<p><b>Introduction</b><b> 1</b></p> <p>About This Book 2</p> <p>Foolish Assumptions 3</p> <p>Icons Used in This Book 4</p> <p>Beyond the Book 5</p> <p>Where to Go from Here 5</p> <p><b>Part 1: Getting Started with Small Business</b><b> 7</b></p> <p><b>Chapter 1: Is Small Business for You?</b><b> 9</b></p> <p>Defining Small Business 10</p> <p>Small (and large) business basics 10</p> <p>Financial basics: The same whether you’re big or small 11</p> <p>Small business: Role model for big business 12</p> <p>Different people and businesses, similar issues 13</p> <p>Our definition of a small-business owner 14</p> <p>Do You Have the Right Stuff? 15</p> <p>Getting started with the instructions 16</p> <p>Answering the questions 16</p> <p>Scoring the test 18</p> <p>Analyzing your results 18</p> <p>Identifying the Pros and Cons of Owning a Small Business 20</p> <p>The reasons to own 20</p> <p>The reasons not to own 21</p> <p>Exploring Alternatives to Starting a Business 23</p> <p><b>Chapter 2: Laying Your Personal Financial Foundation</b><b> 27</b></p> <p>Getting Your Financial Ducks in a Row 27</p> <p>Cutting the umbilical cord 28</p> <p>Improving your business survival odds 28</p> <p>Maintaining harmony on the home front 29</p> <p>Creating Your Money To-Do List 30</p> <p>Assess your financial position and goals 30</p> <p>Shrink your spending 34</p> <p>Build up your cash reserves 35</p> <p>Stabilize income with part time work 35</p> <p>Assessing and Replacing Benefits 36</p> <p>Retirement savings plans and pensions 36</p> <p>Health insurance 37</p> <p>Disability insurance 37</p> <p>Life insurance 38</p> <p>Dental, vision, and other insurance 39</p> <p>Social Security taxes 39</p> <p>Time off 40</p> <p>Managing Your Personal Finances Post-Launch 40</p> <p><b>Chapter 3: Finding Your Niche</b><b> 43</b></p> <p>Why You Don’t Need a New Idea to Be Successful 43</p> <p>Choosing Your Business 45</p> <p>Consider your category 45</p> <p>Take advantage of accidental opportunities 48</p> <p>Inventory your skills, interests, and job history 48</p> <p>Narrow your choices 50</p> <p>Go in search of fast growth 51</p> <p>Take advantage of government resources 53</p> <p>Inventing Something New 54</p> <p>Say yes to useful invention resources 55</p> <p>Run away from invention promotion firms 55</p> <p>Recognizing Your Number One Asset — You 57</p> <p><b>Chapter 4: First Things First: Crafting Your Business Plan</b><b> 59</b></p> <p>Your Mission: Impossible If You Fail to Define It 59</p> <p>Writing your mission statement 60</p> <p>Keeping your mission in people’s minds 61</p> <p>Your Business Plan: Don’t Start Up without It 63</p> <p>Using your business plan as a road map 63</p> <p>Finding financing with your business plan 64</p> <p>Writing Your Business Plan 65</p> <p>Part 1: Business description 66</p> <p>Part 2: Management 67</p> <p>Part 3: Marketing plan 68</p> <p>Part 4: Operations 72</p> <p>Part 5: Risks 74</p> <p>Part 6: Financial management plan 74</p> <p>Keeping Your Plan Current 78</p> <p><b>Chapter 5: Making Financing, Ownership, and Organizational Decisions</b> 81</p> <p>Determining Your Start-Up Cash Needs 81</p> <p>Using Your Own Money: Bootstrapping 84</p> <p>Profiling bootstrappers 85</p> <p>Tapping into bootstrapping sources 86</p> <p>Outsourcing Your Capital Needs 88</p> <p>Banking on banks 89</p> <p>Getting money from nonbanks 90</p> <p>Exploring Ownership Options 96</p> <p>You as the sole owner 96</p> <p>Sharing ownership with partners or minority shareholders 98</p> <p>Deciding between sole and shared ownership 99</p> <p>Going public: Cashing in 100</p> <p>Deciding Whether to Incorporate 102</p> <p>Weighing unincorporated options 102</p> <p>Considering incorporated business entities 106</p> <p><b>Part 2: Buying an Existing Business</b><b> 111</b></p> <p><b>Chapter 6: Exploring Buying a Business</b><b> 113</b></p> <p>Understanding Why to Buy a Business 113</p> <p>To reduce start-up hassles and headaches 115</p> <p>To lessen your risk 115</p> <p>To increase profits by adding value 115</p> <p>To establish cash flow 116</p> <p>To capitalize on someone else’s good idea 117</p> <p>To open