Planning your business – How will you get paid?

Our blog from April 27 – Key questions to consider when planning your business

paid red square stamp

paid red square stamp

outlined some key questions to consider while planning to open a new business.  This week’s post will focus on the financial question, how will you and your business get paid?

This question includes important factors such as method of payment and related costs, and terms and conditions of payments, such as deposits and advanced payments.

There are many payment options available to business owners. Before signing up for one, it is important to consider the target market customers and determine how that specific market would want to pay?

There are various methods of accepting payment. These include:

Cash

  • Generally considered the best method as there are no additional costs to accept payment.

Credit/debit

  • Very popular with consumers
  • There are variable costs associated with accepting debit/credit cards depending on if the payment is made in person or over the phone/internet.
  • If the card is a premium/affiliate credit card then the costs could increase depending on the service provider.
  • Be sure to investigate before signing up to a merchant account.

Cheque

  • Very common in business to business transactions.
  • Some businesses may request a “certified” cheque to ensure payment, however, the term “certified” really means that the institution “certifies” that the funds were in the account when the cheque was written.
  • It does not certify that the funds are guaranteed to be available when endorsed.  Be sure to understand the risks before accepting cheques.
  • Credit/debit card
  • Electronic funds transfer
  • Money order/Bank draft

Electronic funds transfer (EFT)

  • EFT are also a business to business financial instrument and are useful for international/third party managed transactions.
  • They reduce risk of non-payment.
  • This type of transaction does have costs associated to the third party service provider such as a financial institution or broker.

Bank drafts/money orders

  • These methods are as liquid as cash and guarantee payment will be made.

Payment terms and conditions should also be addressed to avoid any misunderstanding with customers.  These should be visible and available to all customers.

To discuss these and other topics for business start-ups The Halton Region Small Business Centre has resources to help.  One of the goals of the Centre is to empower small and medium-sized enterprises and give you the tools to achieve success.  For more information about resources, services, business events and seminars, contact us by dialing 311, 1-866-442-5866, online at halton.ca/smallbusiness, by email at smallbusiness@halton.ca or

 

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How will you reach your customer?

Our blog on April 27, 2015 – Key questions to consider when planning your

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business – introduced four specific questions that an entrepreneur can ask to help get a head start on a business plan. This week’s post will focus on key question number two – “How will you reach your customer?”

How you reach your customer depends largely on who your customer is and what the product or service is that you are offering. Once you determine who you are targeting you will need to determine a realistic budget then decide on a schedule. When starting out, it is typically easier to manage your marketing if you concentrate on a couple of marketing channels. Select a few marketing tactics that fit your audience and your budget and focus on making them the best that they can be.

Track your progress – make sure you are measuring the results of each tactic and continue to use the ones that are giving you the best results. Reaching your customer really is all about having the right product, in the right place, at the right time for the right price.

To help get you started, here are a few ways to reach out to potential customers: Continue reading

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Who Is Your Customer? From The Outside Looking In

Our April 27th blog “Key questions to consider when planning your business” introducedThe Five W's of Business four specific questions. Today we are going to focus on the first – “Who is your customer?”

Every effective business plan begins with a clearly defined view of the most ideal buyer. Profiling who they are, what they care about, why they buy, and what benefit your offering provides will allow you to craft a message that suits their needs and sets your new business apart from the others in the market.

Defining and understanding more than one specific target customer is usually better than defining only one very vague target. Continue reading

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Key questions to consider when planning your business

Starting a small business always starts with an idea. The unfortunate truth is many peopledoodle business ok come up with excellent business ideas but never move forward with them because the thought of developing a business plan seems overwhelming.

While developing a plan does take a lot of work, there are 4 simple questions that you can ask yourself to help give your business plan a head start. These questions can also help provide you with insight into the type of research you should be doing and can come in handy when looking for external assistance or advice (visit halton.ca/smallbusiness to learn how we can help).

This post acts as an introduction into the 4 simple questions you should ask yourself when starting to plan your small business. Check back over the next couple of weeks as we will break down each question in more detail to help you understand how they can help get your small business started.

Marketing related questions:

  1. Who is your customer? 

This may sound like a simple question however it is not as simple as it sounds.  First you must decide if you want to be in a business to business or business to consumer relationship.  Once you determine your business relationship you can start to segment the customer into groups.  For example, your primary target market describes your business’ ideal customer.

