Business Plans•
on January 26th, 2010•
Beginning your own small business can be quite a daunting task. I applaud anyone that is willing to think outside the box, put in the endless hours of hard work and fully believes in new ideas and methodologies that can eventually lead to a successful and thriving small business.
One of the most crucial steps in becoming “the boss” and creating your own business is the business plan. This critical piece can make or break your professional future. It’s the tool that will enable you to clearly see your path and help you navigate any obstacles. Please, please do not take this lightly. Your business plan should become the bible to your business.
- Clarity: Your main business idea should be clearly defined and you should be able to succinctly articulate all aspects of your services or products and how you plan to support each component.
- Passion: Don’t get overwhelmed with the details and mechanical structure of business planning. A wonderful technique is to simply begin with a rough outline and then go back and fill in the sub-components with a bit more detail. Your passion for your new business will take over and items will begin to flow from your mind to your pen (or keyboard.)
- Preparation: As indicated within my first paragraph, owning your own business can entail endless hours of hard work in the beginning. As your success grows, you can outsource several aspects or simply hire on some help. But, if you truly have the passion for what you are building and prepare accordingly, it may no longer become merely “work” to you. Create in your mind the commitment and disciplines that are needed to truly succeed.
- Investigation: Before purchasing a new vehicle, you may take it to a mechanic and ensure it is a sound investment and will perform as needed. You want to ensure you have dependable and safe transportation, right? Well, the same theory is needed when beginning a new business. Do your homework and investigate the market and the need for what you will be providing. Be able to show market analysis numbers and details on expenses and how profit will be created. Learn how to be different than your competitors and articulate this within your business plan.
- Resources: If you are reading this, then you are making wise use of a free resource. This is one very small example of what is available on a long list of resources for small business owners. Seek the knowledge of others that have been there and overcome many of the obstacles that you may see. You will likely learn a few helpful processes that can speed up a few aspects of your business. Don’t be afraid to ask questions! There are multitudes of government agencies, business professionals, trade associations and non-profit groups that are willing to help you succeed.
So many new business owners wish to jump directly into what they know or do best and skip the vital step of business planning. The business plan is your roadmap to success. It is your “way ahead” and when completed will not only fuel your passion, but alleviate much unneeded anxiety. Take the time to prepare a solid business plan and don’t be afraid to ask for help when needed. You’ll be glad you did.
Business Tips•
on January 18th, 2010•
Success Tips, Chapter 3: Learn This or Prepare to Fail
Do you often feel you are chasing your tail? Really…, do you feel you are frantically working or busting your hump and your “To Do” list keeps growing? If you’re like me, it’s easy to lose sight of the big picture when you get bogged down with too many details. This is especially true if you share (with me) the obsessive compulsive gene. If you’re going to do something, you’re going to do it RIGHT!
If there is one thing I have learned over the past few decades, it’s that I have so much to learn. Early on, I made so many mistakes and kept banging my head on my desk until I decided there was something that needed to change. There are so many facets of life, business and personal that get caught up in cycles. You have to break the cycle or expect to get what you have always got!
Learn to Organize
As elaborated in chapter 2 of this series, learn to prepare and organize. This doesn’t mean put together an entire 3-inch volume of your plans. Simply, jot down an outline and schdule in some flexibility. Also, organize time for yourself to once again return to your center. Learn your balance and maintain harmony in your life.
Learn to Listen
Once of the most important things I have learned is how to listen well. I’m not always successful, but I do my best to reflect back what the client or my friends are trying to convey. Put yourself in their shoes! Feel what they feel. Don’t merely look with your eyes…, seek with your soul. Really open your entire being to their needs and desires. When you are in the listening mode, this is the time to really pay attention to detail. If you take in all the facts, all the feelings, all the wants and desire…, only then can you, as a team with your client or friend, collaboratively create the best, real and honest solution.
Learn to be on time
Yes, yes.., I keep returning to the time element, because I feel it’s important. Not only because it’s considerate to be punctual, but if you are not, you will learn that everything will take longer than anticipated! I’m sure there is some event in you past that you can say…, “yep, I should have left early.” Chances are high that you wouldn’t have arrived early, but if something came up, you scheduled in the time to allow for it. Get this imprinted on your brain: Life Happens! So, organize your time accordingly.
Learn to Over-Deliver
One of the reasons people say they like to work with people like us is that we make every effort to go the extra mile. People know we are genuine and really do care. This is evident in how we reflect what they told us and truly get into what is important to them. It’s been said and very true, if you find something you love…, it’s not work. Many times what we create is a part of us for others to enjoy. And, if you truly immerse yourself in it, you will overdeliver, time and time again!
