Once Upon a Time: Telling a Story in the Business Plan
If you could start a business plan with “once upon a time”, what would follow? Once upon a time there was a business that offered a value proposition to customers. Or maybe you would write that once upon a time there was a business with a compelling story and investors couldn’t wait to read the details.
A business plan is a business document, but it’s also your chance to tell a story. That story is the tale of your business brand and what you offer in the way of products and services that create marketplace passion and excitement. Unfortunately, many business plans present the minimum amount of detailed information as required, but they lack enthusiasm. When the plan is presented to potential investors, you can bet they will notice this lack of excitement too.
Let’s face it – a business plan has to create a sense of fascination in the products and services. The story you have to tell should echo what customers are saying about the marketplace and their problems and how you will solve those problems. It’s a never ending story about what makes your business idea different and your products or services special. The story characters are the management team and the customers. The plot is all about turning authentic passion for products into a value proposition for consumers. What makes your story unique? Interesting? Fascinating? Remarkable?
A dry business plan that meets minimum requires but doesn’t share the entrepreneur’s motivation for starting or growing the business is doomed to enter the annals of boredom. That’s no way to get investors interested and especially innovative angel investors or venture capitalists looking for exciting new ideas. The story should not be invented or fictional. It must be authentic because it’s your story, your business and your products.
Once upon a time there was a successful business…
Browse www.funded.com for more advice about getting your business funded.
Getting Competitive in the Business Plan Competitive Analysis
Every business has competitors which is why the business plan includes a section that presents a thorough competitive analysis. The analysis considers businesses in the same industry your business will be operating in and evaluates similar products or services. It also looks at the features of the competitor businesses. The goal is to pinpoint the strengths and weaknesses of the competitors and then position your business in the industry and marketplace.
A common mistake new entrepreneurs make is telling themselves there is no competition. In the excitement of starting a business, they fall prey to the belief that their products or services are so unique there are no other options for consumers to choose among. One point to keep in mind at all times is every business has competition, and you need to know your competition well.
The competitive analysis in the business plan considers a number of factors for multiple businesses. It’s a good idea to analyze at least 5 businesses to ensure your research is thorough. The factors include product and services prices, the quality level and the product lines.
However, the competitive analysis also considers how your competitors market their products and services and the structure of customer services. The more information you know about a competitor’s organizational structure, sales team, type of facilities, management, and culture, the more effectively you can compete. The analysis should also be done from different perspectives based on market segmentation.
Often, the completed competitive analysis developed for a business plan uncovers opportunities for marketing, product and services differentiation, customer service or new distribution channels. So don’t look at the competitive analysis as a tedious research process. Instead, consider it time well spent learning how to succeed. Every business has competitors and should know who they are, what they’re doing and how they’re doing it. Then your business can do it differently.
More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.
Having Trouble Writing Business Plan Goals and Objectives?
One of the important components of a business plan is clearly defining objectives. Stephen Harper in Starting Your Own Business (McGraw Hill, 2003) writes, “Objectives can be viewed as dreams with a deadline.” The point he is making is that objectives should be specific in terms of projected amounts and timeframe.
For example, you would not write an objective like this: The business will grow over the next 5 years. You would write it like this: Sales are expected to be $2 million in 5 years and the business will be one of the top 5 niche market leaders. The dreams you have for the business should look ahead and establish where you want the business to be positioned or how much growth is expected within a set period of time. The dreams should also be reasonable, based in facts and business reality, and achievable.
For example, if you plan on opening 5 franchise businesses within 10 years (1 every 5 years) the objective should be stated as such. However, you should also be able to support plans for opening these franchises in the competitive analysis section of the business plan. If the market is already close to being saturated, those 5 new franchises may be difficult to open. When objectives are focused and sensible, the business plan will become a living breathing document that supports your dream.
If you are having trouble setting objectives for the business plan, there are some questions you can ask yourself to develop focus. Ask yourself what your ultimate goal is 5 years from now. Picture yourself as an entrepreneur 5 years from today and imagine the level of business success you want to succeed. Ask yourself questions like how many sales people you hope to have working and how much market share you want to gain. Picture yourself as successful and put your definition of success in writing.
Objectives will become clear when you take the time to look into the future. Though a business plan is not a crystal ball, it is a driving force with strategies for achieving success. Set clear objectives first and the rest of the business plan will be a lot easier to develop.
Browse www.funded.com for more advice about getting your business funded.
Writing a Business Plan with Employee Taxes in Mind
Writing a business plan isn’t just a matter of writing whatever is on your mind. It’s a carefully crafted document that considers a number of variables. One of the most important variables is a plan for hiring because salaries and wages and benefits expenses can be a substantial amount of total expenses. A couple of ways to minimize payroll expenses and prove you are a savvy business person is to manage the type of employees hired and methods of expense reimbursements to take advantage of tax credits and savings.
