Business Archives - Page 51 of 52

Startup Law 101 Series – Distinctive Legal Aspects of Forming a Startup Business With a Founder Team

Introduction

A startup with a founding team requires a special kind of company formation that differs from that used by a conventional small business in several key ways. This article alerts founders to those differences so that they can avoid mistakes in doing their setup.

Attributes of a Typical Startup Business

A startup is a type of small business, of course, and its founders want to make substantial and long-term profits just as any small business does. Perhaps some of the empty “concept companies” of the bubble era did not ever intend to build for long-term value but that era is over. Today’s startups need to build value in a sustainable market or fail, just like any other business. Nonetheless, a startup that is anything other than a solo effort does differ strikingly from a conventional small business. Why? Not because the enterprise itself has any different goal other than that of building long-term and sustainable value but because of how its founders view their short-term goals in the venture.

Unlike a small business, a startup founding team will adopt a business model designed to afford the founders a near-term exit (typically 3-5 years) with an exceptionally high return to them if the venture is successful. The team will often want stock incentives that are generally forfeitable until earned as sweat equity. It will typically want to contribute little or no cash to the venture. It will often have valuable intangible IP that the team has developed in concept and likely will soon bring to the prototype stage. It frequently encounters tricky tax issues because the team members will often contribute services to the venture in order to earn their stock. It seeks to use equity incentives to compensate what is often a loose group of consultants or initial employees, who typically defer/skip salary. And it will seek outside funding to get things going, initially perhaps from “friends and family” but most often from angel investors and possibly VCs. The venture will then be make-or-break over the next few years with a comparatively near-term exit strategy always in view for the founding team as the hope of a successful outcome.

The blueprint here differs from that of a conventional small business, which is often established by its founders with substantial initial capital contributions, without emphasis on intellectual property rights, with their sights fixed primarily on making immediate operating profits, and with no expectation of any extraordinary return on investment in the short term.

Given these attributes, company formation for a startup differs significantly from that of a small business. A small business setup can often be simple. A startup setup is much more complex. This difference has legal implications affecting choice of entity as well as structural choices made in the setup.

Startups Generally Need a Corporate as Opposed to an LLC Setup

An LLC is a simple and low-maintenance vehicle for small business owners. It is great for those who want to run their business by consensus or under the direction of a managing member.

What happens to that simplicity when the LLC is adapted to the distinctive needs of a startup? When restricted units are issued to members with vesting-style provisions? When options to buy membership units are issued to employees? When a preferred class of membership units is defined and issued to investors? Of course, the simplicity is gone. In such cases, the LLC can do pretty much everything a corporation can do, but why strain to adapt a partnership-style legal format to goals for which the corporate format is already ideally suited? There is normally no reason to do so, and this is why the corporate format is usually best for most founding teams deploying their startup.

A couple of other clinkers inject themselves as well: with an LLC, you can’t get tax-advantaged treatment for options under current federal tax laws (i.e., nothing comparable to incentive stock options); in addition, VCs will not invest in LLCs owing to the adverse tax hit that results to their LP investors.

LLCs are sometimes used for startup ventures for special cases. Sometimes founders adopt a strategy of setting up in an LLC format to get the advantages of having a tax pass-through entity in situations where such tax treatment suits the needs of their investors. In other cases, a key investor in the venture will want special tax allocations that do not track the investors percentage ownership in the venture, which is attainable through an LLC but not through a corporation. Sometimes the venture will be well-capitalized at inception and a founder who is contributing valuable talents but no cash would get hit with a prohibitive tax on taking significant equity in the company — in such cases, the grant of a profits-only interest to such a founder will help solve the founder’s tax problem while giving that founder a rough equivalent of ownership via a continuing share of operating profits.

In spite of such exceptional cases, the corporate format is overwhelmingly favored for startups because it is robust, flexible, and well-suited to dealing with the special issues startups face. I turn to some of those issues now.

Restricted Stock Grants – Rare for Small Business – Are the Norm for Startups with Founding Teams

An unrestricted stock grant empowers the recipient of such stock to pay for it once and keep it forever, possibly subject to a buy-back right at fair market value. This is the norm for a small business; indeed, it is perhaps the major privilege one gets for being an entrepreneur. It may not be worth much in the end, but you definitely will own it!

Unrestricted grants can be problematic in a startup, however. If three founders (for example) form a startup and plan to make it successful through their personal efforts over a several-year period, any one of them who gets an unrestricted grant can simply walk off, keep his or her equity interest, and have the remaining founders effectively working hard for a success to which the departing founder will contribute little or nothing.

Note that a conventional small business usually does not face this risk with anywhere near the acuity of a startup. Co-owners in a conventional small business will often have made significant capital contributions to the business. They also will typically pay themselves salaries for “working the business.” Much of the value in such businesses may lie in the ability to draw current monies from it. Thus, the chance for a walk-away owner to get a windfall is much diminished; indeed, such an owner may well be severely prejudiced from not being on the inside of the business. Such a person will occupy the no-man’s land of an outside minority shareholder in a closely held corporation. The insiders will have use of his capital contribution and will be able to manipulate the profit distributions and other company affairs pretty much at will.

