Costly Mistakes Made With Your Business Entity

Investing in a powerful tool and not using the tool properly does not make a lot of sense. I know when it comes to running a business it requires multiple hats to wear and very often you are off and running on 10 different projects, calls, appointments, presentations... and perhaps the very foundation of your business may be in jeopardy. Here are the top costly mistakes I have seen made over the past 15 years:

Not completing the transition from a sole proprietorship to a separate legal entity. If you started a business in your own name for a few months before you formed an entity odds are part of what you did you completed as an individual and you need to connect the dots to the new entity. If you filed a DBA (doing business as) with yourself as the applicant that needs to be cancelled and re-linked to the entity. That means your entity needs to be the applicant, not you! If you don't do this you still are exposed to unlimited liability and filing a schedule C with a higher audit potential. Next, point is to open a bank account in the name of the business, not just keep the account in your personal name. Use a business credit card in the name of the entity, not just your personal credit card and keep track of expenses. You will want to minimize the amount of debt that shows up in your personal name. Update all affiliate programs, vendors with your new entity information so any income is going to your business entity, not to your name personally. Update your websites, business cards, letterhead with the new name of your business. Another important tip make sure your website is in compliance, most are not.

Funding concerns. 95% of businesses fail within 5 years and undercapitalization is the #1 reason. The pattern I have seen is that small business owners are mostly hoping for revenue to come in as the primary source of money to grow their business. What happens if your revenues are off or don't come in at all? You may be working on that great new product and all your emails go out and no one converts. That is a real problem. The key is to model success. Almost all successful companies do not use only their own money to grow. I know you know the concept, "OPM", other people's money, yet are you doing that? Are you only self funding your business on your own personal credit? Did you know that once the entity was filed the business credit bureaus will start creating a file. They scan the Secretary of State's records to create a file with any new filings. They look for the name of the business, the start date, and name of the officers/managers the address... If you are not paying attention on how you fill out forms with the business address, business license, state forms you can create disconnects in the database. In one business credit bureau, NCP is spelled four different ways. The NCP part is the same, but one way has "Inc.", one has ",Inc." other has ", Inc" and the last one is "Inc". Did you notice the differences with the comma and period? That created four different files! Don't make that same mistake. Unlike the personal credit bureaus, the business credit bureaus are very difficult to fix any mistakes. They have their own set of rules and are not set up for changes after mistakes happen. This creates a problem when it comes to developing credit for your entity because you basically have one shot at the apple to get it right the first time. Banks and vendors are very interested in your financial strength of your company. Now joint venture partners can check you out for free to determine who stable is your operation. You may be losing business and not knowing it. It is really a must to be financially solid in your business and your developing business credit is a must for your long term success.

Safe and risk asset. Mixing asset classes is a major risk to your wealth that is unnecessary. A risk asset is any asset that would cause liability to your entity. That may be a business, real estate, equipment, again, anything that may cause liability to an entity. A safe asset is one that does not cause liability to an entity, like cash, ownership of another company, investments... If your business falters and you need to reply upon your safe assets to recover short term, why unnecessarily put your safe assets at risk? It happens all the time. There are two reasons this may be happening to you, first, you have thought that your amount of safe assets are not large enough to protect. Imagine having $25K in a brokerage account in your name and losing all of that because of a personal lawsuit. Wouldn't you wish that you took the time and invested a small amount to protect that amount? Most clients will tell us they will get to it later but never do. Don't make that mistake. Set in place a safe asset LLC in your home state and transfer your safe assets into it immediately. This LLC does not have to be based in Nevada, because the protection of the entity veil is not important in this situation because as a safe asset entity there should be no one to sue the operating entity because there are no public clients! This is why your home state is fine for a safe asset LLC.

Now clear on who does what? A partner can help you grow a business quickly and destroy it even faster if you are not on the same page. Very similar to being married. I have been married for 16 years with three girls and it is a lot of work and requires meetings, discussions to do the best to be on the same page. Business like marriage can be very exciting at first and you really need to be able to communicate well as to what you are looking to accomplish. The fun part of business is discussing how you will bring in revenue and all the possibilities that can happen with profits. The part that is not a lot of fun is the expense side of the ledger. First, you must agree upon what is actually considered an expense, does that include things like cell phones, travel, meals... ? You may assume this is obvious but typically that is not the case. What happens if revenues are way off and there is not enough money to pay each partner and you need more capital from each partner to keep it going? This can be a very uncomfortable problem. It is best to presuppose the challenges ahead of time and see if you can calmly discuss through them and come up with solutions that make sense. If you can't get to first base on the uncomfortable parts even before you get started that is a bad sign and perhaps you should NOT be a partner. If fact, odds are the business is doomed to fail if you can't get through some of these basics uncomfortable discussions from the start. Now, that does not mean your partner is telling their spouse the same story. That can and often does create more issues. Having as much in writing from the start and a business plan in place makes the most sense. Almost ALL, not all, but close, partnerships that refuse to take the time to put things in writing fail. It is like clockwork. If anyone wants to start a business with you and they refuse to put things in writing, run! Most of the time the only one that makes money in that situation is the attorney's after the partners sue each other! Take the time to be clear and put it in writing!

