*This information was adapted from
the U.S. Small Business Administration home page at http;//www.sba.gov/
1. Do I have what it takes to
own/manage a small business?
You will be your own most
important employee, so an objective appraisal of your strengths and weaknesses
is essential. Some questions to ask yourself are:
Am I a self-starter?
How well do I get along with
a variety of Personalities?
How good am I at making
decisions?
Do I have the physical and
emotional stamina to run a business?
How well do I plan and
organize?
Are my attitudes and drive
strong enough to maintain motivation?
How will the business affect
my family?
2. What business should I
choose?
Usually, the best business
for you is the one in which you are most skilled and interested. As you review
your options, you may wish to consult local experts and businesspersons about
the growth potential of various businesses in your area. Matching your
background with the local market will increase your chance of success.
3. What is a business plan
and why do I need one?
A business plan precisely
defines your business, identifies your goals and serves as your firm's resume.
Its basic components include a current and pro forma balance sheet, an income
statement and a cash flow analysis. It helps you allocate resources properly,
handle unforeseen complications, and make the right decisions. Because it
provides specific and organized information about your company and how you will
repay borrowed money, a good business plan is a crucial part of any loan package.
Additionally, it can tell your sales personnel, suppliers and others about your
operations and goals.
NOTE: We have an area devoted
to helping you with your business plan.
4. Why do I need to define my
business in detail?
It may seem silly to ask
yourself, "What business am I really in," but some owner-managers
have gone broke because they never answered that question. One watch store
owner realized that most of his time was spent repairing watches while most of
his money was spent selling them. He finally decided he was in the repair
business and discontinued the sales operations. His profits improved
dramatically.
This point is very
important to Kosovo. It seems like
Kosovars would be well-served if they focused attention, prior to business
startup, on a well-thought plan.
5. What legal aspects do I
need to consider?
Licenses required, zoning
laws and other regulations vary from business to business and from state to
state. Your local Small Business Administration (SBA) office and/or chamber of
commerce will provide you with general information, but you will need to
consult your attorney for advice specific to your enterprise and area. You also
must decide about your form of organization (corporation, partnership or sole
proprietorship) or tax status.
See UNMIK/REG/2001/6 On Business Organizations
You can choose from the
following types of Business Organizations: Personal Business Enterprise,
General Partnership, Limited Partnership, Corporation.
Corporations are the most
common type of business organization and this regulation outlines the process
by which a corporation is created and the responsibilities of the Corporation
once it is created. The corporation
standards outlined in this regulation are very similar to those described in
the Delaware Business Corporations Act, but the Delaware Act is much more
thorough. More specifically, the
Delaware Act includes more detailed provisions for seeking remedies, profits,
change of address, details on preincorporation issues, voting, mergers and
annual reporting guidelines.
See also UNMIK/REG/2000/68
on Contracts for the Sale of Goods
The
UNMIK regulation contains the spirit of the Uniform Commercial Code (UCC),
specifically the
UNMIK/REG/2000/8 On the
provisional registration of businesses
Essentially
this regulation requires that all businesses be registered with UNMIK before
their operation will be considered legal.
This differs from the Delaware model in that this information is
contained within the individual regulations that address specific business
organizations like partnerships and corporations, rather than being a separate
regulation.
6. What do I need to succeed
in a business?
There are four basics of
success in small business:
*Sound management practices.
*Industry experience.
*Technical support.
*Planning ability.
Few people start a business
with all of these bases covered. Honestly assess your own experience and
skills; then look for partners or key employees to compensate for your
deficiencies.
7. Would a partner(s) make it
easier to be successful?
A business partner does not
guarantee success. If you require additional management skills or start-up
capital, engaging a partner may be your best decision. Personality and
character, as well as ability to give technical or financial assistance,
determine the ultimate success of a partnership.
8. How can I find qualified
employees?
Choose your employees
carefully. Decide before hand what you want them to do. Be specific. You may
need flexible employees who can shift from task to task as required. Interview
and screen applicants with care. Remember, good questions lead to good
answers-the more you learn about each applicant's experience and skills, the
better prepared you are to make your decision.
9. How do I set wage levels?
Wage levels are calculated
using position importance and skill required as criteria. Consult your trade
association and accountant to learn the most current practices, cost ratios and
profit margins in your business field. While there is a minimum wage set by
federal law for most jobs, the actual wage paid is entirely between you and
your prospective employee.
This aspect of the business
plan should be forward looking. The
entrepreneur must consider that the internationals are creating a false demand
and that their numbers will diminish over time.
The profits that a business might be able to accrue by luring
internationals is probably not worth the price that will be paid later when
only the locals are left to buy the goods.
This complements the wage levels.
