LINGUA INGLESECorso avanzato (3 C.F.U.)

Prof. Domenico Torrettaa.a. 2007-2008

ProgrammeThe programme is based on the course An Entrepreneurial Guide for both Start-ups and Operating Businesses freely available on-line at the address http://www.myownbusiness.org/course_list.html. Sessions 1, 2, 3, 7, 10, 12 and 14 have been dealt with during the course and are the basic content of the programme. A selection of the passages read and discussed during the course follows below. However it is highly recommended to read also passages from the other sessions as further practice of the English of Commerce, Trade and Finance.

Reference Dictionaryhttp://www.thefreedictionary.com/ - For each word it gives definitions from The American Heritage® Dictionary of the English Language (American English) and the Collins Essential English Dictionary (British English) and its pronunciation in both varieties. It also includes a Thesaurus, a Dictionary of Acronyms, a Dictionary of Idioms, translations into Spanish, French, German and Italian and other features.

AimsThis course mainly aims at improving:

your specialized vocabulary; your listening abilities; your skills in understanding and discussing specific topics concerning the field

you are specializing in.

ActivitiesThe course is mainly based on the discussion of the content of the passages read.

Each session includes interviews to entrepreneurs concerning the various aspects and activities that characterize the starting-up and operating of a business. You are expected to listen carefully to the interviews included in this programme, and possibly to the others as well, in order to improve your listening skill in English (particularly geographical and social varieties of English).

While reading the passages that follow, you will find that some words and expressions, mainly referring to specialized discourse, have been underlined. Practice your ability in giving definitions, explanations or equivalents of such words and expressions, in English.

At the end of the passages you will find questions about some of the topics discussed during the course. Use them to practice your writing skills in English.

Final examinationThe final examination consists in:

- a written answer to a question about one of the topics dealt with during the course;

- an oral discussion about the content of passages from the programme.

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An Entrepreneurial Guide for both Start-ups and Operating Businesses

Session 1: Evaluating the Potential of Business

Characteristics of a Successful Entrepreneur

Guts:Guts means you must have an entrepreneurial instinct, which is an overwhelming desire to have your own business. You must have the guts and dedication to be completely devoted to your goal. Incidentally, devotion to your goal is much more likely if you have a love for your intended business. Life is too short to start a business that doesn't give you satisfaction and joy. And, through good times and bad times, you will stick with something you love. As Solomon said, "There is nothing better for men (and women!) than they should be happy in their work - so let them enjoy it now."

Brains:While appropriate educational credentials are important, entrepreneurial "brains" means more than scholastic achievements. To become a successful entrepreneur, you should have a working knowledge about the business you plan to start before you start it. Common sense, combined with appropriate experience, is the necessary brainpower. Prudence, follow through and attention to detail are very important.

Capital:Every Business needs money of your own plus sufficient cash to maintain a positive cash flow for at least a year. In a future session operating entrepreneurs will learn how to forecast future cash requirements through cash flow control. Many businesses can be started on a very small scale with a small investment. Then, as the business grows and you gain experience, cash flow from your business can be used for growth. In some cases, you don't need starting capital to hire other people because you might start by doing everything yourself. The "do it yourself" start is a good way to learn everything about your business and also makes you better qualified to delegate work to others later on. You can control your risk by placing a limit on how much you invest in your business.

  

    |Listen| Interview 1 (go to: http://www.myownbusiness.org/s1/index.html)

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Maureen CostelloWholesale Distributor

You have some wonderful credentials including being a CPA, an MBA and being president of a large company. Were these credentials helpful to you when you purchased your own business?

Very much. One of the things I learned over the years is that for anybody to be successful in any role you have to have ability to begin with and then you need education and training and experience and probably most of all the willingness to do whatever it is the function that you are going to take on. My educational experience certainly helped prepare me because it gave me an overview of what kinds of things happen in a business and I got some basic accounting skills which are really critical to a business. That's probably the lifeblood of a business; making sure you have cash and that you know how the cash is coming in and going out. But the experience is invaluable and everybody is going to make mistakes in life, in the job.

Your employees are going to make mistakes. You can't expect them to be perfect. Those mistakes are going to cost you money and you almost have to budget for that. I was able to make my mistakes on somebody else's dime which was probably good for me, maybe not so good for them, but that is part of the cost of doing business. Now you as the owner of a business are going to have to accept the fact that when you bring somebody in new, part of the cost of hiring a new employee and training them is that they are going to make mistakes that cost you money and you may as well budget for it. But I had the opportunity to make those mistakes before I bought a business and that prevented me from making a lot of mistakes after I purchased the business.

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Step-by-Step Approach

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Decide if you really want to be in business:

You are putting some (not all, hopefully) of your net worth at risk. You may run the risk of becoming eccentric, meaning creating a life that is out of balance, with working hours taking away from other family or pleasurable activities. There may be levels of stress you have not experienced as an employee.

Decide what business and where:

Once you are satisfied you have the characteristics of a successful entrepreneur and that you definitely want to be in business, then you must decide which business is best for you and where to locate that business. Selection strategy is covered later on in this session. Also see our home based business article for those considering operating a business from their home.

Decide whether to operate full-time or moonlight:

There are some interesting advantages and some pitfalls in operating as a moonlight business. (That is, a business you start in your off hours while still working at your current job.) More often than not, the advantages of starting as a moonlighter outweigh the risks:

You avoid burning your bridges of earnings including retirement, health and fringe benefits and vacations.

Your full-time job won't suffer if you maintain certain conflict of interest disciplines, including compartmentalizing your job and business into completely separate worlds.

You can avoid conflict of interest with your job by choosing a business that is appropriate for moonlighting, such as single products, real estate, specialized food, e-commerce, direct marketing or family-run operations.

There are great advantages for operating a family business. If you are a moonlighter the family can run the business while you are at work. You have a built-in organizational structure. You can teach your kids the benefits of being in business.

But there are also some pitfalls to consider in starting a moonlight business:

There is a temptation to spend time at your job working on your moonlight business. That is unfair to your employer and should not be done under any circumstances. (You may need a family member or some trusted person to cover emergencies when you are at your job.)

Another problem may be competing with your employer, which is not right. Think of how you would feel or handle this employee if you were the boss.

Any kind of conflict with your regular work can jeopardize your job and your moonlight business.

Overwork and mental and physical exhaustion can also become a very real problem for moonlight entrepreneurs.

A special message for people in transition

If you happen to be unemployed and are thinking about starting a business, our following template "Helping People in Transition" will offer some suggestions.

     |Listen| Interview 2 (go to: http://www.myownbusiness.org/s1/index.html)

Stan HensleeC.P.A.

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What recommendations do you have for someone just starting out in business?

Well there are a number of things I think that they should do. Number one, they should talk to other people that are already in the industry and ask them what they feel they need to know. Learn as much as you can from others who have already started their own business and been successful and find out what some of their secrets were.

Number two, make sure that you're going to be adequately capitalized so that you have the necessary funds to get your business started and to support you for a while, while the business is growing.

Number three, make sure that you have your family's support, both emotionally and sometimes even financially.

And number four, take stock of your emotional ability to deal with some of the disappointments that are going to come along in the early stages, because there will be disappointments. There will be some rough times and you want to make sure you know yourself well enough so that you can cope with those disappointments and ride them out till it all gets better.

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How To Evaluate The Business You are in or Have In Mind

Here are some questions to help clarify your thoughts:

Is it something I will enjoy doing? As Harvey McKay has said, "Find something you love to do and you'll never have to work a day in your life."