That is your top 4 of the most costly mistakes that can be made with your business entity. There are more, but these are the biggest. The key is to take a few minutes and determine if any areas you are making mistakes and if so set an appointment on your calendar now to solve them!

Using Social Media To Promote Start-Up Businesses

If you are planning to launch a start- up business or have recently started one, you probably have encountered a wealth of information on using social media to promote a business. Though there are millions of social media users across the world, around 900 million of them, it is easy to get carried away by the numbers. Finding the right social sites to promote your business to maximise its potential is essential for business success, and this is where you should concentrate your efforts.

What Social Media Engagement Achieves For Business

Social media in essence is about engagement through sharing, which for business means targeting your product range, your articles, or your services at engaging a potential customer or client base. Collectively, products, services and articles are known as content, and it is through offering quality content that success through your channels can be achieved. Social media has around 900 million users globally, and covers every topic range you can think of. As well as engaging a potential customer and client base or readership, social media is also relevant to search engine optimization. Social media is a unique format as it helps you promote your content directly to your audience, and in turn it generates traffic via people sharing your content with others, and through SEO. Perhaps more importantly than this, however, social media with its online reviews helps a business build trust, and nearly every brand you can think of uses social media for this reason. Consider this: you come across two companies offering the same services; one has 250 Facebook likes, the other 43 - which one would you opt for? So regardless of whether you're an online retailer, an affiliate marketer, offer a service such as tuition, or run a news site, social media can help you build your business online. Google estimates that by 2015, UK consumers will have purchased £40bn of products and services online.

Popular Social Media Sites And Their Uses

Getting to get grips with the nuances of social media's role in promoting your business can cause more than its fair share of headaches. Here is a list of the most popular social media sites and their uses:

Facebook is predominately for sharing. This can be products, articles, or services. In a nutshell, it's for sharing your content with as many people as possible.

Twitter is about sharing news on any subject. Don't let the word news make you feel it does not apply for products. New product launches, new stock ready to be sold - Twitter is good for all of this.

Google+ is in part a combination of the two and has become important for search engine optimization if nothing else.

Blogging is a great way to impart news and expertise to your readership, customer and client base, or followers. It offers a good way to attract visitors on your site via search engines.

YouTube is about showcasing videos to a wide audience. It is being utilised by businesses all the time to sell products and services. As YouTube is owned by Google, videos tend to feature prominently on search engine results. You can also utilise the YouTube ads to make a secondary income stream.

Pinterest and other bookmarking sites are very good at showcasing visual products. If your business is selling something online, albeit a product or service, ensure you are posting on Pinterest and as many bookmarking sites you can find.

Social Media And Search Engine Optimization (SEO)

Good positioning on search engines is about unique quality content that is well shared and well linked to from other websites. By sharing your content on social sites, the more chance there is of people liking it on Facebook, retweeting on Twitter, or sharing the pin on Pinterest. Links are important for good SEO and posting your content on social sites provides a link from the social site to yours, and in every case this can be targeted to a specific web page. By web page I mean a specific product, service, or article. This also ensures Google indexes the web page. That is to say, it adds it to its database, ensuring it can be found on search engines.

Finding The Best Social Media Sites For Your Business

To find the best social sites suited to your business, think about what your business is trying to do. If your business sells products or services, then use social sites that showcase pictures and videos to sell the product. YouTube, Pinterest, Delicious and Instagram are all really good for showcasing products. If you're in the selling game, make videos of your products, take good professional photos and get them on these sites, and ensure you link the pictures and videos directly to the content on your site. If you sell on eBay or an affiliate seller, try to link directly to the product page where a potential customer can buy it. Also, put the products on your Facebook page, Google+ page, and Twitter. For service providers, a slightly different spin on social media promotion is needed as, more often than not, a service provider will sit in the middle of visual social media, and text-based social sites. This also applies to affiliate marketers. If you can, represent your services with a picture or icon, and publish the picture or icon on the visual sites. Use videos to showcase your services - if you can get testimonials from clients, well, that's gold dust. Publish regularly on your blog and tweet the articles, together with insights into the industry. This engagement will help build trust with your existing clients, showcase your skills, and help you to be found by people wishing to become new clients.