locked doors 117</p> <p>To inherit an established customer base 117</p> <p>Knowing When You Shouldn’t Buy 118</p> <p>You dislike inherited baggage 118</p> <p>You’re going to skimp on inspections 118</p> <p>You lack capital 120</p> <p>You think you’ll miss out on the satisfaction of creating a business 120</p> <p>Recognizing Prepurchase Prerequisites 120</p> <p>Business experience and training 121</p> <p>Down-payment money 122</p> <p><b>Chapter 7: Finding the Right Business to Buy</b><b> 123</b></p> <p>Defining Your Business-Buying Appetite 123</p> <p>Generating Leads 125</p> <p>Perusing publications 126</p> <p>Networking with advisors 126</p> <p>Knocking on doors 126</p> <p>Enlisting business brokers 127</p> <p>Considering a Franchise 130</p> <p>Franchise advantages 130</p> <p>Franchise disadvantages 131</p> <p>Evaluating Multilevel Marketing (MLM) Firms 132</p> <p>Being wary of pyramid schemes 132</p> <p>Finding the better MLMs 133</p> <p>Checking Out Work-from-Home Opportunities 134</p> <p><b>Chapter 8: Evaluating a Business to Buy</b><b> 137</b></p> <p>Kicking the Tires: Doing Your Due Diligence 138</p> <p>Examining owners’ and key employees’ backgrounds 138</p> <p>Finding out why the owner is selling 141</p> <p>Surveying the company culture 142</p> <p>Inspecting the financial statements 145</p> <p>Uncovering lease contract terms 151</p> <p>Evaluating Special Franchise Issues 151</p> <p>Thoroughly review regulatory filings 151</p> <p>Evaluate the franchiser’s motives 152</p> <p>Interview plenty of franchisees 152</p> <p>Understand what you’re buying and examine comparables 153</p> <p>Check with federal and state regulators 153</p> <p>Investigate the company’s credit history 154</p> <p>Analyze and negotiate the franchise contract 154</p> <p><b>Chapter 9: Negotiating Terms and Sealing the Deal</b><b> 155</b></p> <p>Valuing the Business 156</p> <p>Exploring valuing methods: Multiple of earnings and book value 156</p> <p>Getting a professional appraisal 158</p> <p>Tracking businesses you’ve explored that have sold 158</p> <p>Tapping the knowledge of advisors who work with similar companies 159</p> <p>Consulting research firms and publications 159</p> <p>Turning to trade publications 159</p> <p>Enlisting the services of a business broker 160</p> <p>Developing Purchase Offer Contingencies 160</p> <p>Allocating the Purchase Price 162</p> <p>Doing Due Diligence 162</p> <p>Think about income statement issues 163</p> <p>Consider legal and tax concerns 164</p> <p>Moving Into Your Business 164</p> <p><b>Part 3: Running a Successful Small Business</b><b> 167</b></p> <p><b>Chapter 10: The Owner’s Responsibilities in the Start-Up and Beyond</b><b> 169</b></p> <p>Dotting Your i’s and Crossing Your t’s: Start-Up Details 170</p> <p>Buying insurance 170</p> <p>Paying federal, state, and local taxes 172</p> <p>Negotiating leases 172</p> <p>Maintaining employee records 173</p> <p>Getting licenses and permits 174</p> <p>Signing the checks 174</p> <p>Outsourcing: Focus on What You Do Best 174</p> <p>Surveying the most commonly outsourced tasks 175</p> <p>Figuring out what to outsource 176</p> <p>Simplifying Your Accounting 177</p> <p>Introducing some common systems 178</p> <p>Choosing the system that’s right for you 184</p> <p>Controlling Your Expenses 185</p> <p>Looking at fixed and variable expenses 186</p> <p>Understanding zero-based budgeting 187</p> <p>Managing Vendor Relationships 188</p> <p>Dealing with Bankers, Lawyers, and Other Outsiders 190</p> <p>Bankers 190</p> <p>Lawyers 192</p> <p>Tax advisors 194</p> <p>Consultants 195</p> <p>Governments 196</p> <p><b>Chapter 11: Marketing: Products, Pricing, Distribution, Promotion, and Sales</b><b> 197</b></p> <p>Marketing in a Nutshell 198</p> <p>Tackling Product and Service Development 199</p> <p>Pricing: Cost and Value 201</p> <p>Developing your pricing strategy 201</p> <p>Picking the right price 204</p> <p>Distribution: Channeling to Customers 205</p> <p>Direct distribution of products 205</p> <p>Indirect distribution of products 209</p> <p>Deciding on distribution 210</p> <p>Promotion: Spreading the Word 210</p> <p>Networking (It’s not what you know . . .) 