When starting a business, we rarely think about failure or exit strategy. Maybe because of our overflowing self-confidence and passion to succeed, we completely forgot about this. We are often too busy raising capital, spying on the competition, and improving operations.

PowerHomeBiz asks 3 basic questions when starting a business. We must be fully prepared to answer the 3rd question:

If the business fails, how will it affect me and my family? As a family man with 3 kids, he always looks at the risks involved and the odds of his success. While he doesn’t believe in playing it safe, he also does not want to go blindly into something and lose everything his family has.

But why do small businesses fail?

Among hundreds of reasons, there are are two common ones: Lack of research and poor financial control.

Lack of Research

Without thorough understanding of the market and comprehensive competitor analysis, you can never compete competently and will miss important market trends. This will provoke you to take actions without thinking.

Poor Financial Control

Eager to gain more customers, we tend to overspend on our marketing and sampling initiatives. Eventually, it will lead to insufficient working capital and business closure.

As small business owners, we are sometimes guilty of talking too much or dominating every business meeting. We might be carried away by our passion to delight our customers, or even frustration about our current business performance.

But do you know that listening is a good management style as well as a strong motivator to your employees? Leading by listening is a not new concept although it is not a common practice.

In fact, the 7th rule among the ten rules that worked for Sam Walton, founder of retailing giant Wal-Mart, is about listening to everyone and finding ways to get to talk.

The folks on the front lines — the ones who actually talk to the customer — are the only ones who really know what’s going on out there. You’d better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.

So the next time you feel like talking, shut up and listen to what your partners or employees have to say. For starters, check out Tyner Blain’s post about ten active listening skills.

When asking for startup funding from several venture capitalists, having a great elevator pitch is very important. This is a very concise presentation about your company, products or services designed to draw attention to your business proposal. Just like an elevator ride, you must limit your pitch to a few minutes, or about 150 to 225 words.

Go BIG Blog recommends you pitch everyone, all the time, to improve your skills in this area.

Like practicing at anything, the more you pitch, the more you learn about the pitch itself. You learn how people are reacting to your value proposition, how they are digesting your message, and whether or not you even make sense. I’ve probably given the Go BIG pitch a thousand times, but every time I modify it just a bit to make it better.

Here are some additional tips:

• Use plain English to minimize misunderstanding.
• Use analogies to break down complex and technical ideas. Do not babble on the technical aspect but focus on the most important advantages.
• Be passionate when delivering your pitch.
• Establish your credibility as an expert in your chosen industry.

Many business experts and experienced entrepreneurs believe location, location, location is the most important thing for startup businesses. Even today, this classic advice remains relevant. Finding a good area to conduct your business is as important as having excellent products or services.

Of course there are some exceptions like online startups. However, if you are into retailing and other service-oriented businesses, location matters most. Here are some tips on finding the best location for you:

Know Thyself
Location depends on your good understanding of the scope of your operations like the importance of walk-in customers, or if there is a need for more customer interaction. You must also determine if the demographic or population in the area represents your target market.

Smell the Competition
Find out how many direct or indirect competitors operate in the area and draft your competitor analysis. See if the market is highly competitive and if you have a unique advantage over them. Forecast how much money is needed to compete aggressively and establish strong presence. If you do not see any positive gain, start looking for another place.

Rush on Business cautions entrepreneurs not to overlook the zoning ordinance. Additionally, Communication at Work encourages you to follow the coffee shops as part of her 9 tips for choosing a business location.

To protect you and your business against any form of fraud, erratic deliveries, and late payments for products sold or services rendered, it is important to sign a business agreement. It will also empower you to create binding agreements between your customers, vendors, and other partners.

Although hiring a lawyer will add up to your expenses, Business Lawyer Blog emphasizes the importance of customized agreements instead of standard forms that you can easily download from the Internet.

Some people prefer to go the “cheap” route by picking a form randomly off the Internet and plugging in details trying to customize the form without having the legal knowledge to do it right. When things go wrong, as they often will, if the completed form is enforceable at all the court’s interpretation of what it means can come as an unpleasant surprise to the nonlawyers who signed it.

So, it is important to arm yourself with enough knowledge regarding business contracts. This will help you discuss more intelligently with your business partners and with your legal counsel as well. As reference, Entrepreneur.com shows the ins and outs of business agreements for starting small business owners.

Did you ever consider the contributions of your small business to the economy? Small Business Trends talks about the increasing number of single person businesses based on the latest statistics by US Census.

For proper perspective, US Census defines Nonemployer statistics as “one that has no paid employees, has annual business receipts of $1,000 or more ($1 or more in the construction industries), and is subject to federal income taxes.”

For the past three years the number of single-person businesses has grown each year between 4% and 5%. That means the single-person businesses grow faster than the rate of growth of the U.S. population as a whole (which grows at about 1% a year according to the U.S. Census).

As of 2005, there are 20.3 million single person businesses generating $951 billion annual sales or about 78% of all US businesses! As Chinese philosopher Lao Tzu adequately put, “Great acts are made up of small deeds.” In terms of revenues, real estate, construction, and technical services are industry leaders.

While this is a positive news on the macro level, it also signals intensive competition in the years to come and more business failures. In one study about success rates of small businesses (PDF, 14 pgs), it is estimated that “businesses with fewer than 20 employees have only a 37% chance of surviving four years (in business) and only a 9% chance of surviving 10 years.”

So, gear up to outsmart and outpace your competitors with innovative marketing programs and strong customer service.

Nevertheless, be proud to be one of the entrepreneurs driving the economy!

From personal to business, planning is always necessary for survival. In the case of starting entrepreneurs, a business plan summarizes the different facets of your business from mission/vision, long-term directions, and financial estimates.