The local entrepreneur is not expected to pay wages that are competitive
with the jobs the internationals can provide; however, these entrepreneurs
should strive to be competitive with the internationals and not take advantage
of the depressed wage situation that currently exists. This attempt to pay higher wages will
eventually lead to a higher standard of living.
10. What other financial
responsibilities do I have for employees?
You must withhold federal and
state income taxes, contribute to unemployment and workers compensation
systems, and match Social Security holdings. You may also wish to inquire about
key employee life or disability insurance. Because laws on these matters vary
from state to state, you probably should consult local information sources
and/or SBA offices.
Reg/2001/27 Labor Law
This
describes the age at which an individual may legally work and explains the
legal requirements and ramifications in the areas of: discrimination,
collective bargaining, the employment relationship, salaries and leave time.
See Also Reg/2001/35
Regarding Pensions
UNMIK/REG/2000/24
Establishes the department of labor and employment
11. What kind of security
measures must I take?
Crimes ranging from armed
robbery to embezzlement can destroy even the best businesses. You should
install a good physical security system. Just as important, you must establish
policies and safeguards to ensure awareness and honesty among your personnel.
Because computer systems can be used to defraud as well as keep records, you
should check into a computer security program. Consider taking seminars on how
to spot and deter shoplifting and how to handle cash and merchandise; it is
time and money well spent. Finally, careful screening when hiring can be your
best ally against crime.
It is true that Kosovars
must be careful to deter shoplifters and embezzlers. Careful screening when hiring is good
advice. Also, the Kosovar entrepreneur
should invest in the latest available internet and computer security
system. A computer in Kosovo is just as
likely to be infected as one in the US.
However a security system is probably not the answer. Presumably neighbors look out for one
another. The shopowners probably have
other means of keeping the store safe besides a high tech security system.
12. Should I hire family
members to work for me?
Frequently, family members of
the owner "help out in the business." For some small business owners
it is a rewarding experience; for others it can cause irreparable damage.
Carefully consider their loyalty and respect for you as the owner-manager. Can
you keep your family and business decisions separate?
These are legitimate
concerns; however, Kosovars are probably much more likely to hire family
members out of necessity and are unable to turn away less desirable family
members. In addition, the family
relationship structure is probably significantly different from the American
structure and the Kosovar family members are probably easier to keep in line
due to stronger family loyalty.
13. Do I need a computer?
Small business today faces
growing inventory requirements, increased customer expectations, rising costs
and intense competition. Computers can provide information that leads to better
returns on investment. At the same time, they help you cope with the many other
pressures of your business. Computers are not cure alls, however, and
considerable care should be given to:
(1) deciding if you need one,
and
(2) selecting the best system
(or personal computer) for your business.
14. What about
telecommunications?
All small businesses share
some common functions: sales, purchasing, financing, operations and administration.
Depending on your individual business, telecommunications can support your
objectives in any or all of these areas. In its basic form, the telephone (the
terminal) and the network (local or long distance) make up the basic components
of telecommunications. It is an effective tool that can easily change with
seasonality and growth. How you use telecommunications can affect how
efficiently and profitably your company grows in the future.
Absolutely! In Kosovo the entrepreneur must be forward
looking. The telecommunications network
seems stable but the entrepreneur must consider how he will change with a
changing marketplace. The goal is to
improve the local economy and each businessperson must act accordingly. The entrepreneur should be sure to
incorporate or plan to incorporate a phone, fax, computer modem and the
necessary equipment for credit card payment.
All of this equipment may not be needed presently, but the idea should
be to plan for the day when the business can handle it. Design every aspect of the business plan so
that adaptation to current global technology will be an easy transition when
the time comes.
For an idea of how much
this will cost: An office in Dragodan, Pristina with 10 employees pays the
following per month:
Phone and fax line:
1500-2700 €
Internet 128 Kbps: 700
€
Water: 50-70 €
Central heating: 7000-8000
€ (per year)
Cost of mid-range
generator: 5000 €
Diesel and generator
maintenance: 600 € (per month)
15. How much money do I need
to get started?
Once you have taken care
of your building and equipment needs you also must have enough money on hand to
cover operating expenses for at least a year. These expenses include your
salary as the owner and money to repay your loans. One of the leading causes of
business failure is insufficient start-up capital. Consequently, you should
work closely with your accountant to estimate your cash flow needs.
16. What are the alternatives
in financing a business?
Committing your own funds is
often the first financing step. It is certainly the best indicator of how
serious you are about your business. Risking your own money gives confidence
for others to invest in your business. You may want to consider a partner for
additional financing. Banks are an obvious source of funds. Other loan sources
include commercial finance companies, venture capital firms, local development
companies and life insurance companies. Trade credit, selling stock and
equipment leasing offer alternatives to borrowing. Leasing, for example, can be
an advantage because it does not tie up your cash. Ask your local SBA office
for information about these various sources.
