I was reading the UW-Madison Business Alumni Magazine Update for Spring/Summer and I was excited to see the educational opportunities available for entrepreneurs. The fourth annual Wisconsin Entrepreneurial Boot camp was held at the School of Business. This event brings together graduate students from engineering, law and sciences to learn more about running a business by attending interactive sessions led by Wisconsin School of business faculty and real-world professionals. The university also offers two formal certificates in entrepreneurship-one for undergraduates and one for graduate students. The School of Business hopes to assist students in engineering, liberal arts, sciences, law and other majors learn the fundamentals necessary to run a successful business.
This all shows that having a great product or service isn’t enough to have a successful business. Business owners need to be able to read their financial statements and understand cash flow. They need to know what the trends are in their industry and in their market. They need to focus less on minimizing income taxes and more on building adequate equity and capital for their company. The economic downturn showed that businesses which had a plan and had proactive management and had adequate capitalization were able to weather the storm with much less pain than those companies without these essentials.
For those of you starting out or those who survive the latest recession, now is the time to get your business in good shape. Write a business plan, figure out what business knowledge or skills you lack and do something about it. There are classes available at local universities and plenty of books available, such as the E-Myth series. There are software programs available to help you write a business plan, or you can work with the many consultants out there who provide this service.
Entrepreneurs aren’t afraid of hard work so now is the time to take charge.
Showing posts with label business plans. Show all posts
Showing posts with label business plans. Show all posts
Monday, July 19, 2010
Friday, July 9, 2010
Is There A Wrong Time In Your Life To Start A Business?
So you have an idea and you have the entrepreneurial bug.The question arises: is this a good time in your life to start a business? In fact, is there a right time and a wrong time to start a business? This is a question we mull over ourselves as we work with various clients. Ours is not the business to deflate people's dreams. However, inherent in planning for success is pointing out potential weaknesses in the plan and developing a contingency plan.
So what is our opinion, you ask?
Whether you are male or female, I wouldn't plan to start a new business if you are in the process of getting married. The same holds true if you are thinking about having a baby within the next 5 years. Both of these events are life changing events. Until you are in the middle of them, you cannot imagine how they will affect your attitude, your energy, your ambitions, your time, and your resources. They are some of the most joyful, yet stressful moments in life. Businesses that start up in the middle of these phases of life often fail.
Go ahead and work on your plan, and do some contingency planning regarding your time and resources, for example, but if at all possible, give yourself time to get through these phases and adjust to your new life before throwing the stress of starting a business into the mix. You will likely have better success in all areas of your life by following this advice.
What is your opinion?
So what is our opinion, you ask?
Whether you are male or female, I wouldn't plan to start a new business if you are in the process of getting married. The same holds true if you are thinking about having a baby within the next 5 years. Both of these events are life changing events. Until you are in the middle of them, you cannot imagine how they will affect your attitude, your energy, your ambitions, your time, and your resources. They are some of the most joyful, yet stressful moments in life. Businesses that start up in the middle of these phases of life often fail.
Go ahead and work on your plan, and do some contingency planning regarding your time and resources, for example, but if at all possible, give yourself time to get through these phases and adjust to your new life before throwing the stress of starting a business into the mix. You will likely have better success in all areas of your life by following this advice.
What is your opinion?
Monday, February 22, 2010
Why Operating Agreements are great!
Beth and I are often asked how our working relationship affects our friendship. We were friends for over eight years before we became business partners. I feel that working together has made us better friends. What has allowed this to happen is all the work we put in before we started working together.
When we were exploring the possibility of forming a partnership, we had extensive conversations about how we envisioned the business working and growing. We talked about our skills and our fears-what were we good at, what scared us, what could Beth never count on me to do (cold calls-shudder). After all the talking was done, we committed all this information to paper. We have a very detailed operating agreement.
Last week, a situation arose in our business that we had a difference of opinion over how to handle. We exchanged several emails on the subject and gathered all the information we needed to make a decision. Then we followed the terms of our operating agreement: we talked in person. It is so easy to have misunderstandings when communicating via email. We were able to reach a compromise we both felt comfortable with and this difficult situation did not impact our working relationship or our friendship.
The moral of this story: Most businesses put a good deal of time and money into creating operating agreements and business plans. Use them! Any other good stories out there about using your business plan or operating agreement to solve problems? Let us know.
When we were exploring the possibility of forming a partnership, we had extensive conversations about how we envisioned the business working and growing. We talked about our skills and our fears-what were we good at, what scared us, what could Beth never count on me to do (cold calls-shudder). After all the talking was done, we committed all this information to paper. We have a very detailed operating agreement.
Last week, a situation arose in our business that we had a difference of opinion over how to handle. We exchanged several emails on the subject and gathered all the information we needed to make a decision. Then we followed the terms of our operating agreement: we talked in person. It is so easy to have misunderstandings when communicating via email. We were able to reach a compromise we both felt comfortable with and this difficult situation did not impact our working relationship or our friendship.
