What You Need to Know Before Opening a Business Account....

Life as an Entrepreneur: What You Need to Know Before Opening a Business Account
Business Column By: CEO LaNisha Rene of LR Consulting Enterprise, LLC


Society identifies finance as the management of revenue or the activity of providing funds or capital. Today, I ask you, what are the fundamentals of finance in your life? This is an important question to ask yourself to determine the best uses for it or the best ways to gain more of it. Learning the basics before you tackle the full responsibilities of finance is key and can be extremely rewarding in the end. As an Entrepreneur, having an understanding of finance can help your business prosper during the good times and succeed during the bad times. In this issue, we will discuss the importance of finance from a business and personal aspect. First, you must learn how to handle your personal finances before you can tackle the extreme responsibility of how to handle your business finances. As you read further, you will learn essential tips, differences, and tools that will help manage your personal and business funds.

Before opening a business account, you must know how to spend your money wisely, how to budget, balance a checkbook, create goals, and of course, how to save money in your personal account. Think of it as building a brick wall, the height of the wall is considered your savings goal, this goal will serve as your objective. The bricks can be considered the amounts of money you will save at a time, depositing $10.00 to $50.00 a month, and the cement will serve as your actual bank account, this is what holds your bricks together and allows you to reach your walls height. The above metaphor is important to understand because you can associate your finances with the steps it takes to build a brick wall. Now that you have figured out how to take pride in building your finances, we move on to separating them.

Your next goal is making sure, while you’re still saving; you choose the appropriate accounts to continue your savings goals. Your checking account will serve as your personal bill paying or primary necessity account, and yes, this account does require a set goal in order to handle your monthly deductions.

Determine what your monthly revolving accounts and house hold bills total. The best way to keep this account active and in good standing is by knowing your costs and having at least an additional $200 to $500 after these monthly deductions have been taken out just in case of emergencies. A savings account will serve as the next account to open, this account will also need a goal set, the difference in how you will save in this account from your checking account is you will not touch this money.

This is your special account, whether you’re starting a business or making an investment. It is essential to first meet your goal and only withdrawal what you need at a time. I will reiterate, this money is not to be touched until you reach or exceed your goal and should only be used with another goal in mind, a goal that will recoup or double the money you withdrew such as an investment i.e., buying a house, starting a business, taking out shares, purchasing stocks, etc.

Reality is - you can’t possible tackle the tasks of a business account without holding yourself accountable with your personal account first. The tips above are basics and will serve as your learning guide. Business finance will follow the same techniques. However, after you build your brick wall, you will separate and distribute your cash flow differently.

Let’s begin with your business checking account, this account is important because this is where you will receive capital and pay for your businesses overhead or expenses. You will actually need this account prior to opening a savings account for your business. The savings account mentioned for your personal account is a guide to help you learn to save money and set realistic goals. Though opening a business savings account is a good suggestion, the best type of account to open is one the business can benefit from besides the checking such as a line of credit.

A line of credit is the best way to build credit for the company without putting your business into major debt and the best part is that you only use what you need or what you can pay back at a time. I will not suggest a new business take out a loan or business credit card until you have built a substantial wall with enough capital to handle monthly expenses, emergency money, and operating costs for at least 3 months.

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Introducing New Products

Why do so many new products fail? Usually for many reasons. Companies often are so enamored of their new product ideas that they fail to do their research, or they ignore what the research tells them. Sometimes the pricing or the distribution channels are wrong. Sometimes the advertising doesn't communicate. Successful product launches result from an integrated process that relies heavily on research and solving up-front issues. Let's review some of these critical issues that affect product introduction.

Market Research - Market is key. Without necessary information, you're simply flying blind in a storm, headed for a crash landing without a para-shoot.

Timing - Can dictate your products success, without asking the right questions to research the correct answers, you are looking at a downward spiral in the production and launch of your product.

Capacity - If the product or service is successful, do you have the personnel and manufacturing capacity to cope with the success?

Training - Your sales organization, inside employees, and distribution channels will need to be trained about the product.

Promotion - Finally, you need the promotional program to support, introduction, forms of advertising, trade shows, promotional literature, samples, incentives, Web site, seminars, and public relations.

For time sake, we only indicated the bare necessities an entrepreneur will need to be successful and to expand their business further. Please visit WWW.LRCONSULTINGENT.COM and contact one of our consultants TODAY!!

Common Business Plan Mistakes to Avoid.....

In the last 8 years I have been involved with business planning, in between this time, I have seen all different styles and fashion of plans change a lot, but the fundamentals remain fairly constant. As a recap to what you've already been told, your business plan should tell a compelling story about your business, explaining who, what, when, where, how and why. A business plan should be focused and clear. It is not about the number of pages or style of the cover, however; a basic business plan should not exceed 22 to 25 pages. To help you craft a plan that hits all the right notes, here's a list of some of more common business planning mistakes you should avoid:

1. Don't put off writing a plan. Do not wait until you have enough, don't wait until you have the right people, and definitely don't wait until there's an urgent reason you suddenly need a plan. Instead, just just do it now. Recognize that you need a business plan and that your first step is to prepare your first plan.

2. Don't confuse cash with profits. There's a huge difference between the two. Waiting for customers to pay can cripple your financial situation without affecting your profits.

