Do I Have What It Takes ......................?

What is a Small Business ................?

Small businesses are generally characterized by low annual sales and a
small number of employees .

A small business is managed by its owner, who makes all the decisions
and is solely responsible for the success or failure of the business.
Another characteristic of small businesses is that they tend to be
run by members of the same family .

Business men and Business women come in all shapes and sizes

The Importance of sound Management

In recent years , statistics show that close to 96 percent of bankruptcies in
Canada were due to poor management .

The most frequent causes of failure are :

1- incompetence;
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 2- lack of management experience;

3- lack of experience in the field;

4- uneven general experience .

Negligence , fraud and disaster also contribute to failure , but to a lesser

degree.

Managing Means Planning

Planning is one of the keys to sound management; the time and energy
you spend on analysis and evaluation is crucial to the project .
The Business Plan
Perhaps the most valuable tool for starting a business
successfully is your business plan . Your business plan is a document you
prepare to explain why you want to start a business , what your business
is all about and how it will operate .
Creating a business plan requires that you examine all aspects of the
business you want to start . It forces you to be realistic, to put your ideas
on paper and back them up with facts . It will help you to determine how
practical the idea of starting your business really is .
The various components of a solid business plan should answer the
following questions :

1- Do I have the skills and personality to start a business ..?

2- Does my product or service meet a consumer need ..?

3- What is the competition ..?

4- Who are my target customers ..?

5- what will be my pricing policy ..?

6- How will I advertise ? What are the costs of promotion ..?

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 7- Will buy an existing business or a franchise, or will I start my own
business ..?

8- What will my start-up costs be and how much money will I need ..?

9- How will I select and manage staff ..?

10- Have I planned my project using different financial techniques ..?

11- What legal structure . will my business take ..?

12= What are the potential funding sources ..?

13- What documents do I need to obtain financing ..?

14- What information sources can I consult ..?

Your business plan will be your tool for communicating with your family ,
your bank manager , partners and advisors .

Questionnaire
This questionnaire will help you determine whether you have the
attitudes and the skills to succeed in business.

yes no I Don't Know

1- I value personal success

more than I do personal

security .

2- I can work long hours

without feeling tired .

3- I like to manage and

I get things done .

4- I accept responsibility
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 for all work I do

5- I rarely doubt my abilities.

I am self-confident.

6- I can make decisions even

when they involve taken risks.

7- I learn from my mistakes .

8- I keep going despite failures.

9- I have the necessary perseverance

and self-discipline to bring a

long-term project successfully

to completion .

10- Tough problems don't scare

me . I thrive on challenge!

11- I know my strengths and my limitations.

I'm not afraid to ask for help .

12- People like to work with me .

I motivate them .

13- I set realistic objectives

which reflect mu situation

and I make a commitment

to meet them .

14- I adapt well to change .

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 15- I like working with people .

16- I can find creative solutions

for different types of problems.

Personality Traits

Do I have what it takes ?

Owners and managers generally have a great deal of energy, initiative ,

drive , motivation, determination, perseverance, good judgment and self-
confidence . They also have good communication, decision-making and
people skills. They have the will to succeed and a strong need to achieve .

What do you have that will make you successful ....?

1- Are you able to motivate your self ..?

2- Can you get things done ..?

3- Do you like responsibility and can you accept it ..?

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 4- Are you a hard worker ..?

5- Are you sociable ..?

6- Are you persistent..?

7- Are you a good organizer ..?

8- Are you an effective negotiator ..?

9- Are you able to make decisions ..?

10- Do your family and friends support you ..?

11- What is your state of health ..?

Skills

The essential thing is to feel comfortable with what you do and to be

able to adapt to the demands of the business and its changing
environment .

What Are Your Present Skills ..?

Analyze and list your work experience ,your achievements, your

education, and training and your hobbies . Remember your management
experience . The following questions will help you

Work Experience
1- In which fields have you worked and how many years of experience do
you have ..?

2- What jobs have you done ..? For how long ..?

3- What did you like and what didn't you like about these jobs.?

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 4- What skills and abilities did you acquire ..?

5- What are your skills and experience in management ..?

Achievements
1- What were your achievements .? Why were they successful ?

2- What were your failures ,and why ..?

Training
1- How many years of education and what degree do you have

2- What other courses have you taken ..?

Other Pertinent Information

1- What things are you most knowledgeable about ..?

2- What kind of social media do you read ..?

2.1- web site .

2.2- face book .

2.3- twitter .

3- Do you have e-mail or any other account in the social media?

4- What newspapers and magazines do you read ..?

5- What are your favorite hobbies ..?

6- What are you likes and dislikes ..?

7- Do you speak any foreign language ..?

