Posts

Writing An Effective Business Plan That Works For You

So you have a small business idea that just might be your ticket out of your 9 to 5. What’s the next step?

Business Strategic Planning

Expert opinion varies somewhat on the subject, but most agree a plan of some kind is in order.

“It’s really important for businesses to have a plan so they have a roadmap for their business,” said Carol Roth, entrepreneur, CNBC contributor and author of The Entrepreneur Equation. “It’s difficult to figure out where you want to go if you haven’t figured out the best way to get there and haven’t planned it out.”

Roth suggests that your business plan should be a living, breathing document that’s adjusted over time as the circumstances of your small business change. She recommends evaluating and tweaking your business plan twice a year. “If you do it the right way, it really should be a roadmap for you to figure out where you want to take your business and have very concrete milestones that have timeframes associated with them,” Roth said.

She emphasizes that the plan doesn’t have to be pretty if you’re not using it to obtain funding. It just has to be a functional guide that works for you.

A key area to focus on while drafting your plan is revenue projections. “You do want to go in-depth to give yourself very concrete plans,” Roth said. “Really analyze where most of your revenue is coming from, making sure you spend most of your time on things that create the revenue rather than wasting a lot of time on things that aren’t producing revenue.”

Writing a business plan doesn’t have to be intimidating, thanks to software. Roth and Ivana Taylor, publisher of DIY Marketers, recommend the business planning tools available through Palo Alto Software. Taylor has found the Live Plan version especially helpful, which she says is very cost effective. “The reason I love it is it is more or less done for you—it connects to your QuickBooks and syncs up all kinds of information. It guides you through the process. You don’t have to think too much, you just have to answer the questions.”

One of the important benefits associated with going through the rigor of writing a business plan is that the process itself reveals weak points in your plan. Heed the red flags—if your plan isn’t feasible, you may need to abandon it, Roth said. “I see business plans from entrepreneurs all the time, where they’re giving up a nice salary and then when they look at their business plan, say year five, they see that their profits are going to be $20,000. That trade doesn’t make any sense whatsoever.”

In addition to financials, Roth also advises to pay close attention to how much time you allow to reach certain goals and objectives. “The good news is that entrepreneurs tend to be optimistic, and the bad news is that entrepreneurs tend to be optimistic. They forget that everything is probably going to take three times as long,” she said.

For assistance crafting business plan strategy, ABC can help  a variety of tools where you can get low cost insights and ideas  from successful coaches.   The information may be basic, but if you don’t have a plan, any information can be helpful.  Also, use resources around you like your business banker, community chamber of commerce, local business coaches / consultants and your accountant can be valuable assets while strategic planning.  Finding resources that have experience in your industry or service area can also be very beneficial.

Even if you’ve been owning and operating a small business for several years, it’s not too late to write a business plan. It could still prove useful—especially if you want to grow, improve your profit margins, eliminate waste, identify new opportunities and more.  Finding employees that will help the business grow and expand your capacity to deliver high quality service should be a key component to your plan

“You’re working with empirical data, not hopes and wishes, and you’re going to get better results,” Roth said. “You already know what’s happening in your business. Then it’s looking at where it is you want to take it next.”

If you would like learn more about how you can get help writing an effective and useful business plan call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

Business Plans Are Key To Getting The Capital You’ll Need For Growth

Business AlignmentA Business Plan Takes Your Vision For The Future and

Puts It Down On Paper For Others To Understand

There comes a point for most small companies when capital is needed to grow the business. It may be a new product idea, a tantalizing market opportunity or an innovative sales technology tool that can boost revenue and profits—but money is needed to invest in these opportunities.

A carefully thought-out and executed business plan can mean the difference between leaving a bank or other capital provider with pockets full or empty. Here are a few crucial tips to help increase the chances of the former.

Know What You Seek

Too many business plans fail to articulate the important reasons why you need growth capital and why the amount you’ve specified is the right figure. They can get lost in describing the company, when what the bank wants to read in the first paragraph is a succinct summary of how much money you want and for what purposes.

The writer of the business plan should describe in brief, understandable and compelling language the value of the growth opportunity to your business. Once presented as a simple story, transform this narrative into dollar figures—that is, how the money will be spent and the timing of the return you expect from this investment.

Plain & Simple Does It

It’s easy for a business owner to let ambition get in the way of truthfully describing the organization and its goals. Banks and venture capital providers are professionals able to spot a gilded lily in two paragraphs.

