Tag Archives: Business planning

Writing a Business Plan

Writing a Business Plan: The Dark Art of Predicting The Future

Leave a comment

By Dan Boudreau

The strongest resistance to business planning typically comes from diehard pessimists, who ask, “What good are my 3-year financial projections if I step off the curb tomorrow and get hit by a bus?”

That’s a great question that will stop anyone from ever doing a business plan. And it seems logical enough, until you consider that everything great that happens in the world comes about because somebody decided to make an impact on the future.

Truthfully, you might be the most unpredictable element of your business plan. Here are a few of the ways in which you can become the real wildcard in your business plan.

  1. You might not believe you can succeed, which is the kiss of death for any business. Your lack of belief in your business assures its failure.
  2. You might hate managing people, which is impossible to know until you try. Business owners need to be skilled at managing several groups of people; employees, customers, suppliers, and creative teams.
  3. After going through all the effort of getting your business started, you might discover that you really want to work for someone else and not carry the responsibility of owning and running a business.
  4. You might discover that you can’t turn the business off, that you simply worry about it until you burnout.
  5. You might learn that you’re not a salesperson. Not everyone is, but successful business owners are.
  6. As the owner of a business, you might find that the activities that fill your hours and days—marketing, selling, logistics—are things you really don’t enjoy. This leads to artists who insist on doing all art while ignoring the business. It happens to the technician who gets immersed in his profession and refuses to get out and market his business.
  7. You might learn that you’re hopeless with finances, and that you’re missing some of the necessary knowledge and skills to manage your business—how to prepare a cash flow forecast, how to read an income statement, how to keep records.
  8. You might discover that you’re disorganized, and that you dread having to plan your days, weeks and months. Does freedom unleash your creative spirit, or do you self-destruct when faced with an open road?
  9. After getting immersed in your business, you might discover that you work too long and too hard for the amount of money you earn. It’s true that many small and micro businesses never get fine tuned to the point of earning a profit; too many evolve into a twisted form of enslavement.

Any business worth its salt will present its owner with many learning opportunities. Each speed bump can be taken as an opportunity to learn and grow; or it can be the roadblock that motivates you to change direction and get a job.

It seems insane to attempt to predict the future, but it seems even more so to accept a life of drudgery in a dead end job. For those who aspire to improve their work life by working at something they enjoy, business planning is a great place to start, even if it seems a bit crazy at first.

Related Articles:

Entrepreneurs View Business Through Different Lenses

Myths About Owning Your Own Business

Article Archive: Entrepreneurship

 

Business Growth, Entrepreneurship

Defragging Your Business Will Help Your Bottom Line

Leave a comment

defrag_computer-001When my computer gets sluggish, I defrag the hard drive to make it more efficient. Defragging is a process that cleans up your hard drive. It does this by tidying up stray bits of information to leave more free space, which enables the computer to operate more efficiently. Businesses need to be defragged on a regular basis too.

Tough economic times demand the very best from business owners. For the most part, it’s easier for businesses to thrive in a robust economy. But when a downturn hits, the claws come out. Continuous innovation and persistent defragging are the secret to not having your business bounced out of the gene pool. On a larger scale it seems like the economy gets bloated from time to time and does its own defrag. In a very Darwinian way, many small businesses get cuffed into place or trounced out of existence along the way.

As owners, we’re defragging different parts of our business at any given time. You know those processes in your business that just break down, fall apart or become redundant over time? They get slower and slower, more noticeable, then downright annoying; that’s usually when we’re motivated to defrag.

For a small business there are always things begging to work more efficiently. Here are a number of areas of you might consider for potential defragging:

  1. Business Concept – your vision, corporate mission, which products and services to offer, and short-term business goals
  2. Marketing – market area, customers, competition, how you sell your products and services, advertising and promotion, and pricing
  3. Operations – computer hardware and software, how you manage your people, policies on safety, banking procedures, invoicing, trade accounts, your telephone service, insurance, and staff training
  4. Financial – sales forecast, costing, operating expenses, asset management, how you collect your receivables, and how you manage your payables

If the items listed above look suspiciously like the parts of a business plan… they are. Improvements to any of the above areas can make the difference between smooth sailing or crashing in a ball of flames.

In times of plenty, we tend to over indulge and get bloated. This is as true for businesses as it is for people. When the economy gets crazy and none of the old rules seem to work, it’s time to trim the bloat and get back to basics.

The sun always shines after a storm. There are positive economic times and an abundance of opportunities just around the next corner. The lean, efficient entrepreneurs will survive to do business on those bright days.

