Milton Friedman, the American economist and Nobel Memorial prize winner for Economics had said, “The most important single central fact about a free market is that no exchange takes place unless both parties benefit.” So, while I may be drawing a salary as an employee, I have to render services to my employer for that salary. If I am a consultant, I will barter my expertise for a fee. If I am in the business of business, I have to make products or render services to my customers. Only then can I justify the profits as my earnings. It is this profit which, beyond sustenance, provides for growth of the business, helps counter competition in the marketplace, provides for contingencies, etc. Hence, the concept of ‘maximizing’ profit.

So when ‘profitability’ has to be sustained, all profit-making entities must standardize and benchmark ‘profitability’ first. The ‘standardization’ is for the purpose of a common and clear understanding of profit in the context of a given business entity. The ‘benchmarking’ is to gauge performance in the marketplace.

A profitability index, also referred to as a profit investment ratio or a value investment ratio, is a method for discerning the relationship between the costs and benefits of investing in a project. Many companies and investors use the profitabilityindexas a way of ranking a group of potential projects.

Broadly, there are several commonly used and important Profitability Ratios including:

Gross Profit Margin is gross profit as a percentage of sales revenue.
i.e., (Revenue- Cost of Sales)/ Revenue
Cost of Sales includes variable costs and fixed costs directly linked to sale such as material and labor for a manufacturer. It does not include indirect fixed costs like office expenses, rent, etc. Hence, higher gross margins show greater efficiency in turning raw materials into income.

For a retailer, on the other hand, it is the markup over wholesale. Hence, retailers can measure their profit by using two basic methods, markup and margin. A markup is the percentage of profit as a retailer’s cost for the product. The margin reflects profit as a percentage of the retailer’s sales price for the product. Both yield different results but are valid descriptions of the retailer’s profit.

Operating Margin is the ratio of operating income divided by net sales. Operating income is the difference between operating revenues and operating expenses. This is also called Earnings before Interest and Taxes (EBIT or Sales) or operating profit. Thus, it is a measure of the revenue surplus before taxes and other indirect costs like rent, interest, etc. Essentially, a good operating margin is required to provide for fixed costs like interest on debt, etc.

Net Profit Margin or Return on Sales indicates profitability after all costs have been accounted for.
i.e., Net Profit Margin = Net Profit (After Taxes) / Revenue
A low profit margin indicates a higher risk that a decline in sales will lead to net loss. It is also an indicator of a company’s pricing policy and the ability to control costs.

However, the business entity’s financing and operating arrangements have to be taken into account first. To overcome the potential confusions created by these considerations, FINTEL uses a measure called Return on Asset Investment. It is calculated using earnings before interest and taxes and provides a direct measure of the earnings ability of the company. The earnings ability is related to the investment in assets using both debt and equity. The ROAI calculation allows you to see whether an adequate return is being earned on the assets that have been purchased for use in your business regardless of the amount of debt that is carried by the firm.

There are a host of other profitability ratios like Return on Equity (ROE), Rate of Return (ROI), Return on Assets (ROA), and others. All these measurements have their own unique applications and usefulness but they function like an eagle’s eye on your business. Rather than go into the specifics of these ratios theoretically, it is better to identify the ratios appropriate for your business and purpose initially.

FINTEL (www.fintel.us) provides the financial intelligence needed to make sense of the various profitability performance situations including in light of the relevant industry. So, whether you are viewing it from an investment perspective or to study a particular industry, you can get an insight into the financial profiles and performance of privately-held companies.Or,you may just want to check out the profitability quotient of your company.

One of the most important provisions of the American Recovery and Reinvestment Act, 2009 is ‘To preserve and create jobs and promote economic recovery’, as mentioned in its Statement of Purpose.Much water has flown under the bridge since this Act was passed by the Senate a year back on Feb 17, 2009.

We have read and seen and heard in all forums about the efforts being made by the powers-that-be to get the economy back on track. The big companies that were ‘too big to fail’ are back in business but the big banks have certainly chosen to distance themselves from small businesses for lending purposes for fear of high default rates in these uncertain times.

Given that small business accounts for almost half of America’s workers, it is the cynosure of all eyes at present to drive job growth. No surprise then that Main Street is focusing on (i) job creation for the millions of unemployed, and (ii) the credit crisis of small business, across America, simultaneously.
2.7 million jobs have been lost in the last two years in companies with less than 50 employees. This accounts for almost a third of the total jobs lost in that period. Yet, companies with 50 to 499 employees have added a net 9,000 positions in January, 2010. At least, this one segment of business reflects a change for the better. The pace of losses has slowed down, too.

