Four Suggestions for Developing an Idea for Starting a Business

The first step to finding a business that’s right for you is to develop an idea you can become passionate about. Starting a business doesn’t require you to develop a new product or process. In fact many successful businesses are started by selling a known successful product or process that is already branded and in demand. If your goal is to start a business, without the involvement of partners, you have to search your inventory of skills as a starting point, for developing a business idea. In fact, it doesn’t make much sense to even think about planning until you develop an idea. I offer these four suggestions for how you might develop an idea for your business:

  1. In the end, you have to follow the money. But a good first place to search for a business idea, would be to develop a list of everything you’re passionate about. One of your passions could be something that excites other people as well. If your passion is lounging, you could develop an idea for a line of lounging wear or supplies like pillows. If your passion is eating you may be able to develop a new taste sensation. If fashion is your passion, you may be able to design clothes or accessories.
  2. If you have a hobby in which you are an expert, if it has the potential to earn a profit, that may be the source of your idea. If you’re an avid model rail road enthusiast, you may be able to build a business around designing custom rail road layouts, for sale. If you like fish or plants, you may design a business around an aquarium or plant decorating company, for rentals to offices. Just be certain you can make a profit because the IRS will frown on hobbies turned into businesses that don’t earn a profit.
  3. Consider work and other experiences you already have. Unless you are very young, it’s likely you have had many jobs. The issues you addressed at one of those jobs may provide you with an idea you could turn into a business. If you ever worked as a secretary, you could earn a lot more money setting up an administrative overflow service. Performing the overflow work of a few large companies has the capacity to pay far more that most secretaries earn.
  4. If you are creative, have an engineering background or feel you’re capable of improving on existing products or processes, consider designing a new product or process. This unfortunately may be the most difficult method for developing an idea for a business. Your new product would need to be branded and promoted. Sometimes it may be best to license your idea to a large company. This is easily the most challenging method for developing a business to start. But, if you think you have what it takes, this may be a possibility. This could lead to the collection of royalties or a big payoff if your idea is good.

The best thing you can do when you are considering opening a business is to absorb all the information you can get your hands on about the industry your business will operate in, idiosyncrasies related to the specific business you plan to open, and best practices for promoting your business. Because once you develop an idea, you then have to determine what problem it will solve for your target market and the consumers most likely to buy your offering. Finding an idea for a business you can open is simply one of the many steps you must perform prior to planning or preparing to open for business.

Family and Friends As a Funding Option

The average cost to start a business is $30,000. In addition, starting a business has proven to be a challenge for many; young and old. What are beginning entrepreneurs who face this situation supposed to do? Well, many have utilized “friends and family” as a financial source. Why not; some may ask. Friends and family normally have their best interest at hand; they tend to be very trusting when it comes to lending and investing in the new entrepreneur business venture.

For example, Paul Graham the Vice President of his work on “Lisp” which eventually became the Yahoo Store; raised $10,000 from a close friend. However, Paul Graham really thought about this decision before executing it. His friend not only knew him well; but he was also wealthy and a lawyer. Likewise, Paul received funding and access to free legal advice.

It’s important to research the advantages and disadvantages of accepting a “family and friend” loan. There could definitely be potential risks and/ or blessings when completing this type of transaction.

Let’s begin by discussing the advantages of “Friends and Family” funding

1. Your friends and family know you personally. They are less likely to judge your funding request based on your personal credit rating or business credit score.

2. Your family and friends will give you time to develop the business vision; because they want you to succeed; likewise, their terms maybe more favorable than those offered by financial institutions; most likely will not be as demanding on your financial projections as a professional investor

3. Your family and friends funding will assist you in requesting funding from professionals in more prestigious valuations.

Next discuss the disadvantages of “Friend and Family” funding
1. You may end up in a heated lawsuit and break up family and friend relationships if or when things become challenging.
2. They may not be able to bring wisdom, experience or resources that could enhance your business – they may begin to just be in the way.
3. If you receive a significant amount of funding; you could be potentially putting your “friends and family” at risk of losing everything.
4. You may put the people you love best at risk, if they are giving you a significant portion of your savings

A few great pointers to consider and/ or to keep in mind are:
1. Just as Paul Graham, Vice President of YahooStore did; choose someone with solid business skills; one who understands legal issues as well as any risk and benefits that could affect you.
2. Demonstrate your passion and diligence for your business venture; take the time to research your idea before you present and request funding from family and friends. This will show them that you are serious, thorough and passionate.
3. Create a legal agreement or contract with “family and friends”. This will ensure all expectations are spelled out and everyone is on the same page. It will explain issues such as how funding will be used, how progress will be measured, and how repayment will be made.

