Five Steps to Business Plan Success

Every year, hundreds of startups are founded but only a select few will make it past the first year. Furthermore, statistics indicate that most startups will close within 24 months of starting up due to poor cash flow, financial instability, and difficulty finding investors. You can improve your chances and enjoy a healthy start to your business by strategizing these five steps in your business plan:

1. Don’t Overextend Yourself Financially. It is natural to want to put all you have into your business to ensure its success but your best plan of action is to start off small and build your business responsibly. Limit your services or product line until your business is generating some income and sustaining itself. By adding to your service or product line prematurely, you are jeopardizing any financial gain you’ve managed to make and run the real risk of accumulating more debt than your new business can manage.

2. Know Thy Competition. Get to know your competition, what they stand for, what they offer and figure out what you can do differently to attract your customers. Always remember, competition in any marketplace promotes excellence amongst the players.  Be assured when the competition sees a new kid on the block, they will act accordingly to secure their spot in the marketplace.

3. Know Thy Customer. Every business should be aimed at a specific target market, if you haven’t determined who your target market is then go back to square one and rethink your business plan.  To establish your target market, determine who would be most likely to utilize your product or services. Age? Gender? Level of education? Income? Martial and family status? All these factors are important when determining what products or services you are offering to selected consumers at a certain price.

4. Don’t Do it Yourself.  Nothing spells disaster more than the one man/woman show! It is impossible to perform every task that your business entails by yourself. Consider outsourcing some of your work to individuals who are more qualified to do the work such as a writer (for your sales promotional literature), website designer, typist, or bookkeeper. These professionals will save you time and money in the long run so don’t try and muddle through certain tasks if your specific talents are limited to certain areas.

5. Budget for Exposure. A common mistake for many small business owners is failure to establish an advertising budget. If you haven’t budgeted monies to advertise your business, you can expect your sales to reflect this omission. How can you attract customers if no one is aware your business exists?  Your advertising plan doesn’t have to elaborate but it should be focused and persistent. Start off small by placing advertisements in your local newspaper or trade publication, or send out introductory letters to prospective customers. Consider enrolling in your local board of trade or getting involved in your community by sponsoring community sports teams and events. Be generous with your business card, they are cheap to print and are an effective means of advertising.

With a bit of luck, determination and advance planning, you can be assured that you have given your business a good start to build on and move ahead.

 

 

SWOTT Away Distractions With Successful Analysis

The most powerful tool for a startup is the mind of the founder. With the right tools at the ready a founder can transform strategies toward success in ways big companies can only dream about. One of the most important sections of the business plan is the SWOTT framework. SWOTT is a tool used by companies to analyze internal and external areas that relate to Strengths, Weaknesses, Opportunities, Threats, and Trends. Analyzing a business through these lenses helps a founder grow their business by focusing on areas that need the most attention.

Strengths

Understanding your strengths are important for a startup, particularly with limited resources because it directs you to areas of focus for your business. Any other areas might just be clutter. Strategic decision-making becomes simpler when you view your problems and goals in the context of your strengths. A company can begin to shine when both customers and employees experience a businesses’ strengths.

Weaknesses

For a startup, being realistic about weakness is perhaps the most important idea to understand about the company. It is in these areas of business that refinement can take place. Is the business putting a high amount of spending into its weakest areas rather than strengths? Has the core area of business shown to be a weakness? Being practical and tough about weaknesses will help solve business problems and spark dramatic positive change.

Opportunities

Opportunities are signals for positioning company resources to attract and retain new business. Don’t forget, opportunities can take on many forms including, new market trends, consumer spending shifts, partnerships, new locations, and even the hiring of a skilled employee. Doing SWOTT analysis in order gives a good understanding of whether these opportunities fall into your strengths or weaknesses making this a critical factor in the success of the analysis.

Threats

Threats are particularly troubling for a startup because they often cannot absorb large failures in one or more areas. Some threats can be quite devastating if not caught early and understood completely. Threats may come in the market shifting away from the business or a competitor changing tactics. Threats from the business may also be internal through unskilled staff in areas of strength or ineffective business processes. The important take-away from threat analysis is finding and forecasting threats early. Then develop a strategy to see the company through the challenges. The most savvy businesses find a way to turn threats into opportunities.

Trends

Trend analysis is important for a business because it allows a business to be proactive to internal or external changes. This proactive analysis of trends ties SWOTT together by allowing a business to spot potential areas of market growth in strengths, weaknesses, opportunities, and threats. The most successful and growth-oriented businesses are always looking into the future for trends, avoiding pitfalls and finding advantages their competitors haven’t.

By focusing on SWOTT’s five areas of business, it’s easy to see why even a quick assessment can have enormous positive results on small business resources. SWOTT analysis helps the business focus on the most important areas for success while staying aware and proactive of potential problems and valuable opportunities.