Amongst the various proposals being put forth to deal with the present crises of unemployment, the one being most discussed is the president’s proposal to give a $5,000 tax credit for each new employee hired this year. Companies of all sizes are eligible for the credits. Yet, a clear edge has been given to small companies by placing a cap of $500,000 per company. This benefit will be retroactive from the start of the year. Start-ups launched in 2010 will be eligible for half of the tax credit.
A further proposal has been made for reimbursement of the Social Security taxes that businesses pay on increases in their payrolls in 2010. Firms could earn credit by raising wages or increasing the working hours of their current workers, as well as by hiring new employees. The tax credits would be adjusted for inflation, and will not apply to wage increases above the current taxable maximum of $106,800.

It is expected that 1 million businesses will benefit from it. Firms eager for cash could claim the credits on a quarterly basis. This will spare them the year-long wait of when they will file their annual taxes. To prevent abuse of this proposed benefit, a slew of safeguards are being put in place. For example, companies would have to show net increase in their staffing and payroll to qualify. Businesses that cut 20 workers and hire five will not be eligible, nor would those that lay off a $50,000 worker and hire two $20,000 staffers.The detractors say their businesses are so ravaged that they are in no position to hire new workers. They think it is the proverbial case of the cart before the horse.Efforts are on to get bipartisan support for various other proposals to spur economic growth for small businesses, too.
For these proposals to go any further, the Congress needs to pass the legislation when it returns from its President’s Day recess on Feb. 23.

The return to job growth depends on private industry.The moot point is,will the private sector come back? For the sake of the collective conscience of all Americans, one sincerely hopes it does.

Yes. The United States of America is still struggling to get out of the economic quagmire that it still finds itself in. All of us know that it is not going to be resolved in a hurry. We hope we have seen the worst and pray that things start getting better sooner than later.

Nonetheless, when I started off with my business venture, had I anticipated any adversities? Had I provided for contingencies? Was I too euphoric to even think wisely and sagely that unforeseen occurrences are part and parcel of not just personal, but professional life, too? It would have been extremely naïve of me to venture into a business without, at least, being mentally prepared for stormy days.

Today, when the American economy is in the doldrums, all businesses have not shut down, all have not resorted to handing out the pink slips. Those that survived and continued to do well were not all lady luck’s favorite children. So what were they good at? Or, better still, what is it that I am not good at? I dared not shy away from my shortcomings. Absolute honesty and forthrightness is required. If it was not me who was directly responsible, then was it my employee, or a business associate; was it the market, competition, customers or the economic policies of the government? If it was any of the issues other than me, even then I better take onus because at the end of the day, it is my business. Have I identified that sore point? Until and unless I do that, I am sinking deeper into trouble. The earlier I identify it, the better it will be. Only then will I be able to resolve it. And whether I like it or not, the result is a mirror in front of me. I am responsible. Government policy or not, I am the entrepreneur. The onus is on me. May I not use the economic crisis as an excuse!

Seek professional help if the situation so demands. Better that than wasting precious days trying to grapple with an unfamiliar problem. Seek help to identify the problem or to resolve the problem, as the case may be. FINTEL can be a great source of financial intelligence in both bad and good times, helping you determine your competitive position among industry peers as well as to identify potential pitfalls and challenges early.

Once the issue has been identified for what it is, you should be able to justify its nature. Do not camouflage the actual issue. You will be doing great injustice to your own self first and to all those associated with your business if you fail to be transparent in your efforts and actions. Have the customers disappeared? Why did they disappear? Was I short on cash? Why was I short on cash? Are my industry peers / competitors doing something differently to weather difficult periods? Why did I not anticipate problems? Did I have contingency plans in place to meet the credit crisis? If not, why again? This is not a blaming exercise. The purpose is to ensure that we are absolutely strict and disciplined with ourselves. If not now, then when? Further, the purpose is that in the future, I will be a seasoned entrepreneur who will be able to weather and survive any kind of a crisis/risk/contingency. No finger pointing will be required. Maybe I will write a book or better still an article for a business journal for posterity! Something useful that our younger generation may draw upon and learn from: our experience and wisdom.

