Starting and Running a Business All-in-One For Dummies E-Book

Colin Barrow

• Herausgeber: John Wiley & Sons
• Kategorie: Ratgeber
• Sprache: Englisch

Seitenzahl: 1146

Veröffentlichungsjahr: 2011

Beschreibung

Written by a team of business and fi nance experts, Starting & Running a Business All-In-One For Dummies is a complete guide to every aspect of setting up and growing a successful business. Featuring straight-talking advice on everything from business planning and marketing, managing staff and dealing with legal issues, to bookkeeping and taking care of tax obligations, this book is your one-stop guide to turning your business plans into profit.

Leseprobe

Starting & Running a Business All-in-One For Dummies®

By Liz Barclay, Colin Barrow, Paul Barrow, Gregory Brooks, Ben Carter, Frank Catalano, Peter Economy, Lita Epstein, Alexander Hiam, Greg Holden, Tony Levene, Bob Nelson, Steven D. Peterson, Richard Pettinger, Bud E. Smith, Craig Smith, Paul Tiffany, and John A. Tracy

Edited by Dan Matthews

Starting & Running a Business All-in-One For Dummies®

Published by John Wiley & Sons, Ltd The Atrium Southern Gate Chichester West Sussex PO19 8SQ England

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Published by John Wiley & Sons, Ltd, Chichester, West Sussex

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ISBN: 978-0-470-51648-5

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About the Authors

Dan Matthews: Dan Matthews is Group Online Editor of Caspian Publishing, which produces magazines, Web sites, and events for an audience of UK entrepreneurs. Primarily working on realbusiness.co.uk, Dan writes about stellar business success stories as well as up-and-coming start-ups. He was previously Group Online Editor of Crimson Business Publishing, with responsibility for sites such as startups.co.uk and growingbusiness.co.uk. He has contributed to a range of business magazines, including being contributing editor of Real Business Magazine and Growing Business Magazine.

Liz Barclay is presenter of BBC Radio 4’s daily consumer and social affairs programme You and Yours. Before joining the BBC she worked for Citizens Advice specialising in Employment and Family Law and Money Advice. She writes on business issues for BBC Online and has written on business and personal finance for various national newspapers, magazines, and Web sites over the past 10 years. Liz has also produced and presented 60 small business and 10 occupational health and safety programmes for BBC2 and written several booklets on work and personal finance to accompany BBC television and radio programmes. She chairs and speaks at conferences and seminars on work and business, is a trained counsellor, and lives in London.

Colin Barrow is Head of the Enterprise Group at Cranfield School of Management, where he teaches entrepreneurship on the MBA and other programmes. He is also a visiting professor at business schools in the US, Asia, France, and Austria. His books on entrepreneurship and small business have been translated into fifteen languages including Russian and Chinese. He worked with Microsoft to incorporate the business planning model used in his teaching programmes into the software programme, Microsoft Business Planner, now bundled with Office. He is a regular contributor to newspapers, periodicals, and academic journals such as the Financial Times, The Guardian, Management Today, and the International Small Business Journal. Thousands of students have passed through Colin’s start-up and business growth programmes, raising millions in new capital and going on to run successful and thriving enterprises. He is a non-executive director of two venture capital funds, on the board of several small businesses, and serves on a number of Government Task Forces.

Paul Barrow trained and qualified as a Chartered Accountant with Deloitte & Touche before obtaining his MBA at Bradford University. As a senior consultant with Ernst & Young he was responsible for managing and delivering quality consulting assignments. During the mid-1980s, he was Investment Review Director for a UK venture capital business. In 1998, as Group Finance Director of Adval Group plc, he was part of the team which took their software company on to the Alternative Investment Market. Adval specialises in providing multimedia training – both bespoke and generic. Paul has also been a director of several owner-managed businesses, and has started up and sold other businesses. He currently works with businesses as diverse as software, turkey farming, and food retailing. Paul is a Visiting Fellow at Cranfield University where he teaches on the Business Growth Programme. This programme is designed specifically for owner managers who want to grow and improve their businesses. He also teaches at Warwick University and Oxford Brookes on similar programmes. Paul has written several other business books: The Business Plan Workbook and Raising Finance (both Kogan Page/Sunday Times); The Best Laid Business Plans and The Bottom Line (both Virgin Books). All these books are aimed at owner managers trying to grow and improve their businesses.

Greg Brooks is a freelance journalist who has written for a number of broadcasters, newspapers, and magazines including Channel 4, The Guardian, Marketing, New Media Age, and Marketing Direct. He has also carried out corporate ghostwriting and consultancy duties for a number of blue-chip clients around the globe. As part of his role as an industry commentator, he has spoken to organisations such as the BBC about how to communicate with consumers and journalists using interactive channels.

Ben Carter runs his own digital agency helping famous and not so famous brands launch marketing initiatives to capitalise on the changing media landscape and ever-changing consumer behaviour. Current clients of Ben Carter & Associates include npower and AOL, and the company has also provided consultancy services for several major UK-based blue-chip companies. Before setting up BCA, Ben worked as a business journalist for eight years, covering the UK’s media and marketing sectors and most recently was News Editor of Marketing magazine. He has also freelanced for a number of national newspapers including The Times and The Guardian and is used regularly as a commentator on the booming digital economy by different media, including the BBC, The Independent, and CNN.

Frank Catalano is a veteran marketing consultant and analyst. He’s the principal of Catalano Consulting, a strategic marketing firm advising Internet and technology companies. His consulting assignments include stints as Managing Director for PC Data’s Internet Monitoring Division, VP Marketing for McGraw-Hill Home Interactive, VP Marketing for iCopyright, and VP Marketing for Apex Computer. He also was a marketing manager for Egghead Software and for the Apple Programmers and Developers Association. When not consulting, Frank provides tech industry analysis and commentary for KCPQ-TV Fox Seattle and is the author of the long-running Byte Me columns for Seattle Weekly and others. His essays and short fiction about technology have appeared in a wide variety of print and broadcast media, including ClickZ, Omni, Inside Multimedia, and Analog.

