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Posts Tagged ‘Basics’

Presenting a proposal to the right people in the right way can make all the difference in the business world. Here are a few of the basics of a good business proposal.

Outline:

Every good business proposal should start with a summary that is based on an outline of the proposal itself. You can start with a list of the problems you intend to solve, the objectives you hope to reach, and what you will need in the way of resources in order to reach your goals. The outline should include a short summary of what start-up costs are estimated to be and what operating costs will be on bot a monthly and annual basis if your proposal is for a project that will last that long. Even if you proposal is for a short term venture, you should also include what the required investment will be as well as what you anticipate the resulting income to be.

Make sure that all the components of your outline are clear and based in fact, as often it is the only part that will be read. The following would be an example of what a well-stated objective: “with the proposed ad campaign on seven radio stations, we expect to increase sales by 500 in the next two months.”

Investment:

The people you are presenting your proposal to are going to want to know what you will be requiring of them to complete the project as a whole, and if it is simply capital, where the money will be going. An example might read: “We will be hiring a professional copy writer at 0/hr to write the radio spot, then will be purchasing drive-time spots at a bulk rate of 20 spots for 00.”

Then, if possible include any evidence that you have that your goals will be met by this method by citing past experience or precedent.

Labor and Equipment:

If there will be increased labor needs or you will be hiring outside help, here is where you mention these items in detail. Any extra purchases of materials, or use of equipment, or anything else that requires the use of resources should be noted in detail, so those to whom you are making your proposal will know exactly what to expect and can plan ahead.

Schedule and Completion Date:

Gather all the information you can from the people who will be involved with the actual work to put together an estimate of when certain milestones will be met and when the project will be concluded. For the project we have been discussing, you might want to note when the first concept meeting will occur, as well as when the first draft will be finished and submitted, when all revisions will be complete, and when the spot will be recorded and ready to air.

Printing and Binding:

It may seem like a small point, but the more impressive your proposal looks on the outside, the more weight the information inside will carry. Look around for a binding style that fits the needs and image of your company and that will keep your ideas and plans together in a elegant and memorable way.

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This article is the third in a series of four articles that will guide you on how you can start your own crafts business using the four Ps of Marketing -Product, Place, Price and Promotion. What are the things you need to consider when pricing your product to ensure that your product is priced well enough to sell and well enough for you and all involved to earn well?

Pricing, as you might have experienced, is something many people struggle with. If you’ve already created your product, you’ll know what I mean. When I first had to price my products, I checked out some marketing textbooks. They were unfortunately of little use to me, other than telling me there were different ways of pricing the products.

What are the 2 challenges of pricing?

1) Pricing at a level that attracts the buyers

2) Pricing at a level that maximizes profits while remaining attractive to the buyers

In certain businesses, the cost-plus method of pricing works very well, meaning you calculate your cost and add a certain percentage of profits. However, in the crafts business, this method, while being able to give you reasonable income, may not always be the best.

For example, the Harrod’s bear and Paddington’s bear don’t cost much more to produce than a nameless toy bear, but they sell for so much more. If you were to simply apply the cost-plus method, can you imagine how much you’d have lost?

The difference here is the perceived value of the item. If you can make something look expensive or create something that people want, you can and should charge much higher than the cost. In pricing, you will have to look at your packaging and promotion so don’t be pressured to price low simply because your material costs were low. However, if what you have is not unique then it may not be wise to put a high price tag on your product. Your customers may be willing to pay the price at the point of purchase but if they see a similar product selling much cheaper elsewhere, you may lose your credibility and the potential of repeat purchases from them.

If your craft item is not entirely new or you’re just making a popular item to sell, it’s easy to check the market price by visiting a few stores or checking the internet. An original product is trickier because it might involve some testing before you get the right price. Start by asking a few friends, especially those who share your interest in crafts. A better way would be to make a prototype and then take it to your friends and the gift and/or crafts stores and ask them how much they would be willing to pay for it or how much it can sell for. You should be able to get a pretty good idea.

Whether you want to use the cost-plus method or price at the market price, you’ll need to have a very good idea of your cost. Failure to do so may result in you losing money instead of profiting from your crafts.