Learn to Learn
Regardless of what you take away from this writing, I hope you are able to keep one important aspect in mind: Learn to Learn. When I truly learned how to learn, my life took on an entire new meaning. I became a sponge for knowledge. I learned to crave input in every aspect and with all my senses. I learned there is always room for improvement and I continuously attempt improve who I am and what I do. I became not only a much stronger part of my team, but I became a better friend and overall, a better person.
Do you often feel you are chasing your tail? Really…, do you feel you are frantically working or busting your hump and your “To Do” list keeps growing? If you’re like me, it’s easy to lose sight of the big picture when you get bogged down with too many details. This is especially true if you share (with me) the obsessive compulsive gene. If you’re going to do something, you’re going to do it RIGHT!
If there is one thing I have learned over the past few decades, it’s that I have so much to learn. Early on, I made so many mistakes and kept banging my head on my desk until I decided there was something that needed to change. There are so many facets of life, business and personal that get caught up in cycles. You have to break the cycle or expect to get what you have always got!
Learn to Organize
As elaborated in chapter 2 of this series, learn to prepare and organize. This doesn’t mean put together an entire 3-inch volume of your plans. Simply, jot down an outline and schdule in some flexibility. Also, organize time for yourself to once again return to your center. Learn your balance and maintain harmony in your life.
Learn to Listen
Once of the most important things I have learned is how to listen well. I’m not always successful, but I do my best to reflect back what the client or my friends are trying to convey. Put yourself in their shoes! Feel what they feel. Don’t merely look with your eyes…, seek with your soul. Really open your entire being to their needs and desires. When you are in the listening mode, this is the time to really pay attention to detail. If you take in all the facts, all the feelings, all the wants and desire…, only then can you, as a team with your client or friend, collaboratively create the best, real and honest solution.
Learn to be on time
Yes, yes.., I keep returning to the time element, because I feel it’s important. Not only because it’s considerate to be punctual, but if you are not, you will learn that everything will take longer than anticipated! I’m sure there is some event in you past that you can say…, “yep, I should have left early.” Chances are high that you wouldn’t have arrived early, but if something came up, you scheduled in the time to allow for it. Get this imprinted on your brain: Life Happens! So, organize your time accordingly.
Learn to Over-Deliver
One of the reasons people say they like to work with people like us is that we make every effort to go the extra mile. People know we are genuine and really do care. This is evident in how we reflect what they told us and truly get into what is important to them. It’s been said and very true, if you find something you love…, it’s not work. Many times what we create is a part of us for others to enjoy. And, if you truly immerse yourself in it, you will overdeliver, time and time again!
Learn to Learn
Regardless of what you take away from this writing, I hope you are able to keep one important aspect in mind: Learn to Learn. When I truly learned how to learn, my life took on an entire new meaning. I became a sponge for knowledge. I learned to crave input in every aspect and with all my senses. I learned there is always room for improvement and I continuously attempt to improve who I am and what I do. I became not only a much stronger part of my team, but I became a better friend and overall, a better person.
Business Tips•
on January 10th, 2010•
When I first became a certified personal trainer, one of the most difficult things to instill in my clients was preparation. Be it for your muscles, diet or your mind, preparation is a huge key to success. Perparation can be a difficult topic to teach in this day and age, due to the “fast food society” we live in. But, just as we teach our children to be prepared for school, do their homework and get to bed early, we too, must follow suit and set an example. It just as important as an adult (if not, more so) as it was as a child.
Time Management
Preparation Key #1: Time Management
When I was in high school, my physics teacher, Arthur Schang seemed to be a master of time management and efficiency. I never witnessed him bringing any work home and he would tell us that if any one of us did, he would award an automatic grade “A” for his course. But, of course, that never occurred, at least during my time at that lovely institution. Regardless, he set it in my mind how efficiency and time management can make a difference and prevent needless anxiety. Thanks, Mr. Schang!
Preparation Key #2: Goal Setting
So, how do we use time management to help prepare us for what is to come? We set goals and prepare for each one in advance; one step at a time. And, I have learned that this doesn’t require typing things out in perfect format with images and nice bright colors. As my partner and dear friend, Gina has helped instill within me, a simple rough outline works well. If you have some “extra time” in your already busy schedule, then sure, make it pretty (my O.C.D. kicks in about here.) But, mostly my preparation is done within my iPhone or by use of the faithful writing pen! Even if you have one of those “Only Available on T.V.” voice memo devices that you can pickup at the local convenience store, use it! Find a method that works for you and put it in place.
