Some interesting facts for Enterpreneurs, most of them for USA, but I bet the same is for all over the world……..

By Audra Bianca

 

Managing chaos means different things to different business owners. Why? That’s because business owners have problems on a different scale, such as problems with a small operation of 5 employees and problems with a large operation of 400 employees. The commonality for both types, big and small versions of small businesses, is that the owners must manage the workforce so chaos does not diminish productivity.

 

Small business owners may turn their attention to performing their administrative functions and to business strategy. If they are lucky, they can afford to hire one or more managers to supervise employees. Even with managers in place, small business owners need to ensure the working environment is productive and not chaotic.

 

If you are a small biz owner worried about managing chaos, even if it is productive chaos, try these tips to ensure your company employees can help achieve your business goals:  

 

1. Study the causes of chaos in your company. This step might require taking an employee survey or bringing in outside consultants to evaluate your workforce, organizational structure, and operations. If you know what is stopping employees from working together in a pleasant workplace environment, you can move to the next stage of planning.  

 

2. Use planning models such as the SWOT analysis or the priority matrix to select which real causes of workplace chaos your company will solve. Planning is a complex process requiring input from multiple people in the company. This planning may be part of strategic planning or it might be conducted as a special project. Using a model such as SWOT (identifying strengths, weaknesses, opportunities, and threats) in relation to workplace conditions ensures you and your staff will consider sources of chaos from multiple perspectives.  

 

3. Create an implementation plan. The goals identified through the planning process must be achieved through stages of implementation. Each stage should include a map of how managers will structure the workplace activities, performance measures, assignments, and other aspects of organization differently to create a less chaotic environment.

 

4. Communicate the plan to all employees. You need employee buy-in for your plan to work. Therefore, you might need an incentive plan to motivate workers. Also, show employees how each stage of implementation leads to achieving the objective of a better workplace. Hold employees accountable for their roles under a new plan. 

 

If you have a very small staff, you may conduct most of these steps yourself. Keep yourself organized and focused on the stages of studying the problem, planning solutions, implementing solutions using a plan, and communicating the plan to all employees. If you use this type of structured approach, you can slowly transform the workplace into a more pleasant environment and increase productivity.

 

 When you own a small business, there's no easier way to discuss how critical saving on overhead costs is to just tell you that if you do not manage the costs of your operating expenses effectively and properly, it can kill your business. Of all the expenses involved that are not directly related to the manufacturing of your products or from the process of delivering them, expanding overhead expenses are dangerous. Here are three critical aspects that you need to be aware of concerning operating expenses or overhead:

 

Even in small businesses, overhead expenses have the tendency to increase, usually slowly and oftentimes unnoticed. Then suddenly you are confronted with a serious situation – your overhead expenses have grown and are out of control

 

Swollen overhead costs are a threat to the competitiveness of your small business as well. By the same token, lower overhead costs can become one of the best competitive weapons in your arsenal.

 

Creeping costs can oftentimes be insidious. Those seemingly minor costs that get added here and there start to add up. Just remember that it is very easy to add additional overhead expenses, but eliminating them can be far more difficult.

 

Your office space is a prime example of a major overhead expense. The big mistake that most new business owners make is that they have more space or higher quality office space than what is actually necessary. I call this one “overkill”, but the only thing that really gets killed is your cash flow and your profits. Keeping overhead expenses in check is the most ideal reason for designing and using a home office.

 

Here is a list of the 7 most important action steps to deal with first in order to help you save money on overhead in your small business:

 

1) F ocus on cutting your energy costs ; this is one of the major areas that drain a business  bank account and they are continually rising. A terrific source of assistance in cutting energy costs is the government-backed program called Energy Star.

 

2) Control your inventory; carrying excess inventory or the wrong inventory hinders your turns on that merchandise and can ultimately cripple your operation. Inventory control software is available online and it is highly advisable that you invest in this.

 

3) Do you have a cost-effective insurance policy? another critical area is business insurance. You might want to consider re-evaluating the type of coverage that you have versus what you actually need.

 

4) Don't waste money by spending it on waste ; sounds redundant doesn't it? I'm referring to what it costs you monthly to have your trash removed. Try using smaller receptacles and having fewer pick-ups per month.

