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Introduction If you don’t know where you are going,
How will you know when you are lost ?
Over the past two decades,

Successful Business Plan:
Secrets & Strategies has been used by entrepreneurs to launch hundreds of thousands of businesses.

I am incredibly proud of helping entrepreneurs to achieve their
dreams — and, as importantly, create new jobs.

It is my life’s work. It’s led to some wonderful moments in my life.
Like the time I was speaking at a conference in Pittsburgh and a man, surrounded by a gaggle of his employees, told me that he had been homeless, found this book in his local library, and used it to help start a small business, which eventually grew to having more than 100 employees.

Or the time a woman came rushing out of a store in Boise, Idaho.
She had somehow recognized me, and pulled me into her beautiful home goods store. “I built this store following your book — just look around.”

And I did — not only at the lovely products she was selling and the employees she had working, but at the immense pride she had in her accomplishment.

Or meeting some of the hundreds of thousands of students who have
used this book to better understand the possibilities and opportunities of entrepreneurship. Many have used what started as a class assignment to actually launch their own businesses.

It’s been immensely gratifying to hear from entrepreneurs from all walks
of life, from all over the globe,about the businesses they’ve started, the
money they’ve raised, the jobsthey’ve created — and knowing that this
book has been a part of that.

“With the first edition of your plan, you shouldn’t even think about getting money. Use the planning process to decide if the business is really as good as you think it is. Ask yourself if you want to spend five years of your life doing this. Remember, that’s about 10% of your active working life, so seriously examine whether the enterprise could really be worthwhile to you.”

Eugene Kleiner Venture Capitalist “
The intensity in football incorporates,
in one season, what a corporation must have over five years or so.
You deal with people under stress; performance is measured by the bottom line; success is what the group accomplishes.
To succeed, you must set goals, define roles, recognize excellence, acknowledge failure, recover from disappointment,
and stay abreast of the competition.

Beautiful Young Ladies Store

You must always be evolving systematically, improving the mechanisms
for developing progress, and bringing along younger players.”
Bill Walsh Former Coach and President,
San Francisco 49ers Creating a business plan helps you:
■ Think through your entire business
■ Better understand your true financial needs
■ Secure funding
■ Attract key management
■ Develop marketing messages and materials
■ Identify key strategic partners and customers

Remember, it’s the PLANNING and not the PLAN that’s really important.
The process of developing a business plan is what helps you succeed.
The greatest benefits come from examining all the critical aspects of your business, looking at the factors and trends that can affect your success or threaten your livelihood, and then asking yourself the tough questions.

During the process of developing a business plan, you’re almost certainly
going to change several facets of your business — perhaps even some
major components of it. It’s far better to make your mistakes on paper instead
of with your real money and precious time.

Making Your Plan Compelling.
The Successful Business Factors of a Successful Business
The Business Concept Understanding the Market Industry Health and Trends Clear Strategic Position and Consistent Business Focus Capable Management Ability to Attract, Motivate, and Retain Employees Financial Control Anticipating Change and Adaptability A Company’s Values and Integrity Responding to Global Opportunities and Trends.

What Motivates You ?
Personal Satisfaction: The Four Cs Control Challenge Creativity Cash Chapter Summary It is not enough merely to survive; the goal is to succeed.

Factors of a Successful Business
The ultimate purpose of developing a business plan is to have a successful business. In the long run, it is fruitless to write a business plan that can raise the funds you seek if your enterprise is so poorly conceived it is bound to fail. So, as you create your plan, be certain to address the long-term needs of your business and devise strategies that enhance both the overall performance of your company and your personal satisfaction.

“Even if you have all the money you need, you still need a business plan.
A plan shows how you’ll run your business. Without a plan, you don’t know
where you’re going, and you can’t measure your progress. Sometimes, after
writing a business plan, you may change your approach, or even decide not
to go into a certain business at this time.”

