The next thing you need to do is check the balance sheet – not for the current year, but for the past several years. Obviously you will look at the profits. But keep an eye open for other things as well. Have there been a lot of ups and downs? If so why? Has the profit been steady with no real growth? This is not a good sign. Has all the profit come from operations or has some money come in from the sale of assets (even small things like computers and furniture)? Yes, obsolete equipment needs to be sold off, but is this the real reason? If the current year’s profits are exceptionally high, look carefully for the reasons. Could it be that the owner has artificially boosted the figures to make the purchase look sweeter to you? Understanding accounts is a fine art. If you are not competent to do this yourself, get professional help. It’s worth the cost.

Study the business and economic environment. Is the company dealing in products or services that are becoming outmoded? Or is there legislation on the anvil that will restrict the use of the product or service? If so, the business doesn’t have a future.

Check out the financial aspects that do not appear on the balance sheet. Get a copy of the owner’s credit rating. Is he in debt? Could it be that he has been using his personal funds to keep the business looking healthy? Check with the local Better Business Bureau to see what information they have on the business. Banks are notoriously reluctant to talk about their clients, but there is no harm in meeting the company’s banker and asking a few questions.

Meet the other stake holders – the web designer and hosting company, the computer maintenance people, the suppliers. They too may not be willing to say too much, but even from their attitude, you can learn a lot about how their relations with the company have been.

The employees will also not say much. But spending some time with them will tell you if the office atmosphere is positive or negative.

Buying a running business can be a good idea. Just be sure that if you are paying for an apple, you are not getting a lemon.

All the money that’s left after deducting all your expenses is Net Income. It’s not profit. A significant portion of this Net Income has to stay in your business. Profit is something you take out of the business once everything else is taken care of. Lets see what these things to be taken care of are.

• Start with the business expenses. Have you taken everything into account? Even if you are working from home and are just reselling, which means you are not paying your supplier in advance for your goods, you still have business related expenses. Some of them could be:
  • You are using more electricity than before you started your business. The extra cost needs to be added to your operating expenses.
  • You are using your phone more. Who pays for that?
  • Your internet costs will have gone up.
  • You are probably drinking more coffee!
  • Think and you will find other costs that your business incurs.
• If you don’t have a complete picture of all your business expenses, you are fooling yourself. These expenses have to be met and if you add them to your personal expenses you are not just incorrectly judging your businesses value, you are cheating yourself.
• As your business grows, you are going to have to spend more to earn more. Things like:
  • Getting a bigger office
  • Getting another computer or upgrading your current one
  • New software
  • Paying for higher inventories
  • Getting another phone line
  • And lots of other stuff!
• You need to plan and budget for all these expenses. The money has to come out of your Net Income in regular installments calculated so that when the expenses arises, the money is there.
• You need to keep some money aside for contingencies. No one is ever prepared for all eventualities. Having a buffer of money, built up slowly is always a safety factor.
• Outsourcing some of the work of running your company to experts like http://www.ringgle.com is something you need to look at and budget for. Outsourcing some jobs can save you money in the long run.
• This is not to say you live on bread and water. Give yourself a salary. Be modest in the beginning and take just what you need. Having this as a fixed monthly outflow will help your budgeting. Depending on the size of your business this should be not more than 25% to 40% of your Net Income, subject to your meeting the other commitments. Your salary will automatically grow with your business.
• At the end of the year, take a look at your final profit – what is left after you have covered all the other costs. You can take this money and have a ball, but maybe it would be better to put some back into the business for growth or additional lines of work.

You may not make money in the beginning. But you will soon enough. You need to look after yourself and your family. But everything you earn is not profit and thinking it is and plowing nothing back into your business is robbing it of its sustenance!

Actually marketing involves many more activities that work together to facilitate a satisfactory exchange of relationships via creation, distribution, promotion and pricing of goods, services and ideas.

To succeed, a business requires satisfied and happy customers who return to the business to provide additional sales. In exchange for something of value, like payment, the customer receives a product or service that satisfies their needs.

Such a product or service should have an acceptable level of quality, reliability, customer service and support, is available at places convenient to the customer at the “right” price and is promoted effectively by means of clear message that is readily understood by the customers.

Understanding customers and anticipating their requirements is essential to effective marketing. Also important is the understanding of market trends.

With an understanding of the customer and the general market trends, a company should then devise a marketing strategy. Identifying the right market segments, selecting a suitable positioning platform and beating rivals are some of the core elements of a marketing strategy.

In Europe and the USA, between 25% and 35% of all civilian workers perform marketing activities such as strategic planning, personal selling, advertising, packaging, transport, storage, marketing research, product development, creative design, wholesaling, retailing, marketing planning and consultancy.

