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BULLETIN •ESTIMATING COST Estimating Costs In order to determine how much seed money you will need, you must estimate the costs of your your business for at least the first several months. Every business is different, and has its own specific cash needs at different stages of development, so there is no universal method for estimating your startup costs. Some businesses can be started on a shoestring budget, while others may require considerable investment in inventory or equipment. It is vitally important to know that you will have enough money to launch your business venture. To determine your startup costs, you must identify all the expenses that your business will incur during its startup phase. Some of these expenses will be one-time costs such as the fee for incorporating your business or price of a sign for your building. Some will be ongoing, such as the cost of utilities, inventory, insurance, etc. While identifying these costs, decide whether they are essential or optional. A realistic startup budget should only include those things that are necessary to start that business. These essential expenses can then be divided into two separate categories: fixed and variable. Fixed expenses include rent, utilities, administrative costs, and insurance costs. Variable expenses include inventory, shipping and packaging costs, sales commissions, and other costs associated with the direct sale of a product or service. The most effective way to calculate your startup costs is to use a worksheet that lists all the various categories of costs (both one-time and ongoing) that you will need to estimate prior to starting your business. The following site features a calculator that could be a great help in estimating your Startup costs click here >>•USA VISA IMMIGRATION PROCESS The United States visa immigration process is not the complex mystery everyone thinks it is if you have the right legal advisor guiding you through the system. In order to navigate through the complex governmental bureaucratic network, you have to know what the government is looking for and how to best provide it. Simply stated, the government wants a thriving economy and its citizens employed in a fruitful and productive work environment. How does understanding the visa immigration process help you to obtain a visa? By being aware of the types of visas available to foreigners and the requirements for the various visas, you will have gained a foothold in the long and complex immigration process. For example, the E-2 Treaty Investor visa is designed for foreigners who are citizens of countries holding investor treaties with the United States. It requires the use of the investor’s personal funds in order to invest in a U.S. business. The investor must own at least 50 percent of the prospective US business, must serve in an executive, managerial or specialized knowledge capacity and the business must contribute to the American economy by employing U.S. citizens and through the purchase and sale of goods or services. The opportunities for investors are endless. Do you like gardening? A flower shop or a yard maintenance service would be the appropriate business investment for you. Do you tinker with tools or equipment? You could use your skills as the owner of a hardware store, an auto-repair shop, or a carpentry handyman service. Restaurants, book stores, child care facilities, beach resorts, beauty salons, construction companies, packaging and mailing services, art supply stores, novelty shops, and graphic design services are just some examples of the many successful businesses owned and operated by E-2 visa holders who first consulted with Visa Services before embarking on the immigration process. Key to the E-2 investor visa is the actual investment. While Visa Services uses the general “rule of thumb” that the amount of capital should be at least $100,000, profitable businesses can sometimes be started with less than that figure and still qualify for an E-2 visa, provided that certain guidelines are met. First, the capital to start the E-2 business should put the investor at a substantial risk. “Substantial” means that the investment is around the $100,000 figure, and “risk” is the possibility that the investor could take a loss if the business does not succeed. The higher the investment and the risk, the better your chances of getting your E-2 visa approved. Second, the business must support at least two full-time employees. Visa Services stresses to its clients that, although there is no minimum net profit that the business must generate, the purpose in investing is to make a profit that will allow expansion of the business which in turn will create more job opportunities. Ideally a business should benefit the investor, the employees and the local economy. Third, an E-2 business must be engaging in trade and not be a passive investment. It must have an economic impact on the local economy through the purchase of goods and services from its American suppliers. Fourth, the investor must be an essential part of the operation, whether it is in an executive or managerial capacity, or applying special skills. An executive determines the policy and direction of the business while a manager supervises day-to-day activities. Visa Services defines a skilled worker as someone educated, certified or licensed in a specific field that applies his or her knowledge to the business operation. With offices in London, Canada and Florida – Sarasota, Orlando and Miami – Visa Services has an international team of dedicated professionals with a wide range of expertise. We offer a friendly, personal approach, free consultations, no hidden extras, money back guarantee if not successful with visa status approval (subject to conditions) and a “hand holding” policy for all of our clients. Attorney, Karen L. Varela, Esq., a member of the American Immigration Lawyers Association, heads the Visa Services, Inc office in Miami. She and her staff can guide you through every step of the E-2 visa process; from identifying a suitable business for your investment, setting up and registering your US Corporation, transacting the purchase of your new business, filing the required immigration registration forms and gathering any necessary supplementary evidence. We are a one-stop service provider! We look forward to working with you and sharing our knowledge and experience.We invite you to contact us at: (954)596-8060 or E-mail us at : INFO@EMPIREBAI.COM click here >>•FINANCING BASICS While poor management is cited most frequently as the reason businesses fail, inadequate or ill-timed financing is a close second. Whether you're starting a business or expanding one, sufficient ready Financing capital is essential. But it is not enough to simply have sufficient financing; knowledge and planning