What is Days Sales Outstanding (DSO)?

Days Sales Outstanding (DSO) represents the average number of days it takes
credit sales to be converted into cash or how long it takes a company to
collect its account receivables. DSO can be calculated by dividing the total
accounts receivable during a certain time frame by the total net credit sales.
This number is then multiplied by the number of days in the period of time.

The period of time used to measure DSO can be monthly, quarterly, or

annually. If the result is a low DSO, it means that the business takes a few days
to collect its receivables. On the other hand, a high DSO means it takes more
days to collect receivables. A high DSO may lead to cash flow problems in the
long run. DSO is one of the three primary metrics used to calculate a
company’s cash conversion cycle.

What is the Formula for Days Sales Outstanding?

To determine how many days it takes, on average, for a company’s accounts

receivable to be realized as cash, the following formula is used:

DSO = Accounts Receivables / Net Credit Sales  X Number of Days

Example Calculation

George Michael International Limited reported a sales revenue for November

2016 amounting to $2.5 million, out of which $1.5 million are credit sales, and
the remaining $1 million is cash sales. The accounts receivable balance as of
month-end closing is $800,000.

Given the above data, the DSO totaled 16, meaning it takes an average of 16
days before receivables are collected. Generally, a DSO below 45 is considered
low, but what qualifies as high or low also depends on the type of business.
Different industries have markedly different average DSOs. Also, cash sales are
not included in the computation because they are considered a zero DSO –
representing no time waiting from the sale date to receipt of cash.

Six Ways to Reduce Days Sales Outstanding

Years of low interest rates and easy credit have allowed companies to take their eye off the ball
when it comes to managing days sales outstanding.

Cash flow is the lifeblood of any business. And a key measure to track for a healthy cash flow is
Days Sales Outstanding (DSO). DSO represents the number of days it takes for a company to
convert its accounts receivable into cash. The sooner the company gets that cash, the stronger its
cash flow and financial position is likely to be.

But years of low interest rates and easy credit have allowed companies to take their eye off the ball when
it comes to managing DSO. If the company can easily borrow money at low interest rates, there is less
need to worry about DSO increasing by a few (or even more) extra days.

Not surprisingly, many companies have significant opportunities to improve DSO. The 2016 Hackett
Group Working Capital Survey (registration required) of 1,000 public companies shows how variable
DSO can be from company to company. The survey found a considerable gap between companies with
median performance on DSO (43.5 days) and those in the top 25% of DSO performers (25.1 days).
Overall, the survey found that data from the 1,000 public companies included in the sample have $316
billion tied up in DSO. Strategies for Reducing DSO
Reducing DSO is not completely within the control of finance and accounting. Other parts of the
company also have an impact on this metric. Therefore, reducing DSO requires not only a
focused effort on the part of finance executives but the cooperation of various departments in the
company. Here are some steps to begin reducing DSO.

1. Get Ready

Any effort to reduce DSO must begin with data on a company’s current DSO status and a
benchmarking analysis that shows how that level of DSO compares to peers and competitors.
This insight not only provides a starting point for the effort but also provides a sense of what
DSO result is possible for the business. The Hackett survey offers some basic data by industry,
but other industry surveys or private benchmarking studies may provide greater detail.

Accounting and finance executives can also use this data to make the case for reducing DSO to
senior management and the various departments whose cooperation is necessary. By making
DSO reductions a strategic priority, executives can more readily justify the resources they devote
to the project and incorporate DSO improvement metrics into the individual performance
objectives and incentives of those driving the effort.

Overall, companies should focus on DSO reductions that are both attainable and sustainable in
terms of the realities of the business. For example, companies may be able to reduce DSO by,
say, 20 days by significantly tightening customer credit approvals. But that will not be worth
much if customer acquisition and retention suffers as a result.

2. Focus on Customer Credit

DSO is often driven by customers’ ability to pay their invoices on time. Therefore, any effort to
reduce DSO must address customer credit risk and focus on the development of appropriate
parameters for acceptable customer credit risks as a good first step. A company can then use that
criteria to ensure that all new customers don’t represent an unacceptable level of slow or no
payment. Companies can also extend the criteria to existing customers, starting with those that
have been slow to pay.

The sales function must be on board with this renewed focus on customer credit risk. Salespeople
don’t want to lose a sale because a customer has credit problems. Therefore, companies may
need to implement specific incentives and penalties to make sure salespeople and sales managers
adhere to the company’s customer credit requirements. In some cases, companies can
strategically deploy tools like credit insurance to help mitigate credit risks without losing an
otherwise attractive customer.

3. Define Customer Payment Terms

DSO metrics are heavily influenced by the payment terms a company extends to its customers.
Those payment terms must carefully balance the company’s own DSO goals against common
industry practice and customer needs and expectations. That means identifying under what
circumstances the company will offer customer incentives for faster payment or require deposits
or upfront payments, supported by a clear approval process when making these decisions.

Invoices must clearly and visibly state payment terms to reduce the chances of confusion over
when payment is expected. The company should also be regularly communicating with
customers about outstanding invoices and how the company can make it easier for customers to
pay them. For example, some customers may be moving to electronic payments or prefer their
employees use payment cards for certain purchasing.

4. Look at Invoicing Processes

Slow or inefficient accounting processes can also extend DSO. Therefore, reducing DSO often
requires a focus on making sure that invoices are going out on time, contain all necessary
information, and are free of errors. A thorough review of the billing process, including spot
checking invoices, can uncover errors, large or small, that could delay payment. Incorrect
charges, invoices that do not reflect agreed-upon discounts, and even the wrong mailing address
are just a few examples of common errors that can delay payments.

Companies should also regularly review and update policies on when to send invoices (When the
contract is signed? At delivery? Using some other milestone?) and make sure that those policies
are being followed. They should also be auditing invoice processes to identify delays or errors.

5. Manage Accounts Receivable Carefully

Once invoices have been sent, a company must have a plan for following up on outstanding
balances and reminding customers of unpaid invoices. This communication should focus on
identifying any problems that are preventing the customer from paying the invoice. In some
cases, an otherwise strong customer may be having cash flow problems that make it appropriate
to offer a special arrangement or payment plan.

If non-payment continues, the company should have a clear policy and process for handling
these situations and any disputes that arise, including guidelines on when and how to escalate the
situation as needed. For example, this guidance might include when to turn over unpaid invoices
to a collection agency.

6. Keep up the Momentum

Companies must commit to reducing DSO and sustaining this effort over the long term.
Reducing DSO often requires changes to habits as much as it does to administrative processes
and procedures. Therefore, companies will need to make sure those changes stick and people do
not return to the old ways of doing things. By conducting regular reviews of and discussions
about DSO metrics, companies can keep the focus on these efforts and reinforce their importance
to the company.

Easy Money

Reducing DSO is a relatively straightforward way to strengthen your company’s cash flow. It
just takes a focused and sustained effort. When they realize the impact lower DSO can have,
your colleagues are likely to lend needed support and provide a strategic focus for the initiative.
There is no reason not to get started lowering DSO today.
What are the Indications of a High or Low DSO?

A high DSO value illustrates a company is experiencing a hard time when converting credit sales
to cash. But, depending on the type of business and the financial structure it maintains, a
company with a large capitalization may not view a DSO of 60 as a serious issue.

However, for a small scale business, a high DSO is a concerning matter because it may cause
cash flow problems. Smaller businesses typically rely on the quick collection of receivables to
make payments for operational expenses, such as salaries, utilities, and other inherent expenses.
They may struggle for cash to pay these expenses from time to time if the DSO continues to be at
a high value.

To solve high DSO issues, a company must determine what factors are affecting sales and
collection. The situation may suggest the following various reasons:

 Credit issues with customers with a negative credit standing

 Sales teams are offering longer payment terms for customers to pump up sales
 Company is encouraging customers to purchase on credit, so they buy more
products and services
 Company is inefficient or ineffective in its collection process

On the other hand, a low DSO is more favorable to a company’s collection process. Customers
are either paying on time to avail of discounts, or the company is very strict on its credit policy,
which may negatively affect sales performance. However, having a low DSO for small to
medium-sized businesses generally carries considerable benefits. Fast credit collectability
decreases problems related to paying operational expenses, and any excess money that is
collected can be reinvested right away to increase future earnings.

How Important is Days Sales Outstanding in Business Operations?

Determining the days sales outstanding is an important tool for measuring the liquidity of a
company’s current assets. Due to the high importance of cash in operating a business, it is in the
company’s best interests to collect receivable balances as quickly as possible. Managers,
investors, and creditors see how effective the company is in collecting cash from customers. A
lower DSO value reflects high liquidity and cash flow measurements.

The DSO is also an important assumption that is used in building financial models.

Learn More
CFI is the official provider of the global Certified Banking & Credit Analyst
(CBCA)™ certification program, designed to help anyone become a world-class financial
analyst. To keep advancing your career, the additional CFI resources below will be useful:

 Inventory Turnover
 Accounts Receivables
 Current Liabilities
 Financial Modeling Guide

Free Accounting Courses

Learn accounting fundamentals and how to read financial statements with CFI’s free online
accounting classes.
These courses will give the confidence you need to perform world-class financial analyst work.
Start now!

How to Get Started with Financial Planning

Financial planning encompasses a wide variety of different financial matters including debt
management, budgeting, investing, saving and retirement planning.

Because there is so much involved with financial planning, it can be overwhelming, and you
may not know where to begin. Although planning out your finances can be intimidating at first,
once you get started you will feel empowered and much more organized. The knowledge and
security that you gain once you begin sorting through your finances will make it easier to
manage your money and eventually increase your wealth.

The fundamentals of any good financial plan begin with setting a budget so that you know
where your money is going and how much you have left over to allocate towards other goals.
Once you are aware of your spending habits and have a budget in place, you can begin working
on debt management and building up a savings account. Retirement planning is also a very
important aspect that you need to spend some time on as well. Finally, you can decide what
investment opportunities you are interested in. To learn more about the steps you need to take
when you first start financial planning, read the sections below.

DECIDE ON YOUR GOALS

The most important first step when you begin financial planning is setting your goals. You must
know what your end goals are so that you can set up your financial plan in a way that can help
you achieve those goals. Both short-term and long-term financial goals need to be considered.
Short-term goals are usually goals that you aim to accomplish within approximately six months
to a year. This may include saving for a vacation, putting money into an emergency savings
fund or paying off a credit card. Long-term goals typically take longer than a year to accomplish
and may include saving for a house, planning for retirement and more.

HOW TO SET A BUDGET

Once you have decided on the goals you want to achieve, you need to create a budget so that
you can allocate a certain amount of your money towards those goals. To start your budget, you
must total all of your sources of income in a given month.

Financial Management Service

The Financial Management Service (or FMS) was a bureau of the United States
Department of the Treasury and provided several financial services for the federal
government. On October 7, 2012, Secretary of the Treasury Timothy Geithner issued a
directive merging the FMS with the Bureau of the Public Debt to form the new Bureau of
the Fiscal Service.[1]

Services[edit]
These services include centralized payment, collection, and reporting services, oversight of a
daily cash flow of nearly $58 billion into and out of federal accounts, disbursement of more than $1.5
trillion to more than 100 million individuals via Social Security and veterans' benefits, issuance of tax
refunds and other federal payments, collection of more than $2.67 trillion per year in payments to the
government through financial institutions, and collection of delinquent debts owed to the
government.
FMS has a total of 2,100 employees located in its headquarters offices in Washington, DC, and
Hyattsville, MD, and its five regional centers in Austin, Birmingham, Kansas City, Philadelphia and
San Francisco. Before 1984, FMS was known as the Bureau of Government Financial Operations.

Credit Gateway[edit]
On September 13, 2010,[2] the Financial Management Service started to use Credit Gateway as a
deposit program for the receipt of federal agency Fedwire and ACH credit transactions.[3][4] It is an
effort to modernize the collections and cash management programs of the US Department of the
Treasury and is being implemented in multiple phases over the course of two years. [2][4]
The Credit Gateway is operated by a commercial bank that has been designated as a financial agent
of the government.[2][4] The bank processes FMS transactions using its own infrastructure and
commercial software. The transactions settle at Federal Reserve Banks, rather than at the
designated commercial bank.[2][4] The Credit Gateway processes transactions in real time to FMS
reporting systems, namely the Transaction Reporting System.[

Return on Assets (ROA)

Return on assets (ROA) is a profitability ratio that helps determine how
efficiently a company uses its assets. It is the ratio of net income after tax to
total assets. In other words, ROA is an efficiency metric explaining how
efficiently and effectively a company is using its assets to generate profits.

Calculate Return On Assets (ROA) Using Formula

The formula for ROA is very simple which is expressed below:
Return on Assets = Profit after Taxes / Total Assets

The numerator is the profit considered after deducting the costs, depreciation,

and tax etc. One important thing to keep in mind while arriving at this figure is
to consider the profits which are generated using such assets. Incomes
generated from activities in which there is no contribution of these fixed
assets should be excluded for this purpose. The denominator comprises of
fixed as well as current assets. A more accurate version of ROA is when
average total assets are considered i.e., the average of the opening assets at
the start of the accounting period and closing assets at the end of
the accounting period.

A different expression of ROA formula can be as follows and that gives better
and deeper insight of this ratio.

Profit after Tax Total Revenue

ROA = ————– * ————– = Profit Margin  *  Asset Turnover Ratio
Total Revenue Total Assets

Return On Assets (ROA) Example

Below is a sample of financial figures for ABC Co.

All figures in USD. The accounting period under consideration is Financial Year
2011-12.

Net Profit after tax = 20000

Assets
Non-current Assets
Tangible Assets = 50000
Intangible Assets = 10000
Current Assets
Inventory = 20000
Cash = 15000
Accounts Receivables = 5000
Total Assets = 100000
Return on Assets = Profit after Tax / Total Assets
= 20,000/100,000
= 0.2

From the above illustration, ROA is 0.2 or 20%. From this, one can conclude
that for every dollar invested in the assets of ABC Co, it results in a profit
worth 20 cents. In other words, to create 1 unit of profit, 5 units need to be
invested in the assets of the company.

Return on Assets (ROA)

By MARSHALL HARGRAVE
 Reviewed By MARGARET JAMES 
 Updated Feb 17, 2021
TABLE OF CONTENTS

 What Is Return on Assets (ROA)?

 The Basics of Return on Assets
 The Significance of ROA
 Example of Return on Assets—ROA
 ROA vs Return on Equity—ROE
 Limitations of Return on Assets
 Frequently Asked Questions

What Is Return on Assets (ROA)?

Return on assets (ROA) is an indicator of how profitable a company is relative to
its total assets. ROA gives a manager, investor, or analyst an idea as to how
efficient a company's management is at using its assets to generate earnings.
Return on assets is displayed as a percentage; the higher the ROA the better.

KEY TAKEAWAYS

 Return on Assets (ROA) is an indicator of how well a company utilizes its

assets in terms of profitability.
 ROA is best used when comparing similar companies or by comparing a
company to its own previous performance.
  ROA takes into account a company’s debt, unlike other similar metrics like
Return on Equity (ROE).
The Basics of Return on Assets
Businesses (at least the ones that survive) are ultimately about efficiency: squeezing the most out
of limited resources. Comparing profits to revenue is a useful operational metric, but comparing
them to the resources a company used to earn them cuts to the very feasibility of that company's
existence. Return on assets (ROA) is the simplest of such corporate bang-for-the-buck measures.

ROA is calculated by dividing a company’s net income by total assets. As a formula, it would be

expressed as:

Return\ on\ Assets = \frac{Net\ Income}{Total\

Assets}Return on Assets=Total AssetsNet Income
Higher ROA indicates more asset efficiency.