Being aware of your strengths and weaknesses will help you to use your
skills more effectively . You will also be able to identify the skills that need
improvement .

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 Setting Objectives
Write your objectives down in measurable terms so that you can
determine whether or not you have met them .

Time
On average , owners of small businesses work 50 to 60 hours a week .
Owners will face :

clients prefer to do business directly with the owner ; suppliers want to

offer you a new product ; employees are always wanting to see you . Are
you willing to meet all of these demands
.........................................................................?

Case Study
Responsibilities skills

O-She has frequent contact with the public .

O- She buys from the suppliers .

O- she must do several things at the same time .

O- She is in constant demand from employees ,suppliers ,customers .

O- She works long hours .

O- She must hire a new employee .

O- She reads the financial statements .

O- She surveys new competition .

The Market and the competition

You have assessed your experience and skills and established your
priorities .

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 Now you want to go to the market . Whether you are selling a
product or a service, the method is the same . To simplify things we will
refer to both products and service as products .In addition to analyzing
the market ,it is crucial that you evaluate the competition and determine
its strengths and weaknesses .

Do you know your customers ..?

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 Analyzing the Market
Since you cannot have a business with out customers , you must
determine the needs and tastes of your customers and adapt your
product accordingly . By analyzing the market, pinpoint your target
market and evaluating competing businesses, you will be able to estimate
your potential sales .

Lenders are also concerned with market analysis .

Products meet specific needs, but consumers satisfy these

needs is different ways .

customer profile
A customer profile is a description of customer characteristics which
influence the type of goods and services desired and the buying process
of the purchaser . To establish a customer profile, the following questions
must be answered :

1- Who are they ..? ( Their ages,incme,family,group).

2- What do they buy ..? ( Types of products, brand names, styles )

3- Where do they live ..? ( Property owners, or tenants, City/
neighborhood )

4- Where do they work ..?

5- Where do they buy ..? ( To meet essential needs , To meet the need
for luxury ) .

6- How do they buy ..? ( In person, by catalogue , With cash , credit cards,
cheques or other means ) .

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 Identifying Your Target Market Segmentation

Identifying your market

Many small businesses start by operating in a local or regional market.

Customer characteristics have been classified by district, city or region .
Now you must identify an area of the market in which consumer needs
are not being met, and pinpoint the type of consumers most likely to buy
your product . In other words , you must divide the market into segments.

Sources of Information
Different types of information are available to guid your research and to
help you analyze your market . But you have to know :
1- What to ask for

2- Where to look

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 Evaluating the Competition
After determining your target market, you will want to estimate potential
sales for geographical sector chosen . You must face the fact that you will
not have the entire market to your self, you will have to share it with your
competitors.

Identifying competitors
The phone directly can help you locate the competitors in your region .
Make a list of those offering products that are similar to yours . Using a
map of the area , locate your competitors . Visit them all and try to
determine their images, markets and the territories they serve .

Evaluating Competitors
Study your competitors and assess their strengths and weaknesses .
Evaluate their products and prices, the types of promotion they use , their
locations and the quality of their service .
Estimating sales
New businesses are faced with problem when it comes to estimating
sales because they lake previous results to guide them . A new business
must base its sales estimate on available statistics .
There are two questions which must be answered . First, what is
the market potential ? The market potential is based on consumer
demand for a particular product . Second, is there a place for your
product in that market ? Remember that you will probably not be the
only one meeting this demand, you will have to face the competition .

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 Cornering the Market

Marketing strategies really work

You have learned to identify your potential customers, analyze your

market and evaluate the competition . How do you attract and keep
customers ? How do you make profile ? One good way to do it is to give
your customers the right product at the right time, at a good price and in
an appropriate setting . What the consumer wants and needs should
dictate your choice of product, price,place,and promotion .
The four Ps of marketing are ( produ,price,place or distribution
channel, and promotion .

These four key elements define a marketing strategy .

Managing the four Ps of Marketing

Decisions concerning product, price, and promotion will determine the
specific strategy for each component . The effective combination of the
individual elements creates the overall marketing strategy . They should
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 reflect the needs and characteristics of the target markets and make it
posible to reach the sales objectives .

Product
The product is an integral part of any business and, to be successful,
should satisfy a consumer need .

What products will you carry or what services will you offer ? Will you
have just one product line or several ? How many units of each product
will you stock ? Will your products be new ones or established ones

Consumer needs
When consumers buy a product or service, they are responding to a need
. What products do you think will meet the following needs ?
Price
Consumer behavior is often influenced by price of product . Sound
business management will enable you establish a pricing policy that is
effective .

