SELF INSURED GROUP HEALTH PLANS

What is a self insured group health plan? A self-insured group health plan is one in which the company assumes the financial risk for provide health care benefits to its employees. In realistic conditions, self-insured employers pay for each out of pocket claim as they are incurred as a substitute of paying a flat premium to an insurance carrier, which is known as a fully insured plan. In general, a self-insured employer will set up a special trust fund to allocate money (company and employee hand-outs) to pay incurred claims. According to a 2000 report by the Employee Benefit Research Institute, around 50 million employees and their dependents receive settlement through self-insured group health plans sponsored by their companies. This represents 33% of the 150 million total participants in personal employment based plans nationwide.

Why do companies self fund their health plans?

There are many reasons why employers choose the self-insurance option. The company can customize the plan to meet the specific health care needs of its workforce, as opposed to purchasing a 'one-size-fits-all' insurance policy. The employer maintains control over the health plan reserves, enabling maximization of interest income - income that would be otherwise generated by an insurance carrier through the investment of premium dollars. The employer does not have to pre-pay for coverage, thereby providing for improved cash flow. The employer is not subject to conflicting state health insurance regulations/benefit mandates, as self-insured health plans are regulated under federal law of ERISA. The employer is not subject to state health insurance premium taxes, which are generally 2-3 percent of the premium's dollar value. The employer is free to contract with the providers or provider network best suited to meet the health care needs of its employees.

Self insurance the best choice for every company

Since a self-insured employer assumes the risk for paying the health care claim costs for its employees, it must have the financial resources (cash flow) to meet this obligation, which can be impulsive. Therefore, small employers and other employers with poor cash flow may find that self-insurance is not a viable option. It should be noted, however, that there are companies with as few as 25 employees that do maintain viable self-insured health plans. While the largest employers have sufficient financial reserves to cover virtually any amount of health care costs, most self-insured employers purchase what is known as stop-loss insurance to compensate them for claims above a specific dollar level. This is an insurance contract between the stop-loss carrier and the employer, and is not deemed to be a health insurance policy covering individual plan participants.

Administers claims for self-insured group health plans

Self insured employers can either administer the claims in-house, or subcontract this service to a third party administrator (TPA). TPAs can also help employers set up their self-insured group health plans and organize stop-loss insurance coverage, provider network contracts and utilization review services. Any payments made by employees for their coverage are still handled through the company’s payroll branch. on the other hand, instead of being sent to an insurance company for premiums, the hand-outs are held by the company until such time as claims become due and payable; or, if being used as assets, put in a tax-free trust that is controlled by the company. Self-insured group health plans come under all applicable federal laws, including the, Health Insurance Portability and Accountability Act (HIPAA), Employee Retirement Income Security Act (ERISA), the Americans with Disabilities Act (ADA), Consolidated Omnibus Budget Reconciliation Act (COBRA), the Age Discrimination in Employment Act, the Pregnancy Discrimination Act, the Civil Rights Act, and various budget settlement acts such as Tax Equity and Fiscal Responsibility Act (TEFRA), Economic Recovery Tax Act (ERTA) and Deficit Reduction Act (DEFRA).

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How do we become self insured?

How do we become self insured?

When someone says that how do we become self insured, it does not mean that go outside and getting independent health insurance. Self insuring means that you save up enough money to cover the related and possible expenses that may occur in the event that you need to use the insurance. Most people who self insured only do so on life insurance policies, once they have built up enough wealth that their loved ones would be taken care of without the life insurance policy.

What Does It Mean to Self Insured? 

When you self insured, you basically pay for any accidents or bills yourself. You do not have insurance to cover the costs that insurance normally would. You pay for everything completely on your own. This means if your home burns down, you will have to pay to rebuild it. If you are in a car accident, you pay for the repairs and the medical bills. If you worried about car accident, you are responsible for paying a lawyer and any judgment. If you are diagnosed with a serious illness, you pay for all treatment on your own.