Similarity of Success Traits in People and Successful Aspects of a Business Plan

Most people wish they could make their work, their life and their business more interesting and productive; just the way successful entrepreneurs do.  We all want to achieve everything possible, and  we want to make the most of our time and our business productivity; but we have a problem in that we don’t know how to go about doing this.

The guide to attaining this type of success is closer than you might think; you just need to look at other successful business models. In other words, create a business strategy or business plan to follow and refer back to. By structuring a plan as other successful entrepreneurs have, you create a type of strategy, a guideline that allows you and your organization to follow.

Great Entrepreneurs Know What They Want

Although this may seem obvious, it may not be as clear as you think to your family, your employees, suppliers and associates; basically, everyone that work with you. By putting these thoughts down clearly in a business plan, you specify exactly what the aim of your business is and where you want it to head.  Your big goals suddenly become real when you actually write them down in a professional business goal.

Successful Business People Focus

Every successful entrepreneur focuses on the goals they set out for themselves. They are tenacious and focused on their progress. They remain focused on the end task in all of their interactions and daily activities.  So, once the goals are set, all you have to do is specify the methods you’ll use to grasp your goals. This serves as your business strategy guide and keeps you and your organization focused on the ultimate goal, and on the methodology you need to follow to get the end results you want.

Let’s Forget About Procrastination

Those who are very successful at what they do, don’t procrastinate, not even when they don’t like a certain business task. But the only way to avoid this “putting things off” is by having a step-by-step plan, one that guides you to the next objective or purpose – and that is exactly what a well thought out business plan or strategy is. It is your roadmap, one that keeps you from putting important tasks off for a future date (one that may never come.)

New Opportunities

Successful business people never miss out on opportunities. A well elaborated and planned business plan can offer new opportunities for your organization too. It helps others see your thought process, makes valuable people with important skills want to work with you; want to help you attain your goals. Knowing what your plans are, what your financial future is, and understanding your costs can also create interest from investors, angel investors and even bank lenders.

Bottom Line

Just as there are many facets and characteristics to successful entrepreneurs, so there are many facets to any new business. You have to deal with customers, finances, growth – and the everyday tasks that come up which could change or deviate you from your original plan.  It is because of this myriad of tasks, changes and thoughts that occur daily that you need a guide, a strategy to keep you on course, much like a map you use to travel by.  This is what a good business plan does for any successful entrepreneur or startup company.

How Long Should My Business Plan Be?

“Oh my gosh! You want me to do what? Write a 40 page business plan for this new project of mine. I don’t have time to do that.”

Many a business plan consultant has come across this type of statement. In fact, these are probably the first words a client has to say, but most experienced business plan writers are quick to offer calming advice. They offer quick reassurances by quickly assuring entrepreneurs that a business plan doesn’t have to be 40 pages long – and for new startups it probably isn’t a good idea that it be this extensive. So just how long should a good business plan be? Unfortunately, there is no right answer to this question. It really depends on who your audience is, what industry you are in, and on what stage your company is in. The following are a few basic guidelines to determine the length of your business plan.

Internal Use

If your intentions are in using your business plan as a guide for your operations and your personnel, you can skip several sections including company background and company’s current condition. This type of business guides often focuses on financial projections and specific goals for the next quarter or year. This business plan makes you and your team accountable for these objectives, and gives you a specific metric against which you can measure your progress. This helps you determine the customers you acquire, the traffic to your website and more. If using this plan, you can create a relatively short business plan of just a few pages.

Financial Backing

When creating a business plan to raise funds for your business, even if it is just a bank loan, then you also need a shorter business plan. Angel investors, venture capital investors and private investors don’t want to read an extensive business plan. But they do want to get the information they need in the first few pages of your plan. In these cases, it is your executive summary that captures their attention and gets them to continue reading through to your financial data. That’s why you want to focus on this area first and make sure your executive summary covers the following:

• The problem your company addresses.
• The solution you offer.
• Your market size
• Your business model
• Your funding needs

Aside from a great executive summary, you’ll need to add the data, research studies and statistics that validate the statements you make in the summary. You need to include clear and detailed financial forecasts as well as specific details about your product and how you plan to market it.

Bottom Line

When writing a business plan you need to write until you clearly cover all areas pertaining to your specific business. You neither want a guide that is too short, one that doesn’t offer support for your ideas and objectives, nor a guide that is too long and wordy; one that will bore investors and give them that tedious feeling of “oh no, not another long-winded business plan with no set objective.” How do you attain this happy medium? The solution is pretty simple. You get the expert advice from a business plan expert, one who is experienced with this type of writing, and one who even knows what type of investor your business should look for.

