realize that there is a huge opportunity on the internet to market to their prospects – it’s also cheaper. However, this no small project. Creating a professional online presence requires planning and organization. Here are 10 steps you need to follow to launch a business online.

1. Domain Name Register a name for your website. Choose a name that is short and easy to remember. When you tell other people what your domain name is, they should easily remember it, know how to spell it and know the type of business you’re in.

2. Web hosting You don’t need to go for expensive web hosting at the start of your business unless you have lots of traffic. Avoid free web hosting with ads on them. It will kill your company’s image.

3. Face of the business Decide on a spokesman for your website. Will it be the CEO, Director or Marketing Director? This person’s photo should be on the website with contact details. It will give your company and the website personality.

4. About Us, Contact Us & Services The common pages of a website are About Us, Contact Us and Services. Spend a lot of time planning the content for these pages. Make sure you give as many options as possible for people to contact you. e.g. Telephone, Fax, Email, Mail Address, Skype

5. Taking orders Decide how you would like to take orders online. It could be via telephone, Paypal, credit card payment or money transfer. Have your order button displayed in an eye-catching area. Your visitors need to know exactly how to buy your products or services.

6. Good web design With the structure planned out, hire a professional designer to create your website. You need to give a corporate image that is eye-catching and exciting. Your website gives your visitors their first impression of you, which determines the number of customers you’ll have.

7. Create a free report Give out valuable information in the form of a pdf file. This report will contain useful information your prospects can use, with links to your website and products. The objective of the report is to show your expertise in the market and make your prospects remember you.

8. Squeeze page This is a web page which describes the benefits of the free report. It informs visitors that they can download the report free of charge and sign up to your company’s newsletter, if they enter their name and email address. This is how you collect targeted email leads and add them to your autoresponder account. You can regularly email good information to your list of subscribers and occasionally remind them to purchase your products and any new promotions you have.

9. Write articles To launch your business website, one of the most effective ways is to write related articles in your niche and distribute them to directories linking back to your website. This will help your website rank higher in the search engines and drive targeted visitors to your website.

10. Press Release To announce your website to the public, write a press release that has a news-worthy story related to your business. With this press release, submit it to as many media channels as you can. This will send visitors to your website and may even get you interviews with journalists. Online press release submissions will also help your website rank higher in the search engines. The above is a brief summary of the steps you need to go through, to create and launch your business online. Each step requires planning and careful implementation. You may consider outsourcing this to companies who specialize in creating and launching online businesses if you don’t have a team of your own.

How Important Is It To Plan Your Business?

Planning and a business plan are two sides to the same coin. Let’s be clear – a business plan is not an academic exercise : it is an articulated statement of the case for your business idea setting how to go from ”zero to hero”. While many entrepreneurs view a business span as a document that is used to raise capital from an investor or a bank, many other start-up entrepreneurs, particularly the younger ones, use a business plan as kind of milestone diary. In effect to keep them on track. Read the rest of this entry »