The priority of marketing is to identify customer needs, determine priority target markets and achieve sales through implementing marketing principles and practices. Relationship marketing focuses on long term, mutually beneficial arrangements in which both the buyer and the seller focus on enhancing the value of the exchange between them.

Relationship marketing continually deepens the buyer’s trust in the company and in turn helps the company better understand customer needs. Better markets respond to customers’ needs and strive to increase value to buyers over time.

So how does a company go about marketing? It all starts with gaining marketing intelligence through analysis. The analysis should focus on the customers, the competition, the general market trends or factors and finally the company’s own capabilities.

By analyzing customer needs and trying to understand buying behavior, companies can try and formulate effective marketing strategies. This leads to improvements in the product or service, quality management, strategic promotion and overall improvement in service.

By studying and understanding the competition, companies can try and change their marketing strategies and be better able to compete. This leads to changes in features, benefits and price of the products or services. This also leads to improved promotion and better brand positioning.

By keeping an eye on general market trends and in particular related market factors, companies can come up with pre-emptive marketing strategies, attacking potential threats and take advantage of future opportunities.

Finally, by fully understanding it’s own strengths and weaknesses, a company can improve it’s processes and ultimately improve the quality of it’s products or services. This also prevents the company from getting into ventures or areas that they might not be able to handle or which have a potential to fail. At the same time, it could also show the company opportunities that they might have been missing.

For online businesses, many of the same principles are relevant. Online companies should also focus on marketing analysis, strategies and programs. In the coming weeks and months, I will be writing more articles about each of the above mentioned ideas and principles and how they can be applied to small businesses.

But, a brand defines the firm that will deliver and stand behind the products or service that the customer will buy and use. It is an amalgamation of various aspects of a company that are brought together cohesively and called a “brand”.So what are these “aspects of a company” that form a brand?

The People

The people of a company provide the basis for the corporate brand image. They should be engaged, interested in their customers, responsive and competent. This will foster greater respect and brand loyalty over the long run. Ultimately, people define a brand.

Value and Priorities

The values, proprieties and the company philosophy are the very essence of a company. What ideals does the company hold up? What will not be compromised, no matter what? Some companies have a cost-driven culture that supports a value position in the market place. Others place priority on delivering a prestige customer experience. Innovation, quality, and customer concern and 3 values and priorities that are worth highlighting because they are so frequently seen as drivers of corporate brands.

Products and Services

A brand is also defined by the quality of it’s products or services. Is your product high in quality? Is your service fast and dependable? Being fast, responsive and dependable enhance the brand and create brand loyalty. Companies spend millions on advertising and marketing. But some companies fail to tackle some basic fundamental issues such as customer service and value for money.

Corporate Identity

A company’s logo and corporate identity also enhance the brand and complete it. The logo, the colors used, the marketing messages in their promotions all act to create the brand image. These corporate identity elements should reinforce the company’s values and priorities. They must be aligned to the kind of products or service the company delivers. Then only do you have a brand that benefits the company.

Over the coming weeks, I will eloborate on the points mentioned above and write details posts on how companies turn from being just a company to a brand.

The situation is further complicated by the need for every company to have a domain name. It is very hard to get and register a decent domain name and much harder to get your hands on domains which are short and contain generic words in them.

So, how does a small business owner come up with a good company name that would also be available as a domain url? A tough question to answer. I will try to answer this question based on the experience I have had helping many small business get a brand name that works well.

I always advocate that companies should be bold enough to separate their company name from their domain name. This is more so for companies that choose a company name that is not available as a domain name. They could try and find alternative variations of the name as a domain name but if your company name already exists as a domain name and is owned by some one else then, you should consider the fact that you might put in a lot of time and effort into promoting your brand and that domain name might get hits as a result of of your target audience assuming your domain name would be the same as your company name.

So, it is quite tricky. On the one hand you need to select a company name that relates to what you do or is in some one connected with your brand story and on the other hand it has to be unique enough to be available as a domain name that you can grab and register.

First of all, make sure your company does not use common names or words that would have been used by a 1000 other companies. I know this is easier said than done. But it is quite important to have at least some part of your company unique.

You can try several different methods of coming up with names. If you do not have an obvious choice or the compulsion to use a particular name or combination or words, then you can try and formulate a list of names in the 4 popular categories of brand names: Generic, Evocative, Derivative and Negative.

Second, before you finalize the name, make sure it is available as a domain URL. Normally, it would be a good branding practice to get a domain URL name that is short and easy to remember. It is not nessasary to have a domain name that includes all the elements of your company name. If it makes sense, it is ok to have one or two elements of the name.