What Makes a Good Business Plan?

Over the years I have read and critiqued many business plans produced by students in my Entrepreneur classes.  Few are great, others are not so great.  So, what is the difference in the great ones that make them stand out?  What are the elements they should contain? 

The answers to these questions encompass, among other things, what the business is, the products or services that you want to develop, how the operation works, what you are up against in the way of the competition, what consumer need you are fulfilling, and lastly, what is your experience in this business?  Of course, you will begin with a concept, but a business plan is not just for concepts.  There are goals that must be presented with solid, reasonable tactics and strategies that will result in a good business.

The development of these tactics and strategies are in the marketing plan, the crux of your business plan. Following the tools of marketing, the 4Ps of Product, Price, Placement and Promotion, is the key.  To do this you must do market research to vet or validate your business concept.

Many students fail to do significant market research.  Learning all about the consumer and his psychological makeup will help you design a product or service that will appeal to him. Comparing your product to the competition in the way of price, quality and costs to manufacture are important factors to work on. Differentiating your product from the competition to attract buyers is important. Looking at consumer buying trends, new innovative products and, of course, the technology that will reduce costs to manufacture and distribute products must be considered and studied.  Knowing these and incorporating them in your planning will help you stay ahead of the competition.

Communication with prospective consumers is so vital to convey what you have to offer and to attract and motivate them to buy.  Advertising and promotion — by utilizing social media, ads in newspapers, television, local ad placement — are ways to keep your name in front of the consumer.

Financial projections are another important part of a business plan. They reflect how you are going to make money.  You will consider your costs and expenses and determine the number of units that will be sold and at what price.  This is where competitive analysis comes into play.  How much are your competitors charging for similar products or services?  How much are they selling?   Is there demand for your product?   Do you believe you will be able to take a share of their market away from them in order to have a successful business? Starting in the first year, how much will you project to sell, then determine for the second year how much of an increase or growth from the first year is reasonable, and so on. You must consider seasonality, cyclicality and economic conditions, and adjust the projections for these. The answers to these questions are daunting and difficult to achieve without research. 

The writing style the plan contains is concise and accurate information geared toward your audience of potential investors and bankers.  Including charts, graphs, and pictures of the product make appealing reading and can show at a glance the data and points being made.  Show your completed draft to some friends who do not know your business to determine whether they understand it and address any ambiguities.

The key to a good business plan is market research. The more research you do, the better your planning will be.  For a start-up business, the projections will help to determine whether you have enough money to start the business and stay in business.

Small Business: Risky Business

By Marguerite Moore

As small business owners we probably have a few clients who give us enough business to make us complacent.  However, what happens if we lose one or two of them?

Many small businesses have only a handful of customers or clients at a time.  If they work by themselves, they cannot take on additional work.  But some may say that It is less complicated to have a few clients, but it makes a business more vulnerable.

What are small business owners to do when a client leaves and revenues dip?  Don’t wait for this to occur.  Keep your name out there by networking, creating a blog, using social media and attending conferences all with the thought of not only learning something new, but also meeting new people and exchanging business cards.  So, if a downturn occurs you have met people who may hire you if you connect with them again.  If the client is a large corporation with several divisions, there may be an opportunity to do some prospecting in other parts of the company.

Keeping up to date regarding both negative and positive developments with your clients is key.  For example, when Toys R Us and Sears announced that they were closing some of their stores, it didn’t come as a surprise to vendors.  They had time to act to make new connections.

Here are a few good practices to keep in mind:

  • If a client is happy with your work, ask him for referrals to grow your business.
  • Never have a client who provides more than 10% of your sales. That would mean having more than 10 clients in your roster. Those clients should be diverse, that is, being from different industries, so that not all of them would be affected by a downturn at the same time. Try to make efforts to solicit more business from the contacts you have made.
  • Get out there and network at least once a week. Meet people who could be potential clients.  See what the trends are that potential clients are looking for and address them with your skills. There are many meetings taking place on a weekly basis.  To find them look at a local/regional or industry newspaper.
  • Keep your name out there by writing a blog on your industry containing information which could be helpful to potential clients.
  • Make a presentation to an industry group.