are required to manage it well. These qualities ensure that entrepreneurs avoid common mistakes like securing the wrong type of financing, miscalculating the amount required, or underestimating the cost of borrowing money. Before inquiring about financing, ask yourself the following: · Do you need more capital or can you manage existing cash flow more effectively? · How do you define your need? Do you need money to expand or as a cushion against risk? · How urgent is your need? You can obtain the best terms when you anticipate your needs rather than looking for money under pressure. · How great are your risks? All businessess carry risks, and the degree of risk will affect cost and available financing alternatives. · In what state of development is the business? Needs are most critical during transitional stages. · For what purposes will the capital be used? Any lender will require that capital be requested for very specific needs. · What is the state of your industry? Depressed, stable, or growth conditions require different approaches to money needs and sources. Businesses that prosper while others are in decline will often receive better funding terms. · Is your business seasonal or cyclical? Seasonal needs for financing generally are short term. Loans advanced for cyclical industries such as construction are designed to support a business through depressed periods. · How strong is your management team? Management is the most important element assessed by money sources. · Perhaps most importantly, how does your need for financing mesh with your business plan? If you don't have a business plan, make writing one your first priority. All capital sources will want to see your for the start-up and growth of your business. Not All Money Is the Same There are two types of financing: equity and debt financing. When looking for money, you must consider your company's debt-to-equity ratio - the relation between dollars you've borrowed and dollars you've invested in your business. The more money owners have invested in their business, the easier it is to attract financing. If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged to the point of jeopardizing your company's survival. Equity Financing Most small or growth-stage businesses use limited equity financing. As with debt financing, additional equity often comes from non-professional investors such as friends, relatives, employees, customers, or industry colleagues. However, the most common source of professional equity funding comes from venture capitalists. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries. The high-tech industry of California's Silicon Valley is a well-known example of capitalist investing. Venture capitalists are often seen as deep-pocketed financial gurus looking for start-ups in which to invest their money, but they most often prefer three-to-five-year old companies with the potential to become major regional or national concerns and return higher-than-average profits to their shareholders. Venture capitalists may scrutinize thousands of potential investments annually, but only invest in a handful. The possibility of a public stock offering is critical to venture capitalists. Quality management, a competitive or innovative advantage, and industry growth are also major concerns. Different venture capitalists have different approaches to management of the business in which they invest. They generally prefer to influence a business passively, but will react when a business does not perform as expected and may insist on changes in management or strategy. Relinquishing some of the decision-making and some of the potential for profits are the main disadvantages of equity financing. You may contact these investors directly, although they typically make their investments through referrals. The SBA also licenses Small Business Investment Companies (SBICs) and Minority Enterprise Small Business Investment companies (MSBIs), which offer equity financing. Apple Computer, Federal Express and Nike Shoes received financing from SBICs at critical stages of their growth. Additional Reading Raising Money through Equity Investments - Inc. Magazine click here >>•Check Out Your Service Check Out Your Service Conduct a "test" of your answering service similarly to the above; however, you'll be listening here for that extra level of care an answering service should take in personalizing its service. Be sure the following standards are met: § Answering service operator answers with the name of your company, not just a generic "May I help you." § Operator should know pertinent facts about your business: times of operation, key names of personnel, etc. § Check message you give operator against the message that he or she transmits to your company. If you aren't satisfied, take the time to educate your answering service about your standards and expectations. If the service can't--or won't--comply with your request, engage another organization to do the job. Tune Up Your Message When was the last time you listened to your own company's voice mail message? When you do, turn a careful ear to the following checkpoints: § Are you satisfied with the voice that represents your company? It should be upbeat, but also well-modulated and pleasingly-pitched. Do a test of several voices and choose the one that sounds best "on tape." § If your voice mail system has background music, or if your company has a call sequencer with on-hold music, be sure the sound is welcoming and soothing. Take High-Tech Down a Peg Does your company have automated voice mail? Speaker phones? Conference-call capability? All well and good in this era when communication is king. Just keep in mind the advantages of the "live" human voice--when you make a call, business or personal, isn't this what you prefer to hear? Although the person in your business who answers the phone may well be your lowest-paid employee, remember that this human voice is vital to the image of your company. 11. Financing the Business Acquisition The epidemic of corporate downsizing in the U.S. has made owning a business a more attractive proposition than ever before. As increasing numbers of prospective buyers embark on the process of becoming independent business owners, many of them voice a common concern: how do I finance the acquisition? Prospective buyers are aware that any credit crunch prevents the traditional lending institution from being the likely solution to their needs. Where then, can buyers turn for help with what is likely to be the largest single investment of their lives? There are a variety of financing sources, and buyers can find one that fills their particular requirements. (Small businesses--those priced under $300,000--will usually depend on seller financing as the chief source.) For many businesses, the following are the best routes to follow: click here >> |