3. Don't dilute your priorities. A plan that stresses three or four main priorities is a plan with focus and power. People can understand three or four main points. A plan that lists 20 priorities doesn't really have any.

4. Don't overvalue the business idea. What gives an idea business value is not the idea itself but a business that's already built on top of it. It takes employees having shown up every morning or actively representing and participate in company, phone calls being answered, products being built, ordered and shipped, services being rendered, and customers paying their bills to make an idea a business.

5. Don't confuse a plan with the act of planning. You need both to succeed. And your planning process doesn't end when your plan is done. The value of a plan is in the implementation it causes, and implementation starts the day you settle on the main points of your plan.

6. Don't fudge the details in the first 12 months. By details, I mean your financials, milestones, dates, responsibilities and deadlines. Cash flow is the most important, but you also need lots of details when it comes to assigning tasks to people, setting activity dates and specifying what's supposed to happen and who's supposed to make it happen.

7. Don't sweat the details for the later years. This is about planning, not accounting, and you're only guessing the future in a system full of uncertainties.

8. Don't write too much. Keep your business plan short and focused on your main priorities.

Five important tips before you start!

1. The business plan should tell a compelling story about your business, explaining who, what, when, where, how and why.

2. Your plan should be focused and clear. It is not about the number of pages or style of the cover.

3. The plan should define specific business objectives and goals with general parameters to guide the organization.

4. Writing a business plan should force logic and discipline into a business.

5. A good business plan is a living document. It should be updated regularly.

For more details on a basic, extensive or financial plan, please visit WWW.LRCONSULTINGENT.COM and contact one of our consultants TODAY!!!

Basics of Business Credit....The 4C's......

What are the 4 C’s that companies look for? A business’s creditworthiness is ultimately determined by what are known as the “4 C’s of Credit” -- character, capacity, capital and conditions -- most of which can be found explicitly or implicitly in a company’s credit report.

Character includes factors such as: size, location, number of years in business, business structure, number of employees, history of principals, appetite for sharing information about itself, media coverage, liens, judgments or pending law suits, stock performance, and comments from references.

Capacity assesses the ability of the business to pay its bills, i.e., its cash flow. It also includes the structure of the company’s debt—whether secured or unsecured—and the existence of an unused lines of credit. Any defaults must also be identified.

Capital assesses whether a company has the financial resources (obtained from financial records) to repay their creditors. In general, this portion of the credit report is the one most closely reviewed by the credit analyst. Heavy weighting is given to such balance sheet items as working capital, net worth and cash flow.

Conditions consider the external factors surrounding the business under consideration - influences such as market fluctuations, industry growth rate, political/ legislative factors, and currency rates.

A credit manager or loan officer will answer these questions by locating and reviewing:

1. requests for credit information
2. customer supplied information
3. bank information
4. trade information

These factors are also taken into consideration by other service providers, such as insurance companies to set premiums. More than ever, companies are using automated decisioning, which means they input scores and ratings that summarize the 4 C's into a financial model to determine the risk of doing business with you.

The Risk and Rewards of Business Ownership.....

When were really excited about doing something, we sometimes forget or ignore the downside of it. However; it would be very foolish to ignore the risks of going into business!

Failure. The emotional stress of failure can be very hard to handle.

Loss of money. You may have your own money at risk.

Long hours. You may have to work 60 or more hours per week.

Family problems. Your family relationships are likely to suffer unless you can find a way to balance your personal life and your business life.

Bad timing. Sometimes, its just not the right time to start a business. In that situation, its better to put it off for a while, than to let unresolved problems in your life threaten your business success.


Now lets look at some rewards of starting your own business!

Independence. The ability to be your own boss is a very powerful incentive.

Money. The financial rewards can go far beyond what one can expect from a normal job.

Pride. The experience of making idea work transforms many people, and gives them a real sense of self-esteem.

Fun. Running your own business presents opportunities for fun, excitement, and creativity that many businesses can't offer their employees.

Four Stages of Business..........

Starting A Business

Starting a business is one of the most exciting journeys an individual can take. Over ten million people each year consider starting a business. As a result, more than three million new small businesses are started annually. Entrepreneurship offers numerous rewards, but it also presents many challenges. Understanding these challenges and careful business planning can help a new business succeed.


Managing

The success of any business is closely related to how well the business is managed. Good management is the root source of business growth. Managing your business should not be considered an academic exercise. Rather, it is the real-world application of strong leadership, a positive attitude, solid business knowledge, and good people skills. It is the ability to influence and make decisions; and it is the ability to inspire and lead others. Acquiring good management skills is essential for the success like putting money in the bank.


Marketing

Few things are more exciting than expanding a business. Whether you want your business to grow in size or remain small but successful, growth is critical. Business growth assumes you have made it through the early start-up phases and are now ready to expand. It is a period where you can spread your wings and look for new business horizons. However, like earlier stages of development, growing a business requires solid preparation, steadfast commitment and a willingness to take calculated risks. There are many resources that can assist you in expanding your business.


Exit Strategy

Exiting a business is a reality that should be considered and planned for during the early stages of a business. Such preparations will require development of contingency plans for events that may never happen. Planning for getting out of a business is just as important as the planning required for starting a business. A solid, well thought out exit strategy can save time, money, and a great deal of frustration in the future.