In a startup, the dynamic is different because the main contribution typically made by each founder consists of sweat equity. Founders need to earn their stock. If a founder gets a large piece of stock, walks away, and keeps it, that founder has gotten a windfall.

This risk is precisely what necessitates the use of so-called “restricted” stock for most startups. With restricted stock, the founders get their grants and own their stock but potentially can forfeit all or part of their equity interest unless they remain with the startup as service providers as their equity interest vests progressively over time.

The Risk of Forfeiture Is the Defining Element of Restricted Stock

The essence of restricted stock is that it can be repurchased at cost from a recipient if that person ceases to continue in a service relationship with the startup.

The repurchase right applies to x percent of a founder’s stock as of the date of grant, with x being a number negotiated among the founders. It can be 100 percent, if no part of that founder’s stock will be immediately vested, or 80 percent, if 20% will be immediately vested, or any other percentage, with the remaining percentage deemed immediately vested (i.e., not subject to a risk of forfeiture).

In a typical case, x equals 100 percent. Thereafter, as the founder continues to work for the company, this repurchase right lapses progressively over time. This means that the right applies to less and less of the founder’s stock as time passes and the stock progressively vests. Thus, a company may make a restricted stock grant to a founder with monthly pro rata vesting over a four-year period. This means that the company’s repurchase right applies initially to all the founder’s stock and thereafter lapses as to 1/48th of it with every month of continuing service by that founder. If the founder’s service should terminate, the company can exercise an option to buy back any of that founder’s unvested shares at cost, i.e., at the price paid for them by the founder.

“At cost” means just that. If you pay a tenth of a penny ($.001) for each of your restricted shares as a founder, and get one million shares, you pay $1,000. If you walk away from the startup immediately after making the purchase, the company will normally have the option to buy back your entire interest for that same $1,000. At the beginning, this may not matter much.

Now let us say that half of your shares are repurchased, say, two years down the line when the shares might be worth $1.00 each. At that time, upon termination of your service relationship with the company, the company can buy up to 500,000 shares from you, worth $500,000, for $500. In such a case, the repurchase at cost will result in a forfeiture of your interest.

This forfeiture risk is what distinguishes a restricted-stock buy-back from a buy-back at fair market value, the latter being most often used in the small business context.

Restricted Stock Can Be Mixed and Matched to Meet the Needs of a Startup

Restricted stock need not be done all-or-nothing with respect to founder grants.

If Founder A has developed the core IP while Founder B and Founder C are just joining the effort at the time the company is formed, different forms of restricted stock grants can be made to reflect the risk/reward calculations applying to each founder. Thus, Founder B might get a grant of x shares that vest ratably over a 48-month period (at 1/48th per month), meaning that the entire interest can be forfeited at inception and less-and-less so as the repurchase right of the company lapses progressively over time while Founder B performs services for the company. Likewise for Founder C, though if he is regarded as more valuable than Founder B, he might, say, have 20% of his grant immediately vested and have only the remainder subject to a risk of forfeiture. Founder A, having developed the core technology, might get a 100% unrestricted grant with no part of his stock subject to forfeiture — or perhaps a large percentage immediately vested with only the balance subject to forfeiture.

The point is that founders have great freedom to mix and match such grants to reflect varying situations among themselves and other key people within the company. Of course, whatever the founders may decide among themselves, later investors may and often do require that all founders have their vesting provisions wholly or partially reset as a condition to making their investment. Investors most definitely will not want to watch their investments go into a company that thereafter has key founders walking away with large pieces of unearned equity.

Restricted Stock Requires an 83(b) Election in Most Cases

In an example above, I spoke of a $500 stock interest being worth $500,000 two years into the vesting cycle of a founder, with two years left to go for the remainder. If a special tax election — known as an 83(b) election — is not properly filed by a recipient of restricted stock within 30 days of the date of his or her initial stock grant, highly adverse tax consequences can result to that recipient.

In the example just cited, without an 83(b) election in place, the founder would likely have to pay tax on nearly $500,000 of income as the remaining stock vests over the last two years of the cycle. With an 83(b) election in place, no tax of any kind would be due as a result of such vesting (of course, capital gains taxes would apply on sale).

Tax issues such as this can get complex and should be reviewed with a good business lawyer or CPA. The basic point is that, if an equity grant made in a startup context is subject to potential forfeiture (as restricted stock would be), 83(b) elections should be made in most cases to avoid tax problems to the recipients.

Restricted Stock Grants Are Complex and Do Not Lend Themselves to Legal Self-Help

Restricted stock grants are not simple and almost always need the help of a lawyer who is skilled in the startup business field.

