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$mall Busine$$ Financing

How to get the funds you need to grow!

Many small businesses fail to obtain suitable financing to grow their business. A large factor for this is because many small businesses fail to satisfy lender/investor requirements. Lenders and investors are in the business of receiving returns on financing that they provide. This may take the form of interest payments over the term of a loan, dividend payments or increases in stock value for publicly traded corporations.

Most lenders prefer a secured loan. A secured loan involves the borrowing company pledging some asset to the lender in the event of default on the loan. In the event that such security is unavailable the lender or investor must use other means to assure themselves of receiving a return on financing they provide. This type of financing is unsecured. Unsecured loans offer no additional security to the lender other than the borrowing company's agreement to repay the loan and the good credit history of the borrower (some cases require personal guarantee of the president of a company).

Without a third party guarantee the financing decision must be based on the strength of the business. However, many newly formed businesses have limited or no credit history. Also, newly formed business do not have historical earnings for lenders to assess the ability of the company to repay the debt.

Notwithstanding the above statements, it is possible for newly formed businesses to obtain financing in the form of loans and investments based on the lender's/investor's assessment of the strength of the company's business plan. A business plan is a basic tool used by most lenders and investors for performing such assessments. It demonstrates to the potential lender/investor the capabilities of the borrowing company to successfully carry out its profit objective, which ultimately leads to the lender receiving interest or dividend revenue.

A business plan provides a potential lender/investor with the following information:

1. A description of the products and/or services the borrowing company offers or intends to offer.
2. Details on how the company offers its products and/or services. This is called the Operational Plan.
3. Details on how the company plans to market it's products and/or services, including an assessment of the competition and the operating environment. This information is included in a section of the business plan called the Marketing Plan.
4. Detailed financial history (to the extent that it is available) and projected financial activity over the next 3 - 5 years. This includes a forecasted Balance Sheet, Income Statement, and a Cash Flow Statement.

Many small businesses fail to acquire unsecured financing because they fail to address critical factors within their business plans or offer no business plans whatsoever.

There are a great number of resources available to assist with business plan development.

Once your business plan has been developed special consideration should be given to the presentation of that plan. Your business plan presentation should be tailored to the needs of those you are soliciting.

Biz-Builderz can prepare a business plan for you or review a plan you have prepared.

Point-Of-Sale Systems

Buying a barcode system to meet your needs.

Think about your store for a moment... It's your passion... It's your livelihood... And in many ways, it's your life. But, it may be time to make a successful switch in your business.

Running and managing a retail store is increasingly complex and difficult. The retailer is required to deal with intelligent and educated customers who know exactly what they want. The manual pencil and paper and even the electronic cash register are no longer sufficient tools providing the retailer with a competitive edge. Unless this data is easily and immediately captured, this important resource is wasted without any benefit of analysis.

The main device used to capture that information is a barcode reader. A barcode reader is the combination of a bar code scanner and its decoder. The scanner is a device that produces a signal representing the bars and spaces of a bar code. The decoder converts that symbol so a computer can understand it. Together the bar code scanner and decoder produce a bar code reader.

A barcode reader can be used in many different applications including point-of-sale transactions, inventory applications, shipping and receiving and much more. There are a variety of different barcode readers to choose from. They range from CCD to laser scanners, handheld to hands free, wireless to hardwired. The choice of reader depends on the specific applications that you have in mind.

Many companies choose to use hands free units at point-of-sale applications. This can be a model installed in or on a counter top. The advantage of this is it allows for faster operation by a clerk. Other uses may include a wireless unit for picking orders in a warehouse. Also, inventory counting is a popular use of barcode readers. All applications of barcode readers improve speed and accuracy, which translates into bottom line profits.For assistance in choosing a barcode reader call us we can help.

Information Highway Robbery

How to Protect Your Data

With the increasing use of technology in today's business environment it is just as important for companies to protect information resources from theft or loss as it is to protect cash. Often, companies neglect to properly recognize the value of information assets and, as such, fail to assess the cost associated with theft or loss of such resources.

Often the costs associated with such protections are small compared to the costs of losing data but they are merely overlooked. A lot of protection can be afforded a company by simply restricting access to confidential information to authorized personnel only. Another cost effective method of protecting data is to use automated backup routines. Automated backups use low cost hardware and can be simple to implement. Many companies do not consider putting protections in place until it is too late. Often this is a costly mistake. Consider for a moment the impact it would have on a company if it were to lose all of its accounting or customer records. The cost of reconstructing such records greatly outweighs the cost of preventing such a loss to begin with.

Internet business and e-mail only serve to offer more complexity to the situation. Businesses operating in today's environment are restricting their ability to compete by not utilizing the technology available. Yet, some managers avoid moving forward on technological issues for fear of being the target of a hacker and a lack of understanding. It is, after all, new territory. There are several low cost ways to maintain an Internet presence while ensuring your information resources and systems are protected.

The easiest way to do so is to use a virtual host for your website.

Virtual hosting can cost as little as $10 per month for companies who establish themselves as XYZ@ATT.com for instance or $25 - $50 per month for companies who have their own domain name. The advantage of this is the information exchange between the company and the host is uploaded or downloaded periodically. This limits your risk.

Many larger companies have firewalls. Firewalls are usually too costly for small companies. They consist of established security checks and protocols using specialized software.

