Tag Archives: business plan

Tips for Effective Business Plan Writing


Hello. If you are thinking about starting your first business, writing a business plan can seem, …well… overwhelming! If you feel you are not a researcher and writer, you’ll likely want to hire someone who “plays” at doing those things. If you are a good researcher and writer, here are some tips that will help you develop a much better business plan. The more thorough and better written the plan, the more likely you’ll both greatly increase the speed and amount of sales as well as significantly increase the likelihood that you’ll get funded.

Looking for start up capital? Well, lately, just about the only banks giving businesses loans are those that are guaranteed by the Small Business Administration (SBA). Soooo… if you are smart, you’ll visit your local SBDC (Small Business Development Center) and get your first draft of a business plan reviewed by trained experts.

Ok. So, here are the tips, written in the order of a typical plan outline. Keep in mind that the executive summary may be placed in the beginning but it is always written in the end, after you’ve written almost everything else.

Tip #1: What sets your apart from your competition? What is your Unique Selling Proposition (USP)?

Think about the number of business plans your readers must plow through each day (if they are angel investors, venture capitalists, or bankers). An average venture capitalists, for example, usually sees about 1,000 plans a year and likley invests in up about 10! What distinguishes yours from the rest of the stack?

Highlight the qualities that set you apart from all the other businesses early on in your Executive Summary. Put your winning concept up front and make sure your readers get it. Really emphasize that you’ve done your marketing research and concisely explain why you will dominate your particular market (with sufficient capital to send the message out, of course!).

Tip #2 The eye loves white space. Give your words breathing room.

Separate out your summary into paragraphs that mirror the sections of your business plan, giving at least 1/2 an inch of white space between each topic. It gives the reader’s mind a chance to breath. Summaries are best written very dense, with the lease words possible to say the most important things. So, the reader will want to take a moment to soak it in. Give them the white space to take a “mental breath” before taking on the next big gulp of information.

Tip #3 Inc and grow rich.

If you are presenting a business plan to someone other than your friend or relative, be sure to have incorporated already. Have your incorporation information listed in the Company Description section of the website. Telling the reader that you have yet to incorporate could lead them to think that you’re not taking your business seriously. When you show that you have at least an LLC (which can later be converted to a C Corp or S Corp), then they see that “you mean business.” Now, which state to incorporate in? Did you know that there are good reasons NOT to incorporate in the state in which you currently reside? Talk to a good business attorney and ask about which states give the most protection in court. Also, never sell more than 49% of your stocks unless you are willing to give up all control to other stock holders.

Tip #4 Milestones show maturity.

You’ll want to develop a history of your company that makes you look smart. You’ll want to list milestones that you’ve already achieved. For example, show a chronology of the following, providing the dates of when you:

Incorporated

Completed your prototype

Shipped your first product

Secured major accounts / customers

Secured key strategic partnerships

Reached a significant sales level

You’ll want to indicate at what phase of development your company is currently. Choose one of the following that best describes where you are:

Seed Company: The business concept is developed, but the product or service is not yet finalized. Not yet making sales.

Start-Up: In the early state of operation. Securing first customers.

Expanding: Established company adding new products, services, or branches. Rapidly increasing sales growth.

Stable: Established company with modest ongoing sales growth.

Retrenchment: Consolidating or repositioning product lines. Little or no sales growth.

Tip #5 Avoid Disclosing Sensitive Information

Be careful about putting highly proprietary or technical details in your plan, even if your reader has signed a non-disclosure agreement. You can present these details at a later stage of discussion.

Tip #5 Research, Research, Research – spot trends before they take you out of the game

Researching industry trends enables you to provide facts supporting your claims for your company’s potential success. You’ll need to show that your industry is growing instead of dying or flat. Even more convincing are sales figures for similar companies in the industry.

Tip #6 Invest in Yourself

Most lenders and investors want to see that the business owners have already made a significant personal financial investment in their own company. Many loan programs require owners to contribute 20 to 30% towards any funds sought. So, make certain you highlight the amount of money–as well as the time and other resources–you’ve already committed to your company.

Tip #7 Targeting your Market Shows Exactly How You’ll Reach Certain People

A strong target market definition is:

Definable: It identifies the specific characteristics potential customers have in common

Meaningful: These characteristics directly relate to purchasing decisions

Sizable: The number of those potential customers is large enough to sustain your business.

Reachable: You can affordably and effectively market to them and have proven they will respond via cost effective marketing campaigns.

