Adding to the Conversation?

Several people have asked me about blogging – what’s the point – what should I say – do I need one – and of course how can I start one?   So I thought I would offer some reasons for blogging, what they might contain and how to get started.

Why Blog?

This really depends on you… maybe you can use it as a way to communicate with friends and family or as a creative outlet for your talents. Perhaps you have extreme knowledge of a particular subject and can offer some insights to others. You may want to start a blog to enhance your business by letting the world know what your business is and what you are doing or to draw in customers.  If you like to write then blogging is for you. 

Starting a Blog

Getting started couldn’t be easier – within a few minutes you can set up a theme for your blog and start writing.  eBlogger and the increasingly popular Wordpress will lead you through this free and easy process.  Sure you can pay for extras but the basics are free.

And then…

Another question I am often asked is – can I make money doing it?  The answer is a resounding yes…

Get that blog started and in the next few weeks I let you know how to start earning some pennies that might grow into a bundle of cash.

Moving In On The Market - Claiming Your Space!

The competitive analysis is number five on our business plan table of contents. Most companies fail to adequately investigate and analyze the competition.  Failure to fully investigate the competition can be the single reason a company fails to thrive.  Proper analysis provides the framework from which to build and formulate your strategic plan and to settle your place or position in the market.

In order to know your competitors you must first identify them. You need to understand what they offer and how this may speak to your target market. Perhaps the easiest way to get a global look at the competition is to rate them according to some key metrics.  For example – you might look at reach or distribution, customer focus, cost and access.  You should rate your own company against the competition (or how you expect your company to rate.)  The more metrics you use the better your overall understanding of  the competition will be.  A thorough review may provide clues to possible future “potholes” that you can plan to avoid or exploit.  At the end of the exercise you will have a competitor profile from which to plan your market strategy.  A good or comprehensive profile will show the strengths and weaknesses of competing companies - when compared to your knowledge of what your customer needs/wants – it can offer you the competitive edge.

Your profile of each competitor should consider at the very least: location, background, financial health, product, market, brand, strategy and key personnel strength and style.   You may also want to check the competition’s media buy, this will give you their target market and also help strategize your own media plans. Finally, providing a thorough analysis in your business plan will show possible investors that you are thorough and know your competition.

Without a competitive analysis – it’s just a roll of the dice....

Get to Know Your Customers and Keep an Eye on PESTS!

Part IV of our business plan looks at customer analysis and market targeting.  Knowing your customer is one of the most important functions of marketing. Only through a complete understanding the customer can you begin to offer services to meet their needs or conversely – know if your product is “buyable” to your target population. A customer analysis, is essentially a study centered on the “buyer” and an integral part of any business plan.

Perhaps the first question to ask is “what is the total market size for the product?” Where, and the details of “who” - are the next critical questions.  Where is the market location, and what are the preferences and socioeconomic status of the target customer are critical to know.  If the sale of your product is already underway – an analysis of who has purchased the product and where/how will help to focus in on your target population.  Have you received any feedback on how the product might be improved? It is necessary for you to correctly understand your customers in order to create and develop a profile for targeting purposes. This is important if you are seeking investors since they usually ask for a complete profile of your niche target customers.

Businesses usually target many consumer categories or segments, and each consumer segment should be well developed.  You will need to know who the decision makers are – are they your direct target? or will they confer with others before making a purchase.   The decision processes - before, during and after purchase -should be included in the customer analysis.

The Target

The best companies manage to meet customer needs over a long period of time.  Revenues and profits result from one thing – finding customers who are willing to pay for products or services that they need or meet their needs.  Understanding the target customer is therefore, critical. Knowing and meeting your customer needs will help grow a long-term relationship that can endure and create a long standing loyalty.

Don’t Forget the Pests!

Businesses sometimes forget to look at the big picture (macroenvironmental factors.)

• Political Factors - Include government regulations and legal issue. For example: Tax policies; employment laws; trade restrictions or tariffs.
• Economic Factors – These impact the buying power of your customers. For example: interest/exchange/inflation rates.
• Social Factors – These factors impact the size of current and potential markets. For example: health awareness, population growth, career emphasis, safety emphasis.
• Technological Factors – These factors can reduce or remove barriers to access or increase productivity.  Some examples are: rate of technological change; research and development climate; automation.

All the above factors need to be presented in your business plan to some degree in order to show that the company is knowledgeable of its markets and is viable for possible investors.

3 Simple & Compelling Reasons to Form A Corporation

I was discussing the fun task of doing my 2010 taxes with some friends recently when the subject turned to “business ownership.”  I was surprised to find the number of friends that were working as consultants or freelancers but had not “incorporated.”  Since I have recently been working with a company that forms corporations on-line (making the chore very simple), I was asked why anyone would want to spend the money to incorporate.  I immediately thought the opposite – why on earth would anyone risk their personal assets for the sake of spending a couple of hundred dollars on the protection and flexibility that incorporation brings.  Incorporation offers separation between the business and its owners which is known as the “corporate veil” with that in mind here are my top 3 reasons to incorporate…

Limited Liability

No matter what state you live in, there are provisions in law that offer the incorporated protection of personal assets.  Should your company get into trouble, have a “sue happy” client or get into debt, thanks to the “corporate veil” you have some protection for your personal assets and generally, they cannot be taken to satisfy corporate obligations.

Corporations are responsible for their own acts and debts – they can enter into contracts, own property, sue and be sued. A properly established corporation – operated separately and honestly offers the individual or sole proprietor personal asset protection.  Without this protection your current and future assets are ripe for the picking. 