Here’s a simple checklist to help you work out your cost.

1) Material cost

Make sure you list down everything, even things you are able to get for free now because you may have to pay for them later and that will affect your pricing. Furthermore, even free things need time and time is money.

2) Labour cost

If you’re making them yourself, you need to ask yourself how much you’re worth per hour then work from there. Suppose you make ten of an item in an hour and you want to pay yourself $20 per hour. The labour cost of each item would be $2.

Remember to include packaging time and even the time you need to travel to the post office.

3) Marketing cost

Depending on the sales channels you’re using, the cost here will vary. If you’re selling on the internet, you’ll need to factor in your webhosting, domain name, design fees etc. If you’re selling via catalogs or mail-orders, you must factor in your printing and shipping cost as well.

Also, if your product requires you to explain or clarify things on the phone, remember you need to factor in your phone bills and more importantly, the time you’ll need to spend on the phone.

4) Your Profit

This is an area which many freelancers or work-from-home business people miss. It’s alright to just earn your income based on your per hour worth but that would be a bad way of running a business. We need to remember we’re running a business here and we need to treat a business as a business. This profit amount will make up for lower sales volume, increase cashflow for purchase of more materials and also fund your expansion. If we don’t factor this in, we’ll forever be stuck with the same pay. Even employees get raises right?

After you have included your material and labour cost, you should mark up another 20% to 30% or more as your profit margin. However, this only represents the minimum amount that you’ll accept for your product. The next part will help you determine the cost you’ll sell to different parties.

5) Distribution Channel Markup

For most product-based businesses, a product typically flows through the distribution channel in this fashion.

Manufacturer -> Distributor/Wholesaler -> Retailer

In between them, there may also be agents and if the products are sold to different states or different countries, there may be other local agents/distributors and the chain will get longer and longer.

What this means for you as you’re pricing your product is you will need to ensure that you keep the retail price competitive and that the various parties get their fair share of profits at the same time.

Typically wholesalers will accept a lower markup than retailers because they work with higher volumes and because they need to ensure that the retailers have enough to earn. If you’re just starting out, you can be your own distributor and go directly to the retailers. This allows you to earn more or give a greater markup to your retailers but because you or your staff will need to go to the stores, it will require greater effort on your part.

Retailers will as for a minimum of 20% to 30% markup for most products, depending on the products. I may be spoiler here but many products are marked up hundreds or thousands of percent. In my own store, I only retail products that I have at least 30% to 40% (usually more for craft products) unless the product is so popular that I can sell a lot more to justify the lower markup. With a healthy margin, I have some room to do promotions or clearance sales so even if the product doesn’t do too well initially, I can do something about it without losing money.

It is very important to keep yourself focussed on your core competency and earn from that. Some people get greedy and try to do everything themselves and earn from every stage of the distribution channel. It may sound attractive but don’t forget that to do everything, you will need to do a lot more work and you only have 24 hours a day.

To become a wholesaler requires a lot of running around from store to store. Retailing requires significant capital to startup. If you spend time on these, you will not have time to create your products. We all work with limited time so you will need to choose your business focus wisely. Ultimately, if you learn the power of leveraging then you will be able to create a company that controls the whole process. However, our focus here is about starting a home-based crafts business so that is out of the consideration for now.

The whole idea is to do very well in what you focus on and let the experts in the other areas help you succeed in the other areas. If you find that you are good in product distribution or retailing instead of craft-making, you might want to focus on those areas and source your products from others.

If we are able to implement the win-win thinking in our business, we should be able to at least do ok. At the end of the day, business is about making money. If your suppliers or distributors or retailers can earn well from your products because they move fast and they have high markup, you can rest assured they will put in that extra effort to promote your products. Some people try to save a few percent here and there and cut down on others’ profits. While this might sound logical and prudent, it might work against you in the long-run because your distributors and retailers will gravitate towards whatever is making them the most money. If you are in doubt, err in favour of the distributors/retailers without compromising your minimum amount (see part 3 of this checklist) and you won’t go wrong.

