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Mistakes You Should Avoid in Writing Your Business Plan

Mistakes You Should Avoid in Writing Your Business Plan

Ideally, all business startups should have business plans. These are the documents that detail the objectives and goals of the company. And while many believe that writing plans are not difficult, there are things that entrepreneurs must remember when it comes to producing business plans. These are:

Mistake #1: Not all startups need business plans

In reality, all businesses – including startups – must have business plans. These things are not just materials that can be used when trying to secure financial support from potential investors. It can also function as a “handbook” that can guide all the employees as regards the operations of the business.

Having a business plan will give an entrepreneur the opportunity to look into the positive and negative aspects of the business. Moreover, the plan will assure that the company will always remain on track

Mistake #2: Business plans have to include extensive description of the product

Business plans are not about promoting your product. And while it contains the visions of the owner for the company, the document should also contain a truthful representation of the problems that may face the company in the future.

With this, it must be emphasized that the plan should contain not just an extensive description of the product, but also a thorough explanation on how the owner wants to achieve his or her objectives and vision for the company.

Likewise, the business plan should also talk about the relevance of the product to its potential market.

Mistake #3: Business plans are easy to craft

Planning is an easy task, especially for business owners who’ve already thought of the things that he or she wants for his or her business. Unfortunately, while it is easy to write a business plan, crafting something that would be effective for the company is a different thing.

It must be emphasized that a business plan is only effective when it serves its purpose for the company – that is, if it assists the owners and the employees in achieving the goals of the business startup.

Business plan writers, therefore, must consider all the necessary aspects of the company in order to produce an output that could function well for the business startup.

More detailed information and useful advice can be found at 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.Funded.com

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Is It Time To Apply For A Startup Accelerator?

Following the rise of startup accelerators, the number of new entrepreneurs who want to get a position within these incubators has also significantly increased. Wall Street Journal reports that the applications to more than 200 accelerators around the world have almost doubled in the past two years.

According to Marc Nager, Chief Executive Officer of Startup Weekend, an accelerator may be good for those who are new on the field of entrepreneurship. However, in isolated cases, some of the terms may not be as acceptable. Nager provided some information that might help those who have yet to apply for an accelerator.

Understand the Basics

For Nager, would-be entrepreneurs must start with understanding the basic terms of the deal. He said that before applying, they should look at the benefits that they will get once they participate in this venture.

In the world of startup accelerators, a lot of value will come from the network that will be established amongst the students, mentors, and program leaders. Nager added that the applicants should also use to their advantage the possibility of having one-on-one experience with experienced entrepreneurs. He stresses the need for applicants to identify at least three mentors who have had experience on the industry that they are working on. This will ensure that the sessions will be maximized and will result in a highly beneficial experience.

Choose Wisely

Nager advises that when applying for startup accelerators, would-be entrepreneurs should consider signing up in well-known programs. He said that these will ensure better results that will be advantageous for the participants.

Unfortunately, well-known start-up accelerators usually have very low acceptance rates. With this, applicants can also try signing up in local versions of the accelerators provided that they have high quality program, mentors, and leaders.

Nager also noted the rise in the number of accelerators that offer specialized programs. There are those that focus solely on providing programs that help healthcare startups, civic startups, and startups that use a specific technology, among others.

The specialization may be advantageous for some startups. However, it must be noted that there are also things that one may miss if he or she decides not to sign up in one of the traditional accelerators that offer a wider range of coverage. Because of this, would-be applicants should know how to weigh the benefits before deciding to participate in specialized programs.

 Work on that Application

As stated, the chances of getting admitted into a well-known accelerator are very slim. Because of this, would-be entrepreneurs should toughen up their applications if they want to get the nod of the evaluators. 

One thing that they can do, Nager says, is to understand how the applications were evaluated by the accelerators. He also said that having a good team that will shine above the rest will boost the chances of getting selected.

Finally, he said that the applicants must do all their best to impress those who will decide on the applications. He suggests the use of human element, among others, to get the approval of the decision makers.

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.

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Funding Your Own Business

Say you are planning to have a business and, furthermore, you know the know-how to bring it into development.  The only thing you are losing is the cold money to get started.  What are your options?

Suppose you do not have a ready line of credit, an extensive bank administrator, rich family members or a significant store of retirement savings you are willing to risk, you are going to have to do some serious preparation and hard work.  Luckily, there are a number of sources of finance for the Business startup owner, at least one of which may be right for you.

SBA LOANS

Available only to U.S.-based businesses (but if you are outside the US you can look for something that has a similar program), the SBA (the U.S. Small Business Administration) has served a large number of business owners begin their own Business.  The SBA does not issue resources (money you do not have to pay back) or create financial loans straight, rather, it assures financial loans made by personal loan organizations thereby decreasing or removing the danger natural in new organizations and making loan organizations more willing to offer.