Peter Economy is associate editor of Leader to Leader, the award-winning magazine of the Peter F. Drucker Foundation for Nonprofit Leadership, and author of numerous books. Peter combines his writing expertise with more than 15 years of management experience to provide his readers with solid, hands-on information and advice. He received his bachelor’s degree (with majors in economics and human biology) from Stanford University and his MBA at the Edinburgh Business School. Visit Peter at his Web site: www.petereconomy.com.

Lita Epstein, who earned her MBA from Emory University’s Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills. While getting her MBS, Lita worked as a teaching assistant for the financial accounting department and ran the accounting lab. After completing her MBA, she managed finances for a small nonprofit organization and for the facilities management section of a large medical clinic. She designs and teaches online courses on topics such as investing for retirement, getting ready for tax time, and finance and investing for women. She’s written more than ten books, including Streetwise Retirement Planning and Trading For Dummies. Lita was the content director for a financial services Web site, MostChoice.com, and managed the Web site Investing for Women. As a Congressional press secretary, Lita gained firsthand knowledge about how to work within and around the Federal bureaucracy, which gives her great insight into how government programmes work. In the past, Lita has been a daily newspaper reporter, magazine editor, and fundraiser for the international activities of former US President Jimmy Carter through The Carter Center.

Alex Hiam is a consultant, corporate trainer, and public speaker with 20 years of experience in marketing, sales, and corporate communications. He is the director of Insights, which includes a division called Insights for Marketing that offers a wide range of services for supporting and training in sales, customer service, planning, and management. His firm is also active in developing the next generation of leaders in the workplace through its Insights for Training & Development. Alex has an MBA in marketing and strategic planning from the Haas School at U.C. Berkeley and an undergraduate degree from Harvard. He has worked as marketing manager for both smaller high-tech firms and a Fortune 100 company, and did a stint as a professor of marketing at the business school at U. Mass. Amherst. Alex is the co-author of the best-seller, The Portable MBA in Marketing (Wiley) as well as The Vest-Pocket CEO and numerous other books and training programs. He has consulted to a wide range of companies and not-for-profit and government agencies, from General Motors and Volvo to HeathEast and the U.S. Army (a fuller list of clients is posted at www.insightsformarketing.com). Alex is also the author of a companion volume to this book, the Marketing Kit For Dummies (Wiley), which includes more detailed coverage of many of the hands-on topics involved in creating great advertising, direct mail letters, Web sites, publicity campaigns, and marketing plans. On the CD that comes with the Marketing Kit For Dummies, you’ll find forms, checklists, and templates that may be of use to you. Also, Alex maintains an extensive Web site of resources that he organised to support each of the chapters in the book.

Greg Holden started a small business called Stylus Media, which is a group of editorial, design, and computer professionals who produce both print and electronic publications. The company gets its name from a recording stylus that reads the traces left on a disk by voices or instruments and translates those signals into electronic data that can be amplified and enjoyed by many. He has been self-employed for the past ten years. He is an avid user of eBay, both as a buyer and seller, and he recently started his own blog. One of the ways Greg enjoys communicating is through explaining technical subjects in nontechnical language. The first edition of Starting an Online Business For Dummies was the ninth of his more than 30 computer books. He also authored eBay PowerUser’s Bible for Wiley Publishing. Over the years, Greg has been a contributing editor of Computer Currents magazine, where he writes a monthly column. He also contributes to PC World and the University of Illinois at Chicago alumnimagazine. Other projects have included preparing documentation for an electronics catalog company in Chicago and creating online courses on Windows 2000 and Microsoft Word 2000. Greg balances his technical expertise and his entrepreneurial experience with his love of literature. He received an MA in English from the University of Illinois at Chicago and also writes general interest books, short stories, and poetry. Among his editing assignments is the monthly newsletter for his daughters’ grade school. After graduating from college, Greg became a reporter for his hometown newspaper. Working at the publications office at the University of Chicago was his next job, and it was there that he started to use computers. He discovered, as the technology became available, that he loved desktop publishing (with the Macintosh and LaserWriter) and, later on, the World Wide Web. Greg loves to travel, but since his two daughters were born, he hasn’t been able to get around much. He was able to translate his experiences into a book called Karma Kids: Answering Everyday Parenting Questions with Buddhist Wisdom. However, through the Web, he enjoys traveling vicariously and meeting people online. He lives with his family in an old house in Chicago that he has been rehabbing for – well, for many years now. He is a collector of objects such as pens, cameras, radios, and hats. He is always looking for things to take apart so that he can see how they work and fix them up. Many of the same skills prove useful in creating and maintaining Web pages. He is an active member of Jewel Heart, a Tibetan Buddhist meditation and study group based in Ann Arbor, Michigan.

Tony Levene is a member of The Guardian Jobs & Money team, writing on issues including investment and consumer rights as well as on taxation. He has been a financial journalist for nearly thirty years after a brief foray into teaching French to school children. Over his journalistic career, Tony has worked for newspapers including The Sunday Times, Sunday Express, The Sun, Daily Star, Sunday Mirror, and Daily Express. He has written eight previous books on money matters including Investing For Dummies. Tony lives in London with his wife Claudia, ‘virtually grown up’ children Zoe and Oliver, and cats Plato, Pandora, and Pascal.

Bob Nelson, PhD, is founder and president of Nelson Motivation, Inc., a management training and products firm headquartered in San Diego, California. As a practising manager, researcher, and best-selling author, Bob is an internationally recognised expert in the areas of employee motivation, recognition and rewards, productivity and performance improvement, and leadership. Bob has published 20 books and sold more than 2.5 million books on management, which have been translated into some 20 languages. He earned his BA in communications from Macalester College, his MBA in organisational behavior from UC Berkeley, and his PhD in management from the Peter F. Drucker Graduate Management Center of the Claremont Graduate University. Visit his Web site at www.nelson-motivation.com or contact Bob directly at [email protected].