Factors Which Influence selling price

1- Controllable Factors :
Suppliers - Operating Expenses - The location of your Business

2- Non-controllable Factors
The Economic situation-The competition

Place
What you plan to sell and to whom you plan to sell will influence how you
deliver your product or service, This third P of the marketing mix-place-
comprises two elements :

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1- Channels of distribution ( for manufactures,wholesalers, door-to-door,
personal services )

2- Physical location ( for retailers, restaurants )

Place is a determining factor in the success of your business and you

should consider it carefully. The following procedure may help .
1- Determine Your Territory .

2- Make List of Your Competitors .

3- Itemize Available Sites .

4- Establish Your Criteria Selection .

5- Choose a location .

Promotion
You are now familiar with importance of product ( or service ), price and
place ( or distribution channel ) . The final P, promotion, stimulates
demand and makes consumers aware of your product or service .
Here is a definition of promotion :

All messages about enterprise that are communicated to potential

customers .

Four elements for promotion :

1- Direct Advertising .

2- Sales Promotion .

3- Indirect Advertising Public Relations .

4- Personal Selling .

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 The Marketing Plan

Instead of running in circles , try marketing

1- Select a target market .

2- Develop a customer profile .

3- Establish your marketing strategy ( 4 P ) .

4- Evaluate your marketing plan .

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 Should You Start from Scratch or Buying

Starting from scratch

When you decide to go into business for yourself, you have three basic
options .

The Three Options

1- Starting from Scratch.

2- Buying an Existing Business .

3- Buying a Franchise .

Each of these options has advantages and disadvantages . The best choice
for your situation will depend on your business objectives, your personal
resources, and the opportunities ( or lake of them ) in your area .

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 Starting From Scratch
You will face the higher risks and the losses or low income in the early
stages .

Advantages and Disadvantages

Advantages :
1- You decide what products to sell .

2- You decide how to sell them .

3- You choose your location .

4- You choose the decor of your interior and exterior .

You decide on the rate at which you will expand .

6- You set the prices .

7- You decide on the type of advertising and promotion .

8- You decide how much capital to invest, depending on the size and type
of business you are starting .

9- You have a feeling of satisfaction of starting and growing with business.

Disadvantages
1- The start-up period is long .

2- It can be difficult to attract customers .

3- The financial risks are high .

4- You must compete and carve out a market niche for yourself.

5- You must work long hours .

6- Income may be irregular .

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7- You may have to do everything yourself because of your limited
financial pertinent .

Buying an Existing Business

Advantages and Disadvantages
Advantages :
1-An existing business with a solid history increases the likelihood of a
successful operation for the new owner .

2- The time, cost and energy required to do a thorough planning job for a
new business are eliminated .

3- Financing is usually restricted to the purchase and easier to obtain .

4- A successful business will have established a clientele .

5- An existing business will have established a clientele .

6- Sales can be realized immediately .

7- Inventory is already there and suppliers are established with

accompanying credit lines.

8- Equipment is in place and its capabilities are known in advance .

9- The owner and employees can pass on their experience to you .

Disadvantages
1-The existing location may not be adequate .

2- The premises may not conform to modern standards and may entail
substantial expenses in modernization .

3- Precedents set by the former owner are well established and may be
difficult to change .

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4- Certain employees may not be useful to the business and good
employees may leave .

5- The buyers inherits any poor public image of the existing business .

6- The clientele may not be the most desirable, and changing the firm's
image is usually difficult .

7- The purchase price may not be justified and may therefore create a
burden on future profits .

Buying Franchise

Buying a franchise

Advantages and Disadvantages

Advantages
1-The reputation and credibility of the network at start-up .

2-The availability of a team of counselors .

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3- The acquisition of a planned business based on a proven concept.

4-Financing at preferential rates .

5- Management and business training .

6- An established reputation .

7- Security and reduce financial risk .

8- Research and development undertaken by the franchisor .

Disadvantages
1- Restrictions on the franchisee's autonomy .

2- High initial cost .

3- Profits shared with the franchisor in the form of royalties .

4- Limitations on creativity and initiative .

5- The consequences of the incompetence of other franchise operations

in the net work .

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 Your Financial Needs

Financial planning is important

Determining Your Personal Financial Requirements

When you start a business , it is important that your personal income and
financial requirements are considered separate from the financial
requirements of your business . Calculating your income and personal
expenses will allow you to determine the amount of money you and your
family will need to live .

You can make this calculation by asking yourself the following questions :

1- Will have any other income apart from the salary I will earn from the
business ?

2- Does the family have more than one income ?

3- What are my current financial obligations at home ( food,rent,or

mortgage,utilities ) .

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Prepare your personal balance sheet .Your bank manager will require it
when you apply for a loan .

