Writing a business plan

Now that you’ve come up with your idea it’s time to move onto the next step: writing a business plan.  A company’s business plan is what lenders use in deciding whether or not to loan you the money needed to start up your new venture.  It is the most important document you will use to gauge your company’s success and help you make decisions about how to move forward with your new undertaking.  (“If you’re starting a home-based business some of these suggestions may not apply but you should still create a plan that outlines your goals, expected costs, marketing plan and exit strategy.  A business plan is your road map for how you expect to succeed and how you’ll measure success.”)

A great business plan is a living blueprint for your business that can help you manage your company while helping potential investors, partners and lenders understand your business strategy and chances of success.  “A business plan is never quite finished because you’re always revisiting it, reviewing it and building upon it.”  Writing a business plan can help you describe your product, service and marketing plan as well as your sales forecasts.

Show your investors how they’re going to make money.  A business plan is a must if outside lenders are sought whether from banks, small business loans or venture capitalists.  It is one of the primary documents a loan officer will want to take a look at.  If you're developing a plan involving a business loan, then your lenders are going to want something slightly different.  “They will want to see a section detailing collateral or assets to pledge against the loan.  Collateral includes funds to support loan payments, interest expenses, and debt repayment.  Banks aren't allowed to make speculative loans, so you need to include information in your plan to make the banker feel safe.”

What components should a plan include?  For starters, a description of the company and products and service offered.  Additionally, a plan should incorporate financial forecasts and analysis and a description of your management team.  Your plan should also include an executive summary: an abstract of your plan and what you will say in greater detail in the coming pages.  It outlines the goals of your business.  It may be wise to review sample business plans in lieu of starting your own.  “Be sure to include background about your company, the market opportunity, your capital requirements, a mission statement, an overview of management, competitors, your business's competitive advantages, and a summary of your financial projections over the next three years.”  A plan should also include a company overview used to provide additional information about your new venture: it’s mission, model, strategy and why it is being formed.

Additionally, in your business plan you should include all the operating costs of your business, such as where the company will take office space and for what approximate cost per year, etc.  Bear in mind that your business liabilities can work against you getting the loans you need and want.  Signing a long term lease for office space for example can be a hindrance.  The investors will see a long term lease as a red flag - if the business fails their money is committed to several years of rent.  Consider including the plan to lease space from an "executive suite space" also known as Office Business Centers.  Options such as Emerge212 (http://www.emerge212.com/) provide your business the impressive space it needs to thrive and grow with the shorter term leases that will look more favorable to investors.

Most importantly, investors need to know that your business plan was created by you and not an Internet company that offers to sell business plans on the cheap.  Each business plan should be as unique as the business you are starting.  “A business owner should also be fully invested and fully aware of every aspect of the plan.”  The text used should be a simple and easy to read font with a table of contents and topic headers.  Including charts where appropriate is also a good idea.  Most experts conclude that a plan should not be more than 30 to 40 pages not counting supporting documents.

What are some of the types of business plans?  The most regularly used is a start-up plan covering standard topics about the company, products and services offered, implementation, management team and financial analysis.  Another type of plan is the internal plan which is not intended for outside investors.  There is also the operational plan or annual plan using milestones, dates and deadlines.  The strategic plan focuses more on high-level priorities than on detailed dates and specific responsibilities.  The growth or expansion plan is focused on a subset of the business.  Lastly, a feasibility plan is similar to a start-up plan that is simpler – focusing on mission statement, keys to success, basic market analysis and preliminary analysis of pricing and expenses.

I hope this blog entry has been helpful in making you understand the tools needed to create a sound business plan and the steps needed to make that happen.  Please log on next Wednesday where I will discuss securing funding.

Until next time…

Is entrepreneurship right for you?

What is the first question you should ask yourself when starting a new business?  Simply put: Is entrepreneurship right for you?  You might also want to ask yourself: Am I prepared to spend the time, money and resources needed to get a company up and running?  In terms of time, when you become an entrepreneur, you’ll likely work harder than you would for any traditional company.  While there is a lot of flexibility involved in a new business, it requires a large investment of time.  You’ll need structure and a schedule of regular business hours that you have to commit to.

