Tag Archives: What Is In A Business Plan

Sales Forecasting Success

Sales Forecasting Success from The Startup Garage

Sales Forecasting Success

One crucial part of a complete business plan is your sales forecast. This component is the basis of a company’s financial projections and should be given high priority when creating a marketing plan. The future direction of the company may rest on the accuracy of your sales forecasting. There are many ways to forecast sales. Lets highlight some of the most common and simple methods for this.

Here are a few things to keep in mind when creating your sales forecast.

Be conservative, be realistic, unrealistic forecasts can cast doubt on the credibility of entire business plan.

– Break your business down into units.

– Pick one of 3 forecasts methods which best meets your business requirements.

-When building your forecast, make sure to base your numbers off of reasonable assumptions about your company and industry.

– Remember: Sales Forecasting is an Art not a Science! Experience is helpful, but creating totally accurate projections is extremely difficult.

The three sales forecasting methods are: The Build Up Method, The Work Backwards Method, and the Market Share Method.

1: Build Up Method:

First you must predict how many units of each product/service you will sell in month 1. It is often helpful in month one to project by week or even by day. Be conservative. Then project out for the next 12 months individually, and then by month or by year for the next 3-5 years. This method is better used in big industries, many competitors and many potential clients, such as the internet industry.

2: Work Backwards Method:

Just like it sounds, this method has you start at the end of your projections and work backwards. Define your sales goals in the final year. Work backwards to determine which sales goals you would need to reach in each year prior in order to arrive at your final year projections. Determine if this is realistic given the internal and external factors.

3: The Market Share Method

In the Market Share Method, you can calculate your sales goals based on simple industry statistics, including revenue, growth rate, and initial unit cost. This method is better used in an industry with few competitors and few clients (for example, 100 restaurants in a city of 100,000 people, or 10 airplane manufacturers with 50 airlines that buy them).

In conclusion, whether you are trying to secure funding for your business or just trying to get an accurate picture of what your sales will be, you must create a conservative, realistic sales forecast. Doing this properly will give you great insight as to what you should expect from month to month as well as year to year as you operate your business. The benefits of these insights are numerous and will really help you understand your business and industry much better.
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*Mxisoft

Whether you have a question about sales forecasting success, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Benchmarking for Startups

Entrepreneurship Benchmarks from The Startup Garage

Benchmarking for Startups

In the business world there are a million different ways to measure success. In essence, what makes your business a success depends on your goals. So how do you measure your success? Its actually much simpler than you may think, using a process called benchmarking. Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries. In fact, you should first be introduced to benchmarking in the earliest stages of your business, the business plan writing process, and more specifically the competitive analysis section of your plan. It is incredible how much you can learn from studying and analyzing your competitors, and a significant amount of research should be dedicated to doing just that.

In order to complete the competitive analysis section of your business plan you will need to gather as much information about your competitors as possible. The more information you are able to gather, the better the conclusions you will be able to draw from your research. The tricky part of benchmarking is deciding which factors actually apply to your specific market and your specific point in time. You will want to analyze not only the similarities between yourself and the competitors but your fundamental differences as well. This is a great opportunity for you to analyze your strengths and weaknesses compared to the competition. If you do this honestly and accurately, you will give yourself a better chance to improve.

Benchmarking is an effective tool to measure success if your business is already operating. Your goals should be clearly laid out in your business plan, and you should have a clear set of key metrics that you use to gauge success. Compare your list of key metrics such as gross revenue, net profits, profit margins, revenue growth, accounts receivable time, market share, liquidity, and turnover ratios to other industry participants and see how you are doing. This will give you a good idea of where you stand as compared to the industry average, and let you know where you need to improve as well as where you are already excelling.

Many business owners and people writing business plans do not thoroughly execute a benchmarking study because they think that they do not have access to their competitors numbers. This is probably because they havent looked for this data. Here are a few ways to track down some of the data that will be beneficial for benchmarking.

  1. Ask other business owners- Form alliances with similar businesses to yours, but located in other cities, so that you don’t compete directly. If you can agree to share financials with one another then you have a legitimate source for really good information.
  2. Ask an industry association- Industry groups often conduct polls of their membership in which business owners anonymously disclose information about their financials. While these won’t tell you how individual competitors are faring, industry statistics often give you good general comparison figures on how a typical business in your industry is doing.
  3. Buy or find market research- If you’re willing to spend, there is market research available on almost every industry segment.

