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What is Equity and Why is it Important to Your Business

What is Equity and Why is it Important to Your Business
What is Equity and Why is it Important to Your Business?   So, you’ve finally started your own business. You are officially an entrepreneur. While you might feel a fleeting sense of accomplishment, it may not last forever. For many new business owners, the thrill of starting a business wears off quickly and is replaced, at least in part, by worry. Will your business be profitable? Have you taken every legal step possible to make it a legitimate endeavor? Did you borrow too much money to start your business? How long will it take to be profitable? While there are many notions to understand as a business owner, equity is a key concept and you should have a firm knowledge base of how it works. It is essentially what will drive your business and its profitability.   What is Equity? Equity is essentially the value of any asset, in this case your business, minus any liabilities on that asset. A liability may be a loan or debt that is owed against the business. Here is an example: If you bought your business’s physical building for $400,000 and the mortgage balance is $200,000, your equity is $200,000.   There is also the concept of owner’s equity. This is essentially the total amount of equity you, as the owner, have in your company. Let’s look at this in another example. If your company has $200,000 in total assets but also carries $50,000 in total debt, your total equity in the business is $150,000. A simpler way to think of owner’s equity is that it is the amount of money that would be left over if you sold all of your business assets and then paid off all of your business debts. The lower your debts, the likelier you are to have positive equity in your business and the higher the probability you would make a profit should you decide to sell it.   Negative Equity Negative equity, as its name suggests, is not a good thing for any business owner. It applies to the concept of when your ownership interest in your business is equal to less than your liabilities and debts. So, for example, if you purchased your business’s building for $300,000 and took out a loan for $250,000 to pay for it but the value drops to $200,000, you now have negative equity. That is because the value of the building is now less than the balance owed on it. You want to avoid negative equity as much as possible. You would not be able to sell your business for a profit if you had negative equity.   Types of Equity You can have both tangible and intangible assets in your business. Tangible assets are those that you can physical touch. If you run a business that keeps an inventory of product, that inventory is a tangible asset. An intangible asset cannot be touched but may even be more valuable than a tangible one. An intangible asset might be the reputation of your business. This can obviously bring you more customers. Another intangible asset might be brand identity. Everyone knows, for example, that golden arches represent McDonald’s. The more recognizable your brand, the better. If customers know you, they may use you for your services or goods.   Importance of Equity Equity is of the utmost importance when it comes to your business. As your owner’s equity increases as time goes on, you can potentially sell your business and turn a profit. So, if you want to eventually make a profitable business, you need to be consistently building equity in it. This means the value of your business should...
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Your Essential Guide to Starting a Small Business

Your Essential Guide to Starting a Small Business
Here’s to New Beginnings: Your Essential Guide to Starting a Small Business   When you have a great business idea and strive to achieve financial independence, you might be thinking about launching a small business. Every huge corporation started with a small business, so why not? While you can definitely achieve success in the business world, keeping your small business successful for at least 2 to 5 years is a huge work. This game is worth the candle, though. So, if you’re trying to start a small business, here’s your handy guide to help you out:   Start your journey with research Perhaps, you’ve already come up with a unique – or any – business idea, but is it going to bring you success? Does your business idea have many competitors? Before you take any step, do your own research. Consider running your idea through a simple validation process that will help you to figure out the future of that idea. First of all, your business idea should offer something – be it a service or a product – that the modern market needs these days.   There are many ways to find out if a business idea will be successful, such as focus groups, deep research, and in most cases, trial and error. But before you go through trial and error ask yourself:   Does the market need your product/service? Who are the people who will want to use your product/service? What are the companies that offer similar or the same product/service? Will you be able to compete with them? It’s important to ask confidently without any fear or disappointment.   Create a business plan Any business idea requires a powerful business plan, which will become your guide during the process of establishment and business growth. There are many types of business plans, so choose the one that will suit your idea.   If you’re looking for financial support from a financial institution or an investor, creating a basic business plan is essential. This business plan is usually thorough and long, and contains a set of sections that banks and investors check out when they’re validating a business idea. In case, you’re not looking for any financial support and you’re going to invest in your startup yourself, it may be enough to create a simple and short business plan just to give you the initial steps you should take. You can also come up with a working business plan on a piece of paper and change it as you start working on it.   Consider your finances Generally, a startup doesn’t need too many investments, yet you’ll need some money to cover a number of expenses during the first months or even a year before your business will earn a profit. Calculate the one-time startup expenses like property leases, permits and licenses, legal fees, equipment, branding, insurance, inventory, market research, opening events, trademarking, etc. Then, calculate how much money you will need to keep your startup running for a year (your own paycheck, employee paychecks, utilities, rent, advertising, marketing, travel expenses, supplies, etc.)   As soon as you find out an approximate amount of money, think about the ways to find them. You can either save money or borrow from family or friends. Many new entrepreneurs also apply for an SBA loan. Filling out an SBA personal financial statement may be tricky, but here’s a guide to help you out.   Select a business structure Whether it is a limited liability company (LLC), a partnership, a sole proprietorship, or even a corporation, your next step is to select a business structure. Your business structure will affect a lot...
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How do I Become an Independent Contractor