Also, if you're doing something you love, you're much more likely to stick with it through thick and thin times.

My favourite activities are ________________________________________I like to serve people by _________________________________________

Will it serve an expanding need for which there is no close substitute?

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Can I be so good at a specialized, targeted need that customers will think there is no close substitute? For example, in California, nobody comes close to See's Candies.

Can I handle the capital requirements? In Session 8, you will learn a simple cash flow control method to forecast your future cash needs.

Can I learn the business by working for someone else first? Our favorite example: if you're planning to open a convenience store, for heaven's sake go to work for a national chain first!

Could I operate as a hollow corporation, without a factory and with a minimum number of employees? For example, if you have in mind marketing a line of furniture, you might consider outsourcing to a manufacturing vendor in China. Cost savings is often the prime objective, but you also free up your time and capital. The major risk is the performance of the vendor and your success in developing good relationships that provide mutual benefits.

Is this a product or service that I can test first? Your concept of a successful product or service may not be in harmony with the reality of the market place. On a small scale, prove it out first. As Wolfgang Puck states: "I learned more from the one restaurant that didn't work than from all the ones that were successes."

Should I consider a partner who has complementary skills or who could help finance the business?

Use a "For" and "Against" List to Evaluate your Business

Make a "for" and "against" list regarding characteristics of the business. On a blank piece of paper, draw a vertical line down the middle of the page and list on one side all the "for's" and on the other all the "against's." Sometimes this will help clarify your thinking. Or, you can use the template provided at the end of this session. We have provided a "for" and "against" template for you to use at the end of this session.

Write down the names of at least five successful businesses in your chosen field. Analyze what these five businesses have in common and make a list of reasons for their success.

Talk to several people in your intended business. Don't be afraid of the negative aspects of your intended business. Instead, seek out the pitfalls -- better now than after you open your doors. Take notes if possible. Write down the information as soon as you can.

Analyze the competition that are not doing well and write down the reasons.

Get Completely Qualified

Before you proceed further in your business, get completely qualified:

The best way to become qualified is to go to work for someone in the same business. Attend all classes you can on the skills you need: for example, accounting, computing

and selling.

Top Ten Do's and Don'ts in starting up a new business                    

TOP TEN DO'S

1. Live frugally and begin saving up money for operating your business. 2. Learn your business by working for someone else in the same business first.

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3. Consider the benefits of starting a moonlight business. 4. Consider the advantages of operating a family business. 5. Objectively measure your skills and training against potential competition. 6. Consider subcontracting to low cost suppliers if you're manufacturing a product. 7. Test market your product or service before starting or expanding. 8. Make "for" and "against" list describing the business you are in or considering. 9. Talk to lots of people for advice. 10. Make a comparative analysis of all opportunities you are considering.

TOP TEN DON'TS 1. Quit your job before you have completed start-up plans. 2. Consider operating a business in a field you do not enjoy. 3. Risk all the family assets. Limit your liabilities to a predetermined amount. 4. Compete with your employer in a moonlight business. 5. Be in a hurry to select a business. There is no penalty for missed opportunities. 6. Select a business that is too high a risk or hurdle. Go for the 2-foot hurdle. 7. Operate a business in which you must have the lowest price to succeed. 8. Neglect to learn the negative aspects of an intended business. 9. Permit entrepreneurial self-confidence to outweigh careful diligence. 10. Allow the promise of a conceptual high reward deter reality testing first.

     |Listen| Interview 3 (go to: http://www.myownbusiness.org/s1/index.html)Rod BanksExecutive Vice President, Small Business MarketBank of America

How important is it for a new entrepreneur to have a written business plan in hand before seeking out financing sources and why?

Well, a great question. Having a business plan is actually more important than the loan application because before you make an application for a loan you really need to have that business plan. The business plan needs to be your vision as to why you want to start this business and where you're going to go with it.

You typically start with an executive summary because at some levels not everybody is going to read every single page. You need to have the executive summary that talks about why you're going to start this business, what you're going to do with it and then you need to describe your product. You need to describe the competitive environment you're in. Talk about competition. Talk about cash flow, because in your business there is probably going to be seasonality. You need to talk about any financial headwinds that might come about, what might the difficulties be and how would you as an entrepreneur be able to weather those headwinds.

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Business Plan

Description of My Business

Describe your product or service

Targeted Market and Customers

Describe your customer profile and why customers want or need your product or service

Growth trends in this business

Is the market for your product or service growing or shrinking?

Pricing PowerExplain the unique qualities or circumstances concerning your product or service that will enable you to maintain profitable pricing.

SESSION TWO Business Plan

     |Listen| Interview 4 (go to: http://www.myownbusiness.org/s2/index.html)

William H. Crookston, Ph.D.Professor of Clinical EntrepreneurshipUniversity of Southern California

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We find that many entrepreneurs find it difficult to write out a business plan. Could you cite why this important step should not be overlooked?

My experience has been both with students and with individual executives who are trying to start or plan or grow a business and are attempting to do it without a plan. Those particular projects don't get the help that good planning could give and it's my belief over many years of experience as well as teaching that it's a necessity to have a written business plan. It helps you figure out where you're going. It helps get people to support you. It's an important sales document. It's a very important financial document and really is your first child.

If you can't write that business plan you can imagine what a mess your second child, the actual business, could be. So if there is anything here that you should tell the world, it is: write a business plan. It doesn't have to be elaborate. There are many templates out there. We prefer to make sure the entrepreneur does it himself. You should revise it anytime you think or feel it needs revision but without it you’re just stumbling around in the dark.

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Business Plan Format

The Business Plan format is a systematic assessment of all the factors critical to your business purpose and goals.

Here are some suggested topics you can tailor into your plan:

A Vision Statement: This will be a concise outline of your business purpose and goals. The People: By far, the most important ingredient for your success will be yourself.

Focus on how your prior experiences will be applicable to your new business. Prepare a résumé of yourself and one for each person who will be involved with you in starting the business. Be factual and avoid hype. This part of your Business Plan will be read very carefully by those with whom you will be having relationships, including lenders, investors and vendors. Templates for preparing résumés are available in your library, Kinko's, bookstores and the Internet under "résumés."

However, you cannot be someone who you are not. If you lack the ability to perform a key function, include this in your business plan. For example, if you lack the ability to train staff, include an explanation how you will compensate for this deficiency. You could add a partner to

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your plan or plan to hire key people who will provide skills you don't have. Include biographies of all your intended management.

Your Business Profile: Define and describe your intended business and exactly how you plan to go about it. Try to stay focused on the specialized market you intend to serve.

Economic Assessment: Provide a complete assessment of the economic environment in which your business will become a part. Explain how your business will be appropriate for the regulatory agencies and demographics with which you will be dealing. If appropriate, provide demographic studies and traffic flow data normally available from local planning departments.

Cash flow assessment : Include a one-year cash flow that will incorporate your capital requirements. Include your assessment of what could go wrong and how you would plan to handle problems.

Include your marketing plan and expansion plans.

     |Listen| Interview 5 (go to: http://www.myownbusiness.org/s2/index.html)

Eddy ChaveyIndependent Web Designer

What would you recommend to those starting out a business that still has a day job?

When I was going to start a business I knew that I needed some more equipment. And I knew I needed a financial cushion because you don't work well if you are under a lot of financial pressure. So I stayed at my job for six additional months, just knowing I was going to take the money from that six months and create this financial cushion: to buy a computer and the stuff I needed for a successful business. And it turned out to be the best six months I ever had at that job--knowing I was going to leave it. Keeping an eye on where my money was going and just kind of seeing this finishing line. I would totally recommend tightening up on your budget and don't quit your day job.

