Tips on making a small-business work

Running a successful business is a constant challenge. It is, therefore, imperative that you surround yourself with the right set of professionals to help you meet some of the common obstacles that growing businesses face.

The following strategies will help uncover opportunities for your business, as well as help you obtain an even greater level of success.

1. Start with a plan. Whether starting a new business or seeking to obtain capital for expansion, an important key to success is a good business plan. The plan should include:

• Business description, including product/services, competition and market size

• Marketing strategy

• Operations analysis, including production, management and human resources

• Financial projections

• Executive summary geared to your target audience

The executive summary represents the first impression you will make on a lender or potential investor. Often, it may be the determining factor in whether the remainder of your plan is read. It should include a mission statement, a summary of your marketing strategy, financial projections and operations analysis.

Although the executive summary will be the first section of your plan, it should be written last. Length should not be more than a few pages. Ask yourself: Who is the reader? What are you asking them to do? And, most important, What is in it for them?

2. Access capital. There may be no greater challenge for a business owner than accessing the right amount of capital, at the right time and for the right price. Whether it's business expansion or purchasing additional inventory, access to a reliable source of funds that can be borrowed quickly and conveniently will be the key to success. Consider some of these lending options:

• Working capital and term loans

• Securities-based loans*

• Home equity loans

• Letters of credit

• Small Business Administration loans

3. Manage cash flow. Maintaining adequate funds on hand, while maximizing returns on "nonworking" capital, is a difficult and time-consuming task. The solution? A working capital account that will not only help ease your cash management burdens, but should also optimize your business' return on assets. This type of account combines cash management, investment and credit benefits and includes such features as:

• Writing checks and transferring funds

• Simplifying payroll administration

• Daily sweep of cash balances into money market funds

• Borrowing against securities*

4. Plan retirement. In order to attract the attention of talented individuals and encourage loyalty and productivity, you will likely need to offer incentives such as retirement plans. These are not only a valuable employee benefit, but they can also generate substantial tax savings for both you and your employees. There are many variables involved when deciding on a particular plan, such as cash flow, cost and tax benefits to the business and what direction you want the business to go. Taking these factors into consideration, review some of these retirement options:



• Profit-sharing plans

• Defined-benefit plan

• 401(k) plans

• Uni-401(k) plans

5. Determine a business succession plan. If you wish to pass on your business to a relative or partner after your departure, it would be prudent to fully analyze the many available estate-planning strategies in order to ensure a smooth transition. By planning ahead of time, you will be safeguarding your business, as well as reducing estate and gift tax consequences, which can be substantial.

Consider some of these strategies:

• Life insurance

• Key-employee life insurance

• Business succession planning

• Buy-sell agreements

• Family limited partnerships

• Limited liability companies

• Lifetime transfers of business interests

• Philanthropic gifting

6. Unlock liquidity from business. Determining the most opportune method to exit the business will depend on several factors - the reason for your departure, your desired level of involvement in the business, market and economic conditions, personal and professional goals and whether or not you have a buyer already in place. Once you have analyzed the reasons to sell, the next step is to review your options:

• Sale/partial sale

• Recapitalization

• Divestiture

• Merger and acquisition

• Employee Stock Ownership Plans (ESOPs)

• Leveraged buyouts

7. Invest your personal wealth. Do not neglect your own financial future! Whether you're just starting out, diversifying assets or selling your stake in the business, it's important that your personal investment strategy not only generate additional wealth, but also preserve the assets you've worked so hard to accumulate. Develop an investment strategy that covers all of your concerns, like educating your children, retiring comfortably, allocating your assets and devising a personal estate plan.

8. Forge Alliances. Successful entrepreneurs draw upon a wide circle of sources when seeking business advice and making decisions. Ask your fellow business owners if they know a great financial consultant, lawyer, CPA, insurance specialist or technology expert.

* Borrowing against securities involves risks should your securities decline in value. These risks, as well as the suitability of this strategy, should be carefully considered beforehand.

For more information, e-mail me at or call 689-8704.

n William Creekbaum, MBA, CFP, a Washoe Valley resident, is senior investment management consultant of SmithBarney, a financial services firm serving Northern Nevada at 6005 Plumas Street, Ste. 200 Reno, NV 89509.


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