Category Archives: Entrepreneurship

Entrepreneurship, Owning a Business, Starting a Business

What Business Planning Is Not

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Carved-in-StoneAfter reading an avalanche of articles on what a business plan should be, I’ve decided it might be helpful to write one about what a business plan should not be. The topic of business planning is sure to incite a lot of rhetoric and passion, whether or not you believe it to be a useful endeavor.

Even with all the hype there are misconceptions about what a business plan should or shouldn’t be. The poor old business plan is expected to do a lot for business owners. It’s little wonder that some people doubt the validity of the exercise. Here is what a business plan is not:

1. A Business Plan is Not a Tome. I’ve seen business plans ranging from a couple pages to over 200. Rarely should a business plan be more than 20 pages plus attachments; shorter is even better. If lifting the printed version of your business plan leads to a herniated disc in your lower lumbar region, or if it takes any more than 4 guys to carry it into your banker’s office, you’re probably overachieving. Wordy tomes are never read. The people who have to read the plans and make decisions are usually very busy. They will appreciate your efforts to keep the plan clear, simple and succinct.

2. A Business Plan is Not a Business. Delusional folks tend to believe that writing a big fat business plan will get them customers and sell products. Only the greenest of newbies could think the work is done once the plan is written and printed. That’s when the real work begins.

3.  A Business Plan is Not a Guarantee of Success. A beautifully fashioned business plan is no assurance of business success whatsoever. No matter how cleverly crafted the narrative is, or how gorgeous the graphs are, or how dazzling the charts; nor does it make a difference how mouth-watering the financial projections are.

4. A Business Plan is Not a Substitute for a Bad Business Model. If you’re business model can’t deliver the goods to customers in a cost-effective, timely way, the business can’t succeed. No amount of business planning will compensate for a faulty business model.

5. A Business Plan is Not a Substitute for Street Smarts. Great business owners think on their feet. A business plan is a plan, not to be confused with the actions that fill a business owner’s day. Planning done right should result in setting strategy and avoiding some of the obvious traps along the way, but it won’t protect idiots from the impact of bad decisions in day to day operations. Your business plan will not protect you from bad business practices or pathetic personal conduct.

6. A Business Plan is Not a Complex, Time Sucking Activity. If you can’t blaze your way through a business plan in 2 to 4 weeks, you’re probably drilling too deep. In fact, many business plans can be blasted together much more quickly. Of course, the amount of time needed will vary according to the size and scope of the business, the type of business, the owner’s availability to work on the plan, how long it takes to build and test a prototype, and a whole lot of other factors. If your business plan eats up more than a couple months of your life, you’re probably getting way too deep, worrying too much, and procrastinating. Get it done and get yourself in front of customers.

7. A Business Plan is Not a Fix for Abysmal Personal Conduct. Planning won’t compensate for bad judgment. Forecasting is a powerful planning tool that can reveal whether or not your business has a chance of surviving or being profitable. No forecast can counteract the devastation that occurs when the owner continually removes too much money.

8. A Business Plan is Not Just for Owners Who Need Money.

A business plan can open the door to a loan or help attract an investor, but by far the biggest benefit of business planning is the knowledge an owner will gain from the researching and planning. The least understood benefit of business planning is the liberating and illuminating effects of writing about your business. You can’t help but strengthen your understanding and resolve when you dispel your assumptions; write your business description; write your vision, strategy, and goals; and remove the mystique from your revenues and expenses. The power of writing has more to offer the business owner than simply attracting a loan or investor.

9. A Business Plan is Not Etched in Stone. You’ll base your plan on a number of assumptions and you’ll build in buffers and safety factors. Your business plan will help you set parameters, but it won’t enable you to pin-point a precise path to success. In fact, many elements of your business plan will change the second you step into business. A business plan is a roadmap to your envisioned success. A map will not get you to a target; it’s the actions you take and the adjustments you make along the way that get you from your starting point to your cherished destination.

A business plan is just a plan. It’s not to be feared or revered. It certainly shouldn’t be put on a pedestal or parked on a shelf and ignored. A business plan is a living document that should be reviewed and revised as the business weaves and bobs its way through the marketplace. A business plan, providing you do it yourself, is the least expensive, most powerful tool available for taking control of your business and your financial future.

 

Entrepreneurship, Owning a Business, Pricing

Ways to Put the Spurs To Your One-Legged Pony

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Businesses with just one revenue stream, sometimes called one-legged ponies, tend to drop off the radar when the single revenue source dries up.

The one-legged pony business killer seems like a kind stranger when starting out. For example, after you’ve driven Uncle Joe’s truck for a couple years, he offers you a contract and helps get you set up to buy your own equipment. Who in their right mind would turn down a lucrative, long-term bread and butter contract offered by a friend or family member? These special deals sometimes work very well, but the dependence on a lone client can become more of a problem than an asset.

The time to deal with the one-legged pony issue is long before it becomes a problem, as early as the first business plan. Here are a few actions to help diversify your business to avoid falling prey to the one-legged pony.