Eugene Kleiner Venture Capitalist
The following factors, discussed in detail in this chapter,
contribute most to business success and should guide your planning process:
■ The Business Concept
■ Understanding the Market
■ Industry Health and Trends
■ Clear Strategic Position and Consistent Business Focus
■ Capable Management
■ Ability to Attract, Motivate, and Retain Employees
■ Financial Control
■ Anticipating Change and Adaptability
■ Company’s Values and Integrity
■ Responding to Global Opportunities and Trends

The Business Concept Meeting needs is the basis of all business.
You can devise a wonderful new machine, but if it doesn’t address some real and important need or desire, people won’t buy it, and your business will fail.

Even Thomas Edison recognized this fact when he said,
“Anything that won’t sell, I don’t want to invent.” “In judging a business concept,
by far the easiest and first place to start is,
‘Do I want to use this myself ?’
If I’m not sold that I would want to use it — if I can’t look at my partners and say,
I know this fills a need because I know no one else does this;
I would use it myself’ — it’s not going to go anywhere.”

Andrew Anker Venture Capitalist Typically, entrepreneurs get their original business inspiration from one of four sources:
1) previous work experience;
2) education or training;
3) hobbies, talents, or other personal interests; or
4) recognition of an unanswered need or market opportunity.

Occasionally, the impetus comes from the business experience of a relative
or friend. As you refine your business concept, keep in mind that successful businesses incorporate at least one of these elements: something new, something better, underserved or new market, new delivery or distribution, and increased integration.

Include at least one of these as you refine your business concept.
Your business should incorporate at least one of these factors — more than one if possible. Ideally, you can bring a new or better product or service to an identifiable but underserved market, perhaps using a more efficient distribution channel.

Evaluate the ways your business concept addresses the elements described above. Your concept should be strong in at least one area. If not, you should ask yourself how your company will be truly competitive.
The Basic Business Concept worksheet on page 6 helps you evaluate the strengths and weaknesses of your basic business idea.

Understanding the Market It is not enough to have a great idea or new invention as the basis of your business; you must also have a market that is sufficiently large, accessible, and responsive. If your market isn’t large enough, you can’t reach it efficiently, or it isn’t ready for you.

Your business will fail, no matter how good your business concept.
Consider the automatic teller machine (ATM) seen on virtually every street corner.
It was invented more than 10 years before it became popular, but the company that initially marketed the ATM was unsuccessful — people weren’t
yet willing to trust their banking to machines.

First, evaluate whether market demand is adequate to support your company.
For instance, if you are opening a flower shop in a neighborhood where none currently exists, what indications are there that the neighborhood residents are interested in buying flowers ?
Do they currently purchase flowers at a nearby supermarket ?
Does national data on the demographics of flower purchasers coincide
with neighborhood demographics ?
Perhaps you should conduct a survey of the neighborhood’s residents, asking about their flower-buying habits and preferences.

Next, if you are creating a new product or service, what indications are there that the market will be receptive to you ?
Market readiness is one of the most difficult and most unpredictable aspects to measure. That is why companies spend substantial amounts of money on market research before launching a new product.

Success key terms Barriers to Entry Those conditions that make it difficult
or impossible for new competitors to enter the market:
Two barriers to entry are patents and high start-up costs.

Cash Flow
The movement of money into and out of a company; actual income received
and actual payments made out. Strategic Position A company’s distinct identity that separates it from the competition and helps it focus on its activities.

Basic Business Concept Using this worksheet as a guide, outline your business concept as you presently conceive it. List your competitive advantages, if any, in each area listed below.

You may not have the funds to undertake extensive market research,
but even a small amount of analysis can help you gauge the receptivity of a particular market to your idea. Methods of conducting market research and evaluation in a practical, economical fashion are discussed in Chapter 2.

When gathering information for your business plan, spend considerable time learning about your market. The more you understand the various factors that affect your market, the more likely you are to succeed. “The main thing is to keep going back and talking to the people who actually use what you’re making. See if what you’re making is truly helpful to your customers.”

Larry Leigon Founder,
Ariel Vineyards Industry Health and Trends Your business does not operate in a vacuum; generally, your company is subject to the same conditions that affect your overall industry. If consumer spending declines nationally, there’s a good chance your retail business — whether a neighborhood boutique or an online shopping mall — will also experience poor sales.

