Wednesday, December 18, 2013

Starting a New Business: A Word About Capital

Because of the changes in price levels, the amounts required to start a new enterprise today are substantially above those of a few years ago.  Prices may or may not stabilize around current levels.  Therefore, any dollar figures given at a specific time may be substantially different two or three years later.  The New York State Department of Economic Development maintains detailed data on changes of this order and has material written expressly for the purpose of guiding owners.

Experience has shown, however, that over a period of time there is little variation in certain standard ratios.  It should be noted that in the food service industry, a diner may require twenty times as much capital investment as a roadside stand or luncheonette.  A dry cleaning establishment requires four times the capital needed to start a mail-order service.  A medium sized furniture store might need an investment half as large as that of a moderate volume shoe store.  Generally speaking, a cash and credit business requires at least 50 percent more capital than does a cash business.

How much money does it take to keep a business running?  One way of answering this is to show the different kinds of capital:

This includes all expenses needed before starting the operation of the business (security deposits, pre-advertising, research, etc.).

This includes operating expenses such as wages, rent, advertising, supplies (including stock), heat, electric, telephone, taxes, insurance, interest on borrowed money, repairs, improvements, delivery, etc.  These are commonly lumped together as overhead.

This amount is needed for machinery, fixtures, and all physical aspects of the business.

The buyer should be aware of all three forms of Working Capital.

Friday, August 23, 2013

Starting A New Business: Getting Started

Small Business Characteristics
As a business owner, you must know and meet your customers’ needs. You must select your location with an eye to market centers or neighborhoods. You must hire and train your own staff, arrange for banking services and insurance, do your own buying and record keeping, make your own plant, office, or store layout complete with window displays, and promote customer goodwill while maintaining proper credit control.

Because it is necessary for you to know about the many and varied aspects of business, this blog is designed to help you develop basic managerial knowledge. You cannot become an expert in banking, real estate, insurance, purchasing, inventory control, record keeping, regulation, advertising and credit, but there are certain things you should know about each of these subjects. You should also consider turning to specialists who are available in your community.

Also, look for small business workshops and seminars offered by government agencies (such as the Town of Brookhaven Economic Development Office), chambers of commerce, banks, libraries, educational institutions, and trade and professional organizations. They are frequently listed in the business section of your local newspapers.

Getting Started
By your interest in this blog, it is assumed that you have taken a personal inventory of your skills, aptitudes, likes and dislikes and have decided to be your own boss. Studies show that most small business owners choose to strike out on their own for the following reasons:

  1. Pride in Product/Service
  2. Control
  3. Freedom
  4. Flexibility
  5. Self-reliance
  6. Customer Contact
  7. Income
  8. Employee Contact
  9. Recognition
  10. Privacy
  11. Security
  12. Status
  13. Pride in Self-Achievement

Your interests, experience and knowledge of trends in different trades will determine your selection of the kind of business to operate. Assuming you have already made that decision, how much capital – cash and credit – will you need to start a small business?

Thursday, August 22, 2013

Starting a New Business: The Big Idea

Origin of the Business Idea
The origin of the business idea is one of the most mysterious aspects of a new business. Remember the following about any idea for a new business:

  • Always be on the lookout for ideas. They can come from anywhere: your work experience, a hobby – or even your experiences as a consumer when an existing product or service does not meet your needs.
  • Identify a niche. Usually this opportunity area will be a proven idea in a new market or a unique idea in an existing market.
  • Learn everything you can about the business you want to start and the marketplace you will be operating in. This means getting work experience and collecting information so you will know the market inside and out.
  • Make sure your idea is so focused that you can express it clearly in 50 words or less.


  1. Summarize your business idea in 50 words or less.
  2. Where did your business idea originate (from a specific experience, long observation of an industry, a sudden inspiration)?
  3. If your idea is for a new product or service, describe how you expect to get it known and accepted in the marketplace.
  4. If your idea is for an improvement or variation of an existing product or service, describe why customers will use it instead of what is already there.
  5. Describe your market niche in 50 words or less.
  6. List at least three qualifications that you have that will allow you to pursue a business in this market niche (work experience, education, research, reputation, etc.)
  7. What are your two most important personal goals for the next five years?
  8. How will this business help you achieve these personal goals?
  9. List and describe briefly the two most significant barriers you expect while launching and operating your business.
  10. Explain how you expect to overcome these problems.

Testing Your Idea

As you evaluate your idea, keep in mind the following:
  • Market research does not have to be complicated or expensive, but you must do it.
  • Do research to determine whether enough potential customers exist to support your product or service. Use the following sources for statistical and demographic information:

- Library (specifically, the Miller Business Resource Center at the Middle Country Public Library is a valuable resource)
- Computerized databases (available at many libraries)
- U.S. Small Business Administration
- U.S. Bureau of Census
- Trade associations for your industry
- Local Chamber of Commerce

  • Test your idea with potential customers and others who can offer constructive feedback (e.g., friends, relatives, bankers, suppliers, business executives). Keep a written record of responses.
  • Be prepared to make changes based on the responses.
  • Study and evaluate the competition.
  • How will your product or service be an improvement over the competition?
  • Price your product competitively – higher if your product or service improves on an existing one, and lower if it will be equal to what is on the market. Be sure you can make a profit.