MORE TIPS TO COME… that’s it for now, but, I’ll post more tips soon… be sure to sign up for my RSS feed

Advertisements

Top 10 Ways to Ruin Your Small Business Plan

Hi there. If you are in the process of writing your business plan, you’re in luck. If you avoid the following common errors, you are far likelier to reach your goals.

1. Make basic mistakes: If you leave out key info or get basic facts wrong, you’ll mess up your entire business plan. Your readers will then begin looking for other obvious mistakes in your research and will discredit your ability to understand your position in the market and how to reach your target audience. Do your homework so you’re familiar with standard industry practices. Educate yourself about distribution channels, price mark-ups, regulations, and legal and accounting matters. One error can ruin all your projections and assumptions.

2. Underestimate the competition: The worst thing you can say in a business plan is “There is no competition.” No matter how unique or terrific your product or service, if you don’t have competition, it means there’s no market for what you’re selling. Be sure to consider potential future competition once you’ve proven the concept.

3. Overestimate sales: When you launch a product or service that’s better, faster, or cheaper than the competitions’, it’s natural to assume customers will beat a path to your door. They won’t. Be realistic, even conservative, about how difficult it will be to build a customer base and how long it will take.

4. Plan more than one business at a time: Even though your business may eventually have a number of revenue streams, concentrate on one part of it at a time. Show you can be successful in one area before branching out.

5. Go it alone: Nobody can build a successful business alone. Strategic alliances, particularly with strong existing businesses, can improve your chances of success. And if you want your business to grow, you’ll need to attract and keep capable management and personnel. Show you can work well and creatively with others to leverage your resources.

6. Use “phantom” numbers: Don’t use financial projections just because they sound good. Don’t use “boilerplate” numbers: industry averages might not apply in your situation. Be able to substantiate where you got your numbers and why you made your financial assumptions. Always overestimate expenses and underestimate income.

7. Forget a “Sources and Use of Funds” statement: Financing sources want to see exactly how much money you’ll need, how you intend to use it, what money you’re contributing, and whether you are expecting to get funds from other sources. If you don’t include this information in a clear, concise format, you’ll confuse potential investors or lenders.

8. Omit an exit strategy: While you may plan on running your business forever, others who invest in your company want to know how they’ll get their money out. It’s usually not enough for them to just get an annual return; they will want a way to make their original investment “liquid.”

9. Lie: This is the best way to get a business plan rejected, increase the chances of your business failing, and ruin your reputation. While every business plan is developed with a certain degree of optimism, when the plan becomes fiction, you’re in trouble.

10. Under-develop the psychographic profile of your ideal client/customer: Money comes from people making decisions. If you don’t thoroughly understand the decision-making process of your preferred client or customer (the person who is most likely to buy what you are offering), you are setting yourself up for low ROIs of your marketing capital.

Business Plan in a Day – Highlights and reviews of Rhonda Abrams’ book

Rhonda has written a very helpful and readable book for new entrepreneurs called Business Plan in a Day, Get it done right, get it done fast. She has also written Six-Week Start-Up, Wear Clean Underwear, and What Business Should I Start?

An experienced entrepreneur, Rhonda has started three successful companies, including a small business planning consulting firm. Her experience gives her a strong real life understanding of the challenges facing entrepreneurs.

There is a disclaimer about the promise of getting an effective business plan done in 24 hours… they may not be consecutive! So, if you’re super busy but you know you need to get your plan written quickly, this 150 page book will help you through the process, show you what you absolutely have to do, and give you tips and tricks to help you reach your goals.

If you are looking to get financing from a bank or other lender, you want to approach investors, such as angel investors or venture capitalists, you want to create a new business or expand an existing business, or even report to upper management on your department’s plans, this well thought out book will help you achieve that goal in a timely manner.

Your business plan is a powerful document telling the story of your company. It presents your current position, your vision for the future, and your plans for realizing that vision.

Rhonda explains that a business plan answers the following questions:

1) What is your business idea or what is your existing business?

2) Who are your existing and / or potential customers/clients and what motivates them to buy from you?

3) How will you let your customers / clients know about your business?

4) Who are your competitors and how are you different from them?

5) Is your management team capable of guiding your business to success?

6) What is the long-range future of your business?

7) What is your company’s financial picture? How much money will it cost to run your business and how much money will you make?

So, now that you know the general questions that it will answer, it will be helpful for you to know the general format that most any business plan will need to follow:

1) Executive Summary: Highlights the most important aspects of your business, summarizing key point of your business plan. If you are seeking outside capital, you’ll want to focus on how the net profits will be distributed to your investors, their return on their investment (ROI), and the possible exit strategies for investors.