4. Be realistic about the amount of funding needed; this is why it is very important to complete research beforehand. You must remember that this is still someone else money; and they deserve and expect to be paid back like the bank would require. Asking yourself questions such as:
a. How much money is needed to implement your vision?
b. How much money do you need to pay employees, buy inventory, and keep the lights on.
c. How much money do you need for your salary
5. You may reduce your funding obligation to any single person by asking multiple people for smaller sums. But, remember to keep track of each person and collaborate consistently with each individual.

Profits Make the Difference: Social Entrepreneurship

What is a social entrepreneur?

In a nutshell, a person who sets up and runs a profitable business enterprise with goals to make a difference in society.

A social entrepreneur sets up a business which aims to earn money to support and deliver problem-solving solutions that help people with social issues such as poverty or making a physical or financial contribution to save an endangered species.

Social intervention, commonly associated with non-profit organizations, is fast becoming a different concept through the response and establishment of Social Entrepreneurs. Thousands of people go out each day to make a difference, and nearly all of them have limited funding, which means that the project has a limited life span.

The message to businesses in the 21st Century is that they need to pick up the ball. Money is in ever decreasing supply for needy people around the world, but the problem won’t go away. More social entrepreneurs are needed to take responsibility and lead the way to combat environmental and social problems by getting involved with economically sustainable projects.

Give a person a fish, and he will eat it and still be hungry. But, if you show him how to catch his own fish, he will have an endless supply of food.

One of the most progressive social enterprise businesses has been the involvement of socio-economic groups in micro-finance projects. Leaders on the ground realized that to keep the social reforms moving forward, best practice dictated giving people financial stability and allowing them to work towards their own social and environmental upliftment.

How to start a Social Enterprise

Finding a viable business project, which will be both sustaining and profitable, is inherently difficult. Coming up with the most suitable business that not only turns a profit but also assists a wider community, without negatively impacting on environmental and social issues are what lead to failure. It is pointless taking a failed business and trying to turn it into a success. What is needed is a new idea with new, sustainable markets, that will take people out of poverty and engage them in keeping up the program for the long term.

Think Outside the Box

Get a big idea that is not local consumer based. Focus on setting up a product or service which has a more powerful end-user, such as government or industry. By creating a problem solver for business, such as software which calculates dirty factory emissions, the business not only helps the company and workers but also gets cleaner air to the surrounding population.

Harness market forces for social enterprise. Create a positive knock-on effect in society.

It is not a difficult proposition when you head straight to the government to find out what their social needs are. Often there are social problems such as alcohol or substance abuse. Investing in these areas can be a little tricky. It is more likely that a big business project will create an upliftment of the socio-economic group with anti-social behavior and substance dependency.

The Social Element

Giving money to charities operating within your business location or neighboring area is another method of sustaining people in dire need of financial or physical assistance. Once could argue that making a tithe to the community charity chest is an excellent way to combat hardship.

The social entrepreneurship, however, is not coming to the fore with handouts. Engaging the group needing the financial assistance is a better way to take them out of hardship. The micro-finance scheme mentioned earlier is one such method. Another is to create an environmental project which includes the population.

Cleaning up streets and neighborhoods, planting trees and gardens and assisting those people who are living in poverty by helping them address their slum-like conditions of life, is one of the most uplifting projects to undertake. It can also be one of the most challenging and involves the formation of a business type platform for successful operation.

Micro-finance

Back again to the subject of lending to the poor to enable small entrepreneurs to get ahead and make long-term changes to their lives. Kiva International, based in San Francisco, runs a successful micro-finance business.

Poor Consumers

One of the challenges facing the poor is their inability to do anything about their environment when making purchasing decisions. Inscrutable suppliers flood the market with cheap and nasty goods. We won’t mention the primary offender here, rest assured that they are a world player when it comes to flooding the third world with junk and need to be stopped.

Setting up a business in an impoverished society is harder than setting up in a first world, especially when that group is in a far flung third world country. However, providing the funds for a small business enterprise which makes soap and washing powder, which is environmentally safe, can and should be done.

Think back to the West African Ebola outbreak of 2013 to 2016. The disease might not have taken hold if the villagers had access to cheap soap for washing and hygiene.

Crowdfunding and Angel Donors

The market for free trade items is growing. The first world is becoming more aware of the environmental impact that their products and services are causing in the poorer countries, giving social entrepreneurs in the first world the biggest opportunity. By setting up a business in the third world which manufacturers and sells products such as coffee and clothing that are partly organic and environmentally neutral.