List everything you own under assets , regardless of whether they are
paid for or not . List everything you own under liabilities .

Do you have debts ? those which you must pay within twelve months
constitute short-term ;liabilities . Long-term liabilities , such as the
mortgage on your house , are repayable over a period of several years .

Your financial net worth is equivalent to the difference between your

total assets and your total liabilities . It represents what you are worth
and also the capital you can invest in your business .

Your Capital Requirements

Your capital requirements include your start-up costs and your operating
expenses for two or three months . This latter amount represents your
working capital . You must possess this capital since the financing of the
assets has already been accounted for .

Personnel Management

Selecting the right person for job

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Why Personnel Management ..?

You may be planning to hire employees but have certain questions about
the process . Where will you find them ? How will you select them ? what
will they do ? Should they be full or part-time ? Casual or permanent ?
What will you pay them ?

These decisions are part of any personnel management policy . When

policies are clearly established , they facilitate the integration of new
employees , contribute to the creation of a healthy working environment
and help your business to prosper .

The Hiring Process

Owners of small business are often overwhelmed by their day-to-day
activities and tend to hire staff quickly, without really considering the
duties which must be performed and the skills they require .

Job Description
Before applicants are recruited, it is important to write a job description
for each position . A job description outlines the main duties
responsibilities of the job . To create a job description you must first
analyze the tasks involved . The following questions will help you :

1- What is the purpose of this job and why was it created ?

2- What will the employee do ?

3- How will the it be done ?

4- Who will the employee work with and report it ?

5- Will the employee have to meet certain performance standards ?

Once you have written the job description you will be in better position to
determine what qualifications ( education , experience , personal qualities
) are necessary to perform the job .
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Advertising the job
Use the job description and the list of qualification you wrote for the
position . Begin by describing the position ; next , outline the necessary
qualifications ; finally , include your address and / or phone number , web
site , e-mail .

Selection
How select the right person for the job ? There is no magic formula but a
systematic approach can help you make a good decision .

1- Applicant form :

This form can help you screen out unqualified applicants, i.e.,those who
fail to meet the minimum requirements as outlined in the qualifications .

2- Employment Interview :

The following tips will help you conduct a successful interview .

3- Be Prepared :

How long will the interview last ? What information will you give the
applicant ? What questions will you ask ? Be sure to plan it all carefully
before the interview .

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 Legal Obligations

In a partnership everyone contributes

There are two main concerns for the new owner-manager:

1- Choosing the legal structure of the organization : proprietorship ,

partnership , or limited company or corporation ;

2- Deciding which business regulations apply , getting a business permit ,

knowing what taxes to pay , and finding out about the applicable building
codes and labour standards .

Legal costs
Registering the business and obtaining licenses usually involve minimal
costs .

Main Advantages and Disadvantages of the Three Legal

Structures
Sole Proprietorship
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Advantages :

1- It is the quickest, easiest, and least expensive way to start a business .

2- When the business income is very low , it provides a lower rate of

taxation than the lowest corporate rate .

3- The proprietor may deduct business losses from income from other
sources .

Disadvantages :

1- The sole proprietor is subject to unlimited liability .

2- Taxes are higher when the income results in a tax rate which is higher
than the corporate rate .

3- All business income is taxable in the hands of the proprietor even if

left in the business to finance expansion .

4- Sole proprietorships have limited existence .

5- An individual is not eligible for tax concessions which are only available
to corporations .

Partnerships
Advantages

1- A partnership is the quickest , easiest , and least expensive way to start

a business that combines the resources and expertise of two or more
people . ( In the case of professional it is the only legal way ) .

2- Where the partner's share of the business income is very low , it

provides a lower rate of taxation than lowest corporate rate 3- A
partner's share of a loss resulting from the operations of the partnership
can be used to offset income from other sources to reduce personal
taxes.

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Disadvantages

1- Liability unlimited , jointly and severally for general partners . 2- Any

partner can legally bind the partnership .

3- As in the case of a proprietorship there are higher taxes when a

partner's share of the income results in a tax rate which is higher than the
corporate rate .

The Limited company or corporation

Advantages

1- It may be possible to benefit from small business deduction ( rate

varies slightly with each province ) .

2- Additional deductions may be available which reduced normal taxes

payable on income from manufacturing and processing .

3- The owner can remove profits from the corporation in the form of
dividends which generally provide a tax benefit to the owner .

4- Capital can be raised by sharing ownership with others through the

sale of shares .

5- Liability is limited .

Disadvantages

1-A corporation is sometimes subject to increased government control .

2- setting up corporation and annual reporting involve cost .

3- A small business cannot be used by the owner to offset income from

other sources .

With my best regards

Faraj . M . Buzaakuk

External Auditor
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