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Ask a business expert your business questions. Answers to selected business questions will be featured on a regular basis. To submit a question, see Ask a Question. For information about Rick Riebesell, the business expert, see About Rick Riebesell.

Pricing - What are the Guidelines

Question: I am trying to understand how to price my product. All I know to do is look at the prices of the competition. Are there any guidelines?

Answer: The initial question, which I assume you have answered affirmatively, is whether the fixed costs of production make the marketing of the product feasible. Fixed costs are relevant when deciding whether to offer a product but are not relevant when deciding how much to charge for a given time period. Assuming there is a sufficient margin over fixed costs, the optimal selling price should depend on two factors – the variable cost per unit and how sensitive unit sales are to changes in price (elasticity).

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S Corporation or LLC - What am I Missing?

Question: My business is incorporated and I elected S corporation status. Most of the business owners I know are doing business as LLC's. Am I missing something by being an S corporation?

Answer: Entity selection and tax planning for an entity are advanced topics. This planning requires consultation with your tax preparer (preferably a CPA) and your lawyer. At different times in the life-cycle of a business different entities and different planning may be appropriate for a variety of reasons. Be sure to seek competent professional help in entity and tax planning.

To respond to your question, there may be a good reason for you to be an S corporation. That could rest in the application of self-employment tax.

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Business Sale - What are the Considerations?

Question: I am starting to think about selling my business. What are the considerations?

Answer: The sale of an owner-managed business requires a willing buyer and seller who have negotiated a price at acceptable terms. As a willing seller, you need a buyer with whom you can negotiate a price to accomplish a sale.

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Cash - How to Raise Quickly?

Question: I need to raise some cash. I can't get a loan from the bank, and my credit cards are maxed out. The good news is that my business is making money, but not fast enough to satisfy my need for cash. How can I raise some cash quickly?

 

Answer: It sounds like you need to use methods to get your present customers to pay you sooner than they ordinarily would.

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