For example, pretend Spartan Sam and Fancy Fran both start hot dog stands. Sam spends $1,500
on a bare-bones metal cart, while Fran spends $15,000 on a zombie apocalypse-themed unit,
complete with costume. Let's assume that those were the only assets each firm deployed. If over
some given period Sam had earned $150 and Fran had earned $1,200, Fran would have the more
valuable business but Sam would have the more efficient one. Using the above formula, we see
Sam’s simplified ROA is $150/$1,500 = 10%, while Fran’s simplified ROA is $1,200/$15,000 =
8%.

The Significance of Return on Assets

Return on assets (ROA), in basic terms, tells you what earnings were generated from invested
capital (assets). ROA for public companies can vary substantially and will be highly dependent
on the industry. This is why when using ROA as a comparative measure, it is best to compare it
against a company's previous ROA numbers or a similar company's ROA.

The ROA figure gives investors an idea of how effective the company is in converting the money
it invests into net income. The higher the ROA number, the better, because the company is
earning more money on less investment.

Because of the balance sheet accounting equation, note that that total assets are also the sum of
its total liabilities and shareholder's equity. Both of these types of financing are used to fund the
operations of the company. Since a company's assets are either funded by debt or equity, some
analysts and investors disregard the cost of acquiring the asset by adding back interest expense in
the formula for ROA.

In other words, the impact of taking more debt is negated by adding back the cost of borrowing
to the net income and using the average assets in a given period as the denominator. Interest
expense is added because the net income amount on the income statement excludes interest
expense.
ROA is one of the components in DuPont analysis.
Example of How to Use Return on Assets
ROA is most useful for comparing companies in the same industry, as different industries use
assets differently. For example, the ROA for service-oriented firms, such as banks, will be
significantly higher than the ROA for capital-intensivecompanies, such as construction or utility
companies.

Let's evaluate the return on assets (ROA) for three companies in the retail industry:

 Macy's (M)
 Kohl’s (KSS)
 Dillard's (DDS)

The data in the table is for the trailing twelve months as of Feb. 13, 2019.

Compan Total
Net Income ROA
y Assets
Macy's $1.7 billion $20.4 billion 8.3%
Kohl's $996 million $14.1 billion 7.1%
Dillard's $243 million $3.9 billion 6.2%
Due to the increasing popularity of e-commerce, and the coronavirus pandemic, brick and
mortar retail companies have taken a hit in the level of profits they generate using their available
assets. Still, every dollar that Macy's has invested in assets generates 8.3 cents of net income.
Macy's is better at converting its investment into profits, compared with Kohl’s and Dillard’s.
One of management's most important jobs is to make wise choices in allocating its resources, and
it appears Macy’s management is more adept than its two peers.

Return on Assets vs. Return on Equity

Both ROA and return on equity (ROE) are measures of how a company utilizes its resources.
Essentially, ROE only measures the return on a company’s equity, leaving out the liabilities.
Thus, ROA accounts for a company’s debt and ROE does not. The more leverage and debt a
company takes on, the higher ROE will be relative to ROA.

Limitations of Return on Assets

The biggest issue with return on assets (ROA) is that it can't be used across industries. That’s
because companies in one industry—such as the technology industry—and another industry like
oil drillers will have different asset bases.

Some analysts also feel that the basic ROA formula is limited in its applications, being most
suitable for banks. Bank balance sheets better represent the real value of their assets and
liabilities because they’re carried at market value (via mark-to-market accounting), or at least an
estimate of market value, versus historical cost. Both interest expense and interest income are
already factored in.
 
The St. Louis Federal Reserve provides data on US bank ROAs, which have generally hovered
around or just above 1% since 1984, the year collection started.

For non-financial companies, debt and equity capital is strictly segregated, as are the returns to
each: interest expense is the return for debt providers; net income is the return for equity
investors. So the common ROA formula jumbles things up by comparing returns to equity
investors (net income) with assets funded by both debt and equity investors (total assets). Two
variations on this ROA formula fix this numerator-denominator inconsistency by putting interest
expense (net of taxes) back into the numerator. So the formulas would be:

 ROA variation 1: Net Income + [Interest Expense*(1-tax rate)] / Total Assets

 ROA variation 2: Operating Income*(1-tax rate) / Total Assets

Frequently Asked Questions

What do you mean by return on assets?
Return on assets, or ROA, measures how much money a company earns by putting its assets to
use. In other words, ROA is an indicator of how efficient or profitable a company is relative to
its assets or the resources it owns or controls.

How is ROA used by investors?

Investors can use return on assets to find stock opportunities because the ROA shows how
efficient a company is at using its assets to generate profits. An ROA that rises over time
indicates the company is doing a good job of increasing its profits with each investment dollar it
spends. A falling ROA indicates the company might have over-invested in assets that have failed
to produce revenue growth, a sign the company may be in some trouble. ROA can also be used
to make apples-to-apples comparisons across companies in the same sector or industry.

How can I calculate a company's ROA?

ROA is calculated simply by dividing a firm's net income by total average assets. It is then
expressed as a percentage.

Net profit can be found at the bottom of a company's income statement, and assets are found on
its balance sheet. Average total assets are used in calculating ROA because a company's asset
total can vary over time due to the purchase or sale of vehicles, land or equipment, inventory
changes, or seasonal sales fluctuations. As a result, calculating the average total assets for the
period in question is more accurate than the total assets for one period.

Note that there are alternative methods for arriving at ROA as well.

What is considered a good ROA?

ROAs over 5% are generally considered good and over 20% excellent. However, ROAs should
always be compared amongst firms in the same sector. A software maker, for instance, will have
far fewer assets on the balance sheet than a car maker. As a result, the software company's assets
will be understated, and its ROA may get a questionable boost.
Compete Risk Free with $100,000 in Virtual Cash

Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of
Investopedia traders and trade your way to the top! Submit trades in a virtual environment before
you start risking your own money. Practice trading strategies so that when you're ready to enter
the real market, you've had the practice you need. Try our Stock Simulator today >>

Related Terms

How Return on Equity Works

Return on equity (ROE) is a measure of financial performance calculated by
dividing net income by shareholders' equity. Because shareholders' equity is
equal to a company’s assets minus its debt, ROE could be thought of as the
return on net assets.
 more
Enterprise Value – EV
Enterprise value (EV) is a measure of a company's total value, often used as a
comprehensive alternative to equity market capitalization. EV includes in its
calculation the market capitalization of a company but also short-term and long-
term debt as well as any cash on the company's balance sheet.
 more
Cash Return On Assets Ratio
The cash return on assets ratio is used to compare a business's performance
with that of others in the same industry.
 more
The Importance of Profitability Ratios
Profitability ratios are financial metrics used to assess a business's ability to
generate profit relative to items such as its revenue or assets.
 more
Understanding Return on Net Assets
Return on net assets (RONA) measures how efficiently a business utilizes its
assets to generate net profit.
 more
Return on Total Assets (ROTA) Definition
Return on total assets is a ratio that measures a company's earnings before
interest and taxes (EBIT) against its total net assets.
 more

Financial Statements
What Are Financial Statements?
Financial statements are written records that convey the business activities and the financial
performance of a company. Financial statements are often audited by government agencies,
accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
Financial statements include:

 Balance sheet
 Income statement
 Cash flow statement.

KEY TAKEAWAYS

 Financial statements are written records that convey the business activities and the
financial performance of a company.
 The balance sheet provides an overview of assets, liabilities, and stockholders' equity as a
snapshot in time.
 The income statement primarily focuses on a company’s revenues and expenses during a
particular period. Once expenses are subtracted from revenues, the statement produces a
company's profit figure called net income.
 The cash flow statement (CFS) measures how well a company generates cash to pay
its debt obligations, fund its operating expenses, and fund investments.
Volume 75%
 
1:47

Financial Statements

Using Financial Statement Information

Investors and financial analysts rely on financial data to analyze the performance of a company
and make predictions about its future direction of the company's stock price. One of the most
important resources of reliable and audited financial data is the annual report, which contains the
firm's financial statements.

The financial statements are used by investors, market analysts, and creditors to evaluate a

company's financial health and earnings potential. The three major financial statement reports are
the balance sheet, income statement, and statement of cash flows.

Understanding Balance Sheets

The balance sheet provides an overview of a company's assets, liabilities, and stockholders'
equity as a snapshot in time. The date at the top of the balance sheet tells you when the snapshot
was taken, which is generally the end of the fiscal year.

The Balance Sheet Formula

\displaystyle \text{Assets}=(\text{Liabilities}+\text{Owner's
Equity})Assets=(Liabilities+Owner’s Equity)
The balance sheet totals will be calculated already, but here's how you identify them.

1. Locate total assets on the balance sheet for the period.

2. Total all liabilities, which should be a separate listing on the balance sheet. It may not
include contingent liabilities.
3. Locate total shareholder's equity and add the number to total liabilities.
4. Total assets should equal the total of liabilities and total equity.

Data From the Balance Sheet

The balance sheet identifies how assets are funded, either with liabilities, such as debt, or
stockholders' equity, such as retained earnings and additional paid-in capital. Assets are listed on
the balance sheet in order of liquidity.

Liabilities are listed in the order in which they will be paid. Short-term or current liabilities are
expected to be paid within the year, while long-term or non-current liabilities are debts expected
to be paid in over one year.

Items Included in the Balance Sheet

Below are examples of items listed on the balance sheet.

Assets

 Cash and cash equivalents are liquid assets, which may include Treasury

bills and certificates of deposit.
 Accounts receivables are the amount of money owed to the company by its customers for
the sale of its product and service.
 Inventory

Liabilities

 Debt including long-term debt

 Wages payable
 Dividends payable

Shareholders' Equity

 Shareholders' equity is a company's total assets minus its total liabilities. Shareholders'

equity represents the amount of money that would be returned to shareholders if all of
the assets were liquidated and all of the company's debt was paid off.
 Retained earnings are part of shareholders' equity and are the amount of net earnings that
were not paid to shareholders as dividends. 

Example of a Balance Sheet 

Below is a portion of Exxon Mobil Corporation's (XOM) balance sheet as of September 30,
2018. 

 Total assets were $354,628.

 Total liabilities were $157,797.
 Total equity was $196,831.
 Total liabilities and equity were $354,628, which equals the total assets for the period.1

Image by Sabrina Jiang © Investopedia 2020

Income Statements
Unlike the balance sheet, the income statement covers a range of time, which is a year for annual
financial statements and a quarter for quarterly financial statements. The income statement
provides an overview of revenues, expenses, net income and earnings per share. It usually
provides two to three years of data for comparison.

Income Statement Formula and Calculation

\text{Net
Income}=(\text{Revenue}-\text{Expenses})Net Income=(Revenue−Expenses)
1. Total all revenue or sales for the period.
2. Total all expenses and costs of operating the business.
3. Subtract total expenses from revenue to achieve net income or the profit for the period.

Data From Income Statements

An income statement is one of the three important financial statements used for reporting a
company's financial performance over a specific accounting period. Also known as the profit and
loss statement or the statement of revenue and expense, the income statement primarily focuses
on a company’s revenues and expenses during a particular period.

Once expenses are subtracted from revenues, the statement produces a company's profit figure
called net income.

Types of Revenue
Operating revenue is the revenue earned by selling a company's products or services.
The operating revenue for an auto manufacturer would be realized through the production and
sale of autos. Operating revenue is generated from the core business activities of a company.

Non-operating revenue is the income earned from non-core business activities. These revenues
fall outside the primary function of the business. Some non-operating revenue examples include:

 Interest earned on cash in the bank

 Rental income from a property
  Income from strategic partnerships like royalty payment receipts
 Income from an advertisement display located on the company's property

Other income is the revenue earned from other activities. Other income could include gains from
the sale of long-term assets such as land, vehicles, or a subsidiary.

Types of Expenses
Primary expenses are incurred during the process of earning revenue from the primary activity of
the business. Expenses include the cost of goods sold (COGS), selling, general and
administrative expenses (SG&A), depreciation or amortization, and research and development
(R&D). Typical expenses include employee wages, sales commissions, and utilities such as
electricity and transportation.

Expenses that are linked to secondary activities include interest paid on loans or debt. Losses
from the sale of an asset are also recorded as expenses.

The main purpose of the income statement is to convey details of profitability and the financial
results of business activities. However, it can be very effective in showing whether sales or
revenue is increasing when compared over multiple periods. Investors can also see how well a
company's management is controlling expenses to determine whether a company's efforts in
reducing the cost of sales might boost profits over time.

Example of an Income Statement

Below is a portion of Exxon Mobil Corporation's (XOM) income statement as of September 30,
2018.

 Total revenues were $76,605 for the period.

 Total costs were $67,525.
 Net income or profit was $6,240.1

Image by Sabrina Jiang © Investopedia 2020

The Cash Flow Statement
The cash flow statement (CFS) measures how well a company generates cash to pay its debt
obligations, fund its operating expenses, and fund investments. The cash flow statement
complements the balance sheet and income statement.

Data From the Cash Flow Statement

The CFS allows investors to understand how a company's operations are running, where its
money is coming from, and how money is being spent. The CFS also provides insight as to
whether a company is on a solid financial footing.
There is no formula, per se, for calculating a cash flow statement. Instead, it contains three
sections that report cash flow for the various activities for which a company uses its cash. Those
three components of the CFS are listed below.

Operating Activities 
The operating activities on the CFS include any sources and uses of cash from running the
business and selling its products or services. Cash from operations includes any changes made in
cash, accounts receivable, depreciation, inventory, and accounts payable. These transactions also
include wages, income tax payments, interest payments, rent, and cash receipts from the sale of a
product or service.

Investing Activities
Investing activities include any sources and uses of cash from a company's investments into the
long-term future of the company. A purchase or sale of an asset, loans made to vendors or
received from customers or any payments related to a merger or acquisition is included in this
category.

Also, purchases of fixed assets such as property, plant, and equipment (PPE) are included in this
section. In short, changes in equipment, assets, or investments relate to cash from investing.

Financing Activities
Cash from financing activities include the sources of cash from investors or banks, as well as the
uses of cash paid to shareholders. Financing activities include debt issuance, equity issuance,
stock repurchases, loans, dividends paid, and repayments of debt.

The cash flow statement reconciles the income statement with the balance sheet in three major
business activities.

Example of a Cash Flow Statement

Below is a portion of Exxon Mobil Corporation's (XOM) cash flow statement as of September
30, 2018. We can see the three areas of the cash flow statement and their results.

 Operating activities generated a positive cash flow of $27,407 for the period.
 Investing activities generated negative cash flow or cash outflows of -$10,862 for the
period. Additions to property, plant, and equipment made up the majority of cash
outflows, which means the company invested in new fixed assets.
 Financing activities generated negative cash flow or cash outflows of -$13,945 for the
period. Reductions in short-term debt and dividends paid out made up the majority of the
cash outflows.1

Image by Sabrina Jiang © Investopedia 2020

Financial Statement Limitations
Although financial statements provide a wealth of information on a company, they do have
limitations. The statements are open to interpretation, and as a result, investors often draw vastly
different conclusions about a company's financial performance.

For example, some investors might want stock repurchases while other investors might prefer to
see that money invested in long-term assets. A company's debt level might be fine for one
investor while another might have concerns about the level of debt for the company. When
analyzing financial statements, it's important to compare multiple periods to determine if there
are any trends as well as compare the company's results its peers in the same industry.

