Budgeting Tips for small business start ups

In simple words budget is an estimation of all costs, expenditures and of course the profits you might incur in a specific time period, budgets are made normally on yearly or quarterly basis. Just like any other plan, it’s better to put your financial plans in writing. It’s easier to analyze and improve a documented plan which is in front of your eyes instead of analyzing bits and pieces in your mind. A budget can also help in pinpointing the culprits (biggest expenditures); you can make changes on sheet and see the impacts in overall profit/loss of your business. Big businesses have got their financial experts to do this planning, however not all small businesses need to hire such experts. You can do it yourself by keeping in mind the following guidelines.

First, no matter how tightfisted you are, do not play down the expenditures. In other words, employ as many of your cost saving skills in actual business dealings as you can, but don’t give too much weight to these skills while budgeting. For the reason that it will make your business look a lot more profitable then what it will turn out to be. Therefore, don’t be too positive when making estimates for expenditures and profits. The toughest part of budgeting is to make estimation for future sales, no matter how much research you’ve carried out, you can never predict sales with accuracy. If you’ve got some sales or marketing staff, you must discuss and ask them to make sales predictions based on their experience.

You can get lots of small business budgeting templates at internet for free, where you just need to put values and you’ll get the total amount for sales, revenues and profit/loss. These templates are designed by professionals, and they will prompt some expenditure that you’d have forgotten to include. Coming to the second part, which is review and correction. Don’t worry if you found the actual expenditures or profits are different from the budgeted amount (it was supposed to happen because a budget is after all an estimation). Another thing to remember is that your small business budget is not some commandment that must be followed and not be changed. You must keep an eye on the actual expenditures and keep reviewing your budget on regular basis, especially if the budget extends over one year period.

Source:
Wholesale

What’s an Exit Strategy and why you need to have one in place

Exit Strategy is one of the most important element of your preliminary business plans (even though you wish that the need of executing these plans will not arise anytime soon). Exit Strategy (also known as an Exit Plan) is the line of action that you may choose in case the going gets too tough to continue. In simple words, it’s the easiest way out of a ruinous situation while incurring the least possible loss. You’ve got to have an exit strategy as a backup plan right from the start instead of waiting for some unfortunate situation to surface, since in most cases the upheaval will be too sudden to tackle on the spot.

Even if there’s no catastrophic situation, you can possibly have other reasons for disengaging from the business that you’ve started (when wrapping off everything is not an option). These reasons can be, you looking to go for another more lucrative venture, or you may be thinking of giving up work for some time, you may also need an exit strategy when planning to sell a running business and sellers are interested in knowing if there’s any exit strategy in place, in case the profits start to go down, putting up an exit strategy will cast positive impression on prospective buyers or investors.

People often make this mistake of ignoring the exit strategy and starting without having any backup plans. Some entrepreneurs are too optimistic to think that anything can go wrong with their business; others are confident that they’ll handle the situation, then and there. Nothing’s wrong with the optimism or confidence but it’s always harder to evaluate and tackle the situation once you are “in” it, the haste or pressure situation can get on your mind, resulting in an erroneous decision. Besides, having an exit strategy will only boost your confidence.

Put these two kinds of entrepreneurs side by side, one starts off without an exit strategy while the other one is having a solid exit plan. Who do you think will crumble more easily and more quickly as soon as the proceeding goes wrong? Quite obviously, the one who’s having an exit plan will immediately get to the task, while the other one will have to do the thinking from the scratch. More often than not, this thinking will eat into the grace period and result in a much bigger loss as compared to the loss incurred by the other fellow.

Source:
Sports Wholesale Suppliers & Distributors

Different types of discounts you can offer to your customers

What are the two most attractive words, you can use in your advertisement to lure customers? Answer is Discount and Free, and although “Free” can pull much larger crowds as compared to “Discount”, you can’t really offer your products for free. Therefore, discount is a more practical, sensible and smart option to use. Different types of discounts and sales are very effective to curb the competition. It can also provide a good boost to your sales in the time of recession, when people are looking to save on every deal. However, offering discount on your products will obviously reduce the inflow of cash, therefore you need to chew over your discount strategy over and over, keeping in mind all costs and expenditures. In addition to this, there are some laws in developed countries that impose some restrictions on discounts; you need to confirm to these regulations as well.

Here are some of the discounts you can offer to your customers.

Quantity Based Discount:
You must have noticed a huge difference between wholesale and retail price. Whenever you buy something in large quantities you expect some discount from the seller. People are more than happy to offer low prices to a buyer who will purchase in large quantities because it allows the seller to save in many ways. But normally these quantities are too large for a normal consumer and only businesses can afford to purchase a product in these quantities, however you can offer some sort of off-price if the customer buy more than one units, for example 5% off if someone purchases 10 units or more.

Payment Based Discount:
If majority of your customers make purchase on credit then you can offer payment based discounts to these customers, tempting them to pay as soon as possible by offering a small discount on paying cash without delay. Prompt payments will save you all those collection costs and help you with daily expenditures of the business, as well.

Trade Discounts:
These are the discounts you have to offer to the middleman, be it the wholesaler, retailer or distributor, so that they can cover all costs of marketing that may be needed before the product reaches to the ultimate consumer. Trade discounts are in fact, the biggest of all.

Special Discount:
In some cases you can offer discounts to some specific group of customers to capture that special segment of the market. This niche group can be of students, house wives, doctors, your previous customers, small business owners or any other strategically targeted group.

Source:
Wholesale

Sorting out business failures, you haven't lost it all

Businesses may fail to prosper for many reasons, bad marketing, insufficient funding, poor customer service, non-supportive market conditions or incapable management. But this article is not about escaping business failures, because failures are a part of life and sometimes all the efforts and capital spent on planning/management can go in vain. If you are into reading success stories or biographies of successful businessmen, you'll note a common pattern in all of these memoirs i.e. they started, fell short, learn from their mistakes, tried again and carried on with the pattern until they accomplished their goals. They all seem to agree on this one point, that the secret to their success was their "never say die" approach.

No failure means No improvement:

It may sound quite idiotic, but the more failures you have in your early days the better, only as long as you are learning from these failures and constantly improving. Let the failures take care of your short comings and make sure you work on your weaklings once they have been revealed by some kind of failure. As a result, your chances of a slip-up decrease in later stages. What comes out of this string of "blunders and correction" is an experienced fellow who knows what's actually going to work and what's not.

You are not a failure just because your business fails:

Quite obvious, isn't it? Still many of us go down with their businesses and never recover. You need to realize that there are many other factors that will decide the fate of your business other than your personal skills, and many of these factors are not even in your control. Businesses should be treated like businesses, an investment or a gamble. Sure, you've got to work hard, give your 100 percent, apply all your experience and skills but please don't put your self-belief on stake.

Don't spend a lifetime in grieving over your failures:

In words of Marlon Brando, "That which does not kill us makes us stronger". Luckily business failures hardly kill anyone; they are not the end of the world even if you have lost it all. To tell the truth, financial deficit is the easiest to regain (you can't recapture youth, friends or time once you lose them). Getting into a mourning mode and staying like that forever will make the situation worse. Business failures (or any other failure) are just a stopover in the journey of your life; do not treat them as your final destinations.