The point is, make a difference with your social enterprise. Find a market where every industry is harming the environment and capture a market share by offering a better alternative. Governments and NGO’s around the world are seeking ways to combat poverty. Often it just takes one energetic entrepreneur to have an epiphanic moment and come up with a “magic bullet” business solution.

It’s not a piece of cake!

Don’t think that setting up and leaving the enterprise is the done deal. Remember, the people you have come to help are not business savvy and marketing their products will become one of the primary functions for the social entrepreneur. You wouldn’t leave money on the table in a typical business environment. Keeping things going for a social enterprise is just as important. Make profits, nothing wrong with that. Doing your bit for society will make an effort seem like child’s play.

How Good Bookkeeping Can Help Protect & Grow Your Business

INTRODUCTION

Bookkeeping is a vital segment of business. Most accountants are looking at your books after the fact and don’t have a handle on all of the detail. As a CPA with over thirty years of experience I can tell you quite frankly that it’s not my job to know all of the details. If your accountant does then he is more of a glorified bookkeeper and you’re paying accounting rates for bookkeeping services. I have handled either directly or indirectly thousands of small businesses and there is no way for any accountant to have the same level of involvement that a bookkeeper has.

A bookkeeper is a financial gatekeeper recording and reconciling all of the businesses transactions. The accountant’s role is to oversee the bookkeeper and make sure that:

All of the transactions have been entered.
The accounts have been reconciled.
The categorization of the transactions are accurate.

Even when doing an audit there is a statement included in the management representation letter that states specifically that an audit is not intended to detect fraud. An audit is conducted to certify that the businesses financial statements reflect accurately, the financial position of the firm and the results of its operations. It’s not going to detect padded expense accounts, over billing, waste, inefficiencies and theft. If it is uncovered it’s usually by luck or someone’s blatant stupidity.

A certified audit is the highest standard of financial reporting there is. Forensic accountants can and do find theft and fraud when hired to do so. Those types of engagements are expensive and usually only occur when there is a divorce, partner disagreement or suspected financial maleficence. Small businesses do not have audits or forensic accounting conducted on a regular basis leaving only themselves, their employees and hopefully a good bookkeeper to watch their money.

Protect Your Business

You worked hard to get where you are. How can you be sure all of your profits are staying in the business. What happens if you get that dreaded letter You are commanded to produce your books and records… ” It’s the kind of stuff that creates anxiety, stress and lost sleep.

Did you ever hear one of those stories where a trusted employee stole $xxxxxx amount of money. If you read between the lines like I do you will learn that the transgressions were going on for a long time. Not only that, as an accountant I could see a few little safeguards that should have been in place to protect the business owner from this happening.

A good bookkeeper will develop a good bookkeeping system with the aid of a pro-active accountant. An understanding of how you run your business is essential for your bookkeeper to help create those checks and balances that insure against:

Government Audits
Inefficiencies
Theft

Grow Your Business

A good bookkeeper working with a good bookkeeping system can help you grow your business. Any successful entrepreneur will tell you that one of their keys to success is knowing their numbers. Most small business owners put the onus on their accountants but the truth is that they are usually not in the unique position the bookkeeper is to identify problems as they occur.

Timing is everything and you need to have a few pieces in place to be in that comfortable place knowing that you are getting the most out of your business. Your bookkeeper can help put you in the position to:

Know your numbers
Utilize Financial Reports
Forecasting Cash Flow
Create Income & Expenses Budgets

The Solution

You need to have a trained bookkeeper to watch over your accounts. It doesn’t matter who that is but they must be trained as a bookkeeper! Not everyone can do bookkeeping and almost nobody can do it unless they have been trained. The founder of Bedrock Business Builders is a CPA and has been successfully teaching individuals bookkeeping for over twenty years. Joe has been utilizing his own remote bookkeeping system to train and oversee his staff of bookkeepers since 2004. Learn how to do your own bookkeeping or have one of your staff become a Bedrock Bookkeeper in as little as 30 days!

Joe DiChiara is a best selling author, publisher and mentor. He has an extensive career in business serving thousands of small business owners over a 30 year career as a Certified Public Accountant. Today Joe’s goal is to empower small business owners by teaching them the fundamentals of starting, building and running a small business. His publishing business is an extension of that mission as he believes that writing is one of the most powerful tools an entrepreneur can employ. He feels strongly that if you have an inspirational story, knowledge and experience that can help, educate, inspire and empower people it’s your duty to share it with the worl