Writing Your Business Plan part 2

A study came out recently from the University of Maryland that said a business plan has no value when trying to get funding for your startup. You can read a press release on the topic here http://www.rhsmith.umd.edu/news/releases/2009/040809.aspx .

I am obviously not going to disagree with this study since I do not have evidence that says otherwise, however I will say that I still think you should create some kind of business plan. Even if you just created an abbreviated one. The business plan will still help direct your company so you always have something to go back to when you start to stray away from your original plan. I also believe that a business plan will make you fully think out all pieces of your business before you jump into the whole thing. So while it may not help you secure funding, I believe it will help make your business more successful in the long run.

In the last business plan post I ended with a section talking about your business. The next section should talk about the market you are going to be entering. What markets are you competing in and what other markets may sell your product or service? Get number on your market such as how much the market has grown, the revenue numbers,  and how many other companies are in the space. Next talk about your market segment and target customers. How much do they make, what is their lifestyle and how is this different then what is out already out there. You should also write out your marketing plan and include pricing, position, distribution channels, advertising and promotion.

You need to write a section on your competitors as well. Who are your key competitors based on product or service, price, location, promotion, and financial position. Talk about who you are competing with directly and indirectly. It’s good to cover all of your bases and do some thorough research so that you are not blindsided half way into launching your business. Before you can position yourself correctly you need to know as much about your competitors and the market as possible.

While you may think it will hurt your funding opportunities, it may look suspicious if you do not include a risk and opportunity section. By putting the risks in your business plan it makes you acknowledge them and it also shows others that you know the risks that are out there. There are always going to be risks, every one understands that, by putting them in your plan it shows that you are going to be prepared for these risks. Always include in your risk section your strategy for over coming them. Everyone wants to write about the opportunities. It shows why the business has potential to be successful. This can help to explain why you should get the funding you are seeking.

There are a few more things that should be in a business plan that I will write about in one more post. If you have any tips on what else should be included please let me know!

Support System

My blog posts have not been very consistent recently because I have been helping my mom with her busy season. My mom has a small business called Meadowview that she started on her own 25 years ago. It is a tree farm and brokering business that sells wholesale seedlings and transplants that are mainly used for conservation and reforestation projects. While most of the year her job is pretty easy, requiring her to work only a few hours a week, in March and April she has to work 6 or more weeks straight without any breaks. Most work days are 12 or more hours long. The only way she can get through this period is by having a support system. I do not go up every year and help her out, although I do when I can, but every season since I was a kid I have found ways to support her. When I was younger I would take food and drinks out to her and her workers so they could take a quick break. I am always around for those quick phone calls when she has a minute to tell me either how great or how bad the day went. I also make sure I do not get offended if she cannot make the time for me. Whatever it is she needs I make sure I am there to give it to her, because I know how stressful of a time this is for her every year. Her whole business depends on these 6 weeks. I am not the only one. She has other family and friends that support her through this time every year.

While your business may not have a specific busy season, there are always going to be times when you need that support system around you. It could be a mentor, family or friends. Starting or running a company on your own does not really mean you can do it alone, even if you are the only employee.  There are going to be some tough moments and long hours, and the easiest way to get through them is to have someone by your side. It does not hurt to have some people that will work as your emergency employees in a pinch or during a really busy time, but sometimes this just isn’t possible. It is also good to have people that you can bounce ideas off of. I know there are times when my ideas sound amazing in my head, but when said out loud people find flaws or have suggestions on how to make it better.

I am writing this because while it may seem obvious to some I feel that others do not understand what they are getting into with a new company. Do not try to do it alone. It will make it that much harder to get through the tough times and make it a success.

Reading: Groundswell

I should say read “Groundswell: Winning in a World Transformed by Social Technologies”.  This book was written based on research done by Forrester. I think the number one take away I had from this book was, your company does not need to be involved in every form of social media to be effective.  One new startup that I was working with was looking at ways to incorporate every form of social media into their site and “product” offerings. This was an overwhelming task, as some forms of social media just did not seem to make sense for what we offered or for what our customers would be using. Yet we were trying to stretch what our company was doing just to make it fit into a social media so that we were not leaving a single stone unturned. You would think it would have become obvious to switch our plans and only use what worked for us, however that thought never crossed our minds.

In the book it is explained early on that you need to understand your customer base and the kind of social media users they are before you create a social media plan. Some people like to create social media, others like to critique and some just like to read what is out there. Knowing the type of people you attract and what their participation level is can guide you to the types of social media that you should implement to reach your audience or enhance your product or service.

