It is essential to know how much money a business will need to meet payments when they are due. A cash flow forecast helps analyze expected receipts and payments and can be used to determine whether there is a need for an overdraft to provide sufficient working capital.
For new businesses, it is particularly useful to be able to determine exactly how much finance will be required to take the business through its early stages and to pinpoint when money will be needed. The cash flow forecast is the key part of any business plan. - Updated: April 23, 2005
Below are suggestions to help make your work environment effective, comfortable and safe.
1) Select a room free of distractions. This is important for you and your customers on line. Background noise like the television, radio, or a dog barking can be distracting and unprofessional. You will hear each other more clearly and a quiet environment can help you stay focused on your task at hand.
2)Look for a place with comfortable conditions. You may spend several hours at a time in this room, so make it a comfortable place. This includes good lighting (add a desk lamp if overhead lighting is not enough) and appropriate temperature control. Don't forget a comfortable chair!
3) Create a spacious desktop. Look for a desk or table that is sturdy (one that can handle the weight of your computer and equipment) and at a good height. Give your self plenty of space for your phone, head set and computer.
4) Be safety conscious. You have a lot invested in your equipment. You can protect your equipment from power outages and surges by plugging everything into a surge suppressor power strip. Keep your cords against the wall and away from traffic areas. Use a spill proof cup with a straw or lid; accidental spills can damage your PC.
5) Stay organized. Find a method that works for you.
We encourage you to seek the advice of your attorney and/or certified public account. - Updated: March 10, 2005
It is important to keep certain documents while you are self-employed because they support the entries in your books and on your tax return. You should keep them in an orderly fashion and in a safe place. The following are some of the types of records you should keep: Gross receipts are the income you receive from your business. You should keep supporting documents that show the amounts and sources of your gross receipts. Expenses are the costs you incur to carry on your business. Your supporting documents should show the amount paid and that the amount was for a business expense. Assets are the property, such as machinery (PCs, modems, telephones, headsets) and furniture, you own and use in your business. You must keep records to verify certain information about your business assets. You need records to compute the annual depreciation and the gain or loss when you sell the assets.
We encourage you to seek the advice of your attorney and/or certified public account. - Updated: March 10, 2005
Generally, you would purchase a state business license only if you intend to have physical offices located in every city of the state.
We highly recommend that you contact your local city, county or state agency for specific instruction on how to obtain a business license. You can also visit the Small Business Administration website for links to all 51 states as a starting point reference. http://www.sba.gov/hotlist/license.html - Updated: March 5, 2005
Generally, you purchase a business license to operate your business in the city which your business is physically located. (Example: if your home office or office is physically located in ABC, North Carolina, you will purchase a business license to operate your business in the city of ABC, NC.)
We highly recommend that you contact your local city, county or state agency for specific instruction on how to obtain a business license. You can also visit the Small Business Administration website for links to all 51 states as a starting point reference. http://www.sba.gov/hotlist/license.html
A written document containing description and guidelines for an organization's or a product’s marketing strategies, tactics and programs for offering their products and services over the defined planning period, often one year.
There are several definitions available on the world wide web which describe what a business plan is. We consider the following to be the most appropriate:
A written document that gives an overview of your company, its future and its financials. It explains what your business is now, what you plan to make itinto in the future, how you're going to do it, how much it will cost and how much you'll make. A business plan includes a description of your company, your products and services, your target market, your sales and marketing strategy, your financial documents, and your management team. www.businessownersideacafe.com/financing/financing_glossary.php
A blueprint and communication tool for your business. A device to help you, the owner, set out how you intend to operate your business. A road map to tell others how you expect to get there. www.onlinewbc.gov/docs/starting/glossary.html
"EIN", or Employer Identification Number, is defined as a nine digit number that the IRS assigns to organizations. The IRS uses the number to identify taxpayers who are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities.
Because the EIN is a unique identifying number, it is especially useful when searching for a particular foundation's tax return, the Form 990-PF. An EIN number helps when you don't know the precise name of a foundation or to distinguish it from other foundations with similar names. - Updated: October 9, 2004
If you plan to start your virtual business while continuing with your full-time job, you will need to manage your time very effectively. There are many instructional guides and books (local book store or library) that can give you the tips you need to get started.
Try analyzing the activities you do everyday. If you spend non-work time reading books, surfing the Internet, or watching television, consider giving up the activity in place of spending time working on your new virtual business. You may be surprised at how much you can accomplish in an hour or two each evening.
Tip: once you get a routine established work hard to stick with it. - Updated: May 30, 2006
There are many magazines aimed at the small business community. Reading magazines can really help you to learn about the types of businesses others have started, learn about their mistakes and successes, discover ideas on the types of businesses that are available, and also generate creative ideas on new markets. Check your local bookstore, library, or search the Web for magazines devoted to small businesses. Some business magazines, such as Inc., Entrepreneur, Home Business. can also be read online.