Time to Sell Your Business?

Business owners will be confronted with the decision whether to sell their businesses. True, it is a very emotional decision to make.  You conceptualized the business from the very start, built it, endured trials and tribulations,and now the thought is blooming whether to hang it all up.

Just as there are many businesses, there are as many reasons to have thoughts of selling. Here are some of them:

  1. Financing may not be available for capital investments, or too expensive to undertake.
  2. The industry is turning down and you want to sell while strategic buyers are still willing to buy.
  3. Conversely, the industry may have seen some events which have driven sales prices high and you want to take advantage of this “window of opportunity”.
  4. You want to retire and reap rewards of your hard work, and  you didn’t plan for  a successor.

If you decide to sell, you should think about how to get your business spruced up for sale. You need think along the lines of asset values,  product lines, customer list, sales force, distribution channels, and employees.

One of the first things to consider is the items on your balance sheet. What is the investment you made in equipment.  What is the state of your equipment; is it technologically advanced or is to ready for the junk heap? How much is it worth?  What is the value of your intellectual property? Do you own any patents and/or trademarks?  Would you be selling them or keeping them for their royalties?

A potential problem area is that of inventory.  What is its value: is it overvalued or undervalued?  Is there any obsolete inventory or failure to properly count inventory? What is the return rate on your inventory,and why was it returned?

Are the liabilities recorded properly, are there any missing?  Are the accounts up to date?

Are the receivables collected on time and recorded properly?  Are there sufficient reserves for doubtful accounts, sales returns and allowances?

The Customer List is a valuable asset.  Many companies would love to obtain a good customer list to increase their own businesses.  What is the concentration of your customers?  Do you have a few large customers with frequent orders?  Where are they located? What is your distribution channel like, distributors, dealers or direct to consumers?

What are your key competitors’ market share?  Are they growing, or declining?  What is the impact of foreign competition?

With regard to your products, who are your suppliers?  Do you manufacture yourself or outsource all or some of your production?  Does your production process require skilled labor?  What are the production costs?  Are you sales increasing or decreasing?  Can you supply three years of projections, including trends and seasonal or cyclical fluctuations?

Any potential buyer will want to look at your financials.  Three years of up to date historical numbers is the norm.  Depending upon the sale date, you may have to obtain interim financial statements.   All of the financials will have to be audited.

So you see, the decision to sell should not be taken lightly.  There is a lot to do to get your business in shape and attractive to a potential buyer.  So, take this advice.  Keep your records and agreements in order, and keep your books up to date.  Run a business in good order, and your business will be attractive to any suitor.







A New Way to Market

Have you ever gone into a store whether it is an electronics store, supermarket, or fashion department store and found on product labels this curious square with the words “scan me” for additional information?  That little square whether it is in black and white or in color is a QR Code (quick response).  You can upload this information into your mobile phone by scanning it for contact information or for product information.

QR Code

What do you do with this QR Code?  You can add it to your business card, put it on tag labels on garments and on packages all with the aim of driving traffic to a sales campaign or website to providing consumers with more information on a product or service.

But before you go ahead and have one designed for you, and you start adding it  to everything that represents you and your business, you should have a strategy in mind. Scanbuy, which processes 20% of all the QR Codes scanned globally, saw an increase in average scans per person from four scans in 2014 to 4.6 scans in 2015.  The industries which consumers are scanning QR Codes are food and beverage, consumer electronics, media, entertainment, wireless and home improvement.

But there is something for us to remember, not all consumers will be using these codes.  We have to determine that our target market will or has used QR Codes, and determine what motivates them.  How can these codes help me to grow my marketing strategy?  Will they pique curiosity enough to initiate the act of purchasing?  These codes can actually link to another page or document, so think what you want them to link to, a resume, a newspaper article or customer recommendations.

The target audience that uses these codes the most are the Millennium generation, those people who are 18 to 35 who use social networking.  But that doesn’t mean that this is the only target, older, savvy folks may use it as well, but they are slower to adopt them.

These codes are another way to have potential customers recognize your name.  So, give it a try and see what happens.