My favorite part about reading is discovering things that you feel you should have always known, but never thought of yourself. Even if you are a new company I would recommend reading “Groundswell” as it will help you develop a better sense of your company, who it is serving as far as their social media profiles, and it will allow you to start utilizing social media and its benefits on day one. This book also teaches you how to understand and use the groundswell to your advantage before the groundswell takes over your company. Great information to have from the moment your company is launched. I highly recommend reading this book to understand the current state of social media.

Register your business

I am writing about this because as many people in business have probably found out before you need to properly establish your business and your licensees prior to starting your company to avoid any penalties when tax time comes. I will provide some general links about taxes for small businesses and startups, but how, where and when you register is up to the state you live in and sometimes even the county you live in. If you earn money previous to getting the proper license and registration there are penalties that are generaly around 10% of your earnings. I realize this may seem basic, but I think it is something that people often do not understand or overlook. The biggest piece of advice I can give is get an accountant asap. It is going to be worth your money!

Here are some resources that I hope you find helpful:
Small Business Tax tips

http://www.irs.gov/businesses/small/

http://sbinformation.about.com/od/taxes/Small_Business_Tax.htm

http://www.entrepreneur.com/tax/index.html

Filing by state
DBA State List- http://www.business.gov/register/business-name/dba.html

PA- http://www.paopen4business.state.pa.us/paofb/site/default.asp

NJ- http://www.state.nj.us/treasury/revenue/gettingregistered.htm

VA- http://www.virginia.gov/cmsportal3/business_4096/starting_a_business_4100/establishing_or_registering_your_business.html

ND- http://www.nd.gov/businessreg/register/index.html

CT- http://www.ct.gov/DRS/cwp/view.asp?a=1509&q=266240

AK- http://www.dced.state.ak.us/occ/register.html

MA- http://www.mass.gov/?pageID=dorsubtopic&L=4&L0=Home&L1=Businesses&L2=Help+%26+Resources&L3=Starting+%26+Registering+a+Business&sid=Ador

WI- http://commerce.wi.gov/MT/BD-Registration.html

GA- https://services.georgia.gov/dor/olbr/TaxRegistrationGateway

IL- http://business.illinois.gov/registration_tax.cfm

NE- http://www.revenue.state.ne.us/business/bus_regist.html

VT- http://www.state.vt.us/tax/businessstarting.shtml

NY- http://www.dos.state.ny.us/corp/corpwww.html

CA- http://www.calbusiness.ca.gov/cedpeybsb.asp

TX- http://www.business.gov/states/texas/start.html

NC- http://www.nccommerce.com/en/BusinessServices/StartYourBusiness/

SC- http://www.scsos.com/

VT- http://www.sec.state.vt.us/corps/

WA- http://www.secstate.wa.gov/corps/

Writing a business plan part 1

A business plan is not always a necessary step in starting a business. When seeking funding it is often required but if you are self-funding your company then you don’t really need to write one. I would however advise that you still create a document that lays out your company’s purpose, value, competitive advantage and your exit. This will give you guidelines to always work by so that you do not get off track at any point in time. Having an exit plan in mind when you first start your company is very important so that you have something you are working towards.

If you are writing a business plan the beginning of it will be your executive summary, but this is the last thing you should write as it just summarizes each section of the plan. The first thing you should write is your mission statement. In that you should include a brief paragraph about what you are going to do to achieve your mission.

The next section should talk about your company. Items that should be included in this section include the date it was founded, the legal form of your company, and where is it located, including the facilities you have. In the section you should also write about the strategic alliances you have and how they are going to help you.

The following section should be about your business. Start with a small paragraph that describes what your business is and does. Then follow up with an explanation of the product or service, what need it fills and the value that you add to the product or service. The next part of this section should go on to explain the unique or proprietary aspects of the product or service. This is very important to investors as they want to know what your product can do that others cannot to make it a success.  Make sure you translate your unique features into an explanation of how it give you a competitive advantage. If you have done any R&D you should explain what you have done and how it has affected your product or service. Then briefly talk about any new or follow on products that you see as a result of the R&D, or just ones that you know you would like to add in the future. Following that you should describe the production of the product or how your service is going to be delivered. This section about your business is the backbone for everything else. If your product is not unique or does not have a competitive advantage you may want to reconsidering spending time on it. Spend time on this section and make sure you have done your research on exactly what your business will be and how it will be successful.

I will write about the next couple of sections in another post.

Self-Promote your Company

The number of options an entrepreneur has to promote their company can sometimes be overwhelming, and in a time when technology reins king people often forget about in person meetings to promote their product. No one cares as much about your business as you do, so as much as it might pain you to go out and promote yourself in front of people it is a necessary part of the process. An in person meeting is the one way you can guarantee that someone will listen to you, as oppose to putting your business online or in print and hoping someone will find you.