Embarking on a new business venture isn’t easy.  Being your own boss can be a challenge.  You have to have the motivation to work hard every day.  You don’t have a boss looking over your shoulder or the structure of a traditional office environment.  You also aren’t getting a paycheck every week and don’t have the luxury of benefits.  Additionally, if you start a business on your own, you won’t have a staff that reports to you or co-workers to brainstorm with and help you when your work flow gets overwhelming.

Next question and possibly the most important one: What is my idea and why is it unique and original?  What will set me apart from my competitors and who are those competitors?  Coming up with a fresh idea can be a challenge.  New ideas can come from reading and of course, talking to others who have the same interests.  Another way to spark your creativity is to think about a problem and the different ways to solve it.  Once you have an idea, think it through and determine if it is reasonable to move forward with it.  If it is, go for it!  If it isn’t, keep trying.  Don’t limit yourself – be open to a variety of possibilities and your mind will logically create new ideas.  There’s a lot of research involved in learning what’s already out there in the broader marketplace.  You might find yourself competing against established businesses.  One thing that can be helpful when facing such a challenge is networking with the right people.  They can provide advice on how to become successful and potentially help you get new clients.  

You also need to ask yourself: Why exactly am I starting a business?  What are the goals I’m looking to achieve?  Do I have the skills and knowledge to be successful?  When you’re an employee of a traditional company, your responsibilities are vastly narrower and highly targeted.  However, when you launch a business, you become responsible for everything from research and development to product delivery and accounting.  Therefore, there will be some tasks you might not be familiar with.  You might want to seek a mentor or sound advice from an expert in your field who can help you learn how to navigate through these new endeavors.

Welcome to "Business in the City!"

Welcome to ‘Business in the City!”  I am here as a resource for all your small business needs whether you are an established company looking to grow or a young entrepreneur just starting out.  I am your inside source to all things NYC and will go beyond just business and provide you with information on lifestyle, entertainment and personal.  Next Wednesday I will be rolling out the first blog in a long series about how to start a business and of course, be successful at it: What you can expect from it, the obstacles you may face, how to get funding and clients, where to create an office for yourself and your company be it a traditional or virtual office, etc. and unravel all that comes along with this.

Today’s post is an introduction so I want you to understand what I’ll be doing, how I’ll be helping you and why I am even blogging in the first place.  It is my hope to become a one-stop-shop or go-to source, if you will, for the small business community in our very own New York, New York!  It’s said that “if” you can make it here you can make it anywhere but what does it really take to make it here?  How can you increase your chances of not falling victim to the odds stacked against small businesses in Gotham City?

With so many blogs out there along with everything else that’s put in front of you to read, why read this blog?  I have my own take on its importance and the overall importance of blogging and social media as a whole.  If you give me a shot, you may be surprised what you learn.  There’s an investment here; an experiment if you will.  That experiment is to create a blog that chronicles the entire process of starting and sustaining a business in NYC.  It is being authored by someone who has never done that before but who will take the steps to do so in a diligent and comprehensive way that benefits all who read along.

So where should I begin?  Today, I’ll just start with addressing the pros of blogging for small business and of course, social media in general…Next time, I’ll start at square one with the creation of a small business in NYC.

As you well know, many of the most significant revolutions of the last 20 years have all had to do with writing – email, webpages, texting and now blogs.  A blog is in essence an “online diary” with a coherent voice and opinion.  When you were a kid and wrote a diary would you ever consider letting someone else read it and comment on it?  Probably not so maybe there’s more to blogging than meets the eye?  First you have to ask yourself: Are you blogging for the right reasons and what are those reasons?  Will your blogs lead to a flow of information and a dialogue with the reader?  One hopes so.  In essence, bloggers are people with attitude and a strong opinion.  

In business, blogs have the potential to help the organization develop brand loyalty and a stronger relationship with the consumer.  By capturing and maintaining visitors, your blog can gain traction in the broader marketplace.  A blog can be seen as the “human face” of an organization.  You have to be careful that your blog does not become pointless or narcissistic; that it remains accurate and original.  Blogs can be a positive way of getting feedback and “keeping your finger on the pulse” as readers react to certain pieces.  Lastly and most importantly, you have to ask yourself: what is your point of view so that your blog has the right mindset for the audience you are trying to target and will engage the reader.  In essence, that is what I am trying to do here.  I will be taking a stance and will not waver from it and I hope you will consider listening and taking my advice.