5) Check against the market

Lastly, you should always check your pricing against the market instead of just plucking a figure from the air. If it’s an existing product, check your price against your competitors to see if your price is competitive. You don’t have to be lower. In fact, try not to be lower because low price often indicates low quality as well. Don’t compete on price. Compete on quality instead. You just have to ensure you’re not so way off the market price that people would not even consider buying. Once you’ve gone through this thought process, I’m sure you’ll be able to come up with a good price.

With the internet, it has become much easier to do price research. Just go to Ebay, Yahoo, Amazon, Froogle and other price-comparison sites and you will be able to get a good feel of the prices around. However, if you are going to sell in retail stores, do go and take a walk to check the prices because there can be a significant gap between the prices at brick-and-mortar retail stores and internet stores.

The last thing to note for pricing is that price is dynamic. The market is changing all the time and so does the price, especially for trend items. Evergreen items can afford to be priced the same for long periods of time because of a slower but steady demand. Trend items because of the demand can often start out with a very high price but as demand dwindles the prices will go down as well.

Affiliate program businesses are still on a roll as the boom in the affiliate industry continues. Many are a part of this industry, and many more want to enter it, either as merchants or as affiliates. The world of affiliate business continues to change and everyone needs to adapt to these changes to be able to stay in the business. The best way to have the ability to go with the radical flow of affiliating is to have firm grasp of the fundamentals. The basics of putting up and operating an affiliate program business are vital to success.

Affiliate Program Business Introduction

A website is the flag that signifies the company it belongs to. In the past only the well established and highly profitable companies have their own websites. But nowadays, thanks to the continuous evolution of the Internet, setting up a website has become so easy anyone can do actually do it. The fastest and easiest way of building a website is by using an online website builder that has ready-made templates and other webpage elements you can choose from to construct your very own unique website design. These sites will also be the ones to provide your sites URL for you. The downside to using these site builders is that most of them attach advertisements on webpages that are made with them, and their greatest advantage is the ability to design a website and get it online in less than an hour.

Design only grabs the attention of human readers, but before people can marvel at the beauty and greatness of your sites appearance, they must first be able to find it. And for people to find your site, the best and fastest way is that they find it in the results page of the major search engines. And one of the best ways you can get good rankings on the trusted search engines is through search engine optimization or SEO. SEO however can prove to be complex and hard to do especially to those who have never even heard of it before. A good alternative to SEO in getting your website seen is engaging in an affiliate program. Such action allows you to profit from your content-driven website’s traffic as well as make sales with the same website.

Affiliate Program Business Definition

An affiliate program sometimes also called associate program in layman’s terms is a system of arrangements in which an online website known as a merchant website pays affiliate websites commissions to send traffic to it. The affiliate websites post links to divert the traffic they receive to the merchant site. They are then paid depending on the affiliate agreement.  The commissions may be based on the number of visitors the affiliate site sends to the merchant site, the number of people the affiliate site sends to the merchant site and clicks at least one of the product advertisements, or the number of visitors directed to the merchant site by the affiliate site and actually makes a purchase. The framework of the agreement is that the merchant pays according to the agreement the associate whenever his affiliate site brings site traffic or money to the merchant website. The recruitment of affiliates is not only a great way to sell products over the internet but it is also a great marketing strategy as it provides the merchant website a unique competitive advantage. Networking can be said to be one of the best and most effective ways to get your site famous online.

There are at least three parties in an affiliate program transaction:

1. The Customer

2. The Affiliate Site

3. The Merchant Site

The concept of having an affiliate program business which utilizes the World Wide Web as a marketing strategy was first announced to the public in 1996 by Amazon.com CEO and Founder Jeff Bezos. Amazon.com encourages affiliates to post links to the Amazon website in general or to specific books. Whenever someone clicks on the link and makes a purchase the affiliate who owns the link will receive a certain pre-agreed percentage of the earnings. All the affiliate need to do is to send traffic, and the rest is done by Amazon.com like order taking, money collection and product shipment. Amazon.com is not only the first affiliate program business; it is also on of the most successful with more than half a million affiliate websites.

Over the years affiliate programs have grown to epic proportions and have taken many different forms. Affiliate program businesses are now everywhere and they are found in almost every niche of the business world. Many companies specializing in e-commerce now function as merchants while those who do little or totally no e-commerce work as affiliates.

