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How to Write a Comprehensive Business Plan

One of the most daunting tasks for most small business owners is creating a business plan. Sitting down, staring at a blank page or computer screen is never easy, and even less so when you are creating a document that will govern, to some degree, the path of your business for the next few years. However, there are a few things that can make the process a little easier:
  • Unless you are using your business plan to apply for finance, it’s more of a personal road map.
o This is to ensure that you know at least somewhat where you are going, and have a clue as to the way to get there
  • Even if you are submitting your business plan for funding consideration, it does not have to be complex or confusing.
o In fact, the simpler you can make your vision seem (and back it up) the more effective your business plan is likely to be
  • Understand that your business plan is NOT intended to be written in stone – it’s a working, living document that you alter as the dynamics of your business changes.
Now that we’ve clarified those business plan fundamentals, let’s get into the nitty gritty of how to actually write one.

Spend Some Time Brainstorming

Before you even put pen to paper on your business plan, it’s a good idea to sit down and make notes. Write down anything that occurs to you which may apply to your business. Don’t restrict yourself to the sections or template of a standard business plan; just allow your ideas to flow onto the paper. This will form the underlying basis of your final document, and will help you solidify the content to include in your plan from a holistic perspective. Once you’ve gathered all your thoughts on paper, you’re ready to start writing the plan.

1. Executive Summary

The executive summary of your business plan is pretty much exactly what it says – it’s a summary of the information contained in the rest of the document. Although it is short (around two pages), it’s the most important part of your business plan, and should be written last – after you have covered all the other sections of your plan. The reason for this is that potential funders and investors, who are extremely busy and have limited bandwidth, will NOT read your entire plan. To be honest, they will probably read just this part of your business plan to figure out whether to schedule a first meeting with you or not. Therefore, your executive summary needs to be a knockout!

2. Business Overview

In the business overview section of your business plan, you will cover the idea behind your business and the legal formation it become. For instance, you might be starting an online business that sells pet products. This is the section where you will cover that, as well as outlining what legal form the business will take, were they company is based, etc.

3. Management

Anyone who is seriously considering investing in, or funding your business, will want to know who is behind the idea. They’ll essentially be asking themselves “who will be steering the business from business plan to market success?” In this section of your business plan, outline who the key players in the business are going to be (along with their resumes), as well as detailing the management structure of the business. Use this section of your plan to assure investors that you and your team are the best people for the job, but don’t lie! If you’re lacking in a particular area, for instance, accounting, indicate how you plan to address the issue – for instance, by outsourcing the function. Remember – no one is good at everything!

4. Your Market

Anyone who is considering investing in your business will want to know that there is, in fact, a market for your product/service. Even if you are self funding, you need to know who your target consumer will be! That means examining both the potential demographic your business is aiming for as well as the overall industry landscape. Market research will also help you to avoid costly mistakes. For example, if you are planning to open a fast food restaurant, but the area you have chosen already has five, there’s a good chance you need to rethink your strategy, right?

5. Sales and Marketing Strategy

Once you have covered WHO you are going to sell to, you need to be clear about HOW you plan to do it.
  • Are you advertising to the general public, or to business?
  • Will you leverage only traditional advertising methods, or will you incorporate technology?
  • Will you have a sales force?
  • What will your USP be, and what will set you apart from your competitors?
All of this information will help you to gain a foothold in the market while you are starting out. If you continue to build on the above, it will be a very worthwhile step toward ensuring the success of your business over an extended period of time.

6. Financial Statements and Projections

Easily the scariest part of preparing a business plan (for most entrepreneurs) is constructing the financial statements and projections. However, there are plenty of free online resources that can help you. There are an abundance of templates that will provide a framework for creating a clear financial picture of where you are right now, what you need to get started, and what your sales and profits will be in the short-term. Alternatively, you could hire an accountant to compile your information into a financial plan. Based on my experience, in the early start-up days, it’s always best to be engaged in every aspect of the business – there’s nothing worse than trying to present a business plan to investors and not understanding the numbers.

7. SWOT Analysis

Yet another aspect of the business plan that scares many entrepreneurs is the SWOT analysis. This acronym simply means an analysis of your business in terms of:
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
Spend some time with a sheet of paper for each of the above, and list your ideas. Then simply transfer them to your business plan, and expound upon them with detailed explanations as to how you’re either going to mitigate or capitalize on each of them.

8. Supporting Documentation

This is the section of your business plan where you can supply any other documentation that is relevant to your company or which your readers may find interesting. Maybe you are applying for growth funding, and your company or product has won an award – include a copy. Or maybe you operate in a highly specialized environment that requires certification – include yours here. This section can have a substantial impact on how your business plan is received from a risk mitigation perspective.

