How Your Business Can Fail If You Aren’t Careful

How Your Business Can Fail If You Aren’t Careful One of the least understood aspects of entrepreneurship is why some businesses fail while others succeed. The painful truth, according to a recent study by the University of Tennessee Research is that most businesses fail for one of the following three reasons.

1) Incompetence

46% of businesses fail due to emotional pricing, reckless spending, nonpayment of taxes, lack of planning, record keeping problems, and no knowledge of financing. Companies that succeed take pricing seriously. The prices they set are influenced by facts instead of emotions. As you set your prices consider the cost of material, labor, and overhead. Also, remember to keep in mind competitor pricing. Does this mean that you have to be the cheapest to compete? Absolutely not. You don’t have to compete on price, but you can’t ignore how much your competitors charge either. You can’t succeed on pricing alone, but your business will fail if you can’t get your pricing right.

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5 Tips for Staying Sane as a Business Owner

5 Tips for Staying Sane as a Business OwnerEntrepreneurship comes with its fair share of perks — the freedom to create your own schedule, call the shots and be in charge of your own destiny is enough to make any cubicle worker drool. But it’s no secret that being a small business owner also has some heavy duty pressure; at the end of the day, you have ultimate accountability for your business’ success or failure.

Stressful? It can be.

But while there’s no cure-all for stress as a business owner, there are a few things you can do to ‘keep calm and entrepreneur on.’

Be flexible with your business plan.

Embrace that the first few drafts of your business plan will be wrong, no matter what. There are bound to be details you didn’t think of, or maybe your sales strategy just isn’t working the first time around. That’s okay! Once you’ve gathered enough data, you’ll be able to validate and/or rewrite the plan to better reroute your course.

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Which Business Structure is Right For You?

Which Business Structure is Right For You?Before going ahead with that new business plan for your start-up, ensure you know all legalities involved, especially the different types of business structures available. The law surrounding each entity can differ from state to state (and country to country!) but generally the rules and regulations are quite similar. However, it is a good idea to seek legal advice beforehand so you are fully aware of the risks involved.  Below are some of the advantages and disadvantages of starting up a business as a corporation, limited liability company (LLC) or partnership.

Starting up as a… Corporation (equivalent to a limited company)

Setting up a corporation can be the preferred (and most beneficial) structure for employers looking to take on a large team of staff and have maximum legal protection. This type of business structure is owned by shareholders and has a board of directors.

Pros: A corporation is its own separate legal entity and is responsible for its own debt in insolvent situations, like administration or liquidation. This means, you, as a director, are protected if the corporation struggles financially.

It’s important to remember that the business owes money, not the director. If, however, directors have acted fraudulently, they will be exposed to the corporation’s liability.

Cons: There can be a lot of paperwork and filing of accounts when setting up a corporation, however this ensures everything is kept up to date and regulations as well as compliance are met. There are also higher tax fees which leads to more expensive accountancy fees.

Starting up as a… Limited Liability Company (LLC)

An LLC is a business structure that has more flexibility when it comes to taxes and regulations and is usually a good fit for small businesses. LLCs are owned by its members.

Pros: Like a corporation, you are protected against personal liability if the company enters insolvency. There is less paperwork to do as the structure is based around an informal agreement can be made when starting up and often adapted later on. An LLC can also choose how the business should be taxed

Cons: This type of entity is a fairly new structure and could be less favored than that of the ‘wise’ corporation structure. With perhaps an unfamiliar set up, investors may be more reluctant to lend.

Starting up as a… Partnership

As the name suggests, this business structure is set up with two or more partners and follows different common laws across the nation. However, there are some general rules that apply.

Pros: As structures get smaller in business size, so does the paperwork and filing of accounts. There are also fewer taxes to pay.

Cons: The big disadvantage of being in a partnership is you are personally liable for the partnership’s debt if the business falls in financial difficulty. Every partner is responsible for the entire debt, so if one partner is unable to afford the debt, creditors will look to the next partner and so on. Before going into this kind of business, drawing up a contract deeming who is liable for what is essential.

There is the option of setting up a Limited Liability Partnership (LLP). This type of formation can differ in law from state to state but is similar to a partnership. It does, however, offer more legal protection to partners if LLP becomes insolvent, hence limited liability. An LLP is essentially a cross between a partnership and a limited liability company.

Remember, you can change structures down the line if you want to. If you are unsure what the best plan of action is, be sure to get legal advice specific to your situation.

Keith Steven of KSA Group Ltd has been rescuing and turning around businesses for over 20 years and has worked with insolvency firms, turnaround funds and venture capital investors. He is also author of the site www.companyrescue.co.uk.  You can follow Keith on Google+.

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12 Must-Know Rules for Startups

12 Must-Know Rules for StartupsIn 2012, entrepreneur Mark Cuban wrote “12 Rules for Startups“ for Entrepreneur.com, contained valuable insight and some entertaining ideas from Mr. Cuban. The article shared some snackable ideas to the startups to roll out with large profits and tag their business as ‘successful’.

Keeping the same spirit, this post is going to narrate 12 additional rules of thumb for startups to follow in 2014 – for both those launching new businesses and those associated with these startups. It’s been a two year leap since Mr. Cuban wrote his article and while the market and tactics have changed quite a bit, startups in 2014 still have plenty of exciting things to look forward to.