With restricted stock, complex documentation is needed to deal with complex issues. This is why the LLC normally does not work well as a vehicle for startup businesses. The value of the LLC in the small business context lies in its simplicity. Entrepreneurs can often adapt it to their ends without a lot of fuss and without a lot of legal expense. But the LLC is ill-suited for use with restricted grants without a lot of custom drafting. If your startup is not going to impose forfeiture risks on founders or others, by all means consider using the LLC as a vehicle. If, however, forfeiture risks will be in play and hence restricted stock will be used (among other tools), there likely is no special benefit in using the LLC. In such cases, it is usually best to use a corporate format and a good business lawyer to assist in implementing the setup.

Startups Also Use Other Equity Incentives Besides Restricted Stock

Unlike a conventional small business, a typical business startup will want to offer other equity incentives to a broad range of people, not just to founders. For this purpose, an equity incentive plan is often adopted at inception and a certain number of shares reserved to it for future issuance by the board of directors.

Equity incentive plans usually authorize a board of directors to grant restricted stock, incentive stock options (ISOs), and non-qualified stock options (NQOs). Again, complex decisions need to be made and a qualified lawyer should be used in determining which incentives are best used for which recipients. In general, though, restricted stock is normally used for founders and very key people only; ISOs can be used for W-2 employees only; NQOs can be used for W-2 employees or for 1099 contractors. Lots of issues (including securities law issues) arise with equity incentives — don’t try to handle them without proper guidance.

Make Sure to Capture the IP for the Company

All too many startups form their companies only after efforts have been well under way to develop some of the key IP. This is neither good nor bad – it is simply human nature. Founders don’t want to focus too much on structure until they know they have a potentially viable opportunity.

What happens in such cases is that a good number of individuals may hold rights in aspects of the intellectual property that should properly belong to the company. In any setup of a startup, it is normally imperative that such IP rights be captured for the benefit of the company.

Again, this is complex area, but an important one. Nothing is worse than having IP claims against the company pop up during the due diligence phase of a funding or an acquisition. IP issues need to be cleaned up properly at the beginning. Similarly, provision needs to be made to ensure that post-formation services for the company are structured so as to keep all IP rights in the company.

Don’t Forget the Tax Risks

Startups have very special tax considerations at inception owing to the way they typically are capitalized — that is, with potentially valuable IP rights being assigned, and only nominal cash being contributed, to the company by founders in exchange for large amounts of founders’ stock.

Tax complications may arise if the founders attempt to combine their stock grants of this type along with cash investments made by others.

Let’s assume that two people set up a company in which they each own 50% of the stock, and they make simultaneous contributions, one of not-yet-commercialized IP rights and the other of $250,000 cash. Because the IRS does not consider IP rights of this type to be “property” in a tax sense, it will treat the grant made to the founder contributing such rights as a grant made in exchange for services. In such a case, the grant itself becomes taxable and the only question is what value it has for determining the amount of taxable income earned by the founder as a result of the transaction.

In our example, the IRS could conceivably argue that, if an investor were willing to pay $250,000 for half of a company, then the company is worth $500,000. The founder who received half of that company in exchange for a “service” contribution would then realize taxable income of $250,000 (half the value of the company). Another argument might be that the IP rights really didn’t have value as yet, but in that case the company would still be worth $250,000 (the value of the cash contributed) and the founder assigning the IP rights would potentially be subject to tax on income of $125,000 (half the value of the company, owing to his receipt of half the stock).

There are various workarounds for this type of problem, the main one being that founders should not time their stock grants to coincide in time with significant cash contributions made by investors.

The point, though, is this: this again is a complex area and should be handled with the help of a qualified startup business lawyer. With a business startup, watch out for tax traps. They can come at you from surprising directions.

Conclusion

All in all then, a startup has very distinctive setup features – from forfeiture incentives to IP issues to tax traps. It typically differs significantly from a conventional small business in the way it is set up. The issues touched upon here illustrate some of the important differences. There are others as well. If you are a founder, don’t make the mistake of thinking you can use a do-it-yourself kit to handle this type of setup. Take care to get a good startup business lawyer and do the setup right.

Is This a Form of Workers Comp for Your Business?

It’s the law: Workers Compensation is something that all business owners must procure for their employees.

Based on an a structure of US state legislature, Workers Comp is a required insurance for employers that ensures employees will receive proper medical attention, disability benefits and loss of wages compensation if they are hurt or injured while on the job. Employees can locate standard and difficult to place risk policies via the appropriate agencies that scout the network for both forms.

But there is another option – a different mode or plan that employees may want to substitute from the general workers comp and liability protection that most often is used. This alternative is called the self-insured Workers Comp Program.

What is it and how does it differ from the more popular version?

The self-insured Workers Comp program is also known as the self-funded Workers Compensation plan and is legal in most states. Allowing the business owner to pay for each claim as an out-of-the-pocket expense in contrast to paying up front with a standardized commercial insurance policy premium or through a state fund policy premium, this program is attractive because of a number of reasons:

• It gives employers the leeway in controlling insurance costs

• It allows employers to provide their hurt workers with timely medical care

Are all business owners eligible for this form of coverage?

