Business Plans

SBOCTeam — Fri, 19 Sep 2008 17:21:00 GMT

Do I Need One? How Do I Go About It?

By Christopher Freeburn

You're ready to take the plunge. You have a good idea for a new business. You've done the requisite soul-searching and determined that owning your own business is the thing for you. You've spent some time researching the idea and you've figured out where you will locate the business, who your customers will be and what sort of market exists for the business. Now it's time to sit down and create a real business plan.

Benefits of a business plan
There is no understating the value of having a properly written business plan. A business plan helps to clarify the challenges you will face when trying to get your business off the ground. It helps you anticipate problems and obstacles in advance and thus work out solutions before you actually run into trouble. It allows you to make a reasonable estimate of how much money you will need to get things going and to keep them going through the early days. A well-researched plan can give you a handle on how much revenue to expect and how to target your business's promotional efforts.

Business plans are not for your eyes alone, however. If you need to borrow money to get your business started, having a professional looking business plan is crucial. "You want to demonstrate to any potential lender that you are serious about your new business and that you have a good idea of what running it will entail," says Martin Lehman, counselor at the New York chapter of the Service Corps of Retired Professionals (SCORE). By providing potential lenders with a well-drafted business plan that deals honestly with potential expenses and problems and demonstrates that you have done the necessary market research, you greatly improve the chances of landing that loan.

Anatomy of a business plan
In general, most business plans follow a basic format.

Executive summary: The purpose of the executive summary is to define the business-what it does and why you are the best person to run it. The summary should be no more than a few sentences, a paragraph at most. The idea is to convey your business's basic activities as concisely as possible.

Market Research: Follow the executive summary by making a case for the viability of your business in the marketplace you've chosen. Is there enough consumer demand to keep your business going? Are there enough potential customers in the given area in which your business will operate? What are the costs of getting the business started? What sort of revenues can you expect in the first year? What will be the cost of rent, utilities, office supplies, equipment, and materials for your products or services? Are there any competing businesses similar to your own in the same area? How does your business differ from them? Government publications, industry publications, trade groups and local chambers of commerce are excellent sources of demographic and marketplace data that you can use when compiling your research. Be as realistic as possible.

Business Outline: Here you will sketch the anatomy of your business. Identify your management structure, supply chain, and operations. "Be as detailed as you can," advises Lehman. "This is the time to work out fundamental questions about how everything in your business will work." Ask yourself the basic questions. Where will your business be located? Will it be a sole proprietorship, a partnership or a corporation? Who will be the owner? Are there employees? How does it provide products or services to customers? Who are the suppliers? "Iron out ownership and decision making roles ahead of time," advises Lehman. "Who gets the final word on things? If there are other people involved in the business, this is the time to figure that out." If there are partners or employees already in place, make sure that their duties and powers are well defined.

Marketing: The business plan should make clear exactly what you are selling and how you plan to let potential customers know about your business. Detail any advertising plans and their likely cost.

Cash Flow: How much money will your business need to get started? How much revenue can you expect from operations? This is an extremely important part of the business plan, and the one that requires considerable research and attention. Try to estimate, as best you can, exactly how much it will cost to keep things going for the immediate future and how much revenue you think your business can reasonably gain. "This can be really difficult for the first time business owner," Lehman warns, "If you don't have an established track record to draw on, you are going to have to make an educated guess. This is where your market research becomes essential." Lehman says that the biggest mistake new business owners make is being too optimistic with their revenue projections while underestimating costs. "Then they find themselves stuck with higher than expected bills and too few customers and they can't afford to keep things going," he says. It's better to err on the side of pessimism when estimating costs and potential revenues. Potential lenders or investors appreciate a little pessimism in financial projections since it indicates a more realistic outlook on the part of the small business owner.

Do You Have the Mindset and Skills to be an Entrepreneur?

SBOCTeam — Thu, 15 Nov 2007 14:43:00 GMT

You probably already know that starting a small business requires extensive research and analysis of many factors. But the one requiring the most critical assessment is often overlooked by many entrepreneurs. And, it's as close as the nearest mirror.

That's because wanting to be an entrepreneur is one thing; being one is quite another. You will take on responsibilities and commitments far different from those of an employee, even if you have management experience. It's a challenge that can be exhilarating and rewarding. Unless you're prepared mentally and emotionally, however, it can also be overwhelming.

Before you study financing options and plan store layouts, sit down and conduct a probing interview with yourself to see if you're the right person for the all important job of entrepreneur-owner-boss.

Are You a Self-Starter?
Nothing in business happens by itself. As the owner, you're responsible for everything from establishing your firm's vision to setting the daily work schedule. The fact that you're exploring small business ownership and asking questions is a good sign.

Are You a Positive Thinker?
The moment you become a business owner, you represent yourself, your business and your expectations for success. What you say and do must convey confidence and commitment to moving forward. Employees who sense these qualities will share that determination to succeed, even under difficult circumstances. If you work alone, there will be days when you have to be your own cheerleader.

Are You Disciplined?
Your days of the "9-to-5 routine" are over. Running a small business requires a continuous commitment to quality and detail. You cannot afford to cut corners, miss deadlines or make promises beyond your capabilities. If you plan to run the business from home, you must be able to resist temptations and distractions in order to get your work done.

Are You a Lifelong Learner?
Entrepreneurs who continually seek information, new ideas and sound advice have the best chance for success. Being attuned to market trends and issues makes it easier to adjust products and services to customers' needs and preferences. You're also in a better position to enhance your competitive advantage and efficiency, and address potential problems before they harm your business.

Can You Market Yourself and Your Business?
Some people have trouble with this one because of the negative (and often unfair) connotations associated with being a "salesperson." No business, no matter how good, will succeed without some kind of marketing. The good news is that promoting your business is easier than you may think as long as you know what to do and how to do it. After all, we all enjoy saying good things about ourselves. When you craft and tell your story in the right way, more people will be willing and eager to hear it.

Can You be Objective?
Your ideas and practices may seem "bulletproof," but reality may be far different. Is there really a need for a particular product or service in your area? Are the hours of operation fair to your employees? Is renting equipment better than owning it? A good business owner knows how to examine an issue from many perspectives and understand that strengths and limitations of each.

So how did your "candidate" for entrepreneur-owner-boss do? If every answer was a "yes," your small business dream is on its way to becoming a reality. For areas of concern, the solution may be business counseling, management courses, or a concerted effort to discard some unproductive habits in favor new ones.

Finally, make it a point to conduct regular self reviews. Thinking and approaches that worked in the start-up phase may not be as appropriate for a thriving concern, or if a major market shift occurs. When you work for yourself, you want to be confident the entrepreneur-owner-boss knows exactly what he or she is doing.

Brought to by SCORE "Counselors to America's Small Business" www.score.org

Starting A Business

Business Plans

Do You Have the Mindset and Skills to be an Entrepreneur?