Steven Peterson is a senior partner and founder of Home Planet Technologies, a management training company specializing in hands-on software tools designed to enhance business strategy, business planning, and general management skills. He is the creator and designer of The Protean Strategist, a state of the art computer-based business simulation. The simulation creates a dynamic business environment where participants run companies and compete against each other in a fast-changing marketplace. Each management team in the simulation is responsible for developing its own strategy, business plan, and program to make the plan work. Steven has used The Protean Strategist to add excitement, hands-on experience, teamwork, and a competitive challenge to corporate training programs around the world. He has worked with both large and small companies on products and services in industries ranging from telecommunications to financial services and from high technology to consumer goods and industrial equipment. He can be reached by e-mail at [email protected]. When he’s not planning his own business, Steven is planning to remodel his 80-year old house or to redesign the garden. And he confesses that of the three, the garden proves to be the most difficult. Steven holds advanced degrees in mathematics and physics, receiving his doctorate from Cornell University. He teaches part-time at the Haas School of Business, University of California at Berkeley, and lives in the Bay Area with his long-time companion, Peter, and their long-lived canine, Jake.

Richard Pettinger (BA, MBA, DipMktg) has taught at University College London since 1989, where he is senior lecturer in management. He teaches on the foundation courses, organisational change, and construction marketing courses. He has also taught strategic and operations management; the management of change; human resource management; and leadership to a wide range of undergraduate, postgraduate, professional, and international students. Richard is also enhancing and developing Management Studies Centre activities and courses, including the directorship of the new Information Management for Business course. Since 2005, Richard has been a visiting professor at the Jagiellonian Business School, Krakow, teaching strategic management and developing a common UCL/Jagiellonian syllabus in strategic management and organisational change. Richard is the author of over thirty business and management books and textbooks, and also writes journal, conference, and study papers.

Bud Smith’s experience is split between the technical and marketing sides of the computer and Internet industries. Bud was a short-order cook before starting in the computer industry at age 21. He was a data entry supervisor, programmer, and technical writer before working as a competitive analyst and QuickTime marketing manager at Apple Computer. He has been a full-time writer and has joined Frank Catalano in several consulting projects. Bud is currently Director of Marketing at AllPublish, a venture-funded Silicon Valley startup. Bud’s writing experience is all on the nonfiction side and includes computer and medical articles as well as a dozen computer books.

Craig Smith is the editor of Marketing, the UK’s highest circulation weekly magazine, and PPA Weekly Business Magazine of the Year, serving the marketing and advertising industries. He has worked as a business journalist for 18 years and is a regular commentator on marketing issues to the national press and broadcast media. Craig works closely with industry trade bodies, the Association of Publishing Agencies, and Business in the Community to promote best practice in the areas of customer magazines and cause related marketing.

Paul Tiffany is the managing director of Paul Tiffany & Associates, a Santa Rosa, California-based firm that has offered management training and consulting services to organizations throughout the world for the past fifteen years. In addition, he has taught business planning courses at some of the top business schools in the USA, including Stanford, Wharton, and The Haas School of Business at the University of California, Berkeley, where he currently serves as adjunct professor. He holds an MBA from Harvard University and a PhD from Berkeley. He can be reached by e-mail at [email protected].

John A. Tracy is Professor of Accounting, Emeritus, in the College of Business and Administration at the University of Colorado in Boulder. Before his 35-year tenure at Boulder he was on the business faculty for 4 years at the University of California in Berkeley. He has served as staff accountant at Ernst & Young and is the author of several books on accounting, including The Fast Forward MBA in Finance and How To Read a Financial Report. Dr Tracy received his MBA and PhD degrees from the University of Wisconsin and is a CPA in Colorado.

Publisher’s Acknowledgements

We’re proud of this book; please send us your comments through our Dummies online registration form located at www.dummies.com/register/.

Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and Media Development

Project Editor: Daniel Mersey

Content Editor: Steve Edwards

Commissioning Editor: Samantha Clapp

Executive Editor: Jason Dunne

Executive Project Editor: Martin Tribe

Technical Reviewer: Faith Glasgow

Cover Photos: ©Getty Images/Adam Gault

Cartoons: Ed McLachlan

Composition Services

Project Coordinator: Jennifer Theriot

Layout and Graphics: Claudia Bell, Carl Byers, Stephanie D. Jumper, Alicia B. South

Proofreaders: Laura Albert, John Greenough

Indexer: Valerie Haynes Perry

Publishing and Editorial for Consumer Dummies

Diane Graves Steele, Vice President and Publisher, Consumer Dummies

Joyce Pepple, Acquisitions Director, Consumer Dummies

Kristin A. Cocks, Product Development Director, Consumer Dummies

Michael Spring, Vice President and Publisher, Travel

Kelly Regan, Editorial Director, Travel

Publishing for Technology Dummies

Andy Cummings, Vice President and Publisher, Dummies Technology/General User

Composition Services

Gerry Fahey, Vice President of Production Services

Debbie Stailey, Director of Composition Service

Contents

Title

Introduction

About This Book

Conventions Used in This Book

Foolish Assumptions

How This Book Is Organised

Icons Used in This Book

Where to Go from Here

Book I : Where to Start?

Chapter 1: Preparing for Business

Getting in Shape to Start Up

Checking Viability

Going for Growth

Chapter 2: Being Your Own Boss

Going into Business

Taking on Employees

Minding Money Matters

Safeguarding Your Business Assets

Closing Down Your Business

Getting Help

Chapter 3: Can You Do the Business?