The main concern for the SBA is reimbursement ability from the income of the company as well as “good personality, control ability, security and owner’s equity”.  You will be expected to individually assure your mortgage.  This implies your personal belongings are at risk.

As for the types of organizations qualified for SBA financial loans, the SBA enforces the following criteria: the company must be “for-profit” (it only indicates that your company has a revenue reason, not that it has actually produced a revenue yet), ), be engaged in business in the United States, there must be “reasonable” owner equity (what’s reasonable will depend on the circumstances) and you are expected to use alternative financial resources first, including your own personal belongings.

The SBA also enforces restrictions on the use of loan proceeds. For example, although the proceeds can be used for most company requirements (the cases given by the SBA include “the purchase of real estate to house the company operations; development, remodelling or leasehold improvements; getting furniture, furnishings, equipment; buy of inventory; and operating capital”), you cannot use the loan proceeds for financing floor-plan needs, to pay current financial debt, to create expenses to the business owners or to pay past due taxes etc.

As a common concept, loans for working capital must be repaid within seven years and loans for fixed assets must be paid for by the end of the economic life of the assets (but not to exceed 25years).

ANGEL INVESTORS

Angel Investors are good spirits with a healthy sense of self-interest. Determining they can get a higher come back if they are ready to take a bit of a risk, they are also often effective business owners themselves and want to give other a hand up. Think of financing from angel investors as a link or gap-filler between being a start-up and preparing for venture capital.  The kinds of money we’re referring to here are between about$150,000 and $1.5million.  Beyond this point you are in low venture-capital area. The SBA reports that there are around 250,000 angels in the U.S., financing about 30,000 organizations a year.  So, how do you connect with one?  Not a easy task, unfortunately.  It comes down to networking.  Begin by speaking with professional and business associates – they will often know someone who knows someone etc..  However, we at funded.com can help you in this.

VENTURE CAPITAL

You’re in the big teams now.  Usually you are in the ballpark of millions (of money that is) rather than a thousand.  Venture Capital organizations look for their return on investment from capital appreciation rather than interest (unlike banks, for example).  They’re generally looking for a return of 500-1,000% on exit. It will not shock you to learn that vc’s are particularly hesitant of internet-based organizations right about now and not surprising.  It also provides them right.  But if you have a powerful Business Plan and powerful development potential, this could be an option for you longer term.

One of the common issues about this form of financing, however, is that you have a limited control over your business. Venture Capital usually wants to have control on your business, in return for their risk. A venture capitalist will have to seat as a board member, for example. Always remember, that it’s in the vc’s best passions for your company to be successful, so providing up some control in return for outside skills may well be something worth thinking about.

For this, your best bet would be to begin out by analyzing the various loan program provided via the SBA (or your local equivalent).  But do not ignore, close to home sources first.  If you have household resources at your convenience (for example) and you are assured that your business will be effective (and unless you’re assured about that, don’t get into financial debt with *anyone*, let alone household members), better to begin out slowly and convenience into outside sources of financing as your company (and, furthermore, your company’s cashflow) can support it.  After all, Uncle Jack is much more likely to know about the temporary income meltdown than Uncle Sam.

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.

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Business Plans Need to Incorporate Best Practices

In a sense, ‘best practices’ is a euphemism for business plans. Developing business plans is critical to success because it is focused on what makes a business successful. The term best practices is tossed about quite a bit, but what does it specifically mean for a business plan?

The business plan best practices means building a convincing case that your company is an excellent proposition that efficiently and effectively serves the market by providing products and services that the market will embrace. The primary way the business case is built is by differentiating the business in some manner. The business plan must leave no doubt as to why the company is selling particular items and how those items will appeal to the target market.

Forward Thinking

To determine the best practices for marketing, the competition must be thoroughly analyzed. The analysis is not just a case of listing competitors selling similar products or services. The competition must be assessed as to what it is doing now to succeed and how it plans on succeeding in the future. In other words, best practices are forward thinking, and the plan preparer does not get mired down by focusing only on the past. In addition, businesses that can easily become competitors need to be considered also.

A best practice in business plan development is to develop a thorough understanding of competitor specifics. Exactly what sets your competitors apart? Each company has something unique about its products, marketing strategies, management, customer service practices, or product and service delivery. You need to understand these differences in detail to position your company correctly.

It can be fatal to underestimate the competition as many businesses have learned. Even seasoned companies like RIM and Blockbuster found themselves struggling to survive because they failed to understand what the competition was offering the niche market. Your goal in the business plan is prove the competition is not addressing a problem you are able to solve, and then develop a strategic marketing plan to implement your particular solution.