Not all employers can take advantage of the benefits of this alternate form of workers comp. Eligibility is bound to the following terms:

• The business must be located within one of the states that endorse it

• The business must have appropriate credit merit

• The employer must register his enterprise as a self-insured business

• The employer must post a bond that pledges each claim will be remunerated

While the self-insured program might be exceedingly attractive to the business owner on account of what may be perceived as a means of savings, there is another side to this story. In the event a business finds itself flooded with far more claims than anticipated, catastrophic debts may be incurred – especially for the small business that cannot keep up with the expenses. Because of this risk, the insurance marketplace also presents Workers Compensation Excess Insurance.

Related excess insurance? What for?

This type of excess insurance will fund claims up to a prearranged amount. In this way, the business at risk for catastrophic losses will not incur the costs that would put it under in the event self-insured claims exceed expectations.

No doubt, the topic is a complicated one. For greater clarification, speak to an independent agency that understands all the ramifications and deals with many of the leading insurance companies.

5 Insider Secrets To Starting The Best Home Business

There are so many home business ideas, how can you choose the best home business? If you want to know how successful home based entrepreneurs generate a comfortable income, here are 5 secrets that you can use to create the best home business to suit you.

1. You’re Online.

Without a doubt, the best business to start in 2015 has to be on the internet. Not only are the set up costs considerably lower than a conventional bricks and mortar business, but your business can reach customers from all over the world. It can be open for business everyday, 24/7 and be working for you even when you are sleeping.

2. You Don’t Have To Create Your Own Products.

One of the reasons why an online business is the best home business is that you can sell other peoples’ products without having to buy them yourself first and have money tied up in stock. In fact, the product owner will also take care of the product delivery, the customer queries and the payment system. This business model is called affiliate marketing and when somebody buys the product from you, the product owner pays you a commission.

3. You Provide Something Of Value For Free.

Most people who visit your website will not come back. But if you can email them useful information about your products and services after they have visited your website they may buy from you in the future. To get their email address you have to give them something of value in exchange that is relevant to your product or service. This could be a free report or eBook. If you are working with a good affiliate marketing program, they will provide you with the resources that you can give away for free.

4. You’re Always Expanding Your Customer List.

To create the best home business online, building your list should be your number one task everyday. Remember that once you have a prospect’s email, you can contact them anytime you want, for free. That’s not to say you should bombard them with emails trying to sell them something everyday. Email marketing is about building a relationship with your subscribers so as they come to trust and like you, they will be more inclined to buy from you.

5. You’ve Got Multiple Income Steams

If you just sell just one product with no add-ons or up-sells your customers will not have sufficient options to pick from. On the flip side, if you try and sell too many products you may confuse your customers and they’ll buy nothing. The best home business will have a good combination of relevant products that provide 3 revenue streams, basic one-off direct sales income, recurring income, and high ticket income.

Greeting Card Business Success Tips #1

There’s a common theme among those who begin searching for a way to launch their own home based greeting card business – financial freedom. Your current job might not be cutting it for you with the rising cost of living.

Or, it could be that you have a job that pays an amazing salary, but just doesn’t fulfill you as much as starting a greeting card business would. It is hard to have to report to work at a certain time. Do certain tasks that you might not agree with but have to fulfill since they cut your check.

Having your own greeting card business doesn’t just entail sleeping late and working in your pajamas, as many late night infomercials like you to believe. In fact, you may even find there’s more work involved which is usually the case.

There is a huge difference though when it is your greeting card business and not somebody else’s.

The satisfaction level you achieve by pursuing your own goals will far be more enjoyable than the work you are doing at your current job.

I want to share a quote by James Michener:

“The master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his love and his religion. He hardly knows which is which.

He simply pursues his vision of Excellence at whatever he does, leaving others to decide whether he is working or playing. To him he is always doing both”.

There’s a solution available to everyone on the spectrum who want to pursue a life on their own terms – and it’s called the greeting card business.

A greeting card business allows you to work the hours you want to work, whether that’s 11 P.M. to 3 o-clock in the morning or keeping in line with a traditional 8-5 approach. You make the decision. You are in full control.

Your greeting card business can involve as much or as little work as you want it to. You can choose when you want to work. For me, it might be at three o’clock in the morning like the other night because I could not sleep. I knocked out two hours of work and went back to bed. It really is whatever floats your boat.

You’ll be able to choose where you work. There is really no need to rent office space out since this is a home based greeting card business. Because overhead costs are kept low anyway, there’s no reason to add to it when all you need is a computer and an Internet connection, which fits nicely in a spare bedroom or right in the corner of an existing room, like the den!

Running your own greeting card business means being in touch with it on a regular basis, however, there are ways to leverage our time as well.

But the good news is that laptops are portable, and you could spend 365 days a year lounging on the beach since you can run a greeting card business from anywhere in the world, provided you have access to the World Wide Web.

Something that will take getting use to is you won’t have to ask to leave work. You won’t have to alert your clients that you’re going on a month long trip so an island. You just pack up and go, logging in once a day or so to see how things are progressing.

