bizthreads.net: Business Information for Entrepreneurs by an Entrepreneur

You Can Start a Small Business as an Immigrant

Any individual may form a company. Generally, the minimum age is 18.

In most states, you are not required to be a resident of the state to form a company, and some states even allow one company to form another company.

Immigration Concerns

People who are not citizens or legal permanent residents of the United States are free to organize and run any type of business organization in their own name.

The LLC would be the most advantageous, because it allows foreign nationals as owners (unlike an S corporation) and it avoids corporate taxation (unlike a C corporation). Two legal issues should concern foreigners when starting a business—their immigration status and the proper reporting of the business’s foreign owners.

The ownership of a U.S. business does not automatically give you the right to enter or remain in the United States. Different types of visas are available to investors and business owners, and each of these has strict requirements.

A visa to enter the United States may be permanent or temporary. Permanent visas for small business owners usually require investments from $500,000 to $1,000,000 that result in the creation of new jobs.

However, if structured right, there are ways to obtain visas for smaller amounts of money.

Temporary visas may be used by small business owners to enter the U.S. These are hard to get because in most cases, the foreigner must prove that there are no U.S. residents qualified to take the job.

United States businesses that own real property and are controlled by foreigners are required to file certain federal reports under the International Investment Survey Act, the Agricultural Foreign Investment Disclosure Act, and the Foreign Investment in Real Property Tax Act (FIRPTA).

If these laws apply to your small business, consult an attorney who specializes in foreign ownership of U.S. businesses.

What is a Limited Partnership, Anyway?

A limited partnership has characteristics similar to both a corporation and a partnership.

The general partners have control and unlimited personal liability, but the limited partners, who put up money have their liability limited to the amount of their capital contribution to the partnership (like corporate stock).

A limited partnership must have at least one general partner and one or more limited partners.

Advantages

A limited partnership usually only needs to file a one-page document, called a Certificate of Limited Partnership, with the state upon formation and pay a fee. In a handful of states, however, the limited partnership is also required to file an initial report and continuing annual reports with the state to update the contact information for the partnership, resident agent, general partners, and in some cases, the limited partners.

Capital can be contributed by limited partners who have no control over the business and no liability for its debts or obligations.

Just like general partnerships, limited partnerships have higher maintenance costs than a sole proprietorship because they must track assets and liabilities as well as income and expenses.

Disadvantages

Like a general partnership, your attorney should prepare a limited partnership agreement to define the ownership and sharing arrangements of the partners.

In a limited partnership, the general partner is personally liable for partnership debts and for the business-related acts of other general partners.

Limiting Liability: To limit the general partner’s liability, use a corporation or LLC as the general partner.

Limited partners give up most of their control over the business in exchange for limited liability. When limited partners take an active role in the running of the business, they jeopardize their protection from liability and can be held liable as a general partner.

In recent years, the limited liability company has overtaken the limited partnership as the tax-advantaged vehicle of choice, because everyone involved has limited liability and investors can participate in the decisions of the company.

How to Develop Your Business Strategy

Business Vision

You can describe what the business is that you want to build, but you must also understand what makes it the right business for you. Determine the skills and experience it takes to make the business successful.

Which of those critical factors are among your greatest talents? Which of those factors are also the tasks you love to do, twenty-four hours a day, seven days a week? The business that is right for you fits your individual expertise and your personal motivators.

Personal Values

Examine your personal values in order to set meaningful goals and objectives for your business.

High-growth, high-reward, high-risk enterprises are not for people who value security, stability, and tranquility.

Acknowledge what is important to you so that you can build your values into your business.

Goals

When you understand what your business is and how you fit in, you can set goals. Given the market opportunities and your personal values, how large could your company become? How profitable?

What is the time frame for accomplishing this and how will you and the company’s other stakeholders benefit from these accomplishments?

Market Definition

Market issues make the difference between success and disaster. Identify a problem and identify the specific groups of people who have the problem.

How does the market currently solve this problem? Every possible solution—including ignoring the problem—represents your competition.

Business Model

Your business model does not refer to the wheelbarrow-sized pile of financial projection spreadsheets that your favorite number cruncher produces. Instead, it refers to how your company operates.

Not all business model decisions are made at start-up; however, the issues and possible alternative solutions should be identified.

Organizational Structure

As part of the planning process, you will need to determine which type of entity best supports the achievement of your goals. Input from your management team, as well as legal and other advisors, will help you in the decision-making process.

General and Limited Partnerships – Know the Differences

Typically, partnerships can be placed into two categories—general partnerships and limited partnerships.

