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8 tips that insure the success of any new business

(Entrepreneur News) When considering launching a new business, there are proven steps that must be taken to insure that the business succeeds and continues to thrive over the years.

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So you’re thinking of launching a new business?

You’re not alone – entrepreneurialism is the backbone of our nation, and while it is never easy, success is within reach for anyone with grit and integrity. No matter the industry or type of business, there are proven ways that the majority of current successes have reached their goals.

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Victoria Treyger, Chief Marketing Officer of Kabbage, Inc. offers the following eight steps to starting a business, in her own words below:

Step 1: Choose Your Product

What will you sell or offer? Is it a product or is it a service? How will you differentiate yourself and your business from your competitors? How is what you offer different or better than what’s already out there? What is your expertise? What is your passion? If you’re not sure, take a moment to think back to past performance reviews you’ve received in the corporate world. What characteristics and traits stand out as your strengths? Build on these and see how they can translate into starting your own business.

Step 2: Identify Your Perfect Customer

This is crucial for anyone starting your own business. Knowing who your target audience is and then catering your product to fulfill a need is the perfect formula for success. So how do you define your target market? Is it men, women, teens? Are they older? Married? Single? Veterans? Moms?

Know Your Target Market: Knowing your target market and what appeals most to them will help you refine your product offerings. It will also help you develop strategic marketing plans. A printed flyer mailed to young millennials will miss the mark, since these folks get the majority of their news and information online. And vice versa, a targeted banner ad campaign on specific websites may be lost on a demographic that does not spend a lot of time online.

Do Your Research: There are ways to do research – some is free and some comes with a price tag. You can start with your local Better Business Bureau, your local Chamber of Commerce, and your library for some demographic information. The local convention and visitor bureau also has residential demographic information that can be helpful when starting your own business. Also, go online and check out your city or town’s website as well as your county offices

Step 3: Know the Market.

Do you know what your competition is doing? How are they winning customers – and more important – how are they keeping customers loyal? What differentiates their product or services from those that your business offers? Businesses with similar products and services can co-exist in the same markets. But it’s up to you to know exactly how your product is different. Make yourself stand out.

Know what your market responds to by doing some simple focus group research. It can be as simple as having cookies and hot cocoa on a cold day and inviting people to chat with you about their needs. Or, a quick email survey through providers like SurveyMonkey can be a quick and easy (and free!) way to gather critical market research to grow your business.

Step 4: Know Your Worth

It’s important to not underestimate yourself or the price you charge for your products or services. Owning your own business does not mean you give away your services cheaply.

That said, when you’re first starting out as a business owner, you also do not want to overestimate your pricing structure. Do some research and see what your others in a similar business charge for their products or services. As a new business owner just starting your own business, you may want to consider starting out low with your pricing. This gives you a chance to build your reputation and credibility as a quality provider. Once your business is a bit more established and your income is more steady and regular, you can consider raising your prices. At that point, you’ve probably earned a loyal and steady customer base as well.

There are many resources online that can give you estimates of salaries for your industry. These may not always be possible when you start your own business. You will have other expenses as a startup that people working for corporations simply won’t have. Take these into consideration when planning your expenses in the short and long term.

Step 5: Get your finances together

Do you know what kind of startup capital you will need? Do you need to get a business loan? Will you borrow from friends or family or have investors or partners? Will you need to borrow against your home or your 401k? Use this time to gather your projected income as well – it often takes time for a new start up business to turn a profit.

Do you have additional sources of income to get you through the leaner times until you begin to make a steady income? You will need to make sure your credit is in good standing – excellent, in fact – if you plan to get a business loan. If your finances are not quite where they should be, consider going in with a business partner. Perhaps your expertise and their financial strength will help make starting your own business a less stressful venture.

You will also need a Tax ID number. But first you must decide what kind of business you will have. In general, you most businesses are one of the following: a sole proprietorship, a partnership, a corporation, or a limited liability corporation. Do your research and find out which one makes the most sense for you. Then, make sure you are following all tax guidelines for the type of business you’ve selected. Again, there are many resources online – one of the best is the sba.gov, which is the Small Business Administration website.

Step 6: Get a nest egg

Many experts recommend having about six months of savings in the bank. This isn’t just for emergency use; this will be your go-to money while you build and grow your business to turn a regular profit. Put some money aside while you continue to work at your corporate job. This way, when you do leave your steady job and are ready to start your own business, you’ll have a bit of a nest egg to lean on while you get up and running.

Tip: If you are married or have a partner with whom you share living expenses, make sure they can carry a bit of the financial burden while your new business gets off the ground. Emotional as well as financial support is key for an entrepreneur when you start your own business.

