Congratulations! Welcome to a world of excitement, disappointments and a great roller coaster ride. You could also be on your way to become the next billionaire like Bill Gates. As long as there is life...there is hope.

According to a recent study by the Wall Street Journal most entrepreneurs are not adequately prepared to go into business by themselves.

While they have the motivation, desire and talent, many have not taken time to properly investigate and research the business they are interested in starting.

Similar to the game of chess, success in small business starts with decisive, and correct opening moves. And although initial mistakes are survivable, it usually requires skill, discipline and hard work to regain the advantage.

The First Five Steps In Starting Your Small Business

Step 1: Reasons to Start a Business

Before starting a small business, list your reasons for wanting to go into business.

 Whatever they are, use a specific and systematic approach to build a plan from which

your success can be evaluated.

Step 2: Some common reasons for starting a business are:

1. You want to be your own boss.
2. You want financial independence.
3. You don't work well with others.
4. You dislike policy and procedures.
5.  You want creative freedom.
6. You want to fully use your skills and knowledge.

Step 3: Determine what business is "right for you," answer the following
questions:

1. What do you like to do with your time?
2. What technical skills have you learned or developed?
3. What do others say you are good at?
4. Will you have the support of your family and/or spouse?
5. How much time do you have to run the business?
6. Do you have any hobbies or interests that are marketable?

Step 4: Determine what niche your business will fill. 
The following helps you to answer that question.

1. Is your idea practical, and will it fill a need?
2. Who is your competition?
3. What is your advantage over existing businesses?
4. Can you deliver a higher/better quality service?
5. Can you create a demand for your business?

Step 5: The pre-business checklist.

The following are questions you should answer.  Write down your
responses to each question before developing the plan.

1.  Describe the business you are interested in starting.

2.  What services or products will you sell?
3.  Where will you locate?
4.  What skills and experience do you bring to the business?
5.  What will be your legal structure?
6.  What name will you go by?
7.  What equipment or supplies will you need?
8.  How will your business records be maintained?
9.  What  coverage will be needed?
10. What financing will you need?
11. What are your resources?
12. How will you compensate yourself?

The Small Business Plan:

"If you don't know where you are going you may end up somewhere else."

                                                                                                    - Yogi Bera

The small business plan is like a road map, with specific goals

 that defines how you will get from point "A" to point "B" within a

specific time frame. It should define who will be responsible for doing

what, where, when why and how.

How To Write A Small Business Plan

Introduction

1. Give a detailed description of the business.
2. Explain the type of business.
3. State the ownership of the business and the legal structure.
4. List the skills and experience you bring to the business.

5. Discuss the product/service offered.
6. Give the advantages over your competitors.

The Market And Operations

1.  Identify the demand for your product/service.
2.  Identify your customers and their location(s).
3.  Explain how your product/service will be advertised.

4.  Discuss how your product/service will be delivered.

5.  Explain pricing strategy.
6.  Explain your source and amount of initial equity capital.

7. Develop a monthly operating budget for the first year.
8  Provide three years of projected quarterly balance sheets and
   profit or loss statements.
9. Provide monthly cash flow statements which tie to other
   statements provided for a two-year period.
10. Discuss your break-even point.
11. Explain your personal balance sheet, and method of
     compensation.
12. Discuss how and who will maintain your accounting records.

13. Provide "what if" statements to demonstrate alternative
     approaches to addressing any negative which may develop.

Operations

1.  Explain how the business will be managed on a day-to-day
     basis.
2.  Discuss how you will hire your employees and discuss personnel
     procedures.
3.  Discuss , lease or rent agreements, and issues
    pertinent to your business.

Once you have completed your business plan, review it with a friend
or business associate.  When you feel comfortable with the content
and structure, make an appointment to review and discuss it with
your banker.  The business plan is a flexible document that will
change as your business grows.

GUIDE TO PLANNING YOUR SMALL BUSINESS

Suppose you lived in Boston and decided to drive to Dallas, would
use a map?  Of course you would. But what would if you didn't? It
would be a very long trip and if you didn't know your geography,
you probably would not make to Texas, never mind Dallas.

Starting or running or business without proper planning is like
driving from Boston to Dallas without a map. Planning will show you
your destination and the best road to get you there.

This information summary will provide you with an overview of
planning and discus how and why to prepare a business plan.

Why Planning Is Critical

1. Planning gives you a path to follow. It makes your future what
   you want it to be.

2. It is the most important guide to starting, building and
   managing a successful business.

3. It is the best tool available to help a small business raise
   money.

4. A business plan can be a communications tool for investors,
   suppliers, employees and others interested in understanding
    the operations and goals of your business.

5.  If you don't plan for the success of your business -- you will
    fail. It is that simple!

Planning Can Be Difficult

Although planning is critical to your success, it is often
overlooked in favor of intuition or "gut feeling." There are other
obstacles that hinder planning, including:

1. Lack of know-how -- it is sometimes difficult to know how to
   plan and what to plan for.

2. Fear of the unknown -- it is hard enough dealing with the
   problems of today without worrying about what's going to
   happen in the future.

3. Inexactness -- the best set plans have a funny way of not
   working out exactly the way they should.

These obstacles are very real. However, they must be overcome if
you are to be successful. While we may find it difficult to
face the future, heading into it without any direction is much
worse.

The Small Business Plan Guide

The business plan is a written document that clearly defines the
goals of a business and outlines the methods for achieving them.
A business plan describes what a business does, how it will be
done, who has to do it, where it will be done, why it's being done
and when it has to be completed.

Dreams and ambitions are great and important. But what really
counts in the business world are results. Therefore, it is
important
to establish realistic goals with a sound methodology for achieving
them. A business plan:

1. Is the management and financial "blueprint" for a business
   start-up and profitable operation.

2. Is written by the business owner with outside help as needed.

3. Explains how the business will function and depicts its
    operational characteristics.

4. Details how the business will be capitalized and managed.

Elements Of A Business Plan

1. Business Description

2. Business name, address and owner identification

3.  Identifies goals and objectives. Clarifies why you are or why
    you want to be in business.

Products and Services

1. Very descriptive explanation of all products and services.

2. Describes what you are selling and why.

Sales and Marketing

1. Sales and marketing are the core of your business rationale. Your
    plan should address several basic questions.

2.  Who and how large is your market? How will you be competitive?
    What pricing and sales terms are you planning? How will you market
    your  products and services?

Operating Requirements

1. The plan should identify and describe the equipment,
   facilities and people necessary to generate your products and
   services.

2. How will your products and services be produced and made
   available to the customer?

Financial Management

This is the most critical part of your business plan. You will
establish vital schedules that will guide the financial health of
your business.

If you are just starting a business, your plan should include:

1. Projected "start-up costs."

2. Your expected profit or return on investment (ROI) for the first
   year.

3. Projected income state and balance sheet for two years.

4. Projected monthly cash flow statement for 12 months.

If you have a young or established business,

your plan should include:

1. Income statement and balance sheet for the last two years.
2. Projected income statement and balance sheet for the next two
   years.
3. Projected monthly cash flow statement for 12 months.

Your plan should include an explanation of all projections. If you
feel that your finance or accounting knowledge is not sufficient
to prepare these statements, get professional assistance.

The bottom line is: will, or does your company make a profit?

Concluding Narrative

1. This segment of your plan should summarize your business goals

and objectives and send a message that your are  committed to the

success of your business.

Put Your Best Foot Forward

Your business plan should be complete, clear, neat and accurate. It
will be an extension of you and your business.

The length of a good plan will vary from a few pages to well over
a hundred pages. The plan should provide a sound "blueprint"
for your business and entice any reader to want to know more.

A Final Word On Planning

Planning is the most important part of starting and running a
successful business. It is a fact...unless you know where you are
going, you will end up somewhere else.

GUIDE TO UNDERSTANDING YOUR MARKET

Your business will not succeed just because you want it to succeed. 
Determining if there is a market for your products or services
is the most critical item of planning. Once you decide on your
product or service, you must analyze your market -- a process
involving interviewing competitors, suppliers and new customers.

However, before you begin researching your market, you should take
a brief, but close, look at your product or service from an
objective standpoint. In terms of a checklist, you should ask
yourself the following questions:

-    Is this product or service in constant demand?
-    How many competitors provide the same service or product?
-    Can I create a demand for my product or service?
-    Can I effectively compete in price, quality and delivery?
-    Can I price my product or service to give me the projected
     profit?

Once you are satisfied that these questions are answered, move on
to performing your research.

Market research is extremely beneficial; the information gathered
can increase your profit potential.


Market Research

-    Shows alternative approaches to your market.
-    Provides a more accurate base for making profit assumptions.
-    Aids in the organization of marketing plans.
-    Assists in the development of critical short/mid-term goals.
-    Breaks down your market's profit boundaries.

Unfortunately, many entrepreneurs fail to complete this critical
section of their business plan. Collecting research data can be
frustrating unless you have defined your goals and organized the
collection and analysis process. To prevent this from happening,
you must plan how you will collect, sort and analyze the
information.  Maintain a notebook and file in which to store,
organize and retrieve data as needed.


Questions To Ask

Your research should ask these questions:

-    Who are your customers?
-    Where are they located?
-    What are their needs and resources?
-    Is your service or product essential in their day-to-day
     activity?
-    Can the customer afford your service or product?
-    Where can you create a demand for your service or product?
-    What areas within your market are declining or growing?
-    What is the general economy of your service or product area?


Market Data

Knowing your market not only requires an understanding of your
product, but also an understanding of your customers' socio-
economic conditions. This information will serve as a map in
letting you know what is ahead.

More market information can be found in:

-    Library listings of trade associations and journals.
-    Regional planning organizations' studies on growth trends.
-    Banks, realtors and  companies.
-    Competitors.
-    Customer surveys in your market area.
-    U.S. Government publications.