Sure, you will have an ultimate big-time goal, but as sure as I am bald, you will undoubtedly need to set smaller goals as steps to your final achievement. This is evident in so many things we do today, but we either get side-tracked or become too lazy to set these smaller steps in place that we don’t accomplish anything. There are just too many disctractions to pull at our thoughts and we then later pay for it by frantically running around in circles.
Preparation Key #3: Balance Your Mind
Okay, this may sound a good bit hokey to most people, but balance of mind and body is a tremendous step to being prepared. Why did we get sent to bed early on school nights? To get a good nights sleep and awake refreshed and able to soak in more knowledge. If your body isn’t telling your mind you need more rest or you are hungry, it won’t be distracted by these natural impulses and can focus more on what it needs to.
Additionally, even subsequent to watching a football game or a hard training session, I need some downtime to think and unwind so that my mind can find a balance and become that sponge for more data input. Take time for yourself. Schedule time for yourself!
So, learn to think ahead a bit. Life happens and you will, of course, need to be flexible and go ahead and expect the unexpected. I don’t mean something catastrophic, but you’ll need to stop and get gas, pickup something at the store or the dog will get sick on the carpet. UGH! But, we deal with it and move on. Preparation isn’t rocket science, BUT it does take practice. Don’t give up. Keep at it and you will succeed!
Let’s take this very dry, kind of intimidating subject and a few topics down to an understandable language for us every day business people!
Our economy has been troubled but entrepreneurs provide a sunny outlook for the future. Small businesses employ roughly 50% of the private US sector and have generated somewhere between 60-80% of net new jobs annually over the last decade (according to IRS.gov).
ARRA was designed with all businesses in mind and will positively impact small businesses.
First, a little about ARRA – It was introduced on 1.26.09, was passed by the House on 1.28.09, passed by the Senate on 2.10.09 and signed into law by President Obama on 2.17.09. It has been estimated to cost $787 billion by the Congressional Budget Office over the 2009- 2010 period. Stunning number by any stretch of the imagination! And its intention was to stimulate the economy, get money moving and businesses in the black again.
Here are a select few tax provisions of the bill that likely will affect you and your small business:
REDUCTION OF ESTIMATED TAX PAYMENTS:
In the recent past small business owners were required to pay in to the U.S. Treasury 110% of their previous year’s taxes in estimated taxes for the current year’s projected tax liability. ARRA permits small business to reduce their estimated tax payments to 90% of the previous years’ tax. This is terrific as income and cash flow for a large percentage of our small businesses are down for 2009!
NET OPERATING LOSS CARRYBACK:
As I recall, small businesses that have deductions (expenses) exceeding their income – resulting in a net loss – can use a new net operating tax provision in ARRA which will result in getting a refund of taxes paid over the past five years instead of the customary 2 year look-back period.
SECTION 179 DEDUCTION:
Qualifying businesses can treat certain property as an expense instead of depreciating it over several years. Up to $250,000 of Section 179 can not be expensed for tax years beginning in 2009 – that’s up from $133,000 prior to this legislation. The Section 179 limitation of $25,000 imposed on sports utility vehicles has not been altered. There are additional specifics regarding qualifying businesses and property so it is recommended you consult your tax accountant for more details.
BONUS DEPRECIATION DEDUCTION EXTENDED THROUGH 2009:
The bonus depreciation – which allows businesses to take a larger tax deduction within the first year of a property’s purchase – has been extended through 2009.
CAPITIAL GAINS TAX BREAK FOR INVESTMENT IN SMALL BUSINESS:
Individuals who have invested in small business and who have held their investments for five years are allowed to exclude from taxation 75% of their capital gains – if there is any in this economy!
ENERGY-EFFICIENT INCENTIVES:
ARRA contains many tax incentives for individuals and business to encourage investment in energy-efficient products. The two key provisions affecting business are:
- Election of Investment Credit in Lieu of Production Credit (Section 1102). Ever so briefly, this generally provides a 30% tax credit for investments in energy products or a credit of up to 2.1 cents per kilowatt-hour for electricity produced from renewable sources.
- Coordination with Renewable Energy Grants (Section 1104).
Instead of claiming the above mentioned credits, there is also the option of applying for a grant for energy investment credit property placed into service in 2009 or 2010. The grant is available up to 30% of the investment in the facility for property placed into service before 2014.