2) Company Description: Features the basic, factual details about your business.

3) Target Market Description: Identifies the types of people or businesses most likely to be your customers, and explains their needs and wants. This is where most business owners fail to realize just how important the psychology of their ideal client is to the success of their marketing strategies. You’ll want to really REALLY spend a lot of time on developing a psychographic profile (demographic is usually just common sense, but, still takes some homework).

The psychographic profile will be the one document on which all of your marketing and sales strategies will be anchored. The profile of your ideal client/customer will, to put it simply, make or break your business. ALWAYS REMEMBER: You business will succeed or fail based on how accurately and how thoroughly you understand, document, and leverage the psychology of your preferred customer / client.

4) Competitive Analysis: Evaluates other companies offering a similar product or service or filling a similar market need. This is where a very thorough SWOT analysis is necessary. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. You’ll need to do a SWOT on your company as well as each direct competitor and on the general category of indirect competitors.

5) Marketing and Sales Plan: Outlines how EXACTLY you will reach your customers / clients and secure orders or make sales. This is the detailed procedure and use of vendors and capital to initially test and then create a repeatable system to turn “x” amount of money into “x times 2” or more.

6) Operations Plan: Explains how you run your business and the operational factors that may give you an edge over your competition.

7) Management Team: Describes the key people running your business.

8) Development Plan and Milestones: Shows where your business will be in several year’s time, how you will get there, and the milestones you plan to reach along the way.

9) Financials: A set of financial statements showing the current financial status and future financial goals of your company.

Although the Executive Summary appears first in your plan, prepare it last. You’ll find it much easier to put together when you can draw from the highlights of each previously completed section.

You will need a number of documents that will enable you to complete your plan faster. These include:

Surveys and other research about your target customer

Info about your competition, including research from their web sites

Marketing brochures and other marketing materials

Any past internal company planning papers

Past tax returns for existing companies or for the principals of new businesses

Organizational charts

Charts depicting operational procedures

Product data sheets

Well… that’s enough for now. Subscribe to this blog to read the next section that addresses the key components of each part of the plan… if you’ve found this post much later than the post date, simply keep reading the next article in this series.

To Your Success,

Andrew Barden

A largely untapped resource to help small business owners

Hi there. If you’re a small business owner, entrepreneur, or just thinking about starting a business, you’ll want to see what the Small Business Administration of our government has to offer you, often at no charge, that will help you start or grow your business. What a pitch! Basically, the government is saying “We’ll help you make more money and never charge you a dime!” Can you beat that? And yet, I’m amazed at how many small business owners DON’T use the services of their local Small Business Development Center (SBDC)!

For 54 years, the US Small Business Administration has been a key resource for small businesses across our nation, funding local SBDCs and providing an amazing amount of helpful online and printed content. I urge you to take advantage of the many products and services your local SBDC provides. If you are looking for financing, business counseling, federal procurement opportunities (where the federal government buys from you), or you need help attaining the certifications necessary to compete in today’s marketplace, then you’ll want to stop by your local Center. You can locate yours by visiting http://www.SBDCnetwork.com

Like most any non-profit or government organization, when you work with an individual in that group they may be great or they may be less than great. It is hit-or-miss. But, just know that it is worth finding that “diamond in the rough,” that person whose talent and sincere interest in your success actually makes the difference. So, don’t be disheartened like I was many years ago when I made my first appointment with an SBDC counselor in Pennsylvania who turned out to be a dud. Since then, I’ve not only had amazing counselors but have become one myself, so I know that these positions do attract very effective business counselors.

It is easy to get excited about serving the small business community. People walk into our offices with such energy and hope and talent that you know they will do whatever it takes to succeed! And it usually requires that kind of attitude and persistence in order to make any new business work or to begin to dominate the market and grow your existing business.

Small businesses like yours are the lifeblood of our economy. Did you know that? Small business owners create between 60 to 80 percent of the new jobs in America. It isn’t the big businesses that make up most of the GDP, it is the work of small business owners. They help drive our economy, transform communities, create jobs, and e3nable people to realize their dreams. What dream businesses do you want to start?

At the SBDCs, our goal is to help small businesses by giving the mthe tools they need to succeed. Curious about what we can do? Visit:  http://www.SBDCnetwork.com to learn more. Whether you are starting or expanding a small businesses and need help developing a business plan, targeting clients that make you more money for your time, or establishing a budget or need additional training (don’t you just LOVE to do bookkeeping!) (tee-hee), or you need technical or financial assistance, the SBDCs are here to help.

