Get inspired to build a profitable business with this essential guide
In the latest edition of this bestselling and authoritative reference, Small Business For Dummies explains how to set your business on the path for success. Using this guide, you'll discover how to nurture your entrepreneurial spirit, build a winning edge over your competitors, and respond to the increasing challenges of everyday business.
From the basics of setting up a budget to working out your exit plan, this book explains how to grow a profitable business that responds quickly to opportunities. You'll learn how to identify what's different about your business, and how you can use this knowledge to build your brand and generate above-average profits.
This new edition also covers:
Using business plans to stay one step ahead
Building positive teams and managing employees
Creating financial projections that actually work
Attracting the kind of customers you really want
Expanding your online presence
Whether you're a small business veteran or new to the game, this guide provides practical advice and inspirational guidance for every step along the way.
Small Business for Dummies
Description
Table of Contents
Introduction 1
About This Book 1
Foolish Assumptions 2
Icons Used in This Book 2
Where to Go from Here 3
Part 1: Getting Started 5
Chapter 1: Is Small Business for You? 7
Working for Yourself - A Dream Come True? 8
Doing what you love to do 8
Earning pots of money (here's hoping) 8
Being your own boss 9
Staying home 9
Working for Yourself - Reality Strikes 10
Teetering on the edge 11
Working night and day for little pay 11
Weathering feast and famine 12
Getting the Timing Right 12
Timing it right for your idea 12
Timing it right for you 13
Timing it right for the economy 14
Staying Safe or Inventing the Wheel? 16
Playing it safe 16
Finding your own niche 16
Going out on a limb 17
Assessing your chances of survival 17
Getting the Government to Help You 21
Setting Yourself Up for Success 22
Chapter 2: Figuring Out What's So Special about You (And Your Business) 23
Understanding Strategic Advantage 24
Identifying your secret weapon 24
Focusing on real-life examples 25
Justifying Why You Can Succeed 27
Uncovering your inner mojo 27
Asking three key questions 27
Growing your advantages over time 28
Making sure a demand really exists 29
Understanding How Risk Relates to Gain 29
Figuring Out Who Your Competitors Really Are 30
Understanding why you need to do this 31
Grouping competitors 32
Profiling your competitors 33
Thinking about future competitors 33
Choosing Your Competitive Strategy 35
Pick one, and only one, competitive strategy 35
Connecting your competitive strategy to your strategic advantage 37
Chapter 3: Starting from Scratch, Buying a Business, or Joining a Franchise 39
Weighing Up the Good and the Bad of Buying a Business 40
Buying an existing business - the upside 40
Buying an existing business - the downside 41
Asking the Right Questions 42
Finding out who owns the intellectual property 42
Analysing sales trends, profit and break-even 43
Clarifying what the purchase price includes 43
Calculating the 'True' Earnings of a Business 45
Valuing an Existing Business 47
The times earnings method 48
The capitalised earnings method 49
The strategic advantage method 50
Dotting Your I's, Crossing Your T's 50
Buying a Franchise 53
Considering the positives 53
Weighing up the negatives 54
Exercising Due Diligence 55
Wising up 55
Putting a franchise through the griller 56
Doing your sums 58
Part 2: Finding Your Entrepreneurial Spirit 61
Chapter 4: Separating Yourself from Your Business 63
Deciding What Path You Want to Take 64
Doing the thing you love to do 64
Getting help and delegating what you can 65
Building a business that's separate from you 67
Creating a way of doing business 68
Wearing Different Hats 69
Building a Business with a Life of its Own 71
Defining your difference 71
Documenting and building systems 72
Setting goals for you and your business 74
Planning for a graceful exit 75
Appreciating the Limitations of Your Business 75
Chapter 5: Staying One Step Ahead 79
Taking an Eagle-Eye View 80
Looking at what's happening in your industry 80
Being realistic about industry decline 83
Riding the wave of opportunity 83
Rating Your Capabilities 84
Putting yourself through the griller 84
Prioritising where you need to do better 86
Identifying Opportunities and Threats 86
Doing a SWOT Analysis 89
Putting theory into practice 89
Translating your SWOT analysis into action 90
Creating a Plan for Change 91
Chapter 6: Creating a Business Plan 93
Getting Started with Your Plan 94
Charting a True Course 95
Setting off on your mission 96
Saying what you're about 97
Matching goals to your mission 97
Assessing the Environment 98
Analysing outside influences 99
Checking out the competition 99
Justifying market demand 99
Declaring Your Battle Plan 100
Building your SWOT analysis 100
Choosing a strategy 100
Expressing your competitive advantage 101
Outlining Your Marketing Plan 101
Developing your marketing plan 101
Defining your customers 102
Articulating your online business strategy 103
