Saturday, August 16, 2014

Who is on Your Team?


            Mark Twain once said, “Keep away from people who try to belittle your ambitions.  Small people always do that, but the really great make you feel that you too, can become great.”  During most of our waking hours we are surrounded by people.  In business, many of these individuals are people who we choose to invite into our lives.  Two types of people exist in the world.  There are people who give us energy, and there are people who take it away from us.  

            The smart entrepreneur needs to surround him or herself with a team of people who provide a consistent positive energy charge to take you to the next level.  Look at the people around you.  Who gives you energy?  Who absolutely sucks it out of you on a regular basis?  Be honest with yourself.  Disregard who has been on your team the longest.  No extra points should be given for the client or customer who generates high profits.  Be brutally honest here.  If you were stuck in a life boat or stranded on a desert island, who would you want with you?

            Now the challenge, set a goal and make a plan for eliminating the energy suckers from your life.  Don’t just passively try to ignore them and hope they will change or go away.  They won’t.  Once an energy sucker finds a host from which to drain energy they rarely go away voluntarily.  If the energy drainer is a team member, plot a plan to find a replacement.  If it is a client or customer, be proactive and creative about finding replacement revenue.  Eliminating the energy thieves from our lives is a sure way to build a stronger business and a more productive future.

Monday, August 11, 2014

Doing An Internet Start-up? Don't forget to plan (Part 2)

Many business plans include a section about Strategies, describing how the start up will address particulars like funding, market penetration, customer relations, cost control, pricing and competition. Other sections could be included in the plan, depending on the type of business. A section discussing suppliers and product costs would be critical for retail or manufacturing businesses, but is probably unnecessary in service-type businesses.

In its final section, the comprehensive business plan provides financial forecasts (usually in the form of a spreadsheet or table) in sufficient detail to reveal any particular short-term problems such as cash flow, seasonal variations in sales, and projected growth. It may be advisable to project the financial results on a month-to-month basis the first year of operation, then quarterly for the second year, and annually for the third through fifth year. When complete the plan will be an easy-to-understand logically-organized narrative fully describing the scope, strategy, and projected operating results of the proposed business.

Banks invariably ask for a written business plan when the entrepreneur applies for a business loan. Usually, they receive an unorganized assortment of spreadsheets and a short, one page, ill-conceived narrative. The bank loan officer will give much more consideration to the professional entrepreneur who presents a well-organized, comprehensive business plan.

When completed the business plan should never be tossed into a file cabinet to be forgotten. The plan is a living document, kept on the entrepreneur’s desk for day-to-day reference. The entrepreneur writes notes in the margins, adjusts strategies, updates information on the competition. Periodically the business plan is reprinted with the changes incorporated. It becomes the foremost document guiding the startup business toward its eventual success.

Monday, August 4, 2014

Entrepreneurship 101: The Importance of a Business Plan

Here’s a sobering fact: More than half of small businesses fail within 18 months. Only about 10-20 percent will be in operation after five years. Entrepreneurs who successfully navigate the startup phase will credit their success to varied reasons—including passion, long hours, or superior customer service. However, detailed planning is one of the most commonly cited reasons for small business success.

A well-written comprehensive business plan is simply a must for any reasonable chance of success. In developing the plan, the entrepreneur must discipline herself to consider (and mathematically prove in the financial forecast section) the assumptions underlying the business model. Too many small businesses have a great idea but allow themselves to grow too quickly, thus draining themselves of necessary operating cash. Others do not properly plan for contingencies. Still others may not fully consider the impact of competition or governmental regulation. Writing an in-depth business plan forces the entrepreneur to consider the proposed operation from every possible perspective, discovering weaknesses, contingencies and strengths in the most improbable places.

Business plans may be organized in several ways, but they commonly begin with an Executive Summary (which is the final part written). The second section could contain a narrative showing how the entrepreneur is especially suited to operating this company. That second section might also contain short biographies of other principals or advisers (for example, the CPA or an outside consultant). One early section will include a narrative about the business itself—the legal structure, where the business will be conducted, what the business will sell,  and, perhaps, the amount of investment the entrepreneur has made into the business.

The core of the narrative will be a detailed market analysis, preferably illustrated with charts, tables and graphs proving the demand and projecting sales of the product or service being offered. The Analysis of Competition, usually given its own section of the plan, follows the market analysis.