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Does Your Plan Include the Following Necessary Factors

A Sound Business Concept: The single most common mistake made by entrepreneurs is not selecting the right business initially. The best way to learn about your prospective business is to work for someone else in that business before beginning your own. There can be a huge gap between your concept of a fine business and reality.

Understanding of Your Market: A good way to test your understanding is to test market your product or service before your start. You think you have a great kite that

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will capture the imagination of kite fliers throughout the world? Then craft some of them and try selling them first.

A Healthy, Growing and Stable Industry: Remember that some of the great inventions of all time, like airplanes and cars, did not result in economic benefit for many of those who tried to exploit these great advances. For example, the cumulative earnings of all airlines since Wilber Wright flew that first plane are less than zero. (Airline losses have been greater than their profits.) Success comes to those who find businesses with great economics and not necessarily great inventions or advances to mankind.

Capable Management: Look for people you like and admire, who have good ethical values, have complementary skills and are smarter than you. Plan to hire people who have the skills that you lack. Define your unique ability and seek out others who turn your weaknesses into strengths.

Able Financial Control: You will learn later the importance of becoming qualified in accounting, computer software and cash flow management. Most entrepreneurs do not come from accounting backgrounds and must go back to school to learn these skills. Would you bet your savings in a game where you don't know how to keep score? People mistakenly do it in business all the time.

A Consistent Business Focus: As a rule, people who specialize in a product or service will do better than people who do not specialize. Focus your efforts on something that you can do so well that you will not be competing solely on the basis of price.

A Mindset to Anticipate Change: Don't commit yourself too early. Your first plan should be written in pencil, not in ink. Keep a fluid mindset and be aggressive in making revisions as warranted by changing circumstances and expanding knowledge.

Include Plans for Conducting Business Online: According to the January 2005 Trend/Forecasting Report of The Dilenschneider Group, in the U.S. alone, the 2004 holiday season online shopping jumped by more than 25% from 2003. (In 2005 it jumped another 25%!) Consumer and business-to-business online sales are set to expand exponentially in the coming decade, and small retailers can reach an ever-increasing pool of customers. Be sure to see the how-to details in the following Session 10, E-commerce.

  

     |Listen| Interview 6 (go to: http://www.myownbusiness.org/s2/index.html)

Ezequiel PadillaJugos Tropacales Mexican Food

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My name is Ezequiel Padilla. I'm the owner of Jugos Tropicales Fast Food Mexican Restaurant in Compton, California. I started my business ten years ago. I had many years of experience and had my savings. I thought I knew everything. But I didn't have the most important thing: a business plan. So, there I was working on a daily basis with nowhere to go until I learned from the My Own Business seminar all the basic tools I needed to reach success. I would like to give you some important tips before you start.

Create your business plan. There are some computer programs that will help you do it.

It is very important to find a good location. Make sure you have plenty of parking.

Make sure you read and agree to all the terms and conditions of the lease contract before you sign it.

Learn the basics of accounting and know your product. When you are ready to open your business, be honest and treat your

employees and customers as you would like to be treated. Remember that a satisfied customer will help increase your clientele.

Always be ready for the unexpected.

Overlooking these details might cost you a lot of money, and you might go out of business. We don't want that.

One last thing, when your business is doing well, consider buying the property if it is possible. Real estate is always a good investment. If you follow these simple steps, I'm sure you will be a successful businessperson like me. Good luck in your business venture.

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SESSION THREE

Computer & Communication Tools

Types Of Communication

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Communication is key to any business success! Unless potential clients and customers are aware of your business, they will not have the information to contact you or to purchase your products. When they are aware of your business, they must be able to contact it easily.

Two types of communication are essential - external and internal.

External communication reaches out to the customer to make he or she aware of your product or service and to give the customer a reason to buy. This type of communication includes your brochures, various forms of advertising, contact letters, telephone calls, Web sites and anything else that makes the public aware of what you do.

Image is extremely important in external communication! Your logo should represent who you are; your letterhead should be a selling tool; your telephone message should reflect your professionalism.

Internal communication is essential to attracting and retaining a talented staff. You must provide the direction for the company by consistently communicating that message; you must motivate your staff through various forms of communication, which can include awards, newsletters, meetings, telephone calls and formal and informal discussions.

     |Listen| Interview 7 (go to: http://www.myownbusiness.org/s3/index.html)

Gwyn Myers, Ph. D.

Management Consultant My name is Gwyn Myers, and my topic is computers and communication. It's an exciting topic because the big difference is it's now affordable. We can all have the help of a computer that was sometimes not possible in the earlier days.

I think that good communication, when you're starting a business, is critical, so I'm going to talk about just staying in touch. It's very important that when your phone rings, there's some appropriate way that you have of communicating with people. We have all sorts of devices now. There are all types of telephones, there are pagers, fax machines, and there's e-mail. So there is no reason that you cannot be accessible to the people that you are selling to.

Now, regarding computers, my basic advice is get as much as you can afford. But also get something that you know is going to be reliable, that you can get repaired, that the company is not going to be out of business tomorrow. And again, get as much as you can afford, and don't be bothered by the fact that it's

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going to be obsolete the minute you walk out of the store. We all know that, but you need something to help you in your business.

Get standard software and buy it, don't borrow from a friend because then you're not going to have accessibility to the help desk and those types of things. Learn as much as you can. There are all types of night schools and community colleges that can teach you about computers, and while you're there, you may make contacts that will come in handy at a later date.

So, again, you can't do without communication and computers. They are absolutely key to the success of your business.

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Internet

The Internet has become a very important business tool! For example, a new marketing tool that is a huge benefit to local businesses is now available: the “local” link on search engines. To demonstrate the power of this tool, please go to a search engine such as Google or Yahoo and enter “Flower Shops”. Then, click on the “local” link at the top of the page and enter your zip code. Presto: local flower shops will be displayed on a map along with links to their Web sites. Savvy businesses today are taking advantage of this marketing tool. It can be used at a basic level for e-mail and for research and it can be used at a more comprehensive level as a channel for selling your products and services.

To get access to the Internet, you need a browser. This is a piece of free software. Microsoft Internet Explorer and Netscape Navigator are the two leading browsers.

Now that you have a browser, you need to get access to the Internet. This is done through an Internet Service Provider (ISP). These providers range in the features that they provide, but all give you the capability of e-mail. If you want a very comprehensive set of features, then America Online or MSN might be for you. If you are comfortable with accessing the Internet and working within an environment that assumes a little more knowledge on your part, an ISP such as SBC, AT&T or Earthlink might meet your needs. As with other forms of communication, there are many plans and prices from which to choose.

How you use the Internet in your business is up to you. Perhaps you are not ready to sell your products on the Internet, but you are interested in developing a Web site, or home page, that lets people know what you do. At the other extreme, you may want to use the Internet as your main sales channel. Just remember, the basics are still on the ground - you need products and services that people need; you need to attract people to your Internet site so that they have the option of purchasing these products and services from you; you need to convince them to buy; you need a place to store your products; and you need a way to get them to the purchaser.

     |Listen| Interview 8 (go to: http://www.myownbusiness.org/s3/index.html)

Greg WashingtonConsultant, Marketing for Physicians

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I'm Greg Washington, and I'm President and Founder of Patients Unlimited Marketing Consultants. We are an advertising agency that does marketing and public relations. Our current business concentration is in the Internet. We have been involved with the development and advancement of Internet businesses now for about five years.