Road Test Your Business Plan with an Expert

An inexperienced, first-time driver lets his anxiety and nerves get the best of him. His lack of experience becomes clearly visible when he decides to take the driving test. Consequently, the officer conducting the test notes the driver’s mistakes and failures. The realization that this is an unsafe driver leads the officer to believe that this driver is not ready to take the wheel in real traffic. 

In a similar fashion, investors can easily identify the mistakes a new entrepreneur makes just by looking at the business plan. When founding a business it is in your best interest to road test your new business plan with an expert to expand and develop it to the fullest potential.

A startup expert can help with almost every facet of the process — from analysis of the initial idea and developing the strategy to researching, writing and editing. A professional can answer specific questions and identify areas of weakness a potential investor is sure to notice.

The following are a few of the reasons why you want a coach to help you through the business plan writing process.

 

What Investors Want

As an entrepreneur you may know a lot about running your business, but you may not know what investors are looking for. An experienced business plan expert knows exactly what investors are looking for in your plan, and they can guide you towards formulating it correctly. A professional can also help you decide on the type of investor you should look for (depending on your business).

As a general guideline, most investors not only look at the plan in general, but they also want more specific information on other factors such as the management team, the business model and even on the risk associated with the business. Outlining these details in your business plan can certainly go a long way towards attracting the eyes of a viable investor.

 

You Need Well Documented Research

Business plan consultants do this on a daily basis. They know how to do marketing analysis and they conduct research constantly. They work in areas you could certainly be unfamiliar with.  A research expert such as this can find the data you need in about as long as it takes you to describe what you are looking for.

 

Strategy

While you may know what your general strategy is for the business. You can’t necessarily write what you’re thinking down on paper. You can’t say, “I’m going to go door to door and sell my heart out.” Unfortunately, business investors don’t see this as a business-like proposal. It offers no proof of low risk, or of potential profitability.  By hiring an expert, you offer the data and information to back up your own personal strategy.  Besides, a business proposal expert can also guide you away from a purpose that may be too difficult for you to undertake.  The business strategist will ask you the type of questions an investor or lender may ask when reading your plan – and this is the type of feedback you need early on in the business strategy. This consultations  offers you a better operations guide, but also improves your chances of getting funded, because it offers the data, statistics, research and analysis your proposal needs to prove its viability.

 

Bottom Line

In some ways, planning out a business is like planning a trip. You have a great idea of where you want to go, but when it comes to a business (like many destinations), getting there is like navigating through a field of land mines. The good news is that many people have gone down this path before. These people are now experts, and they are willing to help share their experience with others. This expert road testing of your business gives you guidance and helps you avoid the pitfalls of other startups. More importantly, getting an expert to help you write out a business plan can double your chance of getting a loan or getting the investment you want to help grow your business.

5 Top Business Plan Mistakes

Running a business requires you to become a jack-of-all-trades. You must be versed in sales, product development, customer service, database management, HR and in making or selling the service or product — all activities you probably didn’t originally set out to be in business for. That’s where the business plan comes in handy. It gives you a guide to work with to stay on course with original objectives. Preparing a well thought out business plan is extremely important. However, 4 out of 5 businesses often make mistakes when it comes to writing out their business plan – and unfortunately, this can mean the ultimate demise of the business. The following are five major mistakes people make when writing out a business plan.

 

1. Poorly Written

Many business plans are only half put together and poorly written. They have spelling, punctuation, grammar and style issues. These are important because the business plan presentation offers a first impression to other businesses, lenders or investors. Before showing your plan to any investor, business associate or banker, you want to review your plan with a fine-tooth comb. You want to look for grammar errors and catch any misspells within the plan. Preferably, you want someone with experience in elaborating a business plan to review every facet of the guide. Essentially, you want your style to be clean, crisp, authoritative and formal.

 

2. Too Complicated

Although you certainly aren’t writing a book or novel, you still need to detail the process so that everyone understands it. If an intelligent person with a high school education can’t understand your plan you need to simplify it.

 

3. Incomplete

Everyone is busy, and entrepreneurs are even busier. You have customers, services, products, sales to organize, but that doesn’t mean your business plan should be incomplete. It’s important that you cover every facet and area of your business. Your plan should discuss your industry, trends and future possibilities in the market. It should include detailed data and financial information such as monthly cash flow, income and annual balances.

 

4. Too Technical

This is a common mistake that technology based startups often make. You need to simplify the technical details. You may need to include them in an appendix, but you want to keep the essence of the business plan easy-to-understand for everyone.

 

5. Make Assumptions and Fail to Identify Them

Often a business owner will make assumptions in the business plan. The most obvious of these is stating that the business will succeed. Good business plans highlight assumptions and back up information when possible with facts.