All-in-all some positive benefits for small business owners! For more detail on any of the above, please consider contacting your tax accountant and/or read from the Official Bill Text at http://www.opencongress.org/bill/111-h1/show
Gina Panzieri
Founder and CEO – Business Strategy & Finance
Small Business Solutions
Business Tips•
on December 23rd, 2009•
You have client appointments to keep, emails to answer, phone calls to return and a staff luncheon to attend. Your little yellow sticky’s are everywhere and you have even jotted down a few notes on a napkin or two and will transcribe them later. Your voicemail mailbox is full and there is a stack of “snailmail” on your desk awaiting your attention. How did it get like this when you were caught up two weeks ago? Are you experiencing high-anxiety because you fear losing important work information or missing that critical phone call or client meeting?
In our “fast food” society, more and more we are sucked into the work zone and can’t seem to get enough done. There are simply not enough minutes in each hour and certainly not enough hours in each day. Organization is critical; not only to your business success, but for mental stability!
Here are a few quick tips that will save you time and ease your mind. Not only will they help keep you organized, they will prevent the chaos from snowballing and pushing you further behind. Yes, they can seem tedious in nature, but if you are not already well-versed in project or time management, your profit margin and your mental health will suffer!
- Daytimer/PDA: In the old days, I lived by my “Daytimer”. It was the little six-ring binder with my calendar, contact information, business cards and more. It was my little “brain book” and I was lost without it. Okay, so I have evolved a bit and don’t use the traditional “Daytimer”, but something similar in my iPhone. The iPhone is mainly for my contacts these days, but it also can synch with your email client and do more. Technology is fantastic, if you will take the time to use it.
- Lists: I’m all about lists! Lists do many things for you. They help you track your most important “To-Dos” as well as allowing you a small form of accomplishment as you mark things off. It assures you that things are getting done. Make lists! Use one notepad or one computer file and keep it updated. Add to it, mark things off and understand that it is a dynamic document. Check it before you begin your day. Check it again, before you end your workday to ensure you are lined up for the following day. You will sleep much better at night as your subconscious prepares you for the upcoming day.
- Desktop: Keep your desktop organized. If you must daily deal with actual paper documents, have an “inbox”, along with a “To Be Filed” box, “Immediate Attention” box and so on. Then, when something hits your desk, immediately place it in the appropriate box and don’t allow your “snail mail” to pile up. Do Not put it off until later. Later costs you more time as you have already looked at the envelope and thought about what the item is and where it will later go. If you wait until later, you will have expended more than twice the amount of time.
- Scheduling Repetitive Tasks: Many of us have certain tasks that we must perform each week to sustain an on-going project. Schedule it – every Tuesday and Friday from 1 to 3 p.m., for example. Don’t keep putting it off. This routine will make you more efficient and allow you to mentally prepare for that specific task.
- Outline it! With many projects…, from building a house to creating a short list of things to do, they can first be overwhelming. As my old Physics teacher used to say, “Better to begin with something and change it, than try to complete the task with nothing.” Take a birds-eye view and jot down the major points of what needs to be done. Then, rearrange these points by timing or importance and create and outline. After the outline is complete, you can then attack each component and break it down again.
These are my top 5 organization elements for success. If you can learn to do these things, with practice, you will become much more efficient and a lot less likely to shoot the messenger or have a mental meltdown! Additionally, it will impress your co-workers and quite possibly your clients!
P.j. Germain
CEO – IT and Innovation
Coaching•
on November 21st, 2009•
When we set out on a new business adventure we set goals and head off into the wild blue yonder, excited and ready to take on the world!
Expect Challenges
Then…bam! Surprise and challenge upon challenge are presented to us. It’s part of life so expect it! The more prepared you are to expect obstacles the less they will flatten and discourage you. Get ready! Clear the path! The goal is still there. The ever-powerful goal hasn’t changed…we’ve just been surprised by unexpected mountains and valleys. You’re a pioneer otherwise you wouldn’t have embarked upon this entrepreneurial adventure. You can do it!
What are some of the mountains or valleys you might encounter?
PEOPLE: How about other people? You likely have to deal with them every day…customers, suppliers, vendors, etc. Likely a few might not be too competent. A select few might actually be dishonest cheats who may try to betray you.
You may be disappointed that customers are not purchasing your outstanding product as fast or in as much quantity as you wish initially. Or, perhaps your customers may take longer to pay than you’d like.
