Businessplan Tips
When it comes to Businessplan, we've been there, done that, now serving 12 tips in 4 categories ranging from Finance to Writing.
Regulations And The Business Plan
Organizations today are subject to an increasing number of regulations that entail compliance. From Sarbanes-Oxley to the Health Insurance Portability Accountability Act (HIPAA), companies are required to adhere to a multitude of standards and regulations. In addition to various national and international regulations, there are many more rules that stem either from regional or local governments or industry oversight committees. The end result is that new and tenured businesses must juggle multiple sets of regulations on local and international levels while maintaining industry-specific regulations. This means that your business proposal must show that the business has done the research, knows the regulations, and how to follow them. Failure to follow regulations can result in fines. A simple one or two paragraph addition to your business plan that examplifies how you will meet regulatory standards can go a long way in establishing that your business is greater than a fly-by-night operation. Show that you have done your research.
SWOT Analysis
Some business plans will require a SWOT analysis. This is especially true when you are showing a business proposal to investors. The SWOT analysis is simple: Strengths, Weaknesses, Opportunities and Threats. The single most important tip in a SWOT construction is that you must be honest and remove assumptions. Assumptions will only confuse your investors.
Strengths are the foundation of your business. These are the things that you can do better than any other business in the same industry. Ask yourself why customers choose (or should choose) your business. This is your strength.
Weaknesses are the cracks in the foundation of your business. These are the recognizable components that limit your organization's ability to compete. Ask yourself what is internally preventing the business from growing, or what is constricting the business. Weaknesses are generally internal, common weaknesses include financial debt vs. equity, high employee turn over, and lack of supply chain capability.
Opportunities are possibilities your business can build upon. These are the events that can create profit growth. Ask yourself what competitors in the industry are doing, and how they are doing it. Then ask yourself how you can do it better. This is your opportunity.
Threats are the predicaments that close the doors on your business. Common threats include major competitors, lack of supply, and extreme conditions. Ask yourself what is externally preventing your business from growing. These are your threats. Common threats include industry competition, product substitution and new technology that outdates your current technology.
If your business plan does not require a SWOT analysis, it is still a good idea to have these in mind. Constantly evaluating SWOT will keep you ready for increasing strengths and opportunities or decreasing weaknesses and threats.
For further information regarding SWOT:
http://www.mindtools.com/pages/article/newTMC_05.htm
http://en.wikipedia.org/wiki/SWOT_analysis
http://erc.msh.org/quality/ittools/itswot.cfm
When Do I Need To Write A Business Plan?
There are many successful businesses that do not have a business plan. You will need a business plan if you are planning on getting bank or government loans and grants. You will need a business plan if you are seeking venture capitalists and investors. You will especially need a business plan if you are applying for a SBA loan (www.sba.gov)--it is a requirement for this type of loan.
Quick Tip--Consumer Demographics
When creating a business plan, one of the components of your plan should be a demographic study. Demographic studies are comprised of information about your potential consumers. A well thought out study can help a business of any size understand who their market is and how to pitch their products to them.
Composition of study
There are several items that are important to include in a demographic study to ensure a business is reaching their audience. Some of these items include:
Age group of consumer - when you are targeting teenagers, you should be looking at age groups between 13-18. When targeting seniors the age group would be 60-over
Spending capacity - disposable income figures are typically available by using information available on census websites
Specific consumer - when marketing oftentimes products are more suitable for men than women or vice versa
Creating a strong demographic profile for your business can help you ensure you can reach your target market. Businesses who take the time to create a good demographic study can typically tailor their marketing more effectively in order to reach the audience they wish to market their products for.
Census Bureau data can be retrieved from the US Census Bureau at http://www.census.gov/econ/geography.html
What's All This Risk Stuff? And Do I NEED It?
Business planning needs include risk and risk management in: cost management, scheduling, equity and debt.
That's all well and good, but how do you KNOW what your risks are? Well the short of it is, you don't KNOW what all the possible risks are. You plan for production failure, and sure enough you will have a transportation of goods issue.
To understand how to overcome risks, know your resources. Since all risk can not be planned for, it is important to include who to contact in certain project risks. Know your investors, bank lenders, SBA (small business administration) contacts, local businesses, and professional associations. Keeping these numbers at hand can help you in the event of a calamity.
Good, verifiable resources for risk management include:
Books by Harold Kerzner (most of which are on Amazon.com)
The Risk Management Association http://www.rmahq.org/RMA/
The Project Management Institute http://www.pmi.org/info/default.asp
Pay or Do It Yourself Business Planning.
Tailored business plans can cost a few hundred dollars or thousands of dollars, but that does not mean that you HAVE to purchase a tailored business plan.
You may want to purchase a tailored business plan if you have done the recommended Web research and are still not sure how to proceed. You may want to purchase a business plan consultant if you are looking at high up front capital (this is found especially in manufacturing and financing industries).
You may NOT want to purchase a tailored business plan if you are developing a service industry, or a small business that does not require a massive up front investment.
The decision to choose a writer or consultant for your business plan should be based on the following questions:
Do you have the TIME to write a business plan?
Do you have the ABILITY to write a business plan?
Do you lack the MONEY to pay for a business plan?
If you answered yes to any of the above, do not hire a consultant. Instead, search for simple, easy to navigate templates and outlines that will assist you. If you find that the business plan is taking too much of your time, energy, and ability, then look into hiring a consultant. Many will be happy to simply edit your business plan at a reduced price.
There is a plethora of business plan outlines and templates that are free and located on the Internet. A simple search in any search engine will bring you literally hundreds of thousands of consultants, templates, outlines, and so forth.
The Small Business Administration has several guides to writing the business plan at http://www.sba.gov/index.html
The Center For Business Planning has several business plan templates I have enjoyed using
http://www.businessplans.org/
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