Tax Flexibility

Tax pass through entities such as Corps and LLC’s typically have a fiscal year the same as the personal tax year. C-Corps can set their own their own tax year dates.  Financial management can make great use of this flexibility and can offer great tax savings.  Tax requirements change every year with additions and repeals – however the greater flexibility allows for better money management and most commonly lower taxes.  IRS stats tell us that individuals deducting business expenses on their personal tax returns are the highest audited group. Corps earning less than $2 million a year is the lowest audited group. Naturally you should consult a tax advisor to find out what is best for you.

Credibility

Whether you are freelancing or selling widgets, you gain instant credibility with a well named business. It separates the professional from the hobbyist.  Operating your business as a company is more attractive to creditors, investors, banks and prospective customers.  Referrals and recommendations are more “sticky” if you have a company. 

For me, an LLC was the best choice because it requires the least amount of “corporate chores.”  There is no need to hold regular meetings of shareholders or board of directors – so less paperwork!  With an LLC I can put shares into a living trust and I can deduct operating losses (to a certain extent) against my regular income.  Should I decide in the future that I want to offer employee benefits; as an LLC, I can elect to be treated as an S or C- corporation for tax purposes.

Know your COMPANY, your COMPETITION and your CUSTOMERS….

Make sure that you are armed with the right information before starting this section:

• Know your COMPANY – conduct a SWOT analysis – know your strengths and weaknesses!
• Know your COMPETITION – gather info on the successes and failures of others – you can learn from their mistakes increasing the odds of success!
• Know your CUSTOMERS – who they are and what they want is critical information – a mistake here is “make it - or break it.”

The Industry Analysis is where you explain your position in the market. Always use topnotch references to support your position - this will add trust and weight to your analysis.  Highlight the areas you want to emphasize with a graph or chart that is visually striking.

The items listed below naturally lead one to the other, they don’t need to be itemized, however, it is often helpful for the reader to know that you have provided a thorough analysis. You can combine overview and trends or market size and your position or any combination that works to provide interesting reading. Remember this doesn’t need to be a book we want the whole thing to be about 5 pages plus chart/graphs.

I have provided some very simple examples to help with writers block….

What a Brilliant Idea!!!

In the next section of our business plan (Part II) we cover the company overview.  This part really needs some loving care – if the reader gets past here - we are well on our way!!  A fail here will put your business plan in the trash – especially if you are looking for funding.  This part needs to convey what sold you on the business in the first place! 

II. Company Overview

          Company Profile

          Company Vision/Mission Statement

          Past Accomplishments

This is the place to set out the basics of your company and discuss your vision and overall goals.  This section tells the reader who you are, what you are currently doing and where you plan to be in the future.  The main reason your company exists (besides making money) is to provide a service or product to the marketplace that will either meet a need/desire, fill/enhance a niche or solve a problem – or perhaps all three.

The company Profile should be two or three paragraphs at most with a basic history of the company and the core message of what the company does. You should include the basic structure of the company and its core competencies. If someone reads these paragraphs they will know who you are.

Next in line is the Vision/Mission statement.  The mission explains the guiding theme of your company -what you do – I provide X to Y in support of Z.  The vision reaches into the future explaining what the outcome might be. You can mention the goals/milestones/objectives you have or “see” for the company in the future.

Now we have Past Accomplishments this is where you get to tell the story of the company. If you already have notable accomplishments they belong here – we want to leave this section upbeat with either accomplishments or highlights that demonstrate the successful side of the business.

In the next section we get a little deep into Industry Analysis.  Don’t worry – it is easy if you take it step by step! We would love to hear from you – please feel free to leave a comment or send us an e-mail – it will help us improve the information we offer.  We won’t ever try to sell you anything – promise!

Executive Summary First or Last?

The first item on our table of contents (TOC) is the Executive Summary (ES.) The ES is a summary of your business plan and although it is first on the list - most people leave this until last because while working through the other elements of the business plan - you can see your most important aspects appear. Since this is the opening of your plan you need to be sure that you have included all the important elements. IMO this should be left until last because you need to get this right and interesting enough to ensure that the rest of the plan is not dismissed – especially if you are using it to ask for funds.

So what should the ES include? The usual suspects are included such as your business name, location, and product – then you should include the purpose of the plan. You might want to have a couple of standard ES – depending on the purpose. Of course you need to include items such as forecast sales and profits (generally for 3 years) and an explanation as to how you arrived at these. It is important to speak plainly, a bank or lender will be used to seeing fluff and unreal expectations and are less likely to put money up for unsubstantiated ideas.

As I said depending on the purpose your ES might look different. So what different purposes might those be? Here we get into the plethora of plans that you might need such as a strategic plan, an operations plan, an annual plan or a plan that seeks funding. Each ES should say what the intention of the plan is – if you are looking for money say so, and what you will give in return. Don’t forget to explain your niche or why you have the competitive edge. Stay focused – the ES doesn’t need to be a book ! Todays ES is concise and should be about one page in length. This may sound quick and easy but as Mark Twain once said “I have made this letter longer than usual, only because I have not had time to make it shorter.” So keep it short and sweet – remember you want them to read the whole plan – this is just the introduction. Like the trailer to a movie!

Tomorrow we will look at the basics of part II of our TOC – the Company Overview (Mission etc.) Also take a few moments and see what you can find on the web – think of some successful (of course!) companies and check out their business plans. OK we are on our way! Like I said earlier -you can do this! –no investment except a little time is required – what is the point of buying business plan software? That’s not to say that a good consultant is not worth their weight in gold – shameless plug! Until tomorrow….