As you develop your plan, you need to respond to the industry-wide factors affecting your own company’s performance. While it is certainly possible to make money in an industry that is experiencing hard times, you can only do
so if you make a conscious effort to position your company appropriately.

For example, if you are in the construction business and the number of new-home starts is down, you may want to target the remodeling market
or the commercial real estate market rather than the new-home construction market. Investors and lenders are particularly sensitive to issues of industry health. It is much harder to raise money to start or expand businesses in troubled industries.

Even though opportunities exist in such fields, investors and bankers are concerned about the increased risks an enterprise faces in an unhealthy industry. Conversely, if your business is in a healthy and expanding industry, investors are likely to be more receptive.

What direction is your industry going ?
It is important to look at the major trends that will influence industry health in the future as well as examining its current condition. Is the industry consolidating as big companies merge into huge businesses ?
What is happening with pricing pressures, consumer demand, availability of parts and supplies, and global competition ?
Several worksheets included in Chapter 6 help you identify and anticipate trends in your industry.

If you are seeking outside funds, your business plan must reassure
investors or bankers that you understand the industry factors affecting your company’s health and that you have taken those factors into consideration when developing your business strategy.

Clear Strategic Position and Consistent Business Focus A crucial factor
for a successful business is the development of a clear strategic position that differentiates you from your competition — and then maintaining focus on that position. All too often businesses fail because management loses sight of the central character of the enterprise.

Defining a clear strategic position enables you to capture a particular place
in the market and distinguish yourself from your competitors. Different companies may sell a similar product, but each may have a very different
sense of what its business is really all about. For example, suppose four companies are making jeans.

Company “A” defines itself as selling work clothes;
Company “B” sees itself as a sportswear manufacturer; and Company
“C” defines itself as being in the business of selling youth and sex appeal.
But Company “D” has never clarified its mission — it just sells jeans.
These different positions affect the way each company markets itself, how it designs its jeans, what subsequent products it produces, and even the employees it hires.

The first three companies may all succeed and rarely be in competition with
one another. But Company D, which misses the big picture, is almost certain
to fail over time as it flounders in its attempts to compete with all of the other,
more-focused companies. “What tips me off that a business will be successful is that they have a narrow focus of what they want to do, and they plan a sufficient amount of effort and money to do it.

Focus is essential; there can be the possibility of the business branching
out later, but the first phase of a company should be quite narrowly defined.” Eugene Kleiner Venture Capitalist A second aspect of positioning your
company and maintaining focus is the development of a company style or corporate culture.

By creating a consistent style that permeates every aspect of your
enterprise, from the design of your stationery to personnel policies,
you give your customers and employees a sense of trust in your company. Imagine two different restaurants on the same street, both with basically
the same business mission: providing good, fast food, priced at only a
few dollars a meal.

The first restaurant is a national burger chain. Its style is characterized
by consistency, cleanliness, and impersonal friendliness. A strong corporate image is important, which is reinforced through the restaurant’s decor, the food’s packaging, and the employees’ uniforms. The meals are prepared by standardized routines, and every customer is given the same greeting.

The second restaurant is a diner. Management characterizes its corporate culture as that of a friendly neighbor. To help make sure that employees know customers’ names and food preferences, management aims to retain employees for many years. A bulletin board features notices of local events.

This restaurant’s target market is the neighborhood regulars who know
they will feel at home there. With a strong company style, each restaurant clearly distinguishes itself from its competitors and gives its target customers
a precise understanding of what to expect. Every business needs to consider
its style as it relates to the company’s overall mission, and then infuse that
style into virtually all its undertakings.

To help clarify your company’s position and focus as part of the business plan process, you should define a Statement of Mission. This Mission Statement should guide your company’s short-term activities and long-term strategy, position your marketing, and influence your internal policies.

A Statement of Mission worksheet is in Chapter 5. Capable Management Perhaps more than any other factor, competent management stands out as the most important ingredient in business success. The people in key positions are crucial in determining the health and viability of your business.

Moreover, because of the importance of capable management to business success, many investors and venture capital firms place the single greatest emphasis on this factor when evaluating business plans and deciding on loans or investments.