Describing Your Dream Team 103
Presenting Financials 104
Balancing dreams against reality 104
Building on history to create a picture of the future 105
Staying real with benchmarks 106
Chapter 7: Getting the Legals Right 107
Picking a Business Structure 108
Independent and single 109
Tea for two 109
We've got company 110
Matching the Name to the Game 111
Using your own name 111
Thinking about how others will find you 112
Making sure you're not on someone else's patch 112
Checking for trademarks 112
Registering your business name 113
Avoiding trouble 114
Protecting Your Brand 115
Registering trademarks 115
Protecting other kinds of intellectual property 116
Registering with the Powers That Be 117
Getting that baby's number 117
Signing up for taxes (unavoidable, I'm afraid) 117
Checking out what else you need 118
Working with Contracts 119
Understanding when you're legally bound 119
Dealing with standard form contracts 120
Knowing what to look for in a contract 121
Signing on the dotted line 122
Negotiating Lease Contracts 123
Part 3: Planning for Profit 127
Chapter 8: Figuring Out Prices and Predicting Sales 129
Choosing a Pricing Strategy 130
Setting prices based on costs 130
Setting prices based on competitors 130
Setting prices based on perceived value 131
Building a Hybrid-Pricing Plan 132
Offering a premium product or service 132
Cutting back the frills 134
Getting creative with packages 134
Charging different prices for the same thing 135
Forming Your Final Plan of Attack 136
Monitoring and Changing Your Price 137
Building Your Sales Forecast 138
Calculating hours in a working week 138
Increasing sales with extra labour 140
Predicting sales for a new business 141
Predicting sales for an established business 142
Creating Your Month-by-Month Forecast 144
Chapter 9: Building Profit Projections 147
Understanding the Cost of Your Sales 148
Costing your service 148
Costing items that you buy and sell 149
Costing items that you make 150
Forecasting Expenses 152
Forecasting monthly expenses 152
Forecasting expenses for the year ahead 154
Allowing for loan repayments and interest 155
Allowing for personal and company tax 156
Building Profit Projections 157
Step one: Starting with sales 157
Step two: Adding variable costs 158
Step three: Showing gross profit 160
Step four: Adding expenses and revealing the bottom line 160
Understanding the Whole Deal 161
Factoring Personal Expenses into the Equation 162
Chapter 10: Calculating Your Break-Even Point 165
Identifying Your Tipping Point 165
Understanding the concept of break-even 167
Factoring personal expenses into the equation 167
Putting theory into practice 168
Changing Your Break-Even Point 171
Looking at Things from a Cash Perspective 173
Chapter 11: Creating Your Marketing Plan 175
Laying Down the Elements of Your Plan 176
Going to the heart of the matter 176
Expressing your difference 177
Defining Who Your Customers Are 178
Analysing your customers 179
Understanding what it is your customers really want 179
Thinking creatively about channels 180
Researching the market 181
Analysing Your Competitors 182
Setting Sales Targets 183
Expressing sales targets in dollars and cents 184
Expressing sales targets in other ways 184
Building Sales Strategies 186
Growing a brand that people want 186
Pricing things right 187
Defining your social media strategy 188
Engaging customers and building trust 189
Expanding Your Reach Offline 191
Networking (yes, actually in person) 191
Investing in public relations 192
Creating marketing alliances 193
Keeping Yourself Honest 193
Comparing targets against actuals 193
Measuring conversion rates 194
Part 4: People Power 197
Chapter 12: Making Service Your Business 199
Creating a customer service culture 200
Asking for feedback at every touchpoint 200
Being prepared to listen 201
Cultivating a positive workplace 202
Going the Extra Mile 203
Delivering on your promises, and more 203
Understanding how to build trust 206
Brainstorming how you can do better 206
Appreciating the need for speed 207
Continuing service after the sale is made 208
Evaluating Your Performance 208
Designing surveys 208
Measuring your speed 209
Reflecting on other service benchmarks 209
Showing That You Care 211
'I appreciate how you feel' 211
'I've done that sometimes!' 212
'Let me confirm what you just said' 212
Can I help you with anything else? 213
Dealing with Complaints 214
Why complaints are serious 214
How to respond to complaints 214
Chapter 13: Becoming an Employer 217
Becoming an Employer: The First Steps 217
Getting employees to fulfil their part of the deal 218
Covering employees for accidents 219
Ensuring your software is up to speed 220
Subscribing to super 220
Meeting Minimum Pay and Conditions 222
Understanding what laws apply 222
Choosing between part-time, full-time or casual 224
Playing Safe and Playing Fair 226
Being practical, not pedantic 226
Blonde jokes are over 228
Chapter 14: The Art of Management 229
Drawing Up a Position Description 230
Playing the Recruitment Game 231
Reaching the best applicants 232
Selling the position 232
Picking the Best 233
Asking the right questions 234