Business Planning, Entrepreneurship

Everyone Needs a Good Business Plan

Leave a comment

everyone_planMention the need for a business plan to the uninitiated, and they will likely give you a lot of reasons why they don’t need one. But anyone who has successfully completed a business plan knows it is a healthy learning process that enables you to manage risk and confidently start or grow your business.

Keep the body of your business plan brief. Attach important detail and supporting information in the appendices. In the body of your plan, make reference to the appendices so your readers will know where to find details.

Write for your average reader. Don’t try to baffle your reader with big words. Explain any terms that might be confusing. Break the complex down until it becomes simple.

Clarify your assumptions for the reader. You will be doing some guessing. If you’re assuming an interest rate of 8 percent, say so. Use only the safest assumptions, and use them sparingly.

Support your narrative and financial assertions with relevant documentation. There are a number of possible appendices that might add to the credibility of your business plan. For example, if your resume will help your reading audience to understand why your experience qualifies you to own and operate the business, attach it to your business plan.

Don’t slag your competitors. They are not necessarily enemies, just people who have similar goals to yours. When describing the competition in your business plan, never be critical of them; focus on your strengths and positives rather than the competitors’ weaknesses and negatives.

Prove your business case. First, identify any potential flaws or reasons your business might fail. After that, if you still have confidence in the idea, go all out to prove the business case. In its simplest form, this means ensuring that your business can survive in the gap between supply (cost) and demand (price). If you can’t prove your business case find a different business or get a job.

Eliminate inaccuracies and inconsistencies. A good business plan will increase your confidence by enabling you to minimize uncertainty. On the other hand, mistakes erode confidence. Always have someone proof read your draft plan before attempting to use it to apply for a loan.

Don’t make your reader to go fishing for information. Create one complete, cohesive communication package that makes it easy for your reader to read and understand.

A good business plan template provides you with a checklist so you don’t miss important points, and a sensible structure in which to organize your thoughts and information. A business plan makes it possible to identify and solve potential problems before you risk your house equity or savings on a business venture.

For a free business plan template visit http://www.riskbuster.com/tools/

Related Articles:

Make a Plan to Succeed in Business

Eight Tips for Planning Your Business

Does Your Business Plan Prove Your Case?

Business Planning, Entrepreneurship, Starting a Business

Ten Ways to Strengthen Your Business Plan

Leave a comment

The most important reason to write a business plan is create a roadmap for the entrepreneur or business owner. A business plan can also be a valuable tool for communicating your business idea to others, for example, to secure financing or attract investors.

Whatever your reasons, any business plan will be stronger by following these basic guidelines.

  1. Anticipate the questions readers will have and answer them in your business plan. They’ll want to know about you, your business, and your industry. They’ll be interested in your financial and employment history. They’ll need to know that you understand your customer, and that you know how to makes sales and serve customers.
  2. Forecast sales a bit lower than you think they will be. Smart business planners will intentionally err on the conservative side, showing viability with as few sales as possible.
  3. Estimate expenses a little higher than you believe they might be. The brutal truth is that contingencies or expense buffers are all too often necessary and get spent once the business is in play.
  4. Remove some of the guesswork from your sales projections by gathering items such as signed contracts, letters of intent or some other form of written confirmation that customers are willing to buy your products or services from your business.
  5. Provide a complete set of clear and realistic financial forecasts, and make sure you know them well enough to discuss them intelligently with your banker or investor. Demonstrate your understanding of how money flows in and out of your business, and convey your knowledge with sales projections, a cash flow forecast, and pro forma income statements and balance sheets.
  6. Be frugal. In your business plan, show readers that you make wise buying decisions and that you are sourcing the best products and materials. If you can get by with an older truck, don’t ask for financing for that shiny new one.
  7. Be realistic and factual throughout your business plan. Nothing undermines your credibility quicker than inaccuracies. Where it makes sense to do so, state where the information comes from.
  8. Communicate various ways that you know your business, including, understanding your customers, having a savvy approach to pricing, and knowing how to make the operation work efficiently.
  9. Your business plan needs to communicate your knowledge of the industry you will operate in. What types of goods are sold? Who are your competitors? What competitive advantage will motivate customers to buy from you?
  10. Somewhere in your plan you’ll want to talk about your qualifications, and share information about any business-relevant assets such as your educational background or work experience.

Everything you do to create a business plan will increase or decrease your confidence in the business idea. As your confidence increases you move toward launching the business; if it decreases, you have more work to do.

For most small business or micro-business ventures, the business plan doesn’t need to convince anyone that you’ll be wealthy or retire early. It has only to demonstrate viability, that is, to show that the business will provide you with enough of a salary to pay your monthly living expenses, and hopefully earn a bit of profit as well.

Ready to write your business plan? Get started with our free business plan template or become a member of the Oasis today!