  1. If A Good Deal Falls On Your Desk, Take It. By all means, take advantage of the amazing evergreen contract when the opportunity comes along. A bread-and-butter contract gives any business a solid base from which to build a great business. Plan from the start to use the stability as a benchmark from which to diversify and build a broader base.
  2. Develop Efficiencies. Get the business running and become proficient at providing top-notch service for your customer. Fine-tune the business to ensure you can provide a high level of service with every engagement. More importantly, become competitive.
  3. Research Similar Businesses. Learn about other businesses similar to yours, how they are surviving, what additional services they provide, and what other clients they attract in order to broaden their base.
  4. Add Revenue Streams. After an appropriate amount of research and comparison of different opportunities, make a plan to diversify your business and increase your sources of revenue. Here are a few examples:
  • A log hauling trucking business could buy a gravel box and start competing for gravel-hauling contracts to fill in the cracks whenever logging gets slow.
  • A service station selling only gas could add a mechanic, incorporate a car wash, or begin selling high-margin trinkets to entice its customers to spend more while on-site.
  • A web designer who builds websites for small businesses could partner with a search engine optimization specialist to sell a broader range of services to its customers.

5. Keep An Eye On your Financials. Your financial reports will tell you if you’re adequately diversified. A one-legged pony’s cash flow rises or falls each time the lone customer hiccups, whereas a suitably diversified offering brings financial stability to the business.

As you work to diversify your business, make sure you look after Uncle Joe. Assuming it was your Uncle Joe that helped you get into business, it’s important to keep him happy as you seek opportunities to branch out. Keep your original customer happy. The one thing less enviable than a pony with one leg is one with no legs.

 

Entrepreneurship

Business Models Morphing

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Working business models live and thrive all around us in the marketplace. In the world of business—manufacturers, wholesalers, distributors, retailers, and services—there are many tried and true business models. With the mass adoption of technology and the internet, old business models are morphing and new business models are emerging.

A business model is a brief explanation of how a business concept makes money. It describes who buys the products or services, how much they pay, and how often they purchase. It is the logic of a business.

Unfortunately, not all businesses are logical. A poorly conceived business model quickly becomes a liability and unless it’s fixed, can bring a business down.

The same products and services can be marketed through several different business models. For example, the transportation of people can be achieved through different means. You can buy and own a vehicle, you can lease a vehicle for a specific term, or you can rent a vehicle for short-term use. Car dealerships, leasing companies, and rental agencies are three different proven business models that connect cars with customers and enable people to get where they’re going.

Another business model, the razor and blade model, gives away razor handles and earns its revenue by selling the user blades or refills. A different model sells electric razors to customers at a much higher initial cost, but without the ongoing costs for refills. These two business models serve the same market through different strategies.

The artisan business model describes how artists, musicians, and writers market their wares. Many artisans simply create their works and sell them to local shops. Some set up as vendors on busy streets or at space rented at a farmer’s market, while others become part of a marketing cooperative. These are all variations on the artisan business model.

Franchising is the practice of using another firm’s successful business model. For the franchisor, the franchise is an alternative to building chain stores to distribute goods and avoid the investment and liability that comes with owning a chain. The franchisees benefit from the franchisor’s success and pay royalties for that benefit. Franchisees are thought to have a greater incentive than direct employees because they are invested in the business.

The freemium business model works by offering basic web services, or a basic downloadable digital product, for free, while charging a premium for advanced or special services or features. This model is made possible in part by the fact that there is little or no cost of costs for the products, once created.

The online auction is a prime example of a business model that didn’t exist a few short years ago. Customers bid online for products and services. Buying and selling in the auction format is made possible through auction software which handles the various processes involved.

A number of new business models are emerging in the e-business realm. E-businesses earn revenue through strategies such as subscriptions, sale of advertising, and transaction commissions. Search engines, for example, provide their services to the end user for free—rumour has it that they manage to make ends meet through the sale of advertising.

The business model of choice must serve the owner’s needs, enable the business to stay competitive, and meet the needs of customers.

Entrepreneurship, Starting a Business, Writing a Business Plan

How to Write a Business Plan: Six Webinars to Guide You

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Only Six days left to access your $100 Early-Bird Discount for the Business Planning Online Workshop!

Ready to start a small business? Wondering how to write a business plan?

This is a terrific opportunity to access six webinars that will help you master business planning, market research skills,  and 3-year financial projections, so you can write a business plan for any small business and launch with confidence. These six webinars (plus business planning worksheets, a business plan example and template, and resources and checklists) will guide you step by step through the process of writing a business plan.

Here is a quick breakdown of the 2-week workshop (remember it all happens online so you can join from anywhere!)

Webinar 1-3. September 24-28, 2012 (self-directed, you get unlimited access to the videos so you can watch at times that fit your schedule)

Live Phone Call. October 1, 2012 (If you’re not able to make the call time, you’ll have access to the recording afterwards)

Webinar 4-6. October 1-5, 2012 (self-directed, you get unlimited access to the videos so you can watch at times that fit your schedule)

Live Phone Call and Wrap Up. October 9, 2012 (If you’re not able to make the call time, you’ll have access to the recording afterwards)

Here’s a look at the Six webinars that will help you write your business plan and get your business off to a successful start!

  1. Jumpstart Your Business Plan
  2. Business Plan or Bust!
  3. Research Business Ideas Without Going Crazy
  4. Tell Your Story – Make Your Case
  5. Take the Fear Out of Forecasting
  6. Present Your Business Plan To Different Audiences

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