Entrepreneurial Itch: Don't Scratch Until You Read This Book

by David Trahair

Overview

Statistics show that 90% of businesses fail within their first five years of operation. What is the story behind these intimidating odds? Every year, unsuspecting entrepreneurs show up at their banks asking for small-business loans. The problem is that far too many people go into business without doing thorough research into what it really takes to be successful. The best way to learn is to learn from someone who has worked with hundreds of small businesses. In this new book, small-business accountant and author David Trahair lays out in plain language everything that no one else tells you about starting a business. Trahair stresses that it's important for most people to start their business first as a side job. The owner should market and develop the business until it becomes strong enough to survive those crucial first years, and profitable enough to provide an income for the owners. Trahair also offers excellent tips on what the major franchisors will never tell you.

Product Details

ISBN-13:	9781770408609
Publisher:	Self-Counsel Press, Inc.
Publication date:	04/15/2012
Series:	Business Series
Sold by:	Barnes & Noble
Format:	eBook
Pages:	176
File size:	2 MB

About the Author

David Trahair is a chartered accountant with more than 20 years’ experience in accounting, finance, and tax. He has made many television appearances as well as being a speaker on numerous radio programs. He is also a feature writer on the web at Moneysense.ca and Microsoft.com, and he offers useful financial information on his website, http://www.trahair.com/.