One way to determine what kind of business to start is to evaluate your own interests, hobbies, and abilities. It is important to be passionate about the business you plan to start, as you will probably be spending a great deal of time building the business. If you need to learn a trade or skill, consider a trade school or community college. You can also search for Web-based training on a variety of subjects/topics. - Updated: May 30, 2006
WAIT! Before you quit your job, ask yourself the following questions to see if you're really ready to start your own business.
Do I have enough money to get started? If you don't have enough cash to carry you through the first six months, your chances are not good. You need survival money while you're waiting for your business to bring in income.
Can I live without a steady paycheck? If not, you're not ready. It might be a long time before your first payment comes in.
Can I start by running my business part-time? This way you keep a steady income while you build your business.
Do I have a written business plan? If you don't, write one now.
Can I afford to wait 3-5 years for success? That's how long it usually takes, so be patient.
Am I an expert in my industry/field? Am I known in my community? If so, these are areas that can help you market your ideas and your business, raise money, and attract customers. If not, this will make your work even more difficult.
Am I comfortable enough with computers to handle my own billing, taxes, and record keeping? If you're not comfortable, you should make sure you have enough money to pay someone who can handle these things or take some seminars or classes to brush up on these areas.
Do you have a professional network of supporters? If so, these are the people you'll be counting on to spread the word about your business and help you find clients. If not, this will make your work even more difficult.
Are you self-motivated and confident, with a strong vision and ability to make decisions? If not, you will have a hard time building a business on your own. - Updated: October 9, 2004
Things You Need to Know Before Starting Your Own Business
"If I knew then what I know now, I would have done things differently." Sound familiar? Many small business owners say this over and over again. Take a look at the list below of things to think about before you get started.
1. Sell what your customers want. Don't focus only on what you want. If you don't think about your customers, chances are they won't buy your product. Make sure you research your market to find out if your service or product makes sense and has a potential customer base.
2. Write a business plan. This is the best way to attract investors and lenders for your business. A good business plan also helps you keep detailed records of your vision and goals. Write your own business plan.
3. Know thy strengths. Focus on what you do well and leave the rest. You don't have to know all the answers and you don't have to cover all the bases. Be realistic about what you can and can't do. Remember, it's better to ask for help when you don't know something.
4. Research, Research, Research.... Use classes, seminars, books, and tapes to learn all you can before you start. If you don't know anything about running a business, there are plenty of free and low-cost classes, books, and tapes. Try your local library or bookstore, and ask around. Find out all you can about your market, your competition, possible locations, and what people want.
5. Live within your means. You need to keep a close eye on your budget or you'll end up in serious debt or out of business very quickly. If you can't get everything you think you need right away, stop and rethink your plan.
6. Develop a marketing plan / strategy. This is your key to attracting new customers. Map out how you want to get new customers to use your product or service and how you'll keep them coming back. You have to sell yourself to get people to come to you.
7. You can't do it all by yourself. The more people you have helping you with the "little things," the more time you can spend growing your business. Don't be afraid to ask for help and advice from friends and family. - Updated: September 23, 2004
When you start your own business, whether a virtual company or brick and mortar, you'll have a lot of different hats to wear, from salesperson to payroll clerk to bill payer. Having to play all those roles may not be for everyone. If you aren't comfortable with these roles, you may not want to be a small business owner. Look at the list below to get an idea of how many areas you will have to think about every day.
Administrative Support/Receptionist: In the beginning, you will answer phones, file paperwork, buy office supplies, handle shipping, answer customer requests, and more.
Advertising/Marketing Manager: You're the one who has to research similar businesses to see what you can do differently and better. You have to write ads, join business groups, and network with anyone who could be a possible funder or client.
Bill Collector: You have to figure out the best way to handle customers who don't pay their bills. You might have to make repeat calls, send lots of invoices, or even take someone to court to get paid.
Bookkeeper/Accountant: You have to maintain all records. You have to manage your accounts to the penny, prepare tax forms, and understand your financial statements.
Business Planner: You'll need to draft and then make changes to your business plan, depending on your financial, personal, and retirement goals. You have to plan for expected and unexpected costs.
Lawyer: You don't have to do legal work on your own, but you do need to understand the laws related to your business. If you have employees, you need to know the related federal and state laws. If you own a liquor store, you need to know what days you can't sell alcohol. You also need to know the penalties for breaking those laws.
Manager/Boss: You'll be responsible for all the people in your business. You'll need to take care of things like time off, sick days, insurance forms, complaints, taxes, and more. At the very least, you'll have to take care of all these things for yourself and your business.
Tax Collector: If you have a retail business, you must collect sales tax for government entities, payroll taxes from employees, and your own income tax.
Technical Support: You have to fix your business equipment if it breaks. If you think it's easier to call for repairs or buy new equipment, you're throwing money away. You have to learn how to repair your equipment so you can save money in the long run.
Projects Manager: You will be responsible for overseeing all of your clients projects, ensuring that each project is accurate, complete, and delivered on time and within budget. In this capacity, you will be in most cases the primary point of contact for your clients and must be available to answer their questions.
Visit the main VBO Homepage to take a free self assessment quiz. To access, click on "Public Access Areas" and select "Self Assessment Quizzes". - Updated: May 30, 2006