Deciding What You Want From a Business

Assessing Yourself

Chapter 4: Starting Your Business Plan

Getting the Most Out of Your Plan

Naming Your Planners

Putting Your Plan on Paper

Chapter 5: Establishing Your Starting Position

Situation Analysis

Identifying Strengths and Weaknesses

Analysing Your Situation in 3-D

Chapter 6: Researching Your Customers, Competitors, and Industry

Why Research Matters – And What to Focus On

Planning Your Research

Carrying Out Primary Research

A Dozen Ideas for Low-Cost Research

Finding Free Data

Book II : Money in Mind

Chapter 1: Finding the Money

Assessing How Much Money You Need

Reviewing Your Financing Options

Determining the Best Source of Finance for You

Going for Debt

Sharing Out the Spoils

Finding Free Money

Chapter 2: Figuring Out Financials

Understanding a Profit and Loss Account

Interpreting the Balance Sheet

Growing Up

Examining the Cash-flow Statement

Evaluating Financial Ratios

Chapter 3: Cash Flows and the Cash Flow Statement

The Three Types of Cash Flow

Setting the Stage: Changes in Balance Sheet Accounts

Getting at the Cash Increase from Profit

Presenting the Cash Flow Statement

Sailing through the Rest of the Cash Flow Statement

Free Cash Flow: What on Earth Does That Mean?