Benchmarking is a very important process when comparing yourself to the rest of your industry. Do as much research as you can and dig as deeply as possible in order to find out the most information that you can about your competitors. Often times the answers to your problems are out there, you just have to spend the time and energy to find them.

 

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Image by*Prevue USA
 

Whether you have a question about Benchmarking for Startups, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Workspace Design as it Relates to Employee Productivity

Workspace Design as it Relates to Employee Productivity from the Startup Garage

Workspace Design as it Relates to Employee Productivity

When starting a small business in todays incredibly complex business world, there are numerous factors that give firms an improved chance of success. One such factor is Employee Productivity. Leaders in the business community have known for years that if your employees are more productive, then generally speaking, your business is more successful. One way to have a positive effect on employee productivity is to design your workspace to promote and nurture creativity and productivity.

If there is one thing in the workplace that can cause a significant decrease in employee productivity, it isstress. U.S. industries lose nearly $300 billion a year, or $7,500 per worker, in employee absenteeism, diminished productivity, employee turnover, and direct medical, legal, and insurance fees related to workplace stress, according to the American Institute of Stress* . Todays employees are suffering from the increasing complexity of the workplace, rapidly changing work environments, increased information and responsibility load, increases in intrusions on employee privacy, and the pressure to be productive, which is especially stressful considering the global competition that reduces job security.

Although there are many ways in which employees are subjected to stress, there are also many things that one can do to mitigate the stresses caused directly by the workplace. Good workplace design can make a big difference in staff satisfaction, attraction, motivation, and retention. It can also affect the level of knowledge and skills of workers, how innovative and creative they are, and how they respond to business and technological change. Poor workplace design, by contrast, is linked to lower business performance and higher level of stress experienced by employees*.

An effective work environment should provide positive sensory stimulation through the proper use of color, lighting, aroma, space, and furnishings. These elements can be critical to effective work activities and workplaces, and they generally lead to increased productivity of employees. Some ways to increase your employee productivity through workspace design are:

  1. Use higher quality lighting
  2. Position fixtures to avoid glare and reflection
  3. Integrate higher levels of daylight
  4. Increase individual control of the workplace in matters of heating and cooling
  5. Improve acoustics
  6. Improved air quality
  7. Integrate views of nature.

If you are a startup company with just a small space or just a few employees, just consider these elements where applicable. If you start thinking about how to design your workspace from the beginning then you will only have to update it as time goes on, not completely overhaul you current system. There is no evidence suggesting that these elements alone will make your business grow, however they will increase your ability to get the most out of your workforce, which should be at the top of any managers list.

*http://www.apa.org/monitor/mar06/employees.aspx

*http://www.management-issues.com/2006/8/24/research/poor-workplacedesign-damages-productivity.asp

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*BiNA Office Furniture

 

Whether you have a question about Workspace Design as it Relates to Employee Productivity, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Your Personal Foundation Is Your Backbone (Part 1)

Your Personal Foundation is Your Backbone from the Startup Garage

Your Personal Foundation Is Your Backbone (Part 1)

Starting a business requires one to compose a variety of different elements, and combine them all into a business plan, and then execute the plan according to the strategy laid out in the plan. At the very core of all of this information is YOU, the business owner. An often overlooked part of starting a business is properly setting up your Personal Foundation. After all, your business will be an extension of you, so taking a look in the mirror and deciding exactly what you want from your business is a great idea.

The Personal Foundation is for you to learn more about yourself, your goals and what you want out of your company. This is a place for you to be honest and realize if your goals, strengths, resources, and desired lifestyle all fit together. In order to do this effectively, give yourself at least a solid one hour time slot in which you are completely free from distraction and have the ability to get introspective. During this time you will ask yourself a series of questions that will outline your personal foundation. We will go into these questions in part 2 of this blog.

After you have answered the questions and completed that part of the exercise, you need to analyze your own strengths and weaknesses, as well as come up with a commitment statement that you write to yourself that outlines what you want out of your business in relation to what you are willing to put in.

Once you have completed this you will be able to accurately identify whether or not your business idea aligns with your goals both personally and professionally. If they clearly do not align, then you do not need to waste any more time on that idea. If they do align, then you have just given yourself the green light to get your entrepreneurial gloves on and get to work. Great success!
For Part 2 of this blog post, click here.