Social Media Advertising

If you have the budget for it, Facebook offers advertising on a click-through basis like Google AdSense, or it can be used to earn likes. It is often a case of experimentation. For affiliate marketing revenue streams, click-throughs will expose the user to your revenue stream, while a like will ensure every time an article or new product is published they'll be informed. It's trial and error and seems to work well for some businesses, but others have lost faith in it.

Saving Time

By now, you have probably guessed that updating social sites, especially if you publish a lot of daily content, is hard work. Larger businesses employ people to keep on top of it, something many start-up business don't have the budget or the time for. It is possible to automate your social accounts updating using automatic syndication sites.

A Social Media Strategy

Step 1: Create a Facebook Page, Twitter account and Google+ Page For Business

These have their uses regardless of the type of business, and all help considerably with SEO. Ensure you create business pages on Facebook and Google+. This keeps your personal details and indeed social media life hidden from your customers or clients, and it offers better options to promote a business.

Step 2: Identify Social Media Sites That Are The Most Important To Your Business

If your site sells products, make a list of all the online bookmarking and video sites you can find and create accounts. Ensure you use Pinterest and YouTube. If your business is for services, information, or is for an affiliate marketing revenue stream, you want to spread the word in as many ways as possible. Use blogging sites such as Tumblr, Blogger and WordPress.org to syndicate your blog posts and services, and try to create news content if you provide services to show your expertise in your field.

Step 3: Use Social Media Tools Such As 'If This Then That'

'If this then that' or ifttt.com automatically updates your social accounts. This is easy to establish and works by syndicating the information across a host of social sites automatically as soon as one site is updated. This, as you can imagine, saves a lot of time. Be cautions, however, and ensure social sites suited to the business, such as bookmarking sites for online retailers, appear just as you want them to be found. Automatic syndication has limitations and often links and pictures do not appear as you would like them to. Nonetheless, and especially for syndicating blog posts via an RSS feed, it is a very good time-saver for promoting your business via social media. Not all social media can be syndicated in this way, but the sites that ifttt.com syndicates to are well worth creating accounts on to promote your business. The more social media sites you post on, the better.

Step 4: Use #hashtags

Whenever you post your content, ensure you use accurate #hashtags. This will help users find your content when they search for it. So if I'm selling tyres on ebay, #tyres, #cartyres, #car, #tyres is good, and for sports news, #sportsnews, #football #cricket, and so on is good.

Step 5: Once It Starts

Once your content starts hitting the social media world, monitor your accounts for feedback. Concentrate on the sites you've identified as important to your business and respond to questions and comments. When responding, try to be helpful and non-abusive, even if the commentator is not pleasant. Professionalism goes along way.

Step 6: Participation

Twitter and Google+ show trending topics and these are popular subjects people are discussing. It is worth performing the odd Twitter search to see what people are talking about in relation to your business, and making a contribution to the discussion. This is a good way to make connections and hopefully achieve more success.

Step 7: Monitoring Success

Monitoring success has proven to be quite difficult for social media. Unlike SEO results, which can be measured on click-throughs and content engagement, it is not so simple on social sites for a variety of reasons. You may feel if you provide news that 10 comments on one story is a good sign of success, while 100 likes of a product video on YouTube with no obvious link to sales may not be immediately obvious as positive. It is worth remembering, however, that though people may not directly access your main site via social sites, it may prompt them to return later. Always keep in mind that social media is for sharing content, so any like, comment or retweet is positive.

Which Is The Right Structure For Your Business

Choosing the structure of your business and identifying the accompanying legal requirements is absolutely essential; as this will affect how you run your business, how you do business in the future and, perhaps most importantly, the tax you pay.

It doesn't matter what home-based business you are planning, it could be a nail salon, pet grooming service, language tutor, physiotherapist, landscape gardener, affiliate marketer or eBay seller. Before you take another step, you need to decide what kind of legal structure will be most suitable for your venture.

The 3 Most Common Types Of Business Structure

While there are a number of different types of business structure, there only three main types that you need to explore when operating a home-based business: Sole Trader, Partnership or Private Limited Company.* Below is a breakdown of each type of business structure, together with their advantages and disadvantages, what you have to do to set them up and finally what the costs are likely to be.