The number of opportunities to network and promote your business are growing every day. As the economy gets worse more and more people are turning to networking events to gain contacts. This is good news because it means more events are taking place and more people will be at them for you to talk to. There are two ways to go about spreading the word about your company at these events. One is through sponsorship, the other is through just attending and shaking hands. Both options are generally very affordable, even on a startup’s budget. Sponsorship can be nice because you generally get an area where you can set up a display and people come to you specifically to talk about your business. However, just attending the event also has its upside in that you may talk to people who would otherwise not come up to your booth.

When you are attending a networking event, do not expect to walk out of there with sales in hand. The events are just opportunities to meet new people, tell them about your business and answer any questions they might have. A goal of 10 business cards is always a good one to have. Then you should follow up through email with at least half of them and call those that you feel may really lead to something. By attending these events you are not only selling to attendees, but also to all of their contacts. You never know when a sale might come from a referral from a person you met at an event.

To be prepared for these events make sure you have plenty of business cards in hand and your elevator pitch ready to go. Your elevator pitch is your 30 sec pitch that informs people what your companies does, what makes it special and how it can help them or what you are looking for. Here are some articles you can read about elevator pitches http://www.businessweek.com/careers/content/jun2007/ca20070618_134959.htm

http://www.startupnation.com/pages/contact/elevator_pitch.asp

As I mentioned before these types of events are everywhere now a days. A good place to start looking is your local chamber of commerce. You do not have to be a member to attend the events. You should also look for networking groups in your area that focus on your industry or those that may need your product or service. Another place to find these types of events is a website called meetup.com, where people who share common interests form networking groups. Most cities will also have groups that are focused on startups and entrepreneurs, these events can be a great place to meet individuals. Google will become your best friend in finding such events and organizations, however if you are also looking for associations go to your local library and look through the Encyclopedia of Professional Networks. This is a great place to find out what is going on in your industry and area.

Tips for Using Twitter to Promote your Business

While twitter has been around since 2006, it only recently has become a part of every day conversation. As with all social media tools, the more people that are using it the better it becomes as a promotional tool. Some of you may be asking, what is twitter? In short it is a mico-blogging website that allows you to say pretty much anything you want in 140 characters or less. Below are tips on how to get started using tiwtter. The more you use it, the better understanding you will get and you will start to see how other people are using the platform.

The first step is to sign up for an account at twitter.com. If you are using the account for your business or professional purposes, make your handle (username) something relevant to your company. You can change your username at anytime if you feel you did not hit a home run on your first try. After you set up an account go through these tips.

1. Get a good profile pic.

2. Make sure your profile includes key words that will help people find you. You want people following you that share similar interests or are looking for a company to solve a specific need.

3. Don’t follow more people than the number of updates you have on twitter. While this is not a hard and fast rule, it shows that you are on twitter to actively participate and not just to rack up as many followers as possible.

4. Don’t appear like a spammer by following more than 30 people over your follow count.

5. Start conversations or continue other conversations with your followers. You can do this by sending tweets to them using @ then their name. For example my twitter handle is LettieG. So if you wanted to send me a message you would type @LettieG before your message.

6. Retweet (RT) the twitter posts that you like. It shows respect, and shows others you enjoy what they say. To retweet something you put RT and then @their handle: paste their message. As soon as you start using twitter you will see that retweeting is very common and very encouraged.

7. Never use auto follow or auto Direct messages. Be personal. Say hi. Since you are using twitter to promote your company you want to build relationships, not just talk and hope someone hears.

8. Make your followers stick with you for 24 hours before following them. If they appear to be spammers they will never listen to what you have to say. In the end, Twitter is about a two way conversation. Make sure your followers want to listen as much as they want to talk.

9. The power of Twitter is not in the numbers that follow you, but in the power that you have in the smaller numbers that listen to you.

10. Spend at least 10 minutes a day making your followers look better to the twitter community and on #FollowFriday, make sure you thank your followers by recommending them to others.

11. Use search.twitter.com to your advantage to find users with similar interests. This is a great way to get started finding people that you want to connect with.

12. Take part in conversations about your industry. Its a great way to find new followers. Such as #journchat care of @PRSarahEvans.

13. It is perfectly acceptable to promote your business using twitter, weather its talking about a sale you have or a new product launch, however do not use twitter only for this purpose. Other users want to follow you because of the interesting things you share, whether it is a good article you just read or tips on how to do something. Use your expertise and help educate others with it. This will be much more valuable to your company then constantly talking about the promotions you have going on.

Twitter is still in early stages of use and everyone is trying to figure out the best way to use it. These tips were written to help you understand the basics of twitter and how to use it in a way that benefits both you and the rest of the community. My best advice is sign up and start using it. Every day it is becoming more and more popular, it does not cost you anything expect some of your time and you will reach people you never will otherwise.