They’ll review the management section of a business plan with special scrutiny.
Your business plan must inspire confidence in the capabilities of your management, and you should put your management team together carefully. Before submitting your business plan to investors, conduct your own analysis of your management team.

Evaluate each individual (and yourself) to see if he or she fits the profile of a successful manager. Some of the traits shared by successful managers are:
■ Experience.
They have a long work history in their company’s industry and/or they have a solid management background that translates well to the specifics of any business in which they become involved.
■ Realism.
They understand the many needs and challenges of their business and honestly assess their own limitations.
They recognize the need for careful planning and hard work.
■ Flexibility.
They know things go wrong or change over time, and they are able to adapt without losing focus.
■ Ability to Work Well with People.

They are leaders and motivators with the patience necessary to deal with a variety of people. They may be demanding, but they are fair. “The most successful entrepreneurs tell you they have a great team, but lots of small business owners let ego get in the way. Many people helped me along the path.

You’ve got to remember the people who were loyal to you. Don’t forget them when you become successful.” Bill Rancic Serial Entrepreneur In developing your business plan, determine whether key members of your management team possess these characteristics. If not, perhaps you can increase training, add staff, or take other measures to enhance your management’s effectiveness.

For instance, if you have little or no experience in your chosen field, perhaps you should first take a job with an existing company in that field before opening your own business. In addition to evaluating the traits of each individual, look at the overall balance of your management team.

Do you have people who are capable and experienced in the various aspects
of your business — marketing, operations, technology, finance, and so on ?
Are some managers better at dealing with internal issues and others at handling external relations ?
Or do the talents and traits of your managers duplicate each other ?
Ability to Attract, Motivate, and Retain Employees A company is only as good as its people. The ability to find, attract, and keep outstanding employees and managers is crucial to a company’s longterm viability and competitiveness.

Demographic trends indicate a tight labor market in the United States well through the early part of the 21st century. Companies will have a difficult time competing for the relatively limited number of outstanding job applicants.

Your company’s reputation for treating employees well directly enhances both the number and the quality of job applicants and your company’s ability to retain employees once hired. Employee morale also has a significant impact on a company’s productivity, the quality of its products or services, and its ability to provide outstanding customer service.

Unhappy employees are less motivated to do excellent work. Satisfied employees are far more likely to want to see their company succeed, and they can dramatically alter a company’s bottom line. Examine your management style and policies as part of your overall business planning process.

Develop management practices that treat employees fairly, offer opportunities
for advancement, afford reasonable job security, and provide fair pay and benefits.
“We don’t just want to make secure loans; we want to make good loans.
A good loan is a loan with a high probability of being repaid from the primary source, such as the business, without interrupting the lifestyle of the borrower.

Collateral makes a loan ‘safe,’ not necessarily good. It’s not fair to make a loan if the collateral is good BUT the business plan is shaky. We’re not interested in getting people’s homes; we’re interested in successful businesses.
Robert Mahoney Corporate Banker Financial Control Key to any business is how it handles money. Not fully anticipating start-up costs can immediately place impossible pressures on a new business. Poor cash flow management can bring down even a seemingly thriving business.

One of “Rhonda’s Rules” is “Things take longer and cost more than anticipated.”
Build financial cushions in your plan to allow for unanticipated expenses and delays.
As you develop your business plan, make sure you have the information to understand your financial picture on an ongoing basis.

What does it take to open your doors each month ?
Where is your real profit center ?
How much expansion do you need to maintain growth ?
What are the hidden costs of marketing your company ?
What are the consequences of your credit policies ?

Build in mechanisms to keep you continually informed as your business develops.
It is easier to establish good financial procedures right from the
start than to wait until you face a financial crisis.
How frequently will you do your billing ?
What kinds of credit policies will your business follow ?
How will you keep informed on inventory ?
Make certain you receive detailed financial statements at least monthly
and that you understand them thoroughly.

Examine financial reports for any deviations from your plan or any indications of impending cash flow problems. Controlling and understanding your finances makes decisions easier. And you’ll sleep better at night. Anticipating Change and Adaptability Change is inevitable, and the rate of change gets ever faster.