 

Bottom Line

You may have a great idea, but you need to carefully map out the steps to creating the business. You need to specify everything from the management team, the sales force, to the way you plan on operating; and how you plan on getting your customers. You must think of cash flow and the ways you can minimize your expenses and maximize revenue.

Can a Business Plan Help Find Investors?

Attracting an investor to a business takes a little more effort than calling up your uncle in Baltimore and saying something like, “Hey, you want to invest in my business?”

While this may work for some, it won’t for most startups — especially those that need a significant dollar amount. Investors want to see facts and figures. They want to know who you are, what value you have and more importantly, why they should invest in your company.

In other words, your business plan needs to answer the question, “what makes your startup special?” You need to put yourself in the shoes of an investor and answer the unasked questions they have in your business plan.

Just as you need a blueprint for building a home, you need a plan for creating your business. This gives a foundation to your purpose, and one of the top qualities investors want to see is STRENGTH. So the answer is yes — if you’re trying to raise money for your venture, your business plan can help get a prospective investor interested in your business.

 

What Does a Well-Written Business Plan Show Investors?

A well thought-out business plan increases your odds of succeeding, and shows any investor that you have taken the time to do research, plan and organize the process. The right business plan does the following:

• Offers a roadmap towards future profitability.
• Provides an estimate of needed costs and investment needs.
• Offers investors a reason for making a commitment to your project.
• Defines the market for the business.
• Provides a revenue estimate
• Allows you to create an effective and quantitative marketing strategy that investors can see.
• Allows investors to clearly see potential issues and risks.

 

Getting Capital

If your startup needs fresh funding, you need to create a strong business plan. You must demonstrate in writing and with facts the future possibilities of your business. This well-written and researched business plan is the only way of attracting investor capital or a banker’s interest. The only person willing to invest in a business without a plan might be a family member or parent, and even then it’s questionable.

 

The Importance of Data

A business plan just isn’t a well thought-out blueprint for a business unless you include hard financial data. You must include financial statements and make predictions based on past finances.
However, if this is a brand new startup then you’ll need to include estimates of start-up costs, break even statistics and a profit forecast. You’ll also need to create a cash flow projection. The purpose of all of this data is to help an investor decide whether your business is worth supporting.

 

Bottom Line

To attract investment capital, you need to think like an investor as you create your business plan. Every investor, whether for a nonprofit or profit, must calculate the risks of any venture. Your challenge is to demonstrate the opportunity available in your idea. You need to demonstrate, using research and statistics, the value of your business and the possibility for growth.

Is the Business Plan Dead?

Recently, we’ve experienced a wave of articles, blogs, news and comments, where a few entrepreneurs and theorists suggest that business plans are unnecessary, especially for small fast growing companies. In fact, some even go as far as saying that the business plan is dead, and a waste of time. They take too much time to elaborate; cost too much and have too small a payoff are the most common excuses for this mind set. But, does this really mean the business plan is dead?

No, this is still a needed and useful tool, but one that has evolved to meet the needs of the modern startup company. What has it become? Rather than emphasizing dreams and theories a good business plan has become a real tool; one that serves as a guide for strategy, product information, team information, one where investors can visualize the future of a startup company.

 

The Argument

Most business plan templates are taken from textbook examples. And while learning these processes in business school can be effective, just because of the amount of data available for large businesses, there is an erroneous assumption that a small business should perform and a adapt to the practices of a large corporation. Best practices for a large corporation dictate careful planning, with annual planning rhythms, a comprehensive survey of the competitive environment, product build scenarios, set strategies, a monitoring of results and the list goes on. It is true that small businesses may not need as detailed a report, sometimes reaching as many as 50 pages, this doesn’t mean they need no guide at all.

 

The Key Lies in Defining the Words “Business Plan”

The English language can be somewhat confining, using one word to define so many things. Just as English only has one word to define the word “love” so there is only one word to define “Business Plan.” The consequences to this, is that we only have one perspective and one-size-fits all approach to the business plan, when there are actually many.

For instance, a small startup or early stage company could do well with an adaptive business plan and strategy. However, when seeking investors, a business may need to change their approach and adapt to the strict guideline presented by the investor in question.

 

The Need for Strategic Thinking

Whatever the size of the business, and despite the discussion of the relevance of a traditional business plan, every business needs some type of strategic thinking guide; one that offers clarity for the company. They need a plan that among other things details the specific areas of the business; these include customer approach, retention, profit model, and the path to success for the business.

That doesn’t necessitate a 50 page business plan based on theory and unfounded ideas, but instead, a guide for product, team and strategy information – one that investors might use to visualize the future success of a company. You can call this whatever you want – a business plan, blueprint, guide or whatever it is that outlines the future process and methods a business will conduct itself.