Maybe, you and your business partner – whom you usually communicate with VERY well are just having an off day. It’s ok! It’s just one day out of many. Agree that today you shouldn’t talk much or make decisions together. Table the issue until tomorrow. Everything is always different tomorrow!
Let’s just remember the golden business rule…the customer is always right. You can work with them. In the end it’s not what we produce that is key, but what services or products people will buy. Keep your eye on the goal and evaluate your products and services to meet demand. And you don’t need the few dishonest ones you may encounter. Send them on their way, wishing them the best.
Remember…we may have to adjust OUR expectations!
FINANCES: We all know there are teachings out there that if you expect abundance you’ll get it! Well, there likely is great truth in that belief, BUT it doesn’t just come to you! We have to work our butts off! And we must plan, plan, research and plan. Are our budgets in line with reality? Have we adequately priced our product or our service? And have we budgeted what it will actually cost to produce our product? Do we have adequate initial capital to fund our enterprise? Have we allowed some room for price increases for our supplies? Plan, plan, plan and leave room in our budgets for variances for they will surely be there.
PERSONAL: You are now headlong into your business endeavor and you’ve discovered that you are missing a skill set, a talent or some piece of knowledge that is essential. Or maybe you are not the best money manager or you fritter away time on tasks that really are not important. Or you are just plain overwhelmed with too many chores. No worries! Accepting our limitations as well as our strengths is essential. Accept that you need to beef up your knowledge, learn a new skill set or hire a consultant for a brief stint to help you through a particular challenge. Mastering skills or asking for assistance is likely not a problem for you if you are where you are today. Get on it! You can do it!
Gina Panzieri
Small Business Solutions
Tax Planning•
on November 13th, 2009•
NEW RULINGS & YOUR 2009 TAX RETURN – Quick Snapshot
Economic Stimulus Law & Tax Relief: This has been a busy year on the tax front and much of the news has been good for taxpayers. The economic stimulus law enacted early in the year provides significant tax relief in various forms. And the IRS and the court have issued a number of rulings that have favored the taxpayer.
Homeowners:
For example, homeowners with large mortgages may be entitled to a bigger deduction for their interest payments, thanks to a new ruling from the IRS. The tax law imposes a limit on the amount of interest that’s deductible on a mortgage used to buy a home and a second limit on deductions for interest paid on “home equity” loans. The IRS ruled that you can combine the two limits and treat first mortgages in excess of the first limit as “home equity” loans, thus entitling you to a bigger interest deduction.
IRA’s:
Another winning combination came in the IRA area. While withdrawals from an IRA before age 59 ½ are generally subject to a penalty tax, there are exceptions. One exception applies to IRA owners who make periodic level withdrawals. Another exception applies to IRA owners who withdraw funds to pay a child’s college expenses. The Tax Court ruled that IRA owners can combine these two exceptions. Your regular periodic payments will still be considered “level” even though you withdraw additional amounts to pay college costs.
TAX PAYMENTS VIA CREDIT CARDS:
Another pro-taxpayer ruling from the IRS is good news for taxpayers who make tax payments via credit or debt cards. Reversing a prior position, the IRS says it will allow taxpayers to deduct the convenience fees that credit and debt cards charge for tax payments. The deduction is available if you itemize your deductions and have sufficient deductible “miscellaneous” expenses.
INVESTORS – PONZI SCHEMES:
The IRS also provided much-needed tax relief to investors who lost money in the recent widely-publicized “Ponzi” schemes. While investment losses are generally treated a capital loss, of limited tax value, the IRS ruled that investors in the Ponzi schemes can write off their losses as thefts. This allows investors to claim a bigger deduction for their losses.
If you want more information about these ruling or would like to learn about other new developments that may affect your upcoming tax return, please contact us or your tax accountant.
Gina Panzieri
Small Business Solutions
Business Plans•
on November 7th, 2009•
Do you have a dream? A business you KNOW you’ll succeed at? Or a successful business you are ready to take to the next level? Are thoughts rambling around that creative, driven brain? Put them on paper! Develop a plan!
Hire a specialist to help you do the research and write a fabulous document that will be your road map to success!
We are experts in business management and in business plan development. We talk with you and intimately discuss your ideas, document them in a specific way to help you ‘see’ your strengths and weaknesses. We will analyze your market, help you price your product, develop financial projections and cash flow analyses to assist you on your path to an enduring, flourishing business.
Business plans help you identify and organize your goals, and set up an outline to keep you and your hard work on track. We write in depth about your product, help construct a marketing plan, identify resources that all small businesses require.