In today’s world, your company needs to anticipate and respond to change quickly and train its employees to be adaptable. Nimble companies that can quickly evaluate and respond to changing conditions are most likely to be successful. In planning for change, keep in mind the kinds of conditions that will affect your business’ future.


They include:
■ Technological Changes.
It’s impossible to predict the exact technological developments that will affect your industry, but you can be sure that you will be faced with such changes.

Even if you make old-fashioned chocolate chip cookies, you’ll find that advancements in oven design, food storage, or inventory control software will place competitive pressures on your business. Competitors’ technological advances may cause significant downward pricing pressures on you.

■ Sociological Changes.
Evaluate demographic and lifestyle trends in light of their potential influence on your business. In the cookie business, for example, consumer interest in natural foods or the number of school-age children in the population may influence the number and kinds of cookies you sell.

What sociological factors have the greatest impact on your company ?
Keep your eye on trends that represent true change; be careful not to build
a business on passing fads.

■ Competitive Changes. New businesses start every day.
How hard is it for a new competitor to enter the market, and what are the barriers
to entry ?

The Internet makes it possible for companies all over the world to compete against each other, increasing the number and type of competitors you may face. “You need to be able to fail fast and fail forward. At PayPal, our business started out as sending money between Palm Pilots, then we had the idea of sending money over email.

We saw the need for electronic payments, but we weren’t wedded to the
idea of something that wasn’t working.” Premal Shah President, Kiva When developing your business plan, consider how your company deals with
these outside changes.

Also anticipate major internal changes, such as growth, the arrival or departure of key personnel, and new products or services. No business is static.
Planning a company responsive to change will make the inevitable changes easier. for more on anticipating change.

A Company’s Values and Integrity
Every company must make money. You can’t stay in business unless you eventually earn a profit. However, studies of business success over time have shown that companies that emphasize goals in addition to making money succeed better and survive longer than companies whose sole motivation is monetary.

As you develop your business plan, keep in mind those values you wish to have characterize the company you are creating or expanding.

These values can be aimed externally
(at achieving some business, social, or environmental goal) or they can be aimed internally (at achieving a certain type of workplace or quality of product or service)
or both. Articulating your company’s values to employees, suppliers, and even your customers can strengthen their commitment to your business.

Valuesdriven companies often have greater success in attracting and retaining good employees, and they can usually better weather short-term financial setbacks because employees and management share a commitment to goals
in addition to financial rewards.

Passion is a prerequisite. If you don’t have passion, you’re not going to be successful. Entrepreneurship is not purely a numbers game. But you can’t be stupidly passionate, you have to do your homework.

Damon Doe Managing Partner Montage Capital A company is likewise strengthened by maintaining integrity in all aspects of its dealings — with employees, customers, suppliers, and the community. Certainly, you will face situations where it appears that you will be at a disadvantage if you are more honest than your competitors or more fair than other employers.

However, the long-term benefits of earning and keeping a reputation for integrity outweigh the perceived immediate disadvantages. A clear policy of honesty and fairness makes decision-making in difficult situations easier, inspires customer
and employee loyalty, and helps avoid costly lawsuits and regulatory fines.

It’s also the right thing to do.
Responding to Global Opportunities and Trends Today’s business world is
a global world. In all aspects of your business, you may find it possible to
be working internationally.

Even a small company with an online presence may be selling its products internationally. Certainly, your raw materials or inventory may come from global sources. You may have competitors, suppliers, employees, contractors,
and partners worldwide.

A successful business in this environment must at least evaluate international opportunities and consider international threats when constructing a business plan.
Some of the global considerations to keep in mind as you develop your business
plan are:

■ Target market.
Because of the electronically connected world, it’s possible to target a market even halfway around the globe, and that can be a way to significantly expand your market opportunities.

If you have a highly niche product, your customers may be widely scattered internationally, and you may need to or want to serve a wide geographic area. Even if you plan to concentrate on a local or domestic market, you must address how you’ll serve international customers who find you online.

Successful companies today at least evaluate international market opportunities when choosing which markets to target.

■ Competitors.
It’s far easier than ever for global competition to enter local markets.
Certainly, if you are selling a product — even a fairly mundane one — you may find yourself competing with online international companies.

