Establish and operate small business

INTORDUCTION

Business is an activity of making money through buying and selling or supplying of goods or services. The purpose of Business is to generate income through profit.

A small Business or small scales industry could be defined as a small firm or organization established for the purpose of carrying on some economic activities which could be manufacturing or production, trading or rendering services. A business could be small or big in size, it all depends on the nature of business and capital seed involved.

Why Business?............

The gate way to additional income To enjoy financial independent, a man or society must not depend on a single income, getting involved in extra enterprises can solve a lot of worried often created as a result of shortage of cash. Owing business is for those who want to be rich and successful. There are so many business you can embark upon and run well.

However, if it's going to be, it's up to you. A business of yours is the lasting solution against the fear of unemployment retrenchment or lack of funds. However, to survive in business, you need guts, generous dose of ambition and drive. You must have a strong reason that will keep your business alive.

TAKING THE FIRST STEP

In deciding what type of business to do there are range of ideas to choose from to know whether its along existing hobby, talent on a new idea, however, ensure that there is a market that needs your service of product. Also, you must be personally interested in the business (not just because of the gain you hear people makes from it)

THINK FIRST:

If you want to start a business, business is about thinking-well those who can not think can not create, therefore, if it is business you want to go into, think first. First thing first Develop your business first before building your house (Proverbs 24:27) Therefore, I recommend that you belt yourself with these three instructions: (i) Think deeply about the business (ii)

Open your eyes to see opportunities (iii) Have an open-ear to hear business advantages (iv) Above all, pray to God for wisdom and Guidance Orji Kalu, the chairman of slok group of companies says: "Agood business man must have nose for business the same way a journalist has nose for news. The entire world is a big marked waiting for anybody who knows the rules of the game"

In deciding to establish a business. Find a need around you and fill it; there after, money will flow into your bank account. There are infinite business possibilities where you are but in order to have access to them. You must exercise wisdom. Since business is about the production of goods and services.

Geared towards meeting people need. For financial regard, it follows therefore, that your business line must depend largely on three principal factors

(i) people
(ii)Environment
(iii) Season

1 Business Environment and the people Business environment is not the same. It differs from place to place, and from people to people. To succeed in business you must study your environment and the people well enough. (Their taste. Needs, Values, tradition and culture). Do not start a business until you have located the market.

i People
ii Environment
iii Season

2 Season: Some business is seasonal while some are for all seasons. You must identify the difference. For instance, starting your ice block business in the rainy season is a bad strategy. Baker's complain of low sales whenever the season of fresh corn sets in (it is advisable that you embark on the feasibility study of your choice-business and prepare a business plan of action. Identifying resources needed for your venture )

1 Knowledge is power.
Do not start a business until you have acquired the right knowledge read management books and journals

2 Master the required skill and training before going into production or manufacturing of any product, what you don't know well can't be produced better. Attend seminars workshop and vocational training centers. If possible have a business coach or consultant.

3 Locate your business at the right place 4 Capital is needed for the survived of any business. Ensure that you have adequate money to finance your business. The following are sources of capital for business

(1) personal savings
(2) Friends and relatives
(3) Leasing option
(4) Leans from banks (SME loans)
(5) self-help option
(6) Partnership
(7) Brain equity
(8) Money from other Business "Any enterprise built by wise planning becomes strong through common sense, and profit wonderfully by keeping a breast of facts" \proverb 24:3-4 Conclusion Without missing words, you need a business of your own additional streams of income.

However nothing happens without an ACTION.

ACT NOW.

Let me leave you with the business secrets of DANGOTE
1 Manufacture something don't just trade
2 Build a brand and don't let it die
3 Sell cheap, give quality and don't kill the competition
4 Start small, Rome was not built in a day
5 Have connection and pray for a big break
6 Believe that there is money to be made in every where
7 All work and less play makes Jacka rich man 8 Give back to those who make you

10 Things You Can Do to Establish Amazing Business Credit

Good business credit is crucial to the success of a company. It not only helps potential clients evaluate whether they'd like to do business with you, but also secures a certain level of respectability. Establishing an excellent business credit score means you'll be in the best position to negotiate top deals for your company, from low interest loans to competitive credit cards, without jeopardizing your personal credit score. Unfortunately, many fledgling businesses and budding entrepreneurs often make the same mistakes when starting out, so their business credit suffers. But that isn't an inevitability. By following these simple rules, any company will be sure to build up brilliant business credit.