Now how do we become self insured business owner

If you choose to become self insured business owner, you will want your money

to work for you while it is waiting to be used. The best way to keep self insurance money working for you is to invest it. Your investments should be in short term investment that can be quickly turned into useable cash without a large loss in value. These types of investments would include money accounts or mutual funds. Avoid long term investments such as stocks and bonds as they are not suitable for a short-term emergency fund such as a self-insurance fund. If you would like, you can also choose a savings account. Your return on a savings account will be lower but it will make quick and easy access to your money while at the same time earning a small return

Things to do become self insured business owner

Eliminate your need for some type of insurance policies that you can assume the risk yourself. For example, you may be able to eliminate purchasing extended warranties on appliances, full coverage automobile insurance for a vehicle that is of little value, or insurance on valuables and jewelry by using self insurance fund to pay for the cost of replacing these items by yourself.

Make your auto and home deductibles larger. By making your auto and home insurance deductibles larger, you will be insuring yourself through self insurance for the amount up to the deductible which will enable you to immediately lower your premium payment.

Everyone needs disability insurance and if you want to be able to afford it you can use self insurance fund to permit you to accept a longer waiting period before your disability insurance kicks in which in turn will enable you to have reduced premiums.

By switching to a health insurance policy that only kicks in after a large deductible, which is sometimes called emergency health insurance, you can save a substantial amount on your health insurance premiums. By using this type of policy, you will use self insurance to pay for your doctor visits and minor medical procedures and your emergency health insurance will be there as a safety net if a substantial medical emergency arises.

Set Up an Emergency Fund

An emergency fund is even more important when you are self-employed because you will not qualify for unemployment insurance if your work were to completely dry up. If you want to keep the business open you should have an emergency fund set up to cover the costs to stay open for at least six months. At that point, you will need to determine if you need to close the business or not. These costs include all the costs that make your business run from day to day.

Additionally, you should have a large emergency fund to cover your personal expenses. If you are the only breadwinner in your family or you are single, plan for a year of personal expenses for your emergency fund.

These are the main things in your mind when you are thinking about how we become self insured? In the next article we will discuss about what is a self funded health plan?

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Advantage and Disadvantage Of Self Insured Business

Advantage and Disadvantage Of Self Insured Business

In order to seek knowledge of advantage and disadvantage of self insured business, support employers to make a decision whether or not it would be in their concern to have a self insured business, they need to weigh up their existing plan and evaluate past claims occurrence if available, specifically large applicant information. They also need to evaluate the advantages and disadvantages of self insured business before making the final decision to move self insured business

Business owners may also become more reluctant to taking risks and become provisional in their decision-making. This could restrain the growth potential of the business. Additionally, self insured business may restrain business activities. This is because many financial service providers, particularly banks, want to see evidence of risk administration efforts and may require certain types of insurance before they provide business finance. Suppliers may also be deterred from dealing with a business that is not insured. Some business owners provide health or disability benefits to their employees through paying fixed monthly premiums for insurance coverage to an insured business, the employer uses company resources to pay each claim as it is incurred. Following few lines will help you to decide whether or not a business should be self insured:-

Manageable Investment and Reserves

When you self insured, you choose the hoard you want to invest in,

within reason. When a business uses self insurance plan for health insurance, the investments do have to follow some guidelines, though the guidelines vary by state. The procedure of self insuring means you may take additional risks in your investments that an insurance corporation wouldn't or couldn't take. You may end up with enough cash reserves at a lower effective premium cost than if you had used an insurance corporation to move the risk away from you.

Manage benefit expenditure

With self insurance, you can manage when claims are paid. With an insurance corporation, there may be claim forms to fill out and you may have to have your claim approved by an adjuster. When you self-insure, you won't have any of that to worry about. You simply withdraw the funds as desired. When you withdraw the funds from your bank account, or whatever investment account you're using for your cash assets, you may spend the money any way you wish. With an insurer, the insurance corporation may otherwise specify how those funds are to be used and may require proof that the funds were used a positive way.

Improved Regulation

When a business tries to self-insure, it may be subject to strict

systematic regulations. This is especially true in the case of health insurance. A corporation wishing to self-insure for medical operating expenses often needs to establish significant cash reserves, which may hinder the company's ability to spend money on business growth. The regulations may also specify that only part of the liability may be self-insured while the company may be required to purchase catastrophic coverage in the event the company's reserves fall below a certain threshold.

