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Howard County MD Business Law Blog

Why keeping business plans simple may help business owners

Some prospective Maryland entrepreneurs get bogged down when they are trying to write their business plans for their new ventures. It is fairly easy to lose sight of the big picture when writing a business plan, and many people tend to get lost in the details.

When a business owner is just starting out, it is a good idea to focus on keeping the plan as simple as possible. The obvious focus should be on the big details, such as the goals for the company, existing competitors, the direction the business owner wants to go with the company and other such details.

Organizing finances in a small business

Maryland small business owners may want to start a few new habits if they don't do these things already. One is to separate business and personal expenses. The best approach is to have separate bank accounts. Business owners might want to work with an accountant to estimate taxes, and the business account can also be used to save up for these.

Profit is not the same thing as having a healthy cash flow, and businesses need both. Business owners should ensure that this is the case. They should also prepare for times when cash flow might be limited because invoices are caught in accounts receivable. A banker might be able to sit down with a business owner and discuss options including available lines of credit for times when cash flow is tight.

Things to think about before launching a startup

More and more people in Maryland are starting their own businesses these days. Thanks to technological advancements, the barriers to owning a small business are getting lower each year. As a result, almost anyone with an entrepreneurial spirit can seriously contemplate starting a new venture. Before launching a startup, entrepreneusr should ask themselves some questions to make sure that they are truly ready to own a business.

One of the first things prospective owners should think about before starting a new business is whether they are psychologically up to the task. Many people dream of being their own boss as a way to escape the rate race but fail to consider how much work a small business will actually take. If a person wants to have a lot of free time, a small business isn't likely to providethat at first. Successful companies take a lot of work, and about 80 percent of new businesses fold within 18 months.

Creating an effective business plan in Maryland

It is recommended that Maryland residents who are starting a new venture create a comprehensive business plan that outlines how their company will be run. While a business plan is frequently an essential part of the success of a new enterprise, it's also essential that these plans are accurate. Failing to take into account for things like cash flow or not being specific enough can create problems for a start-up company.

While many business plans put an emphasis on ensuring that the business is profitable, many neglect the issue of cash flow. Cash flow ensures that an organization is able to pay its bills, and a business can be profitable while being strapped for cash if clients are not paying their invoices on time.

Health insurance companies battle over prescription drug costs

Thousands of Maryland residents rely on health insurance provided by Anthem and prescription drug coverage from Express Scripts, but they may not be aware that these two leading health care companies are embroiled in a contentious legal battle. The first shots were fired in March when Anthem sued Express Scripts for $15 billion, but the Missouri-based pharmacy benefit company fired back on April 19 by filing a lawsuit of its own.

The two companies are involved in a contract dispute over the cost of prescription drugs. Anthem's CEO says that he tried to negotiate a better deal for his company in January seeking savings of up to $3 billion a year. Anthem claims that it is entitled to a percentage of the savings earned by Express Script from negotiating more advantageous deals with drug makers.

Successful marketing for online businesses

Online business owners in Maryland may want to take a look at their marketing plan and determine what's working and what isn't working. Successful marketing can take time because it is about developing relationships. When creating a marketing plan, business owners should be realistic about their goals and intentional about what they can do to reach them.

A big part of online marketing is content creation, and every piece should be created for the purpose of reaching a specific goal. For example, a business owner may have goals like establishing an online audience of 20,000, acquiring four new clients every month or getting 50,000 page views per year. Each of these goals could be addressed with marketing actions like blogging regularly, posting on social media strategically and writing page content that is search engine optimized.

Health care tax credit for small businesses

Maryland small business owners might be unaware of a federal tax credit for some businesses that provide health insurance for their workers. It is available for businesses making less than $50,000 annually with less than 25 full-time employees.

The credit was established by the Affordable Care Act. Despite the fact that the Government Accountability Office estimates up to 4 million small businesses were eligible for the credit in 2014, fewer than 200,000 companies claimed it.

Accepting risk when starting a company

When starting a new business or developing a product, there are two significant issues that need to be overcome by Maryland entrepeneurs. The first issue is how much money a company can afford to spend on a product or service knowing that there is a higher likelihood of failure than success. However, the one product or service that is a success could possibly make enough money to overcome the other losses.

This means that it is imperative that an owner stays in business or keeps coming up with ideas long enough to come up with that one successful idea. Whether or not the owner is willing to stay in the game long enough is a mental issue more than a mathematical one. For most, this is the hardest problem to overcome and may be even harder if there are investors who may not have the same risk appetite that the owner does.

The importance of succession and development planning

Having a strong development and succession plan is important for Maryland businesses regardless of their sizes. When a supervisor or owner leaves a company, it is important to have talented people who can step into the needed roles so the business has continuity and doesn't end up failing.

Despite the importance of succession plans, only about 8 percent of businesses have these types of plans in place. Developing a succession and development plan doesn't have to be difficult, but it should include several key features. After the plan, establishing a development program for key staff that follows the plan can make unexpected transitions much smoother.

Tips for setting up and growing a small business

Maryland entrepreneurs who are starting new ventures should think about how they will deal with issues such as cash flow problems and social media promotion. Planning ahead to look at options for loans and credit addresses the first challenge. There are a number of small business loans available and programs to help small businesses. Loans and credit can also be used to invest toward growth such as hiring more employees or buying more equipment.

A social media presence is also important. This allows a business to communicate directly and more personally with customers. It also gives customers the opportunity to write reviews of the company.