Compete Risk Free with $100,000 in Virtual Cash

Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of
Investopedia traders and trade your way to the top! Submit trades in a virtual environment before
you start risking your own money. Practice trading strategies so that when you're ready to enter
the real market, you've had the practice you need. Try our Stock Simulator today >>
ARTICLE SOURCES

Related Terms

Accounting Equation
The accounting equation shows that all of a company's total assets equals the
sum of the company's liabilities and shareholders' equity.
 more
How the Expanded Accounting Equation Works
The expanded accounting equation is derived from the accounting equation and
illustrates the different components of stockholder equity in a company.
 more
Financial Statement Analysis
Financial statement analysis is the process of analyzing a company's financial
statements for decision-making purposes.
 more
Profit and Loss Statement (P&L) Definition
The profit and loss statement is a financial statement that summarizes the
revenues, costs, and expenses incurred during a specified period.
 more
Balance Sheet
A balance sheet is a financial statement that reports a company's assets,
liabilities and shareholders' equity at a specific point in time.
 more
What You Should Know Operating Activities
Operating activities are those that pertain to a company's core business
activities, such as manufacturing, distributing, marketing and selling a service. 
Cash flow statement
In financial accounting, a cash flow statement, also known as statement of cash
flows,[1] is a financial statement that shows how changes in balance sheet accounts and
income affect cash and cash equivalents, and breaks the analysis down to operating,
investing, and financing activities. Essentially, the cash flow statement is concerned with
the flow of cash in and out of the business. As an analytical tool, the statement of cash
flows is useful in determining the short-term viability of a company, particularly its ability
to pay bills. International Accounting Standard 7 (IAS 7) is the International Accounting
Standard that deals with cash flow statements.
People and groups interested in cash flow statements include:

 Accounting personnel, who need to know whether the organization will be

able to cover payroll and other immediate expenses
 Potential lenders or creditors, who want a clear picture of a company's ability
to repay
 Potential investors, who need to judge whether the company is financially
sound
 Potential employees or contractors, who need to know whether the company
will be able to afford compensation
 Company Directors, who are responsible for the governance of the company,
and are responsible for ensuring that the company does not trade
while insolvent
 Shareholders of the company.

Purpose[edit]
Statement of Cash Flow - Simple
Example
for the period 1 Jan 2006 to 31 Dec 2006
Cash flow from operations $4,000
Cash flow from investing ($1,000)
Cash flow from financing ($2,000)
Net cash flow $1,000
Parentheses indicate negative values
The cash flow statement was previously known as the flow of funds statement.[2] The cash flow
statement reflects a firm's liquidity.
The statement of financial position is a snapshot of a firm's financial resources and obligations at a
single point in time, and the income statement summarizes a firm's financial transactions over an
interval of time. These two financial statements reflect the accrual basis accounting used by firms to
match revenues with the expenses associated with generating those revenues. The cash flow
statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions
that do not directly affect cash receipts and payments. These non-cash transactions include
depreciation or write-offs on bad debts or credit losses to name a few. [3] The cash flow statement is
a cash basis report on three types of financial activities: operating activities, investing activities, and
financing activities. Non-cash activities are usually reported in footnotes.
The cash flow statement is intended to[4]

1. provide information on a firm's liquidity and solvency and its ability to change cash

flows in future circumstances
2. provide additional information for evaluating changes in assets, liabilities and equity
3. improve the comparability of different firms' operating performance by eliminating the
effects of different accounting methods
4. indicate the amount, timing and probability of future cash flows
The cash flow statement has been adopted as a standard financial statement because it eliminates
allocations, which might be derived from different accounting methods, such as various timeframes
for depreciating fixed assets.[5]

History and variations[edit]

Cash basis financial statements were very common before accrual basis financial statements. The
"flow of funds" statements of the past were cash flow statements.
In 1863, the Dowlais Iron Company had recovered from a business slump, but had no cash to invest
for a new blast furnace, despite having made a profit. To explain why there were no funds to invest,
the manager made a new financial statement that was called a comparison balance sheet, which
showed that the company was holding too much inventory. This new financial statement was the
genesis of the cash flow statement that is used today. [6]
In the United States in 1973, the Financial Accounting Standards Board (FASB) defined rules that
made it mandatory under Generally Accepted Accounting Principles (US GAAP) to report sources
and uses of funds, but the definition of "funds" was not clear. Net working capital might be cash or
might be the difference between current assets and current liabilities. From the late 1970 to the mid-
1980s, the FASB discussed the usefulness of predicting future cash flows. [7] In 1987, FASB
Statement No. 95 (FAS 95) mandated that firms provide cash flow statements. [8]In 1992, the
International Accounting Standards Board issued International Accounting Standard 7 (IAS 7), Cash
Flow Statement, which became effective in 1994, mandating that firms provide cash flow statements.
[9]

US GAAP and IAS 7 rules for cash flow statements are similar, but some of the differences are:

 IAS 7 requires that the cash flow statement include changes in both cash and cash
equivalents. US GAAP permits using cash alone or cash and cash equivalents. [5]
 IAS 7 permits bank borrowings (overdraft) in certain countries to be included in cash
equivalents rather than being considered a part of financing activities. [10]
 IAS 7 allows interest paid to be included in operating activities or financing activities. US
GAAP requires that interest paid be included in operating activities. [11]
 US GAAP (FAS 95) requires that when the direct method is used to present the
operating activities of the cash flow statement, a supplemental schedule must also
present a cash flow statement using the indirect method. The International Accounting
Standards Committee (IASC) strongly recommends the direct method but allows either
method. The IASC considers the indirect method less clear to users of financial
statements. Cash flow statements are most commonly prepared using the indirect
method, which is not especially useful in projecting future cash flows.
Cash flow activities[edit]
The cash flow statement is partitioned into three segments, namely:

1. cash flow resulting from operating activities;

2. cash flow resulting from investing activities;
3. cash flow resulting from financing activities.
The money coming into the business is called cash inflow, and money going out from the business is
called cash outflow.

Operating activities[edit]
Operating activities include the production, sales and delivery of the company's product as well as
collecting payment from its customers. This could include purchasing raw materials, building
inventory, advertising, and shipping the product.
Under IAS 7, operating cash flows include:[11]

 Receipts for the sale of loans, debt or equity instruments in a trading portfolio
 Interest received on loans
 Payments to suppliers for goods and services
 Payments to employees or on behalf of employees
 Interest payments (alternatively, this can be reported under financing activities in IAS 7)
 buying Merchandise
Items which are added back to [or subtracted from, as appropriate] the net income figure (which is
found on the Income Statement) to arrive at cash flows from operations generally include:

 Depreciation (loss of tangible asset value over time)

 Deferred tax
 Amortization (loss of intangible asset value over time)
 Any gains or losses associated with the sale of a non-current asset, because associated
cash flows do not belong in the operating section (unrealized gains/losses are also
added back from the income statement).
 Dividends received general reserves
Investing activities[edit]
Examples of Investing activities are

 Purchase or Sale of an asset (assets can be land, building, equipment, marketable

securities, etc.)
 Loans made to suppliers
 Payments related to mergers and acquisitions
Financing activities[edit]
Financing activities include the inflow of cash from investors such as banks and shareholders, as
well as the outflow of cash to shareholders as dividends as the company generates income. Other
activities which impact the long-term liabilities and equity of the company are also listed in the
financing activities section of the cash flow statement.
Under IAS 7,
  Payments of dividends
 Payments for repurchase of company shares
 For non-profit organizations, receipts of donor-restricted cash that is limited to long-term
purposes
Items under the financing activities section include:

 Dividends paid
 Sale or repurchase of the company's stock
 Net borrowings
 Repayment of debt principal, including capital leases

Disclosure of non-cash activities[edit]

Under IAS 7, non-cash investing and financing activities are disclosed in footnotes to the financial
statements. Under US General Accepted Accounting Principles (GAAP), non-cash activities may be
disclosed in a footnote or within the cash flow statement itself. Non-cash financing activities may
include[11]

 Leasing to purchase an asset

 Converting debt to equity
 Exchanging non-cash assets or liabilities for other non-cash assets or liabilities
 Issuing share
 Payment of dividend taxes in exchange for assets

Preparation methods[edit]
The direct method of preparing a cash flow statement results in a more easily understood report.
[12]
 The indirect method is almost universally used, because FAS 95 requires a supplementary report
similar to the indirect method if a company chooses to use the direct method.

Direct method[edit]
The direct method for creating a cash flow statement reports major classes of gross cash receipts
and payments. Under IAS 7, dividends received may be reported under operating activities or under
investing activities. If taxes paid are directly linked to operating activities, they are reported under
operating activities; if the taxes are directly linked to investing activities or financing activities, they
are reported under investing or financing activities. Generally Accepted Accounting Principles
(GAAP) vary from International Financial Reporting Standards in that under GAAP rules, dividends
received from a company's investing activities is reported as an "operating activity," not an "investing
activity."[13]
Sample cash flow statement using the direct method[14]

Cash flows from (used in) operating activities

  Cash receipts from customers 9,500

 (2,000
  Cash paid to suppliers and employees
)

  Cash generated from operations (sum) 7,500

(2,000
  Interest paid
)

(3,000
  Income taxes paid
)

  Net cash flows from operating activities 2,500

Cash flows from (used in) investing activities

  Proceeds from the sale of equipment 7,500

  Dividends received 3,000

  Net cash flows from investing activities 10,500

Cash flows from (used in) financing activities

(2,500
  Dividends paid
)

  Net cash flows used in financing activities (2,500)

Net increase in cash and cash equivalents 10,500

 Cash and cash equivalents, beginning of
1,000
year

Cash and cash equivalents, end of year $11,500

Indirect method[edit]
The indirect method uses net-income as a starting point, makes adjustments for all transactions for
non-cash items, then adjusts from all cash-based transactions. An increase in an asset account is
subtracted from net income, and an increase in a liability account is added back to net income. This
method converts accrual-basis net income (or loss) into cash flow by using a series of additions and
deductions.[15]
Rules (operating activities)[edit]
To Find Cash Flows
from Operating Activities
using the Balance Sheet and Net Income
For Increases in Net Inc Adj
Current Assets (Non-Cash) Decrease
Current Liabilities Increase
For All Non-Cash...
*Expenses (Decreases in Fixed Assets) Increase
*Non-cash expenses must be added back to NI. Such expenses may be represented on
the balance sheet as decreases in long term asset accounts. Thus decreases in fixed
assets increase NI.
The following rules can be followed to calculate Cash Flows from Operating Activities when given
only a two-year comparative balance sheet and the Net Income figure. Cash Flows from Operating
Activities can be found by adjusting Net Income relative to the change in beginning and ending
balances of Current Assets, Current Liabilities, and sometimes Long Term Assets. When comparing
the change in long term assets over a year, the accountant must be certain that these changes were
caused entirely by their devaluation rather than purchases or sales (i.e. they must be operating items
not providing or using cash) or if they are non-operating items. [16]

 Decrease in non-cash current assets are added to net income

 Increase in non-cash current asset are subtracted from net income
 Increase in current liabilities are added to net income
 Decrease in current liabilities are subtracted from net income
 Expenses with no cash outflows are added back to net income (depreciation and/or
amortization expense are the only operating items that have no effect on cash flows in
the period)
 Revenues with no cash inflows are subtracted from net income
 Non operating losses are added back to net income
 Non operating gains are subtracted from net income
The intricacies of this procedure might be seen as,
For example, consider a company that has a net income of $100 this year, and its A/R increased by
$25 since the beginning of the year. If the balances of all other current assets, long term assets and
current liabilities did not change over the year, the cash flows could be determined by the rules
above as $100 – $25 = Cash Flows from Operating Activities = $75. The logic is that, if the company
made $100 that year (net income), and they are using the accrual accounting system (not cash
based) then any income they generated that year which has not yet been paid for in cash should be
subtracted from the net income figure in order to find cash flows from operating activities. And the
increase in A/R meant that $25 of sales occurred on credit and have not yet been paid for in cash.
In the case of finding Cash Flows when there is a change in a fixed asset account, say the Buildings
and Equipment account decreases, the change is added back to Net Income. The reasoning behind
this is that because Net Income is calculated by, Net Income = Rev - Cogs - Depreciation Exp -
Other Exp then the Net Income figure will be decreased by the building's depreciation that year. This
depreciation is not associated with an exchange of cash, therefore the depreciation is added back
into net income to remove the non-cash activity.
Rules (financing activities)[edit]
Finding the Cash Flows from Financing Activities is much more intuitive and needs little explanation.
Generally, the things to account for are financing activities:

 Include as outflows, reductions of long term notes payable (as would represent the cash
repayment of debt on the balance sheet)
 Or as inflows, the issuance of new notes payable
 Include as outflows, all dividends paid by the entity to outside parties
 Or as inflows, dividend payments received from outside parties
 Include as outflows, the purchase of notes stocks or bonds
 Or as inflows, the receipt of payments on such financing vehicles. [citation needed]
In the case of more advanced accounting situations, such as when dealing with subsidiaries, the
accountant must

 Exclude intra-company dividend payments.

 Exclude intra-company bond interest.[citation needed]
A traditional equation for this might look something like,
Example: cash flow of XYZ:[17][18][19]

XYZ co. Ltd. Cash Flow Statement

(all numbers in millions of Rs.)

31 Mar 31 Mar 31 Mar

Period ending
2010 2009 2008

Net income 21,538 24,589 17,046

Operating activities, cash flows provided by or used in:

Depreciation and amortization 2,790 2,592 2,747

Adjustments to net income 4,617 621 2,910

Decrease (increase) in accounts receivable 12,503 17,236 --

Increase (decrease) in liabilities (A/P, taxes

131,622 19,822 37,856
payable)

Decrease (increase) in inventories -- -- --

Increase (decrease) in other operating activities (173,057) (33,061) (62,963)

    Net cash flow from operating activities 13 31,799 (2,404)

Investing activities, cash flows provided by or used in:

Capital expenditures (4,035) (3,724) (3,011)

Investments (201,777) (71,710) (75,649)

Other cash flows from investing activities 1,606 17,009 (571)

    Net cash flows from investing activities (204,206) (58,425) (79,231)

Financing activities, cash flows provided by or used in:

Dividends paid (9,826) (9,188) (8,375)

Sale (repurchase) of stock (5,327) (12,090) 133

 Increase (decrease) in debt 101,122 26,651 21,204

Other cash flows from financing activities 120,461 27,910 70,349

    Net cash flows from financing activities 206,430 33,283 83,311

Effect of exchange rate changes 645 (1,840) 731

Net increase (decrease) in cash and cash

2,882 4,817 2,407
equivalents

See also[edit]
 Cash flow
 Income statement
 Balance sheet
 statement of changes in equity

Notes and references[edit]

1. ^ Helfert, Erich A. "The Nature of Financial Statements: The Cash Flow
Statement". Financial Analysis - Tools and Techniques - A Guide for Managers.
2. ^ Bodie, Zane; Alex Kane; Alan J. Marcus (2004).  Essentials of Investments, 5th ed.
McGraw-Hill Irwin. p. 455.  ISBN  0-07-251077-3.
3. ^ Epstein, Barry J.; Eva K. Jermakowicz (2007). Interpretation and Application of
International Financial Reporting Standards. John Wiley & Sons. pp. 91–97. ISBN 978-
0-471-79823-1.
4. ^ Epstein, pp.90-91.

Cash Flow Statement

By ADAM HAYES

 Reviewed By JULIUS MANSA 

 Updated Aug 9, 2020

What Is a Cash Flow Statement?

A cash flow statement is a financial statement that provides aggregate data
regarding all cash inflows a company receives from its ongoing operations and
external investment sources. It also includes all cash outflows that pay for
business activities and investments during a given period. 
A company's financial statements offer investors and analysts a portrait of all the
transactions that go through the business, where every transaction contributes to
its success. The cash flow statement is believed to be the most intuitive of all the
financial statements because it follows the cash made by the business in three
main ways—through operations, investment, and financing. The sum of these
three segments is called net cash flow.

These three different sections of the cash flow statement can help investors
determine the value of a company's stock or the company as a whole.