Increased accountability

Regardless of whether you're a business or individual, you're retaining all of the speculation risk yourself. This could be considerable. If you have to use your cash reserves to fund an otherwise insurable event, then you may be left with low or no cash reserves to fund future insurable events as they occur. A series of unfortunate insurable events may completely drain your cash reserve account, causing you to incur damages that you have no way to pay for. In some instances, like self insured business for health insurance, you may be sued by creditors or employees to provide promised benefits. You may be fined by the state, in a business perspective, if you're unable to provide the promised advantage costs.

One of the Advantages of self insured business is economic sense when the premiums you would pay far compensate the risks you are covering the yearly damages costs less than the premiums. And disadvantages of self insured business is You can't predict the future, the once in two hundred year event can happen any year, so you could end up with a huge loss.

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Self Insurance retention for business

A self insurance method often used by businesses is a self insured retention. A self-insured retention can be used in combination with a auto liability, general liability or workers compensation policy. The retention represents the summation of risk, in economic terms, that a business has nominated to retain. A self insured retention can be an useful way to save funds on insurance premiums. We will discuss here, how it works.

Amount of risk Retention

Business elects a self insured retention when it has chosen to preserve some

risks. A business decides the amount and types of risk it wants to maintain. It then creates a fund to pay losses that result from those risks. States may bound the use of a self insured retention as an alternate for certain types of insurance.  For example, many states may forbid businesses from using a self insured retention in place of auto liability assurance unless they meet certain necessities. Some states permit the use of a self insured retention only if the business owns a specific number of autos. The business may also be compulsory to provide proof of monetary security and to purchase excess auto liability insurance. Several states permit employers to self insure a section of their workers compensation commitment via a deductible or self insured retention. To utilize self insurance, an employer must obtain a self insurance certificate from the state employee’s compensation authority. The self-insured retention can be an important part of an employer's risk managing plan. However, it is usually available only to mid sized or large employers. Small employers don't have the financial capacity to pay large losses out of pocket.

How It Works

How a self insured retention typically works.

1.     You will need to estimate your firm's liability risks and establish the maximum amount of loss it can uphold. This amount will become your self insured retention. Your business will create a fund to pay all losses that are less than the self insured retention.

2.     Self insured retention may include damages only, or it may include both damages and claims expenses. If your self insured retention includes claims expenses, you may be responsible for adjusting claims that fall within the self insured retention. You may hire a third-party administrator for this purpose. on the other hand, your insurer may adjust claims and bill, for the claims expenses.

3.     Your fund must be sufficient to sop up all claims you accumulate during the policy period. You must estimate the utmost amount of losses you imagine to incur during that period. You must create and maintain your loss payment fund as required by law. Your funds should be held in an interest-bearing account. 

4.     You may be required by law to purchase an excess policy. For example, if you self insured your workers reimbursement obligation, you may be obligated by state law to purchase an excess workers compensation policy.

5.     A self insured retention offers numerous benefits. First, it can offer significant savings on insurance premiums. Second, you may have better control over the adjustment of claims process. You can decide which claims to settle. Third, you will have an encouragement to control losses since you will be paying many of them out of pocket. Fourth, your cash flow may be improved. You'll pay fatalities as they occur rather than paying insurance premiums in advance.

Final Words

Generally all classes of insurance risk are suitable for self insurance providing that the premiums are sufficient to balance the cost of maintaining a self insured retention, overall losses are satisfactorily low and exposure to suddenly high losses can be controlled. Some types of risk that protect against injury to individuals have special self-insurance legislation as these coverage’s are required by law. Therefore, self-insurance can be adopted without reference to state legislation. States do control captives and risk retention groups when filed for use or domiciled in the State. The Cost of Excess Insurance The pricing of excess or specific and aggregate is fundamental to small or medium sized companies that are dependent on the coat to limit their weakness. Premiums on these insurances are usually adjusted for loss occurrence but will also vary according to market situation. Apart from maintaining adequate loss results self insured retention can benefit from developing long term interaction with their excess insurers.