You see, the role of government is to create an environment in which the entrepreneur can flourish, in which minds can expand, in which technologies can reach new frontiers. Serious, hard-working and successful small business owners create wealth for themselves, their investors, and their employees. Their creativity, hard work, and productivity have combined to produce the most vibrant economy in the world (it’s only the banks that have made it unstable lately).

Your local SBDC (Small Business Development Center), one of over 1,000 offices nationwide, are accessible via one of America’s largest resource vaults for supporting small business owners at  http://www.SBDCnetwork.com Register for free, watch some training videos, write a business plan, apply for a loan, and a whole lot more. We’re here to help.

Small business plan – build it and they will come

Hi again. This is in some way a continuation from my previous post.

Business is simple. Really. Ask yourself this: how does any business make money? Money comes to you from people. People make a decision to do business with you. Money doesn’t come from owning a lease on a storefront in a high traffic location, from websites, from post cards, from ads. Money comes from people making decisions. When people make decisions to do business with you, to exchange a value that they want for the cash in their pocket, you have successfully transacted a business relationship, both an immediate profitable transaction as well as a long term relationship (long term if you are following the NEW RULES). Now more than ever before in the history of business, devleoping a long term relationship with your preferred or ideal clients is crucial to your success.

There is no magic formula for writing a small business plan, but, you’ll see similarities in nearly every guide book or course available. In fact, I’ve spent years researching and reviewing the industry’s best books, programs, instructors, and general theories and principles. You need to ask yourself the right questions in the right order in order to develop a step-by-step plan. Once you’ve thoroughly answered all the necessary questions for your particular type of business, you’ll have a bullet proof plan that will not only make sure you launch your business’s marketing campaigns successfully, but, also give you confidence and clarity in making decisions based on your knowledge of what is most likely to bring you the greatest profit in the shortest amount of time.

Plus, if you are looking to raise capital to either start a new business or do a turn around or expansion of an existing business, you’re far more likely to get all the money you need since it will be obvious to those with money to lend or invest that you’ve done your homework. Did you know that the 2nd more common reason that small businesses fail is that they start their business under capitalized. In other words, it took longer and was more expensive to get started than the business owners predicted, and they simply ran out of money. How can you avoid this very common mistake?

The answer is obvious: start out with a lot more money available to you than you think you’ll ever need. Keep in mind that 67% of the Inc 500 businesses started with less than $25,000 cash. So, you don’t necessarily need a lot of money in order to grow rapidly. But, compare that statistic with another: over 85% of start ups that are still standing after 4 years all had a business plan.

A good business coach can help you identify government agencies like the Small Business Development Centers who help you apply for SBA-guaranteed low interest loans.  Visit http://www.SBDCnetwork.com to find your local SBDC.  You can also find out some foundations who give out NO interest loans to start ups. A good business coach will help you gain confidence to network with those in the venture capital and angel investor circles as well as make presentations that ultimately establishes relationships with individual and institutional investors who end up depositing large checks into your bank account, thus enabling you to launch your business with confidence, clarity, and fully capitalized.

Consider that the average mistake of a small business owner costs them about $15,000, hiring a coach or a consultant for a lot less than that for a few hours can make a huge difference. In writing an effective small business plan, you need not have all the answers, you just need to recruit those who can help you get all the answers. You’ll need to understand how to do your homework both online, in business libraries, and with consultants who have specialized knowledge that will greatly increase your chances of succeeding in your marketing campaigns to generate new business.

Small businesses can succeed even during bad economic times

Hi again.  I’d like to offer you some strategies to help your small business grow even during our current recession.  Basically, there are opportunities for most industries to turn lemons into lemonade.

As a consultant for many years to both private clients and clients of Small Business Development Centers, I’ve seen some businesses succeed while others fail.  I’ve noticed that the ones who succeed, even during touch economic times, are usually the ones who do their homework… they take the time to study the market.  They have developed their strategies and documented those strategies in a thorough business plan.

Basically, failing to plan is planning to fail.  Successful business people do what unsuccessful people are unwilling to do.  Are you unwilling to take a few hours each week and dedicate them to studying economic trends that affect your business?  Or, are you “planning to fail” like all of the other people around you who work blindly in their local, national, or international market.  Now is the time to do MORE studying and less WATCHING of the news!  Get out of your TV room and into your local college library.