One simple yet often overlooked protection is antivirus software. Although, many companies do have antivirus software the virus definition files which allow the software to protect against the latest viruses known are rarely kept up to date. The result is no protection against the latest viruses.

Some managers feel the solution is to avoid the information highway altogether. Yet, this position is an uninformed one. The competitive advantages and gains in operational efficiency that can be achieved through technology will be embraced by your competition; if not today - soon. The decision is not a question of whether or not to embrace the change but rather a question of whether to embrace such change in an informed way or an uninformed way.

The information highway is no different than any other highway, while there are risks there are also airbags, driver training and maps - be informed.

For The Records

Choosing The Right Accounting Software.

A constant problem faced by many business both large and small is ensuring the accounting records are in good order. These records are both a governmental requirement and a managerial requirement. Accurate and timely record keeping can lead to a better understanding of the success of business operations. Furthermore, timely filing of required government forms can result in receiving GST rebates sooner if they are due and it can eliminate penalties and interest for late filing.

Many companies fail to maintain adequate transaction journals. With the introduction of computerized accounting systems many journals are maintained within the accounting system. To the extent that these systems are utilized hardcopy records can be minimized. In the event that a company chooses not to use a function within an accounting system, hardcopy transaction records must be maintained for that function. It is not uncommon to find a company producing its invoices externally to the accounting system. Preferences in invoice appearance that are not available within an accounting system often prompt this decision.

In any case, whichever system is chosen a company should still maintain hardcopy records of cheques received and issued, cash receipts and disbursements, and invoices received. These items should all agree with the amounts contained within the system.

Companies often choose an accounting system without being fully aware of their requirements and the options available with different software packages. The most popular system on the market for small to medium sized businesses in Canada is QuickBooks. QuickBooks offer single or multi-user versions. The determining factor between obtaining a single or multi-user accounting system is the maximum number of user that will be on the system at any given moment in time. Another consideration is the amount of items that will be stored in the systems. QuickBooks Pro/Premier allows for a maximum of 14500 items including inventory items whereas the Enterprise version can handle significantly more. Other features include the ability to handle multi-currency transactions, job costing, time billing, importing of transactions, online banking and export features for enhanced reporting. In Addition there are various 3rd party software programs written to provide enhanced functionality. Furthermore with the release of the SDK (Software Developers Kit) custom application development is possible.

QuickBooks / Quick Books Pro

Please Note: These are not intended to offend

Q: What's the definition of an accountant?

A: Someone who solves a problem you didn't know you had in a way you don't understand.

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Three engineers and three accountants are traveling by train to a conference. At the station, the three accountants each buy tickets and watch as the three engineers buy only a single ticket. "How are three people going to travel on only one ticket?" asks an accountant. "Watch and you'll see," answers an engineer.

They all board the train. The accountants take their respective seats but all three engineers cram into a restroom and close the door behind them. Shortly after the train has departed, the conductor comes around collecting tickets. He knocks on the restroom door and says, "Ticket, please." The door opens just a crack and a single arm emerges with a ticket in hand. The conductor takes it and moves on.

The accountants saw this and agreed it was quite a clever idea. So after the conference, the accountants decide to copy the engineers on the return trip and save some money (being clever with money, and all that). When they get to the station, they buy a single ticket for the return trip. To their astonishment, the engineers don't buy a ticket at all.

"How are you going to travel without a ticket?" says one perplexed accountant. "Watch and you'll see," answers an engineer.

When they board the train, the three accountants cram into a restroom and the three engineers cram into another one nearby. The train departs. Shortly afterward, one of the engineers leaves his restroom and walks over to the restroom where the accountants are hiding. He knocks on the door and says, "Ticket, please."

Hooray, It's Payday!

Paying Less Taxes!!

One of the most often questions that business owners ask is, "How can I pay less taxes?" It is the right of any business owner/operator to receive the maximum benefit from their business activities as possible.

There are a number of ways to do this depending on whether the business is incorporated or a proprietorship/partnership. The income from a proprietorship/partnership is taxed at the same tax rate as that of its owner(s). This results in higher taxes being paid in periods of higher earnings and lower tax being paid in periods of reduced earnings. The goal of every proprietor/partner is to minimize taxes payable in periods of higher earnings.

1. The first step is to take advantage of all available business expense deductions. This will reduce your business earnings for the period in question.
2. Another step that can be taken is to pay your spouse and children for services they perform. This keeps the income levels of both the owner and the family members in the lowest tax brackets as possible. The net result of this is to increase take home pay for the household.
3. Another way of minimizing taxes payable is to maximize RRSP contributions in periods of higher earnings. RRSP's earn interest income tax free. The theory behind this is to reduce taxes payable in periods of higher earnings. The accumulated wealth held in RRSP's can be drawn upon in periods when earnings are low. Again, the goal is to keep income at lower tax rates.

Corporations are treated as a separate entity from their owners and, as such, are taxed separately. Owner/Operators that are established as private corporations can receive payments in the form of salaries for services provided to the corporation and in the form of dividends as a shareholder.

Proforma (mock-up) calculations should be performed to determine the idea mix between dividend and salary payments.

The key to remember when trying to reduce your tax burden is to plan ahead. Once the tax year in question is completed many opportunities are lost until the next tax year so act now!