Once you have obtained and analyzed this information, it will
become the foundation of your business plan. Research data is
important
because it supports the basic assumptions in your financial
projection -- your reason for going into business.

Summary

To be successful, a small business owner must know the market.
Market research is simply an orderly, objective way of learning
about people -- the people who will buy from you.

Guide To Small Business Government Resources
 
The Importance of Information

Information is power! It is an asset that can help overcome
uncertainty and open new avenues for opportunity. Success in
business depends on what you know and how well you can apply what
you have learned. With the right information, your business gains
an important edge in today's competitive world. Learn to use the
following information sources. They are the key to unlocking your
business's full potential.


Federal Information Resources For Small Businesses:

The Small Business
Administration

The SBA is an independent government agency created by Congress to
help small businesses grow and prosper. The SBA has more than 100
offices that offer small firms financial assistance through
guaranteed loans, management assistance, help in obtaining
government contracts, counseling services, and many low-cost
publications. The SBA is an excellent source of information.

Small Business Answer Desk
1-800-8-ASK-SBA
This toll-free hotline provides personalized attention to your
business needs. Provided by the SBA's Office of Business
Initiatives, Education and Training, the ANSWER DESK is an
excellent information and referral service.  You're only one call
away from improving your business...don't hesitate, phone today! In
Washington, D.C. call 205-7333. The hotline operates from 8:30 a.m.
to 5:00 pm. (EST), Monday through Friday.

SBA Publications and Products
The SBA has more than 50 business booklets and products available
for a small suggested donation (most under $3.00). These
publications and products address important business topics and
answer the questions most frequently asked by prospective and
existing small business owners. Get your free copy of The Small
Business Directory listing SBA's products by contacting either your
local SBA Office or the SMALL BUSINESS ANSWER DESK.

Service Corps of Retired Executives (SCORE)
SCORE consists of more than 13,000 business executives who
volunteer their time to provide training and free management
counseling to small business owners. SCORE's nationwide reputation
for helping new and existing businesses is a result of their
high-quality service.

Small Business Development Centers (SBDCs)
SBDCs are sponsored by SBA in partnership with state and local
governments, the educational community and the private sector. They
provide high-quality, low-cost assistance, counseling and training
to prospective and existing small business owners. There are more
than 700 SBDCs in 50 states.

Small Business Institute (SBI)
SBIs are operated through the SBA in every state on almost 500
college campuses across the nation. Over the course of a college
semester, the Institutes provide in-depth student and faculty
counseling to select small business clients.

SBA District and Regional Offices
Most SBA offices maintain a "training calendar" to help business
people locate appropriate training sessions and information.
Consult your telephone directory under U.S. Government, or call the
SMALL BUSINESS ANSWER DESK at 1-800-8-ASK-SBA to locate the SBA
office nearest you.

Department Of Commerce

Office Of Business Liaison (OBL)
The Office of Business Liaison provides information on business
assistance programs offered by all Federal agencies. For a listing
of U.S. Department of Commerce services, call 202-377-3176.

Economic Development Administration (EDA)
EDA assistance is available for areas experiencing high
unemployment, low income quotas or sudden and severe economic
distress. Call 202-377-5113 for more information.

The Minority Business Development Agency (MBDA)
MBDA provides management and technical assistance to business
owners and, in general, encourages financial support for
minority-owned firms. Look under U.S. Government in your local
telephone directory or call the SMALL BUSINESS ANSWER DESK to find
the MBDA office nearest you.

International Trade
Administration (ITA)
ITA's office of U.S. and Foreign Commercial Service maintains a
vast data base of up-to-date foreign market information and assists
in establishing foreign market contacts. Call 202-377-1289 for more
information.

Internal Revenue Service
For more information on your Federal tax obligations, go to the
local office of the Director of Internal Revenue Services. An
excellent booklet (revised from year to year) on this subject is
Tax Guide for Small Business, prepared by the Internal Revenue
Service.

GUIDE TO STATE INFORMATION RESOURCES:

State Economic Development Agencies
Most states have agencies that promote economic growth within the
state by helping the state's businesses grow and by encouraging
outside firms to relocate in the state. These agencies are a
valuable source of information on business opportunities, markets
and state and local business assistance programs. Check your phone
directory under Government (State), for Economic or Industrial
Development Agencies.

GUIDE TO LOCAL INFORMATION RESOURCES:

City or County Development Agencies
Like most states, many local governments have their own development
agencies
which help small businesses in their jurisdiction.

Schools
Local colleges are an excellent source of business information.
Most colleges offer courses in entrepreneurship, business
management and other disciplines helpful to the small business
owner.

The Library
Your local library is a virtual gold mine of information -- use it!
Most libraries have a business section and there is usually someone
available to assist you in finding the specific information you
need.

Business Periodicals
Information on most business topics can be found in a business
periodical.  These magazines and newspapers are a great source for
up-to-date business news, recent technological developments, new
marketing and management techniques, finance and related subjects.
To find the article you need, look in the Business Periodical Index
at your local library. The Readers' Guide to Periodical Literature
is another excellent source for locating small business articles.

Chambers of Commerce
Most cities and towns have a Chamber of Commerce. These
organizations promote the interests of local business owners and
serve to stimulate business activity throughout their jurisdiction.
Your local Chamber is an excellent source for information about
local markets, business activity and business opportunities.

Banks
Many bank officers have a broad understanding of finance, business
operations, and the local economic climate. Do not be afraid to ask
your banker questions.

Consultants
Consultants make their living by providing information and can be
a great asset to a small business owner. A business consultant's
fees typically range between $25 and $250 an hour. If you decide to
retain the services of a consultant, make sure he/she is reputable
and be certain that you understand the fee schedule up-front.

Ask The Right Questions... Get The Right Answers

Before you rush out to use these valuable resources, it is
essential that you have a strategy -- that you have focused on what
questions you need answered.  If you don't prepare, it won't be
long until you're overwhelmed by a tidal wave of meaningless facts,
figures and recommendations.

1)   Be prepared; know exactly what you want to ask and ask
      intelligent questions.

2)   Express your questions as simply as possible and be
     diplomatic.

3)   Always be prepared to tell someone why you are asking the
     questions.

4)   If the person you ask does not have an answer, ask where you
     can find the answer.

5)   Seek knowledgeable people and be persistent.

Knowing where to find the information your business needs is
extremely important. Cultivate your knowledge of these resources,
learn how to use them to your business's advantage, but most
importantly -- use them!

All SBA programs are available to the public on a nondiscriminatory
basis.

HOW TO PRICE YOUR PRODUCTS AND SERVICES

The primary goal of business is to make a profit.  Many small
businesses fail to do so because they do not know how to price
their products or services.  Pricing is the critical element in
achieving a profit and is a factor that all firms can control.

Before setting your prices, you must understand your product's
market, distribution costs, and competition.  Remember, the
marketplace responds rapidly to technological advances and
international competition.  You must keep abreast of the factors
that affect pricing, and be ready to adjust.

Retail Cost and Pricing

A common pricing practice among small businesses is to follow the
manufacturer's suggested retail prices.  The suggested retail price
is easy to use, but it can cause problems.  It may create an
undesirable price image, and it doesn't consider the competition.

Competitive Position

Another approach is a strategy in which a firm bases its price on
those of its competitors.  A small retailer should compare prices
with a similar store.  Do not try to compete with a large store's
prices, because they can buy in larger volumes and their cost per
unit will be less.  Instead, highlight other factors, like customer
service.  Customers will often pay more for merchandise if they get
courteous service.

Pricing Below Competition

Many vendors have been very successful using this pricing strategy. 
Since this strategy reduces the profit margin per sale, a firm
needs to reduce its costs and:

1. Obtain the best prices possible for the merchandise;
2.  Locate the business in an inexpensive location or facility;

3. Closely control inventory;
4. Limit the lines to fast moving items;
5. Design advertising to concentrate on "price specials;"
6. Offer no or limited services.

Pricing goods below the competition can be difficult to maintain. 
Why?  Because every cost component must be constantly monitored and
adjusted.  It also exposes a business to pricing wars.  Competitors
can match the lower price, leaving both parties out in the cold.

Pricing Above The Competition

This strategy is possible when price is not the customer's greatest
concern.  Non price considerations important enough for customers to
justify paying higher prices include:

1. Service considerations:  delivery, speed of service,
   satisfaction in handling customer complaints, knowledge of product
   or service, helpful and friendly employees,
2. A convenient or exclusive location,
3. Exclusive merchandise.

Price Lining

This strategy targets a specific segment of the buying public by
carrying products only in a specific price range.  For example, a
store may wish to attract customers willing to pay over $50 for a
purse.  Price lining has many advantages:

1.  Reduced errors by sales personnel;
2.  Ease of selection for customers;
3.  Reduced inventory;
4.  Reduced storage costs, due to smaller inventory.

Multiple Pricing

This strategy involves selling a number of units for a single
price.  For example, two items for $1.98.  This is useful for low
cost, consumable products like shampoo or toothpaste.  Many stores
find this a desirable pricing strategy for sales and year-end
clearances.

Service Costs And Pricing

Every service has different costs.  Many small service firms fail
to analyze their services' total cost, and therefore, fail to price
them profitably.  By analyzing the cost of each service, prices can
be set to maximize profits and eliminate unprofitable services.

Service Cost Components

Material, labor and overhead make up the total cost of any product
or service.

Material Costs

This is the cost of materials found in the final product.  For
example, the wood and other materials used in the manufacturing of
a chair are direct materials.