KEY TAKEAWAYS

 A cash flow statement provides data regarding all cash inflows a company
receives from its ongoing operations and external investment sources.
 The cash flow statement includes cash made by the business through
operations, investment, and financing—the sum of which is called net cash
flow.
 The first section of the cash flow statement is cash flow from operations,
which includes transactions from all operational business activities. 
 Cash flow from investment is the second section of the cash flow
statement, and is the result of investment gains and losses. 
 Cash flow from financing is the final section, which provides an overview of
cash used from debt and equity.
How Cash Flow Statements Work
Every company that sells and offers its stock to the public must file financial
reports and statements with the Securities and Exchange Commission (SEC).1
The three main financial statements are the balance sheet and income
statement. The cash flow statement is an important document that helps open a
wind interested parties insight into all the transactions that go through a
company.

There are two different branches of accounting—accrual and cash. Most public
companies use accrual accounting, which means the income statement is not the
same as the company's cash position. The cash flow statement, though, is
focused on cash accounting.

Profitable companies can fail to adequately manage cash flow, which is why the
cash flow statement is a critical tool for companies, analysts, and investors. The
cash flow statement is broken down into three different business activities:
operations, investing, and financing.

Let's consider a company that sells a product and extends credit for the sale to
its customer. Even though It recognizes that sale as revenue, the company may
not receive cash until a later date. The company earns a profit on the income
statement and pays income taxes on it, but the business may bring in more or
less cash than the sales or income figures.

 
Investors and analysts should use good judgment when evaluating changes to
working capital, as some companies may try to boost up their cash flow before
reporting periods.

Cash Flows From Operations

This is the first section of the cash flow statement covers cash flows from
operating activities (CFO) and includes transactions from all operational business
activities. The cash flows from operations section begins with net income, then
reconciles all noncash items to cash items involving operational activities. So, in
other words, it is the company's net income, but in a cash version.

This section reports cash flows and outflows that stem directly from a company's
main business activities. These activities may include buying and selling
inventory and supplies, along with paying its employees their salaries. Any other
forms of in and outflows such as investments, debts, and dividends are not
included.

Companies are able to generate sufficient positive cash flow for operational
growth. If there is not enough generated, they may need to secure financing for
external growth in order to expand.

For example, accounts receivable is a noncash account. If accounts receivable

go up during a period, it means sales are up, but no cash was received at the
time of sale. The cash flow statement deducts receivables from net income
because it is not cash. The cash flows from the operations section can also
include accounts payable, depreciation, amortization, and numerous prepaid
items booked as revenue or expenses, but with no associated cash flow.

Cash Flows From Investing

This is the second section of the cash flow statement looks at cash flows from
investing (CFI) and is the result of investment gains and losses. This section also
includes cash spent on property, plant, and equipment. This section is where
analysts look to find changes in capital expenditures (capex).

When capex increases, it generally means there is a reduction in cash flow. But
that's not always a bad thing, as it may indicate that a company is making
investment into its future operations. Companies with high capex tend to be
those that are growing.

While positive cash flows within this section can be considered good, investors
would prefer companies that generate cash flow from business operations—not
through investing and financing activities. Companies can generate cash flow
within this section by selling equipment or property. 

Cash Flows From Financing

Cash flows from financing (CFF) is the last section of the cash flow statement.
The section provides an overview of cash used in business financing. It
measures cash flow between a company and its owners and its creditors, and its
source is normally from debt or equity. These figures are generally reported
annually on a company's 10-K report to shareholders .

Analysts use the cash flows from financing section to determine how much
money the company has paid out via dividends or share buybacks. It is also
useful to help determine how a company raises cash for operational growth.

Cash obtained or paid back from capital fundraising efforts, such as equity or
debt, is listed here, as are loans taken out or paid back. 

When the cash flow from financing is a positive number, it means there is more
money coming into the company than flowing out. When the number is negative,
it may mean the company is paying off debt, or is making dividend payments
and/or stock buybacks.

Compete Risk Free with $100,000 in Virtual Cash

Put your trading skills to the test with our FREE Stock Simulator. Compete with
thousands of Investopedia traders and trade your way to the top! Submit trades
in a virtual environment before you start risking your own money. Practice trading
strategies so that when you're ready to enter the real market, you've had the
practice you need. Try our Stock Simulator today >>

5 Resources You Need to Succeed to Start

a Business
 Small Business

 Setting Up a New Business

 |

 Needs to Start a Business

ByKJ HendersonUpdated February 05, 2019

RELATED
 Business Grants for Women & Minorities
 How to Offer Training to Your Laid-Off Employees
 The Average Start-Up Cost for a Childcare Center
 Businesses to Start in a Recession
 How to Start a Colonic Irrigation Business
Starting a business can be daunting, but many people open successful businesses
each year. Those who do succeed typically spend significant time raising capital,
doing market research and developing a realistic business plan before launching their
new company. Of course, careful preparation isn't an absolute guarantee of success,
but it can improve your chances enormously. Take stock of your resources and be
prepared to meet the challenges you'll encounter.

Tip

The resources you need to start a business can be broken into five broad categories:
financial, human, educational, emotional and physical resources.

Financial Resources: Funding 

The most important element in starting a business is funding. Even the most basic
home business incurs a multitude of startup costs, including registering a business
name, obtaining a business telephone line and printing business cards.

Financial resources can be obtained from a variety of sources, the easiest being from
the personal accounts of the company’s founder. Alternatively, loans and lines of
credit may be granted from financial institutions, friends and relatives, private investors
and even the United States government. In addition, many grants are offered from
private and public sources to entrepreneurs of all demographics and personal
situations.

Human Resources: Employees

The success of an organization is heavily reliant on the talent and strength of its
employees. The hiring of experienced professionals with track records of excellence
within their area of expertise ensures that the mission and goals of the company will
be carried out efficiently and with competence. Strong team members can be recruited
using a variety of methods. Staffing agencies and executive search firms specialize in
placing talent of all levels within every industry. An alternative is to find employees
through referrals from individuals whose judgment is trusted.

Educational Resources: Industry Know How

Perhaps the greatest thing an entrepreneur can do when establishing a new business
is to gain as much education possible. By understanding her competition and gaining
an in-depth knowledge of her industry, she will be better prepared to make smarter
decisions regarding the direction of her firm. Educational resources can be found
through professional trade associations that are geared toward her industry, her local
chamber of commerce as well as the Small Business Administration.
Physical Resources: Premises and Equipment
Whether a small home business or a retail operation with multiple locations, every
organization must have the appropriate physical resources to survive. This includes a
proper work space, working telephone line, adequate information systems and
effective marketing materials. This aspect of business planning can be one of the
costliest. As such, it is important for an entrepreneur to realistically assess his needs
before making any purchases.

Emotional Resources: Support Systems

Starting a business can be an extremely stressful endeavor for an entrepreneur to
undertake. To maintain her sanity as well as stay motivated, it is important she have a
support team that can give her inspirations and guidance as needed. This team may
be composed of friends and family as well as a mentor or professional group.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

Getting this Treasure is impossible! Prove us wrong Hero Wars

Work For a UK Company, Live in Ethiopia UK Jobs

Do You Speak English? Work a USA job from home in Ethiopia Work from Home | Search
Ads

Top 24 Richest and Poorest Countries of Africa - Find out Ethiopia

RankEverydaychimp

Finding a Job in the USA from Ethiopia Might be Easier Than You Think Job in the
USA | Search Ads

Hair Transplant Cost in Nekemte Might be Cheaper Than You Think Hair Transplant |
Search Ads

MOST POPULAR
 1Business Capital Resources
 2Steps to Start a Business From Scratch
 3Startup Business Procedures
  4What Businesses Require a Low Startup Cost?

Business Capital Resources

ByKJ Henderson

RELATED
 What Are the Strength & Weakness of a Sole Proprietorship?
 Do Banks Lend to Partnerships or Sole Proprietorships?
 Interview Questions for Capital Management Firms
 Why Businesses Tend to Be Cautious When They Invest
 3 Questions To Ask Before Financing a Business
Though establishing a new business can be rewarding experience, it certainly has
challenges. An entrepreneur must develop a business plan. She must create a product
or service and implement a supply chain to deliver the product or service to customers
and clients. Perhaps the biggest obstacle to overcome when working toward these
goals is the identification and acquisition of capital resources. As the saying goes, it
takes money to make money. Ideas cannot come to life without funding.
Entrepreneurs can obtain financing for business development through several different
methods.

Personal Capital
Using monies in personal accounts including checking, savings, individual retirement
funds (IRA) or 401(k) assets, as well as from the sale of personal assets such as cars
or real estate, is perhaps the simplest way an entrepreneur can fund his business.
Since none of this cash is borrowed, the business begins operating with no debt. The
entrepreneur can focus solely on running his business, not fretting about keeping
creditors at bay. Personal funding may not be a realistic method for everyone, as
depending on the business, a large initial amount of capital may be required.

Borrowed Capital
When personal funding is not an option, the entrepreneur may consider borrowing. A
qualified borrower may apply for loans and lines of credit from banking institutions.
She may also charge business expenses to personal and business credit cards.
Alternatively, she may borrow money from friends and family. In many instances,
relatives and friends will not charge interest on monies loaned, making this method an
excellent source for some. Additionally, the Small Business Administration (SBA), an
agency of the United States government, offers a variety of low-interest loans to
entrepreneurs who qualify for its various programs. Funding through the SBA is
granted to creditworthy borrowers following an involved application process.

Venture Capital
Many start-up businesses turn to venture capitalists as a method of receiving
financing. A venture capital firm offers funding to new businesses in exchange for a
seat at the management table. The level of involvement of the firm varies, ranging
from simply overseeing and advising the venture to actively making day-to-day
business decisions. A benefit of resources obtained from venture capitalists is the
wealth of experience these firms have in growing a business. On the other side of the
coin, these investors may want to have a large role in business operations in an effort
to protect their investment. A company must possess exceptional growth potential in
order to obtain this type of financing.

REFERENCES
WRITER BIO

by Taboola
Sponsored Links
You May Like

Hero Wars For Free. No installHero Wars

This Is How To Use VPNs To Stream Movies In Nekemte Without

RestrictionsTheTopFiveVPN

Searching for a Job Online Might be Easier Than You Think Search for Job | Search Ads

Play this Game for 1 Minute and see why everyone is addicted panzerrush.com

Are You From Ethiopia? Work From Home Jobs May Pay More Than You
ThinkWork from home | Search Ads

Getting a Master Degree Online Might be Easier Than You Think Master Degree Online |
Search Ads

MOST POPULAR
 1Business Credit Resources
 2Recommended Actions a Business Might Take When Experiencing Cash Flow
Problems
 3The Top Ten Risks in a Sole Proprietorship
 4About Pro Forma Statements

Steps to Start a Business From Scratch

ByOwen E. Richason IV


  

RELATED
 Backyard Nursery Growers Business Basics
 Do You Have to Have a Business License to Open a Cupcake Store?
 The Disadvantages of Using Accounting Software
 How to Open a New Window If Thunderbird Is Already Running But Is Not
Responding
 How Can a Teen Start a Home Business?

The adage "start from scratch" means beginning a project with various pieces and
incorporating each piece into the project to make one cohesive product. Starting a
business from scratch is where most small business owners begin, taking a passion
and skills and combining each with real world applications. Opening a new business
takes simple planning and proper use of resources.

Evaluate Resources
Resources, simply put, are tools available to an entrepreneur when beginning a new
business venture. Most often, resources are composed of a desire to achieve
independence using money, sweat equity, experience, knowledge and skill. For
instance, an entrepreneur with good language skills might open a tutoring business or
a person who is well practiced in cooking might open a home chef business or a
restaurant. An entrepreneur should list her qualities, skill set and experience along
with cash on hand and available equipment to evaluate how many resources already
exist.
Determine Legalities
Before actually doing business, an entrepreneur should research and learn all legal
requirements, such as but not limited to: filing articles of incorporation or articles of
organization, registration of the business' fictitious name or Doing Business As name,
obtaining an Employer Identification Number from the Internal Revenue Service,
applying for necessary licenses and operating permits such as a retail resale license.
Some businesses will need only one or two licenses while other businesses may need
multiple license. For instance a retail clothing store may only need a retail license but
a mechanic's garage may need environmental permits, business license and
certification with the state, county or municipality.

Transition Strategy
Many small business owners test the market before opening a full-time company,
choosing to work part time to evaluate how the product or service is received and what
level of demand exists. If the product or service is well received and a profit can be
made on a regular basis, a transition strategy is required to take the business from
part-time to full-time. Recording and reviewing operating expenses to surmise how
much additional earnings are necessary to meet overhead and turn a profit large
enough to make a living. By determining the current versus future earnings, a part-
time business can become a full-time business.

Marketing
Marketing is crucial to the success of any business. Some business owners choose to
develop a niche business while others develop a brand name to compete in the
marketplace. As an example, a person with an extensive knowledge of wines opens a
retail wine and cheese store, specializing in wines from Italy or from California or a
person with fashion experience launches a new clothing line. Starting a business from
scratch will require marketing tools, such as using social networking websites,
distributing fliers, email marketing, offering discounts or specials, and eventually
running print, radio or television advertising.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

These Simple Steps To Unlock HBO Geo Restrictions In Ethiopia TheTopFiveVPN

Online Jobs in the USA May Pay More Than You Think Online Jobs | Search Ads
The Most Beautiful Hotels In The World100JournalNews

Luxury Apartments in Nekemte Might be Cheaper Than You Think Luxury Apartments |
Search Ads

Remember Him? Wait 'Till You See Him NowHorizontimes

Man Moves Out Of His House After He Found A Secret Room Containing
This...Daily Sport X

MOST POPULAR
 15 Resources You Need to Succeed to Start a Business
 2How to Open a BPG File
 3The Requirements for an At-Home Bakery Business in California
 4How to Open an STX File

Startup Business Procedures

ByKJ Henderson


RELATED
 Things to Know About Starting a Small Business
 Why Does a Business Need a Business Plan?
 Checklist for a Business Plan
 Guide to Setting Up a Small Business
 What Do I Need in Order to Open a Restaurant in Virginia?

Entrepreneurs across the country realize their dream of starting up a new business
every day. In fact, the U.S. Small Business Administration of Advocacy reported that
627,200 new businesses opened in 2008. The agency also estimates that 50 percent
of all small businesses fail within their first five years of operation. With this in mind, it
is important for new business owners to dot all T’s and cross all I’s when completing
startup business procedures. This will ensure that their new organization is compliant
with all laws and positioned for success.

Business Plan
Creating a solid business plan is the first startup business procedure every
entrepreneur must complete. A business plan is a document that highlights the goals
of a business in explicit detail. Every business plan includes a mission statement,
company description, market analysis and financial forecasts.

The company description of a business plan explains the basic information about the
new organization. It details the legal structure under which the company will be
formed, such as a sole proprietorship or legal liability company. It also describes the
products and services that will be offered to consumers. In addition, the company
description includes the professional biographical information of key senior
management team members.
The market analysis of the business plan identifies the strengths and weaknesses of
each of the organization’s competitors. The financial forecast explains how the new
venture will be funded. It also estimates, as accurately as possible, the potential
revenue that will be generated.

Financing
Once the business plan is completed, an entrepreneur must next identify options for
financing the start of business. Applying for a loan from a bank is the most traditional
method for accomplishing this task. In addition to filling out an application regarding
his personal credit history, a would-be small business owner may also be required to
present his business plan.

An entrepreneur may alternatively approach independent investors or angels for

startup money. In this instance, the potential benefactors will weigh the strength of the
business plan alongside the entrepreneur’s professional track record to determine if
the venture is a smart investment. Another way for a small business owner to finance
his startup business is by applying for grants. It should be noted that many grants are
restricted to nonprofit organizations, such as cultural institutions and social services
agencies.