Business Performance Measurement is concerned with measuring performance relative to some benchmark, be it a competitor’s performance or a preset target. A typical performance measurement helps businesses in periodically setting goals and then providing feedback to managers on progress towards these goals. The time span for these goals is normally a year or less for short-term goals and may extend up to several years for long-term goals. Hence, specifically, business performance measurements are formal, information-based routines and procedures managers use to maintain or alter procedures and practices in organizational activities.

The primary reasons that may be attributed to this exercise of Business Performance Measurement are to synergize profit and growth, and, consequently, decide upon extents of control to be exercised for favorable and justified outcomes. This will also enable you in measuring and redefining your short-term and long-term goals by offsetting them against opportunities and capabilities as you move along. These strategic goals and plans then peter down to operations, human resources and other day-to-day management practices. As an ongoing exercise, it will ensure monitoring and control to drive growth and improvement.

Obviously, to achieve this, a business has to spell out the parameters and subsequently, the scores or ratings to gauge performance vis-à-vis these parameters. The outcomes of such collated data will be very strong indicators of the business health of your enterprise. And this, will, no doubt, reflect on the performance of the top management which mainly drives such business activities. As an entrepreneur, you can then have a holistic view of your business. Such data-based information will empower you with indices with which you can fast-forward your business towards betterment and growth. But do make sure the data are honest and dependable. Check out the IT support practices and tools which collate this data and generate reports as it can make or break your strategic decisions. And always remember that efficiency and effectiveness are central to your business performance measurement, the challenge being to strike the right balance between them.

You can now review performance at all levels, identify improvement areas, set new benchmarks for improvement and then again review the impact of these actions. And, not to forget, reward excellent performance to sustain motivation which always runs the risk of falling by the wayside if ignored. This is what shouldering responsibility is all about, after all.

As an entrepreneur, you must be aware that these parameters of business are being continually researched upon and these indicators have evolved over the years to suit the needs of the present times and different natures of businesses and industries. And even within a business entity, there are various indicators for different aspects of business, including the financial perspective, the manufacturing/operations perspective, the customer perspective, etc. For small enterprises, the financial perspective by itself is crucial. A balanced business scorecard will help you to study and gauge the financial framework of your organization.

FINTEL can be helpful in the process of gauging and managing business performance by providing tools and data designed just for that purpose, including reliable and insightful industry comparisons and trends.

The iconic Brazilian soccer player of the 1960s and 1970s, Edson Pele, was once caught smoking by his father when he was a child. His father advised, “ Listen, if you want to play sport, you have to be in good health”.

This applies to your businesses’ health too. Check out what you need to smoke out! Go, get the barometer.

No doubt, the year 2009 had been a difficult one. And the road ahead is not going to be easy, either. “Small businesses have hung on as long as they can and are basically at the end of their rope”, Senator Mark Warner of the state of Virginia, had said in mid-November, 2009, in a gathering of bankers and small business owners, to address the credit crunch that has plagued small business owners for more than a year.

“The New Year is shaping up to be a rough one for community lenders. Dozens if not hundreds of small banks figure to disappear in 2010, as a weak economy and regulatory pressure lead to more failures and mergers”, wrote Colin Barr, senior writer of Fortune, on Dec 23, 2009. He went on to say, ‘Small-business lending, after all, is what smaller banks do best…. But the smallest banks have been dropping like flies for years, as they labor to master expensive new technologies and regulatory changes- at a time when giant banks spawned in a rash of mega-mergers are expanding their reach.”

After helping out the big entities to protect the jobs of the masses, Capitol Hill has turned its attention towards the small businesses. The government had met with little success earlier in its attempts to unlock small business lending as the 2009 SBA (Small Business Administration) loan fell sharply from the year 2008. Technical problems like extensive paperwork requirements for SBA-backed lending and regulatory problems banks face if too many of their small business loans default had been cited as major hurdles.

Left out in the cold by banks unwilling to make risky lending bets on start-ups and small companies, the nation’s 6 million small employers are struggling, striving to meet their expenses against deteriorating sales. Scarce credit is preventing small business owners from creating jobs. The Treasury Secretary, Tim Geithner, called on the nation’s financiers to step up and do more to fix the damage they helped cause. Geithner said, “As we wind down programs that help big banks, we are committed to doing more to help small businesses access the credit they need to grow and hire new workers.”