Step 7: Write a business plan

There are many resources online to teach you how to write a business plan. Basically, a business plan is a detailed roadmap of where you expect to take your business. It is a clear picture of who you are, what your business is, how you will reach your target customers, and your plan for revenue and profits. Your business plan is a critical factor when applying for business loans. In fact, it is the very first thing – in addition to your credit reports – that a bank loan officer or other nontraditional lender, such as Kabbage, will look at. Lenders review your business plan to make sure you are a good risk. Don’t be fooled into thinking that your business plan needs to be long and lengthy.

Step 8: Seek out free counseling and assistance

The Small Business Administration has local offices in every state. They offer free counseling and training for small business owners. Their services are invaluable to any start up. They can help you develop a business plan, a marketing plan, as well as help you navigate what you need to know about filing and paying taxes as a small business owner. Many of their services and training programs can be found online. Others require that you attend training classes or one on one meetings with small business advisors. These resources are there for your benefit – take full advantage of all they have to offer. And attend as many of their networking events as possible – it’s a great way to meet other small business owners and promote your products and services.

Starting your own business is an exciting adventure! It is possible to take your passion and drive and turn it into a profit-making business where you are your own boss. Follow these steps and do your research and you’ll be well on your way to becoming a successful business owner.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business Entrepreneur

‘Small’ business was once a stigma, but is now a growing point of pride

(BUSINESS ENTREPRENEUR) Small businesses make up the majority of companies, employers, and money makers of the American economy, that’s something to be proud of.

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American small business

Prior to the Industrial Revolution, all businesses were small businesses. Independent craftsmen served communities with vital services. Small merchants opened shops to provide the community with goods. Lawyers, doctors, and other professionals hung out a shingle to offer their services to neighbors. Small businesses were the norm. Some of the most beloved American companies started out local. John Deere, Harley Davidson, and King Arthur Flour, all got their start as small businesses.

Business changes led to a attitude change

It wasn’t until manufacturing allowed businesses to scale and produce more efficiently that the idea of big business became more important. Post-World War II, the idea of a small business became derogatory. It was the age of big government. Media was growing. Everyone wanted to be on top. Small businesses took a back seat as people moved from rural to urban communities. Small business growth plateaued for a number of years in the mid-20th century. Fortunately, the stigma of small business is fading.

Small businesses are the backbone of the economy

According to the Small Business & Entrepreneurship Council, the “American business is overwhelmingly small business.” In 2016, 99.7% of firms in American had fewer than 500 workers. Firms with 20 workers or less accounted for 89.0% of the 5.6 million employer firms. The SBE also reports that “Small businesses accounted for 61.8% of net new jobs from the first quarter of 1993 until the third quarter of 2016.” Small businesses account for a huge portion of innovation and growth in today’s economy.

Modern consumers support small businesses

According to a Guidant Financial survey, the most common reason for opening a small business is to be your own boss. Small business owners are also dissatisfied with corporate America. Consumers also want to support small businesses. SCORE reports that 91% of Americans patronize a small business at least once a week. Almost half of Americans (47%) frequent small businesses 2 to 4 times a week.

Be proud of small business status

Small businesses are the innovators of tomorrow. Your neighbors want to support small businesses, knowing that their tax dollars stay in the community, and that they’re creating opportunities within their own city. Your small business status isn’t a slight. It’s a source of pride in today’s economy. Celebrate the fact that you’ve stepped out on your own in uncertain times. Celebrate the dirt under your fingernails, literally, or figuratively, that made you take a risk to do what mattered to you.

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Business Entrepreneur

Why and how to acquire a business – 4 tips for radical success

(BUSINESS ENTREPRENEUR) Acquiring a business can be a key part of your business’s future growth, but there are some factors you should consider before signing the deal.

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A meeting room with people shaking hands over acquiring a business

Growing businesses have multiple levers that can be pulled separately or in unison to continue scaling and expanding. And while many companies choose to grow internally, there’s always the option of acquiring other businesses to supercharge results and instantly expand.

Why Acquire?

Acquiring a business is certainly a complicated path to expansion, but it’s also a highly attractive one for a variety of reasons. This includes:

  • Increased market share. If you’re acquiring a business that happens to be a competitor, you can instantly increase your market share. If you currently own 20 percent of the market share and the competition has 15 percent, you suddenly catapult to 35 percent. That might make you the industry leader overnight!
  • Expansion into new markets. Sometimes you acquire a business outside of your industry or niche. In this case, it allows you to expand vertically or horizontally. This can improve top-line revenue and/or reduce costs and benefit profit margins.
  • Advanced tech and IP. In some situations, an acquisition is about acquiring a specific piece of technology or intellectual property (IP). This may prove to be the final boost you need to accelerate growth and initiate further expansion.
  • Talent acquisition. One of the secondary benefits of an acquisition is the opportunity to welcome new talent into your team. Whether it’s a seasoned executive or a highly effective sales staff, this is one benefit you can’t ignore.