 

5) Spend less time on the phone ; phone costs can be lethal. A good suggestion here is to look into converting your landline over to VoIP (an internet-based phone service provider). This is much cheaper than the standard phone service.

 

6) Involve your employees ; believe it or not, you would be amazed at how adept your employees can be when it comes to identifying wasteful spending in your business. It is always advisable to enlist their assistance in your cost-cutting mission, just be sure that you can reward their valuable input if that is warranted.

7) Spend less for assets; if you require to buy assets for your small business try to search through search engines to identify second hands systems furnitures and machinery from liquidated  businesses. Buying such used systems can greatly help you reduce your expenses.

 

Here are 4 helpful suggestions for implementing the above actions in your business:

 

Avoid overstaffing your business. Establish staffing levels in order to meet minimum requirements, not what you define as needs. The critical issue here is that you don't want to compromise the quality of your customer service levels. Hiring temporary employees occasionally or biting the bullet and paying some overtime is far cheaper than having excessive payroll expenses.

 

Investigate the cost of delivering or shipping your products or services (if these expenses exist). Over-nighting product is one area where numerous small businesses spend money needlessly. I have always found that coordinating all your deliveries and shipments through one person or company is the most beneficial way to handle this aspect of your operation.

 

Sharpen up those purchasing skills. Developing good vendor relationships helps to eliminate needless expense. Ignoring these relationships oftentimes leads to unnecessary expenses. You should constantly evaluate every product or service that you purchase regardless of how large or small that expense is. This is a potentially huge source of savings for you.

 

Review all those monthly business dues, memberships, and subscriptions that you are currently paying for. Are these necessary to the life of the business or are they just for personal enjoyment. Learn to recognize the difference between the ones that are critical to the operation of your business, versus those that are a waste of money. Additionally, avoid any memberships or subscriptions that utilize an automatic renewal function. Granted, automatic renewal is a nice convenience, but they can add up and hinder your cash flow.

Franchise businesses have gained popularity over the years. Many business-minded individuals have seen greater potentials for success in franchising rather than starting their own businesses from scratch. This makes the concept of franchising even more powerful. The development of the franchise industry gives more franchisers an increasing opportunity to gain higher profits and revenues.

A franchise is an exact copy of a certain unique idea that has gained popularity and profitability through years of expertise in its particular niche. It’s actually replicating or even spreading the original successful formula of a certain established business to other unsaturated locations. Your success level in buying a franchise business lies in the manner of how you follow the original business proven formula.

The Basics of Franchising

The original business creator establishes a solid formula that will endlessly repeat the same successful results for different owners at different locations. Once this formula is carefully evaluated, it is then packaged and sold to potential franchisees. Once business professional purchases the magical formulated package, he then receives the full rights and responsibilities of a legal franchisee. He now proceeds to follow the entire formula of the purchased business package in a very careful manner to generate more successful results.

Franchising vs. Self Expanding

You might probably wonder why these great successful original business developers will bother selling a franchise, when in fact, they can really afford branching out to different locations or even spread globally. Yes, they could surely do that. Yet, what makes them even more successful is that they have learned to determine the time and energy required to establish potential branches globally without getting stressed out.

Franchising yields the possibility to gain more profits and fame while reducing stress as you introduce it to the global market to attract more potential franchisees to share your business goals for more success.

The Franchising Advantage

Starting a business requires a focused idea on niche selection. It even needs the correct process of implementing a business plan for long-term success. Setting up your own business from scratch requires an even more complex process that involves more of your time and efforts for greater results to happen.

The advantage of buying an established franchise business of your choice basically lies in the fact that this particular business package has been proven for years to generate more income or endless successful outcome. Some new business owners who have enough funds readily available to buy a franchise business package automatically do so, rather than starting from scratch.

Franchising is indeed a fair way to generate more income and successful benefits for both the franchiser and the franchisee. The original business developer or the franchiser earns his share by selling the profound formula for a successful business. The franchisee, in return, gains successful results in the form of profits and revenues by carefully following the unique formula associated with the purchased business package. Management training and product knowledge are even included in the franchise to let the franchisee run the franchise business successfully through the years.   
         
 

By Michael Rosenthal

There are so many issues to deal with when you start up your own business.  There are the initial basics like naming the business, hours that the business operates, choosing inventory of products and/or services, and then pricing them.  There are operational issues like writing a business plan, developing your marketing plan, advertising campaigns, and so on.  It just gets crazier and crazier with every phase, and then, just when you thought there was a light at the end of the tunnel, it turns out to be another train.  And that train is the LI., A., and T. line — Legal Issues, Accounting, and Taxes.