In the last week of December, 2009, Goldman Sachs and the Federal government earmarked more than $300 million to get financing to worthy small businesses through a little-known community-lending vehicle, CDFI (Community Development Financial Institution). The purpose is to invest in the local financiers in 2010. No comparison to the billions bailout for Wall Street, it is, nonetheless, three times bigger than any they’ve ever had before. The government had also lined up various stimulus measures aimed at increasing lending through SBA’s programs. Most of it was exhausted by Thanksgiving. The SBA plans to push for more funding to continue the stimulus measures.

So small businesses have reason to be optimistic. Go ahead and gear yourselves up for better times ahead. An accurate, professional assessment of your business and a practical solution should be clearly spelt out. Are you in a crisis situation, barely able to hang on there? Or, are you just looking for a much-needed financial boost to move into higher gear? Identify and justify it. Seek professional help, if need be. Do not let this opportunity go by. FINTEL is a company that can assist you in evaluating your business in relation to your industry and in identifying the future course of action.

The dawn of the year 2010 brings fresh promises. Amen to that.

Quite often, we see that new dreams and new businesses do not sustain beyond the take-off stage due to a small error in management. For instance, a miscalculation of the operating expenses that in business parlance is called ‘Working Capital’ can be catastrophic.
In some cases, an entrepreneur might have done a reasonably good assessment of the operational expenses but may have simply failed to incorporate the debt payment as a key component of working capital. Or maybe, a crisis situation was not provided for by way of contingency funds. One false step, and it triggers a chain of events that lead to a situation like a boulder hurtling down a hill wherein one has no choice but to wait for the boulder to damage everything on its way down and then come to a standstill. And, of course, it is too late by then.

The short-term decisions of a company can be grouped under the heading ‘Working Capital Management’. This deals with the short-term balance of current assets and current liabilities, the focus being on management of cash, inventories, and short-term borrowing and lending.

By definition, Working Capital is simply the excess of current assets over the current liabilities. Short-term assets denote the cash and all such assets that can be converted to cash within a year like marketable securities, accounts receivables, short-term notes receivables, inventory and pre-paid expenses. The short-term liabilities comprise cash expenses within a year like accounts payable, short-term debts such as credit lines, short-term components of long-term debts, accrued expenses.

All small and mid-sized companies consider Working Capital management as the most important management activity because of the significant financial impact it has on the overall organization’s health, not just the financial health. The availability of liquid cash or the ability to generate liquid cash at short-notice through current assets can go a long way in sustaining smooth operations of your business. It is critical to business, and hence, the optimal utilization and constant effort at improvement of Working Capital management are of utmost importance. Else, it hits at the very core of such businesses.

So, what should be considered as adequate Working Capital for a company in a specific industry and, of a specific size? What are the key components of working capital? How should the working Capital for your specific business be financed? What are the various methods required to manage the working capital? For example, excess of cash is also a sign of operating inefficiency. Perhaps, this surplus cash could be better utilized towards growth. An analysis of the cash conversion cycle is a good indicator of this. And yes, one cannot forget to consider external factors like legal requirements, business environment, and internal factors like the organizational structure and internal information communication system, that can impact working capital management.

What has been discussed here is just a basic introduction to the topic. A real-life scenario will have many more complex components and aspects to it. FINTEL is a leading provider of industry data and financial management tools, including it proprietary concept of Net Balance Position developed by the company’s co-founder, Dr. Robert W. Pricer. Empirical testing has shown that this is by far a more effective tool than the traditional liquidity ratios to map a company’s liquidity situation.

Just like an agile sportsperson has to sustain his competitive edge with regular exercises, the wheels of business can keep churning only if they are well greased all the time with excellent Working Capital management.

Here’s wishing you Happy Working of your Capital!

‘Tough Economy Sends Holidays Back to the Future’, says Fox News on its website dated Dec 07, 2009. Christmas shoppers flocked to the Walmarts and Targets this weekend but failed to loosen their purse strings even as much as they had the previous year. And this is when experts are speaking cautiously of the much-awaited recovery of the economy. The National Retail Federation spokesperson, Kathy Granis, said, “We knew [consumers] would be cautious, stick to a budget.’

Having been branded as habitual spenders who do not know how to save, Americans are now becoming financially responsible and are looking for ‘deals’ that would help them buy and save. Hence, discounted prices are the shortest route to American wallets. The savvy businessman knows that he has to match this trend. He also knows this will not last long. The businessman in you is certainly looking beyond this festive season not only to the year 2010 but also to the phase beyond this economic downturn. So, how do you manage in these tumultuous times?