Friday, August 16, 2013

Starting a New Business: Evaluation

Self-Awareness and Evaluation
Begin your business career with a careful self-examination. Make sure you realize what you are getting into. Do not be afraid to ask questions about things you do not understand. Do not accept every statement at face value. You need to know what you are doing. Remember that a business – large or small – is a BIG responsibility.

To help you along, consider these questions:

  1. Do I get along with people and inspire confidence?
  2. Am I willing to shoulder the responsibility of meeting a payroll and paying debts on time?
  3. Do I like the business I want to enter so that I would not mind working long hours and making other personal sacrifices?
  4. Do I understand that business is speculative, and am I willing to take the risk involved?
  5. Do I like to sell?
  6. Can I keep the financial books?
  7. Can I make decisions and can I weather wrong ones?
  8. Am I resourceful in emergencies?
  9. Am I a good organizer?

If you can answer most of the above questions affirmatively, you can feel quite certain that you have the personal aptitude you need to start a business.

The importance of the questions may vary, for example: Question one is exceedingly vital. The success of many a business has hinged on the way the proprietor dealt with customers and employees. The idea that you can get business merely by opening a shop is an outdated notion. There is plenty of competition to face, so plan on dealing with your customers just a little bit better than your competitors.

You will find that courtesy and understanding are important factors in handling the public. The main thing is to get along with people, understand their needs and inspire their confidence. From the time you sit down with your banker to negotiate a loan to the time you try to convince a customer to buy your product or service, your personality and reputation for honesty and reliability can make the difference between success and failure.

Business owners who lack tact in dealing with people and who do not love their work probably cannot stay in business long. No doubt, you may recall many persons who have started new businesses and attracted customers by their geniality and warmth, and others who have driven customers away by their negative attitude. Your employees, too, will reflect your way of doing business. Be pleasant even when you must say “no”.

When you become your own boss, you alone are responsible for what happens. Your earnings are not guaranteed; they will be what you make them. Some weeks will be big, some weeks very lean, and other weeks they may be non-existent. You must be ready to face these facts as they arise and meet them without worrying. That takes good sense, as well as confidence and courage.

As an employer, you will also find that hours do not stop at forty (40) per week. Long after others have gone home you may have to stay on the job checking odds and ends, getting books in order, going over inventory, rearranging stock, seeing that repairs are made, and a thousand and one other details. You will find early in the game that anyone who launches into business will not be able to keep golf appointments at three o’clock in the afternoon.

Selling, to varying degrees, enters into all business practices. Sales skills are related to your ability to inspire confidence, but it also involves an understanding and enthusiasm for selling. You will need to convince others that they need what you offer, whether it is in the form of goods or services.

If you are keeping your own books, consider taking courses in these subjects before entering into your venture. The State Education Department has course outlines and other materials on a variety of business subjects. These become the focal point of local adult education programs, which are sponsored by schools throughout the state. SCORE, The New York State Small Business Development Center, and The State Division of Veterans’ Affairs all offer guidance and assistance. Veteran counseling centers are conveniently located in every county of the state.

Some people have the ability to make wise decisions quickly, while others learn decision making the hard way – by experience. If you possess decision making skills, you will be able to apply them successfully in business. It is a quality closely related to resourcefulness, the ability to adjust and re-adjust rapidly.

Finally, as a business owner, you must be a good organizer and administrator, even if you have no employees. You must be self-disciplined and able to arrange your own time profitably. You must coordinate the parts of your business so that they fit together and operate at maximum efficiency. You must gear your buying to your selling, and your selling to your customers’ needs.

When you hire employees, you must plan their work in order to obtain the full value of their services. You must arrange to meet payments and wages on time and to avoid, as much as possible, having a surplus of funds at one time and a shortage at other times. You must maintain your credit rating, since credit is as good as money and there is much more of it (credit) available.

Business is not a “bed of roses”. Basically, it is a great adventure and calls for initiative, integrity, good judgment, courage and determination. You probably have some or all of these qualities or you would not consider going into business for yourself. You may have to grit your teeth many times and perhaps survive disappointments.

Thursday, August 15, 2013

Starting a New Business: Pitfalls to Avoid

Starting Your Own Business

Despite the ups and downs of business, the chances for individual success depend largely upon the knowledge, experience, intelligence and care used in setting up an enterprise. The Town of Brookhaven’s Business Advisory Council, which is charged with acting as liaison between government and the business community, has created this blog to help guide you toward a successful plan of action.

Avoiding Pitfalls
In the past, there have been few agencies to which men and women planning to start a business could turn for advice. As a result, many who had scraped together a small amount of capital plunged ahead full of confidence, but with little actual knowledge or appreciation of the problems they faced. That they did not always achieve success is understandable. Business records over a period of years reveal how difficult the going can be.