Honesty Counts

In addition, best practices in business plans dictates establishing realistic financial goals. A new business will need to make a profit with a couple of years in most cases in order to remain viable. Projecting unreasonable sales or underestimating expenses will be detected by experienced angel investors, banks, venture capitalists and equity funders. There must be evidence or documentation that the business plan marketing and financial goals make sense based on industry performance. You can project sales and expenses for brand new products and services, but they still need to be based on market research.

There are many other best practices that include developing a flexible business plan and analyzing best case/worst case scenarios. Ultimately, the business plan is about honesty – honest descriptions, honest research, honest analysis and honest assumptions.

Browse www.funded.com for more advice about getting your business funded.

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Business Plans and Benchmarking

Benchmarking can be an important concept in business plans. Benchmarking comparisons can be used to compare your business goals to the domestic or foreign competition. The comparisons can show how your business idea is viable in comparison to other successful businesses. The benchmarking can make your business plan more credible and prove that you have identified the best practices for marketing products and services.

The benchmarking process has one ultimate goal which is to evaluate your current competitive position. It is a method for taking your focus on the internal business to the external environment. How does your business fit in the industry? Are you competing locally, nationally or internationally? How have other businesses achieved success, and what will you do the same or differently to achieve excellent performance? If performance gaps are apparent between your business and the competition, what are the plans to close the gap? How will you measure success?

There are different ways to perform benchmarking analysis. You can review the marketing strategies other companies have used to succeed, compare products or services, complete a functional analysis to identify where you are innovative, and so on. In reality, you can benchmark in any way that makes sense for your particular business in terms of market performance.  Business success requires serving a niche market more efficiently and innovatively than the competition. If you don’t understand how successful competitors have performed, then you have no comparative information for competitive assessment.

Benchmarking is an important step in business plans. Before starting the analysis, the first step is to identify the most logical type of benchmarking. From that point on, it’s a matter of research and then identifying the best practices that suit your business.

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.

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Spin Out with a Business Plan

Business plans are a bit like tornados. There is a core that is tightly woven and concentrated and from that core there are a number of spin-offs even as the tornado keeps moving. An effective business plan is always concentrated on the ultimate mission, in constant motion, and ready to spin-off whatever is needed for a long-term successful business.

The power of tornadoes has been witnessed by thousands of folks over the last couple of years. They can wreak incredible damage if anyone or anything in its path is not prepared. The business plan can be a powerful tool for business success but can also cause a lot of damage if it is never amended to take into account what blocks its path. For example, a new competitor enters the marketplace and your business fails to respond because it’s not in the business plan.

High quality business plans are never really completed because they need to keep moving with the market, the customers, the competitors and the economy. One of the reasons so many companies failed during the Great Recession was due to inertia. They insisted on doing business according to the business plan that was not updated to accommodate the new economic conditions. There are also thousands of business that have failed or are failing because they did not respond to changing consumer buyer habits.

Right now there is national big box company relying on showroom floors that is struggling to survive in a market where customers have changed from buying computers and equipment locally to buying online. If the company had stay tuned to the marketplace, and revisited and adapted its business plan, there is a good chance that management would have developed alternative selling strategies that improved its competitive position.

The business plan is the core plan and from it you need to spin out changes, market responses, new opportunities and so on. The core of the business plan does not change from its inception, but the details will change with the competitive environment. The business plan should not be like a tornado wreaking savage damage because it refuses to change course. The path should always be well-defined and obstacles removed through strategic planning.

Browse www.funded.com for more advice about getting your business funded.

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Polishing Business Plans

Developing business plans takes time, effort and patience. It is a plan for success, no matter how you define success. The business plan can be used to find funding for a start-up or expansion, or to guide an existing business. Some people think the business plan is only needed when searching for financing, but that is faulty thinking. The business plan forces business owners and managers to define goals and then make plans to meet them within a set of circumstances that include competition.

Following are some tips for refining your business plan. The business plan template is the best guide available to ensure that all elements are completed. These tips will simply add a bit of polish to the plan.

 

  1. Do the Executive Summary last and not first. The summary needs to concisely state the nature of your business. The best way to ensure the important information is included despite the brevity of the summary is to develop the plan details first. In that way, the Executive Summary is much easier to develop.
  2. Market strategies are more than just numbers and some statements defining the market. It should also define what makes your selling proposition different from that of your competitors.  What does your business bring to the marketplace that is different in terms of products or services, customer services, selling approach and so on? A polished business plan emphasizes uniqueness.
  3. In the competitive analysis, don’t simply describe the competition. You need to explain the distinct advantage your business has over the competition. Once again, the polished business plan makes differences and not sameness clear.
  4. In the operations plan, don’t forget to discuss the benefits that your business will bring to the community. This has become especially important in light of the current economic condition. Will your business opportunity create new jobs or support economic growth?