■ Suppliers.
Whether for raw materials for production/manufacturing or inventory for sale, it is likely that at least some of your supplies will come from countries other than your own. You should certainly be considering sourcing material and inventory globally as you grow your company.

■ Labor. It is no longer necessary for your employees or contractors to be located in the same office, same city, or even same country as you.

Finding workers — especially technology or manufacturing labor — in other countries may offer significant labor cost reduction. It is now typical for companies to “offshore” many tasks, and flexible companies evaluate some of those opportunities. Of course, managing a far-distant labor supply has significant challenges, and you must think those through as you plan the global aspects of your business.

“Getting sufficient supplies can be challenging. When we launched our Honest Kids organic drink pouch, we had to buy half the world’s supply of organic, kosher grape juice.” Seth Goldman Cofounder, Honest Tea

■ Legal issues.
Whether protecting your intellectual property, ensuring that you are following
all necessary laws and regulations, or dealing with international tax or finance issues, you will certainly need to understand the legal issues affecting you as you work globally.

■ Partners. As you think about expanding your business internationally, one approach is to find existing companies “on the ground” in those markets to partner with. This can make your entry far easier, help you understand local business customs and practices, and better serve your market.

■ Social responsibility.
The best international companies are good global citizens.
As you work globally, make certain that you are always acting in a socially responsible manner — whether dealing with labor issues, human rights, the environment, bribery, or corruption.

“First and foremost you have to have passion.You’ve got to understand why you’re in the business, you have to understand why you’re going to be wildly successful, and you have to be able to sell it to people.

It’s very easy to write a business plan with lots of pretty charts and graphs and research quotes, and if you can’t present it to coworkers, employees, investors, and ultimately to the customer, you’re not going anywhere.

You always have to have the passionate person who lives and breathes,
eats and sleeps the idea.” Andrew Anker Venture Capitalist What
Motivates You ? Personal Satisfaction:

The Four Cs For smaller enterprises,
sole proprietorships, or businesses in which one or two key members of management have primary control, issues of personal satisfaction can be
a central element in determining long-term success.

Some businesses fail, and others flounder, because their founders, owners,
or key managers are uncertain what they really want to achieve or because they did not structure the company and their responsibilities in ways that satisfy their personal needs and ambitions. It is useful to evaluate and consider your personal goals when deciding on the nature of your business development.

For most entrepreneurs, these goals can be summed up by the Four Cs: Control, Challenge, Creativity, and Cash. Control How much control you need to exercise on
a day-to-day basis influences how large your company can be.

If you prefer to be involved in every business decision or are uncomfortable delegating or sharing authority, your business should be designed to stay small. Likewise, if you need a great deal of control over your time
(because of family or personal demands), a smaller business without
rapid expansion is more appropriate.

In a large company, you will have
less immediate control over many decisions, and others will share in decision-making. Structure your management reporting systems to ensure that as the company grows, you continue to have sufficient information about and direction over developments to give you personal satisfaction.

If you are seeking outside funding, understand the nature of control your funders will have and be certain you are comfortable with these arrangements. Challenge If you are starting or expanding a business, you are likely to be a problem-solver and risk-taker, enjoying the task of figuring out solutions to problems or devising new undertakings.

It is important to recognize the extent of your need for new challenges and develop positive means to meet this need, especially once your company is established and the initial challenge of starting a company is met.

Otherwise, you may find yourself continually starting new projects that divert attention from your company’s overall goals. As you plan your company, establish personal goals that provide you with sufficient stimulation, while also advancing the growth of your business.

“Writing a business plan forces you into disciplined thinking if you do an intellectually honest job. An idea may sound great in your own mind, but when you put down the details and numbers, it may fall apart.”

Eugene Kleiner Venture Capitalist Creativity Entrepreneurs want to leave their mark. Their companies are not only a means of making a living, but a way of creating something that bears their stamp.
That’s why many businesses carry the founder’s name.

Creativity comes in many forms.
For some, it is the creativity involved with designing or making a new “thing” — a fashion designer creating a line of clothes, a software developer writing a new program, a real estate developer erecting a new building.