  1. How will you reach your customer?

Once we know who our customer is, we can then understand what is important to them and where they may look for your product/service. This is a good launching space for the development of your market research strategies.

Financial related questions:

  1. How will you get paid?

Once you establish your target customer, you can determine which method of payment they may prefer. Will you receive cash, credit, cheques and other methods? Advanced payments and terms?

When you start a new business it is essential to determine how much money  you need to pay your monthly obligations, or how much do you want to earn?  You will want to test the viability of the business model and if it can meet your needs.

Before starting a new business, or developing a business plan, think about the questions above and be honest with your answers.  The information you gain will make the steps in developing your business more manageable.

One of the goals of the Centre is to empower small and medium-sized enterprises and give you the tools to achieve success.  For more information about resources, services, business events and seminars, contact us by dialing 311, 1-866-442-5866, online at halton.ca/smallbusiness, by email at smallbusiness@halton.ca or visit us at 1151 Bronte Road, Oakville.

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How to get the most out of networking

Networking has become a hot topic in the past few years.  It is one of the best ways toconversations promote your business.  The whole spectrum of what networking is all about has changed.  It is not just about meeting people, it is also about creating business relationships and cultivating those relationships so that your external network can grow, resulting in greater visibility for your business.

Here are a few tips on how you take advantage of your next networking opportunity.

Be in the moment

You should be prepared to listen and make eye contact and keep your attention focused on who you are talking to and not on what is going on around you. In the business world, conversation can be a powerful tool if used right.  You really need to consider carefully what is being said during a conversation and how effectively you are communicating your thoughts and ideas.  It is then you can evaluate the return on conversation.

Prepare before you attend

Before you attend your next event sit down and formulate a plan.  Consider how you are going to network and what questions you are going to ask.  Make sure the questions will help to create a clear picture of the other person and their business so that you can make good decisions. Continue reading

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National Volunteer Week – Thanking Our Local Professionals

National Volunteer Week (April 12 – 18) is a time to recognize, celebrate and thank theThank you - business card millions of volunteers across Canada who generously donate their time and energy.

Volunteers are people from all walks of life with a common desire to make a difference in their community and personal life by giving their time and expertise.

Halton Region Small Business Centre would like to thank the many business professionals who volunteer in our Access to Professionals Program, offering guidance and support to new entrepreneurs and businesses in Halton.  Professionals in our group include lawyers and accountants, marketing, human resources, insurance, import/export, website, e-business experts and business coaches. Continue reading

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Financial statements are a record of your businesses health

Financial Statements are a collection of reports that provide information on your young businessman in a suitbusinesses health. It is very important that you review your financial statements on a yearly basis as they can help provide you with a firsthand look at how your business is performing.  A good time to review and analyze your statements and check the health of your business is during tax reporting season.

Viewing and understanding your statements can help you plan for the next year and help you make any necessary adjustments to improve your business’ performance.

Three important statements for your small business!

  1. Balance sheet: a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.
  2. Income statement: measures a company’s financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities.
  3. Cash flow statement: shows how changes in your balancesheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities.

Let’s look closer at the income statement and the insight it can provide:  

In the example below, we see that total sales equal 100% of income, and that each expense item is a percentage of that income. When looking at the ratios (a ratio is the percentage of income that has been used to pay particular business expenses) in the right column we can see that each expense indicates the percentage of monies used to pay that expense. If we compare year over year we can review and analyze to see if our expenses are increasing, decreasing or maintaining ratios. This is a great way to keep track of where money is being spent.

To illustrate this, if we see a rise in our COGS (cost of goods sold), then we can address this by negotiating better pricing from suppliers, source new suppliers, or possibly look at raising our sale price to cover the cost increase.

Ratio analysis can be complicated but is a great way to give your business a quick check-up. Ask a small business consultant or your accountant or bookkeeper for further information

April 6 Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

The Halton Region Small Business Centre offers a financial basics course during the year.  One of the goals of the Centre is to empower small and medium-sized enterprises and give you the tools to achieve success.  For more information about resources, services, business events and seminars, contact us by dialing 311, 1-866-442-5866, online at haltonsmallbusiness.ca, by email at smallbusiness@halton.ca or visit us at 1151 Bronte Road, Oakville.

 

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