In a partnership, all profits and losses are passed through to the partners according to their percentage of ownership (in the absence of a special allocation), even if the profits remain in the business to fund continuing operation or expansion.

Beyond this basic principle, partnership tax law is a complex subject to understand and is fraught with traps for the unwary.

Unless limited by the partnership agreement, each partner has full managerial control over the partnership. In addition, each partner has unlimited personal liability for the debts and obligations of the partnership.

To form a general partnership, prepare a written partnership agreement to set forth the ownership and responsibilities of the partners.

Unless otherwise stated, any new partners will have the same rights, responsibilities, and liabilities of the original partners.

Advantages

General partnerships have higher maintenance costs than a sole proprietorship because they must track assets and liabilities as well as income and expenses. However, they have lower maintenance costs than a corporation because they are not required to follow the same formalities as corporations.

In addition, the business can continue after the disability or death of a partner if there are more than two partners.

Disadvantages

A general partnership is potentially a dangerous form of business entity because each partner is jointly and severally liable (meaning together and separately liable) for the debts of the partnership and the acts of other partners within the scope of the business.

It is often hard to get rid of a disgruntled partner.

A carefully drafted partnership agreement prepared by an attorney can help you avoid the disadvantages inherent in partnerships.

Implement Your Business Idea in 4 Simple Steps

For your business idea to be successful, you will need to take some concrete steps to take it from the drawing board to the market.

Here are 4 simple steps to implement your business idea.

1. Conduct Thorough Market Research
   
   Even though your idea might be technically perfect, you will still need to evaluate if there is a need for your idea.
   
   Consult your friends, relatives, and any mentor to find out their reaction to your idea. Also, compile a sample list of your target market and get their views.
   
   Find out if there are any competitors that are already in the market and their mode of business.
2. Calculate the Time Factor
   
   Some ideas have a limited shelf life before they become obsolete or are overtaken by newer ideas.
   
   Calculate the time required for you to introduce your idea in the market and the approximate period that your product or service will take to flourish.
   
   Also, calculate the time required for you to come up with any new ideas to keep the show going.
3. Calculate the Cost Factor
   
   You will also need to arrange for financing to convert your dream idea into reality. If you do not have ready funds, then you will also need to explore the option of taking out a loan.
   
   Calculating the interest payable on that loan is crucial to your business’ long-term viability. A proper technical and financial plan is also necessary if you do not want to run out of funds after a couple of months.
4. Determine Your Skills
   
   You will need to determine your technical and selling skills in order to successfully sell your idea.
   
   Your products or services should also have something more to offer than the competition does.
   

   Bringing a new product or service to market isn’t easy. By following the 4 steps above, you can give your new small business a fighting chance.

How to Negotiate a Business Deal over a Business Meal

Negotiating a business deal over a business meal is not only a good way to save precious time, but it can also create a personal bond with your client.

In addition to your selling skills, it is essential to polish up your social skills too, as illustrated by the following tips.

Plan in Detail

If you can obtain details of the likes and dislikes of your client, then book your table in a restaurant that you know your client would love.

Ensure that your table is well away from the hustle-and-bustle of the kitchen or aisle so that you can talk and eat in privacy.

The restaurant should have a peaceful atmosphere and comfortable seating arrangements along with excellent food.

Re-Confirm Your Booking

You should re-confirm your booking on the day of your appointment with the restaurant and your client.

You should also reach the location before your client to make sure that everything is in order. You can also confirm with the server that you will be paying the bill.

Do Not Jump Into Negotiations

Engage in some small talk to make your client feel relaxed before you get down to business.

Depending on the nature of your business and the expected length of your negotiations, you can either start your business discussion during the main course or wait until you order dessert.

Stay Away From Alcohol

Even if your client drinks alcohol, you should stay away from it, or consume a minimum quantity in order to concentrate at the task on hand.

Negotiating business deals over business meals is a very old tradition. If planned and handled correctly, then you can ensure that you have a client for life.

How to Handle Merchandise Returns

If you are running a small retail business, then you are aware that store returns are a part of life.

However, the manner in which you handle these returns can determine the future of your relationship with your customers.

Here are some tips on how to handle returns.

Make Your Return Policy Clear

Ensure that your store return policy is clearly mentioned on your invoices and also posted prominently.

Instruct your employees to explain the policy to your customers, in case they are not able to fully comprehend any aspects of your return policy.

If you will not accept any returns during a sale, then mention it in clearly so there are no misunderstandings later.