Today the United States government offers assistance from the Small Business
Administration. The New York State Small Business Development Center located at SUNY Stony Brook, The Town of Brookhaven’s Division of Economic Development, SCORE, and the Miller Business Resource Center at the Middle Country Public Library are all valuable resources. Additionally, the Town of Brookhaven offers this blog. While businesses differ in nature, the same fundamental principles apply to all. Every entrepreneur should STOP – LOOK – THINK before starting a new enterprise.

Experts agree there is no substitute for experience. It is possible, however, to operate a business successfully through the exercise of prudence, common sense, willingness to devote time and attention to it, boldness in making progressive decisions and alertness in anticipating where and how mistakes can be avoided.

Next Post: Self-Awareness and Evaluation

Wednesday, February 6, 2013

Benefits of Social Media to a Local Business Owner

Facebook, Twitter, Google plus, Pinterest, Yelp, YouTube, the list of social media goes on and on, and seems to grow each month.  It becomes a difficult highway to navigate, especially if you are a local business owner.  I’m sure everyone with a small bit of business sense has always recommended that “Your business must be on social media” or “You have to have a Facebook page”.
Easy enough to figure out that you need to be on social media sites, but it’s more difficult understanding the value propositions that social media sites hold for a local business owner.  In this article we will discuss the three main value propositions social media sites in general hold for your business.
The first is SOCIAL AUTHORITY.  What is social authority?  In April 2011, Google changed the way they rank websites in search results.  In addition to using their complex algorithm, metatags and keywords,  Google added something new to the mix called social authority - basically they are looking at business websites and their social pages.  They have determined that a business that is active on social media sites is a more relevant business than one that is not active.  It’s simple, be active on your social sites and it will help with your search engine optimization (SEO).
The second is WORD OF MOUTH, the oldest and best form of advertising.  Any business that values word of mouth advertising can benefit from social sites.  The way we communicate is radically different than a mere twenty years ago.  People are posting on walls, tweeting messages and checking in to communicate with their friends and family.  When someone interacts with a business on a social site, it’s a public recommendation.  It’s word of mouth, in digital format.
The last is KNOWLEDGE. You can gain valuable insights to your business by having an open communication with your customer base.  You can gauge feedback on new offerings or services by engaging with your customers.  The knowledge you gain can help improve your business.
Social Media is not a clear cut return of investment scenario, but a valuable tool for any business serious about growing in this modern age.

Tuesday, February 5, 2013

Suffolk County Small Business Advisory Council's 2nd Annual Small Business Summit

Due to Super Storm Sandy the Suffolk County Small Business Advisory Council's 2nd Annual Small Business Summit:  Resources for Success was postponed.  We are happy to announce that the Summit has been rescheduled, so please save the date:

March 20, 2013
5:30 pm - 8:30 pm
Suffolk Community College Culinary Arts Center
20 East Main Street, Riverhead

To RSVP for the Summit, please e-mail
Work Opportunity Tax Credit Extended
On January 3, 2013, the President signed into law the American Tax Payer Relief Act of 2012, which authorizes an extension of the Work Opportunity Tax Credit (WOTC) program, including the following:
  • Continues authorization of all veteran target groups (including those implemented under the VOW to Hire Heroes Act) until December 31, 2013
  • Retroactively reauthorizes all WOTC non-veteran target groups, from December 31, 2011 to December 31, 2013
  • Retroactively reauthorizes Empowerment Zones, which determines eligibility for the summer youth target group, from December 31, 2011 to December 31, 2013
  • Does not reauthorize the Recovery Act disconnected youth and Recovery Act unemployed veteran target groups.
The Employment & Training Administration will be issuing forthcoming guidance on the new legislation.

Visit the following website for more information:
FREE Crisis Counseling is available for those affected by Hurricane Sandy through
Project HOPE

For more information please click here:  Project HOPE flyer

To reach Project HOPE call (631) 471-7242 ext. 1010

Friday, January 18, 2013

Increase YOUR sales by selling to the “Government”

Increase YOUR sales by selling to the “Government”.

If you provide U.S. Government Agencies and/or their Prime Contractors with excellent products and/or services at reasonable prices and deliver them on time - they’ll come back to you again and again.

By expanding their market to include selling to the government:

M.S. Hi-Tech, Inc. (a Long Island small business) initially increased their sales by about 30%.

And they have had the “Government” as a customer for about 20 years (per Mike Montenes, President).

Whatever the product and/or service your company sells - the U.S. Government and/or their Prime Contractors probably buys it and a LOT of it.

Two basic reasons to sell to the U.S. Government and their Prime Contractors are:

1. They probably buy what you sell, because they are the largest customer in the world. They buy everything from pins to tanks.

2. They pay on time (maximum 30 days). And you can get paid even faster, if you offer a prompt-pay discount.

Start selling to various U.S. Government Agencies and/or their Prime Contractors, by:

- Contacting your local (free to low cost) Procurement Technical Assistance Center (PTAC) at LaGuardia Community College:


- Contacting your local (free to low cost) Small Business Development Center (SBDC) at Stony Brook University:

In summary, if you provide the U.S. Government Agencies and/or their Prime Contractors with excellent products and/or services, at a reasonable prices and deliver them on time - they’ll come back to you again and again, just like they did with M.S. Hi-Tech, Inc.