For the sake of the subject matter at hand, this content deals with the primary legal issue, namely the legal classification of your business.  There are so many choices, yet for the most part, only one category that you can choose.  It will require tons of due diligence, hours of research, and possibly costly legal counsel to play it safe.  In fact, I would highly recommend the legal counsel for safety reasons if for no other (only if you can afford it, of course).  There are five basic categories that businesses fall under:

1.     C Corporations
2.     Subchapter S Corporations (S Corporations)
3.     Limited Liability Companies (LLC’s)
4.    Partnerships
5.    Sole Proprietorships

Then there are three other types of businesses — Consumer’s Cooperative, Not-for-Profit (non-profit) corporations, and Trust Companies.  There are also 11 sub-categories to be aware of (actually 12, however one of them applies to companies of Norway), as if I hadn’t dumped enough potential brain frying information on you already.  Since these sub-categories really get detailed in nature, they may be covered in another article, should I decide to tackle that content.

C Corporations

A C Corporation is a United States business entity that is subject to federal taxes under the Internal Revenue Code, for lack of a simpler definition.  Most of the major companies fall into this category.  However some smaller companies are listed as C corporations as well.  The tax issue is the most significant difference between C and S corporations.  Another major difference is that there is no limitation on the number of domestic or foreign shareholders with a C corporation.

Nolo Press of Berkeley, CA is a company that publishes tons of do-it-yourself guides and software so that the average Joe (such as me) does not have to pay for an attorney’s services.  Wills and business incorporation issues are Nolo’s two primary money-makers, but there are others.  According to Nolo, there are seven steps involved in forming a C Corporation.

First, the name of your business must conform to your state’s corporation rules.  Second, if you are going to have a Board of Directors (and it may be required in some states), now’s the time to appoint them.  Third, file your “articles of incorporation.  Depending on what state your business is located in, this will run anywhere from $100 to $800 (or more).  Fourth, you will need to develop the operating rules for your corporation or “bylaws” as they are referred to.  Fifth, schedule and conduct your first board of directors meeting.  Sixth, if there are other owners, and if they are stockholders, it is time to issue their stock certificates.  Finally, go get business licenses and permits that are applicable to your business so you can open your doors (or website) and start earning some revenues.

Subchapter S Corporations

An S corporation does not pay federal income tax — its shareholders do.  However, it can elect to be taxed under Chapter 1, subchapter S (hence the corporation name) of the Internal Revenue Code.  If left as an S corporation, then the shareholders must report their income or losses on their individual income tax returns.

To be treated as an S corporation, there are five criteria that must be met in order to be classified as such.  First, the corporation must be either domestic or a limited liability company (LLC).  Second, the corporation may not have more than 75 shareholders.  Under this criterion, there is also a clause about spouses and family members being counted as individual shareholders, but this is only if the family member elects to be treated as such.  Third, your shareholders have to be real people.  Not only that, but they must be US citizens or residents.  In other words, a corporate shareholder or a partnership is excluded from the mix.  Fourth, you can only offer one class of stock in the company.  And finally, the profits and/or losses must be distributed to each shareholder based on their percent of interest in the company.

Here is a huge caution when it comes to incorporating as this type of corporation.  If, at any time, the corporation fails to meet any of these criteria, the status will revert back to a C corporation status and be subject to federal taxation.  Also, the issue only applies to federal taxation and does not have anything to do with FICA (Social Security) or federal Unemployment tax issues.  You still have to pay this one way or the other for your employees.

Limited Liability Companies (LLC’s)

This type of company offers more flexibility than the corporation (though it is similar to one in nature) in some instances, but it is referred to as “limited” in that its owners are offered limited liability where the debts of the entity are concerned.  Also, it is a more suitable form of incorporation for smaller companies with a limited number of owners and can be managed by one or multiple members.  It can be “member managed” or “manager managed.”  If it is member managed, it becomes a partnership structure.  If it is manager managed, it becomes a two-level management structure that can be easily converted into corporation status.