Avoiding the wrong questions 234
Matching people and positions 235
Offering Someone a Job 236
Sending an offer of employment 236
Setting a probationary period 237
Learning to Lead 238
Daring to delegate 239
Building a positive workplace 239
Communicating every way you can 240
Don't Worry, Be Happy 241
Rewarding with more than money 241
Reviewing performance regularly 242
Managing change 243
Managing Difficult Employees 243
Figuring out whether the problem is actually you 244
Knowing when to draw the line 244
Giving an employee a warning 245
Terminating an employee 246
Part 5: High Finance 249
Chapter 15: Financing Your Business 251
Budgeting Enough for Start-Up 251
Creating a start-up budget 252
Adding enough to live on 253
Assessing how much you really need 253
Separating Start-up Expenses from Operating Expenses 254
Dealing with initial start-up expenses 254
Putting theory into practice 255
Sizing Up Your Finance Options 257
Taking out a business loan 258
Finding a new lease of life 260
Getting hitched with chattel mortgage or hire purchase 261
Canoodling with credit cards 262
Seeking equity partners 262
Choosing Your Lender 263
Compare interest rates and loan fees 263
Consider other interest(ing) factors 264
Watch out for honeymoon periods and interest-free credit 264
Chapter 16: Cooking the Books 267
Figuring How Often to Do the Deed 268
Doing your books just once in a while 268
Doing your books regularly 269
Choosing Software that Fits 270
Creating Recordkeeping Systems 272
Keeping track of income 272
Tracking expenses 273
Storing your business records 273
Doing the bare basics 274
Keeping Track of How Much You're Owed 276
Asking nicely 276
Getting drastic 277
Meeting Bookkeeping Deadlines 278
Chapter 17: Understanding Financial Statements 281
Discovering What Reports You Need (and When) 282
Telling a Story with Your Profit & Loss Report 283
Understanding how it all works 283
Looking at sales 285
Counting the costs 285
Weighing up your expenses 286
Taking a Snapshot with Your Balance Sheet 287
Understanding the fine print 288
Building documentation to support each figure 289
Appreciating your net worth (someone has to, after all) 291
Why Profit Doesn't Always Mean Cash 291
Gazing into the deep, black hole 292
Looking through rose-coloured spectacles 292
Doing the sums for sustainable growth 293
Budgeting As If You Mean It 294
Creating your first budget 294
Recognising relationships 295
Understanding the psychology of budgets 297
Developing your budget in tune with your business plan 298
Looking at Cashflow 299
Chapter 18: Taming the Tax Tyrant 303
Getting a Grip on GST 303
Deciding whether to register or not 304
Choosing your cashflow destiny 304
Reporting for duty - how often? 305
Coughing up 306
Staying out of trouble 306
Growing Some Recordkeeping Smarts 307
Treating receipts with respect 307
Cultivating your obsessive-compulsive streak 307
Riding that (t)rusty chariot 308
Declaring home office expenses 309
Planning Ahead 310
Getting an instant deduction 311
Managing stock valuations 311
Salting funds away into super 312
Staying Out of Trouble 312
Don't claim what you can't 312
Be able to back up your story 313
Avoid Personal Services rulings, if you can 314
Monitor shareholder or director loans closely 314
Don't kid yourself about the cash economy 315
Budgeting for Tax 315
Planning for that difficult second year 316
Putting funds aside 316
Budgeting for GST and PAYG 317
Fessing up if you're short on cash 318
Part 6: The Part of Tens 321
Chapter 19: Ten Things to Do If You Hit Hard Times 323
Work Out How Bad Things Really Are 324
Get Breathing Space 325
Innovate! 325
Slash Those Expenses 326
Pull Back Personal Spending 327
Get Rid of Dead Weight 327
Chase Up Overdue Accounts 328
Run Special Offers 328
Re-Jig Your Margins 329
Don't Be a Shag on a Rock 330
Chapter 20: Ten Tips for Selling Your Business 331
Start with a Game Plan 332
Prepare Well in Advance 332
Give Your Financials a Make-Over 333
Get a Professional Valuation 334
Go for the Max 334
Plan for a Few Bills 335
Woo the Buyer 336
Do Due Diligence in Advance 337
Be Straight Up with Employees 339
Spread the Word 339
Index 341
Author Description
About Veechi Curtis
Born in Scotland, Veechi Curtis attended university in Bathurst, NSW, where she completed her degree in Accountancy and Business Management. Specialising in business consulting and accounting software training, she has been an MYOB Certified Consultant and QuickBooks trainer for over a decade, training many hundreds of businesses in how to make their accounting software work for them.
As a journalist, she has written for many publications including Australian PC World, Australian Personal Computer, CCH Australia Limited and a columnist for the The Sydney Morning Herald.
Curtis is a qualified accountant and business consultant who specialises in teaching small businesses about technology and finance. She is the author of MYOB Software For Dummies (now in its seventh edition); QuickBooks For Dummies, Second Edition; Small Business For Dummies, Fourth Edition; and Creating a Business Plan For Dummies (publishing March 2014).