While this is a serious requirement among MBA students, Guy Kawasaki showed a study to validate if there is really a need to do formal business plans.

The analysis revealed that there was no difference between the performance of new businesses launched with or without written business plans. The findings suggest that unless a would-be entrepreneur needs to raise substantial startup capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.

Despite these recent findings, drafting a business plan remains a very important exercise particularly for starting businessmen. It gives you a checklist of things you need to cover before you can formally start your own business.

There are many things you need to know before you embark in any business undertaking. This includes the nature of your industry, target market, scope of operations, level of technology, intensity of competition, marketing strategy, investments needed, and many more. Using a simple business plan, you can organize all information to serve as a good foundation for your decisions.

Just do not take too much time preparing your business plan. Instead, focus your efforts in the running the daily operations.

Online networking services such as LinkedIn and Biznik offer entrepreneurs and business owners a great way to connect with others in the industry, find work, or even find employees or collaborators.

LinkedIn

LinkedIn appears to be based on the Six Degrees of Separation concept, keeping you apprised of your connections, their connections, their connections connections, etc. It becomes easy to get introduced or recommended, or you can search for fellow employees or old classmates. If people in your network are hiring, you can see this in your member panel. Got questions? LinkedIn has Answers. Just ask, and one or more members will likely answer.

Biznik

Biznik’s social network was once Seattle-based, but just relaunched with new features and a wider geographic scope. Thanks to location-aware features, online meetings can turn into event planning. Other new features include messaging and business referrals.
These are merely two of many online networks, though these are probably most suited to business owners, professionals and entrepreneurs.

In essence, we are all negotiators using diverse strategies and tactics to get what we want and need. From ordinary tasks like buying a brand new car to conflict resolutions in Iraq, the need to master the art of negotiating has become a crucial skill for success. For this reason, renowned negotiator, Chester Karrass, titled his bestseller book as “In Life You Don’t Get What You Deserved, You Get What You Negotiate”.

Entrepreneurs active in daily operations are exposed to a multitude of manipulations and negotiating tactics. It can be discussions to lower supply prices, hire or terminate people, acquire resources, and get longer payment terms. In order to fight back and help the business survive, you must learn how to play the negotiating game!

While it is a complex game, there are popular tactics employed by many people. It may take the following forms:

The Sound of Silence
Humans like to interpret responses may it be verbal or non-verbal. If the opposite party offers something on the table, they expect you to react immediately. But if you stay silent, the common tendency of the other party is to offer another concession or explain further. At the end of the day, you can gauge their strategies and negotiating parameters without revealing yours.

Low-Balling
These negotiators are experts in hidden costs. Basically, this tactic starts by offering products or services at very low prices relative to competition. Once you agree with the price, these low-ballers will immediately present the hidden costs, saying those are not part of the deals.

There are more negotiating strategies and tactics available for entrepreneurs. Even anger can be a very effective negotiating tool but not encouraged for inexperienced negotiators. In Fast Cash Loan, the top 10 negotiating tactics are explained fully. Michael Scott shares his top 5 negotiation tips in Thoughts About Law, Business, Online Marketing, & Life.

Do you have a weblog for your SMB (small to medium business)? Want a no-cost, effective way to promote your weblog and thus your business? Do you have a couple of hours per week to spend doing a bit of promotion?

The answer is Blog Carnivals, and you can utilize them in two effective ways:

1. Submitting articles to get exposure at “host” weblogs.
2. Hosting a carnival, which draws web traffic and hyperlinks from other weblogs.

Here are some of the benefits of participating in blog carnivals:

1. Have an inexpensive (as in free) way to promote your weblog, website and business.
2. Gain exposure to other like-minded bloggers and possibly business owners.
3. Gain exposure to readers of other link-minded bloggers’ blogs.
4. Get links back to your weblog, which builds both reader traffic and authority in the search engines.
5. Gain authority about a certain topic, either by submitting quality articles, or by choosing quality submissions for your own carnival. (There’s no rule that says you must accept everything, but be diplomatic about it. Or simply don’t mention anything that’s been left out.)

You do not necessarily need to start a new carnival. Search the massive list at the Blog Carnival website. Find a dozen or so suitable carnivals, preferably weekly, and try to submit your best article of the week to your list.

Note: Many carnival hosts do not like multiple submissions from one blogger for the same edition. Err on the side of caution and only submit one per week, if a carnival is weekly. Some are bi-weekly or longer between editions. So if you start submitting to a lot of carnivals, track submissions in a spreadsheet. I like to use Google Docs and Spreadsheets because you can click on an URL and have a browser window open to that page. Everything stays in a browser framework. This makes it far easier track and submit articles each week, especially if you use a multi-tabbed web browser such as Mozilla/ Firefox, Netscape or Opera.

If you want to host a carnival, check existing ones. Hosts will often state that they’re looking for rotating hosts. If you don’t find anything suitable, you can consider starting your own carnival. However, before you do, consider a few things:

1. Build a bit of authority for your blog first, possibly by submitting to carnivals for a few weeks.
2. It takes time to look over entries. You could cheat and let every submission in. The Blog Carnival has a new feature where they automatically generate the HTML code for a carnival edition based on all pending submissions. It takes 5 seconds instead of a an hour or more to read entries. But if you do this, without filtering entries, you may end up with some poor quality articles and thus lose any authority your blog has gained.
3. Don’t be afraid to reject a submission if it does not seem relevant or is just an article trying to sell something via an affiliate link. People make mistakes or just don’t followed instructions about what type of articles a carnival is looking for. One oddity taking place is use of software that chops up a real article and rearranges it into what appears to a new article. And then someone will submit this to a carnival You do not want to publish links to this sort of garbage.

It takes a bit of effort and organization, but if you utilize blog carnivals on a regular basis, it can be a powerful way to build up your weblog and business.