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Coverage of Insurance : A Small Business Need

Small business should not ignore the Coverage of insurance needs. Business that is under insured or without broad, proper and satisfactory coverage is taking unnecessary risks, which could eventuate in serious financial problems, including bankrupt. In a crisis, a business without insurance or which is under insured can be totally destroyed. Business owners must be systematically informed on what their insurance policies cover and what is expelled. A periodic review of insurance, therefore, is an absolute essential, along with updates and adjustments in coverage as situation change. This article will discuss the various types of insurance coverage available to small businesses and what you should do to best protect yourself against unsafe claims against your business.

Historical Penalty

In the wake of hot storms that ravaged New Orleans, Galveston, Houston and other hard-hit areas, limitless owners of small businesses were under insured,

or carried no insurance at all, for natural disasters such as hurricanes and flooding and were cruelly hurt. Many of these owners were either unaware that their companies were not covered by insurance, or decided not to buy storm-damage coverage because of a scarcity of cash. A number of owners were shocked to learn - when their insurance claims were denied that they were not covered for the damages they reported even when they thought they had bought the right policies. Another insurance issue that requires the vigilance of small-business owners is the expiration date of their policies. In most cases, the insurance company, agent or broker from whom a business owner bought his or her policies will inform them when their policies are about to drop or need to be converted. But the careful owner should make a note as to when a policy is about to expire, and then renewing it in advance so that there is no gap in coverage and no disappointment if claims are filed.

Coverage of Insurance Types

Insurance products are contract arrangements between the insured and the insurer. The contract spells out the following details:

What is insured?

The conditions under which a claim may be made

The cost of the insurance

The conditions of payment if the claim is honor

There is a large variety of insurance categories and degrees of coverage that both the startup business owner and the owner of an ongoing concern should examine. Deductibles and premiums vary in price. An insurance deductible is the amount of money the insured must pay toward a claim before the insurance company pays on the claim. Usually, higher deductible, lower premium cost of buying and maintaining the policy in force. Premiums may be paid on a variety of schedules, including annually the most common, quarterly or monthly.

Insurance of Small Business Owner

Owner of a business insurance policy offers universal protection against fiscal loss resulting from damage to the owner's property. The damage may result from fire, flooding and other disasters. The policy will spell out what is covered. The business owner's policy can also cover the legal liability of the owner for any physical injury suffered in any occurrence related to the business. An all-risk policy, in which complete coverage is offered, is preferable to a named policy, in which specific risks are covered. In an all risk policy, every eventuality is covered, except for specifically cited exclusions. The all-risk policy minimizes the possibility that some problem won't be covered and also minimizes the possibilities of overlapping and unnecessary coverage. Among the risks that may be covered in a business owner's policy are:

Theft

Flooding

Fire

Physical injury

Business interruption for specified reasons, with exceptions specified

Other sources of property damage

Liability of Product

This type of insurance, which may be obtain at additional cost, may be a requisite requirement if you sell a product that has the potential to injure a user. Even if you did not design, manufacture or distribute the product, if you sell it and it injures a user, you may have legal liability that should be covered.

Commercial Insurance

This policy may be required if your business is larger and more complex than a

simple single or partnership trade operation, or is a service-oriented business or an expert practice. An expert practice may require malpractice insurance, which is a sector whose business may require a commercial insurance policy include manufacturing, restaurants and commercial real estate. A commercial policy is typically more expensive than a business owner's policy, but the risks are correspondingly higher and potentially more costly to the under write, the insurance company which issues the policy.

Professional malpractice Insurance

Professions that give advice and/or provide services to consumers, in which errors of commission or omission may eventuate in significant liability, may require professional malpractice insurance. These can include such businesses as Medicine, Dentistry, Law, Accounting, Advertising, Financial Planning, Occupational therapy, Computer analysis, Journalism, Real estate. Premiums are calculated on actual data for risk, dollar damages and other factors and vary widely depending on the profession, its sub-specialties and the specific services or advice offered. Neurosurgery, for example, is a profession that carries a high premium for malpractice insurance. Coverage for a single-owner, private-practice accountancy would normally carry a smaller premium. Coverage for low-cost legal representation is another option offered by insurance firms. A professional of any specialty who practices without error or omission may still be the target of a malpractice suit, even if the claim is without merit.