Take Your Time, and Treat Your Business Plan as a Learning Tool

As you can probably now see, the concept behind your business plan is not that difficult or complicated.

Yes, building a business plan can be a process that takes some time, but it is an exercise that will help you to gain a clearer picture of your company. Furthermore, a great plan will help you to convince potential investors and funders that you are worth the risk.
Think of your business plan as your sales pitch for your business on paper – invest time in making it great.
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How to Start a Business with Little or No Money

Do you think you need a lot of money to start a business? You don’t! I’ve started eight businesses with less than $1000 each. These are the tricks I use.

You Don’t Need Everything from Day One

Don’t feel like your business has to look like a “real business” from day one.
  • You don’t need an office.
  • You don’t need to incorporate from day one.
  • You don’t need fancy business cards, a fax machine or that desk you really like.
People can often become distracted by the things mentioned above and lose focus on what matters. Concentrate on selling and then selling some more. That’s all you should be working on at the very beginning.

Use Relationship Marketing to Your Advantage
This is the most important lesson that I’ve learned in my career as an entrepreneur, so please pay attention. The best kind of marketing is called “relationship marketing” and it’s free. How does it work?
  1. Find the people that have access to your audience.
  2. Offer them a commission for referring business to you.
  3. Let them market your company at no risk to you.
Let’s say you offer city tours in London. Go to all the hotels in the city, talk to the front desk staff at each place and tell them what you do. They have access to millions of travelers and that’s your target audience. Pay the front desk clerks a commission for each guest they send your way. This is risk-free and extremely effective.

Do As Much as You Can Yourself

Design your own business cards, build your own website, and write your own marketing copy. These won’t look as great as work done by professionals, but it’s free and fast. Once you’ve sold a few thousand dollars worth of products or services, you can always re-do your website, business cards and marketing copy using experts.

Good Enough is Good Enough

There’s a group of people that struggle more than anybody else when it comes to starting a business with no money: the perfectionists. They can’t stand good business cards; they need great business cards. They can’t stand using a template for a website; they want a custom-made site. They can’t work with a web-based application that’s $5 a month because it doesn’t have all the features they want. They don’t leverage existing products, they need stuff that is customized for them, and that can be very expensive.

Have Contractors, not Employees

Having contractors has many advantages:
  • You can stop working with them when you don’t need them anymore or if they’re not good at what they do.
  • They don’t need a desk or office space.
  • When work is slow, they get paid less. When there’s a lot of work, they make more money. Try that with an employee.
Pay for Results

It’s OK to have some people on retainers, but make sure that most of their income is tied to results. If they bring you a lot of business, they should make a lot of money. After all, you’ll be making a lot of money too, so it’s only fair that you share it with those that help you achieve your goals.

Be Smart About Your Inventory

These are two great pieces of advice I learned from my mentor:
  • Produce on demand. When you receive an order, collect payment and then manufacture the product. By doing this your working capital will come from your customers instead of your own funds.
  • Be the middle man. Instead of producing your own products, buy them at a discount from someone else and sell them at retail price. The profit margin will be smaller but this is a lot less risky. Once you’re in a better financial situation, you can start producing your own products.
Barter as Much as You Can

Very few people barter these days, but bartering is extremely powerful. If you have something other people want, try to barter for their services. You might not get the best expert in the industry to work with you, but whomever you get will be good enough.

Leverage Other People’s Businesses

You should take advantage of the retail locations, distribution channels and manpower that other companies pay for. For example, if you sell t-shirts, opening your own retail store will be way more expensive than selling your t-shirts through other people’s stores. Let them carry your products. Use their salespeople, their retail space and their distribution channels.

Bonus Tip: Don’t Quit Your Job Yet!

Having to make money by tomorrow in order to be able to buy groceries is no fun. I know it because I’ve been there; several times. Don’t quit your job yet. Work on your business in your free time. Grow it without taking stupid shortcuts because you’re desperate for money. Once you’re getting a decent income from your business, you can quit your job and work on your business full-time.
What other tips do you have for low- or no-budget startups?  Share your comments below!
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Learn Strategies in Convincing People to Loan You Money for Your Startup

The funding problem is one that all entrepreneurs face. Without money to start your business, your options are very constrained and growth could take eons longer than it would with the help of an investor. If you don’t have the means to self-fund, you should begin polishing your pitch to investors immediately, but without proper etiquette and requisite plans you could come off looking desperate and unprepared. The following tips will help you look more credible, serious, and promising to potential funding sources.