211</p> <p>Recognizing the power of referrals 212</p> <p>Online marketing 213</p> <p>Media advertising 219</p> <p>Publicity 225</p> <p>Sales: Where the Rubber Hits the Road 227</p> <p>Pitting in-house versus outsourcing 227</p> <p>Becoming a sales-driven company 229</p> <p><b>Chapter 12: Tapping Technology</b><b> 233</b></p> <p>Making the Decision: Cloud-Based versus Internal Server 234</p> <p>Improving Your Business’s Efficiency 235</p> <p>Managing your time 235</p> <p>Providing supplemental web services 236</p> <p>Lowering your administration costs 237</p> <p>Scanning and managing inventory 238</p> <p>Managing finances 238</p> <p>Expanding Your Research Possibilities Online 239</p> <p>Brainstorming business ideas 239</p> <p>Finding and obtaining financing 240</p> <p>Buying a business or franchise 241</p> <p><b>Chapter 13: Keeping Your Customers Loyal</b><b> 243</b></p> <p>Retaining Your Customer Base 244</p> <p>Getting it right the first time 244</p> <p>Continuing to offer more value 245</p> <p>Remembering that company policy is meant to be bent 245</p> <p>Learning from customer defections 246</p> <p>Recognizing and practicing customer service 248</p> <p>Dealing with Dissatisfied Customers 252</p> <p>Listen, listen, listen 252</p> <p>Develop a solution 253</p> <p><b>Chapter 14: Managing Profitability and Cash</b><b> 255</b></p> <p>Cash Flow: The Fuel That Drives Your Business 256</p> <p>Making Sense of Financial Statements 259</p> <p>The profit and loss statement 259</p> <p>The balance sheet 262</p> <p>Turning the Numbers into Action 265</p> <p>Understanding Key Ratios and Percentages 266</p> <p>Return on sales (ROS) 267</p> <p>Return on equity (ROE) 267</p> <p>Gross margin 268</p> <p>Current ratio 268</p> <p>Debt-to-equity ratio 268</p> <p>Inventory turn 269</p> <p>Number of days in receivables 269</p> <p>EBITDA 270</p> <p>Managing Your Inventory 270</p> <p>Collecting Your Accounts Receivable 272</p> <p>Finding paying customers 272</p> <p>Managing your accounts receivable 273</p> <p>The Three Ways to Improve Profits 274</p> <p>Decreasing (or controlling) expenses 275</p> <p>Increasing margins 278</p> <p>Increasing sales 280</p> <p><b>Chapter 15: Learning from the Experiences of Others</b><b> 281</b></p> <p>Utilize Mentors 282</p> <p>Finding your mentor 282</p> <p>Building the mentor-mentee relationship 283</p> <p>Network with Peers 284</p> <p>Form a Board of Advisors 285</p> <p>Reaping the benefits of a board 285</p> <p>Forming your advisory board 286</p> <p>Find a Partner 287</p> <p>Join a Trade Association 289</p> <p>Find a Business Incubator 291</p> <p>Locate a Small Business Development Center 291</p> <p>Give SCORE a Try 292</p> <p>Tap into Small-Business Information 292</p> <p><b>Part 4: Keeping Your Business in Business</b><b> 295</b></p> <p><b>Chapter 16: Finding and Keeping Superstar Employees</b><b> 297</b></p> <p>Assembling a Top Team 298</p> <p>Hiring hints 299</p> <p>Mastering the interview process 303</p> <p>Training: An Investment, Not an Expense 305</p> <p>Motivating: Pay and Performance Issues 306</p> <p>Designing a compensation plan 308</p> <p>Get SMART: Goal-setting that works 310</p> <p>Writing performance expectations 313</p> <p>Reviewing an employee’s performance 314</p> <p>Parting Company: Firing an Employee 317</p> <p>Designing Flexible Organization Charts 319</p> <p>Valuing Employee Manuals 321</p> <p>Turning the Tables: Characterizing Successful Employers 323</p> <p>Flexibility: The bending of rules 323</p> <p>Accountability: Where the buck doesn’t get passed 324</p> <p>Follow-up: The more you do it, the less you need it 325</p> <p><b>Chapter 17: Providing Employee Benefits</b><b> 327</b></p> <p>Seeing the Real Value in Retirement Plans 327</p> <p>Getting the most value from your plan 329</p> <p>Convincing employees that retirement plans matter 332</p> <p>Deciding Whether to Share Equity 333</p> <p>Stock and stock options 334</p> <p>Employee Stock Ownership Plans (ESOPs) 335</p> <p>Buy-sell agreements 336</p> <p>Including Insurance and Other Benefits 336</p> <p>Health insurance 336</p> <p>Disability insurance 340</p> <p>Life