Kosovars should look to the
local community for financial support.
The Diaspora is another good source, as well as grants from
international development organizations.
17. What do I have to do to
get a loan?
Initially, the lender will
ask three questions:
*How will you use the loan? *How
much do you need to borrow? *How will you repay the loan?
When you apply for the loan,
you must provide projected financial statements and a cohesive, clear business
plan which supplies the name of the firm, location, production facilities,
legal structure and business goals. A clear description of your experience and
management capabilities, as well as the expertise of other key personnel, will
also be needed.
This is probably tough for
the local Kosovar. Kosovars typically
have no credit history and the banks in Kosovo probably have limited funds but
that is changing and will continue to improve.
18. What kind of profits can
I expect?
Not an easy question.
However, there are standards of comparison called "industry ratios"
which can help you estimate your profits. Return on Investment (ROI), for
example, estimates the amount of profit gained on a given number of dollars
invested in the business. These ratios are broken down by Standard Industrial
Classification (SIC) code and size, so you can look up your type of business to
see what the industry averages are
19. What should I know about
accounting and bookkeeping?
The importance of keeping
adequate records cannot be stressed too much. Without records, you cannot see
how well your business is doing and where it is going. At a minimum, records
are needed to substantiate:
1. Your tax returns under
Federal and State laws, including income tax and Social Security laws;
2. Your request for credit
from vendors or a loan from a bank;
3. Your claims about the
business, should you wish to sell it.
But most important, you need
them to run your business successfully and to increase your profits.
20. How do I set up the right
record keeping system for my business?
The kind of records and how
many you need depend on your particular operation. The SBA's resources and an
accountant can provide you with many options. When deciding what is and is not
necessary, keep in mind the following questions:
1. How will this record be
used?
2. How important is this
information likely to be?
3. Is the information
available elsewhere in an equally accessible form?
21. What financial statements
will I need?
You should prepare and
understand two basic financial statements:
(1) the balance sheet, which
is a record of assets, liabilities and capital; and
(2) the income
(profit.and-loss) statement, a summary of your earnings and expenses over a
given period of time.
22. What does marketing
involve?
Marketing is your most important
organizing tool. There are four basic aspects of marketing, often called the
"four P's":
*Product: The item or service
you sell.
*Price: The amount you charge
for your product or service.
*Promote: The ways you inform
your market as to who, what and where you are.
*Provide: The channels you
use to take the product to the customer.
As you can see, marketing
encompasses much more than just advertising or selling. For example, a major
part of marketing involves researching your customers: What do they want? What
can they afford? What do they think? Your understanding and application of the
answers to such questions play a major role in the success or failure of your
business.
23. What is my market
potential?
The principles of determining
market share and market potential are the same for all geographic areas. First
determine a customer profile (who) and the geographic size of the market (how
many). This is the general market potential. Knowing the number and strength of
your competitors (and then estimating the share of business you will take from
them) will give you the market potential specific to your enterprise.
24. What about advertising?
Your business growth will be
influenced by how well you plan and execute an advertising program. Because it
is one of the main creators of your business' image, it must be well planned
and well-budgeted. Contact local advertising agencies or a local SBA office to
assist you in devising an effective advertising strategy.
25. How do I set price levels?
The price of a service or
item is based on three basic production costs: Direct materials, Labor and
Overhead. After these costs are determined, a price is then selected that will
be both profitable and competitive. Because pricing can be a complicated
process, you may wish to seek help from an expert.
26. Are some locations better
than others? Time and effort devoted to selecting where to locate your business
can mean the difference between success and failure. The kind of business
you are in, the potential
market, availability of employees and the number of competitive establishments
all determine where you should put your business.
Pristina is a great
location for restaurants and shops, but a manufacturing plant should locate in
the country where land is cheaper.
Farizaje is a great location for shops and restaurants because of the
proximity to Camp Bondsteel.
27. Is it better to lease or
buy the store (plant) and equipment?
This is a good question and needs
to be considered carefully. Leasing does not tie up your cash; a disadvantage
is that the item then has no resale or salvage value since you do not own it.
Careful weighing of alternatives and a cost analysis will help you make the
best decision.
28. Can I operate a business
from my home?
Yes. In fact, experts
estimate that as many as 20 percent of new small business enterprises are
operated out of the owner's home. Local SBA offices and state chambers of
commerce can provide pertinent information on how to manage a home-based
business.
29. How do I find out about
suppliers/manufacturers/ distributors?
Most suppliers want new
accounts. A prime source for finding suppliers is the Thomas Register, which
lists manufacturers by categories and geographic area. Most libraries have a
directory of manufacturers listed by state. If you know the product line
manufacturers, a letter or phone call to the companies will get you the local
distributor-wholesaler. In some lines, trade shows are good sources of getting
suppliers and looking over competing products.
