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Monday, 2 February 2009

Business Strategy - Essential in Getting Ahead of Competitors

Companies need a sales strategy to go up above their competitors. However, the formulation and the planning of the strategy for the business need some goals as basis.

Have Goals in Mind

It is very important to state the goals of business first. The business must state its long and short term goals. With this, a business strategy can be formulated. Strategies are formulated as to how such goals can be reached.

Goals of arrangement should be given a timeframe. In this way, the strategies formulated for each one can be evaluated after such time. The goals should also be measurable so there would be a manner of indicating if the strategies and the execution were effective.

It is also important to maintain the strategies up to date. If the business did not achieve its goal for a certain period, then the strategies must be reviewed and adjusted. The markets also evolve and change, hence the need for updating strategies.

Come up with a Marketing Plan

Execution of a plan is very important in formulating business strategy. The marketing plan would contain a background of the business. More importantly, it would contain core marketing strategies. These strategies would be generally based on research and the analysis. A list of strengths and weaknesses should be enumerated and analyzed. Opportunities and threats are also considered if the business wants to be thorough.

Include the Financial Forecast

This is usually included in the marketing plan as well. The financial forecasts should be included in assessing the profitability of the business to determine how it is going to be or expected to be. It is from the financial forecast that the business would know how to manage its finances and anticipate its cash flow, inventory and other financial matters.

Business Strategy: Evaluation

Since marketing plan is very important, checking the effectiveness of its strategies is also important, for the business to achieve not only its short term goals but as well as its long term goals. Evaluation is done so that the strategies can bring the business ahead of its competitors.

Knowing Your Business, Customers and Competitors

Business strategy should not only be about the company itself but also looking out what is happening in the market. The business must be conscious of what its competitors are doing, thus it can strategize on how to get ahead of them.

For example, a business could decide to pursue a price based strategy in order to get a lion’s share of the market. On the one hand, one can also pursue a differentiation-based strategy.

Still strategies should be based on what the company sees will bring it ahead of its competitors. While knowing the company customer is another thing however. If the company knows its customers, well then it will be able to anticipate how it would react to every price change, for example, or how it will appreciate additional features.

Naturally, the decision on which strategies to be taken should always be based on the combination of all these factors. Again, the time frame and the evaluation are very important. Keeping the strategies updated is essential too.

Learn how to map out your path to success with comprehensive tools and guides to get your life back on track. Discover how to effectively obtain personal, career or business goals and learn how to stay motivated right to the end.

*By Victor Ghebre


Sunday, 25 January 2009

Seven More Tips for Business Success

Consider the following ideas for saving time and money and making your business more profitable.

1. Develop tight controls over billing and collections. To speed up cash flow, reduce the time between shipping your product and sending an invoice. Consider semi-monthly instead of monthly billing, and send second notices more quickly.

2. Collect past-due receivables. Almost every business has past-due receivables. Phone the people who owe you the most money, and try to resolve the problem on the spot. If you can't collect the total immediately, try to negotiate a payment schedule, or schedule a follow-up call.

3. Watch your payables. Don't be one of the many businesses that overpay vendors due to sloppy accounts payable procedures. Go over these rules with your accounts payable clerk:

• Don't pay vendors twice (or more) for the same invoice.
• Don't pay for goods that you return to the vendor; check the invoice to be sure an adjustment has been made.
• Keep track of credit memo allowances you receive and subtract them from the next invoice.
• Be sure to take discounts for early payments when they apply.
• Don't pay for charges that are incorrectly included on the invoice, such as shipping charges the vendor agreed to pay.

4. Keep payroll costs under control. Payroll costs are a major item in most businesses. Perhaps a more efficient plant layout or work schedule would result in reduced labor needs. Consider the use of temporary employees and subcontractors if your business is subject to seasonal variations.

Payroll-related costs are fertile areas for cost reduction. Fringe benefits can easily amount to 25-50% of direct payroll. Review employee classifications for workers' compensation insurance. Improperly classified workers can be costing you significant premiums. Review group insurance programs. Solicit bids for the programs every three years. Consider higher deductibles as a means to lower premiums.

5. Watch those numbers. Use your financial statements to give you important management information. Compare inventory turnover (cost of sales divided by average inventory) year by year. If turnover drops, consider it a warning sign and investigate further.

Compare your gross profit margin (sales less cost of products sold) from year to year. A decreasing profit margin may be a danger sign; it should be checked as soon as it is spotted.

If you sell a number of different products, determine their individual gross profit margins and their mix. Give particular attention to low-margin products to see if it's still worthwhile to carry them.

6. Use prior financial statements as a guide to prepare budgets and long-range projections. Actual results should be compared to these projections to highlight areas needing attention before major problems develop.

7. Use your advisers wisely. Keep your accountant, banker, insurance agent, and lawyer informed about your business. These professionals consult regularly with many other businesses and can help you avoid pitfalls in making business decisions.


The following areas are keys to the success of any small business:

1. Well-trained and enthusiastic employees

2. Appropriate image for the business

3. Effective merchandising

4. Product selection, turnover, and quality

5. Location

6. Effective advertising

7. Excellent customer service

--adapted from Seven Secrets to Small Business Success by Kent J. Burnes

On the other hand, there are a number of reasons why businesses fail. You can avoid many of the following pitfalls by planning ahead and seeking out help when needed.