Homeowner's Insurance

As a balance to business owner's insurance, a comprehensive homeowner's policy is also an essential, both for home-based businesses and for other business entities, such as partnerships and corporations that are not operated from a private residence. Homeowners insurance will protect a residence from non-business-related injuries or other legal liability. Because a business and the personal assets of a business owner are connected, the homeowner's residential insurance coverage is a necessity. Complete coverage is the policy most frequently written for homeowners, regularly referred to in the insurance business as "HO-3." Usual coverage includes:-

1. Home or personal-property damage caused by fire or storms, including lightning and wind 2. Medical costs of occupants' injuries caused by fire, storms, wind and lightning 3. Medical and legal expenses of persons accidentally injured in the insured home 4. Loss or theft of specified personal property, either in or away from the insured home

The Cash Amount of Coverage

The cash amount of coverage for property damage or loss should be consistent with the replacement cost of the properties covered, including your home. Over-insurance in this area can be avoided and is usually a needless expense. Minimum insurance requirements for a business are often imposed by the state in which the business is located. Your agent or state insurance commission can provide these figures.

Last Words

Discuss your insurance needs in detail with your insurance agent or broker and be completely forthcoming and candid in describing your business so that coverage is adequate. Make sure you understand what is covered and if your policies are void if you have employees or clients to your home. Shopping for competitive pricing is a good idea, especially in tough economic times, when companies eager for your business are willing to adjust their prices accordingly. And finally, be sure to include in your annual budget the cost of insurance. Hopefully, you will never file a claim or experience a claim against you or your business, but if and when either of these unfortunate circumstances occurs, you'll have adequate coverage. 

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Managing Your Small business Financial

Secure start-up costs

By managing your small business financial first first you secure start up cast. Most businesses require capital to start. Money is typically required to purchase supplies and equipment, as well as keep the business operational for the period before your business becomes profitable. The first place to look for financing is yourself. Do you have investments or savings? If so, consider using a portion to fund your business. You should never invest all your savings into a business due to the risk of failure. In addition, you should never invest money put aside for emergency savings (experts recommend having three to six months of income put aside for this purpose), or money you will need over the next few years for various obligations. Consider a home equity loan. If you have a home, looking to get a home equity loan can be a wise idea, since these loans are typically easily approved (since your home acts as collateral), and interest rates are typically lower. If you have a 401(k) plan through your employer, consider borrowing against the plan. Plans typically allow you to borrow against 50% of your account balance up to a maximum of $50,000. Consider saving ahead as another option. If you have a job, save a portion of your monthly income over time to cover your start-up costs. Visit a bank to inquire about small business loans or lines of credit. When doing this, always visit many providers to ensure you are getting the best rate.

Manage your running costs

Keep a close eye on your running costs and keep them in line with

your projections. Whenever you see something spent wastefully, like electricity, phone plans, stationery, packaging—look around and estimate how much you really need, and minimize or remove the cost in every way possible. Think frugally when you start up, including renting items instead of purchasing them and using pre-paid plans for services your business needs instead of locking yourself into long-term contracts.

Have more than the minimum

You may determine it will take $50,000 to start your business, and that's fine. You get your $50,000, buy your desks and printers and raw materials, and then then the second month arrives, and you're still in production, and the rent is due, and your employees want to be paid, and all the bills hit at once. When this happens, your only likely recourse will be to pack it in. If you can, try to have the reserves for a year of no income.

Pinch those pennies

Plan to keep purchases of office equipment and overheads to a

minimum when starting up. You do not need amazing office premises, the latest in office chairs and pricey artwork on the walls. A broom cupboard in the best address can be sufficient if you can artfully steer clients to the local coffee shop for meetings every time (meet them in the foyer). Many a business start-up has failed by purchasing the expensive gizmos instead of focusing on the business itself.

Decide how to accept payment

You will need to do something to get payment from your clients or customers. You can get something like a Square, which is great for small businesses since it requires the minimum amount of paperwork and the fees are minimal. However, if you feel uncomfortable with technology, you can inquire about a more traditional merchant account. A merchant account is a contract under which an acquiring bank extends a line of credit to a merchant, who wishes to accept payment card transactions of a particular card association brand. Previously, without such a contract, one could not accept payments by any of the major credit card brands. However, the Square has changed that, so don’t feel locked in or limited to this option. Do your research. The Square is a card swiping device which connects with a Smartphone or tablet and turns that device into a sort of cash register. You may have encountered this device in the businesses you frequent, as they are becoming common at coffee shops, restaurants, street food stands and other businesses (look for a postage-stamp sized plastic square plugged into a tablet or phone). Note that PayPal, Intuit, and Amazon all offer similar solutions. Make sure to look into all options before making a selection. If you are online business, services like PayPal offer an excellent way to receive payment and make transfers.