Affiliate Program Business Basic Payment Methods

There are three basic types of affiliate program payment arrangements:

1. Pay-Per-Sale (Cost-Per-Sale)

The pay-per-sale agreement has been popularized by the mother of affiliate program businesses Amazon.com. Under cost-per-sale the affiliate is earns commissions from the merchant each time he sends a customer to the merchant website and that customer makes an actual purchase. Amazon and many others pay a specific percentage of the sale as commission while others pay a fixed rate for every sale.

2. Pay-Per-Click (Cost-Per-Click)

Pay-Per-Click is considered by many as the most popular and common affiliate agreement. Under such agreement affiliates are paid fixed rates based on the number of visitors who click on the links placed on the affiliate website that lead to the merchant website. A purchase is not required to earn commissions, all that has to be done is that the visitor clicks the link and stays for a certain time usually at least 30 seconds on the merchant website. Whatever the visitor does once he gets to the merchant site does not affect the commission.

3. Pay-Per-Lead (Cost-Per-Lead)

Under the pay-per-lead arrangement affiliates are paid based of how many visitors they send to the merchant website and subsequently sign up as leads. Signing up as leads means that the visitors fill out the information request form at the merchant site. Leads are used as targets for conversion into customers or are simply sold to other companies which are in search of leads.

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Affiliate Program Business Other Payment Methods

A company sets up an affiliate program based on its needs. Therefore, it is very usual for a company to have an affiliate agreement having some variations with the basic payment methods. There are also three common variations of affiliate program payment methods.

1. Two – tier programs

Affiliate program businesses that offer two-tier agreements profit through sales recruitment and commission sales hence thy have a structure similar to network marketing business or multilevel marketing organizations. In addition to the traditional commissions based on sales, clicks or leads facilitated by the affiliate’s site, commissions based on the activity or productivity of referred affiliate sites are also received.

2. Residual Programs

Affiliates under this arrangement are continuously paid commissions if the visitors they get to go to the merchant website also continue to make purchases of products and services from the merchant. This king of arrangement is usually utilized by online merchants who require regular payments usually on a monthly basis from their customers.

3. Pay-Per-Impression (Cost-Per-Impression)

Online merchants who make use of this arrangement which is also sometimes referred to as pay-per-view pays commissions according to the number of visitors affiliates can cause to see the merchant’s banner ad. Such arrangement has been developed as an advertising strategy but has now been adopted as an affiliate strategy.

The reduced risk is the biggest advantage of the payment methods utilized by affiliate program businesses because a merchant pays out commissions only when its desired results are met. Traditional advertising like television and radio ads as well as online banner ads are relatively risky on the part of the advertiser because they are like placing their money on a bet that the advertisements will be effective and achieve whatever they are suppose to achieve. The ad is considered as a success when it brings to the merchant more money than what was spent, but this is unfortunately not always the case. With affiliate programs on the other hand, the online merchant only pays out commissions when things are going the way he wants them. It is far easier for websites to join affiliate programs than it is for them to attract advertisers but much less risky for merchants.

Affiliate Program Business Administration

Affiliate programs are relatively simple and easy to manage, all they need is some dedication and patience because there should always be someone tracking the actual activity of all affiliate’s links to be able to provide them proper commissions.

Common data an affiliate program business should always be aware of are as follows.

1. The number of people who click on the merchant site’s link on an affiliate site

2. The number of people who end up buying something or performing some other predetermined action once the affiliate sends them to the merchant site.

3.  The number of people who see the merchant site’s banner link on an affiliate site

4. The original arrangement between the merchant and each affiliate as well as changes if any.

Both merchant and affiliates need a lot of effort to enter the affiliate industry. Merchants need to actively seek and recruit affiliates while affiliates need to actively search for affiliate programs they might be interested in. Many huge and successful affiliate programs like Amazon.com even deal with their affiliates directly because the benefits they reap from their associates are more than worth direct administration. Such companies are in complete control of the payout process and the merchant is the sole entity that determines the amount of commission each affiliate will receive. In spite of this fact, these companies still attract a lot of associates due to the fact that there is no real risk or cost in their program. Affiliates simply put links up and wait for commissions.

