Business in General

Choose a Small Market
A USA business commentator suggests that if you’re thinking of going into business it is best to develop a market that does not involve the big boys. Be a big fish in a tiny pond. Develop and profit from an area that you can eventually lead in and possibly dominate.

Work at Home
Alvin Toffler in his book “The Third Wave” calls them electronic cottages. They are the “home businesses”. He predicted that as many as 20% of the USA work force would transfer to work at home within the next decade. USA census figures show that nearly half a million home businesses are owned and operated by women.

They include public relations, graphic arts, investment consultants, lawyers, accountants, architects, stockbrokers, insurances and secretarial services.

The work-at-home movement is here to stay. For tax advantages working from home is high on the list of “dos” because of the availability of home expenses as deductions.

Valuing Goodwill
Valuing that part of the business which is known as goodwill is extremely difficult. All sorts of formulas have been used, but in the end it will usually be finally determined by what a reasonable buyer will accept.

Goodwill is the benefit from a good name and reputation; the unseen force that continues to bring customers to the business; that thing that makes an old established business different from a new one.

It is usually best valued on the super profit method. This is the extra profit remaining after making allowances for the proprietors involvement and the return that would have been received if the funds tied up in the business had been invested elsewhere.

Constantly “stocktake”
To be successful take time off every three months to assess your past performance, make necessary corrections and set new targets. In this way you will keep on top of things and make vital adjustments where they are needed and not when it’s too late.

Ensure Adequate Working Capital
More small businesses fail from lack of working capital than for any other reason. Working capital is the cash required to pay the business operating expenses such as rent, wages, electricity etc.

Generally 3 – 6 months working capital would be considered adequate.

Remember, You Know Best
If you have started your business from scratch, you will probably be the best person eventually to run it profitably and you will know best.

Most people go to an accountant or lawyer for technical, business or legal advice. That’s fine – but in the main the owner has a better feel of the operation than anyone else – it’s that “gut feeling”.