For the present, sustenance is the name of the game. And this should see you through till the tide has well and truly turned. So fine-tune your business. Overhaul your finances. Streamline your operating procedures. Smart maneuvers of your business will help you tide over this long spell of uncertainty. The days when you start trending towards better times are going to be challenging ones too. After all, it is not a week or a month or even a year that we are talking about. It is the entire transition phase that you have to prepare for.

Have you checked out on how your assets are performing? Are the resources and assets being adequately utilized? Get a firm grip on your overall business operations. Check out on the Efficiency Ratios. It will help you measure how well your business is utilizing its assets and receivables. This will guide you on the kind of controls you need to exercise over the assets for optimum utilization for a long haul. There is a gamut of Efficiency Ratios that should be studied in totality to get a complete picture of your business functions. This is especially so in a market-driven economy. Some of these ratios are:

Operating expenses to Average Assets ratio
Collection period ratio
Sales to inventory ratio
Assets to sales ratio
Sales to net working capital ratio
Accounts Payable to Sales Ratio

You can even measure your Management Efficiency ratios by studying the Return on Investment and Return on Equity ratios. After all, Equity is the investment of the shareholders. The results are effective indicators that can assist you in your decision-making from thereon. While you are at it, check out on your Management Team, too!

After you have studied the ratios of your company, compare it with that of your specific industry and your competition. And work your way through this maze of economic uncertainty. FINTEL is a company you may like to take assistance from on this account. Take assistance or training or consultancy. www.fintel.us is the website that you may want to visit online.

Meanwhile, keep your ears to the ground so that you do not miss out on the sound of the first footfall of recovery. That will be music for your ears!

Has your business been profiting consistently? Ah! You have been booking profits on your Profit and Loss statements annually for the last few years. Is that enough to say you are profitable? Think again.

To have a comprehensive understanding of the values of your business from every conceivable perspective would make you financially intelligent. Only then would you be able to determine if your business has been profiting in the true sense of the word - ‘business’. That would imperatively mean a theoretical and practical knowledge of your business. So, what is profitability analysis?

Earlier, the concept of ‘profit’ began and ended at the point wherein you had recovered your initial input costs. Then, it moved on to take into account the depreciation of assets. Today, you may analyze your finances from the perspective of various business activities, i.e., the cost of placing an order or a group of products, servicing a customer or a group of customers, etc. Hence, profitability analysis may be studied at different levels – marketing level, order level, customer level, channel level, enterprise level, to name a few. You will then be able to decide where to increase or decrease capital infusion to generate more profits. Alternatively, profitability analysis may be studied as various segments for each product or service, or, group of products/services, as the case may be. You also have the concept of Profit Centers, whereby each unit is expected to generate its own profits and thereby, add value to the organization. You may even work out the profitability per employee. Profitability Analysis today, has taken on a whole new meaning in a much larger context of the business.

Broadly, as an equation,

Profitability Index = Present value of future cash flow/ Cost of Investments

A profitability index reflects the relationship between cost and benefit for a particular aspect of your business entity. This can be calculated by using profitability ratios as a tool. There are many Financial Ratios that can be applied as tools to measure different aspects of your business. It helps you identify the Gross Profit Margin, Net Profit Margin, Operating Margin, the Internal Rate of Return, Return on Capital Employed, Return on Fixed Assets, Return on Total Assets, Return on Sales, to name only a few. The results yielded by these calculations give you information, insights and perspectives crucial to your business. Aside from researching company’s own performance trends illustrated by these indicators, it’s extremely important to place them in the relevant industry context by comparing their levels with those of competitors and industry peers. Management of these results helps you streamline your business operations: ultimately, to maximize profits with optimum utilization of all your resources.

Thereby, a profitability analysis helps you make investment decisions, guides you to plan your cash flows, to plan your profit margins and to take a host of other business decisions. Meanwhile, do not forget to compute your tax returns!

You may be managing your own business or you may be helping others manage their businesses. FINTEL can help you work with such relevant numbers and data as well as guide you with benchmarking figures for your specific industry.

All said and done, Profitability is, and will remain, the primary objective of any business.

Whether we like it or not, the word ‘competitive’ has taken on a global dimension nowadays. There is no business entity today that can remain ensconced in its shell and have a good night’s sleep. A predator in a jungle is always wary of the fact that it can also be preyed upon. And, however lazy its body language may look, do not get fooled. It moves stealthily all the time, mindful of the fact that it’s very survival is at stake all the time. In our urban jungle of today, a business must ensure a sustainable competitive advantage to survive not just in the present but in the future, too.