In the next we will discuss about “How to cover the legal side”.

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How to write your small business plan

How to write a small business plan? A business plan helps to define what you think you need to launch your business, large or small. It summarizes the sense of your business in a single document. It also creates a map for investors, bankers, and other interested parties to use when determining how they can help you for their best and to help them decide whether or not your business is physically possible. Your business plan should consist of the basics outlined in the steps below.

Write down your business description.

Describe your business more uniquely, and how it fits into the market in general. If you are a corporation, LLC, or sole

proprietorship, state that, and why you chose to go that route. Describe your product, its big features, and why people will want it. Answer the subsequent questions. Who are potential customers? Once you understand who they are and what they want, come up with a marketing strategy. What price are they willing to pay for your product or service? Why would they pay for your product or service over your competitor's? Who are your competitors? Do a competitive analysis to identify key competitors. Find out who is doing something similar to what you are planning, and how have they been successful. Just as important is to find the failures, and what made their venture fall apart.

Write an operational plan.

This will describe how you will produce or deliver your product or service and all costs. How will you create your product? Is it a service that you are offering, or if it's more complex- software, a physical product like a toy or a toaster — how will it get built? Define the process, from sourcing raw materials to assembly to completion, packaging, warehousing, and shipping. Will you need additional people? Will there be unions involved? All of these things must be taken into account. Who will lead, and who will follow? Define your organization, from the receptionist up to the CEO, and what part each plays in both function and financials. Knowing your organizational structure will better help you plan your operating costs, and fine-tune how much capital you will need to function effectively. Getting feedback. Friends and family make great resources for asking questions and getting feedback––don't hesitate to use them as your sounding board. Need to increase the size of your premises. This happens more often than expected. Once the stock starts piling up, you may find it ends up in your living room, bedroom and the garden shed. Think rental of storage premises if needed.

Write the marketing plan.

Your operational plan describes how you will produce your

product, and your marketing plan describes how you will sell your product. When you create your marketing plan, try to answer the question of “how” you will make your product known to potential customers. First how you will use the type of marketing. For example, will you use radio ads, social media, promotions, billboards, attend networking events, or all of the above? Second you will also want to define your marketing message. In other words, what will you say to convince customers to choose your product? Here, you want to focus on your Unique Selling Point (also known as USP). This is the unique advantage your product has to solve your customer’s problem. For example, you may be lower cost, faster, or higher quality than your peers.

Come up with a price Model

Start by checking out your competitors. Know how much they are selling a similar product for. Can you add something to it (add value) to make yours different and hence make it a more enticing price? Competition isn't just about the goods or services themselves. It is also about your social and environmental credibility. Consumers are increasingly conscious of the need to show that your business is concerned with labor conditions and isn't damaging the environment. Certification endorsements from reputable organizations, such as labels and stars, can reassure customers that your product or service is more aligned with their values than one lacking the certification.

Cover the financials

The financial statements translate your marketing and operational plans into numbers, profits and cash flow. They identify how much money you will need and how much you might make. Since this is the most dynamic part of your plan, and perhaps the most important for long-term stability, you should update this monthly for the first year, quarterly for the second year, and then annually after that. Cover your startup costs. How are you going to finance your business initially? The bank, venture capitalists, angel investors, Small Business Administration (SBA), your own savings: these are all viable options. When you start a business, be realistic. You will probably not roll out of the gate making 100 percent of whatever you project, so you need to have enough ready reserve to fund things until you are really up and running. One of the surest roads to failure is under-capitalization. What price do you intend to sell your product or service for? How much will it cost you to produce? Work out a rough estimate for net profit—factoring in fixed costs like rent, energy, employees, etc.

Come up with an executive summary

The first part of a business plan is the executive summary. Once you've developed the other parts, describe the overall business concept, how it will be monetized, how much funding you will need, where it stands currently, including its legal standing, people involved and a brief history, and anything else that makes your business look like a winning proposition.