The moral of this story: Most businesses put a good deal of time and money into creating operating agreements and business plans. Use them! Any other good stories out there about using your business plan or operating agreement to solve problems? Let us know.
Friday, August 28, 2009
Fix Your Credit Score
Most people who approach us to help them write business plans and organize their businesses will at some point need to obtaining financing. If you are worrying about losing your job or dreaming of starting a new venture or perhaps looking to take advantage of the SBA loans while in the next few months while their fees are still suspended, then pay attention now! The process of fine-tuning your idea and researching and writing your business plan may take some time, but there is something that you can focus on immediately to improve your chances of getting a good rate on a loan: your credit score. Obtain your FICO score immediately. If your credit score is not as good as you would like it to be, then you need to do some work to improve it.
An excellent score is a score greater than 750. So what do you need to do to move yourself towards that number? First of all, you need to have some revolving credit lines and you need to hang on to them and manage and protect them for a long time. For credit companies, a long time means about 20 years. My oldest credit card is 14 years old and that only gets me a GOOD rating for that portion of my credit score. If you do have a few old cards that you are not using, assign a recurring purchase such as a monthly charitable deduction to those cards to keep them active. In this time of tight credit, credit companies may take away cards that are not active and that hurts your credit rating by reducing the amount of total credit that you have available.
This brings us to the second piece that you need to manage, your credit utilization rate. EXCELLENT credit scores require your credit utilization rate to be less than 20%. Less than 10% is preferrable. This means that if you have $50,000 available credit on various cards, your total amount actually charged should be less than $5000. The point to a credit card is that you make purchases and then you pay them down to $0, preferrably by the next payment due date so that you do not incur any finance charges. Credit cards are one of the most expensive ways to finance purchases with rates often between 10-33%. So if you are looking to make a purchase that you cannot afford to pay for within the next month or two, consider a different type of loan or even think of saving up ahead of time for the purchase. Stay on top of how much you have charged in a given month. If you have a credit card limit reduced or a card closed, then you will need to pay off some of the debt on your card even faster to keep your credit utilization rate in line.
The most important factor when managing your credit score is to pay on time. Mark the due dates on your calendar; check your amounts due and arrange payment on-line instead of waiting for statements to come in the mail. If paying by mail, send it 10 days ahead of the due date. Whatever your trick, just make sure that you pay on time. This is a high-impact part of your credit rating and it is the simplest thing that you can take action on.
What if you haven't been able to pay down your credit cards yet? Consider reallocating your budget, dropping or reducing one or two items and directing that money toward your credit card payment. Or consider taking on a second job until your cards are paid off and allocating all of that second income to your debt payments. If you are thinking of starting your own business, you could even hold onto that second job for a little while after your debts are paid off to build up some of the equity savings that you will need in order to obtain financing for starting your business.
An excellent score is a score greater than 750. So what do you need to do to move yourself towards that number? First of all, you need to have some revolving credit lines and you need to hang on to them and manage and protect them for a long time. For credit companies, a long time means about 20 years. My oldest credit card is 14 years old and that only gets me a GOOD rating for that portion of my credit score. If you do have a few old cards that you are not using, assign a recurring purchase such as a monthly charitable deduction to those cards to keep them active. In this time of tight credit, credit companies may take away cards that are not active and that hurts your credit rating by reducing the amount of total credit that you have available.
This brings us to the second piece that you need to manage, your credit utilization rate. EXCELLENT credit scores require your credit utilization rate to be less than 20%. Less than 10% is preferrable. This means that if you have $50,000 available credit on various cards, your total amount actually charged should be less than $5000. The point to a credit card is that you make purchases and then you pay them down to $0, preferrably by the next payment due date so that you do not incur any finance charges. Credit cards are one of the most expensive ways to finance purchases with rates often between 10-33%. So if you are looking to make a purchase that you cannot afford to pay for within the next month or two, consider a different type of loan or even think of saving up ahead of time for the purchase. Stay on top of how much you have charged in a given month. If you have a credit card limit reduced or a card closed, then you will need to pay off some of the debt on your card even faster to keep your credit utilization rate in line.
The most important factor when managing your credit score is to pay on time. Mark the due dates on your calendar; check your amounts due and arrange payment on-line instead of waiting for statements to come in the mail. If paying by mail, send it 10 days ahead of the due date. Whatever your trick, just make sure that you pay on time. This is a high-impact part of your credit rating and it is the simplest thing that you can take action on.
What if you haven't been able to pay down your credit cards yet? Consider reallocating your budget, dropping or reducing one or two items and directing that money toward your credit card payment. Or consider taking on a second job until your cards are paid off and allocating all of that second income to your debt payments. If you are thinking of starting your own business, you could even hold onto that second job for a little while after your debts are paid off to build up some of the equity savings that you will need in order to obtain financing for starting your business.
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