The most important thing that Warren Buffet looks for before investing in a company is sustainable competitive advantage. “What really counts is the presence of a competitive advantage. You want a business with a big castle and a moat around it, and you want that moat to widen over time… We want an economic castle.”

If you happen to be running a small private or family business, you are well aware of the need to keep up with the changing times. The fact that your business is thriving today is no guarantee for tomorrow’s survival, let alone success. First and foremost, to maintain your own competitive advantage, you have to be competent and have the capacity to think and act strategically. Never ever outsource your core competency. It is this excellence that your competitors will find hard to replicate. Create barriers to imitation by building ambiguity around it. This core competency should be able to give you benefits in the long run. Be a master of your territory like a lion in the jungle.

So, now, you must know where exactly you stand vis-à-vis your competition. For this purpose, you must be able to quantify your own business, that of your competition and that of the industry on common parameters. Each and every company keeps a record of its data and financial transactions. What is then needed is relevant information of your competition and the industry. These comparisons need to be interpolated and interpreted in context to derive useful information with latest financial models and tools available. Apart from gathering outside information, it will give you an objective perspective of your own business. Get to know the best practices. Get to know the industry standards and benchmarks. This will then help you to assess your own business and charter you future course of action accordingly. You will then be able to plan strategy ahead.

After all, to anticipate and out-maneuver competition is the best way to ensure that your competitive advantage sustains in the marketplace. But, as a small or private family business, you may not have the wherewithal or the resources for an exercise of this magnitude. A cost-efficient approach to this exercise is to seek professional assistance. FINTEL offers several ways for small business and their advisors to gain access to this valuable information, including a free online tool for you to gauge the performance of your own business. Complete privacy and confidentiality is ensured.

Once you are armed with this information, the rest you can take care of with your own business acumen. You innovate or differentiate thereafter. Always remember, competitive advantage is relatively easy. It is sustainable competitive advantage that is the challenge! So, put on your fatigues and step into the jungle of co-predators. Just make sure you have camouflaged your flanks!

So, you have been running your business on your own steam for the last few years and you are dreaming bigger now. Business expansion plan is what is on your mind.

Does that mean more staff, more time at this juncture? Not necessarily.

Does that mean more information on product/service, funds, competition, etc and more funds? Certainly.

Here are a few basic tips that you would certainly need to expand upon. It will work as a trigger point that you can take off from.

Define your Business as it is today:

Before you venture further into your business expansion plan, you must have a formal report card of your present business: the Product, Market Position, Financial Health, laws and regulations, compliance, strengths, opportunities for growth, the challenges ahead.

Ensure that you have applied correct, effective and useful management tools for this purpose. There are key business metrics used to understand and gauge a business. These are very sophisticated indicators of the present health of your business. They help you and your business associates to gain insight into your business from a common perspective. This reduces the risk of difference of opinions on many crucial issues.

For this purpose, the data collated of your business must be accurate. Ensure you have the right technology, tools and staff for this purpose. An honest and comprehensive database of all aspects of your business is imperative. This is essential for building strategy and planning ahead.

Shape up your business expansion plan:

While the very idea of taking off on your next big venture is exciting, you know there are multiple challenges ahead. You must be absolutely sure that you are on secure ground before you even begin to execute your next big dream.

If you are expanding just to survive or to beat competition, then this is not a profit-oriented growth plan. This should be identified as a contingency business plan. Be honest with yourself for all the right reasons. The present economic shakedown should be an adequate lesson for all of us.

Well, since you are going ahead with your business expansion plan now, you need to prepare your project report. There is a plethora of software available to plan out and shape up your reports. All you need is accurate, comprehensive and concise information of the market, competitors, technologies and funds available, etc. The challenge here is to source dependable information that you can base your decisions upon. You can outsource this information from external bodies. Do not ever think that you will be able to collate all this information on your own in this time and age of information explosion. There are a few dependable organizations doing just this job for you, it is their business, after all. For instance, you might want to check out FINTEL for current and reliable financial information related to privately-held companies.

For any such business expansion plan, funds are the propellers. If your basic project report is accurate, you have won more than half the battle. And in these times of recession, while institutes are wary, they are also looking for business. It is here that your reputation and ethics come in handy. The challenge is to convey it to the person across that you are worth trusting. Simple, you should live your ethics day in and day out.

Good Luck !