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Jose Santillan

Ms. Bennett

British Literature

7 October 2011

Establishing a Small Business

Decided to become an entrepreneur and take control of your own financial destiny? Take

control and be the boss for once? Appealing is it not, but sounds farfetched does it not? Fact is, it

is not, it is attainable with determination, hard work, and skill. Establishing a business is

difficult, but rewarding in its own sense; if managed with great efficiency.

Starting a business is hard and is laborious, as are most things in life, but the rewards are

worth the extra effort. It is laborious in the beginning with planning, financing, establishing, and

servicing/marketing. To get started it is always helpful to have an oversight as to what the

competition is and how the market is. As this will affect the success of whether entry into that

market is a good decision. For example landscaping, it is easy enough to enter as it is a pure

competition market.

The barriers to entry are low, the market is controlled by few firms and there is a lot of

competition. No problem as competition can make or break some entrepreneurs, but then again

be aware that as becoming entrepreneur failure is the most likely thing. Also be aware that

starting up a business can be a tremendous strain on personal finances at the beginning so you

might want to consider applying for a loan (“Understanding the Basics”; “Using Business vs.

Personal Finances”). Before going into any business though, it's always wise to get your finances

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in order if you are planning to apply for a loan say (“Understanding the Basics”; “Using Business

vs. Personal Finances”).

To get started, you might want to write a monthly household budget that accounts for

your income and your household expenses and be as conservative as possible, because it is vital

to your success that you have the resources to maintain your household expenses while your

business is growing (“Understanding the Basics”;“Using Business vs. Personal

Finances”).Because any strain on your personal budget can also put the financial success of your

business at risk (“Understanding the Basics”;“Using Business vs. Personal Finances”).Make sure

your credit is good as getting a loan from the bank is the usual approach by many to starting a

business and many are usually turned down because of bad credit. When the bank is thinking of

approving your loan be aware that all banks want to see two sources of repayment—cash flow

from the business as well as a secondary source such as collateral (“Understanding the Basics”;

“Borrowing Money”).Which is why banks favor giving loans to business(es) that have a steady

flow of cash and collateral.

Banks also tend to feel most comfortable dealing with a business(es) that have been in

existence for a number of years because it has a financial track record (“Understanding the

Basics”; “Borrowing Money”). Which is why if the business(es) have consistently made a profit

and that profit can cover the payment of additional debt, it is likely that the loan will be approved

(“Understanding the Basics”; “Borrowing Money”). If however, the business is a start-up or has

been operating marginally and now has a new opportunity to grow, it is necessary to prepare a

thorough loan package with a detailed explanation addressing how the business will be able to

repay the loan (“Understanding the Basics”; “Borrowing Money”). Most importantly try not to

borrow money at high interest rates except if it is absolutely necessary and start small - with the

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capital you can access easily, or pay back without a problem for example through savings you

made, or with the assistance of family and friends (“ How to start a successful small business: the

six basic principles. Principle 3”).

Difficult is it not establishing a business much more starting it and financing it so it can

take off. To start a business like a landscaping company or any other business the first thing that

should be done is plan out the business and what it will be like. Like, am I prepared to spend the

time, money and resources needed to get my business started most likely will need a loan from

the bank just to get started (“20 Questions Before Starting a Business”)? How much money do I

need to get my business started (“20 Questions Before Starting a Business”)? Borrowing money

is the most common thing for small business and starting business to do, but can be difficult in

some cases as banks have to approve your loan and they check your financial records to make

sure you are a safe risk as to whether they should let you borrow money. Though before you

actually think of applying for a loan consider asking yourself some questions; like can the

business repay the loan (Borrowing Money). Can you repay the loan if the business fails

(Borrowing Money)? Does the business collect its bills (Borrowing Money)? Does the business

pay its bills (Borrowing Money)? Always be prepared for failure as entrepreneur, the risks are

high 9 out of 10 statistics state that starting business will fail.

As an owner usually must put some of her/his own money into the business to get a loan;

the amount depends on the type of loan, purpose and terms (“Understanding the Basics”;

“Borrowing Money”. Because most banks want the owner to put in at least 20 to 40 percent of

the total request make sure that you have some money handy (“Understanding the Basics”;

“Borrowing Money”). For example, if a new business needs $100,000, the business owner must

put $20,000 of his/her own money into the business as equity (“Understanding the Basics”;

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“Borrowing Money”). The loan amount would be $80,000(“Understanding the Basics”;

“Borrowing Money”). The debt to equity ratio here is 4:1(“Understanding the Basics”;

“Borrowing Money”). Make sure you know the laws and regulations of running a business as

competitors might take advantage of your small business.

So let’s say that the banks approved the loan for the start of your landscaping company..

You have your equipment and everything else needed to work in this business, now all you need

are clients. Business consumers are what make you and what break you, so be good. As the

leader of your business you will have to face many a people a day and have to tolerate

indifferences with a client. Be ready and be prepared for the worst as in this business there is a

lot of competition from others like you.

You need to be enthusiastic, charismatic, self assured and social most important. You

need to sell your product/service, advertise. Advertising, you want to sell your business to clients

so they will hire your business over the competition? Be aware that bigger business exceed you

so an order to counter them you want to show determination, hard work and enthusiasm about

your work. Remember even though your landscaping business is small, hard work and

determination and the quality of your work are key to help selling your business.

These characteristics help fight competition and price differences. Decision making any

business is important to the success of the present and future success of the business. It is

important to be wise and with decision making as it will impact the future of the business. Take

into consideration that relying too much on expert information (“Making Decisions”).

Oftentimes, people have a tendency to place too much emphasis on what experts say (“Making

Decisions”). Remember, experts are humans too and they have their own set of biases and

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prejudices just like the rest of us (“Making Decisions”). When in doubt always consult an expert

as they are professionals in their own line of work. You should seek information from a lot of

different sources, so you will get much better information than if you focused all of your energy

on only one source (“Making Decisions”). Be wise in not believe in everything experts say as

some of what they say can be false. When questioning over info it is best to research different

viewpoint then just choice one and ask: Do they know as much about this problem as I do

(“Making Decisions”)? Are their values the same as mine (“Making Decisions”)? Have they had

any personal experiences with a problem like mine (“Making Decisions”)? Establishing a

business hard but worth it if determined enough to take command; good luck and be wise.

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