One of the most important things that I would tell you as aspiring businesspeople is that the Internet is probably the best thing that could happen to a small business owner and operator. The reason is that it levels the playing field. As you present your services and meet your customers and clients on the Internet, they can't tell a big company from a small company.

So there is a wonderful opportunity there for those of you who are astute enough and resourceful enough to find the kind of individuals who can create a presentation of what you do and how you do it on the Internet. Look at the Internet as an opportunity to create an electronic brochure that will tell your story in a very quick way better than anything you could possibly do.

One final point that I think is very important is not to overlook the opportunity to have a Web site or an address where information on your business can be found. Not to have vital information on the Internet is a serious handicap because you're competing with other businesses--very small businesses that look very big on the Internet--and if you don't have that little special place to get information, it suggests that maybe you really do not have a successful business.

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What Type of Business Organization is Best for You?

Whether you are going it alone or with another person, it is best to consult a lawyer to determine which form of business organization will be best for you. Your choices and the benefits of each form are essentially as follows:

Sole Proprietorship: A sole proprietorship is one person alone. He or she will have unlimited liability for all debts of the business, and the income or loss from the business will be reported on his or her personal income tax return along with all other income and expense he or she normally reports (although it will be on a separate schedule).

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Although proprietorship avoids the expense of forming a partnership or corporation, many start businesses this way because they are unfamiliar with the other forms of organizations.

General Partnership: In a general partnership, each of the two or more partners will have unlimited liability for the debts of the business. The income and expense is reported on a separate return for tax purposes, but each partner then reports his or her pro-rata share of the profit or loss from the business as one line on his personal tax return.

Limited Partnership: With a limited partnership, each of the general partners has unlimited liability for the debts of the partnership, but the limited partner's exposure to the debts of the partnership is limited to the contribution each has made to the partnership. With certain minor exceptions, the reporting for tax purposes is the same as for a general partnership.

Corporation: A corporation provides limited liability for the investors. Except as indicated below, none of the shareholders in a corporation is obligated for the debts of the corporation; creditors can look only to the corporation's assets for payment. The corporation files its own tax return and pays taxes on its income. If the corporation distributes some of its earnings in the form of dividends, it does not deduct the dividend in computing its taxes, but the shareholder recipients must pay taxes on those dividends even though the corporation has paid taxes on its earnings. A corporation has some tax benefits such as deductibility of health insurance premiums.

"S" Corporation: A corporation that has made an election to be an "S" Corporation for federal income tax purposes is treated as a partnership for tax purposes, although it is treated as a regular corporation for other purposes.

Limited Liability: A limited liability company provides limited liability for all of its members, but typically can be treated as a partnership for federal income tax purposes. State laws may differ as to whether it is treated as a partnership or a corporation for state income tax purposes. It can be managed by all of the members or can have centralized management in one or more of the members.

Obviously there are variations in these rules, and you should consult with your attorney and/or accountant in each specific case to determine what form of organization best fits your needs.

One of the things to consider in making the final decision is, although a corporation has limited liability for its shareholders, if the corporation does not have sufficient assets various creditors may insist on personal guarantees from the shareholders. Examples are your landlord, some suppliers, and by law, liability for certain payroll taxes and liabilities to employees.

     |Listen| Interview 9 (go to: http://www.myownbusiness.org/s3/index.html)Stan HensleeC.P.A.

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What are some of the most common mistakes you see with people going into small business?

Basically I think there are three. The first one is that they're going into the business under-capitalized. They put everything they've got into the business at the very start and they don't have anything to fall back on. If they just had some high limit credit cards that were fairly clean to have something to fall back on to pay the bills when the business takes off a little slower than expected.

The second problem I see is co-mingling funds: paying personal expenses out of the business bank account and paying the business bills out of the personal bank account. You have to keep them separate and you have to treat the business as a separate entity and let it stand on its own.

The third biggest mistake I see, and this cripples most young businesses, is that owners take too much money out of the business in the early stages; where they leave the business under-capitalized and no longer have the money needed to replace the product on the shelf or to expand into new areas. That is the kiss of death to a young business.

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SESSION SEVEN

Business Location and Leasing

Criteria for a Retail Business

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Each retail and commercial business has its own criteria. For example, a donut shop should be located on the "going-to-work" side of the street. On the other hand, a liquor store should be on the side of the street with traffic going home from work.

The selection of your first location will have an overwhelming impact on your chances for success.

In Session 1, you analyzed businesses that are similar to the one you chose. Did you analyze where they were located and why?

Select the appropriate type of center (mall, strip, mini). Some business do best in a large center but some, like Mini-Marts, video stores and laundromats, do better in much smaller centers. Others such as florist, nursery or antique stores, do well located on the street front.

Demographic data will provide you information about the neighborhood. It will inform you about the population, the number of households, estimated population by race, age and income level within a one, two or five-mile radius. You can find firms that supply this information on the Internet. A good place to start is the International Council of Shopping Centers at www.icsc.org/srch/rsrch/demographics/.

Walk and talk the area . You will be surprised how much you can learn by talking to customers, employees and owners.

Traffic count is very important because it will give you the number of cars at the intersection. You can also get the pedestrian count, which is great for drop-in or walk-in business. This report can be obtained from the local traffic department.

Visibility and signage: Customers must know you are there. They should be able to see your store. Usually the end or corner location is better, which is why the rent for those spaces is higher. Get the biggest sign you can. Tell the public clearly what you are selling. Examples: Travel, Gifts, Pets, tell the products. Both your lease and the city ordinances will have limitations regarding your signs.

Access and parking: Be sure you have adequate and convenient parking. Avoid streets with dividers or one-way traffic. Customers prefer stores where the parking is in the front.

Proximity to competition: Know where your competitors are located. You can get the names and address from the Yellow Pages. Find out what your competition is doing and how they are doing it.

Generators (anchors): These are the big national stores in a mall or shopping center. For example, Albertson's, Nordstrom, Wal-Mart and/or McDonald's will help to bring customers into the center. The closer your business can be to generators, the better it usually is for your business.

     |Listen| Interview 10 (go to: http://www.myownbusiness.org/s6/index.html)Phil HollandFounder, My Own Business

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Could you offer some suggestions about locating a business and signing a lease?

These are two important business decisions that you will need to make. One is deciding on a location for your business and the second is signing a lease. This will probably be one of the largest financial obligations you will incur. If you sign a lease for $2,000 a month for five years, you will have a total obligation of $120,000. So you have to be absolutely certain that your judgment will be correct both as to the location and also the lease document itself.

If you're in the retail business your location is going to be most important of all because every retail business has its own special criteria. If you're opening a donut shop, you want to be sure you're on the going to work side of the street. And if you're opening a liquor store, you'll want to be on the side of the street that people use going home. So you will need to know the special criteria for your business and this session will explain how you can do that.

A couple of suggestions: When you sign a lease, sign a short term lease, like a one or two year lease and ask for options. Be sure you have a lawyer working with you in the document itself because you will find that his experience will save you a great deal of trouble and money as well. So even though you may not be looking for a real estate location today (you may start by operating out of your spare bedroom or garage) someday, as your business expands, you'll be facing this big issue. I would suggest that you review this chapter now and also have a copy of the My Own Business Textbook handy for the future. When you need it, you can pull it off the shelf and refer to all the basic do's and don'ts of locating your business.