*There are others such as Public Limited Companies, Private Unlimited Companies and Right-to-Manage Companies, but there's no need to worry about them. If your business takes off and your empire expands, just get your lawyers to sort it out.

1. Sole Trader

Setting up as a sole trade is by far the simplest and most straightforward way of starting a business. You can start up at any time simply by registering your business and there is no fee! The good news is that, after tax, any profits go straight into your pocket. The bad news is that if your business fails you are personally liable for any debts, which means that your house and any other assets can be seized.

The Advantages:

Fast start-up with no registration fee

Minimal records and accounting

Greater flexibility as you can control when and where you work

Greater privacy as you don't have to answer to anyone else

Any profit after taxes is yours and yours alone

The Disadvantages:

You are personally liable for any debts

You are solely responsible for all the legal requirements and paperwork that come with submitting your yearly tax bill and paying your own National Insurance Contributions (NICs)

Premiums for insurances such as life, home and car are generally higher

How To Become A Sole Trader

All you need to do is register with HM Revenue & Customs (HMRC), which you can do online by going to HMRC.You will be asked some basic information about yourself and your business, HMRC will gladly set up tax records for you and you are ready to go! Once registered, you'll receive a self-assessment tax return that you have to complete every tax year (6th April to 5th April) and the kind people at HMRC will calculate how much you owe. NB: Even if you already fill in an annual tax return, you need to inform HMRC as soon as possible or you may be fined!

The Records You Have To Keep

General bookkeeping of expenditure and income of all business-related costs

If you are employing people you need to either contract them as a supplier and keep a note of costs or, if you employ them full-time, calculate their monthly Income Tax and NICs with Pay As You Earn (PAYE)

What It Will Cost You

Income tax on any profit

Class 2 National Insurance at the fixed rate

Class 4 National Insurance on any profits

PAYE if you are employing people

2. Partnership

If you don't want to go it alone, a business partnership is the next natural progression. In essence, a partnership is two or more self-employed people working together and sharing the workload and any resultant profits. While it's not a legal requirement to have a formal agreement in place, I strongly advise it! Like any relationship it all starts out with good intentions and a shared vision, but things go wrong, circumstances change and it can all too easily end up in tears. I once set up a partnership with two of my best friends and it all went swimmingly for nearly three years until the cracks started to appear. The result was a long drawn-out court battle to 'divorce' our partnership, resulting in two fewer names on my Christmas card list.

The Advantages:

Fast start-up with no registration fee

No formal agreement required (although recommended)

Minimal records and accounting

Someone to bounce ideas off and share the workload

Shared cost and risk

Any profit after taxes is shared between the partners

The Disadvantages:

With a simple partnership you are not only liable for the overall partnership's debts but also any debts incurred by other partners regardless of whether you agreed to the expenditure or not.

Profits are generally shared in equal proportions regardless of the actual working contribution made

You are jointly responsible for all the legal requirements and paperwork that come with submitting your yearly tax bill and paying your own National Insurance

Premiums for insurances such as life, home and car are generally higher.

How To Form A Partnership

Each partner must register individually with HM Revenue & Customs (HMRC) (even if any of the partners already fills in an annual tax return, you all must inform them as soon as possible or you may be fined!) Optional: a deed of partnership outlining how the business will be run and duties and responsibilities of each partner. You don't have to go to a lawyer to draw up a partnership, simply draw up and sign a mutually agreeable division of profits and, most importantly, what happens in the event of the partnership breaking down.

The Records You Have To Keep

One partner should be appointed the nominated officer, responsible for submitting the annual partnership tax return

General bookkeeping of expenditure and income of all business-related costs accrued by each partner

A partnership statement showing how profits (or losses) have been divided amongst the partners

In the majority of cases, each partner is responsible for paying their individual Income Tax or National Insurance Contributions based on the above

If you are employing people you need to either contract them as a supplier and keep a note of costs or if, you employ them full-time, calculate PAYE

What It Will Cost Each Partner

Income tax on any apportioned profit

Class 2 National Insurance at the fixed rate

Class 4 National Insurance on any apportioned profits

PAYE if the partnership is employing people

2b. Limited Liability Partnership

The main difference between an LLP and a standard partnership is that the business is liable for the business' debts and not the individual partners. This protects partners from personal bankruptcy and debts incurred by other partners, but offers exactly the same tax advantages as a normal partnership. All the other details for forming and running an LLP partnership are as above, except that accounts will most likely have to be audited and filed at Companies House.

