Thinking Like Funders

To write a fundable business plan, one which does its part to convince investors or lenders to put money into your business, you must think like funders. Consider these top questions which funders will ask themselves as they consider business plans to get into their mindset.

How Can I Tell If the Market Exists?

A funder cares deeply whether a market (and a large enough one) exists for the proposed product or service. They look to see if competitors and substitutes already exist, which proves to some extent that the business opportunity exists. Without this, they will look to research on customer needs, demographics and the industry to prove that there is room for a new product or service here. The more support an entrepreneur can provide in their business plan, the easier they make it for funders to do this leg work.

How Can I Tell If the Strategy Will Work?

Next, funders will wonder whether the chosen strategy for the business will work. If it seems to be incorrect or not carefully thought out, it is not necessarily the end of the road for the entrepreneur. If the funder is relatively hands on and trusts the core ability of the entrepreneur, he or she may help to craft a better strategy. They will look to the marketing and operations plans in the business plan to see that the tactics described fit the resources of the company and the market situation in order to evaluate whether the chosen strategy is good.

How Can I Tell If the Entrepreneur Can Execute?

Funders rely on past records of success and experience to know if the entrepreneur will be able to execute on the plans he or she has laid out. This should include experience with entrepreneurship or entrepreneurial activities in some form, experience leading others, and experience in the business sector in question. The management team must pull together individuals that cover these skill sets and assign roles to each that put their skills to use.

Is The Return Enough For Me?

Finally, funders examine whether they believe that the return represented by the plan’s financial projections is realistic and appropriate for the risk of the investment. Lenders generally require lower returns than investors, as they protect themselves from downside risk by requiring some type of collateral. Investors require higher returns because of their greater risk of losing the entire investment. Be sure that the return can be deduced from the financial projections without a great amount of legwork. For investors, however, you may choose to not set how many shares you intend to give away for their cash, but rather leave this open to negotiation.

Plan the Work, Work the Plan

One of the most common questions we hear from potential entrepreneurs is “Where do I start?” The short answer is Plan Your Business. You don’t need a formal, extensive business plan at the earliest stages, but you do need to have a clear idea of the business idea. That is, you should know what a typical workday will look like, who your customers will be, how they will find and buy from you, where you want the company to go, and the like. Planning your startup will also give you a good idea of how much money you will need to get your venture off the ground and force you to think through any potential obstacles in your way. Here are a few options to get your business planning started.

There are hundreds of free business plan templates available on the web. They all cover basically the same topics, and most include the broad areas that you need to consider to really plan your business. However, many first-time entrepreneurs have trouble actually making a plan from these templates, and for good reason.

In general, those outlines are useful once you already have a pretty clear plan in mind and just need to organize it for the bank or investors. They do not help you decide what to look for, or how to evaluate your idea, or even really explain what each section means. For most startups, the ready-made, fill-in business plan forms are not the best option.

There are also several good business plan software programs out there, but they have a similar problem to the templates. They are excellent tools for putting your developed ideas into a logical, presentable order for investors and banks, but don’t really help with the actual planning process.

A fairly recent addition to the small business outsource community are planning consultants. For a fee, these folks will tell you, step by step, what you need to do during the startup process and beyond. While this kind of hand-holding can be very tempting, it is also very expensive…costing money that would be better spent on marketing your new venture!

One popular consultant charges $750 per session and leaves you with a “homework assignment” of the next three steps to starting your business. Can they help you improve your business? Probably, because they should be experienced with the startup learning curve. Will they give decent advice? Possibly, though since it is an unregulated industry just about anyone can claim to be an expert. Will using a planning consultant make your business a sure success? Definitely not. YOU need to become the expert yourself in order to ensure long-term success for your startup.

Rather than relying on business plan templates or disconnected consultants, look for opportunities to learn the fundamentals of entrepreneurship for yourself. Most successful entrepreneurs will tell you that learning to plan effectively is an important key to success. And, since experience is the best teacher, you are better off finding resources that will teach you more than just what needs to be done, but also how to be an entrepreneur.