Mergers and acquisitions aren’t the correct solutions in every situation, but they often make sense. It’s ultimately up to your team to sit down and discuss the pros, cons, opportunities, drawbacks, and possibilities of pursuing this option.

Helpful Acquisition Tips

Should your business choose to move forward with the acquisition route, here are some essential tips to be aware of:

1. Assemble a Talented Team

Don’t do anything until you first develop an acquisition team. This is a very important step and should not be delayed. (Many businesses make the mistake of starting the search and then forming a team on the fly, but this results in missed opportunities and foundational errors that can compromise an otherwise smart acquisition.)

A good acquisition team should include an experienced mergers and acquisitions advisor, a responsible executive, an attorney, an HR professional, and an IT expert. You’ll also want to bring on a public relations professional as soon as possible. This will ensure you control the messaging that customers, investors, and even employees hear.

2. Do Extensive Due Diligence

With the support of a talented dream team, you’re equipped to find the best acquisition opportunities. As you narrow your targets down, you’ll want to identify and implement a very detailed due diligence process for acquiring a business. This may include an extensive, objective analysis that consists of a letter of intent, confidentiality agreement, contracts and leases, financial statements, tax returns, and other important documents.

3. Make an Initial Offer

If the due diligence checks out, then it’s time to work on formulating an offer for acquiring a business. While the first offer almost certainly won’t be the offer that gets accepted, it’s the single most important offer you’ll make. It frames the transaction and sets the tone for the rest of the negotiations. It’s generally a good idea to offer no more than 75 to 90 percent of what you’re willing to pay. It should be low enough to leave room to inch up, but not so low that the other party could potentially see it as an insult.

4. Negotiate

Your first offer won’t get accepted. But unless you’ve totally insulted the other business, they should come back with a counter. Now is where things get really interesting. Negotiations ensue and it’s time to counter back and forth. The offer consists of a variety of elements – not just a price tag – so consider all of these variables in your subsequent counters.

Adding it All Up

As valuable as an acquisition can be, the process is often filled with friction. It’s up to your team to make the transition after closing as smooth as possible.

It’s very important that you respect the products, services, employees, and customers that the acquired business has. If you come into an acquisition and attempt to shake things up on day one, you’re going to get backlash. There’s nothing wrong with making changes – you now own the business – but be diplomatic and patient. Build trust, work together, and gradually introduce changes.

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Business Entrepreneur

Should you use use confidentiality clauses in your severance agreements?

(BUSINESS) Confidentiality clauses and NDAs have long been tied to severance agreements – but is that notion becoming outdated?

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Severance agreements and their ilk have long included confidentiality clauses, often comprising an exhaustive list of actions former employees may not take should they desire to keep the benefits listed in the agreement. Carey & Associates P.C.’s Mark Carey breaks down the knowledge you’ll need to successfully incorporate a severance agreement – including a stern warning about the future of confidentiality clauses.

There is a long list of things you’ll need when curating a severance agreement, but we’ll start with Carey’s honey-do-nots.

Carey’s primary recommendation is avoiding a non-compete clause where, previously, there wasn’t one.

“As employment lawyers, we see this tactic used every day, but you do not,” he says.

This is because most employment lawyers will advise that a non-compete agreement is largely unenforceable, which sets a poor precedent for an otherwise airtight document.

Carey even recommends against reviewing prior non-compete clauses for the same reason.

He also eschews what he calls the “21 days to sign – or else” philosophy, and he advises that employers should loop themselves into the non-disparagement clause so that employees cannot be blacklisted – something he refers to as “a very real phenomenon.”

What a severance agreement should include is a non-admission provision, a payment provision, a release of all claims to cover any feasible scenarios regarding employee disclosure, a challenge to agreement, a “no other amounts are due” section to release the employer from future responsibility, and a mandate to return any company property. This is a truckload of information, so you’ll want an employment lawyer to help you through the process.

But what Carey warns against is the future of confidentiality agreements, or NDAs. While these provisions have long accounted for employee silence in the face of abusive or corrupt employers, Carey posits that, one day, “confidentiality provisions in employee severance agreements will be banned as a matter of statute and public policy.”

This assertion comes in the wake of the #MeToo movement and the uncovering of the manner in which powerful people were using NDAs to buy silence from the people who suffered under their direction. Carey points out that it’s a non-partisan issue; corruption isn’t aligned with one specific political party, and the option to come forward with allegations of misconduct is a courtesy that should be afforded to all.

Whether or not confidentiality agreements are ethical is a moot point, and Carey does recommend continuing to use them when necessary – but, sooner or later, one can safely assume that the landscape of severance agreements will change, arguably for the better.

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