Let’s talk money now. Can sending greeting cards make you money? Enough to give you financial freedom?

Financial freedom has a different meaning for everyone. To some, it could be having enough to finally cover all bills. To others, it may mean making plenty to sock away for retirement and live a luxurious lifestyle.

The benefit of running a home based greeting card business is that you have nobody preventing you from earning as much as you want to. And you won’t have to ask anyone to pay you more. You now decide on when you want a raise.

Plus, with our greeting card business opportunity, you have the benefit of making a residual income from mailing greeting cards.

You work more when you want to earn more or cut your hours when money isn’t too tight. You decide when and if you want to branch out and build your greeting card business empire.

Now you know about the benefits. Let’s talk reality of starting a greeting card business.

You’re not going to wake up and start making $400 a day without doing something to reach that goal. Makes sense right? I will tell you that it is possible to make that much money though if you work.

If you’re looking for a turnkey, get rich quick miracle, this greeting card business opportunity isn’t it. Go buy a lottery ticket and pray that your numbers win big.

The reality is though, if you will stay consistent and build up your greeting card clients, you can do extremely well at this home business. I explain it like building an apartment building. It takes time to build but once you start renting out rooms you come into a flood of money each and every month.

There are a lot of people who don’t take the time to educate themselves about this business, and those are the ones who fail to generate any money and continue spinning their wheels until they finally quit out of frustration.

It is so important to have a coach to be right there and walk you through the process of building a successful greeting card business.

Buyer beware – there are a lot of people out there and you’re going to be very disappointed if you join by the seat of your pants and don’t get with someone that can coach you personally when starting a greeting card business.

Some marketers will tell only half the story – others will blatantly lie (or maybe they just mislead because they don’t know what they’re talking about). But a few are very, very reliable and give you exactly what you need to build a blueprint for your online greeting card business success.

I’m going to show you the route many have used to gain the financial and personal freedom you now desire. You’ll be learning the basics first – like boot camp for greeting card marketers.

All of your fundamental questions will be answered, and some rules will be spelled out before we move on to specific strategies like building a list of prospects, generating traffic to your personal branding site, and developing partnerships with other business owners so you can take in a lot of money in a short period of time.

All of the nitty gritty details of our greeting card business opportunity- the elements most sponsors skip over because they assume you know this stuff already, I’m going to share with you.

You will get a ninety day greeting card business plan to help you become successful.

At the end of this introduction to the greeting card business, you should have all of the fundamental knowledge you need to launch a solid business where you’re at the helm, placing one building block on the next until you reach the level of success you’ve always dreamed about.

This isn’t some industry where you can waft in and out from one day to the next. If you’re serious about this, it can become a multi-million dollar empire – a bona fide business you can pass down to your heirs.

If you have the motivation and mindset to become a greeting card entrepreneur, taking on the responsibilities that entails, along with reaping the rewards, then you might be a perfect fit to don a new career hat as a business owner.

If your needs are more pressing, then it’s advisable that you go out and get a job that has a steady paycheck attached to it. Then, work on building your online greeting card business in your spare time until it reaches a level of success where you can afford to turn in your resignation and work toward increasing your earnings over time.

Having your own online greeting card business isn’t a magic bullet. However, it can provide you with the financial security, the lifestyle, and the prestige you want out of your life. If you’re hesitant or need more information, it only means you’re proceeding with caution, and that’s perfectly normal.

Catering Business Profits, Earnings and Salaries – How Much Money Can You Really Make?

Many people have turned their love of cooking and entertaining into a good living by starting catering businesses.

Catering is a multi-billion dollar industry in the U.S. and as one of the fastest growing segments of the food and beverage industry, the catering business offers great opportunities for those wanting to start a small business with a low start up cost.

In this article we will look at catering business profits, earnings and salaries and how much money it is really possible to make in this industry. Then we will examine some of the things that separate the really successful players from the amateurs.

Is a $100,000 Yearly Profit Possible in Catering?

Many people consider a $100,000 pre-tax salary or profit to be a benchmark for success and they wonder if they can reach this level of earnings in catering.

Most small catering business owners who put in the effort can expect to earn between $20,000 and $40,000 profit per year for the owner during the first couple of years. After a couple of years in the business, you can easily scale up to earning a ‘six figure’ annual income from catering.

Tips for Getting to the ‘Six Figure’ Level

1) Forget catering from your home kitchen if you want to get to this salary level. Business savvy caterers do volumes that require them to either rent commercial kitchen space by the hour, arrange access to restaurant kitchens during off-hours or focus on ‘on-premises’ jobs only and use the kitchens of their clients.

2) Successful players love spending time creating menus, following food trends and interacting with people without neglecting the business side of catering.

3) Start to create a powerful brand right from the start with your logo, company values and unique service that will grow into a valuable asset that allows you to command a premium price for your catering services in the market.