Preparing Online Business Plans

A lot of people can surely agree that planning is a very important, if not the most important, part of any endeavor. Entire kingdoms of old and new have gone down due to lack of or ineffective planning. Entrepreneurs know this and that’s why drawing up an effective business plan takes at least an entire semester in business school.Online business plans are just as important and therefore should be studied and prepared thoroughly.

So why exactly should online business plans be prepared? They are going to be very useful as they will define your goals and objectives through appropriate information and analysis. Once you have a business plan, you will have an anchor you can come back to whenever you feel distracted or have strayed from your original vision. It will also be useful as a selling tool when dealing with key relationships such as with lenders, banks, and investors. It can uncover weaknesses and omissions in the planning process you undergo. It can be used to solicit advice and opinions from people, especially those in your target field of business. Input from those who have already gone some ways in the online business field will be invaluable to you, and you will have your online business plan to show those experts so they can study it and draw up conclusions and appropriate advice afterward.

How should your online business plan look like? It should be formatted in a way that all factors essential to your business purpose are systematically assessed. First, there must be a mission and vision statement, which may seem trivial but, as aforementioned, will anchor you during the whole process of maintaining your online business.

Second, you should include the people involved. Not to make your ego inflate, but you will be a key ingredient here. Consider all your prior experiences which may be applicable to your new online business. Study your resume and that of anyone else who will be involved, such as your partner(s). Be factual and completely objective as this section will be particularly focused on by anyone with whom you’ll be having relationships from potential investors to vendors.

Third, your business profile should be written. This will be the definition of your intended business and how you plan to execute it all exactly. If you envision serving a specialized market, indicate so.

Fourth is an economic assessment, which is an evaluation of the economic environment your business will be a part of. Demographics will be included here. In relation to that, the fifth portion is your cash flow assessment. Draw up a one-year cash flow which will cover your capital requirements. Write what potential problems you may encounter financially and how you plan to address them. Sixth, will be your marketing and expansion plans.

Those are the basic parts of online business plans, and hopefully after having drawn those up you’ll be able to focus properly on what your business needs to really take off and be successful. Good luck on your entrepreneurship!

The New Entrepreneur’s Guide to Powerful Business Plans

There’s an old adage that states ‘A business that fails to plan plans to fail.’ One of the top reasons that new businesses fail or enjoy limited success is lack of or ineffective planning. The bottom line is this: you can have the best idea in the world but it is only as good as how well it is put onto paper. The best way to do this is with a business plan and I know in saying this that I am not exactly turning you onto the mother lode.

Business plans are nothing new in the world of business and you may even already have one. That said, there may be some additional applications for the business plan that can help you continue to grow and prosper. Just to summarize, you want to make sure that your business plan contains the following key elements.

First, a business plan should have some sort of summary. This is particularly effective for entrepreneurs who seek venture capital. Many venture capitalists or angel investors read a lot of proposals and see a lot of business plans so a captivating opening summary is a great way to capture and retain their interest. A summary should outline the key aspects of your business, contain some sort of mission statement, and hit the highlights of why the reader should keep turning the pages and learn more.

Next, a business plan should outline the key features of your business. How was the idea or product generated? How is it unique? What makes you and/or your business stand apart from the competition? What market share can you expect to capture with the business running at full steam? In this part of your business plan, you may want to include a detailed description of your products and/or services, especially if they make a compelling argument for why your business stands apart from the crowd.

Next, you will want to include some operational information that outlines how your business is being run. Who are your customers? Why do they want the product or service? How is your business currently being marketed? Who are your current staff, what are their roles, and what growth in staffing do you expect? Answers to these types of questions not only keep you focused, but also address key issues that potential funding sources will need to know.

Next, you will want to include some projections for things like the scope of your customer base, staffing, business volume, and revenue for at least the next five years. Remember, this will not only be appealing to potential funding sources, but will also help keep you on track to reach those goals as your business grows.

Last, a business plan should clearly outline the financial needs of your company. As you might gather, any sort of funding source for your business is going to want to know how much capital you need to reach your goals. Also, you need to be thinking about your capital needs long before you ever seek outside capital. Lack of funding is also a common reason why businesses fail so make sure this is not an overlooked part of your planning process.

In closing, treat the preparation and updating of your business plan as the owner’s manual for what you are working to achieve. In doing so, you will be able to effectively attract capital (as needed) and it will also serve as a sort of written contract between you and your business and it can be remarkable how real your business dreams can unfold, just as planned.