Legal Formalities
Before officially opening for business, an entrepreneur must complete all legal
formalities required to establish a company. This includes registering the name of her
business, applying for a Tax Identification Number and registering for state and local
taxes. She may also be required to obtain a license to practice her trade. This
requirement, however, varies by industry and location.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

Man Orders Pizza Every Day for 10 Years Until Employees Realize… Sizzlfy

Top 10 Foods With More Calcium Than MilkShlop Articles & Reviews

Born Into Billions: Meet America's Richest Heirs Bedtimez

Nekemte: Work From Home Jobs In The US May Pay You More Than You
ThinkWork From Home | Search Ads

Are You From Ethiopia? Online Programming Courses Might Suprise You Sponsored
Listings

We Ranked These Beautiful Women - Who Is Number 1?Habit Tribe

MOST POPULAR
 1Keys to Small Business Success
 2Business Capital Resources
 3Kinds of Business Plans
 4Differentiate Between an Entrepreneur & a Small Scale Business Owner

What Businesses Require a Low Startup

Cost?
ByKJ Henderson


RELATED
 Businesses to Start in a Recession
 Ideas for Starting a Company
 Low Startup Home Business Ideas
 Home Business Ideas for a Mom
 Things to Know About Starting a Small Business

Many Americans dream of starting their own business. The lure of being the boss and
calling the shots is just one of many reasons the U.S. Small Business Administration
reported in 2008 that more than 600,000 new businesses are founded each year.
Establishing a new enterprise can be tricky, particularly for an entrepreneur with little
startup capital. An enterprising individual, however, will find that there are a variety of
businesses that require a low startup cost.

Personal Shopping
Shopping is a wonderful pastime. It is even more fun when spending someone else’s
money. A person who loves the thrill of the sale and cannot resist a creative
department store display may find success of the personal shopper. Clients hire
personal shoppers for a variety of reasons. Some individuals view this professional as
a subject matter expert who will make smart purchases on their behalf. Likewise,
many individuals’ schedules are so overbooked they do not have time to shop for
themselves.

A personal shopper interviews each client to get a sense of what they need, their
personal tastes and, most importantly, their budget. The shopper then procures the
requested merchandise. Starting a personal shopping business requires little, if any,
funds. The nature of the job eliminates the need for office space. With only a
telephone and day planner, an organized entrepreneur is in business.

Tutoring
A tutor supports students in their academic endeavors. Whether her client is an eighth
grade math student or middle-aged immigrant attempting to learn English, a tutor
supplements each student’s educational course work with one-on-one instruction. She
may open this low cost business in her own home, working on either a part-time or
full-time basis.
Virtual Assistant
A virtual assistant performs secretarial services for multiple clients. Unlike a traditional
executive assistant who sits in the same location as the person for whom he works,
this professional works with clients remotely. In fact, he can even work from the
comfort of his own home. During a typical day, a virtual assistant drafts
correspondence and other documents, maintains his clients’ calendars and designs
presentations.

Starting a virtual assistant business requires very little startup costs. In some
instances, establishing this business may not cost anything. A telephone, computer
and printer are the only basic equipment required. Access to the Internet is all that is
needed to open shop.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

Dad Puts Recording Device In Kid's Hair, Catches Teacher Doing

UnthinkableSizzlfy

Free Courses Online Might be More Fun Than You Think Free Courses Online | Search Ads

Real Estate Prices in Miami Might Surprise You Miami Real Estate | Search Ads

Baking Soda Tricks Everyone Should Know About Oceandraw

Online Nutrition Courses Might be More Useful Than You Think Health Studies | Search
Ads

This is what your sitting posture says about your personality Tips and Tricks

MOST POPULAR
 1Ideas for Starting a Company
 2Low Startup Home Business Ideas
 3A Day in the Life of a Business Owner
 4Five Reasons to Do Direct Selling Business
How to Write a Good Interview
Questionnaire
ByChristina Hamlett

RELATED
 Reference Check Questions for Employment
 How to Open Disk Utility on a Mac
 How to Uninstall Windows Office 2003 Before Installing Office 2007
 How to Prepare for a Behavioral Interview
 Good Interview Questions to Ask Candidates for Executive Director
An interview questionnaire is a management tool used to pre-screen job applicants.
Based on the answers they provide regarding education, experience and skill sets, the
employer then determines which candidates are the best match for the opening and
schedules appointments to meet them. The questionnaire can help during the
interview as a springboard for exploring answers in greater depth, discussing
hypothetical situations and identifying career goals.

Probe the applicant's knowledge of the company and the job requirements by asking
essay questions, such as why he is interested in working in this field, what he has
done to prepare himself for the inherent responsibilities of the position and what
aspects of the company's products, services, growth and core values are the most
exciting to him.

Request relevant examples of how the applicant has assumed leadership roles, taken
the initiative to identify and resolve problems, participated as a team player and
improved communications and procedures in past assignments that resulted in saving
her company time, money or resources.

Ask if the candidate participates in any volunteer activities or community outreach

programs and what skills he uses to help achieve the programs' objectives.

Provide three problem-solving scenarios typical of those the candidate most likely will
encounter on the job. Ask her to explain what methodology she would use, what
resources she would require and what outcome she would anticipate as the result of
her actions.

REFERENCES

TIPS

WARNINGS

WRITER BIO

Ad 
 
Unmute
by Taboola
Sponsored Links
You May Like

Finding a Job Portal in USA Might be Easier Than You Think Job Websites in USA | Search
Ads

You Might Be Surprised By SUV Prices in Ethiopia SUV Prices | Search Ad

Man Gives Girlfriend A Necklace, 2 Years Later She Screams When She Realizes
What’s InsideBedtimez

Identical Twins Marry Identical Twins - But Then The Doctor Says, "STOP" Sizzlfy

Remember Her in ABBA? Take A Deep Breath Before You See What She Looks
Like NowHabit Tribe

Getting an US visa Might Be a Better Idea Than You Think US Visa | Search

MOST POPULAR
 1Selection Criteria for Hiring
 2Interview Questions for a Team Leader Role
 3How to Run an Interview
 4How to Interview Self-Starters

Things to Know About Starting a Small

Business
ByKJ Henderson

 
 

RELATED
 What Are the Typical Traits & Characteristics of Entrepreneurs?
 What Businesses Require a Low Startup Cost?
 Net Operating Loss for a Sole Proprietorship
 Part-Time Business Ideas
 5 Resources You Need to Succeed to Start a Business

The idea of being self-employed is appealing to many people for a variety of reasons.
Some envision the time and monetary freedom entrepreneurship will bring. Others
fantasize about working within their dream industry. Many simply enjoy the idea of no
longer having a boss. Although it is possible for each of these daydreams to become a
reality, a lot of hard work must be performed to accomplish these goals. Self-
employment is not for everybody. Before starting a small business, an individual
should be able to successfully answer a few questions. If he cannot, well, as the
saying goes: "don’t quit your day job."

Products Or Services
A business is an organization that offers goods or services in exchange for money.
Before establishing an enterprise, an entrepreneur must have a clear idea of what her
company will sell. Has she developed new computer software that will revolutionize
the information technology industry? Perhaps her education and skill at accounting will
be an asset to other small businesses. By clearly defining the products or services she
will be offering, she can better identify her potential customer base, as well as develop
appropriate and effective marketing strategies.

Financing
You have to spend money to make money, as the old saying goes. All small
businesses, regardless of industry, require an initial capital investment. Manufacturing
equipment may need to be procured. A website must be designed. Notebooks and
pens must be purchased. Whether the amount is large or small, an entrepreneur must
determine how he will establish and sustain his business financially until it turns a
profit. He may use his personal savings. He may also apply for loans from financial
institutions. Alternatively, he may qualify to receive grants from government agencies
and private organizations. Lack of appropriate funding, according to the United States
Small Business Administration, is one of the leading reasons an estimated 50 percent
of all businesses in this country fail within their first five years of operation.

Customers
Before founding a small business, an individual must also determine who her target
customer base will be. For example, if her company will specialize in performing
clerical tasks for other entrepreneurs, her marketing efforts would be most effective if
geared toward local small businesses. Alternatively, if she is opening a boutique that
sells the latest in casual fashion, she may identify female teenagers as her target
demographic. By successfully determining who will buy her wares or services, she can
effectively spend her marketing dollars on those avenues that will ensure a positive
response.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

Drive Business Growth with Entity ResolutionQuantexa

The One And Only WD40 Trick Everyone Should Know Oceandraw

Family Dog Grabs And Throws Baby, Mom Freezes Until She Learns Why Bedtimez

Working in the USA for Ethiopia residentsUSA Jobs | Search Ads

Recruitment Agencies USARecruitment Agencies USA | Search Ads

Getting a Master Degree in the United Kingdom Might be Easier Than You
ThinkMaster Degree in UK | Search Ads
MOST POPULAR
 13 Questions To Ask Before Financing a Business
 2Things to Know When Starting a Fashion Company
 3The Best Home Businesses If You Have Children
 4Business Capital Resources

How to Build a Gymnasium Sports

Business
ByTim Burris

RELATED
  How to Get a Loan for a First Time Business
 How do I Get Financing Help for a Small Home-Based Business?
 What Is Needed to Get Started in the Spa Business?
 What Creditors Look for in a Business Plan
 The Cash Flow Needed to Finance a Business

Gymnasium sports businesses provide a valuable service to home schooled youth

sports programs, youth travel sports clubs and adult recreational sports teams. Often
these organizations do not have the facilities to provide a venue for team practices
and games. Gymnasium sports businesses provide a home for a number of sports,
including basketball, volleyball and indoor soccer. Building a gymnasium sports
business can be challenging, as there is competition from indoor sports businesses as
well as established school district gyms that rent court time. In addition, the costs for
start-up, facilities management and staffing needs can be high.

Seek out business partners and employees with experience in the gymnasium sports
field. Management is key to the success of any new business. Surround yourself with
knowledgeable people from the start to give your new business an edge over the
competition. Investors and lenders are more likely to provide start-up funds to
businesses having experienced employees and managers.

Develop a unique business advantage over your competition. You will need more than
quality facilities to start your gymnasium sports business. Decide on what additional
services you can provide to set yourself apart. Examples are sports park amenities,
national sports league sanctioned courts and fields, referee referral services and
specialized team season and tournament scheduling assistance.

Create a business plan that includes your gymnasium business model, your
experience in gym or sports management and qualifications of business partners and
employees. Include the required financing for your first three years of operation. In
addition to the initial capital requirements, investors need to be shown your entire plan
for a profitable business. Local small-business development centers and chambers of
commerce can provide resources to help you craft a successful business plan,
ascertain business capital needs and project ongoing operational costs. Similar
gymnasium sports businesses in other cities can also be an information resource.
Contact organizations that have the same business model; the information obtained
will be more relevant to your business plan. Look to chambers of commerce in cities of
similar size and demographics to find a comparable market environment.

4
Obtain the capital to fund your new operation. Look to personal investments first, but
be ready to seek outside financing due to the large capital requirements and operating
costs. Talk to investors and lenders, using your completed business plan. The United
States Small Business Administration and local small business development centers
can provide lists of lenders to assist with financing. These organizations can also
provide leads for potential investors. Be ready to provide personal as well as business
financial information from all current business partners and investors. This information
will include tax returns, banking and investment account statements, as well as a
complete listing of personal assets and liabilities.

Market your new business through all feasible community resources. Start early by
joining your chamber of commerce or merchants association. Market your new
business directly to home school networks, travel basketball, soccer and volleyball
clubs as well as adult recreational sports teams. You should also approach school
districts to propose your facilities and services. Show your business can provide cost
savings to the district by reducing facilities and personnel costs.

REFERENCES

RESOURCES

TIPS

WARNINGS

WRITER BIO

Ad 
 
Unmute
by Taboola
Sponsored Links
You May Like

The Best Luxury Hotels in the World100JournalNews

Florida Real Estate Prices Might Surprise You Florida Real Estate | Search Ads

Colorado Mom Adopted Two Children, Months Later She Learned Who They
Really AreHabit Tribe

Movie Moments You Had No Idea Were ImprovisedBedtimez

25 People Who Did Not Get What They Ordered Online Sizzlfy

The 8 Countries Where You Can Go To College For Free WomensArticle.com

MOST POPULAR
 1How to Get Startup Funding for a Gym
 2What Financial Firms Look for in Business Plans to Grant Loans
 3Types of Management & Financial Assistance That the Small Business
Administration Offers
 4How to Open a Gymnasium

What Is a Common Weakness in Small-

Business Financing?
ByJonathan Lister


RELATED
 The Importance of Equity to an Organization
 What Are the Major Funding Options for Small Businesses?
 Operating Capital & Its Importance
 The Top Ten Risks in a Sole Proprietorship
 Start-Up Loans for Business

Securing financing for a small business can be the most harrowing part of the startup
process. Inconsistencies in bank lending practices can create impossible situations
where a business owner can't get funding without proper credit but can't get proper
credit without funding. A small-business owner who handles existing finances poorly
may also find it difficult to secure additional capital to correct financial errors in the
early days of business startup.

Low Cash Assets

Maintaining low available liquid cash in proportion to available credit makes it difficult
for a small business to address sudden problems or business complications.
According to the International Council for Small Business, this common weakness in
small-business finance leads to difficulty in paying short-term debts if issues arise
requiring sudden infusions of cash. For example, sudden breakdowns in
manufacturing equipment can require a small business to divert a large portion of its
available cash to fix these problems and restore normal business operations. If the
company keeps only a small amount of available cash on hand, paying for repairs and
meeting other immediate financial obligations becomes problematic.

Carrying too Much Debt

A small-business owner may underestimate the amount of available cash she needs
to effectively operate her company and pay her creditors, employees and vendors.
The Council for Small Business states that a ratio of current cash assets equal to two
times the amount of current debt is sufficient to pay debts and sustain growth.
Carrying debt above this ratio may force a small-business owner to borrow additional
funds to pay creditors, which only increases her debt and widens the gap for business
revenue to fill.

Credit Rating Issues

Obtaining a small-business loan for startup costs can be difficult for an entrepreneur
operating as a sole proprietor or member of a partnership. This difficulty arises from
the fact that the entrepreneur's personal credit rating plays a large role in determining
his ability to secure small-business financing. A potential business owner, regardless
of business experience, can't usually secure business financing as a sole proprietor or
member of a partnership if his personal credit score is poor. Banks and other financial
lenders consider this a bad investment risk.

Providing Startup Capital

A bank or other financial institution doesn't usually provide 100 percent of the
financing necessary to start a small business. The potential business owner provides
a portion of the startup costs from personal funds or infusions of capital from private
investors. Problems can occur if the potential business owner doesn't have sufficient
private funds to supplement a small-business loan. This leads to inadequate startup
capital, which can sink a fledgling company if the business is slow to generate
revenue.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

40 Hit Songs That Are Now Banned From Playing On The Radio Oceandraw

This Is Why Putting an Onion in Your Sock Can Do Wonders Tips and Tricks

Woman Sues Teen Over Fence Fire, So He Leaks Her Photos High Tally

Plumbers Don't Want You To Know This Simple TrickStudent Sea

This Is Monica Lewinsky's Net Worth As Of 2020FinancialAdvisorHeroes

Remember Him? Grab Tissues Before You See Him Now Articles Vally

MOST POPULAR
 1Reasons for Financing a Business
 2Three Competitive Risks When Using Cost Leadership
 3Implications of Poor Cash Flow
 4Funding for Small Business Ideas
Major Factors Involved in Successful
Entrepreneurship
ByLisa McQuerrey

RELATED
 Characteristics of Small-Business Owners
 Qualities to Become a Successful Entrepreneur
 Top 10 Characteristics of an Entrepreneur
 The Cash Flow Needed to Finance a Business
 Methods to Capitalize a Business
Becoming a successful entrepreneur takes hard work and dedication paired with a
business concept that has the potential to stand out in the marketplace and make
money. A well-developed business plan, market knowledge and the ability to surround
yourself with the right individuals who can help you achieve your vision is also key.