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SESSION TEN

Internet Business & Search Engine Marketing

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E-commerce Overview

What is E-commerce?

E-commerce is the sale of products and services over the Internet. It is the fastest growing segment of our economy. It allows even the smallest business to reach a global audience with its product or message with minimal cost. The sale of products or services on your Web site can generate sales that will make the difference between success and failure. Even Walmart, the largest retailer in the world with one billion dollars sales per day, could not anticipate the increasing wave of Internet business. On the morning of November 24, 2006, their Web site broke down because it could not handle the volume of Internet orders.

180 million people in the US use the internet at least once per month. In 2005 there were approximately 1.08 billion people worldwide who used the internet at

least once a month. This is projected to grow to 1.8 billion in 2010. The online population has hit 73% of all U.S. adults. The average income of Internet households is over $66,790, making the Internet user a

very attractive customer for you to target.

Is an E-commerce Web site right for your business?

Probably. much depends on the nature of your business. Web sites such as Amazon.com and Barnes & Noble have established their hold over the book market, and their sheer size, name recognition and the relationship of trust they have with their customers allows them to dominate this market with good pricing (due to economies of scale) and remarkable customer loyalty.

However, if you own a local bookstore, there are several ways to reach new customers, get them to know you better and have them keep coming back for more. You might want to offer notices of special promotions or readings by authors. Trust will become the cornerstone of building your e-business. As Warren Buffett has said, "If you don't know jewelry, know your jeweler."

A Web site doesn't need to exist solely to sell your product online. It could supplement the sales of your already established retail store. If you sell a unique product, such as wheat grass or gourmet chocolates, you might find success reaching others around the country (or the world, for that matter) who do not have access to these products in their own towns.

Using the Internet for conducting e-commerce will not assure you of being able to compete favorably with large established competitors. They already have the inventory, delivery and marketing systems in place, and they can deliver the groceries as cheap (or more cheaply) than you can. Yet, the beauty of the Internet is that it provides a global audience of potential customers and it never closes.

Your customers will have access to information about your business 24 hours a day 365 days a year. You can add pictures, audio, video, news, and so much more. Your customer will even be able to buy from you 24 hours a day. So, your Web site address should be promoted everywhere including your stationery, sales forms and advertisements.

     |Listen| Interview 11 (go to: http://www.myownbusiness.org/s9/index.html)Brian KernsComputer Programmer, Web Developer/Designer

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My name is Brian Kerns. I am a computer programmer, web developer and designer. Working on the cutting edge in this industry of web design, I am often approached to lend technical expertise to speculative projects. Often someone has an idea and is willing to offer a profit sharing arrangement or back end payment based on the success of his or her particular idea. Often these ideas are genuinely original and viable yet the collective talents and dynamics of the group have led to the project's destruction.

After investing many hours of my time and effort, I have never received any benefits from several speculative projects that I have tried in this manner. I would imagine it takes the right group of people: money, contracts, artistic and quality control have all been hurdled in every single instance. Therefore, I have adopted the policy of not accepting speculative development deals. A project must be able to carry talent and time at least of the cost of the time. Additional fees may be paid out of back end deals but a project without money or any running capital is one I have learned to be very leery of.

If I were to offer any single advice to service oriented individuals based on the experience I have made in my business it would be to steer clear of speculative deals.

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Setting Up a Web site

Before you get started you need to answer the following questions:

What types of customers will you attract? How will these customers interact with your Web site, and how can you make your Web

site promote that interaction? How many sales do you expect to make each month? What additions would you like to

add once you get going? Do the monthly profits justify the monthly costs?

Setting up a professional Web presence can be a big project and setting up an e-commerce system on top of that can be yet another big project. Be sure to consult with professionals in this field who have experience in e-commerce not just Web design.

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Tips for Developing a Successful Site

Make your site easy to use: While it might be tempting to have a cutting-edge Web site - don't forget the basics. You will fail if a visitor can't navigate successfully through your site. Provide clear, easy-to-understand navigational tools on each page of your site. Make it easy for a visitor to find your contact information on every page.

Provide useful content: Don't just sell! These days, it's not enough to have a Web site that lists your products and provides a shopping cart for purchases. If you want your visitors to return, you'll want to provide meaningful content. A CPA's* site could publish tax tips and offer links to IRS** forms. A catering service could offer articles on how to host a successful party.

Encourage customer feedback via online forms and e-mail: Pay attention to the valuable information your customers can give you. Consider using online surveys such as www.zoomerang.com.

Develop a mailing list: Most consumers resent junk e-mail, also called "spam." A far more appealing strategy is to develop a mailing list. Invite your customers to "opt in" to receive a newsletter or notices of specials running at your business. Make this information relevant and useful for your customer. Consider providing a "coupon" that will give them a discount on their next purchase. And, always give the recipient an easy means to "opt out" of receiving future e-mails.

*CPA: Certified Public Accountant**IRS: Internal Revenue Service. The IRS is the US government agency responsible for tax collection and tax law enforcement.

Online Marketing and Promotion

There are thousands of well-designed Web sites, but very few are visible on the search engines. Almost 90 percent of Internet users today use search engines to find the information they need. Yet, many businesses are not registered with search engines. Four billion searches are done in the U.S. each month. Search engines have a great capacity to drive traffic to your site, yet few new entrepreneurs have the know-how to tap into this resource. Top search engines such as Google and Yahoo! now provide local search. Local search makes it even more important that you market your Web site effectively.

 

    |Listen| Interview 12 (go to: http://www.myownbusiness.org/s9/index.html)

Thomas Mix   Online Mktg & Tech Mgr. Executive Director My Own Business, Inc.

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Hello, my name is Thomas Mix and I am the Executive Director for My Own Business, Inc. My background is in Online Marketing and Search Engine Placement.

Simply building a great Web site for your business will not bring people to it. The primary way people find what they are looking for is through search engines. Your Web site should come up in the top search results when people search for keywords relating to your business. To accomplish this you need to have a continual and aggressive marketing strategy.

Coming up with an effective marketing strategy is by no means easy however there are several things you can do to help your site get more exposure through the search engines.

1. Make sure your site is submitted with the top 10 search engines where the large majority of searches take place.

2. Content is crucial. Make sure you provide updated, useful, and comprehensive content relating to your business. This will help the search engines associate what people are looking for with your business.

3. Keep up to date with your competitors and the latest marketing techniques. Continually optimize your Web site for search engine placement.

4. Consider pay per click marketing for additional targeted leads. 5. Network with other sites and relating business to develop links to your site

and therefore additional avenues for people to find your business.

I hope this audio session helps. I would strongly advise you to read through the e-commerce session, which includes more specific information. Included in the e-commerce section you will find various links to even more information. Good Luck!

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Search engines: your primary marketing tool

In the past, the methods that search engines used to rank pages were primitive and easily deciphered for savvy Webmasters to manipulate.

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Times have changed and gaining a high rank on the top search engines has become extremely competitive. Today, submitting your Web site to a large number of free search engines will only result in your e-mail address being added to a large number of spam lists. Search engines are now looking to provide quality listings for their users, but also to turn a profit: hence "paid listings."

How does your Web site rank?

It is important to monitor your search engine rankings so that you can track changes, monitor the ones that you need to improve and identify engines with whom you are not listed. If your customers did a search for specific keywords on a search engine, would they find your site? Are you in the first 10 results or the first 30? The average visitor scrolls through 1.8 page results during a typical search. If your business does not appear in those first 1.8 results, that could translate to lost business.

What are people searching for?