DDr. Matt Fagerness is an educator, venture capitalist, business consultant, and author who has touched the lives of those who are looking to build upon their own dreams of success. Focusing on written materials and coaching services for success-driven and business-minded people, Dr. Fagerness has a no-nonsense approach to starting and building small busine

Steps to Successful Entrepreneurship

I used to listen to my dad’s advice when I was a little girl. He always said that when I grow up I should start my own business because nobody really gets rich just by being an employee. He repeated the same context over a period of time until it penetrated my system. I understood very well that he wanted me to break free from the hassles of corporate world and use my skills and talents in the progress of my own business. In one research, I learned that there are so many things to consider before starting a business. At this point business planning is a determinant factor of the success of every business venture.

Business Planning: Where to begin laying out the plans?
The very first thing to consider in business planning is establishing the goals and expectations of the business. You must ask yourself what is the reason of the business venture? Here are the common reasons of neophyte business people: Freedom and Independence, Respect from peers and family, Power, Self-fulfillment, Livelihood, Change of Lifestyle, and Money. In business planning, consider what motivates you and what drives you to sustain in that venture. Your goals are essential guide to where you are heading in your business enterprise.

Business Planning: What are the key questions to ask?
When you have determined your reason for entering into the business world, the next step in business planning is to ask. Ask these following series of questions:

What kind of business? You should be able to assess yourself if you have the knowledge on the kind of business you want to start. The degree of knowledge and experience you have is a great tool in managing your own business. If you don’t have any knowledge or experience to the kind of venture you want, you might as well start learning about them. After all, you don’t want to go to battle without any weapon. Your knowledge about the business is your best weapon. In small business planning, you need to know the ins and outs of the business from ground up.

When and where to start the businesses? The timing and the location your business are also very crucial part in the success of your business planning. Know the people in the area and identify their needs or potential wants. Just imagine putting up your business where there are hundreds of similar businesses offering the same products and services in that area. Although healthy competition is good, putting up the same kind of store among hundreds of similar stores will saturate the area and create redundancy. To make your business stand out, put up in places where there are less stores offering what you have and when you do that make sure you also have a compelling offer to the customers that they can’t simply resist.

Other additional questions in the steps of business planning that must be addressed right away are the following: Who are involved in the business? Who is the target market? How to start the business? How much is the capital? What are the strategies to use in jumpstarting the business? What is our business plan? What is our Marketing Strategy? You must also include in the business planning the legal documents that you need to accomplish in order to operate in that area smoothly. Some businesses start off as a hobby like jewelry making, crafts making or antique refinishing business and do not require much registration papers but as your business grows, the IRS will eventually question the documents somehow.

Business Planning: Determining the Nature of Business
You can choose from the various kinds of businesses that you can offer to the people. As part of your business planning you must identify what is the nature of your business. It will come handy to know your business from time to time when consumers ask.

Service. You sell your skills to consumers. i.e home repairs, pool cleaning, massage

Wholesale. You buy in bulk and sell them by piece with a marked-up price.

Retail. You sell products directly to consumers. i.e convenience stores, grocery, dress shop.

Project Development. You gather resources to make profitable product or service and deliver to the customers as fixed-price project.

Manufacturing. You put together parts and components to create products for the consumers or other businesses.

The steps in this article are just the baby steps in becoming a successful entrepreneur. Along the way, you will have to learn the curves as you operate your business. There will be more trying times that will eventually lead you to prosperity. For the meantime, you can focus in finalizing and executing your business plans. It is in the business planning stage that the growth and direction of your venture will follow. A good business planning is the solid foundation of lasting business enterprise.

How to Make Sure You Become a Successful Entrepreneur

Entrepreneurship is a challenge, mainly because some people plunge into the business world with little knowledge of how to run a company. Due to several circumstances like loss of employment or seeing someone else doing well in a certain area of business, people decide to start a company only for things not to work out as expected.

Having a business plan is very important. It is crucial that you take time to study the market trends and more so identify what customers in a particular location are looking for. Once you have identified the need, come up with a business strategy that will fill this gap. Try as much as possible to be innovative, this will make sure you stay ahead of your competitors.