3. Private Limited Liability Company

If you really want to protect yourself from any potential business failure, then it may be wise to choose a Private Limited Liability Company. The company is owned by its shareholders, yet it is an entirely separate legal entity and the structure of the company limits the shareholders' liability to the value of the shares issued. Which basically means that if the business goes bust, your personal assets can't be touched (unless you have been acting illegally... ). There is no minimum share capital requirement, but shares cannot be offered to the public and any profit is paid to shareholders in the form of a dividend.

The Advantages:

Keeps business and personal finances completely separate

If the business goes bankrupt, you don't

Generally regarded as a safer business trading partner than a sole trader or partnership

The Disadvantages:

Lots of paperwork and lots more rules

Before you can start trading you need a certificate of incorporation issued by the Registrar of Companies. While Companies House will automatically pass on your details HMRC, you also need to contact your local HMRC office to advise them of your company's existence.

The Records You Have To Keep

Your company's name, place of registration, registered number and registered office address must be displayed clearly on everything from your letterheads to invoices, websites to emails

Detailed bookkeeping of all business-related expenditure

All payments to salaried directors, employees and contracted services

Self-assessment of the level of corporation tax to be paid

What It Will Cost

Corporation tax on all profits

PAYE to collect monthly Income Tax and National Insurance Contributions from all employees and directors

Value Added Tax (VAT)

Finally, regardless of the business structure you choose, by law you must register for VAT if your business is going to turn over more than the current figure of £77,000 per year. If you genuinely don't believe that your business will exceed this figure then you can wait, but keep a careful eye on your monthly figures! HM Customs and Excise has more power than the police and can enter your home at any time, without a warrant, and seize anything they believe is related to their enquiry. I remember getting two hours' notice about a visit from an inappropriately named Mr Pratt from the VAT office, who proceeded to audit my returns with uncanny insight. As a result, by the time he had left my office, he or rather HMRC was several thousand pounds richer.

Why Start A Business From Home

The are many reasons to start a home-based business: to earn extra income, to supplement an existing salary, looking to new horizons after leaving a permanent job through redundancy or company downsizing or to fulfill a lifelong dream. Whatever your motives, thanks to the growth of the internet and the changes in the way people work, there has never been a better time to start your own business. You too can take advantage of the freedom offered by running a business from home, with its lower costs, reduced travel expenses and the flexibility to choose both the environment and hours that suit you.

Top Tip: You are in good company as Apple Computers, Lush Cosmetics, Facebook and even the Ford Motor company are just some of the household names that started as small home-based businesses! So, let's get started.

Step 1 - Make A Solid Commitment To Your New Venture

Ask yourself a question: how many of the success stories that you have read about were founded by people who simply sat back and dreamt about it? The hard truth is that if want to achieve something then you need to make a commitment - for as long as it takes to succeed. It's highly unlikely that you are going to make your fortune overnight, but if you persevere you will succeed. It doesn't matter if you can only commit 15 minutes a day, what is important is that you make those minutes count by always giving 100% effort.

Top Tip: Apparently Thomas Edison took 1,000 attempts before he invented the light bulb. He never said I failed 999 times; he said I spent 999 learning how not to invent a light bulb!

Step 2 - Have You Got What It Takes To Become Your Own Boss?

The answer is yes! It helps if you enjoy taking risks and the responsibility that goes with it. It also helps if you like hard work, making decisions and the challenges that come with owning your own venture. And finally, it's extremely useful to be well organised, have the ability to stick to deadlines and can work with figures. But the fact is if you don't have all of these qualities (and very few people do), then simply find someone who does. So, for example, if you aren't familiar with the requirements surrounding keeping records, hire someone!

Top Tip: Success is 5% inspiration and 95% perspiration.

Step 3 - What Business?

It could be that you want to start your own nail salon, a pet grooming service, be a language tutor, physiotherapist, landscape gardener, affiliate marketer, eBay seller, create self-help videos, set up an ecommerce website... the list is almost endless. The fact is that it doesn't really matter. Because the steps to success are the same for every business. What does differ is the way that you manage and respond to the needs of your particular business or sector. If you haven't yet decided upon a particular business, then there are literally thousands of ideas for business, covering every imaginable product and service. Whichever you choose, ask yourself the following questions:

Is there an identifiable gap in the market for your product or service?

Have you identified a product or service that you just can't seem to find?