Scrutinising the Cash Flow Statement

Chapter 4: Forecasting and Budgeting

Constructing a Financial Forecast

Exploring Alternatives

Making a Budget

Book III : Getting the Staff

Chapter 1: Staying on the Right Side of the Law

Cutting through the Red Tape

Working Out What the Law Expects from You

Going the Extra Distance

Deciding Who Has Rights

Deciding What to Put in the Contract

Drawing Up Other Employment Policies

Managing Without an HR Department

Getting Help and Advice

Chapter 2: Finding Person Friday – Advertising and Interviewing

Filling the Gap

Getting It Right from the Start

Considering Diversity

Sorting the Wheat from the Chaff – CVs and Application Forms

Handling the Practicalities of Interviews

Planning the Interviews

Checking Up on Your Chosen One

Offering the Job to Your Dream Candidate

Chapter 3: Employing People Successfully

Motivating and Rewarding Employees

Compensating Your Employees

Staying on the Right Side of the Law

Chapter 4: Disciplining and Dismissing Staff

Resolving Disputes

Dismissing of Staff – the Right Way

Dismissing Staff – the Wrong Way

Tying up the Loose Ends

Facing Tribunals – Something to Be Avoided

Chapter 5: Paper Money, Money Paper – Payslips and Deductions

Setting Everything Out on the Payslip

Carrying Out Your Duties as a Tax Collector

Counting Up Any Other Deductions

Overpayments

Money to Make Up for Shortfalls

Chapter 6: Inspiring Employees to Better Performance

The Greatest Management Principle in the World

Discovering What Employees Want

Deciding What to Reward

Starting with the Positive

Making a Big Deal about Something Little

Money and Motivation

Chapter 7: Coaching and Development

Playing a Coach’s Role

Coaching: A Rough Guide

Coaching Metaphors for Success in Business

Confronting Turning Points

Tapping Into the Coach’s Expertise

Chapter 8: Tackling Performance Appraisals

Appraising Performance

Spelling Out the Performance Appraisal Process

Avoiding Common Traps

Sorting Out Why Appraisals Go Bad

Preparing for the No-Surprises Appraisal

Book IV : How Not to Cook the Books

Chapter 1: Working for Yourself Can Be Less Taxing

Defining the Terms

Formalising Your Status

Keeping Accounts to Keep Everyone Happy

Scanning National Insurance

Hiring Helpers

Giving Up Work

Chapter 2: Filling In and Filing Your Self Assessment Form

Managing the Mechanics of the Form

Filling In the Return

Counting the Ways of Doing the Sums

Filing Your Form

Paying on Account

Chapter 3: Getting Down to Bookkeeping Basics

Bookkeeping: The Record Keeping of the Business World

Wading through Basic Bookkeeping Lingo

Pedalling through the Accounting Cycle

Understanding Accounting Methods

Seeing Double with Double-Entry Bookkeeping

Differentiating Debits and Credits

Chapter 4: Controlling Your Books, Your Records, and Your Money

Putting Controls on Your Business’s Cash

Keeping the Right Paperwork

Protecting Your Business Against Internal Fraud

Insuring Your Cash through Employee Bonding

Chapter 5: Producing a Profit and Loss Statement

Lining Up the Profit and Loss Statement

Formatting the Profit and Loss Statement

Preparing the Profit and Loss Statement

Deciphering Gross Profit

Monitoring Expenses

Using the Profit and Loss Statement to Make Business Decisions

Testing Profits

Branching Out with Profit and Loss Statement Data

Chapter 6: Developing a Balance Sheet

Breaking Down the Balance Sheet

Gathering Balance Sheet Ingredients

Pulling Together the Final Balance Sheet

Putting Your Balance Sheet to Work

Generating Balance Sheets Electronically

Book V : Bigging Up Your Business

Chapter 1: Taking a Closer Look at Customers

Checking Out Who Your Customers Are

Discovering Why Your Customers Buy

Finding Out How Your Customers Make Choices

Remembering the Big Picture

Dealing with Business Customers

Chapter 2: Marketing Your Wares

Making Up the Marketing Mix

Defining Your Product Parameters

Using Advertising to Tell Your Story

Getting in the News

Selling and Salesmanship

Pricing for Profit

Pondering Place and Distribution

Looking at Legal Issues in Marketing

Chapter 3: Writing a Marketing Plan

Identifying Some Planning Rules and Tips

Writing a Powerful Executive Summary

Clarifying and Quantifying Your Objectives

Preparing a Situation Analysis

Explaining Your Marketing Strategy

Summarising Your Marketing Mix

Exploring Your Marketing Components

Managing Your Marketing

Projecting Expenses and Revenues

Creating Your Controls

Chapter 4: Brochures, Press Ads, and Print

Designing Printed Marketing Materials

Producing Brochures, Fliers, and More

Placing a Print Ad

Chapter 5: Signs, Posters, and More

The Essential Sign

Discovering Flags, Banners, and Awnings

Posters: Why Size Matters

Messages on the Move: Transport Advertising

Ambient Media – Your Ad in Unusual Places

Small but Effective – From T-shirts to Shopping Bags

A Few Commonsense Rules for Outdoor Advertising

Chapter 6: Public Relations and Word of Mouth

Using Publicity to Your Advantage

Making the Most of Word of Mouth

Chapter 7: Planning Your Business Web Site

Guiding Principles for Business Sites

Specifying Your Site Content

Creating a Look and Feel for Your Site

Having Your Site Done for You

Chapter 8: Choosing and Equipping Your New E-Business

Starting Off on the Right Foot

Mapping Out Your Online Business

Flavours of Online Businesses You Can Taste Test

Marketing One-to-One with Your Customers

Software Solutions for Online Business

Chapter 9: E-Marketing

Reaching Out with a Web Site

Creating a Compelling Web Site

Getting Your Site Noticed

Tracking Your Site’s Traffic

Designing and Placing a Banner Ad

Using E-Mail for Marketing

Getting Mobile with Your Marketing

Knowing How Much to Budget for the Web

One Final – But Important! – Thought

Book VI : Getting Bigger

Chapter 1: Thinking Strategically

Making Strategy Make a Difference

Applying Off-the-Shelf Strategies

Checking Out Strategic Alternatives

Coming Up with Your Own Strategy

Chapter 2: Managing More Than One Product

Facing the Product Life Cycle

Finding Ways to Grow

Managing Your Product Portfolio

Chapter 3: Improving Performance

Checking Your Internal Systems

Retaining Customers

Improving Productivity

Increasing Sales

Chapter 4: Franchising for Growth

Finding the right franchise

Franchising your Business Idea

Chapter 5: TV and Radio Ads (or Your Own Show!)

Creating Ads for Radio

Cheaper Ways to Use the Power of Video

Designing Ads for TV

Chapter 6: Becoming a Great Manager

Building a Team

Coaching and Training

Appraising Performance

Developing a Leadership Style

Measuring Morale

: Further Reading

Introduction

Welcome to Starting & Running A Business All-in-One For Dummies, your launch pad to understanding the fundamentals of setting up, establishing, running, and growing a successful small business.

With help from this book, you can transform a simple idea into your very own business empire.

About This Book

This book is the ultimate business advisor providing expert guidance for businesses at every stage of the start-up process.

Starting & Running A Business All-in-One For Dummies draws on advice from several other For Dummies books, which you may wish to check out for more in-depth coverage of certain topics (all published by Wiley):

Bookkeeping For Dummies (Paul Barrow and Lita Epstein)

Business Plans For Dummies (Paul Tiffany and Steven D. Peterson, adapted by Colin Barrow)

Digital Marketing For Dummies (Ben Carter, Gregory Brooks, Frank Catalano, Bud E. Smith)

Managing For Dummies (Richard Pettinger, Bob Nelson, and Peter Economy)

Marketing For Dummies (Craig Smith and Alexander Hiam)

Paying Less Tax 2006/2007 For Dummies (Tony Levene)

Small Business Employment Law For Dummies (Liz Barclay)

Starting A Business For Dummies (Colin Barrow)

Starting and Running an Online Business For Dummies (Dan Matthews and Greg Holden)

UK Law and Your Rights For Dummies (Liz Barclay)

Understanding Business Accounting For Dummies (John A. Tracy, adapted by Colin Barrow)

Conventions Used in This Book

To make your reading experience easier and to alert you to key words or points, we use certain conventions in this book:

Italics introduces new terms, and explains what they mean.

Bold text is used to show the action part of bulleted and numbered lists.

Monofont is used to highlight Web addresses, showing you exactly what to type into your computer.

Foolish Assumptions

This book brings together the essential elements of knowledge that are essential for understanding the world of small business. As a consequence, to keep the book down to a reasonable number of pages, we’ve made a few assumptions about you (we hope you don’t mind!). Maybe you’re:

A entrepreneur looking for a start-up bible

A small business owner-manager seeking a comprehensive reference guide

An aspiring business owner

How This Book Is Organised

We’ve divided Starting & Running A Business All-in-One For Dummies into six separate books. This section explains what you’ll find out about in each one of these books. Each book is broken into chapters tackling key aspects of that part of the business world.

Book I: Where to Start?

This book is the one to turn to first if you’re thinking about starting up a new business. It runs through all of your main considerations during the initial planning phase, and offers all sorts of advice and information to get you off to a flying start.

Book II: Money in Mind

You might not be running your business to get rich (on the other hand, you actually might be running your business for exactly that reason!), but without mastering the basis of finance, you won’t stay in business for long. This book walks you through the basic money matters you’ll need to know and stay on top of.

Book III: Getting the Staff

Unless you’re intending to run your business all by yourself, you need to master the essentials of recruiting and retaining staff, and employing them safely and legally. This book tackles the ‘people management’ section of business, regardless of whether you employ one or 100 members of staff.

Book IV: How Not to Cook the Books

Tax, financial records, profit and loss, and balance sheets. Unless your new or growing business is a firm of accountants, you need to know the facts and figures outlined in this book. And even if you are an accountant, this book tackles the business side of figures.

Book V: Bigging Up Your Business

One of the keys to successful business is bringing in customers. This book looks at the many and varied ways of doing just this, from humble beginnings for a new start-up to grander ideas for an expanding venture.

Book VI: Getting Bigger

If you’ve already made a success of your business – or if you’ve followed the advice in the other books to their most profitable conclusion – this is the book you need to read! Showing you how to expand your business into an even greater one, this book considers factors as diverse as being a great manager to undertaking a TV advertising campaign.

Icons Used in This Book

When you flick through this book, you’ll notice some snazzy little icons in the margin. These pick out key aspects of starting and running a business, and present you with important nuggets of information:

Want to get ahead in business? Check out the text highlighted by this icon to pick up some sage advice.

They say elephants never forget, and nor should good business owners. This icon focuses on key information you should never be without.

Running a business isn’t without it’s dangers – be they financial or legal – and the text beside this icon points out common pitfalls to avoid like the plague.

Every once in a while, we all like to get a bit carried away. And that’s where this icon comes in – sometimes we like to give you information that is interesting but not absolutely essential to starting or growing your own business. If you see this icon next to a paragraph, you have our permission to skip by if it’s not of immediate interest to you – doing so won’t harm your chances in business.