Innovation is imperative when it comes to marketing strategies. To build you business brand, ensure your advertisements are unique. This will set you apart from other adverts thus customers will notice you.

In entrepreneurship it is advisable to start small and grow from there. When you start a small business you are able to learn more of what the customers need and hence with time begin stocking the right commodities, in correct quantities that can be affordable in the identified business location.

Before you decide to quit employment, implement your business idea first and see how things will progress. Once your business picks up then you may decide to quit or employ professionals to run your business. This will ensure you have several streams of income which is recommended if you want to create wealth.

A View on How Authors Should View Their Literature As a Business

I once was told an old saying that a key to success was “prior proper planning prevents pot poor performance.”

As authors, especially in fiction writing, we have two businesses to look after and herein lies the problem. Many authors spend a lot of time working on the books that we often fail to plan our literary careers. Many authors are under the assumption that once the book is written that it will get into stores, they will become bestselling authors and that they will get millions. Then it is no wonder that many “former authors” just do one or two books and then the “literary career” is over before it began.

Most authors… including a large number of those who hit the New York Times or USA Today or Wall Street Journal Bestseller’s lists… still work daytime jobs. The truth is it takes YEARS for most authors who have a name, to build a name. Usually it’s the third or fourth book that reaches bestseller status or even gets the author some sort of notoriety. Using my own books as an example, Worth Fighting 4, is one of the standout titles for my teen series and is currently my bestselling title… happens to be my fourth published novel. Prior to that, that title was held by the title my teen series was named after, Hold On Be Strong, my third.

As authors, we spend a lot of time writing our books, planning our plots, building our characters and studying the craft of telling our stories. And this is good because we want to create good novels that we want to put our names on and that we feel will sell well in the market place. In the back of our minds, we have an idea of what the cover looks like and which markets we enjoyed signing our books at and what places we want to go back to. And we spend a year or so making sure that each book we work on is as presentable as possible. We go through the technical phase where we ensure that the books are properly edited; we present the books to review readers who critique the book and give their stamp of approval; the package is presented to book buyers who usually commit to a certain number of copies (if the book is selected to be sold in the store).

We as authors need to look at things from this perspective… creating a business plan for our literary careers:

Our “Statement of Purpose” can be a short mission statement for why we are writing (for those who use pseudonyms, perhaps the statement of purpose can be the reason or goals for writing under that name).

The “Executive Summary”, which would be written last, would compile a short listing of our author plan.

“Description of Business Opportunity” would be what we as authors see in the industry and where we find our niche.

The “Company Description” would be our company structure, location.

Our “Products and Services” would be the writings and perhaps some co-authoring and ghostwriting we may due. It is here where we would specify genre and other important information.

Our “Market Research and Analysis” would be our study of other contemporary authors who write in the same genre. A comparison and contrast of what stands out as positives and negatives about their books and how as a new author, one would plan to be different.

The “Marketing Plan” would be how to get the work out to the masses. This is a perfect opportunity to talk about the website (and the cool graphic designer you know), the newsletter, a companion blog, the bookmarks and postcards, social media and any other marketing efforts that will not only lead to the success of the book, but to longevity in a literary career.

The “Management Plan” is tricky. As the author, the writer is the overall CEO of their brand. But the management team would include major key players with the publisher if the author has a publishing deal, the editors, the graphic designers and others who make the creation of the book to life.

The “Financial Plan” would be the project sales minus expense in the Income Statement. The Cash Flow Statement that shows the expenses versus when an author expects income. A Balance Sheet will show the assets and liabilities the author’s equity in those materials.

“Closing Statement” should be why we are writing books and what we want out of our careers.

I think if we all though of our careers with that mindset, some of us would not just last longer, but be satisfied when we see our careers grow.

Free Government Resources to Aid in Business Planning

In your quest to develop your business plan you will want to obtain information regarding industry analysis, legal and regulatory statutes, manufacturing, training and counseling, and maybe corporate financials and international information and data. This is just a few of the areas you can research through our government’s online resources. Though they are free and free is often synonymous with undervalued they are indeed not free. Your tax dollars pay for them and the information is rich and vast. These government resources are put there to help you succeed so there is no better place to start your research than with the resources you pay for. The U.S. Census Bureau, Department of Commerce, Small Business Administration, Internal Revenue Service, The State Department, FedStats, Export.gov, and the U.S. Securities and Exchange Commission all have information that you will find helpful. I will talk a little about each one, what they do, and how you can use them.