"Search volume" is the number of times a specific keyword is searched over a period of time. Having knowledge of search volumes will give you a sense for what is being searched for and what keywords you may want to focus on. A good place to look up search volumes is through Wordtracker.com or Overture.com and its search suggestion tool. The goal is to find keywords or keyword phrases that you feel would drive qualified traffic to your site. Keep in mind the amount of competition for each keyword and be creative in finding different keyword combinations that others may not have tried yet.

How to manage search engine placement

It takes hard work, market research, educated decisions, and even trial and error. There are ways to improve your rankings - and actions to avoid that will hurt your rankings. While you have the option of hiring a search engine consultant to manage this important responsibility, you can also do this yourself. Here are the factors that go into search engine placement and how to better optimize your pages for search engines.

Local Search

With the advent of "Local Search" the playing field has just gotten a whole lot more competitive. Now it is almost essential that you have an internet presence or you will lose out to your nearest local competitor that does. Do a search on any of the major search engines and look for a "Local" tab to see how this works. Expect "Local Search" to greatly expand and improve over the years ahead.

Key components to successful search engine marketing for a Web site

Start with a descriptive domain name: The domain name you choose is important. It is so very important because the name itself can help your Web site be more relevant to search engines. Pick a domain name that is easy for your clients to remember.

Submit to the top engines: Submit your Web site for review and indexing only to the top search engines where people are actually doing their searches such as Google, Yahoo, MSN, etc. Be careful to read the submission guidelines for each search engine before submitting. For example, have a look at Google's search engine guidelines.

Focus on your homepage: Your homepage is the single most important page on your site. Your homepage represents your business and its image. Make sure you focus on developing the content and the relevancy to search engines for this page.

Develop content rich pages: Add content that includes keywords and phrases you are targeting. Many search engines consider the location of the keywords in your site along with their frequency to assess how relevant your site is to those keywords.

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Keep an eye on your competition: Stay informed of your competition's rankings. Top-ranked pages rank well for a reason - so see what you can do to be more competitive! Can you offer something they do not offer?

Add new content: Keep your Web site fresh and updated with new content. Your visitors will appreciate it, and the search engines will look favorably upon it.

Networking with others: Expand your "link popularity" by gaining more inbound links to your site. Get the word out and let other sites know about your site and how to link to it. The more links coming into your site, the more doorways you open for visitors to find you.

Title Tags: Make sure the title tags across all the pages on your site are relevant to that particular page. Your domain name is not a good idea for a title tag.

Pay Per Click Advertising: Consider "pay per click" strategies such as Overture.com , Google.com and MSN.com to enhance your overall marketing strategy. Pay per click now offers local search options to better reach a targeted audience.

Review your activity logs: "Activity logs" or "server statistics" provide you with statistics on the number of visitors coming into your site, where the visitors come from and what keywords are used. Some Web servers/hosts provide this information free. Google also offers this as a new free service called Google Analytics.

Top Ten Do's and Don'ts of E-commerce                       

TOP TEN DO'S

1. Create a Web site to compliment your business. 2. Hire a professional to create your Web site. 3. Use a .com Web site domain name that is descriptive of your business and easy to

remember. 4. Register your domain name. Keep your account information in a safe place. 5. Develop a mailing list to better connect with your visitors. 6. Provide updated useful content on your Web site in order to encourage visitors to

return. 7. Encourage customer feedback via online forms and e-mail. 8. Learn how to, and continually implement, ways to improve your placements on top

search engines. 9. Keep your eye on your competition’s rankings and get pointers from its sites. 10. Consider eBay as a means of selling your product and gaining traffic to your online

store.

TOP TEN DON'TS 1. Assume a Web site will assure you of competing favourably with large, established

competitors. 2. Turn your customers off with an unprofessional Web site. 3. Incorporate unusual or unique Web design styles that are difficult to print or save. 4. Make it difficult to navigate your site. 5. Permit out-of-date content to remain on your site. 6. Rely on graphical buttons. 7. Try to create a Web site on your own unless you are a Web designer. 8. Make it difficult for people to find your contact information. 9. Turn off your customers with unsolicited e-mail advertising. 10. Weigh your pages down with too much graphics and media.

SESSION TWELVE

Small Business Marketing and Opening

     |Listen| Interview 13 (go to: http://www.myownbusiness.org/s11/index.html)

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Maureen CostelloWholesale Distributor

In your opinion what are some of the worst mistakes entrepreneurs can fall into?

One of the worst mistakes an entrepreneur can fall into is becoming complacent when you're successful and things are going well. It's easy to sit back and let things just go on autopilot and maybe not think in terms of the future, especially if you have a very successful business going on. I think you have to be careful not to have all your eggs in one basket. Not to have only one big customer because if that customer goes away, your business goes away. Not to be totally dependent on anyone vendor nor be dependent on any one or two employees so that if you lose them your business doesn't function. You have to diversify with product, customer and employees, so that you have a business that is ongoing and won't fall apart if just one of those things goes away.

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Marketing

What it takes to promote sales

Every business has a specific marketing strategy that usually works best and has already been proven by your most successful competitors. You can benefit from their experience by copying successful marketing plans, including selling methods, pricing and advertising. Make a list of the most successful businesses that fall within

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your field of interest and study them (and even go to work for them). Visit these businesses and be prepared to ask the questions that are most important to you.

Learn as much as you can about the needs of your customers and how to gain feedback from them. For example, if you open a restaurant, a displeased patron will probably not complain because it is not a pleasant experience. Instead, he will not return. So, for example, you must take care to inspect the plates as they are returned to the kitchen.

Will your customers be looking for convenience, pricing, quality and/or service? It will be difficult to make sound marketing and promotional decisions without being informed on their real wants and needs. If a specific geographical area defines your market, low cost demographic reports based on the census can be obtained that will furnish information on population by race, income and home ownership. For resources that provide this information, use Google.com to search for "demographic data" on the Internet.

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Recruiting, hiring, and training good employees

Finding the good employee:

Most employers agree the toughest part of being an employer is finding and keeping good employees. Begin your search for the good employee as soon as you decide that you are going to be an entrepreneur.

Define what you need from an employee. List the characteristics you require. Network: get the word out that you are looking for help. Develop and maintain sources for building your workforce. Consider family members, retired workers and students.

Your customers need to feel confident that they are dealing with people who are knowledgeable and helpful. Five characteristics customers like most when dealing with a sales or service person are:

1. Product or service knowledge 2. Presentable appearance 3. Courtesy 4. Honesty 5. Sincerity

Here's a checklist for hiring and training your marketing team:

Know whom you will need to hire. Have a hiring policy in place that includes salary structure, incentive compensation and

perks. Create job descriptions for everyone (including for yourself), including specific skills

required for each employee. Maintain a schedule of ongoing staff meetings to discuss product information, sales

techniques and customer service. Develop policies and procedures on handling customer complaints and concerns. Keep

in mind that you will get your best marketing feedback from an unhappy customer. Develop clear protocols for handling customers via telephone, fax or e-mail. Continuously redefine the skills and requirements needed by new employees. Use motivational posters to build employee teamwork. Here are some inexpensive

examples: Challenge , Courage , Integrity , TeamWork , and many others.

  

  |Listen| Interview 14 (go to: http://www.myownbusiness.org/s11/index.html)

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Eddy ChaveyIndependent Web Designer

What would your top recommendations be for people just starting out in business?