Where to Go from Here

Starting & Running a Business All-in-One For Dummies can help you succeed no matter what kind of business expertise you’re looking for. If you have a great and proven business idea, you may want to plug straight into finding out how to raise finance (head over to Book II). If you need more than just yourself to get your great business idea off the ground, then you may want to find out how to find great employees (check out Book III). If you’re planning to take care of your own bookkeeping and finances then you may want to find out how to successfully balance the books and take care of tax (flick through to Book IV). Or perhaps you’ve already started out and you’re looking for advice on how to take you’re business to the next level (Book VI gives some great advice). This book is set up so that you can dip in and out of it in a number of ways depending on your situation.

Book I

Where to Start?

In this book . . .

I f you’re contemplating starting up a new business – or even if you just want to check that your current business is running smoothly – you’ve come to the right place! In this book we address the basic issues to consider when you’re setting out on your career in business.

Here are the contents of Book I at a glance:

Chapter 1: Preparing for Business

Chapter 2: Being Your Own Boss

Chapter 3: Can You Do the Business?

Chapter 4: Starting Your Business Plan

Chapter 5: Establishing Your Starting Position

Chapter 6: Researching Your Customers, Competitors, and Industry

Chapter 1

Preparing for Business

In This Chapter

Working up to opening up

Measuring your business’s viability

Growing for success

Would you go into the jungle without carrying out some pretty rigorous preparation? You’d need to know something about the terrain and how to navigate it, as well as the temperature, rainfall, and food supply. You would also be keen to know what predators you might meet on the way and how to defend yourself against them.

When you’re starting a business, particularly your first business, you need to carry out the same level of preparation as you would for crossing the Gobi desert or exploring the jungles of South America. You are entering hostile territory.

Your business idea may be good, it may even be great, but such ideas are two a penny. The patent office is stuffed full of great inventions that have never returned tuppence to the inventors who spent much time and money filing them. It’s how you plan, how you prepare and how you implement your plan that makes the difference between success and failure. And failure is pretty much a norm for business start-ups. Tens of thousands of small firms fail, some disastrously, each and every year.

In this chapter the scene is set to make sure you are well prepared for the journey ahead.

Getting in Shape to Start Up

You need to be in great shape to start a business. You don’t have to diet or exercise, at least not in the conventional sense of those words, but you do have to be sure you have the skills and knowledge you need for the business you have in mind, or know how to tap into sources of such expertise.

The following sections help you through a pre-opening check-up so you can be absolutely certain that your abilities and interests are closely aligned to those needed by the business you have in mind. It will also help you to check that a profitable market exists for your products or services. You can use this section as a vehicle for sifting through your business ideas to see if they are worth devoting the time and energy that is needed to start up a business.

You may well not have all the expertise you need to do everything yourself. Zillions of agencies and advisers can fill in the gaps in your expertise.

Assessing your abilities

Business lore claims that for every ten people who want to start their own business only one finally does so. It follows that there are an awful lot of dreamers out there who, whilst liking the idea of starting their own business, never get around to taking action. Chapter 3 looks in detail at how you can assess whether you are a dreamer or a doer when it comes to entrepreneurship. For now, see whether you fit into one of the following entrepreneurial categories:

Nature. If one of your parents or siblings runs their own business, successfully or otherwise, you are highly likely to start up your own business. No big surprise here as the rules and experiences of business are being discussed every day and some of it is bound to rub off. It also helps if you are a risk-taker who is comfortable with uncertainty.

Nurture. For very entrepreneur whose parents or siblings have a business there are two who don’t. If you can find a business idea that excites you, has the prospect of providing personal satisfaction and wealth, then you can assemble all the skills and resources needed to succeed in your own business. You need to acquire good planning and organisational skills and either develop a well-rounded knowledge of basic finance, people management, operational systems, business law, marketing and selling, or get help and advice from people who have that knowledge.

Risk-taker. If you crave certainty in everything you do, then running your own business may be something of a culture shock. By the time the demand for a product or service is an absolutely sure-fired thing, there may already be too many others in the market to leave much room for you. Don’t confuse risk taking with a pure gamble. You need to be able to weigh things up and take a calculated risk.

Jack-of-all-trades. You need to be prepared to do any business task at anytime. The buck definitely stops with you when you run your own business. You can’t tell a customer their delivery will be late, just because a driver fails to show up. You will just have to put in a few more hours and do the job yourself.

Discovering a real need

You might be a great potential entrepreneur but you still need to spell out exactly what it is you plan to do, who needs it, and how it will make money. A good starting point is to look around and see if anyone is dissatisfied with their present suppliers. Unhappy customers are fertile ground for new businesses to work in.

One dissatisfied customer is not enough to start a business for. Check out and make sure that unhappiness is reasonably widespread, as that will give you a feel for how many customers might be prepared to defect. Once you have an idea of the size of the potential market you can quickly see if your business idea is a money making proposition.

The easiest way to fill an endurable need is to tap into one or more of these triggers:

Cost reduction and economy. Anything that saves customers money is always an attractive proposition. Lastminute.com’s appeal is that it acts as a ‘warehouse’ for unsold hotel rooms and airline tickets that you can have at a heavy discount.

Fear and security. Products that protect customers from any danger, however obscure, are enduringly appealing. In 1998, two months after Long-Term Capital Management (LTCM), one of America’s largest hedge funds, was rescued by the Federal Reserve at a cost of $2 billion, Ian and Susan Jenkins launched the first issue of their magazine, EuroHedge. In the aftermath of the collapse of LTCM, which nearly brought down the US financial system single-handedly, there were 35 hedge funds in Europe, about which little was known, and investors were rightly fearful for their investments. EuroHedge provided information and protection to a nervous market and five years after it was launched the Jenkins’s sold the magazine for £16.5 million.