Build a Prototype

Let’s face it: talk is cheap. Anyone can have a “great idea” that sounds like a real winner on paper, but no amount of talk is ever as impressive as using the real thing. TechRepublic warns against spending too much time and effort on the functionality of the prototype. They recommend that a prototype should be an empty shell of an application that does little more than visually represent your current vision.

The purpose of the prototype is to get it in front of your prospective investors fast and let them critique it. If you invest too much time in programming the technical back-end, you might end up having to scrap a lot of your work when the investor submits changes he or she want to see before writing you a check.

Identify a Clear Target Market

Too often investors meet people who have grandiose new ideas that they are sure the world will want, but can’t specify who in particular will use it. Believe it or not, a product without a market is like a rowboat without oars – practically useless. Investors know it, too. “It’s a big red flag when someone outlines the size of the market-multibillion dollars-but doesn’t clearly articulate a plan for how the idea will meet an unmet need in the marketplace,” says Aaron Keller, an adjunct professor of marketing at the University of St. Thomas.

Dedicate a significant amount of time putting yourself into the shoes of your future customer. What problems do they have? How does this product solve them? How can you communicate the value of your product to them? Understand as much about your market as possible and communicate this knowledge to your investor.

Seek Help with Your Business Plan

If you plan to seek funding from a professional investor (such as a venture capitalist, or a small business bank loan) you will need a dynamite business plan before you even walk through the door. No amount of crafty salesmanship or product hype will get the job done with these folks – they’ve heard it all before. The problem is that you’re not a professional business plan writer, you just know your product and want to get started developing it.

That is why the Small Business Association (SBA) offers free online business plan consulting. Their toolkit offers everything you need to complete an attractive business plan quickly, from essential inclusions to formatting guidelines. There is even an interactive online workshop to help you ensure that you learn all the tricks and tips for writing to investors.

Define Your Team’s Roles and Credentials

Behind every great company is a talented team that can combine specific skills to create the magic that drives their sales. Investors know that the success of a new business is as much about the people turning the wheel as it is about the wheel itself. Before seeking funding, write a brief biographical outline of the credentials and roles of your core team members, making sure to include all professional certifications, work experience, and educational merits that apply.

Design Clear Return on Investment Figures

An important component of your business plan that every experienced investor needs to see is your return on investment outline. Specifically, this section explains how the investor stands to benefit from your company. What percentage of profit is he or she entitled to, how soon do you expect to reach profitability, and how long will it take him or her to gain their investment total back? Considering that these are likely the biggest questions on the mind of anyone you ask for money, it is important that your ROI figures are backed by research and show a positive outcome for the investor.

Decide On Your Exit Strategy

New entrepreneurs are so excited to begin their businesses that the concept of an exit strategy is usually the furthest thing from their minds, but it is an important aspect that deserves attention. For those unaware, an exit strategy is how you plan to leave your business in the future. Some envision a life-long company that they will work at until retirement while others plan to build the business up and sell it off for a big pay-out.

It’s tempting to put off this decision for later, but StartUpNation points out that the exit strategy can actually shape the business right from the start. “If…you plan to exit your business and transform your equity into cash through a sale, merger or IPO, you need to prepare for that every step along the way,” they explain. “You’ll need to build value and equity in your company by creating unique products, services, relationships and distribution channels, building an intellectual property portfolio and expanding your customer base.”

Try Approaching Friends And Family First

Often, when entrepreneurs think about funding, their mind immediately focuses professional investors and neglects an alternative possibility. Before calling the bank, consider talking to your friends and family about investing in your company. Consider that you have a reputation with the people closest to you, and they surely want to see you succeed. New investors are fine, but they are a much harder sell because they see you strictly as a business proposition.

Tonia Papke, president and founder of MDI Consulting, agrees. “Family and friends are great sources of financing. These people know you have integrity and will grant you a loan based on the strength of your character.”

Justify Every Dollar of Capital

Deciding on an amount to ask for is one of the most difficult steps in planning funding. Carl Showalter, founder of an early-stage venture capital firm known as Opus Capital says that proposing a reasonable amount of funding is a skill many new entrepreneurs lack. “It’s surprising how often I meet with first-time entrepreneurs who tell me they need $5 million. Not many companies need that amount in their first round of funding.”

If you want to increase your chances of getting the money you need, keep the estimates conservative and justify every dollar. Never name a high figure just because it sounds like you’d be financially set for a while, this is inappropriate. Instead, create a comprehensive expense report that explains exactly how the money will be used to grow the business.
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How to Choose the Right Colors For Your Brand

Ten years ago, Heinz  unveiled a new type of ketchup that became an immediate success.  It sold seven million bottles in its first seven months and gained international attention.  It became so popular that when it sold out of some supermarkets, people actually auctioned it off on eBay. So what was so special about this ketchup? Did it taste better? Not at all. Was it made out of better ingredients? Nope.