Affiliate Program Business Networks

Affiliate networks composed of affiliate brokers serve as mediators between merchants and affiliate program websites and affiliates. They assist the associates put up the links in their websites and also track all the activity of these links as well as arrange all payments. Affiliate networks are also beneficial to merchants in the sense that they help recruit affiliates by including the merchant’s website in their online affiliate program directory. Help centers and report centrals are the common features of affiliate networks though additional features may vary.

Affiliate networks are most beneficial to aspiring affiliates because through them a wide variety of affiliate programs become available in one central location making finding a good and suitable program that fits your site much easier. Affiliate networks of course, as payment for the convenience they serve take a certain cut on each transaction they facilitate which is usually around 20% of the affiliate commission.

Any type of website can involve itself into an affiliate program though most affiliate network service agreements forbid offensive and pornographic content. Successful affiliate program businesses though referred to as merchants do no even need to make sales to gain profits. Content based affiliate businesses in fact get most of their earnings from advertisers which where attracted into advertising on the merchant website because of the high volume of traffic its affiliates are sending to it; hence there is direct conversion of traffic into profit. Pay-per-click affiliate programs are one of the most efficient means of increasing traffic.

It can be said that there are as many kinds of affiliates as there are types of businesses. Generally, any website from top sites to personal pages can take part in an affiliate program, and with the correct choices can earn themselves some money. There also exist affiliate businesses which are just actually huge collections of many affiliate programs. These sites operate by joining a lot of pay-per-click or pay-per-lead advertisement programs and then offer their visitors a portion of the commission they receive on each click or offer them a chance to win big rewards.

Becoming an Affiliate Program Businessman

The first choice for anyone wanting to involve himself in affiliate programs is whether to be a merchant or an affiliate or both. Setting up an affiliate program and becoming an affiliate merchant is the best choice for those who operate an e-commerce site and desire to improve their sales. Becoming an affiliate of several merchants is the best choice on the other hand for people who own small content sites and run them only as a hobby. The choice is likely to be influenced by the budget and the element of affiliate programs what suites your website the most.

Entering an affiliate program as an associate is quite easy. Just go to the merchant website and fill out the online affiliate application form. The form is likely to ask of your name, address, desired payment method and other personal information as well as information on your website like URL, name, and content description and then of course have you agree to the merchant’s service agreement. Affiliate networks are generally free.

Once you receive the approval of the affiliate network you are then ready to start selecting the affiliate programs that interest you. Since most affiliate programs accept affiliates at no cost al all, it is best to immediately discard all programs than charge membership fees. Once selection is complete, the merchants you have selected will then review our site and once they accept your site they will guide you step by step on the process of appropriately posting links. Payment arrangements will also be finalized during this guide. Most affiliate programs require associates to reach a minimum earning threshold before they release commissions because of the fact that the amount an affiliate earns per transaction is relatively small. This means that no payment will be received by the affiliate until he reaches the particular minimum amount. After everything is set up and all has been explained to you, you can then start working on your website to help you earn more money.

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HOW TO EVALUATE THE TRUE WORTH OF A BUSINESS
PART 1 of 21

“Buying a Business—The Basics”
by Willard Michlin

Buying a business in today’s economic climate requires that you, the buyer, be on the ball, with regard to business basics.  This economic climate, as far as businesses are concerned, is a sellers market.

With the corporate downsizing, economic downturn and other factors, there are a lot of very knowledgeable buyers out there looking for one of the very few good business to buy.  This means that you, as a buyer have a lot of competition.  Consequently, you need to be well prepared. Professional business buyers, report that it takes anywhere from three months to three years to find the right business.  So, if anything, what can be done to speed this looking process and at the end finally get a good business?

The decision,  the first step is deciding to buy a business.  Once you have made this decision and you are definite and firm about the fact that you are definitely buying a business, and the process has started. 

The second step is to decide what kind of business. This is really, really important.  What is the criteria for this business you are looking to buy? Do not make a wish list or what would be nice. Make a list of what is important. For example, if your standard of living requires 0,000 income, do not compromise by looking at businesses that make only ,000.

