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Internet Business Articles THE How to start internet business PROCESS
Once you have established the target company profile, understood the best ways to generate deal flow, and gathered the necessary resources, you should prepare to enter the deal market. At this phase, it is important to recognize and prepare for the random nature of the process and two important timing issues.
First, the sequential nature of the search process makes it difficult to consider two deals within a timeframe allowing for a comparative evaluation. It is important to realize that if you let one deal pass, you will probably encounter another in the near future. An analytical framework for screening How to start internet businesses (see Exhibit) will assist you in comparing and tracking various deals as you interface with sellers, deal sources, and other active parties throughout the deal process.
1. GENERAL Company, How to start internet business strategy, age and history, trends
2. PRODUCT
Description/technical specifications, /unction, volumes, prices, value added/commodity
3. How to start internet business TEAM
Key employees: names, positions, education, track record, skills Organization chart
. Is management team complete? Efforts/ability to hire new management? Willingness to remain after purchase? Characterization of management team (i.e., aggressive/passive, young /old, etc.)
4. MARKET
Market size (S, units) Market growth and growth drivers Segmentation of the market (geographic, functional) Identification of customer: Who? How? Why does the buyer buy? Relationship with customers: number, loyalty, concentration
Distribution channels: types, support/training required, advertisement strategy • Market share of major players Company's major differentiating factors: price, quality, service, features, brand identity
5. How to start internet business ANALYSIS
Barriers to entry/exit: economies of since, proprietary technology, switching cost, capital requirements, access lo distribution, cost advantages, government policy, expected retaliation, brand identity, exit cost
Competitive factors: number, strength, characterization, product differences, concentration, diversity, management, industry capacity, competitive advantages, corporate stakes
Substitution threat: relative price/performance c-f substitutes, switching cost, buyers' propensity to substitute
Suppliers' power; relationship, concentration, manufacturing/marketing process, presence of substitute inputs, importance of volume to supplier, switching cost of supplier, cost relative to total purchases, impact of in put on cost or differentiation, threat of forward integration, supplier profitability
Buyers' power: bargaining leverage, buying patterns, concentration, volume, switching cost, ability to backyard integrate, substitute products, price sensitivity, price/total purchases, product differences, brand identity, impact on quality/performance, buyer profitability, decision-making units' incentives and complexity
Trends: technology, economic, changes in tax la iv
OPERATING How to start internet business CASH FLOWS
Cash or value that flows out of the How to start internet business during its operations includes:
Perquisites These benefits are not literally cash but can be considered cash equivalents. How to start internet business-related expenses charged to the company, such as company cars and country club memberships, are received by the individual and are not taxed at either the corporate or personal level. Their disadvantage is that they are limited in absolute dollar terms.
Return of Capital Through Debt Repayment This form of • cash flow is also tax-free at both the corporate and personal levels. Its additional advantage is that it can occur while the entrepreneur maintains equity interest in the company. Its disadvantage is, of course, that it requires the entrepreneur to „ make the original investment.
Interest and Salary Both these items constitute personal income and are taxed at the personal level; no tax is imposed on them at the corporate level.
Dividends As a means of getting cash from a venture, dividends are the least desirable, as the resulting cash flow has undergone the greatest net shrinkage. Dividends incur taxes first at the corporate level (at the 15% or 34% rate as income accrues to the corporation) and then again at the personal level (at the personal income tax rate). At the maximum corporate income tax rate of 34% and the maximum personal income tax rate of 28%, this double taxation can reduce SI.00 of pretax corporate profit to $.48 after-tax cash flow to the How to start internet business.
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