Labor Costs

This is the cost of the work that goes into the manufacturing of a
product.  An example is the wages of all production line workers. 
The direct labor costs are derived by multiplying the cost of labor
per hour by the number of man-hours needed to complete the job. 
Remember to use not only the hourly wage, but also include fringe
benefits.  These include:  social security, workers compensation,
unemployment compensation, , and retirement benefits.

Overhead Costs

Any cost not readily identifiable with a particular product is
overhead.  These include indirect materials and indirect labor,
such as maintenance, supplies, repairs, heat and light,
depreciation and .  These are not charged to direct labor,
but must be included as a cost.  Examples are clerical, legal and
janitorial services and supplies.  , taxes, rent,
advertising and transportation are also overhead costs.

Part of the overhead costs must be allocated to each service
performed or product produced.  The overhead rate can be expressed
as a percentage or an hourly rate.

Adjust your overhead costs annually.  Charges must be revised to
reflect inflation and higher benefit rates.  It is best to project
the costs semi- annually, including increased executive salaries
and other projected costs.

A cost lid must always be used in preparing a bid or quoting a job. 
Include shipping, handling or storage in the total material cost.

Figuring Costs And Profits For A Consultant Service

Pricing services where your own labor or expertise is used is
different from pricing services that use materials and other labor. 
For instance, most consultants price their services by the hour. 
Senior consultants charge more for their time than do their less
experienced counterparts.

Remember to charge for an adequate number of hours.  Travel time is
usually listed as an extra charge.

It is unlikely that all of your time will be billed to clients. 
Therefore, hourly or contract fees must be set high enough to cover
expenses during slow periods.  That is why one-half of the total
normal working hours for a given year are used in figuring overhead
rates.  Try to obtain long term, monthly, or contract assignments
when possible.

Summary

Your pricing structure and policy are major components of your
public image and are crucial to securing and keeping your
clientele.

Pricing for service businesses may be more complex than retail
pricing.  However, the result is the same:  cost, plus operating
expenses, plus desired profit, equals the services price.

The key to success is to have a well-planned strategy.  Establish
your policies, constantly monitor prices and operating costs to
insure profit.  Accuracy increases profits!

Guide to small business exporting


World Trade is increasingly important to the health of our economy
and to the growth of U.S. companies.  Every billion dollars in U.S.
exports generates about 25,000 jobs.  Exporting not only creates
jobs, but provides small firms with new growth, new markets and
additional profits.  There has never been a better time for
American businesses, particularly small businesses, to begin
exporting.  As the world economy continues to become more
interdependent, the opportunities for small businesses to compete
in the international marketplace become more attractive.

Exporting is booming in the U.S. and small businesses are beginning
to realize that the world is their market.  Experience shows that
small businesses can and do export successfully.  A business does
not have to be big to sell in the global marketplace.  Finding your
niche in the world market is similar to finding it in the U.S.
market.  The same qualities that make small business owners
successful in the U.S. apply to success in world markets:  hard
work and tenacity.

The Advantages of Exporting

Small business exporters can play a significant role in improving
the U.S.  balance of trade while at the same time protecting their
competitiveness and improving their profits.  The international
marketplace represents a vast array of opportunities and challenges
for small businesses.  Entering the overseas marketplace offers
many benefits, including:

1. increased growth;
2. increased profits;
3. additional markets;
4. extended product/service life cycles;
5. increased number of customers;
6. tax advantages;
7. added product/service lines;
8. improved competitiveness; and
9. favorable publicity and recognition.

Exploring To New Markets

Many thousands of small firms are already in the global market. 
Yet small firms still represent the largest pool of potential
exporters - companies that could export but do not.  Small firms
already account for almost a quarter of all exporters, and survey
results show substantial export growth potential for this size
firm.  This should encourage smaller companies to consider the
global arena.

Entering the overseas market does not have to be difficult.  The
same basic strategies applied in the U.S. market can be used in
exporting.  Selling abroad requires hard work, perseverance, and a
commitment of resources.  It requires planning, market research and
attention to detail.  It may also involve changes, like new
packaging and metric conversion.

The mystery can be taken out of exporting by considering some of
the fundamental elements of the export process:

1. analyze the capabilities of your small business;
2. know the export potential of your product/service;
3. locate the foreign markets that are right for you;
4. study market entry strategies and export procedures; and
5. learn how to process exports.

Where to Find Assistance

Once a decision has been made to expand into the overseas
marketplace, the next step is knowing how to get started.  There
are many resources that provide assistance for the small or
medium-sized business seeking to export.

Federal Programs:

Small business exporters may benefit from a variety of services

provided by the SBA and the U.S. Department
of Commerce (DOC).  Types of services include:

1.  export counseling;
2.  workshops and training conferences;
3.  publications; and
4.  financial assistance.

Special services provided by the SBA include:

1. Service Corps of Retired Executives (SCORE),
2.  Small Business Development Centers (SBDCs),
3.   Export Legal Assistance Network (ELAN), and
4.   Export Revolving Line of Credit (ERLC) Program.

SCORE, with over 730 locations and 13,000 members throughout the
country, offers one-on-one counseling by retired executives,
providing small businesses with access to years of business and
international experience.

SBDCs, operating in cooperation with local colleges and
universities, also offer in-depth business counseling and training.

Through ELAN, a small business can receive free one-time legal
consultations from export-knowledgeable attorneys.

SBA's financial assistance programs are also available to small
business exporters.  The ERLC program provides guarantees on
short-term, pre-export working capital and commercial bank lines of
credit.  In addition, through its Export Information System (XIS),
the SBA can provide an initial market study.  XIS identifies the
primary importing and exporting countries for a particular product.

The Department of Commerce offers a wide range of information on
export potential, overseas markets, trade leads, and overseas
contacts.  The Department also conducts trade missions and catalog
exhibitions, and assists firms participating in overseas trade
shows.  For more information about DOC, consult your telephone
directory under U.S. government.

1. State and Local Agencies:  Entrepreneurs interested in
    international trade may look to state and local agencies for
    additional information and programs.

2. Chambers of Commerce:  Small business owners may take
    advantage of assistance available through chambers of commerce. 
   Some chambers are active in promoting exports, providing training
   programs, counseling, referrals, trade missions, and publications.

3. International Trade Associations:  Many of these associations
   and other private organizations offer a wide range of services. 
   Most conduct regular meetings with qualified speakers and provide
   networking opportunities with others involved in international
   trade.

4. Export Management and Export Trading Companies:  These
   companies serve as export sales intermediaries and representatives
   for manufacturers.  They can aid small businesses by locating
   foreign buyers, promoting products, making export sales, providing
   documentation and shipping products overseas.

5. Consulting Firms:  Trade consultants can provide information
   on domestic and foreign trade regulations and overseas markets, and
   can assess overseas commercial and political risk.  They often
   specialize in product lines and/or geographical area.

6. Some small law firms, accounting firms, or specialized
   marketing firms also provide international trade consulting
   services.

For information about SBA consult your telephone directory under
U.S.  government or call the Small Business Answer Desk at
1-800-8-ASK-SBA.  You may also contact the Office of International
Trade, U.S. Small Business Administration, Washington, D.C. 20416
(202) 205-6720.

All SBA programs are available to the public on a nondiscriminatory
basis.

HOW TO START A HOME BASED BUSINESS
A small business Guide for success


Fifteen years ago, going to work meant traveling from home to a
plant or office. Today, many people do some or all of their work at
home. A private marketing research firm estimates that as many as
13 million people squeeze extra hours into their workweek by taking
work home from their full-time jobs, and that 9 million people are
independent home-workers who work exclusively at home.

Many people find working at home is the "ideal work arrangement"
and decide to formally set up businesses in their homes. SBA
estimates that more than 3 million of these home-based businesses
are now operating throughout the country.

Every day, people are striking out and achieving economic and
creative independence by turning their skills into dollars.
Garages, basements and attics are being transformed into the
corporate headquarters of the newest entrepreneurs -- the
home-based business person. And with today's rising demand for
"service-oriented" businesses and recent technological advances,
the opportunities seem to be endless.

Getting Started

Before you dive headfirst into a home-based business, it's
essential that you know why you are doing it. To succeed, your
business must be based on something greater than a desire to be
your own boss. You have to plan and make improvements and
adjustments along the road.

As you ask yourself the following questions, remember: there are no
"best" or "right" reasons for starting a home-based business. But
it is important for you to understand what this new venture
involves.

Working under the same roof that your family lives under may not
prove to be as easy as it seems. It is important that you work in
a professional environment. One suggestion is to set up a separate
office in your home to create this professional environment. Ask
yourself these questions:

1. Can I switch from home responsibilities to business work?

2.  Do I have the self-discipline to maintain schedules?

3.  Can I deal with the isolation of working from home?

4.  Am I a self-starter?

Finding Your Niche

Choosing a home business is like choosing a spouse; your decision
must be approached with a great deal of care and concern for the
future.

Before you invest your time, effort and money, take a few moments
to answer the following questions. They'll help separate sound
ideas from those with a high potential for failure.

1.  Does your home have the space for a business?
2.  Can you identify and describe the business you plan on
     establishing?
3.  Can you identify your business's product or service?
4.  Is there a demand for your product or service?
5.  What advantages do you have over your competitors?
6.  Do you have the talent and expertise needed to compete
     successfully?
7.  Can you successfully run the business from your home?

Legal Requirements

A home-based business is subject to many of the same laws and
regulations affecting other businesses. Here are some general areas
to watch out for, but be sure to consult an attorney and the state
department of labor to find out which laws and regulations will
affect your business.

1. Be aware of your city's zoning regulations. If your business
   operates in violation of them, you could be fined or closed down.

2. Certain products cannot be produced in the home. Most states
   outlaw the home production of fireworks, drugs, poisons,
   explosives, sanitary or medical products and toys. Some states also
   prohibit home-based businesses from making food, drink or clothing.