That is unless you consider yourself a knowledgeable business manager and marketing person who knows that any business they buy will double in income and sales. That kind of buyer can buy a business that makes no profit and probably should.

Other criteria include; is it something you can handle?  What kind of work are you willing to do?  If you like sales and do not like running a factory, buy a distribution company, or sales organizations, and do not buy a manufacturing firm, unless you have a partner that likes running a production line.

I have people call me to inquire about buying a body shop that have no automotive experience at all.  You can buy an auto repair shop, muffler shop, brake shop or lube store, and learn the business, with no experience to start.  You probably should not buy a salvage yard body shop, or scrap yard with out being raised in the business.  If you are a salesman you can buy almost any business.

All manufacturing, distribution or retail sales require good personal sales skills.  If you are poor at communication skills, or English is a second language, consider buying a liquor store, gas station or hamburger stand, just a few of the businesses that do not require, personal selling, or do they?

About you.  There are some things you need to prepare for the brokers when they start coming to you with possible businesses.  You need to make sure that you have your down payment sorted out.  Expected down payments are anywhere from 25% to 100% of the selling price.  So make sure you know what you want to spend and then make sure you have the down payment easily available.

Then you need to get your financing options determined.  You can get yourself pre-qualified for a business loan or an SBA loan.  SBA loans are only available to businesses that have shown a five-year profit on their tax returns.  If you are looking at businesses that are heavily unrecorded income, you must have cash or seller financing.

Being your own broker.  You should determine who is going to make your offer. A broker, or yourself?  If it is you then you should locate the necessary offer forms and study them carefully. Determine what must be in your offer so that you can put in an offer, the instant you find a business that meet your requirements.  This is an important step, as putting in an offer tends to lock out other buyers while you look over the business.  Make sure you have contingencies in your offer, which means you have lots of “get out of the deal” clauses.

I would like to suggest, for the less experienced buyer to hire as a consultant the sharpest attorney, business broker, due diligence expert, or business evaluation expert, you can find and pay him for his time to watch your rear end, in negotiations and in reviewing the companies you are considering buying.  In real estate we call this a buyers agent, except with businesses the listing agent will not always co-operate in splitting the commission with a buyer’s agent.  This means you need to be willing to pay your agent an hourly fee for helping you.  Let me give you a real example.

The Car Wash Soap Manufacturing Business

David and his Father were looking for a business to buy.  They were interested in a Scrap yard that I was selling.  I asked their buying agent to bring them over so I could interview them and to explain this business to them.  In three minutes it was clear that they should not even consider this business.  We spent the balance of the meeting talking about the businesses they had looked at and the pros and cons of each.  I gave them my honest suggestions about each from their description.  They thanked me and left.

Two months later David called and asked if he could come talk to me.  He told me about an FSBO “For Sale by Owner,” who would never pay any agent a commission unless he got his price, plus the commission.  That of course doesn’t make sense to a buyer.  David told me about the deal and I gave him my honest opinion about it.  David asked what my time was worth and gave me a check for an hour’s time.

Two months again passed and David called and said, “I need to see you today.”  He proceeded to tell me about a Car Wash Soap manufacturing company that was suppose to be making 0,000 profit per year.  The asking price was Million.  David wanted several things from me.  He wanted my opinion of the business, he wanted me to help get the price down to a more reasonable amount and he wanted me to verify the income.  It took me thirty hours of reviewing the books and talking to the seller to determine that the business was making only 0,000 per year including what was not on the books.  The books were made complicated, intentionally so that no one could understand what was going on.

I related my findings and told David he had to do his own negotiations but I would coach him every step of the way.  David paid my fee and I didn’t hear from David for one year.  When he called, I asked what happened to the car wash soap business.  He filled me in on the story.

He bought the business for more than I suggested because he saw where he could improve the business instantly.  The profit turned out not to be 0,000 as the seller guaranteed, but exactly 0,000 as I had determined.  David took over sales and marketing and within one year had the company profit up to the 0,000 he was promised.

David now had found a related business that had been listed with an agent who did not understand the business he was marketing and could not sell it.  David was now talking to the seller directly.  The seller wanted 0,000.  David wanted me to negotiate, on a consulting fee bases with the seller to get the price down.