For others, it may be the creativity of coming up with a new business process. Creativity also comes into play in finding new ways to make sales, handle customers, or reward employees. If you have a high need for creativity, make certain you remain involved in the creative process as your company develops.

You’ll want to shape your business so it is not just an instrument
forearning an income but also a mechanism for maintaining creative
stimulation and making a larger contribution to society.

But don’t overpersonalize your company, especially if it is large. Allow room
for others, particularly partners and key personnel, to share in the
creative process. Cash Understand how your personal financial
goals have an impact on your business plan.

For instance, if you require substantial current income, you may need
investors so you have sufficient cash to carry you through the lean start-up time.
This means you will share ownership interest with others, and the business must be devised for substantial profit potential to reward those investors appropriately.

Likewise, if your aim is to build a very large company and accumulate substantial income or wealth quickly, you will need outside investors to
finance such rapid development or expansion. Once again, this means
giving up more control over your company.

If, on the other hand, your current income needs are less demanding or your overall financial goals more modest, you may be able to forego giving up a piece of your company to investors and instead expand your business more slowly through sales or through loans or credit lines.

Keep in mind there is sometimes a trade-off between personal goals: Wanting more cash often means having less control. Examine your personal goals and those of key personnel using The Four Cs worksheet on page 16.

Chapter Summary A successful business plan not only ensures that you achieve your short-term objectives, it also helps secure the long-term viability of your business. When developing your plan, keep in mind the underlying factors affecting business success and personal satisfaction.

Make sure your business concept is clear and focused and your market is well-defined. Understand the key trends in your industry, both nationally and globally, and develop responsive, disciplined management procedures. The Four Cs Each founder or key employee in small or new companies should complete their own copy of this worksheet.

Check the level of importance to you in each area.
Getting Your Plan Started The Business Plan Process Gathering Information Sources of Information Online Offline Research Resources SBDCs and Other Support Organizations Trade and Industry Associations Paid Research,

Services Historical Performance of Your Company How to Conduct Your Own Market Research Accessible Sources for Market Research Getting Help Evaluating the Data You’ve Collected A Quick Feasibility Analysis Business Model Canvas Chapter Summary You find easy answers only by asking tough questions.

The Business Plan Process Once you determine that a business plan is
a necessary tool for your company, you may wonder, “Where do I start ?”
Because a plan requires detailed information on almost every aspect of
your business, including industry, market, operations, and personnel,
the process can seem overwhelming.

The business plan process entails five fundamental steps:
1. Laying out your basic business concept.
2. Gathering data on the feasibility and specifics of your concept.
3. Focusing and refining the concept based on the data you compile.
4.Outlining the specifics of your business.
5.Putting your plan in compelling form.

The first step is to lay out your basic business concept. In the previous chapter, you were provided a worksheet on which to delineate the various components of your business. With an existing operation, it may be tempting to skip over this step, but if you wish to develop strategies for future success, you must first examine the assumptions underlying your current efforts. “You must have ongoing contingency plans to allow for miscalculations, disappointments, and bad luck. It’s assumed that if you’re a leader, you don’t make mistakes.

But it’s not so; if you’re decisive, you’ll sometimes miscalculate, and sometimes just be unlucky. You need to openly discuss the possibility of mistakes, so people are prepared and aren’t crestfallen when they occur. You need to rehearse your contingency plans.”

Bill Walsh Former Coach and President San Francisco 49ers The focus of this chapter is on steps 2 and 3: gathering and interpreting the data you need. Solid information gives you a realistic picture of what happens in businesses similar to yours, as well as a better understanding of your own company.

You can then evaluate and refocus your concept in light of your newly acquired information; a worksheet provided on pages 39–40 will help you with this evaluation. Once you have compiled sufficient information and reevaluated
your business concept, you can begin to actually write your plan.

By following the chapters of this book and completing the Plan Preparation Forms, you can shape your plan into a compelling document. Developing a business plan is much more a business project than a writing assignment.

The process itself — not just the document produced — can positively affect
the success of your business. During the everyday operation of your business, you seldom have time to think through the kinds of issues you’ll examine while putting together your business plan; the planning process gives you a rare opportunity to enhance your knowledge of how your company, market, and industry work. Gathering Information Knowledge is power.