4) Develop systems for every part of your business to streamline day-to-day operations. Analyze the way that you and your staff work and strive to increase productivity.

5) Understand that there are ‘niche’ markets within the catering industry that you would never think of until you really start looking. Top caterers find these untapped opportunities, and carve out a business catering to the specific needs of these groups.

6) Perfect the process of consulting with new clients and learn how to politely up-sell them on some of your more expensive offerings.

7) Realize that you are leaving money on the table if you don’t also up-sell additional event related services to your customers.

8) Learn how to hire, train and organize a small team to assist you with food preparation, delivery, service, and even sales if you want a realistic chance of getting to an income level above $100,000.

9) Don’t neglect traditional advertising methods but also pursue other modern marketing methods such as networking, cross promotions and guerrilla marketing.

10) Successful caterers also recognize the importance of customer referrals. Customers may introduce friends to you because they like your food and services but there are also other ways to get them talking about your company.

To get started on the right track, do as much reading as you can about general small business management and the catering business specifically. Many highly successful caterers have published start up guides and you have a chance to learn from their mistakes instead of making your own and you can benefit from their expert advice and insider tips.

It is possible to make a lot of money in the catering business if you put in the effort. Reaching a level of earnings that will allow you to make a ‘six figure’ salary from your catering business is entirely possible within your first two years in business.

Home Business Leads – The Pathway to Success

The path to success in any business is to find the correct marketing leads which will help you sell the products and bring in the profits. With the technology advancing at a faster rate and internet becoming a powerful medium to communicate, it is now possible for marketing companies to look forward for Multi-Level marketing technique which enables them to sell, promote and buy different products. As stated earlier it is important to have best MLM leads, there are many ways through which one can obtain the best home business leads one should have in their hands.

The first way through which one can obtain Home business leads is by surfing internet to find different websites coming forward to provide you free MLM leads. Though there are many such websites, you will have to choose the one which has good reputation.

Once you have the list in your hand, you can start verifying all the leads present in the list to get a confirmed and verified investor for your business expansion. This requires you to carry out a thorough research regarding the leads and also may require you to invest good amounts of money.

The second way through which you can have Home business leads in your hand is by purchasing a verified and screened list from a website which charges you as part of a package they offer. Depending on your expansion plans and requirements you can choose the one which suits better.

These Home business leads are already verified and screened by the website by trained professionals. These lists also contain all other details one should know about other company before getting into collaboration. These are also called as real time MLM leads for they are verified and are those who are ready to talk to you and invest in your business.

The other way through which you can obtain Home business leads is by creating your own website. You can then advertise for the same in different websites. Once a visitor clicks on the ad, he/she will be redirected to your website which speaks of the goals, the commitment and the offers you provide to employees.

As soon as they fill in the information form, with the help of auto responder, you can send mails, news, information and other promotional offers which will interest them to join you and invest in your business.

Steps For a Productive Affiliate Marketing Business

Business has always been a tricky project. You could start up on the top of the ladder, but end up falling to the ground after a while. You won’t know how it will turn out if you don’t take a hand in it directly. Same also goes with affiliate marketing.

This can be a very hard business to go into considering the factors involved that will result to its success. If you really want to give affiliate marketing a try to earn some extra profit on the Internet, then here are some steps that will help you out for a successful venture.

Step 1: Choosing A Product To A Sell

The product that you pick out for your affiliate marketing business will be the turning point of your venture. An inferior quality product that is unpopular with the online consumer will spell bad news for the business.

It is advisable that you scout the Internet for a niche that is popular and beneficial to the needy masses. Since your income will be based on a percentage of every product you manage to sell, then you need to ensure that your product will be useful and beneficial to your online customers

Also, you need to keep in mind that your reputation as an online business will depend on the product that you chose to promote. In fact, the success of your venture will mainly depend on the reputation you build up to the people that you sell your product to. After all, a happy and satisfied customer will also promote your product to their friends and family members that will benefit from it.

Step 2: Promoting Your Product

You need to make your product accessible to potential customers on the Internet before it can be of any use to your business. Remember, creating a Web site alone is not enough for your affiliate marketing to become successful.

You need to implement internet marketing strategies that will help promote your product to on the Internet. You can make use of search engine optimization to utilize the functionality of search engines to increase your traffic and accessibility. Building links to business Web sites and Web directories on the Internet can also be a big help for your venture.

You can even take it one step further by making use of business bookmarking and social networking techniques to achieve your goal of business accessibility, as well as building a network of contacts that will become your down-line that will also help promote your product to the rest of the online community.

7 Business Development Marketing Tips For Social Media

You would have heard so many marketing experts telling everyone to use social media as part of their promotional marketing mix. The Internet is flooded with information on using Facebook, Twitter and other social sites. Numerous articles have been written on how using social media can help promote your brand image and how it can generate web traffic for your main business website.

Keep in mind that that social networking is a marketing tool and it is only effective when used properly to promote your business.

The key question for a business is “How is social media harnessed to generate real revenue and customers?” In today’s digitally connected society your customers regardless of their age, gender or economic status will be active on social networking sites.