A huge part about starting a business, and I wish I would have corrected this early on, is letting people know that you started a business. So promotion early on is very important. I wish I had done some promotional things even before the business was started. Case in point; business was going just steady, I wasn't shouting out I've got a business but then I did this thing. My site is "breakfast" my whole business revolves around breakfast, so we got these silly putty eggs and having these eggs as a promotional gimmick giving them out to people who visited the site and contributed to the site increased traffic just immensely, it increased profits. I would have to say out of a $1000 investment in a whole bunch of eggs, I think I probably got back 20 times the return. So promotion, announce that you got that business.

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Promotion and advertising

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Your advertising plan becomes your blueprint for marketing. It will include your objectives, budget, media plan and creative approach. A basic rule in promotion and advertising is, "Do what you do best, and hire for what you don't."

Discuss your advertising plan with your vendors. They may provide you with co-op money if you follow their rules and make proper application for the money. Even the smallest advertiser can get up to half of their advertising costs reimbursed.

There are many types of paid media to deliver your message. A few of the most commonly used are

Print (newspapers, magazines and newsletters) Radio Television, including cable Internet Yellow Pages Direct mail Trade shows

Every entrepreneur learns through experience that there is a most efficient way to spend advertising dollars. This can be hit or miss for the beginner and very costly. So, once again, learn from the previous mistakes of your competitors. Find out and follow how your most successful competitors advertise and promote their products or services.

Whatever advertising media you decide to use, become knowledgeable regarding the do's and don'ts of advertising in that particular medium. For example, if direct mail works best for you, there are books in your library devoted to this subject. They will provide huge insights that can save you from wasting advertising dollars.

Media publicity is free and helps to create a positive image for you business. Newspapers could be interested in writing a feature story about you because of the widespread interest in entrepreneurship and the fact that you are a successful start-up. Local newspapers, even the free ones, are very effective. Your "press release" must have news value that can be turned into a bit more of a feature story, as opposed to an announcement. This will make it more interesting and relevant to the reader. Editorial space is much more valuable to you than display space…and it's free!

SESSION FOURTEEN

International Trade

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Is International Trade Appropriate for Small Businesses?

The answer is definitely yes! According to the U.S. Department of Commerce, big companies make up about 4 % of U.S. Exports. Which means that 96% of exporters are small companies. Why is international trade so important to starting small businesses? In some cases the products or services you may wish to market are not available or made in your home country. For example, think about selling cashmere sweaters. You may need to become an importer in order to compete with imported products sold by your competitors.

International trade is enormously beneficial for entrepreneurs and enables producers of goods and services to move beyond the U.S. market of 280 million people to the world market of 6.2 billion. While international trade accounted for 5% of U.S. economic growth in 1950, today it has become an integral part of business, accounting for more than 25% in 2002. For many small companies importing and exporting is becoming an essential cornerstone in achieving success, yet it requires knowledge of business disciplines far beyond the basic do’s and don’ts of operating a domestic business.

Advantages and Disadvantages of International Trade

Advantages to consider:

Enhance your domestic competitiveness Increase sales and profits Gain your global market share Reduce dependence on existing markets Exploit international trade technology Extend sales potential of existing products Stabilize seasonal market fluctuations Enhance potential for expansion of your business Sell excess production capacity Maintain cost competitiveness in your domestic market

Disadvantages to keep in mind: You may need to wait for long-term gains Hire staff to launch international trading Modify your product or packaging Develop new promotional material Incur added administrative costs Dedicate personnel for traveling Wait long for payments Apply for additional financing Deal with special licenses and regulations

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Online Resources

Since international trade necessarily requires interaction with governmental agencies, and most all governments wish to expand their country's role in international trade, entrepreneurs can look to governments themselves for a great deal of information. The U.S. government provides many valuable resources of information and these will be generously referred to in this session. The U.S. Small Business Administration offers aid to small international businesses through two major programs: business development assistance and financial assistance. Our first recommended resource is therefore the U.S. Small Business Administration’s Office of International Trade. The SBA Web site www.sba.gov/oit is the place to begin.

Resources are offered in four building blocks: Education, Technical Assistance, Risk Management, and Finance.

     |Listen| Interview 15 (go to: http://www.myownbusiness.org/s13/index.html)

Ming FriedmanLinen Pro Designs, Inc.www.linenpro.com

Are there any particular resources for information on international trade you would recommend to a start-up entrepreneur?

I would like to recommend two. One is the Center for International Trade Development. This is a state funded agency in California. It has 22 offices in California and offers classes on import and export. Their website is www.citd.com. The other one is for export only: the U.S. Department of Commerce. Their export division has a lot of offices in California. It offers classes on export depending on the industry. They also have a list of different trade associations. Their website is www.commerce.gov

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Common Mistakes Made in International Trade

A detailed guide on international trade can be found in Exporting, Importing and E-Commerce by Sharon T. Freeman, Ph.D., President of the All American Small Business Exporters Association. Another book of interest would be Conversations With Women Who Export.” Following is a condensed version of Dr. Freeman’s “how-to” guide in avoiding the ten common export start-up mistakes

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Common Export Mistakes Solutions

1. Failure to obtain qualified export counseling and to develop a master international marketing plan before starting an export business.

Obtain Export Counseling

2. Insufficient commitment by top management to exporting. Determine Export Readiness

3. Failure to have a solid agent/distributor’s agreement Understand Agent/Distributor

Contracts

4. Blindly chasing “E-orders” from around the world. Avoid Accidental Exporting

5. Failure to understand the connection between country risk and securing export financing.

Understand Export Financing

6. Failure to understand Intellectual Property Rights Understand Intellectual Property

Rights (IPR)

7. Insufficient attention to marketing and advertising requirements. Pay Attention to Overseas Marketing

and Advertising

8. Lack of attention to product preparation needs. Pay Attention to Product Preparation

Requirements

9. Failure to consider legal aspects of going global. Understand Licensing and Joint

Ventures

10. Failure to know the rules of trade.Understand Export Regulations

1. Failure to obtain export counseling and to develop a master international marketing plan before starting an export business.

Utilize Government and Association Resources for Export Counseling: It is also important for new exporters to seek legal counsel.

Hire a Lawyer to Help You Structure Your Export Operations for the Long Run: Lawyers are concerned with issues of compliance on both ends of the transaction, therefore they are instrumental in helping you to make sure that your recordkeeping system is planned correctly, that your legal documents are

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structured correctly, and to advise you on a broad range of compliance issues before the sale, during the sale, and after the sale.

2. Insufficient commitment to overcome the initial difficulties and financial requirements of exporting.

To be successful in exporting, firms have to establish an export department to which they dedicate personnel and a budget, and for which they develop appropriate procedures, preferably in consultation with a qualified trade lawyer. A recommended resource for helping firms to assess their “readiness” to export is cited below:

Michigan State University’s Center for International Business Education and Research—CIBER: MSU has an Export Academy that has developed a state-of-the-art system to assess export readiness. Called CORE V™, it is a Windows-based managerial tool for self-assessment of organizational readiness to export. (See www.ciber.bus.msu.edu/dss).

3. Failure to have a solid agent and or distributor’s agreement.

Firms that intend to enter and to expand in exporting will likely need an agent or distributor at some point. Key considerations include:

Understanding the Role of Agents: The NTDB (National Trade Data Bank) Web site at (www.stat-USA.gov) provides information on agents and distributors. As explained on this Web site, agents receive commission on their sales rather than buying and selling for their own account. As agents do not own the products they sell, the risk of loss remains with the company the agent represents.