Build your product or develop your service

Once you have the business all planned, financed, and have your basic level of staffing, get going. Whether that's sitting down with the engineers and getting the software coded and tested, or getting materials sourced and shipped to your fabrication room (aka "garage"), or purchasing in bulk and marking up the price, the building process is the time during which you prepare for market. During this time, you may discover things such as: Needing to tweak the ideas. Perhaps the product needs to be a different color, texture or size. Maybe your services need to be broader, narrower or more detailed. This is the time to attend to anything that crops up during your testing and development phases. You'll know innately when something needs tweaking to make it better or to make it less like a competitor's stale offerings.

In the next post we will cover “how to manage your small business finance”.

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HOW TO OPEN A SMALL BUSINESS

Opening a small business without a doubt is a large undertaking, but it is happily something that can be attained by any person with a good idea, a strong work ethic, and a fine set of resources. Starting a business involves thinking of a business concept, writing a business plan, understanding the economic side, and finally marketing and launching.

DEFINE YOUR GOALS

First of all think and question yourself, do you want financial independence, eventually selling your business to the highest bidder? Do you want something small and sustainable, that you love doing and from which you want to gain a steady income? These are the things that are good to know very early on.

CHOOSE AN IDEA

It might be a product you've always wanted to make, or a service you feel people need. It might even be something people don't know they need yet, because it hasn't been invented! It can be helpful to have people who are bright and creative join you for a casual brain storming session. Start with a simple question like: "What shall we do?" The idea is not to create a business plan, just to generate potential ideas. Many of the ideas will be duds, and there will be quite a few ordinary ones, but a few may emerge that have real potential. Consider your talents, experience, and knowledge when selecting a concept. If you have a particular skill set or talent, consider how these resources can be applied to meeting some sort of market demand. Combining skill and knowledge with a market demand increases your odds of having a successful business idea. For example, you may have worked with electronics as an employee for many years. You may have noticed a demand in your community for a particular form of electrical work, and combining your experience with the market demand can allow you to attract customers.

CREATE A WORKING NAME

You could even do this before you have an idea for the business, and if the name is good, you may find it helps you define your business idea. As your plan grows, and things begin to take shape, the perfect name may come to you, but don't let that hinder you in the early phases. Create a name that you can use while you plan and don't hesitate to change it later. Always check to see if the name is being used by somebody else before selecting it. Try to create a name that is simple and memorable. Think of popular brand names like "Apple". These names are memorable, simple, and easy to pronounce.

DEFINE YOUR TEAM

Will you do this alone, or will you bring in one or two trusted friends to join you? This brings a lot of synergy to the table, as people bounce ideas off each other. Two people together can often create something that is greater than the sum of the two separate parts. Think of some of the biggest success stories in recent times, such as John Lennon and Paul McCartney; Bill Gates and Paul Allen; Steve Jobs and Steve Wozniak; and Larry Page and Sergey Brin. In every case, the partnership brought out the best in both sides of the equation. Think about the areas that you are either weak in, or have little knowledge of. Finding partners compatible with your personality who can fill in your knowledge or skill gaps is an excellent way to ensure your business has the resources you need to succeed.

CHOOSE YOUR PARTNERS WISELY

 When choosing the person or people you're going to build the business with, be careful. Even if someone is your best friend, it doesn't mean that you will partner well in a business operation. Start it with a reliable person. Things to consider when choosing your co-leaders and support cast include: Does the other person complement your weaknesses? Or do both of you bring only one set of the same skills to the table? If the latter, be wary as you can have too many people doing the same thing while other things are left unattended. Do you see eye to eye on the big picture? Arguments about the details are a given, and are important for getting things right. But not Seeing Eye to eye on the big picture, the real purpose of your business, can cause a split that may be irreparable. Be sure your team cares about the and buys into the purpose as much as you do. If interviewing people, do some reading on how to spot real talent beyond the certifications, degrees or lack thereof. The area an individual is educated in is not necessarily the area they are most talented in. An interviewee may have a background in accounting for example, but their experience and your assessment of them indicates they may be a better fit helping with marketing.

In the next post we will discuss about How to Writing a Small Business Plan

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