Resist over-telling your story with over-the-top growth rates and financial projections. Stick to historical facts and figures—verifiable (if not audited) internal data, as well as external data from independent third-party providers. Resist exaggeration and overstatements and, when it comes to financial projections, qualify them with words like “may,” “might” and “could.”

“A good business plan for securing any stage of capital validates the key assumptions and turns them into data,” said Dirk Brown, director of the Faber Entrepreneurship Center at the University of South Carolina’s Darla Moore School of Business, where he is a clinical professor in the College of Engineering and Computing.
Be Honest About the Risks

Even rosy projections have thorns. State these risks early in your business plan, getting them out of the way quickly to dwell more deeply on the potential rewards. Point out how the plan may mitigate these threats, if not eliminate them. Banks and other capital lenders understand that business is a chess game with ebbs and flows. Point out your competitors and their strengths and strategies.

Sweeping the risks under the rug only makes their absence stand out. Capital seekers should provide “a clear understanding of how the organization is well positioned to manage the company across a broad range of scenarios, given that we all know things won’t work exactly according to plan,” Brown said. “It also demonstrates that the executive team has thought through these scenarios and is prepared to adjust or pivot the plan as needed.”

Know Your Capital Provider

Banks are driven by different needs than other capital providers, such as venture capitalists. Both have a stake in your ability to deliver on the terms of the agreement, but venture capitalists are looking for sustainable growth and exponential scalability—fast-paced business expansion.

If your company does not have an idea that truly sets it apart from the competition, chances are venture capital firms will pass. Banks, on the other hand, primarily want surety that you can pay back the loan on time, over time. The more sure a bank is about your business in this regard, the greater the likelihood that it will lend a higher amount at a lower rate.

There’s Help If You Want It

Organizations such as the U.S. Small Business Administration (SBA) and local chambers of commerce can help small companies draft a business plan with strong legs underneath. The SBA, for instance, has templates that business owners and operators can use to start the process.

The templates help guide the business plan writer to explain how the organization will use the funds it receives, such as to retire debt, to invest in a new technology system or to fund working capital needs. Different types of funding are addressed, such as equity and debt capital. There’s also a breakeven analysis tool to show how your sales revenue can cover both your ongoing fixed and variable business expenses and the loan repayment amount.

No company should go half-armed when battling for dollars. An honest, well-written business plan can win the day, but it is the planning that goes into the document that can be key. As Dwight Eisenhower said, “Plans are nothing. Planning is everything.”

If you would like learn more about how you can create a powerful and effective business plan that will help you secure growth funding,  call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

5 Reasons To Know The Value Of Your Business Today

business-value

How much is your small business worth?

Knowing can help you plan your business and personal future.

As a small business owner, it’s easy to fall into the trap of thinking that a business valuation simply isn’t necessary, at least not yet. After all, you’re busy trying to grow your business. You can worry about what your business is worth down the road, when it’s time to sell or think about retirement, right?

As it turns out, though, you shouldn’t wait for a business valuation. There are several reasons why it’s important to know how much your business is worth right now.
  1. Planning for the future: A business valuation provides a current market value that you can use to assess the strength of your business and determine where improvement is needed—before you retire, sell or pass the reins to another family member. Once you know how much the business is worth, you’ll be able to plan for these events with confidence.
  2. Purchasing adequate insurance coverage: Small businesses often use a life insurance policy to protect against the death of a key employee. In this case, a business valuation can help determine how much insurance coverage is necessary.
  3. Expanding the business: When it’s time to grow your business, an accurate and up-to-date business valuation makes it easier to approach lenders and raise capital. It provides potential lenders with a snapshot of the health of your business, which in turn facilitates the decision-making process.
  4. Establishing a buy-sell agreement: This agreement typically outlines what happens to a business in the event of death, disability, divorce or retirement. If one of these events triggers a sale, you’ll need to know the value of an owner’s or partner’s share of the business.
  5. Helping with tax and estate planning: If a business owner passes away, the family or estate may be required to pay taxes based on the value of the business. Without a certified business valuation, determining how much your business is worth will probably fall into the hands of the IRS.
We’d like to offer you the NO COST opportunity for You to get your “Value Builder Score”.  This is a score from 1-100.  Your Value-Builder Score is calculated through an analysis of your businesses performance on eight attributes proven to be important to acquiring companies when evaluating a business as a potential acquisition target.
If you would like learn more about how you can grow the value of your business in preparation for you exit, call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.