First, I’d like to applaud your interest in doing whatever it takes to successfully start or grow your own business, especially in a challenging economy that we now face here in the US, and congradulate you for having the courage to change your life for the better.  Running your own business can be both rewarding and challenging, and researching and writing and effective business plan will go a long way to making sure you are a success.  When you research and write a plan, you’re doing the kind of work that Fortune 1000 companies do in order to increase their profits year after year.  You’ll gain clarity and confidence in making decisions based on the knowledge and understanding of principles that make the best businesses successful.

So, welcome to the new rules.  You’ve got to be more savvy and more careful in this new economy.  You’ll need to map out a step by step process for you to move from where you are to where you want to be.  If you don’t have a “entrepreneur coach” or “business coach,” you’ll want to hire one who has been down the road you need to take.   I’d recommend that you check out the local franchise owner from a company for whom I used to work as an Membership Advisor.   Visit them at http://www.onecoach.com.

One of the key things I learned from the highly successful founders of OneCoach is that your own mindset, belief systems, confidence, and decision making habits, often unconscious, can lead your business down a path of success or failure.  If you don’t make consistently the right decision, you’re going to doom your business even if you have a product or service in high demand with little competition.

“Know thyself” is a command from the philosophers that applies equally to entrepreneurs.  Know what your tendencies are, how emotionally involved you are in your business to see if you are making decisions based on emotions of fear or hope or greed instead of making wise rational objective decisions.  You’ll want to get in the habit of consulting with people more often than you ever have been before.  Just like in real estate the motto is “location, location, location,” in developing the best strategies to take your business to where you want it to be, you need to “consult, consult, consult.”  Make sense?

You’ll also want to look into business plan writing software.  I’d recommend Business Plan Pro by Palo Alto.  Get their latest version if you want to pay full price or get last year’s version for a discount.  I’ve found killer deals on business plan software in the clearance section of Office Depot:  last year’s software at 1/3 the cost!  Software will guide you through all the number crunching and create automatic and pretty looking reports for you.  And it will ask you not all, but, MOST of the questions you’ll need to have solid and thorough answers to before you start any marketing campaign.

You’ll also want to do some market research and start following the blogs of the nations best economists.  I’d recommend the book Basic Economics.  I don’t recall the subtitle off hand but I’ll look it up and post it for you.

Just as much as you want to learn what the best practices are for your particular industry, i.e. learn from the most successful people around you, you’ll also want to find out from failed business owners what took them out of the game.  This information can often be even more valuable.  Learn from others’ mistakes.  Now, sometimes, when asked, people don’t truly know all the factors that lead to their failure … or for that matter, their success.  So, take what they say with a grain of salt.  But, still, you’ll want to ask.

You may have heard that the Small Business Administration, a Federal government agency, has reported that about 60% of all small businesses fail within the first 4 years.  So, you’re probably asking, “How can I beat the odds?”  In this blog, we’ll cover all the common mistakes and help you navigate the waters so you don’t drown.  You’ll also learn from me all the logical but often overlooked marketing and sales strategies that can lead to an increase in the return of your investment of time and money.
Without sales, and the marketing process necessary to get those sales, you’re business will not last.  I will teach you in simple plain language exactly what homework you’ll need to do in order to develop effective marketing strategies.  When you understand your own strengths and weaknesses as it relates to your business, that is, your own personality from an objective point of view of a good psychologist, and when you understand the psychology of your preferred client or customer, you’ll know exactly what to do and what not to do to generate the greatest profit form the lowest risk of marketing investment.  The strategies are simple.  They simply take time to develop and test.

If you are like most small business owners, though.  You simply won’t take the time to do it… and that is why you are most likely not to have a profitable business as the economy weakens.  I strongly recommend that you start planning now, as the economy isn’t going to get any better any time soon.  I’m confident, since I’ve been doing my homework.

Too often, small business owners act like foolish generals of an army:  they send out their troops with no plan, no understanding of the battlefield, no weapons, no ammo, and no defenses.  Just how likely is it that they are goign to win a war like that?  Instead, you’ll want to research and write your plan, raise capital if you need to, and establish relationships with all the right people… partners, vendors, and clients.  Actually, it is a lot simpler than you think.

But, if you haven’t been in the habit of doing even simple things, things that you KNOW you need to be doing, what is the liklihood that you are going to start doing them?  That’s why you need to hire a coach, hire a business plan writer, hire a market research firm, and work with as many of the free service providers made available to you in your local community, like the SBDCs and SCORE counselors.  Attend their low cost workshops and sign up for their free counseling.  To find the local SBDC near you, visit:  http://www.SBDCnetwork.com

Create a team that will help you recession-proof your business.  Become the smart general that plans, prepares, recruits, edifies, protects, and feeds its army.  Then your business can “Be all it can be.”  :O)