Here are some of the latest usage statistics on social media use that will make a business take notice:

68% of small businesses will increase their social networking marketing efforts in the next year
56% of Twitter users say they use the micro blogging site for business or work related purposes
Over 40% of people have become ‘friends’ with or ‘like’ a brand/company on Facebook or MySpace
20% of tweets are about business products
46% of Facebook users say they would talk about or recommend a product on Facebook
44% of Twitter users have recommended a product
Social media played a major role in holiday shopping – 28% of shoppers say social media has influenced their purchases

On the Facebook site alone:

More than 400 million active users
50% of active users log on to Facebook in any given day
Average user has 130 friends
People spend over 500 billion minutes per month on Facebook
There are over 160 million pages, groups and events that people interact with
Average user is connected to 60 pages, groups and events
Average user creates 70 pieces of content each month
Males and females almost equally use social sites (47% vs. 53%)
61% of Facebook users are middle aged or older, with the average age being 37
18- to 24-year-olds don’t dominate any particular social networking site; they’re spread out all over
More than 25 billion pieces of content (web links, news stories, blog posts, notes, photo albums, etc.) shared each month

The participation of your business in social networking should be self-evident, however, many businesses will go on to set-up social media sites and make no effort to participate and engage in the groups that their potential customers use.

To be successful in using social networking your business must find out where your potential customers spend time on these sites so that you can engage with them where they prefer and not where you prefer or are comfortable with. Participation and engagement with their social networks will form a platform from which to build relationships with communities of interest. This in turn will provide a new customer acquisition channel using the share and like capabilities of the social networking world. This “sharing” is the equivalent of word of mouth in traditional marketing.

Here are the 7 Business Development Marketing Tips for using Social Media:

1. Go where your customers are and not where you are comfortable

To find your customers on social networking sites consider the following:

Conduct a survey among your customers or potential customers.
Analyse and monitor traffic on social sites to discover how and where customers are sharing information about your business and your competitors.
Review marketing research or statistical information on the usage and demographics of the different social media sites.

2. Engage and interact

Social-media engagement is a conversation and your participation in the social network groups and communities is core to building relationships. Your value as a participant is judged by the value that you provide to the community as a whole. You can achieve this by freely sharing relevant, interesting and useful information

3. Research your competitors’ activities

You need to gather competitive information that can help your efforts. Conduct a competitive analysis of your top five competitors’ use of social media for the following:

The social networking sites that they actively participate
The type of content they publish
The number and type of followers, fans and views
The products, programs or events promoted

4. Release offers and programs that are exclusive to your social networking channels

You must give importance to your social media with exclusive offers for these promotional channels. This will entice potential customers to share with their networks the offer that is not available from other marketing channels.

As an example, provide offer an exclusive offer for your social media channel, such as discount coupon or voucher.

5. Social media participation requires authenticity and transparency

The words “authenticity” and “transparency” are a bit overused today, however, these are cornerstones to be successful with social networking. Be a real human being in your interactions. This is the foundation to build trust and connections with real people on social media groups and networks.

6. Look for value opportunities in selling through social networking

Take the opportunity to leverage social media in selling your products and/or services by offering relevant items that are of value to your followers. Make it easy for them to make the purchase from these social media channels.

7. Always test and refine based on results generated

Social media programs as a marketing channel are not exempt from testing and refining your messages and offers. You must make the effort to test, gather results and analyse how it can be improved before launching the program to the entire channel.

Apply these 7 Marketing Tips for using Social Media to give you the foundation for success building and growing your business using these communication channels.

Sound is a Sound Reason for Business Success! How to Get Rich in Any Business?

It sounds good:

I know you do some relaxation exercise or reading some magazines in your drawing room leisurely. You hear a number of sounds that come from the street outside. Some are attractive while some distract attention! You like it or not, you need to hear all these noises.

Nutty business:

Now also you here a bell-ring sounds differently, with a unique musical rapidity.

You know, it is a special sound coming from a hot selling item on the street: It is the peanuts! Some call it groundnuts too!

This ringing noise is coming from the street and that too you know it is from a peanut seller pushing his handcart. The steel spatula generates the sound by hitting on the rims of an iron Chinese woke.

Sound Attraction:

He has a small stove burning, which heats the sand filled Chinese woke for hot dry frying the peanuts. He pushes the cart, shouts loudly with his special voice and makes the sound just by hitting the rims of the iron woke.

Interesting Musical Note:

By this, a peanut seller informs that he passes on the road; he sells hot fried tasty groundnuts; this shows that he is closer to you on the street; further alerted by the sound that may leave at any time.

Desire with Flavor:

Now the spatula makes a different sound by turning and frying the nuts. It is also unique and your nose is sharper to inhale the flavor of the hot frying of the nuts in the sand bath. Aha, you want to taste it instantly.

Act Fast to Taste the Nuts:

You are just calling your maidservant to go and get it immediately as the peanut merchant may leave at any time. She bought it; you got it! You simply admire at the taste of round bold hot peanuts.