Viable Business Model

For an entrepreneurial endeavor to be successful it must be well vetted. This includes
conducting in-depth market research, having knowledge of the competition and a well-
defined financial and marketing strategy. Going into entrepreneurship without these
critical action plans can lead to unanticipated roadblocks, cost overruns and delays.

Business Financing
Entrepreneurs must have access to financing, or understand how to go about
obtaining the funds they need to successfully launch and operate their businesses.
This can involve writing business plans, applying for loans or grants or seeking
investors. They must have first have detailed knowledge about anticipated cost
projections as well as anticipated return on investment.

Self-Discipline
An entrepreneur doesn’t typically work a traditional schedule or a 40-hour week.
Commitment to working as necessary to get a business off the ground is essential to
success. This can include sacrificing personal time, forgoing salary and covering a
variety of roles, from CEO to janitor, at least initially. Understanding your industry
inside and out is also essential to an entrepreneur’s success. This means staying on
top of industry trends, continually networking, monitoring economical factors that could
impact business and surrounding yourself with knowledgeable and talented individuals
who have skills you yourself do not possess.

Be Open to Change
Being open and flexible to change as necessary is critical to entrepreneurial
undertakings. Changes in technology, the introduction of new products and
competition from a worldwide marketplace make this essential. Entrepreneurs must be
able to quickly respond to and re-adapt to changing conditions to stay on top.

Stress Management Skills

Entrepreneurship often involves taking calculated risks, and you must be able to
handle the stress that comes with this line of work. This is essential not only to the
company’s success, but to the mental health and confidence of your employees,
partners and investors. If you don’t love what you do, you won’t be able to convince
anyone else that your product, service or concept is viable either. Be fully vested in
your endeavor and be able to talk passionately and intelligently about it.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

She Wouldn't Do The Scene, So She Got A Stunt Double Horizontimes

The Most Expensive High School in the US is in Nekemte Tip Parents

Moving to the United Kingdom to Study Might be Easier Than You Think Study in UK |
Search Ads

Getting a Degree Online May Have Never Been Easier Online Degree | Search Ads

Baby Keeps Waking Up With Scratches, Mom Checks Camera And Calls
CopsBedtimez

These Mysterious Trail Cam Photos Raised Some Questions Crafthought

MOST POPULAR
 1Characteristics of Small-Business Owners
 2Good Characteristics of an Entrepreneur
 3Finance & Business Strategies for the Serious Entrepreneur
 4What You Need to Open Your Own Business

Business Grants for Women & Minorities

ByKJ HendersonUpdated March 04, 2019

 
 

RELATED
 Can a for Profit Company Form a Nonprofit Foundation for Scholarships?
 Grants for Business Degrees
 Nonprofit Organization Travel Expense Grants
 Veteran-Owned Business Grants
 Assistance for Single Mothers Wanting to Start a Business

Although Federal and state government agencies don’t typically offer grants aimed at
establishing small businesses, there are many sources of free money available from
nonprofit institutions whose mission is to support women and minorities in achieving
their professional goals. Business-related grants for women and minorities typically
have specific eligibility requirements that applicants must meet to secure funding.
Although some assist in the creation of a business, many provide the financial support
needed to receive the proper training or education needed for career success.

Ideas Café Awards

Although not specifically geared toward women and minority entrepreneurs, Idea Café
is an organization that provides a variety of educational resources to small business
owners. In addition to maintaining a thorough website and publishing a multitude of
literature, the Idea Café awards grants to the “most deserving small business owner
who is willing to take their business to the next level.” Anybody, women and minority
candidates included, who owns a business is eligible to apply.
The organization also allows those who are planning to open a business to throw their
hat into the ring. The mission of the contest is to “spur the imagination and spirit of
entrepreneurism.” As such, only the entrepreneur who has what Idea Café deems is
the most innovative idea will be awarded the prize. The grant as of July 2017 consists
of $1,000 and promises of free publicity and national recognition.

National Association of Black Accountants

The National Association of Black Accountants (NABA) has provided more than $8
million in scholarship funds to deserving students preparing to enter various business
professions. On an annual basis, the organization provides 40 to 70 scholarships
ranging from $1,000 to $10,000. To qualify for NABA monies, an applicant must be an
ethnic minority. In addition to being enrolled in an academic institution, he also must
be a student member in good standing of NABA.

Women in Defense
Founded in 1981, Women in Defense aims to cultivate and support the “advancement
and recognition of women in all aspects of national security.” In addition, the
organization, an affiliate of the National Defense Industrial Association, provides
women with “a formal environment for professional growth through networking,
education and career development.” Each year the group grants the HORIZONS
Scholarship.

Created in 1988, the HORIZONS Scholarship gives academic assistance to women

who are working and planning to pursue a career in the defense industry. Eligibility is
open to residents of the United States. In addition, applicants must be enrolled in an
accredited post-secondary educational institution, as well as maintain a minimum
grade-point average of 3.25.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

Nekemte Coworking Prices Might Be Lower than You Think Coworking Prices | Search Ad

Mom Delivers Triplets – Dad Takes Closer Look And Bursts Into Tears Tip Parents

Ex-cop dog barks at tree, dad cuts it down Gloriousa

Work From Home for a USA company Might Be More Fun Than You Think Work From
Home USA | Search

Blockchain Technology Courses Might be More Rewarding Than You

ThinkBlockchain Technology Courses | Search Ads

Ex-Police Dog Barking At Tree, Dad Cuts It DownHigh Tally

MOST POPULAR
 1Grants to Go Back to College for an MBA
 2Where To Get College Grant Money for Women in Business
 3Grants For Women & For-Profit Business Startups
 4Grants for Students Interested in Nonprofits

How to Offer Training to Your Laid-Off

Employees
ByTara Duggan


RELATED
 How to Disable the Microsoft RDP Audio Driver
 How to Start Your Own Home Care Business
 Virtual Assistant Contractor Training
 Small Business Startup Help
 How to Find Grants to Start a Business

Offering training to laid-off employees typically involves referring these former workers
to career centers run by local government agencies. These institutions provide
counseling, job fairs and retraining advice. The CareerOneStop website helps laid-off
employees set goals, locate training, get financial aid and get credentials so they can
find another job. In addition, you can instruct employees to seek out the self-paced
training alternatives provided by the Small Business Administration. These free
training courses enable laid-off employees to develop skills in managing, marketing
and accounting.

Provide a list of Internet resources relevant to your industry. Industry associations

typically provide career development and training resources. For example, the
CareerOneStop Career Resource library provides a comprehensive list of web
resources. Professional associations usually offer training opportunities, including
internships. Encourage employees to make use of social media technology to locate
training opportunities. Wikis, blogs and forums provide these resources. For example,
the Moodle virtual learning environment provides a free web application that allows
educators to provide access to online learning that may benefit your laid-off workers.

Help employees assess their current skills. Companies typically lay off employees who
no longer have a relevant set of skills. Encourage them to take advantage of the
United States Department of Labor Employee and Training Administration website that
provides free online resources from the O*NET Resource Center. These tools help
your laid-off employees identify their marketable skills and find occupations and jobs in
their location.

3
Show employees where they can get additional credentials to make themselves more
marketable. For example, the Project Management Institute offers the Project
Management Professional to experienced project managers. The Project Management
Institute website provides access to resources, including the Project Management
Body of Knowledge, necessary to pass the exam. Online resources, such as the
Massachusetts Institute of Technology OpenCourseWare website, provide free course
materials, including videos of lectures, assignments, suggested readings and the
opportunity to join a study group.

Help employees locate financial aid to fund training. Provide a list of resources
relevant to your industry. For example, the CareerOneStop website provides links to
places to obtain financial aid. Grants and scholarships provide money that recipients
don’t have to pay back. Loans need to be repaid. The Federal Student Aid Direct
Loans website provides a calculator to help people determine expenses, such as
tuition and books. By offering these lists of resources to your laid-off employees you
facilitate their re-entry into the workforce.

REFERENCES

RESOURCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

Mom Gives Birth To 7 Babies Where Are They 20 Years Later? Dailyforest

Top 10 Most Beautiful Natural Wonders Of Canada Thebest1.xyz

Royal Family Confirms Unfortunate NewsArticles Vally

The One WD40 Trick Everyone Should Know About Cleverst

After Her Weight Loss, Celine Dion Confirm What we Knew All along Student Sea

Digital Transformation Courses in Nekemte Might Be Better Than You Think Digital
Transformation Courses | Search Ads

MOST POPULAR
 1Training Materials on Student And/Or Employee Retention
  2How to Build Leadership Capacity
 3How to Start a Staffing Training Business
 421st Century Employee Training

The Average Start-Up Cost for a Childcare

Center
ByMarie HuntingtonUpdated August 19, 2017

RELATED
 What Business License Will I Need to Start an Indoor Playground?
 Guidelines for Daycares
 What Operating Funds Will Be Needed to Start Up a Day Care?
  How to Start a Day Care Center Facility
 How to Conduct Quantitative Market Research for a Childcare Center

The increase in two-family household incomes has created a huge demand for
childcare related services. Starting a childcare center can be profitable; however, the
average start-up cost for one can range from $10,000 to $50,000, according to
Entrepreneur. Established childcare facilities generally attract parents of infants,
preschool children and school-age children who are looking to place their children with
daycare providers because of their need to work outside the home.

Operation Costs
The actual start-up costs for your childcare center will depend on how you choose to
establish and operate your business. For instance, opting to start a childcare center in
your home will be less costly than leasing or buying a building or office location.
Home-based childcare centers have lower overhead costs, including rent and costs
associated with building utilities and maintenance. Also, other factors to consider
when ascertaining the start-up costs for a childcare center are the daycare hours;
whether you choose to supply food for the children; the amount of children you plan to
accommodate; how much you plan to charge; and staff considerations, such as
salaries and employee benefits.

Running Expenses
Self-Help.org says that the costs to start a childcare center if you’re taking over an
existing facility can run at least $55,000 in renovation costs. They also reveals that
supplies and equipment can costs over $60 per child. According to Self-Help.org,
educational supplies and equipment can total over $4,700. Other expenses include
marketing costs, furniture and administrative expenses; Self-Help averaged the total
costs for a start-up childcare center to be $95,485.

State Regulations
Every state has its own regulations regarding the requirements to become a licensed
childcare provider and other requirements, such as the qualifications to legally operate
a childcare facility, the teacher-to-child ratio and safety requirements for staff and
children. Your state may charge fees to register as a licensed childcare center. States
establish childcare regulations to protect the health and safety of children. These
childcare requirements are set by the childcare licensing agency in your state.

Other Resources
The National Childcare Information and Technical Assistance Center provides
licensing information for each state. Other organizations that may provide resourceful
information are the National Association for the Education of Young Children, National
Association for Family Child Care and the National Child Care Association.

REFERENCES

RESOURCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

The 50 Most Beautiful Women in the WorldNovelodge

The 20 Most Beautiful Beaches in the WorldBest-journal.xyz

What And Where Are These Famous Wrestlers Now? Oceandraw

She Never Got Married, and Now You Know Why Dailyforest

After Rescuing Them, Firemen Realized They Weren't Puppies Wanderoam

From Ethiopia? Doing Cyber Security Courses Online May Be Highly

RecommendedCyber Security | Search Ad

MOST POPULAR
 1How to Conduct Quantitative Market Research for a Childcare Center
 2How to Start a Home Daycare in Texas
 3Things to Consider When Starting a Day Care Business
 4Information on Starting a Day-Care Business

Businesses to Start in a Recession

ByKJ Henderson


  

RELATED
 Problems Faced by Temporary Staffing Agencies
 Ideas for Starting a Company
 What Are the Advantages of Employment Agencies?
 Tax Deductions for a Staging Business
 How to Update a Printer Spooler

Although a recession is a stressful time for many, it can also be a time for new
beginnings. The loss of employment and an uncertain future often make a person
reevaluate his goals. If he has dreamed of owning his own business but never acted
upon the impulse, this is possibly the best time in which to embark upon that journey.
Many businesses thrive in a down economy that have low start-up costs and require
minimal overhead.
Administrative Services
In times when businesses are forced to do more with less, a person with exceptional
clerical skills may find her services in demand. Though employers are forced to
downsize their full-time administrative staff for budgetary reasons, there is still work to
be done.

An outsourced administrator performs a variety of tasks such as typing, transcription,

bookkeeping and desktop publishing for multiple clients. She may charge by the hour
or on a per-project basis. Requiring only basic office equipment including a computer,
telephone, photocopier and fax machine, the savvy entrepreneur may open this type
of business in the comfort of her home.

Teaching
In times of recession, displaced workers often take courses aimed at sharpening their
current skills and gaining new ones. Entrepreneurs who possess education,
professional experience or skills in a specific subject matter may find success teaching
those skills to others. A person with human resources experience may teach
interviewing techniques to clients on a one-on-one basis. Another with a degree in
theater can teach group acting classes.

Establishing this type of business does not require a large cash outlay. Depending on
the nature of the classes, a teacher may train students in his own home. Those who
require more room can rent space by the hour at an inexpensive rate from academic
institutions, virtual office centers and artistic rehearsal studios.

Resume Writing
A person with resume writing skills will surely find herself in demand during a
recession. Excellent writing skills, a background in human resources or staffing as well
as a computer and printer are all that is needed to open this type of home-based
business.

Working as a resume writer, this person interviews clients, gaining a complete

overview of their employment history. After identifying their goals and objectives, she
advises them on the structure of their resume. She may also offer tips geared toward
performing successfully during a job interview.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

These Cars Are Selling At The Lowest Prices Yet Daily Sport X

The Head-Turning Transformation Of Precious Mortgage After Life

Deep Cleaning Service Costs in Nekemte Might Surprise You Deep Cleaning | Search Ad

15 Places You Need to Visit Before You DieBleuBloom.com

Tacky Living Room Mistakes Everyone MakesDailyforest

Stepdad Insists On Alone Time, Mom Sets Up Camera Articles Stone

MOST POPULAR
 1Small Business Ideas During Economic Hard Times
 2Part-Time Business Ideas
 3What Businesses Require a Low Startup Cost?
 4Ideas for Home-Based Businesses Which Are Easy to Start

How to Start a Colonic Irrigation Business

ByValencia Higuera


  

RELATED
 About Starting a Nutritionist Business
 How to Start My Own Pastry Shop
 How to Start a Medical Staffing Company
 How to Get a Lawn Business Started
 How to Open a Philly Cheesesteak Restaurant

Colonic irrigation cleanses the colon and helps remove harmful toxins from the body.
The procedure is performed at such facilities as spas. This typically involves a
practitioner administering an enema to flush the colon. If you're thinking about a
career in colon therapy, you can apply for a job with a medical facility or spa, or open
your own colonic irrigation business.

Education
Enroll in a school that specializes in holistic and alternative medicine, and receive
medical training in colon therapy. These schools not only provide training on how to
administer enemas to cleanse the colons, but they also provide background education
on areas such as anatomy, physiology and sanitation techniques. In addition, formal
training in colon therapy supplies you with business skills to run your own facility, and
you'll learn how to properly use the medical equipment for colon cleanses. Upon
completion of the required coursework and training, you can test with the International
Association for Colon Hydrotherapy to become certified in colon therapy.

Business Plan
Creating a business plan for your colonic irritation business helps secure financing for
your venture. Opening a colonic irrigation business requires acquiring a location,
purchasing equipment and supplies, and hiring staff. Banks and credit unions can
provide the startup capital. However, securing a loan often requires a detailed
business plan that outlines various aspects of your business. Information to include in
your business plan for a colonic irrigation business includes the price point for your
services, types of services, target demographics, information on local competition,
sales forecast, projected expenses and information on how you plan to allocate the
loan money.