1. Make your business known. First of all, name your business in a way that it will be easily identifiable. This doesn't mean using a wacky name - just something that's memorable and creatively reflects what your business is about. Make sure the company name stands out clearly on your Web site, packaging and marketing materials, and is listed correctly in the Yellow Pages. If your business is based at home, it's always good to set up a separate business line and list it with 411 or the White Pages.

2. Write a good business plan. If you can demonstrate that you know where you want your business and your money to go, creditors are more likely to see you as a good prospect. Someone who just wants some money for "costs" isn't going to be viewed as well as someone who has a good idea of what he or she is going to spend the money on and how he or she intends to pay it back.

3. Set up shop properly. If you're operating as a small business as a personal venture or as a partnership, setting up a corporation or limited liability company is strongly advisable, though it's a good idea to weigh up the advantages and disadvantages of each before you decide which one to go for. Consulting an accountant or corporate attorney will help steer you in the right direction, but there is a wealth of information online so you can research what best suits your needs first.

4. Get in with the IRS. As soon as possible, apply for your Employment Identification Number, or EIN. It will be the tax identification number for your business, much like your social security number for your personal taxes. You can apply via fax, phone or snail mail, although online via the IRS Web site is undoubtedly the quickest and easiest method.

5. Don't make it personal. Some budding entrepreneurs find that the only way they can secure funds for start-up costs is by using their own personal credit rating. Be warned though: while you might be doing your business a favor by utilizing your own good credit history, if your business fails or doesn't do as well as you'd hoped, it will go into decline and so will your own personal credit rating, which may end up quashing your chances of having another go at starting a business for some time to come.

6. Open a reputable business account. As early as you can, open a business checking account with a well-established bank. It's important, especially in the current financial climate, to check out the bank's background and whether it's likely to stand up to future financial instability. Most banks offer introductory business packages, so shop around. More often than not, smaller community banks will be more accommodating to small local companies. The main thing is to research what's available to you and evaluate a number of banks before making a definitive decision. After all, this is a potentially long-term relationship you're entering into.

7. Apply for a DUNS number. A DUNS number, or Data Universal Numbering System, from Dun & Bradstreet, is a unique nine-digit code used to identify your business, and is recognized as the universal standard for keeping track of over 150 million businesses worldwide. It's free to obtain and undoubtedly helps establish credibility for your business among suppliers, lenders and potential clients. Applications can be made online and after 30 days you should receive your DUNS number and be able to start building your business credit record with vigor.

8. Develop good trade relations. Once you've received a DUNS number, start building strong relationships with the people you're most likely to trade with frequently. This doesn't necessarily mean clients; it could be your stationery supplier or courier. Ask your suppliers to open a trade account in your business name and aim to pay on account every time you use them. It's a good idea to make sure the companies you're dealing with are part of the D&B network - not all companies report to D&B - so when you set up the account, your information will automatically be added to your D&B file using your DUNS number. When starting out, plan to open a new trade account each month with a D&B affiliated company so you can quickly build on your business credit. Some of the large companies that offer new businesses credit, without asking for personal details are, Dell, FedEx, Home Depot and UPS, to name a few.

9. Pay up and on time. There's much to be said for having a good set of trading accounts. Well-established businesses with plenty of strong trading behind them are more likely to be able to borrow reasonable sums of money. While missing payment deadlines is sure to cause problems for your credit rating. If you're having difficulty meeting all your commitments, pick up the phone and speak with your debtors. They may be able to extend something for you or offer you a different payment plan. Likewise, with loan repayments, rather than missing a payment, getting a fine and doing the business some serious damage, go and talk to the lender and let it know the situation. Keeping quiet equals a lower rating, and that's going to be like a ball and chain on the growth of your business.

10. Get a business credit card. A good way to influence your credit rating is to start borrowing. That might seem nonsensical - why would a bank lend me money if I'm already borrowing money? Well, if you take out a company credit card, put your expenses on it and pay it off each month, you'll find that not only do you have a great way of managing your cash flow (if initial income is slow) but you'll be doing your credit rating the world of good. You're proving to investors that when you borrow money - even if it's only small sums each month - you can pay it back. Some of the larger credit card companies will insist that your business has been established for at least two years before they will grant you credit, but others will be more than happy to help a small business - something you should take into consideration when scouting around for your business bank account. Use your established trade accounts and D&B record to show that you've been working on building strong business credit; your responsible credit history will hopefully sway the bank manager's decision and lead to you getting your hands on a much sought-after business credit card. This will certainly pave the way to being able to get a business loan with your bank in the future, and secure and good, strong line of credit for your growing business.