Keep the Return Procedure Smooth

Keep your cool when dealing with angry customers that might have a complaint about one of your products.

Don’t allow yourself to get drawn into arguments. Rather, handle each issue on a priority basis to defuse the situation as soon as possible.

Your employees should be familiar with the return process so that it can be handled as quickly as possible.

Take Swift Action

If a product needs to be replaced, then make sure that the customer receives a replacement within the shortest possible time.

If a refund has to be made, then do so immediately so that the process isn’t stretched out over a long period of time. If this happens, it will only agitate your customer even further and affect your business reputation negatively.

If you want the relationship with your customers to prosper over the long term, it is essential that you have a clear return policy in place and that you execute all returns quickly.

Essential Small Business Leadership Qualities

If you want your employees to convert all your orders into action, then you need some essential leadership qualities. Your staff won’t just happily and efficiently follow your orders - unless they feel compelled to.

Here are some essential leadership qualities that are necessary for your small business to succeed.

Clarity of Thought

Whenever you give instructions to your employees, make sure that they can clearly interpret them.

You should teach your employees to report back to you in a precise way to avoid any confusion or misunderstandings.

Tact and Decisiveness

If there are some areas where your employees are reluctant to take orders, you need to be tact, but remain firm in your decision.

This will get the message across that you are serious about getting the job done -your way.

Problem Solving

Your employees may have genuine problems in executing some of their duties.

Understand what their problems are – hear them out. If you find they have merit, then try and solve their problems quickly.

This will reassure your employees that you are sensitive to their needs and are ready to help them when necessary.

Overall Leadership

Instead of trying to please your employees in order to become friends, realize the fact that they need a strong leader to make your business successful and also instill pride in their work.

If you are only on friendly terms with them, then it will become very difficult if you need to discipline or even fire them if the need arises.

These qualities will help you earn the respect of your employees and project you are an able and strong leader, ensuring the success of your small business in the long run.

5 Tips for Staving Off Workplace Stress

Experts agree that having a small business is often more stressful than working for someone else.

After all, if you have a regular 9 to 5, you can usually leave office problems at the office – but the same can’t be said for small business owners, whose business problems are with them all the time.

Here are some tips on how to relieve stress related to your small business.

1. Watch What You Eat.
   
   Networking often involves unlimited buffets and oily food. Stay in control by having more soups, salads and green vegetables to reduce your intake of fattening and oily foods, which will only leave you tired and sluggish.
2. Maintain Your Exercise Routine.
   
   Even if your schedule is busy, you need to make time for exercise.
   
   Make sure that you maintain any exercise routine, be it jogging, cycling or walking. This will take care of any digestion problems and will also lower your stress levels.
3. Catch Up On Your Sleep.
   
   When you take a break from your business, make a point to catch up on lost sleep and use that time to relax.
   
   If possible, switch off your mobile device.
4. Get A Massage.
   
   If you travel a lot for your business, then try to check into a hotel with a spa and have a massage in order to relieve the tension from your body and mind.
   
   If that is not possible, then at least go to a swimming pool/sauna/jacuzzi on a regular basis to get adequate exercise and relaxation at the same time.
5. Get Back With A Bang.
   
   Once you have refreshed your body and mind, then come back to your business with renewed zest and motivation. If you have any new ideas, then implement them as soon as you come back, since your energy levels will be high.

How to Identify the Ideal Business Partner

If you are unable (or unwilling) to run your small business alone, you need to scout around for a partner. However, you should pay heed to the following tips before you team up with anyone.

Make Sure They Share the Same Vision

Your partner should have the same goals and should be motivated enough to achieve them.

He or she should be in harmony with you, and should have the ability to quickly settle into their role to effectively contribute to the business.

Your Partner Should Bring In Additional Skills

Adding a partner to your business will result in increased costs.

The additional skills that your partner brings in should offset these additional costs, provided he or she utilizes those skills wisely to garner extra business and profits.

Will They Go Above and Beyond?

In addition to just bringing in capital, your partner should be willing to work long hours and to go that extra mile to ensure that the business succeeds.

Do They Complement Your Skills?

Your partner should be able to cover your weaknesses as you will also cover theirs.

They should be able to take up the slack when required without complaining or making excuses.

Your Partner Should Be Warm and Friendly

Human relationships are essential to partnerships – and your partner should be warm and friendly.

You will be spending long hours working with him or her and you should be able to enjoy their company along with the work.

An ideal partner should share the same passion and should strive equally hard to achieve the goals that you have envisioned for your business. Choose wisely.