There was one difference. It was green.

Now, consider the story of Crystal Pepsi, a clear cola that debuted in 1992. Though the soft drink tasted like regular Pepsi, it seemed that most people didn't react well to the idea of drinking a clear cola. After lackluster sales, the product was discontinued after only a year.

The message is clear enough: the choice in color for your product and its marketing materials matter.

Choosing the Best Color for Your Brand: It's not Just an Artistic Decision

Research has shown that color influences our emotions in a variety of ways, but perhaps most importantly, it's the first sensory touch point with a customer or client. "The first point of interaction is shaped by the color, and color is the most memorable sense," says Leslie Harrington, the executive director of The Color Association and a color consultant. "Before anything else, they see color."

Harrington, who wrote a Ph.D. thesis titled Color Strategy: Leveraging Color to add and Extract Values for Products and Brands, urges her clients not to think of color as an artistic choice or preference, but rather a grounded business decision. 

"Color has been one of those things that's been left up to the designer to select something," she says. "The CEOs or management say 'oh I can’t do that, I’m not artistic.' But my argument is that it's not about being artistic – it's not any different than making any other strategic decision for your business."

Case studies have shown that a consumer's decision to purchase products can range from anywhere between 60 and 80 percent based on the product's color.  Color has the unique ability to make or break the success of a product, Harrington notes. "It doesn’t cost you any more to make the right color decision for your product. But if you choose the wrong color, from the onset, you’re not going to communicate what you want to your customer.” In other words, if you get it wrong, it can really impact the overall performance of your company.

Choosing the Best Color for Your Brand: Color Selection

Color is contextual. For example, you might buy a shampoo that's bright orange, but you're probably unlikely to buy a car in that same color. So when thinking about a color for your product or marketing materials, it's important to research the typical choices of color among your competitors, and understand what a particular color is trying to communicate to a customer.

"Go into the store and take a critical look at what colors are there," says Jill Morton, a color consultant and author of a series of e-books about color.  

Morton explains that point-of-purchase sales (e.g. walking down the aisle of a pharmacy), are difficult because your product will sit on the shelf with at least 20 or 30 other products. Sometimes choosing a color that stands out can help. "Garnier Fructis did something quite brilliant with their choice of that green," she says. "You go to a shop, and that stands out."

But choosing an unlikely color can backfire, too. For example, "everything in contact solutions is blue or green, but if you put a product on the shelf that is red, no one is going to buy it," she says.

Most importantly, it's important to distinguish whether the color serves to imply a certain function (e.g. blue is clean, healthy, safe) or if the color implies a certain idea (e.g. neon green is fun, adventurous, different). Once you've determined what it is that your target customer is looking for, you can best decide on the color to help them find it.

Choosing the Best Color for Your Brand: Keeping it Real

Though your company may want your product to reflect a certain idea by a choice in color, it may not be that simple. "Consumers know intuitively if the color and brand connect, and if it's authentic," says Harrington. "If it doesn't connect, it turns them off."  Sometimes, companies think that finding a "popular" color or one that customers "like" will help sales. But this is rarely the case.  "Whether its trendy or not, or whether they like it or not, won't necessarily matter as much as if it’s authentic."

Harrington points out the following example. When Volkswagen came out with the new Beetle, most of the billboards pictured a neon green Beetle, which was a car color few people had seen before. However, that color was authentic to the ideas VW was trying to communicate: rebirth, renewal, and bringing an old icon back to make it new. "It really resonated with the customer," she says. "It allowed VW to communicate in the ad what they were all about – even if it just brought the customer in the store to buy the black or the silver."

This example also illustrates another element of color psychology, something she calls the "pink purse syndrome," namely, you put a pink purse in the window to get customers to come into the store where they buy the black one.

Choosing the Best Color for Your Brand:  When you Need a Change

Sometimes, changing a company color is necessary to indicate the company is still modern and progressive. When freshening up logos or changing a product's color, there are a number of things to consider, says Leatrice Eiseman, executive director of the Pantone Color Institute and international color expert.  "You have to think about whether or not you want to retain some of the past, or completely do away with it," she says.

There are a couple of ways to do this. One is to scrap the color entirely. However, this isn't always the best option. Rather than get rid of all the equity you've built with a certain color, it's sometimes best to hold on to one color, and consider altering the accent color, says Eiseman.  "Most companies want to hold on to the equity and goodwill of their image, and color can certainly do that: maintaining some of the color but adding something new as a secondary color to refresh the image."