Establishing a Business

In this chapter we explain how you go about setting up a business in the Cayman Islands. We explain the legal formalities, the Trade & Business Licensing requirements, the registration process and which corporate service companies can help you with the paperwork. We then advise on finding commercial office space, give an overview of costs of office space and give insider tips on fitting out your office from a telephone, internet, computer and office staff point of view.

THE BENEFITS 

Cayman offers a well-regulated and internationally respected, tax-neutral, offshore business environment. The type of Cayman structure required or best suited for a particular endeavour will depend largely on the type of business and whether it will be conducting its affairs locally or outside of the Cayman Islands. If the business is operating in another country, advice from that country’s legal and tax counsel will be of prime importance in understanding the benefits that can be derived from setting up a business in Cayman. A fully operational physical presence with locally based staff, as opposed to a nominal presence through a registered office address, can be an essential component in ensuring compliance with many international and local reporting requirements.

There are many reasons why Cayman is a great place to have a business. We are a small yet sophisticated jurisdiction with a stable government, a well developed Common Law system based on English law and a proliferation of world class corporate and service companies, all contributing factors in making the running of a business easy. The dominant factor though is that there is no taxation on income or gains. We are, as one well known leader in his field is fond of saying, “a very, very safe oasis in a troubled world”.

LEGAL FORMALITIES

A business in the Cayman Islands can be run as a sole trader operation, as a partnership or as a limited company. The main distinction is that sole traders and general partners have unlimited liability to third parties doing business with them, whereas the shareholders of a limited company have limited liability to third parties doing business with the company. The differences in, and suitability of, the different types of business structure are highly technical and are best discussed with an adviser qualified to discuss what might best fit your situation.

Typically small owner operated businesses with few liabilities might consider operating as a sole trader (often using a “doing business as” title such as: Fred Smith d.b.a. Fred’s Fantastic Fences). There are few formalities for formation and few annually repeating fees. However, the sole trader is personally responsible for any debts the business incurs.

Where two or more people want to go into business together but wish to avoid all the formalities and expense of a company, they would use a partnership structure. Professional advisors such as lawyers and accountants have traditionally used a partnership structure for their business. A partnership has less legislative governance than a company and can be more flexible in its treatments of the partners’ responsibility for liabilities and share of profits. Partners are also personally liable for any debts the business incurs.

A company will be used where the owners and operators of the business want to have limited liability for the debts of the business. Companies are very commonly used for all sorts of businesses from one man operations to multi-million dollar, multi-national businesses. There are more formalities and fees associated with forming and operating a company than with a partnership or sole trader business but many people feel the limited liability a company brings is well worth the extra effort and cost.

If your aim is to operate a business on Island, then it needs to be borne in mind that a Trade and Business Licence (“T&B Licence”) will be needed (more detail on this procedure is given later in this section and you are advised to consult an attorney who will be able to both advise and assist with compliance with the necessary local business licensing). For a business wholly or 60% owned and controlled by a person with Caymanian Status (which term includes Caymanians), the acquisition of a T&B Licence is a formality.

For a business that is not a “Local Business”, in addition to acquiring a T&B Licence it will also need to secure a Local Companies Control Law Licence (the “LCCL Licence”) unless it is otherwise exempted from this requirement.

The grant of an LCCL Licence is a matter of discretion for the Trade & Business Licensing Board which will consider, amongst other things, the benefit such business will bring to the Islands, the extent to which Caymanian participation has been sought (which will ordinarily include a requirement for public advertising) and whether the proposed business will compete with local Caymanian owned businesses.

Businesses whose activities are carried on mainly outside the Islands are in most cases outside the parameters of the Local Companies Control Law due to the fact that they are not considered to be “doing business in the Islands” as that term is defined in such law. Therefore, although they would require a T&B Licence to set up a physical presence locally, they would not require an LCCL Licence or 60% ownership by a Caymanian Status holder. (It should be noted that banks, trust companies, company managers and a number of other businesses are exempted from requiring both T&B Licences and LCCL Licences though they would need to secure licensing/regulation with the Cayman Islands Monetary Authority as may be appropriate given their proposed on-Island activities).

There is a strong desire on the part of the CI Government to encourage investment into the local economy and the time could therefore be considered optimal for the set up of a physical presence on-Island.