Can you make a living from your hobby or something you are passionate about?

Can you offer a product or service better than someone else?

Top Tip: At this initial stage it's also worth exploring the common mistakes that start-ups make and how to avoid them.

Step 4 - Developing Your Business Idea

The next step is to dig a little deeper and define exactly what products and services you intend to sell and, equally importantly, who you are going to sell them to. Even if you already have a fixed idea of what you want to sell, you still need to focus more intensely. It's not enough to say you are going to sell pet products, you need to focus on what types of pets and as a consequence what products those pets would need. Marketing your product and conducting a little market research yourself can make all the difference between success and failure. You can discover the buying habits of your target market, geographical location and even who your competitors are. You can gather a great deal of this information, by simply spending some time searching the internet and gathering a list of businesses that are already trading in your chosen field. In addition you can scour the ads in local newspapers and shops to see who is out there or even conduct your own market research by asking people in the street if they would be interested in your services.

Top Tip: Your family and friends often say it's a great idea, even if they think otherwise, just so they don't hurt your feelings. So ask some independent people.

Step 5 - Do You Need A Business Plan?

The good news is that not every business requires a formal plan, especially if your home-based operation doesn't require any outside funding. Click here to learn more about Sources of Funding for Start-ups. The problem with a business plan is that not only will you have to learn how to put a plan together, they can also take weeks to prepare, time that may be better spent concentrating on getting your business off the ground. In fact, studies have shown that having a formal business plan for a small home-based venture really makes no difference to the ultimate success of the business. The time when you may need to produce a business plan is when you're looking for potential financial support. It's not just for banks, but also if you have to approach family, friends or business connections. The clearer your vision and the more organised you look, the more likely you are to get the support you desire.

Top Tip: Matt Coffin, founder of LowerMyBills.com, secured funding of $4 million from investors simply by using a 10-page PowerPoint presentation!

Step 6 - Initial Start-up Costs

OK so let's assume you have your idea, have spent some time examining the sector and its market potential, now is the time to make sure you have all the tools necessary to carry out the first phase of your venture. Below is a list of the most common items that a home-based business requires to starting functioning:

A computer and associated software

Internet access

Build a website

Fixed and/or mobile phone

Business cards

Access to sufficient stock - if you're selling products

A designated space, preferably in a quiet location

A desk

It's not a long list and can all be obtained without breaking the bank.

Step 7 - Additional Finance And Funding

It may be that you are starting up a business while you are still employed or have another source of income to cover you while the business finds its feet. If you don't require any outside funding then skip this section for the time being and move on to the next. But there are a number of reasons why you might require funding, above and beyond simply paying for office equipment, website development, advertising etc. One of the main requirements is sufficient funds to cover personal expenses while the business gets under way and your customers start paying you! As a rule of thumb, many business advisors suggest that you should have at least three months' money squirreled away, as it may be this long before you start seeing any returns. So where do you go for funding? Well to start with there are your own savings (if you don't have faith in your idea, who will?), then there are family members, friends and business associates. A little further afield there are additional sources of funding, such as bank loans, grants and equity funding from private investors. In these instances you are strongly advised to produce a business plan in order to persuade and secure the necessary funding.

Step 8 - Keeping Records

Not the most enjoyable aspect of running a business, but nevertheless essential. It is extremely important to keep an accurate record of your income and expenditure from day one - start as you mean to go on and introduce a proper system. Not only does it enable you to keep a close eye on how well your business is progressing, it's also a legal requirement!

A few tips:

Retain and file all your invoices and receipts that relate to your business (if in doubt, keep them anyway and ask your accountant if you can claim on them)

As you will be using part of your home for business, keep copies of the utility bills so that you can work out how much relates to your business

You need to be able to show what you have spent personally and what is spent on your business. So having a separate bank account will make life a lot easier

If you are employing staff, then you must keep records of their wages and tax and National Insurance you have deducted and paid to HM Revenue & Customs (HMRC)

Keeping good records will pay huge dividends in the long term as you will reduce your overall tax bill, make filling in tax returns much easier and help ensure you pay your tax bills on time and avoid any interest or penalties.

Step 9 - Promoting Your New Business

People used to say "build the best mousetrap in the world and people will beat a path to your door". But today there are so many businesses offering such a wide variety of products, how do you know which door to open? You have at your disposal a vast array of both online advertising services and more conventional offline advertising services, which when combined create a powerful weapon to attract and retain those all-important customers!

Key Factors That Make a Business Valuable

Intuitively the value of a business should reflect its attractiveness and the generation of profits or dividends for its owners.