Research the Business

Acquire working knowledge of the colonic irrigation business before starting your own
venture. Contact local colonic irrigation businesses to offer your services as an
employee or intern. This gives you the opportunity to shadow experienced colon
therapists, and learn the management or business side of colon therapy. Working
knowledge of the field also provides insight on in-demand services, as well as the
average price for colon services. This information helps you narrow down the type of
services to offer in your facility.

Startup Options
You can start a colonic irrigation business from scratch or purchase an existing
business. Building a business from scratch takes time because you must build a good
reputation and acquire steady clients. By acquiring or purchasing an existing business,
you obtain an established location with staff, equipment and customers. You might
also consider a colonic irrigation franchise. Benefits include running your business
under an already well-known name, and your purchase may include national and local
advertising to help drive additional business to your facility. Check with your local
health department before starting or purchasing a colonic irrigation business.
Regulations, inspection requirements and license requirements vary from state-to-
state.

REFERENCES

RESOURCES

WRITER BIO

Ad 
 
Unmute
by Taboola
Sponsored Links
You May Like

Colorado Mom Adopts 2 Kids, Months Later She Learns Who They Really
AreArticles Vally

The Most Expensive Planes The Military Has Ever Commissioned Horizontimes
Historians Found Disturbing Photos During The Woodstock Festival In 1969 Student
Sea

Remember Him? Wait Till You See Him NowHousediver

Top 10 Most Expensive Buildings In The World100topjournal.xyz

Pregnant Dog Can't Give Birth, Vet Can't Figure Out Why Until She Sees The
UltrasoundBedtimez

MOST POPULAR
 1How to Start My Own Gym Business
 2What Is Needed to Get Started in the Spa Business?
 3How to Start a Nursing Services Business
 4How to Start a Staffing Training Business

Mentoring Skills & Strengths

ByGeorge N. Root III


RELATED
 The Advantages of Mentoring in the Workplace
 The Most Important Traits of Leadership With Emotional Intelligence
 The Importance of Coaching and Mentoring
 Basic Leadership Principles & Competencies Related to Staff Supervision &
Development
 Motivating a Manager for Success

Mentoring in the corporate world occurs when an experienced employee helps in the
development of newer staff members. It can be different than managerial coaching in
that mentoring can be done by a coworker and does not require any kind of
administrative paperwork. It takes a certain kind of person to be an efficient mentor.
Managers need to identify the staff members with strong mentoring skills and
strengths and get those employees involved in staff development.

Listening
A skill and a strength of a good mentor is the ability to listen. It is a skill because a
good mentor can listen to questions being asked by staff members and pull out the
important information that gets to the heart of the question being asked. The strength
is in a mentor's ability to lend a reliable ear to employees that employees feel
confident will yield career-developing results.

Personal Development
The advantage that a mentor has over the people she is mentoring is her years of
experience. A good mentor knows that workplace development is an ongoing process
for every employee. The mentor is aware of her own professional shortcomings and is
constantly looking to improve on those deficiencies. Not only does personal
development improve the mentor's career skill set, it also sets a strong example for
those she is mentoring on the benefits of constant career education.

Organized
When a person acts as a mentor to co-workers, demands on his time start to become
challenging. To help the mentor maintain his own work productivity while still being a
valuable resource to co-workers, he needs to be organized and have a good sense of
time management. As in the case of personal development, maintaining organized
work habits is not only beneficial to the mentor but it stands as an example to co-
workers on how to best use their time.

Humble
A strength of any mentor is humility in the face of something she does not understand.
Instead of feeling embarrassed when a co-worker asks an unfamiliar question, a good
mentor remains humble and admits to not knowing the answer. An efficient mentor
also understands that a question that requires research is an excellent opportunity for
the mentor to teach the co-worker good research habits and for both of them to learn
something new together.

REFERENCES

RESOURCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

The One Baking Soda Trick Everyone Should Know About Cleverst

The Best Western Films That Changed The Way We Watch Movies Horizontimes

Girl Ordered To Leave Her Prom Immediately For This Reason Sizzlfy

These Are The Most Loyal Dog Breeds For Seniors Senior Mag

A Scientist Released A Painting Of Jesus, And It Changes What Everyone

BelievedGloriousa

Firemen Save Them But Soon Realize That These Were Not Actually Puppies Tip
Parents

MOST POPULAR
 1Disadvantages of Using Senior Employees to Coach Employees in New
Positions
 2What Are Strengths in Employment?
 3How to Interview Self-Starters
 4How to Manage Introverts When Coaching
Assistance for Single Mothers Wanting to
Start a Business
ByLainie PetersenUpdated May 17, 2019

RELATED
 How to Get a Minority Small Business Loan
 How do I Get Financing Help for a Small Home-Based Business?
 Money for Women Entrepreneurs to Start a Business
 How Do Small-Business Loans Work?
 Grants for a Single Mom's Business

Entrepreneurship is often attractive to single mothers who seek the flexibility of self-
employment while they raise their children. Starting a business is challenging,
however, particularly when there isn't another parent or other family member who can
step in to help with the kids. It's critical that you seek out resources for education,
training, funding and support so that your business gets off to a good start.

Business Training and Education

Successful entrepreneurs have the education and training needed to operate their
companies effectively. Trade schools, community colleges and four-year institutions
can provide you with the knowledge and training you may need.

Entrepreneurship Education

Some community colleges offer diploma, certificate and degree programs in

entrepreneurship or small business management. If you've never operated a business
before, these programs are helpful. In addition, tuition at community colleges is usually
significantly lower than what you might pay at a four-year university. If the cost
remains a concern, talk to the financial aid office. You may be eligible for state grants,
scholarships or student loans.

Professional Licensing

Some businesses require professional licensing, which means that you may need to
complete an educational program. For example, if you have a cosmetologist license
and hope to open your own salon, state laws may also require you to have a salon
owner or salon manager license. This may require additional education. When
planning your business, verify all educational and licensing requirements.

Tip

When searching for schools, ask about child care options. Some colleges and
universities, including community colleges, operate on-site day care centers for
students.

Business Startup Counseling

Starting a business is a big decision: A good idea isn't enough to ensure business
success. Working with business professionals and counselors who provide assistance
as you develop a business plan, seek funding and set achievable goals can improve
your chances for success.

Small Business Association and Women's Business Centers

The Small Business Administration office in your area is an excellent place to start
your search for counseling and support. Your local SBA office might be associated
with a Women's Business Center, which can provide specialized assistance. These
organizations may also be able to refer you to local nonprofit groups that specialize in
helping single mothers achieve vocational and career goals, including
entrepreneurship or self-employment.

SCORE

SCORE is a nationwide volunteer program that matches entrepreneurs with mentors

who have experience and success in business. By receiving one-on-one assistance,
you can explore and refine your business plans with someone who has already
accomplished what you are trying to do.

Small Business Funding

Putting together funding for your business can be a challenge. Contrary to what many
people believe, there are few direct grants made available to small-business owners.
Instead, government and private grants are often given to government and private
agencies. These agencies then take responsibility for providing grant money and
services to local businesses.

A Small Business Association counselor can let you know whether there are grant
programs in your area that are worth applying for. Also, some prominent businesses,
such as FedEx, operate private grant programs. Competition for grant money is often
fierce, and you may benefit from working with a professional grant writer.
Small-business loans are often far more accessible. The SBA partners with lenders to
provide these loans to small business owners. You still need to qualify for a loan, so
it's essential to check your credit reports before starting the application process.

Ongoing Networking and Support

One way to promote your business, form strategic partnerships, and possibly attract
investors is to become involved with your local business community. Get in touch with
your local Chamber of Commerce. Typically, chambers promote regular networking
and informational events that cost little or nothing to attend. You may also find local
women in business groups that provide camaraderie and referral opportunities.

REFERENCES

RESOURCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

Caught on Camera: Celebs Photobombing Fans Photos Crafthought

21 of the Oldest Surviving Photographs Known to Mankind Wanderoam

Preschool Sweethearts Reconnect 20 Years Later, See Them Today Horizontimes

Real Estate Prices in LA Might Surprise You LA Real Estate | Search Ads

Man Posts Photo Of 'Rock' Found On Beach Until Doctor Tells Him What It Really
IsStudent Sea

Woman Tricks Husband Into A Makeover, Gets Surprise Of A Lifetime Sizzlfy

MOST POPULAR
 1How to Learn to Be a Successful Small Business Owner
 2Grants for Small Businesses Owned by Women
 3Where Can I Get a Woman Owned Business Loan?
 4Entrepreneurial Success and How to Learn All You Can

List of Easy to Start Businesses

ByKJ Henderson
RELATED
 In-Home Caregiver Labor Laws
 Ten Home Business Ideas
 Business Ideas That Help the Elderly Population
 What Is Virtual Bookkeeping?
 Information on Starting an Errand Service for the Elderly

Starting a business does not have to be a hard process. In fact, there are many easy
to establish businesses. In addition, a lot of these opportunities require little or no
startup money. Whether an entrepreneur is looking for a part-time vocation to earn
extra money or a complete career change, there are easy to start businesses
available to meet a variety of interests and skill sets.

Dog Walking
Dog owners who work during the day often engage the services of dog walkers to take
a little Fido out for his morning constitutional. Starting a dog walking service is
incredibly easy. No licensing or formal training is required. All that is needed is a love
of four-legged creatures and the ability to maintain a consistent schedule. A dog
walking business is an excellent choice for college students and others who have
flexible daytime schedules.

The first step to opening this type of business is acquiring clients. Marketing can be
accomplished in a variety of ways, including posting fliers throughout the
neighborhood, advertising in local newspapers, as well as good old fashioned word of
mouth. It is important, when working with a new client, to create a service agreement.
This document highlights the service that will be provided and the fee to be paid.

Housekeeping Service
Just as busy individuals hire professionals to walk their dogs, they also engage
housekeepers to clean and maintain their homes. A housekeeping service is relatively
easy to start and can be established on a shoestring budget. An entrepreneur must
only purchase basic supplies, including a bucket, rags, mop, broom and a vacuum
cleaner.
Customers can be found through the placement of classified ads, Yellow Page listings
and strategically posted fliers. Those with a new business may also distribute
business cards. A benefit of starting a housekeeping service is the flexibility it
provides. An entrepreneur may take on as many or as little clients as he chooses.

Secretarial Service
In addition to being an easy business to start, a secretarial service can be operated
out of its owner’s home. A secretarial service requires a person with strong
administrative skills to perform a variety of clerical tasks for her clients, including word
processing, desktop publishing, dictation and transcription. She may even perform
basic financial services, such as bookkeeping, accounts payable and receivable tasks,
as well as income tax preparation.

Although starting a secretarial service it is easy, the purchase of expensive equipment

is required. An entrepreneur must purchase a computer outfitted with the most current
business related software or office suite. She must also own a telephone, copy
machine and printer, as well as have the ability to send and receive facsimiles.

REFERENCES

WRITER BIO

by Taboola
Sponsored Links
You May Like

These Box Office Bombs Destroyed Careers Crafthought

Rowan Atkinson's Car Cost Him $12.2M, and This Is What It Looks Like TeleHealth
Dave

See Forex Trading OptionsForex Trading | Search Ads

AI Courses in Nekemte Might Be Better Than You Think AI Courses | Search Ads

At 50 Jay-Z is a Billionaire & One of The Most Famous Team Owners in

SportWanderoam

23 Rules That All "Hells Angels" Have To Follow Horizontimes

MOST POPULAR
 1Proven Home Business & Work-at-Home Ideas
 2What Businesses Require a Low Startup Cost?
  3Easy Quick-Start at-Home Businesses
 4Considerations, Tips & Tricks for Setting Up a Virtual Home Business

Tips on Motivating Sales Staff

ByMary Nestor-Harpe

RELATED
 Three Important Elements of Sales Motivation
 Motivation Techniques for Sales Staff
 Motivating Employees With Limited Resources
 The Disadvantages of No Commission for Sales People
 Work Motivation Factors

Generating sales leads, learning about a company's needs, asking the right questions,
promoting products and services and handling objections can make a career in sales
difficult and stressful. Rejection is part of the job. Companies use many ways to
motivate sales teams to overcome objections and rejection so that they can approach
prospective customers with confidence.

List of Business Resources

By: Andra Picincu

Reviewed by: Michelle Seidel, B.Sc., LL.B., MBA
Updated July 11, 2019

RELATED

HOW TO FIND GRANTS FOR NATIVE AMERICANS

LEARN MORE →
What is the first thing that comes to your mind when you think about business
resources? Is it money, labor or equipment? While these are important tools for any
business, there are many other things you need to remain competitive and relevant.
The resources of a business organization can be tangible or intangible and may
include software programs, customer databases, copyrights and more.

Business Resources List

Whether you want to start a business, secure funding or increase productivity in the
workplace, there is a wealth of resources available. These can be classified into
several categories, including physical, financial, intellectual and human resources.

For example, your inventory, equipment and office buildings are all tangible assets, or
physical resources, without which you would not be able to work. You also need
skilled employees (human), industry know-how (intellectual) and access to capital
(financial).

No two businesses have the same needs. However, any company big or small relies
on certain resources to carry out its activities.

A small marketing agency, for example, can be operated from home and does not
require machines and equipment, storage space, raw materials or physical office
space. However, it does need a quality computer system, visual and audio equipment,
software, analytics tools and a virtual office. It may also need access to other
companies' resources, such as customer data and market reports.

The resources of a business organization may also include distribution networks,

warehouses, intellectual talent, cash, lines of credit, patents, trademarks, buildings
and land. For example, in the case of a computer manufacturer, its resources would
be:

 Physical resources: plastic, hardware parts, glass, electronic components,

factories, storage facilities, equipment, buildings and inventory.

 Financial resources: credit, cash, loans, bonds and bank deposits.

 Human resources: employees.

 Intellectual resources: patents, proprietary knowledge and customer data.

Educational Resources for Small Businesses

As an entrepreneur, you may need to get your business up and running or expand
your operations. Hiring a lawyer or a financial adviser to guide you is not always an
option, especially if you are on a budget. Luckily, there are plenty of free resources
you can use to keep yourself informed and educated.

The Small Business Administration, for example, offers helpful tips and step-by-
step guides for entrepreneurs. All you need to do is to access SBA.gov and search for
information on starting a business, getting a loan, applying for licenses and expanding
your operations. You can visit the nearest SBA district office or regional office for one-
on-one training and counseling. The SBA also connects startups with lenders, which
can be helpful if you need capital to launch or grow your business.

Another helpful resource for small business owners is SCORE Willamette.The

organization provides free mentorship, affordable workshops and access to
educational materials, tools and documents for starting and running a business. You
may also access the free resources provided by the U.S. Department of Labor, the
United States Patent and Trademark Office, the local chamber of commerce and other
government agencies.

Leverage Online Resources

Small businesses can also take advantage of free online resources. For example, if
you need help with your business plan, you may use the free templates provided by
Bplans and SCORE. The SBA's business plan tool is designed for startups and
includes everything you need to map out and organize your business.

E-books, podcasts and community forums are all excellent sources of information. The
Bank of America Business Forum, for instance, connects entrepreneurs and small
business owners. Members can ask questions, exchange ideas and discuss topics
related to business financing. Another option is to join LinkedIn groups, which provide
a wealth of information on how to grow your business, increase customer engagement
and gain a competitive advantage.

There are also free online resources for website design, analytics, search engine
optimization, accounting and social media marketing. LegalZoom, for example, offers
free legal forms that you can customize according to your needs. BizStats provides
free business statistics that can help you gain a better understanding of your target
market. Skype and Asana allow you to work remotely, share files with your team
members and collaborate on the go.