Sole Trader

Due to immigration requirements (see the Immigration chapter), and the rules governing the grant of a T&B Licence, in practice only a Caymanian Status holder will be able to operate a business as a sole trader. A sole trader is able to start his/her business without any formalities by simply offering services or goods in return for payment. The sole trader can employ people to work in the business but the sole trader is personally responsible for all the liabilities of the business e.g. rent, T&B Licence fees, salaries and benefits of employees and is also the person who gets all the profits.

Partnerships

One form of partnership is where all the partners are “general” partners and participate in the management of the business and the only restrictions on sharing profits and withdrawing capital are those agreed between the partners. As well as general partnerships, the Partnership Law sets out the rules for “ordinary” limited partnerships, but limited partners must not participate in the management of the business, and a limited partner’s right to share in the profits or withdraw capital is restricted. The exempted limited partnership is another form of partnership which is specially designed to provide more flexibility to suit the needs of the financial industry in Cayman. In all cases you are advised to contact a specialist to determine the partnership arrangement most suitable for your needs.

Companies

The main characteristic of a limited liability company is that the company is treated in law as a legal person able to enter into contracts and own property as well as incur liabilities. An individual who is a shareholder in a company has a liability to the company limited to the amount unpaid on the shares the individual owns and cannot be liable for the liabilities of the company itself. The company may distribute profits to shareholders by paying dividends and a shareholder can only get their investment in the company back by selling or redeeming the shares they have. Company formation and operation is governed by the Companies Law (2010 Revision). Formation of a company is fast and straight forward.

Types of company:

The categories of companies that may be formed in the Cayman Islands include:

> Ordinary Companies are generally formed by those wishing to conduct business within the Cayman Islands. However you must ensure at least a 60% Caymanian participation.

> Exempted Companies are the most common and are utilised by those wishing to conduct business outside the Cayman Islands. There are no restrictions on the nationality of the directors or shareholders of an exempted company and an exempted company is not required to hold an annual shareholders meeting.

> Limited Duration Companies and Limited Life Companies were created as an equivalent of the US limited liability company but are not used very often these days as a result of changes in US tax rules which generally enable an exempted company to be used instead.

> Segregated Portfolio Companies were first developed for the Cayman Islands insurance industry, but are complicated structures that wouldn’t normally be suitable for a business supplying goods and/or services in the Cayman Islands.

REGISTRATION PROCESS

If you wish to establish a Cayman Islands company, an application must be made to the Registrar of Companies for company incorporation and a Cayman Islands registered office must be designated. The documents which are required to be filed are not pro-forma and most people would obtain help with these from attorneys or corporate services and management firms. Applications should be delivered in person to the Registrar of Companies, Ground Floor, Citrus Grove Building, Goring Avenue, George Town. (Tel: (345) 946 7922).

Application Process

Your local legal counsel or incorporation consultants can:

Contact the Registrar of Companies and enquire if the company name you want is available;

Prepare

a) Memorandum of Association;

b) Articles of Association; and

c) a cover letter providing details of the proposed business;

Provide a minimum of two sets of copies of both these signed forms (you may need a certified copy for a bank account);

Submit paperwork with a filing fee payable to the Cayman Islands Government.

The fees for incorporation vary depending on the share capital and whether the company is non-resident, resident, exempt, etc. For a typical local company with a share capital of less than CI$42,000 the fee is CI$300. The company is deemed incorporated on the day the incorporation papers and fees are submitted to the Registrar. The processing time for return of the proof of incorporation (namely the certificate of incorporation and Registrar stamped and certified Memorandum and Articles of Association) is approximately three to four business days unless these are submitted on an express basis (for an additional fee of CI$400) in which case the proof of incorporation will be returned the following business day.

As a matter of practice, the Companies Registry will require some categories of company, such as exempt companies, to have a local licensed corporate service provider maintain the company’s registered office.

Company Registry Fees

The registration and annual fees for any company are dependent on the size of the authorised share capital. Also worth noting is that licence fees are due annually in January of each year but the Companies Registry is under no obligation to notify the company that the fees are due. Every company is responsible for paying these annual fees and if you do not pay them the company will usually be struck off the register of Cayman Islands incorporated companies. If the company had any assets at the time it was struck off, those assets would then become the property of the Government of the Cayman Islands and dealings with such assets will be illegal. It is possible, if you were ignorant of the fact that annual fees are due, that your company could be struck off without your knowledge. This is one of the benefits of using a local licensed corporate services provider as they will process the annual paperwork and remind you of the amount and timing of annual fees. Their fees are a lot less than the fees you would pay to an attorney to make the necessary application to the Cayman Court for the company to be re-instated to the register!