A good example of the need to change colors is Kodak, Harrington says, because they needed to move from being a film business in the minds of consumers, to a digital business.  "Since yellow was so iconic with the product, they went to red," she says. "They wanted to signal to the customer that the focus of the company had changed."
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3 Mental Preparations for Opening Your Own Business

The phrase, “It’s a cold, cold world out there,” is an American classic.  The main driver for the phrase’s popularity is that, it actually is a cold, cold world out there.   It’s not a firm rule, though typically business lends itself to the thought that there is an inverse relationship between risk and reward.

Well, the more rewards that you actively pursue, the colder the temperature is going to get.  These are not tangible concepts; rather they should lay an understanding that the aforementioned theories are usually spot-on, and this is what you will be dealing with.  In a nutshell, mentally prepare yourself for the uphill physical and mental battle that will constantly be waged against you via both external and internal forces.

Ask any basic office manager – it’s pretty warm making a $1,200 weekly paycheck.  Also, there is nothing wrong with any bit of labor, regardless of how much it pays.  If it’s honest, in my eyes, it’s respectable.

As the business makes its first headway and you are away from the mother paycheck for about a month, the warmth slowly fades as you get deeper into opening your own entity.  There’s no turning back, however.  Take the jacket off, feel the chill, and simply stop reflecting on that guaranteed paycheck.  That was a different life.  Instead, envision the possibility of a $20,000 weekly profit intake that could not be achieved via a puffy jacket, a scarf and gloves.  Then, begin working your way to that paycheck.

With the opening remarks made, listed below, you will find some common psychological and life changes that encompass opening one’s own business.  These are to inform, not to scare, though to simultaneously be realistic.

You Will Second Guess Yourself – It’s Part of Human Nature

If you are mentally prepared, or at least anticipate and recognize the pending self-doubt that rears its ugly head from time to time, then you are very much ahead of the entrepreneurial pack.  However, before you open your business, take some time to fully embrace and eagerly anticipate the fact that there will be upsides a.k.a. times that you feel like you could conquer the world.

Conversely, there will be downsides when you feel that you couldn’t sell a free sports car to somebody out of gas.  More or less, this psychological factor is “what it is.”  Go with full confidence, and also go in with full confidence that self-doubt arises, you’re going to be able to swiftly recognize and squash the hindered thoughts.  Work hard enough and become good at what you do and the following becomes the God’s Honest Truth: it’s always darkest before….

The Computer Is Going To Be Your New Best Friend

Before you quit your day job, make sure that you have saved enough money for a very nice, functional computer.  Personally, I swear by MACs and they’re easy to use, but prior to purchasing the new machinery, understand that you are buying your new best friend.   The mentality that goes with a brand new computer upon firing up a brand new company is much more positive than starting with old equipment.  No mental excitement.

Think of it as the equivalent of your pet, only a little more advanced.  You must have the mentality that this new piece of machinery is all that matters for 12 hours each day.  If you’re not prepared to sit at a computer that long, find one of the few businesses to start that don’t require heavy, heavy internet work.

Try to save a few hundred dollars and use an old, outdated piece of equipment, and a single virus from a far-off land, can make your new organization go near belly-up.  As an animal lover myself, I prefer to adopt older pets as they need the homes more, but the same rules need not apply for the screen and, subsequent hardware attached to your keyboard.  You’re going to be staring at her all day and night, make sure that your prom date is pretty.

Getting A Mentor Is Great, But In the End…

Finding a good mentor is difficult, but rewarding and many swear by finding one, but it is not all that easy.  Moreover, there is a huge misconception that a mentor can make or, otherwise break your business.  Simply not true; unless you become a slave to every word and action that the mentor says and you become dependent, one of two things will happen:

1. They won’t have the time to provide all this guidance.

2.  You will get, for lack of a better term, annoying and turn the individual off.

I, at a time, was lucky to have a strong mentor by the name of Harvey Cohen, but was unlucky enough to see him die of cancer.  The only difference in my mentor is that he was extended family from my sister-in-law’s side.  Still, I could not always run to him for advice, as he was busy and, I was not the first and foremost thing on his mind.

As a new entrepreneur, you are consistently going to be referred back to the “cold, cold world” reference.  Don’t heavily reply upon a mentor; instead use them when advice is direly needed.  Again, bear in mind to never be overly needy.  Go into the business with the mentality that it is you against the world and think of a great mentor as a gift from the heavens, not something that is owed to you.
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