The first step is to research the tax credits that are available. For example, the Affordable Care Act offers small businesses hiring low and moderate income workers a health care tax credit for health insurance expenses as long as the business covers at least half of the single coverage for employees. The business plan can reflect this tax credit so you reflect higher profit.
Another way to lower employee related taxes is to institute an accountable plan. An accountable plan is one in which you reimburse employees for certain expenses and those amounts are exempt from FICA and FUTA taxes. This amount can be sizable if your business plan is written for a company that will have employees incurring regular expenses for travel, entertainment, business tools, supplies and so on. The accountable plan described in IRS Publication 463 requires that all reimbursable expenses be business related, of course. The expenses are not taxable to the employees either.
There are a host of tax credits available for hiring particular types of employees. For example, there are tax credits for hiring veterans or Indians. As you develop a business plan, consider ways to minimize taxes through savings and credits. These amounts will flow right to your bottom line, and just as importantly, potential funders will know you are a wise and savvy business person.
More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.
Though the Looking Glass with Business Plan Financial Statements
Business plans have several sections and way at the end is the financial plan with the income statement, cash flow statement and balance sheet. Don’t let that lull you into a sense of complacency though because the placement of the financial statements is not reflective of the importance. The statements can be thought of as a mirror reflecting the written descriptions that came earlier in the business plan. That means the investor should not find too many surprises in the way of numbers that don’t support or match the marketing strategies, operational plan or competitive analysis.
In other words, the business plan financial statements shouldn’t remind anyone of Alice in Wonderland. She steps through a mirror and finds an alternate world that doesn’t make any sense. The alternate world is upside down, confusing and leaves Alice in a constant state of puzzlement. A funder reading your business plan financial statements shouldn’t wonder how you got from your marketing plan to the cash flow projections or how you made the leap from expansion plans to the liabilities on the balance sheet.
The financial statements need to present an accurate picture of the proposal. If it’s a startup, the projections should be reasonable. If it’s an ongoing business ready for expansion, the financial statements must be historically accurate and prepared according to Generally Accepted Accounting Principles (GAAP) and projections should once again support the business plan proposal.
You won’t find GAAP in the looking glass alternate world. In the alternate world, business plan preparers make up numbers not supported by the facts, overstate revenues and profits, understate liabilities and make cash flow projections that are clearly pie-in-the-sky. Potential funders recognize financial statements that are overstated, optimistic and unreasonable.
As you prepare the financial statements, just remember this: Don’t be Alice!
Browse www.funded.com for more advice about getting your business funded
Business Plan Writing When the Economy is Less Than Desirable
Writing a business plan for a new business to secure funding in a weak economy may seem like an impossible task. That’s the wrong attitude to have though because it’s actually quite the opposite. In a weak economy funders are looking for innovative and creative ideas that give them an opportunity to make a profitable investment when other financial vehicles are experiencing low returns.
Investors have trouble making money when the Federal Reserve is keeping the federal funds rate at 0 to one-quarter percent. In fact, the U.S. Central Bank Open Market Committee just reiterated on April 25, 2012 that it’s holding interest rates to near zero levels through the end of next year. That means investors must turn to alternative investments to compensate for lack of opportunity in the traditional financial markets.
Writing a business plan in a less than desirable economy should be viewed as an opportunity rather than an impossible task. As an entrepreneur, you are presenting the opportunity to increase investor cash flow and earnings. The business plan can also prove that a weak economy offers unique competitive conditions that increase the odds of success.
For example, the high unemployment rate means specialized labor is available at affordable wage rates. Another business advantage is the fact many potential competitors have already gone out of business which creates market opportunities. Also, the marketplace is ready for innovation in an economy that demands high performance levels. Your business plan can present strategies that take advantage of these opportunities, and that’s just the kind of thinking that gets the attention of funders.
So don’t think of the weak economy with discouragement. Think of it as opportunity for innovation, and then present those opportunities in your business plan with confidence.
More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.
How Do You Know Your Business Idea is Good?
Investors want to fund good business ideas. That’s a broad statement because what seems like a good idea to me may be different from what seems like a good idea to you. So many ideas never seem to go anywhere. Some are just so uninspiring that they can’t seem to get the attention of anyone, much less investors. You can even write a whole business plan around a bad idea, leading to great disappointment when investors spot the fact it’s bad.
A good business idea is much more than just an idea. You can sit there all day and come up with ideas, but that doesn’t make them good. Good business ideas have certain qualities that differentiate them from other ideas. For one thing, a good business idea fulfills an unmet customer need, and it is often a need the consumer doesn’t even recognize yet. That may sound odd, but great ideas are often not great until someone invents a product or service.
Determining if a business idea is a good one requires more than just knowing the market will appreciate products or services. The idea must be feasible and realistic in terms of production costs, the time from funding to sales, profitability and safety. A good business idea is also one that can be brought to fruition because the entrepreneurs have the knowledge and skills needed.