Greed. Anything that offers the prospect of making exceptional returns is always a winner. Competitors’ Companion, a magazine aimed at helping anyone become a regular competition winner, was an immediate success. The proposition was simple. Subscribe and you get your money back if you don’t win a competition prize worth at least your subscription. The magazine provided details of every competition being run that week, details of how to enter, the factual answers to all the questions and pointers on how to answer any tiebreakers. They also provided the inspiration to ensure success with this sentence: You have to enter competitions in order to have a chance of winning them.

Niche markets. Big markets are usually the habitat of big business – encroach on their territory at your peril. New businesses thrive in markets that are too small to even be an appetite wetter to established firms. These market niches are often easy prey to new entrants as they have usually been neglected, ignored or ill-served in the past.

Differentiation. Consumers can be a pretty fickle bunch. Just dangle something, faster, brighter or just plain newer and you can usually grab their attention. Your difference doesn’t have to be profound or even high-tech to capture a slice of the market. Book buyers rushed in droves to Waterstones’ for no more profound a reason than that their doors remained open in the evenings and on Sundays, when most other established bookshops were firmly closed.

Checking the fit of the business

Having a great business idea and having the attributes and skills needed to successfully start your own business are two of the three legs needed to make your business stool balance. Without the third leg, though, your stool isn’t stable at all. You need to be sure that the business you plan to start is right for you.

Before you go too far, make an inventory of the key things that you are looking for in a business. These may include working hours that suit your lifestyle; the opportunity to meet new people; minimal paperwork; a chance to travel. Then match those up with the proposition you are considering. (Chapter 3 talks more about finding a good business fit.)

Checking Viability

An idea, however exciting, unique, revolutionary, and necessary is not a business. It’s a great starting point, and an essential one, but there is a good deal more work to be done before you can sidle up to your boss and tell him or her exactly what you think of them.

The following sections explore the steps you need to take so that you won’t have to go back to your boss in six months and plead for your old job back (and possibly eat a large piece of humble pie at the same time).

Researching the market

However passionate you are about your business idea, it is unlikely that you already have the answers to all the important questions concerning your market place. Before you can develop a successful business strategy, you have to understand as much as possible about your market and the competitors you are likely to face.

The main way to get to understand new business areas, or areas that are new to you at any rate, is to conduct market research. The purpose of that research is to ensure that you have sufficient information on customers, competitors, and markets so that your market entry strategy or expansion strategy is at least on the target, if not on the bull’s-eye itself. In other words, you need to explore whether enough people are attracted to buy what you want to sell at a price that will give you a viable business. If you miss the target altogether, which you could well do without research, you may not have the necessary resources for a second shot.

The areas to research include:

Your customers: Who will buy more of your existing goods and services and who will buy your new goods and services? How many such customers are there? What particular customer needs will you meet?

Your competitors: Who will you be competing with in your product/market areas? What are those firms’ strengths and weaknesses?

Your product or service: How should you tailor your product or service to meet customer needs and to give you an edge in the market?

The price: What would be seen as giving value for money and so encourages both customer loyalty and referral?

The advertising and promotional material: What newspapers, journals, and so forth do your potential customers read and what Web sites do they visit? Unglamorous as it is, analysing data on what messages actually influence people to buy, rather than just to click, holds the key to identifying where and how to promote your products and service.

Channels of distribution: How will you get to your customers and who do you need to distribute your products or services? You may need to use retailers, wholesalers, mail order, or the Internet. They all have different costs and if you use one or more they all want a slice of the margin.

Your location: Where do you need to be to reach your customers most easily at minimum cost? Sometimes you don’t actually need to be anywhere near your market, particularly if you anticipate most of your sales will come from the Internet. If this is the case you need to have strategy to make sure potential customers can find your Web site.

Try to spend your advertising money wisely. Nationwide advertisements or blanketing the market with free disks may create huge short-term growth, but there is little evidence that the clients won by indiscriminate blunderbuss advertising works well. Certainly few people using such techniques made any money.

Inflated numbers on the Internet

If you plan to advertise on an Internet site it makes sense to check out the sites you’re considering. Be aware that some sites publish a fair amount of gobbledygook about the high number of ‘hits’ (often millions) the site scores. Millions of hits doesn’t mean the site has millions of visitors. Some Internet sites increase their hit rate by the simple expedient of adding the number of pages each viewer must download to view the page.

Another mildly meaningless measure of the advertising value of a site is the notion of a ‘subscriber’. In Internet parlance anyone visiting a Web site and passing over their e-mail address becomes part of that company’s share price! It is rather like suggesting that anyone passing a shop and glancing in the window will turn into hard cash tomorrow.

Any real analysis of Web site use starts with ‘page impression’, which is a measure of how many times an individual page has been viewed. The Audit Bureau of Circulations, which started its life measuring newspaper response, has now turned its attention to auditing Web sites (www.abce.org.uk).

Doing the numbers

Your big idea looks as though it has a market. You have evaluated your skills and inclinations and you believe that you can run this business. The next crucial question is – will it make you money?

It’s vital that you establish the financial viability of your idea before you invest money in it or approach outsiders for backing. You need to carry out a thorough appraisal of the business’s financial requirements. If the numbers come out as unworkable you can then rethink your business proposition without having lost anything. If the figures look good, then you can go ahead and prepare cash flow projections, a profit and loss account and a balance sheet, and put together the all-important business plan.

You need to establish for your business:

Day to day operating costs

How long it will take to reach break-even

How much start-up capital is needed

The likely sales volume

The profit level required for the business not just to survive, but also to thrive

The retail price of your product or service

Many businesses have difficulty raising start-up capital. To compound this, one of the main reasons small businesses fail in the early stages is that too much start-up capital is used to buy fixed assets. While some equipment is clearly essential at the start, other purchases could be postponed. You may be better off borrowing or hiring ‘desirable’ and labour-saving devices for a specific period. This is obviously not as nice as having them to hand all the time but remember that you have to maintain every photocopier, electronic typewriter, word processor, micro-computer, and delivery van you buy and they become part of your fixed costs. The higher your fixed costs, the longer it usually takes to reach break-even point and profitability. And time is not usually on the side of the small, new business: it has to become profitable relatively quickly or it will simply run out of money and die.