How do I Become an Independent Contractor
Rolling Up Your Sleeves: 8 Steps to Registering as an Independent Contractor Are you ready to be your own boss?  There are many advantages to becoming an independent contractor, some of which we’ll cover today. But it’s also a big responsibility – one that you and you alone must handle. Here are some general steps you can take to make your dreams of striking out on your own as an independent contractor a reality.   Learn what an independent contractor is.  First, learn more about what being an independent contractor means. To be an independent contractor, you must have multiple clients (companies) annually. You own your business at least in part, work with your own materials, tools, and expertise, and each job you take on is considered ‘temporary’, as you will leave when your task is complete.  Pick your business name.  Now, pick a name for your business. Make it something other than just your first and last name, as you can get some good marketing in with a clever or memorable name.  Get licensed.  Next, head down to your local city or county clerk’s office and figure out whether or not you’ll require a license to operate where you live. This is especially important if you work in any type of labor/contractor field. Often, you are required to be licensed in your trade as well.  Get insured.  Whatever you do, don’t skip this step! Your career as an independent contractor could be over as soon as it begins if you get entangled in a lawsuit with a client. Check out various professional liability insurance companies to find a policy that suits your industry and individual needs.  Take care of the accounting end of things.  Decide whether or not you’ll hire an accountant. In many cases, this isn’t necessary; many independent contractors get by fine on their own with accounting software.  Make estimated tax payments.  This can be a little tricky, but do your best to come up with a ballpark figure on what you’ll make in a year. Now, you must make four estimated tax payments throughout the year. Trust us, you do not want to end up owing all at once, or end up attracting the attention of the IRS in any way.  Stay motivated.  We all lose steam, and we all find ourselves stuck in a rut from time to time. But as an independent contractor, you need to maintain the will to work and consistently formulate ways to draw in new clients. Create a routine and schedule for yourself, even when work is thin.  Enjoy the benefits.  While it can have its tough moments, being an independent contractor is incredibly freeing. You make your own hours, you dictate what you’ll be paid, and most of all, it’s your chance to do what you love for a living. Appreciate it!   Finding the right work-life balance can be difficult, but when you’re an independent contractor, you make the rules. Start off on the right foot by taking care of licensing, insurance, and accounting, and from there, the sky’s the limit....
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How To Measure Instagram Marketing ROI

How To Measure Instagram Marketing ROI
How To Measure Instagram Marketing ROI & Establish If It’s Worth Your Money Instagram can be a highly effective addition to your business. As a marketing tool, it’s great for driving engagement, increasing sales, boosting brand recognition, and much more.  But looking beyond all the fuss, how do you know if it’s actually worth it for your business? Read on to discover how you can measure your Instagram marketing ROI and determine if it’s worth your money in 2019.  Recommended reading: Which Digital Channels Deliver the Best ROI?   What is ROI on Instagram? It has historically been difficult to measure the ROI of social media in general, and Instagram is no exception. However, it is possible to get a good idea of how successful your Instagram marketing actually is by comparing the initial costs against your SMART objectives. The initial costs of Instagram marketing are relatively simple, in their most basic terms:   Time: the working hours needed to administer your Instagram strategy. Cost-per-click: this will vary depending on how much you want to pay to get your sponsored posts ad seen (and even if you want to go for a paid ad campaign).   While the costs of an Instagram marketing campaign are fairly easy to track, monitoring the outcomes are a little less straightforward. With most social platforms, results are viewed in terms of likes, shares, and comments — rarely as actual sales. And while Instagram’s Shoppable posts make it easy for you to track, it’s less easy to monitor sales from outside the platform but informed by your Instagram marketing.   However, using SMART goals can help you evaluate your Instagram ROI with a firm footing. These goals are: Specific: what is your goal? do you want more mentions? Followers? Increased sales? It’s down to you, but be specific about the end result you want to achieve. Measurable: how will you measure your goal? Think about the metrics you will use to identify this. Achievable: what do you need to achieve your goal? What resources, tools, and skills are required? Relevant: is your goal aligned with the overall goals of your business? It should be relevant to your brand. Time: how long will your Instagram marketing campaign take? Set a clear deadline so you know when you should begin measuring your success.     Setting SMART objectives as outlined above gives you a strong idea of how successful your Instagram marketing actually is overall. SMART objectives Let’s break down your SMART objectives in terms of Instagram and establish how you can measure your Instagram marketing ROI. Specific Before you do anything else, you should establish exactly what goal it is you want to achieve. Without this, you won’t know the steps you need to take to achieve it. The goals you might be working towards include: Followers Mentions Sales Email subscriptions Of course, these are just a few potential goals you might choose to work towards. There is no right or wrong goal — just choose the one that best serves your business needs. Measurable Once you’ve established your goal, how will you measure this? This is largely tied to your specific goal, and it might be easier for some goals than others. For example, if you want to get more followers, there’s really only one way to measure that. If your follower count increases, then you’ve nailed it. But let’s say you want to see increased sales. In this instance, you’ll need to determine where the sales will come from (in-app or through your online store), if you want to see sales for a certain product or across the board, and so on. Instagram...
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What Small Businesses Need to Know About Developing a Brand