There are more qualities associated with good business ideas, but one of the most important is related to innovation. Good business ideas offer a new twist on products or represent creative and innovative new products. The new twist or innovation should represent something that matters to people which means it brings some kind of satisfaction.
There are no hard and fast rules or magic formula to define a good business idea. Instead, investors will consider all of the qualities of the idea coupled with the marketing, competitive and financial factors.
More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.
Convincing Investors Your Business Idea is Really Worth the Risk
How do you convince investors your business idea is worth the risk of investing money? You may have the most innovative and creative idea ever put forth, but that doesn’t mean anyone is going to invest in it. Even a good idea can flop if it’s not implemented correctly. Of course, the most well known example in business history is the 1958 Edsel. The car had a poor name, a poor pricing strategy and was manufactured during a recession. It remains to be seen if the modern day Chevy volt will be classified as the “new” Edsel for similar reasons.
Investors are willing to accept risk, but they will do everything in their power to ensure they understand how much risk is involved. Investors are not the same as business speculators in most cases because they want a value proposition that includes a very good probability of earning positive returns. There are many different factors investors will consider to determine risk, and you should assess them first.
Risk is a function of management competencies, available collateral, market acceptance of the business idea and time. To convince investors your business idea is worth the risk of funding, you will have to first prove that the people implementing the plan are fully competent and capable of running a business. Investors will also want reliable collateral. You need to show that the product or services can be efficiently brought to a willing market. Finally, the investor will want to assurances that the payback agreement in terms of time will be met. Payback in terms of money is taken care of by the other factors of competency, market success and collateral.
You can convince investors to fund your projects by developing a sophisticated business plan that clearly and carefully shows the level of risk the investor is assuming. The good news is that the time spent developing a business plan in the first place reduces risk right away.
More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.
Crowdfunding Facilitated with New Legislation
Smaller investors can now be solicited via the internet to pool resources in a practice called crowdfunding. The recently passed Jumpstart Our Business Startup Act (JOBS Act) sent to President Obama for signing is designed to make it easier for small businesses to raise capital. The main foundation of the legislation rests in giving businesses the ability to raise a limited amount of seed money or growth capital by encouraging investors to visit an SEC registered website where projects are listed.
The SEC registered websites will be used by entrepreneurs to list their businesses and present their funding needs. To drive potential investors to the website, the business will notify family, friends, customers and other individual investors that the business is listed by using social media tools like Twitter, Facebook and other internet based communication systems. The potential investors can visit the website, read about the business idea and then operate as a community to analyze and pick apart the business idea, investment opportunity, business model and so on. Once the business idea is accepted, investment money is sent by individual investors, accumulated and eventually transferred once the funding target is met. There are a number of other requirements, rules and limitations associated with this legislation, and this is only a brief summary of the law.
Legislating crowdfunding is considered by many to be an important step towards making it easier for people to become investors in small businesses. With tight capital markets, this new form of business funding can become an important source of money for startups and small businesses having difficulty accessing traditional funding sources. Professionals who connect businesses with investors can provide more information about the new legislation, and other sources of funding, and provide critical assistance with developing a successful business plan that attracts funding.
Browse www.funded.com for more advice about getting your business funded.
Is Your Elevator Pitch Ready for Investors?
Getting the attention of investors takes finesse and a quality business plan. It also takes an “elevator pitch” that can be pulled out at a moment’s notice. If you haven’t heard of the elevator pitch then there’s a good chance you are a young entrepreneur who has a great business idea but are not immersed in the business lingo. All you know is that you need start up funding.
The elevator pitch is a short speech that summarizes your business plan. When we say short, we mean very short. The elevator pitch is prepared for those moments when you have a chance to tell someone about your business idea and have the time equivalent to a short elevator ride. In other words, the elevator pitch should be no more than a minute long. It’s a summary of the summary of a business plan. You can use it during a conversation or online when potential investors ask you to quickly describe your idea.
It can be intimidating to think about compressing an entire business plan into 200 to 300 words. Yet having a well written elevator pitch ready proves two things. First, you are prepared in advance for an unexpected opportunity to sell your business idea and investors appreciate people who are prepared. Second, having a prepared concise statement about your business shows that your business idea is focused. The elevator pitch is the equivalent of a first impression, and you only get one chance to make it.
The best way to approach developing an elevator pitch for investors is to draw from the information in the Executive Summary in the business plan. The Executive Summary concisely highlights the important information in the business plan. Using it as the source document, you can pick the information that will articulate your message in a way that piques the interest of investors. It’s merely an overview designed to start a conversation between an investor and you. Obviously, you cannot include a lot of detailed information in a minute long description, so you need to pick and choose the most compelling information about your business.
The elevator pitch may be short, but it’s a powerful sales tool whether you speak it, email it, or post it on a website.
More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.