No matter what your business goals are, there are resources available to you to help
you achieve progress. Think creatively and use all that is at your disposal.

REFERENCES

WRITER BIO

Related Articles
  How to Find Grants for Native Americans
 Government Assistance for Entrepreneurs
 Small Business Grants and Loans for Women
 Grants for Start-Up Organic Farmers for Women
 Resources Needed to Start a Small Business
 How to Locate Grants for Free
 How to Get a Small Business Loan in Texas
 Start Up Grants for Non Profit Businesses
 How to Get New Business Loans for Veterans
 Free Grants for a Small Business Startup
 Sources of Financial Information
 A Skill Set for a Successful Sole Proprietorship
 What Is an Industry Profile?
 How to Market a Credit Repair Business
 Definition of Financial Resources of Business
 How to Do Background Checks From Home
 Various Types of Accounting Systems
 What Is the ERP Market?
 Define Pledging Accounts Receivable
 How to Start a Pawn Shop in Arkansas
CITE THIS ARTICLE
Did you find this page helpful?
👍
👎
FUNDING/ FINANCING

How to Find Grants for Native Americans

By: Andra Picincu

Reviewed by: Jayne Thompson, LL.B., LL.M.
Updated October 23, 2019
RELATED

LIST OF GOVERNMENT GRANTS FOR INDIVIDUALS

LEARN MORE →

Are you planning to start your own business, but your finances are limited? If you're a
Native American, you may apply for grants, scholarships and other types of financial
aid. Both public and private organizations offer grants for Native Americans and other
minorities. Depending on the grant requirements, you may use the money to finance a
new business, expand your business or continue your education.

TL;DR (Too Long; Didn't Read)

Start your search on grants.gov. Filter the results to see what grants are available for
Native Americans. Other helpful resources are the Administration for Native
Americans, the American Indian Education Fund and First Nations, which offer
scholarships, business grants and consulting services.

Apply for Government Grants

The United States is home to more than 2.9 million American Indians and Alaska
natives, according to the National Congress of American Indians. Each year,
approximately one out of 10 becomes a victim of violent crime. Only 5% have received
graduate or professional degrees. This ethnic group has the highest poverty rates.

Many Native Americans find it difficult to start a business venture due to a lack of
capital and social support. The good news is that a growing number of organizations
are offering free money in the form of grants. As a Native American, you may apply
for a grant to buy food and other essentials, pay your bills, purchase a house or
launch your own business. Government grants don't need to be repaid, but they must
be used for specific purposes, and they have strict conditions and require extensive
paperwork.

The Administration for Native Americans offers grants of up to $37.1 million to Native
American communities. This money can be used to preserve Native American
languages, help people save for a small business or education and improve social and
economic development. The Native American Research Centers for Health provide
funding for research projects linked to the health concerns expressed by tribal
communities, while Temporary Assistance for Needy Families supports low-income
families with money, educational resources and counseling.
Business Grants for Native Americans
Whether you want to open a small store, launch a consulting business or develop new
products, it's worth applying for a business grant. Head over to grants.gov or search
for "Native American free money" online to see what grants are available. For
instance, if you're planning to restore a centuries-old house that belonged to your
ancestors, search for historic building renovation grants.

Reach out to First Nations if you're interested in business grants for Native
Americans. The organization offers funds for economic development to Native
American tribes and nonprofits. It has awarded 1,648 grants worth over $35 million to
Native American projects in 2019 alone.

Another helpful resource is the U.S. Small Business Administration. Although it

doesn't offer loans or free money, it connects business owners and entrepreneurs to
private and public organizations that offer financial help. Applicants who qualify for a
grant may also receive guidance for running their business. You may also want to
check out the National Center for American Indian Enterprise Development, a
nonprofit organization that provides business training, consulting, contract and
subcontract opportunities and assistance to Native American entrepreneurs.

Continue Your Education

Business ownership comes with its challenges. Anyone can start a business, but
getting it off the ground and turning it into a successful venture is the hard part. That's
why it's important to learn the ins and outs of your industry and invest time in your
education. There are plenty of organizations that offer grants for Native Americans
who wish to return to school, take courses or enroll in training programs.

SallieMae, for instance, features over 5 million college scholarships, including need-
based and merit-based college grants. All you have to do is register as a member and
search for grants that meet your needs.

The American Indian Education Fund also offers education grants worth nearly

$450,000 each year. Students can apply for graduate or undergraduate scholarships.
Those who qualify receive grants of $1,000 to $2,000, which are paid directly to their
college or university.

REFERENCES

RESOURCES

WRITER BIO

Related Articles
  How to Find Grants for Native Americans
 Government Assistance for Entrepreneurs
 Small Business Grants and Loans for Women
 Grants for Start-Up Organic Farmers for Women
 Resources Needed to Start a Small Business
 How to Locate Grants for Free
 How to Get a Small Business Loan in Texas
 Start Up Grants for Non Profit Businesses
 How to Get New Business Loans for Veterans
 Free Grants for a Small Business Startup
 Sources of Financial Information
 A Skill Set for a Successful Sole Proprietorship
 What Is an Industry Profile?
 How to Market a Credit Repair Business
 Definition of Financial Resources of Business
 How to Do Background Checks From Home
 Various Types of Accounting Systems
 What Is the ERP Market?
 Define Pledging Accounts Receivable
 How to Start a Pawn Shop in Arkansas

FUNDING/ FINANCING

Government Assistance for Entrepreneurs

By: Selam Nuri

Updated September 26, 2017

RELATED

SMALL BUSINESS GRANTS AND LOANS FOR WOMEN

LEARN MORE →

Entrepreneurs have access to various government programs such as small-business

assistance, assistance for minorities and women, and environmental grants. The
Small Business Administration provides various counseling and training programs and
resources for business owners seeking financial support. The administration’s website
provides useful tips for starting a new business and writing business plans. Other
government organizations such as the U.S. Department of Energy and the U.S.
Department of Transportation assist entrepreneurs through various startup and
funding programs.

Small-Business Assistance
Small-business owners should review the Small Business Administration’s directory of
services, which lists information and resources for starting a new business and the
latest information on business law. The administration also assists small-business
owners with finding startup funds through grants, loans and venture capital. The U.S.
Department of Transportation assists small-business owners, including disabled
veterans and individuals investing in historically underutilized business zones such as
urban and rural centers around the country.

Minorities and Women

Minorities and women have access to a wide array of resources under the Small
Business Administration’s Office of Women’s Business Ownership program. The
program includes a business directory, which links women business owners to
national and local women’s associations that provide counseling, training and startup
funding sources for women. Organizations that support minority groups, including
women, such as the First African Methodist Episcopal Church, assist small-business
owners in underprivileged regions around the Los Angeles district. Other minority
assistance programs for business owners include Operation HOPE, which helps
business owners working in underserved communities around the country.

Venture Capital
In addition to the Small Business Administration’s information center for obtaining
funding from venture capital investors, entrepreneurs should research resources,
including vFinance.com and garage.com, for information on venture capital investors.
Venture capital financing is ideal for young, high-growth companies and provides
entrepreneurs long-term financial security. Venture capital financing is provided for
different types of businesses and ranges widely in the amount. Entrepreneurs must
provide a clear business plan highlighting their short-term and long-term goals.
Environmental Programs
Entrepreneurs can find business-specific funding opportunities from government
agencies such as the U.S. Environmental Protection Agency. The Environmental
Protection Agency offers five contract opportunities per year to finance various types
of environmental projects. Business owners can schedule one-on-one meetings with a
counselor to discuss their project proposals and bid for contracts. The Environmental
Protection Agency offers environmental contracts to business owners in areas such as
chemical safety and pollution prevention, solid waste and emergency response, air
and radiation, and resources management.

REFERENCES

RESOURCES

WRITER BIO

Related Articles

 How to Find Grants for Native Americans

 Government Assistance for Entrepreneurs
 Small Business Grants and Loans for Women
 Grants for Start-Up Organic Farmers for Women
 Resources Needed to Start a Small Business
 How to Locate Grants for Free
 How to Get a Small Business Loan in Texas
 Start Up Grants for Non Profit Businesses
 How to Get New Business Loans for Veterans
 Free Grants for a Small Business Startup
 Sources of Financial Information
 A Skill Set for a Successful Sole Proprietorship
 What Is an Industry Profile?
 How to Market a Credit Repair Business
 Definition of Financial Resources of Business
 How to Do Background Checks From Home
 Various Types of Accounting Systems
 What Is the ERP Market?
 Define Pledging Accounts Receivable
 How to Start a Pawn Shop in Arkansas

FUNDING/ FINANCING
Small Business Grants and Loans for
Women

By: Quentin Webb

Updated September 26, 2017
Jupiterimages/BananaStock/Getty Images

RELATED

GOVERNMENT ASSISTANCE FOR ENTREPRENEURS

LEARN MORE →

One of the best sources of information for grants and loans for a women-owned small
business is the U.S. Small Business Administration, or SBA. Through its online
resources and local network of small business centers, it provides technical and
management assistance, as well as information about federal, state and local
government grants and loans and private sources. In addition, women in private
networking organizations are important sources of information.

Government Route
 Jupiterimages/Photos.com/Getty Images

Through SBA programs for small business, the federal government backs loans and
provides information about grants. To be clear, however, the federal government does
not provide loans and grants directly to businesses. Private lenders that participate in
federal financial programs provide the loans that are guaranteed by the SBA. Since
small business loans are considered high risk, the backing of the SBA can increase
the chances of a new business obtaining a loan.

Searching
 Jupiterimages/Goodshoot/Getty Images

The SBA provides an online search tool for loans and grants. Some of the search
paths are based on whether the business is a start-up, energy efficient, owned by a
woman and located in a rural area. The search results are classified into three
categories: loans, grants, and seed (start-up) and venture capital. In addition, the
results include information about federal, state and local government, as well as
private sources.

Grants
One of the best sources for grants is a women's networking group. For example, Make
Mine A Million $ Business and Woman Owned are such private organizations. Other
sources include the Women's Finance website, which can lead to grants from $1,000
to $5,000, as of 2011, the Fundsnet Services website, and WomensNet.net, which
offers small grants to a woman-owned small business.

Loans
The SBA's Office Of Women's Business Ownership, is a good information resource.
The SBA has a number of loan-support programs. While there are no loans
specifically for a woman business owner, you will receive special assistance in
applying for one. Separately, some private lenders, such as Accion USA, specialize in
small business loans, including those sought by women. The maximum loan amount is
$50,000, as of 2011, with interest rates ranging from 9 percent to 16 percent for up to
60 months.

REFERENCES

RESOURCES

WRITER BIO

Related Articles

 How to Find Grants for Native Americans

 Government Assistance for Entrepreneurs
 Small Business Grants and Loans for Women
 Grants for Start-Up Organic Farmers for Women
 Resources Needed to Start a Small Business
 How to Locate Grants for Free
 How to Get a Small Business Loan in Texas
 Start Up Grants for Non Profit Businesses
 How to Get New Business Loans for Veterans
 Free Grants for a Small Business Startup
 Sources of Financial Information
 A Skill Set for a Successful Sole Proprietorship
 What Is an Industry Profile?
 How to Market a Credit Repair Business
 Definition of Financial Resources of Business
 How to Do Background Checks From Home
 Various Types of Accounting Systems
 What Is the ERP Market?
 Define Pledging Accounts Receivable
 How to Start a Pawn Shop in Arkansas

Grants for Start-Up Organic Farmers for

Women
By: Erin Lierl
Updated September 26, 2017
kuhportrait image by Gerold Setz from Fotolia.com

RELATED

START UP GRANTS FOR NON PROFIT BUSINESSES

LEARN MORE →

The number of women as principle operators of organic farms increased by 13.4

percent between1997 to 2002, and more than one-fourth of U.S. farmers and ranchers
are women. Various funding resources are available to this rapidly developing sector.

Grants for Businesses

The government does not typically give grants for start-up businesses, but sometimes
funds expanding or improving businesses. See the Small Business Administration
(SBA) planner page for opportunities (Resources).

Government Loans
The government provides start-up businesses with funding in the form of low-interest
loans through various agencies, including the USDA. See the Business.gov page on
small business loans (Resources).

Become a Nonprofit
Consider establishing your organic farm as a tax-exempt 501(c)3 nonprofit, to become
eligible for the majority of grants available. See the IRS page on charitable
organizations for information on registering as a nonprofit (Resources).

Networks for Women

The growth in numbers of women farmers has resulted in the development of support
networks offering advice and resources. See the report from ATTRANews in
Resources for a list of women's farming networks.

Opportunities for Organic Farmers

Social and environmental organizations offer grants in support of research, food
security and educational initiatives. Search the National Sustainable Agriculture
Information Service's website for these opportunities (Resources). The USDA also has
a list of funding resources (References).

REFERENCES

RESOURCES

WRITER BIO

Related Articles

 How to Find Grants for Native Americans

 Government Assistance for Entrepreneurs
 Small Business Grants and Loans for Women
 Grants for Start-Up Organic Farmers for Women
 Resources Needed to Start a Small Business
 How to Locate Grants for Free
 How to Get a Small Business Loan in Texas
 Start Up Grants for Non Profit Businesses
 How to Get New Business Loans for Veterans
 Free Grants for a Small Business Startup
 Sources of Financial Information
 A Skill Set for a Successful Sole Proprietorship
 What Is an Industry Profile?
 How to Market a Credit Repair Business
 Definition of Financial Resources of Business
 How to Do Background Checks From Home
 Various Types of Accounting Systems
 What Is the ERP Market?
 Define Pledging Accounts Receivable
 How to Start a Pawn Shop in Arkansas

BUSINESS IDEAS
Resources Needed to Start a Small
Business

By: Kathryn Christ

Updated September 26, 2017

RELATED

HOW TO START A BUSINESS IN ARKANSAS

LEARN MORE →

When you start your small business, you need certain resources to ensure its success.
Do you have these resources needed to start your business now? Careful planning will
make certain that you begin your business with all of the tools you need to achieve
your goals.

Idea
Your business idea will drive the entire company. It is your idea that sets you apart
from competitors, attracts customers and is your reason for existing. You may have
your own idea, decide to buy an existing business or buy into a franchise.

Business Plan
Create a business plan to serve as your guide. A well-written plan will also provide you
with benchmarks so you can check your progress throughout the year. It is best to
reference your plan every month or every quarter so you can make adjustments, as
needed.
Structure
You will want to decide the legal structure for your business. Will you be a sole
proprietor, have a partnership or choose to incorporate as a C- or S-corporation?
Investigate your options with professional resources, such as your attorney and
accountant. Financing decisions will be affected by the type of structure you choose.
(See Reference 1)

Once your business structure is finalized, you will be able to apply for the appropriate
local and state licenses, federal tax identification numbers and other legal
requirements. With those documents, you will be able to open a business checking
account.

Capital
Capital is money in the bank or money you can access. You will need sufficient capital
to pay expenses until your business becomes profitable. These funds may come from
your own savings, friends and relatives, loans or private investor financing. (See
Reference 2) For the majority of entrepreneurs, this money comes from themselves or
friends and relatives.

Workspace
An important resource for your small business is space. Depending on the type of
business you choose, you may work out of your home, share space with an existing
business or lease an office or storefront. Be sure to learn about zoning requirements
and sign permits so you stay within legal restrictions.

Customers
To be successful, every business needs customers. The lifeblood of your business,
customers and their purchases will determine your ability to meet financial projections.
If you are just getting started in business, know who will buy your product, where you
can find them and how you will reach them. This market research will enable you to
analyze the markets to target with your marketing and advertising tactics.

Open Your Doors

Your confidence as a business owner comes from being prepared. Having the
resources to start your own business gives you an opportunity for independence and
unprecedented financial rewards.