The fundamental basis of valuation is that:

• The value of an asset today is the present value of the future cash flows that the asset is expected to provide its owners.

So the value of a business (the asset) is the present value of future cash flows (or "adjusted" net profits).

The typical methods used to assess the value of a business include:

• Earnings Multiple.

• Discounted Cash Flow Analysis.

• Asset or Book Value.

• Return on Invested Capital.

Ideally the valuation range should be arrived at using a number of these valuation methods, and the range should be as narrow as the assessment process allows.

The valuation should be performed with a typical buyer or range of buyers in mind. After all, it is the buyer that ultimately decides the value of your business. The value is never known until the buyer gives you a cheque and the funds have cleared in your account. Until this point the value can only ever be estimated within a certain range.

There are three major assessment criteria for assessing the business value. These are:

1. Is the business transferable?

2. What is the relevant cash flow that the buyer will get a benefit from?

3. How attractive is the business to other buyers?

Is the Business Transferable?

No one wants to buy a business that they can't operate. If it relies on the owner to bring in the customers, service them and manage the business, there is a big question as to whether it can be transferred to someone else.

Many professional services businesses exist because of the relationship with the owners. If these relationships cannot be transferred, there is little or no value in the business.

What is the Cash Flow?

Cash flow refers to the operating profit generated over and above any wages or salaries that should be paid to the owner. If the owner is working in the business, then they should receive a wage for their efforts. But the business should also generate a cash flow in addition to this wage.

The cash flow can be adjusted to remove the effects of one-off expenses or revenue or non-operating items.

The higher the cash flow, the higher the business valuation.

What influences the attractiveness of the business?

The attractiveness of a business is a combination of the profitability and the key factors that influence its financial performance. These key factors contribute towards the Earnings Multiple. If one business is more attractive than another similar business it will have a higher Earnings Multiple and hence a higher valuation.

Selection of the Earnings Multiple will depend on factors such as:

• Type of business, industry and location.

• Size and profitability.

• Attractiveness of business.

• Demand for this type of business.

• Perceived risk of the business.

• Efficiency of operations of the business.

Understanding the value of your business will allow you to develop plans to increase the value. An experienced professional can identify the key factors in your business that will increase its value and what actions you should take. Knowing the value of your business is the starting point to change it, and is not just for those buying or selling.

We have helped hundreds of business owners understand the value of their business and discover the actions that increase the value of the business.

Places Where You Can Still Get A Business Loan Today

Let's look at some of the recent news headlines regarding small business lending:

"Why Aren't Banks Lending to Small Business? Ask Bernanke." - The American.

"Are the Big Banks Keeping Their Commitment to Small Businesses?" - The Wall Street Journal.

"Banks keep lending standards tight for small firms." - CNNMoney.

So, the obvious conclusion for those starting new businesses or looking for ways to access capital to grow their existing business is that you or your small business can't get any financing - right.

Not so fast.

Banks may not be lending (or are only lending to large businesses who don't really need the capital) but banks are not and have not always been the best options for small businesses or startups.

Most banks won't touch a startup business - regardless of the economy and very few banks will fund growing businesses as most growing businesses have short-term cash flow issues (something that banks say is too risky and shy away from).

Therefore, banks really don't matter to your small business when it comes to lending.

So, what can smaller firms do to gain the money they need to get off the ground or expand?

The simple answer is to do what every other business has done since the start of history - find another way. So, put on your entrepreneurial hat and look into these 4 alternative sources of capital.

4 Places To Find Business Capital Today

1) Private Business Loans:

Did you know that there are other businesses out there (big and small) that all they do is lend to small businesses? It is their business (how they make money) and they are pretty good at it.

In fact, in order for these private lenders to stay in business and make profits (just like you want to do) they have to make business loans to companies just like yours - banks do not have to as they have clearly shown.

You are their targeted customers and they are there for you. Private lenders have more leeway as they don't have regulators watching their every move and as such have created more products (more business loan programs) to fit your individual needs. Plus, most decisions of these lenders are made right there on the spot - no waiting weeks or longer.

How do they do this? Well they don't look at your entire business or your overall cash flow or your overall profitability. They look to the next event in your operating cycle - where your business earns revenue.

It's all based on the conversion of assets. Your business lands a new customer, completes that job and waits to get paid. The lender knows that you will get paid and will provide your business needed working capital until that point. Then, you start the process all over again. Thus, these private lenders will lend against your outstanding accounts receivables - not based on your overall profits or the long-term cash flow prospects of your company.

