Sharing Ownership With Others

Now that you have decided what business to start and about how much capital will be required, you may find it necessary to join with one or more associates to launch the enterprise.

Partnership

If you lack certain technical or management skills which are of major importance to your chosen business a partner with these skills may prove a most satisfactory way to cover the deficiency. If you are very skilled in your special area but lack management training and skills, you might look for a partner with a background in management. If you may need more start-up money, sharing the ownership of the business is one way to obtain it. Great care should be taken in deciding upon a partner. Personality and character, as well as ability to render technical or financial assistance, affect the success of a partnership.

A partnership can be a mixed blessing. A partner who puts in time or money has a right to expect a share in running the business.

In a partnership the liability for the debts of the firm is unlimited, just as it is in a single proprietorship. This means the owners are personally responsible for the firm's debts, even in excess of the amount they have invested in the business. In a corporation the liability of the owner is limited to the amount they pay for their shares of stock. A partnership, like a single proprietorship, lacks continuity. This means the business terminates upon the death of the owner or a partner, or upon the withdrawal of a partner.

Corporation

The corporation is a legal entity whose continuity is unaffected by death or transfer of stock shares by any or all of its owners. Even with no partners, you may decide a corporation with minor stockholders is better than a single proprietorship primarily because of the corporation's limited liability.

Since partnership agreements and incorporation papers should be prepared by a lawyer, consultation with a lawyer will help you determine the best type of organization for you.

Selecting a Location

Once you have decided what type of business you want to start and the investment requirements, you are ready to select a location. The number of competitive businesses already in the area should influence your choice of location. Some areas are overloaded with service stations or certain types of restaurants. Check on the number of your kind of business in Census figures, the yellow pages, or by personally checking out the location.

Factors other than the potential market, availability of employees and number of competitive businesses must be considered in selecting a location. For instance, how adequate are utilities - sewer, water, power, gas? Parking facilities? Police and fire protection? What about housing and environmental factors such as schools, cultural and community activities for employees? What is the average cost of the location in taxes and rents? Check on zoning regulations. Evaluate the enterprise of the local business-people, the aggressiveness of civic organizations. In short, what is the town spirit? Such factors should give you a clue to the city or town's future.

Chambers of Commerce and nearby universities usually have made or are familiar with local surveys which can provide answers to these questions and the many other questions which will occur to you.

Next you must decide in what part of town to locate. If the town is very small and you are establishing a retail or service business, there will probably be little choice. Only one shopping area exists. Cities have outlying shopping centers in addition to the central shopping area, and stores spring up along principal thoroughfares and neighborhood streets.

Consider the shopping center. It is different from other locations. The shopping center building is pre-planned as a merchandising unit. The site has been deliberately selected by a developer. On-site parking is a common feature. Customers may drive in, park and do their shopping in relative safety and speed. Some centers provide weather protection. Such conveniences make the shopping center an advantageous location.

There are also some limitations you should know about. As a tenant, you become part of a merchant team and must pay your pro rata share of the budget. You must keep store hours, light your windows, and place your signs according to established rules. Many communities have restrictions on signs and the center management may have further limitations. Moreover, if you are considering a shopping center for your first store you may have an additional problem. Developers and owners of shopping centers look for successful retailers.

The kind and variety of merchandise you carry helps determine the type of shopping area you choose. For example, clothing stores, jewelry stores and department stores are more likely to be

successful in shopping districts. On the other hand, grocery stores, drug stores, filling stations, and bakeries usually do better on principal thoroughfares and neighborhood streets outside the shopping districts. Some kinds of stores customarily pay a low rent per square foot, while others pay a high rent. In the "low" category are furniture, grocery and hardware stores. In the "high" are cigar, drug, women's furnishings, and department stores. There is no hard and fast rule, but it is helpful to observe in what type of area a store like yours most often appears to flourish.

After determining an area best suited to your type of business, obtain as many facts as you can about it. Check the competition. How many similar businesses are located nearby? What does their sales volume appear to be? If you are establishing a store or service trade, how far do people come to trade in the area? Are the traffic patterns favorable? If most of your customers will be local inhabitants, study the population trends of the area. Is population increasing, stationary or declining? Are the people native-born, mixed or chiefly foreign? Are new ethnic groups coming in? Are they predominantly laborers, clerks, executives or retired persons? Are they all ages or principally retired, middle aged, or young? Judge buying power by checking average home rental, average real estate taxes, number of telephones, number of automobiles and, if the figure is available, per capita income. Larger shopping centers have this type of information available, and will make it available to serious potential tenants.

Zoning ordinances, parking availability, transportation facilities and natural barriers - such as hills and bridges - are all important considerations in locating any kinds of business. Possible sources for this information are Chambers of Commerce, trade associations, real estate companies, local newspapers, banks, city officials, local merchants and personal observation. If the Bureau of the Census has developed census tract information for the particular area in which you are interested you will find this especially helpful. A census tract is a small, permanently established, geographical area within a large city and its environs. The Census Bureau provides population and housing characteristics for each tract. This information can be valuable in measuring your market or service potential.