 

Whether you have a question about your personal foundation or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Building the Support Team

Building the Support Team from the Startup Garage

Building the Support Team

Although it is your idea, your intellectual property, and your business plan, success is not achieved alone. Even the greatest entrepreneurs in history had help, and they needed it to get to the top, trust me. The quality of the people involved in your business also determines the success of your business. Many ventures ultimately fail because the proper talent has not been assembled. Individuals with strong technical backgrounds might ignore the importance of including management team people with the appropriate business background, and vice versa.

Outside of your management team (CEO, CFO, COO), which handles business operations on a daily basis, every business needs a support team. There are three main elements that will comprise your support team. These elements are a Board of Advisors, the Board of Directors, and Professional Service Providers. We will go into who makes up each group and what to look for when assembling your support team.

Board of Advisors

A board of advisors is normally a group of well trusted, respected and knowledgeable individuals. They may or may not be stake-holders in the business. A board of advisors usually includes an accountant, a legal representative, a retired professional or any other individual whose input is considered valuable and relevant to your industry.

Board of Directors

The Board of Directors plays a significant role in a business. They are typically responsible for determining the overall direction and goals of an organization. Their job is to focus on long term planning and strategy rather than tactical operations and day-to-day management control. Depending on the size of the proposed business, the Board of Directors may consist of a single individual or an entire group of stakeholders.

Professional Service Providers

Few business owners hold all of the skills and abilities needed to run a successful operation. For that reason, a solid collection of pre-selected, outside consultants will reassure potential investors of a proposed business ability to achieve its goals. Examples of these include but are not limited to a law firm, from which you will seek all of your legal advice, as well as an accounting firm that will make sure your books are properly kept and up to date.

One of the most important parts of the business plan, and certainly the most important part of the personnel plan and organization section, is a presentation of the backgrounds of those individuals expected to play key roles in the initiation and operation of the venture. This will go a long way in establishing credibility in the eyes of investors.
Assembling a good team of experienced individuals is paramount to the success of your business, so choose your team wisely. If you can put together the right mix then you will greatly improve your chances for success.

Whether you have a question about building your team or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Branding is a Key Element of the Business Plan

Branding from the Startup Garage

Branding is a Key Element of the Business Plan

Throughout the business planning process you will be put in the position to make many creative decisions. If you are serious about starting a business that creates value, then you should be ready to attack them head on.

Branding your business is just one of these challenges, however when your branding strategy is well thought out and intensely focused, the sky is the limit. The American Marketing Association (AMA) defines a brand as a “name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers. In this process, you will gather all of the identifying characteristics of your company so far, such as your Mission Statement, Target Market, and Competitive Advantages, using them as a basis to build your brand.

Many business owners spend very little time to focus on their branding strategy. This may be due to the fact that there are many components that may seem more important to the plan, or simply that they are overwhelmed by the amount of decisions there are to be made, and feel like they do not have enough time to really zero in on this element. Do not make this mistake! Branding is actually an extremely powerful method of communication. If the design of the brand is right, it can deliver your message to your customers even without the aid of expensive advertising. A good brand should make you look credible, professional, and knowledgeable.

Several examples of strong branding that have left their footprints on our society are: When you think Volvo, you might think safety. When you think Nike, you might think of Tiger Woods or “Just Do It.” When you think IBM, you might think “Big Blue.” These are all brands that have been well established and are practically ingrained into our brains.

This part of the business planning process really gives you a chance to be creative. Embrace your creative side and conduct one or several brainstorming sessions in order to come up with names that reflect your business, your customers, and your mission statement/core values. After some consultation with friends, family, and other stakeholders in your business, choose the names and taglines that you feel most strongly represent your company and the image you want to portray. Your branding strategy starts when you are writing your business plan so it is a good idea to set up a nice foundation for the future to build upon.

After your business is up and running and the credibility of your company grows, your customers will easily associate your brand with your company. This can go a long way to solidifying your stance in your particular industry. Surely, there are many ways to become successful in any business endeavor, but there are few elements more powerful than having a recognizable, appealing and unique brand that your customers can easily associate themselves with, so do not sell yourself short on your branding!

 

Whether you have a question about branding your business or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!