Or, let's say that your business has orders coming in but doesn't have the capital to even get those jobs started. Well, these private lenders will fund 100% of what you need to start and complete those orders or jobs allowing you to satisfy your customers and earn that all coveted profit.

Now, clearly these seem like a great option for existing businesses. But, if you are a startup, you just have to work a little harder to either get yourself in that position (i.e. getting orders in hand) or use some of these other options (see below) to position your business to generate the needed accounts receivables or purchase orders required by these lenders.

2) Personal Loans:

Most business owners hate to use personal resources to get business capital. But, when all is said and done - money is just money after all. However, personal loans have been the catalyst for growing new businesses since the beginning of time.

For a business loan, banks want business cash flow, profitability and commercial collateral. Items that most new or small businesses don't have.

However, personal loans don't have such stringent requirements.

Home loan rates are at record lows opening up the possibility to tap into home equity for money to start or grow your business. Build your business and use the business to pay off the home equity loan. No different than taking a business loan, building your business and paying the loan off. But, with a home equity loan, you get a lower interest rate and longer term for a lower payment and more flexibility. Plus, these loans are so much easier to get approved.

Or, utilize your retirement funds. Roll over your 401(k) or IRA into your business. Not much difference than in investing in your business or investing your retirement funds into someone else's business. Plus, since this is not a loan - NO interest, no terms and the ability to pay it back when it is best for you and your business and not in the best interest of the bank or lender.

Lastly, use your personal income to make a business loan to your business. This means keeping your day job (or getting one) and running your business part-time until it is strong enough to support you and itself - all being funded from the money you make from your job.

3) Alternative Loans:

Since banks have not been lending to small businesses over the last four plus years, other lenders have been stepping up to fill some of the gap left behind.

Some alternative lenders are finding new ways or better ways to provide those old tried and true methods of business financing - like Business or Merchant Cash Advances. If your business is earning revenue from customers who pay via credit or debit cards, your merchant processor can advance cash against those future customer payments. As this is now becoming one of the leading ways to finance small businesses today, many of these lenders have innovated new ways to provide these loans - programs that can meet nearly any business in any stage of development.

Or, following those merchant cash advance lenders, other, new alternative loan programs have cropped up that, instead of just focusing on credit card and debit card payments from customers, they just simply look at the volume of cash that flows through your bank account. These so called bank statement loans are great for businesses that take all forms of customer payments from cash and checks to credit and debit cards.

The only real requirement with these types of alternative loans is that the business has to actually be conducting business and generating some revenue. But, the business does not have to be profitable or met many of the other rigorous requirements that banks and similar lenders require.

Additional alternative business loans resources to look into are micro credit loans that have programs for both startup business - up to $35,000 in loan amounts - and existing businesses - up to $50,000 in loan amounts. And, never forget about other resources that by-pass bank and traditional lenders all together like peer-to-peer social lending where other people, just like you, become your small business lender.

4) Friends and Family Loans:

Lastly, tap those that know you best. Most lenders or investors in small businesses don't necessary focus on the business itself but on the people who run it. If you can demonstrate a track record - that you can run a business and make money - then you stand a better chance of getting your loan approved.

But, if you don't have the track record and cannot convince a lender about your abilities, you may still be able to convince those that know you best - like friends and family. If you believe in your business and your friends and family believe in you - then you have the perfect match - everyone wins.

While personal loan resources are the number one way that most small businesses fund themselves, friends and family loans are a close second.

As stated, banks are not usually the best option for new or small business when seeking capital. And, as shown here, banks are not your only option either.

Business is about using the set of assets and resources that it currently has and employing them in such a way to get the biggest return from whatever opportunity that arises. Thus, if your resources are limited - you just have find new ways tackle those new opportunities with what you have at hand.

You will find that in marketing your business, you will face many challenges and obstacles in getting customers in your door. In managing your business, you will face many challenges and obstacles to ensure that your business is profitable and growing. And, in financing your business, you will find many challenges and obstacles in ensuring that your business has the money it needs to succeed.

To overcome all of these challenges and obstacles, you cannot always use the same old tried methods that worked for other people or businesses. You have to find your own way - and, in this market - financing your business is no different.

So, if you are sure that your business cannot get a business loan from a bank - then you are probably right and should not be in business anyways. But, if you are willing to turn over every stone or look under every rock - you are already on your way to success. Start here with these 4 methods to finance your small business and see where or how far they can take you.