I instructed David that I would appraise the business, and convince the seller that my appraisal was accurate, but David had to do the negotiations.  The seller would never talk to me about the inside details if he was negotiating with me directly.  This time I spent five hours with the seller, not the books, to determine the business was worth 0,000.  The seller would not take the price, but felt I had done an excellent appraisal.  I suggested to David to wait sixty days and open discussions again.  I also told him the seller would eventually take the 0,000.

I again didn’t hear from David, this time for six months.  When David called I asked for his report on what happened.  The seller called him after one month and sold the business to him at my appraised amount, just as predicted.  What did David want this time?  Two guys wanted to buy the business and David wanted me to justify a price of 0,000?  I did my updated analysis and got paid.  I will not find out what happened until David calls me with my next assignment.

Get the word out.  Now that you have got all of your preliminary work done you are ready to go looking for businesses.  You are ready to look for businesses for sale. Go on to the Internet and look at sites that have businesses for sale. Look in the classified section of your county newspapers and look at what is for sale.  Contact business brokers and tell them what you are looking for in detail.  Call on broker listings and FSBO (For Sale by Owners.)  When you find something interesting you move through the steps with a broker, accountant or attorney or without a broker, accountant or attorney.

Find out what financial records they have.  This will eliminate 75% of the businesses.  The records are false because of cash sales and/or cash payroll.  A lot of auto repair shops pay their mechanics a base salary on the books and the balance in cash.  This is crazy and illegal.  They have cash sales, which are illegal, and not reported and then they give this money to the employees illegally.  Have fun figuring out the profit on these businesses.  Some businesses do not want to give you any financials.  They do not even want to lie to you about the numbers; they just do not give them to you.  You need financials even to just see what the operating expenses are.

Cash income, The problem with cash income, besides being illegal is it is unconfirmed.  Jack bought a body shop doing ,000 sales on the books.  The seller showed Jack records that proved to Jack, an experienced body shop owner that the business was really doing 5,000 a month in sales.  After escrow closed Jack was given the production records for the last five years by the general manager that stayed with the company.  The business was doing ,000.  Exactly what was on the books!  There was no cash.  The seller reported every dime.  I hate to say it but if someone w…

Willard Michlin is a Due Diligence and Business Evaluation Advisor.  He is also a California Business Broker and a California Real Estate Broker. He has published many articles and is in demand as a public speaker in the Southern California business community.See other articles and information about his services at:
http://www.businessbuyingservices.com
http://www.kismetbusinessbrokers.com

Are you ready for the recession? Here’s how you can turn it into an opportunity to survive and thrive: set up your own online business and create an extra stream of income.

Starting a new online business does not mean that you have to give up your current job. You can set it up doing extra work in your evenings and weekends and keep your income from your current job while the income from your new business grows.

So what do you need to do to maximise the chances of success of your new business?

Find something that you’re either good at or passionate about. Then you need to research and plan properly.

Here are 8 questions – answer them in full for your situation and you’ll have the basis of a sound plan for your business:

1. What are your skills?

Can you teach? Can you write? Can you sell? Are you technically proficient?

2. What do people want to buy? In a recession.

Luxuries and frivolous things are not going to be at the top of people’s shopping lists if they are struggling with the effects of recession. Necessities are.

3. Is there a market?

Is there a demand for it? How much would people be prepared to pay for it? What will affect demand for it (e.g. weather, strikes, competition) and how? How much competition is there? How much is your competition charging?

4. What will the process be?

How are you going to make it? How are you going to market and sell it? How are you going to deliver it? How are you going to get people to pay you for it?

5. What are the dependencies?

What type of premises do you need? Do you need outside suppliers – if so for which parts? Do you need licences – if so what licences? Do you need special equipment? Do you need staff?

6. What are the costs?

Premises, raw materials, suppliers, marketing, delivery, license costs, staff costs, lawyers and accountants, day-to-day operational expenses.

7. How much money can you make?

How much can you sell it for? How many can you sell in a week/month/year? What sales channels will you use? How will you promote it?