30. Where can I go for help?
This is the official website
of the United Nations Mission in Kosovo.
It features relatively up-to-date, official information disseminated by
the UN. You can link to the four
“pillars” of UNMIK from this cite to search for information on police &
justice, civil administration, institution building and economic
reconstruction. In addition the cite
features news headlines and a comprehensive list of the UNMIK regulations. This should be your first stop if you are
looking for any information regarding Kosovo.
http://www.kta-kosovo.org/index.html
This is the official website
of the KTA. The KTA is responsible for
encouraging the success of socially owned and public enterprises and
instituting the privatization of socially owned and publicly owned institutions
in Kosovo. Here you can find an explanation
of the objectives of the KTA, as well as, press releases and pertinent UNMIK
regulations. This cite also features a
useful publication called “Ten Top Tips for Investors Coming to Kosovo.”
http://www.usaidkbs.com/intro.html
The mission of the KBS is to
support and encourage small and medium private business enterprises in Kosovo
in order to stimulate employment and economic growth. This website contains many useful business
tools including publications explaining the current accounting standards for
small businesses, information on conversion to the Euro and , information on
how to write a business plan. The cite
lists KBS press releases that appeared in the local newspaper and they list services
which include assistance with writing a business plan and other useful training
programs. A visit to the KBS seems like
a necessary first step for the new business entrepreneur.
http://www.cdc.org/koassignments.htm
This site has a lot of
information describing the mission of this organization and information
encouraging young Americans to volunteer for this organization. The Market Development Services page linked
to this site is the page pertinent to the Kosovar entrepreneur. This page links to a business resources
guide, a chat room for entrepreneurs and contains links to other sites. Also, the newsletter is accessible from this
site. Here a person can read about other
entrepreneurs’ successes and related articles.
http://www.albaniabiz.org/index.html
This site offers current
information regarding the Albanian business sector. It is also a source of information for
Americans wishing to do business in Albania.
You will find explanations regarding how to set up a business in
Albania. The Business Development and
Information Services page of this site explains specifically programs available
to Kosovar entrepreneurs and American entrepreneurs wishing to invest in
Kosovo.
This page provides resources
for Kosovar entrepreneurs to connect with the European small business
sector. The website provides a source for
business news in Kosovo. The primary
benefit of using this site is that an entrepreneur can register here and have
information regarding business opportunities in Europe or in Kosovo sent to
him. This site provides a place for
entrepreneurs to link with one another to pursue some sort of business
relationship.
http://www.mti.gov.sg/public/Home/frm_MTI_Default.asp
This is the site for the
Ministry of Trade and Industry. This site
is dedicated to improving the market in Singapore and Southeast Asia
generally. This site is useful to the
entrepreneur who is interested in learning more about the concepts and
philosophy of free trade as this is discussed at length. In addition, an entrepreneur can learn how to
trade with Singapore by exploring this site and making contact with the
appropriate person through the site.
Lastly, using the information on this site, an entrepreneur can model
his business concept after some of those presented here.
http://lnweb18.worldbank.org/eca/kosovo.nsf
This links you to the World
Bank Kosovo page. This site provides
information describing the role and mission of the World bank along with local
contact information. There are a number
of press releases, links to other sites and news articles on these pages where
an entrepreneur can access information.
This site contains the “World Bank Report on Kosovo: Medium Public
Expenditure Priorities.” This document
traces the economic situation in Kosovo from the war until the present. This site gives the entrepeneur an overview
of the current economic situation and some background information useful for
constructing the business plan.
This is the site for the
Kosova Development Agency. There are a
lot of helpful statistics about Kosovo on this site. The site lists the businesses that have
retistered with the site throughout Kosovo. The site describes the offerings of the Kosova
Development Agency including consulting, training and promotion. You will find contact information for the
Kosova Development Agency at this site.
http://www.usofficepristina.usia.co.at/index.html
This is the US Office
Pristina home page. This page is the
official US government site on Kosovo and you can link to other official US
government websites from here. The general
purpose of this site is to keep Kosovars informed of the US government policy
toward Kosovo and the programs that the US supports in Kosovo.
http://www.wannalearn.com/Business_and_Careers/Accounting/
Sources of Web-based
accounting lessons:
31. What do I do when I'm
ready?
You have done your homework:
you have a complete business plan; you know where you want to operate; you know
how much cash you will need; and you have specific information on employee,
vendor and market possibilities. You now may want someone to look over your
plans objectively. Contact the business department at a local college for
another opinion. Then, when you have made the final decision to go ahead, it is
time to call the bank and get going. Good luck!