With accurate information at your fingertips, you make better business decisions as well as a more persuasive presentation of your plan when
meeting with a banker, potential investor, or divisional president. Savvy investors use a business plan not merely to learn about a new business
concept but as a means to judge whether an entrepreneur has the knowledge and exercises the due diligence necessary to run a business. So take time
to do your homework.

Sufficient research prevents you from placing inaccurate information in your plan — a mistake that can keep you from getting funded — and enables you to make informed decisions. If you’re new to an industry or to business management, allow yourself more time on your research efforts and start with general background information.

Use the research project as an opportunity to educate yourself on the key issues of your industry, not merely as a way to find the specific details you need for your particular company.

To begin your information-gathering efforts, start by checking the resources listed later in this chapter and in the References & Resources chapters at the back of the book. First, seek general information about each of the areas you’ve identified in your Basic Business Concept worksheet from Chapter 1.

As you progress, focus your research on more-specific issues, compiling
the details necessary to make operational and financial decisions. Chapters through 17 outline the data you need to complete each section of your business plan, and in some cases include suggestions of possible sources of such information.
How Much Information Is Enough ?

It is relatively easy to get a great deal of information online; it is likewise easy
to feel overwhelmed with so much of it. Conversely, you will also feel frustrated because some critical data is proprietary and unavailable.

The difficult challenge is determining which information is important and how much information is enough to put in your plan, especially if you are seeking funding. Don’t try to be exhaustive in your research efforts; it’s not necessary
or possible. You are merely looking for information that will answer the key questions about your business.

At the same time, your research must be thorough enough to give you, and those reading your plan, confidence that the answers are accurate and from reliable sources. For example, if you are manufacturing dolls, you might identify your target market as girls between the ages of 4 and 10. One of the questions you need to address in your plan is, “How large is the market ?”
For this, you may have to consult only one source, the U.S. Census Bureau,
to find a reliable answer.

However, other questions that arise, such as, “What are the trends in doll-buying habits?” may require consulting three or four industry sources
or undertaking your own market research to compile information you can
trust. Success key terms Business Model Canvas A tool for describing some elements of a new business in a one-page, visual format. It was originally created by Swiss management consultant Alexander Osterwalder.

Distributor Company or individual that arranges for the sale of products from manufacturer to retail outlets; the proverbial “middleman.” Due Diligence
The process undertaken by venture capitalists, investment bankers, or others to thoroughly investigate a company before financing; required by law before offering securities for sale.

Milestone A particular business achievement by which a company can be judged. Profit Margin The amount of money earned after the cost of goods (gross profit margin) or all operating expenses
(net profit margin) are deducted; usually expressed in percentage terms.

Proprietary Technology or Information Technology or information belonging
to a company; private information not to be disseminated to others. Receipts Funds coming in to the company; the actual money paid to the company for its products or services; not necessarily the same as a company’s real revenues.

Start Your Research by Asking Questions Start your research by making
a general statement that is the basis of your business (or a portion of your business). For example, if you are planning to open a sporting goods store
in Chandler, Arizona, your statement might be: “There is a substantial need
for a sporting goods store to serve the city of Chandler.”

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“A lot of entrepreneurs don’t pay attention to the financial side of the house, and that’s where we see a lot of them fail.
They relegate finance and accounting to the back seat.
” Damon Doe Managing Partner Montage Capital Next, make a list of questions that logically follow from and challenge that statement.

Here are some questions you might then ask:
■ How many sporting goods stores now serve the area ?
■ How profitable are the current sporting goods stores in the area ?
■ Are residents generally satisfied with the current sporting goods stores ?
■ Is there more business than current sporting goods stores can handle ?
■ What are the trends in the sporting goods industry nationally ?
■ What are the demographic trends in Chandler ?
■ How do Chandler demographics relate to national sporting goods trends and statistics ? As another example, your statement might be:
“There is a profitable way to provide psychological counseling online.
” The questions following from and challenging that statement could include:
■ What companies are already providing such a service?
■ What is the size of the market for psychological counseling now ?

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