The first place you may want to start with your investigation on industry analysis is through The Department of Commerce. The DoC is comprised of twelve separate agencies responsible for many things regarding business from weather forecasts to patent protection. Their mission statement states exactly what they do and there is no better way to sum it up, “The DoC touches the daily lives of the American people in many ways, with a wide range of responsibilities in the areas of trade, economic development, technology, entrepreneurship and business development, environmental stewardship, and statistical research and analysis.” There is much to the DoC and they also are a portal to several other government agencies and partners that you may find useful.

The U.S. Census Bureau, a derivative of the DoC, is a great resource for industry analysis and they are arguably the most important branch of the DoC for demographic information ranging from population breakdown, income, education levels, and housing to name just a few which you can find in the Peoples and Households section of their website. The Census Bureau also collects massive amounts of data on economic activity. You may need to search the industry code for the particular type of business you’re in or looking for, by searching its NAICS code. You can break information down from a national level and/or by zip code for information on total number of businesses as well as types and average sales in their business and industry section. They also have information on foreign trade and so much more. The fact of the matter is that there is so much data that the U.S. Census Bureau has accumulated it may seem daunting. It is in fact a huge database with so many useful links that I have to write three paragraphs about all the different links worth noting. You should spend some time navigating around, taking notes, and leaving yourself a trail of breadcrumbs one way or another so that you can remember just how you got from place to place.

The U.S. Census Bureau’s website is vast, as I previously stated, and there are a number of portals you should know a little about and even bookmark. Censtats is a database that includes county and zip business pattern information, international trade data, demographic and economic data for states and counties, Census Tract Street Locator, and some other databases on top of those. American FactFinder has information regarding demographic information about people that can be broken down in many ways to suit your needs. QuickFacts provides information on people, business, and geography which can be targeted on a national, state, and/or county level. If you need information on industry and manufacturing you can skim through the Current Industrial Report section. There contains vast amounts of information which may satisfy your needs for market analysis, forecasting, and decision-making.

The next noteworthy online resource at your disposal is the SBA or Small Business Administration. If you need information on federal and/or state legal and regulatory information the SBA has important and detailed information on these two important issues. The SBA also funds and supports business’s and you can find and apply for government grants, contracts, as well as sign up to receive training and counseling from SCORE. Score are a group of retired executives that volunteer their time to help business owners and aspiring entrepreneurs with development of their business plans and give advice to current businesses management dilemmas and questions and other assistance. If you have never spoken with a SCORE representative you should. They have a plethora of experience and expertise on a variety of subjects and industries. The SBA’s website also offers you a place to register your business, find business licenses, and permits. Ultimately the SBA is another great government resource that is a must-add to your toolbox.

If you’re interested or need to get your hands on international data and statistics our government provides information through U.S. Census Bureau, The State Department, and Export.gov. The Census Bureau’s contains an international database (IDB) that provides rankings by population size as well as global trends and demographic data. The State Department’s website has background information that includes information on each country’s economy and a great deal more all in alphabetical order by country. You can find out information on that country’s history, people, government, relations, travel, and more. Export.gov’s slogan is helping U.S. companies succeed globally by combining and providing the resources from across the U.S. government to assist American businesses in planning their international sale’s strategy. They have in-depth data about markets and industries on a global scale.

If you need information on corporations The U.S. Securities and Exchange Commission’s Edgar Database provides information regarding corporation’s financial information as well as their operations. There is a lot more to the Edgar Database. They also have a user guide that will provide you a more detailed analysis of who they are and what all they can do for you.

The last government resource that is worth mentioning is Fedstats. FedStats is a government sponsored website that has vast quantities of data collected by over 100 different agencies. You can search by topic compiled in a nice, user-friendly A-Z format or you can search the agencies in which they receive their data from, also in an alphabetical format. If you’re interested in state-by-state statistical data you might try clicking through FedStat’s MapStats section which profiles states, counties, cities, congressional districts, and even federal judicial districts. Besides the particular places I have pointed out there is also information on international comparisons, statistics from the individual agencies, press releases, and more.