Say that you're the sort who is starting new small business. You Have given attention to the overall chances for success, and have
selected the new company you wish to establish.

What practical problems will you face in establishing the organization? How Much money will you require for starting new small
business? Where can you get it? What form of business organization will you have? Where should you find the company? (start
company tips to follow along )

The first question you need to reply is: How much cash will I need? But this question can't be answered until several other
questions are answered and many choices are made.

To decide how much cash is needed to start a business, enter all Of your prospective income and all of your planned expenses onto
a job sheet or form.

Though you may feel that This Type of preparation is more than You have to initiate a simple small business it's beneficial to get
started with this particular approach to management which puts down figures in black and white. You will find the same approach
valuable within an established small business.

First, estimate your sales volume. This will depend on the total Amount of business in the region, the number and ability of
competitors now sharing that company, and your own capability to compete for the customer's dollar. Obtain assistance in making
your sales quote from wholesalers, trade associations, your banker, and other business-people. A number of company and statistical
publications could be useful in making sales volume estimates.

In reaching your final estimate of sales don't be over-enthusiastic. A new business generally grows slowly at the beginning. If
you overestimate sales you're most likely to spend too much in equipment and initial stock, and devote yourself to thicker
operating expenses compared to your real sales volume will warrant. Since you are just beginning you might have no earnings for
the first few months. At any rate you may expect your first few months to be very low.

You must also determine what proportion of your earnings will be money And what proportion will be sold on credit. If you guess
that a certain portion of the earnings are going to be on credit then you have to figure when you are likely to have the money for
all these sales. 1 month? Two months? More? Never?

In our guide to starting new small business, estimate how Much cash will be paid out. Remember in starting a company you might be
purchasing gear, paying licenses and fees, which makes deposits on rent, utilities and so forth, several months until you open the
door. Some of these expenses are simple to estimate. If you've decided to rent a building (more about this later) then you
understand what your deposits will be and just how much you will have to pay out each month. You can probably get the expense of
fees, licenses and utility deposits with a couple of telephone calls.

Other expense figures might take a little more work for you. 1 way Is to acquire typical operating ratios for the kind of business
in which you're interested. Among the resources for such ratios are Dun & Bradstreet, Inc., trade associations, publishers of
trade magazines, technical accounting companies, industrial companies, and colleges and universities. The normal ratios for your
type of company multiplied by your projected sales volume will serve as bench marks for estimating the several items of
expenditure. But do not rely solely on this method for estimating each expense item. Verify and modify these estimates through
investigation and quotes in the particular market place where you plan to operate.

Do not forget to pay yourself too. You Might Need money to live on if You need to quit your job. If your spouse is working and can
encourage the family for some time you might not need to withdraw cash from the company. The more time you can go without taking
money from, the quicker you will build up a strong cash position. Now that you have estimated your money receipts and
expenditures, write down the amount of money you'll put into the business to begin. This goes online 1 at the example below. Then
add lines 1 and 2 for the first month to get line 3. Then add up all the expenses to find 5. Subtract line 5 from line 3 to get
line 6. This cash at the end of month 1 then goes to line 1 for the beginning of the following month, and so on.

Should you continue this for the entire year, very soon you will find You have negative numbers or a negative cash flow. About
this time you'll also understand that you should be operating on this kind with a pencil that has a good eraser.

In this overly-simplified case, you notice that from the end of June you're minus $200 in cash. Two solutions can be attempted -
reduce your purchases at June by $200 or start with $200 more. You may be unable to reduce costs (they will likely go up as your
company starts). So you'll have to put in $200 more to start with. If all you've got is $4000 then the additional $200 you will
need is capital you need to get from someplace else.

Don't be fooled by this very simple illustration. Many small businesses Start with the $200, and try to get the $4000 from
somewhere else. Since a Major reason for failure in the early stages of a business is Under-capitalization, be very careful in
your planning at this stage. You can Almost always plan on several unexpected expenses and a few flaws in anticipated income.

 imitation-jewelry immigration-consultant income-tax iphone-repair iptv irrigation it-onsulting iv jam janitorial japan-surplus jeans jerky jet-ski-rental jewelry-making job-consultancy job-placement joinery journal juice jumper-rental junk-hauling junk-removal junk-shop junkyard jute-bag kaju karaoke-dj kayak-rental kebab keto kettle-corn key-cutting kiosk kitchen kitchen-remodeling korean-bbq kurti lash lawn-care lawn-fertilizer lead-generation leaf-raking leather led-bulb lip-balm lipgloss lipstick liquidation locksmith logo-design lottery lounge-bar lumber-yardhtm lumper-service lunch-truck lunch-truck lure-making luxury-car-rental luxury-watch