What Small Businesses Need to Know About Developing a Brand
What Small Businesses Need to Know About Developing a Brand? If I asked you the name of your business, you could probably respond without a second thought. But what if I were to ask you about your brand? What is the story you would tell, the mission you want to achieve, and the unique characteristics that set your business apart from your competitors? You’d probably need a bit more time, but it would be time well spent. Branding is a powerful tool. It can turn first-time customers into loyal followers and long-time customers into word-of-mouth marketers. Branding, when done masterfully, is the reason we apply “Chapstick” to soothe dry lips, eat “Popsicles” to cool down on a hot day, and “Google” the answer to life’s most pressing questions. Needless to say, brand identity is an important component to your business.     Picture Courtesy : 4 Compelling Brand Stories You Should Be Telling   How Can You Grow Your Brand? Its clear brand development is important, but how do you build it into your marketing efforts? There are numerous answers to that question, but the following often represent the most common and impactful way to increase brand awareness: Content Marketing: In many circles, content is considered the leading way to do everything from improving organic search results to, as you guessed it, increase brand awareness. Through this method, well-curated articles, blog posts, videos, white papers, etc. are used to increase brand credibility. Content is then distributed through various channels, including email, social media, and on the brand’s website or blog.     Picture Courtesy: 18 Types of Content Marketing You Can Use To Grow Your Business Ultimately content works to show your brand as a source of knowledge, whether it pertains to industry trends or customer needs.   Social Media Advertising: Social media allows business owners to leverage posts, shares, stories, and comments to engage directly with existing and potential customers. While much of that interaction is free, there are additional paid advertising options that can help small business owners take advantage of social media advertising to increase reach.   Picture Courtesy: Best Social Media Management Tools – No More Social Media Babysitting Many social media platforms, including LinkedIn, Facebook, Twitter, Instagram, and Snapchat offer paid advertising opportunities that base ad placement on user data. This can place your brand in front of a specific audience base or target user.   Charitable Initiatives: Companies like PetSmart, TOMs, and REI have long attracted customers through their dedication to philanthropic initiatives. By doing so, they’ve associated their brands with a specific mission – helping pets, clothing children, or saving the environment. When “giving” initiatives are leveraged correctly, they highlight your brand’s mission and show your commitment to goodwill. As such, your brand gains notoriety among audiences that share similar interests or philanthropic goals.     Picture Courtesy: Top 10 Best Free SEO Tools To instantly Improve Your Google Ranking in 2019   Search Engine Marketing (SEM): Today, SEM refers to any type of paid search efforts and has become an umbrella term used to refer to pay-per-click (PPC) and cost-per-click (CPC) marketing strategies. Through this method, you purchase ad space on search engine result pages (SERPS) on Google, Bing, etc. Instead of ranking organically for specific keywords, SEM allows your brand to show up at the top of a SERP, presenting your brand to highly targeted audiences. You Know How to Grow It, But How Do You Pay for It? While each of these methods can help you increase brand awareness, they often come at a price. Social media and SEM ads are often paid promotions that are based on the number of clicks. Content...
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