Our strong research and analytical skills, demonstrated financial analysis and marketing experience and effective writing strategies will leave you with a winning business planning tool! Call us today!
“The more intensely we feel about an idea or a goal, the more assuredly the idea, buried deep in our subconscious, will direct us along the path to its fulfillment.” ~ Earl Nightingale
One of the great things about mediation is that a case can be mediated at any time, from before a matter is in litigation to any time during the litigation process. The United States Court of Appeals for the Eleventh Circuit even has a program for mediation of cases that are on appeal. Although an appeal in the federal court system would not seem to be the optimal time for mediation, the administrator of that program has told me that it has a surprising amount of success.
In many instances, the timing of mediation reflects a tension between limiting litigation costs (best served by an early mediation) and having all the information on the table necessary to evaluate the case (often best served by mediating after the completion of discovery). However, this is not always the case. If the parties are in an on-going business relationship, for example, they may already have equal access to all of the relevant information, and that would favor an early mediation.
In theory, the optimal time for mediation will be as soon as both parties have enough information to make a thorough and reasoned evaluation of their case and the likely outcome. This time will vary from case to case, but it does not always require that discovery be completed and every last bit of information gathered. If an informed mediation can take place sooner, the parties may be more flexible because there are fewer “sunk costs” and a settlement will allow additional expense to be avoided.
In some instances, such as where confidentiality and speed are desired, the parties may consider exchanging information outside of the court-supervised discovery process. In such circumstances, mediation can be used to establish a process for information exchange and then for the resolution of the case.
The parties may also agree to mediate over a number of sessions. The first session can be devoted to defining the information that each side needs to assess the merits and to establish a timetable for exchanging information. During interim sessions, the mediator can assist the process in making sure that the exchange is moving forward, and that any disputes about the information exchange are resolved. Once the information has been exchanged, the final session or sessions are devoted to a traditional meditation focused on settlement.
Although the foregoing counsels in favor of mediation relatively early in the process, I have recently modified this view to include the following caveat: The parties have to be ready to settle. For some reason, it seems that some parties need to go through at least several rounds of discovery, motion practice, and “head butting” before they get serious. This is unfortunate, but, in some instances, it seems to hold true.
John L. Watkins is a Shareholder of Chorey, Taylor & Feil, a business litigation and business law firm in Atlanta. John represents John represents domestic and international companies in business litigation matters, including trade secret, insurance coverage, and corporate cases. In addition to handling matters in litigation, John has represented parties in arbitration and mediation for many years. John is also a registered mediator with the Georgia Office of Dispute Resolution, and is available to mediate trade secret, business, corporate, tort and other business matters.
John does not serve as a mediator for domestic relations matters. John graduated first in his class at the University of Georgia law school in 1982. He was named to the list of Georgia Super Lawyers in Business Litigation by Atlanta Magazine and the Journal of Law and Politics in 2008 and 2009. John is rated AV by the Martindale-Hubbell Law Directory, its highest rating, and 10.0 by the AVVO website, its highest rating. More information can be found http://watkinsmediation.com or at the firm’s website,http://www.ctflegal.com
Business Plans, Funding•
on April 22nd, 2009•
A business plan for a startup venture is most successful if it serves three purposes: attracting outside funding, helping the managers think through strategy, and providing a road map for future action and evaluation. Many business plans end up serving only one or two of these purposes, leading to problems for the business and contributing to the high rate of new business failure.
Attracting Outside Funding
Most startups cannot launch without funding from investors and lenders beyond the founders of the company. For most funders, reading a business plan is an important preliminary (but not the only) step to choose who to fund. The business plan must attempt to convince funders to move on to direct talks with the founders, to go through their own process of due diligence, and to move on to negotiations over the financing deal. The business plan cannot convince funders to give money on its own, but it can easily kill the company’s chances of getting outside funding it finds to be lacking.
Thinking Through Strategy
A business plan also serves the purpose of letting entrepreneurs “make mistakes on paper” before making them in wasted dollars, cents, and time. Putting the plan on paper allows time to consider how the elements of a strategy complement the research done and the resources of the firm. It also allows advisors and other managers to give feedback on the plan of action.
Creating a Road Map
When kinks are worked out, the plan becomes an excellent tool to direct the company with. It should include the high level actions the firm must take, which can then be broken down into specific schedules and actions by the company’s manager or managers. As time goes on, managers can return to the plan and its financial projections to judge the progress of the company, how successful the planning was, and whether company is following the plan well.
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