 

In the final analysis, polishing business plans means adding the information that turns a paper business into a real business for the readers.

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.

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When Opportunity Knocks, the Business Plan Can Answer

Business plans can be viewed in a lot of ways, but in some cases they represent a plan to answer an opportunity. A business opportunity is basically a packaged business that you can start but is not necessarily a franchise. Unlike a franchise, a packaged business is fully controlled by you, and the seller has no say in how you operate your business. Once the business sale is completed, the buyer is on his or her own. The business purchase includes buying equipment or specialized materials and then establishing whatever type of operations you want.

When a business opportunity comes along, it is important to thoroughly evaluate it, of course. There are unfortunately a lot of scam artists who promise big returns if you will only make the initial investment. A good example is a cabinet company that promised business owners enormous returns for redoing cabinet faces. An investment basically bought you a manual and a half day of training. That may be enough for some people, but for others it was a plan for failure. The company was taking advantage of people desperate to get a side business started.

Review From All Angles

The business plan template can be used to ensure you evaluate the business opportunity from every angle. Naturally, you want to ensure the business is legitimate, follows state laws and regulations, and can support its claims with a list of others who have bought the opportunity. If it passes the first review, then use the business plan template as a guide for further evaluation.

For example, in the market strategies section you would be guided towards doing research on the niche market the business opportunity would target, the type of strategies that would be most successful, and the competition. The template can help you make sure that you consider all the important business factors before investing.

Evaluating a business opportunity after it has been purchased is not a good idea. The evaluation needs to be thorough before the opportunity is purchased. The business plan template is the best guide you can use.

Browse www.funded.com for more advice about getting your business funded.

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Business Plans Begin With a Mission to Thrive

Business plans are meant to be adaptable plans for thriving, not just surviving, as a company. Yet, according to famed Harvard professor John Kotter, 70 percent of business initiatives meant to bring organizational change will fail. That is an impressive number because it means efforts to adapt to a changing marketplace are failing. There is a disconnect between the business plan founded on a mission and the real world.

The problem is often one of losing sight of the company mission and failing to plan. The mission statement represents the starting point for the direction of the business plan and captures the essence of business purpose. It has a philosophy underlying it that does not change. Philosophies are encompassing, so the mission statement is a reflection of the nature of products or services sold, potential for growth, pricing strategy, customer service, role in the community, competition and much more.

On a Mission to Fulfill a Mission

The business plan needs to be developed so that each and every section drives the business towards fulfillment of the mission. A change initiative is merely a strategy for keeping the business on track to fulfill the mission. Leading change requires first turning to the mission statement and the business plan. A business that needs to change must be able to communicate a sense of urgency throughout the organization because staying true to the mission statement is necessary to thrive. If a change initiative is needed, it means the business has gotten off course from its mission and its vision.

The business plan goals and strategies may need to be revised, but that should always be a step in the change process. In fact, business plans can serve as the guide for change as each section, from the Executive Summary to the Financial Statements, are reviewed in light of the need for change. Leadership will identify specific strategies for incorporating change and then communicate the revisions on an organization-wide basis. The change process must be empowering and encompassing, meaning employees at all levels should be embraced as change agents.

Business plans begin with a mission statement and then serve as a living breathing document. Leading organizational change is not always easy, but it can be impossible unless there is buy-in to the mission and the business plan. The strategies used to get that buy-in can vary, but staying on message cannot.

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.

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Planning for Change in Business Plans

Business plans are not etched in stone; yet that is exactly how some businesses treat them. The business plans are written and then put into a proverbial drawer where they never see the light of day. One day the plan is dusted off, updated for the Board of Directors, and then put back into the drawer. This does not make sense after so much time and effort has been put into developing a plan that is supposed to establish a clear path to success.

Viable businesses never stand still. They are movers and shakers as they interact with customers, develop new products and services, and adapt to good and poor economies. When major changes happen that affect your business, it is like a time warp because everything changes from that point forward. Change is always imminent today and largely because of technology. Businesses can enter the marketplace faster and roll out a marketing program quickly on the internet.

The business plan can quickly become an anachronism if it does not plan for change. This doesn’t mean doing multiple business plans addressing all the what-if scenarios. However, change should be built in to the business plan process. First you develop a business plan based on the most sensible goals using current knowledge and expectations for the future. You can include a decision tree analysis section, if desired. However, you plan to change by simply doing an honest and regular review of the developed business plan.

It is important to have the same groups involved in the original plan development also participate in review sessions. The business plan may need to be revised, but you have identified where and how which is good strategic management.

The real issue is whether management can develop the discipline needed to make sure the business plan is regularly reviewed. Developing business plans should not merely be an academic exercise. It needs to be an important management function.

Browse www.funded.com for more advice about getting your business funded.