Table of Contents

1 WHY DO YOU WANT TO BE SELF-EMPLOYED? 1 You Hate Your Job 1 You Hate Aspects of Your Job 2 The commute 2 Annoying coworkers 2 Making money for others 3 You Lose Your Job 3 Your Life Changes 4 Maybe You’ve Just Got the Urge 4 Why Listen to Me? 4 The Self-Employment Alternative 5 Do You Have the Entrepreneurial Itch? 7 How This Book Will Help Scratch Your Itch 7 v CONTENTS 2 WHAT DOES IT TAKE TO SUCCEED? 9 The Key to Success 9 Attributes of a Successful Entrepreneur 10 Attributes of a Successful Business 12 Leg 1: Operations 12 Leg 2: Selling and marketing 13 Leg 3: Finance and administration 14 3 WHAT DO YOU WANT TO DO? 17 “A Restaurant Sounds Good” 18 Something Old? Something New? 19 Research, Research, Research 20 The Business Plan 23 Research Should Never End 25 Niche Today, Gone Tomorrow? 26 What is good about a niche? 27 Always be thinking about your next niche 27 4 IF YOU CAN SELL, YOU’LL DO WELL 31 What Doesn’t Work 32 The mailing list 32 Expensive one-time advertising 33 Newsletters 33 Build a website and they will come 34 What Works (for Me) 35 Personal contacts 35 The story of my dentist 36 Other Keys to Marketing Your Business 37 5 GIVE YOURSELF A CHANCE: START ON A SHOESTRING 41 The Home Office 42 Advantages of a home office 42 vi The entrepreneurial itch Disadvantages of a home office 42 Start-up Costs 43 Why Not Get the Bank to Help? 44 Where Does Cash Come From Besides a Bank Loan? 45 Your savings and “sweat equity” 45 Friends and family 45 Credit cards 46 The bank again 46 The Cash-Flow Crunch 47 Tips for easing the cash-flow crunch 47 Track your daily cash flow 49 6 BOOKKEEPING: LIFEBLOOD OF A BUSINESS 53 Basic Accounting Concepts 53 Accrual accounting 54 Debits and credits 55 Financial statements and journal entries 56 Equity 57 Capital assets, amortization, and depreciation 58 Bookkeeping for Sole Proprietors 59 Recording business finances separately makes tax time easier 60 Recording business finances separately gives a clearer view of your personal finances 60 Recording business finances separately lets you see how your business is doing 61 Act Like a Corporation 61 Bookkeeping Made Easy 62 Invoicing and accounts receivable 62 Paying bills 63 Other bookkeeping entries 63 A word about using spreadsheets for bookkeeping 64 Contents vii Setting Up Your Books 65 Bookkeepers versus accountants 65 The chart of accounts 66 Schedule C — Profit or Loss from Business (US) 66 Form T2124 — Statement of Business Activities (Canada) 67 Group your expenses 68 Focus on the Key Numbers 71 Improving the Bottom Line 72 Increasing revenue 72 Cutting the right expenses 72 Keeping Current Is Key 74 7 AIM FOR THE IDEAL BUSINESS 75 The Ideal Client 75 Pick and choose your clients 77 Make sure your clients are in a solid industry 77 Get Others to Do the Work 78 What kind of help do you need? 79 When can you afford to hire someone? 79 Competing with You Is Difficult 80 Your Whole Family Is Not Tied Up in the Business 81 Could It Be Web-Based? 81 8 RUN YOUR BUSINESS; DON’T LET IT RUN YOU 83 Juggling Three Balls at Once 84 What’s On Your Dashboard? 85 My dashboard 86 Other useful information 88 The Early Stage 88 The Growth Stage 89 viii The entrepreneurial itch 9 IT’S NOT THE TIME, IT’S THE EFFORT 91 The Good Old Hourly Rate 92 Disadvantages of Hourly Billing 92 It focuses on hours, not results 92 It limits the amount of money you can make 93 Billable hours become more important than business growth 94 It treats customers unequally 94 It doesn’t reward the “finding” function 95 It penalizes technological advances 95 Hourly Billing Versus Set Fees 95 Setting an hourly rate 96 Going beyond time 97 Value points 97 Time-Tracking Secrets 98 Keep track during the day 98 Use increments of less than one hour 99 Track chargeable and nonchargeable time 99 Time-Tracking and Reporting Software 100 What to look for 101 The quest for five-star time-tracking and reporting software 101 Why I chose BillQuick 103 10 INTEGRATE YOUR LIFE WITH YOUR BUSINESS 109 Life Tip 1 — Do What You Don’t Want to Do First 111 Life Tip 2 — You Get What You Expect 111 Life Tip 3 — Balance Is the Key 113 Life Tip 4 — Plan on a Weekly, Not a Daily, Basis 113 Life Tip 5 — Be Flexible with Your Time 114 Life Tip 6 — Don’t Be Afraid to Ask a Stupid Question 115 Contents ix Life Tip 7 — Stay Away from Those Who Say You Can’t Do It 116 Life Tip 8 — Don’t Be Afraid of Your Competition 117 Life Tip 9 — Leave Lots of Time for Completing Each Task 118 Life Tip 10 — Don’t Wait for Everything to Be Perfect 119 11 THE MILLIONAIRE DREAM: I’LL SELL IT AND GET RICH! 121 Business Valuation Methods 121 Business valuation method 1: Profit multiple 122 Business valuation method 2: Book value 124 Business valuation method 3: Service business 125 Are You Building It to Sell It? 126 Make it work without you 126 Make it big enough 127 Take time for planning 128 12 COULD A FRANCHISE BE FOR YOU? 131 What Is a Franchise Anyway? 131 Advantages of a franchise 132 Disadvantages of a franchise 133 How Much Is a Franchise Worth? 135 Questions to Ask Before You Buy 136 Watch Out for Scams 137 Examples of franchise fraud 138 How to spot a scam 139 The Five Most Frequently Asked Questions about Franchises 140 Where can I get a company’s presale disclosure document? 140 How can I find out if there have been complaints against a company? 141 x The entrepreneurial itch How can I file a complaint against a company? 142 How do I know what must be included in a disclosure document or offering circular? 142 How can I find a lawyer who specializes in franchising? 143 13 THE SELF-EMPLOYMENT PENSION PLAN 145 Cushy Pension Plans Are Dying Out 145 Keeping a Job Is Getting Tougher 146 What Are You Going to Do? 146 Freedom 55? 147 I Love What I Do Now — Why Stop? 148 14 DO YOU STILL HAVE THE ENTREPRENEURIAL ITCH? 151 FIGURES 1 Cash versus accrual method of accounting 55 2 Sample journal entry: Income 56 3 Sample journal entry: Expense 57 4 Balance sheet 58 5 My dashboard 87 6 BillQuick work in progress report 105 7 BillQuick write up/write down report 106 8 Sale price based on a percentage of future billings 126