1. Insufficient assessment of professional and personal skills

2. No business plan

3. Inadequate financing

4. Incomplete records

5. No marketing strategy

6. Inappropriate location

7. Not implementing good management

8. Hiring the wrong people

9. Poor customer service

10. Unwilling to ask for help


Business Success Stories

Talking to Mario Batali

Chef Mario Batali discusses celebrity, his biggest mistake, and cautions about the possible perils of opening a restaurant in this economic climate

As the owner of 14 restaurants, the author of six cookbooks, and a familiar presence on several TV shows, Mario Batali has entered the rarefied ranks of what is known as the celebrity chef. Born in Seattle and trained at Le Cordon Bleu in London, Batali became known to millions as the host of the Food Network's Molto Mario and Ciao America as well as an intense culinary opponent on Iron Chef America. Batali, who recently kicked off his PBS television series Spain…On The Road Again (with his friend Gwyneth Paltrow), spoke with BusinessWeek's Stacy Perman about starting a restaurant in a bad economy and keeping it going in an industry known for its high failure rates (, 4/16/07). Edited excerpts of their conversation follow.

You opened your first restaurant, Babbo, in 1998. Having just opened your 14th restaurant in September, do you find that it is easier or harder to open another eatery given your track record? Is there pressure to outdo yourself?

It doesn't get easier. You can predict a lot of snafus and be prepared for them. That said, each location is different with a different set of dilemmas and problems that arise.

How did you make the switch from chef to restaurateur?

I still like to think I'm a chef. That said, I realized as I was moving in and around the kitchen, it was kind of the financial center of operations. All of the decisions that you make affect the bottom line.

Then would you say that there are a particular set of skills in being a chef that is directly translatable to being in business?

It happened naturally, but I have a business partner, Joe Bastianich. We each have a different perspective, and we've learned a lot from each other about the front of the house and the back of the house and wine along the way.

What do you account for your success?

I think at the end of every month when someone looks at their credit-card bill and looks at the name of a place and how much they spent there, whether it was $220 at Babbo for two or some place else, they equate it with remembering the experience. [If they think,] yes, it was worth it, they will go back at any price point. That is what keeps people coming to our restaurants.

What do you think of the phenomena of the celebrity chef?

It certainly worked for me. A funny thing happened socially 20 years ago. [Back] then people went out to a show and got a bite or to a game or the opera. Now, there is a fascinating amount of information on how to cook. What happened is suddenly cooks are the performers and actors. People make reservations at restaurants a month in advance—at mine, I hope. People send fan letters. They call us celebrity chefs and there is a brand recognition in what we are selling and making. It is free publicity but it takes a lot of time to make those shows. The only real celebrity chefs are Wolfgang Puck and Emeril Lagasse. Paul Prud'homme was the first. I'm on the B-tier. Julia Child was a famous cook but she was not a restaurant chef.

What were some of the biggest lessons you learned along the way?

Clearly the people are the true gold supply in a restaurant, and they are not as quickly or easily replaceable as you may imagine. I'm talking about everyone from the coffee maker to the bartender to the captain. You have to have everyone committed, and you have to commit to them.

What would you say was your biggest mistake?

Letting people get lured away by people offering them 10% more. The big lesson is that you do not have to make all the money—you can share a lot of it.

What would you advise a young restaurateur wanting to open a restaurant in this economy?

I would advise them to wait. This bailout could be a disaster or a bump in the road. But if you have the capital and the real estate, proceed.

Customers are not looking for exotic, hot restaurants—now they want comfort, something they can afford. There are still lots of people with disposable income. Our restaurants are still all up compared to last year.

What would you say is a reason to open a restaurant?

The main reason is because you love the business of making food and beverage available to customers. They come in and you treat them like special members of your family or a fan base. It is evident to anybody who talks to me that I love to go to my job and that I am not looking at the clock to see that there are only two more hours until I can go home. I look at the clock and say, I should have gone home two hours ago. You have to love it, or it's a job and then you should do something else, because owning a restaurant is fraught with risk. The first year failure rate is 70%.

Why is the restaurant business such a risky venture?

I'd say it is because most restaurants are usually undercapitalized. What happens is lots of people come over to your house for dinner and they say you should open a restaurant. But opening up a restaurant is so much more than just being a good cook. That is the hard thing for a lot of people to understand: it's about purchasing up the volume without compromising.

For example, there's somebody's Italian aunt who is a great cook. Somebody says we'll back you in a restaurant—it is every mom and pop's dream. They get a critical review and they do one full seating and all of sudden they have twice as many people coming. Suddenly, auntie is tired of trying to figure out how to make more lasagna and she makes compromises, she let's others do the work, and they don't pick it up or don't capture it the way she has and suddenly her great food is lesser food. It happens in no time. There is no time to properly manage things, and the customers recognize that immediately. They come in less and less, and the hot restaurant six months ago is no longer hot. It's not an indictment, but if you don't carefully keep a watch on things, you can go from a really good cook to just O.K.

How have you avoided that fate?

I've not avoided it at all. There are a lot of angry people out there on the blogs masked by anonymity. They are the most vicious people in the world. I've developed a real thick skin, but every time I'm feeling real good, I go on those blogs.

*Perman is a staff writer for in New York.*