With an LLC, the members are the owners, although the percentages of ownership are not always in equal amounts.  The LLC can also lose its tax advantage without a partnership structure being in place.  In addition to the articles of organization, it is also common to have an “operating agreement” that is designed by the members.  This is basically a form of contract between the members of the LLC, and mandates such things as distribution of income, management, membership, and operation issues of the LLC.

Most of the states require that the name of the company contains one of three terminologies — Limited Liability Company (LLC or L.L.C.), Limited Company (LC or L.C.), or Ltd. Co.  Conversely, the company may not use terms such as Company (Co.) and Limited (Ltd.).  The Limited terminology is reserved for corporations located in Texas, with the sole exception of Nevada which allows the use of the term Limited or Ltd.

Partnerships

This type of business entity is exactly what the name implies in that it is owned and operated by two or more partners.  However there are four different degrees of partnerships as follows:

•    General Partnership
•    Limited Partnership
•    Limited Liability Partnership
•    Limited Liability Limited Partnership

I’ll try to explain the differences as clearly as I can and not run the risk of embarrassing myself in the process.

Basically, in a GP, there are two or more partners as previously mentioned and they all share in the company’s profits and losses.  The major difference with a Limited Partnership is that like the GP, they have general partners wherein the LP, there are one or more limited partners.  They are only liable for the firm’s debts based on the percentage of their investment out of the total.

The LLP is similar to a Corporation in that it contains some of the same elements.  The partners in a LLP are somewhat protected by a limited degree of liability in much the same way that shareholders in a corporation are.  But in this case, the partners all have equal management rights and can manage different levels of tax liability, unlike with a corporation.

The LLLP is new on the legal scene for all practical purposes.  Recognized under U.S. Commercial Law, the LLLP like the LLP has general and limited partners.  The difference is that the general partners manage the LLLP, while the limited partners manage the financial end of the business.  There is also a difference in the way the debts and liabilities are managed.  In the LP, the general partners are “jointly and severally” liable for the debts of the company.  The limited partner’s liability ends where the debts have equaled what they have contributed in the way of capital.  With all four, there are very minute but critically distinct differences.

Sole Proprietorship

In this type of business, unlike Corporations and Partnerships, the business and the owner are joined at the hip, so to speak.  They do not exist separately and neither do the debts, liabilities, and other obligations.  It is called a sole proprietorship in that there is only the single owner and no partners.  It also means that business is done in the name of that sole owner as well, hence the “dba” connotation and a trade name.

Since it is not considered a corporation, the SP does not pay any corporate taxes.  Instead, the owner files his business taxes on his own 1040 doing the long form with all the proper attachments.  Best of all, the SP does not have the worry of double taxation unlike the corporation.  The use of the dba enables the owner to conduct the business in a name other than their own, and also makes it easier to open a business account with most financial institutions.

Before closing, I wanted to cover one more area about the different types of businesses.  There have always been contentions between the General Corporation and the Subchapter S Corporation.  The advantages of the General Corporation are:

•     Any deductions for plans such as insurance, retirement, or travel are TAX FREE benefits.
•    The ownership is easily transferred.
•    The ownership has no effect on the current management.
•    Personal assets of the owners are protected from debts, liabilities and subsequent legal action should any arise.
•    Raising capital/funds through the sale of stock options is simplified for all parties concerned.
•   The life of the corporation extends beyond the death(s) of any of the owners.  In other words, it is perpetual.

The only three disadvantages that I could find were:

•     The corporation is more expensive to form than the partnership or sole proprietorship.
•     The corporation must abide by Federal and State regulations and rules.
•     There are additional legal formalities.

As mentioned earlier, the main difference between a General versus a Subchapter S Corporation is in the area of tax liability.  But there are five restrictions with the Subchapter S Corporation.  They are:

•     Every one of the stockholders must be a citizen of the United States.  This type of business entity is the only one listed in this content that carries that stipulation.
•     Only individuals can be classified as stockholders.
•     There cannot be more than 75 stockholders.
•     There can only be one class of stock offered or one type of option.
•     The corporation can only be domestic — not foreign.

In closing, my recommendations are to be very thorough and cautious as to the type of business entity that you eventually define yourselves as.  More often than not, business owners, partners, and others have suffered disappointments in their choices of partners, types of businesses they chose to be, etc.  Just remember that the decision could be a costly one if not thought through properly and with due diligence and common sense.