In addition, there are registration and accounting requirements to
consider.  Among them:

1.  You may need to obtain a work certificate or license from the
state.  Your business's name may need to be registered with the
state.

2. Usually, a sales tax number must be obtained.
3. A separate business telephone and bank account normally are
required.

And if you have employees, you are responsible for:

1. Withholding income and social security taxes.
2. Complying with minimum wage and employee health and safety laws.

Once you've thought over the pros and cons of home-based
businesses, it's time to put together a business plan.

Guide To Developing A Business Plan
A small business guide for success


Putting together a business plan forces you to take an objective
and critical look at your business idea. Even more, the finished
product is an operational tool that will help move your business
toward success.

A business plan should be neat, not fancy, and should include:

Cover Page: List the business name, address, mailing address,
telephone number and the name of the owner(s). Identify your
primary goals and objectives.

Business Description: Include an accurate and concise description
of the business.

A.   What is the principal activity? Be specific. Give product or
       service descriptions.
B.   How will the business be started?
C.   Why will it succeed? Promote your idea.
D.   What experience do you bring to the business?

Marketing

Remember, marketing is the core of your business. Carefully think
about these questions:

A.   Can you market your business from home?
B.   Who and what is your market?
C.   What pricing and sales terms are you planning?
D.   How will you be competitive?

The Financial Plan

Money is what fuels all businesses. With a little planning you'll
find that you can avoid most financial difficulties.

When you're drawing up a financial plan, don't worry about using
estimates.  The process of thinking through these questions helps
develop your business skills and leads to solid financial planning.

Start-up Costs: To estimate your start-up costs, include all
initial expenses such as fees, licenses, permits, telephone
deposit, tools, office equipment and promotional expenses. Business
experts say you should not expect a profit for the first eight to
10 months, so be sure to give yourself enough cushion.

Projecting Operating Expenses: Include salaries, utilities, office
supplies, loan payments, taxes, legal services and 
premiums. Don't forget to include your normal living expenses.

Projecting Income: It is essential you know how to estimate your
sales on a daily and monthly basis. From the sales estimates, you
can develop projected income statements, breakeven points and cash
flow statements. Use your marketing research to estimate initial
sales volume.

Cash Flow: Cash pays your bills, not profits. Even though your
assets may look great on the balance sheet, if your cash is tied up
in receivables or equipment, your business is technically
insolvent. Or to put it in layman's terms, you're broke.

Make a list of all anticipated expenses and projected income for
each week and month. If you see a cash flow crisis developing, cut
back on everything but the necessities.

Remember, preparation is the foundation of success. Talk to
home-based business people, join a home-based professional
association or "moonlight" at a similar business. Learn how to use
business resources to strengthen your home-based business. Success
doesn't just happen, you have to make it happen.

How To Get More Information

Make it your business to know
what business information is available, where to get it and, most
importantly, how to use it. Sources of information include:

U.S. Small Business Administration

1.  SBA District Offices.
2.  Small Business Centers (SBDC).
3.  Service Corps of Retired Executives (SCORE).
4.  Small Business Institutes (SBI).

Consult your telephone directory under U.S. Government for your
local SBA office or call the Small Business Answer Desk at
1-800-8-ASK-SBA for information on any of the above resources. In
Washington, D.C., call 205- 7333.

Other Sources

1.  State economic development agencies.
2.  Chambers of commerce.
3.  Local colleges.
4.  The library
5.  Manufacturers and suppliers of small-business technologies and
    products.

All SBA programs are available to the public on a nondiscriminatory
basis.

CASH FLOW ANALYSIS

In recognition of the importance of small business to a strong
economy, the U.S. Small Business Administration (SBA) endeavors to
help meet the information needs of existing business owners and
aspiring entrepreneurs.  We hope this "Focus on the Facts" can be
a catalyst for the continued success of your small business.

Understanding Cash Flow

To be competitive, small business owners must plan and prepare for
all future events and market changes.  Possibly the most important
aspect of preparation is effective cash-flow planning.  Failure to
properly plan cash flow is one of the leading causes for small
business failures in the United States.

Experience has shown that many small business owners lack a general
understanding of accounting principles.  For this reason, a few of
the basic principles will be covered.  There also are
self-instructional guides from which you can obtain a better
understanding of accounting.


The Basics

Cash in business serves several purposes.  First, it is used for
meeting normal cash obligations (i.e., paying bills).  Second, it
is held as a precautionary measure for unanticipated problems. 
Third, it is held for potential investment purposes.  The term
"cash" refers to:

1.  Cash
2.  Checks
3.  Checking Accounts

The Operating Cycle

The operating cycle can be defined as the system through which cash
flows, from the purchase of inventory through the collection of
accounts receivable.

It measures the flow of assets into cash and is, in effect, a
"business stopwatch."

For example, the operating cycle may begin with both cash and
inventory on hand.  Additional inventory is purchased on account to
work as a cushion for future sales to guarantee that you will not
deplete your stock.  Except for cash sales, when some of your
inventory is sold, accounts receivable increase, but your cash
doesn't.  Typically, you pay for the inventory you have purchased
thirty days after it is received.  When the payment for inventory
is made, both cash and accounts payable are reduced.  Thirty days
after the sale of inventory, receivables are usually collected,
which increases cash.  Now your cash has completed its flow through
the operating cycle and is ready to begin again.


Current Assets

Cash and other balance sheet items which convert into cash within
twelve months are referred to as current assets.  Typical current
assets are:

1.  Cash
2.  Marketable Securities
3.  Receivables
4.  Pre-Paid Expenses

A Plan is Necessary

Cash-flow analysis shows whether your daily operations have
generated enough cash to meet your obligations, and it shows how
major outflows relate to major inflows.  As a result, you can tell
if inflows and outflows from your operation combine to result in a
positive cash-flow from operations or in a net drain.  Any
significant changes over time will also appear.  Understanding this
will lead to better control of cash-flows and will allow adequate
time to plan and prepare for the growth of your business.

It is best to have enough cash on hand each month to pay the cash
obligations of the following month.  A monthly cash-flow projection
helps to project funds and compare actual figures to past months. 
It is important to project your monthly cash-flow to identify and
eliminate deficiencies or surpluses in cash.  When cash-flow
deficiencies are found, business financial plans must be altered to
provide more cash.  When excess cash is revealed, it might indicate
excessive borrowing or idle money that could be invested.  The
objective is to develop a plan which will provide a well-balanced
cash flow.

Planning a Positive Cash Flow

To achieve a positive cash flow, you must have a sound plan.  Cash
reserves can be increased by:

1.  Collection of receivables
2.  Tightened credit requirements
3.  Price of products
4.  Loans
5.  Increased sales

Collection of Receivables

Actively manage accounts receivable and quickly collect overdue
accounts.  Revenues are lost when a firm's collection policies are
not aggressive.  The longer your customer's balance remains unpaid,
the less likely it is that you will receive full payment.

Tightened Credit Requirements

As credit and terms are tightened, more customers must pay cash for
their purchases, thereby increasing the cash on hand and reducing
the bad debt expense.

While tightening credit is helpful in the short run, it may not be
advantageous in the long run. Looser credit allows more customers
the opportunity to purchase your products or services.  But, be
certain that the increase in sales is greater than the increase in
bad-debt expenses.

Pricing of Products

The primary goal of business is to make a profit.  Many small
businesses fail to do so because they do not know how to price
their products or services.  Pricing is the critical element in
achieving a profit as well as in maintaining positive cash flow,
and is a factor all firms can control.

Before setting your prices, you must understand your product's
market, distribution costs, and competition.  Remember, the
marketplace responds rapidly to technological advances and
international competition.  You must keep abreast of the factors
that affect pricing and be ready to adjust.

Loans

Loans from various financial institutions are often necessary for
covering short-term cash-flow problems.  Revolving credit lines and
equity loans are common types of credit used in this situation.

Increased Sales

Increased sales would appear to increase cash flow, but be careful. 
For many companies, a large portion of sales are purchased on
credit.  Therefore, when sales increase, accounts receivable
increases, not cash.  Collection of receivables is usually 30 days
after the purchase date, and sales expenses are most often incurred
befor e receivables are collected.  When sales rise, inventory is
depleted and must be replaced.  Because receivables have not yet
been collected, a substantial increase in sales can quickly deplete
a firm's cash reserves.  Again, by using a computer, you can
maintain this critical data, as well as speed the time required to
consider the "what if" concept.

More Helpful Guides And Tips

Cash Reserve

You should always keep enough cash, as an added cushion for
security, on hand to cover expenses.  But, it is unwise to keep
more money on hand than is necessary to cover your obligations. 
Excess cash should be invested in an accessible, interest bearing,
low-risk account, such as a savings account, short-term CD or
T-bill.  Keeping excess cash on hand reduces both the growth and
the return on investment.

Projections

Good accounting records and projections are important tools for a
small business.  Qualified accountants are necessary to help keep
your records accurate and current.  However, you can reduce your
accounting expenses by producing your own summary statistics and
projections.

Using A Personal Computer

With a personal computer, your business can have the added
advantage of quick cash-flow projections as well as many other
useful financial planning tools.  A good financial-management
package and computer will enable you to review projected inflows
and outflows of cash from month-to-month or year-to-year.  By
analyzing these projections you can see the fluctuations in cash
flow and create management policies to avoid potential shortfalls.

There are numerous computer programs for making projections and
keeping records and many advantages to having a personal computer
for your business.  The capabilities of modern computers are almost
unlimited--they can aid in nearly every situation, from basic
bookkeeping and "what if" analysis to inventory control or market
demand projections.  While a computer is not a specific requirement
to success for a small business, it is a business tool which in the
future will separate the competitive from the mediocre.

