1. Santillan 1
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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