One of the first tasks for someone starting a business is to develop a budget of cash required to start and run the business.  You need to address CAPITAL requirements, FIXED costs, and VARIABLE costs.

Capital requirements are expenses associated with such things as equipment, vehicles, and buildings.  Typically these will be your big ticket items required to get the business off the ground.

Fixed expenses are regular expenses that you will have, whether you sell one widget or 100,000 widgets – things like rent, salaries, insurance, retainer fees, registration fees, licenses, garbage collection, etc.

Variable costs are things such as production labor, sales commissions, payroll & unemployment taxes, and raw materials and supplies for production.

You will need these figures to write your business plan, calculate breakeven points, plan working capital, etc.  The more accurate you can be with your estimates, the better your business plan will be, and the less likely you are to run out of cash.  There are resources available to help you develop your estimated costs.  Most industries have an industry group that typically compiles statistics you can use.  If you can’t find an industry group, look for similar businesses that might have  similar expenses.  Don’t short change this exercise.  It can mean the difference between success and failure!

Do you change your website periodically?  Or is it the same stale information that you wrote way back when you set up the site?  To come up in the searches, you need fresh (relative) content on your site.  You may want to start a blog to keep things changing.  Maybe post weekly tips (Accounting tips, Sales tips, Inventory Management tips, Tax tips, etc – whatever your specialty is).

The key is to make your site interesting and updated so that when someone visits, and then comes back a month later, they aren’t looking at the same old dated material.  The search engines also recognize when material is dated and stagnate.  This works against you in the quest for position on the search results pages.  You don’t have to publish a novel every week.  Just add new relevant information.

What have you done today to grow your business?  You should take some action every day to further the business.  Some days it may be a large action; other days a smaller action.  But the important thing is to do SOMETHING every day.  It may just be calling a business associate that you haven’t talked to recently, to catch up on how their business is doing.  It may be sending a press release to the local paper.  It may be launching a $10,000 television advertising campaign! 

Most small businesses have a difficult time dropping $10,000 at one time on advertising.  But you CAN attend a Chamber event.  Or join a networking group.  Or meet a business associate for lunch to discuss how you can help each other get more business.  It doesn’t have to take an enormous amount of time.   Sales is the lifeblood of any business.  You have to spend time on it if you want to grow your business.

Do you review your financials on a monthly basis?  Every small business owner should!  I know – it’s about as fun as taking a fastball to the mouth – but is IS vital to the success of your business.  Review source and amounts of revenue as well as expenses.   Many owners glance at the “Total Sales” number, then turn to the back page, look at the “Net Profit” number, and then toss the P&L into their desk drawer.

What I’m suggesting is to actually LOOK at the numbers.  Is there a way to increase sales?  What can be done to reduce expenses?  Get out of your “zone” and challenge those expenses.  How hard is it to take an hour or so, once a month?  Really dig into why you are spending your money.  Every dime you cut from expenses goes into YOUR pocket…

If your small business was damaged in the recent Tennessee flooding, you may be able to claim your losses on your 2009 return, even though the damage occurred in 2010.  The SBA also has some special loan programs for business owners that suffered flood damage.

If you weren’t damaged, let this be a wakeup call to develop an off-site backup for important business information.  For your electronic data, http://www.carbonite.com/ is an inexpensive option.  If you have valuable printed documents, make copies and store them in a safe at an off-site location.  No one ever expects a disaster will happen to them, but if it does, you’ll be SO glad you took a little time to safeguard your business information.

By: Ken Lewellyn

There are more than 15 million family businesses in the United States, ranging from giants like Wrigley and Marriott to the local corner grocery store. Yet, history tells us that less than one-third of family owned companies will make it to a second generation.

One reason for the disheartening statistic may be that business owners tend to forget about succession planning. It’s often not a priority and it definitely can be an emotional issue. Many owners just can’t imagine the business succeeding if they aren’t involved or they may be too busy with day-to-day operations to take the time to adequately plan for someone else to take the reigns when it’s time to step aside.

But as more and more baby boomers approach retirement age, the time for succession planning is today. Tomorrow may bring a serious illness, disability or even death.

Having a well thought out plan is critical to the continuation of a business, particularly for a small, family-run operation.

Plan early. Developing a succession plan early will help to smooth the transition. You may think the plan won’t be implemented for years, but unexpected factors may move up the timeline.

Bring in outside experts. As you’ve grown the business, you no doubt have had some help along the way. Hiring the right professionals – attorneys, accountants, financial advisors and business intermediaries – will help you ensure you have the best possible succession plan when it is needed. Their expertise will be invaluable as you develop and plan while continuing your every day tasks in running the company. They will look more objectively at the business and the goals you’ve set and help you ensure that everything is in place.

Involve family members in the planning process. Developing a succession plan and simply announcing it to the family will only bring discontent when you unveil the plan. You may come up with the same plan, but bringing the family into the process will certainly create goodwill and support.

Train your successors and work with them. Take the time to work with the person you’ve selected to take over so he or she knows and understands what it takes to run the business and keep it successful. Help your successor understand the big picture in running the entire operation, not just the duties he or she is currently handling.

Look at all options. Pay particular attention to three areas when putting your financial plan together; management, ownership and taxes. As you work on your succession plan, consider that management and ownership aren’t necessarily one and the same. You may look to one family member for the management of the company, but transfer ownership of the firm equally to several members of the family.

Look carefully at the financial impact. Be sure to develop a financial plan as part of the overall succession plan. You don’t want your heirs hit by heavy gift taxes that they cannot bear. And no matter who takes over the business, be sure the valuation of the firm is accurate.

Be realistic. Of course you want to turn the business over to your eldest son or daughter so they can follow in your footsteps. But it’s important to carefully consider whether he or she is really the right person to take over the operations of the company. Consider another family member, or someone else within the company, if that person is the best qualified and has the business skills and desire to run the firm. Ultimately, selling to an outside party may be the best option. A business intermediary can guide you through that process, identifying potential buyers and advising you on options for structuring a transaction.

The time for succession planning is now. Don’t delay starting the planning process. It is one important way for you to ensure that you have the funds you will need in retirement, while helping to ensure that your company will continue on after you leave.

The International Business Brokers Association is the largest international, non-profit association operating exclusively for the benefit of people and firms engaged in the various aspects of a business brokerage and mergers and acquisitions. IBBA has 1,950 members worldwide, with corporate headquarters in Chicago, Illinois.

©2008 International Business Brokers Association® (IBBA®) all rights reserved. Permission to reuse any or all of this material should be directed to the IBBA at 888-686- 4442 and is restricted to IBBA members.