How to Get More Information

SBA has a number of programs and services available.  They include
training and educational programs, advisory services, publications,
financial programs, and contract assistance.

Our offices are located throughout the country.  For the one
nearest you consult the telephone directory under U.S. Government
or call the Small Business Answer Desk at 1-800-U-ASK-SBA.  A free
copy of The Small Business Directory of publications may be
requested from your local SBA office or the Answer Desk.

Other helpful sources include:

1.    State Economic Development Agencies
2.   Chambers of Commerce
3.   Colleges and Universities
4.   Public Libraries

All SBA programs are available to the public on a nondiscriminatory
basis.


BUYING A COMPUTER

U.S. Small Business Administration in cooperation with Microsoft Corporation

Successful small business expansions and new formations lead the
way in creating new markets, innovations, and jobs that fuel
economic growth and prosperity.

In recognition of the importance of small business to a strong
economy, Microsoft Corporation has joined with the U.S. Small
Business Administration (SBA) to help meet the information needs of
existing business owners and aspiring entrepreneurs.

We hope Focus on the Facts meets your needs, and we invite your
comments and questions. Your success in business depends on what
you know and how well you can apply what you have learned.

Do I need to computerize?

The decision to buy a computer system for your small business can
be a costly one, in both time and money. Be sure you are ready to
invest in making computerization work for you. There are two major
reasons to computerize a small business: to increase your profit
and to increase your productivity.  The kinds of benefits that may
result from computerizing include:

1. No more bottlenecks in the flow of information or products

2.  On-the-spot information on which to base decisions
3.  Increased sales and new opportunities that come with being well-
    organized
4. More current accounts receivable and, as a result, reduced cash
   flow problems, reduced overtime and higher productivity for yourself and
   your employees

What tasks will I computerize?

The prime candidates for computerization are labor-intensive tasks.
Payroll, order tracking, monthly invoicing, cash flow analysis,
account tracking, proposal writing, form letters, and mailing lists
are some examples of labor- intensive tasks.

First make a list of all the tasks you need to do in your office.
You might find it helpful to design a form on which to put
information about each task:

1.  What information does the task require? Financial data?
    Charts?  Drawings?  Customer information?
2.  What results from the task? A business plan? A report? Mailing
    labels?  A client newsletter?
3. How often is the information needed? Daily? Weekly? Monthly?
    Yearly?

4.  Who uses the information? You? Your accountant? Your
    clients?
5.  What process is currently used to produce the information? Do
    you or an employee produce it manually? Do you contract it out?

Will computerization save me time or money?

Analyze each of the tasks you put on your list to determine how
computerizing them might save you time or money:

1.  How much does it cost to do the task manually? For example,
     how much time and salary does it cost you to type five identical
     contracts for five different clients?
2.  How much time and salary would it cost you if the contract
     were typed once on a computer and then printed out in five
     individualized copies?
3.  Is your current process an efficient one? There is no point in
    speeding up a bad system.
4.  Do you need to do lots of calculations? Is most of your work
    typing tasks? Do you have many records to keep track of? Or does
    your business require all of these?
5.  Are there things you are not doing now that you would like to
    do? How about a daily cash-flow report? Weekly inventory status?
    Direct mail to preferred customers?

What software do I need?

When choosing a computer, you will need to select the right
software.  Software is what gives your computer instructions and
tells it how to do your tasks.

There are five primary types of business software, often called
applications:

An electronic spreadsheet does calculations such as budgets,
business plans, amortization, cash-flow analysis, statistical
analysis, what-if analysis, and other mathematical functions.

A word processor creates and stores documents such as letters,
reports, catalogs, mailing labels, and procedure manuals. With many
word processors, you can put charts from a spreadsheet or drawings
from a graphics application into your documents.

A database stores information about customers, vendors, investors,
or inventory and then organizes, sorts, and updates the information
so that you can create reports, catalogs, invoices, monthly
statements, or form letters.

A desktop publisher gives you tools to produce sophisticated
layouts for newsletters, catalogs, business plans, and other
documents.

With communications you can connect your computer to a modem and
call other computers to send or receive information. This might
include getting market demographics from an online database
service, filing taxes, or sending financial information to your
accountant.

Integrated software includes several tools-spreadsheet, word
processor, database, and often communications-that work together to
help you do all your basic business tasks.

How do I choose the right application?

Before shopping for applications, create a table that lists your
required tasks in one column and each software package you want to
look at in another column. Compare the packages to find out which
one does the best job for you.

Create a sample document or representative worksheet of the task(s)
you want to do with the computer, and take this with you when you
shop. Ask the salesperson to demonstrate the software and show you
how to use it to do your work. Then try the software yourself:
learn enough to type a letter or create a spreadsheet. This can
help you decide which software will work for you and your business.

What kind of applications you buy depends on three main factors:

1.   The tools you need to automate the tasks in your business.
2.   The cost to purchase and install: when does this software
      begin to pay for itself?
3.   The cost of and method for training yourself or employees,
      fixing any problems, and keeping the system running.

There are two ways to buy software: off-the-shelf or custom-made.

Off-the-shelf software can be purchased at a computer store, a
software store, or through a mail-order catalog. The cost can be
approximately $50 to $500 per package. You can also purchase
additional tools, such as financial models, to adapt off-the-shelf
software to your needs.

Custom-made software is written for you by a consultant, who also
provides the training and manuals for the system. Such a system
will be more expensive than off-the-shelf software.

 for the computer hardware

What software you buy determines how much operating memory (RAM)
you will need, how much storage space you will need for your data
(disk memory), how fast the computer needs to be, and how many
people can work with it at the same time. Once you have selected a
software package that fits your needs, you need to find hardware to
run it on. You can buy a desktop computer that stays in the office
or a laptop computer that travels with you.

What hardware do I need?

There are several components to a computer, all of which combine to
give you a system that meets your needs.

Microprocessor - The electronic heart of the computer. It performs
all the operations of the computer. The speed (megahertz-Mhz) at
which a computer processes information is determined by its
microprocessor.

Memory - How much information (kilobytes-K) the computer can
process during a work session. Called Random Access Memory, or RAM.

Disk space - The amount of information (kilobytes-K or
megabytes-MB) you can store on a disk. Disks are either enclosed in
your computer (a hard disk) or put into the computer each time you
need the information (a floppy disk).

Monitor - The screen on which you see the information in your
computer's memory (RAM). The most important consideration is the
screen's readability- can you see what you need to see without
eyestrain?

Printer - The component you use to get the information out of the
computer and onto paper. If your primary need is for high-speed
rather than high- quality printing, you might consider a dot-matrix
printer. Laser printers provide high-quality output that resembles
typed or typeset text.

How to get more information

Information is power. Make it your business to know what business
information is available, where to get it, and, most important, how
to use it.  Information sources include:

U.S. Small Business Administration (SBA)

1.  SBA District Offices
2.  Small Business Development Centers (SBDCs)
3.  Service Corps of Retired Executives (SCORE)
4.  Small Business Institutes (SBIs)

For information on any of the above resources, consult your
telephone directory under U.S. Government for your local SBA
office, or call the Small Business Answer Desk at 1-800-8-ASK-SBA.
In Washington D.C., call 202-205-7333. Also, you may request a free
copy of The Small Business Directory, a listing of business
development publications and products, from your local SBA office
or the Answer Desk.

Other sources

1.  State economic development agencies
2.  Chambers of commerce
3.  Local colleges
4.  Libraries
5.  Manufacturers and suppliers of small business technologies and
    products.

The SBA's participation in this publication does not constitute an
overt or implied endorsement of the co-sponsoring company's product
or service. SBA Authorization No. 88-1133
Microsoft is a registered trademark of Microsoft Corporation.

Microsoft Part No. 098-10989
All SBA programs are available to the public on a nondiscriminatory
basis.

SMALL BUSINESS GUIDE HEALTH 

U.S. Small Business Administration in cooperation with The
Travelers Companies Successful small business expansions and new formations lead the
way in creating new markets, innovations and jobs that fuel
economic growth and prosperity.

In recognition of the importance of small business to a strong
economy, The Travelers Companies has joined with the U.S. Small
Business Administration (SBA) to help meet the information needs of
existing business owners and aspiring entrepreneurs.


Guide To Structuring Your First Small Business Benefits Plan

Health  is the second most-coveted fringe benefit in
America today -   behind only paid vacation.  Yet only half of employers with
fewer than 10 employees offer it, some because of the price tag.

Cost, of course, is a major consideration.  But in today's
environment of managed care plans and increase cost-sharing with
employees, it doesn't have to be an overriding issue.

Structuring your benefits plan properly -- with an eye on the
quality and cost of care -- can help you attract and retain
qualified employees.


Where to Start

When considering your first benefits plan, begin by determining the
needs of your employees/ You may want to sit down with them to
discuss options, making it clear that you may not be able to afford
all of what they want and that some costs may have to be shared.

Armed with this information, you should contact an independent
 agent or broker who:

Can explain the different coverage options available, ù Present
you with alternative plans and quotes and ù Sell and service your
policy.

Because you will have an ongoing relationship with your agent,
consider the agent's reputation, personal dynamics and
responsiveness when making your selection.

Your agent will explain to you the major categories of 
plans, including:

Indemnity

This is a traditional pay-as-you go health  plan.  The
employee pays a set deductible, then a co percentage
(usually 20 percent) of covered expenses.  After he or she has paid
a certain amount out of pocket, the plan pays 100 percent of the
expenses.  The employee can use any doctor or hospital, and simply
files claims for reimbursement.

Some indemnity plans have "managed care" features, which control
costs by monitoring care to make sure it is appropriate and
cost-effective.  Pre- admission review of hospital stays or medical
treatment is one popular and effective managed care feature.