Now, on the business side, let us find what has happened and perceived in this groundnut selling process.

Small Mobile Shop:

The pushcart is a small shop of 6 feet by 3 feet by size drawn on the road. On one side, it is true that the cart is a small retail shop. On the other side, one can expand the business to the size of the world, as much as one can draw the cart.

That is to say, the cart moves to the nook and corner of the city or the village. The business can be expandable with the capacity of the drawing retailer. Naturally, he will get more business with more area and more people.

Further, the process shows the following steps in selling process.

Attention:

The sound is the key factor that initiates the business. If the cart moves on the street with out making any sound, then it would have gone with out the notice of the potential customers residing in the houses. The vocal sound of the street vendor with the noises generated from the hit tings on the Chinese woke is the prime factor that introduces the shopkeeper on the street.

Interest:

The unique noise that emanated from the spatula while frying creates further more interest for the insider.

Desire:

The unique smell of the frying groundnuts brings in desire to the potential buyer.

Action:

Then it is over as the potential buyer moves out, goes near the seller and makes the buying process. The retailer finds the requirements of the purchaser and completes the process of delivering and collecting the sale proceeds.

The students of business management science are learning about the salesperson’s success techniques. The above said example of selling of peanuts is a very simple and true selling process. Of course, the peanut seller knows or not, this has built in scientific sales process!

We call it “AIDA principle”, comprising of the following.

1. Attention is drawing customer’s awareness.

2. Interest is increasing curiosity for the customer.

3. Desire is creating crave by exhibiting more characters and creative visualization.

4. Action is pressing for customers’ accomplishment for completing the sale.

Sound is a Key to Business:

Besides, we learnt that sound is a key factor in bringing business here. You hear the bell ring sound from churches and temples and sacred voice from the mosques. They draw the attention of the people and invite them for the prayer.

The bakeries and roadside fast food counters use radios and speakers to pull the crowd. The street circus player makes sound with drums. Different kind of ring tones are used for different commodities like ice creams soft cotton candies etc. With a threadbare analysis of this sound subject, we can understand that it has unique role in very many ideal businesses.

Hence, sound is a sound business idea to bring more customers into our business.

AIDA is more scientific method of selling anything on earth!

Similarly, there is more number of customer pulling tools.

We shall see them next.

Small Business Opportunity: The Top 7 Reasons to Start a Painting Business

House painting is a skill that most people can pick up quite easily. It is one of those rare home based business opportunities that actually work and it is very possible to make $30- $50 an hour without much effort.

Here are the top 7 reasons why anyone with basic painting skills should consider starting a painting business of their own.

1. Residential and Commercial Painting is a 22.5 Billion Dollar a Year Industry!

Every day homeowners across the country (and around the world) spend millions of dollars to have a living room, bedroom, kitchen etc painted. This is an industry that indeed has an unlimited amount of work available.

There is far more work then there are painters. Listed in the top 10 businesses in 2006 and predicted to grow into the foreseeable feature, there has never been a better time to start a painting business then right now.

2. Basic Painting Skills Are Easy to Learn.

It doesn’t take much time at all to develop basic painting skills. Just about anyone can do it. Most painters who learn through “On the job training” pick it up in just a few weeks. All it takes is a little practice.

3. Very Low Start-Up Costs

A painting business is one of the best businesses because it doesn’t require a lot of money to start. For under $250.00 (depending on where you live) you can get a painting business up and running and earning money.

With start up costs this low it doesn’t take long to become profitable and if you target small high paying jobs your overhead costs are next to nothing.

4. No Expensive Advertising Needed

Unlike most other business, a painting business doesn’t require a huge monthly advertising budget. In fact it is completely possible to build a profitable painting business without any traditional advertising at all.

Smart painting business owners spend time building relationships with people who “know people” that can refer them jobs.

5. Earn Professional Income Working Part Time Hours.

Many successful painting business owners earn $60,000 – $100,000 per year working less then 35 hours per week. Once you develop your skills and become proficient, it is not uncommon to make $300-$500 per day working just 4-6 hours.

It is possible to earn more in one day then most painting employees make working a 40 hour week. Every day painters sell their valuable skills to a boss for a measly $12-$15 when they could be earning top dollar running their own painting business.

6. Freedom, Lifestyle and Security.

The best thing a house painter can do to secure their future is to start a painting business of their own.

The potential to earn an above average income working part time hours is one of the biggest benefits of owning a successful painting business.

Many painters are making a great living running their own painting business. They drive nice vehicles, live in nice homes and have the time and money to do the things they love.

7. Outstanding Tax Benefits

Running a small painting business out of your home offers many outstanding advantages like high profit potential and low over head. Expenses like gas, tools and your vehicle may be write offs. (Be sure to check with your accountant) But the tax benefits of owning a small business are wonderful.

As you can see the sky is the limit for painters. Unlimited work and top pay draw a lot of people to the painting trade every year.