Understanding the Role of Distributors: The key legal distinctions between an agent and distributor are:

A distributor takes title to the goods and accepts the risk of loss. A distributor makes profits by reselling the goods.

Distributors cannot contractually bind the company producing the goods. Distributors establish the price and sales terms of the goods.

Contract Drafting Considerations for Agent/Distributor Agreements: The first and most important consideration when drafting an agreement is to ensure that the agreement clearly states whether there is an agent or a distributor relationship. The agreement should also clarify the terms and conditions for selling the products. For example:

Determine whether the relationship is exclusive versus non-exclusive. Specify which geographic regions are to be covered. Outline issues of payment and payment schedules for the products (in the case of a

distributor) and for payments of commissions (in the case of agents). Determine the currency in which payments are to be made and address currency

fluctuation issues. Provide specific provisions regarding renewal of the agreement, including specific

parameters for performance, promotional activity and notice of desire to renew. Establish a specific provision for termination of the agreement and terms for such

termination. (Some foreign countries restrict or prohibit termination without just cause or compensation.)

Outline the termination process for the end of the agreement period. Provide for workable and acceptable dispute settlement clauses.

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Assure that the agreement addresses whether or not intellectual property rights are being licensed or reserved.

Do not allow, without seller’s consent, the contract to be assigned to another party (sub-agents or sub-distributors) to be used to fulfill obligations in the contract or the contract to be transferred with a change of ownership or control over the agent/distributor.

Assure that your contract complies with both U.S. and foreign laws.

The Commercial Service of the Commerce Department provides a service to identify qualified agents, distributors, and representatives for U.S. firms. For each Agent/Distributor Service, (www.ita.doc.gov/cs/) Commercial officers abroad identify up to six foreign prospects that have examined the U.S. firm's product literature and expressed interest in representing the U.S. firm's products.

4. Blindly chasing orders from around the world

You may be in your office when suddenly and unexpectedly someone from a foreign country contacts you electronically and wants to buy a line of your products. What do you do next?

Make sure the order is not on the denied list: Go to the Bureau of Industry and Security’s Web site to view the entire list of denied orders (www.bis.doc.gov/dpl/default.shtm).

Business considerations in checking out the firm making the inquiry: Make sure the opportunity is a reasonable one and involves something that can reasonably be handled by your firm, without spending countless hours researching the requirement. The Department of Commerce Commercial Service has a number of services to assist you.

International Company Profile (ICP) – The ICP service, referred to earlier, helps firms investigate the reliability of prospective trading partners.

Country Directories of International Contacts (CDIC) Provides the name and contact information for directories of importers, agents, trade associations, government agencies, etc., on a country-by-country basis. The information is available on the National Trade Data Bank.

Competitive considerations in checking out the market for the product: By reviewing industry sector information, firms can obtain useful data to assess the probability that the inquiry they are investigating is real. One resource that may be helpful is the Department of Commerce, Commercial Service’s Industry Sector.

The U.S. Department of Commerce’s Commercial Service Officers are a valuable resource for information about firms overseas. Access this service to learn if a particular deal sounds legitimate and whether the agency has any information on the firm making the inquiry. For the e-mail addresses of Commercial Service Offices go to www.export.gov/eac/index.asp.

8. Lack of attention to product adaptation and preparation needs

The selection and preparation of a firm’s product for export requires not only knowledge of the product, but also knowledge of the unique characteristics of each market being targeted. Key considerations include:

Product Adaptation to standards requirements: As tariff barriers (tariffs, duties, and quotas) are eliminated around the world in accordance with the requirements of

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participation in the World Trade Organization (WTO), other non-tariff barriers, such as product standards, are proliferating. Exporters must understand conformity requirements to operate on an international basis. The DOC’s National Center for Standards and Certification Information (NCSCI) provides information on U.S. and foreign conformity assessment procedures and standards for non-agricultural products. You can visit their Web site by going to ts.nist.gov.

Product Engineering and Redesign: The factors that may necessitate re-engineering or redesign of U.S. products may include differences in electrical and measurement systems.

Branding, Labeling and Packaging: Cultural considerations and customs may influence branding, labeling and package considerations.

Are certain colors used on labels and packages attractive or offensive? Do labels have to be in the local language? Must each item be labeled individually? Are name brands important?

Installation: Another important element of product preparation is to ensure that the product can be easily installed in the foreign location. Importers and exporters need to know they may also consider providing training or providing manuals that have been translated into the local language along with the product.

Warranties: In order to compete with competitors in the market, firms may have to include warranties on their products.

Servicing: The service that U.S. companies provide for their products is of concern to foreign consumers. Foreign consumers want to know whether they can access spare parts, technicians who can service the product, and distributors of the products in their countries.

  

  |Listen| Interview 16 (go to: http://www.myownbusiness.org/s13/index.html)

Ming FriedmanLinen Pro Designs, Inc.www.linenpro.com

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What is the worst mistake that could be made by someone starting in international trade?

I think the worst mistake that people could make is to think they can go directly to the factories and overcome the language barrier and the culture difference. They could receive something which is different from what they think they purchased. And I think also not getting enough information is a mistake. Do your homework by going to classes and seminars. Talk to people who are already in the business. There is plenty of help out there and I believe that people like to see other people succeed.

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Top Ten Do's and Don'ts of International Trade                      

TOP TEN DO'S 1. Take international trade classes at the college level.2. Visit trade shows and trade missions. See www.tsnn.com.3. Join an international trade association specializing in your business. 4. Personally visit your offshore suppliers (or customers). 5. Take advantage of online resources such as www.sba.gov/oit. 6. Inspect and approve merchandise before it is shipped. 7. Consider hiring an international trade consultant. 8. Become personally familiar with all monetary transactions. 9. Use a trade lawyer for agent and distributor agreements and licensing

requirements. 10. To begin, start on a very small scale.

TOP TEN DON'TS 1. Investigate the potential opportunities and benefits of international trade. 2. Rely on a single source of supply (or customer). 3. Have an understanding of intellectual property rights. 4. Have an understanding of import/export financing. 5. Learn how your best competitors are handling international trade. 6. Provide dispute settlement provisions. 7. Make assumptions as to vendor's compliance with your specifications. 8. Check out your suppliers/customers before establishing relationship. 9. Rely on handshake agreements. 10. Rely solely on others including employees for importing/exporting expertise.

QUESTIONS

Here follow some examples of the matters discussed during the course.

1. What are the most important qualities for an entrepreneur?

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2. Listen to Ms Costello’s interview (page 3), then answer the following questions: - What do you need to be successful?- Why is educational experience important?- Can mistakes be avoided?- Has Ms Costello made mistakes in her career?

3. What should a business plan define?4. What should be described in an executive summary?5. Imagine you have decided to start up a new business. Write down a

basic business plan using the grid on page 8.6. Why is communication important in business?7. What are the aims of internal communication?8. What tools are used in business communication?9. What type of organization would you choose for your business? Why?

And which you wouldn’t? Why not?10.While listening to Mr Holland’s interview find out:

- the two important decisions he mentions about locating a business;- the two examples of criteria he gives when choosing the location;- the two final suggestions.

11.Imagine you have decided to develop a web site in order to promote your activity or sell your product(s) on the Internet. What information would you pass and what requests would you make to the web site developer?

12.Read the Top Ten 10 DO’s and DON’Ts at the end of Session 7. Say which of them, in your opinion, are the three most important DO’s and the 3 most important DON’Ts and explain why.

13.Make your comments on the DO’s and DON’TS in international trade?

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