Raising the money

Two fundamentally different types of money that a business can tap into are debt and equity:

Debt is money borrowed, usually from a bank, and which you have to repay. While you are making use of borrowed money you also have to pay interest on the loan.

Equity is the money put in by shareholders, including the proprietor, and money left in the business by way of retained profit. You do not have to give the shareholders their money back, but they do expect the directors to increase the value of their shares, and if you go public they will probably expect a stream of dividends too.

If you do not meet the shareholders’ expectations, they will not be there when you need more money – or, if they are powerful enough, they will take steps to change the board.

Alternative financing methods include raising money from family and friends, applying for grants and awards, and entering business competitions.

Check out Book II for a review of all these sources of financing.

Writing up the business plan

A business plan is a sellingdocument that conveys the excitement and promise of your business to potential backers and stakeholders. These potential backers could include bankers, venture capital firms, family, friends, and others who could help you get your business launched if they only knew what you want to do.

Getting money is expensive, time-consuming, and hard work. Having said that, it is possible to get a quick decision. One recent start-up succeeded in raising £3 million in eight days, the founder having turned down an earlier offer of £1 million made just 40 minutes after his business plan was presented. Your business plan should cover what you expect to achieve over the next three years.

Most business plans are dull, badly written, and frequently read only by the most junior of people in the financing organisations they’re presented to. One venture capital firm in the US went on record to say that in one year they received 25,000 business plans asking for finance and invested in only 40. Follow these tips to make your business plan stand out from the crowd:

Hit them with the benefits: You need to spell out exactly what it is you do, for whom, and why that matters. One such statement that has the ring of practical authority about it is: ‘Our Web site makes ordering gardening products simple. It saves the average customer two hours a week browsing catalogues and £250 a year through discounts, not otherwise available from garden centres. We have surveyed 200 home gardeners, who rate efficient purchasing as a key priority.’

Make your projections believable: Sales projections always look like a hockey stick: a straight line curving rapidly upwards towards the end. You have to explain exactly what drives growth, how you capture sales, and what the link between activity and results is. The profit margins will be key numbers in your projections, alongside sales forecasts. These will be probed hard, so show the build-up in detail.

Say how big the market is: Financiers feel safer backing people in big markets. Capturing a fraction of a percentage of a massive market may be hard to achieve – but if you get it at least it’s worth it. Going for 10 per cent of a market measured in millions rather than billions may come to the same number, but it won’t be as interesting.

Introduce you and your team: You need to sound like winners with a track record of great accomplishments.

Include non-executive directors: Sometimes a heavyweight outsider can lend extra credibility to a business proposition. If you know or have access to someone with a successful track record in your area of business who has time on their hands, you could invite them to help. If you plan to trade as a limited company you could ask them to be a director, without specific executive responsibilities beyond being on hand to offer their advice. But they need to have relevant experience or be able to open doors and do deals.

Provide financial forecasts: You need projected cash flows, profit and loss accounts, and balance sheets for at least three years out. No-one believes them after Year One, but the thinking behind them is what’s important.

Demonstrate the product or service: Financiers need to see what the customer is going to get. A mock-up will do or, failing that, a picture or diagram. For a service, show how customers will gain from using it. That can help with improved production scheduling and so reduce stock holding.

Spell out the benefits to your potential investor: Tell them that their money will be paid back within ‘x’ years, even on your most cautious projections. Or if you are speaking with an equity investor, tell them what return they will get on their investment when you sell the business on in three or five years time.

Going for Growth

Growth is as natural a feature of business life as it is of biological life. People, animals, and plants all grow to a set size range and then stop. A few very small and very large specimens come to fruition, but the vast majority fit within a fairly narrow size band.

Businesses follow a similar formula: most successful new businesses, those that survive that is, reach a plateau within five to seven years.

Gaining economies of scale

Once a business starts to grow, the overhead costs are spread over a wider base. You can buy materials and services in larger quantities, which usually means better terms and lower costs. The combination of these factors generally leads to a higher profit margin, which in turn provides funds to improve the business, which, in turn can lead to even lower costs. This virtuous circle, as it is known, can make a growing firm more cost competitive than one that is cautiously marking time.

Securing a competitive advantage

A new business can steal a march on its competitors by doing something vital that established businesses cannot easily imitate. For example a new hairdressing shop can locate where customers are, whilst an existing shop has to content itself with its current location, at least until its lease expires.

A growing firm can gain advantages over its slower competitors. For example, launching new products or services gives a firm more goods to sell to its existing customer base. This puts smaller competitors at a disadvantage because they are perceived as having less to offer than the existing supplier. This type of growth strategy can, if coupled with high quality standards, lead to improved customer retention and this too can lead to higher profits – a further push on the momentum of the virtuous circle.

Retaining key staff

The surest way to ensure a business fails is to have a constant churn of employees coming and going. Valuable time and money has to be invested in every new employee before they become productive, so the more staff you lose the more growth you sacrifice.

Most employers believe that their staff work for money and their key staff work for more money. The facts don’t really support this hypothesis. All the evidence is that employees want to have an interesting job and be recognised and praised for their achievements. In Book VI you will see how to get the best out of your staff.

By growing the business you can let key managers realise their potential. In a bigger business your staff can be trained and promoted, moving up the ladder into more challenging jobs, with higher salaries earned on merit, whilst staying with you, rather than leaving for pastures new. And if employees are good at their jobs, the longer they stay with you the more valuable they become. You save time and money on the recruitment merry-go-round and you don’t have to finance new managers’ mistakes whilst they learn how to work in your business.

Gaining critical business mass

Bigger isn’t always better, but a growing business will have a greater presence in its market, and that’s rarely a bad strategy. Large businesses are also more stable, tending to survive better in turbulent times. Bigger businesses can and do sometimes go bust, but smaller ‘doing nicely’ small businesses are far more likely to go bump.