Another method of controlling costs with an indemnity plan is
raising the deductible and/or increasing the employee's portion of
the co.  The higher the deductible and employee
co, the lower the cost to the employer and employee.

Managed Care

Managed care plans, which are becoming increasingly popular,
encourage employees to avail themselves of quality, cost-effective
care by offering them financial incentive -- usually higher
co -- to use certain doctors and hospitals.  The provides
in a managed care network agree to limit their fees in return for
a guaranteed number of patients.  The provides also handle all
claims of quality reviews.

One type of managed care network is a Health Maintenance
Organization (HMO), which generally provides 100 percent
reimbursement for most services, but provides little or very
limited benefits if the employee chooses to see doctors outside of
the network for care.  In a Preferred Provider Organization (PPO),
the employee receives higher reimbursement (often 90 percent) when
using a network provider, but benefits are lower (sometimes 70
percent) when the employee receives care from a physician outside
the network.  However, many plans reimburse emergency care at the
90 percent level, regardless of whether the services is provided by
a physician within or outside of the network.

Self 

Some employers self-fund their own plans, but contract with an
 company for claims administration.  This option is
generally for larger businesses with more sophisticated 
administration capabilities and financial resources to absorb the
higher risk involved.

Selecting a Plan

Your agent or broker will probably provide you with several
different proposals and quotes from  companies.  Since
each quote may provide for different coverages, don't just compare
prices.  Ask to see the entire proposal from the insurer, including
customer service and claims paying capabilities.

In reviewing the proposals, ask your agent the following questions:

1.  Is the  carrier reputable and financially strong?

2.  Will the policy be renewed every six months or annually?

3.  Is the plan easy to administer? Is there a toll-free 800
    number to call to make changes or have questions answered?

4.  Does the insurer process and pay claims quickly?

5.  What are the penalties employees should know about? Are there
    any "hidden" deductibles, such as a separate inpatient hospital
    deductible?

6.  Will the insurer underwrite the policy as a group, as
     individuals or both?

7.  Does the managed care plan provide enough of a financial
     incentive to encourage employees to select network providers?

Once you decide on a benefits plan, your  company will
provide follow-up information for employees that details plan
specifics, enrollment periods and claims procedures.  Once the
program is operational, you will soon become aware of the
importance of accurate, responsive service.  And, keep the lines of
communication open between you and your insurer.  Only through
continued dialogue can the benefits program be fine-tuned to
provide the highest level of service to you and your employees.

In today's benefits environment, providing employee health
 coverage does not have to be an all-or-nothing
proposition.  Understanding your employees' needs, researching the
options available and selecting a reputable insurer can give you a
competitive advantage in recruiting and retaining a skilled
workforce.

GUIDE TO GOOD SMALL BUSINESS RECORD-KEEPING

You arrive at work this morning and look around with a sense of
accomplishment.  This business is yours!  From the start, you've
done everything right.  You conducted meaningful market research. 
Your product is in demand.  You understand the competition and have
identified your competitive advantage (i.e., cost, service, and/or
quality).  You've established the optimum price.  Business flows
steadily through the doors.  Yet, this bright sense of
accomplishment begins to fade slowly as you acknowledge those
little nagging questions that ever seem to disturb your great
American dream.  "Why is my cash flow always a problem?  How much
real profit is in my business, anyway?  I'll deposit the payroll
taxes well enough . . . but, why is it going to be tight again this
quarter?" What's really happening in your business?  If you're not
exactly sure, then it's time to return to the basics -- the basics
of good record keeping.

Why?

Bluntly, a small business that fails to keep complete and accurate
financial records places its long term success and continuance in
grave, grave doubt.  The following three points discuss some of the
major reasons that good (i.e., complete and accurate) financial
record keeping is crucial to the success of your business.

1.   Good records provide the financial data that help you operate
more efficiently, thus increasing the profitability of your
enterprise.  This is because accurate and complete records enable
you, or your accountant, to identify all your business assets,
liabilities, income, and expenses, which, when compared to
appropriate industry averages help you pinpoint the strong and weak
phases of your business operations.

2.   Good records are essential for the preparation of current
financial statements, such as the Income Statement (Profit and
Loss) and the Cash Flow Projection.  These, in turn, are critical
for maintaining good relations with your banker.  They also will
present a complete picture of your total business operation which
will benefit you as well.

3.   Good records are required for the preparation of complete and
accurate tax documents.  For example, poor records often lead to
the preparation of income tax returns that result in underpayment
or overpayment of taxes.  In addition, good records are essential
in an IRS audit situation, if you hope to answer questions
accurately and to the satisfaction of the IRS.

The Key to Success is Information

Think back to the steps you went through to open your business. 
First, you invested a tremendous amount of time in gathering
information -- about your abilities, finances, market, customers
and competitors. You understood why you wanted to go into business
-- the opportunity to be your own boss, a desire for financial
independence, the freedom to set your own course.  Then you chose
the business "right" for you.  And, more importantly, your market
research showed that your particular "business dream" was in
demand.  You then took all this information and developed a
business plan -- the same business plan that helped you get the
loan you needed to open the doors.  You demonstrated your business
skills to the bank when you stated precisely how much money you
needed, why you needed it, and how you were going to pay it back.

What Went Wrong?

While it's true that success often begets success, it's equally
true that success often breeds failure -- in a small business as
well.  That's because as a business begins to grow rapidly, the
owners often work frantically to simply meet demand, minimizing the
time they devote to keeping good records.

If one of your reasons for starting a business was to get away from
paperwork, it is critical that you hire someone to perform the
necessary task of keeping your financial records.  Although you
must pay for the services of a public accountant, bear in mind that
their professional advice frequently can increase your profits,
more than covering the professional fees.

What Exactly Will The Records Tell You?

The following checklist highlights the type of information your
financial records should provide in assuring your success:

1.  How much income are you generating now and how much income can
    expect to generate in the future?

2. How much cash is tied up in accounts receivable (and thus not
    available)

3. How much do you owe for merchandise?  Rent?  Equipment?

4.  What are your expenses, including payroll, payroll taxes,
     merchandise and benefit plans for yourself and employees (such as health
     , retirement, etc.)?
5.  How much cash do you have on hand?  How much cash is tied up
     in inventory?  What is your actual working capital budget?
6.  How frequently do you turn over your inventory?
7.  Which of your product lines, departments or services are
    making a profit, which are breaking even, and which are financial
    drains? What is your gross profit?  What is your net profit? What is your
    gross profit?  What is your net profit?
9.  How does all of the financial data listed above compare with last
    year - or last quarter?  How does it compare with the projections in
    your business plan?

10. How does all of the financial data compare with that of your
competitors? With that of the industry?

While your review of this checklist may have uncovered some glaring
deficiencies, it's never too late to correct problems related to
poor record- keeping habits. It may take you a bit of time and
effort to analyze the company checkbook, take inventory, review
bank statements and, in general, just catch up on your paperwork.
It is essential that you make the effort to determine the precise
financial condition of your business at present. It is just as
critical as maintaining good customer relations.

What to Look for in an Accountant

How do you find an accountant who is knowledgeable, capable and
discreet? Here's what you should ask possible candidates: How do
you find an accountant who is knowledgeable, capable and discreet?
You will be seeking an individual with high ethical standards who
will be a respected member of the community. Due to the
ever-changing complexities of the tax laws and development in the
methods and practices of accounting, the accountant must be alert
to the value of continuing professional education. Look for an
accountant who takes advantage of educational seminars,
professional publications and other study opportunities.
You will probably want your accountant to assist you in many ways,
as a consultant, financial advisor, counselor, etc., who
understands your business affairs as well as you. So, seek out
broad experience, as well as education, in selecting your
accountant. Professional accountants have year-around offices and
are listed in telephone directories under accountants, public
accountants, bookkeepers and tax preparers. Look for references or
recommendations from local business associates, your banker or
attorney Look for memberships in state and national professional
accounting societies. This generally proves a commitment to
continuing professional education and the profession. Additionally,
in most all cases, membership requires adherence to a strict code
of ethics and high standards for professional performance.

The Basic System

A basic record keeping system should be simple to use, easy to
understand, reliable, accurate, consistent and designed to provide
information on a timely basis. It needs:

1. A basic journal to record transactions (receipts, disbursements, sales, purchases, etc.)
2. Accounts receivable
3. Accounts payable
4. Payroll records
5. Petty Cash records
6. Inventory: Equipment & Goods

Without knowing where your business is financially, you may be
forced to close or sell, despite an excellent customer base. You
could find yourself in this trap if your cash flow is desperate, or
if you are unable to pay creditors, or ù if too much of your
cash is tied up in old inventory and accounts receivable.

Make a vow now to maintain your records and assure your success!
If yours is a small firm just starting out in the exciting world of
business, resolve now that you will not fall into the trap of
letting the books wait until --you are less busy -- you are more
rested -- you have more time available to start and finish the job
all in one sitting -- or whatever excuse you use at the time.
Remember, too, there are experts available to help you in all
aspects of your new business. There are people who can assist you
with market research and advertising/promotion, there are those who
can help you with your real estate needs, transportation and
shipping, telecommunications needs and more. But most important of
all, there are professionals available to help you maintain and
manage your financial records. They are public accountants, and
they are ready to serve you and your business.

SBA's participation in this publication does not constitute an
overt or implied endorsement of the co-sponsoring company's product
or service. SBA Auth. 88-1178

All SBA programs are available to the public on a nondiscriminatory
basis.

GUIDE TO USING THE METRIC SYSTEM IN YOUR BUSINESS

Successful small business expansions and new formations lead the
way in creating new markets, innovations and jobs that fuel
economic growth and prosperity.