8. Do you have sufficient funds?

What are the start-up costs? What are your marketing and promotion costs? How long before you can break even? Where is the funding going to come from?

It doesn’t matter what type of business you’re thinking of, going through that checklist is a good way to make sure you’ve got most things covered.

Use the answers to those questions to create your business plan.

And here’s some good news: if you start an online business many of the items above won’t apply.

With an online, affiliate marketing business, for example, your start up costs would be negligible, your delivery and logistics costs zero, you would have no need for special equipment or premises and no need for separate outside suppliers.

But you still need to develop a plan!

It’s important to remember that, whether your business is online or off-line, it’s still a business.

Don’t be taken in by all the promises of easy money online. It simply isn’t the case – if it was everyone would be doing it!

But, as long as you treat it like a real business, you can make a lot of money online.

There are lots of resources available to help you with developing and promoting your online business – just make sure you pick top quality ones.

And beware (and avoid) the snake oil salesmen: those who promise huge monthly incomes for doing just a few hours work a month.

If you have spent any time searching at all you know that there are hundreds of opportunities to start an online business. But how can you decide which one to choose and which one you would succeed in? What is the difference between network marketing and an affiliate program? How do you weed out the scams? How can you know whether you will succeed in the business?

If you have absolutely no experience with any online business all this can be quite confusing.
First, how do you find a legitimate online business? In order to be an online business some product or service must be provided. There are continually online moneymaking schemes where you simply send a given amount of money to someone somewhere above you in the scheme. Even if these are called gifting schemes to keep them from being illegal, they are not online businesses. They will not legitimately support you for any length of time.

Look for a product or service you genuinely believe in, because you will be using it yourself as well as promoting it online. One way is to select a product category, such as online marketing information or health products and look at all the online businesses you can find that provide that product or service.

There are essentially three different types of online businesses; network marketing, affiliate programs and sales. In a sales business you promote something online that you buy wholesale or make. You then ship it to customers when they buy it. In an affiliate program you market a product or service for the company that produces it and get a commission for each sale. They ship the product. In a network marketing program you promote the product or service and also recruit others to do the same. You then receive a commission on the sales of those you recruited and those they recruited.

Network marketing programs are often the most popular with newcomers because there the upline, or sponsors have a vested interest in your success and are there to help. These systems are set up in a variety of ways so that you may have two or three people in the level below you and may be paid on the sales of differing numbers of levels below that. They also have different ways of handling your recruits once the given number of levels below you fill up. Be sure you understand the system and compensation plan of any online business you are considering.

Another very important aspect of the business is how you will recruit people. In some online businesses recruiting involves several telephone calls to interested prospects. Do not choose a business like this if you have telephone phobia. In other online businesses most people sign up or buy directly from the web site. In still others paid marketers do the sales and signups for you. These are more expensive to get into, for obvious reasons. Select a recruiting and sales style you are comfortable with.

If you are new to online business a very important factor in the selection of a business is the level of support you will receive. Ask about their education program before you put any money down. Many online businesses today offer free education before you even have to put any money down. You can sign up for a free trial period, check out their educational material and then decide if you think you could make money following it. Basically they should teach you how to use advertising, forums, articles, traffic generators, links and Adwords. Some will teach you more than this and some will teach most but not all of these.

When you have found the product, type of business and education you want, sign up for the online business. Then stick with it. Despite many of the advertising claims you have seen, you are highly unlikely to make a fortune overnight. You are even highly unlikely to make a fortune in a month or two. You need to build the business. You can probably get someone to buy from you or sign up from you in two to three weeks, but you will not reach the full potential of the business in that time. Stick with it for at least six months, doing everything you are told by your sponsor or the educational program.

If you have absolutely no results in the first month, talk with your sponsor and find out what you did wrong. If you keep promoting the online business for a few more months and do not see continuing results, seek out one of the many educational programs online that will teach you, independently, to market your home business. Learn all you can from the free sites, then perhaps sign up for paid assistance if you feel you need it.

One estimate is the 1.25 million people are seeking an online business. With a little effective promotion some of these people can be drawn to your site. Persistence pays off. You will make money if you keep promoting and keep learning.