insurance 343</p> <p>Dependent care plans 343</p> <p>Vacation 344</p> <p>Flexible hours 344</p> <p>Flexible benefit plans 345</p> <p><b>Chapter 18: Handling Regulatory and Legal Issues</b><b> 347</b></p> <p>Navigating Small-Business Laws 347</p> <p>Suffering through Start-Up Regulations 349</p> <p>Complying through licensing, registrations, and permits 349</p> <p>Protecting ideas: Nondisclosures, patents, trademarks, and copyrights 356</p> <p>A business prenup: Contracts with customers and suppliers 359</p> <p>Laboring over Employee Costs and Laws 360</p> <p><b>Chapter 19: Mastering Small-Business Taxes</b><b> 361</b></p> <p>Getting Smarter about Taxes 363</p> <p>Reading income tax guides 363</p> <p>Using tax-preparation software 364</p> <p>Hiring help 364</p> <p>Keeping Good Financial Records Leads to Tax Benefits 367</p> <p>Knowing (And Managing) Your Tax Bracket 368</p> <p>Staying on Top of Employment Taxes 369</p> <p>Be aware of your benefit options 369</p> <p>Stay current on taxes 369</p> <p>Report your work with independent contractors 370</p> <p>Hire your kids! 371</p> <p>Spending Your Money Tax-Wisely 372</p> <p>Take equipment write-offs sensibly 372</p> <p>Don’t waste extra money on a business car 373</p> <p>Minimize entertainment and most meal expenditures 373</p> <p>Grasping the Tax Implications of Your Entity Selection 373</p> <p><b>Chapter 20: Cultivating a Growing Business</b><b> 375</b></p> <p>Recognizing Growth Stages 376</p> <p>The start-up years 376</p> <p>The growth years 377</p> <p>The transition stage 377</p> <p>Resolving Human Resources Issues 379</p> <p>Identifying important HR concerns 379</p> <p>Dealing with HR issues in three stages 380</p> <p>Addressing Time-Management Issues 381</p> <p>Choosing Your Management Tools 383</p> <p>Management by objective 385</p> <p>Participatory management 385</p> <p>Employee ownership 385</p> <p>Quality circles 386</p> <p>Total Quality Management 386</p> <p>Reengineering 386</p> <p>Open-book management 388</p> <p>Troubleshooting Your Business Challenges 388</p> <p>Filling out a troubleshooting checklist 388</p> <p>Taking the five-minute appearance test 389</p> <p>Redefining Your Role in an Evolving Business 391</p> <p>Making the transition to manager 392</p> <p>Implementing strategic changes 393</p> <p><b>Part 5: The Part of Tens</b><b> 397</b></p> <p><b>Chapter 21: Ten Mistakes You Don’t Want to Make</b><b> 399</b></p> <p>Failing to Use Financial Statements to Manage Your Business 399</p> <p>Failing to Prepare an Annual Budget 400</p> <p>Failing to Utilize Your CPA 401</p> <p>Failing to Understand How Marketing Applies to Your Business 402</p> <p>Hiring Too Quickly 403</p> <p>Taking Too Long to Terminate Nonperforming Employees 403</p> <p>Assuming That Your Employees Are Motivated by the Same Things You Are 404</p> <p>Considering Training to Be an Expense and Not an Investment 405</p> <p>Failing to Take Advantage of Available Resources 406</p> <p>Failing to Maintain an Up-to-Date Organization Chart 406</p> <p><b>Chapter 22: Ten Tips for Small-Business Success </b><b>409</b></p> <p>Focus on the Execution 409</p> <p>Assemble a Team of Superstars in Game-Breaker Positions 410</p> <p>Work Hard, Get Lucky 411</p> <p>Realize the Difference between Profits and Cash 412</p> <p>Hire for Attitude, Teach Skills Later 413</p> <p>Create an Exit Strategy 414</p> <p>Grow or Die — There’s No In-Between 415</p> <p>Prepare for the Transition to Manager 415</p> <p>Develop an Insatiable Appetite to Learn 416</p> <p>Do What You Love 417</p> <p><b>Chapter 23: Ten Ways the 2017 Tax Reform Bill Benefits Small Business</b><b> 419</b></p> <p>Corporate Income Tax Rate Reduction 420</p> <p>. . . and (Some) Simplification 420</p> <p>Individual Income Tax Rates Reduced 420</p> <p>20% Deduction for Pass-Through Entities 421</p> <p>Better Equipment Expensing Rules 422</p> <p>Increased Maximum Depreciation Deduction for Automobiles 422</p> <p>Limited Interest Deductions 423</p> <p>Reduced Meal and Entertainment Deductions 423</p> <p>Elimination of Health Insurance Mandate 423</p> <p>Revised Rules for Using Net Operating Losses 424</p> <p>Index 425</p>