BUSINESS PLANS

You may wish to consider professional help when it comes to creating a business plan for your business. Business plans are typically required by lenders, either in the form of banks or other investors, who want a written understanding of your business objectives, cash flow, time-lines, etc. Two companies that can help you with this exercise are the Cayman Islands Investment Bureau (Tel: (345) 945 0943) and ConsulTech (Development Advisors) Ltd. (Tel. (345) 945 2223).

FINANCING

As well as approaching any of the retail banks listed in the Settling In chapter you might also wish to consider contacting the Cayman Islands Development Bank. They offer financing to Caymanian owned small business projects, and along with the Cayman Islands Investment Bureau, will work out a business plan and repayment schedule.

Why establish a Business on the Internet?

There is no denying that the internet has brought about a revolution. Never before have people been able to interact in such a cost effective and comfortable way. The Internet with its multiple communication channels also changes the world of business. Now it is possible for you to establish your own company with a very small financial investment or in some cases even without any start-up capital at all. The majority of people in any country in the world do not really like their regular jobs. Nevertheless they get up early every morning to go to work and when they return home tired and frustrated they switch on the TV to forget all about their problems. They often dream about a life that gives them the freedom to do what they really like with people who are friendly, intelligent, understanding and supportive. Now with the internet available in almost every household in any developed country, it is possible to achieve the type of lifestyle you have always dreamed about. The following facts will show why you really should consider establishing your own internet company:

Downsizing
Let's face it — a computer is more productive than a human in business areas such as accounting, administration, data management, calculating, statistics and many more activities. Whatever industry you name — new technologies increase productivity which, in turn, often leads to fewer jobs. To be sure new technologies also create new jobs but these require a much higher level of qualification and knowledge. A person who has been working in the same sort of job for several years is often not capable of acquiring all the skills and qualifications needed for a job in a new workplace.

Globalization
The world is becoming more and more interconnected. Even, or maybe especially after September 11, international travel activities have been increasing and this pattern will continue into the future. The number of companies that operate on a multinational scale is constantly rising because they need new market places. In Europe nations have agreed on a uniform single currency — the EURO, enabling the European Community to develop into a strong economic entity. The same sort of thing is taking place in Asia with China, Taiwan, South Korea and Japan forming a powerful economic alliance.

Information
More than 500 million people worldwide are using the internet on a regular basis, with email and search engines as the most popular services. Information is power. People are able to influence, direct, convince, educate and manipulate others through one single tool: The distribution of information. Email and discussion forums allow people to share their thoughts, ideas and experiences with other people from all corners of the world. Within a relatively short period of time the Internet and its communication channels will be part of our daily lives as are running water and electricity.

Cost Effectiveness
The internet is by far the most cost effective communication tool. If you want to send a letter via conventional or so-called snail mail it will cost at least around $1 (assuming you restrict yourself to two single sheets of paper). Sending the same amount of information via email will be up to 100 times cheaper with immediate delivery. In addition to this, email has a number of advantages over the snail mail system and we will examine the details in further chapters of this book.

How To Establish A Business?

 When starting a new business, there are many important decisions to make and many rules and procedures that must be addressed. While there is no single source for all filing requirements, the following steps have been developed to assist you in starting your business.

Disclaimer: The information and links to various websites, including various non-governmental sites, are provided for your convenience. The information on this website is constantly updated, however, there may be omissions or additional requirements not represented here. This is unintentional and does not exempt any individual or institution from complying with the laws and regulations of the State of California and the federal government. Inclusion of links to other websites is not an endorsement of those sites by the State of California or the federal government.

Step 1  

It is helpful to begin with a business plan.  A business plan is a blueprint of every aspect of your business.  Sales, Marketing, Advertising, Promotion and Location are just some of the aspects of creating a plan.  Click on the following link to the US Small Business Administration to find a tutorial on how to create a business plan.

Step 2  

If you would like help deciding on a location for your business, visit the Websites of California's Regional Chambers of Commerce.

Step 3  

Choose a business structure. Select a business entity type from the following list for a brief overview of the principal types of legal business structures available in California. A legal representative and accountant should be consulted before making a determination as to the type of business entity to form.

    * Sole Proprietorship
    * Corporation
    * Limited Liability Company
    * Limited Partnership
    * GeneralPartnership
    * Limited Liability Partnership