In recognition of the importance of small business to a strong
economy, the U.S. Small Business Administration (SBA) is pleased to
help meet the information needs of aspiring entrepreneurs.

We hope Focus on the Facts meets your needs and we invite your
comments and questions.

Metrication

The U.S. government's decision to mandate the metric system as the
preferred system of weights and measures for procurement contracts
will have far reaching implications for the business community and
for society.  Metrication will have an impact on both product-
oriented and service-oriented firms.  For example, a retail
business currently selling fabric in units of inches and yards
will, after conversion, sell fabric in centimeters and meters. 
Similarly, a janitorial firm vying for cleaning contracts will bid
on office space based on specifications for square and cubic
meters.

Metrication in essence will create a new business language as well
as new opportunities for business growth.

Despite these new opportunities, some small business owners will
resist metrication.  You should, however, convert as quickly as
possible.  Why?  The answer is simple.  Those small businesses
among the first to convert to the metric system will be able to
obtain the benefits of improved competitiveness, market access and
standardization savings, while those who are slow to convert will
recover little, if any, of their costs.  The conversion process,
which may involve some effort, is a procedure small business owners
must undergo in order to retain their share of federal contracts. 
Any small businesses failing to make the transition eventually will
not be competitive in metric markets of the future.

The Process

Metric conversion is not necessarily a complicated process.  But,
it will take time and careful planning to make the transition as
cost-effective and as efficient as possible.  There are a number of
steps you can take to simplify the process.

First-Cut

The initial stage in metric conversion is called First Cut.  In
First Cut you perform a quick, rough analysis to determine if
conversion is warranted.

Questions you should address are:

1.    When should you start developing a metric capability?
2.    How fast should you phase-in metric capability?
3.    What is involved in moving in that direction?

Once you have assessed and answered these questions, you are ready
to analyze the market to assure yourself there is or will be a
large enough market to justify the investment.  Also during this
stage, prepare a cost analysis for an estimate of the costs and
prepare a preliminary phase-in plan to identify when to start
implementation.  Your analysis should include:

Market Analysis

1.    Define goals and objectives
2.    Check metric products sales trends (foreign and domestic)
3.    Check suppliers, competitors and trade associations for
       trends
4.    Identify types of product conversions and their impact on
       servicing work
5.    Project customary vs. metric new business

Cost Analysis

1.    Add, replace or modify tools and service equipment
2.    Add, replace or modify inspection and test equipment
3.    When necessary, train employees in metric
4.    Maintain, store and handle dual inventories, but work to
       reduce and phase-out non-metric items
5.    Revise service order forms and other documents
6.    Project total costs for developing metric servicing
       capability

Preliminary Metric Phase-in Decision

1.    Review projected sales revenues
2.    Consider alternative phase-in plans for cost reductions
3.    Evaluate non-cost considerations
4.    Make preliminary decision

By analyzing these factors, you will be able to

1.    Identify new market areas,
2.   Determine if your market is saturated with small businesses
     offering similar services,
3.    Estimate the initial cost and
4.    Outline a conversion method.

Planning

Next, start your Planning.  This process usually focuses on four
major areas --

1.    Demand forecasting
2.    Service planning
3.    Personnel training and
4.    Paperwork changes

Gather the following data for each area.

Demand Forecasting

1.    Trends in converting products now serviced to metric
2.    Potential new metric product service work
3.    Sales literature
4.    Customer notification
5.    Continuing metric market research

Servicing Planning

1.    Tools and service equipment
2.    Inspection and test equipment
3.    Performance and testing specifications
4.    Metric supply sources
5.    Purchasing specifications
6.    Dual inventory facilities procedures
7.    Scheduling metric servicing phase-in (lead time requirements)

Personnel Training

1.    Employee notification
2.    Training needs identification
3.    Type of training determination
4.    Training materials availability (including shop charts)
5.    Scheduling training

Paperwork Changes

1.    Service order forms
2.    Testing reports
3.    Parts/tools check-out forms
4.    Accounting records
5.    Scheduling procedural/printing changes

By working through the areas described above, you now have a
comprehensive, detailed metric servicing plan.  But, before you
make a final decision, there are two additional cost factors to
consider.

First, consider whether you will need to borrow money to cover the
costs of metrication.

Second, consider the tax implications of your metric phase-in plan. 
With this information you will be able to prepare a fairly accurate
cost projection, which can be incorporated into the financial
section of your business plan and used to justify investment costs
if you apply for a loan.

Phase-In

Now you are ready to begin the final stage of the metrication
process: Phase-In.  A usual way to begin this stage is to schedule
a meeting in which you affirm your commitment to the metric
program.  Employee motivation and support can be enhanced by
outlining the importance of the program to the future of the
company and to job security.  Also, keeping employees informed
about and identifying their roles in the process will alleviate
fears and make the transition smoother.  Remember, your employees
are a vital key to the success or failure of the conversion
process.

As your company changes to metric, it is critically important that
you keep a continuous check on how closely the conversion process
correlates with your plans.  Many companies have discovered that
the most effective way of accomplishing this is by having frequent
meetings of task leaders to review the previous week's experience,
and by generating a set of special reports for use by the leaders. 
The contents of these reports should be tied closely to your phase-
in plans.

Metric Information

Excellent sources for further information and assistance on metric
conversion and the metric system are:

American National Metric Council
1735 North Lynn St., Suite 950
Arlington VA 22209

National Institute of Standards and Technology
Office of Metric Programs
Gaithersburg MD 20899

American National Standards
1430 Broadway
New York NY 10018

U.S. Small Business Administration
409 Third St. SW
Washington DC 20416

For More Information

Make it your business to know what business information is
available, where to get it and, more importantly, how to use it. 
Several sources of information include:

U.S. Small Business Administration

1.    SBA District Offices
2.    Small Business Development Centers (SBDCs)
3.    Service Corps of Retired Executives (SCORE)
4.    Small Business Institutes (SBIs)

Consult your telephone directory under U.S. Government for your
local SBA office or call the Small Business Answer Desk at 1-800-U-
ASK-SBA for information on any of the above resources.

Other sources

1.    State economic development agencies
2.    Chambers of Commerce
3.    Local colleges and universities
4.    The library
5.    Manufacturers and suppliers of small business technologies
      and products
6.    Trade and professional associations

All SBA programs are available to the public on a nondiscriminatory
basis.

GUIDE TO ADVERTISING YOUR SMALL BUSINESS

Recognizing the importance of small business to a strong economy,
Yellow Pages Publishers Association (YPPA) has joined with the U.S.
Small Business Administration (SBA) to help meet the information
needs of existing business owners and aspiring entrepreneurs.  This
Focus On The Facts discusses the fundamentals of advertising
planning.

Advertising Your Business

Advertising is an investment in your business, similar to other
investments to improve and expand your business. The return you
receive depends on the planning and thought that precede the actual
commitment and expenditure of advertising dollars. By first
developing an effective advertising plan you increase the
likelihood of a positive return on your advertising investment,
regardless of the amount of money you spend.

Four Basic Questions

The basic premise of an advertising plan requires you to thoroughly
analyze the answers to key questions before you can make effective
advertising decisions. There are four key questions to ask
yourself:

1.   What do I want my advertising to accomplish?
2.   Who should my advertising speak to?
3.   What should my advertising say?
4.   What advertising medium should I use?

In a specific business situation, each question has any number of
potential answers. As you think about each question do not accept
any answer until you have considered and explored the full range of
possibilities.

What Do I Want My Advertising To Accomplish?

The first step in developing your advertising plan is to specify
your advertising goals. Be as precise as you can as to why you are
advertising and what you want to achieve. Everyone wants
advertising to increase business, but for your advertising plan to
work it requires you to be more precise.  Some possible goals for
your advertising are:

1. Increase awareness of your business.
2. Attract competitors' customers.
3. Increase the likelihood of keeping current customers and
   developing their loyalty.
4. Generate immediate sales or sales leads.

It is possible you may want your advertising to achieve all of
these goals plus some others. What is important is that you
prioritize your goals.  Advertising works best when it is developed
to meet one specific goal at a time.

Who Should My Advertising Speak To?

Once you determine your advertising goals you can then select the
target audience for your message. Advertising that tries to reach
"everyone" rarely succeeds. Successful advertising is written with
a specific customer in mind.  Try to picture the person you must
reach in order to achieve your advertising goals. Try to describe
your target consumers in each of the following:

1.  Demographics: such as gender, age, income, location of
     residence or business, etc.
2.  Behaviors: such as current awareness of your business; the
    products, services or vendors they currently use; loyalty to either
    you or your competitor's business, etc.
3. Needs or desires: such as what benefits consumers look for,
    the basis on which they will decide whether to use your product or
   service, and how your business can fulfill those needs, etc.

What Should My Advertising Say?

Once you know who your target audience is and what they are looking
for in terms of the product or service you offer, you can decide
what your advertising will say.

Advertising should always be written to communicate a message that
will be seen as important by your target customer. Your advertising
should clearly and convincingly "speak" to your target audience,
explaining the important benefits your product or service offers.
In deciding how to discuss the major benefits of your product or
service in your advertising keep "AIDA" in mind: attract Attention,
hold Interest, arouse Desire and motivate Action.

Where Should I Place My Advertising?