4 Myths of Business Planning After Buying a Business

Just because you have bought a business does not mean that everything will run on autopilot. I’ve worked with entrepreneurs that really have no solid business plan to follow up their acquisition. They live in a world where they firmly believe that business will continue “as usual” after the acquisition. Regretfully most entrepreneurs quickly discover that there really is no such thing “as usual” in the field of business entrepreneurship and management.

Myth #1 You don’t need a business plan if you are buying an existing business. The previous owner has a general guideline or plan already.

Reality – The purpose in buying a business is to reduce risk and take a good business and make it great.

Myth #2 You need a 300 page business plan for your business purchase that will take roughly 3 years to write, rewrite, revise, and edit.

Reality – Business plans are a very personal and individual resource. Your business plan needs a few basic elements including a pro forma/cash flow analysis/ (for a minimum of one year and a maximum of the length of the time to pay off the debt); milestones for your business, and a few other basic elements.

Myth #3 I’ll write a business plan and wipe off the dust to show it to potential investors, executive management, and the occasional motivation session for the employees.

Reality – Business plans are part of effective management and entrepreneurship. Your business plan should be a dynamic document that should be shared with everyone in your organization on some level.

Myth #4 In business planning – sales will solve everything.

Reality – This is by far the most common mistake that first time business buyers make. I’ve made this mistake myself. You’ve just bought a business, you want to pay off the seller and become debt free. You figure if you boost your sales you can pay off the seller and keep all the profits. You need to factor your first 3-6 months after your acquisition with sales at 70%, 80%, and 90% of target. The reason for this is you need to spend time with the previous owner focusing on learning the processes, vendors, and employees. Your job for the first 3-6 months is to learn the trade. A good business may have clear and precise processes so consequently the business can run on auto pilot without the owner’s daily babysitting of day to day duties. My personal experience is that the previous business owner needs to help with the day to day responsibilities until the transition process is complete. The business owner or owners naturally drive sales.

Based Entrepreneur

Are you and Entrepreneur or a Small Business Owner?

While many people think Entrepreneurship and Small Business Ownership are the same thing, there really is a difference. Whether you’re thinking of starting a small business to follow a dream of not having to work at a job you detest, or, your convinced there’s “a better way to build a mouse trap”, creating an effective, concise, and working business plan should reflect this difference in four distinct ways:

Wealth Creation: Most small business ventures are started to simply generate an income that replaces the owner’s traditional method of employment. A successful entrepreneurial venture, however, has potential to create substantial wealth, typically from a business model that seeks multiple ways to generate passive methods of generating revenue and income.

Speed of Wealth Creation: The success of a small business can literally take a lifetime to generate sustainable profit. If the goal, however, is to create wealth, using an entrepreneurial business model can result in rapid growth within the first five years and huge profit potential for the long-term.

Risk: The business risk of an entrepreneurial venture is usually higher than that of a small business. Motivation to achieve high profits is the source of most entrepreneurs, while the need to create and coddle a unique idea, build an organization, or develop the product is the usual impetus for success of the small business owner.

Innovation: Entrepreneurship often requires a strong degree of critical thinking which usually results in substantial innovation beyond what a traditional small business model might require. This innovation gives the entrepreneurial venture competitive advantage necessary to create extraordinary wealth. The innovation may be in the product or service itself, or in the business processes used to deliver it.

So what’s your plan?

Many people who want to start a home business ask if they really need a business plan. My answer is usually in the form of a very simple question: How bad do you really need to start a home based business?

Writing a business plan for your home based business should be considered essential for many reasons. Perhaps the most important reason to write a full plan is that it will help you gain focus and think through each aspect of your business. Having a working written document will also help you to remain and regain focus when you get discouraged or feel overwhelmed.

So, one of the best things you can do for yourself before you start your business is to sit down and write your business plan. It doesn’t have to be very long, but does have to be written in a fashion that clearly defines you, your vision, and your business goals – both short and long term.

Richard “Hank” James, a Human Resource Development professional dedicated to improving quality of life in the workplace by aligning human performance with the organization’s business objectives.