Rule 1: Grow Your Passion

Startups are diligent, and have to build a problem-solving attitude since the launch of business. Startup strategy must consist of moving two steps forward and one step backward. However, it’s critical that all start-ups include plenty of passion as it’s important for entrepreneurs to deal with business upheavals.

Rule 2: Never Give Up

As startups grow and experience challenging times, they need an attitude in place that tells them to never give up! Overall persistence in business works to help startup owners grow a strong survival strategy in the long run.

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5 Things Entrepreneurs Need To Know Before Starting Up A Small Business

5 Things Entrepreneurs Need To Know Before Starting Up A Small Business Are you a potential entrepreneur considering venturing into starting up your own business? If so, it’s important that you start familiarizing yourself with information on how to succeed in the current business climate right now. Operating a small business requires you to possess the necessary skills to plan and manage the business efficiently and a vision that seeks to grow from nothing to something substantial after a period of time. Here are the top 5 things an entrepreneur needs to know before starting up a small business.

1. A perfect business plan is indispensable.

A business plan is the foundation of any successful company today. It serves to chart out the goals of the business as well as the possible ways of achieving them and acts as a blueprint that outlines the road to the future of any business. It’s also a necessity when seeking financial help to set up your business, hiring future employees, and keeping track on how you run your business once it’s operational.

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How to Plan and Afford Business Expansion

How to Plan and Afford Business Expansion People assume they will have to pump money into their start-up business, but what they don’t always know is that to continue to keep their business strong and thriving, they also need to continue investing in their growth and internal development. The question, then, becomes how to afford keeping their growing business from becoming stagnant. Here are a few strategies and financial options for managing business expansion without sinking the ship.

Prioritize

First, you must decide what it is that you are looking to invest in. Do you want to update a software system? Open a new business location? Remodel your existing one? Add a product line, or develop a new product? Expand your marketing outreach? Decide where your focus lies, and then you can strategize how much you’ll need to invest. You may not be able to tackle all of your goals at once, but choosing one or two specific paths will help you to be intentional when it comes to your money and other resources.

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Experts Weigh In: What Should Black Friday, Small Business Saturday and Cyber Monday Be Renamed As?

Black FridayWe’re really getting in the Thanksgiving spirit here at MyCorp! Not only are we all prepping our turkeys, and candying our yams, but we are prepping for our upcoming Black Friday and Cyber Monday sales as well! It seems that with the passing of each Thanksgiving, there is a new sales day added into the mix. What was once Black Friday, is now the trio of Black Friday/Small Business Saturday/Cyber Monday. Companies and customers alike are choosing to partake in all three!

We noodled on it and thought the entire sales weekend should just have its own name – something that combines and explains Black Friday, Small Business Saturday, and Cyber Monday. We turned to our fellow small business owners and here’s what they came up with!

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Business Basics – Copyrights

Protecting your intellectual property is a vital part of protecting your business. Your intellectual property will essentially define your brand – the very element of your business that consumers associate with all of the goodwill you’ve built into your business. We’ve already talked about trademarks, but this week we decided to look at the other half of intellectual property protection; the copyright. So what exactly is a copyright? And what does registering a copyright even protect?

Copyright Symbol

Copyright Symbol

What is a copyright?

Copyright protection actually dates all the way back to the advent of the printing press. After its invention, it was much easier to copy and sell books. But the printing press also meant that rebellious literature could also be produced much more quickly. This, combined with the threat to the livelihood of the creators of the works being printed, meant the government began to license shops with the right to print copy – and thus the copyright was born. As the decades passed copyright protection became more about protecting the artist, and less about stifling rebellious text, and today we continue to use copyright protections to enforce the rights creators have to their work.

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50 States of Incorporation: Iowa

incorporate in IowaHome to the most crooked street in the world in Burlington’s Snake Alley, and the world’s largest strawberry, Iowa is this week’s ’50 States of Incorporation’ spotlight.

Iowa is often fondly referred to as the “American Heartland.” It’s the only state whose eastern and western borders are completely made up of rivers, with the Mississippi River to the east and the Missouri River to the west. Iowa’s capital and largest city is Des Moines. The overall population rings in as being the 30th most populous of the states.

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Do Businesses Prefer Limited Liability Companies Or Corporations?

Limited Liability Company formations outpace Corporate formations by nearly two-to-one, so the easy answer to this question seems to be that businesses prefer LLCs. However, what works for one, or even the majority, of businesses may not be right for others. Every company faces its own unique challenges and has its own needs, and even though LLC formation is so much higher than corporate formation, that doesn’t mean that every business will be happy with a limited liability company structure.

LLCs vs Corporations

The main reason behind why LLCs continue to be so popular seems to be the ease in which an entrepreneur can run an LLC, either by themselves or with a handful of other people. Limited Liability Companies don’t require annual shareholder meetings, nor do they need meticulous notes on every debate that leads to a business decision. Corporations, on the other hand, can be a bit of a pain to run and have to contend with plenty of extra state regulations. But what sort of companies find dealing with those regulations worth the benefits of a corporate structure? And what kind of businesses do better as limited liability companies?

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