PROTECTION, PROMOTION AND CONTROL
When I finally start my
business, there are certain aspects of the
operations I must plan in advance. This
type of planning concerns the physical organization of my business to protect me, my
employees and my assets against
unpredictable occurrences, it also
covers the types of permits I must get
from various levels of government to lawfully operate, it relates to the choices I must
make to make my business known to my
future customers and how will I
inform myself on the progress of my efforts and how will I control
Even though the running of a
business is subject to no other rules
than good sense and prudence,
the various levels of government
have, over the years, found
it wise to regulate and tax certain
aspects of business. These
regulations have emerged from several
contradictory, such as the need for additional
funds or a concern over the
rights of individuals, the rights of
and even of animals.
Depending on the kind of
business I will run, I will have to find
out which taxes I will have to pay, which permits I must get and
what regulations apply to my
specific operations. These vary from
the simple business permit,
to construction permits, to retail tax
licences, to local or long
distance transportation permits, to
operate an airplane; the list is practically endless.
These regulations, as they
apply to me, are usually enforced by three levels of government, Federal,
State and Municipal. In my
specific case I might even
find that I need a County permit, but
this is not
quite as prevalent as the other levels of government.
My accountant and my lawyer can help me through this maze. I will
then be able to run my business worry free, as I will have secured
all the necessary authorizations and paid all
fees and taxes.
The next important
area of concern is insurance. What type of
should I buy to protect my business? my employees? my
assets? my profits? my work?
There are several types
of insurance to cover practically any risk,
some insurance companies even provide all inclusive insurance
policies to cover my assets, my liability for damages resulting
from poor or faulty products, faulty work, and they will also cover
my profits if, as a result of disaster, I have to stop doing
In general, I should cover
-loss of assets
through disaster - automobile and truck accidents
- public liability
- employee liability
- loss of business due to disaster
- health insurance for
myself and my employees
- life insurance including disability
According to the type of business I intend to start, I will need
specialized insurance. To find out I will ask the advice of an
insurance agent or broker. When I will have outlined my needs he
will be able to recommend the type of insurance coverage best
suited for me while suggesting alternatives as well. To make wise
choices, I must consult professionals.
Next, I must decide how to make my new business known to my
potential customers. How will I advertise my opening, and what type of
promotion shall I use to attract customers? Once more I am faced
with several choices:
Some local newspapers are
distributed free to all households in
a given area (town, county,
suburb, etc.) They rely on
advertisers to pay for the
paper, so they can offer it for free.
They usually have a large
circulation. Other local newspapers
rely both on subscriptions
and advertising for their revenues,
these usually have a
smaller circulation. They reach fewer
Radio can repeat my message
as many times as I want and am
willing to pay for. Radio
rates are usually higher than
newspapers, but they
reach more people.
In general, this is considered the best way to advertise
is very expensive and may be too costly for me.
To decide what advertising method I am going to use, I
decide how much I am prepared to spend on initial advertising, then
contact the various media to find out
what they can offer for my money.
Then, I must come back to my description of "my customer",
the outline I did earlier. From this
information, I can choose what
type of media is most likely to reach my customer. Some media,
through research of their own, can provide me with the profile of
their readers, listeners or viewers. I
can ask this profile from them and find the medium most suited to my
needs. This profile of their audience can be compared against the profile of my
customer. I can then make a choice while respecting my budget.
from advertising in that it usually provides some
direct incentive to the customer to buy at a certain place or to
buy a certain product. It usually is more selective than
advertising. Promotions can be advertised and advertisements are
Here are some types of promotions:
- an opening discount of x% on all merchandise in the
- a discount of y% on certain products or services
- an extension of the basic guarantee, at half price or
- buy three get one for free
- coupon rebates on
selected products, on first purchase, on
- invitation to an
opening celebration, a wine and cheese party,
flowers to the
ladies, balloons for the children, etc.
The list is limited only by my imagination.
Once I have decided
how I will inform my customers of this
promotion, I have
several methods available to reach my target
- I can have pamphlets printed, coupons made. Then I can recruit
people to distribute these door to door, for a fee of
- I can use a distribution service to circulate my
- Finally, with my family's help, I can do my own distribution.
- I can get the coupon printed, as a cut-out, in my ad in the local
paper. I can have the pamphlet inserted inside the local
- I can advertise on the radio, inviting people to pick up their
coupon at the store or the office.
Promotional methods will
vary according to my analysis of my
customer and on how likely he
is to respond to or otherwise be
interested in my promotion.
Each type of business uses different
attract different customer types.
A good method, to find out
what is being done, in my business
concern is to
collect as many various promotional materials from my competitors. Then
analyze these promotions to determine if they are
effective. My analysis will help me select the most efficient
method of reaching and interesting my
customer. There is nothing wrong with imitating success.
One of the most important
tools of management is the set of
accounting books. These
books will record all my business
expenses, profits, and will provide me with
information to help me manage successfully.
Here again, depending on the
type of business I propose, I will may
need different sets of
accounting books. These are the books
generally needed by most
businesses. To complete the list for my
operations, I will ask the advice of my accountant.
- General ledger: this will summarize all my transactions.
- Sales journal: in it I will record all my sales.
- Purchasing journal: I will keep track of all my purchases.
- Payroll ledger: I will
record salaries and wages, including
- General journal: in it I
will keep track of transactions and
that occur only infrequently.
- Accounts receivable ledger:
to keep track of payments and amounts
owing to me.
- Other specialized books:
these will keep track of shareholders, accounts payable, capital expenses,
long term contracts if any, long term investments or borrowing through bonds
or debentures. These are very specialized and will
be set up as the need arises.
These books will help
me (my accountant) draw up periodical
statements to put
financial information in an easy to read format.
The more usual statements are:
- The balance sheet: this is
a financial snapshot of my business at
date, which tells me how much I am worth, as owner of the
business and tells me where my money is
tied up, in what assets, as well as, what I owe to others, my
- The profit and loss
statement: this, in summary form, is the
history of my business over a
period of time, usually one year,
but monthly interim
statements are recommended, to help me keep
track of what is happening in
my business and to help me take
corrective measures at the proper time. This statement gives me
my sales for the period, the
cost of my sales, my gross profit,
my expenses during that same
period and if I made a profit or a
loss on these
- Source and application of
funds: this statement tells me where I
money from (profits, my suppliers, borrowing, sale of
assets, etc.) and what I used
it for (more inventory, new truck, new machinery,
equipment or building, etc.)
- Cash flow statement:
this statement tells me if I generate enough
cash in my business to take care of all my obligations.
- Other statements: dividend statements, etc.
All the preceding
statements are drawn up to facilitate my
understanding of my
business, to help me find out in time that
certain things must be corrected and
finally to provide my bank, my partners
or shareholders, with information about the health of my
business. These will be the tools I will
use most often when I manage my business.
As I proceed along the road to my goals, I realize that in
be a successful manager, I must be willing to wear several hats. The
following is my assessment of my managing
skills and questions about which
hats I will wear myself and which hats I should let others wear, to
improve my chances of success.