Every month new advertising options become available. Beyond
"traditional" media you can place ads in airports, on ski lifts and
on television monitors in the front of grocery carts. Where you
place your advertising should be guided by a simple principle: go
where your target audience will have the highest likelihood of
seeing or hearing it. Many advertising media work well to reach a
diverse range of target consumers. There is no single medium
inherently good or bad. A good medium for one product or service
may be a poor medium for a another. As you consider media choices
look for one that fits your advertising goals, reaches your target
efficiently and cost- effectively and is with your advertising
budget.  Based on, these considerations, the following summarizes
the relative advantages and disadvantages of the advertising media
most frequently used by small businesses:

Television

Television provides a means for reaching a great number of people
in a short period of time. Small businesses will typically use
either spot television or cable television. A spot television ad is
placed on one station in one market. The number of target audience
who see your ad depends upon how many viewers are tuned into the
television station at a specific time. Cable advertising is placed
either on a local cable television channel or on a cable network.
The number of people reached by cable advertising depends upon the
cable penetration and cable channel/program viewership in a given
market.  Beyond television's reach, an additional advantage is its
ability to convey your message with sight, sound and motion. The
disadvantages of television advertising are: relatively higher cost
- both the terms of airtime and production, limited length of
exposure, short airtime (making it difficult to present a complex
or detailed message) and the clutter of many other ads.  Television
ads may require multiple exposures to achieve message retention and
consumer action. Also, many commercials are considered intrusive,
prompting viewers to switch channels to avoid them.

Radio

Radio, like television, has the ability to quickly reach a large
number of consumers. The major advantage of radio lies in its
ability to efficiently target narrowly defined segments of
consumers. The vast array of radio program formats lets an
advertiser gear ads to almost any target audience.  Beyond this
advantage, radio is commonly used by small businesses because it is
relatively inexpensive (both in terms of airtime and production
costs) and because deadlines for placing radio advertising are
relatively short, providing an advertiser with increased
flexibility. The disadvantages of radio are: an advertiser is
limited to an audio message so there is no visual product or
service identification, ad clutter can be high and exposure to the
message is short and fleeting. Finally, similar to television,
multiple exposures may be required for message retention and
consumer action.  Also, listeners may change stations to avoid
commercials.

papers

papers permit an advertiser to reach a large number of people
within a specified geographic area. paper advertising has
several advantages for the small business. An advertiser has
flexibility in terms of ad size and placement within the newspaper.
Exposure to the ad is not limited, so readers can take their time
with your message. Short deadlines permit quick response to
changing market conditions. Disadvantages of newspaper advertising
include: declining readership and market penetration, ad space can
be expensive, clutter of competitive advertising and a relatively
short life- span (newspapers are typically read once, then
discarded), thus requiring multiple insertions.

Magazines

Magazines provide an advertiser with the means to reach highly
targeted audiences. Specific groups can be reached by placing an ad
in a magazine whose editorial content specializes in topics of
interest to that target.  This is true of both consumer and
business publications. Audiences can be reached by placing ads in
magazines which have well-defined geographic, demographic or
lifestyle focus. Beyond the ability to reach specific audiences,
the advantages of magazines include relatively long ad life and
re-peated ad exposure (magazines are typically looked through
several times before discard), excellent reproduction quality and
pass-along value. The disadvantages of magazines include: long lead
time, limited flexibility in terms of ad placement and format, and
the potential for high costs in production and placement.

Outdoor (Billboards)

Outdoor advertising is typically used to reinforce or remind the
consumer of the advertising messages communicated through other
media. The advantages of outdoor advertising are: ability to
completely cover a market and high levels of viewing frequency. The
disadvantages of outdoor advertising are related to viewing time.
Because target consumers are typically moving, an outdoor
advertisement must communicate with a minimum of words. Messages
must be simple, direct and easily understood.

Direct Mail

Direct mail advertisers use targeted mailing lists to reach highly
specialized audiences. In addition to low waste in ad exposure,
direct mail provides an advertiser with great flexibility in the
message presentation.  The disadvantages of direct mail include:
relatively high cost per contact, obtaining updated, accurate
mailing lists and difficulty in getting the audience's attention
(direct mail is often considered "junk mail").

Yellow Pages

The Yellow Pages are an advertising medium that share many of the
strengths of other advertising media while at the same time
avoiding some of the limitations or disadvantages. As such, the
Yellow Pages are best used to complement or extend the effects of
advertising placed in other media. Like other media, the Yellow
Pages permit an advertiser to select a well-defined geographic
area, ranging from a neighborhood to an entire metropolitan area. 
Once the geography is defined, a Yellow Pages ad has permanence:
Yellow Pages are kept as a regular reference. In addition, Yellow
Pages support your other advertising by providing a convenient way
for consumers to contact sources and obtain information on the
products or services they desire at the time they are ready to
"take action." Also, the Yellow Pages are relatively low in cost in
terms of both ad production and placement. The disadvantages of the
Yellow Pages include: lack of timeliness (ads can be changed only
once per year and, as a result, there is no opportunity for "price
advertising"), potential clutter in some classifications and not as
much creative flexibility as other print media.

INTERNET MARKETING

Internet marketing is now a very powerful, effective and low cost

form of advertising and should not be overlooked. For more information contact:

www.paylessyellowpages.com



How To Get More Information:

Television Bureau of Advertising, Inc. (212) 486-1111
Radio Advertising Bureau, Inc. (212) 254-4800
paper Advertising Bureau (212) 921-5080
Magazine Publishers of America (212) 752-0055
Outdoor Advertising Assoc. of America (202) 371-5566
Direct Marketing Association (212) 768-7277
The Yellow Pages Corporation (888) 883-0531

U.S. Small Business Administration

Consult your telephone directory under U.S. Government for your
local SBA office or call the Small Business Answer Desk -
1-800-8-ASK-SBA. Also, you may request a free copy of The Small
Business Directory, a listing of business development
publica-tions, from your local SBA office or the Answer Desk.

The SBA's participation in this publication does not in any way
constitute an express or implied endorsement of the cosponsor's
opinions, products or services. SBA Auth. No. 88-1250. All SBA
programs are available to the public
on a nondiscriminatory basis. SOFTWARE COMPUTER PIRACY

The personal computer (PC) has become a necessity for today's
successful small business operations. These increasingly powerful
machines use sophisticated software programs for a variety of
applications. Software can help a small business correspond with
its customers, keep track of inventory and even answer the phone
and process orders.

Unfortunately many computer users make illegal copies of computer
software.  Called "piracy" in the computer industry, this theft is
a violation of federal copyright law. Software pirates hurt
themselves as well as others through their actions. They sacrifice
the long term benefits of legitimate software ownership for a
cheap, short term fix. This fact sheet identifies the hazards of
illegal copying and the benefits for small businesses in becoming
"software legal."

Software is developed by publishers, including many small
businesses relying upon steady sales not only to survive but also
to improve their products and invest for the future. The creative
teams who develop software -- programmers, writers, graphic artists
and others -- also deserve fair compensation for their efforts.
Without the protection given by our copyright laws, they would be
unable to produce the valuable programs that have become so
important in our daily lives: educational software that teaches us
much needed skills; business software that allows us to save time,
effort and money making us more competitive, and entertainment and
personal productivity software that enhances our leisure time.

The fact sheet you are holding was produced using a licensed word
processor on a personal computer.

Guide To Software Piracy

What is Software Piracy?

Computer software is protected under the federal copyright law
which states that, "Users may not make a copy of a piece of
software for any other reason than as an archival back-up without
permission of the copyright holder." The unauthorized reproduction
of a computer program is considered theft. In 1990, the PC software
industry lost $2.4 billion in the United States alone and over $10
billion worldwide, according to estimates by the Software
Publishers Association.

Computer piracy is different from copying other recorded media,
such as videotapes and compact disks, because there is no
degradation in the quality of the copy. The computer industry is
the only industry that empowers the end user to become a
manufacturing subsidiary. Trust and responsibility is placed in the
hands of the computer user. A computer program copied over and over
again will work exactly like the original. A program that took
years to develop can be copied in a few seconds. And, although
software is expensive to develop, almost any PC can be used to
generate a cheap copy.

Why Is It Important?

Why should a computer user be concerned with software compliance?
First and foremost, computer piracy is illegal and there are stiff
penalties for breaking the law. Companies and individuals who break
the law can be penalized as much as $100,000 for every instance of
software copyright violation. Recently, a 75-employee Colorado
embroidery and monogramming company paid $30,000 in penalties, and
a 200-person New Jersey commodities business paid $46,000. These
small businesses were caught and paid the price for illegal
software use.

There are also valuable benefits for becoming software legal. By
using original versions of computer software, users receive upgrade
notifications, usually at discounted prices. They are also
investing in the quality assurance and reliability of the product.
Legal compliance means that the business relationship does not end
when the buyer walks out of the store.  Full documentation,
technical support and product change notices await the rightful
owner of computer software. The user also enjoys efficient business
functions due to fully operational and productive employees,
computer systems and virus protection.

Who Pirates Software?

There is no one type of person who misuses computer software. Many
people do not even realize that what they are doing is illegal.
People who would never think of stealing a candy bar from a drug
store may have no qualms about duplicating a $500 software package.
In a small business environment, resources may be limited and an
owner may even think that such a small infraction can have any
serious consequences. After all, a small business is very different
from a large corporation. But piracy is theft and theft is against
the law.

What Types of Piracy Exist?

Computer piracy comes in many forms. Software counterfeiting is the
illegal duplication and sale of copyrighted software in a form
designed to make it appear legitimate. Hard disk loading takes
place when computer dealers or consultants load unauthorized copies
of computer software onto the hard disks of personal computers,
often as an incentive for the user to purchase from that particular
person. Electronic bulletin board services (BBS) may offer the
illegal opportunity to download copied software using a modem
connected to a telephone. Finally, there is the all too common
practice of copying software within companies for use in the home
or office, or "sharing" software among friends.

This last type of piracy accounts for over half the total revenues
lost by the industry. The reasons for piracy differ widely. A small
business person may copy one piece of software to trim costs.
Another user may feel that "everyone else is doing it" and they do
not wish to stand out. Finally, there are those who believe that
piracy "doesn't hurt anyone" or "isn't really stealing.&quo